Whether the new government created by the Constitution of 1787 was in fact a republic, as Benjamin Franklin had claimed and as its supporters, who called themselves “Federalists,” believed, was an open question as the new presidential administration of George Washington began in 1789. Still, the signs were reassuring, for, with Washington as President, Alexander Hamilton at the Treasury, and Thomas Jefferson as Secretary of State , the new government had more sheer ability and what we would nowadays call “star power” than any American administration before or since.
On the other hand, once Washington and his Cabinet moved from the theory to the practice of “republicanism,” two disturbing tendencies became clear: first, there was no agreement on what constituted the “common good”; and, second, those who opposed the Administration’s measures seemed both willing and able to organize a “faction” or a “party” to oppose them. What made these developments particularly scary was that neither was supposed to occur in a republic, where, so theory held, there was only one “common good,” and all men of good will were supposed to discover, enact, and support it.
To Treasury Secretary Hamilton, who thought himself the “prime minister” under President Washington, the government’s most pressing task was to place the republic on a firm financial footing. This would, he believed, both solidify the nation’s credit abroad and give monied men in the United States a reason to support the government created by the Constitution.
The key to Hamilton’s program was funding and assumption of the entire national debt, which was to be paid at face value, with no distinction made between the original purchasers and current holders of certificates of indebtedness. James Madison, “Father of the Constitution,” co-author with Hamilton and John Jay of the Federalist Papers, and now Congressman from Virginia and the Administration’s floor leader in Congress, split with the Treasury Secretary over the issue. Madison believed that Hamilton’s plan discriminated against the original purchasers of the debt, many of whom had been forced by circumstances to dispose of their certificates, at a fraction of their face value, to financial speculators. This marked the first major breach in the ranks of the nation’s original “Federalists,” those who had worked to ensure ratification of the Constitution.
Moreover, under Hamilton’s scheme, the national government would pay all state Revolutionary War debts that were still outstanding as of 1790. (It should be noted that one of the states that had already redeemed its Revolutionary War debt, and so would not benefit from the provision, was Virginia, home of Madison and Jefferson.) Finally, the combined national and state debt, both principal and interest, was to be “funded”; that is, the national government would call in old certificates of indebtedness and issue new negotiable bonds in their stead.
An integral part of Hamilton’s financial plan was creation of a Bank of the United States (BUS), modeled on the Bank of England. The United States government would be a minority stockholder in the BUS; the majority stockholders would be the wealthiest and most influential class in the new nation, who would support the new government in order to enhance their financial interest. Jefferson and Madison claimed that the BUS was unconstitutional, arguing that the power to charter such a financial institution was not specifically granted to Congress in the Constitution. Hamilton’s response was that, because the need for such a Bank was “necessary and proper” to the financial health of the new nation, the power to create it was implied in the Constitution.
Although much of the new government’s income would be from tariffs, Secretary Hamilton also recommended, and Congress enacted, a tax on whiskey, in order to secure additional funds to pay principal and interest on the combined national debt. This measure was not popular among small farmers, many of them Jefferson supporters, for whom turning grain into whiskey before shipping it eastward was, because of the nation’s primitive transportation routes, the most efficient method for marketing their crop.
The only one of Hamilton’s proposals that failed in Congress was his Report on Manufactures (1791) recommending a closed economic system for the new nation: the southern and western states were to produce raw materials, while the eastern states would manufacture them. This idea struck many Americans as too much like Britain’s policy of mercantilism; Congress rejected the report.
By the early 1790s, Secretary of State Jefferson, Congressman Madison, and a number of other members of Congress had begun to coalesce into an opposition bloc in Congress. According to the theory of republicanism, this was not supposed to happen, because it was believed that there was only one “common good.” By definition, then, those who opposed the “common good” identified by the ruling Federalists were considered members of a “faction” or “party” (the terms were used interchangeably), who were out for themselves, not for the welfare of the republic.
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Even more decisive to this development than Hamilton’s financial program was the American response to the French Revolution, which began in 1789. France had been our most faithful ally during the American Revolution; moreover, at least at first, most Americans seemed to believe that the people of France were rebelling for the same reasons we had in 1775. When the French Revolution turned ugly and violent with the rise of Robespierre and the Jacobins, however, America’s strong support for the Revolution in France disappeared.
With Secretary Hamilton’s support, President Washington issued a Proclamation of Neutrality in 1793 designed to keep the new American republic out of the crossfire of the developing European war between France and Britain and their allies, and, not coincidentally, to allow us to trade with both sides in the conflict. Jefferson and his supporters opposed the Neutrality Proclamation, contending that it would only aid Britain, which controlled the seas. (And it is well to remember that the nation’s foreign trade policy, crafted by Hamilton, depended upon tariffs levied on trade for revenue, and most of this trade was with Britain.)
Between 1793 and 1795, public opinion in the United States was polarized on the question of support for the French Revolution. One was either for it or against it; there seemed no neutral ground. By that time also, opposition to the Washington Administration’s course in the French Revolution had solidified around Jefferson and Madison, in a “party” or “faction” increasingly referred to as the “Republicans.” Those who supported Hamilton’s financial plan and the Administration’s course in the French Revolution kept the “Federalist” label for themselves.
In 1794, following a rebellion in western Pennsylvania against Hamilton’s whiskey tax, an angry President Washington denounced the so-called “Democratic Societies,” groups that backed Jefferson, the Whiskey Rebels, and France, as “self-created societies.” By the mid-1790s, in other words, the new American republic was witnessing a development that should never have occurred in a classical republic, the formation of two “factions” or “parties,” each claiming that it represented the “common good” and that the opposing group represented a threat to the future of the republic.
In 1797, the new American President, John Adams, sent a peace mission to France to try to end seizures of American shipping by the French revolutionary government. When three French emissaries (referred to as “X, Y, and Z,” tried to secure a bribe from the American delegation before allowing them to see the French foreign minister, the angry Americans refused and sent word of the attempted bribe back to the United States, where it became known as the “XYZ Affair.” Word of this insult to American diplomats touched off an undeclared naval war with France and led the Federalist-dominated Congress to pass the Alien and Sedition Acts (1798), in an effort to silence their Republican critics in Congress, the state legislatures, and the press.
The Alien and Sedition Acts sparked the first state rights movement under the new Constitution and, eventually, helped elect Thomas Jefferson President of the United States. Jefferson and Madison considered the Alien and Sedition Acts proof, if any were needed, that the Federalists were allied with Great Britain and intended to subvert the American Republic and replace it with a monarchy on the British model. The Federalists, of course, claimed only to be defending the republic against the threat posed to it by what they professed to see as an atheistic, radical, bloodthirsty Republican “faction.”
Madison and Jefferson responded to the Alien and Sedition Acts by having the legislatures of Kentucky (Jefferson) and Virginia (Madison) pass resolutions declaring the laws unconstitutional (1798-1799). (It should be noted that, at this early period in American history, the recently-created Supreme Court had not yet asserted its right to declare acts of Congress unconstitutional, so it was not at all clear where those who believed a federal law violated the Constitution could go for redress.)
This controversy, along with fistfights on the floor of Congress and rumbles, especially from the South, of a determination to resist the Alien and Sedition Acts, formed the bizarre backdrop for the presidential election of 1800. The candidates, chosen by party caucuses in Congress, were John Adams and Charles C. Pinckney for the Federalists and Thomas Jefferson and Aaron Burr for the Republicans. During the electoral votes, party unity gave Jefferson and Burr the same number of votes, while divisions among the Federalists split the vote unevenly between Adams and Pinckney, which threw the final choice of the new President into the House of Representatives, which was still controlled by the Federalists, who, ironically, would have to choose between two Republicans.
After more maneuvering, and additional rumors of armed Republicans set to march on the capital to make Thomas Jefferson President, enough Federalists were convinced, by Alexander Hamilton and other party leaders, to abstain that the “people’s choice,” measured by the popular vote, Thomas Jefferson, was named the nation’s third President, and the first non-Federalist. Simplifying an extremely complex situation, one can say that in 1800 the American people opted for the weak, agrarian republic promised by Jefferson over the strong, commercial republic envisioned by Hamilton. There is irony here, but like all irony, it is clearly visible only with hindsight: despite Jefferson’s victory in 1800, in the long run the Hamiltonian republic would triumph.
But that, of course, was not obvious in March 1801, when Thomas Jefferson took the oath of office and delivered his famous inaugural address in a soft voice that was inaudible beyond the first few rows of spectators. All that was evident was that the American Republic endured, at least the version Jefferson believed in. The peaceful transfer of power from the Federalists to the Republicans showed the acceptance in the new nation of majority rule, the idea of the power of a majority of the people that was a central tenet of republicanism.
That the principle of majority rule had been validated only after a bitterly fought contest between rival “factions” or “parties,” each claiming to represent the “common good,” was a cause of concern for all good republicans. The larger question at issue in 1800, whether the nation would be able to keep its republican form of government, as Franklin had cautioned in 1787, would depend upon the challenges the new President faced and how successfully he dealt with them.