3.7: Hammering Out a Federal Republic 1787 - 1820 --> Hamilton's Financial Plan

EQ: How did Hamilton’s Financial Plan unify the nation economically as well as politically?

• National gov. - pay back $55 mill. of Confederation securities held by foreign and domestic investors

  • Good for sepculators, bad for Americans who sold their bonds during the war

• Have the new gov. issue new securities (with interest)

  • This created a way to pay old debt at the expense of new national debt

    • helped unify the nation. all states are in the “same boat”

• National gov. assumes war debt of the states ($22 mill)

  • Pays off a face value (reimburse states who already paid debt)

His Plan - The Bank

Bank of the United States (Dec. 1790)

• owned by private stock-holders and gov.

• stabiliza America’s economy

  • lack of specific (gold and silver) means they need another way to keep currency stable

• make loans; handle gov. funds; issue bills of credit (bonds)

• Constitutional?

His Plan - Raising Revenue

• Excise (tax paid when the product is purchased) on whiskey ($1 mill)

• Tariffs on Imports - MODERATE (not high)

  • raised $4.5 mill

  • Goal was to pay the interest on the debt (not principle)

  • avoids a trade war with other nations

Washington Presidency

1789 - 1791

• John Adams - Vice President

• Hamilton - Treasury (conservative)

  • Elite

  • Big central government

  • supports merchant economy

• Jefferson - State (liberal)

  • common person (democratic Republicans)

  • small government (agriculture)

• Knox - War

First Party System

Political Party →

a label and an organization designed to get candidates with a set of policy beliefs to office

Political Ideology

a consistent set of elief’s about who ought to rule and what principles they ought to follow

In this age, liberals tended to be Democratic Republicans, and conservatives tended to be Federalists

LIBERALS - small gov; empower the common man; Agrarian economy (Jefferson)

• more hostile towards the British - critical of Jay’s Treay; (more sympathetic towards the French)

• favor less restrictive immigration

• develop the local economy

CONSERVATIVES - large gov; elite rule is best; merchant economy (Hamilton)

• Favor the British Jay’s Treaty (more hostile towards French; i.e. XYZ affair)

• Limit immigration

• develop a global economy

Jay’s Treaty

1794

• Negotiated by Chief Justice John Jay

• Realized several American economic goals (like removing British forts from the Northwest Territory)

• Britain benefited

  • gave them trading rights & allowed them to continue anti-French maritime policies

• Angered the French & Democratic-Republicans

XYZ Affair

French kept on attacking American ships, therefore they sent out deploymates to negotiate with French foreign minister, Charles Maurice de Talleyrand-Perigord.

• 3 French diplomats demanded a large sum of money (bribe) but America refused to pay

  • 1st time it did not work

  • 2nd time it did work

Alien and Sedition Acts (Federalist Policy)

Naturalization Act →

lengthened the residency requirement to become a citizen to 14 years

Alien Act

authorized the deportation of foreigners

Sedition Act

prohibited the publication of insults or malicious attacks on the president or member of Congress

• (Constitutional conflict BEFORE powers of judicial review were established)

Virginia and Kentucky Resolutions

establish the idea STATES can judge the legitimacy of national laws

• (states rights; judicial review)