Federalist Era: 1789-1801

 During the first 12 years under the new Constitution, the Federalists established a strong and
vigorous national government.
 Alexander Hamilton’s economic program attracted foreign investment and stimulated economic
growth.
 The creation of political parties was an unexpected development that involved the voting
population in politics.
 Presidents George Washington and John Adams succeeded in keeping the nation free from
foreign entanglements during the nation’s first crucial years.

Anti-Federalist
Introduction In U.S. history, anti-federalists were those who
opposed the development of a strong federal
government and the ratification of the
Constitution in 1788, preferring instead for
power to remain in the hands of state and local
governments.
Federalists
In U.S. history, federalists wanted a
stronger national government and the
ratification of the Constitution to help
properly manage the debt and tensions
following the American Revolution.

Political Wanted Strong States. Wanted strong national Govt.

Ideology

Position on Opposed until inclusion of the Bill of Rights Proposed and supported.
Constitution (Dec, 1791).

Prominent Thomas Jefferson, James Monroe, Patrick Alexander Hamilton, George

Figures Henry, Samuel Adams. Washington, John Jay, John Adams.

Economic  Dominated by farmers and smaller  Dominated by big business

Ideology rural communities. Local power.
 Believed in wide distribution of wealth.
 Promoted Laissez faire.
interests, wanted government
to help regulate the economy.
 They were not content with
mere adoption of laissez faire,
wanted positive steps from govt
i-e Navigation Policies, granting
subsidies, passing positive
tariffs.

Position on Felt that states were free agents that should Felt that many individual and
Fiscal and manage their own revenue and spend their different fiscal and monetary
Monetary money as they saw fit. policies led to economic struggles and
Policy national weakness. Favored central
banking and central financial policies.
Anti-Federalist vs. Federalist Debate
The American Revolution was a costly war and left the colonies in an economic depression. The debt and
remaining tensions—perhaps best summarized by a conflict in Massachusetts known as Shays'
Rebellion—led some founding political members in the U.S. to desire for more concentrated federal
power. The thought was that this concentrated power would allow for standardized fiscal and monetary
policy and for more consistent conflict management.

However, a more nationalistic identity was the antithesis of some founding political members' ideals for
the developing states. A more centralized American power seemed reminiscent of the monarchical power
of the English crown that had so recently and controversially been defeated. The potential consequences
of centralized fiscal and monetary policy were especially frightening for some, reminding them of
burdensome and unfair taxation. Anti-federalists were closely tied to rural landowners and farmers who
were conservative and staunchly independent.

The most important parts of this debate were decided in the 1700s and 1800s in U.S. history, and the
Federalist Party dissolved centuries ago, but the battles between federalist and anti-federalist ideologies
continue into the present day in left and right wing American politics.

Analysis: The Anti-Federalists and Federalists agreed on one thing: the future of the nation was at stake
in the contest over constitution. Their differences and debates were based on the principles they believed
in and both groups wanted the new found American state to flourish and serve its people.

Federalist Regime: First Governmental Machinery

During the 1790’s, the young republic faced many of the same problems that confronted the newly
independent nations of Africa and Asia in the 20th Century.

 Challenge of building a sound economy

 Preserving national independence
 Creating a stable political system

7th Jan, 1789: Electoral college was elected.

30th April, 1789: George Washington, who had presided over the Philadelphia Convention, was
unanimously chosen as the first President of the United States by the Electoral College.

1) First Cabinet:

The Constitution had established the basic layout of the federal government, but much of the
structure of the government was established during the Federalist Era. The Constitution empowers
the president to appoint the heads of the federal executive departments with the advice and
consent of the Senate.

President Washington and the Senate established a precedent whereby the president alone would
make executive and judicial nominations, but these nominees would not hold their positions in a
permanent capacity until they won Senate confirmation.
 President Washington organized his principal officers into the Cabinet of the United States, which
served as a major advisory body to the president. The heads of the Department of War,
the Department of State, and the Department of the Treasury each served in the Cabinet.

2) Judiciary

After the passage of the Judiciary Act of 1789, the Attorney General also served in the Cabinet as the
president's chief legal adviser.

Judiciary Act of 1789: Established federal court system with 13 district courts, 3 circuit courts, and a
supreme court. Also affirmed that the supreme court exercised final jurisdiction in all legal matters,
and set the number of supreme court judges at 6.

*John Jay was appointed as the first chief justice of USA.

3) The Bill of Rights:

Sought to enumerate certain liberties that could not be invaded by the federal government. In the
1833 case of Barron vs Baltimore the supreme court ruled that the bill of rights only protects
individuals from national, and not the state governments.

Bill of Rights were the 1st ten amendments in the American constitution granting rights to the ordinary
people of America. Following are the amendments if the bill:

1. Freedom of religions, speech, assembly, press and petition

2. Right to possess arms

3. No quartering of soldiers during peacetime

4. No search and seizure of people ‘s property

5. No criminal case to stand twice for same crime

6. Speedy trail of cases

7. Right to jury in case of 20 dollars and above

8. No excessive bails and cruel punishments

9. Rights not mentioned in constitution lies with peoples

10. Powers not mentioned in constitution will be exercised by states

4) Two Party System:

Washington himself was appointed as a unanimous president of America and it became a popular
belief that the political parties are not needed as nothing was mentioned about the political parties
in the constitution also. But this soon proved wrong as the debates between federalist and anti-
federalist indicated that the two party system would emerge in America as the permanent feature of
politics.

The Federalist Party:

Realizing the need for broad political support for his programs, Hamilton formed connections with
like-minded nationalists throughout the country.

He used his network of treasury agents to link together friends of the government, especially
merchants and bankers, in the new nation's major cities. What had begun as a faction in Congress
supportive of Hamilton's economic policies emerged into a national faction and then, finally, as
the Federalist Party.

The Federalist Party supported Hamilton's vision of a strong centralized government, and agreed with
his proposals for a national bank and government subsidies for industries.

In foreign affairs, they supported neutrality in the war between France and Great Britain.

The Democratic-Republican Party:

It was founded in 1792 by Jefferson and James Madison. The party was created in order to oppose
the policies of Hamilton and his Federalist Party.

It also opposed the Jay Treaty of 1794 with Britain and supported good relations with France.

The Democratic-Republicans espoused a strict constructionist interpretation of the Constitution, and

denounced many of Hamilton's proposals, especially the national bank, as unconstitutional.

The party promoted states' rights and the primacy of the yeoman farmer over bankers, industrialists,
merchants, and other monied interests.

The party supported states' rights as a measure against the tyrannical nature of a large centralized
government that they feared the Federal government could have easily become.

5) Economic Problems Faced by the Federalist Era and Alexander Hamilton’s Financial Policies

The most pressing problems facing the new government were economic.

 As a result of the revolution, the federal government had acquired a huge debt: $54
million including interest.
 The states owed another $25 million.
 Paper money issued under the Continental Congresses and Articles of Confederation was
worthless.
 Foreign credit was unavailable.

The person assigned to the task of resolving these problems was 32-year-old Alexander Hamilton.
He gave a comprehensive plan to promote and stable the financial condition of America.

I. Revenue generation via taxation

ii. Payment of national and state debts ($54 million State Debts)

iii. Establishment of National Bank on the basis of Bank of England

iv. Establishment of Uniform Currency in all states of USA

Details of the plan:

The paramount problem facing Hamilton was a huge national debt. He proposed that the
government assume the entire debt of the federal government and the states. His plan was to
retire the old depreciated obligations by borrowing new money at a lower interest rate.

Hamilton's debt program was a remarkable success. By demonstrating Americans' willingness to

repay their debts, he made the United States attractive to foreign investors. European investment
capital poured into the new nation in large amounts.

The National Bank (1791) Hamilton's next objective was to create a Bank of the United States,
modeled after the Bank of England. A national bank would collect taxes, hold government funds,
and make loans to the government and borrowers.

One criticism directed against the bank was "unrepublican"--it would encourage speculation and
corruption. The bank was also opposed on constitutional grounds. Adopting a position known as
"strict constructionism"

Hamilton responded to the charge that a bank was unconstitutional by formulating the doctrine
of "implied powers." He argued that Congress had the power to create a bank because the
Constitution granted the federal government authority to do anything "necessary and proper" to
carry out its constitutional functions (in this case its fiscal duties).

In 1791, Congress passed a bill creating a national bank for a term of 20 years, leaving the question
of the bank's constitutionality up to President Washington. The president reluctantly decided to
sign the measure out of a conviction that a bank was necessary for the nation's financial well-
being.

Tariffs: Finally, Hamilton proposed to aid the nation's infant industries. Through high tariffs
designed to protect American industry from foreign competition, government subsidies, and
government-financed transportation improvements, he hoped to break Britain's manufacturing
hold on America.

The most eloquent opposition to Hamilton's proposals came from Thomas Jefferson, who
believed that manufacturing threatened the values of an agrarian way of life. Hamilton's vision
of America's future challenged Jefferson's ideal of a nation of farmers, tilling the fields,
communing with nature, and maintaining personal freedom by virtue of land ownership.
6) Years of Crisis

In 1793 and 1794 a series of crises threatened to destroy the new national government. The
crises were all related to hostilities.

a. France tried to entangle America in its war with England;

In April 1793, a French minister, Edmond Charles Genet, arrived in the United States and
tried to persuade American citizens to join in revolutionary France's "war of all peoples
against all kings." Genet passed out letters authorizing Americans to attack British
commercial vessels.

b. Armed rebellion erupted in western Pennsylvania (Whiskey Rebellion);

 To help pay off the nation's debt, Congress passed a tax on whiskey.

 On the frontier, the only practical way to transport and sell surplus corn was to
distill it into whiskey. Frontier farmers regarded a tax on whiskey in the same way as
American colonists had regarded Britain's stamp tax.

 By 1794, western Pennsylvanians had had enough. Some 7,000 frontiersmen

marched on Pittsburgh to stop collection of the tax. Determined to set a precedent
for the federal government's authority, Washington gathered an army of 15,000
militiamen to disperse the rebels.

 In the face of this overwhelming force, the uprising collapsed.

c. Indians in Ohio threatened American Westward Expansion;

 Due to the treaty of Greenville and Jays, US government controlled vast lands.
 Congress passed a Public Land Act in 1796 for rapid settlement of land and selling
federal land at reasonable price.
 This also allowed process of adding new states to the union and
 in 1791 Vermont became the 1st newly added state followed by Kentucky and
Tennessee

d. War with Britain appeared imminent;

 The year 1794 brought a crisis in America's relations with Britain. For a decade,
Britain had refused to evacuate forts in the Northwest Territory.
 Control of those forts allowed the British to monopolize the fur trade.
 Frontier settlers believed that British officials sold firearms to the Indians and
incited uprisings against white settlers. War appeared imminent when British
warships stopped 300 American ships carrying food supplies to France and to
France's overseas possessions and forced sailors suspected of deserting from British
ships into the British navy.
 To end the crisis, President Washington sent Chief Justice John Jay to London to
negotiate a settlement with the British.
 Britain agreed to evacuate its forts on American soil and to cease harassing
American shipping (provided the ships did not carry supplies to Britain's enemies).
 Britain also agreed to pay damages for the ships it had seized and to permit the
United States to trade with India and carry on restricted trade with the British West
Indies.
 But Jay failed to win compensation for slaves carried off by the British army during
the Revolution