e.
Moreover, two communities had not yet "thrown themselves into the bosom
of the Confederacy." The wisdom of this course was attested by the
prompt ratification of ten of the twelve proposed amendments.

On November 21, 1789, North Carolina ratified the Constitution, leaving
Rhode Island to a position of hazardous isolation. Congress was
considering a bill to cut off the commercial privileges of the State, by
putting her on the footing of a foreign nation, when news came that a
convention at Newport had ratified the Constitution by the narrow margin
of two votes. In the following year the number of States was increased
by the admission of Vermont. The admission of Kentucky followed in 1792;
and Congress paved the way for the entrance of other States into the
Union by organizing the Southwest Territory out of Western lands ceded
by the three southernmost States. The expansion of the United States had
begun, bringing with it unforeseen problems.

The severest labors of Congress began in the second session, when the
new Secretary of the Treasury presented his first report on public
credit. Shortly after the Convention of 1787, Hamilton had expressed his
belief that one of the great dangers which threatened American society
was "the depredations which the democratic spirit is apt to make on
property." Distrusting the political capacity of the people, whom in
private he called "a great beast," he believed that the new Government
would succeed or fail in just the proportion that it enlisted the
support of the influential and wealthy classes. He set himself
deliberately to the task of identifying the interests of the propertied
classes with those of the Government.

It was a sorry state in which Hamilton found the national finances. The
foreign debt, including principal and arrears of interest, amounted to
$11,710,000. The domestic debt, much more difficult to determine, was
not less than $42,414,000, about one third of which was made up of
arrears of interest. The debts of the individual States, principal and
interest, were estimated at about $25,000,000. These were heavy burdens
for the shoulders of a young Government whose fiscal powers were as yet
untested. But the shoulders had to be fitted to the burden, if public
credit was to be restored.

In this first report on public credit, January 9, 1790, Hamilton
analyzed the financial situation with masterly clearness and set forth
his plans for the adjustment of the natio