MONEY PROBLEMS IN MONEY PROBLEMS IN THE NEW REPUBLICTHE NEW REPUBLIC

The NATIONAL DEBT as of 3/29/09:

National debt in 1792 - est $80 million • The estimated population

of the United States is 305,904,250 so each citizen's share of this debt is $36,143.96.

• The National Debt has continued to increase an average of$3.74 billion per day since September 28, 2007!

BACKGROUNDBACKGROUND• US in debt from the American US in debt from the American

RevolutionRevolution• During the war Americans sold During the war Americans sold bondsbonds

– Document which promises to repay the Document which promises to repay the money loaned plus interestmoney loaned plus interest• EXAMPLE:EXAMPLE:

– You buy a $100.00 bond for $50.00.You buy a $100.00 bond for $50.00.– Years later you sell it back to the government and Years later you sell it back to the government and

get $100.00get $100.00

• These bonds now need to be repaidThese bonds now need to be repaid

HAMILTON TO THE RESCUEHAMILTON TO THE RESCUE

• Secretary of the Secretary of the Treasury, Treasury, Alexander Alexander Hamilton comes Hamilton comes up with a plan to up with a plan to get the US out get the US out of debt and of debt and boost our boost our EconomyEconomy

HAMILTON’S PLANHAMILTON’S PLAN

• 1) Sell new bonds to pay for old 1) Sell new bonds to pay for old bondsbonds

• 2) National government will pay up 2) National government will pay up old state debtsold state debts

• 3) Create First Bank of the United 3) Create First Bank of the United StatesStates

• 4) Use a Protective Tariff4) Use a Protective Tariff

UPROAR OVER THE PLANUPROAR OVER THE PLAN• James MadisonJames Madison

leads opposition leads opposition to Alexander to Alexander Hamilton’s planHamilton’s plan

• Believes Believes northerners have northerners have too much power too much power and influence over and influence over federal federal governmentgovernment

MADISON’S COMPLAINTSMADISON’S COMPLAINTS

• 1) Plan would benefit 1) Plan would benefit speculatorsspeculators people who make people who make risky investments to gain a risky investments to gain a profit.profit.

• 2) Southern states already 2) Southern states already paid off their debtpaid off their debt

COMPROMISECOMPROMISE• 1) U.S. Capital is 1) U.S. Capital is

moved from New moved from New York to District of York to District of Columbia (to be built Columbia (to be built near near Maryland/Virginia Maryland/Virginia border)border)

• 2) Government will 2) Government will repay all state debts repay all state debts with bondswith bonds

HAMILTON’S PLAN TO BOOST THE HAMILTON’S PLAN TO BOOST THE ECONOMYECONOMY

• 1) Create National Bank of the United 1) Create National Bank of the United States to help organize moneyStates to help organize money

• 2) Create protective tariff to 2) Create protective tariff to encourage Americans to buy encourage Americans to buy American goodsAmerican goods

PROTECTIVE TARIFFPROTECTIVE TARIFF

MORE OUTRAGEMORE OUTRAGE• Thomas Jefferson and Madison argue Thomas Jefferson and Madison argue

that:that:

1) National Bank is unconstitutional1) National Bank is unconstitutional

2) Protective Tariff is unfair to 2) Protective Tariff is unfair to southernerssoutherners

Is the National Bank Constitutional? If so Is the National Bank Constitutional? If so how?how?

Yes, look at Article 1, section 8, point 18Yes, 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 1) Sell new bonds to pay for old bondsold bonds

2) National government will 2) National government will pay up old state debtspay up old state debts

3) Create First Bank of the 3) Create First Bank of the United StatesUnited States

4) Use a Protective Tariff4) Use a Protective Tariff

1) Plan would benefit 1) Plan would benefit speculatorsspeculators people who people who make risky investments make risky investments to gain a profit.to gain a profit.

2) Southern states already 2) Southern states already paid off their debtpaid off their debt

JAMES MADISON’SCOMPLAINTS

COMPROMISE

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