Alexander Hamilton proposed an economic plan as the first Secretary of the Treasury to establish the nation's finances and tie wealthy Americans' financial interests to the new government. The plan included fully funding the national debt by exchanging government securities for bonds, assuming state debts to unify the nation financially, implementing a protective tariff and excise taxes to generate revenue and encourage domestic industry, and establishing a national bank to facilitate government transactions and create a uniform currency. The plan met some resistance from southern states but was largely implemented.

1. HAMILTON’S ECONOMIC PLAN

2. ALEXANDER HAMILTON
 1st Secretary of the
Treasury
 Protégé of Washington
 Born on St. Croix, became
an orphan at 13
 Attended King’s College
(Columbia University)
 Was an “agitator” prior to
the Revolution as a
speaker and pamphleteer
 Washington’s aide during
the Revolution
 A hero at the siege of
Yorktown

3. ECONOMIC PLAN
 Hamilton wanted to put the new nation on solid
financial footing
 Most important was tying the wealthy to the
financial interests of the nation

4. ECONOMIC PLAN
F Fully fund the national debt
As Assume state debts
T Tariff (Protective Tariff)
E Excise Tax
N National Bank

5. FUND THE NATIONAL DEBT
 After the Revolutionary War, the United States
owed money to those who helped pay for it
 Much of this debt was owed to private, wealthy
Americans who bought government “securities”
from the Congress under the Articles of
Confederation (AOC)
 This made them part owners of the United States
of America (USA) under the AOC

6. FUND THE NATIONAL DEBT
 Hamilton wanted to settle the question of how a
person can own a government and get rid of the
securities
 These investors could exchange their securities
for interest-bearing bonds (an “IOU” but without
the ownership)

7. ASSUME STATE DEBTS
 During the American Revolution, states incurred
debts to help finance and the war and outfit their
troops
 Hamilton wanted to make these debts part of the
national debt instead of having the states have to
deal with it individually
 This would make the states more cooperative
instead of competitive

8. ASSUME STATE DEBTS
Sectional differences emerge
 Many southern states had already significantly
or entirely paid down their debts
 Most northern states still held much debt,
Massachusetts having the largest
 Southern states did not want to help the
northern states pay down their debts (via the
federal government)

9. ASSUME STATE DEBTS
A Settlement Is Reached
 A compromise that moved the nation’s capital to
the south in exchange for support from southern
states
 The land for Washington, DC would come from
territory from Virginia and Maryland – it helps
that the land was owned by George Washington

10. PROTECTIVE TARIFF
 In order to protect domestic manufacturing, a tax
should be placed on imports (tariff)
 This would increase the price of imported goods
encouraging Americans to buy the less expensive
domestic goods

11. EXCISE TAX
 Hamilton sought a tax on distilled spirits,
especially whiskey, but why?
1. Revenue for the government
2. To pick on poor farmers
 Angry farmers in western Pennsylvania revolt
 Washington leads a force of 13,000 (part of the
way) to put down this “Whiskey Rebellion”

12. EXCISE TAX
Hamilton’s Motives (?)
 Create a crisis (a la Shays’ Rebellion) that would
allow the federal government to use force to
combat it
 Show the states that the federal government is a
“real” government and that it would use force in
the states when necessary

13. NATIONAL BANK
 A national bank would issue banknotes (paper
money) to provide a uniform currency
 Government bonds held by the bank would back
the would back the value of the banknotes
 Private investors would supply $8M of the capital
and name 20 members of the board of directors
 The government would provide $2M and name 5
members of the board of directors
 The bank would help aid in the bookkeeping
needs of the government
 It would help Congress regulate the value of
currency (as per the Constitution) – but was it
necessary?

14. ECONOMIC PLAN
 Hamilton got 4 out of 5 of his points of his plan
right away
 The idea of a protective tariff could only be
postponed before the interests of domestic
industry would become an important issue across
the aisle (for both political parties)