Post on 30-Dec-2015
AP US HISTORY
Hamilton’s Economic Program
Cornerstones of Hamiltonian Policy
1. funding at par – full funding 2. assumption of state debts3. establishment of a National Bank4. establishment of a protective tariff to
benefit domestic manufacturing5. excise taxes to assert the power of the
national government
Hamilton’s Goals
1. strengthen the national government2. win the support of the wealthy elite3. encourage the growth of American industry
through protectionism4. maintain a public debt so citizens have a
stake in the survival of the government
1. Full Funding
Foreign debt $11.7 m, domestic debt $42.4 m, state debt $21.5m
Options available – default, partial, or full funding
Chose full funding – Why? Establish credit of the US with foreign governments Means of establishing support of the elite for the
government
The accumulation of a national debt would insure the loyalty of those to whom it was owed to
The accumulation of capital in the Northeast
2. Assumption of State Debts
Federal government would assume state debts – Why? Compromise necessary Tie the states more closely to the federal government Loyalty of state bond holders Creation of a federal debt Designed to cause money (capital)
3. First Bank of the United States
Would serve as depository for federal fundsCapitalized at $10m – one fifth owned by the
federal government and four fifths by private investors (elite)
It was oversubscribed in two hoursDeposits would be loaned to finance industry
and commerceThe elite would have a stake in the survival of
the federal governmentMajor debate over the constitutionality of the
bank
4. Protectionism
Concept of revenue versus protective tariffFirst tariff in 1789Hamilton favored a protective tariff to benefit
infant industriesIndustry and commerce would support the
federal governmentWho would benefit most from a protective
tariff? The elite of the north would again have a financial
stake in the federal government
5. Excise Tax Policy
Excise tax on whiskey – why whiskey?Whiskey was the preferred drink of the south
and the west while rum or cider was the preferred drink of the north and east (rum was excluded)
Flow of tax money would be from the south to the north
Flow of money from agrarian to industrial areas
Balance Sheet of Hamilton’s Economic Plan
Masses were largely untouched by the policies of Hamilton
Hamilton believed that the benefits of his program would eventually trickle down to the masses
His program strengthened the federal government but failed to provide a sense of national unity
Increased sectionalism as a result of discriminatory economic policy
It established a direction for the country – proactive rather than reactive