7 Secretary of the Treasury

CHAPTER 7 Secretary of the Treasury In 1789, the United States government was set up just the way it is today. The First Congress had already been in session since March. It was made up of a Senate and a House of Representatives that made laws. The Senate had two representatives for each of the thirteen states. The House of Representatives had different numbers of congressmen from each state, based on how many people lived there. The first Supreme Court met on February 2, 1790. It was the court's job to decide whether a law followed the rules that had been established by the Constitution.

Alexander was the secretary of the treasury. The treasury is a place where money is kept, but it can also mean the money itself. He advised President Washington on all kinds of money matters and financial decisions. Thomas Jefferson was the secretary of state. He advised the president on US relations with foreign countries. People both in the United States and around the world quickly came to see that Alexander

Hamilton was one of the most important people in the new country. Many remembered him as a war hero at Yorktown. But he was now famous as Washington's most trusted advisor and one of the creators of the government. Alexander had a lot of ideas about the US Treasury. For example, he thought the federal government should pay off all the money that the individual states had borrowed as loans during the Revolutionary War. In order to do this, there would need to be a federal bank— a government-run bank that would collect taxes. Some states, especially in the South, had already paid off their debts by 1789. They didn't think it was fair that other people shouldn't have to do the same. Other states, especially in the North, thought Alexander's idea was good because most of the fighting had been done there. Therefore, their governments had spent more money to fund the army. Why shouldn't

the whole country help pay it off, when it was everyone's war? Alexander hoped to use taxes to pay off these debts. He especially wanted to tax imports arriving from other countries. This, too, worried some people in the South. Although their economy was based on selling and exporting cotton to other countries, they were afraid that these new taxes would cause other countries to tax American cotton in return. They thought Alexander was giving the North an unfair advantage. Alexander thought that if America had a bank that was strong enough to loan and borrow money, it would show that the United States could do the same for other countries as well. He felt that having a federal bank was the only way to compete with other countries, like England.

In February 1790, Alexander made a speech to Congress explaining his financial plans. A few days later, he was surprised and hurt when his friend James Madison made a speech that criticized it. Alexander felt very betrayed. People in the government—and all around the country—were starting to fall into two groups when it came to how they thought America

should be run. The Federalists believed in Alexander's ideas. They also thought the United States should have a strong relationship with England because England's government was much like the one they had built. The Anti-Federalists became known as the Democratic-Republicans. These included Thomas Jefferson and James Madison, who had by then changed his mind about Alexander's ideas. They believed in strong state governments and an economy based on farming, and they wanted a close relationship with France. The Democratic-Republicans did not like how close Alexander was to George Washington. The