Arguments Against Federalism

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Banks It is well known that Hamilton and Jefferson disagreed strongly about the national bank. Hamilton was the architect of the First Bank of the United States, believing it essential to the financing of the federal government and to the establishment of a robust domestic banking system. As such, Hamilton is considered a pioneer of central banking and a forebearer of the modern Federal Reserve. Jefferson believed the bank would put too much power over the government in the hands of the bank's owners. But the issue went deeper than that. Jefferson, in fact, didn't like banks at all. Steadfast in his belief that working the land was the only "honest" way to make a living, he saw bankers as essentially swindlers, and he didn't trust them. Hamilton, by contrast, thought banks were to be a vital part of the American future—if we want a strong economy, we need lending, and lending is the business of…show more content…
But this controversy is still alive, and Jefferson's voice can be heard today, for example, in the reaction to problems in the subprime mortgage market. Federalism The debate over Federalism in the early years of the United States may seem to be only a political issue, but it also had important economic aspects. After the end of the American Revolution, the United States had considerable war debt, mostly held by the states. Hamilton had a plan for the federal government to assume and pay down the states' foreign debts. Many in the South were skeptical of that plan, largely because Southern states had paid off more of what they owed and didn't want to assume responsibility for the Northern states' debts. In the end, the two sides reached a compromise. The federal government would assume the debt, in exchange for placement of the nation's capital in Jefferson's native Virginia. In this way Hamilton was able to ensure that the debt would not be defaulted
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