Reference no: EM133252455

Some aspects of Hamilton's system to stabilize the government in the war era:

The federal government should pay off all CONFEDERATION (state) debts at full value. Such action would dramatically enhance the legitimacy of the new central government. To raise money to pay off the debts, Hamilton would issue new SECURITIES bonds). Investors who had purchased these public securities could make enormous profits when the time came for the United States to pay off these new debts.
A central bank, which faced significant opposition. Many feared it would fall under the influence of wealthy, urban northeasterners and speculators from overseas.

The third major area of Hamilton's economic plan aimed to make American manufacturers self-sufficient. The American economy had traditionally rested upon large-scale AGRICULTURAL EXPORTS to pay for the import of British MANUFACTURED GOODS. Hamilton rightly thought that this dependence on expensive foreign goods kept the American economy at a limited level, especially when compared to the rapid growth of early industrialization in Great Britain.

Overall, Hamilton wanted the United States to adopt a MERCANTILIST economic policy. This would protect American manufacturers through direct government SUBSIDIES (handouts to business) and TARIFFS (taxes on imported goods). This PROTECTIONIST policy would help fledgling American producers to compete with inexpensive European imports.

Question 1: Were the moves made by Hamilton to stabilize the economy and expand it an overstep of governmental powers? What part of the Constitution was used to justify these not-so-enumerated powers of Congress?

Question 2:  Federalists and Hamilton himself were often accused of moving the country toward a model of Great Britain, where do you see this pop up in his policies or plan? Is this a positive or negative thing for a fledgling country?

Question 3: There is a belief that the US has always operated as a laissez faire economic system where the government had little involvement. The contrary can be seen from the very beginning with government subsidies in businesses and internal improvements funded by the government. Does this alter your view about the nature of "hands off" American capitalism that is often discussed in today's world?