Creating a New Government A new Constitution had been created,
now it was Washington’s task to create an effect gov’t for the U.S.
Institution of Powers 1st task provide the pres. with a bureaucracy
to handle different responsibilities▪ 1789=created Dept. of State, Treasury, and War,
and Office of Attorney General To manage these Washington wanted people
who were “disposed to measure matters on a Continental Scale”
Creating a New Government
▪ Secretary of State= Thomas Jefferson▪ Treasury Department=Alexander Hamilton▪ Secretary of War=Gen. Henry Knox▪ Attorney General=Edmund Randolph▪ Became known as the president’s cabinet
Congress also created the Judicial Branch▪ Judiciary Act of 1789=13 district courts, 3
courts of appeal, and the Supreme Court▪ Washington chose the federal judges w/ Senate’s
consent John Jay=1st chief justice of U.S.
Creating a New Government
Bill of Rights One of most important acts of Congress
was the introduction of the Bill of Rights▪ Drafting of Bill of Rights= took from Virginia
Declaration of Rights (George Mason) and the Virginia Statute of Religious Freedom (Thomas Jefferson)
In late Sept. 1789, Congress agreed on 12 amendments▪ Only 10 were approved=by states ratification
Financing the Government By the end of 1789, new federal gov’t
was running Gov’t now needed a source of revenue▪ James Madison and Alexander Hamilton both
provided plans for financing gov’t The Tariff of 1789
James Madison suggested raising money by taxing imports from other countries▪ Congress passed Tariff of 1789▪ Importers had to pay % of the value of their cargo▪ Shippers also had to pay tonnage=tax based on how
much their ships carried
Financing the Government
Upset southerners=high tonnage rates on rice and tobacco Suspected the new gov’t opposed their regions
interests
Hamilton’s Financial Program Believed gov’t needed the ability to
borrow money▪ 1790- asked Congress to accept full debt of the
Continental Congress▪ Owed $40 million to American citizens=purchased
through bonds▪ Owed $11.7 million to France, Spain, and the
Netherlands
Financing the Government
▪ Hamilton believed if U.S. accepted debts in full value then wealthy creditors, bankers, and merchants who owned bonds would have a stake in the new gov’ts success ▪ They would loan them money in the future
Opposition to Hamilton’s Plan Led by Madison▪ Madison felt it was unfair to original
purchasers of bonds▪ Sold for discounted rates to speculators ▪ Some paid as little as $10 for $100 bond
They would receive full price from gov’t
Financing the Government
▪ Was also opposed by Southerner b/c most Northerners owned most of the bonds▪ Most of tax used to pay for bonds would come from the
South
▪ Madison also worried creditors would dominate American society and endanger liberty
In July 1790, Hamilton, Madison, and Jefferson struck a deal▪ Madison and Jefferson influenced Southerners to
vote for Hamilton’s Plan▪ In return, the capital was moved to a section of
land off the Potomac, District of Columbia▪ Placed capital in the south=pleased Southerners
Financing the Government The Bank of the United States
Hamilton asked Congress to created a national bank▪ Arguments for the bank:▪ Gov’t needed it to manage its debt and interest payments▪ Needed to issue paper money=national currency
Would promote trade, encourage investment, and stimulate economic growth
Southerners opposed the plan▪ Place the stock in hands of Northern merchants▪ Madison stated Congress couldn't establish a bank▪ Wasn’t a enumerated power of the gov’t
Financing the Government
Congress passed the bank bill▪ Att. Gen. Randolph and Sec. of State Jefferson
argued that Constitution didn’t give the gov’t power to create a bank▪ Put Washington in a tough spot
▪ Hamilton disagreed, pointed out Article 1 Section 8= “necessary and proper” clause▪ Created implied powers
In 1791, the Bank of the United States was established
Financing the Government Whiskey Rebellion
In 1791, Congress imposed a tax on whiskey▪ Urged on by Alexander Hamilton▪ Whiskey was used a medium for exchange in
western regions of U.S. In summer of 1794, rebellion erupted in PA▪ Farmers terrorized tax collectors, stopped court
proceedings, robbed the mail, and destroyed the whiskey-making stills of those who paid the tax▪ In August 1794, George Washington sent nearly 15,000
troops to crush the Whiskey Rebellion
The Rise of Political Parties
FEDERALISTS
Supporters of Alexander Hamilton and his financial program
Favored strong federal gov’t
Believed manufacturing and trade were basis of national power and wealth
Supporters: artisans, merchants, manufacturers, bankers, urban workers, and Eastern farmers who benefitted from trade
DEMOCRATIC-REPUBLICANS
Hamilton’s opponents, led by James Madison and Thomas Jefferson
Believed strength of the U.S. was its independent farmers (agrarianism)
Feared too much emphasis on commerce= a divide in society=rich vs. poor
Believed wealthy would corrupt gov’t
Supported agriculture over commerce and trade