sought out Jefferson, whose influence over the
Congressmen from Virginia was very considerable, and laid the project
before him. With a readiness which he afterward regretted, Jefferson
fell in with the scheme, and invited Hamilton and certain Virginia
Representatives to dine at his table. In this comfortable fashion, over
their wine, these gentlemen reached an amicable agreement. Such is
Jefferson's account, but the matter could not have been quite so simple,
for other Representatives than those from Virginia changed their votes
and so contributed to the final settlement of the controversy. Nor is
Jefferson quite ingenuous when he afterward described himself as duped
by Hamilton, for he had not shown himself averse to assumption at any
time. Be this as it may, Congress voted to assume the debts of the
States, and to remove the seat of government from Philadelphia after ten
years to a district ten miles square on the Potomac, which Washington
was to select.

The need of further revenue was now imperative. As Hamilton said in his
second report on the public credit, the duties on imported articles had
reached a point which might not be exceeded "without contravening the
sense of the body of the merchants." When Congress met for its third
session in December, 1790, Hamilton boldly urged what was perhaps as
unpopular a tax as he could have proposed--a duty on distilled spirits.
To most Americans an excise was not only an internal tax, but as
Jefferson said, "an infernal one." It was bound to fall with heavy
weight upon the people of the interior who turned much of their corn and
rye into whiskey, for more convenient transportation over the mountains
to Eastern markets. But despite strenuous opposition the excise was
voted. It was, as a member of Congress expressed it, like "drinking down
the national debt."

In this same report of December 13, 1790, Hamilton advocated the
establishment of a national bank. Such an institution, he believed,
would increase the amount of active capital in the country and at the
same time serve the Government as a fiscal agent in obtaining loans and
in collecting taxes. Opposition to this project gathered rapidly and was
encouraged by the Secretary of State. The debates in Congress touched
upon the monopolistic tendency of such a banking institution and its
constitutionality, rather than upon its intrinsic merits and demerits.
The bill was carried by substantial majorities in February, 1791, a