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Lecture 12

Lecture 12

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Michigan State University
HST 202

HST 202 Lecture Notes Forming a New Nation American Expansion I: Imperial Aspirations 2/25/13 IDEAS FOR NEW GOVERNMENT: Founding Fathers faced the problem of establishing a new government with two main competing philosophies (but not yet political parties):  Federalism: o Strong central government o Believed government should bolster the national economy o Advocated for by John Adams (from Massachusetts, a small, wealthy trade state)  Democratic Republicanism: o Strong local/state governments o Believed government should stay out of most citizen affairs and instead citizens should be more involved in their local government o Advocated for by Thomas Jefferson (from Virginia, a large state relying on slave labor, plantations, and cash crops) Leading thinker of the Founding Fathers was Alexander Hamilton:  Secretary of the Treasury  Born in the West Indies so ineligible for the presidency  Supported Federalism and focused on the economy as a key point of intervention by turning it into a political issue  Proposed ways to increase revenue and establish international credibility (since citizens were not going to support taxes) o Tariff Act of 1789: (Taxed goods brought in by other countries)  Benefits of taxing foreign imports:  Domestic goods are cheaper  Decreases foreign dependency  Growth of new businesses  More favorable position in world trade  Provided 90% of government income for the first 30 years of the new nation  Easily passed in Congress o National Debt (“Report on the Public Credit”):  Ranked 3 types of debt by importance:  $12 million to foreign countries  $30 million to citizens  $25 million that individual states owed to citizens  Proposed that the federal government take on all three debts and pay it back at a rate of 4% per year, but this was met with issues  Dissent in Congress o Many favored paying international debt to build good credit and diplomatic relationships (debt was called a “national blessing”) o State debt was unequal (north owed more than south to their citizens)  Many speculators had already “bought” debts and held on to the money hoping that the currency would later be worth its face value and they could reap the benefits o National Bank (“Report on the Bank of the United States”):  Hoped to raise revenue and establish legitimacy around the world  Wanted to raise $10 million by selling shares, lending to small businesses/developments, and profiting off interest 
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