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On December 5, 1791, Secretary of the Treasury Alexander Hamilton presented to Congress his "Report on the Subject of Manufactures," which proposed significant government support for nascent American industry through tariffs, subsidies, and other incentives. It seemed that Hamilton's politico-economic vision for America had substantial political momentum, yet James Madison and his circle viewed Hamilton's proposals with alarm, and a financial panic in August-September, 1791, raised new anxieties about the rapid political and economic changes occurring in the United States. In the face of these concerns, would Congress sustain its support for Hamilton's vision? This B case explores the reactions to and events following Hamilton's Report on Manufactures.
Consider how a financial panic induced significant political and civic reactions against the financial sector, and more generally, against policies of national economic development. Review Hamilton's interventions in capital markets to provide liquidity and quell panic selling. Explore the pros and cons of government intervention in markets through economic development spending. Introduce the Bank of the United States (BUS), the first quasi-central bank in US history. Profile Hamilton as a "policy entrepreneur," one of the most creative innovators in finance and public policy in US history.