About Alexander Hamilton's attempt to strengthen the finances and footing of the new government.

1. HAMILTON’S ECONOMIC PLAN

2. ALEXANDER HAMILTON
 1st Secretary of the
Treasury
 Protégé of Washington
 Born on St. Croix, became
an orphan at 13
 Attended King’s College
(Columbia University)
 Was an “agitator” prior to
the Revolution as a
speaker and pamphleteer
 Washington’s aide during
the Revolution
 A hero at the siege of
Yorktown

3. ECONOMIC PLAN
 Hamilton wanted to put the new nation on solid
financial footing
 Most important was tying the wealthy to the
financial interests of the nation

4. ECONOMIC PLAN
F Fully fund the national debt
As Assume state debts
T Tariff (Protective Tariff)
E Excise Tax
N National Bank

5. FUND THE NATIONAL DEBT
 After the Revolutionary War, the United States
owed money to those who helped pay for it
 Much of this debt was owed to private, wealthy
Americans who bought government “securities”
from the Congress under the Articles of
Confederation (AOC)
 This made them part owners of the United States
of America (USA) under the AOC

6. FUND THE NATIONAL DEBT
 Hamilton wanted to settle the question of how a
person can own a government and get rid of the
securities
 These investors could exchange their securities
for interest-bearing bonds (an “IOU” but without
the ownership)

7. ASSUME STATE DEBTS
 During the American Revolution, states incurred
debts to help finance and the war and outfit their
troops
 Hamilton wanted to make these debts part of the
national debt instead of having the states have to
deal with it individually
 This would make the states more cooperative
instead of competitive

8. ASSUME STATE DEBTS
Sectional differences emerge
 Many southern states had already significantly
or entirely paid down their debts
 Most northern states still held much debt,
Massachusetts having the largest
 Southern states did not want to help the
northern states pay down their debts (via the
federal government)

9. ASSUME STATE DEBTS
A Settlement Is Reached
 A compromise that moved the nation’s capital to
the south in exchange for support from southern
states
 The land for Washington, DC would come from
territory from Virginia and Maryland – it helps
that the land was owned by George Washington

10. PROTECTIVE TARIFF
 In order to protect domestic manufacturing, a tax
should be placed on imports (tariff)
 This would increase the price of imported goods
encouraging Americans to buy the less expensive
domestic goods

11. EXCISE TAX
 Hamilton sought a tax on distilled spirits,
especially whiskey, but why?
1. Revenue for the government
2. To pick on poor farmers
 Angry farmers in western Pennsylvania revolt
 Washington leads a force of 13,000 (part of the
way) to put down this “Whiskey Rebellion”

12. EXCISE TAX
Hamilton’s Motives (?)
 Create a crisis (a la Shays’ Rebellion) that would
allow the federal government to use force to
combat it
 Show the states that the federal government is a
“real” government and that it would use force in
the states when necessary

13. NATIONAL BANK
 A national bank would issue banknotes (paper
money) to provide a uniform currency
 Government bonds held by the bank would back
the would back the value of the banknotes
 Private investors would supply $8M of the capital
and name 20 members of the board of directors
 The government would provide $2M and name 5
members of the board of directors
 The bank would help aid in the bookkeeping
needs of the government
 It would help Congress regulate the value of
currency (as per the Constitution) – but was it
necessary?

14. ECONOMIC PLAN
 Hamilton got 4 out of 5 of his points of his plan
right away
 The idea of a protective tariff could only be
postponed before the interests of domestic
industry would become an important issue across
the aisle (for both political parties)