#1 George Washington
George Washington is ranked first here as he was tasked with holding the fragile republic together in its infancy. This was a perilous time in which the whole country could have fractured apart, collapsed, turned into a dictatorship or even been taken over by a foreign power. The fact the the United States thrived, and in such a calm manner, is a testament to Washington’s greatness.
Washington’s every move as President would set precedents for generations to come and he did so masterfully. The Constitution had given the office of the Presidency certain powers, but was vague in its details. For example, the president could make treaties “with the consent of the Senate”, but what did this mean? Did the president need approval before negotiating? Did he have to include the Senate within the negotiations? Washington tried to consult with the senate during treaty negotiations with the with the Creek Indians, but the discussion was chaotic. After that Washington decided that the executive could complete negotiations and then submit the treaty to the Senate for approval.
Under the Articles of Confederation the federal government could not levy any taxes. This was a major problem because the government needed money to pay officials and service the debt. Congress passed the Tariff of 1789 to fulfill these needs. This tariff was revised slightly upwards by the Tariff of 1790 and the Tariff of 1792. In order to collect the import duties Congress also passed the Collection Act of 1789 that set up ports of entry and established the United States Customs Service. Many people state that Tariffs are a bad way to levy taxes because they increase the cost of goods which lowers buying power. Whereas this is true, all taxes lower buying power. Sales tax, excise taxes and value added taxes increase the price of goods as well. Direct taxes, such as income taxes, payroll taxes and property taxes, lower the amount of money one has with which to purchase goods. Pointing out a negative affect one tax has that is common to all taxes isn’t a convincing argument. Tariffs do have a major benefits that the other taxes do not, they help foster and maintain businesses within the home country creating more jobs. Tariffs also lack negative affects that other taxes have:
- People can avoid payment. Working “under the table”, hiding assets and offshoring income allows avoidance of several forms of taxation
- Some taxes force people or businesses to lay open their finances and personal lives to government scrutiny
- Some taxes can be costly for the government to collect
- Some taxes can be so complicated that they force people to hire specialist in order to be in compliance with the tax
- Some taxes can be assessed in an inequitable manner
Another advantage of tariffs is that the federal government generally ran a surplus when it’s main form of revenue was from tariffs, and it has generally ran a deficit when its main form of revenue was from income taxes.
When Washington became president the economy was mired in a recession and U.S. savings bonds were trading between 20-25% of face value. With American debt trading so far below face value, it would be hard to secure needed capital from Europe. To remedy the debt issues and reinvigorate the American Economy the Secretary of Treasury, Alexander Hamilton, came up with a plan. The first steps of his plan were outlined in the First Report on Public Credit. In this Hamilton called for payments of debts at full value to the current debtholder as a way of establishing confidence in American credit and for the Federal Government to assume the state debts left over from the revolutionary war. Some members of Congress took issue with paying full face value of the debt because many speculators had bought up debt at a discounted rate, but to establish America as a creditworthy borrower the debts would need to be paid in full. Whereas resumption of debt payments at full face value easily passed through congress, assumption of state debts did not. The issue with the federal government assuming the state debts was that Virginia, Maryland and Georgia had paid down the bulk of their debt, so they were opposed to the individual state debts being collectively redistributed among all of the states. Another matter stalled in Congress at the same time was where to locate the permanent federal capital. At the time the capital was in New York City with several areas wanting the permanent capital and the prestige that would come with it. Hamilton and James Madison came to a compromise where the state debts would be assumed by the federal government under the Funding Act of 1790 and the capital moved to Philadelphia for ten years then a new city on the Potomac River, between Virginia and Maryland, under the Residency Act of 1790.
In his Second Report on Public Credit Hamilton called for the establishment of a national bank and federal mint. The First Bank of the United States was chartered on February 25th 1791 for twenty years with the passage of the Bank Bill of 1791. The bank could make loans to the government or private interest, it could issue bank notes creating a national currency, but only up to the amount of its deposit, and it served as a depository for federal funds. Thomas Jefferson and James Madison both argued against the constitutionality of the bank and the mint, but Washington agreed with Hamilton’s reasoning and signed both into law. In recent years some people have erroneously stated that the tenth amendment prohibits the formation of a national bank, but this is wrong on two counts. First, the Bank was chartered before the Amendment was ratified, so the argument that it was against the tenth amendment when the law was signed is not valid. Secondly, the government of the United States is given powers that were carried out by the bank. Certainly the Constitution wouldn’t bar Congress from forming an apparatus for carrying out its own mandates.
With Hamilton’s reforms Washington was able to pull the economy out of the recession it had suffered under the Articles of Confederation. From 1790-1796 real GDP growth is estimated to have been 7%. Because the national bank had limits on the amount of currency it could issue, inflation was also curbed. Washington put the United States on the road from being a quasifeudal agrarian economy to a free market powerhouse it is today.
Even with the Tariff of 1790 the federal government was still running a deficit primarily due to the assumption of revolution era state debts. Hamilton believed that import duties had been raised as high as they feasibly could be, so he pushed for an excise tax on alcohol as the least objectionable tax that could be passed at the time. The Distilled Spirits Duty Act, commonly known as The Whisky Act, was passed on March 3rd 1791 and went into affect on June 1st. This was the first tax levied by the federal government on a domestic product. Farmers west of the Appalachian mountains were bitterly opposed to the tax. Throughout western Pennsylvania tax resisters used violence and intimidation to prevent collection of the tax. In July of 1794 a group of 600 men, called the Mingo Creek Association, attacked tax collector John Neville and a group of federal soldiers, with causalities on both sides. The rebels continued by capturing a federal marshal, robbing the mail, stopping court proceedings and even planning an attack on Pittsburgh. Alarmed at the obvious insurrection in western Pennsylvania, Washington invoked the Militia Act of 1792. Washington took control of the militia force of over 12,000 men, which was roughly the size of the force he commanded in the Revolutionary War, and marched to western Pennsylvania. The rebellion quickly melted away in the face of the large army. Two men were sentenced to hang for treason, but Washington later pardoned both of them. The suppression of the Whisky Rebellion showed that the federal government had the will and power to enforce federal laws.
Washington favored adding the Bill of Rights to the Constitution and he supported James Madison’s work in Congress to get them passed and ratified. The Bill of Rights emphasized protections of vital freedoms for individuals rather than the rights of states. Without Washington’s support it is possible that the Bill of Rights might not have passed, as some stated at the time that they were unnecessary. All these years later we can see that it was important to enshrine these rights into the Constitution. The addition of the Bill of Rights also put an end to talk of a second Constitutional Convention, which may have weakened or radically changed the federal government.
When Washington heard that Revolutionary France Declared war on Great Britain in 1793 he convened his cabinet to discuss the issue. Washington wisely knew that the new nation couldn’t risk another war with a major European power until it had time to grow stronger. The Cabinet unanimously agreed that the United States should remain neutral in the war, and Washington issued the Proclamation of Neutrality. Secretary of State Thomas Jefferson, who was a major supporter of the French, saw a Federalist influence behind the proclamation and eventually resigned his post in the cabinet over it. The Neutrality Act of 1794 further made it illegal for American citizens to make war on nations that were at peace with the United States. This act was passed in response to the French ambassador, Edmond Charles Genet, recruiting American privateers to attack British and Spanish shipping.
With the war raging between France and Britain Washington decided to send John Jay to Britain to negotiate a treaty. The main goal of the British was to improve relations with the United States lest it fall into the French orbit. The American aims were to normalize trade relations with Britain and to resolve issues left over from the Revolutionary War. Out of these negotiations came the Jay Treaty which specified the following:
- British agreed to vacate their forts that were inside the United States
- Granted “most favored nation” trade status to both parties
- Allowed limited trading rights in the British West Indies
- Used arbitration to decided debts owed between Britain and the United States. Britain paid $11.7 million for damages to American shipping and received £600,000 for pre-1775 debts.
Many southerners were unhappy with the treaty because Jay dropped the issue of compensation for slaves taken to the West Indies in 1783. They were further angered because it was mainly southern planters that owed the pre-1775 debt to the British as well. These southern interests, as well as the pro-French interests who wanted to go to war with Britain, were opposed to the treaty. The treaty was a catalyst in the favorable negotiation of Pickney’s Treaty with Spain that allowed American goods to use the port of New Orleans and settled disputed border with Florida . Most importantly the treat averted war with Britain for the time being. The Jay treaty was a ten year treaty that Jefferson rejected the renewal of in 1806 which eventually led to the War of 1812.
After eight years of steady leadership, Washington gave the country one last gift, he stepped aside from power one final time. He gave the country the two term limit for the presidency, which wasn’t broken until Franklin Roosevelt did so in 1940. Washington could have easily won a third term and died in office. If had been a different man he could have become king or ruler for life, that he didn’t is a great credit to his character.