Major Features of Hamilton’s Economic Plan

1. Major Features of Hamilton’s Economic Plan

2. The Tariff 1789 • Designed to protect domestic manufacturing • Discouraged competition from abroad • Forced foreign competitors to raise prices • Provided much needed income for US

3. Report on Public Credit • US owed an enormous amount of money to creditors • $20 million to individual states • $11 million to foreigners • $40 million to private individuals • Hamilton used this report to suggest that US pay off its domestic and foreign debt.

4. Report on Manufacturers • Hamilton envisioned a program for growth and development of manufacturing • Tariffs, loans, grants to businesses • Excise tax to raise money to aid businesses and government • Infrastructure development

5. Creation of National Bank • Contribute to steady and balanced growth of the economy. • Chartered by the US and controlled: • US government 20% • Private US citizens 60% • Private foreign citizens 20% - many Americans opposed to this!

6. Revolution of 1800 • Election went to the House of Reps when the presidential and vice-presidential candidates tied for electoral votes

7. The Jeffersonian Movement • Spirit embodied in the Democratic-Republican party, represented the common man • Anti-capitalistic • Limitations on Federal power/strict interpretation of Constitution • Francophile – party favored support of France

8. The Hamiltonian Movement • Spirit embodied in the Federalist party, represented capitalist class • Expansion of federal power/loose interpretation of Constitution • Future of nation dependent on developing manufacturing and industry • Anglophile, party favored Great Britain

9. AP TIP

10. Key Events in Jefferson’s Presidency • 1st term- carried out domestic and foreign policies of predecessors • Kept Bank of US • Stayed out of foreign alliances and stayed neutral • Used this as an excuse to reduce size of government • Whiskey Tax eliminated

11. Key Events in Jefferson’s Presidency • Louisiana Purchase (1803)

12. Key Events in Jefferson’s Presidency • Lewis and Clark

13. The honeymoon is over: Jefferson’s Second Term • US had to pay bribes to Barbary Ships (Pirates) to protect American merchant vessels

14. Conflict between France and Britain AGAIN • Essex Decision 1805 – British ruled that trade closed during peace time could not be opened during war – No American trade with West Indies • Leopard-Chesapeake Incident 1807 – British navy short on sailors • Impressment of American sailors

15. Conflict between France and Britain AGAIN • Orders in Council 1806 and 1807 – Britain blockaded the ports of France and its allies, thereby preventing neutral nations from trading with these nations

16. Conflict between France and Britain AGAIN • Berlin Decree 1806 – France responded in kind to the Orders in Council • Milan Decree 1807 – France announced it would seize any ships that had obeyed Britain’s Orders in Council

17. Punish France and Britain with Trade Acts • Nonintercourse Act 1806 – This halted the importation of many British commodities but failed to influence the British • Embargo Act 1807 – Prohibited all foreign trade

18. Punish France and Britain with Trade Acts • Nonintercourse Act 1809 – Trade was opened with all nations except the belligerents, Britain and France. Jefferson agreed to trade with either nation so long as it repealed its trade restrictions against American shipping.

19. Punish France and Britain with Trade Acts • Macon’s Bill No. 2 – Replaced the Nonintercourse Act with his own plan to open trade with both Britain and France. • Agreed to suspend trade with the enemy of the nation that first agreed to cease its violations of American Rights

20. Marshall Court • Vested rights in contract clauses • Expanding the Court’s jurisdiction • Judicial nationalism over states’ rights • Blocking state regulations that limited property rights • Freeing American commerce from restraints placed on it by the state

21. Marbury v. Madison

22. Fletcher v. Peck 1810 • The Court ruled that a state could not pass laws that invalidated a contract

23. Martin v. Hunter’s Lessee 1816 • Established the supremacy of federal courts over state courts.

24. Dartmouth College v. Woodward 1819 • Reaffirming the Fletcher decision, the Court ruled that a state cannot alter or invalidate a contract.

25. McCulloch v. Maryland 1819 • The Court ruled that the government possessed the implied power to create a national bank; that the bank could not be taxed by a state because this would give the “power to destroy” to the bank; and that federal law is absolute over state law.

26. Gibbons v. Ogden (1821) • The Court recognized the federal government’s authority over interstate trade.

27. Cohens v. Virginia 1821 • Much to the dismay of the states’ rightists, the Court asserted the right of the Supreme Court to review the decisions of state supreme courts in issues dealing with the authority of the federal government

28. Connecting the Dots • The period from 1788 to 1808 was problematic for the new nation. Washington’s administration had experienced infighting between various political leaders and their followers. Jefferson’s second term witnessed serious foreign challenges to the sovereignty of the US.

29. Connecting the Dots • Yet the nations was developing, physically (LA Purchase), politically (Judicial Branch). After another war with Britain the US emerged with a sense of nationalism.

30. Reflection Time • What led up to Hamilton’s Report on Public Credit, what was it, and what impact did it have?

31. Report on Public Credit • The US was in debt after the American Revolution. The US owed over $71 M to individuals, states, and foreign governments. This report of our debts was used by Hamilton to suggest that we pay off all of our debts. Paying off debts would improve our credit rating allowing us to borrow more money and give loans to businesses. Southern State’s were against the federal government paying off all of these debts, because they had already paid off most of theirs. The North argued that all would enjoy the benefits of an improved economy. In the end, an agreement was worked out, the Assumption Bill & Bank of US: Southerners agreed to support Hamilton’s proposal if the capitol was moved to the South.

32. Reflection Time • What led up to the Whiskey Rebellion, what was it, and what was the impact?

33. Whiskey Rebellion • Hamilton’s plan placed a high tax on Whiskey. This was a good way for the US to make money on what some thought of as a frivolous commodity. The farmers though distilled alcohol from corn and rye for a cheaper way for them to get their crops to market. Several farmers began to rebel against this tax in a way reminiscent of the Stamp Tax days. This was a test for the federal government. Washington sent troops to put down the rebellion. The Rebellion was quickly put down. The consequences were much larger than the Rebellion itself. The government commanded more respect, but critics condemned the brutality.

34. Reflection Time • What caused Pinckney’s Treaty of 1795, what was it, and what was the impact?

35. Pinckney’s Treaty • Concerned that the animosity between Britain and the US was thawing because of Jay’s Treaty, Spain made a series of concessions in negotiations with the U.S. ambassador to Spain, Thomas Pinckney. The treaty opened up the lower Mississippi and the important port city of New Orleans to American trade and shipping. It also granted Americans the right of deposit – a transfer of goods – in New Orleans without having to pay a tax to the Spanish. Spain further agreed to accept the 31 st parallel as Florida’s northern border and to stop inciting Native American tribes.

36. Reflection Time • Jay’s Treaty

37. Jay’s Treaty • Chief Justice John Jay was sent by Washington to negotiate with the British an end to their practice of seizing American ships and impressing American sailors into the British Navy. The British did agree to remove their forts on America’s western frontier, but made no guarantees that seizures and impressments would end. The U.S. Senate narrowly ratified the treaty, but the American public was so incensed by Britain’s disdain for American neutral rights that support for the French cause in the US swelled. Nevertheless, the US was able to maintain its neutrality in the Anglo-French War.

38. Reflection Time Implied powers

39. Implied Powers • The founders of the US knew that they could not predict every future event or problem so they incorporated implied powers into the constitution. The Elastic Clause (Article I, Section 8, Clause 18) of the Constitution grants such powers. This Clause gives the federal government the power to make laws that are necessary and proper for the running of the government. This clause was put to the test early on with the controversy between the Loose Constructionist (Hamilton) and the Strict Constructionists (Jefferson). Through the rulings of the Marshall Supreme Court the Federalist position regarding implied powers became part of the national fabric. • You might want to include the issue the Jeffersonians brought up about the 10th Amendment.

40. Reflection Time 3/5 Compromise

41. 3/5 Compromise • In order to persuade the Southern (large) States into signing the new Constitution a series of compromises had to take place. One of those compromises was the 3/5 Compromise. The Southern states wanted the House of Reps that was based on population to be based on the states entire population, including slavery. The Northern states would not hear of this. In order to solve this problem, the 3/5 compromise was agreed upon. This was one of a series of concessions made to the South to entice them to stay in the Union. The 3/5 Compromise said that 3/5 of the state’s slave population would be counted for representation and taxes. A fugitive slave law also required that runaway slaves who escaped to a free state must be returned to their owners. The issue of slavery was a hot-topic even before the Constitution was signed, but the Union could not survive without the southern states. Because of this, the north compromised out of necessity and began putting off the problem of slavery one compromise at a time until the issue finally erupted into a civil war.

42. Reflection Time Great Compromise

43. Great Compromise • The large southern states wanted representation based upon population and the smaller northern states wanted equal representation. The Great (Connecticut) Compromise combined the Virginia and New Jersey Plans for the Constitution into a more equitable solution. This Compromise created a House of Reps that is based upon population and a Senate that has equal representation with 2 senators from each state. All money bills would originate in the House and direct taxes on states would be assessed according to population. The outcome was the current US Constitution which has survived for 218 years.

44. Reflection Time Edmund Charles Genet

45. Edmund Charles Genet • The Franco-American alliance of 1778 bound the US to defend the French West Indies from all foes. Washington, in his wisdom, knew that the US could not yet withstand another war and declared the Neutrality Proclamation of 1793. This document proclaimed the US officially neutral, but warned American citizens to be impartial toward both camps. Citizen Edmond Genet, a representative of the French Republic landed in Charleston and was welcomed by the Jeffersonian Republicans. Believing that this was the way all American felt, he began to fit privateers and take advantage of the Franco-American alliance. He recruited armies to invade Spanish Florida, Louisiana, and British Canada. Washington, Jefferson, and Madison soon became tired of this and Washington demanded that Genet be replaced. This illustrated that when both sides have something to gain that alliances are good, but alliances do not last when both sides have nothing to gain.

46. Reflection Time Washington’s Farewell Address

47. Washington’s Farewell Address • Washington felt that a president should only serve two terms so he would not become too king like. This was a tradition that held until Franklin Roosevelt. In this farewell address, Washington advised the avoidance of “permanent alliances” like the Franco-American Treaty of 1778. He was not opposed to all alliances; but cautioned against permanent alliances. This became sound advice for the young nation. This advice was followed for the most part until the Monroe Doctrine. He also warned about the divisiveness of political parties, but in fact political parties is what made our democracy strong.

48. Reflection Time • Hamilton’s election scheme of 1796

49. Hamilton’s election scheme of 1796 • The tradition during the early days of the US was that presidential candidates did not campaign for themselves. The campaigns played out in newspapers, editorials, and pamphlets. All attention was on the mid-Atlantic states because it was clear that Jefferson would carry the South while the New England states would certainly go to Adams. In those days, most southern states chose presidential electors to the electoral college by direct vote. In the mid-Atlantic states, however, state legislatures selected the presidential electors, and the election of 1796 would be decided by the political scheming within those assemblies. In the electoral college balloting, Jefferson came in second to Adams (71 to 68 votes), principally because Adams had won the behind-the-scenes battle for the New York legislature. While the vice president received only two electoral votes south of the Potomac, Jefferson won only eighteen votes outside of the South, thirteen of which came from Pennsylvania. In those days, the candidate receiving the second-highest vote became the vice president. In a scheme to deny Adams the presidency, Alexander Hamilton influenced South Carolina's Federalist electors to withhold their votes from Adams. This would have made Adams's running mate, Thomas Pinckney, President, with Adams as vice president. But New England Federalists, learning of the scheme, withheld their votes from Pinckney to counter Hamilton's ploy. As a result of the Federalist intraparty conflicts, Jefferson compiled more votes than Pinckney for second place and became vice president.

50. Reflection Time • Alien Act