Though seemingly cordial in the beginning of George Washington's administration-Alexander Hamilton, who was the current Secretary of Treasury, and Thomas Jefferson, Secretary of State-went head to head when Hamilton proposed several financial programs that Jefferson believed as unconstitutional and even led to "quasi-political parties, the Democrats and the Federalists." (page 18, Critchlow).
The first issue that Hamilton wanted to address as Secretary of Treasury was the increasing national debt. Hamilton proposed that the federal government repurchase bonds held by speculators at full price because it would strengthen the State's credit (20). Jefferson, as well as James Madison, vehemently opposed the idea because it cheated out the original owners out of…show more content… Hamilton wanted the government to assume State debts. Jefferson and Madison on the other hand believed that each state should pay their own dues because southern states, including Virginia, had no debt while northern states including New York were knee deep. So, who won? After the three met over dinner, Jefferson and Madison agreed to Hamilton's proposal in exchange for the removal of the capitol from "New York to the Virgina-Maryland border on the Potomac River", where the capitol still resides today (21, Critchlow).
The disagreements between Hamilton and Jefferson was incessant. In regards to taxes, Hamilton wanted to increase taxes on imported goods, such as whiskey, and proposed to Washington a Protective Tariff which would force Americans to buy other American goods because it restricted access to imported goods (20, Critchlow). Jefferson, on the other hand, who had "an abiding faith 'in the people'" wanted to keep taxes and the price of imports low (20). For the third time in a row, Washington sided with Hamilton and the Whiskey Tax passed in 1791 but not without defiance from the people
