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Hamilton’s Economic Policy

Hamilton’s Economic Policy. Focus Question . Describe the difference between the two major political parties today. Hamilton’s Background. Extremely gifted individual Born illegitimate in the Caribbean Arrived in New Jersey in 1772 to attend college

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Hamilton’s Economic Policy

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  1. Hamilton’s Economic Policy

  2. Focus Question • Describe the difference between the two major political parties today.

  3. Hamilton’s Background • Extremely gifted individual • Born illegitimate in the Caribbean • Arrived in New Jersey in 1772 to attend college • Served as Washington’s aide during the War • Settles in New York • Tied to no one state or region • Had a national vision

  4. Hamilton’s principal goals • Achieving independence from Great Britain • Replacing the ineffective government of the Articles of Confederation with the more effective one of the Constitution of 1787 • Establishing a modern, articulated financial system, not just public credit, for the US

  5. Hamiltonian Economic Policies Hamilton was tasked with two major projects • Restore the nation’s credit • Stabilize the American economy The U.S. was deeply in debt. • Without credit, the economy would falter • To restore credit, old debts had to be paid

  6. Three tier system • Restore Credit • Develop Revenue • Manage Money Supply

  7. Rebuild the nation’s credit • Funding at Par • Pay off the old debt by taking out new debt • Establishes the full faith and credit of the U.S. government • Pay current bond-holders • Original bond-holders left out • Assumption • Congress will pay the debts of the states • Sets the national government as supreme over the states • Several states had already paid off their debts

  8. Develop Revenues • Set a tariff on imported goods • Helped protect industry • Caused trouble for exporters • Established an excise tax on whiskey • Angered western farmers

  9. Manage the Money Supply • Established a Bank of the U.S. • Owned by national government and investors • All federal revenues deposited in the B.U.S. • The Bank could loan money, as any other bank might. • Many unfamiliar with banking • Many felt the Bank was unconstitutional

  10. Results • The national economy rebounded • Credit was available • Trade increased • Many profited • Profits, however, were largest among the wealthy. • As a result, two political parties develop • Federalists • Democratic-Republicans

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