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U.S. History Chapter 10: Launching the New Nation Section 2: Hamilton & National Finances Settling the Debt Secretary of the Treasury Alexander Hamilton • Paying the national debt was Hamilton’s largest challenge Settling the Debt • The debt: – $11.7 million owed to foreign countries – $40.4 million owed to citizens in the form of bonds Settling the Debt • Bonds—certificates that represent money owed to private citizens by the U.S. government Settling the Debt • Bonds sold to speculators • Speculators—people who buy items at low prices in hope that the value will rise Settling the Debt Alexander Hamilton: proposes repaying bonds at full value Thomas Jefferson: Believed idea cheated original bondholders As of December 5, 2007 U.S. population: 303,716,510 Amt per citizen: $30,150.00. The States’ Debts • Hamilton proposes federal government assume $21.5 million of debts from the states • Believed it would help national economy The States’ Debts • Problem: southern states had few war debts • Southerners disliked capital in New York The States’ Debts • The plan: – Hamilton will convince Northerners to move capital – Jefferson & Madison will convince southern states to accept Hamilton’s debt plan The States’ Debts • The result: – Congress approved debt plan – Area along the Potomac chosen as new capital Hamilton vs. Jefferson Alexander Hamilton: Believed in a strong central government Thomas Jefferson: Believed in preserving states’ rights Hamilton vs. Jefferson • Hamilton desired to promote manufacturing & business Hamilton vs. Jefferson • Protective tariff—tax on imported goods to raise the prices of foreign goods in order to protect domestic products Chevrolet Silverado Toyota Tundra $20,000 $18,000 Chevrolet Silverado $20,000 Toyota Tundra $18,000 + $4,000 tariff = $22,000 Hamilton vs. Jefferson • Jefferson wanted to promote an agricultural society • Believed low tariffs would benefit farmers The Debate over the Bank Alexander Hamilton: Proposes a national bank for government to deposit its money Thomas Jefferson: Questioned the authority of the government to establish a national bank The Debate over the Bank • Hamilton says bank allowed under the “necessary & proper clause” “The Congress shall have Power…To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States…” --United States Constitution Article I, Section 8 The Debate over the Bank • Loose construction--the federal government can take any reasonable actions that the Constitution does not specifically prohibit The Debate over the Bank • Jefferson believed “necessary & proper” clause should be used only in special cases The Debate over the Bank • Strict construction— federal government can only do what the Constitution specifically says it can do The Debate over the Bank • February 1791: Congress chartered the Bank of the United States Hamilton Jefferson Bonds Democracy Economy Tariffs National Bank Constitution
