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Week of October 5 - October 9

by: Grey Garris

Week of October 5 - October 9 EC 2113

Marketplace > Mississippi State University > Economcs > EC 2113 > Week of October 5 October 9
Grey Garris
GPA 3.83
Principals of Macroeconomics
Heriberto Gonzalez Lozano

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Principals of Macroeconomics
Heriberto Gonzalez Lozano
Class Notes
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This 4 page Class Notes was uploaded by Grey Garris on Sunday October 11, 2015. The Class Notes belongs to EC 2113 at Mississippi State University taught by Heriberto Gonzalez Lozano in Summer 2015. Since its upload, it has received 64 views. For similar materials see Principals of Macroeconomics in Economcs at Mississippi State University.


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Date Created: 10/11/15
Vl Securing the Republic Questions Facing the US in 1789 A B C D Would the new national government be strong enough to deal with the remaining problems left by the war Would the US be able to command respect as an independent nation What defined the relationship between the government and its citizens Would political parties emerge and would the government be able to withstand their infighting ll Launching the New Government A First President The first President had the extraordinary job of bringing legitimacy to the nation Their leadership would show the world how the nation was going to be George Washington was unanimously approved as the first President of the United States He and the new government inherited what can only be described as an absolute chaos situation but they were adamant about maintaining the rules and laws of the Constitution to fix it First Congress The first thing Congress ever did was raise taxes to pay off the debt from the war This was was followed by the Judiciary Act of 1789 which established the structure and functioning of the lower Courts They also created much of the Executive Organization namely the Cabinet and also the Departments of State Treasury and War III Hamiltonian Federalism A Alexander Hamilton as the Secretary of Treasury 1 Alexander Hamilton was born in the British West Indies but violent storms forced him to go to the colonies There he was very poor initially but he was brilliant and married into one of the wealthiest families in New YorkWhen he became the Secretary of the Treasury he was granted what was at the time possibly the most important position available 2 Purpose He had an absolute obsession with the centralization of power in England and viewed it as the epitome of how the government should function He believed that the states should be nulled and that a central US governmental entity was necessary to the survival of the nation 3 Philosophy Hamilton had no faith in the common man and even detested the lower classes that he had once been a part of He was an adamant elitist and gladly told everyone else this He thought that only the wealthy were valuable to society and considered the poor to be part of the mob He said that the government could capitalize on the natural greed of humanity by turning that private greed into public good with a capitalist system Report On the Public Credit 1790 The government was in great debt and the money issues were rampant so Congress ordered Hamilton to propose solutions to the problem The only problem was that Hamilton knew absolutely nothing about what he was doing and relied solely on his own brilliance 1 Decisions Federal Government would absorb the debts of the States the US would establish credit as he viewed debt as something not necessarily bad Funding amp Assumption if the debt doesn39t have to be paid off at once then use taxes to pay off the interest and fund the debt wanted a stable currency and market and suggested that the US should become an industrial economy 2 Reaction James Madison the then Speaker of the House was fearful of the massive increase in power that Hamilton wanted the government to have and started to side with the States and Thomas Jefferson Madison could ve held the report up but he understood the need for a strong national government and allowed the Report to circulate through Congress They passed the resolutions Hamilton made on the grounds that the national E government would be moved out of the North from New York at the time to its current location in DC Report on the National Bank 1790 The question of who would manage the money came to light and very few people trusted the idea of banks at the time Hamilton s solution was the National Bank to be chartered by the government run by citizens and centered in the North There was immediate uproar in opposition to this as it was believed that doing this might be Unconstitutional The problem was that the Constitution didn t say you could do it but it didn t say that you couldn t This led to a debate over Constitutional Interpretation 1 The difference between the two factions in this debate was of Strict and Broad Interpretation The Strict view stated that the Constitution must be followed directly along its very narrow scope while the Broad side said that some assumptions can be made The two sides were not willing to cooperate until Hamilton used Article I Section 8 to convince George Washington to his side who then promptly twisted a few arms in Congress to get the proposition passed Report on Manufactures 1790 Hamilton s ambition did not stop with the establishment of the National Bank He wanted to make sure that the US became an industrial nation because he hated Agrarian society and used the powerhouse explanation to try and convince Congress that his was a good idea They did not agree with him on this point and refused to allow the government to support big business Results of the Hamilton Programs The US became financially stable the federal government had achieved the significant national power it required and the Federalist Party had been founded IV Jeffersonian Republicanism 89 92 A Mr Madison s Party Jefferson and Madison organized the DemocraticRepublican party together The party consisted of those who were concerned with the states inability to stop the growing power of the national government Jefferson 1 Political Philosophy Jefferson was very much against the increasingly strong federal government He did not agree with the idea of the National Bank at all and wanted very much to lessen the amount of federal power being given to the government 2 Agrarianism In the aspect of the US future he was the opposite of Hamilton Jefferson despised the growing market and industry itself and preferred that the US remain in a farm based economy 3 Strict Constitutional Interpreter Jefferson believed in keeping rigidly to the letter of the Constitution C Republican Party The DemocraticRepublican party became the Republican party under Jefferson V Foreign Policy and Party Politics A Jefferson and Hamliton differ on Foreign Policy B Problems of the French Revolution 1 Neutrality Would the US remain outside of the conflict or come to the aid of the nation that helped them against England was a big quesion 2 Citizen Genet The French ambassador to the US He gathered support for the French and began to use US ships as privateers to attack British ships Eventually his actions forced President Washington to ask that his status as an ambassador be rescinded C British Violations of Neutrality The British were stopping American ships heading to France and seizing their goods despite the fact that America was a neutral party in the conflict This added on to the problem that was the remaining British forts that were still active in the US which also purposely irritated the Native Americans against the settlers This instance damaged the Federalist party because they had a preference for English ways of doing things and the Republicans used it to lash out since the French revolution had damaged their own credibility The Federalists knew that they couldn39t declare war to finish this so they decided to send an ambassador They didn t have a set ambassador at that time so they sent John Jay the Chief Justice to negotiate the terms 1 Jay s Treaty 179495 Jay was told by Washington to go to England to negotiate American interests from a position of strength He was told that the issues of maritime crimes and the forts had to be solved The treaty that was agreed to decided that England would remove its forts from the US if they were granted favored nation statusquot This term made the US an international partner with England against France Jay returned to see himself burning in effigy by the Republican party who viewed the treaty as them now being lawfully beholden to England Whiskey Rebellion 1794 Congress placed a high tax on whiskey to help pay for things Out in the western areas it was harder to enforce so many distillers in Pennsylvania simply ignored the law The federal government realized this and in response Washington raised a 12000 man militia to march into Pennsylvania to claim the taxes that the government was due and enforce the laws 20 men were arrested and 2 were set to be executed but Washington pardoned them Federalist party used this rebellion to flex its power and show that it had the right and ability to levy and enforce a tax The Republicans once again attacked this action with the argument that the government was overstepping its bounds again Washington Farewell Address 1796 At the end of his second term Washington had come to despise the presidency and all of the political infighting that was inherent with it Though the 22nd Amendment had yet to be in place he stepped down from the Presidency in a move that shocked many people as there were almost no prior instances of someone in a high level of power relinquishing it In his farewell address he encouraged the nation to stay out of the politics of the constantly warring Europe and said that if the political parties remained then the system would fail His leaving did not help the situation Instead he was the only things holding the system together at some level and him leaving allowed the parties to be at each other s throats even more fiercely than before Vl Adam s Administration 17971801 A John Adams won the election that took place after washington which left the Federalist Party still in power There was dissension in the party along the faultlines of Hamilton who wanted Adams position and Adams who had to deal with Hamilton s strong political allies XYZ Affair 1797 Due to the French not seeming to care about US neutrality diplomatic relations between the two countries were broken off To try to reconcile this Adams sent three ambassadors to France The three waited for months without hearing from anyone but then three individuals who referred to themselves as X Y and Z showed up and agreed to negotiate if they were given 10 Million dollars Adams was furious and the Republican party was ashamed over this incident but Hamilton was quite happy about the idea of going to war with France Undeclared Naval War with France 1798 Since there were no longer any diplomatic relations protecting the situation both sides began to attack one another s ships and steal their goods The whole fiasco split the parties even more and allowed the Federalists to launch a smear campaign against the Republicans As a final act against the Republican party the Federalist led Congress passed the Alien and Sedition Acts which made it a criminal offense to speak against the government Most individuals were immune but Jefferson who was the explicit target of the new laws which carried a punishment of 2 years in prison and a 2000 dollar fine The Republicans shouted about the fact that it was unconstitutional but they were the minority party and could do nothing In an effort to solve the problem Jefferson and Madison tried to solve the problem of Constitutional Interpretation once and for all The went to the states of Virginia and Kentucky to argue that the states could declare an act of Congress unconstitutional and following the Compact Theory that says that the states that made up the Union could control it said that the states didn t have to follow an Act of Congress if they saw it as Unconstitutionaland illegal Virginia and Kentucky agreed with the idea and refused to follow the laws D Election of 1800 1 Issues What is the role of the Federal Government What kind of identity is the US trying to form 2 Results and Significance Jefferson won This meant that the political party controlling the White House switched hands due to the public will The parties conceded to the change and so it was established that the parties no matter how divided were not strong enough to totally collapse the system because they would always have a common interest in maintaining said government Vll Republicans in Power 18011815 A First Term 18011805 1 Revolution of 1800 Jefferson declared his election a Revolution which was kinda dumb since it didn39t really change anything at all 2 Struggle with the Federal Judiciary At this point nobody still had any real clue as to what the Judiciary was for but Adams had made sure to pack the lower courts and the Supreme Court with Federalists before he left office Jefferson began to see a problem when they began to make political speeches even though they were supposed to be apolitical His biggest issue was with the fact that the new Chief Justice was John Marshall


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