Student Question
Why did Jefferson oppose Hamilton's economic plan?
Quick answer:
Thomas Jefferson opposed Alexander Hamilton's economic plan primarily because it conflicted with his vision of America as an agrarian society based on land ownership and state sovereignty. Jefferson feared Hamilton's plan would centralize power in the federal government, favor commercial elites, and undermine agriculture, particularly in the South. Hamilton's proposal for a National Bank threatened Jefferson's ideals of decentralized power and republican liberty, as it aimed to establish the U.S. as an industrial and financial power.
Jefferson's Republican political ideal entailed an America whose wealth was founded on the ownership of land. As a substantial landowner himself, Jefferson necessarily gravitated to those of a similar economic status. For Jefferson and the Republicans the economic policies of Alexander Hamilton represented a clear threat to their interests. They regarded Hamilton as someone in lock-step with East Coast banking and commercial interests. Hamilton wanted to see the United States as a trading nation, a leading player in international finance, an economic powerhouse that would take its rightful place in the world economy. To this end, Hamilton proposed the establishment of a federal bank that would pay off the country's enormous war debts and lend money to businesses to help them grow and expand.
Jefferson bitterly opposed Hamilton and his vision of America's economic future. For one thing, he believed that Hamilton's plan vested way too much power in the...
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federal government. This represented a clear threat to the tradition of republican liberty which Jefferson so deeply venerated, a tradition enshrined in the ultimate political sovereignty of the states.
On a more purely economic level, Jefferson opposed Hamilton as he felt that the interests of the commercial elite would come to take precedence over American agriculture, especially in the South. Hamilton was a visionary who understood that America's future was as an industrial power. Jefferson, on the other hand, foresaw a number of serious long-term problems on the horizon. A move from an overwhelmingly agricultural economy to an industrial one would undoubtedly lead to American farmers and landowners having less of a say in how the country was run. Aside from the serious political consequences of such a development, Jefferson feared that increased trade with the rest of the world would lead to the United States being deluged by cheap foreign imports, against which the American agricultural sector would be unable to compete.
Why did Thomas Jefferson oppose Alexander Hamilton's national bank plan?
Thomas Jefferson and Alexander Hamilton were on the same 'side' to absolve colonial ties with Great Britain. Once independence was documented at the Treaty of Paris the business of creating a new nation was at hand. It became clear that those who were on the same 'side' during the revolution would find themselves at odds with each other upon its end. This was the case regarding a 'National Bank' for the United States. Alexander Hamilton understood that if the new nation were going to recognized as a nation it must present itself as one. He argued that the nation's financial weaknesses would make the nation vulnerable to nations that had the financial power to destroy the new nation. Hamilton's plan for a National Bank was to take the debt accumulated by the individual states to foreign nations, especially France, during the war and using it to create a line of credit with these nations. Jefferson's opposed the plan for several reasons:
1. He believed a 'National Bank' would only give more power to the new federal government. Jefferson detested centralized authority, for him the 'National Bank' represented the concentration of power in the hands of the few.
2. By the time Hamilton's plan was issued all of the southern states had already paid off their debts to foreign nations...Jefferson was from Virginia.
3. Jefferson simply did not agree with Hamilton when it came to the nations' future. This was the beginning of politics in the United States. Jefferson's was more comfortable with decentralized government power, similar to what we associate local and state authority with. His philosophy regarding the future of the United States was one where the citizens cultivated the land, read books, and enjoyed their 'freedom'. Hamilton saw the future of the United States as that of major player on the global stage. His vision required a strong federal government, as well as the financial prowess it gave the new nation.