1. Chapter 3
The Parties Begin

2. “Liberty for the whale means death for the minnow”
What does this saying mean?
How does this relate to the United States?

3. All About Power
Political parties developed because of a disagreement between Jefferson and Hamilton
They were both concerned about liberty and power
How do you balance the two?
Government powerful enough to keep order
Make sure that the government doesn’t oppress people

4. Hamilton’s Idea In favor of a strong government
Should be run by aristocrats
Feared the masses (the ordinary people)
Why didn’t he trust them?
Wanted government by the few
Knew that the country needed checks and balances to work
Encouraged industry

5. Jefferson’s Idea In favor of states’ rights
Wanted a weak federal government
Why?
Thought ordinary people could govern themselves
If they were educated
Wanted an amendment to provide free education
Did this happen?
Wanted a nation of farmers

6. The Parties Begin Hamilton’s Followers Jefferson’s Followers
Federalist Party
Conservative on most issues
Democratic-Republican Party
Sometimes called the Republican Party
Not like the Republican Party of today
Eventually led to today’s Democratic Party
Liberal on most issues

7. Money Issues America was turning into a capitalistic society
Basic parts of capitalism:
Capital
Money (or goods that can be turned into money)
Credit
Borrowing power (ability to borrow money)
Collateral
Promise something of value to a lender if you can’t pay them back

8. Money Issues Governments also need to borrow money Bonds Interest
Promise to pay back amount loaned (plus interest)
Bond holders are called Investors
Interest
Charge for borrowing money

9. Money Issues
The Congress under the Articles of Confederation borrowed money
Why?
Didn’t pay off the debt properly
After the Constitution was written, there were disagreements over what should be done with the debt

10. Money Issues
There were rumors that the government wouldn’t pay the investors back
What would you do if you loaned someone money and you didn’t think they would pay you back?
Investors sold their bonds to other people for less than they were really worth
The people who bought the bonds from the investors are called speculators
Taking a risk
Why?

11. Attempts to Fix the Money Problem
Jefferson
Said new government shouldn’t have to pay off the debt
Why not?
Shouldn’t be responsible for the mistakes of the old government
Didn’t want the speculators to get richer

12. Attempts to Fix the Money Problem
Hamilton
Wanted the government to pay off the debt
Why?
Made a deal with Madison and Jefferson
They agreed to pay off the debt
His financial plan was very successful
Paid off the debt by the time he left the cabinet
The United States had good credit
Why is this important?
Established free enterprise
Keep government rules for businesses at a minimum