BACKGROUND | THREE GREAT REPORTS | THE CORPORATE EXAMPLE | THE DUEL
Alexander Hamilton
THE CORPORATE EXAMPLE:
Alexander Hamilton not only encouraged private
manufacturing, he provided an example of how corporations could be organized by
individuals to develop manufacturing on a large scale. He established a model,
the Society for Establishing Useful Manufacturers, also known as the S.U.M. This
type of business enterprise forged the basis of American capitalism. Earlier,
Hamilton had proposed to Congress that the federal government spend $1 million,
which was two percent of the national debt, to build a "national
manufactory." Hamilton knew this idea would be rejected, so he initiated
America’s first planned industrial center in 1791 with private funds. He and a
group of investors chose a site where they could harness the power of the Great
Falls of the Passaic River in the state of New Jersey. The enormous height of
the falls, 77 feet, and the surrounding terrain had characteristics that were
essential for the utilization of waterpower at that time.
The New Jersey Legislature granted a charter to the S.U.M.,
which was signed on November 22, 1791 by Governor William Paterson. It became
the first large business corporation in America. The new town was called
Paterson and construction of a water raceway system began in 1792. It was the
first attempt within the United States to harness the enormous power of a major
river. Paterson, along with other manufacturing centers across New England,
eventually created great textile wealth from the combination of enterprise,
labor, waterpower, machines, raw fiber, and capital gained from foreign
commerce.
Related links:
Route 23 website, North Jersey's Internet Magazine: Silk City - Paterson, New Jersey, The Industrial Revolution in North Jersey.
Museum of American Financial History: Hamilton's Great Experiment: The Society for Establishing Useful Manufactures, by Russell Roberts
Capitalism:
Hamilton
was a brilliant young reformer. He helped transform America into a nation that
promised a new way of life for its citizens. During his position as the first
Secretary of the Treasury, money became the universal measure of social
position, a neutral arbiter. It transformed the established economics, made
society fluid, and made industry rewarding and necessary. He made it possible
for men and women to succeed in life without a dependency on birthright, family
connections and ownership of land. He put into place a system of law and finance
in which existing rigid social forms of power over people’s lives were
diminished. Hamilton believed that not only was the existing elitist social and
economic order unjust, it also bred laziness.
Colonial American laws and institutions held that land was
the legitimate source of wealth and status. The property qualifications for
voting and office holding were land and improvements. Except in parts of New
England, most of the land belonged to the few; in the older areas of the South,
10 or 15 percent of the white families owned upwards of two-thirds of the land.
Hamilton had nothing against a hierarchical and deferential
social order. He thought such an order natural, desirable, and, in any
politically free society, inevitable. Furthermore, he abhorred the leveling
spirit. But his detestation of dependency and servility was stronger yet, for
those were contrary to his very idea of manhood, and the system of pluralistic
local oligarchies made everyone dependent upon those born to the oligarchy. He
hated the narrow provincialism that the system nourished and fed upon; and he
resented, as only a natural-born outsider can, the clannishly closed quality of
the system. Most objectionable of all was that the system failed to reward
industry—industry in the sense of self-reliance and habitual or constant work
and effort.
His crucial idea was to enable and encourage individuals so
long held back to invest in themselves and their ideas. He made it possible to
measure worth and achievement in terms of money. One worked for oneself through
the marketplace. Each newly sovereign individual could prosper if he proved
energetic and hard working. Each individual became a free man; each having the
right to seek his own happiness. Hamilton’s mission was to enliven man’s
possibilities. It was a mission premised on human dignity, a dignity that made
each man an equal being.
Excerpts in "Capitalism" from "Alexander
Hamilton, A Biography," by Forrest MacDonald, printed with permission by
W.W. Norton & Co., New York . More excerpts from this book.
Buy at Amazon.com.
Federalists vs. Republicans:
In calling both Hamilton and Thomas Jefferson into his cabinet, George
Washington acquired an explosive combination of talents. Although both had
exceptional qualifications for high office that were beyond question, the new
government mainly followed Hamilton's course. The gathering opposition to
Hamiltonian policies, headed by James Madison, began to turn to Jefferson for
leadership. In the presidential election of 1800, a majority of voters in the
nation abandoned Hamilton and the Federalists, believing that it was the road to
oppressive nationalism and financial oligarchy. Jeffersonians embraced the free
pursuit of private interest policed by the states and regulated by the central
government only in those special cases where the national interest was obviously
of first importance. Their main principle was individual liberty, whereas
the Federalists espoused government discipline as a channeling device for
national development. Both sides of the debate formed an ongoing dialogue
that continues to this day.
After Jefferson's victory in 1800, however, the Republicans
were compelled by circumstances to continue with the Hamiltonian nationalistic
outlook. Jefferson proved to be a pragmatist who could appreciate the benefits
of an energetic central government. His administration began to use the
Hamiltonian financial system effectively. The Bank of the United States thrived
and business went on much as it had before. Public opinion turned back again
toward the broad use of national powers to stimulate and direct economic
development. The public came to believe that Hamilton's financial measures were
designed for the common good and were consistent with the requirements of a free
federal republic.
Preference for Jefferson's doctrine of decentralization and
states' rights gained momentum, however, during the decades leading up to the
Civil War especially during the presidency of Andrew Jackson. Southerners
asserted their states' rights as resistance to any interference in their use of
slavery. On the Union side stood the stability and strength of the federal
government that Hamilton insisted upon for his entire career. The Union shared
Hamilton's outspoken opposition to slavery. The outcome of the Civil War and the
abolition of slavery proved the merit of the Hamiltonian way, leaving the South
and simple agrarianism behind the rest of the nation in its steps toward
greatness.
After the war, the United Sates benefited from an era of
great industrialization and innovation. Reconstruction and westward expansion
brought about increasing capitalist enterprises. Hamilton's legacy enjoyed an
unprecedented ascendancy. As he had expected, the United States became the
richest, most powerful and freest nation in the history of the world.
Source material for "Federalists vs. Republicans": "The Rise and Fall of Alexander Hamilton, An Image Through Time," by Ian Finseth
BACKGROUND | THREE GREAT REPORTS | THE CORPORATE EXAMPLE | THE DUEL
|