Launching the New Ship of State

1. Launching the New Ship of State Chapter 10

2. Central government to be distrusted, watched, and curbed.

3. Financial problems plagued the country. • Debt high • Revenue low • Worthless paper money

4. Growing Pains

5. Population still growing fast • Doubling every 25 years • 1790 census shows 4 million • Cities blossoming

6. 90% rural • 95% live east of Appalachian Mountains • New states being carved out • People looked down on America’s ax and rifle pioneering

7. Western states- Tennessee, Kentucky, Ohio open to seduction • Spain and British agents offer independence

8. Washington for President

9. Drafted to be President by Electoral College in 1789 • War hero, strength of character

10. New York temporary capital • Great ceremony at Washington’s inauguration

11. Establishes a cabinet • Not mentioned in constitution • Sec of State- Jefferson • Sec of Treasury- Hamilton • Sec of War- Knox • Attorney General- Edmund Randolph

12. The Bill of Rights

13. Unfinished business • Drafting a Bill of Rights • States ratified Constitution based on fact that one would be drawn up quickly

14. Bill of Rights drawn up by Madison • Feared narrow victory by Federalists would unravel if states called a national convention • Drew them up and led them through Congress

15. Adopted in 1791 • First 10 Amendments • Safeguards to most basic American principles

16. 9th Amendment • Rights not mentioned are protected also • Reassure states

17. 10th Amendment • Reserve Clause • Rights not mentioned are reserved to the states

18. Judiciary Act of 1789 • Creates federal court system • Supreme Court, Chief Justice, 5 Associates, Federal District and Circuit Courts and Attorney General • John Jay becomes first Chief Justice

19. Hamilton Revives the Corpse of Public Credit

20. Hamilton Secretary of Treasury • Genius • Doubts about character • Overzealous at times

21. Establish America on sound financial footing • Favor wealthy who would help preserve the Government. • Hope to help propertied class get more wealth • Trickle down to masses

22. Bolstering the nations credit • Fund debt “at par” • Assume all states debts accrued during the war

23. “Funding at par” • Government would pay off debts at face value plus interest- $54 million • Bonds depreciated to 10 or 15% of value • Sold to speculators who had not fought in war • Bought from war veterans or widows

24. Wants to assume state debts of $21.5 million • Hamilton eager to take on debt

25. Assumption was logical • Occurred during the War so national government should pay • Would chain states to federal government so that debts would be paid off • Shift loyalty to wealthy creditors to that national government

26. States with heavy debt delighted • States with small debts afraid • Virginia did not want assumption • Got DC in Virginia for assumption

27. Customs Duties and Excise Taxes

28. Hamilton- “Father of the National Debt” • Debt swelled to $75 million • Bold move • Debt a national blessing • Creditors have a personal interest in success of government to get paid back • Makes a debt an asset for federal government

29. Customs duties • Tariff duties • 1789 low 8% tariff • Revenue for government • Protection for weak manufacturing • Saw future of America still lies in manufacturing • America still controlled by agriculture

30. Excise tax on whiskey to raise revenue • 7 cents a gallon • Whiskey flows freely in western frontier • Used as money

31. Hamilton Battles Jefferson for a Bank

32. Idea of a national bank • Modeled after Britain • Government a major stockholder • Deposit surplus money • Stimulate commerce by keeping money in circulation • Print paper money for sound stable currency

33. Jefferson opposed to the bank • No authorization in Constitution for a bank • Powers not granted to federal government reserved to the states • **Strict interpretation

34. Hamilton’s view • What Constitution did not forbid it permitted • Loose interpretation • To collect taxes and regulate trade • Implied powers- justifies national bank • Loose or broad interpretation

35. Hamilton prevails • Support came from North • Opposition came from South

36. Created in 1791 for 20 years • Philadelphia • $10 million • 1/5 owned by United States

37. Mutinous Moonshiners in Pennsylvania

38. Whiskey Rebellion- 1794- Pennsylvania • Challenges new government • Excise tax harsh on pioneers- saw as burden imposed by national government • Cheaper to send east than bales of hay • “Liberty and no excise” • Brought collection to a halt- tar and feather

39. Washington summons militia • Alarmed at self created societies • 13,000 join national army • Captured 2 but no real insurrection

40. Pardoned by Washington • 3 killed • Strengthened command and respect for Washington • Or was it a brutal display of force

41. The Emergence of Political Parties

42. Hamilton’s financial plan a success

43. Creates political liabilities • Encroached on states rights • Organized opposition began to build • Becomes a political rivalry with Jefferson and Hamilton

44. Factions had formed over heated issues • These were ideological organizations

45. Ideas of parties new to government • Opposition parties seemed tainted with disloyalty • Jefferson and Madison form opposition and confined activities to Congress • Newspapers bolster ideas of two parties

46. Two parties emerge • Seemed suspicious • Actually helped America establish sound democracy • Party out of power “Loyal Opposition” keeps things in the middle

47. The Impact of the French Revolution

48. Domestic affairs bring parties into existence under Washington • End of Washington’s first term • Foreign policy brings them further into the political fray

49. French Revolution begins in 1789 • Left deep scare in American life • Americans cheer at first growth of democracy • Jeffersonians liked the Revolution

50. France declares war on Austria and proclaims itself a republic • Americans rejoice • Liberty is moving forward