Development of U.S - Term Paper Example

Hamilton suggested that, as the government did not have the money available to buy the stock, it could be loaned to the government by the bank itself. However, Jefferson rejected the idea on the basis that it would be unconstitutional, since the government did not have the right to form corporations. This issues represented the idea of loose against strict construction of the constitution. Jefferson’s argument was based around the argument that any action not enshrined in the constitution as therefore automatically unconstitutional.

Hamilton, on the other hand, took a more fluid view of the constitution, arguing that the government holds the power to take any action which is not specifically banned by the constitution. This view takes into account changes in society since the writing of the constitution. In order to set up a regular source of income for the government, Hamilton also set up the Tariff. This not only had the effect of increasing government revenue but also of protecting manufacturing in the U.S. It was therefore significant as a protectionist policy.

This was to create a rift within the Federalists. Meanwhile, the issue of national debt, first exemplified in the establishment of the National Bank, was creating more tension between Hamilton and Jefferson. Jefferson strongly believed that public debt and government borrowing was a curse because it would place a serious financial strain on future tax payers. Indeed, he wished to see the constitution amended to remove the ability of the government to borrow. Hamilton, on the other hand, believed that public debt could be a useful tool.

He aimed to use the money generated through the tariff to offset the extremely high debt inherited from the old government by reissuing bonds. He also wanted state debt to be assumed by the government, in order to further benefit from tariff revenue which was federal. The tariff, however, was