George Washington, Hamilton’s Plan, Whiskey Rebellion First steps, Court System, National Debt, Building the Economy

Washington Takes Office Washington was inaugurated on April 30th, 1789. Organized the first Cabinet – gave the President advice and were responsible for directing their departments 5 Departments – State, Treasury, War, Attorney General Office, Postmaster General Helped Congress set up the Supreme Court with the passing of the Judiciary Act Supreme Court made of one Chief Justice and 5 associate justices. The first chief justice was John Jay.

Reducing the Nation’s Debt Alexander Hamilton faced many problems as Secretary of the Treasury. 2 problems included a national debt and a weak economy The national debt is the total amount of money that a government owes to others. During the Revolution, the national and state government needed money so they borrowed from foreign countries and from ordinary citizens. The government used bonds –certificates that promised to repay the money loaned, plus interest, on a certain date- in order to borrow.

Hamilton’s Plan Hamilton wanted the government to repay the debts. His plan was for the government to buy up all the bonds issued by state and national governments before 1789. He then planned to issue new bonds to pay off the old debts. As the economy improved, the government could then pay off the new bonds. Hamilton said that U.S. must repay its debts or else it would lose the trust of foreign countries and investors. Many people like bankers and investors welcomed the plan, while others rejected it.

Debating the Plan James Madison led the opposition (against it) He argued that Hamilton’s plan would reward speculators (someone who invests in a risky venture in the hopes of making a big profit) James Madison said many southern states had already paid their debts and felt others should do the same

The Compromise Hamilton made a compromise- He offered to support the goal of making the nation’s capital in the South if southerners agreed to his plan to repay state debts Congress approved the plan Southerners agreed and the new capital was built along the Potomac River between Virginia and Maryland. It was called the District of Columbia. The new capital was to be ready by 1800.

Rebuilding the Economy Hamilton’s economic plan was two parts 1)The Bank of the United States was created in 1791. The government deposited tax money in the bank and the bank issued paper money. 2)He also asked Congress to pass a tariff (tax) on foreign goods brought into the country. North supported the plan because they were self-sufficient, while the Southerners did not approve because they bought many imported goods. In the end, Congress passed the tariff, but it was lower than what Hamilton wanted.

The Whiskey Rebellion To raise money for the Treasury, Congress passed a tax on all liquor made and sold in the U.S. Backcountry farmers disagreed with this tax. They grew corn but it was hard to ship, so they converted it to whiskey. This new tax made their trade expensive. So, in 1794 farmers rebelled against the tax and tarred and feathered collectors. Washington responded by sending the militia to PA who quickly broke up the rebellion. Washington even pardoned the farmers. Washington’s quick response proved to Americans that their government would act firmly and not tolerate violence.