Artificial Intelligence, Alexander Hamilton, and The Funding Act of 1790…

March 13, 2025 by  
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“A jack of all trades, a master of none” is often how I feel in my role as the overseer of life at Timothy Hughes Rare & Early Newspapers. Since collectible reporting covers nearly every topic under the sun (politics, religion, flight, exploration, literature, social issues, war, and more), it is impossible to know everything about everything. Even the areas which are personal favorites are more than enough to drive my quest to be a life-long learner. One such topic involves the early years of American and the “Founding” of The United States. Still, my nearly 7 decades of knowledge-absorption still leaves me wanting. A case in point was recently brought to the surface by a set of 4 issues covering The Funding Act of 1790. I knew the father of the Act was largely Alexander Hamilton and that it was an essential step in the early formation of the U.S., but beyond these basic elements, I admittedly knew little. Since our desire when describing collectible items is to be as accurate as possible, whenever I/we would be presented with a knowledge gap “back in the day”, our bookshelves full of resource material was essential – but cumbersome. Then the internet came alive and our ability to gather information was drastically reduced – especially once we gathered a repertoire of reliable sources. BUT NOW…

The question of the day: “How reliable/accurate is AI?” Only time will tell, but I thought it might be fun to seek a little input as it relates to the topic at hand. I did a basic (“think”) search on Grok (Elon Musk’s AI) for: “Why was the 1790 Funding Act so significant?” The response was:

The 1790 Funding Act was a landmark piece of legislation in United States history, playing a pivotal role in shaping the young nation’s financial and political landscape. Proposed by Alexander Hamilton, the first Treasury Secretary, the act addressed the massive debt accumulated during the Revolutionary War by consolidating state debts under federal control and funding them at full value. Its significance can be understood through several key aspects:

Alexander Hamilton
(by John Trumbull)

### 1. **Debt Consolidation and Federal Authority**
The act allowed the federal government to assume the debts of individual states, centralizing financial responsibility. This move stabilized the economy by creating a unified approach to debt management. While controversial—some states that had already paid off their debts opposed subsidizing others—it strengthened the federal government’s authority over the states, marking a shift toward a more centralized system.

### 2. **Establishment of National Credit**
By issuing bonds to pay off old debts and funding them through tariffs and excise taxes, the Funding Act established the United States as a credible borrower. This was critical for gaining the trust of international creditors and investors, laying the foundation for future economic growth. It demonstrated that the U.S. could honor its financial obligations, a vital step for a fledgling nation.

### 3. **Foundation for a National Economy**
The act was a cornerstone of Hamilton’s broader financial vision, which included creating a national bank to manage government finances and issue currency. By addressing the debt crisis and introducing federal taxation, it set the stage for a stable, centralized financial system. This stability was essential for the nation’s economic development and influenced future fiscal policies.

### 4. **Political Impact**
The Funding Act deepened the divide between Federalists, who favored a strong central government, and Democratic-Republicans, who worried about federal overreach. This ideological conflict shaped early American politics and highlighted the act’s role in defining the balance of power between federal and state governments.

In summary, the 1790 Funding Act was significant because it marked the federal government’s first major step into financial governance, resolving the post-war debt crisis while establishing the U.S. as a financially credible nation. It solidified federal authority, built a foundation for economic stability, and influenced the political and economic trajectory of the United States for decades to come.

How did Grok do? Did it miss anything of critical significance?

If so, perhaps you would like to review Grok’s “DeepSearch“.

I’ll admit, AI makes me more than a little nervous; however, if properly constrained… Ok, I’d still be more than a little nervous.

Thoughts?

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Filed under: Noteworthy Issues, The 1700's, The Collectible Community
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