having concluded our discussion about the strengthening of the new nation where we looked at the Articles of Confederation as well as the Constitutional Convention and the formation of the U.S Constitution we have today we're going to continue on by turning our attention now to the 1790s right the First full decade of the United States history under the U.S Constitution and keeping with our theme of the critical period what we saw in the 1790s was the emergence of things that we absolutely despise political parties it was in the 1790s this country saw the birth of what is called the first party system or the first political parties in American history and the way we're going to approach this topic is we're going to talk about the various disputes among the American people that went into causing the rift and the political fissure between Americans we're going to talk about some disputes that this country had over economics we'll also talk about disputes we had over Foreign Affairs we'll talk about those first two political parties who were they who were the leaders of them what were their philosophies and ideologies and we'll also conclude in this uh portion of the of of uh module three talking about the some disputes Over Law Enforcement that took place at this time as well as some disputes over the extent of free speech Free Press and of course a a big dispute over states rights but in this lecture we're going to start by talking about some disputes over economics in the 1790s and the way I want to approach this disputes over economics in the 1790s so I first want to just talk briefly about the first presidential election in American history in 1788 because that really sets up the disputes we had in the 1790s over economics because the presidential election of 1788 was going to lead to the appointment of an individual named Alexander Hamilton who was the major central figure in these economic disputes he would be the nation's first Secretary of the Treasury so we'll talk a lot about Hamilton and specifically his economic plan for the country that involved ideas such as funding and assumption taxes and tariffs and the creation of a national bank but that's getting a little bit ahead of us we're going to start by talking about the first election in American history upon the ratification of the Constitution uh the first presidential election would be held in 1788 the various electors that would be chosen by the individual states we're going to be casting votes for two candidates they believed would be good presidents every single one of the electors chosen would cast at least one vote for George Washington uh and so this map shows you that he became the first president in American history um the individual that got the second number second amount uh second highest number of votes was John Adams from Massachusetts so he became the first vice president now the selection of George Washington as president of the United States was important unto its own self because he brought legitimacy to the office this was a very powerful branch of the federal government uh they're greatly worried a lot of people as you learned about uh in the case of the Anti-Federalists and so Washington was really the only man for the job the only logical choice and he had been trusted with a lot of power before during the Continental uh during his time as commander-in-chief of the Continental Army and he had willingly laid down that power and so he could be trusted again with this uh immense power that President of the United States would have now Washington was a Not So Vain that he uh thought he knew everything and so he was going to rely on people he would appoint to advise him on various matters and the people he appoints uh to advise him on various things like diplomacy economics and even war and foreign policy these are the individual secretaries um that work for the president of the United States even today uh the executive branch has individual departments like the Department of State the department of the treasury the department of War although today it's known as the Department of Defense and the individuals that run these departments they are the president's advisors these are the people that advise the presidents on matters of in the case of Secretary of State diplomacy in the case of Secretary of the Treasury economic policies in the case of the Secretary of War Secretary of Defense they advised the president in military matters the three-year individuals you see on the screen here these were the first uh cabinet members of George Washington's cabinet the first cabinet and for Secretary of State yet Thomas Jefferson he would handle Foreign Affairs and diplomacy on the far side you see Henry Knox he must be the Secretary of War he helped advise the president in matters of military um uh Affairs but the gentleman in the middle Alexander Hamilton individual very close and uh very highly regarded by President Washington was chosen to be the Secretary of the Treasury and so as Alexander Hamilton the first Secretary of the Treasury that we really want to focus on here in this video because in the 1790s Hamilton um was given a lot of leeway by President Washington um to handle the nation's economy President Washington deferred a lot to Alexander Hamilton in terms of setting policy for the nation in terms of national the national economy and so that put Hamilton then in a unique position to really dictate and steer the nation's economy in the best ways he believed possible so he's the one we're going to focus on here and look at his economic plans for the country in the 1790s but before we do that I want to just briefly talk about who Alexander Hamilton was um you can see that a lot of people a lot of his contemporaries had varying opinions on him for example John Adams believes that he was just full of ambition blown up with vanity had his eyes fixed on the presidency and he hated everybody young or old that stood in his way um do you see that John Adams may not have a great opinion of who Alexander Hamilton was in his character uh Noah Webster similar to John Adams referred to Hamilton as full of ambition and pride and an overbearing temper uh and even referred to him as an evil genius now you can already see here the commonality between the opinion of say Webster and Adams and the word is of course ambition um but I think the person that pegged Alexander Hamilton the best um was his mentor President George Washington you can see by Washington's comments here that he has a a bit of a more moderate view of Hamilton Joe Washington says that by some he is considered an ambitious man and therefore a dangerous one Washington was willing to admit that he is in fact an ambitious person but of the laudable kind would prompts a man to excel in whatever he takes to hand I think Washington hit on who Hamilton was the best was Hamilton and Hamilton ambitious absolutely but so too was everybody involved in the government in the 1790s everybody was ambitious what made people not like Hamilton was he flunked this he sought power readily when you were supposed to be seen as not seeking it but here's what you can't say about Alexander Hamilton you cannot accuse him of not wanting the United States to succeed and as we get into his economic plan here in this video it will become clear that he can be a very divisive figure but what he's trying to achieve he's hoping will make this country stronger better and establish itself for the Long Haul so what we're going to do now is we're going to now turn our attention to his economic plan we won't get into the real details of it all we'll hit the big broad Strokes here but let's go ahead and turn to his economic plan and talk about what he wanted to achieve okay Hamilton's economic plan is very complicated so let's simplify it it really came down to three pillars the first was that Hamilton was going to propose that the federal government pay off the entire national debt or the entire federal debt as well as assume and pay off the debt of the individual state governments this is a very bold and in many ways very radical idea um and I'll explain why he wanted to do this let's handle the national debt first the federal debt the national debt in the 1790 is about 54 million dollars and most of it came from the American war of independence uh when you learned about the war of independence you learned that we mostly had to fund the Army and fund the supplying of the army through government bonds that the Continental Congress later Confederation Congress would have given to individuals would have given to state governments would have given to Banks uh telling them that they would pay them back whatever they borrowed plus interest well in the 1780s you learned that under the Articles of Confederation the United States government was incapable of paying these things back and so throughout the 1780s that debt just grew and it just set there and it made a lot of people begin to lose Faith then in the national government so what Hamilton's going to propose here as part of his economic plan is that the national government the federal government which now has the ability to tax and the ability to regulate commerce through tariffs we should now fund the national debt by telling everybody if you have a Government Bond left over from the American war of independence the federal government is going to pay it back in full now plus all the back interest we owe you you're gonna get paid in full now by doing this what Hamilton's hoping to achieve is to send the message to not only the American people but also to creditors around the world that the federal government the new United States federal government can pay its debt that we are financially solvent and this will open up Avenues of credit for us which will make any national government highly successful and so part of his economic plan here then was this idea known as funding um and that meant we were going to pay the national debt all of it okay the state debt was also part of his economic plan and what he was proposing here was that the federal government would assume the debt of the state which was about 25 million dollars total some states didn't owe as much as others some states had actually paid down a lot of their debt but at the time Hamilton became the first Secretary of the Treasury all the states combined with about 25 million dollars and what Hamilton's essentially doing here is he's saying that the federal government will assume that that you don't have to pay it anymore and the federal government will pay it down through taxes and tariffs that it will collect now this is what is known as assumption and so if you put these two ideas together funding which is it deals with the national debt meaning we're going to fund the national debt through taxes and tariffs and this idea of assumption um which is the idea that the federal government is going to assume the debt of the states and pay it down now this is something that would have been impossible in the 1780s but in the 1790s with the United States ability to raise taxes and raise tariffs it can now issue these United States Securities notes as you see on the screen here from 1791 and we can pay the debt this was a principal pillar of his plan this idea to assume the debt of the states as well as to fund the entire national debt the second pillar of his economic plans was how are we going to actually pay this debt that's going to be dealing with taxes and tariffs okay so in order to actually pay the national debt and to pay the state debts that you've assumed you're going to need money and again in the 1780s the national government under the Articles Confederation didn't really have the ability to tax it didn't have the ability to regulate commerce so the federal government or the national government in the 1780s didn't have any money this new government under the new constitution has the ability to regulate commerce it has the ability to tax the American people it has that Authority so we have the ability then to raise revenue and it's with that Revenue that we're going to pay the debt down so let's talk about how Hamilton was going to do it he's first going to urge Congress to pass the first ever tariff in American history it was known as the protective Tariff of 1789. and the way tariffs work is it places a customs duty on foreign products coming into the country thus forcing companies that want to sell their products here in the United States to pay this customs duty to the federal government so you can see on the screen here the way a tariff would work is that if the British want to import cloth into the United States we're going to charge them a 25 tariff which means they're going to need to pay the federal government a dollar right for every roll of cloth they want to bring in this has the effect then of raising revenue for the federal government here in the United States and they were going to use that Revenue then to pay down the debt of the states and the national government uh Hamilton was also able to convince the U.S Congress to implement a series of excise taxes that again are designed to generate revenue for the new government now what's an excise tax an excise tax isn't something that affects everybody uh it only affects people that want to actually buy something um you know today we have excess taxes on things like alcohol and cigarettes and even in the 1790s we had an excise tax on the distillment of whiskey what that meant then is that if you wanted to go buy a bottle of whiskey you had to pay a tax to the federal government or if you wanted to distill the whiskey you had to pay a tax to the federal government this is going to have the effect that of raising revenue for the federal government now an excise tax is good because it doesn't hit everybody right you don't have to distill whiskey you don't have to go buy beer or out or you know alcohol or cigarettes today but if you want it you're going to have to pay a tax and so it's a good way for the federal government to raise taxes without really angering everybody and it's something that Hamilton was able to convince the Congress to do in the 1790s and Congress will pass a whole series of excise taxes that is designed to generate revenue for the government so we can use that Revenue to help pay down the debt of the state and the national government and I have the example of a distillment or a tax on the distillment of whiskey because in the next video you're going to learn about how that's going to create a problem here in the United States some people are going to be a little angry about it so what we have here then is we have two main pillars of Hamilton's economic plan this idea that we're going to pay down the national debt both federal and state and we're going to do it by raising revenue through high tariffs on foreign products coming into the another country due to the collection of customs duties and a whole series of new taxes on the American people this is going to generate a lot of Revenue so we can pay Down The Debt Pay down the state's debts and the third pillar and really the crown jewel of his economic plan the thing he believed would make this country economically strong a National Bank so let's turn our attention now all right let's turn our attention now to the bank that uh Hamilton is proposing to create here this would be a National Bank it was going to be created and chartered and centered in Philadelphia uh and this National Bank was going to operate very similar to the way any bank today operates I'm sure everyone listening to this video has a bank account somewhere uh and the way banks operate is they are a place for you to put your money keep it safe um and the way the bank stays in business is it uses your money to loan out to people and charging interest and that's how they make money that's exactly what this bank is going to do the bank of the United States as it was called was going to be a place where the federal government would put all of the money it collects through taxes and and tariffs um the bank would also make loans big loans now this is where Hamilton's genius really comes into play Hamilton wasn't going to have this Bank making loans to just anybody Hamilton was going to have this Bank stimulate areas of the national economy that need to be CR that need to be strengthened that need to be built up now as you can imagine in the 1790s the country was a relatively agricultural based Nation and while Hamilton does not hate Farmers um agricultural interests of this country would not have access to any loans from the bank of the United States because according to Hamilton we had enough agricultural interest in this country what the country needed to do was balance its economy how do you balance a national economy you have to diversify everything you need to build up your agricultural sectors of the economy but you also need to build up your industrial sectors of the economy and it's in that that that industrial sector of the economy that the country was severely lacking so the way this bank was going to work is it was going to hold the Federal government's money and it was going to make loans to States or individuals here in the United States for the use of investing in the creation of industry and Manufacturing so that Hamilton believed we could now balance the economy and thereby strengthen the nation overall he's essentially proposing this Bank help turn the country into essentially Great Britain's National economy and for that he was accused of being a royalist and a monarchist and things like that but that wasn't the case he simply wanted to use this bank to strengthen the national economy by funneling money to the areas of the national economy that needed it most that needed to be strengthened that needed to be built up that meant it would not be going to agriculture it would not be then going to the South or to the West the loans and the money collected and put into this Bank would be mostly directed towards industry and Manufacturing and thus the Northeast portion of the country and as we'll see here in a second that will be divisive okay so let's bring it all together real quick Hamilton's economic plan while complicated can be fairly simplified if you just boil it down to what he's trying to do and how he's trying to do it what Hamilton is trying to do as secretary of state is he's trying to strengthen the country economically and financially and do it through government action he's proposing them to do this by paying off the national debt both federal and state he's proposing to pay that debt off by raising revenue through high tariffs and taxes and then he's also proposing the creation of a National Bank in order to balance the national economy and make the country stronger financially and economically so bottom line what you're getting here with this economic plan is Hamilton's attempt strengthen the country economically financially through direct government action so let's finish by talking about what's significant about his economic plan what should you take away from all of this two things really the first is that he achieved largely achieved what he was trying to do his policies uh created a nation that began to balance its economy it strengthened this country economically it strengthened it financially and really set the country up to become economically successful in the early years of the Republic so you can say then in a sense that one reason his economic plans are important or why they're significant is that they worked they achieved what he was trying to do but the second reason his economic plans are important is that they were incredibly divisive it divided the American people bitterly a lot of Americans agreed with Hamilton but a lot of Americans disagreed with his economic plans and that division over Hamilton's economic plans were going to help create the first two political parties in American history um you're going to learn later on who these parties were but one party would be in support of his policies another party would be opposed to them so just to sum it up here his economic plans were successful because it achieved what he was trying to do it did strengthen the economy but at a cost it divided the American people and in future videos you're going to learn what was divisive about his economic plans hopefully you've gotten a sense of why it was already okay so that will cover Alexander Hamilton's economic plans see you in the next one