The Federalist Era

1. 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?

2. 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

3. 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

4. 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

5. 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

6. 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

8. Hamilton’s Plan (con’t) • New Taxes • Customs Duties • Tariff on imports (8%) • Revenue seeking, not protectionist • Excise Taxes • Whiskey Tax ($.08 per gal)

9. 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

10. 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…

11. 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

12. 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

13. Foreign Affairs • French Revolution • Britain • Support for native Americans of the Miami Confederacy • Impressment of sailors • Jay’s Treaty 1794

15. The Critical Period

16. The Critical Period