Ch. 2 Hamilton and National Finances key the Big Idea



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Ch. 7.2 - Hamilton and National Finances KEY

The Big Idea

Treasury secretary Alexander Hamilton developed a financial plan for the national government.



Main Ideas

  • Hamilton tackled the problem of settling national and state debt.

  • Thomas Jefferson opposed Hamilton’s views on government and the economy.

  • Hamilton created a national bank to strengthen the U.S. economy.


Main Idea 1:
Hamilton tackled the problem of settling national and state debt.


  • Treasury secretary Alexander Hamilton’s biggest challenge was paying off the national debt—money owed by the United States.

  • The United States owed $11.7 million to foreign countries and $40.4 million to U.S. citizens who had purchased bonds from the government to help finance the war.

  • Hamilton planned to pay foreign debt first, and all debt at full value.

  • Some politicians, including Thomas Jefferson, opposed the plan, but Hamilton went ahead with it.

States’ Debts

  • States owed $25 million for Revolutionary War expenses.

  • Hamilton wanted the federal government to pay part of the states’ debts to help the national economy.

  • The South did not want the federal government to pay states’ debts.

  • Hamilton won the South’s support by getting northern approval to move the national capital from Philadelphia to Washington, D.C.


Main Idea 2:
Thomas Jefferson opposed Hamilton’s views on government and the economy.

Hamilton’s Views

  • Believed in a strong central government

  • Wanted a balance of power between the “mass of people” and wealthier citizens

  • Wanted to promote manufacturing and business

  • Wanted higher tariffs on foreign goods to protect American manufacturers


Jefferson’s Views

  • Wanted to protect the states power

  • Believed in the right of “the people” to rule the country

  • Supported agriculture and farmers

  • Wanted lower tariffs to keep costs low for goods farmers bought


Main Idea 3:
Hamilton created a national bank to strengthen the U.S. economy.


  • Hamilton wanted a national bank in which the government could safely deposit its money.

  • The bank would also make loans to the government and to businesses.

  • Hamilton knew that states’ rights supporters would oppose his idea.

  • He suggested limiting the bank to a twenty-year charter.


Bank’s Opponents and Supporters

Opponents

  • Jefferson and Madison said Hamilton’s economic plans gave too much power to the national government and that the Constitution did not give Congress the power to create the bank.

  • They favored a strict construction view of the Constitution— the government should do only what the Constitution says it can do.


Supporters

  • Hamilton believed in a loose construction view of the Constitution—the government can take actions the Constitution does not forbid.

  • President Washington and Congress agreed with Hamilton that the bank would provide stability for the U.S. economy.

  • The Bank of the United States— the country’s first national bank —was chartered in 1791.



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