The Federalist Era

• The new Gov’t launched, but problems still remain with the economy, foreign relations, trade, debt, etc…

• Will the new gov’t work? Will it be respected?

The Washington Administration

• G.W. unanimously elected president in 1789• Sets precedents…esp. in areas where the

Constitution is silent or vague– Creates a cabinet

• Treasury – Alexander Hamilton• State – Thomas Jefferson• War – Henry Knox

– Brings “dignity” to the new gov’t• Delivers annual “State of the Union” addresses to

Congress

– Steps down after two terms

Key Issues for the First Congress

• Bill of Rights adopted– 1-8 define political liberties; rights of the accused– 9th – there are “unenumerated rights” – 10th – powers not expressly given to the federal

gov’t (or denied to the states) are reserved to the states.

• Judiciary Act of 1789– Creates Federal court system– Supreme Court w/ 5 justices– Federal district and circuit courts– Attorney General

Finances

• Hamilton’s vision:– Gov’t involvement in the

economy…encourage trade, protect manufacturing (tariff), internal improvements

– Report on Manufactures• Hamilton’s Financial

Plan– Seeks to use debt/credit

to strengthen confidence in the US gov’t

– A national debt is a national blessing

• Elements of the Hamilton financial plan– Funding at Par

• Funding at Par – wants the US to pay off all debts at face value + interest…

• Gov’t bonds would be recognized at full value.• Upsets those who sold their dollars below value

(some at $.15 per $1), mostly poor farmers • Costs $54 million

– Assumption of state debts• Wants to take over the

remaining obligations of the states -- $21.5 million

• Southern states object• Deal: DC in Md/Va in

exchange for votes

Hamilton’s Plan (con’t)

• New Taxes– Customs Duties

• Tariff on imports (8%)• Revenue seeking, not

protectionist

– Excise Taxes • Whiskey Tax ($.08

per gal)

• National Bank– AH proposes a powerful, private, central

bank– US would be a stockholder and the

Treasury would put its cash into the bank.

– Benefits: holds US money; promotes economic growth through loans; issues paper currency

– But is it constitutional?• AH argues for “loose construction” based on

the “necessary and proper clause”• TJ argues for “strict construction” based on

the 10th Amendment

Article I, Section 8, Clause 18

“The Elastic Clause” or the “Necessary and Proper Clause”

[Congress shall have the power] to make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers…

Assessing Hamilton’s Plan

• Hamilton’s views prevail• BUS chartered by Congress in 1791

– $10 million in capital– US owns 1/5th of the stock

• Provides a stable financial system and restores credit and faith in the US

• However, widens the divide between the commercial north/east and the agricultural south/west

Challenges to the Washington Gov’t

• Washington faces “a sea of troubles”

• Whiskey Rebellion (1794)– The ANTITHESIS of Shay’s Rebellion– SHOCK & AWE

• An army of 13,000 dispatched to crush the rebellion– The laws will be enforced, and the new gov’t

respected.

• Political Parties – Federalists– Jeffersonian Democratic-Republicans

• Foreign Affairs– French Revolution– Britain

• Support for native Americans of the Miami Confederacy

• Impressment of sailors• Jay’s Treaty 1794

The Critical Period

The Critical Period