The greatest population growth, however, was occurring in regions west of the Appalachian Mountains. By the end of his term, 500,000 people, principally from New England, Virginia and Maryland, had migrated west into Kentucky, Tennessee and the Northwest Territory. To pay for the military buildup of the Quasi-War, Adams and his Federalist allies enacted the Direct Tax of 1798. Direct taxation by the federal government was widely unpopular, and the government's revenue under Washington had mostly come from excise taxes and tariffs. Though Washington had maintained a balanced budget with the help of a growing economy, increased military expenditures threatened to cause major budget deficits, and Hamilton, Alcott, and Adams developed a taxation plan to meet the need for increased government revenue. Adams' resolve to advance peace with France, rather than to continue hostilities, especially reduced his popularity.
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