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Hamilton’s Financial Plan • Guarantee Federal Government Supreme • Promote Economic Self Sufficiency • Tie Rich Businessmen to the Economy Hamilton’s Objectives • Pay off Outstanding Foreign Debt • Revolutionary War Bonds exchanged at face value for new U.S Bonds • Maintain a perpetual national debt- give creditors a stake in government • Assume the state debts Report on Public Credit • Southerners are upset- not fair to states who paid off their debt • Compromise of 1790- Hamilton and Jefferson make a deal • Jefferson supports Assumption Bill and Hamilton agrees to move capital to Washington D.C. (the South) Result: Improved US Credit and Confidence in Economy Compromise of 1790 • Proposed the creation of a National Bank • 4/5 of Bank would be privately owned • Place for Fed. Government to deposit revenue, give loans, circulate bonds • Would regulate state banks • Justified by “elastic clause” Report on Bank and Manufacturers Hamilton stretches the power of government • Tariff- Tax on imports to protect manufacturing • Excise Tax on Whiskey- would burden farmers more (especially in Pennsylvania) Raising Money for Government • Loose Construction- broad interpretation of the Constitution. Hamilton believed in a strong federal government. • Strict Construction- narrow interpretation of the Constitution. Jefferson believed in a small federal government Hamilton (Loose) v. Jefferson (Strict) • Supported by George Washington • Leads to formation of first political parties and divisiveness we have today Financial Plan Controversial