Hamilton’s Financial Plan
Who is Alexander Hamilton?
• Federalists
– Strong supporter of Constitution
• Businessman from New York
– Helped create the New York Bank
Dilemma: How do we solve the nations
debt?
• Revolutionary War = National & State debt
Hamilton’s solution
• The Assumption Plan
– Have the nation assume ALL the debt from the
States & Nation
Assumption Plan Goals
Hamilton’s Goals
1.
Pay states’ and national
debts in full (pay back
war bonds)
2. Raise revenue
3. Convince Southern states
to accept plan
Why?
• Restore faith in public credit
• Show strength in national
government
• To pay off the debt
– Pass Tariffs (a tax on imported
goods)
– Pass a tax on whiskey
• Southern States already paid off
most debt
Assumption Plan Simulation
Everyone gets M&Ms BUT you cannot eat them
• Brown = Northern industrialists
• Blue = Southern Plantation Owners
• Green = Northern Financiers
• Yellow = Southern Lenders
• Red = Western/Appalachian Farmers
• Orange = common folk
Which group in America do you represent?
M&Ms
The M&Ms in your bag represent your $
Hamilton Assumption Plan In Action
Goal # 1 = Pay Debts @ full price
• How = Assume all states debt and guarantee that
debts will be 100% paid back to lenders
• What does this do?
1. Erases state debt…yeah!!!
2. But most Southern states had already paid debt off…
• So now they would be essentially paying debt twice…boo 
• So…
– Southern Lenders (Yellow M&Ms) end up having to pay $
to Northern Financiers (Green M&Ms)
Hamilton Assumption Plan In Action
Goal # 2 = Raise Revenue
• How = Tariffs on imported goods
• What does this do?
1.
Protects Industrialists in U.S. b/c imported goods cost
more $
2. Hurts Farmers in U.S. b/c they can’t buy foreign goods as
cheap
• So…
– Southern Plantation Owners (Blue M&Ms) end up having
to buy Northern Industrialists products (Brown M&Ms)
Hamilton Assumption Plan In Action
Goal # 2 = Raise Revenue
• How = Tax on Whiskey made and sold
• What does this do?
1. $ from tax would pay off state and national debt…yeah!
2. However, whiskey is made from grain…
•
Farmers grow grain -> make whiskey -> pay tax 
• So…
– Western/Appalachian Farmers (Red M&Ms) end up
having to pay $ to Northern Financiers (Green M&Ms)
Hamilton Assumption Plan In Action
• Regular/Common folks (Orange M&Ms )did
not lend $ and don’t have $ to buy goods or
build factories
• So…
– Orange you glad you got the orange M&Ms?
What were the consequences of
Hamilton’s Assumption Plan?
• Effect #1: Which group(s) seemed to benefit the
most?
– North, Wealthy, Industrialists
• Effect #2: Sectionalism begins
– Intensified North v. South relationship & differences
• Effect #3: Financiers win (Hamilton’s friends)
– Class divisions grow
• Wealthy make $ and poor get shafted
• Effect #4: Farmers really lose (Jefferson’s friends)
What does the South get?
• U.S. capital would be moved to Washington D.C.