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The Economics of the USA

The Economics of the USA. Alexander Hamilton’s Brilliant Idea. Federalist v. Anti-Federalists. What are three defining characteristics of each? Who are three people who would be a part of each faction. Federalists/Anti-Federalists. Alexander Hamilton Benjamin Franklin John Hancock

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The Economics of the USA

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  1. The Economics of the USA Alexander Hamilton’s Brilliant Idea

  2. Federalist v. Anti-Federalists • What are three defining characteristics of each? • Who are three people who would be a part of each faction.

  3. Federalists/Anti-Federalists • Alexander Hamilton • Benjamin Franklin • John Hancock • James Madison • John Jay • John Adams • Thomas Jefferson (?) – in France during CC. • George Mason • Edmund Randolph • Elbridge Gerry • Samuel Adams • Patrick Henry

  4. Alexander Hamilton • Born as an illegitimate child in St. Croix • Hamilton believed that the United States should be a meritocracy. • He felt that the United States as a full – fledged agrarian economy would stifle this.How could this be possible?

  5. Hamilton’s Ideas • Hamilton learned finance as a clerk in a counting house. • He took his ideas from the Whig government in Great Britain. The main ideas being 1) A funded government debt 2) A national bank 3) A circulating currency • He felt this would help the credit worthiness of the United States. How could these ideas achieve this?

  6. The Hamilton Banking Plan(Problems caused by these ideas?) • The Debt 1) Non-descriminate assumption 2) Funding • Create a National Bank • How are you going to pay for all of this?

  7. The Debt • Buy the all of the debt with interest bearing bonds. (non-descriminate funding) • Assume all of the state debts (Assumption) • This would ensure looking to the central government for payment • The idea was to never pay off the debt. This would keep the people invested in the government’s success.

  8. The National Bank Idea • Hamilton felt the bank could use Treasury debt securities as a reserve assets (instead of gold and silver which was scarce) • The Bank of the United States would be a private corporation but… 1) The government would own 20% of its shares. 2) The government would supervise its operations 3) The bank would have a 20 year charter 4) A board of directors with 1/5 of those members appointed by the government.

  9. The Bank’s Main Functions • Provide loans and currency to business • A safe place for the government to deposit its funds • Help collect taxes and distribute government expenditures. • Keep up the price of bonds through bond purchases (Quantitative Easing).

  10. How to pay for this? • Whiskey Tax – this excise tax on distillers in PA, VA and NC • Tariff on imports – Hamilton proposed no higher than 10% to stem off smuggling.

  11. Also Remember… • In order to appease Southern states who were upset with debt assumption, the national capital was moved to Washington D.C. This city was built on the swampy area around the Potomac River.

  12. The Constitution • Was the creation of a national bank Constitutional? What were the arguments for and against? Jefferson v. Hamilton

  13. Results • The non-descrimination and Assumption act tripled the market value of the assets held by the American people. • It sparked a vigorous economic recovery and the first economic boom in U.S. history. 1) From 1790 – 1796, real GDP grew by about 7 % a year.

  14. Hamilton’s Legacy(Things he wanted that were tabled by Congress) • Gov’t to disburse cash awards to inspire innovation and scientific research • Inspect and set minimum standards for goods • Enact patent laws to encourage inventions • Fund canals, harbors and roads to facilitate transports

  15. Sources Felzenberg, Alvin. The Leaders We Deserved (and a Few We Didn’t): Rethinking the Presidential Ratings Game. New York: Basic Books, 2008. Print. Brinkley, Alan. American History: A Survey. New York: McGraw – Hill. 2007. Print.

  16. Other Topics • Western Frontier Issues • New States? • Britain v. France – how does the new nation deal with this? • Jay’s Treaty • Pickney’s Treaty

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