George Washington 1 st Term as President

Washington is elected President and John Adams becomes vice-president. The first nation’s capital is in New York City. One of the first debates in Congress is over what to call Washington. Many wanted to call him “His Excellency” or “His Highness” Mr. President was agreed upon.

First Order of Business 1.Courts –Congress passed the Federal Judiciary Act of This act gave the Supreme Court six members. One chief justice and 5 associate justices. –Provided for other lower, less powerful federal courts. –John Jay is appointed the chief justice.

Washington’s Cabinet 2.Departments Secretary of war – Henry Knox was to oversee the nation’s defenses. Secretary of state – Thomas Jefferson was to oversee relations between the United States and other countries. Secretary of the treasury – Alexander Hamilton was to manage the government’s money. Advisor to the government on legal matters Washington picked Edmund Randolph as attorney general

Economic Problems 3. Economics The new government needed to repay war debts. Foreign as well as at home. By paying the debts it would win respect and show responsibility. Hamilton came up with his financial plan that would show the central government stronger than the state governments and encourage business and industry.

Hamilton’s Financial Plan Three steps to improve the nation’s finances

Pay Off All War Debts –Paying off war debts caused sectional differences because many Southern states had already repaid their debts and did not want to pay the Northern states debts. –During the Revolutionary War, Congress issued paper certificates, or bonds, which promised to pay the holder the amount printed on the bond plus interest. –Bonds were even given to soldiers to get them to enlist in the army

Bonds Because of the war and the economic depression that followed, many people were forced to sell the bonds for whatever they could. Sometimes as little as 15 cents to the dollar. Speculators willing to gamble on the future bought up the bonds for low prices.

Bonds Hamilton wanted to buy back the bonds at full value. The whole point was to restore national credit. That could only be done if all those who had bought the bonds, at any time and for whatever reason, were paid in full.

Compromise –Compromise was reached. In exchange for Southern support the Northern states agreed to place the new nation’s capital in the South. –The location was on the Potomac River between Virginia and Maryland. –Virginia and Maryland agreed to each give up some land therefore allowing the new capital to not be in one particular state.

Washington D.C. Why was it important to not have the capital in any one state?

Washington D.C. Because if a state had the United States government in its state they could and would have more influence then other states.

Raise Government Revenues –Tariffs created to raise money for the government and encourage the growth of American industry. –A tariff is a tax on imported goods. –The government placed the highest tariffs on foreign goods. –This ensured a steady flow of income to the government and made foreign goods expensive so encouraged people to buy American goods.

Create a National Bank –It would give the government a safe place to keep money. –It would make loans to businesses and government. –It would issue bank notes – paper money that could be used as currency.

Debate over Hamilton’s Plan Madison and Jefferson argued that the Constitution did not give the government the power to set up a bank. Strict Construction – narrow or strict interpretation- of the Constitution

Hamilton Favored a loose construction-broad or flexible interpretation-of the Constitution. Hamilton used the elastic clause to argue that the bank was “necessary and proper” Hamilton’s national bank is approved.