Chapter 10: Launching the New Ship of State 1789-1800190

Chapter 10: Launching the New Ship of State – 1789-1800190

Growing Pains190

I shall only say that I hold with Montesquieu, that a government must be fitted to a nation, as much as a coat to the individual; and, consequently, that what may be good at Philadelphia may be bad at Paris, and ridiculous at Petersburg.

Alexander Hamilton, 1799

Upon the new constitution, the country was growing – doubling every 25 years.

In the first official census of 1790, there were nearly 4m people with the major cities being

Philly, NYC, Boston, Charleston and Baltimore.

The country was still 90% agrarian; only 5% lived west of the Appalachian Mountains, concentrating in

KY, TN and OH which all became states within 14 years (preceded by VT in 1791).

Many foreigners looked down upon frontier/pioneer lifestyle shown in roughness and crudity.

Out west, Spanish/ British agents were trying to seduce settlers with promises of independence.

Washington for President191

What was one major development and change that Washington made in the president’s staff?

1789 – General Washington was unanimously drafted president by the Electoral College.

George Washington – the man:

Physical – At 6’2”, 175 lbs., broad shoulders and sharp line face (marked by smallpox), Washington was

imposing figure.

Personality – He depended on balance rather than brilliance – he commanded with a strength of

character.

He was good-natured but sometimes lost his temper.

He was a poor speaker who could be rendered speechless without a script.

Faith – technically an Episcopalian but religion played only a minor role in his life – he stuck to a strict

moral code based on his idea of right and wrong.

Recreation – he played billiards and cards and loved the idea of a fox hunt but in later years, read

newspapers aloud to his wife and walked daily for exercise.

Death – On 14 December 1799, from pneumonia and inflammatory quinsy.

As the sword was the last resort for the preservation of our liberties, so it ought to be the

first to be laid aside when those liberties are firmly established.

George Washington, 1776

Washington made the trip from Mt. Vernon to NYC (the temporary capital) to take an oath of office

overlooking Wall Street.

Washington immediately changed things up by establishing a cabinet – it was something not specifically

mentioned in the Constitution other than the president “may require” written opinions of the

heads of executive branch departments.

This step was so cumbersome that cabinet meetings soon became protocol in Washington’s

administration.

At the time, there was only three full-fledge department heads under Washington: Secretary of

State Thomas Jefferson, Secretary of Treasury Alexander Hamilton and Secretary of

War Henry Knox.

The Bill of Rights192

What amendments were meant to protect the powers of the states? What was the purpose of the Judiciary Act of 1789?

Anti-federalists initially approved the Constitution with the understanding that a bill of rights would

be drawn up to protect the basic rights of individuals from the power of government.

Many were concerned that another constitutional convention would unravel Federalists’ hold.

James Madison drafted and walked the amendments through Congress himself.

1791 – the amendments were approved by the necessary number of states, the first ten amendments were

passed, known as Bill of Rights.

These rights were meant to protect some of most basic American principles.

In an attempt to make sure no one assumes rights listed were the only ones protected, the 9th

Amendment specifies that certain rights cannot be used to deny other rights held by people.

In the 10th Amendment, Madison also gave a nod to the Anti-federalists by delegating all powers

not specifically written for the federal government to the state powers.

Judiciary Act of 1789 – the creation of effective federal courts, organizing a supreme court with a chief

justice and five associates, a federal district and circuit courts and the creation of office of

attorney general.

John Jay, the co-writer of Federalists’ Papers, was the first chief justice of Supreme Court.

Evolution of Cabinet192

PositionDate est.Comments

Secretary of state1789

Secretary of treasury1789

Secretary of war1789Loses cabinet status, 1947

Attorney general1789No head of Justice Dept until 1870

Secretary of navy1798Loses cabinet status, 1947

Postmaster general1829Loses cabinet status, 1970

Secretary of interior1849

Secretary of agriculture1889

Secretary of commerce/labor1903Office divided in 1913

Secretary of commerce1913

Secretary of labor1913

Secretary of defense1947Subordinates are secretaries of armed forces

Secretary of health/educ/welfare1953Office divided in 1979

Secretary of HUD1965

Secretary of transportation1966

Secretary of energy1977

Secretary of health/human services1979

Secretary of education1979

Secretary of veterans’ affairs1989

Secretary of homeland security2003

Hamilton Revives the Corpse of Public Credit193

What was the thinking behind Hamilton’s idea on the assumption of state debt?

Alexander Hamilton, the treasury secretary, was a native of the British West Indies – there were those

who felt he loved his adopted country more than his countrymen.

Those who doubted, and still do, his commitment to the republican experiment, said he acted

much like a PM to Washington, often interfering with other departments, especially that

of his archrival, Thomas Jefferson at State.

Hamilton, a financial wizard, set about immediately to fix the economic problems of the Articles.

He set out to create fiscal policies to favor the wealthy who in turn, would give money and

support the government, which would, with prosperity, trickle down to the common folks.

Hamilton’s first step was to bolster the national credit – without which, the rest of his plan would not

work.

He urged Congress to fund the entire debt and assume the debts incurred by states during war.

Using the phrase “funding at par” meant the federal government would pay off all of the debts at face

value, plus interest (around $54m).

Many felt the Treasury Department was incapable of meeting such obligations – government

bonds depreciated to 10-15 cents on the dollar.

1790 – Congress passed Hamilton’s measure while speculators, who already owned government bonds

before passing, set out to buy much more from farmers, veterans and widows.

The assumption of the states’ debt burdened the federal government to the tune of some $21.5m.

Hamilton had other motives as well – taking on the states’ debts made sense in that the debt was

incurred while fighting for independence.

Additionally, taking on the states’ debt would chain the states to the federal government, as well

as wealthy creditors from state and federal governments.

The move would strengthen the central government by culling support from the rich towards

a national administration.

States with large debt (MA) were more than delighted to let Hamilton have his plan while those

who didn’t (VA) were less convinced.

VA also wanted the new capital to be on the Potomac River which would increase commerce and

prestige to the South.

Jefferson was dragged from Paris to help secure enough votes in VA to get the measure passed in

exchange for DC being located on the Potomac.

[Hamilton] smote the rock of the national resources, and abundant streams of revenue gushed forth. He touched the dead corpse of public credit, and it sprung upon its feet.

Sen. Daniel Webster (W-MA), 1831

Customs Duties and Excise Taxes194

How did Hamilton propose paying for the payment of debt?

Hamilton’s insistence on taking up national and state debt swelled the national debt to $75m.

Less committed, Hamilton could have sidestepped $13m in interest and state debt.

To Hamilton, he was not greatly worried – the more creditors the government owed money to, more

they had a stake in seeing the government doing well – turning a traditional liability into an asset.

How would Hamilton suggest paying for all of this debt?

First – customs duties, derived from tariff, depended upon heavy foreign trade.

1789 – Congress passed a tariff of 8% on the value of dutiable imports before Hamilton

was sworn in – revenue being the main goal.

Also, the measure was meant to protect the infant industries in US – Hamilton, knowing

that an industrial revolution was coming, pushed for more protection of American

manufacturing groups.

Congress, still dominated by agricultural and commercial groups, only increased the

tariffs twice during the Washington administration.

1791 – Hamilton convinced Congress to pass an excise tax on a few domestic items (notably on

whiskey).

The majority of taxes would fall on distillers who lived in the frontier country and who liquefied

bulky bushels of grain to easily carry them on horrible roads by horseback.

Whiskey was so prevalent in these parts of the country, it was used as currency.

Hamilton Battles Jefferson for a Bank195

What was the argument of Jefferson and Hamilton over the Bank of the U.S.?

Always an admirer of all things English, Hamilton felt the next thing needed was a national bank.

The bank would have as a major stockholder, the government, who in turned, deposited its

surplus.

Federal funds would stay in circulation, stimulating business.

The bank would also have the duty of printing paper money, creating a sound and stable national

currency.

The main debate was, was a national bank constitutional?

Washington asked Jefferson, as member of his cabinet, for his opinion.

Jefferson could not have been more against it, feeling it was indeed unconstitutional.

According to soon-to-be-passed bill of rights, all powers not expressly written for the federal

government, went to the states – only states should have the power to charter banks.

Jefferson believed in a “literal” or “strict” interpretation of the Constitution – document simply

did not account for a federally-created national bank.

Washington then asked Hamilton to respond to Jefferson’s strict interpretation to the Constitution.

Whereas Jefferson felt what Constitution did not say, it forbade, Hamilton was the opposite;

what it did not say, it permitted.

Hamilton used a clause in the Constitution that said Congress had the right to pass any laws

“necessary and proper” to carry out the powers vested with government agencies.

The government was charged with collecting taxes and regulating trade and a bank made sense

in the performance of such a duty – not only proper but necessary.

By the virtue of “implied powers,” Congress was empowered and justified in creating a bank.

Hamilton called for “loose” or “broad” interpretation of the Constitution – over time, he and

his followers argued the theory of “loose construction” by using the “elastic clause of

Constitution.

Hamilton’s view prevailed as Washington signed the national bank charter into law.

The debate was explosive and followed mainly along sectional lines – the industrial and

commercial north supported the measure and the agricultural south was against it.

1791 – Bank of US allowed for a 20-year charter and was located in Philly and stock was opened

for public sale to a line of people ready to oversubscribe for the stock.

Mutinous Moonshiners in Pennsylvania196

What was the importance of the government reaction to the Whiskey Rebellion?

1794 – in southwestern PA, the Whiskey Rebellion strongly challenged the new national government.

Hamilton’s excise tax targeted whiskey distillers and an item that was a life line and even

money for people in western lands.

Whiskey distillers rose up with the cry of “Liberty and No Excise” – tarring and feathering

tax collectors, bringing practice to an end.

Washington, with plenty of convincing from Hamilton, called upon several states to provide

troops to quell the rebellion – something that was not a given if the states would take up arms to

keep fellow Americans in line.

Some 13,000 troops in fine colors made the march to SW PA to deal with the insurrectionists

only to find out they were dispersed and the major leaders already arrested.

Washington, to put incident behind the US, pardoned those convicted for leading a rebellion.

The Whiskey Rebellion was a detractor but a strong test for the new government and it won new respect.

Others criticized the government for strong-arm tactics – using a sledgehammer to kill a gnat.

The Emergence of Political Parties196

What was largely responsible for the creation of political parties?

Hamilton’s action immediately established the government’s sound credit rating – allowing the US to

borrow money from the Netherlands on decent terms.

With Hamilton’s success – funding, assumption, excise tax, bank, suppression of Whiskey Rebellion –

there was an encroachment on states’ rights.

Old anti-federalists, who never would have gone with the Constitution had it foreseen

Hamilton’s measures, saw the moves as the federal government growing out of control.

Out of resentment of Hamilton’s measures, an opposition developed.

The personal feud between Jefferson and Hamilton turned into a full blown and bitter political

rivalry.

At the time, political parties did not exist – groups like the Federalists and Anti-federalists and Whigs

and Tories were just that, groups; ones that faded away with the success or failure of a movement.

No founding father envisioned political parties – any opposition to the publicly elected government was

seen as disloyalty and tore at the national unity that the Revolution created.

Initially, Jefferson and Madison’s opposition to Hamilton stayed within the Congress and both didn’t

anticipate what they would turn into.

As opposition to Hamilton’s plan stiffened and newspapers wailed away opinions of the

Treasury secretary and opposition, political parties emerged.

Though political parties initially were seen as unpatriotic, the 2-party system created has since been

considered an integral part of the democratic process – a “loyal opposition” served the role of

a watchdog to make sure the government never wandered too far from the public mandate.

The Impact of the French Revolution198

How did many Americans feel about the nascent stages of the French Revolution? What part of the revolution led some Americans to turn against the French movement?

Washington’s first term and Hamilton’s economic policy had created 2 distinct parties:

Jeffersonian Democratic-Republicans and Hamiltonian Federalists.

Washington’s second term would be forced to focus on foreign policy and wedged a divide between

the two parties, making it greater.

The French Revolution was not something that’s consequences stayed within France but it reached

throughout the world – few non-American events have so changed the US socially or politically.

The first stage of the revolution in France happened peacefully as constitutional restraints were

successfully placed on Louis XVI.

Most Americans saw this as an extension to the happenings in the US and were happy that their

experiment was spreading to Europe.

1792 – the revolution entered a more dangerous phase when France declared war on hostile Austria.

Later, French citizen armies defeated Austrians and declared its country a republic.

Americans cheered the French victories and sang La Marseillaise and other French

revolutionary songs in public.

Centuries of pent-up frustrations and hatred boiled over in a reaction to and treatment of the French

monarchy.

1793 – guillotine was set up and the king was beheaded, the church was attacked, and the Reign

of Terror began.

Federalists, characterized as aristocrats and the establishment, changed their tune on the support

of revolutionaries from lukewarm approval to heated talk of “blood-drinking cannibals.”

While Federalists eyed the Jeffersonian masses with suspiciousness and mistrust, Jeffersonians

regretted the bloodshed but did not feel a country can go from despot to liberty without

some heads rolling.

While the initial violence of the French Revolution did not impact US, events would soon put the US

into spreading changes of revolution.

Washington’s Neutrality Proclamation199

Why did Washington lay out the Neutrality Proclamation?

The 1778 Franco-American alliance was still technically on the books – now, British fleets were

threatening the French West Indies as the British were sucked into events in France.

Jeffersonians were quick to support honoring the French alliance and support not just high, liberal

ideals of revolution but an ally who helped the US win its independence.

Washington, levelheaded as usual, was not swayed by the roars of war – he knew his country was

militarily weak, economically wobbly and politically disunited.

Washington was buying time for the US population to rise high enough, for the country to be

powerful enough to meet the challenges on seas.

The policy of delay while America’s birth rate climbed was one the founding fathers were familiar with

and one that Jefferson and Hamilton could agree upon.

1793 – shortly after Washington’s second term began, he signed the Neutrality Proclamation at the

outbreak of the war between Britain and France.

The president also warned citizens to be impartial in the face of news of the conflict.

It would set a policy and tradition of isolationism that would carry over until the mid-1900s.

Some Jeffersonians were outraged at Washington’s unilateral approach of proclaiming such a move

without consulting Congress while Hamiltonians breathed sigh of relief.

Soon afterwards, the 30-year-old representative of the French Republic, Edmond Genêt, arrived in

Charleston, SC to fit privateers for action and take advantage of the Franco-American alliance.

With the enthusiastic welcoming of the Jeffersonian Republicans, the envoy felt the

Proclamation didn’t truly reflect the attitude of Americans and began recruiting armies

for invading Spanish Florida and Louisiana, as well as British Canada (not part of

alliance).

Soon, even Madison and Jefferson grew weary and irritated with envoy’s conduct.

When Genêt threatened to go over Washington’s head to the citizens, Washington had

him replaced with a less zealous emissary.

The incident showed a true alliance is only cemented with self-interest.

In 1778 – both France and US stood to get something out of it.