Hamilton and National Finances. A.Settling the Debt 1. Alexander Hamilton becomes Secretary of...

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Hamilton and National Finances

Transcript of Hamilton and National Finances. A.Settling the Debt 1. Alexander Hamilton becomes Secretary of...

Hamilton and National Finances

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