3 Now that President Washington is in office… It’s time to fix the economyWhat’s the problem?Our government had a national debt of $81.5 million dollars!Amount of $ owed by our country to other peopleForeign countriesCitizens we borrowed money fromWhat happens if we don’t pay these people back?
4 Debate over settling the debt Thomas JeffersonAlexander HamiltonWanted to pay back all bonds sold to citizens over time!Bonds = certificates purchased that can be turned in for more money in the futureWhy did Hamilton want to do this?Government gains credibility with the peopleOk with Hamilton’s ideas, but there is a problem:Speculators have bought bonds from citizens for less than they are worth!Now the government is going to buy them from the speculators for full price?That cheats the original owner out of money!Who wins?Hamilton!1790 Government starts buying bonds back!
5 Debate over Paying off debt owed by States from the American Revolution Alexander HamiltonThomas JeffersonArgued that government should pay states debt offWhy?We all fought for freedom.So, our federal government should pay the bill.So who wins?Both….sort of.Felt each state should pay back their part of the billWhy?Some states owed a lot!MassachusettsNew YorkSome did not owe much at allVirginiaNorth Carolina
6 They both get something in the end. HamiltonJeffersonFederal government pays off the states debt.In exchange for….The nation’s capital moves from the North to a more Central location….The birth of Washington, D.C.Will be built as the new nation’s capital!
11 Debate over Role of Government HamiltonJeffersonHad little faith in the average citizenSaid they could not be trusted to do the right thing.Why?Because the average American does not take education seriouslyThey take politics even less seriouslySo, you need a large governmentJob = protect the liberties of all citizens equallyHad a lot of faith in the average citizenSaid they should govern themselvesSaid they would educate themselves and do what is rightSo, government needs to be smallJob = stay out of the way
12 Debate over how the Economy should grow HamiltonJeffersonGovernment should give “stimulus” money to American entrepreneursWhy?So they could start their own factories and businessesHire peopleMake products here in USAGovernment should pass protective tariffsTax on goods from other countriesGovernment should stay out of the economies wayWhy?America is made up of farmers!They know how to do it themselves!Don’t need any help!Tariffs should remain lowKeep price of goods lower.Helps citizens be able to afford them
13 Debate over a national bank HamiltonJeffersonHated the idea of a national bankWhy?Some states are richer than othersThey would lose this power if the federal government owned all of the moneyWhat is the big deal?The Constitution does not give the government the right to make a bank anyways….Or does it?Wanted to start a national bank.Why?So that the government can make their own moneyNo more state moneyWhat is the big deal?Federal government would own all of the money in America!Not each individual state
14 What does the Constitution say? Article I, Section 8Congress has the right to “make all laws that are necessary and proper”Hamilton (loose)Says a bank is necessary for future growth as a nationJefferson (strict)Says a bank is convenientNot necessary
15 Who wins? Washington agrees with Hamilton…again. Bank of the United StatesCreated in 1791For 20 yearsIf it works we will keep it longerIf not, we get rid of it.
16 Meanwhile…While America is trying to build itself into a great country….A great country is trying to destroy itself….1789France decides to have their own RevolutionReplace their monarch with a democracy like America….
17 Review Questions What is the national debt? What are bonds? What was Hamilton’s idea to fix the economy?What was Jefferson’s idea for the role of government?