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AP US History - Unit 3 Study Guide

Terms in this set (33)

(1) Funding at Par
- improve and promote nation's credit
- creditors more likely to lend $ to the government if it felt confident that the government would repay
- urged Congress to assume all national debt (54 mil.) accumulated during the Revolution
- inflated values of government bonds once they gained the confidence of Treasury when Funding at Par was passed by Congress in 1790
- caused a run-on of bond buying in the countryside (news travels slow..)

(2) Assuming State Debts
- Federal Government would take on all states debts accrued during Revolution\
- Assumption Bill (Compromise): States would allow government to assume debt if Capital is moved South
- would create a greater tie between Federal and State governments (cement the union)
- created debate: states w/o debt didn't like paying taxes to pay off debt for other states
- Compromise (Log Rolling): Virginia (along w/ the South) won DC on the Potomac which brought more commerce and prestige
- Virginia and other states agreed to Assumption of state debts
- Hamilton and Jefferson had a major role in hammering out the deal

(3) Tariffs
- passed by Congress in 1789 (Revenue Act)
- provide income
- first national tariff law
- used to protect the growth of American industry

(4) Excise taxes (sales tax on specific items sold to pay national debt)
- Distilled Spirits Tax of 1791: 7 cents per gallon tax
- primarily affected backcountry distillers
- much easier to transport whiskey than a grain crop
- distill grain crop into whiskey for sake of easy transportation
- extremely free-flowing and often used as currency
- hoped it would cut back on alcoholic consumption on moral/social grounds
- wasn't concerned with their protests since most were Anti-Federalists

(5) National Bank
- the biggest source of debate between Hamilton and Jefferson
- the foundation of Hamilton's financial plan was the establishment of the national bank
- bank would be a private organization, but the government would control the majority of stocks/shares
- would deposit surplus government money
- bank would turn around and loan federal funds to private cos. to keep wealth ciculating
bank would print money to ensure stable currency
- bank of the United States established in 1791 after being passed by Congress and signed into law by Washington