Please sit in your assigned seats and quietly follow the directions below: Answer the following question in your bell ringer notebook: 1) The concept of separation and balance of powers in the Constitution refers to A) a separation of powers between various executive departments. B) a separation of powers between the national and state governments. C) a separation of powers between separate and coequal branches of government. D) a separation of individual rights from the rights that are granted to state governments.

The Two-Party System

Congress authorized the funding plan. (They agreed with Hamilton) Hamilton’s Proposal Objections The U.S. Government Decision The government should pay off the debt left from the Revolutionary War by issuing new bonds. Hamilton wanted the current bondholders, wealthy investors, to have a stake in the national government. Jefferson and Madison opposed paying off current bondholders because often these were investors who bought the bonds on speculation from the primary investor at a much reduced price. Congress authorized the funding plan. (They agreed with Hamilton)

Hamilton’s Proposal Objections The U.S. Government Decision The national government should assume the debts of the states. Northern states, and South Carolina, supported this because they had outstanding debts. Southern states, except for South Carolina, objected because they had already paid their debts. A compromise was reached that the capital would be moved farther south (to the District of Columbia, or Washington D.C.) and the state debts were assumed by the national government.

Hamilton’s Proposal Objections The U.S. Government Decision Congress should establish a national bank that would act as a keeping place for the nation’s revenues and a source of loans to spur economic growth. Hamilton argued that the bank was “necessary and proper” for Congress to establish a national currency and regulate trade so it was allowed by the “elastic” clause. Jefferson and Madison objected arguing that the Constitution did not specifically list the establishment of a bank as one of the powers of Congress. Congress passed Hamilton’s proposal and Washington signed a charter for the establishment of the First Bank of the United States.

Hamilton’s Proposal Objections The U.S. Government Decision Congress should establish a protective tariff. He believed this would protect America’s emerging industries. Jefferson opposed because he believed that democracy depended on the independence of the farmer and did not want to promote the development of industry. Congress did NOT pass the protective tariff and the issue continued to divide the two parties.

Hamilton’s Proposal Objections The U.S. Government Decision Congress should levy an excise tax on whiskey to control the drinking habits of Americans as well as raise revenue for the national government. Jefferson and Madison opposed because they supported western farmers who turned their grain into whiskey in order to transport it more easily and cheaply across the Appalachian Mountains to markets in the east. The tax resulted in the Whiskey Rebellion of western Pennsylvania farmers, which was the first challenge to the authority of the new national government but quickly evaporated when troops led by President Washington marched into the state. The Rebellion showed the seriousness of the split between the two political parties.

Key Terms: 1. Bond: form of loan, or IOU 2. Revenue: the income of a government from taxation, excise duties, customs, or other sources, appropriated to the payment of the public expenses. 3. “Elastic” Clause: Also known as the “Necessary and 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, or in any Department or Officer thereof”

Key Terms: 4. Protective Tariff: a high tax on imports designed to prompt consumers to purchase the lower priced goods produced in their home country. 5. The Whiskey Rebellion: a tax protest in the United States beginning in 1791, during the presidency of George Washington; farmers who sold their grain in the form of whiskey had to pay a new tax which they strongly resented. The tax was a part of treasury secretary Alexander Hamilton's program to pay off the national debt