INDEBTEDNESS OF THE UNITED STATES, OF THE STATES, ETC. 397 



which should govern it. But it was finally agreed 

 that whatever importance had been attached to the 

 rejection of this proposition, the preservation of the 

 Union, and of concord among the States, was more 

 important, and that therefore it would be better that 

 the vote of rejection should be rescinded to eifect 

 which some members should change their votes. But 

 it was observed that this pill would be peculiarly bit- 

 ter to the Southern States, and that some concomitant 

 measure should be adopted to sweeten it a little to 

 them. There had before been propositions to fix the 

 seat of government either at Philadelphia, or at 

 Georgetown on the Potomac ; and it was thought that 

 by giving it to Philadelphia for ten years, and to 

 Georgetown permanently afterward, this might, as an 

 anodyne, calm in some degree the ferment which 

 migh't be excited by the other measure alone : so two 

 of the Potomac members (White and Lee, but the 

 former with a revulsion of stomach almost convulsive) 

 agreed to change their votes ; and Hamilton undertook 

 to carry the other point. 



Thus, on August 4, 1790, an act, making 

 provision for the payment of the debt of the 

 United States and embodying provisions for 

 assumption of the State debts, was approved. 

 The following statement, taken from the offi- 

 cial reports, shows the amount authorized to 

 be assumed in the redemption of the debt of 

 each State, and the amount which was as- 

 sumed : 



U. S. BANK. The public debt on January 

 1, 1791, was about $75,250,000. A portion 

 of it having been funded, and payable at 

 future dates, the next step was taken to make 

 additional provision for temporary emergen- 

 cies. Accordingly, on December 14, 1790, 

 Secretary Hamilton, with his annual report, 

 transmitted to the House of Representatives a 

 plan for a National Bank with a capital of $10,- 

 000,000, divided into 25,000 shares, at $400 

 each. The bill of incorporation passed the 

 Senate on January 20, 1791. Debate on it in 

 the House began on February 1st, and con- 

 tinued until February 8th, when the bill passed 

 by yeas 39 to nays 20. The corporation was 

 allowed to sell the evidences of the public debt 

 subscribed to its stock, but was not to purchase 

 any public debt whatever. Notes were al- 

 lowed to be issued, payable to any person or 

 persons, assignable and negotiable, or to bearer, 

 assignable by delivery. The directors were to 

 establish offices, for discount and deposit only, 

 wherever they should think fit in the United 

 States. The President of the United States 

 was authorized to subscribe to the stock of the 

 corporation ,$2,000,000, borrowing an equal 



sum of the bank, the money to be paid out of 

 that which should be obtained under previous 

 acts of Congress. relating to the public debt. 

 The charter was to expire March 4, 1811. The 

 bank was of great benefit to the Government. 

 More than $100,000,000 of Government money 

 was received and disbursed by it, without the 

 loss of a dollar. It made semi-annual divi- 

 dends, averaging about 8^ per cent, and its 

 stock rose to a high price. 



At the close of 1792 the condition of the 

 Treasury was unsatisfactory. The expendi- 

 tures had increased in consequence of Indian 

 troubles, the large amounts required for inter- 

 est, and the growing current expenses seemed 

 likely to exhaust the revenues. The House, 

 therefore, referred to the Secretary of the 

 Treasury the subject of a plan for the redemp- 

 tion of the public debt, and for the reimburse- 

 ment of the subscription loan made to the 

 bank. He replied by recommending for the 

 first, temporary loans and additional revenues 

 by taxation as the only resources remaining ; 

 and, for the second, that power be given to 

 borrow the sum due, to be applied to the re- 

 imbursement of the loan. 



WAR MEASURES. A series of loans followed. 

 Trouble arose with the Barbary powers on the 

 north coast of Africa, in 1794, and an attempt 

 was made to create a small navy of six frigates, 

 four of forty-four guns and two of thirty-six 

 guns each, for the protection of American 

 commerce in the Mediterranean. These frig- 

 ates were begun under many disadvantages 

 one each at the ports of Portsmouth, in New 

 Hampshire, Portsmouth, in Virginia, Boston, 

 New York, Philadelphia, and Baltimore. The 

 timber from which they were to be constructed 

 was still standing in the forest, the iron was 

 still in its native ore, the seed for the flax and 

 hemp was yet to be sown. Copper could not 

 be procured in the United States. The Gov- 

 ernment possessed neither navy- yards nor can- 

 non-foundries. It was resolved to build the 

 ships of live-oak, and agents, with a force of 

 lumbermen, were sent to Georgia to obtain it. 

 They met with so many discouragements from 

 the unhealthiness of the climate, the constant 

 rain, and other causes, that little progress was 

 made. In January, 1796, the frigates remained 

 unfinished, and peace had been concluded with. 

 the Barbary powers. In 1797 the vessels were 

 still on the stocks, but, owing to troubles 

 with France, it was resolved to complete the 

 frigates, to build galleys for the defense of the 

 coast, and to purchase not more than twelve 

 merchant- vessels adapted to naval service. In 

 payment for these stock was to be issued. 



"War, although not formally declared, was 

 carried on by France, upon the ocean, with 

 virulence. Constant captures were made of 

 American vessels, on the ground of having 

 property of the enemy on board. Full prepa- 

 rations were set on foot to resist a French 

 invasion, and, for the management of naval 

 affairs, a naval department was now created. 



