_Assumption of Debts._--The second session of the first congress

began on the 6th of January, 1790. At the close of the preceding

session, the secretary of the treasury had been directed to prepare a

plan for providing for the adequate support of the public credit, and

to report the same at the next meeting of congress. On the 15th, in

obedience to the foregoing requisition, Mr. Hamilton submitted his

report. Having dwelt with great ability upon the importance of a

nation maintaining the public credit, he proposed, as the means of

supporting that of the United States, a system of assuming or funding

not only the public debt, but also the state debts, and of making

provision for the payment of the interest by taxes imposed on certain

articles of luxury, and on spirits distilled within the United States.

The debates on this report were exciting beyond precedent. While not

much difference existed as to funding the foreign debt, a strong

opposition arose, on the part of the democratic party, against

discharging, in full, the domestic debt, and the assumption of the

state debts. The federalists advocated the measure. The contest

between the two rival parties was strong, spirited, and even virulent.

The very foundations of the government were shaken; and a writer has

justly remarked, that to the differences which were then created, and

the excitement which sprung up during the debates, may be ascribed

"the origin of that violent spirit which for years arrayed one part of

the American community against the other."

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 been compelled to sell them at greatly reduced

prices--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. "The federalists were with

Hamilton, in favor of making no difference between the present and

original holders of the continental bills, maintaining that the

government ought not to interfere with transfers. The republican party

advocated the discrimination; contending that it was unjust to the

veterans of the Revolution, who had been obliged to receive this paper

in lieu of gold and silver, and were afterwards compelled to part with

it at a small part of its nominal value, now to be condemned to

poverty, while the speculator was receiving the reward of their blood

and service."

The assumption of the state debts was also violently opposed. The

advocates of assumption claimed that the debts incurred by the state,

were not for their own benefit, but for the promotion of the common

cause, and that therefore it was right that the whole nation should be

responsible. The debts of the states most active in the war, were the

greatest: those of Massachusetts and Carolina amounted to ten millions

and a half, while those of all the other states were not more than

fifteen millions. Was it just to impose such a burden on the people of

these two states? They had already been great sufferers in the

privations they had endured and in the blood they had lost.

On taking the vote in the house of representatives, these two plans of

Mr. Hamilton were lost by a majority of two; and, for a season, there

was little prospect that a just financial system would be adopted, or

that the respective parties could on any basis coalesce. But,

fortunately, at this juncture, a question was exciting a deep

interest, and with reference to which there was a wide difference, and

deep feelings, between the northern and southern members, viz:

_The Removal of the Seat of Government._--The debates on this subject

were almost as exciting as on the fiscal project of Hamilton. A

compromise, however, was at length effected in regard to the permanent

location of the seat of government--the more important, as it led to a

further compromise in relation to the assumption of the state debts.

It was understood that should the seat of government be fixed for ten

years at Philadelphia, and afterwards at a place to be selected on

the Potomac, some of the members of the house of representatives, from

the Potomac, would withdraw their opposition to Mr. Hamilton. This was

accordingly done, and his plans were adopted. The debt funded amounted

to a little more than seventy-five millions of dollars, upon a part of

which an interest of three per cent. was paid, and upon the remainder

six per cent.

_National Bank._--During the third session of congress, Mr. Hamilton

recommended the establishment of a national bank. To such an

institution, the republican party were bitterly opposed, as

aristocratical and unconstitutional. Besides, they considered banking

institutions useless; the present bill, in several particulars,

defective; but, more than all, it was maintained that the constitution

had not vested the power in congress to charter a bank. The supporters

of the measure, of course, held opposite doctrines, and were not less

strenuous in maintaining them. The bill, however, at length passed both

branches of the national legislature; but the different opinions

entertained, and the asperity with which they had been expressed, led

the president to give to the subject, as a constitutional question, more

than ordinary attention. To aid him in his decision, he required

opinions of his cabinet in writing. Mr. Jefferson and Mr. Randolph

opposed--Mr. Hamilton and General Knox sanctioned the bill. After mature

deliberation, the president became satisfied of the constitutionality

and utility of the bill; upon which, he gave it his signature.

The capital stock of the bank was ten millions of dollars, two

millions to be subscribed for the benefit of the United States, and

the residue by individuals. One-fourth of the sums subscribed by

individuals was to be paid in gold and silver, and three-fourths in

the public debt. By the act of incorporation, it was to be a bank of

discount as well as deposit; and its bills, which were payable in gold

and silver on demand, were made receivable in all payments to the

United States. The bank was located at Philadelphia, with power in

the directors to establish offices of discount and deposit only

wherever they should think fit within the United States.

The duration of the charter was limited to the 4th of May, 1811; and

the faith of the United States was pledged that, during that period,

no other bank should be established under their authority. One of the

fundamental articles of the incorporation was, that no loan should be

made to the United States for more than one hundred thousand dollars;

or to any particular state for more than fifty thousand; or to any

foreign prince or state, unless previously authorized by a law of the

United States. The books were opened for subscription in July, 1791,

and a much larger sum subscribed than was allowed by the charter; and

the bank went into successful operation.[64]

The establishment of a national bank, in connexion with the assumption

of the state debts, contributed to the more complete organization of

two great parties, which had their origin in difference of views

regarding the constitution at the time of its adoption.

Mr. Hamilton and Mr. Jefferson, both eminent for their talents, and each

with his adherents, were now openly opposed on points which, as matters

of policy, were deemed of vital importance. The former was viewed, not

only as the author of the funding system, the bank, and other measures,

deemed either unconstitutional, or highly injurious to the public

interest, but was charged with hostility to republican principles and to

state rights. Mr. Jefferson, on the other hand, was considered hostile

to the constitution, and was accused of being opposed to the

administration of which he was a member, and of taking measures to

reduce the powers of the general government within too narrow limits. To

Washington, this determined hostility of his two principal secretaries

was truly afflicting; and the more so, when he found it so deep-rooted,

as in no degree to yield to his affectionate remonstrance.

_Indian War._--While the public councils were engaged thus in matters of

great national importance, the hostile movements of the Indian tribes on

the frontier began to excite the anxious solicitude of all reflecting

minds, especially that of Washington himself. The Creeks at the South

had been at war with Georgia; but in 1790, their chief, M'Gillivray, the

son of a white man, had been induced to go to New York, and conclude a

treaty. This terminated the war in that quarter; but pacific

arrangements, which had been attempted by the president with the tribes

on the north-western frontier, had proved ineffectual. The use of other

means for their pacification, therefore, became indispensably necessary.

In 1790, congress, at the solicitation of Washington, authorized the

raising of about fifteen hundred men, of whom three hundred were

regulars, and the remainder Pennsylvania and Kentucky militia. The

command of these was given to General Harmar, a veteran officer of the

Revolution, whose instructions required him to penetrate to the Indian

settlements on the Scioto and Wabash, and destroy them.

In the execution of his commission, in October, General Harmar

detached Colonel Harden with six hundred militia to reconnoitre the

Indian settlements, and, if possible, to bring them to an engagement;

but the Indians, on the approach of the Americans, fired their

principal villages, and fled to the woods. Thus foiled in his attempt

to bring the Indians to action, Colonel Harden was a second time

directed, with one hundred and eighty militia and thirty regulars, to

spy out the position and intentions of the foe. Ten miles west of

Chillicothe, sight was obtained of a considerable body of Indians; at

which, the Kentucky militia suddenly became so alarmed as to flee.

This evil example was soon after followed by the Pennsylvanians--thus

leaving the thirty regulars to sustain an engagement with a greatly

superior force. They displayed the greatest heroism; and maintained

the action, until all but seven being overpowered, the latter

effected their escape, and rëjoined the army at Chillicothe.

The Indian settlements bordering on the Scioto were now destroyed;

which having been accomplished, Colonel Harden was a third time

detached with three hundred and sixty men, of whom sixty were

regulars, under command of Major Wyllys. This force was attacked by a

large body of Indians at the junction of the St. Joseph with the St.

Mary. It was a most desperate contest. Here the militia retrieved

their character; nor did they attempt to retreat till one hundred and

nine men and officers lay dead on the field. Of the sixty regulars,

only ten survived, and among the killed was their brave commander,

Major Wyllys. Following this reverse, the survivors of the detachments

joined the army, and retired to Fort Washington.

On the failure of General Harmar, Major General Arthur St. Clair,

governor of the North-west territory, was appointed to succeed him. In

1791, at the head of two thousand men, the latter entered upon an

expedition which had for its object the destruction of the Indian

villages on the Miami. On the 3d of November, the army had proceeded

within twelve or fifteen miles of the Indian villages, at which point

the General formed his forces in two lines--the first, under command

of General Butler, composed the right wing, and lay with a creek

immediately in front of them. The left wing, under command of Colonel

Drake, formed the second, and lay with an interval of some seventy

yards between them and the first line. The militia occupied a post

across the creek, a quarter of a mile in front.

On the following day, before sunrise, just after the troops had been

dismissed from the parade, an unexpected attack was made on the militia,

who fled in the utmost confusion, and, in their flight, deranged the

continental troops, who were in the act of forming. The officers exerted

themselves to the utmost to restore order; but were not entirely

successful. The Indians fell upon them with savage impetuosity. The

action instantly became extremely warm. The continental troops fought

with spirit and determination; the Indians, with fearful desperation,

advancing to the very mouth of the field-pieces.

At length, perceiving that the only hope of victory lay in the use of

the bayonet, an impetuous charge was made under Lieutenant-colonel

Drake, and the enemy driven several hundred yards. But not being able

to pursue the advantage gained, the Indians turned, and renewed the

attack. Meanwhile, General Butler was mortally wounded, and the right

wing broken, the artillerists killed, the guns seized, and the camp

penetrated by the enemy. At this critical moment, Major Drake was

ordered to charge with the bayonet. This order he executed with great

intrepidity and momentary success.

But the American troops, failing to keep their ranks, and flocking

together in crowds, were, in several cases, shot down with but feeble

resistance. At length, perceiving that his officers had suffered

greatly, and the remnant of his army became more and more confused,

General St. Clair ordered a retreat. For some miles, the Indians

followed; but, fortunately for the surviving Americans, they at length

turned back, to plunder the camp of such articles as the former had

been obliged to abandon. The routed troops now continued their flight

to Fort Jefferson, a distance of about thirty miles, throwing away

their arms on the road. At this place, leaving their wounded, the army

continued its retreat to Fort Washington.

The loss of the Americans was severe, amounting to thirty-eight

commissioned officers killed, and five hundred and ninety-three

non-commissioned officers and privates slain and missing. The wounded

amounted to between two and three hundred officers and men, many of

whom subsequently died. The loss of the Indians bore no comparison, it

is thought, to that of the Americans. This reverse was as unexpected

as unfortunate; yet want of neither ability, zeal, nor intrepidity was

ascribed to the commander of the expedition, by a committee of

congress, appointed to examine into the causes of its failure.

The subsequent history of this war is brief. In consequence of an

anticipated adjustment of existing difficulties with the Indians, they

having consented to a conference in the spring of 1794, hostilities

were for a time suspended. But the proposed negotiations failing,

General Wayne, with nearly one thousand men, was sent into their

country, to reduce them to subjection. He engaged them in a sanguinary

battle on the 20th of August, 1794, on the banks of the Miami, which

resulted in their utter rout, and which was followed by laying waste

their whole country. By means of this victory over the Miamies, a

general Indian war was doubtless prevented. On the 3d of August, a

treaty was concluded at Greenville, which established peace between

the United States and the Indian tribes, and restored peace and

tranquillity to the frontier settlements.

_Rëelection of Washington._--During the year 1792, as the time

approached for the election of a chief magistrate, General Washington

expressed his intention, to some of his most intimate friends, to

decline a rëelection. His age and increasing infirmities rendered his

retirement from the cares of political life most desirable. In view of

such retirement, he had prepared a farewell address to the people.

But, through the persuasion of Jefferson, Hamilton, Randolph, and

others, he was induced to forego his private wishes, and was

unanimously rëelected to the presidency. No such unanimity has since

been manifested by the people of the United States, in relation to the

choice of a chief magistrate; nor is such unanimity likely again to

exist. And most conclusively does it show, not merely the gratitude of

the nation to the man who had stood foremost in times of peril, but

its deep and universal sense of the purity of his patriotism and the

worth of his skill in moulding and shaping the government still in its

infancy. Such harmony was alike honorable to the nation and to

Washington. Mr. Adams was rëelected vice-president. The following is

a statement of the votes of the several electoral colleges:

Key: A. G. Washington, of Virginia.

B. John Adams, of Massa'tts.

C. George Clinton, of New York.

D. Thos. Jefferson, of Virginia

E. Aaron Burr, of New York.

----------+------------------------+-----+-----+-----+-----+------

Number of | | | | | |

Electors | STATES. | | | | |

from each | | A. | B. | C. | D. | E.

State. | | | | | |

----------+------------------------+-----+-----+-----+-----+------

6 | New Hampshire, | 6 | 6 | | |

16 | Massachusetts, | 16 | 16 | | |

4 | Rhode Island, | 4 | 4 | | |

9 | Connecticut, | 9 | 9 | | |

3 | Vermont, | 3 | 3 | | |

12 | New York, | 12 | | 12 | |

7 | New Jersey, | 7 | 7 | | |

15 | Pennsylvania, | 15 | 14 | 1 | |

3 | Delaware, | 3 | 3 | | |

8 | Maryland, | 8 | 8 | | |

21 | Virginia, | 21 | | 21 | |

4 | Kentucky, | 4 | | | 4 |

12 | North Carolina, | 12 | | 12 | |

8 | South Carolina, | 8 | 7 | | | 1

4 | Georgia, | 4 | | 4 | |

----------+------------------------+-----+-----+-----+-----+------

132 | Whole No. of electors, | 132 | 77 | 50 | 4 | 1

| Majority, 67 | | | | |

_Difficulties with France._--The rëelection of Washington may be justly

considered as among the most signal favors conferred on the American

people. A revolution in France was in progress, remarkable for the

political changes it was affecting and the sanguinary scenes which

marked it. Monarchy had been abolished, Louis XVI. had fallen by the

guillotine, a republic had been proclaimed, and the national convention

had made proclamation of war against England, Holland, and Spain.

It was not unnatural that a people, who had themselves just thrown off

the yoke, and were beginning to taste the sweets of liberty, as was

the case with the Americans, should deeply sympathize with a nation

which was engaged in a similar struggle for independence. From the

commencement of the French Revolution, in 1789, not only the

Americans, but the friends of liberty throughout the world, were full

of hope that the political condition of France might thereby be

improved. And as that revolution progressed, the interest deepened;

and when, at length, the Republic was proclaimed, "the affection of

the American nation to its ancient ally, became devotion." The

enthusiasm knew scarcely any bounds, and was frequently manifested in

the most extravagant manner.

Nor was it unnatural that the French people should look to America for

her sympathy and aid, in so important an enterprise. They had, at a

former period, helped her through her struggle for independence, and

now, that they were embarked in a similar effort, could she withhold

her cöoperation and aid? They had reason to expect it, and were not

long in adopting measures to secure it.

The news of the declaration of war by France, against the powers

already named, reached the United States in April, and with this

intelligence arrived a new minister from the French republic, Mr.

Genet. Both these circumstances contributed to "increase to an

extraordinary degree the excitement already existing in favor of

France, and disposed a large portion of the nation to an actual

cöoperation with their ally against the enemy."

Washington and his associates in power were friends to liberty, and were

well-wishers to the cause of true freedom in France. But the Revolution

was assuming a selfish and sanguinary character, which betokened any

thing but the establishment of a free and enlightened constitutional

government. The most unbridled ambition for power was beginning to show

itself, and reason and religion were apparently being deprived of their

legitimate sway. In addition to this, the United States were in no

situation to embark in angry conflict with Great Britain and other

continental powers. In such a conflict it was apparently the wish of

France to involve the country, and, to a considerable portion of the

American people--arising from their prejudices against Great

Britain--such an event would not have been unacceptable. But Washington

judged more wisely for the interests of the nation; and accordingly, on

the 22d of April, issued his proclamation of _neutrality_.

This neutral and pacific policy of the American government had,

however, no apparent influence upon the new French minister. "Sanguine

in his temperament, of uncontrolled passions, excited to a degree of

insanity by the newborn ideas which raged in France, possessed of the

wildest dreams of national glory and aggrandizement--in a word, the

very incarnation of Jacobinism, he was the fittest brand which the

assembly could have selected to hurl into the magazine of political

strife. His reception at Charleston, where he landed, was well fitted

to encourage him. Public authorities, and private citizens, vied with

each other in glorifying the representative of European democracy. On

all sides he beheld the disposition he desired, and he did not delay

in profiting by it. Vessels were at once fitted out and armed, men

were enlisted, and commissions issued under her authority to cruise

against the enemies of France." Similar demonstrations of regard were

shown him in other places, as he proceeded towards Philadelphia, and

the same arrogant and haughty spirit was manifested by him. Pursuing

his design of involving the country in war, in despite of public

executive prohibition, he issued commissions to capture, and to bring

into American ports, the vessels belonging to countries with whom the

French were at war.

It is not necessary further to detail the conduct, nor the insolence of

this infatuated man. Suffice it to add, that on the meeting of congress,

December, 1793, the proclamation of neutrality was approved. Soon after,

at the instance of Washington, Mr. Genet was rëcalled by the French

government, which, at the same time, disapproved of his conduct.

_Insurrection in Pennsylvania._--The summer of 1794, was signalized by

an insurrection in the western counties of Pennsylvania, commonly known

as the "whiskey insurrection." It had its origin in a dissatisfaction

with a law of congress, enacted in 1791, by which a duty was imposed

upon spirits distilled in the United States. The inhabitants of that

part of Pennsylvania were chiefly foreigners, and consequently were less

disposed to submit to the taxation necessary to the support of

government. Strong opposition to the law was early manifested, and not a

few outrages were committed upon the revenue officers while in the

discharge of their duty--such as "whipping, tarring, and branding."

In consideration of these objections, in 1791-92, congress so modified

the law, as to do away its most obnoxious features. But the law was

now turned to party purposes, and the spirit of discontent was

fostered and inflamed to an excessive degree. The consequence was,

that outrages were renewed, and the wildest anarchy prevailed.

In September, 1792, the president issued his proclamation against

unlawful combinations, and legal measures were adopted against such as

refused to pay the tax imposed, and also against the rioters. But

these measures were of no practical effect. The president's message

was disregarded, and the violence and extent of the combination

utterly prevented any enforcement of the law. The house of the

collector of Fayette and Westmoreland, was, in November, 1793, entered

at night by an armed party, and the officer forced, at the peril of

his life, to surrender his commission and books.

After many fruitless efforts to appease the malcontents, the government

decided that its officers should be protected, and the law, at all

hazards, be sustained. Accordingly, in July, a number of writs were

issued, and the marshal dispatched to serve them. In the performance of

this duty in Allegany county, he was fired upon. The following day, the

house of the inspector, General Neville, in the neighborhood of

Pittsburg, was assaulted--but the rioters were repulsed. On the 17th,

the attack was renewed, and, though defended by a detachment from the

garrison at Pittsburg, it was taken and burned. The marshal and

inspector were obliged to flee for their lives. The effect of this

transaction was electrical. The whole of western Pennsylvania was in a

blaze. All order was at an end. All law was prostrate.

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