Chris Hobeiko's essay on Hamilton

<strong>Chris</strong> HobeikaJuly 24, 2007Andrew MeyersNew York City from Colonial Outpost to World Capital: An Urban Case StudyAlexander Hamilton:One man’s impact on the economicand industrial infrastructure of New York CityAs an immigrant to this country, Alexander Hamilton was faced with many facedmany hurdles along his track to becoming one of the Founding Fathers of America. Heonce said about himself, “I am a stranger in this country. I have no property here, noconnections. If I have talents and integrity… these are justly deemed very spurious titlesin these enlightened days.” Hamilton’s hard work along with “talents and integrity”eventually brought him to the for front of American politics and of New York Citysociety.Throughout his life Alexander Hamilton held a multitude of different job titles.He was Washington’s Aide de Camp during the Revolutionary War, leader of a lightinfantry division during the Revolutionary War, and a lawyer, among other things.Although he excelled at all these different professions, Alexander Hamilton was mostsuccessful during his tenure as Secretary of Treasury under President GeorgeWashington.

Alexander Hamilton’s expansive and logical economic mind helped him tosucceed so prodigiously during his short life. His firm belief that an emulation of Englandin America, along with a few tweaks, led to federal government we see today. Hisunderstanding that only through manufacturing would America become and world powerlead to the creation of an industrial nation, sustained by agriculture that we see today,instead of the creation of a purely Agriculture nation which would have left Americanbehind in the Global world.Alexander Hamilton’s economic and industrial programs are the reasons whyNew York City was the industrial capital of the world, until recently, and why New YorkCity is the economic and financial capitol of the world today.Hamilton first became aware of the need for economic reform during theAmerican Revolution. At that time the United States was heavily indebted to foreigncountries, private investors, and owned a tremendous amount of back pay to soldiers whofought for the Continental Army and soldiers who fought in state militia. The countriesfinances were so bad in fact that at one point James Madison wrote to Thomas Jefferson,“Believe me, sir, as things now stand, if the sates do not vigorously proceed in collectingthe old money and establishing funds, for the credit of the new… we are undone.” Keepin mind that latter in Alexander Hamilton’s life, Thomas Jefferson, along with JamesMadison would provide the staunchest opposition to Hamilton’s plans for the country andthat even they were aware that something needed to be changed.The first time Alexander Hamilton voiced his views on finance was towards theend of the Revolutionary War in a letter to Robert Morris, who was at that time wassuperintendent of finance to the continental congress. On April 20, 1781, Alexander

Hamilton sent a 31 page letter to Morris. In this letter he outlined his ideas on how to setup a system that would give American lower credit and he sited the needs for a NationalBank. Both of these views he would latter bring to the table as secretary of treasury underGeorge Washington, and in his first and second reports on Public Credit. Hamilton’sletter showed that even though, in his own words, he was “not an able financier” he wasable to use his immense intellect to form concrete ideas that would eventually serve asthe basis for Americans financial programs.Hamilton firmly believes that in order to win the war, American must “introduceorder into our finances- by restoring public credit to finally gain our object”; the objectbeing freedom. His solution to the budget deficit was a national bank similar to the banksof rich European nations that would enhance state power and facilitate private commerce.His emulations of British belief would eventually gain him much criticism in the futureby followers of Jefferson.During the Revolution, Hamilton also began to first voice his views on theweakness of the central government and on the power of the states. This would becomeextremely important after the war, when Hamilton, along with Madison helped facilitatethat Constitutional Convention, the creating of the Constitution of the United States ofAmerica, and New York’s acceptance of the Constitution.However, before working with Hamilton on the Constitution, they first created acampaign to introduce a 5 percent duty on all imports. This would give Congressautonomy in money matters and would hedge the growing powers of the states. AlthoughHamilton was fiercely loyal to New York City, he still felt that the Federal government

needed more power and was willing to curb the powers of his State, and City in-order topreserve the newly founded country.According to historian Ron Chernow, “no individual (Hamilton) was identifiedmore with the postwar resurgence of New York City – not to mention the city’s futuregreatness- than Alexander Hamilton. He was destined to excel in what was to emerge asAmerica’s commercial and financial metropolis and he articulated the most expansivevision of its future.” However for all his love of New York City and his craving that itwould eventually become the capitol of the United States, and eventually the world,Hamilton did make mistakes when it came to the future of New York City namely, hisinvestments in upstate New York instead of New York City.Alexander Hamilton’s first contribution to New York City came directlyfollowing the Revolutionary War. After the treaty of Paris was signed, the city changedfrom British rule to American rule. Many returning patriots were hungry for loyalistblood. However Alexander realized that removing the loyalists from New York Citywould be disastrous for the economy of New York City. Firstly, because New York Cityhad such a large base of Tories, it would remove much of the population. Secondly, theLoyalists for the most part were the rich aristocratic landlords. If the die hard patriotswere to succeed in removing all loyalists from the city, it would surely be disastrous.Because he was a lawyer, Hamilton was well suited to help the City negotiate thepassage from English military rule to that of the sober rule of law. Hamilton helpedLoyalists, who were often rich Anglican merchants and members of the social elite intheir legal battles. Hamilton also fought for the Tories because he wanted America to bemore respectable in the eyes of the British. John Jay gave him advice, concerning France.

“The Tories are almost as much pities in these countries as they are execrated in ours. Anundue degree of severity towards them would therefore be impolitic as well asunjustifiably.” Destruction and seizure of Tory property also violated the treaty of Pariswhich could have incited a British renewal to war.Alexander Hamilton’s defense of the rich, aristocratic Tory land owners in theNew York Courts immediately following the Revolutionary War helped to stop a lot ofthe capitol New York City had from leaving. Eventually this would turn out to be veryhelpful for Hamilton and for the City because these Tories, along with Hamilton andother patricians of New York City upper society would facilitate the creation of the Bankof New York, along with the precursor to the New York City Stock exchange.In 1783, Jeremiah Wadsworth and Alexander Hamilton’s brother in low, John B.Church gave Hamilton the task of setting up a Private bank in New York City. Hamiltonreadily accepted the challenge because he felt that a bank would help to reinvigorate NewYork City commerce and finance. Hamilton felt that the best bank would be aconservative bank that would conduct business exclusively in notes and gold and silvercoins. He received opposition from Robert R. Livingston who though a land bank wouldbe better. A land bank is a bank in which the initial capital is pledged in the form of land.Hamilton thought this idea to be “wild and impracticable.Hamilton, with the banking of New York Cities merchants, stymied Livingston’ssolicitations of the New York legislature for a land bank charter. Hamilton waseventually placed on the board of the new Bank of New York; however he onlyrequisitioned one single share of the bank. In the New-York Packet, the gathering of thefirst bankers was recorded on February 23, 1784: “It appearing to be the disposition of

the gentlemen in this city to establish a bank on liberal principles… they are thereforehereby invited to meet tomorrow evening at six o’clock at the Merchants Coffee House,where a plan will be submitted to their consideration.” Hamilton was voted director ofthis bank and over the next three weeks drafted a constitution for it. He also received a50,000 dollar loan from the Federal Government for the bank. This constitution was usedas the pattern for many subsequent bank charters and helped to define American banking.The creation of the bank created much criticism. New Yorkers who lived upstatewanted a land bank and thought that a money bank would only benefit the urban elite, thevery same loyalists for whom Hamilton fought for prior to the creation of the bank.However despite the misgivings of these people, the bank reconciled the Patriots andLoyalist within the city who wanted to the bank to succeed. The bank also introducedorder into the American currency. Currently, the bank is the oldest stock traded on theNew York Stock Exchange.Aside from the purely economic contributions Hamilton gave to New York City,he also contributed to many local institutions. He created the Board of Regents, whichhelped to improved education in the state. He was a trustee to Columbia College,formerly Kings College of which he was a graduate. He helped to relive traffic in lowerNew York City by moving statues as well.During his tenure as Secretary of the Treasury Hamilton began issuing bondsfrom the Federal Government. The main place for selling these bonds was within NewYork City. At the onset these bonds, sold in the securities market, sky rocketed in price.However there were many corrupt price gougers in this business. Bonds could be riggedby swindlers planting false rumors and exploiting the auction system, similar to the pump

and dump techniques of many online investors in today’s market place. In order tocounter this corruption, Hamilton moved to aid in the creation of a more orderly way oftrading.On May 17, 1792, at the bequest of Hamilton 24 brokers gathered at 60 wallstreet, under a Button Wood Tree. The agreement they made there, henceforth called thebuttonwood agreement, reads as follows: We the Subscribers, Brokers for the Purchaseand Sale of the Public Stock, do hereby solemnly promise and pledge ourselves to eachother, that we will not buy or sell from this day for any person whatsoever, any kind ofPublic Stock, at least than one quarter of one percent Commission on the Specie valueand that we will give preference to each other in our Negotiations. In Testimony whereofwe have set our hands this 17 th day of May at New York, 1792.” This agreement was theprecursor of the New York Stock Exchange, a 9 trillion dollar industry, which is in manyrespects the life line of New York Cities Success to this day.Alexander Hamilton’s brilliant, logical, and economic mind helped to create thefinancial and economic capitol of the world, New York City. His defense of LoyalistsNew Yorkers, helped to retain the “Knickerbockers” society of New York City, whichwould become the leaders of this city. His creation of the Bank Of New York stabilizedAmerican currency, created trust in the American market, and helped to develop NewYork City as a trading center. The Buttonwood agreement is in fact the New York Stockexchange. Without it New York City would be undeniably less great. AlexanderHamilton’s many contributions to the City of New York have helped to make it what it istoday; one can only wonder how much greater the city would be today if his life was notcut short by his infamous duel with Aaron Burr.

Works Cited1. Chernow, Ron. Alexander Hamilton. New York. The Penguin Press. 20042. Homberger, Eric. The Historical Atlas of New York City. New York. OwlBooks. 19943. Ellis, Joseph J. Founding Brothers The Revolutionary Generation. New York.Vintage Books. 2000