The Federalist Party was founded in 1787 with the goal in mind of forging a secure federal government and encouraging the states to adopt the Constitution. The Federalists gained prominence from the leadership of Alexander Hamilton, the first Secretary of the Treasury, along with other important members like James Madison and John Jay. The most controversial issues faced by the Federalists pertained to economics and the economy. Issues like funding the national debt, repayment of state debts, the formation of a national bank, and the use of tariffs to support economic growth caused bitter division between the rapidly industrializing North and the Agrarian South as well as between the Federalists and the Anti-Federalists (later known as the Democratic Republicans). From a review or primary sources during the era, it is quite clear that the Federalists advocated deficit spending as the surest means of creating a strong central or national economy and government.
The members of the Federalist party were primarily wealthy merchants or large property owners in the North. The Federalists strongly supported the creation of a centralized national government. President George Washington, for all intents and purposes, supported the economic and government policies of the Federalists. In his ôFarewell Addressö in 1796, WashingtonÆs (3) support of the Federalist position is quite clear with respect to a centralized government and economy, ôEvery part of our countryàall the parts combined cannot fail to find in the united mass of means and efforts greater strength, greater resource, proportionably greater security from external danger, [and] less frequent interruption of their peace by foreign nations.ö
To secure such a strong central government and economy, the Federalists faced a number of issues related to economics and the economy. Chief among these was the ability to raise revenues for the United States. Madison proposed ...