Just a little balance:

Thursday-April 21, 2011

Just a little balance:

On today’s date, in 1789, John Adams was sworn in as this country’s first Vice President. His swearing in was nine days before President Washington’s swearing in as the nation’s first President.

In that period of history, these two men saw great difference in what the nation’s government was responsible for and how it should be organized. In that period of history, there was a party system, but not the two party system that we have today. The president was elected on a separate ticket from the Vice President. There were factions in the government that fought for certain principles that would have a far reaching impact on today’s politics.

The Federalist Party was an American political group in the period 1787 to 1816, the era of the First Party System, with its remnants lasting into the 1820s. The Federalists controlled the federal government until 1801. The party was formed by Alexander Hamilton, who, during George Washington's first term, built a network of supporters, largely urban bankers and businessmen, to support his fiscal policies. These supporters grew into the Federalist Party committed to a fiscally sound and nationalistic government. The United States' only Federalist president was John Adams; although George Washington was broadly sympathetic to the Federalist program, he remained an independent his entire presidency. The Federalist policies called for a national bank, tariffs, and good relations with Britain as expressed in the Jay Treaty negotiated in 1794. Their political opponents, the Democratic-Republicans, led by Thomas Jefferson and James Madison, denounced most of the Federalist policies, especially the bank, and vehemently attacked the Jay Treaty as a sell-out of republican values to the British monarchy. The Jay Treaty passed, and indeed the Federalists won most of the major legislative battles in the 1790s. They held a strong base in the nation's cities and in New England. The Democratic-Republicans, with their base in the rural South, won the hard-fought election of 1800; the Federalists never returned to power. The Federalists, too wedded to an upper-class style to win the support of ordinary voters, grew weaker every year. They recovered some strength by intense opposition to the War of 1812; they practically vanished during the Era of Good Feelings that followed the end of the war in 1815.

The Federalists left a lasting imprint as they fashioned a strong new government with a sound financial base. They also decisively shaped Supreme Court policies for another three decades through the Chief Justice John Marshall.

On taking office in 1789, President Washington nominated New York lawyer Alexander Hamilton to the office of Secretary of the Treasury. Hamilton wanted a strong national government with financial credibility. Hamilton proposed the ambitious Hamiltonian economic program that involved assumption of the state debts incurred during the Revolutionary War, creating a national debt and the means to pay it off, and setting up a national bank. James Madison, Hamilton's ally in the fight to ratify the United States Constitution, joined with Thomas Jefferson in opposing Hamilton's program.

By 1790, Hamilton started building a nationwide coalition. Realizing the need for vocal political support in the states, he formed connections with like-minded nationalists and used his network of treasury agents to link together friends with all parties in the government, especially merchants and bankers, in the new nation's dozen major cities. His attempts to manage politics in the national capital to get his plans through Congress, then, "brought strong responses across the country. In the process, what began as a capital faction soon assumed status as a national faction and then, finally, as the new Federalist party.

Today, the Democratic Party can say they found their roots with the Federalist Party. Today, the Republicans can say they were born from Jefferson’s Democratic - Republican Party. Today’s political roots can be traced back to the first inauguration and the first inhabitants of the office of President. Adams found himself to be a strong advocate of the Federalists and Washington found a balance in his leadership to be independent of the Federalist throughout his entire presidency.

Today, we find ourselves at a crossroads, not only with party politics, but with the politics of balance in the political policy of the two parties. Today, we find ourselves trying to balance the financial policies of the country. Today, one party sees the government as the arbitrator and as owner of the nations industries. Today, one party sees the government’s involvement in business as a regulatory agent of destruction. Today, both parties see the government’s deficit spending as necessary. The difference is the degree at which it spends and the degree at which debts are paid off.

In Washington and Adams day, the government spent the nation’s wealth. However, the government was set up to repay it through a national bank. The balance of governing came through the practice of paying the nations debt when it had to borrow. In those days spending was driven by what the federal government took in, in the way of tariffs and fair taxation policies.

Today our nation’s fiscal policies are driven by the world economy. In our early history our economy was driven by what we produced and the resulting trade with other countries. Not to different from today except that our dollar is now vulnerable due to our debt. There is no balance in the debt until we can decide on a policy to balance our fiscal policy and satisfy the world’s money markets.

Our 14 trillion dollar debt would be unimaginable to Washington and even to Adams who was a Federalist. There is doubt in the credit worthiness of the United States Treasury. There are no dependable signs of balance in the treasury and that is why the value of our dollar is going down. When the value of Gold and Silver goes up or spikes inflation is not far behind. When our dollar’s value goes down the price of oil goes up because our dollar doesn’t go as far in its purchasing power. The price of fuel at the pump also goes up as it is today.

Without a balanced balance sheet there can be no balance in the nation’s debt. When the nation is in debt the Democrats can’t spend. When the nation is in debt the Republicans can’t find a way to save the nations wealth.

Federalist or Democrat, Democrat-Republican or Republican, Washington and Adams had balance, because the policy of balance was achieved.

Gregory C. Dildilian
Founder and Executive Director
Pinecone Conservatives

A footnote: It took a little time to balance my thoughts today, but I had to find the balance in history so that I could write about the importance of balancing our balance sheet.