The GW Years DOMESTIC ISSUES

GW  The first 12 years of the Constitution are filled with animosity (two terms of GW; one of Adams)  Congress is up and running in 1789, but it is definitely not smooth sailing  There are two political parties developing rapidly  Federalists and Republicans  Federalists will dominate politics for the first 12 years of the Constitution  GW felt that the President should not get caught up in political controversies, so the parties tend to battle it out over issues

GW  Federalists  Alexander Hamilton  Wealthy  Strong National Govt.  Genuine Nation-State  Complex Commercial Economy  Industrial  Big place in World Affairs  Broad/Loose Constructionists  Republicans  Thomas Jefferson  Less wealthy  Modest (Weak) National Govt.  Yeoman Society (Farmer/Agrarian)  Not Industrial  Isolated  Strict Constructionists

GW  First Cabinet  Pres.- GW (VA)  VP- John Adams (MA)  Sec. of State- TJ (VA)  Treasury- Hamilton (NY)  War- Henry Knox (MA)  Att. Gen.- Edmund Randolph (VA)

John Jay first Chief Justice of the Supreme Court President Washington appoints 6 justices to the Supreme Court President Washington appoints 6 justices to the Supreme Court 3 from North and 3 from South 3 from North and 3 from South Judiciary Act of 1789, Congress created lower courts to assist the Supreme Court. Judiciary Act of 1789, Congress created lower courts to assist the Supreme Court. President Washington appoints 6 justices to the Supreme Court President Washington appoints 6 justices to the Supreme Court 3 from North and 3 from South 3 from North and 3 from South Judiciary Act of 1789, Congress created lower courts to assist the Supreme Court. Judiciary Act of 1789, Congress created lower courts to assist the Supreme Court.

Hamilton’s Plan  The dominant figure in the administration becomes Hamilton  Huge influence on foreign and domestic policy  Truly believes in an elite ruling class  The govt. needs support from the wealthy/elite, so it’s important to give them a stake in its success

Hamilton’s Plan  Debt is a HUGE problem that has to be overcome during GW’s presidency  The US is in desperate need of currency  $55-60 million in debt  $12 million to France/Netherlands  $40-plus million to individual Americans  Many soldiers from the Revolution were never paid  Individual States will owe $25 million

Hamilton’s Plan  Taxation will be the key element to the early success of the govt.  Taxes are the foundation of the “Federalist Program”  Protective tariffs- high tax on imports to protect American industry  Revenue tariffs- low tax on imports designed to provide income for the govt. (generally between 5% and 8%)  Excise tax- tax on alcoholic beverages that is placed on the manufacturer, then passed to the customer  Sale of Public lands- additional way to raise revenue

Hamilton’s Plan  Hamilton’s plan has four basic principles:  1) Foreign creditors must be paid immediately and in full  Can’t be independent owing other nations $  Paying nations quickly and in full makes us credit-worthy  In order to generate money, govt. needs to tax

Hamilton’s Plan  2) Domestic debt should be paid ASAP and in full  War Bonds  Bonds had fallen by 80%,  Hamilton insists on paying the full amounts  This will show that the govt. makes good on its promises  This will also allow the govt. to enact more taxes  Funding Bill will pass in 1790, but not without a struggle put up by the Republicans

Hamilton’s Plan  3) The Federal Govt. should assume the debts of the States  Whatever an individual state owes, the govt. will assume the responsibility of paying those debts  All of the states fought for the entire nation, therefore the national govt. should take care of them  Generate this money through taxes  Hamilton has to wheel and deal to get this passed  Republicans are against it  Has to agree to move the capital into the South  Assumption Act is passed; Federal City (Washington D.C.) will be created

Hamilton’s Plan  4) The creation of a National Bank  Place for the federal govt. to deposit money  Taxes, private deposits, etc.  The govt. will be able to make loans from here  Can issue paper currency from here, backed by gold/silver  Paper $ can be exchanged for hard currency on demand  Stable center for our weak banking system  Thomas Jefferson’s head nearly blows up over this issue

HAMILTON Safe place to deposit and transfer money Provide loans to government and state banks A national currency---$$$$$ An investment by people to buy stock into US bank Constitution did not forbid a national bank….Loose construction of Constitution National debt good for country JEFFERSON Against the Constitution State banks would collapse Only wealthy could invest in bank and would control bank than control the government Hurt the common man Strict construction…If it is not mentioned in the Constitution than there can’t be a national bank. Against a national debt BUS

Hamilton’s Plan  Republicans are very scared of the Federalists at this stage  Feel as though there will be no limits to federal power if the Federalist Program continues to be unchecked  Republicans also think the federal power is only benefitting Northern states  Many common people are also disillusioned- this isn’t really the government that they signed up for

The Whiskey Rebellion  Things boil over with the Whiskey Rebellion  Western farmers find it very costly to ship grain/corn/rye east  Whiskey was often used as currency; taking that away as well  Anti-tax sentiment is very strong in PA  People will refuse to pay the tax  Will also attack collectors and neighbors  Very similar to Shays; state government slow to act

The Whiskey Rebellion  National Govt. will not be slow to act  GW will personally lead 12,000 troops into PA (militias from 3 states)  Rebellion will be crushed  Leaders will be brought up on charges of treason  GW will pardon them