• With Congress, President Washington worked to create his cabinet, or departments within the executive branch. The first cabinet consisted of departments of state, treasury, and war along with the attorney general and postmaster general.

• The Judiciary Act of 1789 allowed Congress to establish a federal court system with district courts at the lowest level, circuit courts of appeal at the middle level, and the Supreme Court at the top.

• The first ten amendments to the Constitution are known as the Bill of Rights. They limit the power of government and protect individual liberty, including freedom of speech.

• Alexander Hamilton proposed that the new government pay off the debts owed to other countries and to individual American citizens, including speculators. To gain support for a compromise, he promised Southern leaders that if they voted for his plan, he would support locating the nation’s capital in the South.

• Congress created the Bank of the United States despite opposition from Madison and Jefferson. To help pay the nation's debts, Congress imposed a low tariff, or import duty, on some foreign goods to protect American industries from foreign competition. Congress also passed a number of taxes to raise money for the government.

Section 2: Early Challenges

• Washington sent troops to crush the Whiskey Rebellion. Farmers in western Pennsylvania had rebelled against the tax on whiskey. Washington’s actions showed that the government would use force if necessary to maintain order.

• Fighting broke out between Native Americans and American settlers because the settlers moved onto lands promised to the Native Americans. The Battle of Fallen Timbers crushed the Native Americans’ resistance. Conflicts ended when the Native Americans signed the Treaty of Greenville, in which they agreed to surrender most of the land in what is now Ohio.

• Washington worked to establish American neutrality in the conflict between Britain and France in 1793. The British refused to leave forts in the Northwest Territory, which angered Americans. The British also angered the U.S. by interfering with American shipping and impressing, or capturing, American ship crews and forcing them to join the British navy. The unpopular Jay’s Treaty ended the crisis with Britain.

Section 3: The First Political Parties

• Political factions grew into political parties. Thomas Jefferson was the leader of the Democratic-Republicans or Republicans, and Alexander Hamilton was the leader of the Federalists.

• Republicans believed in a strict interpretation of the Constitution and thought all the people should take part in government. The Federalists believed the government had broad implied powers and supported the representative government, in which elected officials ruled in the people’s name.

• In the election of 1796, John Adams, a Federalist, became the second president of the United States. He faced troubling foreign issues. A dispute with France led to the XYZ Affair, in which three French agents demanded a bribe from the U.S. His vice president was Thomas Jefferson, a Republican.

• In 1798, Congress passed the Alien and Sedition Acts in an effort to protect the nation’s security. The Alien Act allowed the president to send aliens he considered dangerous out of the country.

• The Virginia and Kentucky Resolutions of 1798 and 1799 claimed that the Alien and Sedition Acts were unconstitutional and that states could legally overturn federal laws. They supported the principle that the powers of the federal government were limited to those clearly assigned to it by the Constitution, and that the rest of the powers belonged to the people or to the governments of the individual states.

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