Question

Hamilton and Jefferson disagreed on most matters, describe Hamilton’s Financial Plan and Jefferson’s opposition to those policies. What compromises were made to adopt Hamilton’s policies?

Answer 1

Hamiltonian Economic Program was proposed by first Secretary of the TreasuryAlexander Hamilton in three notable reports and implemented by Congress during George Washington's first administration.

Hamilton did not believe the state should ensure an equal distribution of property and advocated that there is no reason to change this reality. Instead, Hamilton wanted to tie the economic interests of wealthy Americans to the federal government’s financial health. Hamilton believed that the federal government must be “a Repository of the Rights of the wealthy.”

The reports outlined a coherent program of national mercantilism- government-assisted economic development.

• The First Report on Public Credit was pertaining to the assumption of federal and state debts and finance of the United States government. (1790)
  • The report analyzed the financial standing of the United States of America and made recommendations to reorganize the national debt and to establish the public credit.
• The Second Report in 1970 on Public Credit suggested to charter a National Bank.
  • It called for the establishment of a central bank, its primary purpose to expand the flow of legal tender by monetizing the national debtthrough the issuance of federal bank notes.
• Third report was presented in 1971 as Report on Manufactures, pertaining to the policies to be followed to encourage manufacturing and industry within the United States.
  • Hamilton reasoned that to secure American independence, the United States needed to have a sound policy of encouraging the growth of manufacturing and ensure its future as a permanent feature of the economic system of the nation. He argued these could be achieved through bounties or subsidies to industry, regulation of trade with moderate tariffs (not intended to discourage imports but to raise revenue to support American manufacturing through subsidy), and other government encouragement. These policies would not only promote the growth of manufacturing but provide diversified employment opportunities and promote immigration into the young United States. They would also expand the applications of technology and science for all quarters of the economy, including agriculture.

Jefferson’s opposition

There was a major discord of the early 1790s, the Virginian Jefferson and the New Yorker Hamilton were on the opposing sides. While Hamilton was an adamant elitist whose policies favored merchants and financiers, Jefferson, though wealthy, favored policies aimed toward ordinary farmers.

Their differences also extended to the branch of government that each favored. Hamilton thought a strong executive and a judiciary protected from direct popular influence were essential to the health of the Republic. By contrast, Jefferson put much greater faith in democracy and felt that the truest expression of republican principles would come through the legislature, which was elected directly by the people. Their differences would become even sharper as the decade wore on.

Thomas Jefferson, who was the secretary of state at the time, thought Hamilton's plans for full payment of the public debt stood to benefit a "corrupt squadron of paper dealers."

Hamilton's suggestion to charter a national Bank of the United States was also opposed by Jefferson. Their disagreement about the bank was because they have differences in interpretations of the Constitution. For Jefferson, such action was clearly beyond the powers granted to the federal government. In his strict interpretation of the Constitution, Jefferson pointed out that the tenth amendment required that all federal authority be expressly stated in the law. Nowhere did the Constitution allow for the federal government to create a bank.

Compromises:

Hamilton responded to Jefferson with a loose interpretation that led to a federal action under a clause permitting Congress to make "all Laws which shall be necessary and proper

Bank found support in Congress through a compromise that included a commitment to build the new Federal Capital on the banks of the Potomac River. In part this stemmed from the fact that southern states such as Virginia had already paid off their war debt and stood to gain nothing from a central bank. While most of the commercial beneficiaries of Hamilton's policies were concentrated in the urban northeast, the political capital of WASHINGTON, D.C.would stand in the more agricultural south. By dividing the centers of economic and political power many hoped to avoid a dangerous concentration of power in any one place or region.