Alexander Hamilton was the first Secretary of the Treasury who advocated which policies?

• A. Creation of a national bank, assumption of state debts by the federal government, and a tariff system to pay off the national debt.
• B. A policy of free trade with all nations.
• C. The abolition of the national bank.
• D. Strict limits on federal taxation.

Answer: (A)

Hamilton sought to shape a strong national economy by using financial institutions and revenue measures that tied the country together and built government credibility. He argued for a national bank to create a stable currency, provide loans, and manage the government’s finances, which would help the new republic operate smoothly and encourage investment. He also supported the federal assumption of state debts so that the national government would assume responsibility for all debt, unifying the states under a common credit and tying their interests to a strong federal government. To fund these initiatives and pay down the debt, he pushed for a tariff system that would raise revenue and protect budding industries, rather than relying on free trade.

That combination—a national bank, federal assumption of state debts, and tariffs to finance and encourage domestic industry—best captures his approach to building a reliable financial system and a capable central government. The other options miss the mark: free trade contradicts his protective tariff stance, abolishing the national bank runs counter to his plan and actions, and strict limits on federal taxation would undermine the revenue and credit foundations he advocated.