Chapter 7

1. Chapter 7 Democracy in Distress

2. Problems of a New Nation • Spain and Britain wanted the new United States to fail • With backing from the British, there were Indian attacks on American settlers who were moving into what the Indians felt was their territory • The British continued to occupy 7 forts on American soil even after the Treaty of Paris

3. The British said they’d retain the forts until loyalists were compensated for their confiscated property • The would retain the forts until Americans paid off their pre-war debts to British merchants

4. Spain had closed off the Mississippi to American trade. • Spain did offer Americans export privileges in New Orleans in return for American help in taking Tennessee • Andrew Jackson considered helping the Spanish because the American government was weak and had many problems

5. 1789 • The government’s credit was essentially no good • Indians and frontiersmen fought constantly • The West considered breaking away • There were foreign restrictions on U.S. trade • There was factionalism among citizens All these problems faced George Washington when he took office as president in 1789

6. President Washington • He took the oath of office on 30 April 1789 • He helped to interpret the Constitution honestly where it wasn’t specific: • Cabinet? • Structure of the court system? • Should he send legislation to Congress? • Amendments?

7. Washington brought dignity and bearing to the office • He won the respect of foreign leaders • He was an able head of government • He was used to using authority • He knew his own limitations • He deferred to Congress whenever possible; he tried not to interfere

8. He used the veto only 2 times in 8 years • He knew he needed advisors so he formed a cabinet • From Virginia: Edmund Randolph as Attorney General & Thomas Jefferson as Secretary of State • From Massachusetts: Henry Knox as Secretary of War & Samuel Osgood as Postmaster General • From New York: Alexander Hamilton as Secretary of the Treasury

9. Revenue • Raising revenue was the most important problem facing the new government • Capital was needed to pay the day-to-day expenses • Capital was needed to pay off debts • To pay for the running of the government, Hamilton asked Congress to place a 5% tax on imports

10. The next problem was to pay off our debts • U.S. owed $12 million to foreign nations • U.S. owed $44 million to Americans Hamilton wanted to pay off all debts in full, both to foreigners and to Americans to establish credibility

11. Congress agreed to pay off foreigners in full • Congress had a problem with paying Americans in full • Americans had bought bonds during the war as a contribution to the war effort • Immediately after the war Congress failed to pay up and people lost hope • To get some money back on their investments, they sold their bonds to speculators

12. They sold them for less than they were worth • Many who bought the bonds were Congressmen • Madison was against paying off the holders of the bonds at full value because in many cases, the government would be paying a profiteer rather than the original investor

13. Madison proposed paying profiteers half the value of the bond and paying the original investors the full value plus 4% interest • He felt this was the moral answer • Hamilton said morality was beside the point; we had to show the government as credible, so the wealthy would re-invest

14. Many congressmen stood to profit from paying the bonds off in full • Hamilton’s proposal passed • Madison lost

15. Hamilton’s Next Proposal: How to Handle States’ Debts • Said federal government should assume all the states’ debts • By paying back loans ignored for 10 years, the viability of the U.S. would be strengthened

16. James Madison was opposed • Said southern states had paid off their debts or most of them • If government assumed debts, then the southern states would be paying twice • Not fair

17. The Assumption Bill, as it was called, was defeated in the House of Representatives 31 – 29 • But it lived to see another day; a deal was struck • It concerned the placement of the new federal capital city • Virginians wanted the capital in the south

18. So Hamilton made a deal with Jefferson • In return for letting the Assumption Bill pass, • Hamilton promised enough northern votes to get the capital moved to the banks of the Potomac On the second go-round, the Assumption Bill passed 34 - 28

19. Bank of the United States • Part III of Hamilton’s fiscal plan • He wanted a central institution where all government money would be deposited • However, the Bank of the United States would not be a government agency • The President would appoint 5 of the 25 bank directors • 20 would be elected by shareholders, the wealthy

20. The bank bill passed in Congress • Jefferson urged Washington to veto it • He thought Congress had overstepped its powers as stated in the Constitution • The Constitution didn’t say, Congress create a bank Hamilton stated that nothing in the Constitution said it couldn’t

21. The Constitution did say “to make all laws which shall be necessary and Proper for carrying them into execution • The Bank of the U.S. would regulate commerce and provide for the general welfare

22. 2 Interpretations of the Constitution • Jefferson was a “Strict Constructionist”; if the Constitution didn’t spell something out in black and while, it didn’t exist • Hamilton was a “Broad Constructionist”; he said Article 1, Section 8 allowed Congress to do what was not prohibited by another section of the Constitution

24. This controversy later helped in the formation of political parties • Part IV of Hamilton’s fiscal plan was discussed in “The Report on Manufactures” written in December of 1791 • It was rejected by Congress

25. In that report Hamilton stated that Congress should promote industry to add to the country’s agricultural and commercial base • To do this, he proposed a “Protective Tariff” • Place a high duty on imported goods • Encourage investors to build mills and factories in U.S. rather than depend on Europe • It would create new American jobs

26. Farmers were opposed because they bought cheap foreign goods for their servants and slaves • Americans, in general, bought cheap foreign goods • American merchants sold these goods • Change would be too fast and too great • It wasn’t voted in; tariffs remained low – enough to pay government expenses

27. Re-election • 1792 – Washington was re-elected without opposition • He been relatively successful in office • He’d established precedents for other presidents to follow • He successfully established a stable government for 4 million people • Washington remained in office until 1797

28. Farewell Address • Written by Alexander Hamilton, influenced by Madison • He warned Americans of 4 problems: • Don’t form political parties • Voice opposition to government policies peacefully, through legal channels • Avoid sectionalism; give allegiance to the nation • Honor alliances already in effect; avoid new ones

29. Revolution in France • Began in 1789, influenced by American Revolution • But went to a further extreme • Rebelled against the excesses of the monarchy, ex: Versailles • Tried to redesign society from top to bottom • Many Americans initially supported French • French went beyond basic freedoms

30. January, 1793 – King Louis XVI was guillotined • Within a year Marie Antoinette, his wife, met the same fate • This was followed by the Reign of Terror launched by Maximilien de Robespierre • Thousands were drowned or guillotined, especially nobles

31. The French also tried to wipe out religion; there was heavy Catholic influence • All this scared some Americans, especially the Federalists (the elite of American society) • Other European nations were afraid this revolution would spread to their countries and so fought back, ex: Britain in 1793

32. Under the terms of the French Alliance of 1778, the U.S. was supposed to help France • Washington and others did not want to get involved in this fight • We were a new, unstable nation ourselves • Hamilton found a legal loophole • Said the Alliance of 1778 was invalid because we had made that agreement with the king

33. We did not make an agreement with this new revolutionary government • The U.S. remained neutral • Enter Citizen Genet: • French Minister who arrived in Charleston in April, 1793 • Tried to commission American ships to act as privateers (armed raiders, paid by French, to seize British ships)

34. Many complied: 80 ships were brought into U.S. ports • Genet gave prizes to the privateers • Genet’s actions were dangerous because they could drag the U.S. into the war • When Washington finally met with Genet, he told Genet to STOP • He later told Genet to go back to France

35. Genet hesitated because his political party had been ousted and the Reign of Terror was in full swing • He was scared to return and asked Washington for political asylum • It was granted • Genet remained in the U.S., got married, and lived a quiet life as a gentleman farmer in N.Y.

36. British Threat • Before Britain and France began fighting, U.S. had been excluded from French ports in the West Indies – trade restrictions • After the war began, France wanted the American trade for supplies • Britain invoked an old law concerning war at sea - Rule of 1756 – which said ships of neutral nations couldn’t trade in ports where they had been excluded before the war

37. Many Americans were doing this and making lots of money • Britain didn’t want America in the war; they didn’t want to lose trade with the U.S. • So Britain began to seize American ships and impress its sailors • 1793-1794 , Britain seized 600 American ships • Removed seamen who had British accents

38. Many Americans began to pressure Washington to declare war on Britain • Instead, Washington sent John Jay to England to work out a peace • The Jay Treaty • Britain agreed to evacuate western forts • Britain agreed to compensate American ship owners for vessels seized in West Indies and allow some trade with British possessions

39. Americans were not to discriminate against British shipping and to pay back all debts incurred before the revolution Nothing was said about impressment. The Jay Treaty only seemed to benefit the wealthy The country protested!

40. The furor showed the growing factionalism in the U.S. that led to the formation of political parties

41. Pinckney’s Treaty • Spain had territory to the west and south of the U.S. • They were afraid the newly reconciled U.S. and Britain would invade their Louisiana • So Spain met with Thomas Pinckney and gave into every demand made by Americans since 1783

42. It honored the American version of boundary between U.S. and Louisiana • It opened the Mississippi to American navigation • It granted Americans the “right of deposit” in New Orleans • Store exports there • Carry on commerce there

43. Western Problems • Hard life in the West – labor, disease, malnutrition, isolation, Indian problems • Washington was eager to remove Indians from western lands, especially from the Ohio Valley • 1790 – Washington sent Josiah Harmer to find and defeat the Miami and Shawnee under Chief Little Turtle

44. They were poorly supplied • They were fighting dysentery and malaria • They were decimated • 1791 – Arthur St. Clair and 600 soldiers were also killed in this same endeavor • The Miami and Shawnee remained supreme in the Northwest Territories until 1794

45. 1794 – General Anthony Wayne defeated them in August at the Battle of Fallen Timbers near present-day Toledo • It was all settled with the Treaty of Greenville

46. Pioneers and Whiskey • Settlers were heavy drinkers – for recreational and medicinal purposes • It eased the isolation; it was a companion • It was also a cash crop and much easier to transport than grain • A problem arose with Hamilton’s tax of 1791, making the whiskey to expensive to sell

47. 1786 – Pennsylvania farmers attacked tax collectors and rioted • Washington wanted to show that the new government was stronger than it had been under the Articles of Confederation • So he led 15,000 troops to put down the rebellion

48. A few men were arrested, tried, convicted of treason, and sentenced to death • Washington then pardoned them • Political significance: • It showed that the federal government had the right and the force to crush rebellion • Troops could cross state lines People of the West remained staunchly Anti-Federalist

49. Federalists vs. Republicans • Party lines were becoming clearer • Federalists • Supported Hamilton’s fiscal policies • Feared the French Revolution • Friendly towards England • Accepted the Jay Treaty • Believed the national government should act decisively and powerfully to maintain internal order

50. John Adams and Alexander Hamilton were its spokespersons • John Jay, the Pinckneys, Washington, and other wealthy Americans were also Federalist