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Objectives
• Describe the steps Washington’s
administration took to build the federal
government.
• Analyze Hamilton’s plans for the economy
and the opposition to them.
• Explain how a two-party system emerged in
the new nation.
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Terms and People
• administration – the officials in the executive
branch of government
• precedent – an act or statement that becomes a
tradition to be followed
• Cabinet – the officials who head the major
executive departments and advise the President
• tariff – a tax on imported goods
• loose construction – a broad interpretation of
the Constitution relying on the implied powers of
Congress
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Terms and People (continued)
• strict construction – a narrow interpretation of
the Constitution that limits Congress’s actions only
to powers specifically granted by the Constitution
• Whiskey Rebellion – a 1794 protest by farmers in
western Pennsylvania against an excise tax on
whiskey
• political party – a group that seeks to win
elections, hold public office and shape policy
• Democratic Republicans – a political party that
emerged in opposition Hamilton’s economic policies
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How did debate over the role of
government lead to the formation of
political parties?
In 1789, the leaders of the new government
gathered in New York City. The newly ratified
Constitution was entirely untested.
The Framers and President Washington knew
that a good start was essential to the future of
the republic.
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When George
Washington took
office, he quickly
established
precedents for
running the
government.
The new President
faced many
challenges:
• The nation was $52
million in debt.
• There was no navy
and the army had only
400 men.
• Spain closed the
Mississippi River in
New Orleans to
American trade.
• British troops occupied
American land along
the Great Lakes.
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Washington picked a
Cabinet to head each of
four executive departments
in his administration.
• Secretary of State
Thomas Jefferson
• Secretary of War
Henry Knox
• Secretary of
Treasury
Alexander Hamilton
• Attorney General
Edmund Randolph
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The first task was to set up a court system.
• The Judiciary Act of 1789
created district and
circuit courts and a sixmember Supreme Court.
• The office of Attorney
General was created to
prosecute legal cases for
the government.
• John Jay was appointed
as first Chief Justice of
the Supreme Court.
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The huge debt was the biggest problem facing
the administration. Treasury Secretary Hamilton
suggested a controversial plan.
Rather than just pay off the federal debt, state debts
would also be assumed. Bonds for the total would be
sold to wealthy investors.
The investors would receive annual dividends and
have a stake in helping the government succeed.
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•
Hamilton also proposed chartering a
Bank of the United States to regulate
state banks and insure business
support.
•
He hoped to replace the nation’s
agriculturally based economy with
commerce and manufacturing.
•
He proposed a high tariff or tax on
imported goods to earn revenue and
encourage domestic industry.
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Hamilton saw 3 advantages to his financial plan
1
The plan would establish the
nation’s financial credibility.
2
The plan would gain political support
from the wealthiest Americans.
3
The plan would enrich investors
who would reinvest and thus
create more wealth.
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Antifederalists
objected to
Hamilton’s plan.
They had 3 main
complaints:
1
Wealth would be
redistributed from farmers
to merchants, and from
the South to the North.
2
Investors who purchased
the bonds would make
huge profits at everyone
else’s expense.
3
The costs would fall on
farmers who would have to
pay excise taxes and
higher tariffs.
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Secretary of State Jefferson
opposed Hamilton’s plan.
Most southern states had already paid off their
war debts. He asked why they should bail out
northern states that still had debts.
Jefferson believed the plan gave more power to
the government than the Constitution permits.
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Jefferson
favored a
strict construction
of the Constitution.
Hamilton
favored a
loose construction
of the Constitution.
Congress should be
limited to the powers
specifically granted
by the Constitution.
Congress has implied
powers, and can take
any actions not
specifically forbidden.
The Constitution does
not give Congress power
to charter a national
bank, so it could not
establish one
The Constitution
allows Congress to act
for the “general
welfare” so it could
charter a bank.
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In 1791, Congress accepted Hamilton’s plan.
The national debt was funded, outstanding state
debts were assumed, excise taxes and tariffs
were levied, and the bank was authorized.
In return, a new
national capital was
created. Washington
D.C. would be placed in
the South, on the banks
of the Potomac River.
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An excise tax on whiskey led to divisions between
the Federalists and the Antifederalists.
• To increase their profits, western Pennsylvania
farmers made whiskey from their grain.
• The whiskey tax reminded
farmers of British taxes.
• In 1794, some farmers
resisted payment. They
harassed and intimidated
tax collectors.
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Hamilton
persuaded
Washington to
suppress the
Whiskey
Rebellion.
• Twelve thousand
militiamen were sent to
deal with the rebellion,
but they found no
organized insurrection.
• Then Jefferson criticized
Hamilton for the use of
federal force to repress
legitimate criticism.
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Despite Washington’s disapproval,
two political parties emerged.
Democratic
Republicans
Federalists
Favored Jefferson
and Madison.
This party was
strongest among
Southerners and
farmers.
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Favored
Hamilton and
was strongest
among
Northerners,
merchants, and
the wealthy.