Hamilton’s Program

  • Strong supporter of National Power (central government)
  • Little faith in THE PEOPLE
  • Government should expand its role and actively direct the economy
  • HAMILTON’S PLAN: US Gov. should take on the debts acquired by the states during the Revolution
  • Controversy: southern states did not want to be responsible for debts of northern states
  • Deal: if southerners accept the debt, he will gain northern support a plan to locate the nation’s capitol in the South
  • The total assumed debt was nearly 50 million
  • Strategy: most state debt was owed to European banks & American merchants
  • Lenders & Speculators did not want to see any government that owed them money to collapse (no way to profit)
  • Thus, the lenders would support the USA as a whole, rather than hassle individual states
  • To raise money the US taxed Whiskey
  • Though most of the money was used to run the government, Hamilton put little bits away to pay off the debt
  • Paying them a little at a time kept them interested in the success of the USA – paying off all at once, they would not care
  • Paying them interest on the loan, helped to keep them happy
  • To handle the money, Congress established BANK OF THE UNITED STATES in 1791
  • Creditors now held an interest in the stability of the USA
  • Opponents: tax seemed similar to those instituted by England in the 1760’s, Monarchy, & Aristocratic
  • Jefferson, Sec of State, opposed the plan, but Washington usually sided with Hamilton – Jefferson resigns
  • Jefferson believed in a STRICT interpretation of the Constitution, if it’s not in there, specifically, the government can’t proceed
  • Hamilton the reverse…LOOSE interpretation – only can’t do what is written in the Constitution
  • Jefferson believed the Federalists were betraying the Revolution – he had more faith in the people