After a warm debate, the resolution proposed by Mr. Parker was set aside by the previous question, and a committee of conference was appointed. They could not agree upon a report, in consequence of which the subject was permitted to rest; and the senate, conforming to the precedent given by the house of representatives, addressed the President in their answer to his speech by the terms used in the constitution.

While the representatives were preparing bills for organizing the great executive departments, the senate was occupied with digesting the system of a national judiciary. This complex and extensive subject was taken up in the commencement of the session, and was completed towards its close.

[Sidenote: Amendment to the constitution proposed by congress and ratified by the states.]

In the course of this session Mr. Madison brought forward a proposition for recommending to the consideration and adoption of the states, several new articles to be added to the constitution.

Many of those objections to it which had been urged with all the vehemence of conviction, and which, in the opinion of some of its advocates, were entitled to serious consideration, were believed by the most intelligent to derive their sole support from erroneous construction of the instrument. Others were upon points on which the objectors might be gratified without injury to the system. To conciliate the affections of their brethren to the government, was an object greatly desired by its friends. Disposed to respect, what they deemed, the errors of their opponents, where that respect could be manifested without a sacrifice of essential principles, they were anxious to annex to the constitution those explanations and barriers against the possible encroachments of rulers on the liberties of the people, which had been loudly demanded, however unfounded, in their judgments, might be the fears by which those demands were suggested. These dispositions were perhaps, in some measure, stimulated to exertion by motives of the soundest policy. The formidable minorities in several of the conventions, which in the legislatures of some powerful states had become majorities, and the refusal of two states to complete the union, were admonitions not to be disregarded, of the necessity of removing jealousies, however misplaced, which operated on so large a portion of society. Among the most zealous friends of the constitution therefore, were found some of the first and warmest advocates for amendments.

To meet the various ideas expressed by the several conventions; to select from the mass of alterations which they had proposed those which might be adopted without stripping the government of its necessary powers; to condense them into a form and compass which would be acceptable to persons disposed to indulge the caprice, and to adopt the language of their particular states; were labours not easily to be accomplished. But the greatest difficulty to be surmounted was, the disposition to make those alterations which would enfeeble, and materially injure, the future operations of the government. At length, ten articles in addition to and amendment of the constitution, were assented to by two-thirds of both houses of congress, and proposed to the legislatures of the several states. Although the necessity of these amendments had been urged by the enemies of the constitution, and denied by its friends, they encountered scarcely any other opposition in the state legislatures, than was given by the leaders of the anti-federal party. Admitting the articles to be good and necessary, it was contended that they were not sufficient for the security of liberty; and the apprehension was avowed that their adoption would quiet the fears of the people, and check the pursuit of those radical alterations which would afford a safe and adequate protection to their rights. They were at length ratified by the legislatures of three-fourths of the states, and probably contributed, in some degree, to diminish the jealousies which had been imbibed against the constitution.

[Sidenote: Appointment of the officers of the cabinet, council and of the judges.]

The government being completely organized, and a system of revenue established, the important duty of filling the offices which had been created, remained to be performed. In the execution of this delicate trust, the purest virtue and the most impartial judgment were exercised in selecting the best talents, and the greatest weight of character, which the United States could furnish. The unmingled patriotism of the motives by which the President was actuated, would receive its clearest demonstration from a view of all his private letters on this subject: and the success of his endeavours is attested by the abilities and reputation which he drew into the public service.

At the head of the department of foreign affairs, since denominated the department of state, he placed Mr. Jefferson.

This gentleman had been bred to the bar, and at an early period of life, had acquired considerable reputation for extensive attainments in the science of politics. He had been a distinguished member of the second congress, and had been offered a diplomatic appointment, which he had declined. Withdrawing from the administration of continental affairs, he had been elected governor of Virginia, which office he filled for two years. He afterwards again represented his native state in the councils of the union, and in the year 1784, was appointed to succeed Dr. Franklin at the court of Versailles. In that station, he had acquitted himself much to the public satisfaction. His Notes on Virginia, which were read with applause, were believed to evince the soundness of his political opinions; and the Declaration of Independence was universally ascribed to his pen. He had long been placed by America amongst the most eminent of her citizens, and had long been classed by the President with those who were most capable of serving the nation. Having lately obtained permission to return for a short time to the United States, he was, while on his passage, nominated to this important office; and, on his arrival in Virginia, found a letter from the President, giving him the option of becoming the secretary of foreign affairs, or of retaining his station at the court of Versailles. He appears rather to have inclined to continue in his foreign appointment; and, in changing his situation, to have consulted the wishes of the first magistrate more than the preference of his own mind.

The task of restoring public credit, of drawing order and arrangement from the chaotic confusion in which the finances of America were involved, and of devising means which should render the revenue productive, and commensurate with the demand, in a manner least burdensome to the people, was justly classed among the most arduous of the duties which devolved on the new government. In discharging it, much aid was expected from the head of the treasury. This important, and, at that time, intricate department, was assigned to Colonel Hamilton.

This gentleman was a native of the island of St. Croix, and, at a very early period of life, had been placed by his friends, in New York. Possessing an ardent temper, he caught fire from the concussions of the moment, and, with all the enthusiasm of youth, engaged first his pen, and afterwards his sword, in the stern contest between the American colonies and their parent state. Among the first troops raised by New York was a corps of artillery, in which he was appointed a captain. Soon after the war was transferred to the Hudson, his superior endowments recommended him to the attention of the Commander-in-chief, into whose family, before completing his twenty-first year, he was invited to enter. Equally brave and intelligent, he continued, in this situation, to display a degree of firmness and capacity which commanded the confidence and esteem of his general, and of the principal officers in the army.

After the capitulation at Yorktown, the war languished throughout the American continent, and the probability that its termination was approaching daily increased.

The critical circumstances of the existing government rendered the events of the civil, more interesting than those of the military department; and Colonel Hamilton accepted a seat in the congress of the United States. In all the important acts of the day, he performed a conspicuous part; and was greatly distinguished among those distinguished men whom the crisis had attracted to the councils of their country. He had afterwards been active in promoting those measures which led to the convention at Philadelphia, of which he was a member, and had greatly contributed to the adoption of the constitution by the state of New York. In the pre-eminent part he had performed, both in the military and civil transactions of his country, he had acquired a great degree of well merited fame; and the frankness of his manners, the openness of his temper, the warmth of his feelings, and the sincerity of his heart, had secured him many valuable friends.

To talents equally splendid and useful, he united a patient industry, not always the companion of genius, which fitted him, in a peculiar manner, for subduing the difficulties to be encountered by the man who should be placed at the head of the American finances.

The department of war was already filled by General Knox, and he was again nominated to it.

Throughout the contest of the revolution, this officer had continued at the head of the American artillery, and from being the colonel of a regiment, had been promoted to the rank of a major general. In this important station, he had preserved a high military character; and, on the resignation of General Lincoln, had been appointed secretary of war. To his past services, and to unquestionable integrity, he was admitted to unite a sound understanding; and the public judgment, as well as that of the chief magistrate, pronounced him in all respects competent to the station he filled.

The office of attorney general was filled by Mr. Edmund Randolph. To a distinguished reputation in the line of his profession, this gentleman added a considerable degree of political eminence. After having been for several years the attorney general of Virginia, he had been elected its governor. While in this office, he was chosen a member of the convention which framed the constitution, and was also elected to that which was called by the state for its adoption or rejection. After having served at the head of the executive the term permitted by the constitution of the state, he entered into its legislature, where he preserved a great share of influence.

Such was the first cabinet council of the President. In its composition, public opinion as well as intrinsic worth had been consulted, and a high degree of character had been combined with real talent.

In the selection of persons for high judicial offices, the President was guided by the same principles. At the head of this department he placed Mr. John Jay.

From the commencement of the revolution, this gentleman had filled a large space in the public mind. Remaining, without intermission, in the service of his country, he had passed through a succession of high offices, and, in all of them, had merited the approbation of his fellow citizens. To his pen, while in congress, America was indebted for some of those masterly addresses which reflected most honour upon the government; and to his firmness and penetration, was to be ascribed, in no inconsiderable degree, the happy issue of those intricate negotiations, which were conducted, towards the close of the war, at Madrid, and at Paris. On returning to the United States, he had been appointed secretary of foreign affairs, in which station he had conducted himself with his accustomed ability. A sound judgment improved by extensive reading and great knowledge of public affairs, unyielding firmness, and inflexible integrity, were qualities of which Mr. Jay had given frequent and signal proofs. Although for some years withdrawn from that profession to which he was bred, the acquisitions of his early life had not been lost; and the subjects on which his mind had been exercised, were not entirely foreign from those which would, in the first instance, employ the courts in which he was to preside.

John Rutledge of South Carolina, James Wilson of Pennsylvania, William Cushing of Massachusetts, Robert Harrison of Maryland, and John Blair of Virginia were nominated as associate justices. Some of these gentlemen had filled the highest law offices in their respective states; and all of them had received distinguished marks of the public confidence.

In the systems which had been adopted by the several states, offices corresponding to those created by the revenue laws of congress, had been already established. Uninfluenced by considerations of personal regard, the President could not be induced to change men whom he found in place, if worthy of being employed; and where the man who had filled such office in the former state of things was unexceptionable in his conduct and character, he was uniformly re-appointed. In deciding between competitors for vacant offices, the law he prescribed for his government was to regard the fitness of candidates for the duties they would be required to discharge; and, where an equality in this respect existed, former merits and sufferings in the public service, gave claims to preference which could not be overlooked.

In the legislative, as well as in the executive and judicial departments, great respectability of character was also associated with an eminent degree of talents. The constitutional prohibition to appoint any member of the legislature to an office created during the time for which he had been elected, did not exclude men of the most distinguished abilities from the first congress. Impelled by an anxious solicitude respecting the first measures of the government, its zealous friends had pressed into its service: and, in both branches of the legislature, men were found who possessed the fairest claims to the public confidence.

From the duties attached to his office, the Vice President of the United States, and President of the senate, though not a member of the legislature, was classed, in the public mind, with that department not less than with the executive. Elected by the whole people of America in common with the President, he could not fail to be taken from the most distinguished citizens, and to add to the dignity of the body over which he presided.

Mr. John Adams was one of the earliest and most ardent patriots of the revolution. Bred to the bar, he had necessarily studied the constitution of his country, and was among the most determined asserters of its rights. Active in guiding that high spirit which animated all New England, he became a member of the congress of 1774, and was among the first who dared to avow sentiments in favour of independence. In that body he soon attained considerable eminence; and, at an early stage of the war, was chosen one of the commissioners to whom the interests of the United States in Europe were confided. In his diplomatic character, he had contributed greatly to those measures which drew Holland into the war; had negotiated the treaty between the United States and the Dutch republic: and had, at critical points of time, obtained loans of money which were of great advantage to his country. In the negotiations which terminated the war, he had also rendered important services; and, after the ratification of the definitive articles of peace, had been deputed to Great Britain for the purpose of effecting a commercial treaty with that nation. The political situation of America having rendered this object unattainable, he solicited leave to return, and arrived in the United States soon after the adoption of the constitution.

As a statesman, this gentleman had, at all times, ranked high in the estimation of his countrymen. He had improved a sound understanding by extensive political and historical reading; and perhaps no American had reflected more profoundly on the subject of government. The exalted opinion he entertained of his own country was flattering to his fellow citizens; and the purity of his mind, the unblemished integrity of a life spent in the public service, had gained him their confidence.

A government, supported in all its departments by so much character and talent, at the head of which was placed a man whose capacity was undoubted, whose life had been one great and continued lesson of disinterested patriotism, and for whom almost every bosom glowed with an attachment bordering on enthusiasm, could not fail to make a rapid progress in conciliating the affection of the people. That all hostility to the constitution should subside, that public measures should receive universal approbation; that no particular disgusts and individual irritations should be excited; were expectations which could not reasonably be indulged. Exaggerated accounts were indeed occasionally circulated of the pomp and splendour which were affected by certain high officers, of the monarchical tendencies of particular institutions, and of the dispositions which prevailed to increase the powers of the executive. That the doors of the senate were closed, and that a disposition had been manifested by that body to distinguish the President of the United States by a title,[43] gave considerable umbrage, and were represented as evincing inclinations in that branch of the legislature, unfriendly to republicanism. The exorbitance of salaries was also a subject of some declamation, and the equality of commercial privileges with which foreign bottoms entered American ports, was not free from objection. But the apprehensions of danger to liberty from the new system, which had been impressed on the minds of well meaning men, were visibly wearing off; the popularity of the administration was communicating itself to the government; and the materials with which the discontented were furnished, could not yet be efficaciously employed.

[Footnote 43: The following extract from a letter written July 1789, to Doctor Stuart, who had communicated to him this among other private insinuations, shows the ideas entertained by the President on this subject. "It is to be lamented that a question has been stirred which has given rise to so much animadversion, and which I confess has given me much uneasiness, lest it should be supposed by some unacquainted with facts that the object in view was not displeasing to me. The truth is, the question was moved before I arrived, without any privity or knowledge of it on my part, and urged after I was apprised of it contrary to my opinion;—for I foresaw and predicted the reception it has met with, and the use that would be made of it by the enemies of the government. Happily the matter is now done with, I hope never to be revived."]

Towards the close of the session, a report on a petition which had been presented at an early period by the creditors of the public residing in the state of Pennsylvania, was taken up in the house of representatives. Though many considerations rendered a postponement of this interesting subject necessary, two resolutions were passed; the one, "declaring that the house considered an adequate provision for the support of the public credit, as a matter of high importance to the national honour and prosperity;" and the other directing, "the secretary of the treasury to prepare a plan for that purpose, and to report the same to the house at its next meeting."

[Sidenote: Adjournment of the first session of congress.]

On the 29th of September, congress adjourned to the first Monday in the succeeding January.

Throughout the whole of this laborious and important session, perfect harmony subsisted between the executive and the legislature; and no circumstance occurred which threatened to impair it. The modes of communication between the departments of government were adjusted in a satisfactory manner, and arrangements were made on some of those delicate points in which the senate participate of executive power.

[Sidenote: The president visits the New England states.]

Anxious to visit New England, to observe in person the condition of the country and the dispositions of the people towards the government and its measures, the President was disposed to avail himself of the short respite from official cares afforded by the recess of congress, to make a tour through the eastern states. His resolution being taken, and the executive business which required his immediate personal attendance being despatched,[44] he commenced his tour on the 15th of October; and, passing through Connecticut and Massachusetts, as far as Portsmouth in New Hampshire, returned by a different route to New York, where he arrived on the 13th of November.

[Footnote 44: Just before his departure from New York the President received from the Count de Moustiers, the minister of France, official notice that he was permitted by his court to return to Europe. By the orders of his sovereign he added, "that His Majesty was pleased at the alteration which had taken place in the government, and congratulated America on the choice they had made of a President." As from himself, he observed that the government of this country had been hitherto of so fluctuating a nature, that no dependence could be placed on its proceedings; in consequence of which foreign nations had been cautious of entering into treaties, or engagements of any kind with the United States: but that in the present government there was a head to look up to, and power being placed in the hands of its officers, stability in its measures might be expected. The disposition of his Christian Majesty to cultivate the good will of the new government was also manifested by his conduct in the choice of a minister to replace the Count de Moustiers. Colonel Ternan was named as a person who would be particularly acceptable to America, and his appointment was preceded by the compliment of ascertaining the sense of the President respecting him.]

With this visit, the President had much reason to be satisfied. To contemplate the theatre on which many interesting military scenes had been exhibited, and to review the ground on which his first campaign as Commander-in-chief of the American army had been made, were sources of rational delight. To observe the progress of society, the improvements in agriculture, commerce, and manufactures; and the temper, circumstances, and dispositions of the people, could not fail to be grateful to an intelligent mind, and an employment in all respects, worthy of the chief magistrate of the nation. The reappearance of their general, in the high station he now filled, brought back to recollection the perilous transactions of the war; and the reception universally given to him, attested the unabated love which was felt for his person and character, and indicated unequivocally the growing popularity, at least in that part of the union, of the government he administered.

[Sidenote: His reception.]

The sincerity and warmth with which he reciprocated the affection expressed for his person in the addresses presented to him, was well calculated to preserve the sentiments which were generally diffused. "I rejoice with you my fellow citizens," said he in answer to an address from the inhabitants of Boston, "in every circumstance that declares your prosperity;—and I do so most cordially because you have well deserved to be happy.

"Your love of liberty—your respect for the laws—your habits of industry—and your practice of the moral and religious obligations, are the strongest claims to national and individual happiness. And they will, I trust, be firmly and lastingly established."

But the interchange of sentiments with the companions of his military toils and glory, will excite most interest, because on both sides, the expressions were dictated by the purest and most delicious feelings of the human heart. From the Cincinnati of Massachusetts he received the following address:

"Amidst the various gratulations which your arrival in this metropolis has occasioned, permit us, the members of the society of the Cincinnati in this commonwealth, most respectfully to assure you of the ardour of esteem and affection you have so indelibly fixed in our hearts, as our glorious leader in war, and illustrious example in peace.

"After the solemn and endearing farewell on the banks of the Hudson, which our anxiety presaged as final, most peculiarly pleasing is the present unexpected meeting. On this occasion we can not avoid the recollection of the various scenes of toil and danger through which you conducted us; and while we contemplate various trying periods of the war, and the triumphs of peace, we rejoice to behold you, induced by the unanimous voice of your country, entering upon other trials, and other services alike important, and, in some points of view, equally hazardous. For the completion of the great purposes which a grateful country has assigned you, long, very long, may your invaluable life be preserved. And as the admiring world, while considering you as a soldier, have long wanted a comparison, may your virtue and talents as a statesman leave them without a parallel.

"It is not in words to express an attachment founded like ours. We can only say that when soldiers, our greatest pride was a promptitude of obedience to your orders; as citizens, our supreme ambition is to maintain the character of firm supporters of that noble fabric of federal government over which you preside.

"As members of the society of the Cincinnati, it will be our endeavour to cherish those sacred principles of charity and fraternal attachment which our institution inculcates. And while our conduct is thus regulated, we can never want the patronage of the first of patriots and the best of men."

To this address the following answer was returned:

"In reciprocating with gratitude and sincerity the multiplied and affecting gratulations of my fellow citizens of this commonwealth, they will all of them with justice allow me to say, that none can be dearer to me than the affectionate assurances which you have expressed. Dear, indeed, is the occasion which restores an intercourse with my faithful associates in prosperous and adverse fortune; and enhanced are the triumphs of peace, participated with those whose virtue and valour so largely contributed to procure them. To that virtue and valour your country has confessed her obligations. Be mine the grateful task to add the testimony of a connexion which it was my pride to own in the field, and is now my happiness to acknowledge in the enjoyments of peace and freedom.

"Regulating your conduct by those principles which have heretofore governed your actions as men, soldiers, and citizens, you will repeat the obligations conferred on your country, and you will transmit to posterity an example that must command their admiration and grateful praise. Long may you continue to enjoy the endearments of fraternal attachments, and the heartfelt happiness of reflecting that you have faithfully done your duty.

"While I am permitted to possess the consciousness of this worth, which has long bound me to you by every tie of affection and esteem, I will continue to be your sincere and faithful friend."

Soon after his return to New York, the President was informed of the ill success which had attended his first attempt to negotiate a peace with the Creek Indians. General Lincoln, Mr. Griffin, and Colonel Humphries, had been deputed on this mission, and had met M'Gillivray with several other chiefs, and about two thousand men, at Rock landing, on the Oconee, on the frontiers of Georgia. The treaty commenced with favourable appearances, but was soon abruptly broken off by M'Gillivray. Some difficulties arose on the subject of a boundary, but the principal obstacles to a peace were supposed to grow out of his personal interests, and his connexions with Spain.

[Sidenote: North Carolina accedes to the union.]

This intelligence was more than counterbalanced by the accession of North Carolina to the union. In the month of November, a second convention had met under the authority of the legislature of that state, and the constitution was adopted by a great majority.



CHAPTER VI.

Meeting of congress.... President's speech.... Report of the secretary of the treasury on public credit.... Debate thereon.... Bill for fixing the permanent seat of government.... Adjournment of congress.... Treaty with the Creek Indians.... Relations of the United States with Great Britain and Spain.... The President visits Mount Vernon.... Session of congress.... The President's speech.... Debates on the excise.... On a national bank.... The opinions of the cabinet on the law.... Progress of parties.... War with the Indians.... Defeat of Harmar.... Adjournment of congress.

{1790}

On the eighth of January, 1790, the President met both houses of congress in the senate chamber.

[Sidenote: Meeting of the second session of the first congress.]

In his speech, which was delivered from the chair of the vice president, after congratulating congress on the accession of the important state of North Carolina to the union, and on the prosperous aspect of American affairs, he proceeded to recommend certain great objects of legislation to their more especial consideration.

"Among the many interesting objects," continued the speech, "which will engage your attention, that of providing for the common defence will merit your particular regard. To be prepared for war is one of the most effectual means of preserving peace.

"A free people ought not only to be armed but disciplined; to which end, a uniform and well digested plan is requisite; and their safety and interest require that they should promote such manufactories as tend to render them independent on others for essential, particularly for military supplies."

As connected with this subject, a proper establishment for the troops which they might deem indispensable, was suggested for their mature deliberation; and the indications of a hostile temper given by several tribes of Indians, were considered as admonishing them of the necessity of being prepared to afford protection to the frontiers, and to punish aggression.

The interests of the United States were declared to require that the means of keeping up their intercourse with foreign nations should be provided; and the expediency of establishing a uniform rule of naturalization was suggested.

After expressing his confidence in their attention to many improvements essential to the prosperity of the interior, the President added, "nor am I less persuaded that you will agree with me in opinion that there is nothing which can better deserve your patronage than the promotion of science and literature. Knowledge is in every country the surest basis of public happiness. In one, in which the measures of government receive their impression so immediately from the sense of the community as in ours, it is proportionably essential. To the security of a free constitution it contributes in various ways: by convincing those who are intrusted with the public administration, that every valuable end of government is best answered by the enlightened confidence of the people; and by teaching the people themselves to know and to value their own rights; to discern and provide against invasions of them; to distinguish between oppression and the necessary exercise of lawful authority; between burdens proceeding from a disregard to their convenience, and those resulting from the inevitable exigencies of society; to discriminate the spirit of liberty from that of licentiousness, cherishing the first, avoiding the last, and uniting a speedy but temperate vigilance against encroachments, with an inviolable respect to the laws.

"Whether this desirable object will be best promoted by affording aids to seminaries of learning already established, by the institution of a national university, or by any other expedients, will be well worthy of a place in the deliberations of the legislature."

Addressing himself then particularly to the representatives he said: "I saw with peculiar pleasure at the close of the last session, the resolution entered into by you, expressive of your opinion, that an adequate provision for the support of the public credit is a matter of high importance to the national honour and prosperity. In this sentiment I entirely concur; and to a perfect confidence in your best endeavours to devise such a provision as will be truly consistent with the end, I add an equal reliance on the cheerful co-operation of the other branch of the legislature. It would be superfluous to specify inducements to a measure in which the character and permanent interests of the United States are so obviously and so deeply concerned; and which has received so explicit a sanction from your declaration."

Addressing himself again to both houses, he observed, that the estimates and papers respecting the objects particularly recommended to their attention would be laid before them; and concluded with saying, "the welfare of our country is the great object to which our cares and efforts ought to be directed: and I shall derive great satisfaction from a co-operation with you in the pleasing though arduous task of insuring to our fellow citizens the blessings which they have a right to expect from a free, efficient, and equal government."

The answers of both houses were indicative of the harmony which subsisted between the executive and legislative departments.

Congress had been so occupied during its first session with those bills which were necessary to bring the new system into full operation, and to create an immediate revenue, that some measures which possessed great and pressing claims to immediate attention had been unavoidably deferred. That neglect under which the creditors of the public had been permitted to languish could not fail to cast an imputation on the American republics, which had been sincerely lamented by the wisest among those who administered the former government. The power to comply substantially with the engagements of the United States being at length conferred on those who were bound by them, it was confidently expected by the friends of the constitution that their country would retrieve its reputation, and that its fame would no longer be tarnished with the blots which stain a faithless people.

[Sidenote: Report of the secretary of the treasury of a plan for the support of public credit.]

On the 9th of January, a letter from the secretary of the treasury to the speaker of the house of representatives was read, stating that in obedience to the resolution of the 21st of September, he had prepared a plan for the support of public credit, which he was ready to report when the house should be pleased to receive it; and, after a short debate in which the personal attendance of the secretary for the purpose of making explanations was urged by some, and opposed by others, it was resolved that the report should be received in writing on the succeeding Thursday.

Availing himself of the latitude afforded by the terms of the resolution under which he acted, the secretary had introduced into his report an able and comprehensive argument elucidating and supporting the principles it contained. After displaying, with strength and perspicuity, the justice and the policy of an adequate provision for the public debt, he proceeded to discuss the principles on which it should be made.

"It was agreed," he said, "by all, that the foreign debt should be provided for according to the precise terms of the contract. It was to be regretted that, with respect to the domestic debt, the same unanimity of sentiment did not prevail."

The first point on which the public appeared to be divided, involved the question, "whether a discrimination ought not to be made between original holders of the public securities, and present possessors by purchase." After reviewing the arguments generally urged in its support, the secretary declared himself against this discrimination. He deemed it "equally unjust and impolitic; highly injurious even to the original holders of public securities, and ruinous to public credit." To the arguments with which he enforced these opinions, he added the authority of the government of the union. From the circular address of congress to the states, of the 26th of April, 1783, accompanying their revenue system of the 18th of the same month, passages were selected indicating unequivocally, that in the view of that body the original creditors, and those who had become so by assignment, had equal claims upon the nation.

After reasoning at great length against a discrimination between the different creditors of the union, the secretary proceeded to examine whether a difference ought to be permitted to remain between them and the creditors of individual states.

Both descriptions of debt were contracted for the same objects, and were in the main the same. Indeed, a great part of the particular debts of the states had arisen from assumptions by them on account of the union; and it was most equitable that there should be the same measure of retribution for all. There were many reasons, some of which were stated, for believing this would not be the case, unless the state debts should be assumed by the nation.

In addition to the injustice of favouring one class of creditors more than another which was equally meritorious, many arguments were urged in support of the policy of distributing to all with an equal hand from the same source.

After an elaborate discussion of these and some other points connected with the subject, the secretary proposed that a loan should be opened to the full amount of the debt, as well of the particular states, as of the union.

The terms to be offered were,—

First. That for every one hundred dollars subscribed payable in the debt, as well interest as principal, the subscriber should be entitled to have two-thirds funded on a yearly interest of six per cent, (the capital redeemable at the pleasure of government by the payment of the principal) and to receive the other third in lands of the western territory at their then actual value. Or,

Secondly. To have the whole sum funded at a yearly interest of four per cent., irredeemable by any payment exceeding five dollars per annum both on account of principal and interest, and to receive as a compensation for the reduction of interest, fifteen dollars and eighty cents, payable in lands as in the preceding case. Or,

Thirdly. To have sixty-six and two-thirds of a dollar funded at a yearly interest of six per cent., irredeemable also by any payment exceeding four dollars and two-thirds of a dollar per annum on account both of principal and interest, and to have at the end of ten years twenty-six dollars and eighty-eight cents funded at the like interest and rate of redemption.

In addition to these propositions the creditors were to have an option of vesting their money in annuities on different plans; and it was also recommended to open a loan at five per cent, for ten millions of dollars, payable one half in specie, and the other half in the debt, irredeemable by any payment exceeding six dollars per annum both of principal and interest.

By way of experiment, a tontine on principles stated in the report was also suggested.

The secretary was restrained from proposing to fund the whole debt immediately at the current rate of interest, by the opinion, "that although such a provision might not exceed the abilities of the country, it would require the extension of taxation to a degree, and to objects which the true interest of the creditors themselves would forbid. It was therefore to be hoped and expected, that they would cheerfully concur in such modifications of their claims, on fair and equitable principles, as would facilitate to the government an arrangement substantial, durable, and satisfactory to the community. Exigencies might ere long arise which would call for resources greatly beyond what was now deemed sufficient for the current service; and should the faculties of the country be exhausted, or even strained to provide for the public debt, there could be less reliance on the sacredness of the provision.

"But while he yielded to the force of these considerations, he did not lose sight of those fundamental principles of good faith which dictate that every practicable exertion ought to be made, scrupulously to fulfil the engagements of government; that no change in the rights of its creditors ought to be attempted without their voluntary consent; and that this consent ought to be voluntary in fact, as well as in name. Consequently, that every proposal of a change ought to be in the shape of an appeal to their reason and to their interest, not to their necessities. To this end it was requisite that a fair equivalent should be offered, for what might be asked to be given up, and unquestionable security for the remainder." This fair equivalent for the proposed reduction of interest was, he thought, offered in the relinquishment of the power to redeem the whole debt at pleasure.

That a free judgment might be exercised by the holders of public securities in accepting or rejecting the terms offered by the government, provision was made in the report for paying to non-subscribing creditors, a dividend of the surplus which should remain in the treasury after paying the interest of the proposed loans: but as the funds immediately to be provided, were calculated to produce only four per cent, on the entire debt, the dividend, for the present, was not to exceed that rate of interest.

To enable the treasury to support this increased demand upon it, an augmentation of the duties on imported wines, spirits, tea, and coffee, was proposed, and a duty on home made spirits was also recommended.

This celebrated report, which has been alike the fruitful theme of extravagant praise and bitter censure, merits the more attention, because the first regular and systematic opposition to the principles on which the affairs of the union were administered, originated in the measures which were founded on it.

On the 28th of January, this subject was taken up; and, after some animadversions on the speculations in the public debt to which the report, it was said, had already given birth, the business was postponed until the eighth of February, when it was again brought forward.

[Sidenote: Debate thereon.]

Several resolutions affirmative of the principles contained in the report, were moved by Mr. Fitzsimmons. To the first, which respected a provision for the foreign debt, the house agreed without a dissenting voice. The second, in favour of appropriating permanent funds for payment of the interest on the domestic debt, and for the gradual redemption of the principal, gave rise to a very animated debate.

Mr. Jackson declared his hostility to funding systems generally. To prove their pernicious influence, he appealed to the histories of Florence, Genoa, and Great Britain; and, contending that the subject ought to be deferred until North Carolina should be represented, moved, that the committee should rise. This question being decided in the negative, Mr. Scott declared the opinion that the United States were not bound to pay the domestic creditors the sums specified in the certificates of debts in their possession. He supported this opinion by urging, not that the public had received less value than was expressed on the face of the paper which had been issued, but that those to whom it had been delivered, by parting with it at two shillings and sixpence in the pound, had themselves fixed the value of their claims, and had manifested their willingness to add to their other sacrifices this deduction from their demand upon the nation. He therefore moved to amend the resolution before the committee so as to require a resettlement of the debt.

The amendment was opposed by Mr. Boudinot, Mr. Lawrence, Mr. Ames, Mr. Sherman, Mr. Hartley, and Mr. Goodhue. They stated at large the terms on which the debt had been contracted, and urged the confidence which the creditors had a right to place in the government for its discharge according to settlements already made, and acknowledgments already given. The idea that the legislative body could diminish an ascertained debt was reprobated with great force, as being at the same time unjust, impolitic, and subversive of every principle on which public contracts are founded. The evidences of debt possessed by the creditors of the United States were considered as public bonds, for the redemption of which the property and the labour of the people were pledged.

After the debate had been protracted to some length, the question was taken on Mr. Scott's amendment, and it passed in the negative.

Mr. Madison then rose, and, in an eloquent speech, replete with argument, proposed an amendment to the resolution, the effect of which was to discriminate between the public creditors, so as to pay the present holder of assignable paper the highest price it had borne in the market, and give the residue to the person with whom the debt was originally contracted. Where the original creditor had never parted with his claim, he was to receive the whole sum acknowledged to be due on the face of the certificate.

This motion was supported by Mr. Jackson, Mr. White, Mr. Moore, Mr. Page, Mr. Stone, Mr. Scott, and Mr. Seney.

It was opposed with great earnestness and strength of argument, by Mr. Sedgewick, Mr. Lawrence, Mr. Smith, of South Carolina, Mr. Ames, Mr. Gerry, Mr. Boudinot, Mr. Wadsworth, Mr. Goodhue, Mr. Hartley, Mr. Bland, Mr. Benson, Mr. Burke, and Mr. Livermore.

The argument was ably supported on both sides, was long, animated, and interesting. At length the question was put, and the amendment was rejected by a great majority.

This discussion deeply engaged the public attention. The proposition was new and interesting. That the debt ought to be diminished for the public advantage, was an opinion which had frequently been advanced, and was maintained by many. But a reduction from the claims of its present holders for the benefit of those who had sold their rights, was a measure which saved nothing to the public purse, and was therefore recommended only by considerations, the operation of which can never be very extensive. Against it were arranged all who had made purchases, and a great majority of those who conceived that sound policy and honest dealing require a literal observance of public contracts.

Although the decision of congress against a discrimination in favour of the original creditor produced no considerable sensation, the determination on that part of the secretary's report which was the succeeding subject of deliberation, affecting political interests and powers which are never to be approached without danger, seemed to unchain all those fierce passions which a high respect for the government and for those who administered it, had in a great measure restrained.

The manner in which the several states entered into and conducted the war of the revolution, will be recollected. Acting in some respects separately, and in others conjointly, for the attainment of a common object, their resources were exerted, sometimes under the authority of congress, sometimes under the authority of the local government, to repel the enemy wherever he appeared. The debt incurred in support of the war was therefore, in the first instance, contracted partly by the continent, and partly by the states. When the system of requisitions was adopted, the transactions of the union were carried on, almost entirely, through the agency of the states; and when the measure of compensating the army for the depreciation of their pay became necessary, this burden, under the recommendation of congress, was assumed by the respective states. Some had funded this debt, and paid the interest upon it. Others had made no provision for the interest; but all, by taxes, paper money, or purchase, had, in some measure, reduced the principal. In their exertions some degree of inequality had obtained; and they looked anxiously to a settlement of accounts, for the ascertainment of claims which each supposed itself to have upon the union. Measures to effect this object had been taken by the former government; but they were slow in their progress, and intrinsic difficulties were found in the thing itself, not easily to be overcome.

The secretary of the treasury proposed to assume these debts, and to fund them in common with that which continued to be the proper debt of the union.

The resolution which comprehended this principle of the report, was vigorously opposed.

It was contended that the general government would acquire an undue influence, and that the state governments would be annihilated by the measure. Not only would all the influence of the public creditors be thrown into the scale of the former, but it would absorb all the powers of taxation, and leave to the latter only the shadow of a government. This would probably terminate in rendering the state governments useless, and would destroy the system so recently established. The union, it was said, had been compared to a rope of sand; but gentlemen were cautioned not to push things to the opposite extreme. The attempt to strengthen it might be unsuccessful, and the cord might be strained until it should break.

The constitutional authority of the federal government to assume the debts of the states was questioned. Its powers, it was said, were specified, and this was not among them.

The policy of the measure, as it affected merely the government of the union, was controverted, and its justice was arraigned.

On the ground of policy it was objected, that the assumption would impose on the United States a burden, the weight of which was unascertained, and which would require an extension of taxation beyond the limits which prudence would prescribe. An attempt to raise the impost would be dangerous; and the excise added to it would not produce funds adequate to the object. A tax on real estate must be resorted to, objections to which had been made in every part of the union. It would be more adviseable to leave this source of revenue untouched in the hands of the state governments, who could apply to it with more facility, with a better understanding of the subject, and with less dissatisfaction to individuals, than could possibly be done by the government of the United States.

There existed no necessity for taking up this burden. The state creditors had not required it. There was no petition from them upon the subject. There was not only no application from the states, but there was reason to believe that they were seriously opposed to the measure. Many of them would certainly view it with a jealous,—a jaundiced eye. The convention of North Carolina, which adopted the constitution, had proposed, as an amendment to it, to deprive congress of the power of interfering between the respective states and their creditors: and there could be no obligation to assume more than the balances which on a final settlement would be found due to creditor states.

That the debt by being thus accumulated would be perpetuated was also an evil of real magnitude. Many of the states had already made considerable progress in extinguishing their debts, and the process might certainly be carried on more rapidly by them than by the union. A public debt seemed to be considered by some as a public blessing; but to this doctrine they were not converts. If, as they believed, a public debt was a public evil, it would be enormously increased by adding those of the states to that of the union.

The measure was unwise too as it would affect public credit. Such an augmentation of the debt must inevitably depreciate its value; since it was the character of paper, whatever denomination it might assume, to diminish in value in proportion to the quantity in circulation.

It would also increase an evil which was already sensibly felt. The state debts when assumed by the continent, would, as that of the union had already done, accumulate in large cities; and the dissatisfaction excited by the payment of taxes, would be increased by perceiving that the money raised from the people flowed into the hands of a few individuals. Still greater mischief was to be apprehended. A great part of this additional debt would go into the hands of foreigners; and the United States would be heavily burdened to pay an interest which could not be expected to remain in the country.

The measure was unjust, because it was burdening those states which had taxed themselves highly to discharge the claims of their creditors, with the debts of those which had not made the same exertions. It would delay the settlement of accounts between the individual states and the United States; and the supporters of the measure were openly charged with intending to defeat that settlement.

It was also said that, in its execution, the scheme would be found extremely embarrassing, perhaps impracticable. The case of a partial accession to the measure by the creditors, a case which would probably occur, presented a difficulty for which no provision was made, and of which no solution had been given. Should the creditors in some states come into the system, and those in others refuse to change their security, the government would be involved in perplexities from which no means of extricating itself had been shown. Nor would it be practicable to discriminate between the debts contracted for general and for local objects.

In the course of the debate, severe allusions were made to the conduct of particular states; and the opinions advanced in favour of the measure, were ascribed to local interests.

In support of the assumption, the debts of the states were traced to their origin. America, it was said, had engaged in a war, the object of which was equally interesting to every part of the union. It was not the war of a particular state, but of the United States. It was not the liberty and independence of a part, but of the whole, for which they had contended, and which they had acquired. The cause was a common cause. As brethren, the American people had consented to hazard property and life in its defence. All the sums expended in the attainment of this great object, whatever might be the authority under which they were raised or appropriated, conduced to the same end. Troops were raised, and military stores purchased, before congress assumed the command of the army, or the control of the war. The ammunition which repulsed the enemy at Bunker's Hill, was purchased by Massachusetts; and formed a part of the debt of that state.

Nothing could be more erroneous than the principle which had been assumed in argument, that the holders of securities issued by individual states were to be considered merely as state creditors;—as if the debt had been contracted on account of the particular state. It was contracted on account of the union, in that common cause in which all were equally interested.

From the complex nature of the political system which had been adopted in America, the war was, in a great measure, carried on through the agency of the state governments; and the debts were, in truth, the debts of the union, for which the states had made themselves responsible. Except the civil list, the whole state expenditure was in the prosecution of the war; and the state taxes had undeniably exceeded the provision for their civil list. The foundation for the several classes of the debt was reviewed in detail; and it was affirmed to be proved from the review, and from the books in the public offices, that, in its origin, a great part of it, even in form, and the whole, in fact, was equitably due from the continent. The states individually possessing all the resources of the nation, became responsible to certain descriptions of the public creditors. But they were the agents of the continent in contracting the debt; and its distribution among them for payment, arose from the division of political power which existed under the old confederation. A new arrangement of the system had taken place, and a power over the resources of the nation was conferred on the general government. With the funds, the debt also ought to be assumed. This investigation of its origin demonstrated that the assumption was not the creation of a new debt, but the reacknowledgment of liability for an old one, the payment of which had devolved on those members of the system, who, at the time, were alone capable of paying it. And thence was inferred, not only the justice of the measure, but a complete refutation of the arguments drawn from the constitution. If, in point of fact, the debt was in its origin continental, and had been transferred to the states for greater facility of payment, there could be no constitutional objection to restoring its original and real character.

The great powers of war, of taxation, and of borrowing money, which were vested in congress to pay the debts, and provide for the common defence and general welfare of the United States, comprised that in question. There could be no more doubt of their right to charge themselves with the payment of a debt contracted in the past war, than to borrow money for the prosecution of a future war. The impolicy of leaving the public creditors to receive payment from different sources was also strongly pressed; and the jealousy which would exist between the creditors of the union and of the states, was considered as a powerful argument in favour of giving them one common interest. This jealousy, it was feared, might be carried so far, as even to create an opposition to the laws of the union.

If the states should provide for their creditors, the same sum of money must be collected from the people, as would be required if the debt should be assumed; and it would probably be collected in a manner more burdensome, than if one uniform system should be established. If all should not make such provision, it would be unjust to leave the soldier of one state unpaid, while the services of the man who fought by his side were amply compensated; and, after having assumed the funds, it would dishonour the general government to permit a creditor for services rendered, or property advanced for the continent, to remain unsatisfied, because his claim had been transferred to the state, at a time when the state alone possessed the means of payment. By the injured and neglected creditor, such an arrangement might justly be considered as a disreputable artifice.

Instead of delaying, it was believed to be a measure which would facilitate the settlement of accounts between the states. Its advocates declared that they did not entertain, and never had entertained any wish to procrastinate a settlement. On the contrary, it was greatly desired by them. They had themselves brought forward propositions for that purpose; and they invited their adversaries to assist in improving the plan which had been introduced.

The settlement between the states, it was said, either would or would not be made. Should it ever take place, it would remedy any inequalities which might grow out of the assumption. Should it never take place, the justice of the measure became the more apparent. That the burdens in support of a common war, which from various causes had devolved unequally on the states, ought to be apportioned among them, was a truth too clear to be controverted; and this, if the settlement should never be accomplished, could be effected only by the measure now proposed. Indeed, in any event, it would be the only certain, as well as only eligible plan. For how were the debtor states to be compelled to pay the balances which should be found against them?

If the measure was recommended by considerations which rendered its ultimate adoption inevitable, the present was clearly preferable to any future time. It was desirable immediately to quiet the minds of the public creditors by assuring them that justice would be done; to simplify the forms of public debt; and to put an end to that speculation which had been so much reprobated, and which could be terminated only by giving the debt a real and permanent value.

That the assumption would impair the just influence of the states was controverted with great strength of argument. The diffusive representation in the state legislatures, the intimate connexion between the representative and his constituents, the influence of the state legislatures over the members of one branch of the national legislature, the nature of the powers exercised by the state governments which perpetually presented them to the people in a point of view calculated to lay hold of the public affections, were guarantees that the states would retain their due weight in the political system, and that a debt was not necessary to the solidity or duration of their power.

But the argument it was said proved too much. If a debt was now essential to the preservation of state authority, it would always be so. It must therefore never be extinguished, but must be perpetuated, in order to secure the existence of the state governments. If, for this purpose, it was indispensable that the expenses of the revolutionary war should be borne by the states, it would not be less indispensable that the expenses of future wars should be borne in the same manner. Either the argument was unfounded, or the constitution was wrong; and the powers of the sword and the purse ought not to have been conferred on the government of the union. Whatever speculative opinions might be entertained on this point, they were to administer the government according to the principles of the constitution as it was framed. But, it was added, if so much power follows the assumption as the objection implies, is it not time to ask—is it safe to forbear assuming? if the power is so dangerous, it will be so when exercised by the states. If assuming tends to consolidation, is the reverse, tending to disunion, a less weighty objection? if it is answered that the non-assumption will not necessarily tend to disunion; neither, it may be replied, does the assumption necessarily tend to consolidation.

It was not admitted that the assumption would tend to perpetuate the debt. It could not be presumed that the general government would be less willing than the local governments to discharge it; nor could it be presumed that the means were less attainable by the former than the latter.

It was not contended that a public debt was a public blessing. Whether a debt was to be preferred to no debt was not the question. The debt was already contracted: and the question, so far as policy might be consulted, was, whether it was more for the public advantage to give it such a form as would render it applicable to the purposes of a circulating medium, or to leave it a mere subject of speculation, incapable of being employed to any useful purpose. The debt was admitted to be an evil; but it was an evil from which, if wisely modified, some benefit might be extracted; and which, in its present state, could have only a mischievous operation.

If the debt should be placed on adequate funds, its operation on public credit could not be pernicious: in its present precarious condition, there was much more to be apprehended in that respect.

To the objection that it would accumulate in large cities, it was answered it would be a monied capital, and would be held by those who chose to place money at interest; but by funding the debt, the present possessors would be enabled to part with it at its nominal value, instead of selling it at its present current rate. If it should centre in the hands of foreigners, the sooner it was appreciated to its proper standard, the greater quantity of specie would its transfer bring into the United States.

To the injustice of charging those states which had made great exertions for the payment of their debts with the burden properly belonging to those which had not made such exertions, it was answered, that every state must be considered as having exerted itself to the utmost of its resources; and that if it could not, or would not make provision for creditors to whom the union was equitably bound, the argument in favour of an assumption was the stronger.

The arguments drawn from local interests were repelled, and retorted, and a great degree of irritation was excited on both sides.

After a very animated discussion of several days, the question was taken, and the resolution was carried by a small majority. Soon after this decision, while the subject was pending before the house, the delegates from North Carolina took their seats, and changed the strength of parties. By a majority of two voices, the resolution was recommitted; and, after a long and ardent debate, was negatived by the same majority.

This proposition continued to be supported with a degree of earnestness which its opponents termed pertinacious, but not a single opinion was changed. It was brought forward in the new and less exceptionable form of assuming specific sums from each state. Under this modification of the principle, the extraordinary contributions of particular states during the war, and their exertions since the peace, might be regarded; and the objections to the measure, drawn from the uncertainty of the sum to be assumed, would be removed. But these alterations produced no change of sentiment; and the bill was sent up to the senate with a provision for those creditors only whose certificates of debt purported to be payable by the union.

In this state of things, the measure is understood to have derived aid from another, which was of a nature strongly to interest particular parts of the union.

From the month of June, 1783, when congress was driven from Philadelphia by the mutiny of a part of the Pennsylvania line, the necessity of selecting some place for a permanent residence, in which the government of the union might exercise sufficient authority to protect itself from violence and insult, had been generally acknowledged. Scarcely any subject had occupied more time, or had more agitated the members of the former congress than this.

[Sidenote: Bill for fixing the permanent seat of government.]

In December, 1784, an ordinance was passed for appointing commissioners to purchase land on the Delaware, in the neighbourhood of its falls, and to erect thereon the necessary public buildings for the reception of congress, and the officers of government; but the southern interest had been sufficiently strong to arrest the execution of this ordinance by preventing an appropriation of funds, which required the assent of nine states. Under the existing government, this subject had received the early attention of congress; and many different situations from the Delaware to the Potomac inclusive, had been earnestly supported; but a majority of both houses had not concurred in favour of any one place. With as little success, attempts had been made to change the temporary residence of congress. Although New York was obviously too far to the east, so many conflicting interests were brought into operation whenever the subject was touched, that no motion designating a more central place, could succeed. At length, a compact respecting the temporary and permanent seat of government was entered into between the friends of Philadelphia, and the Potomac, stipulating that congress should adjourn to and hold its sessions in Philadelphia, for ten years, during which time, buildings for the accommodation of the government should be erected at some place on the Potomac, to which the government should remove at the expiration of the term. This compact having united the representatives of Pennsylvania and Delaware with the friends of the Potomac, in favour both of the temporary and permanent residence which had been agreed on between them, a majority was produced in favour of the two situations, and a bill which was brought into the senate in conformity with this previous arrangement, passed both houses by small majorities. This act was immediately followed by an amendment to the bill then pending before the senate for funding the debt of the union. The amendment was similar in principle to that which had been unsuccessfully proposed in the house of representatives. By its provisions, twenty-one millions five hundred thousand dollars of the state debts were assumed in specified proportions; and it was particularly enacted that no certificate should be received from a state creditor which could be "ascertained to have been issued for any purpose other than compensations and expenditures for services or supplies towards the prosecution of the late war, and the defence of the United States, or of some part thereof, during the same."

When the question was taken in the house of representatives on this amendment, two members representing districts on the Potomac, who, in all the previous stages of the business, had voted against the assumption, declared themselves in its favour; and thus the majority was changed.[45]

[Footnote 45: It has ever been understood that these members were, on principle, in favour of the assumption as modified in the amendment made by the senate; but they withheld their assent from it when originally proposed in the house of representatives, in the opinion that the increase of the national debt, added to the necessity of giving to the departments of the national government a more central residence. It is understood that a greater number would have changed had it been necessary.]

Thus was a measure carried, which was supported and opposed with a degree of zeal and earnestness not often manifested; and which furnished presages, not to be mistaken, that the spirit with which the opposite opinions had been maintained, would not yield, contentedly, to the decision of a bare majority. This measure has constituted one of the great grounds of accusation against the first administration of the general government; and it is fair to acknowledge, that though, in its progress, it derived no aid from the President, whose opinion remained in his own bosom, it received the full approbation of his judgment.

A bill, at length, passed both houses, funding the debt upon principles which lessened considerably the weight of the public burdens, and was entirely satisfactory to the public creditors. The proceeds of the sales of the lands lying in the western territory, and, by a subsequent act of the same session, the surplus product of the revenue after satisfying the appropriations which were charged upon it, with the addition of two millions, which the President was authorized to borrow at five per centum, constituted a sinking fund to be applied to the reduction of the debt.

The effect of this measure was great and rapid. The public paper suddenly rose, and was for a short time above par. The immense wealth which individuals acquired by this unexpected appreciation, could not be viewed with indifference. Those who participated in its advantages, regarded the author of a system to which they were so greatly indebted, with an enthusiasm of attachment to which scarcely any limits were assigned. To many others, this adventitious collection of wealth in particular hands, was a subject rather of chagrin than of pleasure; and the reputation which the success of his plans gave to the secretary of the treasury, was not contemplated with unconcern. As if the debt had been created by the existing government, not by a war which gave liberty and independence to the United States, its being funded was ascribed by many, not to a sense of justice, and to a liberal and enlightened policy, but to the desire of bestowing on the government an artificial strength, by the creation of a monied interest which would be subservient to its will.

The effects produced by giving the debt a permanent value, justified the predictions of those whose anticipations had been most favourable. The sudden increase of monied capital derived from it, invigorated commerce, and gave a new stimulus to agriculture.

About this time, there was a great and visible improvement in the circumstances of the people. Although the funding system was certainly not inoperative in producing this improvement, it can not be justly ascribed to any single cause. Progressive industry had gradually repaired the losses sustained by the war; and the influence of the constitution on habits of thinking and acting, though silent, was considerable. In depriving the states of the power to impair the obligation of contracts, or to make any thing but gold and silver a tender in payment of debts, the conviction was impressed on that portion of society which had looked to the government for relief from embarrassment, that personal exertions alone could free them from difficulties; and an increased degree of industry and economy was the natural consequence of this opinion.

[Sidenote: Adjournment of congress.]

On the 12th of August, after an arduous session, congress adjourned, to meet in Philadelphia the first Monday in the following December.

While the discussions in the national legislature related to subjects, and were conducted in a temper, well calculated to rouse the active spirit of party, the external relations of the United States wore an aspect not perfectly serene. To the hostile temper manifested by the Indians on the western and southern frontiers, an increased degree of importance was given by the apprehension that their discontents were fomented by the intrigues of Britain and of Spain. From Canada, the Indians of the north-west were understood to be furnished with the means of prosecuting a war which they were stimulated to continue; and, to the influence of the governor of the Floridas had been partly attributed the failure of the negotiation with the Creeks. That this influence would still be exerted to prevent a friendly intercourse with that nation was firmly believed; and it was feared that Spain might take a part in the open hostilities threatened by the irritable dispositions of individuals in both countries. From the intimate connexion subsisting between the members of the house of Bourbon, this event was peculiarly deprecated; and the means of avoiding it were sought with solicitude. These considerations determined the President to make another effort at negotiation; but, to preserve the respect of these savages for the United States, it was at the same time resolved that the agent to be employed should visit the country on other pretexts, and should carry a letter of introduction to M'Gillivray, blending with other subjects a strong representation of the miseries which a war with the United States would bring upon his people; and an earnest exhortation to repair with the chiefs of his nation to the seat of the federal government, in order to effect a solid and satisfactory peace. Colonel Willett was selected for this service; and he acquitted himself so well of the duty assigned to him, as to induce the chiefs of the nation, with M'Gillivray at their head, to repair to New York, where negotiations were opened which terminated in a treaty of peace,[46] signed on the 7th day of August.[47]

[Footnote 46: On the first information at St. Augustine that M'Gillivray was about to repair to New York, the intelligence was communicated to the governor at the Havanna, and the secretary of East Florida came to New York, with a large sum of money to purchase flour, as it was said; but to embarrass the negotiations with the Creeks was believed to be his real design. He was closely watched, and measures were taken to render any attempts he might make abortive.]

[Footnote 47: See note, No. IV. at the end of the volume.]

[Sidenote: Treaty with the Creek Indians.]

The pacific overtures made to the Indians of the Wabash and the Miamis not having been equally successful, the western frontiers were still exposed to their destructive incursions. A long course of experience had convinced the President that, on the failure of negotiation, sound policy and true economy, not less than humanity, required the immediate employment of a force which should carry death and destruction into the heart of the hostile settlements. Either not feeling the same impressions, or disposed to indulge the wishes of the western people, who declared openly their preference for desultory military expeditions, congress did not adopt measures corresponding with the wishes of the executive, and the military establishment[48] was not equal to the exigency. The distresses of the frontier establishment, therefore, still continued; and the hostility they had originally manifested to the constitution, sustained no diminution.

[Footnote 48: On giving his assent to the bill "regulating the military establishment of the United States," the President subjoined to the entry in his diary the remark, that although he gave it his sanction, "he did not conceive that the military establishment was adequate to the exigencies of the government, and to the protection it was intended to afford." It consisted of one regiment of infantry, and one battalion of artillery, amounting in the total, exclusive of commissioned officers, to twelve hundred and sixteen men.]

[Sidenote: United States in relations with Great Britain and Spain.]

No progress had been made in adjusting the points of controversy with Spain and Britain. With the former power, the question of boundary remained unsettled; and the cabinet of Madrid discovered no disposition to relax the rigour of its pretensions respecting the navigation of the Mississippi. Its general conduct furnished no foundation for a hope that its dispositions towards the United States were friendly, or that it could view their growing power without jealousy.

The non-execution of the 4th, 5th, 6th, and 7th articles of the treaty of peace, still furnished the United States and Great Britain with matter for reciprocal crimination, which there was the more difficulty in removing, because no diplomatic intercourse was maintained between them. The cabinet of St. James having never appointed a minister to the United States, and Mr. Adams having returned from London without effecting the object of his mission, the American government felt some difficulty in repeating advances which had been treated with neglect. Yet there was much reason to desire full explanations with the English government, and to understand perfectly its views and intentions. The subjects for discussion were delicate in their nature, and could not be permitted to remain in their present state, without hazarding the most serious consequences. The detention of a part of the territory of the United States, was a circumstance of much importance to the honour, as well as to the interests of the nation, and the commercial intercourse between the two countries was so extensive, as to require amicable and permanent regulations. The early attention of the President had been directed to these subjects; and, in October, 1789, he had resolved on taking informal measures to sound the British cabinet, and to ascertain its views respecting them. This negotiation was entrusted to Mr. Gouverneur Morris, who had been carried by private business to Europe; and he conducted it with ability and address, but was unable to bring it to a happy conclusion. The result of his conferences with the Duke of Leeds, and with Mr. Pitt, was a conviction that the British government, considering the posts they occupied on the southern side of the great lakes as essential to their monopoly of the fur trade, would surrender them reluctantly, and was not desirous of entering into a commercial treaty. Those ministers expressed a wish to be on the best terms with America; but repeated the complaints which had been previously made by Lord Carmarthen, of the non-execution of the treaty of peace on the part of the United States. To the observations made by Mr. Morris, that the constitution lately adopted, and the courts established under it, amounted to a full compliance with that treaty on the part of the American government, it was answered, that losses had already been sustained in consequence of the obstructions given by the states to the fair operation of that instrument, which rendered a faithful observance of it, at present, impossible; and, in a note, the Duke of Leeds avowed the intention, if the delay on the part of the American government to fulfil its engagements made in the treaty should have rendered their final completion impracticable, to retard the fulfilment of those which depended entirely on Great Britain, until redress should be granted to the subjects of his majesty on the specific points of the treaty itself, or a fair and just compensation obtained for the non-performance of those stipulations which the United States had failed to observe. Though urged by Mr. Morris to state explicitly in what respects, and to what degree, he considered the final completion of those engagements to which the United States were bound, as having been rendered impracticable, no such statement was given; and the British government seemed inclined to avoid, for the present, those full and satisfactory explanations, which were sought on the part of the United States.

After detailing the motives which in his opinion influenced the English cabinet in wishing to suspend for a time all discussions with America, Mr. Morris observed, "perhaps there never was a moment in which this country felt herself greater; and consequently, it is the most unfavourable moment to obtain advantageous terms from her in any bargain."

Whilst these negotiations were pending, intelligence was received at London of the attack made on the British settlement at Nootka Sound; and preparations were instantly made to resent the insult alleged to have been offered to the nation. The high ground taken on this occasion by the government, and the vigour with which it armed in support of its pretensions, furnished strong reasons for the opinion that a war with Spain, and probably with France, would soon be commenced.

In America, this was considered as a favourable juncture for urging the claims of the United States to the free navigation of the Mississippi. Mr. Carmichael, their charge d'affaires at the court of Madrid, was instructed not only to press this point with earnestness, but to use his utmost endeavours to secure the unmolested use of that river in future, by obtaining a cession of the island of New Orleans, and of the Floridas. A full equivalent for this cession would be found, it was said, in the sincere friendship of the United States, and in the security it would give to the territories of Spain, west of the Mississippi.

Mr. Carmichael was also instructed to point the attention of the Spanish government to the peculiar situation of the United States. To one half of their territory, the use of the Mississippi was indispensable. No efforts could prevent their acquiring it. That they would acquire it, either by acting separately, or in conjunction with Great Britain, was one of those inevitable events against which human wisdom could make no provision. To the serious consideration of the Spanish government, therefore, were submitted the consequences which must result to their whole empire in America, either from hostilities with the United States, or from a seizure of Louisiana by Great Britain.

The opinion, that in the event of war between Great Britain and Spain, Louisiana would be invaded from Canada, was not a mere suggestion for the purpose of aiding the negotiations at Madrid. It was seriously adopted by the American government; and the attention of the executive was turned to the measures which it would be proper to take, should application be made for permission to march a body of troops, through the unsettled territories of the United States, into the dominions of Spain; or should the attempt be made to march them, without permission.

Among the circumstances which contributed to the opinion that, in the event of war, the arms of Great Britain would be directed against the settlements of Spain in America, was the continuance of Lord Dorchester in the government of Canada. This nobleman had intimated a wish to visit New York on his return to England; but the prospect of a rupture with Spain had determined him to remain in Canada. Under the pretext of making his acknowledgments for the readiness with which his desire to pass through New York had been acceded to, his lordship despatched Major Beck with, a member of his family, to sound the American government, and if possible, to ascertain its dispositions towards the two nations. Alluding to the negotiations which had been commenced in London, this gentleman endeavoured to assign a satisfactory cause for the delays which had intervened. It was not improbable, he said, that these delays, and some other circumstances, might have impressed Mr. Morris with an idea of backwardness on the part of the British ministry. His lordship, however, had directed him to say, that an inference of this sort would not, in his opinion, be well founded, as he had reason to believe that the British cabinet was inclined not only towards a friendly intercourse, but towards an alliance with the United States.

Major Beckwith represented the particular ground of quarrel as one which ought to interest all commercial nations in favour of the views of Great Britain; and, from that circumstance, he presumed that, should a war ensue, the United States would find their interest in taking part with Britain, rather than with Spain.

After expressing the concern with which Lord Dorchester had heard of the depredations of the savages on the western frontier of the United States, he declared that his lordship, so far from countenancing these depredations, had taken every proper opportunity to impress upon the Indians a pacific disposition; and that, on his first hearing of the outrages lately committed, he had sent a messenger to endeavour to prevent them. Major Beckwith further intimated, that the perpetrators of the late murders were banditti, composed chiefly of Creeks and Cherokees, in the Spanish interest, over whom the governor of Canada possessed no influence.

These communications were laid before the President, and appeared to him to afford an explanation of the delays experienced by Mr. Morris. He was persuaded that a disposition existed in the cabinet of London to retain things in their actual situation, until the intentions of the American government should be ascertained with respect to the war supposed to be approaching. If the United States would enter into an alliance with Great Britain, and would make a common cause with her against Spain, the way would be smoothed to the attainment of all their objects: but if America should be disinclined to such a connexion, and especially, if she should manifest any partiality towards Spain, no progress would be made in the attempt to adjust the point of difference between the two nations. Taking this view of the subject, he directed that the further communications of Mr. Beckwith should be heard civilly, and that their want of official authenticity should be hinted delicately, without using any expressions which might, in the most remote degree, impair the freedom of the United States, to pursue, without reproach, in the expected war, such a line of conduct as their interests or honour might dictate.