where 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