Hamilton wanted the fiscal policies to favor the higher classes because he felt these wealthy groups would lend the government money and would gain support from the important higher social groups. He believed that it would help give the federal form of government respect and confidence in society.
The liabilities in this approach would be that the wealthier groups may not want to lend Congress money, even after having the wealthier groups being favored in the tax policies. Also, the non-wealthy groups will be unhappy with the fact that despite the wealthier classes excess of money, the poorer classes still weren’t favored in the tax policies. The lower classes may not have confidence in the government.
Hamilton was wise in assuming the state debts because there were more upsides to the motion than there were downsides. Even though Congress had to pay a lot of money for the national debt, just the fact that society will have gained trust in the government was enough. They will also have the support of the higher classes to pay parts of the national debt. Virginia, somewhat unhappy with the assumption of the state debts was content after an agreement that put the federal district on the Potomac River. This would help the District of Columbia be more involved in commerce, as well as giving it a better reputation.
6) Why would Hamilton regard the national debt as actually being a “national blessing”?
Hamilton regarded the national debt as actually being a national blessing because he felt it would strengthen the bond between society and their government. “The more creditors to whom the government owed money, the more people there would be with a personal stake in the success of his ambitious enterprise.” In other words, there would be more people getting involved in the government. These people would be happy to loan the government some money to pay off the national debt. (Which included the state debts) The national debt made society unite with the government. Instead of the national debt hurting the government, it ended up “cementing the union.” They were working together to pay off the national debt.
7) What was Hamilton’s gamble in undertaking such a large national debt?
Hamilton’s gamble was that, in order to pay the national debt and the state debts, a LOT of money would have to come out of the treasury. Hamilton felt that if they paid these debts, society and the higher classes would give them support. Hamilton, by paying these debts, expected the support of society. But what if they still wouldn’t give Hamilton and the federal form of government the support they needed? What if the higher classes refused to loan the government money? Hamilton would be stuck. He would have to find another way to pay the debts. And if the treasury had the money to pay off all the debts, and society still didn’t support the federal government, then all that money to pay the state debts would go to waste. Everything was based on how society would act towards the gesture. Hamilton’s gamble wasn’t a sure deal, and it could have caused the government to be without money, and support from the people.
Hamilton was a loose constructionist because he based most of his arguments on Article 1, Section VIII, paragraph 18. This article in the Constitution stated that Congress has the power “to make all laws which shall be necessary and proper for carrying into execution the foregoing powers. . . .” Hamilton “loosely” interprets the Constitution because this law is not a sure thing. How should a country decided if something is necessary for the government or not. Hamilton felt a bank was necessary, so he was loosely construing this portion of Article 1.
Jefferson was a strict constructionist because he based most of his arguments on the Tenth Amendment in the Bill of rights. This Amendment stated that “all powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states, or to the people.” The power to run a national bank was not one of the powers delegated to the United States by the Constitution. This was written straight out and it is easily seen that it says that the US cannot just make a bank without the consent of the people. This is why Jefferson was a strict constructionist. Unlike Hamilton, his Amendment he was following was a sure thing.