Hamilton’s Program

• Strong supporter of National Power (central government)
• Little faith in THE PEOPLE
• Government should expand its role and actively direct the economy
• HAMILTON’S PLAN: US Gov. should take on the debts acquired by the states during the Revolution
• Controversy: southern states did not want to be responsible for debts of northern states
• Deal: if southerners accept the debt, he will gain northern support a plan to locate the nation’s capitol in the South
• The total assumed debt was nearly 50 million
• Strategy: most state debt was owed to European banks & American merchants
• Lenders & Speculators did not want to see any government that owed them money to collapse (no way to profit)
• Thus, the lenders would support the USA as a whole, rather than hassle individual states
• To raise money the US taxed Whiskey
• Though most of the money was used to run the government, Hamilton put little bits away to pay off the debt
• Paying them a little at a time kept them interested in the success of the USA – paying off all at once, they would not care
• Paying them interest on the loan, helped to keep them happy
• To handle the money, Congress established BANK OF THE UNITED STATES in 1791
• Creditors now held an interest in the stability of the USA
• Opponents: tax seemed similar to those instituted by England in the 1760’s, Monarchy, & Aristocratic
• Jefferson, Sec of State, opposed the plan, but Washington usually sided with Hamilton – Jefferson resigns
• Jefferson believed in a STRICT interpretation of the Constitution, if it’s not in there, specifically, the government can’t proceed
• Hamilton the reverse...LOOSE interpretation – only can’t do what is written in the Constitution
• Jefferson believed the Federalists were betraying the Revolution – he had more faith in the people