Editing Alexander Hamilton (section)

===Report on a National Bank===
{{further|History of central banking in the United States}}
[[File:First Bank of the United States, Philadelphia, Pennsylvania LCCN2011633532 (edited).jpg|thumb|upright=1|The [[First Bank of the United States]] in [[Philadelphia]], commissioned by Hamilton when the nation adopted a single currency]]

Hamilton's ''Report on a National Bank'' was a projection from the first ''Report on the Public Credit''. Although Hamilton had been forming ideas of a national bank as early as 1779,<ref name=schachner />{{rp|268}} he had gathered ideas in various ways over the past eleven years. These included theories from Adam Smith,<ref>Kaplan, p. 21.</ref> extensive studies on the [[Bank of England]], the blunders of the [[Bank of North America]] and his experience in establishing the Bank of New York.<ref name=Cooke82/> He also used American records from [[James Wilson (Founding Father)|James Wilson]], Pelatiah Webster, Gouverneur Morris, and from his assistant treasury secretary Tench Coxe.<ref name=Cooke82/> He thought that this plan for a National Bank could help in any sort of financial crisis.<ref>{{Cite journal |last1=Sylla |first1=Richard |author-link1=Richard Sylla |last2=Wright |first2=Robert E. |last3=Cowen |first3=David J. |date=2009 |title=Alexander Hamilton, Central Banker: Crisis Management during the U.S. Financial Panic of 1792 |url=https://archive.org/details/sim_business-history-review_2009_spring_83_1/page/61 |journal=Business History Review |volume=83 |issue=1 |pages=61–86 |doi=10.1017/s0007680500000209 |s2cid=153842455 |issn=0007-6805}}</ref>

Hamilton suggested that Congress should charter [[First Bank of the United States|the national bank]] with a capitalization of $10&nbsp;million, one-fifth of which would be handled by the government. Since the government did not have the money, it would borrow the money from the bank itself, and repay the loan in ten even annual installments.<ref name=McDonald />{{rp|194}} The rest was to be available to individual investors.<ref>Cooke, p. 89.</ref> The bank was to be governed by a twenty-five-member board of directors that was to represent a large majority of the private shareholders, which Hamilton considered essential for his being under a private direction.<ref name=schachner />{{rp|268}} Hamilton's bank model had many similarities to that of the Bank of England, except Hamilton wanted to exclude the government from being involved in [[public debt]], but provide a large, firm, and elastic money supply for the functioning of normal businesses and usual economic development, among other differences.<ref name=McDonald />{{rp|194–195}} The tax revenue to initiate the bank was the same as he had previously proposed, increases on imported spirits: rum, liquor, and whiskey.<ref name=McDonald />{{rp|195–196}}

The bill passed through the Senate practically without a problem, but objections to the proposal increased by the time it reached the House of Representatives. It was generally held by critics that Hamilton was serving the interests of the Northeast by means of the bank,<ref>Cooke, p. 90.</ref> and those of the agrarian lifestyle would not benefit from it.<ref name=schachner />{{rp|270}} Among those critics was [[James Jackson (Georgia politician)|James Jackson]] of Georgia, who also attempted to refute the report by quoting from ''The Federalist Papers''.<ref name=schachner />{{rp|270}} Madison and Jefferson also opposed the bank bill. The potential of the capital not being moved to the Potomac if the bank was to have a firm establishment in Philadelphia was a more significant reason, and actions that Pennsylvania members of Congress took to keep the capital there made both men anxious.<ref name=McDonald />{{rp|199–200}} ''The Whiskey Rebellion'' also showed how in other financial plans, there was a distance between the classes as the wealthy profited from the taxes.<ref>{{Cite journal |last=Bogin |first=Ruth |date=July 1988 |title=Petitioning and the New Moral Economy of Post-Revolutionary America |url=https://archive.org/details/sim_william-and-mary-quarterly_1988-07_45_3/page/392 |journal=The William and Mary Quarterly |volume=45 |issue=3 |pages=392–425 |jstor=1923642 |issn=0043-5597}}</ref>

Madison warned the Pennsylvania congress members that he would attack the bill as unconstitutional in the House, and followed up on his threat. Madison argued his case of where the power of a bank could be established within the Constitution, but he failed to sway members of the House, and his authority on the constitution was questioned by a few members.<ref name=McDonald />{{rp|200–201}} The bill eventually passed in an overwhelming fashion 39 to 20, on February 8, 1791.<ref name=schachner />{{rp|271}}

Washington hesitated to sign the bill, as he received suggestions from Attorney General [[Edmund Randolph]] and Thomas Jefferson. Jefferson dismissed the [[Necessary and Proper Clause]] as reasoning for the creation of a national bank, stating that the enumerated powers "can all be carried into execution without a bank."<ref name=schachner />{{rp|271–272}} Along with Randolph and Jefferson's objections, Washington's involvement in the movement of the capital from Philadelphia is also thought to be a reason for his hesitation.<ref name=McDonald />{{rp|202–203}} In response to the objection of the clause, Hamilton stated that "Necessary often means no more than needful, requisite, incidental, useful, or conductive to", and the bank was a "convenient species of medium in which [taxes] are to be paid."<ref name=schachner />{{rp|272–273}} Washington would eventually sign the bill into law.<ref name=schachner />{{rp|272–273}}

Hamilton's push for a national bank was not an isolated event but a broader, long-running effort to establish a central banking system in the United States—one that would ultimately result in the [[Federal Reserve]].<ref>{{Cite web |last=Johnson |first=Roger |date=December 1999 |title=Historical Beginnings... The Federal Reserve |url=http://www.bos.frb.org/about/pubs/begin.pdf |archive-url=https://web.archive.org/web/20101225064903/http://www.bos.frb.org/about/pubs/begin.pdf |archive-date=December 25, 2010}}</ref> While Hamilton's vision laid the groundwork for a structured financial system, the concept of [[History of central banking in the United States|centralized banking]] has remained one of the most polarizing economic debates in American history, garnering both staunch [[Criticism of the Federal Reserve|criticism]] and fervent support from economists and the public alike.<ref>{{cite news |last=Taylor |first=John B. |date=2010-01-11 |title=Taylor: Federal Reserve Monetary and the Financial Crisis: A Reply to Chairman Ben Bernanke |url=https://www.wsj.com/articles/SB10001424052748703481004574646100272016422 |access-date=2025-03-23 |work=Wall Street Journal |language=en-US |issn=0099-9660}}</ref><ref>{{Cite web |title=Born of a Panic: Forming the Fed System {{!}} Federal Reserve Bank of Minneapolis |url=https://www.minneapolisfed.org/article/1988/born-of-a-panic-forming-the-fed-system |access-date=2025-03-23 |website=www.minneapolisfed.org}}</ref>