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First Bank

First Bank
First Bank

3rd St. between Walnut and Chestnut Sts.

Alexander Hamilton was the father of the American National Banking System. He created the First National Bank, and began practices such as manipulation of the interest rates and subsidies for American companies that are still in use today.

George Washington named him the first Secretary of the Treasury. Washington was not comfortable with financial affairs, and Hamilton was a trusted friend. (Hamilton served as a General under Washington.) Hamilton had a great respect for the dollar, saying "Power without revenue is only a name." He admired the British national banking system, and how it could help support a country at war. As he put it, "Getting money from the states is like preaching to the dead." He wanted a strong Constitution with a very strong executive, but eventually gave in and supported the Constitution as it was adopted.

Nowhere in the Constitution is there a reference to a national bank, so Hamilton used a loose constructionist interpretation to create his bank, saying that Congress had the right to use whatever methods necessary to implement its proceedings. The bank was part of the compromise struck by Hamilton and Jefferson that moved the national capital from Philadelphia to the banks of the Potamac. This, Hamilton hoped, would help get southern states to assume their part of the war debt. Jefferson was suspicious of a National Banking system and National currency, and when the charter was not renewed after twenty years, the First Bank was sold to Stephan Girard, who established the Girard Bank.

Hamilton was in favor of a large federal bureaucracy, claiming that the more citizens must depend on the Federal government, the more loyalty they will show towards it. He had the largest staff of any secretary, over 300+ workers in Philadelphia, plus more in regional offices acting as tax collectors. At the same time, President John Adams had trouble keeping a secretary. Hamilton admired the British government, and said that a level of patronage and corruption helps the government run better, again because more people would depend on it.

Unlike Thomas Jefferson, Hamilton supported a manufacturing-based economy, saying that manufacturing takes its resources not just from the surface, but from the bowels of the earth as well. He also was a strong supporter of federal involvement in the economy, and was the first to try to manipulate the stock market, establish interest rates, and create government subsidies for American companies so that they could compete with their European counterparts.

Hamilton may have ended up as President were it not for a scandal that tarnished his reputation. Though he was never found guilty, he never recovered from accusations of involvement in a vicious plot to blackmail the Secretary.

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