The New Government After the ratification of the Constitution, elections were held for the new members of the government. Members of the Electoral College voted for two people for President. The person with the most electoral votes would become President. The person with the second most votes would become Vice President.

The President, Vice President, & Cabinet The electors chose George Washington as President. He took the oath of office April 30, 1789 John Adams, the lawyer from Massachusetts, became Vice President. First Cabinet: Thomas Jefferson – Secretary of State (in charge of foreign affairs Henry Knox – Secretary of War Alexander Hamilton – Secretary of Treasury Edmond Randolph – Attorney General

Congress House of Representative Members were elected by the people (just like today). Senators were chosen by the State Legislatures.

A Weak New Nation U.S. owed debts No way to raise money Army was small No Navy Frontier settlements were attacked by Natives Pirates threatened trade

A Nation in Debt Debt from the Revolutionary War was the biggest problem National Debt: total amount a government owes on money it has borrowed The National government and many states owed debts from the war.

Alexander Hamilton Came up with an economic plan to deal with the Nation’s debts Thomas Jefferson & James Madison disagreed with Hamilton and his plan

Hamilton’s Plan Part 1 Federal funds from taxes would be used to buy back government bonds Bond: a certificate sold by the government to raise money (a loan to the government) Southerners did not like Hamilton’s plan Most southern states had paid off their debts on their own Many Southerners had sold their government bonds to Northerners at low prices because they needed cash The government would buy back the bonds at full value Northerners would make money off of the bonds the Southerners had sold them. The South believed Hamilton’s plan would weaken the power of the states governments Bonds Certificates sold by companies or governments in order to raise money. Bonds are issued for a specific amount of time. The government or company that sold the bond must pay interest to the buyer during that time. Here's an example: Let's say a city needs to raise money to build a new bridge. It decides to sell ten-year bonds to the public to get the necessary cash. If you were buying one of those bonds, you would pay a price known as the face value. The city would promise to pay you back in ten years. Every year for ten years, the city would pay you interest on the bond. When the ten years were up, you would get back the face value you spent at the very beginning. 

Compromise Madison & Jefferson compromised with Hamilton The South said the federal government could repay state debts with tax money if the capital of the new nation would be located in the South The capital would be built between Maryland and Virginia, along the Potomac River A territory was created so the no one state could claim the capital city The new nation’s capital was to be called the District of Columbia Congress made the temporary capital city Philadelphia

Hamilton’s Plan Part 2 A National Bank Handle the federal government’s money Collect taxes Issue paper money Give loans to help businesses grow Most people thought a National Bank was a bad idea The Constitution didn’t establish a bank Congress liked the idea of a National Bank and passes a bill creating the Bank of the United States in 1791

Government needed money to pay of war debt, to function, build roads, and build bridges Hamilton proposed: Excise tax: a tax on goods made, sold, and used in the United States Tariffs: taxes placed on manufactured goods brought into the United States Tariffs would not only raise money but would make foreign goods more expensive, encouraging the growth of American industry Congress passed the taxes Taxes

The Whiskey Rebellion The excise tax on whiskey made western farmers angry Bad roads made shipping their grain crops to market very difficult so they turned their crops into whiskey. Whiskey was used as a form of money on the frontier In 1794 Pennsylvania farmers refused to pay the tax Fighting between farmers and the government broke out. President Washington sent a militia to Pennsylvania and the revolt was over quickly. This rebellion was a test of the new government’s power.

Quiz How was the President elected? Who was the first Vice President? How were Senators chosen? What was the biggest problem facing the new nation? Who proposed a plan to pay off the national debt? Who did not agree with the plan? What was the compromise? What was the name given to the nation’s capital? What did Alexander Hamilton propose that most thought was a bad idea? What is a tax on goods made, sold, used in the US called? What does a tariff tax? Why did Washington send a militia to Pennsylvania?