Federalists and Democratic Republicans

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How did Hamilton's and Jefferson's views on government and economy differ?

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Hamilton and Jefferson had opposing views on government and economy. Hamilton advocated for a strong federal government and saw the future of America as an economic powerhouse, which led to his creation of the national bank. He believed in a strong executive branch and the necessity of a national military. Jefferson, on the other hand, favored state governments over the national one, believing they would be more responsive to the people. He envisioned an agricultural economy and opposed the idea of a national bank and military.

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Both Hamilton and Jefferson had very contrary views of how the early republic's government should be established. In fact, they were the foremost advocates of their points of view in the scene of national politics, meaning that they were each considered the fathers of Federalism and Republicanism, respectively.

Hamilton believed the role of the government, and especially the federal government, should be strong. He did not think it was in the interest of the American people to have a national government limited by the rights of states and individuals. Hamilton was famous for his preference for a very strong executive branch of the government, going so far as to recommend an executive for life during the drafting of the Constitution—effectively giving America a king right after they had won freedom from England's King George III. He also envisioned America as an economic power, one of the few men with the vision to build a modern economy, but realized that it needed huge amounts of capital to make this happen. This is why his greatest achievement was building the national bank, ballooning the Department of the Treasury to create a national institution that could lend money, finance growth, and pay down its debts.

Jefferson, by contrast, believed that the national government should not be more powerful than the state government. Jefferson, like many other Founding Fathers, considered himself a Virginian before he considered himself an American. He believed limited, local government functioned best. In this manner, it is very ironic that his arguably greatest act as president was, in fact, a tremendous display of national authority: the Louisiana Purchase. Jefferson's view of economics reflected his background as an aristocratic planter with debts; he disliked the idea of the national government issuing money and financing perpetual debt. He argued against the creation of a national bank, both in the newspapers and in the cabinet of George Washington.

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Alexander Hamilton believed in a strong central government and weak state governments. Hamilton believed that a national bank funded partially by tariffs would not only tie the states to the Union, but also protect factory owners in the early Republic. Hamilton thought that the United States's future lay in producing factory goods. Hamilton also believed that a strong national military was the best way to keep the new nation safe.

Thomas Jefferson, on the other hand, believed that the new nation should have a weak central government and strong state governments since the state governments would be more responsive to the people. Jefferson thought that a national bank would centralize power in the hands of a few elites. Even though Jefferson was one of the biggest slaveowners in Virginia, he believed that the nation's economy should be agricultural, since the small yeoman farmer had more at stake in terms of taxation. Jefferson viewed land ownership as the ideal goal for most Americans. Since Jefferson believed in a weak central government, he thought that a national military would be a tool used by a tyrant and that the nation should promote its state militias. This attitude toward cutting military funding would prove to be disastrous under the presidency of Jefferson's successor, James Madison, during the War of 1812.

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Hamilton, who was George Washington's Secretary of the Treasury, argued for a powerful, centralized state. He wanted a standing army, a national bank, assumption of state debts by the federal government, and high protective tariffs. These measures and institutions reflect the fact that Hamilton envisioned an economy based on manufacturing, one which would allow the United States to rival Great Britain, the nation which Hamilton's economic system fairly explicitly emulated. Jefferson, on the other hand, thought these measures were anathema to a republic of free people. He envisioned an economy and a society based on landholding farmers, whose produce would allow the United States to achieve and maintain economic independence. Rather than producing manufactured goods, which he thought would produce a large, propertyless working class, Jefferson proposed that the new nation should simply trade for many of these goods. Accordingly, he favored a fairly weak central government, one which kept most of the powers of governing at the state level. Perennially in debt himself, he had a visceral distaste for such financial institutions as the proposed Bank of the United States, which he thought unconstitutional in the first place. 

The disagreements between these two men and their followers, which also involved foreign policy, contributed to the development of the Federalists and Republicans, the nation's first two political parties. Many of these issues, particularly the proper scope and extent of federal power, are still current today.

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How did Jefferson and Hamilton's views differ on concepts of the American government and democracy?

The primary debate between the two was over the power of the new federal government and how the constitution should be construed to define that power.

Alexander Hamilton was a brilliant lawyer with a vision of a great American government Although he was a self made man, he became quite wealthy from his law practice and believed that the country should be governed by people of means. His opinion was almost one of Social Darwinism: that the rich and well-born had always dominated the weak, and the government could best survive if it were controlled by the rich. For that reason, he supported a strong central government with far reaching powers. His belief in this type government is illustrated by his plan to have the federal government assume the debts of the states from the Revolution and pay them at face value. Admittedly, this would favor the holders of the bonds, mostly rich men and many of whom were Hamilton's friends. His argument, however was that this would establish the credit of the country and thereby strengthen the government. Hamilton also supported the establishment of a Bank of the United States to be a depository of the funds of the U.S.

Although Jefferson and James Madison originally opposed payment of the states debts, they relented in exchange for an agreement that the new capital of the U.S. would be built in the South. They dug in on the bank issue, however. They believed that the constitution should be construed strictly and narrowly; that the federal government should have no powers not specifically and explicitly granted to it by the constitution. Remaining powers would remain with the states. They believed that if one loosely and liberally interpreted the constitution, then one would soon face the very type abusive government from which the country had so recently freed itself. Their opposition was based on the belief that the country would be stronger if it were an agrarian society comprised of small farmers. Jefferson once famously wrote:

Those who labor in the earth are the chosen people of God, if ever he had a chosen people, whose breasts He has made His peculiar deposit for genuine and substantial virtue

Hamilton argued that a Bank was necessary and proper, and therefore within the context of Article I Section 8 of the Constitution. Since Congress had the power to collect taxes and pay the debts of the U.S, a bank was necessary and proper.

The arguments of Jefferson and Hamilton on the bank issue illustrate their contrasting views of government. Hamilton wished a strong central government; Jefferson a republic of small farmers. Neither man, however was a proponent of direct democracy.

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How did Hamilton and Jefferson differ in their visions for the nation?

Jefferson and Hamilton differed vigorously on what the new nation should be like.  Jefferson wanted a nation made up of small farmers who would all be equal to one another.  Hamilton wanted a nation with a diversified economy (including manufacturing) and did not really care if there were economic inequality.  This led to disagreements on many specific issues.  One was on how to interpret the Constitution.  The Jeffersonians wanted a strict construction of the Constitution that would not allow Congress to do anything the Constitution did not specifically allow.  The Hamiltonians wanted and expansive construction of the Constitution that would give Congress more powers.

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