The Confederation Years. After the war, several states were beset with troubles that alarmed Washington and conservative leaders who were close to him. British merchants flooded the United States with British goods. Inadequate markets abroad for American products obliged American merchants to export coin or to buy imports on credit. Britain excluded American ships from the trade of the British West Indies, to the distress of New England. A shortage of money depressed the prices of American products and enhanced the difficulty of paying debts not only those owed to British merchants but also those that had been contracted by Congress or the states to finance the war. As the debt burdens grew, debtors demanded that the states issue large quantities of paper money.
About half the states did so. Such paper depreciated, to the loss of creditors. The strife between debtor and creditor in Massachusetts exploded in an uprising, Shays Rebellion, that threatened to overthrow the state government.
Apprehensive men turned to Washington for leadership. It seemed to them, and to him, that the troubles of the times flowed from the weaknesses of the central government under the Articles of Confederation. The Union could not provide a single, stable, adequate currency because the main powers over money were vested in the states. Because Congress could not tax, it could not maintain an army and navy. Nor could it pay either the principal or the interest on the national debt. Washington believed that the central government should be strengthened so that it could safeguard property, protect creditors against hostile state laws, afford the Union a uniform, nondepreciating currency, and collect taxes in order both to pay the national debt and to obtain revenues sufficient for current needs.
He also thought that Congress should be empowered to foster domestic manufacturing industries as a means of lessening the importation of foreign goods. Washingtons anxieties over events in the 1780s were deepened by his memories of bitter experiences during the Revolution, when the weakness of Congress and the power of the states had handicapped the army in countless ways. The Constitutional Convention met at Philadelphia in May 1787. Washington, a delegate of Virginia, served as its president.
His closest associate then was James MADISON. The Constitution, as adopted, embodied Washingtons essential ideas. It provided for a mixed or balanced government of three branches, so devised that all three could not easily fall under the sway of any faction, thus assuring that every important group would have some means of exerting influence and of protecting its interests in a lawful manner.
The federal government, as remodeled, was vested with powers adequate for managing the common affairs of the Union, while leaving to the states control over state-confined property and business, schools, family relations, and nonfederal crimes and lesser offenses.
Washington helped to persuade the Virginia legislature to ratify the Constitution, making use of The Federalist papers written in its defense by James Madison, Alexander Hamilton, and John Jay. The Presidency Unanimously elected the first president, Washington was inaugurated in New York City on April 30, 1789. Acting with a cooperative Congress, he and his aides constructed the foundations on which the political institutions of the country have rested since that time. His qualifications for his task could hardly have been better.
For 15 years he had contended with most of the problems that faced the infant government. By direct contact he had come to know the leaders who were to play important parts during his presidency. Having traveled widely over the country, he had become well acquainted with its economic conditions and practices. Experience had schooled him in the arts of diplomacy. He had listened closely to the debates on the Constitution and had gained a full knowledge both of its provisions and of the ideas and interests of representative leaders. He had worked out a successful method for dealing with other men and with Congress and the states.
Thanks to his innumerable contacts with the soldiers of the Revolutionary army, he understood the character of the American people and knew their ways. For eight years after 1775 he had been a de facto president. The success of his work in founding a new government was a by-product of the qualifications he had acquired in the hard school of public service.
The Executive Departments The Constitution designated the president as the only official charged with the duty of enforcing all the federal laws. In consequence, Washingtons first concern was to establish and develop the executive departments. In a sense such agencies were arms of the president the instruments by which he could perform his primary duty of executing the laws. At the outset, Washington and his co-workers established two rules that became enduring precedents the president has the power to select and nominate executive officers and the power to remove them if they are unworthy.
Congress did its first important work in 1789, when it made provision for five executive departments. The men heading these departments formed the presidents cabinet. One act established the war department, which Washington entrusted to Gen. Henry Knox. Then came the creation of the treasury department, its beginnings celebrated by the brilliant achievements of its first secretary, Alexander Hamilton.
The department of state was provided for, and Thomas Jefferson took office as its first secretary in March 1790. The office of postmaster general came into being next, and the appointment went to Samuel Osgood. Washingtons first attorney general, Edmund Randolph, was selected after his office had been created. In forming his CABINET Washington chose two liberals Jefferson and Randolph and two conservatives Hamilton and Knox. The liberals looked to the South and West, the conservatives to the Northeast.
On subjects in dispute, Washington could secure advice from each side and so make informed decisions. In constructing the new government, Washington and his advisers acted with exceptional energy. The challenge of a large work for the future inspired creative efforts of the highest order. Washington was well equipped for the work of building an administrative structure. His success arose largely from his ability to blend planning and action for the attainment of a desired result.
First, he acquired the necessary facts, which he weighed carefully. Once he had reached a decision, he carried it out with vigor and tenacity. Always averse to indolence and procrastination, he acted promptly and decisively. In everything he was thorough, systematic, accurate, and attentive to detail. From subordinates he expected standards like his own. In financial matters he insisted on exactitude and integrity.
The Federalist Program From 1790 to 1792 the elements of Washingtons financial policies were expounded by Hamilton in five historic reports. Hamilton was a highly useful assistant who devised plans, worked out details, and furnished cogent arguments. The Federalist program consisted of seven laws. Together they provided for the payment, in specie, of debts incurred during the Revolution created a sound, uniform currency based on coin and aimed to foster home industries in order to lessen the countrys dependence on European goods.
The Tariff Act 1789, the Tonnage Act 1789, and the Excise Act 1791 levied taxes, payable in coin, that gave the government ample revenues. The Funding Act 1790 made provision for paying, dollar for dollar, the old debts of both the Union and the states. The Bank Act 1791 set up a nationwide banking structure owned mainly by private citizens, which was authorized to issue paper currency that could be used for tax payments as long as it was redeemed in coin on demand.
A Coinage Act 1792 directed the government to mint both gold and silver coins, and a Patent Law 1791 gave inventors exclusive rights to their inventions for 14 years. The Funding Act, the Excise Act, and the Bank Act aroused an accelerating hostility so bitter as to bring into being an opposition group. These opponents, the Republicans, precursors of the later Democratic party, were led by Jefferson and Madison. The Funding Act enabled many holders of government certificates of debt, which had been bought at a discount, to profit as the Treasury redeemed them, in effect, at their face values in coin. Washington undoubtedly deplored this form of private gain, but he regarded it as unavoidable if the Union was to have a stable currency and a sound public credit.
The Bank Act gave private citizens the sole privilege of issuing federal paper currency, which they could lend at a profit. The Excise Act, levying duties on whiskey distilled in the country, taxed a commodity that was commonly produced by farmers, especially on the frontier. The act provoked armed resistance the Whiskey Rebellion in western Pennsylvania, which Washington suppressed with troops, but without bloodshed or reprisals, in 1794. The Republicans charged that the Federalist acts tended to create an all-powerful central government that would devour the states.
A protective tariff that raised the prices of imported goods, a centralized banking system operated by moneyed men of the cities, national taxes that benefited the public creditors, a restricted currency, and federal securities as good as gold that could be used to buy foreign machines and tools needed by manufacturers all these features of Washingtons program, so necessary to industrial progress, repelled debtors, the poorer farmers, and the most zealous defenders of the states.