Modern history

CHAPTER NINE

ILLUSIONS of POWER in the AWKWARD ERA of FEDERALISM

THE NATIONAL GOVERNMENT created by the Constitution was inaugurated in 1789 with more optimism and more consensus among the American people than at any time since the Declaration of Independence. A common enthusiasm for the new Constitution momentarily obscured the deep differences that existed among the national leaders and the states and sections they represented. The unanimous election of Washington as the first president gave the new government an immediate respectability it otherwise would not have had. A sense of beginning anew, of putting the republican experiment on a new and stronger foundation, ran through communities up and down the continent. By 1789 even the leading opponents of the Constitution, the Anti-Federalists, had come to accept it, though of course with an expectation of its soon being amended. In fact, none of the Anti-Federalists in 1787 had been opposed to some sort of strengthening of the national government; they simply had not anticipated as strong a central government as the Constitution had created. Consequently, the former opponents of the Constitution were really in no position to oppose the new national government without giving it a chance.

It was a liberal, humanitarian, and cosmopolitan age. The country’s leaders saw America’s “rising empire” fulfilling at long last the promises of the Enlightenment. Freemasonry flourished, and orators everywhere promised an end to ignorance and superstition and the beginnings of a new era of reason, benevolence, and fraternity. It was a heroic age in which men talked of the aristocratic passions—of greatness, honor, and the desire for fame. It was a neoclassical age, an Augustan Age, as historian Linda K. Kerber has called it, an age of stability following a revolutionary upheaval in which art and literature would thrive.1 Never in American history have the country’s leaders voiced such high expectations for the cultural achievements of the nation as did Americans in the 1790s. The arts and sciences were inevitably moving across the Atlantic to the New World and bringing America into a golden age.

By whatever term the Federalist age might be called, it was in fact a very brief one. It disappeared so fast that we have a hard time recovering or understanding it. The consensus and optimism of 1789 quickly evaporated, and the decade that had begun so hopefully turned into one of the most passionate and divisive periods of American history. By the end of the 1790s the United States was on the verge of civil war, and the “whole system of American Government,” in the opinion of the British foreign secretary, was “tottering to its foundations.”2

The decade of the 1790s is the most awkward in American history. It seems unrelated to what preceded or followed it, a fleeting moment of heroic neoclassical dreams that were unsupported by American reality. The self-conscious, self-molded, self-controlled character of George Washington was the perfect symbol for the age, for, like Washington himself, the entire Federalist project was a monumental act of will in the face of contrary circumstances. The Federalists stood in the way of popular democracy as it was emerging in the United States, and thus they became heretics opposed to the developing democratic faith. Everything seemed to turn against them. They thought they were creating a classically heroic state, and they attempted everywhere to symbolize these classical aims. Instead they left only a legacy of indecipherable icons, unread poetry, antique place names, and a proliferation of Greek and Roman temples. They despised political parties, but parties nonetheless emerged to shatter the remarkable harmony of 1789. They sought desperately in the 1790s to avoid conflict with the former mother country to the point that they appeared to be compromising the independence of the new nation, only to discover in the end that the war with Great Britain they had avoided was to be fought anyway in 1812 by the subsequent administration of their opponents. By the early nineteenth century, Alexander Hamilton, the brilliant leader of the Federalists, who more than anyone pursued the heroic dreams of the age, was not alone in his despairing conclusion “that this American world was not meant for me.”3

The Federalist age was awkward because so many of America’s leaders were heroically confident they were in control of events. No generation in American history was so acutely conscious that what it did would affect future generations, or, in the common phrase of the day, “millions yet unborn.” The leaders felt an awesome responsibility not only for America’s governments and political institutions but for its art, literature, and manners—indeed, for the entire culture.

But of course they were never in charge of events or circumstances. Everything was moving and changing much too fast. Indeed, it is the gap between the leaders’ pretensions of control and the dynamic reality of the forces they were attempting to deal with that accounts for the strangeness and awkwardness of the decade. Subsequent generations of American leaders usually have had a much less heroic attitude about themselves. Mid-nineteenth-century leaders always had a sense of being caught up by forces larger than themselves, of being carried along by inevitable elements—whether called providence, progress, public opinion, or simply the popular masses. But most American leaders of the 1790s still clung to an older hierarchical-gentry world that assumed that a few men at the top could control and manipulate events and shape circumstances. The decade of the 1790s was the last gasp of an American eighteenth-century patrician world quickly lost and largely forgotten—a world of aristocratic assumptions, heroic leadership, and powdered wigs and knee breeches. It was a world soon to be overwhelmed by the most popular, most licentious, and most commercially ridden society history had ever known.

Most of what happened in the period was unanticipated and unwanted by the Founding Fathers. The sudden transformation of the electoral college in the election of the president, which had been the consequence of complicated and painstaking compromises by the Philadelphia Convention, was only the most graphic example of the best-laid plans gone amiss.

It may be hard for us today to see how much in the decade turned out differently from what the leaders at the time expected, for many of their hopes and dreams did eventually get realized, even if decades or centuries after being formulated. Consequently, we tend to give the Federalists and other leaders of the decade credit for foresight and for laying the proper foundations for the future even if they were unable to bring about much in their own lifetimes. The city of Washington, D.C., is a good example. The plans for it were truly monumental, but the implementation of those plans was a long time coming. For a good part of the nineteenth century the national capital remained the butt of jokes, a city of open spaces and long distances, “bearing,” as one observer said, “the marks of partial labour and general desertion.”4 Only after mid-century, or perhaps only at the beginning of the twentieth century—some might say only in the past fifty years—did the Federal City begin to resemble what L’Enfant and others originally had hoped for it. Other dreams of the 1790s have likewise been gradually realized in time. But the fact that many of the hopes and aspirations of the Federalist era have eventually come to pass should not obscure the extent of disillusionment and unfulfilled expectation that dominated that bizarre and stormy decade.

Many of the issues of the decades reveal to one degree or another the gap that existed between the leaders’ plans and purposes on one hand and the reality of dynamic social circumstances on the other. Few of the public decision makers, whether Hamilton or Jefferson, whether Federalist or Republican, clearly understood the complicated historical forces they were dealing with, or if they did, were able to control or manipulate those forces.

The problem can be most fully seen in the ways in which the national government was created in the 1790s. Certainly the political leaders had high hopes for the launching of the ship of state. But though they commonly resorted to a nautical image of launching a new ship, they also realized that in 1789 much of their ship existed only on the drawing boards. Not only was the ship of state largely unbuilt, but the plans and blueprints for it were general and vague enough that the size and shape of the ship still remained uncertain; it was not even clear what the ship would be designed to do. Everyone realized that the nature, purposes, and strength of the new national government all had to be worked out, and beneath the outward consensus of 1789 nearly everyone had his own ideas about what these ought to be.

Because the government was so unformed and the future so problematical, the stakes were high, and men knew that precedents were being set. Consequently, every issue, no matter how trivial, seemed loaded with significance. Many members of the Senate did not think they were wasting their time in spending a month debating the proper title for addressing the president. From that title, whether “His Highness” or simply “Mr. President,” might flow the very character of the future government and state.

In such uncertain circumstances the advantage lay with those whose vision was clearest, whose purposes were most certain, and this meant the Federalist leaders, and in particular Alexander Hamilton, the secretary of the treasury. From 1787 the most nationally minded of the Federalists had wanted the United States to be no mere confederation of disparate states but a republican government in its own right with the power to act energetically in the public sphere—to be a mercantilist state. In building such an integrated national state, the Federalist leaders saw their principal political problem as one of adhesion: how to keep people in such a large sprawling republic from flying apart in pursuit of their partial local interests. This, of course, as Montesquieu had said, was the central problem for any republic, but it was especially a problem for a huge extended republic like the United States. Republics were supposed to rely for cohesion on the moral qualities of their people—their virtue and their natural sociability; unlike monarchies they had to be held together from below, by their natural affection and benevolence and by their willingness to sacrifice their partial and private interests for the sake of the public good.

In today’s language, what was essential for republics was the existence of a civil society—all those voluntary associations and institutions that stand between the state and the individual. In our own time it has been the new states of Eastern Europe and the Middle East that have revived this Scottish Enlightenment emphasis on the importance of a civil society. In light of efforts of the ex-communist states of Eastern Europe and the states of the Middle East to erect viable democratic societies, we today can perhaps more fully understand the significance of a civil society to the workings of a popular government. Certainly we are in a better position than previous generations of Americans to appreciate the weaknesses of republics and the advantages of monarchies and authoritarian governments in holding peoples of diverse backgrounds, interests, and ethnicities together.

By 1789 many of the Federalists, particularly Hamilton, had no confidence whatsoever left in the virtue or the natural sociability of the American people as adhesive forces: to rely on such wild schemes and visionary principles, as radicals like Jefferson and Paine did, to tie the United States together, the Federalists said, was to rely on nothing. Hence Hamilton and the other Federalist leaders had to find things other than republican virtue and natural sociability to make the American people a single nation.

Tying people together, creating social cohesiveness, making a single nation out of disparate sections and communities without relying on idealistic republican adhesives—this was the preoccupation of the Federalists, and it explains much of what they did—from Washington’s proposals for building canals to Hamilton’s financial program. As we saw in the previous essay, many of the Federalists actually thought in terms of turning the government of the United States into a surrogate monarchy, of devising substitutes for traditional monarchical ligaments and placing them within a republican framework.5

In place of the impotent confederation of separate states that had existed in the 1780s, the Federalists envisioned a strong, consolidated, and prosperous national state, united, as Hamilton said, “for the accomplishment of great purposes” and led by an energetic government composed of the best and most distinguished men in the society.6 As we have seen, they aimed to bolster the dignity of this government by adopting some of the ceremony and majesty of monarchy. Many of the Federalists, in short, aimed to make the United States in time a grand, illustrious nation and a rival of the great monarchies of Europe. Hamilton especially envisioned the new national government in traditional European fashion as a great military power. The federal government for him was not to be, as it was for James Madison, simply a disinterested umpire making judicial-like decisions among a number of competing interests. Hamilton wanted to use central state power positively in order to turn the United States into “something noble and magnificent.” He and some other Federalists dreamed of making the United States the equal of the European monarchies on their own terms—terms that, as Washington said, were “characteristic of wise and powerful Nations.”7 This meant a strong central government that reached to all parts of an integrated nation with a powerful army and navy that commanded the respect of all the world.

Hamilton’s model was England, and he consciously set out to duplicate the great English achievement of the eighteenth century. England had emerged from the chaos and civil wars of the seventeenth century that had killed one king and deposed another to become the most dominant power in the world. That this small island on the northern edge of Europe with a third of the population of France was able to build the biggest empire since the fall of Rome was the miracle of the century, even surpassing the astonishing achievement of the Netherlands in the previous century. The English “fiscal-military state,” in John Brewer’s apt term, could mobilize wealth and wage war as no state in history ever had. Its centralized administration had developed an extraordinary capacity to tax and borrow from its subjects without impoverishing them.8 Hamilton saw that the secret of England’s success was its system of funded debt together with its banking structure and its market in public securities. He aimed to do for the United States what English ministers had done for the former mother country. His financial program followed directly from this aim.

Hamilton was undoubtedly concerned with the commercial prosperity of the United States—with furthering “the interests of a great people”—but he was scarcely the capitalist promoter of America’s emerging business culture that he is often described as being. He was a traditional eighteenth-century statesman, willing to allow ordinary people their profits and property, their interests and their petty pursuits of happiness, but wanting honor and glory for himself and his country. He was very much the mercantilist who believed deeply in the “need” in government for “a common directing power.” He had only contempt for those who believed in laissez-faire and thought that trade and interests could regulate themselves. “This,” he said, “is one of those wild speculative paradoxes which have grown into credit among us, contrary to the uniform practice and sense of the most enlightened nations. . . . It must be rejected by every man acquainted with commercial history.”9

Of course, he accepted the prevalence of interests—indeed, he thought there could be no other tie but interest between most people in the society. He himself, however, was extraordinarily scrupulous as secretary of the treasury in maintaining his personal disinterestedness and freedom from corruption. Let others, including congressmen, become “speculators” and “peculators,” but not he. He was determined to stand above all the interested men and try to harness and use them. He agreed with the eighteenth-century British economic philosopher Sir James Steuart that “self-interest . . . is the main spring and only motive which a statesman should make use of, to engage a free people to concur in the plans which he lays down for their government.” Although he later and rather defensively denied that he had ever made self-interest “the weightiest motive” behind his financial program, there is no doubt that he thought the debt and other financial measures would strengthen the national government “by increasing the number of ligaments between the Government and the interests of Individuals.”10

In effect, in the opposition language of the eighteenth-century Anglo-American world, Hamilton set out to “corrupt” American society, to use monarchical-like governmental influence to tie existing commercial interests to the government and to create new hierarchies of interest and dependency that would substitute for the absence of virtue and the apparently weak republican adhesives existing in America. In local areas, Hamilton and the Federalist leaders built up followings among Revolutionary War veterans and members of the Society of the Cincinnati. They appointed important and respectable local figures to the federal judiciary and other federal offices. They exploited the patronage of the treasury department and its seven hundred or more customs officials, revenue agents, and postmasters with particular effectiveness. By 1793 or so the Federalists had formed groups of “friends of government” in most of the states. Their hierarchies of patronage and dependency ran from the federal executive through Congress down to the various localities. It was as close to monarchy and a British system of corruption and influence made famous by Prime Minister Robert Walpole as America was ever to have.

At the same time the Federalists sought to wean the people’s affections away from their state governments and to get them to feel the power of what they hoped would become a consolidated national government. The Constitution had attempted to reduce drastically the power of the states. Article I, Section 10, among other things, had forbidden the states from levying tariffs or duties on imports or exports and had barred them from issuing paper money or bills of credit. As these were the principal means by which premodern governments raised money, their prohibition cut deeply into the fiscal competency of the state governments. Some Federalists hoped to go further and eventually reduce the states to mere administrative units of the national government. Hamilton, at the time the Constitution was drafted, had hoped that the new federal government would “triumph altogether over the state governments and reduce them to an intire subordination, dividing the larger states into smaller districts.”11 Washington thought that the states might in time have no occasion for taxes and “consequently may abandon all the subjects of taxation to the Union.” The federal excise taxes, especially the tax on whiskey, were designed to make people feel the authority of the national government. In a like way, the raising of nearly 15,000 militiamen by the national government to put down the Whiskey Rebellion flowed from Hamilton’s assumption, voiced in 1794, that “government can never [be] said to be established until some signal display, has manifested its power of military coercion.”12

But the national government could not rely on military force to keep people in line. Other more subtle and more ostensibly republican means were needed to control the surging democratic passions of the people. The Federalists found one answer in the judiciary. They were eager to make judges a bulwark against the unruly democratic consequences of the Revolution. Since the 1780s, those concerned about rampaging state legislatures and their abuses of private property and minority rights, particularly those of creditors, had conducted a propaganda campaign to strengthen the judiciary.

Judges in colonial America had been relatively insignificant members of government; they had been viewed largely as appendages or extensions of the royal governors or chief magistrates, who usually appointed them at the pleasure of the crown. At the time of the Revolution, Americans had done little to enhance the judiciary’s negligible status. In their Revolutionary state constitutions of 1776 they had taken away the appointment of judges from the governors and had given it to the state legislatures, and through codification schemes they had tried further to reduce the importance of judges by turning them into what Jefferson called “a mere machine.”13

In the following decades all this was reversed. Suddenly in the 1780s and 1790s, the judiciary in America emerged out of its earlier insignificance to become a full-fledged partner in what was now defined as the tripartite system of American government—sharing power equally with legislatures and executives. Many, in fact, thought that the judiciary had become the principal means for controlling popular legislatures and protecting private rights. The most dramatic institutional transformation in the early Republic was this rise of what was commonly referred to as an “independent judiciary.” It is a fascinating story still not fully told.

It is not surprising, therefore, that the Federalists should have been concerned with creating strong judiciaries, not only in the states but especially in the new federal government. No institution of the new national government would be less susceptible to popular democratic pressure and yet touch the lives of ordinary people in their localities more than a federal court system. Thus the Federalists fought hard to create a separate national court structure in which, they hoped, the common law of crimes would run. The Judiciary Act of 1789, which gave concurrent original jurisdiction to the state courts, was scarcely satisfactory to the more nationally minded Federalists, and throughout the 1790s they struggled to expand the power and jurisdiction of the federal courts. The Judiciary Act of 1801 and the broadened and constructive interpretations of national law by federal judges in the 1790s, including that of treason, were manifestations of these efforts. The actions of the Marshall Court in subsequent years—as its repudiation of the idea that the common law of crimes ran in the federal courts and its limited definition of treason in the Burr trial show—were far from being extensions of national power and were in fact retreats from the advanced and exposed positions that the Federalists of the 1790s attempted to stake out for the national judiciary.14

All these grand and grandiose aims of the Federalist leaders, particularly of the high-toned Federalists, are a measure of their disillusionment with what the Revolution had done to American society and their confidence that they now had the national solution to the problems of the country. Their disillusionment had in fact been widely shared among America’s gentry leadership in 1787 and had helped create the Constitution. But the degrees of disillusionment were vastly different among even fervent supporters of the Constitution. James Madison, for example, certainly shared Hamilton’s misgivings about democracy and his desire to reduce popular state power; and he surely wanted a commercially strong mercantilist national government that would be able both to pass navigation acts and protect minority creditor rights in the several states. But he and others who had created and supported the Constitution, particularly in the Southern and mid-Atlantic states, did not share Hamilton’s vision of the United States becoming a consolidated European-like “fiscal-military” power. Nor did they ever really doubt the popular basis of America’s governments.15Indeed, Madison, Jefferson, and the Republicans never accepted the newly emerging European idea of the modern state, with its elaborate administrative structures, large armies and navies, high taxes, and huge debts. The Republicans’ rejection of this modern state had immense implications for America’s future.

The high-toned High-Federalists’ attempts to impose such a state on America eventually divided the gentry-leaders of the nation and led to passionate factional splits throughout the country. Jefferson and the Republicans came to believe quite sincerely that Hamilton and the Federalists were out to create a monarchy in America. Although Hamilton with equal sincerity denied that that was ever his aim, popular Republican resistance to his projects only made him and the High-Federalists more desperate. By the end of the decade the Federalists had become truly frightened by the popular direction of events and felt compelled to pass alien and sedition acts and to make plans for war involving the creation of armies in the tens of thousands and the calling of Washington back into uniform as commander of these troops. Hamilton even toyed with the idea of dismantling the states.

We know how it all turned out—with Jefferson’s election in 1800 and peaceful accession to power in 1801—and consequently we find it hard to take the fears of either the Federalists or the Republicans very seriously. But both had good reason to be frightened, for there were forces at work in the 1790s that neither the Federalists nor the Republicans fully understood or could control. The consequence was that many of their best intentions went awry.

The men who wrote the Constitution had expected to attract to the national government the best people, “men who possess the most attractive merit and the most diffusive and established characters,” in Madison’s words, or “men of discernment and liberality,” as Washington described them.16They knew whom they meant even if we have a hard time defining such people. They meant men pretty much like themselves, gentlemen of talent and distinction, with all that the term “gentlemen” implied in the eighteenth century. Such gentlemen should ideally be educated in the liberal arts at a good college like Harvard or Princeton, or if not, at least self-cultivated and with sufficient wealth and independence that they did not have to earn a living in too blatant or mercenary a fashion. Madison was apprehensive that the First Congress was going to be composed of the same sorts of illiberal and narrow-minded men who had sat in the state legislatures, and he was relieved at the character of most of the congressmen he met. But it soon became evident that his elevated republic was not going to be high enough to keep out permanently the middling and other ordinary and interested people who had caused so much difficulty in the state legislatures in the 1780s. In the northern parts of America, at least, all levels of government were steadily being democratized and occupied by people with interests to promote. By the Second Congress, even William Findley, an ex-weaver from Pennsylvania and a prototype of the plebeian Anti-Federalists, made it into the elevated national government that was designed to keep his type out.

The problem was that Washington’s “men of discernment and liberality” were hard to find and even when found lacked sufficient income to behave as disinterested gentlemen in government were supposed to behave. By 1795 President Washington was having trouble recruiting proper men for the highest federal offices, including the cabinet. Federalists in the House of Representatives charged that Jefferson, Hamilton, and Henry Knox had all resigned from the cabinet “chiefly for one reason, the smallness of the salary.”17 Although this was not at the case with Jefferson, both Knox and Hamilton did have trouble maintaining a genteel standard of living on their government salaries. There were of course plenty of claimants for the middle and lower offices of the government, but these were lesser sorts of men who were quite openly seeking the offices in order to make a living from them.

The truth was that the entire Federalist scheme rested on a false understanding of America’s gentry. Washington, like other Federalists, conceived of his “men of discernment and liberality” in classically republican terms, as gentlemen of leisure and independence who were generally free of direct market interests and who therefore could take up the burden of public office as a disinterested obligation of their social rank. By proposing in the Philadelphia Convention that all members of the executive be barred from receiving any salaries or fees, Benjamin Franklin was simply expressing an extreme version of this classical republican view of officeholding. But the fact of the matter was that members of the American aristocracy, with the exception of a few wealthy individuals like Franklin and many Southern gentry like Washington and Jefferson, were incapable of living up to the classical image of a leisured patriciate serving in public office without compensation.

Heaven knows many of them tried to live up to the classical image, often with disastrous consequences for themselves and their families. Merchants who wanted to hold high public office usually had to ennoble themselves and put their mercantile property into a rentier form—John Hancock and Robert Morris being notable examples. As we have seen, the goal was to get enough wealth, preferably in the form of land, so that one did not have to work at accumulating money on a regular basis and in an acquisitive manner. All the desperate efforts of men like Morris, James Wilson, and Henry Knox to find genteel independence for themselves through land speculation—efforts that ended in ruin and sometimes debtors’ prison—are measures of the power of that classical image of a leisured patriciate. For it was evident to the eighteenth-century gentry, even if not to us, that one could not acquire real independence of the marketplace without having that independence based on what historian George V. Taylor, in reference to eighteenth-century France, calls “proprietary wealth.”18

Such proprietary wealth was composed of static forms of property—“unearned income,” as we might call it: rents from tenants, bonds, interest from money out on loan—that allowed its holders sufficient leisure to assume the burdens of public office without expecting high salaries. These kinds of proprietary property holders were those Washington had in mind when he used the term “the monied gentry.”19 These monied gentry, with their static proprietary wealth, were of course very vulnerable to inflation, which is why the printing of paper money was so frightening to them. Although these proprietary gentry, like their counterparts in England, were often involved in various commercial ventures, they were not risk-taking entrepreneurs or businessmen in any modern sense. Instead, they were social leaders whose property was the source of their personal authority and independence; inflation therefore threatened not simply their livelihood but their very identity and social position. Until we grasp this point, we will never appreciate the depth of moral indignation behind the gentry’s outcry against paper money and other debtor-relief legislation in the 1780s.

Of course, not only was this kind of proprietary wealth very hard to come by in America—where, compared to England, land was so plentiful and tenantry so rare—but commerce and trade were creating new forms of property that gave wealth and power to new sorts of people. This new property was anything but static: it was risk-taking, entrepreneurial capital—not money out on loan, but money borrowed. It was in fact all the paper money that enterprising people clamored for in these years. It was not “unearned income” that came to a person, as Adam Smith defined the rents of the English landed gentry, without exertion, but “earned income” that came with exertion—indeed, came with labor, production, and exchange. This was the property of businessmen and protobusinessmen—of commercial farmers, artisan-manufacturers, traders, shopkeepers, and all who labored for a living and produced and exchanged things, no matter how poor or wealthy they might be.

The increasing distinctions drawn in these years between, in the words of the uneducated New England farmer William Manning, “those that labour for a Living and those that git a Living without Bodily Labour,” which included all gentry-professionals, expressed the rise of this new kind of property.20 Unlike proprietary wealth, this new kind of dynamic, fluid, and evanescent property could not create personal authority or identity; it was, said Joseph Story, “continually changing like the waves of the sea.”21 Hence it was meaningless to rely on it as a source of independence. Once this was understood, then property qualifications for participation in public life either as voters or officeholders lost their relevance and rapidly fell away. The William Mannings and the William Findleys who spoke for these new kinds of entrepreneurial and labor-produced property—for “earned income”—were precisely the sorts of illiberal and parochial men that liberal gentry like Madison in the 1780s had condemned.22

But Madison, Jefferson, and other Southern gentry leaders of the Republicans no more understood what was happening to American society and to property than did Hamilton and the Federalists. Nor did Hamilton and Jefferson understand very clearly the direction the American economy was taking. Both assumed that the future prosperity of the United States lay essentially with foreign trade, and they were both wrong: it lay mainly with domestic or internal trade, with the United States becoming “a world within themselves.”23 Eighteenth-century leaders had difficulty putting great value on internal trade because of their lingering zero-sum mercantilist assumption that a nation’s wealth as a whole could grow only at the expense of another nation; that is, the country as a whole could prosper only by selling more abroad than it bought.24

Domestic trade was thought to benefit only individuals or regions but not the country as a whole; it simply moved wealth about without increasing its total. Those involved in domestic commerce, however, had a different sense of where the future prosperity of the country lay, but they needed paper money to carry on their internal trading—lots of it. Article I, Section 10 of the Constitution had prohibited the states from printing bills of credit, but the needs and desires of all the protobusinessmen and domestic traders were too great to be stymied by a paper restriction. So the states, under popular pressure, got around the constitutional prohibition by chartering banks, hundreds upon hundreds of them, which in turn issued the paper money people wanted. Hamilton no more predicted or wanted this proliferation of banks and paper money than did Jefferson; he and other Federalists had in fact thought the Bank of the United States would absorb the state banks and have a monopoly on banking and the issuing of currency. 25

Both Hamilton and Jefferson equally underestimated the importance of artisan-manufacturing. As historian Joyce Appleby has told us, Jefferson and the Republican Party benefited from artisan and business support in the mid-Atlantic states, but Jefferson never fully grasped this point; he never appreciated the nature of the popular commercial forces he was presumably leading.26 Hamilton’s biggest political mistake was to ignore the interests of the artisan-manufacturers. Despite his 1791 “Report on Manufactures,” which presumably recognized the importance of domestic commerce, Hamilton, as John R. Nelson has told us, never had his heart in manufacturing and never pushed to implement his report; instead, his program actually favored moneyed men and import merchants at the expense of domestic producers and traders.27 Consequently, artisans in the mid-Atlantic states who had been fervent Federalists in 1787–1788 were eventually driven into the ranks of the Republican Party—except in New England. The exception is illuminating. Too many of the New England artisans were too closely tied to patron-client relationships with wealthy overseas merchants in New England’s port cities to develop as sharp a sense of their separate interests as that possessed by the mid-Atlantic artisans. From 1793 to 1807 New England’s interests and prosperity were almost entirely absorbed in overseas trade. As a result, the emphasis Hamilton’s program placed on overseas trade skewed Federalist support toward New England and helped to mask the fact that the future prosperity of the United States lay largely in the development of domestic commerce and not in international shipping.

In other areas as well, gentry leaders of all sections and both parties lived with illusions and misunderstood the realities of American society. Many leaders in the 1790s, for example, thought that slavery was on its way to ultimate extinction. The American Revolution had unleashed enlightened principles of liberty that seemed to make the disappearance of slavery just a matter of time: David Ramsay of South Carolina thought there would “not be a slave in these states fifty years hence.” 28 Liberal opinion everywhere in the world condemned the institution. When even Southerners like Jefferson, Patrick Henry, and Henry Laurens deplored the injustice of slavery, from “that moment,” many believed, “the slow, but certain, death-wound was inflicted upon it.” 29

Of course, as we know, such predictions could not have been more wrong: far from being doomed, slavery in the United States in the 1790s was on the verge of its greatest expansion. But such self-deception, such mistaken optimism, among the Revolutionary leaders was understandable, for they wanted to believe the best, and there was some evidence that slavery was dying away. The Northern states, where slavery was not inconsequential, were busy trying to eliminate the institution, and by 1804 all had done so. There were indications that the same thing was happening in the Southern states, especially in the Upper South. More antislave societies existed in the South than in the North, and manumissions in the South were becoming more frequent.

Virginia, being the richest and most populous state in the nation, not only dominated the presidency but seemed to be setting the tone for the country. In Virginia alone the number of free blacks increased from 3,000 in 1780 to 13,000 by 1790. Between 1790 and 1810 the free black population in the United States grew faster than the slave population. By the 1790s all the states, including South Carolina, had ended the international slave trade. Many hoped that abolishing the importation of slaves from abroad would eventually kill off the institution of slavery. But faith in the future was not enough: the Founding Fathers had simply not counted on the remarkable demographic capacity of the old slave states themselves, especially Virginia, to produce slaves for the expanding areas of the Deep South and Southwest. Believing that slavery was dying a natural death was the most fatal of the Founders’ many illusions.

Perhaps we can muster some sympathy for the Founding Fathers’ difficulty in predicting the future when we take into account the breathtaking speed of events and complexity of circumstances in the 1790s. Nowhere was this speed and complexity more obvious than in the settlement of the West, and nowhere was the gap between the leaders’ illusions and reality more conspicuous than in the way they dealt with the West.

The Federalists at least were not mistaken in their sense of the fragility of the United States. It was the largest republic since ancient Rome, and as such it was continually in danger of falling apart. Indeed, fear for the integrity of the United States lay behind the Continental Congress’s passage of the Northwest Ordinance of 1787. Despite its progressive promises, this plan for the colonization of American territories was actually quite reactionary. Its proposals for garrison governments with authoritarian leadership for the new western colonies resembled nothing so much as those failed seventeenth-century English efforts at establishing military governments over the obstreperous colonists.30 The ordinance was an indication of how fearful eastern leaders were of the unruly westerners leaving the union, lured away perhaps by one European power or another.

These fears that westerners could be separated from the United States by European powers were not entirely illusory—not when popular societies were toasting the right of everyone to “remove out of the limits of these United States” at will.31 There were indeed conspiracies involving Britain and Spain on the western borders. In fact, some British officials in Canada were convinced that they could reverse the Revolution and put the North American British Empire back together again. American fears of foreign influence help account both for the hasty admission into the Union in the 1790s of Vermont, Kentucky, and Tennessee, and for the later violations of the Northwest Ordinance’s procedures for orderly territorial advancement to statehood. Since Britain in Canada was regarded as by far the more dangerous power, Americans felt they had to organize the Northwest Territory as soon as possible. Spain, on the other hand, was thought to be so decrepit, its hold on its empire so weak, that its Southern and Southwestern territories could be left to fall into American hands like so many ripe fruit. Natural demographic pressures would see to that, it being a common assumption in the 1790s that most western migrants would come from the burgeoning Southern states. This was one of several mistaken ideas that American leaders had about the future of the West.

The Federalists’ western policy, including the working of the Northwest Ordinance and treatment of the Indians, rested on the assumption that settlement of the western territories would be neat and orderly. Many of the Federalist leaders were scrupulously concerned for the fate of the Indians; indeed, the statements of Secretary of War Henry Knox about the need for just treatment of the native Americans might even be deemed politically correct by a modern anthropologist. But purchasing the Indians’ rights to the land and assimilating or protecting them in a civilized manner depended on an orderly and steady pace of white settlement.

So too did both the hopes for governmental revenue from the land and the plans of land speculators depend on gradual, piecemeal, and well-regulated settlement of the West. The federal government hoped to gain steady revenues by selling its western land to land companies and speculators. The speculators in turn counted on the settlers slowly filling in the territory surrounding the land they held, which would raise its value and bring them the promised returns on their investments.

Everything was built on illusions.32 The people moving west ignored the federal government’s Indian policies and refused to buy land at the expensive prices at which it was being offered. They shunned the speculators’ land, violated Indian treaty rights, and moved irregularly, chaotically, unevenly, jumping from place to place and leaving huge chunks of unsettled land and pockets of hemmed-in Indians behind them. The government responded, and continued to respond until the Homestead Act of 1863, in a series of desperate efforts to keep up with popular pressures. It continually lowered the price of land, increased the credit it offered, and reduced the size of the parcels of land people had to buy; and still people complained and ignored the laws. Eventually the federal government recognized the rights of squatters to preempt the land, and finally it just gave the land away. It took more than a half century for governmental leaders to come to terms fully with the reality of popular settlement of the West.

For the Federalists of the 1790s it took less than that for most of their heroic plans and dreams to be exploded. Even if Jefferson had been somehow technically denied the presidency in 1800, most of the Federalists’ blueprints for America were already doomed. They were too out of touch with the surging popular and commercial realities of American life. The demographic and economic forces at work were too powerful for any gentry leadership to overcome or any election to reverse. The secret of Jefferson’s success, insofar as he had any, was his unwitting surrender to these popular commercial forces. He abandoned the Federalist goals of creating a strong, mercantilist, European-like state, reduced the power of the national government in a variety of ways, and in effect left everyone free to pursue his happiness as he saw fit. It remained for later generations of Americans—in some cases even the generation following World War II—to fulfill many of the dreams and schemes of the Federalists of the 1790s.

Perhaps our history since 1800 has been one long effort to do in two centuries what the Federalists unsuccessfully tried to do in a decade: bring under control the powerful and unruly popular and commercial forces unleashed by the Revolution and create a strong integrated nation. When we look at the huge, prosperous, and unitary fiscal-military state that we have built—the most powerful state the world has ever known—we might conclude that Hamilton and the Federalists of the 1790s have had the last laugh after all.

AFTERWORD TO CHAPTER 9

This began as a lecture opening the symposium on “Launching the ‘Extended Republic’” held in the early 1990s under the auspices of the United States Capitol Historical Society. It was later published in Ronald Hoffman and Peter J. Albert, eds., Launching the “Extended Republic”: The Federalist Era (Charlottesville: University Press of Virginia, 1996). By creating and organizing their extraordinarily successful project, Perspectives on the American Revolution (supported by the United States Capitol Historical Society), Hoffman and Albert have made an enormous contribution to our understanding of the Revolution and the early Republic. For nearly twenty years, from the early 1980s to the end of the twentieth century, Hoffman and Albert, supplemented by occasional guest editors, brought out almost a dozen and a half volumes on various important issues connected with the American Revolution and its aftermath—everything from women, slavery, and Indians to religion, social developments, and patterns of consumption. It is a stunning achievement.

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