Hamiltons Financial Plan Who is Alexander Hamilton Federalists

Hamilton’s Financial Plan

Who is Alexander Hamilton? • Federalists – Strong supporters of Constitution • Businessman from New York – Helped create the New York Bank

Dilemma: How do we solve the nation’s debt? • Revolutionary War = National & State debt

Hamilton’s solution • The Assumption Plan – Have the nation assume ALL the debt from the states and the nation

Assumption Plan Goals Hamilton’s Goals Why? 1. Pay states’ and national • Restore faith in public credit debts in full (pay back • Show strength in national government war bonds) 2. Raise revenue • To pay off the debt – Pass Tariffs – Pass a tax on whiskey 1. Convince Southern states • Southern States already paid off most debt to accept the plan

Assumption Plan Simulation Everyone gets candy BUT you can’t eat it! (yet…) • Snickers = Northern Industrialists • 3 Musketeers = Southern Plantation Owners • Butterfinger = Northern Financiers • Milky Way = Southern Lenders • Twix = Western/Appalachian Farmers • Gobstoppers = common folk Which group in America do you represent?

Hamilton Assumption Plan in Action Goal #1 = Pay Debts @ full price • How? Assume all states debt and guarantee that debts will be 100% paid back to lenders • What does this do? – Erases state debt…yeah!! – But most Southern states had already paid debt off…so now they would be essentially paying debt twice…boo. • So… – Southern Lenders (Milky Way) end up having to pay $$ to Northern Financiers (Butterfinger) Lenders give their candy to financiers

Hamilton Assumption Plan in Action Goal #2 = Raise Revenue • How? Tariffs on imported goods • What does this do? – Protects Industrialists in U. S. because imported goods cost more $$ – Hurts plantation owners in U. S. because they can’t buy foreign goods as cheaply • So… – Southern Plantation Owners (3 Musketeers) end up having to buy Northern Industrialists products (Snickers) Plantation owners give their candy to industrialists

Hamilton Assumption Plan in Action Goal #2 = Raise Revenue • How? Tax on whiskey made and sold • What does this do? – $ from tax would pay off state and national debt…Yeah!! – However, whiskey is made from grain. • Farmers grow grain -> make whiskey -> pay tax • So… – Western/Appalachian Farmers (Twix) end up having to pay $ to Northern Financiers (Butterfinger) Farmers give candy to financiers

Hamilton Assumption Plan in Action • Regular/Common folk (Gobstoppers) did not lend $ and don’t have $ to buy goods or build factories • So…are you glad to be a regular/common person?

What were the consequences of Hamilton’s Assumption Plan? • Effect #1: Which groups seemed to benefit the most? • Effect #2: Sectionalism begins…between which two groups? Why? • Effect #3: Financiers win (Hamilton’s friends) Consequences for social classes? • Effect #4: Farmers really lose (Jefferson’s friends) – Class divisions grow: Wealthy make more $$ and poor have no real benefit

Give the candy back! • You can eat now as you reflect on the solutions (and problems) presented by Hamilton’s Financial Plan.