[Sidenote: Kentucky admitted, 1792. _Higginson_, 224-230.]

201. New States.--The first new state to be admitted to the Union was Vermont (1791). The land which formed this state was claimed by New Hampshire and by New York. But during the Revolution the Green Mountain Boys had declared themselves independent and had drawn up a const.i.tution. They now applied to Congress for admission to the Union as a separate state. The next year Kentucky came into the Union. This was originally a part of Virginia, and the colonists had brought their slaves with them to their new homes. Kentucky, therefore, was a slave state. Vermont was a free state, and its const.i.tution forbade slavery.

[Ill.u.s.tration: CENTER OF POPULATION]

[Sidenote: Origin of the National Debt. For details, see _McMaster_, 198-200.]

[Sidenote: Bonds.]

202. The National Debt.--The National Debt was the price of independence. During the war Congress had been too poor to pay gold and silver for what it needed to carry on the war. So it had given promises to pay at some future time. These promises to pay were called by various names as bonds, certificates of indebtedness, and paper money. Taken all together they formed what was called the Domestic Debt, because it was owed to persons living in the United States. There was also a Foreign Debt. This was owed to the King of France and to other foreigners who had lent money to the United States.

[Sidenote: Hamilton as a financier.]

[Sidenote: His plan.]

[Sidenote: Objections to it.]

203. Hamilton's Financial Policy.--Alexander Hamilton was the ablest Secretary of the Treasury the United States has ever had. To give people confidence in the new government, he proposed to redeem the old certificates and bonds, dollar for dollar, in new bonds. To this plan there was violent objection. Most of the original holders of the certificates and bonds had sold them long ago. They were now mainly held by speculators who had paid about thirty or forty cents for each dollar.

Why should the speculator get one dollar for that which had cost him only thirty or forty cents? Hamilton insisted that his plan was the only way to place the public credit on a firm foundation, and it was finally adopted.

[Ill.u.s.tration: ALEXANDER HAMILTON. "He smote the rock of the national resources and abundant streams of revenue gushed forth. He touched the dead corpse of the public credit and it sprang upon its feet."--WEBSTER.]

[Sidenote: The state debts. _Source-Book_, 186-188.]

[Sidenote: Hamilton's plan of a.s.sumption.]

[Sidenote: Objections to it.]

[Sidenote: Failure of the bill.]

204. a.s.sumption of State Debts.--A further part of Hamilton's original scheme aroused even greater opposition. During the Revolutionary War the states, too, had become heavily in debt. They had furnished soldiers and supplies to Congress. Some of them had undertaken expeditions at their own expense. Virginia, for example, had borne all the cost of Clark's conquest of the Northwest (p. 116). She had later ceded nearly all her rights in the conquered territory to the United States (p. 135). These debts had been incurred for the benefit of the people as a whole. Would it not then be fair for the people of the United States as a whole to pay them? Hamilton thought that it would. It chanced, however, that the Northern states had much larger debts than had the Southern states. One result of Hamilton's scheme would be to relieve the Northern states of a part of their burdens and to increase the burdens of the Southern states. The Southerners, therefore, were strongly opposed to the plan. The North Carolina representatives reached New York just in time to vote against it, and that part of Hamilton's plan was defeated.

[Ill.u.s.tration: AN OLD STAGECOACH. The house was built in Lincoln County, Kentucky, in 1783.]

[Sidenote: Question of the site of the national capital.]

[Sidenote: Jefferson and Hamilton.]

[Sidenote: The District of Columbia.]

205. The National Capital.--In these days of fast express trains it makes little difference whether one is going to Philadelphia or to Baltimore--only a few hours more or less in a comfortable railroad car.

But in 1791 it made a great deal of difference whether one were going to Philadelphia or to Baltimore. Traveling was especially hard in the South. There were few roads or taverns in that part of the country, and those few were bad. The Southerners were anxious to have the national capital as far south as possible. They were also opposed to the a.s.sumption of the state debts by the national government. Now it happened that the Northerners were in favor of the a.s.sumption of the debts and did not care very much where the national capital might be. In the end Jefferson and Hamilton made "a deal," the first of its kind in our history. Enough Southerners voted for the a.s.sumption bill to pa.s.s it. The Northerners, on their part, agreed that the temporary seat of government should be at Philadelphia, and the permanent seat of government on the Potomac. Virginia and Maryland at once ceded enough land to form a "federal district." This was called the District of Columbia. Soon preparations were begun to build a capital city there--the city of Washington.

[Ill.u.s.tration: A LADY OF THE "REPUBLICAN COURT."]

[Sidenote: Hamilton's plan for a United States bank. _McMaster_, 201]

[Sidenote: Jefferson's argument against it.]

[Sidenote: The bank established.]

206. The First Bank of the United States.--Two parts of Hamilton's plan were now adopted. To the third part of his scheme there was even more opposition. This was the establishment of a great Bank of the United States. The government in 1790 had no place in which to keep its money. Instead of establishing government treasuries, Hamilton wanted a great national bank, controlled by the government. This bank could establish branches in important cities. The government's money could be deposited at any of these branches and could be paid out by checks sent from the Treasury. Furthermore, people could buy a part of the stock of the bank with the new bonds of the United States. This would make people more eager to own the bonds, and so would increase their price. For all these reasons Hamilton thought the bank would be very useful, and therefore "necessary and proper" for the carrying out of the powers given by the Const.i.tution to the national government. Jefferson, however, thought that the words "necessary and proper" meant necessary and not useful. The bank was not necessary according to the ordinary use of the word. Congress therefore had no business to establish it. After thinking the matter over, Washington signed the bill and it became a law. But Jefferson had sounded the alarm. Many persons agreed with him, many others agreed with Hamilton. Two great political parties were formed and began the contest for power that has been going on ever since.

CHAPTER 20

RISE OF POLITICAL PARTIES

[Sidenote: Formation of the Federalist party. _McMaster_, 202.]

207. The Federalists.--There were no political parties in the United States in 1789. All the leading men were anxious to give the new Const.i.tution a fair trial. Even Patrick Henry supported Washington. Many men, as Alexander Hamilton and Gouverneur Morris, believed a monarchy to be the best form of government. But they saw clearly that the American people would not permit a monarchy to be established. So they supported the Const.i.tution although they thought that it was "a frail and worthless fabric." But they wished to establish the strongest possible government that could be established under the Const.i.tution. This they could do by defining in the broadest way the doubtful words in the Const.i.tution as Hamilton had done in the controversy over the bank charter (p. 162). Hamilton had little confidence in the wisdom of the plain people. He believed it would be safer to rely on the richer cla.s.ses. So he and his friends wished to give to the central government and to the richer cla.s.ses the greatest possible amount of power. Those who believed as Hamilton believed called themselves Federalists. In reality they were Nationalists.

[Sidenote: Formation of the Republican party.]

208. The Republicans.--Thomas Jefferson, James Madison, Albert Gallatin, and their friends entirely disagreed with the Federalists on all of these points. They called themselves Republicans. In the Great Declaration Jefferson had written that government rested on the consent of the governed. He also thought that the common sense of the plain people was a safer guide than the wisdom of the richer cla.s.ses. He was indignant at the way in which Hamilton defined the meaning of phrases in the Const.i.tution. He especially relied on the words of the Tenth Amendment. This amendment provided that "all powers not delegated to the United States by the Const.i.tution nor prohibited by it to the states are reserved to the states respectively or to the people." Jefferson thought that phrases like "not delegated" and "necessary and proper" should be understood in their ordinary meanings. He now determined to arouse public opinion. He once declared that if he had to choose between having a government and having a newspaper press, he should prefer the newspaper press. He established a newspaper devoted to his principles and began a violent and determined attack on the Federalists, calling them monarchists. These disputes became especially violent in the treatment of the questions which grew out of the French Revolution.

[Sidenote: The French Revolution, 1789.]

209. The French Revolution.--In 1789 the French people rose against their government. In 1792 they imprisoned their king and queen. In 1793 they beheaded them, and set up a republic. The monarchs of Europe made common cause against this spirit of revolution. They made war on the French Republic and began a conflict which soon spread to all parts of the world.

[Sidenote: Effect of the French Revolution on American politics.

_McMaster_, 206-207.]

[Sidenote: Federalists and Republicans.]

210. The French Revolution and American Politics.--Jefferson and his political friends rejoiced at the overthrow of the French monarchy and the setting up of the Republic. It seemed as if American ideas had spread to Europe. Soon Jefferson's followers began to ape the manners of the French revolutionists. They called each other Citizen this and Citizen that. Reports of French victories were received with rejoicing.

At Boston an ox, roasted whole, bread, and punch were distributed to the people in the streets, and cakes stamped with the French watchwords, Liberty and Equality, were given to the children. But, while the Republicans were rejoicing over the downfall of the French monarchy, the Federalists were far from being happy. Hamilton had no confidence in government by the people anywhere. Washington, with his aristocratic ideas, did not at all like the way the Republicans were acting. He said little on the subject, but Lady Washington expressed her mind freely and spoke of Jefferson's followers as "filthy Democrats."

[Sidenote: Genet at Charleston.]

[Sidenote: His contest with the government.]

211. Citizen Genet.--The new French government soon sent an agent or minister to the United States. He was the Citizen Genet. He landed at Charleston, South Carolina. He fitted out privateers to prey on British commerce and then set out overland for Philadelphia. Washington had recently made a tour through the South. But even he had not been received with the enthusiasm that greeted Genet. But when Genet reached Philadelphia, and began to confer with Jefferson about getting help from the government, he found little except delay, trouble, and good advice.

Jefferson especially tried to warn Genet not to be over confident. But Genet would not listen. He even appealed to the people against Washington, and the people rallied to the defense of the President. Soon another and wiser French minister came to the United States.

[Sidenote: The Treaty of Alliance of 1778.]

[Sidenote: The Neutrality Proclamation, 1793.]

212. The Neutrality Proclamation, 1793.--Washington and his advisers had a very difficult question to settle. For the Treaty of 1778 with France (p. 115) gave to French ships the use of United States ports in war time, and closed those ports to the enemies of France. The treaty might also oblige the United States to make war on Great Britain in order to preserve the French West India Islands to France. It was quite certain, at all events, that if French warships were allowed to use American ports, and British warships were not allowed to do so, Great Britain would speedily make war on the United States. The treaty had been made with the King of France. Could it not be set aside on the ground that there was no longer a French monarchy? Washington at length made up his mind to regard it as suspended, owing to the confusion which existed in France. He therefore issued a Proclamation of Neutrality. In this proclamation he warned all citizens not to aid either of the fighting nations. It was in this way that Washington began the policy of keeping the United States out of European conflicts (p. 224).

[Sidenote: Internal revenue taxes.]

[Sidenote: The Whiskey Rebellion, 1794. _McMaster_, 203-204.]