Lesson 1: Washington and Adams Presidencies

The new nation faced a financial crisis with massive war debts. Treasury Secretary Alexander Hamilton proposed a bold plan to stabilize the economy. He argued for the federal government to take over, or assume, the unpaid debts of individual states. This would unite the states' financial interests with the national government and build credit for the future.

Hamilton also proposed creating a National Bank to manage government funds and print currency. This sparked a fierce constitutional debate. Hamilton argued the bank was legal under the "Elastic Clause" (implied powers), while Thomas Jefferson argued for Strict Construction, claiming the government could only do what was explicitly written in the Constitution.

The conflict between Hamilton and Jefferson revealed two different visions for America, leading to the first Political Parties. Hamilton’s followers, the Federalists, believed in a strong central government, a manufacturing economy, and a loose interpretation of the Constitution.

In contrast, Jefferson’s followers formed the Democratic-Republicans. They championed States' Rights, an economy based on agriculture (farming), and a strict limit on federal power. These divisions proved that political factions were becoming a permanent part of American democracy.

In 1796, George Washington decided to retire, setting a precedent for a two-term presidency. In his famous Farewell Address, he left the nation with two major warnings to guide its future. First, he warned against the "baneful effects" of Political Parties (factions), fearing they would divide the nation and spark revenge.

Second, he urged the United States to steer clear of Permanent Alliances with foreign nations. He believed that getting entangled in European wars would threaten American peace and independence. This advice established a policy of neutrality that guided U.S. foreign relations for over a century.