History Quiz CH7.2 Flashcards
Alexander Hamilton (national debt)
~born or economics, became 1st Secretary of Treasury
~Wanted to fix national debt: money owed by the United States
National debt
money owed by the US
~11 mil. to foreign, 40.4 to citizens
Bonds
certificates of debt that carry a promise to buy
back the bonds at a higher price.
~Government could not afford to pay back citizens their bonds.
People started to sell bonds to
Speculators: People who buy items at low prices in
the hope that the value will rise.
Hamilton’s Plan
- Pay back foreign debt immediately
- Slowly repay back full value of bonds.
~People complained thinking speculators would unfairly make a profit.
1790: Government followed Hamilton’s plans and exchanged old bonds for new
guaranteed bonds.
Thomas Jefferson (national debt)
~Disagreed with Hamilton’s plan because this would cheat bondholders who sold bonds to speculators at lower prices.
State debts
Hamilton wanted Fed gov to pay for State debts.
Would boost national economy as states can focus on
building business and
trade. (taxes)
**Jefferson and the South: Disagreed with system claiming, they did not want to
help federal gov. pay debts of other states.
Patrick Henry: Did not believe Constitution had power to pay state debts.
Compromise
Hamilton bargained:
1.move capital to Pennsylvania
(closer to south)
2. Thomas Jefferson and James Madison
(Virginians) would convince South to accept
state debt plan.
1791 Philadelphia became nations second state capital for 10 years, while Washington chose the
site which would eventually become Washington
D.C.
Who did Washington agree with about the National Bank?
Hamilton. Washington issued the Bank of the USA.
~it brought stability as Washington hoped
Jefferson vs. Hamilton
Hamilton: strong central gov, promote manufacturing, national bank, loose construction
Jefferson: weak central gov, agrarian society, no national bank, strict construction (friends with Madison)
