The Nation’s Debt

Washington’s Cabinet Washington’s first major act as President. Secretary of War: Henry Knox Secretary of State: Thomas Jefferson Sec. of the Treasury: Alexander Hamilton

Hamilton’s Vision Pay America’s Rev. War debt so other countries will do business with the U.S. Support businessmen to create wealth in the U.S. Tax imports (tariffs) to encourage people to buy American products. Create a National Bank to care for the nation’s money.

Jefferson vs. Hamilton Jefferson and many Southerners believed tariffs would hurt farmers and planters. They fear Hamilton’s plan will make wealthy merchants too powerful. Hamilton and Jefferson compromised: If the South backs the plan, the new U.S. capitol city will be built in the South.

“No National Bank!” Jefferson and James Madison believed the National Bank would make the U.S. government too powerful. They want a “strict Constitution” – following the Constitution exactly as it is written. Since the Constitution says nothing about a National Bank, the government can’t create one.

Why not keep the money in a bank? Hamilton Strikes Back Hamilton wants the National Bank to hold the nation’s money and to issue currency. He wants a “flexible Constitution” – a loose interpretation of the Constitution. The Constitution does say the government can raise money and tax! Why not keep the money in a bank?

Washington Decides Hamilton and Jefferson present their views to Washington. Washington agrees with Hamilton! The National Bank leads to today’s Federal Reserve.