Washington and Congress

Washington and Congress Chapter 6 Section 1

Creating a New Government • Institution of Powers • 1st task provide the pres. with a bureaucracy to handle different responsibilities • 1789=created Dept. of State, Treasury, and War, and Office of Attorney General • To manage these Washington wanted people who were “disposed to measure matters on a Continental Scale”

Creating a New Government • Secretary of State= Thomas Jefferson • Treasury Department=Alexander Hamilton • Secretary of War=Gen. Henry Knox • Attorney General=Edmund Randolph • Became known as the president’s cabinet • Congress also created the Judicial Branch • Judiciary Act of 1789=13 district courts, 3 courts of appeal, and the Supreme Court • Washington chose the federal judges w/ Senate’s consent • John Jay=1st chief justice of U.S.

Creating a New Government • Bill of Rights • One of most important acts of Congress was the introduction of the Bill of Rights • Drafting of Bill of Rights= took from Virginia Declaration of Rights (George Mason) and the Virginia Statute of Religious Freedom (Thomas Jefferson) • In late Sept. 1789, Congress agreed on 12 amendments • Only 10 were approved=by states ratification

Financing the Government • By the end of 1789, new federal gov’t was running • Gov’t now needed a source of revenue • James Madison and Alexander Hamilton both provided plans for financing gov’t • The Tariff of 1789 • James Madison suggested raising money by taxing imports from other countries • Congress passed Tariff of 1789 • Importers had to pay % of the value of their cargo • Shippers also had to pay tonnage=tax based on how much their ships carried

Financing the Government • The Tariff of 1789 • James Madison suggested raising money by taxing imports from other countries • Congress passed Tariff of 1789 • Importers had to pay % of the value of their cargo • Shippers also had to pay tonnage=tax based on how much their ships carried • Upset southerners=high tonnage rates on rice and tobacco • Suspected the new gov’t opposed their regions interests

Financing the Government • Hamilton’s Financial Program • Believed gov’t needed the ability to borrow money • 1790- asked Congress to accept full debt of the Continental Congress • Owed $40 million to American citizens=purchased through bonds • Owed $11.7 million to France, Spain, and the Netherlands

Financing the Government • Hamilton believed if U.S. accepted debts in full value then wealthy creditors, bankers, and merchants who owned bonds would have a stake in the new gov’ts success • They would loan them money in the future • Opposition to Hamilton’s Plan • Led by Madison • Madison felt it was unfair to original purchasers of bonds • Sold for discounted rates to speculators • Some paid as little as $10 for $100 bond • They would receive full price from gov’t

Financing the Government • Was also opposed by Southerner b/c most Northerners owned most of the bonds • Most of tax used to pay for bonds would come from the South • Madison also worried creditors would dominate American society and endanger liberty • In July 1790, Hamilton, Madison, and Jefferson struck a deal • Madison and Jefferson influenced Southerners to vote for Hamilton’s Plan • In return, the capital was moved to a section of land off the Potomac, District of Columbia • Placed capital in the south=pleased Southerners

Financing the Government • The Bank of the United States • Hamilton asked Congress to created a national bank • Arguments for the bank: • Gov’t needed it to manage its debt and interest payments • Needed to issue paper money=national currency • Would promote trade, encourage investment, and stimulate economic growth • Southerners opposed the plan • Place the stock in hands of Northern merchants • Madison stated Congress couldn't establish a bank • Wasn’t a enumerated power of the gov’t

Financing the Government • Congress passed the bank bill • Att. Gen. Randolph and Sec. of State Jefferson argued that Constitution didn’t give the gov’t power to create a bank • Put Washington in a tough spot • Hamilton disagreed, pointed out Article 1 Section 8= “necessary and proper” clause • Created implied powers

Washington and Congress