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Hamilton's financial program had several features. The most important are listed below:
- Assumption of state debts: Hamilton proposed that the federal government assume the debts owed by the states and issue new bonds to pay them.
- Establishment of a national bank: The Bank of the United States would be chartered and initially capitalized by the federal government, and it would both sell its own stock to private investors and grant loans to the federal government and to business and financial interests.
- Federal exise tax: In part to service the new debts the federal government was taking on, Hamilton proposed an exise tax on whiskey (and some other goods).
- Promoting manufacturing: In addition to the role played by the national bank, Hamilton proposed that the government pass protective tariffs to stimulate domestic industries so as to make the new nation less dependent on foreign trade.
Each of these measures met with opposition, and the ensuing controversy alienated Hamilton from James Madison, who shared his friend Thomas Jefferson's concerns. Indeed, the debates over these policies was at the heart of the formation of the nation's first political parties. In general, Hamilton's opponents argued that assumption would result in oppressive taxation, and, like other policies, especially the national bank, would arrogate too many powers to the federal government. The bank was held to be unconstitutional by many Americans, since it was not specifically allowed for in the Constitution. Tariffs were deemed harmful to some exporters, and the excise tax in particular was unpopular with western farmers in Pennsylvania, who depended on whiskey to make their grain crops profitable. Agitation against the tax led to the Whiskey Rebellion in western Pennsylvania in 1791.
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