Launching the New Ship of State, 1789-1800

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 (Russia). Alexander Hamilton, 1799

A New Ship on an Uncertain Sea• The new Constitution was

launched in 1789. The population was doubling every twenty-five. By 1790, there were about 4 million people.

• America’s population was still about 90% rural and all but 5 % lived east of the Appalachian mountains.

• Kentucky, Tennessee, and Ohio were the main overflow areas west of the Appalachian Mountains.

• Many people, especially those in the western states, were very cautious about a strong central government.

• Finances of the new government was in disarray: the national debt was enormous and the paper money was practically worthless.

• Much of Europe viewed the new country with caution, fearing that a similar revolution could erupt within their own borders.

Washington’s Profederalist Regime

• George Washington was unanimously-drafted as president of the United States by the electoral college (members selected by the state legislatures to cast their vote for president).

• New York was the temporary capital-for the United States.

• Washington established the first cabinet. The Constitution does not mention a cabinet; it merely provides that the president “may require” written opinions of the heads of the executive-branch departments. Being burdensome, Washington instituted cabinet meetings. (Adams was V.P.)

• Thomas Jefferson became the Secretary of State; Alexander Hamilton became the secretary of treasury; and Henry Knox became the secretary of war.

The Bill of Rights

• Many anti-federalists had sharply criticized the Constitution drafted at Philadelphia for its failure to provide guarantees of such as freedom of religion and trial by jury. Many states had approved the Constitution under the understanding that a bill of rights would be added.

• Amendments could be Proposed in two ways and Ratified in two ways.

Proposed Ratified

2/3 Congress 3/4 State Legislature

2/3 National Convention 3/4 State Legislature

(when requested by 2/3 states)

2/3 Congress 3/4 State Convention

2/3 National Convention 3/4 State Convention

(when requested by 2/3 states)

• Bill of Rights: Freedom of religion, speech and press; the right to bear arms and to be tried by a jury; the right to assemble and petition the government; prohibits cruel and unusual punishment, prohibits unlawful seizure of property

• James Madison drafted the Amendments and proposed them through Congress.

• Ninth Amendment -any right not given to states or national government goes to the people

• Tenth Amendment -any right not given to the national government nor denied to the states goes to the states. This was intended to pacify the antifederalist’s view of strong central government.

• Congress created the federal courts under the Judiciary Act of 1789. This act organized the Supreme Court, with a chief justice and five associates, as well as federal district and circuit courts (courts of appeals). John Jay, the New Yorker who helped write the Federalist Papers became the first chief justice.

• The office of attorney general was established (the government’s legal advisor and representative).

Hamilton Revives the Corpse of Public Credit

• Hamilton set out immediately to correct the economic problems that had crippled the Articles of Confederation.

• Hamilton’s plan was to favor the wealthier groups. They, in turn, would lend the government monetary and moral support.

• Hamilton believed that if the wealthy were protected and allowed to prosper, then prosperity would trickle down to the masses.

• Hamilton wanted to establish the national credit. He urged Congress to “fund” the entire national debt “at par” (pay off debts at face value, plus accumulated interest) and to assume completely the debts incurred by the states during the war.

• Many did not believe the infant Treasury was capable of meeting these obligations that government bonds had depreciated. However, “speculators” (investors) bought enormous amounts from farmers, war veterans, and widows.

Customs Duties and Excise Taxes• Hamilton is often known as “Father

of the National Debt.” He believed that a national debt was a “national blessing”. The more creditors to whom the government owed money, the more the people would take a personal stake in the success of the national government. He wanted to turn a debt (a liability) into an asset (a plus) in order to vitalize the financial system as well as the government itself.

• The more people depended upon the nation, the stronger the federal government would be.

• Where was the money to come from?– Customs duties (tariffs)-

passed by Congress-1789. This would raise money plus protect the infant industries.

– Excise Tax (tax on products made within the country) primarily whiskey. Whiskey was so prominent on the frontier, that it was used for money.

Hamilton Battles Jefferson for a Bank

• In order to strengthen Hamilton’s financial system he proposed a Bank of the United States. Hamilton admired most things English while Jefferson admired most things French. Hamilton modeled his bank after the Bank of England.

• Hamilton proposed a powerful private institution, of which the government would be the major stockholder and in which the federal Treasury would deposit its surplus monies.

• The bank would print paper money, thus providing a sound and stable national currency by keeping money circulating in the treasury.

• Jefferson felt that the bank was unconstitutional since the Constitution did not authorize such a financial institution.

• Jefferson believed that all powers not specifically granted to the central government were thus specifically granted to the states. He believed that the states not the federal government had the power to charter a bank.

• Jefferson and his states’ rights followers believed that the Constitution should be interpreted “literally” or “strictly,” thus the theory of “strict constructionism.”

• Hamilton believed that what the Constitution did not forbid-it permitted (loose constructionist)

• Hamilton invoked the “necessary and proper clause” of the Constitution (Art. I, Sec. VIII, Para. 18). Since a national bank was necessary in order for the nation to function, it was also proper to create.

• Hamilton believed that the Constitution should be interpreted “loose” or “broad” thus he and his federalist followers evolved the theory of “loose construction” by evoking the “elastic clause” of the Constitution. This created a precedent for enormous federal powers.

• Hamilton’s views prevailed. The most support for the bank came from the commercial and financial centers of the North, whereas the strongest opposition arose from the agricultural South.

• The Bank of the United States, was created by Congress in 1791, and was given a 20 year charter. It was to be located in Philadelphia. Stock (bonds) was then open to public sale.

• The government would sell bonds which would put money into the treasury. Private citizens would earn interest on their money

Mutinous Moonshiners in Pennsylvania

• The Whiskey Rebellion, which flared up in southwestern Pennsylvania in 1794, sharply challenged the new national government.

• Defiant distillers in the west reacted violently to the Excise tax imposed on whiskey. They erected liberty poles, much like the liberty poles of the anti-stamp tax days in 1765 and cried, “Liberty and No Excise.”

• Washington with Hamilton’s encouragement rounded up 13,000 troops from other states to crush the rebellion. Though the Whiskey Rebellion was minuscule, its consequences were mighty. The new government was now substantially strengthened and commanded a new respect.

• Foes of the federalists condemned the administration for its brutal display of force-for having used a sledgehammer to crush a gnat.

The Emergence of Political parties• Hamilton’s fiscal policies had

created a sound credit rating. The Treasury could now borrow needed funds in the Netherlands.

• Hamilton’s financial successes created political problems among the “state-righters.”– Assuming the national and

state debts– The excise tax– The Bank of the United States– Suppression of the Whiskey

Rebellion– Tariffs

• What was once a personal feud between Hamilton and Jefferson, now developed into a full-blown and frequently bitter political rivalry.

• National political parties were unknown in America when George Washington took his inaugural oath. There had been Whigs and Tories, federalists and antifederalists, but these were factions rather than parties. When their cause faded, they faded.

• The Founding Fathers had distrusted the creation of political parties thinking that they would split the Union apart.

• At first, Jefferson and Madison organized their opposition to the Hamiltonian program within Congress only. However, the differences between Jefferson and Hamilton emerged into two national political parties. Ironically, political parties have come to bring compromise instead of disastrous factions.

• Hamilton felt that if the federal government was to assume all the debts of the states, then the states would be bound tightly to the federal government. Also, this maneuver would shift the attachment of wealthy creditors from the states to the federal government. The support of the rich to the national government was crucial to Hamilton’s strategy of strengthening the central government.

• Virginia, who had small debts did not like Hamilton’s idea. Hamilton proposed the District of Columbia to be located on the Potomac River (Virginia and Maryland).

• Jefferson, a Virginian, was persuaded to vote for this plan and the vote was carried through in 1790.

The Impact of the French Revolution

• By the end of Washington’s first administration, there had emerged two political parties: Jeffersonian Democratic-Republicans and Hamiltonian Federalists. Foreign policy was to make the gap wider.

• A few weeks after Washington's inauguration in 1789, the French Revolution broke out. This conflict turned into a world war. At first, the American people cheered the overthrow of despotism.

• In 1792, the French Revolution enlarged when France declared war on Austria. In 1793, the king was beheaded, the Church was attacked, and the Reign of Terror had begun.

• Britain was eventually drawn into the conflict, thus spreading to America.

Washington’s Neutrality Proclamation

• The Franco-American alliance of 1778 was still strong in the minds of Americans and the French. Many Jeffersonian Democratic-Republicans favored honoring the alliance and help to defeat Britain.

• Both Hamilton and Washington perceived that war had to be avoided at all costs. The nation in 1793 was militarily, economically, and politically weak.

• Washington felt that if America could avoid war for a generation or so, it would be populous enough and powerful enough to assert its maritime rights with strength and success. Both Hamilton and Jefferson agreed on this point.

• Washington issued the Neutrality Proclamation in 1793. This proclaimed that the United States would remain neutral. It sternly warned American citizens to be impartial toward both England and France. This proclamation began a long tradition of isolationism that was to be America’s signature mark for a long time to come.

• The pro-French Jeffersonian’s were enraged by the Proclamation. The pro-British Federalists were heartened.

• French Republic, Citizen Edmond Genet -a representative of the French Republic was replaced by Washington for overstepping his boundaries in trying to recruit America against the English and Spanish. Genet thought that the sentiment of the American people were for the French.

• In 1778, both France and America had much to gain; now in 1793 only France had anything to gain

Embroilments with Britain• Britain had been defying the

Treaty of 1783 and had retained its chain of northern frontier posts on U.S. soil. London did not want to abandon the lucrative fur trade. British agents openly sold firearms to the Indians who continued to attack pioneers. When General “Mad Anthony” Wayne crushed the northwest Indians at the Battle of Fallen Timbers on August 20, 1794, the Americans found British-made arms and corpses of a few British-Canadians.

• The Treaty of Greenville in 1795, the Indians, finally abandoned the vast region of the Ohio country.

• On the seas, the British wanted to starve out the

• French West Indies and expected the United States to defend them under the Franco-American alliance of 1778. Britain seized about 300 American merchant ships in the West Indies and impressed scores of seamen into service on English vessels, and threw hundreds of others into dungeons.

• The Jeffersonians (Democratic-Republicans) wanted to attack Britain. At least, cut off all supplies to Britain through an embargo.

• The Federalists resisted all demands for drastic action. War with Britain would be lethal to the Hamiltonian financial system.

Jay’s Treaty and Washington’s Farewell

• Washington sent Chief Justice John Jay to London in 1794. The British promised to evacuate the chain of posts on U.S. soil; Britain would pay damages for recent seizures of American ships (but did not promise a halt in future seizures); and did not stop from supplying arms to Indians.

• The United States had to pay the debts still owed to British merchants on pre-Revolutionary accounts. Part of this was Hamilton’s doing to avoid war with Britain.

• The Jeffersonians were furious. This act by John Jay vitalized the newborn Democratic-Republican party.

• Spain, thinking that an alliance might be in the making, forged a treaty with the United States. Known as the Pinckney Treaty of 1795, Spain granted the Americans free navigation of the Mississippi and territory north of Florida.

• After two terms, Washington decided to retire, thus setting the long held tradition of a two term president.

• In Washington’s Farewell Address, he advised the avoidance of permanent alliances like the French Treaty of 1778.

• Washington’s term proved to be very important: the central government was solidly established, its fiscal (money) policy firm, the West was expanding, the merchant marine (civilian shipping) and most of all, Washington had kept the nation out of both overseas entanglements and foreign wars.

John Adams Becomes President

• Who would become the next president. Alexander Hamilton, the best-known of the Federalist party, had become unpopular over his financial policies.

• The campaign of 1796 was intense.

• The Federalists turned to Washington’s vice president, John Adams.

• The Democratic-Republicans chose Thomas Jefferson.

• The Democratic-Republicans brought up the too-forceful crushing of the Whiskey Rebellion and the negotiation of the despised Jay Treaty.

• John Adam’s support was primarily in New England while Jefferson’s support was from the South and Western states. Adams narrowly won. Jefferson became vice president (this can not happen today).

• Adams, who came across without good social skills was hated by Hamilton who had organized the war minded “High Federalists.”

• Adams had inherited a volatile situation with France.

Unofficial Fighting with France• The French were infuriated by Jay’s Treaty. They looked at it

as an alliance with England and as a violation of the Franco-American Treaty of 1778.

• French warships, in retaliation, began to seize American merchant vessels.

• When the French would not receive our ambassador, Adams sent three men, including John Marshall (future chief justice).

• The three American ambassadors were met by three unidentified men later referred to as X, Y, and Z. The French minister Talleyrand would not meet with the American ambassadors but issued a bribe for them to speak with him. Negotiations broke down, and John Marshall returned to New York, the temporary capital. America was swept with war fever, “Millions for defense, but not one cent for tribute.”

• The Federalists wanted war with France while the Jeffersonians did not want war.

• The Navy Department was created as well as the United States Marine Corps.

• Most of the fighting was in the West Indies (1798-1800).

Adams Puts Patriotism Above Party• France did not want war with America since it was already

fighting in Europe. Britain was lending Americans cannon and other war supplies.

• The Federalists wanted war. Adams, however knew that the young country could not chance a war with France.

• Adams, instead sent a new minister to France to work out tensions. Hamilton and his war-hawk faction were enraged.

• The “Little Corporal,” Napoleon Bonaparte was now in power. He did not want war with America so he could concentrate on his war in Europe.

• The Convention of 1800 was signed in Paris. France agreed to annul the twenty-two year-old Franco-American treaty of 1778; America had to pay the damage claims by American shippers.

• Adams had not only avoided war but smoothed the path for the peaceful purchase of Louisiana three years later.

The Federalist Witch Hunt• The Federalists in Congress drove through the “Alien and Sedition Acts in

1798. These acts were primarily made to hush up the Democrat-Republicans.

• The Alien Acts were to increase the time to become citizens from five years to fourteen. This was to keep the new immigrants from siding with Jefferson’s Democratic-Republicans. The president was also empowered to deport dangerous foreigners in time of peace and to deport or imprison them in time of hostilities.

• The Sedition Act curtailed two priceless freedoms guaranteed in the Constitution by the Bill of Rights -freedom of speech and freedom of the press. This law stated that anyone who impeded the policies of the government or falsely defamed its officials, including the president, would be liable to a heavy fine and imprisonment. Many outspoken Jeffersonian editors were indicted under the Sedition Act.

• Matthew Lyon (the “Spitting Lion”) was failed for four months for writing against President Adams.

• The Sedition Act was in direct conflict with the Constitution. However, the Federalist of the Supreme Court ruled in favor of it.

The Virginia (Madison) and Kentucky (Jefferson) Resolutions

• Jeffersonians feared that the Alien and Sedition Laws could undermine basic freedoms of Americans.

• Fearing prosecution for sedition, Jefferson secretly penned a series of resolutions, which the Kentucky legislature approved in 1798 and 1799. His friend and fellow Virginian James Madison drafted a similar one that was adopted by the Virginia legislature in 1798.

• Both Jefferson and Madison stressed the compact theory. The thirteen sovereign states, in creating the federal government, had entered into a “compact,” or contract regarding its jurisdiction. The national government was consequently the agent or creation of the states. The states were the final judges of whether the government had broken its “compact.” If so, the states could nullify the law.

• The Federalists argued that the people, not the states, had made the original compact, and that it was up to the Supreme Court-not the states to nullify unconstitutional legislation passed by Congress.

• The Virginia and Kentucky resolutions were a brilliant formulation of the extreme states’ rights view regarding the Union.

• The southerners would ultimately use this to secede from the Union.

Federalists versus Democratic-Republicans

• By the 1800 election, the differences between Federalists and Democrats were clear. (1793-1800)

• Federalists-Adams, Hamilton– Rule by the “best people”– Hostility to extension of democracy– A powerful central government at the expense of states’ rights– loose interpretation of Constitution– Government to foster business; concentration of wealth in interests of

capitalistic enterprise– A protective tariff– Pro-British (conservative Tory tradition)– National debt a blessing, if properly funded– An expanding bureaucracy– A powerful central bank– Restrictions on free speech and press– Concentration in seacoast area– A strong navy to protect shippers

continued

• Democratic-Republican (Jefferson, Madison)– Rule by the informed masses– Friendliness toward extension of democracy– A weak central government so as to conserve states’ rights– strict interpretation of Constitution– No special favors for manufacturers– Pro-French (radical Revolutionary tradition)– National debt a bane; rigid economy– Reduction of federal officeholders– Encouragement to state banks– Relatively free speech and press– Concentration in South and Southwest; in agricultural areas

and backcountry– A minimal navy for coastal defense