The Federalist Era 1787-1801 Background Information, Judiciary Act, and Hamilton's Fiscal Program

• Background Information
  • President Washington
    • unanimously elected president by Electoral College in 1789
      • sworn into office in the capital city during that time- NYC
      • during his term the capital was moved to Philadelphia, while DC was being laid out
    • John Adams was first ever VP
    • Washington elected a cabinet- which was not part of the Constitution. He elected the cabinet based on ability, not how much he liked them.
      • Thomas Jefferson: Secretary of State
      • Alexander Hamilton: Secretary of Treasury
      • Henry Knox: Secretary of War
    • Bill of Rights- was adopted in 1791
• Judiciary Act of 1789 (article 3 of the Constitution) created federal courts
  • 3 things the act established
    • Supreme court with supreme justices and five associate justices.
    • Federal district and circuit courts
    • Established office of Attorney General. Governor
  • John Jay was the first chief justice, but he hated it because he never used his power of judicial review.
  • Randolph was the first ever attorney general, and his job was to enforce laws passed by congress. Used the US Marshall Service, which is the oldest law enforcement agency
  • Chrisholm vs. Georgia 1793: led to Amendment 11, which says that if someone sues a person in another state over a land issue, then the case shall be held in the state of the defendant
• Hamilton's Fiscal Program
  • Alexander Hamilton's General idea: favored the rich people, so that they would help the less wealthy. He believed cutting the rich people financial breaks would make them lend government money and political support.
  • "Report on Public Credit," 1790: Hamilton said a little bit of public debt is a good thing, aka you have to spend a little money to earn it. 4 part Fiscal Program:
    • Funding
      • First goal was to restore the national credit plus a little bit of interest back
      • protective tariff
      • did this by selling government bonds of depreciating value to country people
      • Jefferson got really mad, and told Hamilton to pay back all the people who he cheated in order to boost his political image. It was't really possible to pay back the original stock holders anyways.
    • Assumption: This is the program of Hamilton (the federal government) assuming all state debts. Hamilton was trying to get the wealthier people to tie to the national government and not the state government.
      • In exchange for the assumption program, Thomas Jefferson wanted to move the national capital. This was called the Capital-Assumption Compromise. Bannecker was the black man who surveyed the land for DC. Pierre L'Enfant was the frenchman who laid out the streets of DC.
    • Custom Duties and Excise Taxes
      • Custom Duty: a custom is a tax on imports, also called a tariff
        • Report on Manufacturing or Revenue Act of 1789: an 8% tax on imported goods to the United States. This mostly applied to the British.
        • "Report on Manufacturing," in 1791: Hamilton wants the nation to become more industrial, and in this essay he stresses the need for something called a protective tariff. The purpose of the protective tariff is to protect the young and upcoming industries from foreign competition. Two ways this could be taken too far!
          • Retaliation: England would fight back with taxes, and the two sides would just keep taxing each other.
          • Freedom of Choice: some people thing this is unfair. Its not really capitalism or free enterprise.
      • Excise Tax: a tax on a specific item. For example, alcohol, cigarettes, soft drinks, and tires. Hamilton made a 7 cent tax per gallon tax on whiskey. Col. Carrington was the fellow Virginian who advised Washington to pass the tax because "people would eventually like the tax."
        • The tax led to the Whiskey Rebellion in 1794
          • in Western Pensylvania
          • annoying/hurting the profits of the distillers
          • distillers started tarring and feathering collection officers
          • Washington responded with force by calling on militia to crush the rebellion.
          • The Federal Government now commanded a new respect- we will pass laws and enforce them!
          • The Jeffersonians said that the fed government used too much force. Little disagreements like this eventually led to the two party system.
    • Bank of the United States
      • Hamilton wanted to create a Bank of the United States as apart of his financial plan.
        • store national funds, so they could be in circulation
        • print paper money (backed with gold)
        • got one half of his inspiration from the British bank, and the other half from Robert Morris's commercial Bank of North America
        • 4/5 private, 1/5 government owned
        • Intensely debated in Congress
          • Thomas Jefferson was against the bank. He said it was unconstitutional, and advocated for a strict interpretation of the Constitution. He used amendment 9 to say that since the constitution didn't say the federal government could make a bank, it was reserved for the states.
          • Alexander Hamilton was all for a loose interpretation of the Constitution. He used the elastic clause (article 1 section 8 clause 18) to say that it was necessary and proper.
          • The North was all for the bank and the South was not since it was located above the Mason Dixon line