U.S. History Chapter 10: Launching the New Nation Section 2: Hamilton & National Finances

Secretary of the Treasury Alexander Hamilton Settling the Debt Paying the national debt was Hamilton’s largest challenge Secretary of the Treasury Alexander Hamilton

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: Thomas Jefferson: proposes repaying bonds at full value Thomas Jefferson: Believed idea cheated original bondholders

U.S. population: 303,716,510 Amt per citizen: $30,150.00. 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

Problem: southern states had few war debts 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: Thomas Jefferson: 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 Toyota Tundra $18,000 + $4,000 tariff = $22,000 $20,000

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”

--United States Constitution Article I, Section 8 “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