MONEY PROBLEMS IN THE NEW REPUBLIC

The NATIONAL DEBT as of 3/29/09: National debt in est $80 million The estimated population of the United States is 305,904,250 so each citizen's share of this debt is $36, The National Debt has continued to increase an average of $3.74 billion per day since September 28, 2007!

BACKGROUND US in debt from the American RevolutionUS in debt from the American Revolution During the war Americans sold bondsDuring the war Americans sold bonds –Document which promises to repay the money loaned plus interest EXAMPLE:EXAMPLE: –You buy a $ bond for $ –Years later you sell it back to the government and get $ These bonds now need to be repaidThese bonds now need to be repaid

HAMILTON TO THE RESCUE Secretary of the Treasury, Alexander Hamilton comes up with a plan to get the US out of debt and boost our EconomySecretary of the Treasury, Alexander Hamilton comes up with a plan to get the US out of debt and boost our Economy

HAMILTON’S PLAN 1) Sell new bonds to pay for old bonds1) Sell new bonds to pay for old bonds 2) National government will pay up old state debts2) National government will pay up old state debts 3) Create First Bank of the United States3) Create First Bank of the United States 4) Use a Protective Tariff4) Use a Protective Tariff

UPROAR OVER THE PLAN James Madison leads opposition to Alexander Hamilton’s planJames Madison leads opposition to Alexander Hamilton’s plan Believes northerners have too much power and influence over federal governmentBelieves northerners have too much power and influence over federal government

MADISON’S COMPLAINTS 1) Plan would benefit speculators people who make risky investments to gain a profit.1) Plan would benefit speculators people who make risky investments to gain a profit. 2) Southern states already paid off their debt2) Southern states already paid off their debt

COMPROMISE 1) U.S. Capital is moved from New York to District of Columbia (to be built near Maryland/Virginia border)1) U.S. Capital is moved from New York to District of Columbia (to be built near Maryland/Virginia border) 2) Government will repay all state debts with bonds2) Government will repay all state debts with bonds

HAMILTON’S PLAN TO BOOST THE ECONOMY 1) Create National Bank of the United States to help organize money1) Create National Bank of the United States to help organize money 2) Create protective tariff to encourage Americans to buy American goods2) Create protective tariff to encourage Americans to buy American goods

PROTECTIVE TARIFF

MORE OUTRAGE Thomas Jefferson and Madison argue that:Thomas Jefferson and Madison argue that: 1) National Bank is unconstitutional 2) Protective Tariff is unfair to southerners Is the National Bank Constitutional? If so how? Yes, look at Article 1, section 8, point 18

ALEXANDER HAMILTON’S PLAN 1._________________________ _________________________ 2._________________________ _________________________ 3._________________________ _________________________ 4._________________________ 1._________________________ _________________________ _________________________ _________________________ 2._________________________ _________________________ _________________________ JAMES MADISON’S COMPLAINTS 1._________________________ _________________________ _________________________ _________________________ 2._________________________ _________________________ COMPROMISE Name: ________________________

ALEXANDER HAMILTON’S PLAN 1) Sell new bonds to pay for old bonds 2) National government will pay up old state debts 3) Create First Bank of the United States 4) Use a Protective Tariff 1) Plan would benefit speculators people who make risky investments to gain a profit. 2) Southern states already paid off their debt JAMES MADISON’SCOMPLAINTS COMPROMISE 1) U.S. Capital is moved from New York to District of Columbia (to be built near Maryland/Virginia border) 2) Government will repay all state debts with bonds