1. Washington Takes Office
Chapter 9.1

2. Overview
Describe the steps Washington took to make the new government work.
Explain the Hamilton’s plan to reduce the national debt and build the economy.
List the causes and results of the Whiskey Rebellion.

3. Washington Takes Office
Washington set a precedence for Presidents. (No description existed for day to day job).
First Cabinet, consists of five positions (State, Treasury, War and the Offices of Attorney General and Postmaster General)
Jefferson (Secretary of State)
Alexander Hamilton (Secretary of Treasury)

4. First Federal Court Congress passes in 1789, Judiciary Act
Creates Supreme Court
Consists of Chief Justice and Five Associate Judges
John Jay, first Chief Justice
Creates also district and circuit courts
Decision based on appeal from lower courts to Supreme Court

5. Reduce National Debt National debt created by Revolutionary War
Government borrows money by creating bonds, a certificate to pay on a certain date with interest.
Hamilton’s Plan: Repay both national and state debt
Buy back bonds issued before 1789, then issue new bonds
As economy improved, government would pay off bonds
Debate: James Madison (opposed) plan because it would reward speculators who would invest in the bonds to make huge profit

6. Debt (Cont)
During war, bondholders sold speculators a 1$ bond would go for 15 cents. The government would pay off the bond in full, meaning speculators would earn 85cents per $1 bond. Risk losing investors if not paid.
Hamilton compromised; offered capital be located in the south, south would support plan.
July 1790, Congress voted to pay debt, capital selected along the Potomac River, the area called the District of Columbia

7. Plan to build Economy
Created Bank of the United States. Government would place money from taxes in bank
Help manufactures created tariff, tax on all foreign goods, meant to protect local products.
North had more factories, supported by north, Southerners detested tariff because they bought imported goods.
Congress passed it, but very low tariff.

8. Whiskey Rebellion
To raise money for Treasury, Congress passed tax on all liquor
Backcountry farmer upset because corn was bulky and hard to transport, they converted it into whiskey
1794, official collect tax in Pennsylvania, farmers rebelled
Washington responds with militia to put down rebellion. First direct challenge to new government.