Policy and Principles in the Age of Jefferson

A bromide in the recent historiography of early America is that the Jeffersonian Republicans had a poorer grasp of the developing commercial, capitalistic America than did the Hamiltonian Federalists. Historians have all too frequently viewed Treasury Secretary Alexander Hamilton’s economic program of the early 1790s as a harbinger of modernity, and the opposition by Thomas Jefferson, James Madison, and others as activated by a “politics of nostalgia,” which feared economic change as “corruption” and sought to preserve a static, agrarian society of “virtuous yeomen.” Thus according to this view, the political-party struggle in America of the 1790s and early 1800s was merely a replay of the party struggles of early eighteenth-century England between a commercial “Court” party led by the prime minister, Walpole, and its agrarian “Country” opposition, led by Bolingbroke. (See, for example, Lance Banning’s The Jeffersonian Persuasion [Ithaca, N.Y.: Cornell University Press, 1978] and Drew McCoy’s The Elusive Republic: Political Economy in Jeffersonian America [Chapel Hill: University of North Carolina Press, 1980]. An extreme statement of the “Country” interpretation may be found in Forrest McDonald’s The Presidency of Thomas Jefferson [Lawrence, Kansas: University Press of Kansas, 1976], where the author asserts [p. ix] that “very nearly everything in Jeffersonian Republicanism was to be found in Bolingbroke.”)

But the identification of Hamilton with Walpole and capitalism, on the one hand, and of Jefferson with Bolingbroke and classical republicanism, on the other, has not gone unchallenged. Foremost among the critics of this “civic-humanist” interpretation of Jeffersonian Republicans has been Joyce Appleby, who has attempted to show that they were in fact “modern.” Indeed, in her most recent work she has endeavored to turn the tables on revisionist orthodoxy by arguing that “the principle of hope,” a forward-looking confidence in commercial prosperity through an expanding free market economy, was the essence of Jeffersonian Republicanism and of its challenge to the classical republicanism of the Federalists (Appleby, Capitalism and a New Social Order: The Republican Vision of the 1790s [New York: NYU Press, 1984]).

Appleby’s direct challenge to the civic-humanist interpretation has transformed contemporary American historiography essentially into a debate over the significance of the two vastly different, and apparently opposed, traditions of civic humanism and liberalism. (For a more complete bibliography and a more detailed analysis of the debate, see Richard Vernier’s review essay “Interpreting the American Republic: Civic Humanism vs. Liberalism,” Humane Studies Review [4] No. 3, Summer 1987.)

John Nelson’s Liberty and Property is a fresh contribution to this debate. As Appleby has challenged the portrait painted by Lance Banning and others of the clash of political ideologies, Nelson challenges Drew McCoy’s view of the divergent political economies of the Hamiltonian Federalists and Jeffersonian Republicans. Refining the classical republican interpretation, McCoy has argued that while Hamilton unreservedly embraced modernity, seeking to use governmental power to push the United States toward higher stages of economic development, the Jeffersonian Republicans struggled with a political economy wracked by internal contradictions. Seeking to reconcile classical republicanism with more modern social realities and American conditions, the Republicans, argued McCoy, hit on a peculiar solution: “a vision of expansion across space—the American continent—as a necessary alternative to the development through time that was generally thought to bring with it both political corruption and social decay” (McCoy, The Elusive Republic, pp. 9-10).

McCoy’s study of divergent political economies in Jeffersonian America thus neatly meshed with the “Court-Country” interpretation. Madison and Jefferson, as McCoy described them, envisioned the United States as remaining a nation of industrious farmers who marketed their surplus abroad and in return imported finer manufactures, relying on household industry to produce domestically only the coarser manufactures that could not be bought abroad without producing a dangerously unfavorable balance of trade. Hamilton, on the other hand, “had succeeded in discarding the traditional republican heritage” and envisioned America not as a virtuous agrarian republic but as a powerful, economically advanced modern state, much like Great Britain. His program for modernizing America through a national bank and government subsidies for manufactures raised “the specter of Walpole“in the minds of the Jeffersonian Republicans. This was so, argued McCoy, because of their fundamentally different ideological perspectives: “what Nelson’s major thesis—a virtual counterpoint to McCoy’s—is that the Jeffersonian Republicans (in particular, the “triumvirate” of Albert Gallatin, James Madison, and Thomas Jefferson) were the true advocates of comprehensive economic development, including manufacturing, in America. Their opposition to Hamilton’s programs, Nelson argues, was “rooted not in vague philosophical notions but in a hardheaded analysis of the destructive effects his actions had on the economy and the political cohesion of the union.” The Republicans did not oppose federal power or commercial enterprise per se; rather, they opposed Hamilton’s use of the coercive powers and the patronage of the national government “to create government of a faction, by a faction, for a faction,” referring to the handful of powerful merchants on whom Hamilton sought to rely to insure stability for the new government. The Republican triumvirate—and especially Gallatin—sought instead to nourish the national market system so as to generate economic prosperity, political unity, and social stability, which, according to Nelson, are the three “essential attributes of a powerful and independent nation” (pp. xiv, 77).

Nelson’s study is most effective in comparing the actual effects of Hamilton’s and the Republicans’ policies on the development of manufacturing. The distinction between Hamilton’s policy of “giving a free course to Trade” to preserve his fiscal system and the Republican triumvirate’s policy of using the powers of the national government to effectuate and protect “free markets” for American goods is important. Although both policies involved the use of federal powers, only the latter truly promoted the national market system and, with it, domestic manufacturing.

Hamilton’s chief goal was to enlarge the power of the federal government by creating a mutual dependence between it and certain propertied men; his instrument for doing this was the national debt spawned by the newly created Bank of the United States. In practice this fiscal program dictated Hamilton’s foreign policy. Funding an accumulating national debt through tariff revenues meant acquiescence in foreign, chiefly British, restrictions on American trade. To impose protective tariffs and discriminatory tonnage duties against Britain—as Madison and Jefferson proposed in 1793–94—would be disastrous to Hamilton’s program because that program depended on British imports for revenue and on American merchants engaged in the British trade for political support. Thus the necessity of keeping America tied commercially to Britain required Hamilton to embrace a policy of “giving a free course to Trade.”

In contrast, Jefferson’s foreign policy was twofold: commercial discrimination to free foreign markets from restrictions on American trade and development of domestic industry to attain independence from closed markets. “It is of monumental importance,” observes Nelson, “to recognize that Jefferson’s foreign policy mandated the development of domestic manufactures and that Hamilton’s did not. . . . As Merrill Peterson observes, ‘Ironically, the factories and workshops [Jefferson] had preferred to keep in Europe would the more likely result from his commercial system than from Hamilton’s fiscal system’” (p. 69).¹

During his presidency, Jefferson followed essentially the same foreign economic policy that he had urged as Secretary of State; what changed, particularly by his second term, was not the policy but rather the international situation, which determined which side of the policy he would emphasize. As war between Britain and Napoleonic France intensified, and with both sides imposing ever more severe restrictions on American trade, Jefferson’s efforts to play one side off against the other through threats of commercial discrimination failed. Unable to protect American access to foreign markets, Jefferson ultimately chose the harsh policy of the Embargo, interdicting all foreign trade, as the alternative to war. Although the nonimportation and embargo policies of Jefferson’s administration sought primarily to remove foreign encumbrances on American commerce and not to stimulate certain domestic manufactures as an end in itself, they did result in an increase in the number of factories and workshops. As Nelson notes, for example, in New England, the number of cotton mills grew from four in 1804 to eighty-seven in 1809 (p. 168).

Against the background of these differing policies, Nelson reexamines Hamilton’s Report on Manufactures, which was submitted to Congress in December 1791. Noting that the recommendations contained in Hamilton’s report were far more limited in scope than those proposed in the draft prepared by his assistant, Tench Coxe—who was an avid proponent of domestic industry—Nelson concludes that while Hamilton recognized the utility of some American manufacturing, he gave it a low priority in the context of his efforts to establish his fiscal program.² “If the acid test of support for America’s economic independence was support for domestic manufacturing, Madison and Jefferson stood firm for protective tariffs and nonimportation; Hamilton vacillated according to the needs of his fiscal system,” Nelson argues. “In the end it was not he but they who affirmed manufacturing because it came to be an essential condition of independence” (p. 73).

One of the many other valuable contributions of Nelson’s book is its explanation of the “economic origins” of the Republican coalition. Support for the Republican opposition to Hamilton’s programs was not distinctly“agrarian”; the Republican party encompassed a broadly based coalition that cut across occupational, as well as geographic, lines, including merchants and manufacturers along with yeoman farmers. Nelson’s study demonstrates that it was the Jeffersonian Republican economic policy, with its emphasis on the national market system, that was the key to the Republican party’s political success. The alternative that the Republicans offered to Hamilton’s policy of force and patronage was the market system itself; the national market, Nelson persuasively argues, served as a unifying agent—the key not only to prosperity and social stability, but also to the political support of the diverse constituencies that comprised the Republican coalition.

The widely accepted notion that Hamilton was an “economic nationalist” and that the Jeffersonian Republicans, once in power, became “Federalist” in their policies by embracing nationalism is simplistic and misleading, as Nelson persuasively argues. Hamilton’s nationalism “extended only to formation of a central government; otherwise, he sought commercial alliance with Britain, which effectively precluded economic independence.... Hamilton’s policies would have maintained an agrarian America, though under the control of a merchant faction, while the policy proposals of Jefferson, Madison, and Gallatin in the early 1790s would have advanced economic independence through expanded foreign markets and some degree of industrialization” (p. 165).3

The book is also valuable because it helps to explain more fully the transition from Jeffersonian Republicanism to the political party system of later decades, the rivalry between the Jacksonian Democrats and the National Republicans, or Whigs. During the period following the Jefferson and Madison administrations—the so-called “Era of Good Feelings,” when the Federalist party was dead at the national level—a real division lurked beneath the superficial unity of the Republican party. On the one hand were the “Old Republicans,” committed to Jeffersonian principles of federalism and the distrust of governmental power, many of whom found appealing the egalitarian, laissez-faire policies of Jacksonian Democracy. On the other hand were those Republicans, like John Quincy Adams, whose economic nationalism prefigured that of the Whigs—particularly, the “American System” of tariffs, internal improvements, and central banking that Henry Clay would begin to advocate in the 1820s. Nelson’s book, more clearly than most studies of the Jeffersonian period, shows the link between the policy of economic nationalism and the principles of Jeffersonian Republicanism.

In particular, Gallatin’s Report on Manufactures in April 1810 anticipated the American System in advocating direct loans to manufacturers, protective tariffs, and a federally constructed national transportation network. Nelson astutely points to Gallatin’s affinity for finance, commerce, and manufactures as important in easing his party’s transition “from a political-economic program chiefly based on development of agricultural resources and unrestricted international markets to one promoting federal aid for internal improvements, manufactures, and banking.” A common denominator of the program of commercial discrimination proposed by Madison and Jefferson in the 1790s and the program proposed by Gallatin in 1810, Nelson adds, was the idea that it was the purpose of government to facilitate commerce (p. 116).

But despite its important contributions to the scholarship of Jeffersonian America, Nelson’s Liberty and Property is flawed. Indeed, it is ironic that from one of Nelson’s major strengths—the identification and elaboration of the Republicans’ national economic policy—comes a basic weakness in his analysis: an inadequately sophisticated treatment of the ideological dimensions of Jeffersonian Republicanism.

The differences between Hamilton and the Republicans that Nelson describes are differences in policy, not ideology. He asserts that both parties “agreed on property, contract, the ultimate ends and origins of political society, and some form of republican government.” He also writes that the Republicans “consistently shied away from exerting strong pressure on Congress for economic development or straying too far from constitutional strictures” not because of genuine political or constitutional scruples, but simply because they sought “to distance themselves politically” from Hamiltonian policies (pp. 165–66). Surely these assertions are overstated, if not simply wrong.

Real differences in political thought and constitutionalism motivated the Republican opposition to Hamilton’s program in the 1790s and defined the Republican “revolution of 1800,” which brought the Jeffersonians to power. Nelson comes close to conceding this when he quotes Madison: “The distinction [between the parties] has its origin in the confidence of the [Republican Party], in the capacity of mankind for self Govt. and a distrust of it by the other [party] or by its leaders” (p. 165).4 Jefferson expressed a similar idea when he explained to one correspondent, early in his presidency, the vision that would guide his administration:

Our people in a body are wise, because they are under the unrestrained and unperverted operation of their own understandings. Those whom they have assigned to the direction of their affairs, have stood with a pretty even front. If any one of them was withdrawn, many others entirely equal, have been ready to fill his place with as good abilities. A nation, composed of such materials, and free in all it’s [sic] members from distressing wants, furnishes hopeful implements for the interesting experiment of self-government; and we feel that we are acting under obligations not confined to the limits of our own society. It is impossible not to be sensible that we are acting for all mankind; that circumstances denied to others, but indulged to us, have imposed on us the duty of proving what is the degree of freedom and self-government in which a society may venture to leave it’s [sic] individual members.

One would search in vain in the writings of Hamilton, or virtually any other Federalist leader, for so positive an expression of “the interesting experiment of self-government” as a governing principle.5

The Republican conception of “self-government” has implications ranging far beyond matters of economic policy; the concept suggests views of human nature, of social and political philosophy, and of law and constitutionalism that differed profoundly from those held by the Federalists, and particularly Hamilton. As just one example, one may consider Jefferson’s famous description of the Hamiltonians as “an Anglican monarchical aristocratical party...whose avowed object is to draw over us the substance, as they have already done the forms, of the British government.” This description suggests that, to Jefferson’s mind at least, the differences that divided him and Hamilton were not merely differences in economic policy. Jefferson’s concerns over Hamilton’s pro-British, pro-monarchist tendencies were not illusory; as Nelson notes, Hamilton never ceased believing that the Constitution was a “frail and worthless fabric” and that someday “it will probably be found expedient to go into the British form” (p. 28).7

These differences are far more important than Nelson suggests; indeed, the split in the Republican triumvirate helps illustrate the nature of the intraparty schisms that first emerged during Jefferson’s presidency and that ultimately gave way to the party divisions of the decades before the Civil War. Nelson’s book, despite its frequent allusions to the “Republican triumvirate,” is more effective as a study of the political economy of Albert Gallatin alone.

Other, less-important problems mar the book. Nelson’s apparent lack of familiarity with several important recent works in the secondary literature makes his book seem dated in certain odd ways. For example, while he cites the recent studies of Joyce Appleby, whom he credits with “having gone far to restoring political economy and liberal republicanism to a central place in the founders’ intellectual heritage” (note 15, p. 189), he ignores the substance of her work, particularly her emphasis on the influence of the French antimercantilist Destutt de Tracy on Jefferson’s mature economic thought. Nelson also improperly cites (note 1, p. 198) Dumas Malone’s standard multivolume biography, Jefferson and His Time, as a four-volume work completed in 1970, when it is actually a six-volume work completed in 1981. The objection is not trivial since Nelson should have been aware of Malone’s sixth volume, The Sage of Monticello, which contains a chapter devoted to Jefferson’s political economy. Finally, considering the plethora of books and articles devoted to the themes of classical republicanism, liberalism, and early American political ideology, Nelson’s brief overviews of Anglo-American political and economic liberalism, centered respectively on David Hume and Adam Smith (pp. 2-7, 117-121), are embarrassingly simplistic. The explanation for these problems, as for the more serious flaws in Nelson’s book, again seems to be his focus exclusively on policy, disregarding ideology.

These problems should not detract from the real contributions that Nelson’s book makes to the scholarship of America in the early national period. The importance of the contributions is underscored by the quagmire created for students by the artificial and misleading debate over civic humanism. Thankfully, recent scholarship has begun to move toward a far more sophisticated understanding of American politics and political thought during this critical period. Liberty and Property helps fill some important gaps in the existing scholarship and should inspire additional studies that would give Jeffersonian Republicanism its full credit.

At the very least, Nelson’s book should help dissuade students of the early national period in American history from viewing the Federalist-Republican political party struggle in terms of capitalism versus agrarianism, or even civic humanism versus liberalism. The real issue that divided the parties in the 1790s more closely approximated the issue of, as Joyce Appleby has expressed it, “whether American growth should be controlled at the center through the manipulation of public credit or should move in response to the private bargaining of ordinary men.”⁹ The great challenge that faces students of American history is to show more fully how this debate over Hamilton’s policies set the stage for the controversies that constituted the political drama of later generations.

Notes

¹Nelson here cites Peterson’s Thomas Jefferson and the New
Nation (New York: Oxford University Press, 1970), pp. 514–15.
Although, as Peterson notes (pp. 940–41), Jefferson never did quite
overcome his preference for agriculture over manufacturing, the
War of 1812 and his reading of Destutt de Tracy’s treatise on
political economy helped eventually to reconcile Jefferson to manufactures. See Noble Cunningham’s In Pursuit of Reason: The Life
of Thomas Jefferson (Baton Rouge, La.: LSU Press, 1987), pp. 328–
29, and Joyce Appleby’s “What is Still American in the Political
Philosophy of Thomas Jefferson?” William and Mary Quarterly
(April 1982).

²Summarizing the differences between Coxe’s draft and
Hamilton’s final report, Nelson observes (pp. 46–47) the following:
Hamilton rejected Coxe’s proposals to abolish duties on coastal
trade and to aid manufactures directly through government loans
and land grants; he advocated bounties, which Coxe rejected as
more appropriate to exports than to manufactures for domestic
consumption; he declined to eliminate duties on raw materials if
such duties contributed significantly to government revenues; he
demurred from efforts to foster government construction of an
internal transportation system; and he proposed tariff changes that
were of little protective value and were primarily revenue measures.

³Nelson further notes that “[i]t was not the Republicans who
became more ‘Federalist’ after 1800 but the Federalists who
became more Republican under John Adams after 1796.” This
perceptive observation gives new significance to Manning J.
Dauer’s older study of the split in the Federalist party, The Adams
Federalists (Baltimore: John Hopkins Press, 1953).

⁴Nelson cites Madison’s letter to William Eustis of May 22, 1823.

⁵Jefferson to Dr. Joseph Priestley, June 19, 1802, in The Writings
of Thomas Jefferson, Paul L. Ford, ed. (New York: G. P. Putnam’s
Sons, 1892–99, 10 vols.), vol 8, pp. 158–59.

⁶Jefferson to Phillip Mazzei, April 24, 1796, inWritings, Ford, ed.,
vol. 7, pp. 75–76.

⁷Nelson cites Hamilton’s letter to Jefferson of August 13, 1791; the
text quoted is actually from Jefferson’s notes on a conversation he
had with Hamilton on that date. See The Papers of Thomas
Jefferson, Charles T. Cullen, ed., vol. 22 (Princeton: Princeton University Press, 1986), p. 38.

⁸Nelson does observe (note 1, pp. 187–88) that his sketch of Anglo-American liberalism, focused as it is on Hume, “is not intended to
identify specific intellectual influences on particular founders,” but
he clearly views Hume as the archetypal exponent of the “liberal
world view.” Citing the work of William D. Grampp, Nelson
similarly points to Smith as “embodiment and exemplar” of
economic liberalism, distinguishing it from laissez faire (note 10,
pp. 205–206). While Nelson himself may regard Hume and Smith as
exemplars of the liberal tradition, it is far from clear that the
thought of these two men should be regarded as appropriate models
for the thought of Jeffersonian Republicans. Jefferson, in particular,
had little regard for Hume and, later in life, expressed clear preferences for Jean-Baptiste Say and Destutt de Tracy over Smith.

⁹Appleby, “What is Still American,” p. 308.

David N. Mayer is the IHS R. C. Hoiles Postdoctoral Fellow
for 1987–88.