Beginning of a New Nation

Chapter 10

Beginning of a New Nation

The Republic grew quickly, doubling its population every 25 years. The first official census in 1790 counted 4 million people, with 42000 in Philadelphia, 33000 in New York, 18000 in Charleston, and 13000 in Baltimore. America’s population was 90% rural and about 5% lived east of the Appalachians, mostly in Kentucky, Tennessee, and Ohio, which became states within 14 years after Vermont in 1791.

Americans had overthrown a government and a constitution and now distrusted central authority. People in the west were loyal, however, and relied on the Mississippi.

Revenue was low and public debt with interest and inflation was high.

Americans were attempting what people thought was impossible. The world was watching.

George Washington as President

George Washing became the first president in 1789 (start of French Revolution) after he unanimously won the Electoral College (only president to do so). He preferred quiet to politics but worked anyway. He was balanced rather than brilliant and commanded followers with his character rather than his political skills.

Washington moved from Mount Vernon to New York City (temporary capital) with a lavish ceremony. He gave the oath of office on April 30, 1789 (start of French Revolution, Hitler’s death day) in front of Wall Street.

Cabinet

The Constitution didn’t mention a cabinet, but it did allow a president to ask the opinions of others in the executive branch. It was later necessary to have a cabinet, which was hence developed.

At first there were only three advisors: 1.) Secretary of State Thomas Jefferson, 2.) Secretary of the Treasury Alexander Hamilton, 3.) Secretary of War Henry Knox.

The Bill of Rights

One of the main complaints the antifederalists had against the Constitution was that it didn’t have a Bill of Rights providing guarantees of individual rights. Federalists assured them that one would be immediately created and antifederalists therefore ratified.

Constitutional amendments required either, 1.) by a constitutional convention requested by two-thirds of states, 2.) two-thirds vote of both houses (?). James Madison didn’t want to risk damaging the Constitution with a new committee and instead wrote the amendments himself. He put them through Congress and they were approved in 1791. The Bill of Rights consisted of the first ten amendments, 8 of which provided freedom of religion, speech, and the press; right to assemble and petition the government; protection from cruel and unusual punishments and arbitrary government seizure of private property. The Ninth Amendment stated that the first 8 amendments did not state all the rights. The Tenth Amendment gave the responsibility of rights not mentioned by the Constitution to the states or people.

Judiciary Act of 1789

The Judiciary Act of 1789 created federal courts (judicial branch). This included the Supreme Court (consisting of a chief justice and five associates), federal district and circuit courts, and the office of attorney general. John Jay, the man from New York who worked on The Federalist became the first chief justice of the United States.

Hamilton Paying off National Debt

Alexander Hamilton (“Father of the National Debt”) was 34-years-old and was born in the British West Indies. Many claimed he loved his new country more than the countrymen. He liked to butt into other departments’ businesses.

Hamilton, as Secretary of the Treasury, was responsible for fixing the national debt. His plan was to favor the wealthy, which would support the government with financially and morally, which would help the poorer people.

In order to gain faith and credit, America had to pay its debt. Hamilton decided on funding at par, which meant paying off debt at face value and accumulated interest, totaling $54 million in this case. People didn’t believe the government would pay back, so the value of government bonds depreciated.

In 1790, Hamilton’s financial measure passed, and people looked and kept bonds.

Hamilton also had Congress take responsibility for the debt of states, about $21.5 million, which was called assumption. This made sense: the debt was caused by the war America fought together. This helped bring the nation together: creditors would look to the federal, rather than state, government.

States with a lot of debt (like Virginia) would naturally want assumption; states with little debt wouldn’t want to have an equal part of other states’ debt. Virginia wanted the new federal district (District of Columbia) on the Potomac River near it. Hamilton finally had Jefferson reluctantly carry through a deal that passed assumption and put the D.C. on the Potomac.

Paying off Debt

The debt now totaled $75 million. Hamilton assumed responsibility although he didn’t have to. He believed doing so would cement the nation together by having more Americans rely on the success of the nation. Hamilton planned to pay the debt using tariffs and foreign trade.

Tariff Law

An 8% tariff on dutiable imports was quickly passed by congress in 1789, before Hamilton took office. One goal was obviously revenue, but Hamilton also wanted to protect the little companies in hopes of bringing the industrial revolution to America (higher tariff, less imports, less competition, little guys could survive). Congress still focused on agriculture and only made two slight increases in this tariff.

Excise Tax

In 1791, Hamilton got Congress to pass an excise tax on a few domestic items, notably a 7-cent tax on whiskey. This was mostly paid by the backcountry Americans (road were bad, grain converted to whiskey for transportation). The frontier even used whiskey as money. (By the way, an excise is different from regular tax in that it taxes an event. A sale is an event).

Creation of a National Bank

Hamilton liked British things. Britain had a Band of England. Put the two together, and Hamilton wanted a Bank of the United States. The idea was to have an institution to which the government would be the major stockholder (later 1/5) while the people would own the rest of the stock. The purpose of this was so that the government could have a place to put its money safely (rather than under a bed) and keep the money moving from people to people promoting business rather than freezing a quantity of the nation’s currency. The bank would also regulate printing of money, therefore avoiding another Continental dollar. Was the bank a good idea? Yes. Was it constitutional? That’s debatable.

Con (Jefferson)

Washington: “So Jefferson, what do you think about a national bank?”

Jefferson: “Bad idea. The Constitution never mentioned this was allowed, and according to the Tenth Amendment, all responsibilities not given to the federal government are the responsibility of the states. Therefore there should be state banks instead.”

This idea is considered “strict construction”- following the Constitution strictly. Jefferson believed anything not permitted in the Constitution, is forbidden.

Pro (Hamilton)

Washington: “Oh, interesting, Jefferson. Hamilton, what do you have to say to that?”

Hamilton: “Art. I, Sec. VIII, para. 18 of the Constitution states that the federal government may pass any “NECESSARY and LEGITIMATE” laws it needs to pass in order to fulfill its responsibilities. The federal government is responsible for taxes and trade, and a federal bank is both NECESSARY and LEGITIMATE.”

This idea is considered loose or broad interpretation. Hamilton believed anything not forbidden in the Constitution, is permitted. His argument made use of implied or inferred to rules, giving implied powers.

Results

Hamilton’s eloquent arguments convinced Congress to pass a federal bank that Washington reluctantly signed through in 1791. The North and South were split on this issue; the North supported a bank (was more commercial), the South opposed (was more agricultural).

The Bank of the United States would last under this signing for 20 years, be located in Philadelphia, have a capital of $10 million, be one-fifth owned by the federal government, and would open the remaining stocks to the eager public (sold out in two hours).

Whiskey Rebellion

The Whiskey Rebellion occurred in 1794 when pioneers revolted against the whiskey tax. They claimed it was a tax on a necessity and type of currency rather than a luxury. Whiskey distillers created whiskey poles, similar to anti-stamp tax liberty poles, and cried, “Liberty and No Excise”. This brought collections to a halt.

Washington was alarmed, and, with the support of Hamilton, gathered a militia from several states. Questions aroused over having states fight other states’ problems. However, the militia arrived, found the rebellion mostly dismantled, convicted the two responsible, pardoned them, and left. Three rebels had lost their lives. The federal government now was stronger and had new respect. Many, however, condemned the use of excessive force.

Emergence of Political Parties

Hamilton’s financial actions to fix the debt worked very quickly and the United States gained credit with the Netherlands.

Many people would hot have supported the new Constitution if they new Hamilton’s plans. These anti-Hamilton people now formed together in an organization of opposition. Hamilton and Jefferson now had parties supporting them.

Parties didn’t exist before now. There were Whigs and Tories, federalists and antifederalists, but these existed for an event and disappeared afterwards. They were factions rather than parties.

Parties were previously thought of as groups of disloyalty to the government. Jefferson’s and Madison’s opposition to Hamilton created parties that extended beyond Congress. The two-party system existed in America ever since. This system not only doesn’t show disloyalty, but in fact maintains a good democracy. The opposition party always made sure the people’s beliefs were represented.

Impact of the French Revolution

Two parties, 1.) Jeffersonian Democratic-Republicans, 2.) Hamiltonian Federalists, developed during Washington’s first term and intensified because of foreign policy in his second term, which began in 1793.

The French Revolution started in 1789, a few weeks after Washington took office. Europe didn’t see peace for another 26 years. This event had a great impact on Americans and was more of a world revolution than a French one. Americans saw it, in a way, as the second phase of their revolution; both fought for similar causes. Only some ultra-Federalists saw it as “mobocracy”. Jeffersonians were very happy.

In 1792, French went to war with Austria (Remember: Second Coalition) and France finally declared a republic, making Americans happy enough to sing “The Marseillaise” and rename their streets.

In 1793, Louis XVI was beheaded, and the Reign of Terror began. Federalists (pro-British) became nervous and turned to great opposition of the Revolution. Jeffersonians (pro-French) thought it was a necessary step towards liberty.

Britain later became involved in the Revolution and America was forced in as well.

Neutrality Proclamation and Genet

Neutrality Proclamation

The Franco-American alliance was still in existence, and France was obviously in need of help when it fought Britain, especially to defend its West Indies possessions. Some Jeffersonians wanted to maintain the alliance but not risk defending the West Indies, while others believed America owed it to France.

Washington decided in 1793 that it would be best for the militarily weak, economically wobbly, and politically disunited nation to stay out of wars for now until it was stronger to avoid catastrophe. This was a standard policy for founding fathers; Hamilton and even Jefferson agreed. In the Neutrality Proclamation of 1793, Washington proclaimed America neutral in the fighting and warned citizens not to take sides on the war. This was the beginning of the western isolationist tradition (like beginning of WWII).

Jeffersonians (pro-French) didn’t like this, especially since Washington didn’t consult Congress. Federalists (pro-British) were happy.

Citizen Edmond Genet

Before the Neutrality Proclamation, Citizen Edmond Genet, representing France, came to Charleston, South Carolina to take advantage of the Franco-American alliance. He deduced that most Americans really didn’t support the Neutrality Proclamation and actually began recruiting Americans to fight the Spanish and British in the Americas. Even Madison and Jefferson frowned at this foreigner. Genet then decided that if the leaders don’t approve, he’d look over their heads straight to the voters. This was getting out of hand, so Genet was removed and his office was given to someone else.

America didn’t return the favor to France. France and its West Indies needed food from America, but if America joined the war against Britain, Britain would have blockaded these supplies anyhow.

Conflict with Britain

Northwest Indian War

For ten years, Britain had a chain of forts on American soil to the north along the border with British Canada. A few of the reasons (also in Chapter 9) for this were for the fur trade and to protect Canada from Americans. However they profited by selling weapons to Indians who fought American pioneers. This lead to the Northwest Indian War (name not mentioned in book). In the last battle, the Battle of Fallen Timbers, American General “Mad” Anthony Wayne defeated the Indians on August 20, 1794. Fleeing Indians proved British support by leaving British arms and British bodies. The war ended with the Treaty of Greenville in 1795 and made the Indians give up the Ohio country.

British Attack on American Ships

The British were going to starve the French West Indies, and were sure of American support of the French. Therefore they found it legitimate to have the Royal Navy in 1793 seize about 300 American merchant ships in the West Indies, lock up some Americans, and have others work on British ships.

Americans were outraged. Jeffersonians (pro-French) wanted to punish Britain with new war. Federalists (pro-British) still believed war would damage the United States.

Jay’s Treaty

The British attack on Americans needed a response. Washington therefore sent Chief Justice John Jay to Britain. Jay was a Federalist (pro-Britain), who was particularly a British-lover. Jeffersonians therefore feared he would concede to Britain.

The Jeffersonian fears came true. Hamilton, also Federalist (pro-Britain), feared a war and therefore gave America’s bargaining strategy to Britain. This allowed Britain to negotiate carefully what it wanted. The result was Jay’s Treaty, which said that Britain would pull out of the northern American forts, which the British had already promised to John Jay they would do in 1783, and would pay for damages to the American ships. However, there was no promise against future aggression, no stopping of sale of arms to Indians, and America now had to pay its debt to British merchants gathered before the Revolution.