George Washington had to borrow money to relocate to New York, then the center of American government. His presidential inauguration was held near New York's Wall Street in late April 1789. A tremendous crowd showed up to see the man now known as "the Father of His Country." Borrowing a custom from English monarchs, who by tradition address Parliament when its sessions open, Washington gave a brief speech. It was the first inaugural address and the first of many contributions that Washington would make to the office of the presidency. But this would be no monarch; the new leader wore a plain brown suit.

"As the first of everything in our situation will serve to establish a precedent," Washington wrote James Madison at this time, "it is devoutly wished on my part, that these precedents may be fixed on true principles." At every turn, Washington was aware that the conduct of his presidency would set the standard for generations to come.

The American government—in particular, the presidency—was in a remarkably primitive state. But Washington's performance in those early years was both surefooted and brilliant. He went to one session of the Senate to receive its advice about a treaty but was annoyed because senators felt uncomfortable in his presence and would not debate its provisions. Washington withdrew angrily and swore he "would be damned if he went there again," thus ensuring a tradition of separation between the executive and legislative branches. Departments of State, War, and Treasury were established, along with the office of Attorney General, each headed by a trusted presidential adviser. These advisers collectively became known as the cabinet. Washington strove for ideological balance in these appointments, thus augmenting their strength and credibility. He signed the first Judiciary Act of 1789, initiating the development of the judicial branch. A Supreme Court was created, headed by a chief justice and originally five associate justices, who were chosen by the President and approved by Congress. A network of district courts was also established. Congress sent the President ten amendments to the Constitution that became known as the Bill of Rights; these amendments strengthened civil liberties.

The Battle of Fallen Timbers

In 1791, Washington learned that an American force had been defeated by a Native American uprising in the Northwest Territory (present-day Ohio) that killed over 600 American soldiers and militia. The President ordered the Revolutionary War veteran General "Mad" Anthony Wayne to launch a new expedition against a coalition of tribes led by Miami Chief Little Turtle. Wayne spent months training his troops to fight using forest warfare in the style of the Indians before marching boldly into the region. After constructing a chain of forts, Wayne and his troops crushed the Indians in the Battle of Fallen Timbers (near present-day Toledo) in the summer of 1794. Defeated, the seven tribes—the Shawnee, Miami, Ottawa, Chippewa, Iroquois, Sauk, and Fox—ceded large portions of Indian lands to the United States and then moved west.

Debts and Finances

The young country had severe financial problems. There were both domestic and foreign debts from the war, and the issue of how to raise revenue for government was hotly debated. Treasury Secretary Alexander Hamilton laid plans for governmental financing via tariffs, or surcharges on imported goods, and a tax on liquor. Much of this revenue was earmarked for retiring war debts. Hamilton also proposed a national bank to centralize the nation's financial base and urged the new government to assist in developing a manufacturing sector of the economy. He traded his support for Secretary of State Thomas Jefferson's plan to locate the nation's permanent capital near Virginia, with Philadelphia serving as a temporary capital, for Jefferson's support of his policies on retiring the debt.

By the midpoint of Washington's first term, however, such cooperation had deteriorated. Washington's administration had split into two rival factions: one headed by Jefferson, which would later become the Democratic-Republican Party, and the Federalist faction headed by Hamilton. They disagreed on virtually all aspects of domestic and foreign policy, and much of the President's energies were spent in mediating their differences.

War Over Whiskey

A tax on whiskey—production of which had increased dramatically in the 1790s—was one of the key elements of Hamilton's fiscal program. This taxation enraged many citizens, and in 1794, resistance to the whiskey tax boiled over in western Pennsylvania with attacks on tax collectors and the formation of several well-armed resistance movements. Washington was alarmed by the Whiskey Rebellion, viewing it as a threat to the nation's existence. In an extraordinary move designed to demonstrate the federal government's preeminence and power, the President ordered militia from several other states into Pennsylvania to keep order. He then traveled to the site of the troubles to personally oversee the buildup of troops and to lend his encouragement to the enterprise. The insurrection collapsed quickly with little violence, and the resistance movements disbanded. Later, Washington pardoned the men convicted of treason in the matter.

Soon after this incident, however, a pair of high-level departures diminished the quality of the Washington administration. Secretary of War Henry Knox quit in December 1794, and Secretary of Treasury Alexander Hamilton followed suit a month later.

Transfer of Power

Although it was his for the taking, Washington never considered running for a third term. Over four decades of public service had left him exhausted physically, mentally, and financially. He happily handed the office to his successor, John Adams. With customary care, Washington was scrupulously silent on his opinions of the men jockeying to succeed him. By ceding office after two terms, Washington helped ensure a regular and orderly transfer of executive power. His two-term limit set a custom that would stand for a century and a half, until Franklin Roosevelt was elected to a third term in 1940 and a fourth term in 1944.

Washington closed his administration with a thoughtful farewell address. Written with the help of Hamilton and Madison, the address urged Americans to be a vigilant and righteous people. "It is of infinite moment that you should properly estimate the immense value of your national union to your collective and individual happiness," he said. "The very idea of the power and the right of the people to establish government presupposes the duty of every individual to obey the established government." It was as if he saw the great challenges to come in the next decades and begged his fellow citizens to remain a unified nation. But some of Washington's advice was not heeded. He warned his fellow citizens against "the baneful spirit of faction," referring to the party spirit that had disrupted his administration, and he warned against "foreign entanglements." But he could not prevent the formation of parties, nor did his warning against "foreign entanglements" prevent his successors from engaging in active diplomacy with European nations, often leading to de facto alliances. To this day, Washington's farewell address is read aloud every year in the U.S. Senate as a tribute to his service and foresight.