Conflicting Visions:
The Early American Republic

II. Hamilton’s Financial System

• Report on Public Credit (Jan.-July 1790)

  • "Funding" of the national debt: pay regular interest, at face value, to anyone who held debt certificates.

  • "Assumption" of the states’ Revolutionary War debts.

    • Blocked by Jefferson’s allies in Congress, on moral and self-interested grounds: windfalls to speculators, fear of corruption, most southern states had already paid their debts.

    • Resolved by the “Compromise of 1790.”

• The Bank of the United States (2/91)

  • Private corporation under private control, holding government's $.

  • TJ-AH debate on the constitutionality of the bank: hinged on the "necessary and proper" clause, involved basic philosophies of government .

• Immediate taxation: import duties & the the Excise or Whiskey Tax (3/91).

• Report on Manufactures (12/91): government “bounties” & protection for manufacturing industries. Never passed.

III. Sovereignty and Sectionalism in the 1790s

A. Jefferson left cabinet at end of 1793, leaving government controlled by Hamilton and the Federalists.

B. Political Background: War between Great Britain and revolutionary France, in which both sides pressured U.S. for support.

1. Diplomatic insults (Jay Treaty-from Great Britain, XYZ Affair-from France) and fears of subversion from both sides.
2. Federalists tilted toward Great Britain, due to interests of merchants, financiers, and manufacturers in northeastern cities, and also to fears of revolution and democracy.
3. Federalists strongest in New England and among upper classes of coastal cities. Felt they were defending social order & religion as well as the stability of the government.
4. Republicans tilted toward French.
5. Republican opposition strongest in rural South and West. Support in cities came especially from immigrants and workers.
6. Most effective opposition came from newspapers, many of them edited by immigrants who had fled from British repression.

C. Federalist efforts to assert sovereignty of national government.

1. Whiskey Rebellion, 1794: 13,000 troops sent to suppress protests against excise tax in western Pennsylvania.
2. “Quasi-War” with France, 1798-1800: undeclared naval war (with possibility of wider conflict) leading to military build-up and crackdown on domestic opposition.
3. Alien & Sedition Acts, 1798: allowed government to easily deport immigrant radicals, made criticism of government a crime, led to arrests of opposition newspaper editors. Bill of Rights held to be no barrier.
4. Direct or “Window” Tax: first federal income tax, designed to pay for security program.
5. Intimidation and violence (sometimes by paramilitary groups) against Republicans. Example: attack on Rep. Matthew Lyon on floor of Congress.
6. Fries’ Rebellion, 1800: military force used against German farmers who resisted collection of the Direct Tax.

D. Republican Response: Southern Style

1. Virginia and Kentucky Resolutions, 1798-99: Jefferson & Madison arranged for state legislatures to protest the Sedition Act.

a) States and voters, not courts, as enforcers of constitutionality. Could "interpose" themselves to stop violations and nullify unconstitutional laws.
b) Birth of “compact theory,” formulated by James Madison, one of constitution’s chief authors.

2. Tactic rejected even by other southern state legislatures, lost Jefferson votes.

E. Republican Responses: Middle States Style

1. Campaigns to elect Jefferson president, using newspapers such as Philadelphia Aurora (along with many more), party organization, democratic tactics like speeches, parades, festivals.
2. Middle States (NY & PA), where sides were evenly matched and party politics was long familiar, led the way. Key to Jefferson's national victory was Republican win in NY state legislative elections, engineered by Vice Presidential candidate Aaron Burr.

IV. Sectionalism and Potential Civil War in the Election of 1800

A. Federalist New England vs. Republican South.
Feds saved New England by attacking Jefferson’s religious beliefs.

B. NY and PA as "swing states" that gave Jefferson and Burr the win.

C. Electoral College tie allowed Federalists in Congress to delay Jefferson's election, toy with choosing Burr instead, causing first real brush with civil war.