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Alexander Hamilton & Thomas Jefferson: The Disagreement of Finance
Transcript of Alexander Hamilton & Thomas Jefferson: The Disagreement of Finance
•He was elected into the Continental Congress in 1775, and then again in 1776. Thomas Jefferson became the US secretary of state in 1789. He plan was to "unify the government and ensure its successes."
•In his political career, Thomas Jefferson had many arguments with another politician, Alexander Hamilton. Previous Disagreements What Happened Next Thomas Jefferson Hamilton and Jefferson's Big Disagreement •Before the disagreement about the National Bank, Jefferson and Hamilton had many other financial disagreements.
•One of these disagreements was, when Alexander Hamilton was trying to figure out how to pay off the National Debt. The US owed over 81 million dollars to lenders, including their own people.
•Many people had sold bonds to the government. This means that they gave money to the government, and the government promised to pay them back that same amount of money.
•People felt that the governement probably wasn't going to pay them back, so they sold the bonds to speculators. The speculators purchased the bonds for less than their original value.
•Hamilton wanted to pay back the bonds in full value, and repay the foreign debt immediately. As a Federalist, Hamilton believed that the Federal government should take over the debt problems.
•This plan was disputed over by Thomas Jefferson and other politicians, because this plan would give the speculators a profit. Also, some states were against coming together to pay off the debts, such as Virginia. Virginia had already paid off most of their debts. These states did not want to help other states pay off their money. However, the majority of congress still agreed with Hamilton's plan.
• Their compromise was that Hamilton's plan would be used to pay off debts, but Jefferson was able to move the country's Capital to Washinton D.C., where it is today. The Congress also began to use more secure bonds. However, this disagreement continued for Hamilton and Jefferson, as did others, including a major disagreement about the National Bank. Even from a young age, Hamilton was always interested in politics.
From when he worked as General George Washington's assistant and trusted adviser in the military, to when he left his adviser post in 1782, and began his career in law.
He mainly worked with political problems for unknown British Loyalists, who were fighting for their rights.
From 1789 to 1795, he paused his law career, and served as a secretary of the treasury.
In the late 1780s while serving as a New York delegate, Hamilton worked with other delegates in Philadelphia, to discuss how to fix the Articles of Confederation.
Though Hamilton wasn't big in writing, he greatly influenced it's ratification, and was involved in 51 out of the 85 essays in the Federalist.
When he returned to his profession in law, he was one of the most well known attorneys in the city. •Hamilton and Jefferson's differences came to the public's attention in 1791, when Hamilton wanted to start a national bank where the government could safely deposit money, to decrease debt problems.
•This bank would also make loans to the government, as well as businesses.
•Hamilton suggested that the United States build a national mint, where coins could be made for the entire country.
•To limit the national bank's power, Hamilton asked for a 20 year charter, or 'trial'. After this period of time the government could decide if they wanted to keep the bank.
•Hamilton also asked each individual state to start it's own bank, so that the national bank would not become a monopoly.
•Thomas Jefferson and James Madison opposed his plan; as antifederalists, they felt that the states should have more power and have their own banks. They said that the US Constitution did not give this power to the Congress.
•Madison and Jefferson's comeback to Hamilton's plan did not have any effect. •In an attempt to end the disagreement, Hamilton pointed out a clause in Article 1, Section 8. It stated that Congress had the power to "make all laws which shall be necessary and proper for governing the nation."
•This passage was later known as "the elastic clause" because it allowed the government powers to be stretched, and bent. Hamilton argued that this clause was meant to give the government the power to react to new situations. He felt that the need for a National Bank was an ideal example of the afore-mentioned situation.
•Hamiltons view is called a loose construction of the Constitution. This is when the Federal government takes reasonable actions that the Constitution doesn't specifically forbid it from taking.
•Jefferson believed that the Constitution was not meant to be "stretched", and that the clause Hamilton mentioned was to be used only in extreme cases.
•Jefferson wrote a letter explaining his view to President Washington. To Jefferson, having the National Bank was convenient but not necessary, and therefore not worthy of bending the Constitution for. The Story Continues... •Fortunately for our country, President Washington and the majority of Congress agreed with Hamilton. In other words, they agreed with the federalist idea that there should be a National Bank.
•They felt that a bank would offer more security for the national economy, and decrease debt problems.
•In February of 1791, the Congress chartered the Bank of the United States! Over the next twenty years, it offered stability for the United States economy, and played a significant role in ending the debt problem. The End! by Emma Smith and Gabrielle Ruban Bibliography •Call to Freedom by Sterling Stuckey and Linda Kerrigan Salvucci
Copyright 2005 by Holt, Rinehart and Winston
Printed in 10801 N. Mopac Expressway, Building 3, Austin, Texas 78759
•Wilson, Richard L. "Jefferson, Thomas." American Political Leaders, American Biographies. New York: Facts On File, Inc., 2002. American History Online.
Alexander Hamilton (biography.com): http://www.biography.com/people/alexander-hamilton-9326481