How Hamilton Solved the Economic Problems Facing the United States
by Fred Raphael
In this lesson students will develop an understanding of the economic challenges facing the newly independent United States. Those challenges included the lack of a national currency, the national government’s inability to levy taxes, and the crushing war debt. Through analyzing primary sources students will learn how Alexander Hamilton, first secretary of the treasury, addressed these issues.
Students will be able to
- Discuss the economic challenges facing the early United States
- Make inferences about the difficulties of running a country without a stable currency
- Analyze Hamilton’s plans to solve economic problems in the United States
Number of Class Periods
One 45-minute class period
Common Core State Standards
To what extent did Alexander Hamilton’s policies on a national mint and manufacturing strengthen the American economy?
After winning the American Revolution, the newly independent United States faced enormous challenges, particularly on economic issues. Alexander Hamilton believed that the federal government needed to play a much stronger role in the establishment of a national economic system. With the creation of institutions such as a national bank and a national mint, Hamilton sought to establish a system to allow a free flow of commerce within the United States and with foreign countries.
During the colonial era, each colony and bank could print their own currency. During the war and under the Articles of Confederation there were attempts to print a national currency and create a mint, but the efforts failed, and most legislators lost interest. When Alexander Hamilton took charge of the new Department of Treasury, one of his primary goals was to establish a national currency and a mint that would produce coins. This would rationalize payments across the United States and help build confidence around the world in the American economy.
In addition, Hamilton felt that the country needed to establish its own factories to produce goods such as clothing and tools. If Americans relied on manufactured goods from Europe, the economy could easily be destabilized and the US would not be truly independent. He believed that the US had to develop an economy based on agriculture, manufacturing, and commerce.
- Local Currencies
- Colonial currency from Pennsylvania, 1775. Source: The Gilder Lehrman Institute of American History, GLC01980.05.01
- Colonial currency from Delaware, 1776. Source: The Gilder Lehrman Institute of American History, GLC01980.05.03
- State currency from Rhode Island, 1786. Source: The Gilder Lehrman Institute of American History, GLC01980.05.02
- Excerpts from Alexander Hamilton’s Report on the Establishment of a Mint, January 28, 1791, The Gilder Lehrman Institute of American History, GLC01036
- Excerpts from Alexander Hamilton’s Report of the Secretary of the Treasury of the United States on the Subject of Manufactures, December 5, 1791, The Gilder Lehrman Institute of American History, GLC00891
- Students will answer the following questions posted on the board:
- Why do you think we use paper money? Why not trade for what we want?
- How do you know that stores will accept your money?
- Do you think it’s good to have one currency for the whole country, or would it better to have each state have its own money?
- The class will discuss their answers as a whole class.
- Distribute the "Local Currencies" handout. The students will examine the images and answer the questions on the handout. They will discuss their answers to arrive at an understanding of the difficulties of using different currencies across the country.
- Explain that under the Articles of Confederation each state could print money, and there was no single currency that was accepted everywhere.
- Distribute the excerpts from Hamilton’s Report on the Establishment of a Mint and "share read" the text with the class. This is done by having the students follow along silently while you begin reading aloud, modeling prosody, inflection, and punctuation. Ask the class to join in with the reading after a few sentences while you continue to serve as the model for the class. This technique will support struggling readers as well as English language learners (ELL).
- Divide the class into pairs. Students will work with their partners to complete the questions that accompany the excerpts.
- Discuss economic conditions in the United States after the American Revolution. Focus on the fact that the country was primarily an agricultural nation although factories began to be established in the early 1790s.
- Distribute the excerpts from Hamilton’s Report . . . on the Subject of Manufactures. You may decide to share read the text with the class. Students will work with their partners to complete the questions.
- Discuss the answers as a class and encourage the students to ask each other questions about their selections and answers.
Assessment and Summary
Students will complete an exit card answering two questions:
- How do you think establishing a national mint and one standard currency helped the United States grow?
- List two positive and two negative effects of the growth of manufacturing.