THE RISE OF PARTIES
%209. Organizing the New Government.%--he President having been
inaugurated, and the new government fairly established, it became the
duty of Congress to enact such laws as were needed immediately. The
first act passed by Congress in 1789 was therefore a tariff act laying
duties on goods, wares, and merchandise imported into the United States.
Customhouses were then established and customs districts marked out, and
ports of entry and ports of delivery designated; provision was made for
the support of lighthouses and beacons; the Ordinance of 1787 for the
government of the territories was slightly changed and reenacted; the
departments of State, War, and Treasury were established; and a call was
made on the Secretary of the Treasury to report a plan for payment of
the old Continental debt.
%210. The United States Courts.%--The Constitution declares that the
judicial power of the United States shall be vested in one Supreme Court
and such inferior courts as the Congress may from time to time ordain
and establish. Acting under this power, Congress made provision for a
Supreme Court, consisting of a Chief Justice and five Associate
Justices, and marked out the United States into circuits and districts.
The circuits were three in number. In the first were the Eastern States;
in the second, the Middle States; and in the third, the Southern States.
To each were assigned two Justices of the Supreme Court, whose business
it was to go to some city in each state in the circuit, and there, with
the district judge of that state, hold a circuit court. The district
courts were thirteen in number, one being established in each state.[1]
Washington appointed John Jay the first Chief Justice of the
Supreme Court.
[Footnote 1: For later changes, see Andrews's _Manual of the
Constitution,_ p. 183.]
%211. The Secretaries.%--During the management of affairs by the
Continental Congress three great executive departments had gradually
grown up and been placed in charge of three men, called the
"Superintendent of Finance," the "Secretary of the United States for the
Department of Foreign Affairs," and the "Secretary of War." These the
Constitution recognized in the expression "principal officer in each of
the executive departments." Congress by law now continued the
departments and placed them in charge of a Secretary of the Treasury, a
Secretary of State, and a Secretary of War. Washington filled the
offices promptly, making Alexander Hamilton Secretary of the Treasury,
Thomas Jefferson Secretary of State, and General Henry Knox Secretary
of War.
%212. The "Cabinet."%--It has long been the custom for the President
to gather his secretaries about him on certain days in each week for the
purpose of discussing public measures. To these gatherings has been
given the name "Cabinet meetings," while the secretaries have come to be
called "Cabinet officers." The Constitution, however, never intended to
give the President a body of advisers. Indeed, a proposition to provide
him with a council was voted down in the constitutional convention. But
Washington at once began to consult the Chief Justice, the Vice
President, his three secretaries, and the Attorney-general on matters of
importance. At first he asked their opinions individually and in
writing, but toward the end of his first term he convened a general
meeting of the heads of departments, and by so doing set a custom out of
which, in time, the "Cabinet" has grown.
%213. The Origin of the National Debt.%--As soon as Hamilton was made
Secretary of the Treasury, it became his duty, in accordance with an
order from Congress, to prepare a plan for the payment of the debts
contracted by the Continental Congress. When that body was unexpectedly
called on, in May, 1775, to conduct the war, it had nothing with which
to pay expenses, and was forced to use all sorts of means to
raise money.
[Illustrations: Continental money]
%214. Paper Money.%--The first resort was the issue, during 1775 and
1776, of six batches of Continental "bills of credit," amounting in all
to $36,000,000. These "bills" were rudely engraved bits of paper,
stating on their face that "This bill entitles the bearer to receive
---- Spanish milled dollars, or the value thereof in gold or silver."
They were issued in sums of various denominations, from one sixth of a
dollar up, and were to be redeemed by the states. The amount assigned
each state for redemption was in proportion to the supposed number of
its inhabitants.
%215. Loan-office Certificates.%--In 1776 Congress tried another
means. It opened a loan office in each state and called on patriotic
people to come forward and loan it money, receiving in return pieces of
paper called "loan-office certificates." Interest was to be paid on
these; but after a while Congress, having no money with which to pay
interest, was forced to resort to another form of paper, called
"interest indents."
%216. The Congress Lottery.%--The loan office having failed to bring
in as much money as was needed, Congress, toward the close of 1776, was
driven to seek some other way, and resorted to a lottery. A certain
number of tickets were sold, after which a drawing took place, and all
who drew prizes were given certificates payable at the end of
five years.
%217. More Bills of Credit.%--But the sale of tickets went off so
slowly that Congress had to go back to the issue of bills of credit. In
1777, therefore, the printing press was again put to work, and issues
were made in rapid succession, till more than $200,000,000 in
Continental paper were in circulation.
%218. The "New Tenor".%--Then the Continental bills ceased to
circulate, and in March, 1780, Congress called in the old money and
offered to exchange it for a new issue, giving one dollar of the new
paper money, or "new tenor," for forty dollars of the old. But the
attempt to restore credit by such means was a failure, and by the end of
the year 1781 all paper money ceased to circulate.
%219. Certificates.%--Long before this time officials had been forced
to pay debts contracted in the name of Congress with other kinds of
paper, called certificates, and known as treasury, commissary,
quartermaster, marine, and hospital certificates, according to the
department issuing them. To these must be added the "final settlements,"
or certificates given to the soldiers at the end of the war in payment
of their services.
%220. Foreign Debt.%--Besides the debt thus contracted at home,
Congress had borrowed a great sum in Europe.
%221. The National Debt in 1790.%--Thus the debt contracted by the
Continental Congress consisted of two parts. 1. The foreign debt, due to
France, Holland, and Spain, and amounting, Hamilton found, to
$11,700,000. 2. The domestic or home debt, of $42,000,000. But the
states had also fallen into debt because of their exertions in the war.
Just how great the state debts were could not be determined, but they
were estimated to be $21,500,000.
%222. Assumption and Funding.%--For the redemption of this debt
Hamilton prepared two measures,--the funding, or, as we should say, the
bonding, of the foreign and Continental debt, and the assuming and
funding of the state debts. This was done, and Congress ordered stock
bearing interest to be issued in exchange for the old debts, and so
established our national debt, which in 1790 amounted to $75,000,000.
%223. The National Capital.%--Funding the state debts was strongly
opposed by many congressmen, and was not carried till a bargain was made
by which it was agreed that if enough members from Virginia and
Pennsylvania would support the measure to secure its passage through the
House of Representatives, the national government should be removed from
New York to Philadelphia for ten years, and after that to a city to be
built on the Potomac. This was faithfully carried out, and in the summer
of 1790 the government offices were removed to Philadelphia, where they
remained till the summer of 1800, when they were removed to Washington
in the District of Columbia.
%224. The Bank of the United States.%--The troublesome questions of
funding and assumption thus disposed of, Congress called on Hamilton for
a report on the further support of public credit, and when it met in the
session of 1790-91, received a plan for a great National Bank, with a
capital of $10,000,000. The United States was to raise $2,000,000; the
rest was to be subscribed for by the people. The bank was to keep the
public revenues, was to aid the government in making payments all over
the country. To do this, power was given to the parent bank (which must
be at Philadelphia) to establish branches in the chief cities and towns,
and to issue bank bills which should be received all over the United
States for public lands, taxes, duties, postage, and in payment of any
debt due the government. Great opposition was made; but the charter was
granted for twenty years, and in 1791 the Bank of the United States
began business.
The effect of these two measures, funding the debt and establishing a
bank, was immediate. Confidence and credit were restored. Money that the
people had long been hiding away was brought out and invested in all
sorts of new enterprises, such as banks, canal companies, manufacturing
companies, and turnpike companies.
[Illustration: The first Bank of the United States]
%225. "Federalists" and "Republicans."%--When the Constitution was
before the people for acceptance or rejection in 1788, they were divided
into two bodies. Those who wanted a strong and vigorous federal
government, who wanted Congress to have plenty of power to regulate
trade, pay the debts of the country, and raise revenue, supported the
Constitution just as it was and were called "Federalists."
Others, who wanted the old Articles of Confederation preserved and
amended so as to give Congress a revenue and only a little more power,
opposed the Constitution and wanted it altered. To please these
"Anti-Federalists," as they were a large part of the people, Congress,
in 1789, drew up twelve amendments to the Constitution and sent them to
the states.
With the ratification of ten of these amendments, opposition to the
Constitution ceased. But as soon as Congress began to pass laws,
difference of opinion as to the expediency of them, and even as to the
right of Congress to pass them, divided the people again into two
parties, and sent a good many Federalists into the Anti-Federalist
party.
A very large number of men, for instance, opposed the funding of the
Continental Congress debt at its face value, because the people never
had taken a bill at the value expressed on its face, but at a very much
less value; some opposed the assumption of the state debts, because
Congress, they said, had power to pay the debt of the United States, but
not state debts; others opposed the National Bank because the
Constitution did not give Congress express power in so many words to
charter a bank. Others complained that the interest on the national debt
and the great salary of the President ($25,000 a year) and the pay of
Congressmen ($6 a day) and the hundreds of tax collectors made taxes too
heavy. They complained again that men in office showed an undemocratic
fondness for aristocratic customs. The President, they said, was too
exclusive, and owned too fine a coach. The Justices of the Supreme Court
must have black silk gowns, with red, white, and blue scarfs. The Senate
for some years to come held its daily session in secret; not even a
newspaper reporter was allowed to be present.
As early as 1792 there were thus a very great number of men in all parts
of the country who were much opposed to the measures of Congress and the
President, and who accused the Federalists of wishing to set up a
monarchy. A great national debt, they said, a funding system, a national
bank, and heavy internal taxes are all monarchical institutions, and if
you have the institutions, it will not be long before you have the
monarchy. They began therefore in 1792 to organize for election
purposes, and as they were opposed to a monarchy, they called themselves
"Republicans." [1] Their great leaders were Jefferson, Madison, Monroe,
John Randolph, and Albert Gallatin.
[Footnote 1: This party was the forerunner of the present Democratic
party.]
%226. The Whisky Rebellion, 1794.%--One of the taxes to which the
Republicans objected, that on whisky, led to the first rebellion against
the government of the United States. In those days, 1791, the farmers
living in the region around Pittsburg could not send grain or flour down
the Ohio and the Mississippi, because Spain had shut the Mississippi to
navigation by Americans. They could not send their flour over the
mountains to Philadelphia or Baltimore, because it cost more to haul it
there than it would sell for. Instead, therefore, of making flour, they
grew rye and made whisky on their own farms. This found a ready sale.
Now, when the United States collectors attempted to collect the whisky
tax, the farmers of western Pennsylvania drove them away. An appeal was
then made to the courts; but when the marshal came to make arrests he,
too, was driven away. Under the Articles of Confederation this would
have been submitted to. But the Constitution and the acts of Congress
were now "the supreme law of the land," and Washington in his oath of
office had sworn to see them executed. To accomplish this, he used the
power given him by an act of Congress, and called out 12,900 militia
from the neighboring states and marched them to Pittsburg. Then the
people yielded. Two of the leaders were tried and convicted of treason;
but Washington pardoned them.
The insurrection or rebellion was a small affair. But the principles at
stake were great. It was now shown that the Constitution and the laws
must be obeyed; that it was treason to resist them by force, and that if
necessary the people would, at the call of the President, turn out and
put down rebellion by force of arms.[1]
[Footnote 1: Read McMaster's _History of the People of the United
States_, Vol. II., pp. 189-204; Findley's _History of the Insurrection
in Pennsylvania_.]
SUMMARY
1. As soon as Washington was inaugurated, Congress proceeded to organize
the new government.
2. The Supreme Court and circuit and district courts were established.
3. The departments of State, War, and Treasury were formed.
4. Twelve amendments to the Constitution were proposed.
5. Three financial measures were adopted:
A. A tariff act was passed.
B. The debts of the states were assumed, and, with that of the
Continental Congress, funded.
C. A national bank was chartered.
6. The price of funding was the ultimate location of the national
capital on the Potomac.
7. The first census was taken in 1790.
8. The result of the financial measures of Congress was the rise of the
Republican party (the forerunner of the present Democratic party).
THE ORIGIN OF POLITICAL PARTIES
/--------------------------------------------------------------------\
Funding the
Continental Debt.
/------------\
/ Money borrowed in \ Shall it be \
Foreign debt. | France, Holland, | funded at | Yes ------+
\ and Spain. / face value? / |
|
/ Bills of credit. \ |
| Loan-office | |
| certificates. | Shall it be \ |
| Lottery | funded at | Yes ----+ |
Domestic debt. | certificates. | face value / | |
| Interest indents. | or market \ | |
| New tenor. | value? / Yes --+ | |
| Certificates of | | | |
| officials. | | | |
\ Final settlements. / | | | \
| | | |
Assumption of / Yes ---------------------------------------+-+ |[1]
state debts. \ No ----------------------------------+ | | |
| | | /
Establishment / Yes -----------------------------------------+
of a national | | |
bank. \ No ------------------------------------+ |
| | |
Internal revenue / Too heavy ----------------------- \ | | |
taxes. \ | | | |
| | | |
/ / President too | | | |
| | exclusive. | | | | \
| Aristocratic | Secret sessions | | | | |
Administration | customs. | of the Senate. |--+-+-+ |[2]
not democratic. | | Gowns of the | |
| \ justices. | /
| Monarchial / Great debt. |
| institutions. | National bank. |
\ \ Heavy taxes. /
\ / Leaders.
[1]---| Federalists | Washington.
/ | Adams.
\ Hamilton.
\ / Leaders.
| | Jefferson.
[2]---| Republicans | Madison.
| | Monroe.
| | Randolph.
/ \ Gallatin.