4.01 The Early Republic

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The Early Republic

Judicial System

Upon entering office, one of George Washington's first priorities was creating a judicial system. Although Article 3 of the Constitution had created a judicial branch, it had not spelled out the details of how to do so.

The Judiciary Act of 1789 was created to clarify Article 3. It establish the modern court system by:

• providing for a Supreme Court with 5 associate justices and 1 chief justice,
• creating 3 federal circuit courts, and
• establishing 13 federal district courts throughout the country.

The judicial structure created by the Judiciary Act of 1789 is largely the same one we have today. The main differences are:

• More justices have been added to the Supreme Court (we now have 9 justices – 8 associate and 1 chief).
• More federal courts have been created as the country has expanded.

Presidential Cabinet

Washington also chose advisers for policy decisions, creating the first presidential cabinet. Washington's cabinet consisted of 4 members:

• Secretary of State – Thomas Jefferson

  

• Secretary of the Treasury – Alexander Hamilton

  

• Secretary of War – Henry Knox

  

• Attorney General – Edmund Randolph

  

War Debt and the Nation's Economy

As Secretary of the Treasury, Hamilton's job was to get the new nation's finances in order and get the economy on solid ground. The public debt of the new nation was in the millions, mainly because of the Revolutionary War. The national government was responsible for 2/3 of this debt, while the states were expected to cover the remainder. Some of this debt was owed to foreign governments and some to soldiers.

Hamilton's Debt Plan

Hamilton's economic plan was proposed in 1790 and consisted of several parts. The plan called for the national government to:

1. Absorb the entire debt of the nation
2. Pay off foreign debt and soldiers with new bonds (certificates issued the guaranteed payment plus interest) to replace the old ones
3. Relocate the nation's capital from New York City to an area between the borders of Virginia and Maryland that would be called Washington, D.C.
4. Establish the Bank of the United States to issue paper money and run the nation's finances

Hamilton favored having the national government absorb the entire debt, and he wanted to create a national bank to run the nation's finances and issue paper money. He also thought this would give creditors (people who loan money) more faith in the new nation. In other words, the people who we owned money to would now have a financial interest in making sure that the US government was successful. (If the US failed, the creditors wouldn't get their money!)

This complicated plan for the American economy expanded the government's role in directing the nation's economy. Hamilton's act would give the federal government more control over the economies (the money and loans) of the different states. It would also put the federal government in charge of taxes.

Many states did not want to give the federal government so much power. For example, the plan to create a national bank was opposed by Thomas Jefferson and James Madison because they felt that it would give the federal government too much power. The debate over the bank is an example of a "loose" versus a "strict" interpretation of the Elastic Clause (Article 1, Section 8, Clause 18) of the US Constitution. Hamilton convinced George Washington to support the bank plan and the Bank of the United States was established.

This proposal also angered the Southern states that had already paid off their debts. They didn't want to pay additional taxes to pay off any other states' debts.

Hamilton had to arrange compromises agreements where each side gives up something with representatives from each state. One of those compromises was moving the capital further south to Washington, D.C. This appeased to pacify or make concessions; this would ease the Southern states' anger and frustration at the situation Southern states who had already repaid their debt and were unhappy with the new plan.

Although Hamilton knew his plan would ultimately increase the national debt, he believed that having investors in the United States would give the new country allies to help it become successful. Ultimately, Congress passed the debt plan in 1790.

Read more about Hamilton's Financial Plan.

Hamilton vs. Jefferson

Although the presidential cabinet members all had their differences, the most obvious division was between Alexander Hamilton and Thomas Jefferson. Their debates were similar to the arguments between the Federalists and the Anti-Federalists over ratification – they had different ideas about how the government of this new nation should work.

As a Federalist, Hamilton favored a strong central government made up of elite upper-class citizens like himself. John Adams was also Federalist.

Jefferson emerged as leader of a new group called the Democratic-Republicans (and sometimes referred to as the Jeffersonian Republicans). They favored strong state and local governments and valued political participation of the people. They were supported by farmers and craftsmen over wealthier business interests. They even promoted resistance against the Federalists and encouraged attacks on the Washington administration. James Madison was also a Democratic-Republican.

[Note: This is not the same party as the modern-day Republican party, which developed later.]

Hamilton's views were popular in the Northeast, especially New England, while Jefferson's views were popular in the South and West.

Loose vs. Strict Interpretation

Thomas Jefferson opposed Hamilton's economic plan and his construction (or view) on government in general.

Hamilton favored a loose construction of the Constitution. He believed that government can do anything the Constitution does not say it cannot do. He interpreted the Constitution as a loose framework of laws for the government to use to build the nation.

Jefferson had a strict construction, or interpretation, of the Constitution. He believed that government should not exercise use any power that is not specifically given or stated in the Constitution.

Political Parties Form

The debate between Hamilton and Jefferson continued and their conflicting views led to the development of the first political parties of the United States – the Federalists and the Democratic-Republicans. A political party is a group of voters organized to win elections in order to control policies of the government.

A cockade is a rosette or knot of ribbons worn in a hat to denote someone's office or political affiliation.

Financing the Nation

To help pay the national debt, Congress passed a tariff or tax in 1791 on whiskey and foreign goods imported into the country. Many Americans did not like the new taxes and federal interference in state affairs. They regarded Hamilton's policy as an attack on the hard-fought liberty of the people. Secretary of State Thomas Jefferson even resigned in 1793 because President Washington most often sided with Hamilton on issues. Jefferson believed that Hamilton and his Federalist followers were betraying the principles fought for in the American Revolution!

Additional Resources

Read Growing Opposition to learn more about Jefferson's opposition to Hamilton.

Read Two Parties Emerge to learn more about the emergence of the first political parties.