Problems in the New NationProblems in the New Nation

Declaration of IndependenceDeclaration of Independence ……to secure these rights, governments are to secure these rights, governments are

instituted among men, deriving their just powers instituted among men, deriving their just powers from the consent of the governed; that from the consent of the governed; that whenever any form of government becomes whenever any form of government becomes destructive of these ends, it is the right of the destructive of these ends, it is the right of the people to alter or abolish it, and to institute new people to alter or abolish it, and to institute new government, laying its foundations on such government, laying its foundations on such principles, and organizing their powers in such principles, and organizing their powers in such form, as to them to seem most likely to effect form, as to them to seem most likely to effect their safety and happiness. their safety and happiness.

VocabularyVocabulary

DemocracyDemocracy RepublicRepublic RepresentationRepresentation FederalFederal Limited governmentLimited government Popular sovereigntyPopular sovereignty

Problems in the New NationProblems in the New Nation

In 1789, the men who had successfully In 1789, the men who had successfully gained their independence from Britain gained their independence from Britain had already tried one system of had already tried one system of government which did not work.government which did not work.

Confederation to ConstitutionConfederation to Constitution The Confederation form of government

gave too few powers to the national government and had proven to be a failure.

After much debate and a difficult ratification process the new Constitution went into effect in 1788, in spite of the fact that two states – NC was one- had not ratified it yet.

Positive Steps by 1789Positive Steps by 1789 The dispute over representation had been solved with a

bicameral congress. The House was based on population. The Senate had two representatives for every state. The new constitution established a federal system

which divided power between state and national governments.

A stronger national government was the result but its powers were carefully balanced between three branches and each branch could check the power of the other two in some way.

Positive steps by 1789Positive steps by 1789 Memories of the tyrannical King had been

overcome when the office of president was vested in George Washington, who had been elected unanimously in 1788 by the Electoral College.

The new national government was given the power to collect taxes, regulate interstate and foreign trade. This seemed to imply that the nation would be able to deal with the debt it had taken on as a result of the War for Independence.

Northwest Northwest OrdinanceOrdinance

Under the Confederation, a system for dividing the western lands into territories had been established. The system allowed for territorial self-government. When the territory’s population reached 60,000, the new territory could apply to Congress to become a separate state. People could now move west confident that they would not be residents of a colony of the original thirteen United States.

However, some problems still However, some problems still existedexisted

Some previous Anti-federalists feared Some previous Anti-federalists feared that the new government would take that the new government would take power from the states and others feared power from the states and others feared that individual liberties would be that individual liberties would be trampled on by a powerful central trampled on by a powerful central governmentgovernmentThey argued that a Bill of Rights should They argued that a Bill of Rights should have been included to protect citizens.have been included to protect citizens.

More problemsMore problems Treasury was empty and the country had Treasury was empty and the country had

very poor creditvery poor credit No federal laws existed and there were no No federal laws existed and there were no

federal law enforcement officers.federal law enforcement officers. There were no federal courts.There were no federal courts. The Constitution was vague, especially in The Constitution was vague, especially in

Article 3 which referred to the judicial Article 3 which referred to the judicial branch. It needed specific branch. It needed specific implementation.implementation.

President Washington and the first President Washington and the first Congress immediately took steps to Congress immediately took steps to resolve these problems.resolve these problems.

Congress created cabinet departments. Congress created cabinet departments.

Washington’s Washington’s CabinetCabinet

Washington appointed able men Washington appointed able men to assist him.to assist him.

His Secretary of State to deal His Secretary of State to deal with foreign affairs was Thomas with foreign affairs was Thomas Jefferson – an experienced Jefferson – an experienced diplomatdiplomat

His Secretary of theTreasury was His Secretary of theTreasury was Alexander Hamilton a former Alexander Hamilton a former aide who had kept Washington’s aide who had kept Washington’s continental army supplied during continental army supplied during war.war.

Hamilton was considered a Hamilton was considered a brilliant financier.brilliant financier.

The election of John Adams The election of John Adams from Mass. as VP, balanced from Mass. as VP, balanced administration regionally administration regionally

Bill of RightsBill of Rights

In order to satisfy the anti-Federalists, In order to satisfy the anti-Federalists, Congress passed and the states ratified by Congress passed and the states ratified by 1791 the first Amendments, the Bill of 1791 the first Amendments, the Bill of Rights.Rights.

Add to your notes:Add to your notes: The first Amendment guaranteed freedom The first Amendment guaranteed freedom

of religion based on the Virginia Statue of of religion based on the Virginia Statue of Religious FreedomReligious Freedom

Congress passed the Congress passed the Judiciary Act of 1789Judiciary Act of 1789

Judiciary Act of 1789 Judiciary Act of 1789 provided for the provided for the Supreme Court, lower Supreme Court, lower federal courts and the federal courts and the position of Attorney position of Attorney General. General.

Financial ProblemsFinancial Problems

Alexander Hamilton had the job of filling Alexander Hamilton had the job of filling the empty treasury. On his the empty treasury. On his recommendation, Congress passed a recommendation, Congress passed a tariff, or a tax tariff, or a tax on importson imports with the Tariff of with the Tariff of 1789. 1789.

Many of Hamilton’s proposals to Many of Hamilton’s proposals to strengthen the nation’s finances were strengthen the nation’s finances were extremely controversial and opposition extremely controversial and opposition arose at once.arose at once.

Hamilton’s Financial PlanHamilton’s Financial Plan Goal: to strengthen the nation through its economy.

Hamilton believed that the nation needed self-sufficiency based on a mixed economy, agriculture trade and mixed economy, agriculture trade and manufacturing.

Philosophy: Hamilton’s view of human nature was that men were selfish.men were selfish. He did not believe that “virtue” or self-sacrifice motivated people. He believed that private ambition and self-interest motivated men.

He felt was crucial to tie the interest of the Wealthythe Wealthy to to the new nation.the new nation.

Funding or Assumption PlanFunding or Assumption Plan

National debt was $54m of which $12 m was owed National debt was $54m of which $12 m was owed to foreign nations. Additionally $25m owed by to foreign nations. Additionally $25m owed by states.states.

These bonds had lost value during the war and These bonds had lost value during the war and were bought at a discount by wealthy speculators.were bought at a discount by wealthy speculators.

Hamilton proposed paying face value or par for the Hamilton proposed paying face value or par for the bonds by issuing new interest bearing bonds.bonds by issuing new interest bearing bonds.

Some common farmers were outraged at the Some common farmers were outraged at the unfairness of this plan. unfairness of this plan.

Capital moves to PotomacCapital moves to Potomac

Result: Huge profits for wealthy.Result: Huge profits for wealthy. The 4% interest on the new bonds would be The 4% interest on the new bonds would be

paid for with tariffs; Tariff of 1789.paid for with tariffs; Tariff of 1789. Reactions differed between the South and the Reactions differed between the South and the

North because the South had paid its wartime North because the South had paid its wartime debtsdebts

Compromise finally reached when the nation’s Compromise finally reached when the nation’s capital was moved to the Potomac in the South.capital was moved to the Potomac in the South.

Main result: SuccessMain result: Success

Dramatic improvement in the nation’s Dramatic improvement in the nation’s credit rating.credit rating.

The wealthy now had an interest in The wealthy now had an interest in seeing the new national government seeing the new national government succeeding.succeeding.

National BankNational Bank Hamilton believed that the nation needed a Hamilton believed that the nation needed a

ready supply of money in time of war.ready supply of money in time of war. The establishment of the national bank required The establishment of the national bank required

the use of the elastic clause.the use of the elastic clause. He raised $10 million through a public stock He raised $10 million through a public stock

offering. The bank was a safe place to deposit offering. The bank was a safe place to deposit federal revenues. It would give the government federal revenues. It would give the government loans when taxes fell short. The bank could loans when taxes fell short. The bank could issue currency and had the authority to regulate issue currency and had the authority to regulate the state banks.the state banks.

OppositionOpposition Part of Real Whig ideology was that the Part of Real Whig ideology was that the

Bank of England was what had Bank of England was what had corruptedcorrupted the British government. the British government.

Those who were prone to worry about Those who were prone to worry about power corrupting the new US government power corrupting the new US government saw danger in the National Bank being saw danger in the National Bank being established by Hamilton. established by Hamilton.

As stockholdersAs stockholders, the wealthy could influence , the wealthy could influence bank policy and would benefit from public bank policy and would benefit from public deposits. It could also control credit.deposits. It could also control credit.

Sources of Income for Sources of Income for governmentgovernment

1-The sale of western lands: not very large 1-The sale of western lands: not very large since the price was high and squatters since the price was high and squatters multipliedmultiplied

2- Tariffs: greatest source of income but 2- Tariffs: greatest source of income but controversial in the South.controversial in the South.

3- Excise taxes: Hamilton placed one on 3- Excise taxes: Hamilton placed one on Whiskey leading to a rebellion.Whiskey leading to a rebellion.

No taxes on income until World War I.No taxes on income until World War I.

Whiskey RebellionWhiskey Rebellion The Whiskey rebels thought they were The Whiskey rebels thought they were

protesting unfair taxation just as in the protesting unfair taxation just as in the Stamp Act rebellion.Stamp Act rebellion.

Washington Administration sent troops to Washington Administration sent troops to put down the rebellion. The Rebels had put down the rebellion. The Rebels had representation in Congress where this tax representation in Congress where this tax was passed. was passed.

Proved that the new government could Proved that the new government could enforce its own laws.enforce its own laws.

Formation of Political PartiesFormation of Political Parties

Some Americans feared that one Some Americans feared that one tyrannical government tyrannical government had been defeated had been defeated only to be replaced by another home-only to be replaced by another home-grown tyrant. grown tyrant.

The disagreements over Hamilton’s The disagreements over Hamilton’s financial plans resulted in the formation of financial plans resulted in the formation of the first two political parties in American the first two political parties in American history. history.

Result:Result:

It was still unclear whether the new nation It was still unclear whether the new nation could establish a strong national could establish a strong national government, a vigorous economy, or win government, a vigorous economy, or win the respect of foreign nations. the respect of foreign nations.

For a decade, from 1789 to 1800, the new For a decade, from 1789 to 1800, the new nation battled threats to its existence, nation battled threats to its existence, including serious disagreements over including serious disagreements over domestic and foreign policy.domestic and foreign policy.

Problems with BritainProblems with Britain

Evacuating forts in the NorthwestEvacuating forts in the Northwest British fur trading depots.British fur trading depots. Collection points for Canadian nations.Collection points for Canadian nations. Lack of confidence in America’s ability Lack of confidence in America’s ability

to survive.to survive.

Problems with SpainProblems with Spain

Spain disputed the boundary of the new United States with Florida