n of the union if the bill was defeated. To this dispute was
added an equally bitter quarrel over the location of the national
capital, then temporarily at New York City.

[Illustration: FIRST UNITED STATES BANK AT PHILADELPHIA]

A deadlock, accompanied by the most surly feelings on both sides,
threatened the very existence of the young government. Washington and
Hamilton were thoroughly alarmed. Hearing of the extremity to which the
contest had been carried and acting on the appeal from the Secretary of
the Treasury, Jefferson intervened at this point. By skillful management
at a good dinner he brought the opposing leaders together; and thus once
more, as on many other occasions, peace was purchased and the union
saved by compromise. The bargain this time consisted of an exchange of
votes for assumption in return for votes for the capital. Enough
Southern members voted for assumption to pass the bill, and a majority
was mustered in favor of building the capital on the banks of the
Potomac, after locating it for a ten-year period at Philadelphia to
satisfy Pennsylvania members.

=The United States Bank.=--Encouraged by the success of his funding and
assumption measures, Hamilton laid before Congress a project for a great
United States Bank. He proposed that a private corporation be chartered
by Congress, authorized to raise a capital stock of $10,000,000
(three-fourths in new six per cent federal bonds and one-fourth in
specie) and empowered to issue paper currency under proper safeguards.
Many advantages, Hamilton contended, would accrue to the government from
this institution. The price of the government bonds would be increased,
thus enhancing public credit. A national currency would be created of
uniform value from one end of the land to the other. The branches of the
bank in various cities would make easy the exchange of funds so vital to
commercial transactions on a national scale. Finally, through the issue
of bank notes, the money capital available for agriculture and industry
would be increased, thus stimulating business enterprise. Jefferson
hotly attacked the bank on the ground that Congress had no power
whatever under the Constitution to charter such a private corporation.
Hamilton defended it with great cogency. Washington, after weighing all
opinions, decided in favor of the proposal. In 1791 the bill
establishing the first United States Bank for a period of twenty years
became a law.

=The Protective