The first goal was to ensure that the debts and honor of the nation would be secured. Alexander Hamilton apparently felt the Federal government wouldn’t be able to borrow money from anyone in the future if their current debts went unpaid. The general idea was that the selling of bonds provides the much needed money that is required to pay the debt; bondholders, the people that purchased said bonds would have a direct financial interest in helping the new United States government survive and thrive. Creditors who purchased the bonds could use them as collateral for loans, and this in turn would stimulate economic growth. The plan would also create a bureaucracy of agents; an agency spread across the country, one that would be tied to the Federal government and not individual states. This created a national debt. Hamilton’s scheme was called “debt assumption plan,” and at that time was considered to be extremely radical; however, this is not all that surprising. It was 1790.
As previously mentioned; Hamilton’s initial program was seen as being extremely radical, one that could not possibly produce the required results. Not so; Hamilton’s initial program was very successful, the truth is is that the said program produced immediate results. Moreover, the Federal government was not only able to establish excellent credit but provide tangible evidence that showed the government could indeed handle it’s affairs. In addition, Hamilton’s initial program initiated an era of prosperity never dreamed of previously. The primary reason that President Jefferson was able to go forwards with the Louisiana Purchase was because Hamilton’s debt assumption plan provided the essential credit and funding to do so.
The newly created Treasury Department grew quickly both in stature and personnel; a department that not only encompassed the United States Customs Service, but included the United States Revenue Cutter Service, and this is essentially the network of Treasury agents Hamilton had envisaged.
The phrase lightning doesn’t strike twice in the same place clearly doesn’t apply here. Alexander Hamilton’s success with the First Record on Public Credit was soon followed a second equally as impressive success; namely, the Second Report on Public Credit. The Second Record on Public Credit detailed a plan for the creation of a national bank; a Bank of the United States which would be privately-operated, but remain under the ownership of the Federal government. This said bank was in fact the precursor of the Federal Reserve System we know today.
It was in 1791 that Alexander Hamilton released the third and final report of the previously mentioned set of three. This final report was titled the Report on Manufactures. This final report not only encouraged the growth of manufacturing in the United States but provided a level of protection that was previously unheard of. There was however one tiny snag. President Jefferson and Alexander Hamilton were similar to that of what we see in President Obama and Speaker John Boehner today. One believes in a strong centralized Federal government and the other believes in small government; basically put, State’s Rights.
The disputes between President Jefferson and Alexander Hamilton grew; not only was this dispute on a professional level, but extended into their private lives as well. This is when Hamilton’s followers began to call themselves Federalists and Jefferson’s supporters referred to themselves as being Democratic-Republicans (the latter of the two mentioned groups should not to be confused with what we know today as Democratic Party or the Republican Party). The Federalists and the Democratic-Republicans are considered to be the first manifestation of political parties in the United States; which by the way, went against everything that President George Washington believed in.