Hamilton’s Financial Plan
Who is Alexander Hamilton?
• Federalists – Strong supporter of Constitution
• Businessman from New York – Helped create the New York Bank
Dilemma: How do we solve the nations debt?
• Revolutionary War = National & State debt
Hamilton’s solution
• The Assumption Plan – Have the nation assume ALL the debt from the
States & Nation
Assumption Plan Goals
Hamilton’s Goals 1. Pay states’ and national
debts in full (pay back war bonds)
2. Raise revenue
3. Convince Southern states to accept plan
Why? • Restore faith in public credit
• Show strength in national government
• To pay off the debt
– Pass Tariffs (a tax on imported goods)
– Pass a tax on whiskey
• Southern States already paid off most debt
Assumption Plan Simulation
Everyone gets M&Ms BUT you cannot eat them
• Brown = Northern industrialists • Blue = Southern Plantation Owners • Green = Northern Financiers • Yellow = Southern Lenders • Red = Western/Appalachian Farmers • Orange = common folk
Which group in America do you represent?
M&Ms
The M&Ms in your bag represent your $
Hamilton Assumption Plan In Action
• How = Assume all states debt and guarantee that debts will be 100% paid back to lenders
• What does this do? 1. Erases state debt…yeah!!! 2. But most Southern states had already paid debt off…
• So now they would be essentially paying debt twice…boo
• So…
– Southern Lenders (Yellow M&Ms) end up having to pay $ to Northern Financiers (Green M&Ms)
Goal # 1 = Pay Debts @ full price
• How = Tariffs on imported goods
• What does this do? 1. Protects Industrialists in U.S. b/c imported goods cost
more $ 2. Hurts Farmers in U.S. b/c they can’t buy foreign goods as
cheap
• So…
– Southern Plantation Owners (Blue M&Ms) end up having to buy Northern Industrialists products (Brown M&Ms)
Goal # 2 = Raise Revenue
Hamilton Assumption Plan In Action
• How = Tax on Whiskey made and sold
• What does this do? 1. $ from tax would pay off state and national debt…yeah! 2. However, whiskey is made from grain…
• Farmers grow grain -> make whiskey -> pay tax
• So…
– Western/Appalachian Farmers (Red M&Ms) end up having to pay $ to Northern Financiers (Green M&Ms)
Goal # 2 = Raise Revenue
Hamilton Assumption Plan In Action
• Regular/Common folks (Orange M&Ms )did not lend $ and don’t have $ to buy goods or build factories
• So… – Orange you glad you got the orange M&Ms?
Hamilton Assumption Plan In Action
What were the consequences of Hamilton’s Assumption Plan?
• Effect #1: Which group(s) seemed to benefit the most? – North, Wealthy, Industrialists
• Effect #2: Sectionalism begins – Intensified North v. South relationship & differences
• Effect #3: Financiers win (Hamilton’s friends) – Class divisions grow
• Wealthy make $ and poor get shafted
• Effect #4: Farmers really lose (Jefferson’s friends)
What does the South get? • U.S. capital would be moved to Washington D.C.