Hamilton and Limited Government

Hamilton and Limited Government

·The proposed band would raise $10 million through a public stock offering. The Treasury would hold one fifth of the stock and name one fifth of the directors, but four fifths of the control would fall to private hands. Private investors could purchase shares by paying for three quarters of their value in government bonds. In this way, the bank would capture a significant portion of the recently funded debt and make it available for loans; it would also receive a substantial and steady flow of interest payments for the Treasury. Anyone buying shares under these circumstances had little chance of loosing money.

Hamilton and Limited Government

·Hamilton’s plan to establish a permanent national debt violated the principle of equality among citizens; it seemed to favor the interests of public creditors over those of other Americans. Hamilton’s critics also denounced his proposal for a national band, interpreting it as a dangerous scheme that would give a small, elite group special power to influence the government.

·Opponents’ strongest argument against the band was their claim of its unconstitutionality. The Constitution gave Congress no specific authorization to issue charters of incorporation

·Unless Congress adhered to a strict interpretation of the Constitution, critics argue, the central government might oppress the states and trample individual liberties, just as Parliament had done to the colonies

·The president accepted Hamilton’s cogent argument for a loose interpretation of the Constitution

·Tariffs doubly injured the majority of citizens, first by imposing heavy import taxes that were passed on to consumers and then by reducing the incentive for American manufacturers to produce goods at a lower cost than imports

HAMILTON’S LEGACY

·Despite the Federalists’ effort to associate themselves with the Constitution they actually favored a “consolidated” (Centralized) national government instead of a truly federal system with substantial powers left to the states

·Resentment ran high among those who felt that the government appeared to be rewarding special interests

·Southern reaction to Hamilton’s program was overwhelmingly negative

·The Band of the United States had few southern stockholders and it allocated very little capital for loans there

THE WHISKY REBELLION

·Hamilton’s financial program not only sparked an angry political debate in Congress but also helped ignite a civil insurrection called the Whiskey Rebellion

·Hamilton had recommended an excise tax on domestically produced whiskey. He insisted that his proposal would distribute the expense of financing the national debt evenly across the United States

·The law furthermore specified that all trials concerning tax evasion be conducted in federal courts