WASHINGTON’S WORLD Cabinet; National Finances; Whiskey Rebellion; French Revolution; Political Parties

Cabinet Decisions  1789: Washington elected 1 st President of the United States.  Cabinet: appointed heads of the federal departments.  Washington often turned to old friends and war veterans, men he could trust.  Appointees:  Secretary of War: Henry Knox  Secretary of the Treasury: Alexander Hamilton  Secretary of State: Thomas Jefferson

Washington, Knox, Hamilton, Jefferson

National Finances (Pt. I)  American Revolution was fought using both foreign and domestic money.  Domestic money was obtained from American citizens through the sale of war bonds – a note issued by the government promising to pay off a loan with interest.  After the revolution, war bonds depreciated (went down in value) significantly. People were selling them for 10% of their promised value. Most people who owned war bonds were southern farmers and war veterans.

National Finances (Pt. II)  Wealthy, eastern merchants (speculators) took a gamble and bought these war bonds cheap, hoping they would one day increase in value.  Post-American Revolution debt ($52 million) is crippling the young nation.  $40 million owed to U.S. citizens  $11.7 million owed to France, Spain, and the Netherlands  Problem: U.S. must fix the national financial problems. Who should take the lead?

Hamilton’s Plan (Pt. I)  National government will accept all $52 million of debt (domestic and foreign).  Wealthy Eastern creditors, bankers, and merchants (speculators) would now have a stake in federal government’s success.  Would allow government to borrow money and pay back debts (foreign and domestic) – system of public credit.  U.S. government will pay back all war bonds, but that money will go to speculators who bought the war bonds at 10% value. Southern farmers and war veterans will get nothing.  Problem: Is this financial plan the best thing for the nation?

Hamilton’s Plan (Pt. II)  Create a National Bank.  Government needs the bank to manage its debts and interest payments.  National Bank would issue a national currency, which would promote trade and commerce.  Problem: Is a National Bank a good idea?

Whiskey Rebellion  1791: Hamilton convinces Congress to place a direct tax on manufacture of whiskey.  Whiskey tax enraged Western farmers. Believed it was unfair tax aimed at only one group of people. Whiskey was used many ways in the West:  Currency  Medicinal  Cooking  1794: Rebellion erupts in western Pennsylvania.  Farmers terrorize tax collectors, stop court proceedings, rob the mail, destroy whiskey-making stills of those who paid the tax.  Problem: How to deal with rebels?

French Revolution  1789: French Revolution breaks out as peasants storm the Bastille.  1793: Radical group of French peasants start seizing private property and openly executing people in the streets.  Many Americans sympathize with the French people and their fight for liberty.  However, other Americans were horrified with the violence, bloodshed, and chaos.  Problem: Who should America support – king or peasants?

Rise of Political Parties  In each of these three significant issues, America was divided into two sides.  Hamilton’s Financial Plan  Whiskey Rebellion  French Revolution  These two sides were led by two equally significant men: Alexander Hamilton and Thomas Jefferson.  Alexander Hamilton’s faction = Federalists  Thomas Jefferson’s faction = Democrat-Republicans (aka Republicans)

Quick Overview  Role of Federal Government vs. State Governments  Federalists: National government supreme.  Republicans: State governments supreme.

Ruling Power in the Country  Federalists: Ruling power given to wealthy, educated.  Republicans: Ruling power given to all landowners.

Economy  Federalists: Government should promote manufacturing.  Republicans: Government should promote agriculture.

Interpretation of the Constitution  Federalists: Loose interpretation of the Constitution.  Republicans: Strict interpretation of the Constitution.

Protective Tariffs  Protective tariff: a tax on foreign imports to protect domestic products.  Federalists: Protective tariffs protect domestic industries.  Republicans: Protective tariffs burden farmers.