In the first elections for the new federal Congress (1789), those favoring the new system won a huge majority. George Washington was unanimously elected to be chief executive, the only president so honored. He was inaugurated in the temporary capital, New York City, on Apr. 30, 1789. The American experiment in republican self-government now began again. The unanimity expressed in Washington's election would prove short- lived.
Under the leadership of Secretary of the Treasury Alexander HAMILTON, Congress pledged (1790) the revenues of the federal government to pay off all the outstanding debt of the old Articles of Confederation government as well as the state debts. Much of the domestic debt was in currency that had badly depreciated in value, but Congress agreed to fund it at its higher face value; at one stroke, the financial credit of the new government was assured. Southerners, however, mistrusted the plan, claiming that it served only to enrich northern speculators because the southern states had largely paid off their debts. Many southerners feared, too, that the new nation would be dominated by New Englanders, whose criticism of southern slavery and living styles offended them. Before assenting to the funding proposal, the southerners had obtained agreement that the national capital (after 10 years in Philadelphia) would be placed in the South, on the Potomac River.
In 1791, Hamilton persuaded Congress to charter the BANK OF THE UNITED STATES, modeled after the Bank of England. Primarily private (some of its trustees would be federally appointed), it would receive and hold the government's revenues, issue currency and regulate that of state-chartered banks, and be free to invest as it saw fit the federal tax moneys in its vaults. Because it would control the largest pool of capital in the country, it could shape the growth of the national economy. Hamilton also proposed (with limited success) that protective tariffs be established to exclude foreign goods and thus stimulate the development of U.S. factories. In short, he laid out the economic philosophy of what became the FEDERALIST PARTY: that the government should actively encourage economic growth by providing aid to capitalists. Flourishing cities and a vigorous industrial order: this was the American future he envisioned. His strongly nationalist position gained the support of the elites in New York City and Philadelphia as well as broad-based support among the Yankees of New England.
On the other hand, southerners, a rural and widely dispersed people, feared the cities and the power of remote bankers. With Thomas JEFFERSON they worked to counteract the Federalists' anglicized vision of the United States. Southerners rejected the concept of an active government, preferring one committed to laissez-faire (that is, allowing people to act without government interference) in all areas--economic and cultural. Jefferson declared that close ties between government and capitalists would inevitably lead to corruption and exploitation. In his view, behind-the-scene schemers would use graft to secure special advantages (tariffs, bounties, and the like) that would allow them to profiteer at the community's expense.
The Middle Atlantic states at first supported the nationalistic Federalists, who won a second term for Washington in 1792 and elected John ADAMS to the presidency in 1796. However, many of the Scots-Irish, Germans, and Dutch in these states disliked Yankees and distrusted financiers and business proprietors. The growing working class in Philadelphia and New York City turned against the Federalists' elitism. By 1800 the ethnic minorities of the Middle Atlantic states helped swing that region behind Jefferson, a Virginian, and his Democratic-Republican party, giving the presidency to Jefferson. Thereafter, until 1860, with few intermissions, the South and the Middle Atlantic states together dominated the federal government. Although the U.S. Constitution had made no mention of POLITICAL PARTIES, it had taken only a decade for the development of a party system that roughly reflected two diverging visions for the new republic. Political parties would remain an integral part of the American system of government.
During the 1790s, however, foreign affairs became dominant, and dreams of republican simplicity and quietude were dashed. A long series of wars between Britain and Revolutionary France began in that decade, and the Americans were inevitably pulled into the fray. By JAY'S TREATY (1794) the United States reluctantly agreed to British wartime confiscation of U.S. ship cargoes, alleged to be contraband, in return for British evacuation of western forts on American soil and the opening of the British West Indies to U.S. vessels. Under John Adams, similar depredations by the French navy against American trading ships led to the Quasi-War (1798-1801) on the high seas. Federalist hysteria over alleged French-inspired subversion produced the ALIEN AND SEDITION ACTS (1798), which sought to crush all criticism of the government.
The Democratic Republic
As president, Jefferson attempted to implement the Democratic- Republican vision of America; he cut back the central government's activities, reducing the size of the court system, letting excise taxes lapse, and contracting the military forces. Paradoxically, in what was perhaps Jefferson's greatest achievement as president, he vastly increased the scope of U.S. power: the securing of the LOUISIANA PURCHASE (1803) from France practically doubled American territory, placing the western boundary of the United States along the base of the Rocky Mountains.
In 1811, under Jefferson's successor, James MADISON, the 20- year charter of the Bank of the United States was allowed to lapse, further eroding the Federalists' nationalist program. Renewed warfare between Britain and France, during which American foreign trade was progressively throttled down almost to nothing, led eventually to the WAR OF 1812. The British insisted on the right freely to commandeer U.S. cargoes as contraband and to impress American sailors into their navy. To many Americans the republic seemed in grave peril.
With reluctance and against unanimous Federalist opposition, Congress made the decision to go to war against Britain. Except for some initial naval victories, the war went badly for the Americans. Western Indians, under the gifted TECUMSEH, fought on the British side. In 1814, however, an invading army from Canada was repelled. Then, just as a peace treaty was being concluded in Ghent (Belgium), Andrew JACKSON crushed another invading British army as it sought to take New Orleans. The war thus ended on a triumphant note, and the republic was confirmed. The Federalists, who in the HARTFORD CONVENTION (in Connecticut, 1814) had capped their opposition to the war with demands for major changes in the Constitution, now were regarded as disloyal, and their party dwindled down to a base in New England and in the 1820s dissolved. Robbed of their enemy, Jeffersonian Democratic-Republicans broke into factions, effectively disappearing as a national party.