Assump- the certificates at a price far below their full value, for which reason some men in Congress thought it unjust to pay full value to holders who had purchased their certificates perhaps at an absurdly low rate. But Hamilton urged payment in full, contending that this payment would strengthen the credit of the new Government. The views of the great financier prevailed: all holders of the old obligations of the Confedera Alexander Hamilton. tion were permitted to exchange their certificates at face-value for new bonds. The strongest opposition to Hamilton's plan was that which was directed against the proposed assumption of the State debts. Such assumption, it was said, would be an encroachment upon the revenue powers of the State, and would saddle upon the States that had small debts more than their just proportion. The scheme for assumption was about to be rejected by Congress when it was carried to success by being coupled with another question, namely, the location of the new national capital (61). Many of the Southern members of Congress wished the new federal city to be located on the Potomac; many of the Northern members wished it at some point further north. "The Pennsylvania delegates entered into a bargain with the Southern delegates to oppose assumption; in return the capital was to be fixed at Philadelphia for fifteen years, after which it was to be removed to the Potomac. But the story got abroad and the House struck out Philadelphia and inserted Baltimore. Then Hamilton had an interview with Jefferson and on the next day Hamilton, Madison, and others took dinner at Jefferson's house, where the bargain was completed over fine punch and Madeira. The capital was to be removed to Philadelphia for ten years and then permanently established on the banks of the Potomac ; the State debts were to be assumed." (Avery.) This agreement was faithfully kept: before Congress adjourned it passed Hamilton's plan of assumption and made provision for locating the new capital on the banks of the Potomac. The First Bank of the United States Another financial measure of Hamilton related to the establishment of a bank in which the new Federal Government should have a direct interest. At the time there were but three banks in the entire country: one at Boston, one at New York, and one at Philadelphia. But these were all state banks. Hamilton desired to have a strong central national bank that should act as the financial agent of the National Government, a bank that could be relied upon to lend money to the Government and which would furnish a safe depository for the Government's funds. Accordingly, in the face of strong opposition, the Bank of the United States was chartered by Congress (in 1791) for twenty years, with a capital stock of $10,000,000. The Government took $2,000,000 of the stock, thereby becoming an active partner in the banking business. The bank was in every way successful. When it was opened in Philadelphia for the sale of stock, all the shares were taken within an hour. The notes of the bank were everywhere received at their face-value, and its stock paid a dividend of eight per cent. Although the services of the bank to the infant government were important yet when its charter expired in 1811, its friends were unable to secure a renewal, and the first Bank of the United States passed out of existence. Congress also took steps for improving the currency, which, The Free under the Confederation, was in such a disordered condition. The Constitution, depriving the individual States of the right of coinage (72), had lodged that power entirely with the Federal Government. Accordingly in 1792 Congress established a mint and enacted a coinage law that provided for the free coinage of gold and silver at the ratio of fifteen to one, the gold dollar to contain 24.75 grains of pure metal and the silver dollar 371.25 grains. Any person with gold or silver bullion I could take it to the mint and have it made into coins free of Coinage The Democratic Republican Party expense. The law of 1792, therefore, provided for the free coinage of gold and silver at the ratio of fifteen to one. This ratio was maintained until 1834, when a ratio of approximately sixteen to one was established. FEDERALISTS AND REPUBLICANS At the beginning of Washington's administration there was hardly such a thing as a political party in the United States, for after the ratification of the Constitution the Anti-Federalist party dissolved and party lines became blurred and indistinct. But this condition did not last long. The controversies arising over Hamilton's financial measures were so bitter that they caused men to take sides, with the result that by March, 1791, when the first Congress adjourned, two parties were in process of formation, the Democratic-Republican party-in time to be known simply as the Democratic party-and the Federalist party. The Democratic-Republican party-or the Republican party as it was called in its early years—was led by Thomas Jefferson, who opposed the measures of Hamilton on the ground that they gave the Federal Government more power than it ought to have, and more power than the Constitution said it should have. Jefferson believed in a strict construction of the Constitution: he believed that the only powers the Federal Government could lawfully and rightfully bring into use were those that were explicitly enumerated in the Constitution. For example, he thought that Hamilton's bank scheme was unlawful because the Constitution nowhere explicitly gives the Federal Government the power to establish banks. The Republican party, therefore, stood for a strict and narrow construction of the Constitution, and for the preservation of the rights of the States. "I consider," said Jefferson, "the foundation of the Constitution is laid on this ground, that all powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States and to the people (144). To take a single step beyond the boundaries specially drawn around the power of Congress is to take possession of a boundless field of power." The greatest strength of the Republican MERCHANDIZES, imported into the UNITEd States. HEREAS it is receffary for the fupport of Government, and the encouragement and protection of Manufactures, that Duties be laid on Goods, Wares, and Merchandizes, imported: BE it enacted by the CONGRESS of the United States, That from and after the fifteenth day of June next enfuing, the feveral duties herein after mentioned, fhall be laid on the following goods, wares, and merchandizes, imported into the United States, from any foreign port, or place, that is to say: On all diftilled fpirits of Jamaica proof, imported from the European dominions of any state or kingdom, having a commercial treaty with the United States, 12 cents. per gallon, per gallon, On all other diftilled fpirits, imported from the European dominions of fuch state or kingdom, On all diftilled spirits of Jamaica proof, imported from any other kingdom or country whatsoever, 15 cents. |