3.2 Hamilton s Economic Plan. American History I Unit 3 The New Nation Day 2 Alexander Hamilton s Economic Plan
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1 3.2 Hamilton s Economic Plan American History I Unit 3 The New Nation Day 2 Alexander Hamilton s Economic Plan
2 Five parts of Hamilton s Economic Plan 1. Funding 2. State Debt Assumption 3. National Bank 4. Protective tariff 5. Excise tax
3 (1) Funding The first thing the US needed to do was pay its debts (over 80 million dollars) Funding Plan: issuing new bonds for old bonds; borrowing the money and paying back later The government would issue new bonds and replace the old ones (sold during the war) for more than their original value Some found out about the plan early and tried to buy up the seemingly worthless bonds before the plan came out Hamilton believed the wealthy would participate in buying and the US needed their help
4 (2) State Debt Assumption The US govt. would assume state debts to make them debt free The south was upset because they had little debt; the north had higher debt Why would this upset the south? The capital would be in a more southern location (i.e. Washington DC!!!!!)
5 (3) National Bank Set up to have one currency in the US and build confidence in the US Necessary & Proper Clause of the Const. allowed for this Hamilton s belief regarding the Constitution allowed him to create the National Bank. Easier to do business Before this, each state make their own currency and it wasn t always equal It would give more confidence in the Federal Government Anti-Federalists against it
6 A New Capital: Washington, DC Congress decides to build the capital on swamp land called Foggy Bottom Border of Virginia, and Maryland (Potomac River) Located in the middle of the country Created a compromise in Congress (North vs. South) Most financial people lived in the North East Satisfied southerners in Congress (Anti-Federalists)
7
8 (4) Tariffs Protective tariffs Tax on imports (foreign goods) to protect American goods
9 (5) Taxes Excise tax: Type of Sales Tax (specific items) The excise tax was placed on many items including whiskey, which was profitable Whiskey production was the main source of income for many western settlers and the tax was not well liked
10 Whisky Rebellion (1794) Rebellion against taxes in Hamilton s plan on the frontier of Pennsylvania Washington sent out 13,000 militia and stopped the rebellion. Showed the power of the federal gov t & that they wouldn t accept rebellion (Ability to enforce laws) Opposite of Shays Rebellion Leads to more support for the Democratic-Republican Party among the common people The Federalists were seen as a party against the common people Video G.W. & Whiskey Rebellion
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12 Political Parties Authors of the Constitution wanted to avoid political parties Why do you think this was the case? They felt these groups were factions that threatened the unity of a republic However, two political parties form Federalists & Democratic- Republicans (Anti-Federalists)
13 Alexander Hamilton vs. Thomas Jefferson Hamilton wants a STRONG government (Federalist) Believes there should be a bank to cover it! Against Jefferson Jefferson is a Democratic- Republican (formerly an Anti-Federalist) and wants STRONGER STATE gov ts Against Hamilton Thought the states should have more power and that a national bank would give WAY TOO MUCH power too the gov t watch?v=vy7fjj_ud84
14 Formation of Political Parties Problem: What happens when people disagree about the government? Solution: Political parties Issue Government Power Constitution National Bank Economy National Debt Foreign Policy Political Party Hamilton Strong Federal Government Loose interpretation (loose translation) Want national bank (loose interpretation) Based on shipping and manufacturing Pay national and state debt (taxes) Support Britain Federalists Jefferson Weak Fed. and Strong State Government Strict interpretation (strict translation) No national bank (strict interpretation) Based on farming Payment of only national debt Support France Democratic-Republican
15 Script Writing When Washington became the first President, the country was a mess. To help fix this problem, he created a position called the Secretary of Treasury to take care of financial issues. Washington appointed Alexander Hamilton. Another member of Washington s cabinet, Jefferson, disagreed with Hamilton. Your task: Create and film a skit in which Hamilton & Jefferson sit down with a mediator to work out their differences.
16 Skit must include: Introduction of all parties involved Background on the 3 parts of Hamilton s plan Hamilton s point of view on why the plan is good (North) Jefferson s point of view on why the plan is bad (South) A conclusion to the mediation either a compromise (which was what happened historically), or a disagreement (mediation didn t work) Use info from your notes and the textbook (p ) Skit is worth 10 points
17 Questions What are the five parts of Hamilton's economic plan? Why was the U.S. capital moved to Washington D.C.? What does the Whiskey Rebellion in 1794 show about the United States government?
18 Vocabulary Tariff National Bank Whiskey Rebellion (1794)
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