1. Washington Administration: Precedents First Cabinet –Thomas Jefferson: State –Alexander Hamilton: Treasury –Knox: War Serves Only Two Terms Does Not Interfere with Congress Sticks to Foreign Affairs “Regal” Bearing Puts Down Whiskey Rebellion

2. Foreign Affairs Remains neutral in conflict between Britain and France Jay’s Treaty (1794) opens trade with Britain –Also opens up Washington to near hysterical criticism over his “treason” in favor of England –Helps convince him to resign after two terms in office Pinckney’s Treaty (1795) with Spain opens Mississippi and gets right of deposit in New Orleans –Opens the West to American settlement Farewell Address –No Permanent or entangling alliances –No long-term hatred of another country

3. Domestic Policies: Alexander Hamilton’s Plans Report on Manufactures –Protective tariff & federal money spent on roads and harbors. –Not passed by Congress. Report on Public Credit –Pay back debts to foreign nations ($12M) –Pay back bonds at full value ($42M) sells more bonds to pay for old bonds –Assume states’ debts ($25M) –Excise taxes (whiskey) –Create a National Bank

4. The National Bank Controversy National Bank –all federal funds deposited into bank –bank is owned by both private investors (80%) and the federal government (20%) –could become extremely powerful and could put control of the economy in the hands of a small group of wealthy investors; therefore many (especially Jefferson) distrust it. –The conflict over this issue, more than any other, drew the lines between advocates of a powerful central government (Federalists) and states’ rights advocates (Democratic-Republicans).

5. Constitutional Fight Over Bank Jefferson Argues: –Bank is unconstitutional –Amendment X says that all rights not delegated to the federal government are reserved to the states. –Bank is not “necessary;” therefore it is unconstitutional. –“Strict Construction” of Constitution. Hamilton Argues: –Bank is constitutional –“Elastic Clause” says that Congress can pass any law necessary to carrying out its specific powers. –Bank is “necessary;” therefore it is constitutional. –“Loose Construction” of Constitution.

6. Development of Parties FEDERALISTS Hamilton, John Adams, John Jay Want a powerful federal government Loose Construction Led by wealthy merchants & financiers Strongest in northern cities DEMOCRATIC-REPUBLICANS Jefferson & James Madison Want a weaker federal government and stronger states Strict Construction Led by wealthy farmers, especially southern “planters” Strongest in the South and West

7. Washington’s Farewell Address Foreign Affairs –No permanent or entangling alliances. –No long-term hatred of another country. Domestic Affairs –Parties are dangerous to the United States because they divide us. –Parties are dangerous because they can allow foreign states to gain influence in a party.