Pgs 209-215 Doodle Notes PDF

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The Federalist Era -

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*During the 1790s, the debates between Federalists and antiFederalists gave birth to the nation’s first political parties: Federalists and Republicans (also called the Democratic Republicans or Jeffersonian Republicans) *The two political parties came to represent two very different visions of America’s future development *In 1790, the United States were predominately a rural society; 80 percent of households were involved in agricultural production *The Republicans were mostly southerners like Thomas Jefferson and James Madison who wanted American to remain a nation of small farmers and a few large cities *Led by Alexander Hamilton, they embraced urban and commercial growth. Hamilton became the champion of northern efforts to promote trade, baking, finance, and manufacturing as the most essential elements of America’s future economy The Constitution provided a framework for nationhood but not a blueprint; it left unanswered many questions about the actual structure and conduct of the new government *On the whole, the Jeffersonian Republicans promoted a strict interpretation of the Constitution, while Federalists believed that the language of the Constitution should be interpreted broadly to enable the new federal government to take decisive action when necessary One of George Washington’s greatest challenges as the nation’s first president was to bridge the growing divides between Federalists and Republicans, northerners and southerners, merchants and planters

A New Government -

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*On March 4, 1789, the new Congress convened its first meeting in New York City. In April, the presiding officer of the Senate certified that George Washington had been named the first president by the Electoral College; John Adams became vice president *Washington was a reluctant president, but he agreed to serve because he had been “summoned by [his] country” *Washington brought to his new office a capacity for leadership that helped keep the young republic from disintegrating Although capable of angry outbursts, Washington was remarkably selfdisciplined; he possessed extraordinary stamina and patience, integrity and resolve, courage and resilience Few doubted that he was the best person to lead the new nation

The Rise of American Capitalism

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*In 1776, Adam Smith, a Scottish philosopher, published a pathbreaking book titled An Inquiry into the Nature and Causes of the Wealth of Nations. It provided the first full description of a modern capitalist economy and its social benefits *Alexander Hamilton greatly admired The Wealth of Nations and embraced the idea of a diverse capitalist economy in which competition drove prosperity *America’s first Secretary of the Treasury was determined to use the energies of capitalism to transform a weak cluster of states into a global economic power comparable to Great Britain Like the American Revolution, The Wealth of Nations was a declaration of independence from Great Britain’s mercantilist system Under mercantilism, national governments had exercised tight controls over economic life in the contest for world power. In The Wealth of Nations, Smith argued for just the opposite. Instead of controlling economic activity, governments should allow energetic individuals and efficient businesses to compete freely for profits in the marketplace The grinding poverty that had entrapped the masses of Europe for centuries would end to the extent that governments allowed for “free enterprise,” by which individuals through their hard work and ingenuity could at last gain earthly happiness and prosperity Smith also explained that modern capitalism involved diverse national economies in which all the major sectors were flourishing—agriculture, trade, banking, finance, and manufacturing—because the dynamic engine of capitalism—competition—was allowed to work its magic Under capitalism, Smith argued, ordinary people were increasingly given the freedom to unleash their entrepreneurial energies without government interference By allowing investors to funnel cash into productive enterprises, jobs would be created, profits would soar, and national economic growth would occur naturally rather than through government manipulation Hamilton submitted to Congress a series of brilliant reports between January 1790 and December 1791. Alexander Hamilton’s economic reforms outlined his bold vision for the new nation’s economic development

Paying Debts -

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*The United States was born in debt In the first two “Reports on Public Credit” sent to Congress, Hamilton outlined how the new federal government should absorb the massive debt incurred during the War of Independence *Only by paying its debts in full could the new nation gain credibility among the leading nations of the world. He also explained that the state debts from the Revolution were a national responsibility because all Americans had benefited from the war for independence

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Madison did not question whether the war-related debt should be paid; he was troubled, however, that far more debt was owed to northerners than to southerners *James Madison led the opposition to Hamilton’s “debt-funding” plan in Congress *The dispute over the debt issue ended in the summer of 1790 with a secret deal. In return for northern votes in favor of locating the permanent national capital on the Potomac River between Maryland and Virginia, Madison pledged to seek enough southern votes in Congress to pass Hamilton’s debt-assumption plan *The Compromise of 1790 worked as planned. The national capital would be moved from New York City to Philadelphia for ten years, after which it would be settled at a new federal city (soon to be called Washington) to be built on the Potomac River in the new federal District of Columbia Hamilton’s debt-financing plan was an immediate success. By making the United States financially solvent, he set in motion the greatest economic success story in history

A National Bank -

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Hamilton called for establishment of a national bank modeled after the powerful Bank of England. Once again, Madison and Jefferson led the opposition, arguing that the Constitution said nothing about a national bank and therefore the government could not create one. Hamilton and his supporters countered that creating a bank was an “implied power” within the Constitution *Hamilton’s proposed Bank of the United States (B.U.S.) would have three primary responsibilities: (1) to hold government funds and make transfers of monies to other nations; (2) to provide loans to the federal government and to other banks to promote economic development; and (3) to manage the nation’s money supply by regulating the power of state-chartered banks to issue paper currency, or banknotes

The Republican Alternative -

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*By supporting industry and commerce as well as the expansion of federal authority at the expense of the states, Hamilton infuriated a growing number of people, especially in the agricultural South and along the western frontier. *Because the southern states had virtually no manufacturing enterprises and much less varied commercial activity than New York and New England, Thomas Jefferson, James Madison, and other Republicans viewed Hamilton’s economic policies as discriminating against them

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*The increasingly bitter disputes between Secretary of the Treasury Hamilton and Secretary of State Jefferson soon fractured President Washington’s cabinet Jefferson feared that Hamilton’s campaign for American industries would produce a growing class of landless factory workers dependent upon others for their livelihood and therefore subject to political manipulation and economic exploitation *By mid-1792, Hamilton and Jefferson could no longer hide their hatred for each other...