USH1 07292009 2 - 07292009 B. Public Debt and the First...

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07292009 B. Public Debt and the First Bank of the United States – national debt about 52 billion dollars, alexander hamilton comes up with a plan called the Report on Public Credit, plan for repaying the debt. It has 3 parts. First, debt should be paid in full all at once. Second, federal government should take on all state debts. Third, federal government should raise taxes and start new taxes, one of those 25% tax on whiskey. Many southern states had done a good job of paying back their own debt, ask why should we pay more taxes to help out the other states do what we did? Finally make a deal, southern states will vote for hamilton’s plan if congress moves capital from philadelphia to location on potomac river between VA and MD, aka Washington DC. Hamilton also says lets create First Bank of United States, 20% of stock of the bank would be bought by the federal government. Bank would also hold any money government makes. Other 80% of stock sold to private investors. Both govt and general public can deposit money. Hopefully can control interest rates and give loans and therefore control the economy. Some question is congress has that power to make a bank, bring up “necessary and proper” and Washington signs bank into existence 1791, charter to operate for 20 years, has to renew in 20 years. Hamilton also writes Report on Manufactures, says we need to encourage production of American made goods. For all this time, bought manufactured stuff from England, put new tariffs on imports, give subsidies to local businesses to encourage american manufacturer, report on manufactures does not pass, too many merchants in congress. Whiskey Rebellion – officially its a tax on the grain when you bring it to the distillery, bring in $100 worth of grain, pay $25 in taxes on it, extra cost gets passed down to consumers when they go buy the whiskey. Not on all grain, just on grain that’s going to become whiskey. Still called whiskey tax. .Very unpopular, costs the farmers and the drunks money. Back in the day ppl drank a lot of alcohol bc water supplies were so uncertain. People find ways to protest, some people just refuse to pay the tax. Usually the distillery owner is supposed to keep a record of how much grain is brought in, so ppl just straight up fudge the records. Ppl tar and feather the tax collectors. In PA, create committees of correspondence to see what to do about all this. George Washington tells ppl they need to stop protesting and just pay the tax, ppl calm down for a little bit, but Hamilton says this tax isn’t making enough money we need to crack down. Whiskey rebellion starts bc of a tax collector named John Neville in PA, some farmers in west PA burned an effigy of John Neville, try to scare him into resigning, but he won’t. May 1794, files charges against 75 farmers and distillers for tax evasion. Couple months later, gets attacked by a group of men and got roughed up, house gets burned down. At the end of July 1794, 7k farmer from
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USH1 07292009 2 - 07292009 B. Public Debt and the First...

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