n's plan for a United States bank. _McMaster_, 201]

[Sidenote: Jefferson's argument against it.]

[Sidenote: The bank established.]

206. The First Bank of the United States.--Two parts of Hamilton's
plan were now adopted. To the third part of his scheme there was even
more opposition. This was the establishment of a great Bank of the
United States. The government in 1790 had no place in which to keep its
money. Instead of establishing government treasuries, Hamilton wanted a
great national bank, controlled by the government. This bank could
establish branches in important cities. The government's money could be
deposited at any of these branches and could be paid out by checks sent
from the Treasury. Furthermore, people could buy a part of the stock of
the bank with the new bonds of the United States. This would make people
more eager to own the bonds, and so would increase their price. For all
these reasons Hamilton thought the bank would be very useful, and
therefore "necessary and proper" for the carrying out of the powers
given by the Constitution to the national government. Jefferson,
however, thought that the words "necessary and proper" meant necessary
and not useful. The bank was not necessary according to the ordinary use
of the word. Congress therefore had no business to establish it. After
thinking the matter over, Washington signed the bill and it became a
law. But Jefferson had sounded the alarm. Many persons agreed with him,
many others agreed with Hamilton. Two great political parties were
formed and began the contest for power that has been going on
ever since.

CHAPTER 20

RISE OF POLITICAL PARTIES

[Sidenote: Formation of the Federalist party. _McMaster_, 202.]

207. The Federalists.--There were no political parties in the
United States in 1789. All the leading men were anxious to give the new
Constitution a fair trial. Even Patrick Henry supported Washington. Many
men, as Alexander Hamilton and Gouverneur Morris, believed a monarchy to
be the best form of government. But they saw clearly that the American
people would not permit a monarchy to be established. So they supported
the Constitution although they thought that it was "a frail and
worthless fabric." But they wished to establish the strongest possible
government that could be established under the Constitution. This they
could do by defining in the broadest way the doubtful words in the
Constitution as Hamilton had done in the