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I 9 Treasury, the secretary of state, the secretary of war, and the attorney general. Congress, recognizing the dire straits of the nation’s finances, vested the Treasury department with more extensive respon- sibilities and staff resources than any of the other agencies. Washington promptly nominated Ham- ilton, who had spent his years as Washington’s aide-to-camp poring over financial treatises and contemplating the economic state of the confed- eration, to head this prestigious department. Like Washington, Hamilton understood that the success of the new Constitution depended on the precedents established by the country’s first administration. Thus, he immediately set out in his capacity as Treasury secretary to build respect for the new nation in the eyes of foreign nations and confidence and esteem in the hearts of its cit- izens. One of the most important challenges in this regard was to stabilize the country’s finances that had so badly deteriorated under the previ- ous system. Hamilton zealously took on this task, believing that a firm financial foundation would contribute not only to the nation’s economic well-being but also to its security, domestic tran- quility, and liberty. Shortly after Hamilton took office, Congress directed him to devise a plan for restoring the nation’s credit. In response, Hamilton presented Congress with a lengthy treatise, in which he argued that justice and necessity mandate the res- toration of good fiduciary faith. He then outlined a comprehensive plan to honor current agreements, to assume the state debt acquired during the Rev- olution, and to realistically service the debt. Once a congressional agreement to relocate the nation’s capital to the banks of the Potomac River helped overcome Southern resistance to the fed- eral assumption of state debt, Hamilton moved on to his next political priority, securing approval for a national bank. Hamilton easily convinced Congress that a national bank was necessary to facilitate the economic powers of the federal gov- ernment, but the bank bill met stiff resistance when it landed on Washington’s desk. Secretary of State Thomas Jefferson and Attorney General Edmund Randolph fiercely contested the bank bill and urged Washington to veto it on the grounds that it exceeded the federal government’s constitutional authority. In response, Hamilton provided Wash- ington with a detailed Report on the Constitutional- ity of the Bank, in which he argued that the power to create a national bank was an implied power of the federal government derived from the necessary and proper clause of the Constitution. Hamilton’s powerful counterargument sufficiently convinced Washington, and he signed the first bank of the United States into law on February 24, 1791. With the passage of the national bank secure, Hamilton quickly settled in on a third major pri- ority, promoting domestic manufacturing. The new American republic was completely reliant on foreign nations for its military supplies and other essential goods, which Hamilton believed put the country in a vulnerable position economically and politically. In the midst of establishing the Coast Guard and writing regulations for customs collec- tors, Hamilton researched the status of the coun- try’s various forms of industries. On December 5, 1791, in compliance with a request from the House of Representatives, Hamilton submitted his com- prehensive Report on the Subject of Manufacturers to Congress. Although Hamilton emphasized his commitment to free market principles in the report, he contended that minimal protective tariffs and government subsidies would spur the development of America’s manufacturing capabil- ity and thereby contribute to industrial growth. Like his plans for the federal assumption of the revolutionary debt and the establishment of a national bank, Hamilton’s call for government sub- sidies for manufacturing was viewed by many as part of a broader plan to line the pockets of North- ern financiers, weaken the power and influence of the states, and destroy the agricultural economy of the South. Consequently, the schisms that devel- oped in response to Hamilton’s initial financial proposals set the stage for the formation of parties in the 1790s and the vicious political battles that