Title: Teachinghistory.org
Headings: Freedom and the National Debt
Freedom and the National Debt
Question
Answer
Liberty Threatened by Debt
If the government involved itself in the creation and sustaining of credit and debt, it would naturally encourage "public and private profligacy"
Tariffs and the Nullification Controversy
tariffs ... provided most of the federal government's revenue
Eliminating Subsidies for Transportation Projects
The legislative process ... often devolved into corrupt "log rolling"
Dissolving the Bank of the United States
Hard Currency
The requirement to use gold to buy federal lands suddenly deflated the speculative balloon
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Content: Hamilton saw it as the federal government's duty to promote economic development, including an expansion of the money supply and credit in order to finance investment in economic growth, and even direct government subsidies of businesses. Jeffersonians were skeptical of this. For them, debt freedom would vindicate the U.S. as an exception among countries, and would demonstrate that the new country was the golden example for the rest of the world to follow. The implication of this was, for Jackson (following Jefferson), that government should stay out of the economy as far as possible. Tariffs and the Nullification Controversy
When Jackson came into office, the government's economic activities were being conducted along the lines of Whig Senator Henry Clay's "American System," that had two main components—high protective trade tariffs and the funding of domestic "internal improvements," mostly in the form of roads and canal projects. High protective tariffs protected and promoted the growth of U.S. manufacturing against cheap imports. They also provided most of the federal government's revenue. The South, however, saw protective tariffs as a system of sucking money out of the region (by penalizing them with higher prices, domestic and foreign, for manufactured goods and by encouraging reciprocal tariffs levied by other countries against American agricultural products, such as tobacco and cotton) and funneling it to the North and West, as well as into the pockets of northern manufacturers. tariffs ... provided most of the federal government's revenue
Provided with an extended rationale by Jackson's own vice president, John C. Calhoun, South Carolina passed an ordinance that "nullified" federal tariffs, based on the argument that the federal government did not have the power to levy them. Jackson responded by threatening South Carolina with force.