Launching the New Ship of State
Washington for President
George Washington was unanimously elected as President by the Electoral College in 1789. He took the oath of office on April 30, 1789. He established the cabinet. At first, Secretary of State Thomas Jefferson, Secretary of the Treasury Alexander Hamilton, and Secretary of War Henry Knox served under Washington.
Bill of Rights
James Madison wrote the Bill of Rights and got them passed by Congress in 1791. The Judiciary Act of 1789 created the Supreme Court, with a chief justice and five associates, as well as federal district and circuit courts, and established the office of attorney general. John Jay became the first Chief Justice.
Hamilton Revives the Corpse of Public Credit
In order to create a thriving federal government, Alexander Hamilton set out to create a plan to shape the policies of the administration in such a way as to favor the wealthier groups. These wealthier groups would then gratefully lend their money and political support to the government. The wealth in the government would then trickle down through society. In this plan, Hamilton persuaded Congress to fund the entire national debt at par, meaning that the federal government would pay off its debts at face value plus accumulated interest. This would strengthen the national credit by creating public confidence in the small Treasury department. He then convinced Congress to take on the states' debts, which would create confidence in the government by the states. States with large debts, like Massachusetts, were delighted with Hamilton's proposal, but states with small debts, like Virginia, did not want the government to assume state debts. Virginia did, however, want the forthcoming federal district, the District of Columbia, which would bring commerce and prestige. So Virginia made a deal with the government: the government would assume state debts if the District of Columbia was placed on the Potomac River. The deal was passed by Congress in 1790.
Customs, Duties, and Excise Taxes
One of Hamilton's objectives was to keep a national debt, believing that the more creditors to whom the government owed money, the more people there would be with a personal stake in the success of the government. In this objective, he expected tariff revenues to pay interest on the huge debt and run the government. The first tariff law, which imposed a low tax of 8% on the value of imports, was passed by Congress in 1789. Its purpose was to create revenue and to create a small protective wall around small industries. He passed additional internal revenue and, in 1791, convinced Congress to pass an excise tax on a few domestic items, notably whiskey.
Hamilton Battles Jefferson for a Bank
Alexander Hamilton proposed a Bank of the United States that could print paper money and thus provide a stable national currency. The national bank would also be place where the Treasury could deposit monies. Thomas Jefferson strongly opposed the Bank stating it was unconstitutional. He felt that the states had the right to manage their own money. Most of the opposition came from the south and most of the support came from the north. Hamilton prevailed and the 1st Bank of the United States was created in 1791. Its charter lasted for 20 years and was located in Philadelphia.
Mutinous Moonshiners in Pennsylvania
The Whiskey Rebellion in Pennsylvania in 1794 was lead by distillers who strongly opposed the 1791 excise tax on whiskey. The rebellion was ended when President Washington sent in federal troops. Although the troops faced no opposition, a strong message was sent by the government stating that it would enforce the law.
The Emergence of Political Parties
Political parties had not existed in America when George Washington took office. What was once a personal feud between Thomas Jefferson and Alexander Hamilton had developed into a full-blown and bitter...