1. Federalists and Republicans
Objectives:
Understand the fundamental differences between Federalists and Republicans.
Understand Hamilton’s Financial plan.
Do Now:
George Mason’s Objections to the Constitution
Hamilton’s Financial Plan
Homework:
Establishing National Sovereignty pg. 172

2. Hamilton and the Federalists
Federalists dominated government for 12 years under leadership of Treasurer Alexander Hamilton
Washington supported, but avoided direct involvement

3. Hamilton and the Federalists
Believed stable and effective government required enlightened ruling class
Rich and powerful needed stake in its success

4. Hamilton’s Financial Plan
Made government responsible for existing debt and states debts
Create new large national debt with continuous bonds issued to give wealthy stake
Creation of federal bank would fill absence of developed banking system,
Safe place for deposit of federal funds, collect taxes and pay expenses

5. Hamilton’s Financial Plan
Funding of debts required new revenue to pay bonds interest,
Government sales of Western land not enough.
Hamilton proposed tax on alcohol distillers and tariff on imports to raise money and stimulate growth of industry
Heavy toll on whiskey distillers of backcountry PA, VA, NC

6. Enacting the Federalist Program
Few members opposed plan for funding national debt, but disagreement over whether payment should be to original holders or to speculators who bought many bonds from originals during hard times of 1780s.
James Madison proposed dividing between two.
Hamilton won out and current bondholders paid

7. Enacting the Federalist Program
Hamilton faced stiffer opposition to federal assumption of state debts because people of states with few debts (such as VA) would pay taxes to service large debts of other states (like MA).
Compromise w/ Virginians moved capital from Philadelphia to a southern location along Potomac R. for VA support of bill

8. Enacting the Federalist Program
Bank bill most heated debate
Madison, Jefferson, Randolph, others argued Congress should exercise no powers Constitution did not assign it.
Bill passed House and Senate, Bank of United States began operating 1791 under 20 yr. charter

9. Enacting the Federalist Program
Passage of excise tax and tariff 1792
Whole program won support of the influential population
restored public credit,
speculators, manufacturing and merchants prospered.
small farmers (majority of population) complained of tax burden, taxes to state, excise tax on distillation, and tariff
feeling Federalist program served interests not of people but of wealthy elites

10. The Republican Opposition
Framers believed organized political parties dangerous
Should be avoided
Would lead to factions (Madison Fed Papers #10), but
Eventually Madison and others convinced that Hamilton and Federalists had become a majority and used their power to control appointments, offices, and rewards to supporters

11. The Republican Opposition
Federalist structures thought to resemble corrupt British government and menacing structure
critics felt only alternative vigorous opposition through emergence of alternative political organization- The Republican Party

12. The Republican Opposition
By late 1790s Republicans gaining popularity.
Leaders of Republicans James Madison and Thomas Jefferson
Jefferson believed in an agrarian republic w/ independent farmer
citizens tilling own soil.
Didn’t oppose commerce, trade or industry, but feared cities, urban mobs, and advanced industrial economy because of increase of property less workers