Section six: Washington and Adams, 1789–1801
How successful were Alexander Hamilton’s financial problems?
Intro:
Context: 1789 pressing matter remained how to raise revenue. Tariff on trade (on an assortment of
items and thus largely invisible) and a TOnnage Act (1789) failed to raise enough funds.
Hamiltons aims:
1) National govts assumption of states’ war debts, garners international respect as it shows
willingness of the new republic to pay off debt + forge unity.
2) The creation of a national bank.
3) The protection and stimulation of American industry.
CFJ: Achieve his aims? Longevity? (overcome shortcoming of AOC)
National debt ● Creation of a consolidated national debt by Hamilton was successful:
→ Hamilton’s most significant contribution lay in his proposal to fund
national debt.
→ It assumed the state's war debts (resulting legislation - The
Funding Act of 1790).
→ It increased the value of US bonds over time.
→ Ensured the Federal govt could borrow money at home & broad
e.g. The Dutch govt, one of the key leaders, $5million.
→ Ensured the Federal govt could pay back debts e.g. Spanish &
French (Haitian revolution of 1792), All war debts paid back to French by 1795
(8mill).
→ Underpinned the increase in productivity/foreign investment/
economic growth witnessed in the dynamic US economy from 1790’s
onwards. Paves the way for rapid industrial growth.
→ Addressed one of the key failings of the confederation congress
e.g. Morris’ inability to get his financial policies through
BUT:
→ Despite financial success, Hamilton's proposals were contentious
and generated considerable controversy:
1) His reforms furthered north/south divide:
- National debt only achieved through political compromise with Jefferson &
Madison that saw the capital established in the south (banks of the Potomac
river Washington DC).
, - Southern anger as southern states had a;ready repaid most of their war debt
e.g. Delaware and Virginia.
→ Northern speculators stood to benefit from Hamilton’s scheme as
they held most of the debt e.g. Massachusetts.
2) Hamilton’s economic reforms are a source of growing party division
between Federalist and Democratic Republicans.
National Bank ● Creation of a national bank (1791) by Hamilton was successful:
→ Not mentioned in constitution but justified through ‘necessary &
proper clause’.
→ Facilitated the collection of taxes nationally + provided a source of
capital for loans.
→ Controlled currency (preventing states from issuing inflated paper
currencies). e.g. New mint set up in 1792 (Coinage Act).
→ Branches set up in Boston, New York, Baltimore, Charleston &
Philadelphia
→ Contributed to the rapid economic growth of the US (through
increased industrialisation) over the next 50 years.
BUT:
→ Hamilton’s economic reforms a source of controversy/growing
party division between ‘Federalists’ (supporters of Hamilton) and
‘Republicans’ (aligned with Jefferson/Madison) who opposed the
growth in power of the central govt through a national bank.
Excise Tax ● Establishment of an excise tax (1791) on spirits by congress partially
successful:
→ It helped raise vital revenues for the Federal govt (power that the
confederation congress had lacked) + thereby directly addressed a
major failure of the early republic.
→ It also showed congress/ the new constitution could operate
effectively & enhanced America’s standing internationally -
underpinning the achievements secured in foreign policy e.g. Jay’s
Trade Treaty with Britain and Pinckney’s Treaty with Spain.
→ 1792 congress passed a new Tariff on imported goods.
BUT:
→ Congressional spirits tax prompted further division: the tax bore
heavily frontier farmers, leading to an armed rebellion by 6,600 in
Pennsylvania in 1794.
→ The ‘Whiskey Rebellion’ required Washington to raise a militia
force of 13,000 men to put down the trouble. (Tyranny of a national
govt replicating Stamp Act).
- BUT: shows the ability of Federal govt under new constitution vs AOC,
Hamilton’s financial success able to raise an army.
How successful were Alexander Hamilton’s financial problems?
Intro:
Context: 1789 pressing matter remained how to raise revenue. Tariff on trade (on an assortment of
items and thus largely invisible) and a TOnnage Act (1789) failed to raise enough funds.
Hamiltons aims:
1) National govts assumption of states’ war debts, garners international respect as it shows
willingness of the new republic to pay off debt + forge unity.
2) The creation of a national bank.
3) The protection and stimulation of American industry.
CFJ: Achieve his aims? Longevity? (overcome shortcoming of AOC)
National debt ● Creation of a consolidated national debt by Hamilton was successful:
→ Hamilton’s most significant contribution lay in his proposal to fund
national debt.
→ It assumed the state's war debts (resulting legislation - The
Funding Act of 1790).
→ It increased the value of US bonds over time.
→ Ensured the Federal govt could borrow money at home & broad
e.g. The Dutch govt, one of the key leaders, $5million.
→ Ensured the Federal govt could pay back debts e.g. Spanish &
French (Haitian revolution of 1792), All war debts paid back to French by 1795
(8mill).
→ Underpinned the increase in productivity/foreign investment/
economic growth witnessed in the dynamic US economy from 1790’s
onwards. Paves the way for rapid industrial growth.
→ Addressed one of the key failings of the confederation congress
e.g. Morris’ inability to get his financial policies through
BUT:
→ Despite financial success, Hamilton's proposals were contentious
and generated considerable controversy:
1) His reforms furthered north/south divide:
- National debt only achieved through political compromise with Jefferson &
Madison that saw the capital established in the south (banks of the Potomac
river Washington DC).
, - Southern anger as southern states had a;ready repaid most of their war debt
e.g. Delaware and Virginia.
→ Northern speculators stood to benefit from Hamilton’s scheme as
they held most of the debt e.g. Massachusetts.
2) Hamilton’s economic reforms are a source of growing party division
between Federalist and Democratic Republicans.
National Bank ● Creation of a national bank (1791) by Hamilton was successful:
→ Not mentioned in constitution but justified through ‘necessary &
proper clause’.
→ Facilitated the collection of taxes nationally + provided a source of
capital for loans.
→ Controlled currency (preventing states from issuing inflated paper
currencies). e.g. New mint set up in 1792 (Coinage Act).
→ Branches set up in Boston, New York, Baltimore, Charleston &
Philadelphia
→ Contributed to the rapid economic growth of the US (through
increased industrialisation) over the next 50 years.
BUT:
→ Hamilton’s economic reforms a source of controversy/growing
party division between ‘Federalists’ (supporters of Hamilton) and
‘Republicans’ (aligned with Jefferson/Madison) who opposed the
growth in power of the central govt through a national bank.
Excise Tax ● Establishment of an excise tax (1791) on spirits by congress partially
successful:
→ It helped raise vital revenues for the Federal govt (power that the
confederation congress had lacked) + thereby directly addressed a
major failure of the early republic.
→ It also showed congress/ the new constitution could operate
effectively & enhanced America’s standing internationally -
underpinning the achievements secured in foreign policy e.g. Jay’s
Trade Treaty with Britain and Pinckney’s Treaty with Spain.
→ 1792 congress passed a new Tariff on imported goods.
BUT:
→ Congressional spirits tax prompted further division: the tax bore
heavily frontier farmers, leading to an armed rebellion by 6,600 in
Pennsylvania in 1794.
→ The ‘Whiskey Rebellion’ required Washington to raise a militia
force of 13,000 men to put down the trouble. (Tyranny of a national
govt replicating Stamp Act).
- BUT: shows the ability of Federal govt under new constitution vs AOC,
Hamilton’s financial success able to raise an army.
