Chapter 6 The New Republic

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1 Chapter 6 The New Republic Section 1 Government & Party Politics

2 Focus Question 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.

3 Section 125 Section Chapter 1 Washington s Inauguration in New York City, 1789 Government and Party Politics The Cold War Begins

4 Washington Takes Charge 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.

5 Washington Picks a Cabinet 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

6 The Judicial Branch 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.

7 Hamilton & The National Bank 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.

8 Hamilton & The National Bank 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.

9 Arguments Chapter Section 125 Section 1 For The National Bank 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.

10 Arguments Chapter Section 125 Section 1 Against The National Bank Antifederalists objected to Hamilton s plan. They had 3 main complaints: Wealth would be redistributed from farmers to merchants, and from the South to the North. Investors who purchased the bonds would make huge profits at everyone else s expense. The costs would fall on farmers who would have to pay excise taxes and higher tariffs.

11 1 st Bank of the United States, Philadelphia

12 Jefferson & The National Bank 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.

13 Strict vs Loose Construction Jefferson favored a strict construction of the Constitution. Congress should be limited to the powers specifically granted by the Constitution. The Constitution does not give Congress power to charter a national bank, so it could not establish one Hamilton favored a loose construction of the Constitution. Congress has implied powers, and can take any actions not specifically forbidden. The Constitution allows Congress to act for the general welfare so it could charter a bank.

14 A National Bank & A New Capital 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.

15 Whiskey Tax Causes Problems 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.

16 "Famous Whiskey Insurrection in Pennsylvania", an 1880 illustration of a tarred and feathered tax collector being made to ride the rail.

17 The Whiskey Rebellion 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.

18 George Washington reviews the troops near Fort Cumberland, Maryland, before their march to suppress the Whiskey Rebellion in western Pennsylvania.

19 Political Parties Emerge Despite Washington s disapproval, two political parties emerged. Democratic Republicans Favored Jefferson and Madison. This party was strongest among Southerners and farmers. Federalists Favored Hamilton and was strongest among Northerners, merchants, and the wealthy.

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