C6S1b Hamilton's Financial Plan

Questions and Answers

What are the 3 steps for Hamilton's Financial Plan?

Congress creates a permanent national debt (correct)

Federal government pays state debts (correct)

Congress creates a National Bank (correct)

Congress eliminates state debts

What was the purpose of the federal government paying state debts?

States would react with gratitude and loyalty.

What was the problem with the federal government paying state debts?

Southern states had already paid their debts.

What was the purpose of Congress creating a permanent national debt?

To boost confidence and create individual loyalty. Signup and view all the answers

What was the problem related to the permanent national debt?

Southern bonds sold to Northern speculators. Signup and view all the answers

What was the purpose of Congress creating a National Bank?

To manage debt, taxation, and issue paper money. Signup and view all the answers

What was the problem related to the creation of a National Bank?

Opposition based on strict construction principles. Signup and view all the answers

What did the Southern Congressmen promise during the Compromise of 1790?

Not to block the national bank if the capital was moved South. Signup and view all the answers

What became the new capital city during the Compromise of 1790?

Washington, District of Columbia. Signup and view all the answers

What was the Whiskey Rebellion?

A revolt against the excise tax on whiskey. Signup and view all the answers

How did the Rebellion grow after the tax on whiskey?

Grew to 600 militia, prompting a federal response with 15,000 troops. Signup and view all the answers

Is the US Constitution stronger than the Articles of Confederation?

True Signup and view all the answers

Study Notes

Hamilton's Financial Plan Overview

Three main components of Hamilton's Financial Plan: federal government assumes state debts, creation of a permanent national debt, and establishment of a National Bank.

Federal Debts

Federal assumption of state debts aimed to generate gratitude and loyalty of states; however, it caused discontent as Southern states felt burdened by having to pay Northern debts.

Permanent National Debt

The goal of creating a permanent national debt was to enhance financial confidence and foster individual loyalty.
A challenge arose as Southern bonds, sold to Northern speculators, posed a risk to financial stability.

National Bank Purpose

Establishment of a National Bank intended to manage national debt, facilitate taxation, and issue paper currency, creating a centralized financial system.

National Bank Opposition

Opposition from Madison in the House of Representatives hinged on strict constructionist views, while Hamilton argued for loose construction, asserting the necessity of the National Bank for strengthening federal power.

Compromise of 1790

Southern Congressmen agreed to support the National Bank in exchange for relocating the nation's capital to a more Southern location.

New Capital City

The capital was established in Washington, D.C., strategically positioned between Maryland and Virginia, which enabled the approval of the National Bank.

Whiskey Rebellion

The rebellion was sparked by an excise tax on whiskey, supported by Hamilton, which heavily impacted small farmers in the West who produced whiskey in large quantities.

Growth of the Rebellion

The uprising escalated to approximately 600 militia participants, prompting President Washington to respond with 15,000 federal troops to quell the unrest, ultimately leading to the termination of the rebellion.

Comparative Strength of Federal Government

The U.S. Constitution established a stronger federal government in contrast to the Articles of Confederation, reflecting a shift towards a more centralized authority.

Description

Test your knowledge on Hamilton's Financial Plan with these flashcards. Explore the three key steps, their purposes, and the challenges faced by the federal government in addressing state debts. Learn how these elements shaped the early financial system of the United States.