reefs, and the shaky government of the confederation had there gone to pieces.  The country, as a political organism, was bankrupt.  It owed sums of money, which were vast in amount for those days, both at home and abroad, and it could not pay these debts, nor was there any provision for them.  All interest was in arrears, there were no means provided for meeting it, and the national credit everywhere was dishonored and gone.  The continental currency had disappeared, and the circulating medium was represented by a confused jumble of foreign coins and worthless scrip.  Many of the States were up to their eyes in schemes of inflation, paper money, and repudiation.  There was no money in the treasury to pay the ordinary charges of government; there was no revenue and no policy for raising one, or for funding the debt.  This picture is darkly drawn, but it is not exaggerated.  That high spirit of public honor, which seventy-five years later rose above the ravages of war and the temptings of dishonesty to pay the debt and the interest, dollar for dollar in gold, seemed in 1789 to be wellnigh extinct.  But it was not dead.  It was confused and overclouded in the minds of the people, but it was still there, and it was strong, clear, and determined in Washington and those who followed him.

Congress grappled with the financial difficulties in the most courageous and honest way, but it struggled with them rather helplessly despite its good disposition.  It could lay taxes in one way or another so as to get money, but this was plainly insufficient.  It could not formulate a coherent policy, which was the one essential thing, nor could it settle the thousand and one perplexing questions which hedged the subject on every side.  The members turned, therefore, with a sigh of relief to the new Secretary of the Treasury, asked him the questions which were troubling them, and having directed him to make various reports, adjourned.

The result is well known.  The great statesman to whom the task was confided assumed it with the boldness and ease of conscious power, and when Congress reassembled it listened to the first report on the public credit.  In that great state paper all the confusions disappeared, and in terse sentences an entire scheme for funding the debt, disposing of the worthless currency, and raising the necessary revenue came out clear and distinct, so that all men could comprehend it.  The provision for the foreign debt passed without resistance.  That for the domestic debt excited much debate, and also passed.  Last came the assumption of the state debts, and over that there sprang up a fierce struggle.  It was carried by a narrow majority, and then defeated by the votes of the North Carolina members, who had just taken their seats.  Washington strongly favored this hotly contested measure.  He defended it in a letter to David Stuart, and again to Jefferson, at a later time, when that statesman was trying to undermine Hamilton by wailing about a “corrupt squadron” in Congress.