Aim: What led to the formation of political parties in the United States? otJuFGXQ9w

Alexander Hamilton Favored a strong central government Favored close ties with the British Thought the future lied in industry and commerce

Thomas Jefferson Favored a weak central government Disliked the British, favored closer ties with France Thought the future lied in “yeoman farmers”

Hamilton’s Financial Plan 34 year old Alexander Hamilton, secretary of the Treasury, would be put in charge of fixing the nationals reeling economy Hamilton would propose a number of economic reforms to achieve this goal

Deal with the National Debt Problem: The federal and state governments had so much debt from the Revolutionary War and Articles of Confederation era, and such little ability to pay, that any old bonds (IOU’s) were worth practically nothing, so raising new money was impossible.

Deal with the National Debt Solution: The new Federal government would take on all of the old debt, and issue new bonds (IOU’s) to pay them off at lower interest rates. This would make the government seem more credit worthy, and would free up $$ in the states

Deal with the National Debt Criticisms: Many Southern states had no debt, so they would be forced, through taxes, to pay off Northern state debt. Many wealthy investors, who had bought old Bonds for very little, would receive a huge profit

Develop the National Economy Problem: Fledgling American industry could not compete with British industry Solution: Impose protective tariffs (taxes on imported goods) and use government money to subsidize American industry Criticism: Most industry is in the North, and it disfavored slavery

Create a National Bank Problem: The national government needed an institution, or a national bank, to manage taxes and the new bonds being issued by the Federal government.

Create a National Bank Solution: The government would join up with wealthy investors to charter a National Bank, which would be in charge of handling the debt of the country. The bank would act independently under certain restrictions made by Congress, and would result in a better credit standard for the country

Create a National Bank Criticism: The creation of a national bank was not a power given to the government in the Constitution, and it would give extensive power to wealthy Northern businessmen

Ultimately, what group seemed to be most favored by this financial plan? What group would feel most left out?

Hamilton v. Jefferson Although they had found ways to work together, the fights between Hamilton and Jefferson soon spread to their supporters and, in 1792, Washington officially asks them to stop their bickering. Below are both of their responses

Hamilton letter to Washington, 1792 What is Hamilton arguing here?

Jefferson letter to Washington, 1792 What is Jefferson arguing here?

Based on these letters, who is actually doing the attacking? What role does Washington seem to play in this debate? What may happen when he exits the stage?

Political Parties form Soon, supporters of Hamilton and Jefferson would form together to create the nation’s first political parties

Federalists Supporters of Hamilton and John Adams Supported strong relations with Great Britain (through the Jay Treaty) Supported Hamilton’s financial plan Strong base in cities and the North, they favored a strong central government

Democratic-Republicans Supporters of Jefferson and Madison Opposed the British and supported the French during the French Revolution Argued against Hamilton’s financial plan Strong bases in rural communities (especially the south), and promoted a strict interpretation of the Constitution and strong states rights

How would Washington have felt about this? What problems may this cause the new government?