America's Fiscal Constitution (14 page)

Regional conflicts concerning import taxes also intensified in the early 1820s. Iron producers, strongest in Pennsylvania, welcomed taxes offering protection from iron produced in Britain by firms that used more efficient technology. New England textile mills feared competition from modern British textile looms. Southern cotton producers, however, resisted higher import taxes that raised the prices of goods such as iron farm tools and the coarse British wool used to clothe slaves.

Martin Van Buren had learned how to use a political organization to resolve festering conflicts. He grew up on a small farm in upstate New York. The area was dominated by Dutch American aristocrats who owned massive estates cultivated by tenant farmers and who—along with New York City’s merchant class—controlled much of the state government.
Van Buren fought that elite by forming a disciplined coalition consisting of small farmers and merchants in upstate New York and middle-class citizens in New York City. As New York extended the right to vote to tax-paying white males who did not own land, Van Buren integrated them into his organization.

Like many interest groups today, Van Buren’s coalition enhanced its power with the ability to deliver a bloc of votes. After resolving conflicts among its constituency through negotiation, the organization expected its individual members to unite behind the final decision. Silas Wright, a key Van Buren lieutenant, described what was required of members of the party once it took a position on an issue: “The first man we see step to the rear, we cut down. . . . They must not falter, or they perish.”
⁵
By 1822 Van Buren’s coalition—known as the Albany Regency—was no longer a group of outsiders. It won control of the legislature and filled most political appointments in what had become the nation’s most populous state and dominant commercial center.

Van Buren believed that the practice of resolving internal differences in order to create a large, powerful voting bloc could be used to nominate a national presidential candidate.
⁶

A N
EW
D
EMOCRATIC
P
ARTY

Adams, a former professor and diplomat, lacked the interpersonal skills and political organization required to rally Congress behind his administration. It would be daunting, however, for Van Buren and his allies to unseat a sitting president at a time of national peace and prosperity. To prevail over Adams in the election of 1828, Van Buren would need to find a marketable candidate, craft a unifying platform, and neutralize an issue that could energize opponents in the swing states critical to victory in the Electoral College. This three-part strategy today would hardly seem innovative, but it was bold in the 1820s, when many Americans still viewed party organizations as unnecessary or even subversive.

Van Buren shared his vision with potential allies, beginning with Vice President Calhoun, whom Van Buren’s organization would back for the vice presidency.
⁷
He also enlisted support from the leader of Jefferson’s disciplined Virginia organization, publisher John Ritchie. In January 1827 Van Buren described to Ritchie how Jackson’s election based on military
service rather than shared principles “would be one thing. His election as the result of a combined and concerted effort of a political party, holding in the main to certain tenets & opposed to certain prevailing principles, might be another and far different thing.” Van Buren urged Ritchie to help forge an alliance between Southern planters and “plain” citizens in the North, who together would agree politically “in the main to certain tenets.”
⁸
They began to refer to themselves as Democratic Republicans.

Andrew Jackson—the candidate favored by Van Buren, Calhoun, and Ritchie—posed some risks. The venerated Jefferson had considered Jackson “one of the most unfit men” he could think of for the presidency.
⁹
In 1821 Jackson himself had remarked to a journalist: “Do they think that I am such a damned fool as to think myself fit for President of the United States? No, sir; I know what I am fit for. I can command a body of men in a rough way, but I am not fit to be President.”
¹⁰

Yet no other American—apart from former presidents—rivaled Jackson’s fame. Even though Jackson lived on a plantation maintained by slave labor, many voters of modest means could identify with a frontiersman who rose from penniless Revolutionary War private to become a general who had defeated Europe’s best.
¹¹
In contrast, Van Buren and his allies portrayed Adams as a pampered elitist, even though the president lived a spartan existence that included brisk morning walks before the president swam across the Potomac’s chilly waters naked.

Throughout 1828 Van Buren labored to elect Jackson, even though he did not meet the general until after the election. He did know, however, that Jackson rewarded supporters and punished opponents. That type of loyalty would be essential for maintaining discipline in a national party organization.

There were few policies that would serve as what Van Buren had described to Ritchie as “common tenets”—in modern parlance, a party platform. The diverse factions within Van Buren’s broad coalition could agree on little more than the need to balance the budget and pay off the national debt. Accordingly, the party attacked Adams for proposing extravagant federal outlays for a national university, naval academy, new department to manage federal lands, and, of course, the astronomical observatory.

Though he was equipped with both a candidate and a unifying budget principle, Van Buren still had to resolve the divisive issue of import taxes. Henry Clay, who led Adams’s reelection campaign, would use that issue
to try to capture critical electoral votes. Most Americans supported at least some import taxes on
manufactured
goods as a means of paying federal bills. Taxes on imported
raw materials
posed a greater political challenge. Manufacturers sought to obtain raw materials as cheaply as possible, while woolgrowers sought protection against imported raw wool. Shepherds and farmers in the hills of upstate New York, Western Pennsylvania, and Eastern Ohio would eventually breed herds that could yield fine wool, but in the meantime they sought some cost advantage over wool imported from Scotland.

Twenty-first-century journalists report on targeted appeals from presidential campaigns to the voters of Pennsylvania and Ohio, states that often swing the balance in the Electoral College. Van Buren and Clay battled intensely for voters in those states in 1828. To prevail, Van Buren had to convince enough voters in Western Pennsylvania, Eastern Ohio, and his own upstate New York that Jackson’s election would not threaten import taxes on iron and raw wool. He had to thread a needle, by conveying that message without alienating Jackson’s core base of Southern supporters, who opposed those very taxes. The result was the Machiavellian Tariff of 1828, soon to be called the Tariff of Abominations.

Van Buren’s friend and political ally, Congressman Silas Wright of New York, initiated the legislative ploy by bringing to the House floor a bill raising import taxes on imported iron, textiles, and raw materials like wool, molasses, and rope. Molasses was used by New England distillers and rope by shipbuilders in Massachusetts. With support from the large delegations of New York, Pennsylvania, and Ohio, a House majority passed Wright’s bill. States in the South and New England commanded a majority in the Senate. Van Buren reassured Jackson’s Southern supporters that they could defeat Wright’s bill in the Senate so long as it retained high taxes on materials essential to New England’s merchants. Accordingly, “Jackson men”—including those opposed to higher import taxes—voted against all amendments to reduce the harsh taxes on New England’s raw materials.

Then Van Buren sprang a trap. Some New England textile mills sought to avoid the economic impact of high taxes on raw wool by supporting even higher taxes on woven wool. Unexpectedly, Senator Van Buren and another Jackson loyalist voted with New England and the Adams men. Calhoun and other foes of higher import taxes realized only afterwards
that the last-minute addition of a higher import tax on finished woolen textiles had captured the votes of Massachusetts senator Daniel Webster and enough other New Englanders to secure the passage of Wright’s legislation.

Van Buren’s scheme to neutralize the issue of import taxes worked. Van Buren and Wright could now reassure proponents of higher import taxes in Pennsylvania, Ohio, and New York that they had nothing to fear from a Jackson presidency. Southern congressmen attacked President Adams for signing it into law. Jackson himself remained silent on the issue. Congressional veteran John Randolph of Virginia opined that a bill touted as protecting domestic manufacturing in fact “served principally to manufacture . . . a President.”
¹²

Van Buren had completed his three-part plan for melding diverse regional constituencies into a national organization. He backed a popular candidate, highlighted the unifying goals of paying down debt and curbing extravagant spending, and deprived Adams of an economic issue—import taxes—that could have rallied support in swing states.

The “Democratic Republicans” were better organized than the “Adams men,” also known as “National Republicans.” In 1828 Jackson handily won both the Electoral College and a popular vote swollen by a flood of newly enfranchised voters. Voter participation had tripled from its level four years earlier. The United States had a new system for nominating presidents, which Van Buren would refine four years later with use of a convention. Within a dozen years a formal party system soon would become an essential feature of the unwritten American constitution. For the next century and a half, parties would serve as the most powerful means of enforcing the American Fiscal Tradition’s limits on debt.

P
AYING
O
FF
D
EBT

Andrew Jackson formed opinions based on personal experience rather than scholarship, which explains his particular hostility toward debt. When Jackson first arrived in the nation’s capital as a young congressman from Tennessee in 1795, he tried to make a fortune by selling land in the wilderness back home. Finding few buyers, he finally managed to sell fifty thousand acres in exchange for a $10,000 note.
¹³
Jackson promptly endorsed that note over to a merchant in payment for goods destined for
Jackson’s general store in Tennessee. The maker of the note failed to pay and landed in debtor’s prison, leaving Jackson—as endorser—liable for the amount due. Jackson worked for over a decade to pay it off and afterwards viewed freedom from debt as an essential element of independence. In Jackson’s first inaugural address, in 1829, he pledged to work for “the extinguishment of the national debt, the unnecessary duration of which is incompatible with real independence.”
¹⁴

Jackson’s secretary of the treasury made the populist case for paying off debt in terms that: “Interest is now paid to capitalists, out of the profits of labor; not only will this labor be released from the burden, but the capital, thus thrown out of an unproductive use, will seek a productive employment; giving thereby a new impetus to enterprise . . . at a lower charge for interest than before.”
¹⁵
The American policy of paying off its debts contrasted with that of Great Britain, where debt service from its wars—including the War of 1812—consumed over half of all tax revenues for decades following the Napoleonic Wars.

The Jackson administration, like Jefferson’s, subordinated all other goals to its drive to retire the federal debt. For that reason the president did not quickly repeal the unpopular Tariff of Abominations. His position surprised and disappointed Vice President Calhoun and many among the South’s planter aristocracy. High import taxes generally functioned to limit the growth of imports, but the booming demand for cotton exports bolstered the ability of merchants to pay for greater volumes of imports even with the tax burden. Import tax revenues rose steadily during Jackson’s presidency, which allowed the administration to retire debt while funding popular improvements in public transportation at record levels.
¹⁶

Jackson and Secretary of State Van Buren buttressed party discipline by rewarding political allies with appointments and retaliating against opponents. Henry Clay, whom Jackson blamed for blocking his election to the presidency in 1825, was singled out for harsh treatment. Jackson’s veto in 1830 of a project favored by Clay established a powerful and enduring budgetary precedent. The drama began without fanfare, when Congress voted to fund the Maysville road connecting Clay’s home state of Kentucky with the Ohio leg of the National Road. Van Buren later bragged to a friend that he worked hard to hide the president’s views on the road bill in order to enhance the impact of Jackson’s veto. James Madison had
downplayed his 1817 veto of a public works bill, while Jackson’s 1830 veto message was strongly worded and widely publicized.

The veto was a political masterstroke. Jackson, like Madison in 1817, justified the veto in part based on constitutional objections to public works. But Jackson’s constitutional objection was transparently a ruse. While Madison objected to an open-ended fund for public improvements, Jackson vetoed a project that was similar to many others already in existence. Members of Congress were dismayed that the president would use an unexpected veto to blame them for wasteful spending. Meanwhile, voters applauded the president’s role as the guardian of tax dollars.

Vetoes of spending bills by future presidents would anger Congress while earning respect from taxpayers. A century after Jackson’s presidency, Franklin Roosevelt—a careful student of history—would ask his staff to actively search for spending bills that he could veto as a sign of his financial stewardship. Presidents rarely vetoed spending bills after traditional limits on debt collapsed in the twenty-first century.