which did not easily bear contradiction. It consequently happened that the very means by which Washington hoped to promote harmony, produced the opposite effect. The secret councils of the first Administration were often, in the ensuing year, made the scene of violent disputes, which the influence of Washington himself could hardly restrain. The very onerous task of repairing the damaged finances of the State was what chiefly engaged the attention of Hamilton; and in the prosecution of his plans he came into frequent collision with Jefferson, who, as the Minister of Home and Foreign affairs alike, was concerned in the general administration of the whole Government. The plans of Hamilton (which, however, were not publicly unfolded until the next session) included the funding of the Federal debt, the assumption of the State debts, the establishment of a National Bank (already commenced by Robert Morris), a system of revenue from taxation, internal and external, and a sinking fund. There was much in these suggestions which gave offence to a large body of men, of whom Jefferson was regarded as the leader. That eminent politician became every year more attached to the principle of State rights, and was thought, by Adams and some others, to carry his love of freedom to an extent which would have endangered public order. Hamilton was devoted to the President and to the consolidation of his power.

During the first session of Congress, the Senate was engaged on the question of a Federal Judiciary, and ultimately a plan, embodied in a Bill drafted by Ellsworth, of Connecticut, was, after several amendments, concurred in by both Houses. By its provisions, a national Judiciary was established, consisting of a Supreme Court, having a Chief Justice and five associate justices, who were to hold two sessions annually at the seat of the Federal Government. To circuit and district courts was assigned jurisdiction over certain specified cases. Each State was made a district; the territories of Kentucky and Maine were similarly provided for; and the other territories were grouped together into three circuits. In all civil cases, when the matter in dispute amounted to two thousand dollars, an appeal, as to points of law, was allowed from these lower courts to the Supreme Court. A marshal was to be appointed by the President for each district, and this functionary was invested with the general powers of a Sheriff. He was to attend all courts, and was authorised to serve all processes. The interests of the Federal Government were to be represented by a district Attorney, who was to act for the United States in all cases

where such action might be required. The Bill having been passed, John Jay, of New York, a man of considerable legal acquirements, and one of the representatives of the United States at the Paris negotiations for peace, was appointed to the post of Chief Justice, and Edmund Randolph, of Virginia, was made Attorney-General. Randolph had succeeded Patrick Henry as Governor of Virginia in 1786, and was very active in the convention of 1787. John Rutledge, of South Carolina; James Wilson, of Pennsylvania; Wil liam Cushing, of Massachusetts; Robert H. Harrison, of Maryland; and John Blair, of Virginia, were appointed associate judges.

Congress now turned its attention to various amendments of the Federal Constitution made by the minorities of the conventions which had ratified the recent change in the Government of the country. This subject was brought forward by Madison, in fulfilment of pledges which he hal found it necessary to make in order to secure the adhesion of Virginia. The amendments were altogether very numerous. The minority of the Pennsylvanian convention had proposed fourteen; of Massachusetts, nine; of Maryland, twentyeight; of South Carolina, four; of New Hampshire, twelve; of Virginia, twenty, and of New York, thirty-two. There were also separate Bills of Rights proposed by Virginia and New York. Of these amendments sixteen were finally agreed to by Congress; ten of which were subsequently ratified by the States, and became a part of the Federal compact. In connection with this matter. a letter from the Governor of Rhode Island was sent to Congress, in which that official stated the reasons why his State had not acceded to the Union. These were, in the main, that the peop of Rhode Island had from their first settlemen: been strongly attached to a democratic form of Government; that they had viewed in the new Constitution an approach, though perhaps brt small, towards the mode of Government with which they had lately dissolved their connectionin other words, with the Royal and Aristocratic Government of England; that they desired to sei the proposed system organised and in operation, that they might judge what further checks a securities would be agreed to by way of amen ments, before they adopted it as a Constitution for themselves and posterity; that they had feare lest the rights of individual States should be over borne by Federal combinations; that they were sensible of the extremes to which democratic! Government is sometimes liable, but that they esteemed them temporary and partial evils, coLL

1790.]

pared with the loss of liberty, and of the rights of a free people. The sanctioning of the amendments to the Constitution was believed by the Governor of Rhode Island to have afforded some relief and satisfaction to the minds of the people of that State. On the 29th of May, 1790, Rhode Island formally joined the Confederation, and ratified the Constitution. North Carolina, the other objecting State, had signified its adhesion on the 21st of the previous November.

Congress adjourned in September, 1789, and during the recess Washington made a tour through the North-eastern States, in every part of which

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he was welcomed with the greatest enthusiasm, though, on his visit to Boston, there was an unseemly difference of opinion between the Governor of Massachusetts and the municipal authorities of the town, as to which should receive and bid him welcome first- —a difference leading to an awkward delay in the entrance of the President, who was kept for some time waiting on Charleston Neck. The unpleasant character of the incident was increased by the fact of its being an unusually cold. and murky day; but the difficulty was overcome after awhile, and the reception of Washington at Boston was as hearty as in all other quarters.

NOT until 1790 was the Administration of Washington in full working order, as it took several months to form such a Government as would have any chance of meeting the varied demands of party. Indeed, Jefferson, the Secretary of State, did not arrive in America till the 23rd of November, 1789, nor at New York, the seat of Federal rule, till the 21st of March, 1790. On the 8th of January in the latter year, however, the second session of Congress commenced; and its first important business was to act on the report of Alexander Hamilton, the Secretary of the Treasury. The necessity of restoring the credit of the United States was clearly apparent to the mind of Hamilton. He therefore recommended that not only the debts of the late Continental Congress (foreign and domestic), but those of the individual States, so far as they had been contracted in furtherance of the common cause, should be funded, or assumed by the general Government, and that provision should be made. for paying the interest by imposing taxes on certain articles of luxury, and on spirits distilled within the country. The total amount of indebtedness was

very large. In 1790, it was estimated by the Registrar of the Treasury that the entire cost of the struggle for independence was at least 130,000,000 dollars, exclusive of vast sums lost by individuals and by the several States, to the amount probably of 40,000,000 more. The Treasury payments alone ran up to nearly 93,000,000 dollars, chiefly in Continental bills; and other matters were in proportion. From Hamilton's statement it appeared that the foreign debt, including interest due to France and to private lenders in Holland, with a small sum to Spain, amounted to 11,710,378 dollars, and that the domestic debt, registered and unregistered, including interest, and some claims chiefly in connection with the paper-money, reached a total of 42,414,085 dollars. Nearly one-third of the latter sum consisted of arrears of interest. It had been suggested by many that, in liquidating the claims of the holders of paper-money, a scale of depreciation should be adopted, as had been done once before; seeing that the existing holders of Government certificates, Continental bills, and other promises to pay, were for the most part speculators, who had

purchased those instruments at greatly reduced rates, in the hope of a rise. Hamilton, however, argued that such a course would be dishonest and impolitic; and he strongly urged that all the debts of the Government should be discharged according to the terms of the contract. By the proposed funding of the public debt, he believed that the public creditors would receive six per cent. interest until the Government should be able to pay the principal, it being assumed that in five years the United States might conclude loans at five or even four per cent., with which these particular claims might be finally and fully satisfied. Amongst the other suggestions which he threw out, was one to the effect that the proceeds of the Post Office should be used as a sinking fund for the gradual extinction of the debt; but the Post Office department was not at that time fully organised.

Many animated debates ensued upon Hamilton's report. The financier's plans were for the most part resisted by those who were disinclined to a strong Federal Executive, and favourable to the doctrine of State rights. To all such politicians, Hamilton, who had desired that the President and Senate should hold their offices for life, unless they forfeited them by misconduct, appeared as little better than a monarchist. They belonged almost entirely to the Southern States, and, under the cloak of an extreme regard for Republican forms, concealed a great deal of aristocratic class feeling, as must always be the case in communities where there is a large population of slaves, kept in subjection by a body of privileged landowners. These men now expressed their fears that the assumption of the debts would render the Government still stronger by drawing around it a numerous and powerful body of public creditors, who would always, from interested motives, be ready to support the Federal Government against either the States or the people. Mr. Madison proposed that, whenever the public securities had been transferred, the highest price which they had borne in the market should be paid to the purchaser, and the residue to the original holder. The plan was fair and honest; but it would probably have been found difficult, if not impossible, to bring it into practice. At any rate, the proposition was rejected. The opponents of Hamilton's measures admitted that it was expedient to pay foreigners the whole of their demand; but the American holders of papermoney they desired to pay at the depreciated rate. This was the view of Jefferson-expressed, not indeed in Congress, for he was still far from New York, but in letters written by him at the moment. Others opposed the Ministerial projects on the simple ground that a system of public

debt was bad altogether. But, though this might have been a very good argument against contracting the debt at all, it could not prove the honesty of repudiating what really existed. Hamilton wished to render a portion of the public debt irredeemable, except with the holder's consent-certainly a proposal of very questionable policy, since it would have had the effect of saddling the public with an amount of indebtedness which they would have been powerless to remove. After prolonged debates, the propositions of Hamilton, as regards the general debt, were adopted. A discussion then followed with reference to the debts incurred separately by each State. Hamilton desired to throw these into the common fund; the Opposition maintained that each State should account for and settle its own debt. The debate brought out very plainly the line of demarcation between the Federalists and the AntiFederalists, between the North and the South. On the one hand it was argued that such a measure was indispensable to a strong Government; on the other, it was made an objection that the Government would in this way become stronger than was advis able. Hamilton's resolution was at first carried by a few votes; but shortly afterwards the deputies from North Carolina, which had only just acceded to the Union, took their seats in Congress for the first time, and, on the question being re-committed, the original resolution was rejected by exactly the same number of votes as that by which it had previously been affirmed. After the adverse vote, business was for some time suspended. Congress met, and adjourned from day to day, without transacting any business, owing to the extreme heat and temper exhibited by both parties.

The local debts were most onerous amongst the Northern States, and the Southern States objected to being called upon to share their payment. They should have recollected, however, that the North had not merely contracted the greatest amount of debt, but had borne the chief brunt of the war, and that the South was free mainly because the North had been heroic. It seems, therefore, but reasonable that the South should bear its part in defraying all the expenses of independence. Nevertheless, the split became so serious that Hamilton represented to the leading members on the other side the danger of the Union itself being dissolved, should they persist in their objections. He offered to compensate the Southern States if they would abandon their opposition. It had been intended to plant the seat of Government either at Philsdelphia, or at Georgetown on the Potomac; and it was now thought that by offering this favour to Philadelphia for ten years, and afterwards to

Georgetown permanently, a compromise might be effected, which would remove the difficulties that had arisen. This was agreed to; the proposals of Hamilton were adopted; and a law was passed fixing the Federal Administration in the South, after its temporary sojourn in Philadelphia.

The debt funded in accordance with Hamilton's schemes amounted to rather more than 75,000,000 dollars, upon a part of which three per cent., and upon the remainder six per cent., interest was to be paid. Nothing could be more remarkable than the effect of this measure upon the public. The price of the Government paper, which had fallen to twelve or fifteen cents on the dollar, suddenly rose to par, and general confidence was at once restored. But Hamilton had now to meet the interest of his newly-funded debt by a system of taxation which would not too greatly offend the susceptibilities of the Americans in this respect. The subject was deferred until the following session of Congress, when it was proposed to increase the imposts upon wine, tea, and other commodities, and to place a duty upon spirits distilled within the country. This was in fact a scheme of excise, and it roused the utmost indignation amongst the Southern and Western States, whose interests it was supposed to affect, and whose members exhibited every degree of persistent and vehement antagonism. North Carolina again and again threatened to secede. But it was evident that the money must be obtained somehow; no better plan was forthcoming; and in the end the Excise Bill was passed. The next scheme of the enterprising financier had reference to the establishment of a National Bank. We have seen that this had already been done to some extent by Robert Morris under the old Constitution; but Hamilton desired to render such an institution permanent. Here again he met with violent opposition on the part of the Anti-Federalists. They denied that Congress had any authority for the purpose; no such power, they argued, had been delegated by the constituencies, and it was a usurpation to assume it. The debates on this subject were long and bitter. They took place not merely in Congress, but in the Government itself, for Hamilton found one of his most energetic opponents in the Secretary of State, Thomas Jefferson. Between these two chief disputants, Washington was at length called upon to decide, and he gave his decision in favour of the Treasury Minister and of the proposed institution. Jefferson's fears that a vast amount of Ministerial corruption would be the result of this measure seem to have been exaggerated, though they may not have been altogether devoid of foundation. The prosperity of

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the country undoubtedly increased under the stimulus of a National Bank. Industry revived, and commerce once more attained a healthy condition in centres where it had languished for several

years.

The charter of the new National Bank was granted in January, 1791. It was limited to twenty years. The situation of the Bank was to be in Philadelphia, and its management was to be entrusted to twenty-five directors, who were selected from members of both Houses of the Legislature. This was one of the points which Jefferson most strenuously condemned, on the ground that the directors, together with those members of Congress who held stock in the Bank, always voted with the Government, and created a majority on the side of power. The connection between the Bank and the Legislature was doubtless objectionable; but the scheme was in itself a good one, and the Anti-Federalists seem to have made a mistake in carrying their opposition beyond a mere rectification of abuses into a general denunciation of the whole plan. Although chartered at the commencement of 1791, the Bank did not. begin operations in its corporate form until February, 1794, when it started with a capital of 10,000,000 dollars. Before the establishment of this institution, the whole banking capital of the United States was only 2,000,000 dollars, which were invested in Robert Morris's Bank of North America, in the Bank of New York, and in the Bank of Massachusetts.

A National Mint was another subject which required, and received, the attention of Congress. There was at that time a great want of system in the coinage of the United States. In 1782, Gouverneur Morris had, at the request of Robert Morris, written a report on the subject, which was presented to the Continental Congress. The author of this report desired to harmonise the moneys of all the States. Starting with an ascertained fraction as an unit for a divisor, he proposed that ten units should be equal to one penny, ten pence to one bill, ten bills to one dollar (or about seventy-five cents of the present American currency), and ten dollars to one crown. In 1784, Jefferson, as chairman of a committee appointed for the purpose, produced a report, which, while it adopted the decimal system equally with Morris, proposed to carry out that system after a different fashion. Jefferson's conception was, that the dollar should be adopted as the unit of account and payment, and that its divisions and sub-divisions should be in the decimal ratio. He wrote some notes on the subject, which he submitted to the