Chapter 10

1. Chapter 10 Launching the New Ship of State, 1789–1800

2. I. Growing Pains • United States was growing rapidly: • Population doubled every twenty-five years • First official census, 1790, recorded 4 million • Cities blossomed proportionately: • Philadelphia—42,000 New York—33,000 Boston—18,000 Charleston—16,000 Baltimore—13,000. • America’s population was still 90% rural: • All but 5% lived east of the Appalachian Mountains • Overflow concentrated in Ky., Tenn., Ohio.

3. I. Growing Pains(cont.) • People in the west were particularly restive and dubiously loyal: • The mouth of the Mississippi lay in Spanish hands • Many observers wondered whether the emerging United States would ever grow to maturity.

4. II. Washington for President • George Washington was unanimously drafted as president by the Electoral College in 1789: • The only presidential nominee ever to be honored by unanimity • He was the only one who did not in some way angle for this exalted office • He commanded by strength of character rather than the arts of the politician.

5. II. Washington for President(cont.) • Washington’s long journey from Mount Vernon to New York City was a triumphal procession • Took the oath of office on April 30, 1789, on a crowded balcony overlooking Wall Street • Washington put his stamp on the new government by establishing the cabinet • The Constitution did not mention a cabinet (see Table 10.1) it merely provided that the president may require written opinions (see Art. II, Sec. II, para. 1 in the Appendix).

6. II. Washington for President(cont.) • At first only three full-fledged department heads served under the president: • Secretary of State—Thomas Jefferson • Secretary of the Treasury—Alexander Hamilton • Secretary of War—Henry Knox.

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8. III. The Bill of Rights • Failure of the Constitution to provide: • Guarantees of individual rights such as freedom of religion and trial by jury • Some ratified the Constitution on the understanding they would soon be included • Drawing up a bill of rights headed the list of imperatives facing the new government.

9. III. The Bill of Rights(cont.) • Amendments could be proposed in two ways: • By a new constitutional convention requested by two-thirds of the states • Or by a two-third vote of both houses of Congress • James Madison determined to draft the amendments himself he then guided them through Congress • The Bill of Rights, adopted by the necessary states in 1791, safeguard some of the most precious American principles.

10. III. The Bill of Rights(cont.) • Among these: protections for freedom of religion, speech, and the press • Right to bear arms • Right to be tried by a jury • Right to assemble and petition the government for a redress of grievances • The Bill of Rights also prohibited: • Cruel and unusual punishment • Arbitrary government seizure of private property

11. III. The Bill of Rights(cont.) • Madison inserted the Ninth Amendment: • It declares that specifying certain rights “shall not be construed to deny or disparage others retained by the people” • Reassurance to the states’ righters • He also included the Tenth Amendment: • Which reserves all rights not explicitly delegated or prohibited by the federal Constitution “to the States respectively, or to the people.”

12. III. The Bill of Rights(cont.) • Thus Madison’s amendments swung the federalist pendulum back in an antifederalist direction (See Amendments I-X.) • The Judiciary Act of 1789: • Organized the Supreme Court with a chief justice and five associates, federal district and circuit courts, established the office of attorney general. • John Jay became the first chief justice.

13. Table 10-1 p182

14. IV. Hamilton Revives the Corpse of Public Credit • Hamilton’s role in the new government: • Worked to correct the economic vexations of the Articles of Confederation: • Planned to shape the fiscal policies of the administration in favor of the wealthier groups • First to bolster the national credit • Funding at par: • Urged Congress to “fund” the entire national debt “at par” • And urged Congress to assume completely the debts incurred by the states during the recent war.

15. IV. Hamilton Revives the Corpse of Public Credit (cont.) • Funding at par meant that the federal government would pay off its debts at face value, plus accumulated interest—a total sum of $54 million • Because people believed this was impossible for the government, bonds depreciated to ten or fifteen cents on the dollar. • Congress passed Hamilton’s measure in 1790. • Hamilton urged Congress to assume the debts of the states, totaling some $21.5 million: • Assumption: the state debts could be regarded as a proper national obligation

16. IV. Hamilton Revives the Corpse of Public Credit (cont.) • He believed that assumption would chain the states more tightly to the “federal chariot” • It would shift the attachment of wealthy creditors from the states to the federal government • States burdened with heavy debts, like Massachusetts were delighted by Hamilton’s proposal • States with small debts, like Virginia, were less charmed • While Virginia did not want the state debts assumed, they did want the forthcoming federal district—now District of Columbia, located on the Potomac River.

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18. V. Customs Duties and Excise Taxes • The new ship of state was dangerously overloaded: • The national debt was $75 million • Hamilton, “Father of the National Debt,” was not greatly worried • Believed within limits, a national debt was a “national blessing” • Wanted to make debt an asset for vitalizing the financial system (see Figure 10.1).

19. V. Customs Duties and Excise Taxes (cont.) • Money was to come from customs duties: • Tariff revenues from a vigorous foreign trade • The first tariff law imposed 8% on the value of dutiable imports, passed in 1789 • Revenue was the main goal • Was also designed to erect a low protective wall around infant industries • Hamilton wanted to see the Industrial Revolution come to America, thus urged more protection for the well-to-do manufacturing groups

20. V. Customs Duties and Excise Taxes (cont.) • Congress only voted two slight increases in the tariff during Washington's presidency • Hamilton sought additional internal revenue: • In 1791 secured an excise tax on a few domestic items, notably whiskey • New levy of 7 cents a gallon borne by the distillers who lived in the backcountry • Whiskey flowed so freely on the frontier in the form of distilled liquor that it was used for money.

21. Figure 10-1 p184

22. VI. Hamilton Battles Jefferson for a Bank • Hamilton’s capstone: proposed a bank of the United States: • Took his model from the Bank of England • Proposed a powerful private institution, with the government the stockholder and where the federal Treasury would deposit its surplus monies • The federal funds would stimulate business by remaining in circulation

23. VI. Hamilton Battles Jefferson for a Bank (cont.) • The bank would print urgently needed money, providing a sound and stable national currency • Jefferson was vehemently against the bank • He insisted that there was no specific authorization in the Constitution • He believed that all powers not specifically granted to the central government were reserved to the states (see Amendment X) • He concluded that the states, not Congress, had the power to charter banks.

24. VI. Hamilton Battles Jefferson for a Bank (cont.) • Hamilton, at Washington’s request, prepared a brilliantly reasoned reply to Jefferson’s arguments • He believed the Constitution did not forbid it • Jefferson believed that what it did not permit it forbade • Hamilton invoked the clause of the Constitution that stipulates that Congress may pass any laws “necessary and proper” to carry out the powers vested in the various government agencies (see Art. I, Sec. VIII, para. 18) • Congress was empowered to collect taxes

25. VI. Hamilton Battles Jefferson for a Bank (cont.) • Congress was empowered to regulate trade • Therefore, according to Hamilton a national bank was necessary—implied powers and “loose” interpretation of the Constitution • Hamilton ‘s financial views prevailed • Washington signed the bank measure into law • The most support for the bank came from the commercial and financial centers of the North • The strongest opposition arose from the agricultural South.

26. VI. Hamilton Battles Jefferson for a Bank (cont.) • The Bank of the United States was created by Congress in 1791: • Chartered for twenty years • Located in Philadelphia • It was to have a capital of $10 million, 1/5 owned by the federal government • Stocks were thrown open to public sale.

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28. VII. Mutinous Moonshiners in Pennsylvania • The Whiskey Rebellion: • Flared up in southwestern Pennsylvania • Big challenge for the new national government • Hamilton’s high excise tax hurt • Defiant distillers cried “Liberty and No Excise” • Washington summoned the militias • When the troops reached western Pennsylvania, they found an insurrection • Two convicted culprits were pardoned.

29. VIII. The Emergence of Political Parties • All Hamilton’s schemes encroached sharply upon states’ rights: • Organized opposition began to build • Now there was a full-blown bitter political rivalry • National political parties: • Unknown in America when Washington took his inaugural oath • The Founders had not envisioned the existence of permanent political parties

30. VIII. The Emergence of Political Parties (cont.) • The two-party system has existed in the United States since that time (see Table 10.2): • Their competition for power proved to be the indispensable ingredients of a sound democracy • The party out of power plays the invaluable role of the balance wheel, ensuring that politics never drifts too far.

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33. IX. The Impact of the French Revolution • Now there were the two major parties: • Jeffersonian Democratic-Republicans • Hamiltonian Federalists • With Washington’s second term, foreign-policy issues brought the differences between the parties to a fever pitch • The first act of the French Revolution, 1789: • Twenty-six years later Europe would come to a peace of exhaustion.

34. IX. The Impact of the French Revolution (cont.) • Few non-American events have left a deeper scar on American political and social life: • Early stages—surprisingly peaceful • Attempted to impose constitutional restrictions on Louis XVI • 1792 France declared war on Austria • News later reached America that France had proclaimed itself a republic • Americans were enthusiastic.

35. IX. The Impact of the French Revolution (cont.) • The guillotine was set up, the king was beheaded in 1793 • The church was attacked • The head-rolling Reign of Terror had begun • The earlier battles had not hurt America directly, but not until Britain was caught into the revolution did the revolution spread to the New World. • Every major European war, beginning in 1688, involved a watery duel for control of the Atlantic Ocean (See Table 6.2, p. 103).

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38. X. Washington’s Neutrality Proclamation • French-American alliance of 1778: • Bound the United States to help the French defend their West Indies • Jeffersonian Democratic-Republicans favoring honoring the alliance • America owed France its freedom, and now was the time to pay the debt of gratitude • Washington was not swayed by the clamor of the crowd.

39. X. Washington’s Neutrality Proclamation (cont.) • Washington: • Believed that war had to be avoided at all costs • The strategy of playing for time while the birthrate fought America’s battles was a cardinal policy of the Foundling Fathers • Hamilton and Jefferson were in agreement. • In 1793 Washington issued his Neutrality Proclamation shortly before war broke out between England and France.

40. X. Washington’s Neutrality Proclamation (cont.) • Neutrality Proclamation: • Proclaimed the government’s official neutrality in the widening conflict • Sternly warned American citizens to be impartial toward both armed camps • America’s first formal declaration proved to be a major prop of spreading isolationist tradition • It proved to be enormously controversial • The pro-French Jeffersonians were enraged and the British Federalists were heartened.

41. X. Washington’s Neutrality Proclamation (cont.) • Debate intensified: • Citizen Edmond Genet, representative of the French Republic, landed at Charleston, S. Car. • Was swept away by his enthusiastic reception by the Jeffersonian Republicans • He came to believe that the Neutrality Proclamation did not reflect the American people’s wishes • Thus embarking on non-neutral activity not authorized by the French alliance • Washington demanded Genet’s withdrawal.

42. X. Washington’s Neutrality Proclamation (cont.) • Neutrality Proclamation: • Illustrates the truism that self-interest is the basic cement of alliances • In 1778 both France and America stood to gain • In 1793 only France did • Technically , the Americans did not flout their obligation because France never officially called on them to honor it • America was more useful to France.

43. Map 10-1 p191

44. XI. Embroilments with Britain • President Washington’s policy of neutrality was sorely tried by the British: • For ten years they maintained a chain of northern frontier posts on U.S. soil in defiance of the peace treaty of 1783 (see Map 10.1) • London was reluctant to abandon her lucrative fur trade • London also hoped to build an Indian buffer state • They openly sold firearms and firewater to the Indians of the Miami Confederacy

45. XI. Embroilments with Britain(cont.) • Battle of Fallen Timbers, 1794: • General “Mad Anthony” Wayne routed the Miamis • British refused to shelter the Indians fleeing the battle; the Indians offered Wayne the peace pipe • In the Treaty of Greenville, August 1795, they gave up vast tracts of the Old Northwest • In exchange they received $20,000 and an annual annuity of $9,000

46. XI. Embroilments with British(cont.) • The right to hunt the lands they had ceded • They hoped for recognition of their sovereign status • The Indians felt it put some limits on the ability of the United States to decide the fate of Indian peoples.

47. XI. Embroilments with the British(cont.) • The British seized 300 American merchant ships, impressed scores of seamen into British service and threw hundreds into foul dungeons. • Impressment incensed patriotic Americans • War with the world’s mightiest commercial empire would pierce the heart of the Hamiltonian financial system.

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49. XII. Jay’s Treaty and Washington’s Farewell • Jay’s Treaty: • Washington decided to send Chief Justice John Jay to London in 1794 • In London, Jay routinely kissed the queen’s hand, must to the dismay of the Jeffersonians • Jay entered the negotiations with weakness, which was further sabotaged by Hamilton • Jay won few concessions

50. XII. Jay’s Treaty and Washington’sFarewell (cont.) • British concessions: • They promised to evacuate the chain of posts on U.S. soil • Consented to pay damages for the seizure of American ships • But the British stopped short of pledging: • Anything about future maritime seizures and impressments • Or about supplying arms to the Indians.