American Experiment

by James Macgregor Burns

  Dominating the debate too was the politics of sectionalism, for the Southerners, and especially the Virginians, felt that Hamilton’s proposals favored “Eastern” interests over their own. And it was the politics of sectionalism that also rescued the bill. By July, Hamilton’s forces had sustained a series of setbacks in Congress. The arrival of “anti-Federalist” congressmen from North Carolina after that state’s belated ratification further darkened Hamilton’s prospects. Now the political gambler decided to play a strong card. For months New Yorkers, Philadelphians, and Southerners had been jockeying over possession of the permanent site of the nation’s capital. Hamilton now decided to offer support for a “southern” location in exchange for support of his proposals.

  It was not easy for the New Yorker to make this concession. He had dreamed of seating the federal government permanently amid the banking and trading community of Manhattan; moreover, he would have to modify his proposals further if the Southerners were to accept the deal. But once Hamilton did decide, the deal was made almost overnight. In August 1790 the essence of Hamilton’s Report on Public Credit was approved by Congress, though by a narrow margin. And the capital would move to Philadelphia for ten years, and then be relocated permanently on the banks of the “Potoumac.”

  With the nation’s credit narrowly assured, to Hamilton’s satisfaction but at no little political cost, he moved forward resolutely to the linchpin of his grand economic design—establishment of a powerful national bank. In this field too, the young Secretary was no novice. He had studied with admiration the august Bank of England; he had read the great economists, including Adam Smith, whose Wealth of Nations his sister-in-law sent him from abroad; he had been deeply involved in New York banking. In December 1790, Hamilton submitted to the President and to the Congress the second of his carefully drawn reports. Typically he took not a narrow banking approach but a broad fiscal one. Crucial to his plan was assigning to the new bank power over the issuance of bank notes. Money, Hamilton had long argued, was the lifeblood of the economy, and he calculated that a central bank would be strong enough to maintain the necessary supply of money without letting matters get out of hand. The nation’s capital would be augmented by increasing the amount of notes in circulation, by providing wider use of individual notes, and by collecting individual deposits. At the heart of the plan was a marriage of government and private bankers. The two were so intertwined, in a system of mutual support, that the one was financially and legally implicated with the other. To ensure that the bank would not fall into improper hands—that is, into the hands of radicals who would pump out paper money—Hamilton provided for private stockholders to control most of the stock in the bank and appoint the great majority of directors.

  Once again Congress split into warring factions, as Washington glumly watched the further erosion of his government of national unity. The most fiery issue was private control of the bank. The agrarians in Congress raised the old warnings of corruption, control by the rich and wellborn, higher taxes, a mania of speculation. Some also complained that Hamilton’s reports were simply too intricate and complex to be understandable. But part of Hamilton’s task was the education of a people who were still dominated by the notions of small-town economics; and Hamilton’s journalistic supporter John Fenno answered for him:

  The Secretary makes reports

  Where’er the House commands him;

  But for their lives, some members say

  They cannot understand him.

  In such a puzzling case as this

  What can a mortal do?

  ’Tis hard for ONE to find REPORTS

  And understanding too.

  Many of the more moderate Republicans and anti-Federalists had to grant Hamilton’s case for a national bank and a stronger system of currency and credit; they too were concerned about the supply and stability of money. Some of them fell back on the constitutional issue—all the more appropriately, perhaps, now that Congress was meeting in Philadelphia, at the site of the constitutional convention itself. The attack on the proposed bank’s constitutionality was led by Madison himself. Speaking in his quiet precise way, but with unsurpassed authority, he reviewed the Constitution and found in it no “power to incorporate a bank”—no power under the authority to lay and collect taxes, none under the power to borrow money, none under the power “to pass all laws necessary and proper to carry into execution those powers.” He reviewed at length the writing and the ratifications of the Constitution and concluded that “the power exercised by the bill was condemned by the silence of the Constitution; was condemned by the rule of interpretation arising out of the Constitution; was condemned by its tendency to destroy the main characteristic of the Constitution; was condemned by the expositions of the friends of the Constitution…; was condemned by the apparent intention of the parties which ratified the Constitution; was condemned by the explanatory amendments proposed by Congress themselves to the Constitution; and he hoped it would receive its final condemnation by the vote of this House.”

  It did not. Beating off crippling amendments, facing down the charges of the irrepressible Jackson that the bill would help the mercantile interests at the expense of “the farmers, the yeomanry of the country,” surmounting almost solid southern opposition, the Federalists held their ranks firmly enough to pass the bill in its essentials. The problem indeed seemed to lie less in Congress than in the President himself. Washington had been troubled by the arguments of his fellow Virginian Madison. Always—and proudly—dependent on the advice of men he respected, the President referred the question of constitutionality to two other Virginians, the Secretary of State and the Attorney General. Both Jefferson and Randolph promptly agreed with Madison that the Constitution gave the federal government no power to establish a banking corporation and that no such authority could be implied in any power expressly given. Washington turned back to Hamilton.

  The Secretary rose supremely to the occasion. Undaunted by the constitutional authorities arrayed against him, he wrote one of the notable state papers in American history, boldly laying out a broad construction of the Constitution, calling the bank vital to the collection of taxes and the regulation of trade and other functions clearly within the ambit of federal authority, and—even more sweeping—arguing in effect that the federal government as a sovereign entity had the right to use all means “necessary and proper” to realizing such objectives as were not forbidden by the Constitution. His state paper, written with verve and passion, was a direct link between Hamilton the nationalist of 1787 and the Hamiltonian system that the Secretary was seeking to establish. If sustained, his position could be a precedent for later constitutional decisions. But would Washington sustain it? The President, Hamilton had once said, “consulted much, resolved slowly, resolved surely.” Now Washington, delaying as long as he could, resolved in favor of Hamilton and signed the bank bill.

  Though this was a striking victory for Hamilton, the bank still represented only one part of the Federalist thrust in America’s political economy. The House of Representatives had also asked the Secretary of the Treasury for a plan “for the encouragement and promotion of such manufacturers as will tend to render the United States independent of other nations for essential, particularly for military supplies.” As usual, Hamilton interpreted his mandate in the broadest terms, and in December 1791, after almost two years of collecting and analyzing economic data, he submitted to Congress nothing less than an economic plan for the United States. Protection of struggling young industries—a central concern for the congressmen—was only a part of the plan, and the smaller part to boot. Hamilton and his brilliant Assistant Secretary, Tench Coxe, took an elaborate inventory of the nation’s capacities and needs, evaluated its existing and potential manpower, machinery, energy resources such as water power, and proposed economic measures that would guarantee the nation’s economic unity and industrial power for decades to come. His key proposals were for a variety of governmental aids to business, rangin
g from bounties for inventions and subsidies to business, to modernized transport and other internal improvements.

  Hamilton did not feel bound by dogma; he borrowed from Adam Smith while rejecting most of his laissez-faire philosophy. Nor was he handicapped by sentiment. Coldly but approvingly he evaluated the potential of labor by women and children in factories. Better off there than on the farm! He counted especially on the availability of women for the cotton factories.

  It was a superb piece of economic planning. But did it reach the fundamental wants and needs, hopes and expectations of the great mass of Americans, especially in the hinterland, and of the rival politicians who would respond to those basic needs?

  Thousands of Americans indeed did not see Hamilton’s program as meeting their deepest needs and hopes. Their primary concerns were rather the religious and political liberties that had brought their forefathers to America, liberties that had received some protection under state bills of rights, liberties they wanted to protect against any possible threat from the new federal government.

  Madison turned to drafting a bill of rights as quickly as he could in the first Congress, partly in response to the intense demand, partly to head off anti-Federalists who were pressing for a second general convention. Why not use the new amending process? Madison asked. This alternative required passage by a two-thirds vote in both House and Senate and endorsement by three-quarters of the states—a cumbersome procedure, but Madison was confident that the groundswell of support for a bill of rights would push the amendments through. First he and his colleagues in the House had to deal with more than two hundred amendments submitted by state ratifying conventions. These made up a mixed bag. Many simply wanted to restrict federal power in general. A few were anti-civil liberties; thus from New England came one claim that the prohibition of religious tests in the Constitution would enable “Jews, Turks and infidels” to infest the new government. Others were eloquent on the popular demand for procedural and substantive rights. Out of the grist House leaders refined seventeen amendments. After Senate consideration, a conference between senators and representatives to adjust differences, and consideration by state legislatures, ten amendments emerged. Two of them—the ninth and tenth—reaffirmed the reservation of rights to the states and to the people. Others would secure the right of people to bear arms, to be secure in their homes, to enjoy a host of procedural rights in courts and outside. But the heart of the Bill of Rights lay in the bold and absolute provisions of the first article:

  Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

  The amendments were ratified by the end of 1791. The American people had their Bill of Rights. What would they do with it?

  Newspaper editors knew what to do with it. By 1790 the nation had almost a hundred newspapers, most of them weeklies, but a few semi-weeklies and eight dailies. Pressed down a page at a time on a crude block of type by human labor, printed on rough rag paper with a drab grayish or bluish cast, produced at the rate of about two hundred copies an hour, these two- or four-page newssheets were not much to look at. Many papers were short-lived, as editors found they could not make up with job printing for lack of subscribers, high costs of paper and mailing. But these newspapers had an immense vitality. They played up foreign and national news at the expense of local, in part because filching material from foreign newspapers and quoting verbatim from congressional debates were cheap ways of filling their columns. The result was the spread of an immense amount of political news throughout the states.

  These newspapers were by no means “objective.” While few editors published their views as editorials, their biases so infused their news columns as to stamp most papers as clearly Federalist or Republican. Many editors were themselves politicians, or unabashedly sponsored and even financed by politicians. The most famous of these arrangements came to be Jefferson’s sponsorship of Philip Freneau’s National Gazette and Hamilton’s of John Fenno’s Gazette of the United States. Hamilton saw to it that his Gazette received printing contracts from the Treasury Department; and Jefferson arranged for the publication of his Gazette by providing Freneau with a State Department post that allowed for plenty of time off. Each stung by the gibes in the other man’s paper, both Hamilton and Jefferson appealed to Washington, who admonished his two cabinet members to make “mutual yieldings.” Neither Hamilton nor Jefferson would yield. They were operating amid rising political tensions. The editors were not encouraging a politics of accommodation. Raucous, venal, often libelous, yet committed and strong-minded, they went their way, now shielded by the Bill of Rights.

  The early 1790s were indeed a period of political tumult, but even more, of political paradox. George Washington presided over a government of national unity, but his administration was rife with internal conflict. Men addressed one another face to face or in correspondence in the most exquisitely courteous terms—one gentleman writing to another would end his letter, even if he hated his correspondent, with a painfully written out “I have the honor to be with the highest respect, sir, Your most Obedt. & mot: hble Servant”—but public political discourse was conducted in the most extreme language. The men around Washington were building a national governmental structure in a cooperative, soldierly, and workmanlike way, yet they differed violently over banks, tariffs, slavery, fiscal policy, foreign policy, presidential power, congressional prerogative, the permanent location of the national capital, and over a multitude of philosophical issues, such as representation, revolution, responsibility, and the protection of liberty.

  Above all, political leaders at local, state, and national levels were buttressing freedoms of speech and press and assembly, without a clear concept of just how these liberties related to the role of government and opposition, faction and interest, majority and minority party. The leaders in fact feared, spurned, and despised the idea of faction and party even as they took part in factions and shaped embryonic parties. They did not consider and firmly articulate the role of government party and opposition party. Leaders as varied in outlook as Washington, Paine, Adams, Jefferson, and Henry agreed on one thing—the evil of organized factional or party opposition. Such an opposition, indeed, took on a strongly sinister, subversive cast, and became an alien threat to republican government and hence something to be extirpated. The political leadership, in short, had no theory of party. Hence the future of parties would be shaped far more by events than by design.

  One of the more benign of these events occurred in May 1791, when Jefferson and Madison took off on a “botanical expedition” up the Hudson. After tarrying in New York City a couple of days, they left for Albany by carriage and boat. New York Federalists eyed them narrowly. What could these two Republicans be up to? Practical politicians could not believe it, but the two Virginians were actually interested mainly in the flowers and fish, the trees, game, insects, soil, streams, lakes, scenery, and battlefields rather than in the political flora and fauna. However, they probably did visit Governor Clinton in Albany, before pursuing their journey up Lake George to Champlain, down through Vermont to Bennington, overland to the Connecticut Valley, and finally across the Sound to Long Island. They had a chance to compare notes on Republican politics in the “Eastern” states, and doubtless word seeped out to the surrounding countryside that the celebrated Virginians had passed through.

  It was evident that as long as George Washington stayed in office political conflict would be kept within bounds, and by late 1792 it was evident that he would be President for another four years. He had talked much about quitting after his first term, but when leaders in the different factions urged him to run again—“North & South will hang together, if they have you to hang on,” Jefferson told him—the President allowed electors to be chosen for him. His popularity was still at a high pitch, and he had bolste
red it even more when he took a sea voyage to Rhode Island, where he spoke in favor of tolerance to representatives of the Jewish Congregation of Newport, and when he toured Georgia and the Carolinas in 1791.He carried the electoral college unanimously the following year. John Adams was also re-elected, but once again votes were diverted from him, this time mainly by Republicans. Washington, managing as always to stay above the election battle, did not intervene to help his Vice-President.

  The hero worship for Washington had its limits. When it was proposed in Congress that the head of the President be stamped on the new coin of the United States, republicans warned of monarchical tendencies and future Caesars, Neros, and Caligulas, and the move was defeated. Instead Congress ordered that the coins be adorned with the female figure of LIBERTY.