Alexander Hamilton proposed an assumption plan to consolidate state and national debts. The plan would have the federal government assume all Revolutionary War debts owed by the states and individuals, and collect new tariffs and taxes to pay it off over time. This benefited northern industrialists and financiers who were owed debt payments, but hurt southern states that had already paid off their debts and farmers who faced new taxes. The plan increased sectional divisions between northern and southern states and intensified wealth disparities.

1. Hamilton’s Financial Plan

2. Who is Alexander Hamilton?
• Federalists
– Strong supporter of Constitution
• Businessman from New York
– Helped create the New York Bank

3. Dilemma: How do we solve the nations
debt?
• Revolutionary War = National & State debt

4. Hamilton’s solution
• The Assumption Plan
– Have the nation assume ALL the debt from the
States & Nation

5. Assumption Plan Goals
Hamilton’s Goals
1. Pay states’ and national
debts in full (pay back
war bonds)
2. Raise revenue
3. Convince Southern states
to accept plan
Why?
• Restore faith in public credit
• Show strength in national
government
• To pay off the debt
– Pass Tariffs (a tax on imported
goods)
– Pass a tax on whiskey
• Southern States already paid off
most debt

6. Assumption Plan Simulation
Everyone gets M&Ms BUT you cannot eat them
• Brown = Northern industrialists
• Blue = Southern Plantation Owners
• Green = Northern Financiers
• Yellow = Southern Lenders
• Red = Western/Appalachian Farmers
• Orange = common folk
Which group in America do you represent?

7. M&Ms
The M&Ms in your bag represent your $

8. Hamilton Assumption Plan In Action
• How = Assume all states debt and guarantee that
debts will be 100% paid back to lenders
• What does this do?
1. Erases state debt…yeah!!!
2. But most Southern states had already paid debt off…
• So now they would be essentially paying debt twice…boo 
• So…
– Southern Lenders (Yellow M&Ms) end up having to pay $
to Northern Financiers (Green M&Ms)
Goal # 1 = Pay Debts @ full price

9. • How = Tariffs on imported goods
• What does this do?
1. Protects Industrialists in U.S. b/c imported goods cost
more $
2. Hurts Farmers in U.S. b/c they can’t buy foreign goods as
cheap
• So…
– Southern Plantation Owners (Blue M&Ms) end up having
to buy Northern Industrialists products (Brown M&Ms)
Goal # 2 = Raise Revenue
Hamilton Assumption Plan In Action

10. • How = Tax on Whiskey made and sold
• What does this do?
1. $ from tax would pay off state and national debt…yeah!
2. However, whiskey is made from grain…
• Farmers grow grain -> make whiskey -> pay tax 
• So…
– Western/Appalachian Farmers (Red M&Ms) end up
having to pay $ to Northern Financiers (Green M&Ms)
Goal # 2 = Raise Revenue
Hamilton Assumption Plan In Action

11. • Regular/Common folks (Orange M&Ms )did
not lend $ and don’t have $ to buy goods or
build factories
• So…
– Orange you glad you got the orange M&Ms?
Hamilton Assumption Plan In Action

12. What were the consequences of
Hamilton’s Assumption Plan?
• Effect #1: Which group(s) seemed to benefit the
most?
– North, Wealthy, Industrialists
• Effect #2: Sectionalism begins
– Intensified North v. South relationship & differences
• Effect #3: Financiers win (Hamilton’s friends)
– Class divisions grow
• Wealthy make $ and poor get shafted
• Effect #4: Farmers really lose (Jefferson’s friends)

13. What does the South get?
• U.S. capital would be moved to Washington D.C.