The GW YearsDOMESTIC ISSUES

GW

The first 12 years of the Constitution are filled with animosity (two terms of GW; one of Adams)

Congress is up and running in 1789, but it is definitely not smooth sailing

There are two political parties developing rapidly Federalists and Republicans Federalists will dominate politics for the first

12 years of the Constitution GW felt that the President should not get

caught up in political controversies, so the parties tend to battle it out over issues

GW

Federalists

Alexander Hamilton

Wealthy

Strong National Govt.

Genuine Nation-State

Complex Commercial Economy

Industrial

Big place in World Affairs

Broad/Loose Constructionists

Republicans

Thomas Jefferson

Less wealthy

Modest (Weak) National Govt.

Yeoman Society (Farmer/Agrarian)

Not Industrial

Isolated

Strict Constructionists

GW

First Cabinet

Pres.- GW (VA)

VP- John Adams (MA)

Sec. of State- TJ (VA)

Treasury- Hamilton (NY)

War- Henry Knox (MA)

Att. Gen.- Edmund Randolph (VA)

John Jay first Chief Justice of

the Supreme

Court

•President Washington appoints 6 justices to the Supreme Court• 3 from North and 3 from South

•Judiciary Act of 1789, Congress created lower courts to assist the Supreme Court.

•President Washington appoints 6 justices to the Supreme Court• 3 from North and 3 from South

•Judiciary Act of 1789, Congress created lower courts to assist the Supreme Court.

Hamilton’s Plan

The dominant figure in the administration becomes Hamilton

Huge influence on foreign and domestic policy

Truly believes in an elite ruling class

The govt. needs support from the wealthy/elite, so it’s important to give them a stake in its success

Hamilton’s Plan

Debt is a HUGE problem that has to be overcome during GW’s presidency

The US is in desperate need of currency

$55-60 million in debt

$12 million to France/Netherlands

$40-plus million to individual Americans

Many soldiers from the Revolution were never paid

Individual States will owe $25 million

Hamilton’s Plan

Taxation will be the key element to the early success of the govt.

Taxes are the foundation of the “Federalist Program”

Protective tariffs- high tax on imports to protect American industry

Revenue tariffs- low tax on imports designed to provide income for the govt. (generally between 5% and 8%)

Excise tax- tax on alcoholic beverages that is placed on the manufacturer, then passed to the customer

Sale of Public lands- additional way to raise revenue

Hamilton’s Plan

Hamilton’s plan has four basic principles: 1) Foreign creditors must be paid

immediately and in full Can’t be independent owing other

nations $ Paying nations quickly and in full

makes us credit-worthy In order to generate money, govt.

needs to tax

Hamilton’s Plan

2) Domestic debt should be paid ASAP and in full

War Bonds

Bonds had fallen by 80%,

Hamilton insists on paying the full amounts

This will show that the govt. makes good on its promises

This will also allow the govt. to enact more taxes

Funding Bill will pass in 1790, but not without a struggle put up by the Republicans

Hamilton’s Plan

3) The Federal Govt. should assume the debts of the States

Whatever an individual state owes, the govt. will assume the responsibility of paying those debts

All of the states fought for the entire nation , therefore the national govt. should take care of them

Generate this money through taxes

Hamilton has to wheel and deal to get this passed

Republicans are against it

Has to agree to move the capital into the South

Assumption Act is passed; Federal City (Washington D.C.) will be created

Hamilton’s Plan

4) The creation of a National Bank

Place for the federal govt. to deposit money

Taxes, private deposits, etc.

The govt. will be able to make loans from here

Can issue paper currency from here, backed by gold/silver

Paper $ can be exchanged for hard currency on demand

Stable center for our weak banking system

Thomas Jefferson’s head nearly blows up over this issue

HAMILTON• Safe place to deposit and transfer

money• Provide loans to government and

state banks• A national currency---$$$$$

• An investment by people to buy stock into US bank

• Constitution did not forbid a national bank….Loose construction

of Constitution• National debt good for country

JEFFERSON• Against the Constitution

• State banks would collapse• Only wealthy could invest in bank and would control bank than control the government

• Hurt the common man• Strict construction…If it is not mentioned in the Constitution than there can’t be a national

bank.• Against a national debt

BUS

Hamilton’s Plan

Republicans are very scared of the Federalists at this stage

Feel as though there will be no limits to federal power if the Federalist Program continues to be unchecked

Republicans also think the federal power is only benefitting Northern states

Many common people are also disillusioned- this isn’t really the government that they signed up for

The Whiskey Rebellion

Things boil over with the Whiskey Rebellion

Western farmers find it very costly to ship grain/corn/rye east

Whiskey was often used as currency; taking that away as well

Anti-tax sentiment is very strong in PA

People will refuse to pay the tax

Will also attack collectors and neighbors

Very similar to Shays; state government slow to act

The Whiskey Rebellion

National Govt. will not be slow to act

GW will personally lead 12,000 troops into PA (militias from 3 states)

Rebellion will be crushed

Leaders will be brought up on charges of treason

GW will pardon them