duties so as to discriminate against England and in favor of other nations, but the attempt failed in the Senate. A Tariff Act was passed by both Houses, and approved July 4th. Its preamble stated one of its objects to be "the encouragement and protection of manufactures." This language is notable as stating the main object of the "American," or High Protective Tariff, system, thirty years before it became a party tenet. After directing the Secretary of the Treasury to prepare a plan for the settlement of the public debt, Congress adjourned September 29th, until the following January. In November, 1789, North Carolina finally ratified the Constitution, and entered the Union.

6. Congress met at Philadelphia, January 4th, Ist Congress, 1790. January 9th Hamilton Ist Session. offered his famous Report on the Settlement of the Public Debt. It consisted of three recommendations,-first, that the foreign debt of the Confederacy should be assumed and paid in full; second, that the domestic debt of the Confederacy, which had fallen far below par and had become a synonym for worthlessness, should also be paid at its par value; and third, that the debts incurred by the States during the Revolution, and still unpaid, should be assumed and paid in full by the Federal Government.

7. Hamilton's First recommendation was adopted unanimously. The Second was opposed, even by Madison and many moderate Anti-federalists, on

1790.]

The Public Debt.

23

the ground that the domestic debt was held by speculators, who had bought it at a heavy discount, and would thus gain usurious interest on their investment. Hamilton's supporters argued that, if only for that reason, they should be paid in full, that holders of United States securities might learn not to sell them at a discount, and that the national credit might thus be strengthened for all time to come. After long debate the second recommendation was also adopted.

8. Hamilton's Third recommendation involved a question of the powers of the Federal Government. It therefore for the first time united all the Anti-federalists in opposition to it. They feared that the "rope of sand" of the Confederacy was being carried to the opposite extreme; that the "money power" would, by this measure, be permanently attached to the Federal Government; and that the States would be made of no importance. But even this recommendation was adopted, though only by a vote of 31 to 26 in the House. A few days later, however, the Anti-federalists received a reinforcement of seven newly arrived North Carolina members. The third resolution was at once considered, and voted down by a majority of two.

9. Hamilton secured the final adoption of the third resolution by a bargain which excited the deep indignation of the Anti-federalists. A National Capital was to be selected. The Federalists agreed to vote that it should be fixed upon the

Potomac River, after remaining ten years in Philadelphia, and two Anti-federalist members from the Potomac agreed in return to vote for the third resolution, which was then finally adopted. Hamilton's entire report was thus successful. Its immediate effects were to appreciate the credit of the United States, and to enrich the holders of the Continental debt. Its further effect was to make Hamilton so much disliked by Anti-federalists that, despite his acknowledged talents, his party never ventured to nominate him for any elective office. Congress adjourned August 12th, 1790. During this long Session there was no further decided party contest. In May Rhode Island ratified the Constitution, and entered the Union, which now inIcluded all the old thirteen colonies.

10. Congress met December 6th, 1790. Its deIst Congress, bates were mostly on finance. 2d Session. Hamilton proposed the establishment of a National Bank, to act as financial agent of the Government. This involved another question of Federal powers, and renewed party contest. The Federalists claimed that Congress, having the undoubted power to pass all laws necessary for the collection of revenue and taxes, might constitutionally charter a bank for that purpose. The Anti-federalists claimed that such a bank was not necessary, though it might be convenient, and hence was beyond the power of Congress. This difference of opinion, trivial at first sight, continued

1791.]

The National Bank.

25

to be the subject of bitter party feeling, at intervals, for fifty years. The bill passed both Houses, and the President was importuned to veto it. He demanded the written opinions of his Cabinet. In the struggles of succeeding years upon the same subject, Hamilton's argument in favor of the constitutionality of a National Bank has hardly been improved upon, or added to. It prevailed in the mind of the President over those of Jefferson and Randolph, and he signed the bill. At this Session the unpopular Excise Law, to provide funds for the debts assumed by the Government, passed both Houses against the opposition of most of the Antifederalists. Congress adjourned March 3d, 1791. March 4th, Vermont, formerly called the New Hampshire Grants, whose people had for many years resisted New York's claim of jurisdiction over them, and had claimed to be an independent republic, entered the Union.

II. Congress met October 24th, 1791. Jonathan IId Congress, Trumbull, of Connecticut, was Ist Session. chosen Speaker of the House. The number of Federalists was slightly reduced, but the Administration was supported generally by

1 The Bank, thus created, continued in existence until 1811, when the opposite party was in power and refused to recharter it. Another National Bank was chartered in 1816, became the object of violent attack by Strict Constructionists, and ceased to exist in 1836. Other attempts were made without success, by Loose Constructionists, to charter a National Bank, and the project slept until 1862. During the Rebellion (1861-1865) the socalled Greenback Currency was really an assumption of the power to make forced loans.

a large majority of both parties. The Anti-federalists opposed an increase of the army and of the Tariff, but both bills became law. An Apportionment Bill was also passed at this Session, which had no party interest. It increased the number of the House of Representatives to 105. Congress adjourned May 8th, 1792. June 1st Kentucky, formerly a part of the State of Virginia, entered the Union.

12. Party Organization may be considered as fairly begun about the close of this Session. The occasional irritation shown in the debates is an evidence that the first ill-defined estimate of the new scheme of government was giving way to positive and settled opinions of its powers, and of the policy which should be followed in managing it. It is probable that a majority of the American people were Anti-federalist in 1789, although the Federalists, by the active assistance of many of their natural opponents, had gained the Executive, the Senate, the House, the Judiciary, and most of the State Legislatures, and were able to defeat the disagreeing factions known collectively as Anti-federalists. In 1792 affairs were beginning to settle into a more natural order. The various Anti-federalist factions, by union in resisting the Federalists, had learned to forget minor differences, and had been welded. into one party which only lacked a name. That of Anti-federalist was no longer applicable, for its opposition to the Federal Union had entirely ceased.