Alexander Hamilton: The American Dream
Overcoming enormous odds and challenges to find great success during his short life, Alexander Hamilton can be considered both the architect and the exemplar of the American Dream. Watch the video below to learn more about Alexander Hamilton’s life and how he helped lay the foundation for a capitalist economy through the structuring of America’s debt, currency, and central bank.
Hamilton is the architect in that his vision for our economy laid the foundation for our thriving free market system. By showing what can be achieved through the inimitable and unbeatable combination of hard work, determination, and native intelligence, he is the exemplar.
Though people have been living the American Dream for more than two centuries, the phrase itself was first used less than 100 years ago. In his 1931 book Epic of America, historian and writer James Truslow Adams wrote: “The American Dream is that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.” While the mere mention of the phrase evokes a visceral response that makes definition and qualification all but superfluous, the American Dream has been commonly defined by such specifics as home ownership, an improved standard of living from one generation to the next, and the pursuit of higher education.
The American Dream is that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.
James Truslow Adams
What does the dream mean today? In their 2014 book, Chasing the American Dream, authors Mark Robert Rank, Thomas A. Hirschl, and Kirk A. Foster, identify three elements of the American Dream that put it in broader and perhaps more meaningful context: having the freedom to pursue one’s interests and passions in life; the importance of economic security and well-being; and the importance of having hope and optimism with respect to seeing progress in one’s life.
While the definition of the American Dream may have changed or may be more conceptual than concrete, its fundamental meaning is the same. The American Dream is–and always will be–about opportunity and the freedom to pursue it.
Here is the full transcript of the video:
Alexander Hamilton was the founding father of the American economy. Without him, it’s perfectly possible we would have ended up the world’s largest banana republic. Hamilton was very different than the other founding fathers. Most of their fortunes were in land and they had a rural outlook whereas Hamilton was thoroughly urban, thoroughly commercial and never owned any land to speak of. He understood the power of markets and the power of freedom in the markets.
In Hamilton’s time, the word capitalism had not even been coined yet. But he saw the future much more clearly than most people did. He was born on the island of Nevis in the West Indies into deep poverty. He was illegitimate, which nobody ever let him forget. Hamilton had an extraordinary intellect. He was just really, really, really, really bright.
In the time that he lived, the United States was being formed, and he came to New York City. He went to Kings College, now called Columbia college. And by the time of the revolution, he organized and let a military company among his fellow college students. His military exploits soon attracted the attention of high-ranking officers. By the time he was in his early 20s, he was aid-to-camp to George Washington. His ambition was to get this country off to a good start.
The situation in the United States after independence was very unstable. The country was unable to pay its debts. We were not only not paying the interest, we weren’t paying the principle on the debt either. You got to remember that the revolution had been financed through debt. We borrowed money from everybody that we could borrow from. Washington turned to Hamilton who was then in his early 30s and made him the first secretary of the treasury.
Hamilton understood the necessity for fiscal discipline. So, what Hamilton wanted to do, was to create a National Debt. And he argued, you have to have a reputation for paying your debts in order to borrow cheaply. He said if the national debt does not excessive will be to us a national blessing.
Now, Thomas Jefferson, like most of the founding fathers, were opposed to it. Jefferson hated commerce. He hated money-grubbing people out there in the streets trying to make money. He wanted the country to grow up to be yeoman farmers farming their own land and as few cities as possible.
Hamilton was very self-confident. He knew how good he was. So, he was able to argue with people like Jefferson who were older, and in many ways more distinguished. So, Hamilton made a perfectly ordinary political deal. He said to Jefferson, okay, the capital right now is in New York. I will agree to move it to the south. And so, Jefferson said fine, we will take Washington D.C. and you get your debt re-organization bill.
The new bonds were issued. The new federal government had the power to tax to pay for them, and within 5 years, by 1795 American debt was selling in Europe for a premium, because it was so well financed that everybody was confident that this paper was good. We used the national debt to save the union in the civil war, to save the economy in the 1930s… to save the world in the 1940s.
Hamilton also established the central bank which gave us a steady and dependable money supply. People were willing to take Bank of the United States currency at face value because they knew they could pass it on at face value. Who knows what would have happened to the American economy had there been no Alexander Hamilton.