THE DEVELOPMENT OF STRONGER CENTRAL GOVERNMENT AND NATIONATIONALISM: DISCUSS THE DEVELOPMENT OF NATIONALISM AND THE KEY ROLES PLAYED BY JOHN MARSHALL, ALEXANDER HAMILTON' THOMAS JEFFERSON AND ANDREW JACKSON. Objective One: Discuss the difference between Federalist and Antifederalist In 1789, the United States was a nation in name only as people still thought of themselves as citizens of their state first and then the nation. As a result of the weakness of the Articles of Confederation the majority of the people realized the need for a new and stronger government BUT everyone was not in agreement as to how much power the new government should have It is important to keep in mind that the country was large and sparsely settled, that communication was limited and that the central government did not influence
the lives of most people to any great degree' Many persons, including some who had been in the forefront of the struggle for independence believed that a centralized republican system would not work in a country so large and with so many varied interests as the United States. These opponents of the Constitution were called Antifederalists who drew their support primarily from rural areas with subsistence agriculturally based economies, but their leaders came from all regions and classes. Many of the Antifederalists leaders were moved by ideological reservations. They were concemed that the Constitution lacked a Bill of Rights to protect individuals from an aggressive government. Also, many of the Antifederalists leaders feared the new government would be controlled by the wealthy and thus would
remove the control of government from the people. The supporters of the new constitution called themselves Federalists. In order to counter the Antifederalists arguments some of them (James Madison, John Jay, and Alexander Hamilton) published a series of newspapers articles called The Federalist Papers. They pointed out that power within the national government was divided among a (l) president, (2) a bicameral legislature, and (3) a judiciary. It was argued that each branch would "check and balance" the others and thus preserve liberty. Madison suggested that the great size and social diversity of the United States would safeguard republican government rather than destroy it. He argued that the great number of interest groups would diffuse power and prevent tyranny. The Federalists also argued that the new government would provide economic, social and political stability; something that the government under the Articles could not provide. Besides merchants and creditors, the Federalists also included military officers, diplomats, and officials who had served in the Continental Congress during the war. These men had acquired a national, rather than a state or local outlook. With the ratification of the new Constitution the political debates that took place on the national level were more than ever directly related to (l) sectional, (2) social and (3) economic interest groups rather than individual states.
Learning Objective Four: After reading through Washington's Farewell Address discuss Washington key concerns facing the early Republic. How did his address and his leadership contribute to the concepts of Federalism and Nationalism? From the John Adams HBO series: Thomas Jefferson and Alexander Hamilton' debate over breakfast highlights federalists and anti-federalists concerns.
John Marshall Required Reading: John Marshall's Radical Agenda
John Marshal Learning Objective One Discuss the development of the Federal court system and show how John Marshall played a key role in its development and contributed to strengthening and defining "federalism" in the United States by examining his significant rulings: Madison v. Marbury, McCulloch v. Maryland, and Dartmouth College v. Woodward Objective 2.2 Discuss the development of the Federal court system. In order to fulfill the demands of the Constitution for a Federal court system. Congress passed the Judiciary Act of September 24,1789. The Judiciary Act created a Supreme Court staffed by a chief justice and five associated justices, three circuit courts with two supreme court justices
on each circuit court, and 13 district courts authorized to review the decisions of the state courts. It also created the office of Attorney General as well as all other miscellaneous office necessary run the new government;.
Most important of all, the Judiciary Act provided for the principle of judicial review There are two types of judicial review: (l) reviewing the Constitution and federal legislation <using a loose or strict interpretation> and Through his judicial interpretations he helped cement the nation together by spelling out the procedure by which the federal courts could review states laws and state court decisions involving powers and duties delegated by the Constitution to the federal government. (2) reviewing state laws and court decisions involving powers and duties delegated by the Constitution to the federal government. Although the Judiciary Act created the principle of judicial review it was up to John Marshall, as a Federalist and the nation's fourth Chief Justice, to put it to use. How did John Marshall s court decisions help develop a strong central government? Marshall's significance lies in the fact that he gets people to start thinking nationally as a result of his 34 years as Chief Justice of the U.S. Supreme Court. Also, Marshall's loose interpretation reviewing the Constitution kept the states from overwhelming federal laws Marshall's contribution can best be evaluated by a review of some of his most important court decisions: Marbury vs. Madison (1803). MuCulloch vs. Maryland (1819) Dartmouth College vs. Woodward both (1819). An example of reviewing the Constitution and federal legislation is the case of Marbury vs. Madison. An appointment made by John Adams in 1801 presented Marshall with a historic opportunity to establish the principle of judicial review. When William Marbury, whom President Adams had named a justice of the peace for the District of Columbia, learned that his commission was being denied him by the new Secretary of
State, James Madison, (Madison was appointed by the new President Thomas Jefferson) he sued for its delivery. Marshall knew that Jefferson or Madison would hardly spring forward to enforce a writ to deliver the commission to his fellow Federalist Marbury. He therefore dismissed Marbury's suit to avoid a direct political showdown but at the same time he won a political victory by stating that part of the Judiciary Act of 1789 on which Marbury tried to base his appeal was unconstitutional. Marshall said the act that attempted to assign to the Supreme Court powers that the Constitution had not foreseen. In this self denying opinion, Marshall greatly magnified the authority of the Supreme Court. Examples of judicial review of state laws and state court decisions involving powers and duties delegated by the Constitution to the federal government are: McCulloch v. Maryland and Dartmouth College v. Woodward both in 1819 AND both of these cases bolstered the power of the federal government at the expense of the states. McCulloch v. Maryland The state of Maryland had attempted to impede operation of a branch of the Second Bank of the United States by imposing a tax on all notes of banks not chartered in Maryland. Though the law, by its language, was generally applicable to all banks not chartered in Maryland, the Second Bank of the United States was the only out of state bank then existing in Maryland, and the law was recognized in the court's opinion as having specifically targeted the U.S. Bank. The Court invoked the Necessary and Proper Clause of the Constitution, which allowed the Federal government to pass laws not expressly provided for in the Constitution's list of express powers, provided those laws are in useful furtherance of the express powers of Congress under the Constitution. This case established two important principles in constitutional law. First, the Constitution grants to Congress implied powers for implementing the Constitution's express powers, in order to create a functional national government. Second, state action may not impede valid constitutional exercises of power by the Federal government. A similar example was the Dartmouth College v. Woodward case
in which Marshall and the Court invalidated state laws conflicting with the federal Constitution and protected property rights against popular pressures. The college had been granted a charter by King George III in 1769, but the state legislature of New Hampshire had seen fit to change it. Dartmouth appealed the case. The case arose when the president of Dartmouth College was deposed by its trustees, leading to the New Hampshire legislature attempting to force the college to become a public institution and thereby place the ability to appoint trustees in the hands of the governor. The Supreme Court upheld the sanctity of the original charter of the college, which predated the creation of the State. The decision settled the nature of public versus private charters and resulted in the rise of the American business corporation and the free American enterprise system In this sense his nationalism was the most enduring of the era. He supported a strong federal govemment and helped to mold a stable, nationally uniform environment for business and thus ranks as one of the foremost creators of our existing national government.
ALEXANDER HAMILTON Required Reading: The First Wall Street Collapse
https://www.youtube.com/watch?v=tzh4sgdk0ss
Discuss Alexander Hamilton's "Report on Public Credit" or his "Report on a National Bank" and demonstrates the use of the "trickle down" theory. Since Great Britain had already established a successful banking and credit system, Hamilton looked to them for economic models that might be reproduced in this country. Hamilton's government policies supported the wealthy because his view of human nature made him afraid of total democracy. He assumed that in a republican society, the gravest threat to political stability was anarchy rather than a monarchy. He felt the common people lacked the ability to govern. Any attempts by them to rule or for government to rule in their direct interest would only "... exciting their jealousies and apprehensions to throw affairs into confusion and bring on civil commotion." The best hope for the survival of the Republic,
Hamilton believed, lay with the country's monied classes. If the wealthy could be persuaded that their economic self-interest could be advanced (or made less insecure) by the central government, they would support it and bring a greater measure of prosperity to the common people. From Hamilton's perspective. there was no conflict between private greed and public good one was the source of the other. Hamilton realized America's strength and prosperity depended upon incentives for the wealthy and powerful, as well as the striving masses. Today this philosophy is referred to by the Reagan and Bush Administrations as "supply side economics" or the trickle down theory. Explain the trickle down theory and relate it to either Hamilton,s reports on public credit or a national banking system. During bad times: spend money to take care of people, cut taxes to create jobs. During good times: Gradually raise taxes as the economy improves to lower government debt. The "trickle down" theory provides financial incentives to business and wealthy individuals to invest in the economy. The direct benefits in the form of more wealth go to the wealthy and big business while the indirect benefits "trickle down" to the common person in the form of more jobs and thus more purchasing power. The above mentioned theory is clearly demonstrated by reviewing Hamilton's reports on public credit and on a national banking system. Hamilton justified both reports by the doctrine of "implied powers." He originated the doctrine of "implied powers" or loose interpretation of the Constitution that freed the constitution from its exact wording, permitting the government to evolve in a changing world. Hence, Hamilton's reports and contributions are significant because they lead to the development and implementation of the economic philosophy that our society is governed by to this day. THIS ECONOMIC PHILOSOPHY TIED THE INTERESTS OF THE MONIED CLASSES AND THE NEW GOVERNMENT TOGETHER AND STARTED THE WEALTHY TO THINK NATIONALLY. Other significant contributions of the reports: They give the United States the best credit rating (report on public credit) or provides for a uniform money system and a stable economy (report on national bank). Both reports gave people faith in the government. Both reports got people to start thinking nationally.
Both reports helped create our political two party system. Discuss Hamilton's report on Public Credit. The unsettled state of the nation's finances presented the new government with a staggering challenge. In September 1.789,t he House of Representatives Asked Hamilton for suggestions. Hamilton responded with three reports within two years: (1) on public credit, (2) a proposed national bank, and (3) manufacturing and trade guidelines. Hamilton's Report on Public Credit contained two major recommendations addressed FUNDING and ASSUMPTION. FIRST, under his plan for FUNDING the new federal government would fund its foreign and domestic obligations at full face value. America must have credit for industrial development, commercial activity, and the operations of government. Her future credit would depend on how she met her present obligations. The United States debt, foreign and domestic, "was the price of liberty, The faith of America has been repeatedly pledged for it... Among ourselves, the most enlightened friends of good government are those whose expectations [of prompt payment] are the highest. To justify and preserve their confidence; to answer the calls of justice; to restore landed property to its due value; to furnish new resources, both to agriculture and commerce; to cement more closely the Union of the States; to add to their security against foreign attack; to establish public order on the basis of an upright
and liberal policy; these are the great and invaluable ends to be secured by a proper and adequate provision, at the present period, for the support of public credit." Everyone agreed the foreign debt of $l1.7 million owed mostly to the Netherlands, Spain and France should be paid at par. Consequently; almost overnight Hamilton's fiscal feat had established the public credit. As a result the Treasury was able to secure needed funds in the Netherlands on terms more favorable than any other borrowing nation. However, many people objected to paying the $42.4 million at par which the government borrowed under the Articles of Confederation from the American people during the war.
The opposition was led by Jefferson and Madison who were upset when urban speculators rushed to rural areas where they purchased loan certificates from unsuspecting citizens at bargain prices. It was estimated that, of the nation's domestic obligation, about 20,000 people owed a majority, only 20 of whom were the original creditors. Hamilton's program allowed all current holders of loan certificates, no matter how they obtained them, to exchange the old certificates for new government bonds bearing 6% interest. Madison was concerned about the citizens and soldiers who, because of financial hardship, were compelled to sell their certificates at rock bottom prices. Why should wealthy speculators now profit from their hardship? Also to many back country farmers, making money without physical labor appeared immoral, un republican, and, certainly, un American. Too many records had been lost since the Revolutionary War for the Treasury Department to identify all the original holders. The result: In February 1790 Congress soundly defeated Madison's proposal to pay "...the highest price (to the speculators) which has prevailed in the market and the remaining funds would go to the original purchasers." Also, nearly half the members of the House of Representatives, 29 of the 64, owned Continental securities, many through purchase. The debate and organized opposition between the urban commercial class and the agricultural rural class over the domestic debt began the solidification of the two interest groups that would be the foundation of our two party system. Next, under his ASSUMPTION program, Hamilton urged the federal government to pay all remaining state debts. Hamilton argued the state debts were a proper national obligation, for they had been incurred in the war for independence. Hamilton believed federal assumption of state debts would chain the states more tightly to the "federal chariot." It was hoped that the maneuver would shift the attachment of wealthy creditors from the states to the federal govemment. Getting the wealthy to THINK nationally was a crucial link in Hamilton's political strategy to strengthen the central government. Hamilton also reasoned that the federal government's assumption of the states' $21.5 million debt would significantly reduce the power of the individual states to shape national economic policy and thus create a strong federal government. Assumption unleashed great criticism from states like Virginia which had already paid its revolutionary war debts, and Hamilton's program seemed to reward certain states like Massachusetts for failing to put their finances in order. Virginia had levied high taxes to pay its debts and now its citizens would have to pay the debts of other states as well... mostly for the benefit of northem speculators. The debate over financing the federal debt would help polarize the southern agricultural
interest against that of the northern commercial interest which would help lead to the two party system. To win support for his controversial plan, Hamilton made a deal with the large, powerful congressional delegation from Virginia. He agreed to support the transfer of the national capital from Philadelphia, its temporary home, to to a new federal district across the Potomac River from Virginia. Objective 4.3 Discuss Hamilton's Report on the National Bank. As the cornerstone of his financial system, Hamilton proposed a Bank of the United States. A great admirer of the English, Hamilton modeled his bank after the Bank of England. He proposed a powerful private institution, of which the federal government would be a 20Yo stockholder and in which the federal Treasury would deposit its surplus moneys The federal government would not only have a convenient strongbox but federal funds would stimulate business by remaining in circulation. The bank would also print urgently needed paper money and thus provide a sound and stable national currency Hamilton also argued that a growing financial community required a central bank to facilitate increasingly complex commercial transactions. The Bank of the United States was created by Congress In 1791,was chartered for 20 years.
The bank would sell $25,000 shares of stock at $400 each, giving the bark $10 million to start. The government would buy 20%of all stock. The remaining 80% would be sold to the general public. The stock was completely sold out in less than 4 hours. There were 25 men on the Board of Directors of which the President appointed five. The other2 0 would be chosen by private stockholders. The bank's charter prompted a major debate on constitutional principles. l. In his written opinion to Washington Jefferson argued that Congress lacked the authority to establish a national bank. His strict view of the Constitution rested on the assumption that the government and only the powers explicitly stated in the document. Hamilton Disagreed and prepared masterful says entitled "Defense of the Constitutionality Of the Bank." He assured Washington at Article I, Section 8 of the Constitution
" The Congress shall have Power...To make all Laws Which shall be necessary proper for carrying into Execution the foregoing Powers" justified issuing charters national banks. The "foregoing Powers" upon which Hamilton placed so much weights are ( 1) taxation, ( 2) regulation of commerce and ( 3)making war. HE BOLDLY ARTICULATED A DOCTRINE OF IMPLIED POWERS, AN INTERPRETATION OF THE CONSTITUTION THAT NEITHER MADISON NOR JEFFERSON HAD ANTICIPATED. Hamilton's so called loose construction carried the day, and on February 25,1791, Washington signed the bank into law. Secretary of State Thomas Jefferson, an ardent champion of states' rights predicted that state banks could not survive competition from this monopolistic monster. More alarming he felt that the liberties of the states would be jeopardized by the bank which had a virtual monopoly of the government's surplus funds. Jefferson and Madison also opposed the bank because they felt it would perpetuate the interest of the wealthy and would provide little benefit to the common man and farming interest. Jefferson was right, Hamilton's followers were mainly merchants, bankers, and speculators. They gradually began to call themselves Federalists. This name was derived, of course, from the term for supporters of the Constitution in 1788. In general, Jefferson and Madison aimed their arguments toward small farmers Southern planters, and old Antifederalists. They even adopted the name "Democratic Republican"... though it was "Republican" that eventually stuck. In summary Hamilton's dynamic programs under the leadership of Washington strengthened the government politically while bolstering it financially. His programs of funding the domestic debt, assumption, and the bank all encroached sharply upon states rights and created political battles that would lead to the formation of America's two party system. These programs shaped a strong national economic policy which created a permanent national debt and tied the interests of the new financial elite to the national government.
Though a skillful planner, Hamilton was at heart a gambler a taker of calculated risks. He was playing for enormous stakes, and the outcome might be either a resounding success or a crashing failure. The huge debt, which he had so confidently urged Congress to assume, could be paid off only if ample receipts flowed into the custom houses. Disaster would befall the nation if foreign trade fell or if it were choked off by war with America's best customer, Great Britain. Consequently, in foreign policy Hamilton and the Federalists were always pro British. Finally, Hamilton's programs bolstered faith in the government's credit and stabilized the economy and money supply by providing a sound banking program and a uniform currency system. Learning Objective Four : How would you judge the leadership qualities of President Washington in his decision to put two such opposed thinkers as Hamilton and Jefferson in his cabinet? Who do you think was the more significant member of the cabinet? Read this chapter: Launching the New Nation and refer to the Hamilton and Jefferson lectures to respond.