A New Nation
When George Washington took office as the first President in 1789, he was faced with a country full of
problems. In order to face the issues Washington selected a group of advisors who he met with frequently
known as the cabinet. These men included Thomas Jefferson as the Secretary of State, Henry Knox as the
Secretary of War, Edmund Randolph as the Attorney General, and Alexander Hamilton as the Secretary of
Treasury. His cabinet dealt with the major issues facing the country. Alexander Hamilton and Thomas
Jefferson disagreed on the solution to many of these problems and this led to the creation of the first political
parties, called the Federalists and the Democratic-Republicans.
Issue #1 – The Public Debt
Alexander Hamilton was put in charge of creating a plan that would pay off the national debt, or
money the nation owed to other countries and citizens. This debt was the millions of dollars that the states
borrowed from countries like France and the Netherlands as well as from American citizens during the
Revolutionary War effort. Hamilton believed that the only way to establish the credibility of the new nation
was for the federal government to pay off the money owed to foreign nations and to the American citizens.
Congress approved of paying off other countries, but strongly opposed paying off bonds, or issues of paper
notes promising that the government would pay back money loaned to them by citizens in a certain amount of
time. The main reason for this opposition was that many citizens sold their bonds to wealthy speculators
because they needed the money right away and they were not sure that they would ever be paid back.
Hamilton proposed that the money be paid back to those who held the bonds, which benefited the speculators,
instead of the original owners who were shopkeepers, farmers, and small business owners. People like
Thomas Jefferson saw this as an attempt to create a wealthy class of citizens similar to Great Britain.
Hamilton also faced opposition from Southern states because they had already paid off their debts from
the war. Under Hamilton’s plan the Southern states would have to share the financial burden equally with the
Northern states. Realizing that his plan would not be approved, Hamilton agreed on a compromise with
Southern leaders, like Jefferson who was from Virginia, in which they would approve the payment plan to the
states and in turn a national capital would be permanently located in an area between Virginia and Maryland.
This capital would be known as Washington, D.C., or the District of Columbia.
Issue #2 – The National Bank
Another financial problem was that there was no central bank to manage the money brought in by
taxes. Hamilton believed that a national bank would ease the monetary problems of the nation by collecting
tax money, issuing currency, and making loans to private individuals and the government. He modeled the
plan for the bank after that of Great Britain. Once again, he faced opposition from Thomas Jefferson and
others because wealthy citizens and foreign investors would manage the bank and the needs of the majority of
the people would be ignored.
Moreover, Jefferson countered that the bank was unconstitutional because Congress was not given the
power to create banks in the Constitution. He believed that the Constitution should be strictly interpreted,
which means that the government only has the powers that are actually mentioned in the Constitution. On the
other hand, Hamilton believed that there were implied powers, or powers that were not mentioned but were
needed to accomplish the goals of the government. Therefore Hamilton thought that Congress could create a
national bank because the Elastic Clause gave Congress the power to expand its powers when it was necessary
and because it was related to regulating trade and collecting taxes. Congress agreed with Hamilton and
approved the charter for the bank.
Issue #3 – Manufacturing and Agriculture
Hamilton believed that the country would be better off if the economy was based on business and
manufacturing instead of a slave-based agricultural economy. As a New Yorker, he saw the importance of
industry and manufacturing in New York City as well as the benefits of trade with other countries. He wanted
the United States to resemble Great Britain’s economy and political stability. To do this he encouraged
American industrial development by taxing imported manufactured goods, called tariffs, so that Americans
would produce these same items instead of buying them from foreign countries. He also wanted to tax
whiskey made by American farmers, which would be a brand new tax on citizens.
As Hamilton went ahead with his tax plan to bring revenue, or money, to the government strong
opposition arose among poor farmers west of the Appalachian Mountains. These farmers grew wheat, which
was later distilled to produce whiskey. At the time it was more profitable to sell whiskey than wheat because
wheat was too expensive to transport, as there were few roads or canals. Most of these farmers had little
money, and in order to survive they bartered their crops to survive. Once tax collectors arrived in their region
to collect tax money, farmers mobilized, or formed groups, and attacked the government tax collectors and
later burned buildings. This event was known as the Whiskey Rebellion and brought deeper divisions
between those who called themselves Federalists, like Hamilton, and others who called themselves
Republicans, who favored farmers and Jefferson’s idea of an agrarian, or agricultural, society where personal
freedom and owning property were the goals.
President Washington was had a difficult decision to either send government troops into the region to
regain control or negotiate with the angry farmers. Jefferson opposed sending troops because he thought the
government was taking advantage of its power by using American soldiers against American citizens.
Consulting with Hamilton, Washington decided to send over 15,000 troops to the Appalachian region to
prevent any further rebellion. Once the troops arrived, they found no resistance since the farmers had
disbanded and went back to their farms. The President’s actions were significant because it demonstrated that
the government would take any action possible to establish order in the nation. Also, it was made clear that if
citizens wanted changes they would have to utilize methods outlined in the Constitution, such as legislation
and the petitioning the government.
Issue #4 - Foreign Affairs
Washington was also faced with a conflict between Great Britain and France that divided the new
nation. As president, he wanted the United States to be neutral in the conflict. He prohibited both French and
British ships from docking in American ports and did not allow Americans to fight on either side of war. Some
Americans served on French ships anyway. The British would then capture American merchant ships and
force the sailors to serve on British navy vessels. This practice is known as impressment.
Washington made one last effort to preserve peace by sending John Jay to negotiate a treaty with the
British government. The treaty known as Jay’s Treaty stated that the British would evacuate their forts on
American soil, pay for damages of ships that the British had seized, and opened up trade with British colonies
in the Caribbean, which Hamilton supported. The issue of impressments was not addressed. This did not sit
well with Americans like Jefferson, who wanted the practice of impressment to stop. The French were upset
that the Americans had sided with the British by signing the Jay’s Treaty. French ships began seizing the
cargo of American ships that were trading with Britain.
Republican’s who supported France in the past opposed conflict with France while Federalists who
supported Britain saw going to war with France as the solution to the problem. One year later, John Adams, a
Federalist, was elected President. Adams did not want to go to war and tried to negotiate with the French by
sending a delegation to France. The French foreign minister, Charles de Talleyrand refused to meet with the
Americans and instead sent agents known as X, Y, and Z who demanded a bribe and a loan from the
Americans. When the United States delegation refused Mr. X threatened the nation with all of the French
power. Adam’s was insulted with this action and urged Congress to prepare for war with France.
Summary
Even though Washington disliked political factions, it was during his presidency that the nation’s first
political parties were created. Being that Hamilton was associated with the Federalist and came from New
York, it was clear to Southern delegates in Congress that he did not favor states whose economy was
dependent of farming. As an author of the Federalist Papers he supported the new government under the
Constitution. Hamilton advised Washington on the sending of troops into Pennsylvania to suppress the
Whiskey Rebellion and he also launched an effort to arrest those who incited the rebellion. He also supported
the idea of an implied interpretation of the Constitution, meaning that it could be interpreted according to how
those in government understood it. Hamilton’s thoughts on who should rule the country can be summed up in
the following quote.
“The first are the rich and well born, the other the mass of the people.... The people are turbulent and
changing; they seldom judge or determine right. Give therefore to the first class a distinct, permanent share in
the government. They will check the unsteadiness of the second, and as they cannot receive any advantage by
change, they therefore will ever maintain good government.”
-Alexander Hamilton
Thomas Jefferson, who served as Washington’s Secretary of State until he resigned his position
because of differences in political philosophies with Hamilton, is considered the founder of the DemocraticRepublican Party or Republican Party (this is not be confused with today’s Republican Party). Jefferson
believed the nation would be better served if the country based its economy on agriculture. He envisioned a
country in which expansion would continue westward and the people would farm, thus relying on their work
for success. His reason for this is that he believed that men could trade freely and not worry about corruption
and controls of the government. The basis for this philosophy was that of individual rights and liberties,
which he stated in the Declaration of Independence. Jefferson strongly believed that the government should
be in the hands of the people and that the common people could run a successful government. During the
conflict between Great Britain and France, Jefferson supported the French and revolutionary process that was
taking place in the country. He opposed monarchies, which he saw as an instrument of tyranny. In opposition
to Hamilton’s idea of a manufactured-based economy, Jefferson said,
“While we have land to labor then, let us never wish to see our citizens occupied at a work-bench, or twirling
a distaff…….”.
Thomas Jefferson
As Washington’s second term in office came to a close in 1795, he made a decision not to run again
for reelection. This decision set a precedent for future presidents not seek election after serving two terms.
Washington was also plagued by various physical ailments and wanted to retire to his home in Mount Vernon.
Before leaving office Washington issued a Farewell Address in which he addressed various topics relating to
the future of the nation.
Washington on Political Parties
In contemplating the causes which may disturb our Union, it occurs as matter of serious concern that any ground should have been
furnished for characterizing parties by geographical discriminations, Northern and Southern, Atlantic and Western; whence
designing men may endeavor to excite a belief that there is a real difference of local interests and views. One of the expedients of
party to acquire influence within particular districts is to misrepresent the opinions and aims of other districts.
Washington on Foreign Alliances
The great rule of conduct for us in regard to foreign nations is in extending our commercial relations, to have with them as little
political connection as possible. So far as we have already formed engagements, let them be fulfilled with perfect good faith. Here
let us stop. Europe has a set of primary interests which to us have none; or a very remote relation. Hence she must be engaged in
frequent controversies, the causes of which are essentially foreign to our concerns.