Fateful Lightning: A New History of the Civil War & Reconstruction (4 page)

It was at this point that the hinge between democratic republicanism and liberal capitalism began to squeak. Republicanism was based upon liberty, and liberty was based upon independence, but who could consider American farmers independent if their well-being now hung on the price their crops or meat or poultry might get on a faraway exchange market? And how independent could a shoemaker be when he was forced to close up his shop because cheaply manufactured British shoes cost less than his handmade ones, and take a wage-based job in a factory or mill built on the British model? On the other hand, how independent would America remain if it stuck its economic head in the sand, persisted in the old patterns of household agriculture, and became a relative weakling among the emerging capitalist economies of Europe?

These questions were posed, in the name of protecting the Republic, by republicans who now found themselves differing seriously from one another. Beginning with Alexander Hamilton and the Federalist Party, liberal republicans argued that American independence depended on the strength and competitiveness of its economy on the world capitalist markets. Hamilton, in particular, favored direct federal government intervention in the American economy to encourage manufacturing development, trade (through publicly financed roads, bridges, and canals), and finance (by chartering a national bank, which could lend money to entrepreneurs). Power, if used judiciously, could actually protect and promote liberty. Classical republicans, championed by Thomas Jefferson and represented in the Democratic Party, argued that the Constitution gave the federal government no such powers of economic intervention. Even if it did, encouraging Americans to join the system of world markets would only mortgage the American republic to foreign interests and encourage Americans to thirst for money and power over their fellow citizens. Classical republicans wrapped themselves in the toga of the Roman republic and reminded modern Americans that in ancient Rome, materialism and self-interest on Adam Smith’s scale were unknown:

Then none was for a party;

Then all were for the state;

Then the great man helped the poor,

And the poor man loved the great:

Then lands were fairly portioned;

Then spoils were fairly sold:

The Romans were like brothers

In the brave days of old.
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Jeffersonian Democrats especially opposed calls for government-financed public works, or “internal improvements,” since it was obvious that the new roads, bridges, and canals could serve only one purpose—to make it easier for farmers to reach distant markets, and for the markets to tempt American farmers into their grasp. It also went without saying that “internal improvements” could be financed only through federal taxation, and farmers who grew or manufactured only for their own households would never be able to find the money to pay those taxes without surrendering their cherished independence and growing what the market would pay them for in cash. Power was toxic, and no amount of it was safe for liberty. “The market is a canker,” warned a contributor to the
New England Farmer
in 1829, “that will, by degrees, eat you out, while you are eating upon it.”
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The Democrats reserved their greatest venom for the two newest instruments of capitalist finance, the bank and the chartered corporation. America had known no banks until the very end of the American Revolution and had only eighty banks by 1810. By 1840, however, there were nearly a thousand of them, including a congressionally chartered “monster” Bank of the United States in Philadelphia, organized in 1816 with an initial capitalization of $35 million. Democrats hated the banks because the banks were the chief processing agents of the markets: they extended credit for investment (which Democrats attacked as “phony” wealth) and either made windfall profits from manufacturers and farmers when those investments succeeded or else seized the property of those whose enterprises failed. Liberty and virtue dwelt in the hearts of independent farmers sitting under their own vines and fig trees, unmolested by tax agents and bill collectors. “Corruption or morals in the mass of cultivators,” Jefferson wrote in his celebrated
Notes on the State of Virginia
, “is a phenomenon which no age nor nation has furnished an example.” No one seemed to personify that ideal more than Jefferson’s fellow Virginian and virtuous senator, John Taylor of Caroline, who impressed a colleague as “plain and solid, a wise counsellor, a ready and vigorous debater, acute and comprehensive, ripe in all historical and political knowledge, innately republican—modest, courteous, benevolent, hospitable—a skilful, practical farmer, giving his time to his farm and his books, when not called by
an emergency to the public service—and returning to his books and his farm when the emergency was over.”
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Banks, on the other hand, looked like precisely the enormous concentrations of power and self-interest that were the source of corruption, and those fears of corruption were not eased when large-scale banks such as the Bank of the United States began paying handsome retainers to members of Congress to sit on its board of directors. Democrats were equally fearful of chartered corporations, since large-scale corporations could just as easily acquire the same enormous wealth as banks and, with it, the same power for corrupting state and local legislatures. It was a point of pride to John Randolph of Roanoke, one of the sharpest-tongued Jeffersonians in the House of Representatives, that “I am the holder of no stock whatever, except livestock, and had determined never to own any … because it is the creation of a great privileged order of the most hateful kind to my feelings, and because I would rather be the master than the slave. If I must have a master let him be one with epaulettes, something that I could fear and respect, something I could look up to—but not a master with a quill behind his ear.”
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For the first three decades of the American republic, it was clearly the fears of the Democrats that had the upper hand. Of the 4 million people living in the United States in 1790, 3.7 million of them lived in the countryside and only about 200,000 in towns or ports larger than 2,500 people. Although the first two presidents, Washington and Adams, favored development and competition on the world markets as the best method for toughening the independence of the American economy, the costs of that encouragement were federal taxes. A country that had formed in a revolt against British taxes was in no mood to pay them to the federal government. Thomas Jefferson, promising an “empire for liberty,” was swept into the presidency in 1800 in a tremendous landslide, which secured Democratic control of the federal government for the next quarter century. Accordingly, the Democrats allowed banks and corporate charters to wither, and in 1807 Jefferson briefly imposed an absolute embargo on all foreign trade. If the surrounding economic world required that Americans dabble in economic power in order to safeguard political liberty, then better to quarantine the Republic economically rather than surrender it to world markets.
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What Jefferson had not entirely counted upon was the degree to which isolation really did translate into weakness. Britain, then at the height of its titanic grapple with Napoleon Bonaparte, discovered that an American government without a bank for borrowing or taxes for spending had no way to fund a navy for protection, and
so British warships shamelessly boarded American ships and impressed American sailors to fill up depleted British crews. In 1812, Jefferson’s handpicked successor as president, James Madison, responded by leading the country into war against the British. It was a catastrophe. “Our commerce [had been] put in fetters by non-importation acts and embargoes; and the crisis that succeeded found us without the most ordinary resources of an independent people,” complained John Pendleton Kennedy, a Whig congressman from Maryland. “Our armies went to the frontier clothed in the fabrics of the enemy; our munitions of war was gathered as chance supplied them from the four quarters of the earth; and the whole struggle was marked by the prodigality, waste and privation of a thriftless nation, taken at unawares and challenged to a contest without the necessary armor of a combatant.”
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The unprepared American armies were routed by a British empire that was already fighting with one arm tied behind its back by Napoleon, and the household-based American economy fell apart. By the end of the war, only major loans from private bankers kept the United States Treasury from collapse. And only British exhaustion from its European wars kept Britain from turning the American republic back into British colonies.
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The disaster of the War of 1812 frightened many republicans away from Jefferson’s fond dream of a nation of liberty-loving but economically powerless farmers. “These disasters opened our eyes to some important facts,” Kennedy recalled in 1831. “They demonstrated to us the necessity of extending more efficient protection, at least, to those manufactures which were essential to the defence of the nation” as well as the establishment of “the value of a national currency, and the duty of protecting it from the influence of foreign disturbance” through the shield of a national banking system. Led by Henry Clay of Kentucky, a new party of National Republicans, or Whigs (as Clay renamed them in the 1830s), resurrected the program of government support for internal improvements, government-sponsored banking, and a new program of protective tariffs to keep out cheap imported British manufactured goods and stimulate manufacturing at home. “National independence was only to be maintained by national resistance against foreign encroachments,” declared Clay in 1816, “by cherishing the interest of the people, and giving to the whole physical power of the country an interest in the preservation of the nation.” Clay went on to endorse the new military program, “a chain of turnpikes, roads and canals from Passamaquoddy to New Orleans,” and tariffs to “effectually protect our manufacturers.”
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Although the presidency remained firmly in the hands of the Democrats (except for a brief interlude under John Quincy Adams from 1824 to 1828), Clay’s influence in Congress pushed large elements of this “American System” into being anyway.
It was not until the election of Andrew Jackson, an unreconstructed Jeffersonian radical, as president in 1828 that the Democrats struck back. Jackson vetoed congressional appropriations for public roads, effectively destroyed the Bank of the United States by refusing to deposit federal money there, and paid off the national debt so that there would no need for federal taxes and (above all) no need for federal tariffs to protect American industries and corporations.
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Jackson’s war against liberal market-based power was, in the long run, far from successful. Clay, in the role of Jackson’s nemesis, remained a powerful figure in American politics, and many banks protected themselves from Jackson’s wrath by obtaining charters from cooperative state legislatures. Still, that lack of success cannot obscure the anger and violence with which Whigs and Democrats—both supposedly dedicated to republicanism—had come to regard each other. By the 1840s, the Whigs had defined themselves as the party of liberal democracy, of an upwardly mobile middle class, willing to embrace the fluidity of the market and eager to promote national unity and government support for railroad construction, canals, and even steamship lines. They spoke for the small-scale manufacturer who worked beside his employees in making boots and shoes, forging iron, tanning leather; for the banker who lent him the money to start up his business and the lawyer who collected his debts; and for the commercial farmer who grew crops for cash sale on distant markets. In an economy where the average number of employees per manufacturing establishment was only fourteen, it was not unreasonable for the Whigs to see themselves as the friends of “the enterprising mechanic, who raises himself by his ingenious labors from the dust and turmoil of his workshop, to an abode of ease and elegance; the industrious tradesman, whose patient frugality enables him at last to accumulate enough to forego the duties of the counter and indulge a well-earned leisure.” Perhaps most important, the Whigs had enlisted the support of a vast majority of Protestant evangelicals, and they wedded their economic gospel of hard work and thrift to the evangelical gospel of moral self-control.
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They were the party of the bourgeoisie, the “middling sort,” who bridled at slavery and aristocracy in equal portions, and who wanted nothing but the liberty to “improve” themselves without molestation.

The Democrats remained dedicated to resisting “consolidated” national government with its tariffs and “improvements.” They appealed most strongly to the old elite families of the Republic, who feared and resented the ambitious rise of Whig entrepreneurs, and to the poorest farmers and urban workers, who suspected that the Whigs were merely the agents of a “money power” out to rob them, through taxes or
through financial chicanery, of the little they had. “An organized, concentrated, and privileged money power is one of deadly hostility to liberty,” warned a Democratic convention in Ohio in 1845. That included “any form or reform of banking” and any encouragement to manufacturing. “Manufactures are not of themselves objects of desire to a free people, or of favor for a free government,” since they “involve the necessity of a crowded population, subject to a very arbitrary control over their comfort by a few wealthy persons, and devoted to unwholesome employment.” Both parties spoke the language of democratic republicanism, but both were also convinced that their brand of democratic republicanism was the best guarantee of liberty. As one historian has summed up, the Whigs were the party of America’s hopes, the Democrats the party of its fears.
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