Thomas McCraw, "Mr. Hamilton's Growth Strategy," NYT 11/11/12

Hamilton, who took office in 1789, deliberately avoided prolonged fights over tax policy, which he knew he couldn’t win. Indeed, his thinking perfectly describes the political situation today: “To extinguish a Debt which exists and to avoid contracting more are ideas almost always favored by public feeling and opinion, but to pay Taxes for the one or the other purpose, which are the only way of avoiding the evil, is always more or less unpopular.” Could there be a better description of today’s partisan intransigence toward adding a single tax dollar to federal revenues?
Instead, he essentially bet that the country’s prosperity would be strong enough to grow it out of the crisis, provided he could create a climate of predictability and promote the release of pent-up economic energy.
It was a daunting task. The face value of federal and state debts was about $74 million, including $12 million owed to Dutch banks. Federal income for 1790 amounted to just $1.6 million — a debt-to-income ratio of 46 to 1. (Today that same ratio is about 6.5 to 1.)
Hamilton first paid off the foreign debt by rolling it over through new loans from abroad. Determined to establish the nation’s creditworthiness and avoid default, he then consolidated the remaining debts at their par, or face, value, which was higher than their market value — a move opposed by Thomas Jefferson and James Madison, who said it would reward speculators.
Meanwhile, he temporarily ignored Jefferson and Madison’s idea of repaying the principal of the domestic debt. Instead, he persuaded Congress to authorize new bonds to replace existing obligations, while reducing the interest rate to 4 percent from 6 percent. He then announced that all interest would be paid in gold, and that receipts from import duties would be earmarked for these payments — reasoning that bondholders would rather get 4 percent in gold than 6 percent of nothing.
Hamilton then established the Bank of the United States as a private, profit-making institution. Shares in the bank soon rose, and it would eventually have branches in all major cities — at a time when only three small banks existed in the entire country, and when Jefferson and other founders opposed the very existence of banks. The bank, together with funding of the debt, vastly increased liquidity in the country, much as the Federal Reserve chairman, Ben S. Bernanke, has tried to do today.
Hamilton was not, as some have claimed, a proto-Keynesian, but he thought like a modern macroeconomic planner. Some 150 years before the word macroeconomics was coined, he wrote that “in the affairs of a Country, to increase the total amount of industry and opulence, is ultimately beneficial to every part of it.”
He was arguing not only in favor of a growth strategy — a rising tide to lift all boats — but also against the sectional and class disputes that were dividing the country. He was determined to promote growth by whatever means possible, and to rely on a surge of consumer confidence and business investment to increase federal revenues.
And that is what he did. By 1794, four years after his plan went into effect, the federal debt had increased a bit, but revenues had risen more than threefold. The debt-to-income ratio had shrunk to 15 to 1 from 46 to 1; by 1800, it was 8 to 1.