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Question
1. What problems did Secretary of Treasury Alexander Hamilton face when he first took office?
2. What was Hamilton’s plan for dealing with national debt?
3. What was Hamilton's plan for a national bank? Why did he want the bank?
4. What was Hamilton's plan for tariffs? Who would benefit the most from this part of Hamilton’s plan?
5. Why would Federalists support Hamilton’s plan? Why would Anti-Federalists oppose it?
![HAMILTON
Hamilton's Financial Plan
A major problem facing the first federal government was how to deal with the
financial chaos created by the American Revolution. Almost all areas of the economy
looked terrible throughout the 1780s. Economic hard times were a major factor
creating the sense of crisis that produced the stronger central government under the
new Constitution.
George Washington chose the talented ALEXANDER HAMILTON, who had served
with him throughout the Revolutionary War, to take on the challenge of directing
federal economic policy as the treasury secretary. Hamilton is a fascinating character
whose ambition fueled tremendous success as a self-made man. Born in the West
Indies to a single mother who was a shopkeeper, Hamilton would become the
[biggest] advocate for a modern capitalist economy in the early national United
States.
Hamilton's influential connections were not just with Washington, but included a network of leading New York
merchants and financiers. His 1780 marriage to ELIZABETH SCHUYLER, from a wealthy Hudson River valley land
holding family, deepened his ties to rich and powerful leaders in New York. His innovative financial policies
benefited the economic elite with which he had close ties.
The first issue that Hamilton tackled as Washington's SECRETARY OF THE TREASURY concerned the problem of
PUBLIC CREDIT. Governments at all levels had taken on so much debt during the Revolution. The commitment to
pay them back was not taken very seriously. Hamilton issued a bold proposal. The federal government should pay
off all state debts at full value. Such action would dramatically enhance the legitimacy of the new central
government.
Secondly, Hamilton's vision for reshaping the American economy included a federal charter for a national financial
institution. He proposed a BANK OF THE UNITED STATES. Modeled along the lines of the Bank of England, a
central bank would help make the new nation's economy dynamic through a more stable paper CURRENCY. The
central bank faced significant opposition. Many feared it would fall under the influence of wealthy, northern
businessmen. In the end, with the support of George Washington, the bank was chartered with its first
headquarters in Philadelphia.
The third major area of Hamilton's economic plan aimed to make American
manufacturers self-sufficient. The American economy had traditionally rested
upon large-scale AGRICULTURAL EXPORTS to pay for the import of British
MANUFACTURED GOODS. Hamilton rightly thought that this dependence
on expensive foreign goods kept the American economy at a limited level.
Rather than accept this condition, Hamilton wanted to protect American
manufacturers through direct government SUBSIDIES (handouts to
business) and TARIFFS (taxes on imported goods). This policy would help
American businesses to compete with inexpensive European imports.
How a Tariff Works
In the United States
American-made
cloth costs
$4.00 a roll.
British-made cloth
costs $5.00 a roll
in the United States.
A 25% tariff of
$1.00 is added
to the price.
In Britain
British-made
cloth costs
$4.00 a roll.](https://content.bartleby.com/qna-images/question/7c6a3dff-6729-485c-933e-bf615eefedb6/6c283b60-185f-44b0-9d57-1066c3f858e7/dpmzxba_processed.jpeg)
Transcribed Image Text:HAMILTON
Hamilton's Financial Plan
A major problem facing the first federal government was how to deal with the
financial chaos created by the American Revolution. Almost all areas of the economy
looked terrible throughout the 1780s. Economic hard times were a major factor
creating the sense of crisis that produced the stronger central government under the
new Constitution.
George Washington chose the talented ALEXANDER HAMILTON, who had served
with him throughout the Revolutionary War, to take on the challenge of directing
federal economic policy as the treasury secretary. Hamilton is a fascinating character
whose ambition fueled tremendous success as a self-made man. Born in the West
Indies to a single mother who was a shopkeeper, Hamilton would become the
[biggest] advocate for a modern capitalist economy in the early national United
States.
Hamilton's influential connections were not just with Washington, but included a network of leading New York
merchants and financiers. His 1780 marriage to ELIZABETH SCHUYLER, from a wealthy Hudson River valley land
holding family, deepened his ties to rich and powerful leaders in New York. His innovative financial policies
benefited the economic elite with which he had close ties.
The first issue that Hamilton tackled as Washington's SECRETARY OF THE TREASURY concerned the problem of
PUBLIC CREDIT. Governments at all levels had taken on so much debt during the Revolution. The commitment to
pay them back was not taken very seriously. Hamilton issued a bold proposal. The federal government should pay
off all state debts at full value. Such action would dramatically enhance the legitimacy of the new central
government.
Secondly, Hamilton's vision for reshaping the American economy included a federal charter for a national financial
institution. He proposed a BANK OF THE UNITED STATES. Modeled along the lines of the Bank of England, a
central bank would help make the new nation's economy dynamic through a more stable paper CURRENCY. The
central bank faced significant opposition. Many feared it would fall under the influence of wealthy, northern
businessmen. In the end, with the support of George Washington, the bank was chartered with its first
headquarters in Philadelphia.
The third major area of Hamilton's economic plan aimed to make American
manufacturers self-sufficient. The American economy had traditionally rested
upon large-scale AGRICULTURAL EXPORTS to pay for the import of British
MANUFACTURED GOODS. Hamilton rightly thought that this dependence
on expensive foreign goods kept the American economy at a limited level.
Rather than accept this condition, Hamilton wanted to protect American
manufacturers through direct government SUBSIDIES (handouts to
business) and TARIFFS (taxes on imported goods). This policy would help
American businesses to compete with inexpensive European imports.
How a Tariff Works
In the United States
American-made
cloth costs
$4.00 a roll.
British-made cloth
costs $5.00 a roll
in the United States.
A 25% tariff of
$1.00 is added
to the price.
In Britain
British-made
cloth costs
$4.00 a roll.
Expert Solution
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Step 1
Alexander Hamilton was one of the founding architects of the United States and contributed to the nation's creation, and was a significant figure in the formation of financial planning for the country. He was designated as the Treasury Secretary by George Washington.
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