Overview
This lecture covers the emergence of the first American political parties in the 1790s, focusing on major economic disputes and Alexander Hamilton's financial plan under President George Washington.
The First Party System and Early U.S. Politics
- The 1790s saw the birth of America's first political parties, known as the "first party system."
- Political divisions arose from disagreements on economics, foreign affairs, law enforcement, free speech, and states’ rights.
The First Presidential Election (1788)
- The first U.S. presidential election in 1788 unanimously elected George Washington as president; John Adams became vice president.
- Washington's leadership brought legitimacy and trust to the new office.
- Washington established a cabinet with key advisors: Thomas Jefferson (State), Henry Knox (War), and Alexander Hamilton (Treasury).
Alexander Hamilton: Character and Influence
- Hamilton, as Secretary of the Treasury, had significant influence over economic policy.
- He was seen as highly ambitious, which garnered both admiration and suspicion from contemporaries.
- Hamilton's primary goal was strengthening the nation’s economy and financial standing.
Hamilton’s Economic Plan: Three Pillars
- Funding: Federal government would pay off all national (federal) debt, restoring public and international trust.
- Assumption: Federal government would also assume and pay off state debts, uniting national financial interests.
- Revenue Generation: Congress enacted the first protective tariff (1789) and excise taxes (e.g., on whiskey) to raise government revenue.
- National Bank: Creation of the Bank of the United States to hold federal funds and provide loans, especially to stimulate industry and manufacturing.
Impact and Significance of Hamilton’s Plan
- Hamilton’s plan successfully stabilized and strengthened the U.S. economy.
- His policies were highly divisive, directly leading to the formation of America's first political parties.
- The economic plan favored industrial growth, particularly benefiting the Northeast, causing regional tensions.
Key Terms & Definitions
- Assumption — The federal government taking over state debts.
- Funding — Paying off national debt at full value, plus interest.
- Excise Tax — A tax on specific goods (e.g., whiskey) rather than on all citizens.
- Protective Tariff — A tax on imported goods to raise revenue and protect domestic industries.
- National Bank — A federally chartered bank to manage government funds and promote economic growth.
Action Items / Next Steps
- Review upcoming material on political party formation and disputes caused by Hamilton’s plan.
- Prepare for discussion on the Whiskey Rebellion and further political divisions in the next lecture.