WASHINGTON’S WORLDCabinet; National Finances; Whiskey Rebellion; French Revolution; Political Parties

Cabinet Decisions

1789: Washington elected 1st President of the United States.

Cabinet: appointed heads of the federal departments.

Washington often turned to old friends and war veterans, men he could trust.

Appointees: Secretary of War: Henry Knox Secretary of the Treasury: Alexander Hamilton Secretary of State: Thomas Jefferson

Washington, Knox, Hamilton, Jefferson

National Finances (Pt. I)

American Revolution was fought using both foreign and domestic money.

Domestic money was obtained from American citizens through the sale of war bonds – a note issued by the government promising to pay off a loan with interest.

After the revolution, war bonds depreciated (went down in value) significantly. People were selling them for 10% of their promised value. Most people who owned war bonds were southern farmers and war veterans.

National Finances (Pt. II)

Wealthy, eastern merchants (speculators) took a gamble and bought these war bonds cheap, hoping they would one day increase in value.

Post-American Revolution debt ($52 million) is crippling the young nation. $40 million owed to U.S. citizens $11.7 million owed to France, Spain, and the

Netherlands

Problem: U.S. must fix the national financial problems. Who should take the lead?

Hamilton’s Plan (Pt. I)

National government will accept all $52 million of debt (domestic and foreign).

Wealthy Eastern creditors, bankers, and merchants (speculators) would now have a stake in federal government’s success.

Would allow government to borrow money and pay back debts (foreign and domestic) – system of public credit.

U.S. government will pay back all war bonds, but that money will go to speculators who bought the war bonds at 10% value. Southern farmers and war veterans will get nothing.

Problem: Is this financial plan the best thing for the nation?

Hamilton’s Plan (Pt. II)

Create a National Bank.

Government needs the bank to manage its debts and interest payments.

National Bank would issue a national currency, which would promote trade and commerce.

Problem: Is a National Bank a good idea?

Whiskey Rebellion

1791: Hamilton convinces Congress to place a direct tax on manufacture of whiskey.

Whiskey tax enraged Western farmers. Believed it was unfair tax aimed at only one group of people. Whiskey was used many ways in the West: Currency Medicinal Cooking

1794: Rebellion erupts in western Pennsylvania. Farmers terrorize tax collectors, stop court proceedings, rob the mail,

destroy whiskey-making stills of those who paid the tax.

Problem: How to deal with rebels?

French Revolution

1789: French Revolution breaks out as peasants storm the Bastille.

1793: Radical group of French peasants start seizing private property and openly executing people in the streets.

Many Americans sympathize with the French people and their fight for liberty.

However, other Americans were horrified with the violence, bloodshed, and chaos.

Problem: Who should America support – king or peasants?

Rise of Political Parties

In each of these three significant issues, America was divided into two sides. Hamilton’s Financial Plan Whiskey Rebellion French Revolution

These two sides were led by two equally significant men: Alexander Hamilton and Thomas Jefferson. Alexander Hamilton’s faction = Federalists Thomas Jefferson’s faction = Democrat-Republicans

(aka Republicans)

Quick Overview

Role of Federal Government vs. State Governments

Federalists: National government supreme.

Republicans: State governments supreme.

Ruling Power in the Country

Federalists: Ruling power given to wealthy, educated.

Republicans: Ruling power given to all landowners.

Economy

Federalists: Government should promote manufacturing.

Republicans: Government should promote agriculture.

Interpretation of the Constitution Federalists: Loose interpretation of the

Constitution.

Republicans: Strict interpretation of the Constitution.

Protective Tariffs

Protective tariff: a tax on foreign imports to protect domestic products.

Federalists: Protective tariffs protect domestic industries.

Republicans: Protective tariffs burden farmers.