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 controversy over the bank charter (p. 162). Hamilton had little confidence in the wisdom of the plain people. He believed it would be safer to rely on the richer classes. So he and his friends wished to give to the central government and to the richer classes the greatest possible amount of power. Those who believed as Hamilton believed called themselves Federalists. In reality they were Nationalists. [Sidenote: Formation of the Republican party.]