Chapter 10.2 Alexander Hamilton vs. Thomas Jefferson

Hamilton wanted a government strong enough to fix America’s problems…

Thomas Jefferson trusted the people to fix their own problems…

Do these people look happy or mad?

Now that President Washington is in office…

• It’s time to fix the economy

• What’s the problem?– Our government had a national debt of $81.5

million dollars!• Amount of $ owed by our country to other people

– Foreign countries– Citizens we borrowed money from

– What happens if we don’t pay these people back?

Debate over settling the debtAlexander Hamilton

• Wanted to pay back all bonds sold to citizens over time!– Bonds = certificates purchased

that can be turned in for more money in the future

– Why did Hamilton want to do this? • Government gains credibility

with the people

Thomas Jefferson

• Ok with Hamilton’s ideas, but there is a problem:– Speculators have bought bonds

from citizens for less than they are worth! • Now the government is going to

buy them from the speculators for full price? – That cheats the original owner

out of money!

• Who wins? – Hamilton!

• 1790 Government starts buying bonds back!

Debate over Paying off debt owed by States from the American Revolution

Alexander Hamilton• Argued that government

should pay states debt off

• Why? – We all fought for freedom.

• So, our federal government should pay the bill.

• So who wins? – Both….sort of.

Thomas Jefferson• Felt each state should pay

back their part of the bill

• Why? – Some states owed a lot!

• Massachusetts• New York

– Some did not owe much at all• Virginia• North Carolina

They both get something in the end.

Hamilton• Federal government pays

off the states debt.

• In exchange for….

Jefferson • The nation’s capital moves

from the North to a more Central location….

– The birth of Washington, D.C. • Will be built as the new

nation’s capital!

New York to Washington DC

Washington, D.C. 1800

Washington 1850

Washington DC today

Debate over Role of GovernmentHamilton • Had little faith in the average

citizen– Said they could not be trusted

to do the right thing.

– Why? • Because the average American

does not take education seriously– They take politics even less

seriously

• So, you need a large government– Job = protect the liberties of all

citizens equally

Jefferson• Had a lot of faith in the

average citizen– Said they should govern

themselves

– Said they would educate themselves and do what is right

• So, government needs to be small– Job = stay out of the way

Debate over how the Economy should grow

Hamilton • Government should give

“stimulus” money to American entrepreneurs – Why?

• So they could start their own factories and businesses– Hire people– Make products here in USA

• Government should pass protective tariffs– Tax on goods from other

countries

Jefferson• Government should stay out

of the economies way– Why?

• America is made up of farmers!– They know how to do it

themselves! » Don’t need any help!

• Tariffs should remain low– Why?

• Keep price of goods lower. – Helps citizens be able to

afford them

Debate over a national bankHamilton • Wanted to start a national

bank.– Why?

• So that the government can make their own money– No more state money

• What is the big deal? – Federal government would own

all of the money in America! – Not each individual state

Jefferson• Hated the idea of a national

bank– Why?

• Some states are richer than others– They would lose this power if

the federal government owned all of the money

• What is the big deal? – The Constitution does not give

the government the right to make a bank anyways….• Or does it?

What does the Constitution say?

• Article I, Section 8– Congress has the right to

“make all laws that are necessary and proper”

• Hamilton (loose)– Says a bank is necessary for

future growth as a nation

• Jefferson (strict)– Says a bank is convenient

• Not necessary

Who wins?

• Washington agrees with Hamilton…again.

• Bank of the United States– Created in 1791

• For 20 years– If it works we will keep

it longer» If not, we get rid of

it.

Meanwhile…

• While America is trying to build itself into a great country….– A great country is trying

to destroy itself….

• 1789– France decides to have

their own Revolution• Replace their monarch with

a democracy like America….

Review Questions

• What is the national debt?

• What are bonds?

• What was Hamilton’s idea to fix the economy?

• What was Jefferson’s idea for the role of government?