magistrate of the nation. He was every where received with expressions of the purest affection, and could not fail to rejoice in the virtue, religion, happiness, and prosperity of the people, at the head of whose government he was placed.

Sec. 9. The second session of the first congress commenced, January 8th, 1790. In obedience to the resolution of the former congress, the secretary of the treasury, Mr. Hamilton, made his report on the subject of maintaining the public credit.

In this report, he strongly recommended to congress, as the only mode, in his opinion, in which the public credit would be supported:

1. That provision be made for the full discharge of the foreign debt, according to the precise terms of the contract.

2. That provision be made for the payment of the domestic debt, in a similar manner.

3. That the debts of the several states, created for the purpose of carrying on the war, be assumed by the general government.

The public debt of the United States was estimated by the secretary, at this time, at more than fifty-four millions of dollars. Of this sum, the foreign debt, principally due to France and the Hollanders, constituted eleven millions and a half of interest; and the domestic liquidated debt, including about thirteen millions of arrears of interest, more than forty millions; and the unliquidated debt two millions. The secretary recommended the assumption of the debts of the several states to be paid equally with those of the Union, as a measure of sound policy and substantial justice. These were estimated at twenty-five millions of dollars.

Sec. 10. The proposal for making adequate provision for the foreign debt was met, cordially and unanimously; but, respecting the full discharge of the domestic debt, and the assumption of the state debts, much division prevailed in

congress.

After a spirited and protracted debate on these subjects, the recommendation of the secretary prevailed, and bills conformable thereto passed, by a small majority.

The division of sentiment among the members of congress, in relation to the full, or only a partial payment of the domestic debt, arose from this. A considerable proportion of the original holders of public securities had found it necessary to sell them, at a reduced price-even as low as two or three shillings on the pound. These securities had been purchased by speculators, with the expectation of ultimately receiving the full amount. Under these circumstances, it was contended by some, that congress would perform their duty, should they pay to all holders of public securities only the reduced market price. Others advocated a discrimination between the present holders of securities, and those to whom the debt was originally due, &c. &c.

In his report, Mr. Hamilton ably examined these several points, and strongly maintained the justice of paying to all holders of securities, without discrimination, the full value of what appeared on the face of their certificates. This, he contended, justice demanded, and for this, the public faith was pledged.

By the opposers of the bill, which related to the assumption of the state debts, the constitutional authority of the federal government for this purpose was questioned; and the policy and justice of the measure controverted.

To cancel the several debts which congress thus undertook to discharge, the proceeds of public lands, lying in the western territory, were directed to be applied, together with the surplus revenue, and a loan of two millions of dollars, which the president was authorized to borrow, at an interest of five per cent.

This measure laid the foundation of public credit upon such a basis, that government paper soon rose from two shillings and six pence to twenty shillings on the pound, and, indeed, for a short time, was above par. Individuals, who

had purchased certificates of public debt low, realized immense fortunes. A general spring was given to the affairs of the nation. A spirit of enterprise, of agriculture, and commerce, universally prevailed, and the foundation was thus laid for that unrivalled prosperity which the United States, in subsequent years, en joyed.

Sec. 11. During this session of congress, a bili was passed, fixing the seat of government for ten years at Philadelphia, and, from and after that time, permanently at Washington, on the Potomac.

Sec. 12. On the 4th of March, 1791, VERMONT, by consent of congress, became one of the United States.

The tract of country, which is now known by the name of Vermont, was settled at a much later period than any other of the eastern states. The governments of New-York and Massachusetts made large grants of territory in the direction of Vermont; but it was not until 1724, that any actual possession was taken of land, within the present boundaries of the state. In that year, Fort Durance was built, by the officers of Massachusetts, on Connecticut river. On the other side of the state, the French advanced up Lake Champlain, ad, in 1731, built Crown Point, and began a settlement on the eastern shore of the lake.

Vermont being supposed to fall within the limits of NewHampshire, that government made large grants of land to settlers, even west of Connecticut river. New-York, however, conceived herself to have a better right to the territo ry, in consequence of the grant of Charles II. to his brother, the Duke of York. These states being thus at issue, the case was submitted to the English crown, which decided in favor of New-York, and confirmed its jurisdiction, as far as Corn ticut river. In this decision, New-Hampshire acquiesce; but New-York persisting in its claims to land east of the river, actions of ejectment were instituted in the courts at Albany, which resulted in favor of the New-York title. The settlers, however, determined to resist the officers of justice, and under Ethan Allen, associated together

to oppose the New-York militia, which were called out to enforce the laws.

On the commencement of the revolution, the people of Vermont were placed in an embarrassing situation. They had not even a form of government. The jurisdiction of New-York being disclaimed, and allegiance to the British crown refused, every thing was effected by voluntary agree ment. In January, 1777, a convention met and proclaimed that the district before known by the name of the NewHampshire grants, was of right a free and independent ju-* risdiction, and should be henceforth called New Connecticut, alias Vermont. The convention proceeded to make known their proceedings to congress, and petitioned to be admitted into the confederacy. To this, New-York objected, and, for a time, prevailed. Other difficulties arose with NewHampshire and Massachusetts, each of which laid claim to land within the present boundaries of the state. At the peace of 1783, Vermont found herself a sovereign and independent state de facto, united with no confederation, and therefore unembarrassed by the debts that weighed down the other states. New-York still claimed jurisdiction over the state, but was unable to enforce it, and the state government was administered as regularly as in any of the other states. After the formation of the federal constitution, Vermont again requested admission into the union. The opposition of New-York was still strong, but in 1789 was finally withdrawn, upon the consent of Vermont to pay her the sum of thirty thousand dollars. Thus terminated a controversy, which had been carried on with animosity, and with injury to both parties, for twenty-six years. A convention was immediately called, by which it was resolved to join the federal union. Upon application to congress, their consent was readily given, and on the 4th of March, 1791, Vermont was added to the United States.

Sec. 13. At the time that congress assumed the state debts, during their second session, the secretary of the treasury had recommended a tax on domestic spirits, to enable them to pay the interest. The discussion of the bill having been postponed to the third session, was early in that session taken up. The tax, contemplated by the bill, was opposed with great vehemence, by a majority of southern and western members, on

the ground that it was unnecessary and unequal, and would be particularly burdensome upon those parts of the union, which could not, without very great expense, procure foreign ardent spirits. Instead of this tax, these members proposed an increased duty on imported articles generally, a particular duty on molasses, a direct tax, or a tax on salaries, &c. &c. After giving rise to an angry and protracted debate, the bill passed, by a majority of thirty-five to twenty

one.

Sec. 14. The secretary next appeared with a recommendation for a national bank. A bill, conforming to his plan, being sent down from the senate, was permitted to progress, unmolested, in the house of representatives, to the third reading. On the final reading, an unexpected opposition appeared against it, on the ground that banking systems were useless; that the proposed bill was defective; but, especially, that congress was not vested, by the constitution, with the competent power to establish a national baik.

These several objections were met by the supporters of the bill, with much strength of argument. After a debate of great length, supported with the ardor excited by the importance of the subject, the bill was carried in the affirmative, by a majority of nineteen voices.

A bill which had been agitated with so much warmth, in the house of representatives, the executive was now called upon to examine with reference to its sanction or rejection. The president required the opinions of the cabinet in writing. The secretary of state, Mr. Jefferson, and the attor ney general, Mr. Randolph, considered the bill as decidedly unconstitutional. The secretary of the treasury, Mr. Hamilton, with equal decision, maintained the opposite opinion. A deliberate investigation of the subject satisfied