How did America develop its economy and place in the world as a new nation?

From the 1790s to the 1820s, American political leaders made several key decisions that laid the foundation for economic growth and hegemony in the Western Hemisphere. Under the Presidencies of George Washington and John Adams, Alexander Hamilton, creator and first Secretary of the Treasury, established a common currency and consolidated the debts of individual states into federal debt as part of the Bill of Assumption (1790). This legislation gave the executive branch the power to control...

From the 1790s to the 1820s, American political leaders made several key decisions that laid the foundation for economic growth and hegemony in the Western Hemisphere. Under the Presidencies of George Washington and John Adams, Alexander Hamilton, creator and first Secretary of the Treasury, established a common currency and consolidated the debts of individual states into federal debt as part of the Bill of Assumption (1790). This legislation gave the executive branch the power to control monetary policy. Staunch anti-federalists like Thomas Jefferson and Aaron Burr (who later killed Hamilton in a duel) saw this as a brazen power grab. After all, the legislative branch was supposed to have the "power of the purse," under Article I, section 8. Nevertheless, centralizing the country's debt and currency gave Hamilton and his Federalist allies leverage with which to forge trading alliances overseas.

In 1803, Thomas Jefferson acquired the vast Louisiana Territory from the debt-burdened French, thus creating a vast nation with unimaginable resources that spanned from coast to coast. Yet it was not until The War of 1812 that America successfully projected its strength and resilience to the world by repelling a second British invasion. In the aftermath of the war, Senator Henry Clay helped transform America's primarily agricultural economy into a more dynamic manufacturing economy through what he termed the "American System." By instituting higher tariffs (taxes on foreign goods) Clay and his senate colleagues encouraged domestic production and raised money to build a system of canals, waterways and roads that made for easier transport of raw materials and finished goods, further supporting domestic production and trade.

Finally, another early Federalist, James Monroe, was instrumental in articulating and establishing American power with the Monroe Doctrine (1823). This document defined the Western hemisphere as an American hemisphere, and prohibited other European nations from establishing new colonies in the hemisphere. By this time, the United States had a formidable navy with which to buttress these claims, and was on its way to becoming a major world power.