1. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics Chapter 6 The New Republic Section 1 Government & Party Politics

2. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics In 1789, the leaders of the new government gathered in New York City. The newly ratified Constitution was entirely untested. How did debate over the role of government lead to the formation of political parties? The Framers and President Washington knew that a good start was essential to the future of the republic. Focus Question

3. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics Washington’s Inauguration in New York City, 1789

4. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics When George Washington took office, he quickly established precedents for running the government. The new President faced many challenges: The nation was $52 million in debt. There was no navy and the army had only 400 men. Spain closed the Mississippi River in New Orleans to American trade. British troops occupied American land along the Great Lakes. Washington Takes Charge

5. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics Washington picked a Cabinet to head each of four executive departments in his administration. Secretary of State Thomas Jefferson Secretary of War Henry Knox Secretary of Treasury Alexander Hamilton Attorney General Edmund Randolph Washington Picks a Cabinet

6. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics The first task was to set up a court system. The Judiciary Act of 1789 created district and circuit courts and a six- member Supreme Court. The office of Attorney General was created to prosecute legal cases for the government. John Jay was appointed as first Chief Justice of the Supreme Court. The Judicial Branch

7. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics The huge debt was the biggest problem facing the administration. Treasury Secretary Hamilton suggested a controversial plan. Rather than just pay off the federal debt, state debts would also be assumed. Bonds for the total would be sold to wealthy investors. The investors would receive annual dividends and have a stake in helping the government succeed. Hamilton & The National Bank

8. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics Hamilton also proposed chartering a Bank of the United States to regulate state banks and insure business support. He hoped to replace the nation’s agriculturally based economy with commerce and manufacturing. He proposed a high tariff or tax on imported goods to earn revenue and encourage domestic industry. Hamilton & The National Bank

9. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics Hamilton saw 3 advantages to his financial plan 3 The plan would enrich investors who would reinvest and thus create more wealth. The plan would gain political support from the wealthiest Americans. 2 The plan would establish the nation’s financial credibility. 1 Arguments For The National Bank

10. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics Wealth would be redistributed from farmers to merchants, and from the South to the North. Investors who purchased the bonds would make huge profits at everyone else’s expense. The costs would fall on farmers who would have to pay excise taxes and higher tariffs. Antifederalists objected to Hamilton’s plan. They had 3 main complaints: 1 2 3 Arguments Against The National Bank

11. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics 1 st Bank of the United States, Philadelphia

12. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics Most southern states had already paid off their war debts. He asked why they should bail out northern states that still had debts. Jefferson believed the plan gave more power to the government than the Constitution permits. Secretary of State Jefferson opposed Hamilton’s plan. Jefferson & The National Bank

13. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics Hamilton favored a loose construction of the Constitution. Congress has implied powers, and can take any actions not specifically forbidden. The Constitution allows Congress to act for the “general welfare” so it could charter a bank. Jefferson favored a strict construction of the Constitution. Congress should be limited to the powers specifically granted by the Constitution. The Constitution does not give Congress power to charter a national bank, so it could not establish one Strict vs Loose Construction

14. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics In 1791, Congress accepted Hamilton’s plan. In return, a new national capital was created. Washington D.C. would be placed in the South, on the banks of the Potomac River. The national debt was funded, outstanding state debts were assumed, excise taxes and tariffs were levied, and the bank was authorized. A National Bank & A New Capital

15. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics An excise tax on whiskey led to divisions between the Federalists and the Antifederalists. To increase their profits, western Pennsylvania farmers made whiskey from their grain. The whiskey tax reminded farmers of British taxes. In 1794, some farmers resisted payment. They harassed and intimidated tax collectors. Whiskey Tax Causes Problems

16. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics "Famous Whiskey Insurrection in Pennsylvania", an 1880 illustration of a tarred and feathered tax collector being made to ride the rail.

17. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics Hamilton persuaded Washington to suppress the Whiskey Rebellion. Twelve thousand militiamen were sent to deal with the rebellion, but they found no organized insurrection. Then Jefferson criticized Hamilton for the use of federal force to repress legitimate criticism. The Whiskey Rebellion

18. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics George Washington reviews the troops near Fort Cumberland, Maryland, before their march to suppress the Whiskey Rebellion in western Pennsylvania.

19. Chapter 25 Section 1 The Cold War Begins Section 1 Government and Party Politics Despite Washington’s disapproval, two political parties emerged. Democratic Republicans Favored Jefferson and Madison. This party was strongest among Southerners and farmers. Federalists Favored Hamilton and was strongest among Northerners, merchants, and the wealthy. Political Parties Emerge