Launching the New Ship of State

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Launching the New Ship of State
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The Republican Court

• Dispute over the dignity to attach to office of
  the president
• John Adams pushed for flowery, puffed up title
• George Washington insisted on the simple title
  Mr. President
• Washington administration would set precedents
  for the future
• Determined to convey dignity and power
• Aristocratic tendencies prevailed in new
  administration

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The New Congress

• Led by James Madison
• Consistently strengthened new national government
• Agreed to Bill of Rights
• Reflected fear of centralized power
• Focused on civil liberties
• Preserved essential thrust of Constitution and
  power of government
• Created departments of war, state, and treasury,
  all under executive control
• Judiciary Act (1789) established Supreme Court,
  along with district and circuit courts

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Establishing the nations financial plan

• Responsibility fell to Secretary of the Treasury
  Alexander Hamilton
• Most single-minded nationalist in new government
• More than any one else directed the making of a
  national government

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1789 report on the national debt

• 11 million owed to foreigners, mostly war debts
  to France
• 24 million owed by national government to
  citizens
• 24 million owed by state governments to citizens
• Domestic debt concentrated mostly in hands of
  speculators

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Report on Public Credit, 1790

• Urged Congress to assume state debts
• Combine all debts into a consolidated national
  debt
• Foreign debt should be paid immediately
• Domestic debt would be permanent, tax-supported
  fixture of government

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The National Debt

• Interest-bearing securities would attract
  creditors and ensure their loyalty to the
  government
• National debt at heart of Hamiltons plan for a
  powerful national state

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The Bank of the United States

• Component of Hamiltons financial plan
• Federal government would store money there, but
  it would be privately controlled
• Carbon copy of the Bank of England
• Established in 1791

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Instituting an excise tax

• Funding of national debt would come from excise
  tax on wines, coffee, tea, and spirits
• Raise money and confirm federal governments
  right to tax
• Imposed in 1791

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The rise of a political opposition

• National debt became first issue to tear
  Federalist coalition apart
• James Madison and Thomas Jefferson led charge
• Deplored benefits that would accrue to
  northeastern speculators

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The rise of a political opposition

• Compromise on debt and capital
• Hamiltons debt plan accepted
• In exchange, national capital would be located on
  the Potomac River
• Ensured that nations capital would be only a
  center of government power

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Thomas Jefferson vs. Alexander Hamilton

• Jefferson was strict constructionist government
  only had powers specified in Constitution
• Hamilton was broad constructionist government
  could make all laws it deemed necessary and
  just to deal with the nations needs
• Both sides brought their cases to the public
  after 1792