Lesson 9.1: Washington’s Presidency Today we will discuss the political conflicts that arose over Alexander Hamilton’s financial plan. (HSS 8.3.4)

Vocabulary discuss – talk about or talk over political – having to do with government conflicts – disagreements precedent – an example that would become standard practice financial – having to do with money and budget

Check for Understanding What are we going to do today? What is one political leader you can name? What conflict have you had with a family member recently? What precedent is there for scheduling a trip to Knott’s Berry farm at the end of this school year? Why do adults sometimes worry about financial concerns?

What We Already Know In the new Constitution, the government was divided into legislative, executive, and judicial branches.

What We Already Know As the head of the executive branch, the new President would have much more power than any other American ever had, so electing the right man was very important.

What We Already Know Like fellow Virginians Patrick Henry and George Mason, Thomas Jefferson always saw a government with too much strength as a threat to the rights of the people.

Read aloud with me: In 1788, the first presidential election was held. George Washington was elected president and the runner-up, John Adams, was became vice-president.

B tell A Who became the nation’s first vice-president? Be sure to re-state the question in your response!

Read aloud with me! As the first president, Washington faced a difficult task. He knew that all eyes would be on him, and that his every action as president would set a precedent.

A tell B What is a precedent? Be sure to re-state the question in your response!

Congress established the federal court system. The Constitution created a Supreme Court but Congress argued about how much power the Supreme Court should have. Since the states already had their own courts, how would authority be divided between the state and federal courts?

To create a court system, Congress passed the Judiciary Act of 1789. John Jay, was appointed by President Washington as chief justice.

Congress created three departments to help the president lead the nation. Washington appointed talented people to head these departments. These men, who are referred to as his cabinet, helped the president with the many issues and problems he has to face.

A ask B What was the purpose of Washington’s cabinet? Be sure to re-state the question in your response! The purpose of Washington’s cabinet was to help the president with the many issues and problems he faced.

Read aloud with me! For Secretary of War, Washington picked Henry Knox, a trusted general during the Revolution, to oversee the nation’s defenses.

For Secretary of State, Washington chose Thomas Jefferson, former ambassador to France. The State Department oversaw relations between the United States and other countries. These relations are usually referred to as foreign policy.

The brilliant Alexander Hamilton was made Secretary of the Treasury. As Treasury Secretary, Hamilton would manage the government’s money.

B ask A What departments made up Washington’s cabinet? Be sure to re-state the question in your response! Washington’s cabinet was made up of the War Department, the Treasury Department, and the State Department.

The new country faced several economic problems. The United States needed to establish itself with other countries as a nation that was responsible about money.

The nation needed to establish a stable, growing economy.

The nation owed millions of dollars in war debts that needed to be repaid, so that it would have good credit.

Get your whiteboards and markers ready!

1. What economic problems did the new government face? The government owed millions in war debts. The government needed to find a way to raise revenue. The size of the army needed to be increased in order to defend the frontier against Indians. Congress needed to create a financial plan to handle the debt. The money supply of the new nation was too small. Choose all that are true!

It’s two purposes: 1. Create a stable economy 2. Build good credit

What is revenue? Revenue is money earned by the government through taxes, tariffs, or land sales.

How could the nation accomplish these two steps? - pay off the national debt - levy an excise tax - create a national bank - pay off the states’ debts - pass a protective tariff

Check for Understanding What were Hamilton’s two purposes for his financial plan? What would the country have to do to create a stable economy and build good credit? What kind of debts had to be paid? What were three ways Hamilton suggested to raise revenue?

Paying Off the National Debt Hamilton knew that the country would need to borrow money at some time in the future. Hamilton argued that these brave bond-holders should be re-paid by the government, or the nation’s credit rating would fall. During the war, many Americans bought bonds, which were loans to the Continental government.

A bond is a loan made to the government. A ask B What is a bond? Be sure to re-state the question in your response! A bond is a loan made to the government.

Objections to Hamilton’s Plan James Madison During the difficult economic times of the Confederation period, many of the original bond purchasers had been persuaded to sell their bonds by crafty speculators. “Bond speculators will benefit, not the original purchasers of the bonds!”

Objections to Hamilton’s Plan A speculator is someone who buys bonds, land, etc., in the hope that it will be much more valuable later. Many desperate patriots had sold their bonds for a fraction of their value, out of fear that the government would never redeem them.

Madison objected to Hamilton’s plan to redeem the Revolutionary War bonds. James Madison “Bond speculators will benefit, not the patriots who were the original purchasers of the bonds!”

“The benefits outweigh the injustice!”

Check for Understanding Why was it important to Hamilton that the national debt be paid down? What is a bond? Why did Madison object to redeeming the Revolutionary War bonds? Did Congress approve Hamilton’s plan to redeem the bonds?

Paying Off the States’ Debts Hamilton wanted the national government to assume (‘take over’) all remaining state debts, and pay them off for the states. “As long as any state is in debt, all the United States will be looked upon as poor credit risks.”

B tell A What does it mean to assume a debt? Be sure to re-state the question in your response! To assume a debt is to take it over and pay it off as if you owed the debt.

Paying Off the States’ Debts But most Southern and Mid-Atlantic states had already paid off their Revolutionary War debts. Hamilton’s plan would force all the states to bail out the New England states.

Objections to Hamilton’s Plan “To pay the debts of northern states would be unfair to those citizens in the South who have worked so hard to pay off their own debts!”

A tell B Why did Southern states object to debt assumption by the federal government? Be sure to re-state the question in your response! Southern states object to debt assumption by the federal government because they’d already paid off their debts.

Hamilton offered a compromise. “If you Southern states will support me, I will see to it that the new national capital will be built in the South.” Madison, Jefferson, and other Southern leaders agreed, and the District of Columbia was created to be home of the capital city.

Check for Understanding Why was it important to Hamilton that the states’ debts be paid down? Why did Madison object to the national government’s assumption of the states’ debts? How did Hamilton get the South to support his plan to assume the states’ debts?

An excise tax is a tax levied against a specific manufactured item. To raise the revenue needed to pay off the debts, Hamilton suggested an excise tax. What’s an excise tax? An excise tax is a tax levied against a specific manufactured item.

The money generated by an excise tax could be used to redeem the war bonds and repay loans. He asked Congress to levy an excise tax against the manufacture of whiskey.

For many Westerners, making whiskey was their only source of cash. Although whiskey was made in every state, this excise tax would be especially hard on Westerners. For many Westerners, making whiskey was their only source of cash.

Hamilton’s call for an excise tax outraged Westerners.

Frontier farmers refused to pay the tax, and began to attack the tax collectors. Their rebellion spread swiftly throughout the western counties of Pennsylvania.

In Section 9.2, you will read about how Washington brought a quick end to this ‘Whiskey Rebellion.’

Check for Understanding Why did Hamilton want Congress to levy an excise tax? What item did Hamilton want taxed? Who objected most to this part of Hamilton’s financial plan? How was the Whiskey Rebellion ended?

Hamilton wanted Congress to create a national bank. “A national bank could raise revenue by lending money at interest.” “By controlling the amount of money available for loans, the national bank could have a stabilizing effect on the economy.”

Jefferson objected to Hamilton’s call for a national bank. “The Constitution does not give Congress the authority to create a national bank.”

Hamilton argued that such a bank was constitutional. “The Constitution does not prohibit Congress from creating a national bank. To the contrary, the elastic clause does give us the authority to do so.”

Jefferson believed in strict construction: Congress may only do those things specifically authorized by the Constitution.

Hamilton believed in loose construction: Congress may do anything not specifically prohibited by the Constitution.

Check for Understanding Why did Hamilton want Congress to create a national bank? Why did Jefferson object to this part of Hamilton’s financial plan? What is the elastic clause? What is the difference between strict and loose construction?

Hamilton asked Congress to set up a series of protective tariffs. “These tariffs will bring in revenue we need to pay our debts!” What’s a tariff? A tariff is a tax on imported goods.

Protective tariffs raise the cost of buying imported manufactured goods. If foreign imports are more expensive, shoppers will be more likely to buy American products. This protects Ameri-can manufacturers from foreign competition.

Only New England had an economy based on manufacturing and trade. Protective tariffs would be of benefit only to the northeastern states. The rest of the nation’s citizens would have to pay higher prices for all manufactured goods.

Hamilton’s Financial Plan

For what TWO reasons did Hamilton support tariffs? They increased his political power. They raised money for the government. They encouraged the growth of American industry. They made the Southern states richer.

Why did states outside the Northeast object to the protective tariffs? They wouldn’t bring any real revenue to the country. Other states were jealous of the profits northeastern states were already making on cotton. Only the Northeastern states would benefit from the tariffs. Citizens from the other states would have to pay higher prices for manufactured goods. Choose all that are true!