The Washington Administration and Hamilton’s Financial Plan

This lecture initiates the "New Republic" series, which focuses on the period immediately following the ratification of the United States Constitution.
Chronological Scope: The period covered begins with the formal establishment of the new government in $1789$ and extends until approximately $1820$ .
Lecture Focus: The specific focus of this first segment is "The Washington Administration and Hamilton's Financial Plan."

Date of Inauguration: George Washington was inaugurated as the first President of the United States on $04/30/1789$ .
Personal Sentiment: Washington expressed profound "apprehensions and anxieties" regarding his new situation. In his inaugural address, he stated: "I was summoned by my country whose voice I can never hear but with veneration and love from a retreat which I had chosen with fondest predilection."
Sense of Duty: Unlike many politicians, Washington did not actively seek the presidency. He described his feelings in a letter to Henry Knox, comparing his journey to the office to that of "a man going to his execution."
Military Background: Washington’s true preference was for the role of Commander of the Continental Army rather than a civilian administrative role.
Unanimous Election: Washington holds the unique distinction of being the only president in United States history to be unanimously elected by the Electoral College.

Role Creation: Because the presidency was a new office, Washington essentially "created" the position through his daily actions and decisions.
Precedent-Setting Actions: Every action taken was scrutinized as a standard for future holders of the office. This included:
- The delivery of inaugural addresses.
- The formation of a cabinet of advisors.
- The tenure of office (establishing the $8$ -year or two-term standard).
Primary Objective: The central goal of the first generation of American politicians was to protect the "success of the American experiment" and the legacy of the revolution. Washington was viewed as the ultimate symbol of unity required to guard this experiment in its infancy.

Desire for Unity: The founding generation desperately sought political harmony and viewed "factionalism" (political parties) as dangerous and deplorable.
Observation of State Governments: Their fear of factions was rooted in observing state legislatures descend into bitter political infighting, which they hoped to avoid at the national level.
The Reality of Division: Despite these hopes, by the end of Washington’s second term, two distinct political parties had developed due to clashing visions for the nation’s future.
Mutual Accusations: Each faction accused the other of attempting to subvert or destroy the revolution.

Vice President: John Adams (who earned the second-highest number of votes in the Electoral College).
Secretary of the Treasury: Alexander Hamilton.
Secretary of State: Thomas Jefferson (appointed upon his return from France).
Secretary of War: Henry Knox.
Attorney General: Edmund Randolph.

Relationship with Washington: Hamilton was highly favored by Washington, who viewed him almost as a son and shared many of his political leanings.
Core Objective: As Secretary of the Treasury, Hamilton was tasked with resolving the country's dire financial crisis following the Revolutionary War.
National Vision: Hamilton envisioned the United States as a powerful industrial, commercial, and military nation, modeled largely after Great Britain.

Debt Assumption
- The Problem: The Revolutionary War left both the national government and the \n13 individual states with massive debts.
- The Solution: The federal government would assume the burden of all state debts, consolidating them into one single national debt.
- The Purpose: This was intended to establish the country's credit rating and show the world that the United States was a trustworthy borrower that could honor its financial obligations.
National Bank
- Structure: Modeled after the Bank of Britain, the bank would serve as the nation's primary financial institution.
- Functions: It would house government revenues and issue loans to stimulate economic growth.
Taxation and Industrial Development
- Revenue Streams: Revenue to pay off the national debt would be raised through internal taxes and tariffs.
- Whiskey Tax: Hamilton instituted a tax on whiskey distillers, which proved highly controversial.
- Tariffs: Hamilton proposed tariffs on foreign-imported goods to protect and encourage the growth of American industry.

The Stamp Act Echo: The whiskey tax reminded many citizens of the British Stamp Act. Future protests and rebellions against the whiskey tax would even utilize identical slogans from the pre-revolutionary protests.
The Jeffersonian Opposition: Thomas Jefferson and James Madison emerged as the primary opponents to Hamilton’s plan. They feared Hamilton’s admiration for Great Britain and his push for industrialization.
Washington’s Position: Although Washington attempted to act as a mediator and keep the peace in his cabinet, he fundamentally agreed with Hamilton’s political and economic philosophy.
Jefferson’s Alienation: Because Washington consistently sided with Hamilton, Thomas Jefferson began to feel increasingly alienated and isolated within the administration.
Future Implications: This ideological divide sets the stage for the formal development of the first political parties in American history.