The Student's Life of Washington; Condensed from the Larger Work of Washington Irving / For Young Persons and for the Use of Schools

by Washington Irving

CHAPTER LXXI.

FINANCIAL DIFFICULTIES.—PARTY JEALOUSIES.—OPERATIONS AGAINST THE INDIANS.

Congress re-assembled on the 4th of January (1790), but a quorum of the two Houses was not present until the 8th, when the session was opened by Washington in form, with an address delivered before them in the Senate chamber. Among the most important objects suggested in the address for the deliberation of Congress, were provisions for national defence; provisions for facilitating intercourse with foreign nations, and defraying the expenses of diplomatic agents; laws for the naturalization of foreigners; uniformity in the currency, weights, and measures of the United States; facilities for the advancement of commerce, agriculture, and manufactures; attention to the post-office and post-roads; measures for the promotion of science and literature, and for the support of public credit.

This last object was the one which Washington had more immediately at heart. The government was now organized, apparently, to the satisfaction of all parties; but its efficiency would essentially depend on the success of a measure which Washington had pledged himself to institute, and which was yet to be tried; namely, a system of finance adapted to revive the national credit, and place the public debt in a condition to be paid off. At the close of the war the debt amounted to forty-two millions of dollars; but so little had the country been able to fulfil its engagements, owing to the want of a sovereign legislature having the sole and exclusive power of laying duties upon imports, and thus providing adequate resources, that the debt had swollen, through arrears of interest, to upwards of fifty-four millions. Of this amount nearly eight millions were due to France, between three and four millions to private lenders in Holland, and about two hundred and fifty thousand in Spain; making altogether, nearly twelve millions due abroad. The debt contracted at home amounted to upwards of forty-two millions, and was due, originally, to officers and soldiers of the revolutionary war, who had risked their lives for the cause; farmers who had furnished supplies for the public service, or whose property had been assumed for it; capitalists who, in critical periods of the war, had adventured their fortunes in support of their country's independence. The domestic debt, therefore, could not have had a more sacred and patriotic origin; but in the long delay of national justice, the paper which represented these outstanding claims, had sunk to less than a sixth of its nominal value, and the larger portion of it had been parted with at that depreciated rate, either in the course of trade, or to speculative purchasers.

The debt, when thus transferred, lost its commanding appeal to patriotic sympathy, but remained as obligatory in the eye of justice. In public newspapers, however, and in private circles, the propriety of a discrimination between the assignees and the original holders of the public securities, was freely discussed. Beside the foreign and domestic debt of the federal government, the States, individually, were involved in liabilities contracted for the common cause, to an aggregate amount of about twenty-five millions of dollars; of which, more than one-half was due from three of them; Massachusetts and South Carolina each owing more than five millions, and Virginia more than three and a half. The reputation and the well-being of the government were, therefore, at stake upon the issue of some plan to retrieve the national credit, and establish it upon a firm and secure foundation.

The Secretary of the Treasury (Mr. Hamilton), it will be remembered, had been directed by Congress to prepare such a plan during its recess. In the one thus prepared, he asserted, what none were disposed to question, the propriety of paying the foreign debt according to its terms. He asserted, also, the equal validity of the original claims of the American creditors of the government; whether those creditors were the original holders of its certificates or subsequent purchasers of them at a depreciated value. The idea of any distinction between them, which some were inclined to advance, he repudiated as alike unjust, impolitic, and impracticable. He urged, moreover, the assumption, by the general government, of the separate debts of the States, contracted for the common cause, and that a like provision should be made for their payment as for the payment of those of the Union. They were all contracted in the struggle for national independence, not for the independence of any particular part. No more money would be required for their discharge as federal, than as State debts. He recommended, therefore, that the entire mass of debt be funded; the Union made responsible for it, and taxes imposed for its liquidation.

The plan was reported to the House by Mr. Hamilton, the 14th of January, but did not undergo consideration until the 8th of February, when it was opposed with great earnestness, especially the point of assuming the State debts, as tending to consolidation, as giving an undue influence to the general government, and as being of doubtful constitutionality. This financial union of the States was reprobated not only on the floor of Congress, but in different parts of the Union, as fraught with political evil. The Northern and Eastern States generally favored the plan, as did also South Carolina, but Virginia manifested a determined opposition. The measure, however, passed, in Committee of the Whole, on the 9th of March, by a vote of 31 to 26.

The funding of the State debts was supposed to benefit materially the Northern States, in which was the entire capital of the country; yet, South Carolina voted for the assumption. The fact is, opinions were honestly divided on the subject. The great majority were aiming to do their duty—to do what was right; but their disagreement was the result of real difficulties incident to the intricate and complicated problem with which they had to deal.

At this juncture (March 21st), when Virginian discontents were daily gaining strength, Mr. Jefferson arrived in New York to undertake the duties of the Department of State. He had just been in Virginia, where the forms and ceremonials adopted at the seat of our government were subjects of cavil and sneer; where it was reported that Washington affected a monarchial style in his official intercourse, that he held court-like levees, and Mrs. Washington "queenly drawing-rooms," at which none but the aristocracy were admitted, that the manners of both were haughty, and their personal habits reserved and exclusive.

The impressions thus made on Jefferson's mind, received a deeper stamp on his arrival in New York, from conversations with his friend Madison, in the course of which the latter observed, that "the satellites and sycophants which surrounded Washington, had wound up the ceremonials of the government to a pitch of stateliness which nothing but his personal character could have supported, and which no character after him could ever maintain."