Chapter 7: Chapter OutlineI. The Political Crisis of the 1790sA. The Federalists Implement the Constitution1. Federalists swept the election of 1788; members of the electoral college chose George Washington as president, and John Adams became vice president.2. The Constitution gave the president the power to appoint major officials with the consent of the Senate, but Washington insisted that only the president could removethem.3. The Judiciary Act of 1789 created a hierarchical federal court system with a federal district court in each state as well as three circuit courts to hear appeals.4. The Judiciary Act permitted constitutional matters to be appealed to the Supreme Court, which had the final say.5. The Federalists added the Bill of Rights to the Constitution, which safeguarded certain fundamental rights and mandated certain legal procedures to protect the individual.B. Hamilton’s Financial Program1. The Federalists divided into two irreconcilable factions over financial policy, with Alexander Hamilton and Thomas Jefferson defining contrasting views of the American future.2. Alexander Hamilton, secretary of the treasury, devised bold and controversial policies to enhance the authority of the national government and to favor financiers and seaport merchants.3. Hamilton’s Report on the Public Credit asked Congress to redeem millions of dollars in securities issued by the Confederation, providing windfall profits to speculators and creating a permanent national debt owned mostly by wealthy families.4. The House rejected James Madison’s proposal for helping the shopkeepers, farmers, and soldiers who were the original owners of the Confederation securities.5. Congress approved Hamilton’s second proposal that the national government adopt an assumption plan to assume the war debts of the states (which unleashed a flurry of speculation and some government corruption) after Hamilton agreed to reimbursethose states that had already paid off much of their war debt and supported locatingthe permanent national capital along the banks of the Potomac.6. Hamilton asked Congress to charter the Bank of the United States, to be jointly owned by private stockholders and the national government.7. Washington signed the legislation creating the bank, although Jefferson and Madisoncharged that a national bank was unconstitutional because the Constitution did not specifically provide for one.8. At Hamilton’s insistence, Congress imposed a variety of domestic excise taxes and modestly increased tariffs on foreign imports. Hamilton did not support a high protective tarif that would exclude competing foreign productions. Instead, he favored revenue tarifs that would pay the interest on the debt and defray the expenses of the national government.