George Washington took the oath of office as the first President of the United States in New York City in April, 1789. He had many difficult problems to face, but he met them all with courage and honesty.
One of the first things Washington did was to appoint people to run the departments of the executive branch of the new government. These people became known as the President's Cabinet. Washington not only expected them to run their departments, but he also turned to them for advice. Today there are fifteen executive departments, but in Washington's time there were only four. Henry Knox, who had served with Washington during the Revolution, was named Secretary of War. Alexander Hamilton of New York was appointed Secretary of the Treasury. Thomas Jefferson was to be the first Secretary of State, and Edmund Randolph was appointed Attorney General. The Senate approved Washington's appointments, and the new government got to work.
A major problem facing the new government was money. It didn't have any, and it owed a lot, both to American citizens and to people in other countries. The Continental Congress had been forced to borrow money to help fight the Revolution. The government of the Confederation also had been forced to borrow money to meet its expenses. Now those debts had to be paid, or no one would respect the new government.
It fell to Alexander Hamilton, as Secretary of the Treasury, to develop a plan to solve the nation's financial problems. Hamilton believed that the new government should assume [take over] the debts of the national government, and also the debts that the various state governments. Many of the states had also been forced to borrow money during the Revolution. Hamilton wanted to combine the national and state debts into one and pay them off in an orderly fashion.
Another part of Hamilton's plan was the creation of a national bank, the Bank of the United States. This would give the government and the citizens of the U.S. a place to keep their money. They bank could also loan money to the government when needed. Hamilton felt that the bank would make the government stronger.
Finally, Hamilton proposed a series of taxes to raise money. The new Constitution gave Congress the power to pass tax laws. Congress passed a law placing a tax on certain imports, goods brought into the U.S. from other countries. A tax on imported goods is called a tariff. Hamilton also asked Congress to pass an excise tax. This is a tax on goods made and sold within the nation. At Hamilton's suggestion, Congress passed an excise tax on all whiskey made and sold in the U.S.