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Hamilton realized that conditions prevailing at the time of the Constitution's creation would not allow using only metals as money since there was almost none in the new nation.

I appreciate the historical perspective that you've offered. Do you think that Hamilton was proposing something other than a metal-backed dollar? Although there was little gold and silver in the colonies/United States in the 1780's and 1790's don't you think there was an intention to trade with Spain and England to acquire "hard currency" (the Spanish Real and the English Pound)?

While I believe that Hamilton probably would have preferred metallic backed currencies all things being equal he was not an ideologue in any way and would gravitate towards what could be made to work. National banks responsibly run create capital for a nation and this was the intention for the one he created. While trade was clearly a source of specie it would only produce a net gain if there was a trade surplus. That I don't believe would have been the result from a primarily agricultural country. Intuitively I would say that a shipload of American products would not be as valuable as a shipload of English thus a deficit would be the result.

American economic development was stimulated by European investment until at least after the Civil War. So I see no possibility for an money supply totally consisting of metallic backed money.

Theoretically I can't see how it would be a positive economic force today because of two problems. 1) If we assume the supply of gold to be somewhat fixed then as the limit of supply is reached the price of gold would have to skyrocket this would mean that the price of everything else would then to collapse.

2)As population increases the per capita amount of gold shrinks thus, the money supply falls which is also deflationary.

Most of the banking difficulties of the 19th century came about through unwise State sponsored schemes to get around the major problem- lack of specie. That is why State bank regulation skirted outside the limits of safety.

Can you reassure me that my doubts are wrong in this respect?

While I believe that Hamilton probably would have preferred metallic backed currencies all things being equal he was not an ideologue in any way and would gravitate towards what could be made to work. National banks responsibly run create capital for a nation and this was the intention for the one he created. While trade was clearly a source of specie it would only produce a net gain if there was a trade surplus. That I don't believe would have been the result from a primarily agricultural country. Intuitively I would say that a shipload of American products would not be as valuable as a shipload of English thus a deficit would be the result.

American economic development was dependent upon plentiful European investment until at least after the Civil War. So I see no possibility for an money supply totally consisting of metallic backed money.

Theoretically I can't see how it would be a positive economic force today because of two problems. 1) If we assume the supply of gold to be somewhat fixed then as the limit of supply is reached the price of gold would have to skyrocket this would mean that the price of everything else would then to collapse.

2)As population increases the per capita amount of gold shrinks thus, the money supply falls which is also deflationary.

Most of the banking difficulties of the 19th century came about through unwise State sponsored schemes to get around the major problem- lack of specie. That is why State bank regulation skirted outside the limits of safety.

Can you reassure me that my doubts are wrong in this respect?