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Founding ChoicesAmerican Economic Policy in the 1790s$
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Douglas A. Irwin and Richard Sylla

Print publication date: 2011

Print ISBN-13: 9780226384740

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226384764.001.0001

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Financial Foundations

Financial Foundations

Public Credit, the National Bank, and Securities Markets

Chapter:
(p.59) 2 Financial Foundations
Source:
Founding Choices
Author(s):

Richard Sylla

Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226384764.003.0003

This chapter provides an overview of how a second key ingredient of economic success, that is, a modern articulated financial system, quickly emerged in the Washington administration. According to historians, Alexander Hamilton was the founder most responsible for the financial revolution of 1790. This chapter states that Hamilton, who became a student of financial history while an officer on General Washington's staff during the War of Independence, realized that financial modernization was needed both for effective government and economic growth. With the cooperation of Congress, Hamilton implemented the federal revenue system the Constitution authorized, restructured the national debt and placed it on a sound financial footing, argued for, and obtained, a national banking corporation, and defined the new U.S. dollar and provided for its coinage by calling for a federal mint. Hence effective government and modernized finances, two key ingredients of economic success, were realized very quickly in 1790.

Keywords:   economic success, articulated financial system, Washington administration, Alexander Hamilton, economic success, modernized finances

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