U.S. History Chapter 10: Launching the New Nation Section 2: Hamilton & National Finances.
Hamilton and National Finances. A.Settling the Debt 1. Alexander Hamilton becomes Secretary of...
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Transcript of Hamilton and National Finances. A.Settling the Debt 1. Alexander Hamilton becomes Secretary of...
Hamilton and National Finances
A. Settling the Debt
1. Alexander Hamilton becomes
Secretary of Treasury
Hamilton and National Finances
2. Hamilton has to pay off the
national debt (amount of money
owed by the U.S. to its lenders)
a. US owes $11.7 mill to other
countries
Hamilton and National Finances
b. US owes $40.4 mill to citizens
3. Debt in the form of bonds - certificates that represent $ owed
Hamilton and National Finances
a. govern promised to buy bonds
back with interest so that people would profit
b.govern could NOT buy back bonds from Revolutionary War
Hamilton and National Finances
c. people worried and sell their
bonds to speculators – people
who buy items at low prices in the hopes that value will rise
Hamilton and National Finances
4. Hamilton says pay foreign debt ASAP and pay back bonds in full over time
a. This means speculators would make profit
Hamilton and National Finances
5. Jefferson opposes Hamilton’s plan – not fair to original bondholders
“Immense sums were flinched [stolen] from the poor and ignorant.”
- Jefferson
Hamilton and National Finances
B. The States’ Debts
1. States owed $25 mill from Rev. War
2. Hamilton wants federal government
to pay for 21.5 mill
Hamilton and National Finances
a. States in debt would not have to
spend so much on repayment
3. Large, Southern states (Va. and NC)
had few war debts and didn’t want
federal govern to help other states
Hamilton and National Finances
4. Hamilton knows he needs help of
Southern states to get plan approved
a. He makes a compromise and
moves capital from NY to along
Potomac River (present day DC)
Hamilton and National FinancesC. Hamilton vs. Jefferson
1. Hamilton and Jefferson disagree about authority of central govern
a. Hamilton – strong central govern to balance power
1. little faith in common man
Hamilton and National Finances
b. Jefferson – protect power of states
1. defends right of people
to rule country
Hamilton and National Finances
2. Hamilton & Jefferson disagree over
how America should grow
a. Hamilton – new forms of economic growth
1. promote manufacturing and business
Hamilton and National Finances
2. pass protective tariff – tax on imported goods
- force Americans to buy
U.S. goods
Hamilton and National Finances
b. Jefferson – does not want to depend too much on business and manufacturing
1. Farmers good example – they don’t depend too
much on others to make living
Hamilton and National Finances
D. The Debate Over the Bank
1. Hamilton wants national bank so
govern. could deposit money
a. also build national mint – place
where coins are made
Hamilton and National Finances
b. asks for 20 year charter – evaluate
progress after 20 years
c. Each state should start own bank as well
Hamilton and National Finances
2. Madison and Jefferson do not like
national bank idea
3. Hamilton says “elastic clause” of
Constitution gives govern power
to react to new situations
Hamilton and National Finances
“to make all laws which shall be necessary and proper”
Article I, Section 8
Hamilton and National Finances
a. Hamilton’s view known as loose
construction – federal govern can
take any reasonable actions that
the Constitution does not specifically forbid it from taking
Hamilton and National Finances
4. Jefferson does NOT agree with
Hamilton again
a. Necessary and proper clause
only for special cases
Hamilton and National Finances
b. Jefferson’s view known as strict
construction – federal govern
should do only what Constitution
specifically says
Hamilton and National Finances
5. Washington and Congress agree
with Hamilton – security for economy
a. Bank of United States opened in
February 1791