The US was faced with how to finance the war. The solution of choice was to create debt, two forms of domestic and one foreign. The American Congress creates wealth the easy way, they print it…over $200 million, resulting in massive inflation with no specie to back it up. The obvious means of fixing this problem of debt, borrow money. Bonds, certificates…consider it an IOU as the army passes through they took what they needed and left a certificate in return, not really a golden ticket for those who lost goods. Congress was also able to borrow money abroad with France, Spain, and Holland.
“ He sought to transform the American people into free, opulent, and law-abiding citizens, through the instrumentality of a limited republican government, on the basis of consent, and in the face of powerful vested interests in the status quo”
considered a social revolution
strive for money to define value and standing and be the universal measure
believed free government preferable to monarchy because it excited people more…”interested passions of the community” leading to “public spirit and public confidence”
correct economic failings of the Articles of Confederation by shaping fiscal policies to favor wealthier groups
He hoped these groups would lend the gov’t money and support which would in turn lead to a thriving new gov’t, increased land owner wealth, and create a trickle down effect
He encouraged the fed gov’t to fund the nat’l debt and assume the debts of the states in hopes that it would tie the states to the fed gov’t, therefore gaining support of the rich who would have a compelling interest in nat’l success.
Cautious about enhancing power of federal government
Favored yeomen farmer
Sympathized with French
Policies continued that of Washington with westward expansion (Irony is the Louisiana Purchase. Jefferson was dedicated to strict interpretation of Presidential powers but seized the opportunity to double the size of the US with purchase of LA.)
Explicit powers, strict interpretation of Constitution
Jeffersonian Republicanism: self-sufficiency. If everyone is independent they are likely to behave in a manner that will sustain the republic.
Alexander Hamilton, father of the national debt. America develops a national bank, develops on credit, establishes a standing army, US still allies with Britain, and continues on the path of governmental corruption.
Ultimately Hamilton was more convincing and Washington allowed the bank. The US was eventually extended credit by the Netherlands and the credit debt begins. Although some consider Hamilton successful, others believed his fiscal policies created an infringement on states rights. Opposition begins to develop and political parties are in the works.
Now the question was what to do with this debt during the war. Remember, Hamilton thought debt was a good unifying element for the country. Nothing like collectors knocking on the door to strengthen the household right? In this case, consider the collectors family because they have a compelling interest in seeing the new government work.
The British agreed to give up their forts in the Northwest Territory, payments for confiscated ships in the Caribbean, and the opening of trade in the British West Indies to American vessels (with restrictions)
Jay agreed that American shippers would not export from the US certain tropical products and that Americans would repay British creditors for prerevolutionary debts.
Jay Treaty did not solve the problem of British harassment.