Establishing an Economic System


US History The Early Republic Establishing an Economic System
Students learn about the key components of Alexander Hamilton's financial plan, including the institution of a distilled spirits excise tax, which led to the Whiskey Rebellion in Pennsylvania. They learn about the causes and effects of the rebellion and evaluate both sides of the conflict.

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Overview

In this experience, students learn about the key components of Alexander Hamilton’s financial plan, including the institution of a distilled spirits excise tax, which led to the Whiskey Rebellion in Pennsylvania. They learn about the causes and effects of the rebellion and evaluate both sides of the conflict.

Students collaborate in small groups for scene 1 through scene 4. Divide them into their small groups at the start of this experience.

Objectives:

  • Explain how Hamilton aimed to create a stable economic system.
  • Describe arguments around Hamilton’s tax plan and the causes and effects of the Whiskey Rebellion. 


Six months after taking office, George Washington appointed Alexander Hamilton as the first Secretary of the Treasury. At the time, the nation faced overwhelming debt incurred during the Revolutionary War. The new republic owed a great deal of money to foreign countries and had already defaulted on many of these loans. The new government also was tasked with reconciling the varying debt incurred by the federal and state governments.

Objectives:

  • Explain how Hamilton aimed to create a stable economic system.
  • Describe arguments around Hamilton’s tax plan and the causes and effects of the Whiskey Rebellion. 


Painting of an elegant standing man

Sec. Alexander Hamilton,
painted by Caroline L. Ormes Ransom


Alexander Hamilton had served alongside George Washington during the American Revolution and had become a trusted advisor to the new President. When Hamilton was appointed Secretary of the Treasury in 1789, his first priority was to repay the foreign debt owed to France, Spain, and the Netherlands, while also stabilizing the country’s economy. At the time, Hamilton estimated the country’s foreign and domestic debt to be about $79 million dollars—with inflation, that would be over 2 billion dollars today!


Brainstorm ways in which a new country could pay off a large debt. Select a group note taker to share some of your responses here.

Post your answer

Discuss with students the some of the best responses generated by the small groups. Best answers would include: raising taxes, printing money, repaying loans a little at a time, taking out additional loans, and lowering interest rates on loans.


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