Hamilton took charge of a bankrupt federal government still owing enormous war debts from the Revolution. Within two years he had designed a national bank, assumed state debts, and established the credit system that let the United States function as a modern economic power, though his policies deepened early partisan rifts with Jefferson and Madison.
When Alexander Hamilton took the oath as the first Secretary of the Treasury, the United States government had almost no functioning financial infrastructure — a patchwork of unpaid war debts, worthless currency, and squabbling states. He was 34 years old, a former artillery officer and Washington's wartime aide, walking into a job that essentially required him to invent American public finance from nothing.
Over the following two years, Hamilton produced a series of reports to Congress that remain foundational documents of American economic policy: on public credit, on a national bank, on manufactures. He argued the federal government should assume individual states' Revolutionary War debts, binding wealthy creditors' interests to the survival of the new union — a controversial move that required a famous dinner-table bargain with Jefferson and Madison, trading debt assumption for locating the capital on the Potomac.
Hamilton's vision of a strong central bank and active federal economic role put him on a collision course with Jefferson's agrarian vision, planting the seeds of America's first party system. Killed in a duel with Aaron Burr in 1804, Hamilton never saw the full flowering of the financial system he built, but the Treasury Department he founded on this day remains one of the most powerful institutions in Washington.
Key people: Alexander Hamilton, George Washington