Contending Visions of the New Republic: John Taylor and Alexander Hamilton Agrarians and "Capitalists" in the Early Republic
To understand the competing visions that were held for the future of the country, we will examine the competing views of Alexander Hamilton and John Taylor (who is often aligned with Thomas Jefferson). It is these competing views that will serve as the basis for the political parties that will emerge. You will gain an understanding of their views, and then participate in a seminar based on your reading.
- Read "Background" to get an understanding of the two different visions for the new republic— that of John Taylor/Thomas Jefferson and that of Alexander Hamilton.
- Understand Hamilton's Vision.
a.Read "Bastard Brat" for background on Hamilton's Plans.
b.Read Primary Source #2, and give a brief response (note form is fine) at the end of the
document to this question:
i. How does Hamilton address the concern that the benefits of his financial program would not be distributed equally through American society?
c.Read Primary Source #3, and give a brief response (note form is fine) at the end of the
document to this question:
i. What arguments does Hamilton offer in support of manufacturing? How,
specifically, does he attempt to refute the idea that only some Americans would benefit from the expansion of manufacturing?
3.Understand Taylor's/Jefferson's Vision.
a.Read "Crying in the Wilderness," for background on Taylor
b.Read Primary Source #1 "Notes on the States of Virginia," and give a brief response
(note form is fine) at the end of the document to this question:
i. How does Jefferson defend the agrarian tradition? What are his views on manufacturing?
c.Read Primary Source #4 "Arator," and give a brief response (note form is fine) at the
end of the document to this question:
i. How does Taylor make the connection between the sad state of agriculture and the policies of an " aristocratical order. " Do you think this was an effective argument at the time?
4.Be ready to discuss these documents in a class seminar by considering the following
questions:
a.How does Taylor's/Jefferson's vision for American society the economy and the role of
government compare with Hamilton's? Which vision do you think is better?
b.Which vision better matches the nation's founding principles "all men are create equal"
with a right to "Life, liberty, and the pursuit of happiness"?
- Is Hamilton's goal the good of the country or the good of the elite?
Agrarians and "Capitalists" in the
Early Republic:
John Taylor and Alexander Hamilton
John Taylor loved manure. Walking though the fields of his Virginia plantation, he breathed deeply, taking in the smells of fertilizer and moist soil. Stooping to pick up a clod of dirt, crumbling it, and letting it fall through his fingers, he could inhale the life-giving aroma of the earth. He could almost taste the productive potential of the land, the liberating power it contained. Here in the fields lay the future of the United States. As an agrarian, Taylor believed that farming was a morally superior way of life. He was sure that farms and plantations were the only firm foundation on which to build a great nation. And he was just as sure that government had to promote agriculture. Planting crops and reaping the harvest meant freedom for sturdy planters and independent yeomen farmers. Their ownership of land made them subservient to no one. Far away, in the bustling port city of New York, Alexander Hamilton envisioned a very different future for the nation—a commercial one. It could be fulfilled, he knew, only with the help of the new federal government. The Constitution gave the central government far more power than did the Articles of Confederation. Yet he also knew that this power was only on paper. The challenge now was to make it real. Hamilton had a plan to do just that. First, he would attach the "rich and well-born" to the government. Then with the investing class on its side, the government could promote commercial and manufacturing enterprise. Only by moving America away from its dependence on farming could the nation hope to achieve wealth and power. One 'influential group, however, stood in the way: farmers like John Taylor, who romanticized agriculture and clung to the past. A threat to the very future of the nation, these misguided agrarians would have to be overcome with bold action and persuasive arguments. They could not deny the nation its greatness.
Bastard Brat
Hamilton’s Vision
When Hamilton became the nation's first secretary of the Treasury, he took up the problems of the nation's finance with an almost religious zeal. The result was a bold plan designed to assert the new government's power and dramatically transform the country. The details were contained in three reports to Congress in which he proposed a national banking system and developed ways to pay the nation's Revolutionary War debt.
In his First Report on Public Credit, issued in 1790, Hamilton insisted that all of the national debt be paid back, lire national government owed more than fifty million dollars to foreign and domestic lenders, and the states owed about half as much. Hamilton realized that the government would need to borrow money in the future. Repaying all of the national government's debt would make it easier and cheaper to do so. Furthermore, rich investors, who held much of the debt, would be tied through their pocketbooks to the new government. They would be quick to support a government that paid them back their money and all the interest due. The certificates issued to the government's creditors would provide a sound medium of exchange, thereby expanding the nation's supply of badly needed sound money. [See Source 2.] For the same reasons, Hamilton also called for the national government to assume all the Revolutionary War debts of the state governments. This would further tie the investing class to die national regime and help establish its sovereignty over the states. In the Second Report on Public Credit, also issued in 1790, Hamilton proposed that Congress establish a national bank to be headquartered in Philadelphia. The Dank of the United States, he argued, would perform a number of useful services. It would be able to issue payments for the public debt, serve as a repository for government funds, and print bank notes that would stabilize the nation's currency. In addition, it could also make loans to businesses. To fund the bank, the national government would borrow money from the bank to purchase one-fifth of its stock. The remainder of the stock would be sold to citizens. Because private citizens would be able to purchase stock in the bank, their interests would be further lied to the government. Here was another marriage of the investing classes and the government.
Finally, Hamilton's Report on Manufactures in 1791 called for a diverse economy based on agriculture, commerce, and manufacturing. Tire American economy continued to rely on the export of agricultural surpluses, just as in the colonial period. Tire role of the colonies in the empire had been to produce low-value farm products. The British realized that the real wealth was in making high-value finished products. Now Hamilton wanted the United States to emulate Britain, a wealthy nation with a powerful central government that promoted manufacturing and commerce. Wealth, Hamilton realized, was in making goods, not growing them. The government, therefore, had to stimulate private commercial and manufacturing enterprises. Hamilton thus called for government subsidies to help promote the construction of factories. He also proposed protective tariffs—taxes on imported goods—to help domestic manufacturing compete against foreign imports. This would raise prices, but he believed thatsuch tariffs were necessary in the short term. Industry after all, would make the economy stronger and would encourage hard work among the populace. [See Source 3.]
In Congress, Hamilton got most of what he wanted, but his programs sparked a bitter fight. The opposition was led by Antifederalists such as George Mason and Richard Henry Lee, who had opposed a stronger government all along. Especially odious to many was the assumption of the state debts because Virginia and several other states had already retired their debts. Now they would have to share the burden of paying those of the states that had not. Congress narrowly passed Hamilton's proposal to fund, or pay back, the national debt, but assumption was defeated by two votes. In desperation, Hamilton and Iris Federalist supporters played politics. According to legend, Secretary of State Thomas Jefferson and Representative James Madison, leading opponents of assumption, hosted a dinner party during which they struck a deal with Hamilton. The Virginians wanted the new national capital located along the Potomac River. Hamilton wanted assumption. The two parties came to an agreement: Washington, D.C., would be the capital, and Hamilton's assumption plan was enacted in 1790.
Meanwhile, Hamilton’s proposal to create the Bank of the United States received more support in Congress. Most politicians thought that the bank would quickly prove profitable and the government's credit would become all the more sound. But some leaders were skeptical. Foremost among them was Madison, who argued that chartering a private corporation was beyond the constitutional scope of the national government. Congress approved the bank, but opposition to it remained fierce. President Washington turned to Hamilton to demonstrate its constitutionality. Hamilton argued that chartering a bank was covered under the implied powers given to Congress in the Constitution, specifically the closing clause of Article I, Section 8. That clause empowers Congress to "make all laws which shall be necessary and proper for carrying into execution the foregoing powers." Hamilton argued that this clause applied to the bank, which was both "necessary and proper" for executing Congress's power to regulate commerce. His opponents disagreed. They argued for a "strict construction" of the Constitution. Hamilton’s argument for a "loose construction," which interprets the Constitution more broadly, became the foundation of a long tradition in American politics.
Only the Report on Manufactures failed. Madison and other southern planters rallied to defeat this report in Congress. The Tariff of 1792 provided more protection to agricultural interests than to the few American factories in existence. The bulk of Hamilton's other programs were ignored. Hamilton was disappointed, but the facts were against him. According to the 1790 Census, 95 percent of Americans lived in rural areas. Even in the cities, merchants and artisans outnumbered manufacturers and factory workers. Hamilton had gone too far in attempting to move America away from its agricultural roots. Meanwhile, the fight over his plan revealed how far his vision for America was from that of his agrarian opponents. Among them, no one was more alarmed at the implications of the Treasury secretary's proposals than John Taylor.
Source 2: Alexander Hamilton, First Report on Public Credit (1790)
John Taylor, Thomas Jefferson, James Madison, and other opponents of Alexander Hamilton's financial proposals argued that their benefits would not be distributed equally through American society. How does Hamilton address that concern here?
It cannot but merit particular attention, that, among ourselves, the most enlightened friends of good government are those whose expectations are the highest.
To justify and preserve their confidence; to promote the increasing respectability of the American name; to answer the calk of justice; to restore landed property to its due value; to furnish new resources, both to agriculture and commerce; to cement more closely the union of the States; to add to their security against foreign attack; to establish public order on the basis of an upright and liberal policy;—these are the great and invaluable ends to be secured by a proper and adequate provision, at the present period, for the support of public credit.
To this provision we are invited, not only by the general considerations which have been noticed, but by others of a more particular nature. It will procure, to every class of the community, some important advantages, and remove some no less important disadvantages.
The advantage to the public creditors, from the increased value of that part of their property which constitutes the public debt, needs no explanation.
But there is a consequence of this, less obvious, though not less true, in which every other citizen is interested. It is a well-known fact, that, in countries in which the national debt is properly funded, and an object of established confidence, it answers most of the purposes of money. Transfers of stock or public debt are there equivalent to payments in specie;.... The same thing would, in all probability, happen here under the like circumstances.
The benefits of this are various and obvious:
First.—Trade is extended by it, because there is a larger capital to carry it on...
Secondly.—Agriculture and manufactures are also promoted by it, for the like reason, that more capital can be commanded to be employed in both; and because the merchant, whose enterprise in foreign trade give to them activity and extension, has greater means for enterprise.
Thirdly.—The interest of money will be lowered by it; for this is always in a ratio to the quantity of money, and to the quickness of circulation. This circumstance will enable both the public and individuals to borrow on easier arid cheaper terms....
The proprietors of lands would not only feel the benefit of this increase in the value of their property, and of a more prompt and better sale, when they had occasion to sell, but the necessity of selling would be itself greatly diminished.
Source 3: Alexander Hamilton, Report on Manufactures (1791)
Hamilton's Report on Manufactures calls for the expansion of domestic manufacturing and commercial enterprises. Much of the report is devoted to countering the objections of agrarians such as Thomas Jefferson and John Taylor. What arguments does Hamilton offer in support of manufacturing? How specifically, does he attempt to refute the idea that only some Americans would benefit from it?
[T]wo important references are to be drawn, one, that there is always a higher probability of a favorable balance of Trade, in regard to countries in which manufactures founded on the basis of a thriving Agriculture flourish, than rn regard to those, which are confined wholly or almost wholly to Agriculture; the other (which is also a consequence of the first) that countries of the former description are likely to possess more pecuniary wealth, or money, than those of
the latter..
Facts appear to correspond with this conclusion. The importations of manufactured supplies seem invariably to drain the merely Agricultural people of their wealth. Let the situation of the manufacturing countries of Europe be compared in this particular, with that of Countries which only cultivate, and the disparity will be striking. Other causes, it is true, help to Account for this disparity between some of them; and among these causes, the relative state of Agriculture- but between others of them, the most prominent circumstance of dissimilitude arises from the Comparative state of Manufactures. In corroboration of the same idea, it ought not to escape remark, that the West India Islands, the soils of which are the most fertile, and the Nation, which in the greatest degree supplies the rest of the world, with the precious metals, exchange to a loss with almost ever}? other Country. . ..
Not only the wealth; but the independence and security of a Country, appear to be materially connected with the prosperity of manufactures. Every nation, with a view to those great objects, ought to endeavour to possess within itself all the essentials of national supply. These comprise the means of Subsistence habitation clothing and defence....
One more point of view only remains in which to Consider the expediency of encouraging manufactures in the United states.
It is not uncommon to meet with an opinion that though the promotion of manufactures may be the interest of a part of the Union, it is contrary to that of another part. The Northern & southern regions are sometimes represented as having adverse interests in this respect. Those are called Manufacturing, these Agricultural states; and a species of opposition is imagined to subsist between the Manufacturing a[nd] Agricultural interests.
This idea of an opposition between those two interests is the common error of the early periods of every country, but experience gradually dissipates it... . Particular encouragements of particular manufactures maybe of a Nature to sacrifice the interests of landholders to those of manufacturers; But it is nevertheless a maxim well established by experience, and generally acknowledged, where there has been sufficient experience, that the aggregate prosperity of manufactures, and the aggregate prosperity of Agriculture are rntimately connected... .