the said Bank bills of exchange in favor of the directors thereof, on the ministers of these United States in Europe, or any of them, and in such sums as shall be thought convenient, but not to exceed, in the whole, £150,000 sterling; that the said bills are to be considered not only as a support of the credit of the said Bank, but as an indemnity to the subscribers for all deficiencies, losses, and expenses which they may sustain on account of their said engagements, and which shall not, within six months from the date thereof, be made good to them out of the public treasury."

So valuable was the aid furnished by the "Bank," that Mr. Morris determined to secure for it a legal organization, and applied to Congress therefor. The application was referred to a committee, consisting of Messrs. Clymer, Smith, Sullivan, and Witherspoon, who reported favorably thereon; and Congress, on the 26th of May, 1781, resolved that:

"Congress do approve of the plan for establishing a National Bank, in these United States, submitted to their consideration by

1 "One of the first acts of the Superintendent of Finance was to propose the plan of a Bank, which was incorporated by Congress under the name of the Bank of North America. Mr. Gouverneur Morris says, in a letter to a friend, written not long before his death, 'The first Bank in this country was planned by your humble servant.' By this he probably meant that he drew up the plan of the Bank, and the observations accompanying it, which were presented to Congress, and not that he, individually, originated the scheme. This was doubtless matured in conjunction with the superintendent. A warm friendship had subsisted between them for some time, which, it may be presumed, was increased by a similarity in their turn of mind for financial pursuits. To Hamilton, also, may properly be ascribed a portion of the merit in forming this Bank. About two weeks before the plan was sent to Congress, Hamilton wrote a letter to Robert Morris, enclosing an elaborate project for a Bank. In a letter acknowledging the reception of this paper, the financier speaks of it with commendation. He says, 'I have read your performance with that attention which it justly deserves; and, finding many parts of it to coincide with my own opinions on the subject, it naturally strengthened that confidence which every man ought to possess, to a certain degree, in his own judgment.' He then tells him that he shall communicate it to the Directors of the Bank, to aid them in their deliberation on certain points, which it was not thought expedient to embrace in the plan itself, — particularly that of interweaving a security with the capital.

"This Bank had an extraordinary effect in restoring public and private credit in the country, and was of immense utility in aiding the future operations of the financier, although it was begun with the small capital of $400,000. Hamilton's project contemplated a vastly larger sum, in which Mr. Morris agreed with him: but its immediate success on so large a scale was doubtful, and, if it failed in the outset, it could not be revived; whereas, by beginning with a small capital, and establishing a credit with the public gradually, it would be easy afterwards to increase the amount, and, in the end, all needful advantages might be derived, to the utmost extent of banking facilities."- Sparks' Life of Gouverneur Morris, vol. i. p. 325.

R. Morris, on the 17th May, 1781; and that they will promote and support the same, by such ways and means from time to time as may appear necessary for the institution, and consistent with the public good.

"That the subscribers to the said Bank shall be incorporated; agreeably to the principles and terms of the plan, under the name of the President, Directors, and Company of the Bank of North America,' so soon as the subscription shall be filled, the Directors and President chosen, and application for that purpose made to Congress by the President and Directors elected.""

The plan of organization having been matured, Congress, on the 31st of December, 1781, granted to the association an Act incorporating them under the name of the "Bank of North America." The Act conferred the usual and proper powers, and named the first Board of Directors and their President. It provided that the share capital might equal $10,000,000. The amount, however, with which the bank was to begin operations was fixed at $100,000. Of this sum, Congress agreed to subscribe $250,000. It, however, found itself able to pay in but $50,000. The citizens of Philadelphia subscribed $85,000. The balance, $265,000, was furnished from abroad,— chiefly from Holland. The Bank opened its doors for business on the 7th of January, 1782. Accompanying the Act of Incorporation was a resolution of Congress recommending to the State Legislatures to pass such laws as might be necessary to give effect to its Act. Such recommendation, and its adoption by most, if not all the States, affords a striking illustration of the idea which prevailed as to the limited powers and functions of the Central Government. Its constituents were the States, not the people; and for every Act of the kind it was deemed necessary to ask their concurrence, in order to give it the force and validity of a law of the land.1

The Act incorporating the Bank was an event of first-rate importance in the history of the country. It was the first adequate attempt of the kind to symbolize its merchandise, so

1 Much valuable information for this account of the paper money of the Revolution has been obtained from Mr. Henry Phillips' "Historical Sketches. of American Paper Money." In addition to this, he has published several sketches in relation to the paper currencies of the different States. They are all painstaking and creditable works, and contrast most favorably with the loose and slipshod manner in which books upon this and kindred subjects are usually made in this country.

that it could be made available, and transferred from hand to hand, without the interposition of coin. As proof of what was gained, the Bank, within six months after its organization, loaned $400,000 to Congress, and $80,000 to the State of Pennsylvania. What Congress chiefly wanted was food and clothing for the army. Had it been possessed of coin, it would have expended it in their purchase. If such articles could be had by means of the notes of the Bank, these were equally serviceable with coin. All that a person possessed of merchandise, and who wished to render it available to government, had to do, was to lend to the latter the proceeds of the discount of the bills taken in its sale. These would be returned to the Bank in payment of the bills discounted. The operation would be the same as that which has been so often described. In this way, the means of a government may be increased in ratio to the whole amount of those of its people, not absolutely necessary to their subsistence. In order to avail itself of such merchandise it need not be possessed of a dollar in coin. All the coin necessary for a Bank to maintain would be that required to make good its losses. With coin to the amount of $100,000, it may safely put in circulation notes equalling ten times that amount. In no other way than by the use of Banks has it been found possible to supply, on a sufficient scale, adequate instruments of distribution in the place of coin, which, so long as they serve as such, may be properly termed "money." The difference to a country, therefore, between a symbolic currency and the lack of it, may be a difference in its available means, equal, or nearly equal, to the whole amount of its merchandise proper to be symbolized. Added to the positive gain is that resulting from the greater convenience of the use of a currency of symbols over one of coin.

No sooner was peace established, and the people relieved from the pressure of a necessity which, while it lasted, gave to the country a semblance at least of unity, than Congress lost even the little respect and authority it had once enjoyed. With peace came duties graver and more difficult to discharge than those imposed by the war. Provision was to be made for carrying out the treaty with Great Britain, for opening relations with other powers, establishing internal order, and adjusting, and if possible discharging, the enormous debts that

had been contracted. The terms of the treaty were not carried out: internal order was disturbed: no adequate provision was made for the discharge of interest on the domestic or foreign loans. Local jealousies and rivalries began to manifest themselves on every hand. The revenues, if any were to be raised, were to come from imposts on foreign merchandise. Each State sought to increase its own importance by regulations which should attract the commerce of the country to its own ports. In place of being united against a common enemy, each State threatened to become the enemy of all others. All that had been won with so much blood and treasure seemed in danger of being wholly lost. The condition of things is well described in a letter from General Washington to Mr. Jay, under date of Aug. 1, 1786:

"Your sentiments, that our affairs are drawing rapidly to a crisis, accord with my own. What the event will be is also beyond the reach of my foresight. We have errors to correct. We have probably had too good an opinion of human nature in forming our confederation. Experience has taught us that men will not adopt and carry into execution measures the best calculated for their own good, without the intervention of a coercive power. I do not conceive we can exist long as a nation without having lodged somewhere a power that will pervade the whole Union in as energetic a manner as the authority of the State governments extends over the several States. To be fearful of investing Congress, constituted as that body is, with ample authorities for national purposes, appears to me the very climax of popular absurdity and madness. Could Congress exert them for the detriment of the public, without injuring themselves in an equal or greater proportion? Are not their interests inseparably connected with those of their constituents? By the rotation of appointment, must they not mingle frequently with the mass of citizens? Is it not rather to be apprehended, if they were possessed of the powers before described, that the individual members would be induced to use them, on many occasions, very timidly and inefficaciously, for fear of losing their popularity and future election? We must take human nature as we find it. Perfection falls not to the share of mortals. Many are of opinion that Congress have too frequently made use of the humble, suppliant, tone of requisition in applications to the States, when they had a right to assert their imperial dignity and command obedience. Be that as it may, requisitions are a perfect nullity where thirteen sovereign, independent, disunited States are in the habit of discussing and refusing compliance with them, at their option. Requisitions are actually little better than a jest and a byword through the land. If you tell the legislatures they have violated the treaty of peace, and invaded the prerogatives of the confederacy, they will laugh in

your face. What, then, is to be done? Things cannot go on in the same train for ever. It is much to be feared, as you observe, that the better kind of people, being disgusted with the circumstances, will have their minds prepared for any revolution whatever. We are apt to run from one extreme to another. To anticipate and prevent disastrous contingencies would be the part of wisdom and patriotism.

"What astonishing changes a few years are capable of producing! I am told, that even respectable characters speak of a monarchical form of government without horror. From thinking proceeds speaking; thence to acting is but a single step,- but irrevocable and tremendous! What a triumph for the advocates of despotism, to find that we are incapable of governing ourselves, and that systems founded on the basis of equal liberty are merely ideal and fallacious! Would to God that wise measures may be taken in time to avert the consequences we have but too much reason to apprehend! "1

From the condition of anarchy so graphically and feelingly described, the nation was rescued by the genius and patriotism of Washington, Hamilton, Madison, Franklin, Jay, and a few other exalted natures, in the formation of the Federal Government. This was a task far more formidable and difficult than the severance of the political relations which had bound the colonists to the mother country. That was one which might have been accomplished, had the people been wholly incapable of political organization and subjection to one common rule. The Mexican and South American colonies were able to defy the utmost power of Spain. Acquiring political independence, they have never been able to establish social order, or to form themselves into any thing deserving the name of a State.

There can be no doubt that the Constitution of the United States was a conception far in advance of the ideas and sentiments prevailing at the time of its adoption, and that it was carried by personal influence, rather than from any wellgrounded conviction of the people in its favor. All had implicit faith in the great chieftain who had brought the war to a triumphant conclusion, and whose moral and civic qualities, displayed during its prosecution, had excited still greater admiration than his military achievements. If he would again lead, the people would again commit their cause and their welfare wholly to his keeping. But for his transcendent influence the adoption of the Constitution, which he contributed so largely

1 Life and Writings of Washington, vol. vi. p. 187.