Transcript Federalist Vs Democratic

Financing Our New Government
By 1789 the government needed additional monies to continue
to operate
Faced a national debt – money the U.S. owed to lenders
Owed $11.7 million to foreign creditors
Owed $40.4 million to U.S. Citizens
Some Revolutionary debt was in the form of bonds –
certificates that represent money
These bonds had been issued w/ the promise of
interest
Bondholders feared that the government would not buy
back the bonds
Speculators (individuals who bought the bonds @ a
low value in hopes the value would rise) – purchased
the bonds from individuals for below value prices
2 very different plans
James Madison & Alexander Hamilton developed 2
very different plans to help finance the government
James Madison felt the government should raise
money by taxing imports from other countries
Tariff of 1789
Made all importers pay 5% of value of their
cargo when they landed in the U.S.
Shippers required to pay a tax depending on how
much their ships carried
Angered many Southern planters; began feeling
the government didn’t have their best interest in
mind
Hamilton’s Financial Program
• Born in the West Indies
• Went to American colonies for his
education
• Practiced law
• Secretary of Treasurer under
Washington’s administration
• Wanted to pay off the foreign debt
immediately
• Buy back bonds @ full prices
• Bank of the U.S. (founded 1791, closed
1811)
• Believed that bond owners would have a
stake in the government’s success & be
willing to loan $$ in the future
• Supported the Tariff of 1789
• Believed in the government’s ability
to borrow money
Jefferson & Madison
• Opposed this Hamilton’s plan because they felt that paying
“full-value” on bonds would reward the speculators
• Southerners were upset because Northerners owned the
bonds while the tax money used to pay off the debt would
come from the South.
• 1790 Southerners were convinced to vote for
Hamilton’s plan in return for the relocation of the U.S.
capital to a southern location called the District of
Columbia
Hamilton's Plan Passes
• Hamilton also asked Congress to create a
national bank so that the government could
manage its debts & interest payments
• Objections
• Southerners felt on the Northerners could afford
the bank’s stock
• Madison felt Congress couldn’t est. a bank because
it was not with in the Constitution’s enumerated
powers – powers specifically mentioned in the
Constitution
Bank of the United States
• Hamilton argued that the bank fell under
the “elastic clause” (necessary & proper
clause) – powers that are implied & not
specifically mentioned in the Constitution
• Congress passes the bill forming the bank
Whiskey Rebellion
• 1791 – Hamilton proposes a tax on the
manufacturing of American whiskey
• Passed by Congress
• Outraged western farmers
• Result:
• Whiskey Rebellion begins – 1794
• Washington sent 13,000 troops to stop the rebellion
Whiskey Rebellion
Hamilton Vs. Jefferson
The split in Congress over Hamilton’s financial plan
resulted in the formation of two political parties:
Federalist & Democratic-Republicans.
The Federalists
Alexander Hamilton
Democratic-Republicans
Thomas Jefferson
Social Make- Up
Artists, shopkeepers, settlers,
and southern plantation owners,
small farm owners in the south
and from western regions of the
nation; believe in the idea of
agrarianism - idea if owning land
which enabled them to become
independent.
Merchants, Bankers,
manufacturers, New England
and Mid-Atlantic Coast
Attitude Toward Government
•
•
•
Wanted to imitate British
aristocracy (rule by the rich)
but without a king.
Saw the common people as
unable govern themselves.
Willing to censor the press
for political power.
•
•
•
•
Wanted more democracy than in the
British Parliament.
Common people were able to govern
themselves. They wanted greater
involvement by the people through
lower voting qualification.
Reduce government interference by
decreasing numbers of federal
officeholders.
Favored freedom of speech & press.
Views on the Constitution
Held "loose constructionist" view
that the Federal government had
implied powers not listed in the
Constitution.
Held ''strict'' view of the
constitution:
limit the powers of the central
government and support states
rights.
Foreign Policy Positions
Favored Britain in culture
and trade as the basis of
wealth.
Distrusted Britain & wanted
closer relations with France,
which had just been through
a democratic revolution.
Federalist vs. Republicans, cont.