410

SALARIES OF OFFICERS.

[CHAP. V.

those sentiments which have since received the general sanction of the nation.

A majority of all parties, influenced by the poverty of the treasury, and the moderate rate of expense then prevalent in the country, agreed on a modest civil list, according to which, the compensation to the President was twenty-five thousand dollars; to the Vice-President, five thousand dollars; to the Chief Justice, four thousand dollars; the other Judges, three thousand five hundred dollars; to the Secretaries of State and of the Treasury, three thousand five hundred dollars each; to the Secretary of War, three thousand dollars; to the AttorneyGeneral, one thousand five hundred dollars; to the district Judges, from eight hundred to one thousand five hundred dollars.

Besides the deviations from subsequent practice that have been mentioned, the President personally attended in the Senate when he wished the advice of that body on the subject of treaties. But the impropriety of this practice, which now seems so obvious to all, was soon perceived, and it was discontinued after the first session.

It was near the close of the session, before the President sent in his nominations of his cabinet to the Senate. The first was that of Alexander Hamilton, as Secretary of the Treasury.

The talents and virtues of this gentleman had been long known to General Washington, whose aid-de-camp Hamilton had been; and though he had, in the convention, expressed a dislike almost contemptuous to the new Constitution, he had amply redeemed himself with its friends by his able vindication of it in the letters of Publius; and he seemed determined to give it a fair and candid trial. It is probable that, for the same reason it was so much an object of jealousy with many, it was

1789.]

WASHINGTON'S CABINET.

411

recommended to his favor; they regarding it as dangerously encroaching on the sovereignty of the States, and he as imposing on them salutary checks.

General Knox, of Massachusetts, who had been a brother soldier of the Revolution, and who was known to be a discreet man, with business habits, was appointed Secretary of War.

The office of Secretary of State was bestowed on Mr. Jefferson, then Minister to France. His talents as a legislator and statesman had been well proved in the old Congress, both in 1776, when he drafted the Declaration of Independence, and yet more eight years later, when he exhibited, in numerous reports, an industry and ability that had no equal in that body.

To Mr. Edmund Randolph was given the office of Attorney-General. He had presented to the convention that scheme of government which was the basis of the new Constitution; and although dissatisfied with some of its provisions, he was one of the three members who refused to sign it; but he compensated for his course on that occasion, by becoming one of the active supporters of the Constitution in the Virginia convention. Gifted with a very pleasing exterior and manners, and a ready elocution, he was extremely popular in Virginia, and had thus been made Governor of the State at an earlier period of life than is usual.

Mr. Jay was nominated as Chief Justice; and James Wilson of Pennsylvania, John Rutledge of South Carolina, William Cushing of Massachusetts, Robert Harrison of Maryland, and John Blair of Virginia, as Associate Justices: all which nominations as well as those to inferior offices, were confirmed by the Senate: and the government being thus put into active operation, and a revenue sufficient for the more pressing wants of the

412

PRESIDENT'S SPEECH.

[CHAP. V.

government provided, Congress adjourned, on the twentyninth of September, to the first Monday of January, 1790.

In November, the new Constitution received the unqualified ratification of the State of North Carolina.

Congress had been adjourned to meet on the fourth of January (the first Monday), but it was the seventh before a quorum was formed. On the next day the President, from the chair of the Vice-President, addressed both Houses of Congress assembled in the Senate Chamber. The subjects recommended to their notice were: the organizing, arming, and disciplining the militia; and the encouragement of such manufactures as were essential for national defence. The western frontier, too, required protection from the threatened hostilities of Indians; a provision for a diplomatic intercourse with foreign nations; a general naturalization law; a uniform currency; the regulation of weights and measures; the advancement of agriculture, commerce, and manufactures, by all proper means; the encouragement of useful inventions; and a due attention to the post-office, were also recommended. The advantages of knowledge, especially to a free people, were dwelt upon; and whether it would be best promoted by affording aid to seminaries of learning already established, or by a national university, or by other expedients, he submits to the deliberations of the Legislature. Strong terms of approbation were used concerning the purpose manifested by the House of Representatives at the preceding session, of supporting the public credit.

}

The answers of both Houses to this address, being adopted without opposition, except in some slight verbal amendments, indicated entire harmony between the Executive and the members of the Legislature.

1790.]

PUBLIC FINANCES.

413

A letter from the Secretary of the Treasury stated that, in obedience to the resolution of the House, he had prepared a plan for the support of public credit, which he was ready to submit; and after some discussion whether the Secretary should make his report in writing, or in person, in answer to such inquiries as should be made of him, it was decided that it should be in writing.

In this report Mr. Hamilton, with great clearness and force, maintained that policy, as well as moral obligation, required the United States to preserve faith with the public creditors, and the rather, as the debt incurred by the American people was the price of their liberty and independence.

While all were agreed that the foreign debt should be provided for according to the terms of the contract, there was a difference of opinion as to the domestic debt, on two points. One was, whether there ought to be a discrimination between the original holders of the public securities and the present possessors by purchase. The other was, whether there should be any difference made between the creditors of the Union, and the creditors of the individual States.

The Secretary discussed both questions with his wonted ability, and was opposed to any discrimination in either case. He stated the public debt to be about seventy-nine millions of dollars, to wit: due to foreigners, near twelve millions; domestic debt due by the United States, fortytwo millions; and due from the States, twenty-five millions; the interest on which, at six per cent., was four and a half millions.

This sum, in addition to the ordinary expenses of the government, would be beyond the resources of the United States without an extension of taxation, which the interests of the creditors forbade. Exigencies may, more

414

FUNDING OF THE DEBT.

[CHAP. V. over, arise which would still further endanger those interests.

He therefore proposed a reduction of the annual interest on the debt, on giving to the creditors an equivalent. That equivalent he thus explained. He assumed that, from the low rate of interest in Europe, and the funding of the debt in this country, interest would soon fall here to five per cent., and in twenty years to four cent. Of this fall the United States might readily avail themselves; but by stipulating not to profit by it for a certain term, the advantage would accrue to the creditor by the rise in the value of his stock.

In accordance with these views, he then proposed that a loan should be made to the United States to the amount of the whole public debt, on various alternative conditions presented to the choice of the subscribers to the loan. These were:

First. For every hundred dollars subscribed, payable in the evidence of the public debt, interest as well as principal, the subscriber should be entitled to have twothirds funded at a yearly interest of six per cent., redeemable at the pleasure of the government, and to receive the other third in western lands at their actual value.

Second. To have the whole sum funded at four per cent., irredeemable by any payment exceeding five dollars a year (on account of both principal and interest), and to receive, as a compensation for the reduction of interest, fifteen dollars and eighty cents, payable in bonds.

Third. To have two-thirds funded at a yearly interest of six per cent, irredeemable by any payment exceeding four dollars and two-thirds per annum (for principal and interest), and to have, at the end of ten years, twenty-six dollars and eighty-eight cents funded on the same terms.