The Founders and Finance: How Hamilton, Gallatin, and Other Immigrants Forged a New Economy

A Pulitzer Prize winner and Harvard Business School emeritus professor, McCraw sheds light on personalities and policies in this overview of the development of early American finance. The newly independent United States “had long been bankrupt”; both the fledgling national government and the states were in hock for the War of Independence. According to McCraw (Prophets of Regulation), brilliant immigrants, such as Alexander Hamilton and Albert Gallatin, lacked the parochial vision common to their peers, who saw the basis of wealth mostly in land. With at least 50 “coinages and currencies... in circulation” in 1789, banking was in turmoil. The main economic resource for the federal government was tariffs on imports, mostly from Britain. Hamilton’s decisive advocacy of a national bank and assumption of state war debts laid the basis for economic expansion and cemented the dominance of federal power. McCraw then turns to Gallatin’s ascendency in Congress, where in 1796 he denounced the growth in the national debt and decried high military spending. Starting with the still-resonant contrast between the “big government” Hamilton and “small government” Gallatin, McCraw’s wealth of historical data should interest any lay historian, particularly when he presents the many “what if’s.” (Oct.)