Introducing Alexander Hamilton http://www.pbslearningmedia.org/asset/rah11_vid_introalex/ Alexander Hamilton and George Washington http://www.pbslearningmedia.org/asset/rah11_vid_alexgeorge/

Financial Conflicts

Financial Problems American national debt was growing after the Revolutionary War and the Articles of Confederation National Debt – The amount of money the government owes.

How much Debt was the U.S. in?

Financial Problems Who is Alexander Hamilton? As Secretary of the Treasury Alexander Hamilton was looking for a way to improve financial situation while still strengthening the American government.

Hamilton’s Plan Hamilton believed the government needed the ability to borrow money 1790: asked Congress to fully pay all federal and state debts What do you think was the reasoning behind Hamilton’s plan to accept the debts of the Continental Congress?

Hamilton's Plan Wealthy creditors, bankers, and merchants who owned the bonds would have a stake in the federal government’s success and enough confidence in its financial stability to loan money in the future. Federal payment of state debts would give states a strong interest in the success of the national government.

Hamilton's Bond Plan American government had issued bonds at the time of the Revolutionary War. Bonds – paper notes promising to repay the money in a certain length of time. Hamilton said government should repay these bonds.

Opposition To Bonds Original Bond owners had sold the bonds for a lesser value because they feared that the government would never pay them back. Unfair to those who sold their bonds to speculators (people willing to take a risk in hopes of financial gain) since speculators will make more money at the expense of the original owner Northerners owned most of the bonds and much of the tax money that would be used to pay off the bonds would come from the south (larger states) Southern states paid off their wartime debt on their own… so should everybody else Creditors could dominate society and endanger liberty

Compromise Capital agreed to be moved to the South in a special land plot between Virginia And Maryland that became known as Washington DC What did you read about Friday about the creation of Washington DC? South supported plan to pay of state debts.

Hamilton’s National Bank Needed to manage debts and interest payments Issue bank notes – paper money used as a national currency to promote trade, encourage investment, stimulate economic growth

Opposition to The National Bank Southerners: Northern merchants would own most of the bank’s stock Maddison and Jefferson opposed National Bank – only benefit the wealthy Argued that it was not an enumerated/delegated power of the federal government as outlined in the Constitution Saw bank as unconstitutional - inconsistent with constitution.

The Elastic Clause Constitution does not specifically say that government could not create a bank. The Elastic Clause - Article I, Section 8, Clause 18 Congress has the power “To make all Laws which shall be necessary and proper for carrying into Execution” its powers Hamilton thought: If Congress has the power to: Collect taxes Regulate trade Provide for common defense Then it makes sense to have a bank so we should have a bank.

National Bank Is Created Bill passes Congress Washington signs it into law, contingent on a 20-year contract

Hamilton’s Tariff Tariff – a tax on imports Purpose was to raise money and protect American manufactures from foreign competition Tariff of 1789 - Law required importers to pay a percentage of the value of their cargo when they landed it in the United States Congress passed lower tariff for revenue not to protect industry

A Higher Tariff? Hamilton thinks a higher tariff is needed South opposed because they had little industry Angered many southern planters: would have to pay higher prices on imported good. The only part of Hamilton’s Financial Plan that was not passed by Congress.

Outcome Problem: Government needed additional funds to operate and pay national debt. Solution: Hamilton requested, Congress passes new taxes Effect: Hamilton’s economic programs gave new government financial powers