After the passage of the Mint Act, Alexander Hamilton began writing his fourth major Treasury report, the controversial On the Subject of Manufactures, which he delivered to the House of Representatives in December, 1791. Unlike Hamilton's previous reports as the Secretary of the Treasury, On the Subject of Manufactures addressed the future of the nation's economic prosperity, rather than immediate economic concerns. In the report, Hamilton argued that the nation's primary industry should be manufacturing rather than agriculture. If the United States was a manufacturing nation, Hamilton wrote, it would be more self-reliant logistically and militarily. Hamilton also argued that the country would be able to export its manufactures to make money, which would make the country wealthier and more prosperous than farming would. To promote industry, Hamilton encouraged Congress to promote the building of canals and quality roads to improve transportation. He also advocated high tariffs and interest rates to encourage Americans to buy American-made goods and promote speculation.
Once again, Hamilton's plan was met with opposition from Thomas Jefferson and James Madison, who believed that the United States would benefit more from agriculture, than from manufactures. Jefferson admitted that Hamilton's plan would make the nation wealthier, but believed that republicanism and democracy would be lost in a nation of corrupt industrialists. Jefferson argued that the Revolutionary War had been won by farmers who had fought for their freedom. He declared many of Hamilton's propositions unconstitutional and was particularly opposed to the government financing and subsidizing private enterprise.
The personal ideological differences between Hamilton and Jefferson became more serious when they began attacking one another in the national newspapers. Both men hired writers to verbally harangue each other for placing the new government in jeopardy. Jefferson believed that a loose interpretation of the Constitution would eventually lead to government tyranny, while Hamilton charged Jefferson of giving too much power to the states at the expense of the federal government. Their personal skirmish soon emerged into a major political battle, with the Anti-Federalists, including Hamilton's old New York nemesis George Clinton, pitted against Hamilton and his Federalists. Jefferson's and Hamilton's ideologies laid the foundations for what were eventually to become the first American political parties. The two men could only agree that Washington should serve a second term as President, and they successfully encouraged Washington to seek reelection in 1794.
Hamilton was beginning, however, to grow weary of his duties as Secretary of the Treasury, and could no longer afford to remain at his government post, which only provided a small salary. By 1793, Hamilton was also beginning to face growing opposition from the Anti-Federalists in Congress. Representative William Giles from Virginia, an ardent supporter of state's rights and a friend of both Jefferson and Madison, attacked Hamilton for misconduct. Giles charged that Hamilton had kept poor track of government finances and had disregarded several congressional orders. The charges proved to be unfounded, but Hamilton was discouraged by Giles's attack. Between the charges and his financial troubles, Hamilton resigned his post in 1794.
Before Hamilton resigned, however, the entire Washington Administration was forced to deal with a dire situation in western Pennsylvania. Farmers west of the capitol in Philadelphia had grown tired of the heavy taxes Congress had placed on them to pay off the national debt. They turned to petitions, threats of secession, and finally to violence in 1794. Hamilton realized that the Whiskey Rebellion, as this uprising came to be known, could destroy the United States if the government establish its authority. Hamilton convinced Washington to raise troops to quell the rebellion, and Washington organized a task force of 15,000 militia troops from New Jersey, Pennsylvania, Maryland, and Virginia. Washington gave Hamilton command of the troops, and Hamilton and his men marched into western Pennsylvania. The sheer size of the force quickly encouraged the farmers to abandon their cause, and the Whiskey Rebellion ended without loss of life. The outcome of the conflict was significant because it set the precedent that troops from one state could enter another to enforce the will of the federal government and justified the authority of the government to use the military to enforce the law.
After the Whiskey Rebellion, Hamilton issued his last major report to Congress in January of 1795 and resigned two weeks later on January 31, 1795.