Federalist Beginnings Lecture

Introduction

• Topic: Beginning of the new federal government under the United States Constitution
• Focus: Hamilton's financial plan, Washington's reluctance to go to war, emerging political parties (Federalists and Democratic-Republicans)
• Note: Democratic-Republicans of that time have no relation to today's major parties
• Time Frame: Pre-1820s context

Formation of the New Government

• New Constitutional System: Decisions set precedents
• Departments & Responsibilities:
  • State Department: Foreign affairs, headed by Thomas Jefferson
  • Treasury Department: Finances and economy, headed by Alexander Hamilton
  • War Department: Nation's defense (now Department of Defense)
• President's Cabinet:
  • Heads of the departments are linked to the President
  • President appoints and dismisses heads (requires Senate confirmation)
• Key Individuals:
  • Thomas Jefferson: Secretary of State
  • Alexander Hamilton: Secretary of Treasury
  • James Madison: Speaker of the House, architect of the Constitution
• Congress Operations:
  • House of Representatives: Open sessions
  • Senate: Initially met in secrecy; changed in 1797 to open sessions

Judiciary Act of 1789

• 13 District Courts: One per state
• Appeals Process: District courts → Circuit courts → Supreme Court
• Federal Jurisdiction: Limited to constitutional/legal issues
• Supreme Court Justices: Initially served on circuit courts

Economic Challenges and Hamilton’s Plan

• Economic Context: US was failing economically before the Constitution
• Debt: Owed money to France and war veterans (paid by bonds)
• Hamilton’s Proposals:
  • Whiskey Tax: Establish government authority to levy internal tax
  • Tariff on Imported Goods: Promote US industry & raise revenue
  • Funding National Debt:
    • Issue new government bonds payable at 4% interest
    • Federal assumption of state war debts
  • Central/National Bank: Modeled after British bank
    • Jointly owned by federal government and private investors
    • Make loans, create a marketplace for public securities, provide stable currency
  • Aid to Businesses: Diversify economy (from agrarian to include manufacturing)
    • Protective tariffs on goods like iron, steel, shoes
    • Direct subsidies for startup costs in new industries

Controversies and Oppositions

• Debt Redistribution:
  • Controversy over wealthy creditors holding bonds, not actual war veterans or merchants
• Bank of the United States:
  • Debated constitutionality
  • Broad (Loose) Construction: Hamilton’s view (Federalist 85)
    • Government can do anything not explicitly barred by the Constitution
  • Strict Construction: Jefferson’s view
    • Government only do what is explicitly allowed by the Constitution
• Necessary and Proper Clause: Hamilton’s defense for implied powers
• Regional Advantages:
  • Hamilton’s plan seen as favoring the North;
    • Southern states had largely paid off their debt

Political Dynamics

• Madison and Jefferson: Worked together to oppose Hamilton’s plan
  • Madison: Opposed from the House
  • Jefferson: Raised concerns in cabinet meetings
• Supreme Court’s Role: Expected to side with Hamilton due to Washington’s influence

Legacy and Long-Term Consequences

• Hamilton's View on Debt:
  • Wanted a perpetual national debt as a prop for support of the wealthy
  • Believed it would ensure loyalty and economic stability
• Opposition View: Future taxation without representation

Conclusion

• Summary: Hamilton’s plan was a foundational yet controversial aspect of early US financial policy
• Next Steps: Explore the ongoing fight over Hamilton's plan and additional historical content through a modern take (e.g., Hamilton musical's cabinet debate in spoken verse)