original creditor or bearer. On these terms they had been sold, and the sellers had relinquished all their claims to the purchasers for what was deemed an equivalent. When the transfers were made, it was understood by both parties to be on this principle, and the purchaser took the risk of eventual payment. It was clear, also, that it would be impossible to make the discrimination, except to a limited extent and in a partial manner, since the numerous transfers of the original creditors could not be ascertained and examined; and even at best no provision was offered for the losses of the intermediate holders by the gradual depreciation. After a long debate in the House of Representatives, this scheme was rejected.

Next came up the State debts; and the proposition to assume them created still greater divisions and heats in Congress, and much excitement abroad. It brought into action all the local prejudices and high-toned doctrines of State rights and State sovereignty, which had been so heavy a stumblingblock in the way of union and concord from the beginning of the Revolution. The debts of the respective States were very unequal in amount. This led to an investigation of the services rendered by each, and to invidious comparisons. The project was opposed as unconstitutional and unjust. Congress, it was said, had no power to take this burden. upon the nation. Such an assumption of power was moreover an encroachment upon the sovereignty of the States, tending to diminish their importance, and lead to a consolidation destructive of the republican system. Each State was responsible for the debts it had contracted, and there was no reason for taxing the States, which owed little, to pay a portion of the large debt of others.

It was argued in reply, that, as the expenditures had

all been for the common cause of the nation, they came strictly within the legitimate control of Congress; and also, as the constitution had transferred to the national legislature the entire power of raising funds from duties on imports and the sales of public lands, the principal sources of revenue, it was just that the debts should be paid out of these funds. The States could pay them only by excise duties, or direct taxes, which would be odious to the people and difficult to collect. In any event there must be long delays, and much uncertainty as to the result. The creditors had a right to claim more prompt payment, and better security from the nation.

At last the secretary's plan for funding all the domestic debts was carried by a small majority in both houses of Congress. In regard to the State debts, however, the original proposition was modified. The specific sum of twenty-one millions and a half of dollars was assumed, and apportioned among the States in a proximate ratio to the amount of the debts of each. An act was passed by which the whole of the domestic debt became a loan to the nation. It was made redeemable at various times, and at various rates of interest.

One of the principal arguments for funding the debt, in addition to that of its equity, was the advantage that would be derived from it as an active capital for immediate use. Sustained by the credit of the nation, bearing interest and redeemable at certain times, the paper securities of the government would have a permanent value in the market, and thus be a spur to enterprise, and increase the prosperity of the country in its agriculture, manufactures, and commerce. All that was anticipated from the funding system, in these respects, was realized. Politically considered, however, it had an unhappy influence. It widened the breach of parties, produced irritations, and excited animosities. Nor

was it to be expected that the adversaries of the plan, and these a large minority, would readily change their opinion after the strenuous opposition they had shown, or cease from their hostility. The President expressed no sentiments on the subject while it was under debate in Congress, but he approved the act for funding the public debt, and was undoubtedly, from conviction, a decided friend to the measure.

Another important point, upon which Congress under the old Confederation had been for a long time divided, was settled in the course of this session. Local interests, and other considerations, made it difficult to agree on the place for the permanent seat of government. It was at length determined, that it should be removed for ten years to Philadelphia, and then be established at some place on the Potomac River. Ultimately the position was selected, which has since been called the District of Columbia; and the territory was surveyed, the city planned, and the public buildings commenced, under the direction of Washington, this duty devolving on him as President. For three or four years it occupied a great deal of his attention; and, in compliance with the laws, he appointed commissioners for managing the business, with whom he carried on a voluminous correspondence, giving personal directions, and requiring exact accounts of all proceedings.

Rhode Island having adopted the constitution, and acceded to the Union, the President made a visit to that State immediately after the session of Congress. In his eastern tour he had avoided going to Rhode Island, because it had not then joined the Union under the new government.

Another severe disease, and constant application to business, had much impaired his health; and he determined to take advantage of the recess of Congress,

throw off for a brief space the burden of public cares, and seek repose and recreation in his own quiet home at Mount Vernon. He always returned to that spot with delight; and it was now doubly dear to him, as it promised rest from labor, refreshment to his weary spirit and debilitated body, and a few days of leisure to ride over his farms, view his gardens, orchards, and fields, and observe the progress of his agricultural operations.

The foreign relations of the United States, at the beginning of the new government, though not complicated, were nevertheless in an unsettled condition. With France there was a good understanding, the treaties of alliance and commerce having been scrupulously fulfilled on both sides. The revolutionary disorders, however, soon broke out, and produced disagreements, alienation, and trouble.

With Morocco a sort of informal treaty existed, and Washington wrote two letters to the Emperor, who had received American vessels into his ports, and promised his aid to conciliate the Barbary powers. This promise was unavailing. The Algerines had seized vessels belonging to citizens of the United States, and held the officers and sailors in bondage for several years.

The government stood in a more delicate relation to England, than to any other power. The old feuds and bitter feelings of the war subsided slowly. All attempts to bring about a treaty of commerce between the two countries had failed. The British cabinet, probably distrusting the stability of the Union under the old Confederation, had shown no disposition to enter into a treaty of this sort, and had never sent a minister to the United States. The military posts on the frontiers had not been given up, as was stipulated in the treaty of peace. The reason assigned, that some 59

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of the States had refused to pay the debts due to British subjects, which they were likewise bound to do by the treaty, was plausible, and perhaps well founded. Congress had but a limited power to enforce a compliance with treaties; and it was natural in such a case, that other nations should be tardy in making them. This state of things being altered by the constitution, President Washington thought it desirable to ascertain the views and intentions of the British government, in regard to complying with the treaty of peace, and to future intercourse. To attain this end he commissioned Gouverneur Morris as a private agent to hold conversations with the British ministers, deeming it of great importance, as he said, that errors should be avoided in the system of policy respecting Great Britain.

Affairs with Spain were yet more unpromising. At the outset of the Revolution, his Catholic Majesty, yielding to the solicitations of France, seemed to abet the American cause; but he soon changed his mind, refused to join with France in acknowledging the independence of the United States, even when he declared war against England, and gave his sanction to the treaty of peace with no good will. He feared the effect, and not without reason, which the example of the northern republicans might have upon his colonies in South America. A negotiation had been going on, tedious as it was unprofitable, down to the time of Washington's election to the Presidency, but no apparent progress had been made. The Floridas and Louisiana belonged to Spain. The navigation of the Mississippi was the great point of controversy. This was essential to the settlers in the West, and was becoming every day more and more so on account of the rapid increase of the population. Spain persisted in withholding all rights and privileges in that navigation from citizens of the