What we now call the First American Party System was birthed over an economic crisis and two huge personalities. During Washington’s presidency the economy ranked as one of his most important issues.
The new nation and the individual states faced series debt from the Revolution both from foreign nations and American citizens. The man tasked to face this crisis was Washington’s protégé, Alexander Hamilton.
When I was a young professor starting out, I spent at least half a day if not more introducing my students to the founding father I felt was most responsible for the nation as it is today. He only played a small role in America’s freedom; his contribution came after the war with the creation of our government.
When I was first teaching, Hamilton had become an obscure founder on the tendollar bill that needed explaining. Now I just say America’s favorite rapping founding father and most of the class knows all the words to his play. A man who was ignored for a century on purpose is now most students’ favorite Founder Father.
I am going to assume that most know Hamilton’s background by now, there is an entire song about it, and simply focus on three key things that are important about his upbringing in the Caribbean.
One, he was clearly brilliant, and his writing was impressive. Two, while working for his uncle’s import business he learned the ways of the British economic system and respected it. Three, he was one of only five men to have not been born in America and the most recent immigrant. That allowed him to be an American first instead of a Virginian, a Pennsylvanian or a whateverian, which could have prompted his allegiance more to the nation than a state.
At heart, Hamilton was a classical conservative. While he supported America’s desire for independence, he still wanted to retain much of what made the British Empire great. He believed a strong central government was the key to protecting the American experiment’s future. The reason Hamilton even chose the position of Secretary of the Treasury over State was he felt that office could best help him carry out his plan of strengthening the weaknesses that he saw in the Constitution and the federal government.
His economic plan, known as Reports on Public Credit, wanted to tie the wealthy and powerful to the government to build its strength. Add that to his distrust of the people and democracy and you can see why Hamilton fell out of favor with America until he started sing-ing on Broadway.
On the other side of the coin was the classic liberal Thomas Jefferson. Jefferson was the opposite of Hamilton in every way. Jefferson was born wealthy while Hamilton was poor.
Both owned slaves but Jefferson depended on them for his economy while Hamilton did not. Jefferson saw bigger government as the opposite of liberty and wanted the federal government as small as possible. Jefferson wanted an agrarian nation while Hamilton wanted industry.
Jefferson was born to an elite southern family and attended one of the best schools in the nation, both then and now, in the College of William and Mary.
He had been away as Ambassador to France during the writing of the Constitution but had returned when Washington summoned him back to be his Secretary of State. Entering the cabinet, Jefferson quickly found himself at odds with Hamilton.
Hamilton proposed his plan to fix the economy while also strengthening the government. The plan had several parts. First, he proposed a new tax on Whiskey, or really all liquor, as a way to earn revenue. It’s hard to pay off debt without an income. Secondly, he proposed to assume all state debts so the separate states would no longer owe money to foreign nations. While some states welcomed this lifted burden, Jefferson understood that it would make the states more dependent on the federal government. Third, he wanted to manage the debt by paying off foreign investors first then America’s wealthiest. This would help secure foreign loans in the future and tie the wealthy to the success of the government.
Finally, Hamilton wanted to create a new Federal Bank to help manage all the money transactions. The Bank of the United States would be a private bank but would manage the nation’s money. This bank would also serve the nation by keeping local and state banks in line from lending too much money as well as creating a national currency. While both these functions would protect the economy and stop local banks for folding, it also gave more power into the federal government and away from local control.
When Hamilton introduced his Notes of Public Credit there was an outcry from the “liberals” that this new government was too big. The best way to fight the plan was to organize with like minded individuals and fight it together.
So, while the Founders still believed that parties were evil, they were claiming it while holding party meetings.
The two parties formed were Hamilton’s Federalists and Jefferson’s Democratic Republicans or Jeffersonian Republicans.
Hamilton’s plan ultimately passed thanks to a meeting where the two sides compromised, yes surprisingly parties can do that. Hamilton got his plan and Jefferson got the new American Capital moved down to the banks of the Potomac River closer to his own home. While a compromise was reached, parties were just getting started.
James Finck, Ph.D. is a professor of history at the University of Science and Arts of Oklahoma. He can be reached at HistoricallySpeaking1776@ gmail.com.
