President George Washington Expands the Financial System of the United States Government to the First New State

A real rarity, this is the only letter of Washington relating to this expansion of the Union that we can find in private hands

The Constitution was adopted on September 17, 1787 by a Constitutional Convention meeting in Philadelphia, PA.  George Washington was the presiding officer over the Convention, and his presence helped give gravity and legitimacy to the work and document that issued from the convention.

What followed was an arduous and often contentious process of ratification by special state conventions.  Ratification was not a forgone conclusion; there was serious criticism from the anti-federalists, who argued that it granted the national government too much power. Others complained of the lack of a Bill of Rights. In the end, the Federalists, with Alexander Hamilton playing a strong leadership role, managed to sway opinion in favor of the Constitution, arguing the power granted was reasonable and necessary, and that a Bill of Rights could be implemented as an amendment after ratification.  Hamilton, James Madison and John Jay wrote essays, now renowned as "The Federalist Papers," which successfully made the case for the new Constitution and government.

Only 9 states needed to ratify the Constitution for it to take effect, and 11 states had done so by July 1788. The U.S. government thus authorized was put in place in April 1789, when President Washington, Vice President Adams, and the Cabinet members took their oaths of office.  Among these was Alexander Hamilton, who took on the role of the highly influential Secretary of the Treasury. In this capacity, he would conceptualize, formulate and implement the country's financial system.  His program would ensure that the U.S. would have money to pay its war debts, leave states strong enough money to do the same, and supervise a system for the collection of revenue to fund the federal government via strong duties on imports that would, for the first time, function nationwide.

In 1789, Congress passed a series of measures designed to fund the new government, to collect tariffs, regulate commerce and divide the country into financial regions. On July 4, 1789, George Washington signed into law the first significant Act of the new U.S. government.  The Tariff Act of 1789 had two purposes, as stated in Section I of the Act which reads: "Whereas it is necessary for that support of government, for the discharge of the debts of the United States, and the encouragement and protection of manufactures, that duties be laid on goods, wares and merchandise:" The Federal legislature, acting under the recently ratified Constitution, authorized the collection of tariff and tonnage duties to meet the operating costs of the new central government and to provide funds to pay the interest and principal on revolutionary war debts inherited from the Continental Congress. It also provided a degree of protection. This was how the new US government was to function and be funded.  

Also signed into law that month was the Collection Bill or “An Act to Regulate the Collection of the Duties imposed by law on the tonnage of ships or vessels and on goods, wares and merchandises imported into the United States." This was the dawn of the American system of self-regulation of finance. There were others in 1789, among them acts to regulate coastal trade specifically.  All these combined would be applied only to the 11 states that had ratified the Constitution.

In November 1789, fearing less a Federal government it already saw in place, under trade disabilities for not being officially part of the United States, and with a Bill of Rights already proposed in Congress, North Carolina finally ratified the Constitution.  In January, Alexander Hamilton issued his own opinion on the ramifications: North Carolina would no longer be treated as a foreign entity, it would be a state and become part of the Federal system of the U.S. government.

When the second session of the 1st Congress opened in January 1790, its first order of business was to pass legislation applying the same U.S. revenue laws to North Carolina as existed in the rest of the states. This legislation provided "That the several and respective duties specified and laid…shall be paid and collected upon all goods, wares and merchandises, which…shall be imported into the state of North Carolina”, divided North Carolina into five tariff collection districts, determined "That the ports of Wilmington, Newbern, Washington, and Edenton, shall be the sole ports of entry within the said state of North Carolina, for ships or vessels not registered or licensed within the United States”, provided relating to these laws "That all the regulations, provisions, exceptions, allowances, compensations, directions, authorities, penalties, forfeitures, and other matters whatsoever” applying to states generally would apply to North Carolina, and "by virtue of the adoption of the Constitution of the United States”, discriminatory penalties against North Carolina were ended.

On February 8, Washington signed this Act into law, expanding the Union for the first time under the Constitution.  Having done this, he wrote to the state governors to notify them officially; among these was Samuel Huntington, Governor of Connecticut and a Signer of the Declaration of Independence.  

Letter signed, February 20, 1790, to Governor Huntington.  “Sir, I have to honor to transmit to your Excellency an Act passed in the Second Session of the Senate and House of Representatives of the United States entitled “An Act for giving effect to the several Acts therein mentioned in respect to the state of North Carolina, and other purposes. I have the honor to be with due consideration, your Excellency’s most obedient servant, G. Washington.” Huntington himself has docketed the letter in his hand on the back.  On receiving the letter, he notes "President Washington, Febr 20, 1790," going on to note the day he received it and responded, those being the same day.  

In the first year under the U.S. Constitution, Washington assumed the function as President of notifying the governors of the passage of Acts of Congress. But although Washington notified ten other governors, many of these letters may not have survived. We can find only one other copy, and that is in an institutional library. This is therefore likely the only one of these remaining in private hands.

Interestingly, later this same year (1790) Washington gave the job of notifying governors to his Secretary of State, Thomas Jefferson. As a result, only a small number of these official notification letters signed by Washington for any Act of Congress exist.  We are aware of only a few having reached the market in the past few decades.