Hamilton’s Financial Plan

Who is Alexander Hamilton?

• Federalists – Strong supporter of Constitution

• Businessman from New York – Helped create the New York Bank

Dilemma: How do we solve the nations debt?

• Revolutionary War = National & State debt

Hamilton’s solution

• The Assumption Plan – Have the nation assume ALL the debt from the

States & Nation

Assumption Plan Goals

Hamilton’s Goals 1. Pay states’ and national

debts in full (pay back war bonds)

2. Raise revenue

3. Convince Southern states to accept plan

Why? • Restore faith in public credit

• Show strength in national government

• To pay off the debt

– Pass Tariffs (a tax on imported goods)

– Pass a tax on whiskey

• Southern States already paid off most debt

Assumption Plan Simulation

Everyone gets M&Ms BUT you cannot eat them

• Brown = Northern industrialists • Blue = Southern Plantation Owners • Green = Northern Financiers • Yellow = Southern Lenders • Red = Western/Appalachian Farmers • Orange = common folk

Which group in America do you represent?

M&Ms

The M&Ms in your bag represent your $

Hamilton Assumption Plan In Action

• How = Assume all states debt and guarantee that debts will be 100% paid back to lenders

• What does this do? 1. Erases state debt…yeah!!! 2. But most Southern states had already paid debt off…

• So now they would be essentially paying debt twice…boo

• So…

– Southern Lenders (Yellow M&Ms) end up having to pay $ to Northern Financiers (Green M&Ms)

Goal # 1 = Pay Debts @ full price

• How = Tariffs on imported goods

• What does this do? 1. Protects Industrialists in U.S. b/c imported goods cost

more $ 2. Hurts Farmers in U.S. b/c they can’t buy foreign goods as

cheap

• So…

– Southern Plantation Owners (Blue M&Ms) end up having to buy Northern Industrialists products (Brown M&Ms)

Goal # 2 = Raise Revenue

Hamilton Assumption Plan In Action

• How = Tax on Whiskey made and sold

• What does this do? 1. $ from tax would pay off state and national debt…yeah! 2. However, whiskey is made from grain…

• Farmers grow grain -> make whiskey -> pay tax

• So…

– Western/Appalachian Farmers (Red M&Ms) end up having to pay $ to Northern Financiers (Green M&Ms)

Goal # 2 = Raise Revenue

Hamilton Assumption Plan In Action

• Regular/Common folks (Orange M&Ms )did not lend $ and don’t have $ to buy goods or build factories

• So… – Orange you glad you got the orange M&Ms?

Hamilton Assumption Plan In Action

What were the consequences of Hamilton’s Assumption Plan?

• Effect #1: Which group(s) seemed to benefit the most? – North, Wealthy, Industrialists

• Effect #2: Sectionalism begins – Intensified North v. South relationship & differences

• Effect #3: Financiers win (Hamilton’s friends) – Class divisions grow

• Wealthy make $ and poor get shafted

• Effect #4: Farmers really lose (Jefferson’s friends)

What does the South get? • U.S. capital would be moved to Washington D.C.