The Life of John Marshall (Volume 2 of 4). Beveridge Albert Jeremiah

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amendments were used by many, who changed from advocates to opponents of broad National powers, as a pretext for reversed views and conduct; but such as were actually adopted were not a sufficient justification for their action.148

      The great question, however, with which the First Congress had to deal, was the vexed and vital problem of finance. It was the heart of the whole constitutional movement.149 Without a solution of it the National Government was, at best, a doubtful experiment. The public debt was a chaos of variegated obligations, including the foreign and domestic debts contracted by the Confederation, the debts of the various States, the heavy accumulation of interest on all.150 Public and private credit, which had risen when the Constitution finally became an accomplished fact, was now declining with capital's frail timidity of the uncertain.

      In his "First Report on the Public Credit," Hamilton showed the way out of this maddening jungle. Pay the foreign debt, said Hamilton, assume as a National obligation the debts of the States and fund them, together with those of the Confederation. All had been contracted for a common purpose in a common cause; all were "the price of liberty." Let the owners of certificates, both State and Continental, be paid in full with arrears of interest, without discrimination between original holders and those who had purchased from them. And let this be done by exchanging for the old certificates those of the new National Government bearing interest and transferable. These latter then would pass as specie;151 the country would be supplied with a great volume of sound money, so badly needed,152 and the debt be in the process of extinguishment.153

      Hamilton's entire financial system was assailed with fury both in Congress and among the people. The funding plan, said its opponents, was a stock-jobbing scheme, the bank a speculator's contrivance, the National Assumption of State debts a dishonest trick. The whole was a plot designed to array the moneyed interests in support of the National Government.154 Assumption of State debts was a device to increase the National power and influence and to lessen still more the strength and importance of the States.155 The speculators, who had bought the depreciated certificates of the needy, would be enriched from the substance of the whole people.

      Without avail had Hamilton answered every objection in advance; the careful explanations in Congress of his financial measures went for naught; the materials for popular agitation against the National Government were too precious to be neglected by its foes.156 "The first regular and systematic opposition to the principles on which the affairs of the union were administered," writes Marshall, "originated in the measures which were founded on it [the "First Report on the Public Credit"]."157

      The Assumption of State debts was the strategic point of attack, especially for the Virginia politicians; and upon Assumption, therefore, they wisely concentrated their forces. Nor were they without plausible ground of opposition; for Virginia, having given as much to the common cause as any State and more than most of her sisters, and having suffered greatly, had by the sale of her public lands paid off more of her debt than had any of the rest of them.

      It seemed, therefore, unjust to Virginians to put their State on a parity with those Commonwealths who had been less prompt. On the other hand, the certificates of debt, State and Continental, had accumulated in the North and East;158 and these sections were determined that the debt should be assumed by the Nation.159 So the debate in Congress was heated and prolonged, the decision doubtful. On various amendments, sometimes one side and sometimes the other prevailed, often by a single vote.160

      At the same time the question of the permanent location of the National Capital arose.161 On these two subjects Congress was deadlocked. Both were disposed of finally by the famous deal between Jefferson and Hamilton, by which the latter agreed to get enough votes to establish the Capital on the Potomac and the former enough votes to pass the Assumption Bill.

      Washington had made Jefferson his Secretary of State purely on merit. For similar reasons of efficiency Hamilton had been appointed Secretary of the Treasury, after Robert Morris, Washington's first choice, had declined that office.

      At Jefferson's dinner table, the two Secretaries discussed the predicament and made the bargain. Thereupon, Jefferson, with all the zeal of his ardent temperament, threw himself into the contest to pass Hamilton's financial measure; and not only secured the necessary votes to make Assumption a law, but wrote letters broadcast in support of it.

      "Congress has been long embarrassed," he advised Monroe, "by two of the most irritating questions that ever can be raised, … the funding the public debt and … the fixing on a more central residence… Unless they can be reconciled by some plan of compromise, there will be no funding bill agreed to, our credit … will burst and vanish and the states separate to take care every one of itself." Jefferson outlines the bargain for fixing the Capital and assuming the debts, and concludes: "If this plan of compromise does not take place, I fear one infinitely worse."162 To John Harvie he writes: "With respect to Virginia the measure is … divested of … injustice."163

      Jefferson delivered three Southern votes to pass the bill for Assumption of the State debts, and Hamilton got enough Northern votes to locate the National Capital permanently where it now stands.164 Thus this vital part of Hamilton's comprehensive financial plan was squeezed through Congress by only two votes.165 But Virginia was not appeased and remained the center of the opposition.166

      Business at once improved. "The sudden increase of monied capital," writes Marshall, "invigorated commerce, and gave a new stimulus to agriculture."167 But the "immense wealth which individuals acquired" by the instantaneous rise in the value of the certificates of debt caused popular jealousy and discontent. The debt was looked upon, not as the funding of obligations incurred in our War for Independence, but as a scheme newly hatched to strengthen the National Government by "the creation of a monied interest … subservient to its will."168

      The Virginia Legislature, of which Marshall was now the foremost Nationalist member, convened soon after Assumption had become a National law. A smashing resolution, drawn by Henry,169 was proposed, asserting that Assumption "is repugnant to the constitution of the United States, as it goes to the exercise of a power not expressly granted to the general government."170 Marshall was active among and, indeed, led those who resisted to the uttermost the attack upon this thoroughly National measure of the National Government.

      Knowing that they were outnumbered in the Legislature and that the people were against Assumption, Marshall and his fellow Nationalists in the House of Delegates employed the expedient of compromise. They proposed to amend Henry's resolution by stating that Assumption would place on Virginia a "heavy debt … which never can be extinguished" so long as the debt of any other State remained unpaid; that it was "inconsistent with justice"; that it would "alienate the affections of good citizens of this Commonwealth from the government of the United States … and finally tend to produce measures extremely unfavorable to the interests of the Union."171

      Savage enough for any one, it would seem, was this amendment of the Nationalists in the Virginia Legislature; but its fangs were not sufficiently poisonous to suit the opposition. It lacked, particularly, the supreme virtue of asserting

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