To the triumph of popular government and of the

proposition that sovereignty rightly belongs to the mass of ordinary individual and equal

citizens.

The Federalist Era and the Launching of a New State

“The preservation of the sacred fire of liberty, and the destiny of the Republican model of Government, are justly considered as deeply, perhaps as finally staked, on the experiment entrusted to the hands of the American people.”

Commanded his followers by strength of character rather than by

the arts of the politician.

“he may require the opinion of the principle officer in each of the executive departments…”

Henry Knox

Secretary of War

Thomas Jefferson

Secretary of State

Alexander Hamilton

Secretary of Treasury

“The most insignificant office that ever the invention of man contrived or that his imagination conceived.”

Vice President John Adams

The Judiciary Act of 1789John Jay

1st Chief Justice

We have a continent bountiful in vast resources, but governments that are

handcuffed by DEBT.

• Assumption – urged Congress to take on all of the State’s debts– $54 million

• Problems: – Southern States had already

paid off war debts– Wealthy merchants of North

had bought the gov’t bonds from poor farmers at cheap price and would now make huge profits

What road should our ECONOMY take?

He outlined his plans in three groundbreaking reports to Congress: on public credit (January 1790), on a

national bank (December 1790), and on manufactures (December 1791).

Hamilton called on Congress to pay at face value the millions of dollars in

securities issued by the Confederation government. He reasoned that, as an

underdeveloped nation, the United States was heavily dependent on foreign loans

and needed good credit to survive.

Hamilton proposed that the national government improve the public credit by

assuming the war debts of the states. This plan would favor wealthy creditors. It unleashed a flurry of speculation and

government corruption.

findingthefounders.com

In December 1790, Hamilton issued a second report, which asked Congress to

charter the Bank of the United States. The bank would be jointly owned by

private stockholders and the national

government.

How will the Government keep track of paying this new debt and organize

our currency?

Hamilton argued that the bank, by making loans to merchants, handling

government funds, and issuing bills of credit, would provide financial stability

and a respected currency for the specie-

starved American economy.

These potential benefits persuaded Congress to charter Hamilton’s

bank, for a period of twenty years, and send the legislation to the

president for approval.

At this critical juncture, Secretary of State Thomas Jefferson joined the ranks with James Madison against

Hamilton’s financial initiatives.

“The incorporation of a Bank,” Jefferson told President Washington, was not a

power expressly “delegated to the United States by the Constitution.” Jefferson’s

argument rested on a strict interpretation (Expressed Powers) of the national charter.

In response, Hamilton devised a loose interpretation of the Constitution, stating

that Article I, Section 8, empowered Congress to make “all Laws which shall be necessary and proper” to carry out

the provisions of the Constitution.

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(Implied Powers)

Agreeing with his treasury secretary, Washington signed

the legislation.

Where was the money to come from to pay off this new DEBT?

• Tariff – tax on imports– Revenue income gov’t collects for public use– Designed to erect a protective wall around

growing industry

• Excise Tax – internal tax levied on manufacture, sale, or consumption of commodities within a country

- encourage the spirit of enterprise, innovation, and invention within the nation;- support the building of roads and canals to encourage internal trade;- grow the infant United States into a manufacturing power independent of control by foreign powers through reliance on their goods for domestic and especially defense supplies.

Although he urged the nation to become self-sufficient in manufacturing, Hamilton

did not support high protective tariffs that would exclude competing foreign

products.

Instead, he advocated revenue tariffs that would pay the interest on the debt and defray the expenses of

the national government.

Hamilton’s scheme worked brilliantly. As American trade increased, customs

revenue rose steadily. Tariffs also had the unexpected effect of encouraging

rapid settlement of the West, an outcome opposed by Hamilton and favored by his

political opponents.

As treasury secretary, Hamilton devised bold policies to enhance

national authority and to favor wealthy financiers and merchants.

The Peoples’ Reaction

• Whiskey Rebellion of 1794– Western Pennsylvania farmers refused to pay tax on

Whiskey that would lead them to bankruptcy– Attacked revenue collectors: protecting their “liberties”– George Washington responds by sending in 15000

militiamen– Rebellion collapsed with no bloodshed

• POV - Some saw this as proof of strength of the national gov’t, others saw it as an unwarranted use of force

Trickle Down Theory: Favor the wealthier groups in the economy who as they prosper, prosperity will trickle down to the masses (& the powerful would then support the gov’t.)

Foreign Policy

• French Revolution explodes in Europe, Who should we support?

• Proclamation of Neutrality 1793 –– Washington believed the young nation was not strong

enough to engage in a European war

• Jay Treaty 1794 – Treaty with Great Britain– Evacuate British troops from NW– GB would pay damages from stolen ships– America would pay pre-war debt

Native Americans

• Battle of Fallen Timbers 1794

• General Anthony Wayne defeated the Native Americans (Shawnee, Wyandot, etc.)

• Treaty of Greenville – surrendered the Ohio Territory and promised to open it up to settlement

George Washington was more than willing to answer the call to become the first president, but was unsure he was

fit to launch this new state successfully. Others were not as doubtful as shown

in the unanimous vote to elect Washington.

Why was Washington the unanimous

selection for president?

Washington was the hero of the Revolutionary War who led our troops and

nation to victory from the oppressive British government. He also presided over

the Constitutional Convention in Philadelphia as our fledgling government

attempted to repair itself.