Cronyism

CHAPTER 4

PRIME MINISTER HAMILTON: THE FISCAL PROGRAM

The Creation of a National Debt

The Hamiltonian Era was the nation’s first decade of pure corruption. Secretary of the Treasury Alexander Hamilton embodied the court intellectual of the secularized altar, quickly supplanting James Madison as the nation’s virtual prime minister. Unsurprisingly, Hamilton soon wrote of “my commercial system,” a thoroughly mercantilist economy where the government privileged select business interests. In particular, he desired a funded debt to benefit securities speculators, a monopolistic national bank to provide loans to favored businesses, subsidies and a moderately protective tariff to establish elite manufacturing firms, and internal improvements and land grants to aid speculators. Ever the economic and political genius, Hamilton realized that he could achieve his goals by using the Constitution. He first secured debt assumption with the Funding Act, made possible by a corrupt bargain that also determined the permanent location of the nation’s capital. But in doing so he alienated Madison and caused the Antifederalists to devise new forms of resistance.

The United States grappled with three types of debt: $12 million in foreign debt, $42 million in domestic federal debt, and $25 million in domestic state debt. The Constitution empowered Congress to assume the Confederation’s debts but said nothing about the particular value or assuming state debts. In his Report Relative to a Provision for the Support of Public Credit, delivered to Congress in January 1790, Hamilton argued that the federal government should assume all debts at face value. The Treasurer had no use for the anti-debt theories of Adam Smith, siding instead with James Steuart, who championed the blessings of public debt. Hamilton’s rationale was straightforward: establish a near-permanent debt to increase government power and benefit Robert Morris–affiliated speculators who bought securities at a fraction of their face value. According to one historian, “Hamilton’s precept was: Bind the rich to the government by self-interest.”

Indeed, the rich were eager for an alliance. After Congress passed revenue legislation in mid-1789, the Morris ambit bought up federal and state debts, accelerating their purchases later in the year once they secretly learned of Hamilton’s plan. In New York, seventy-eight individuals acquired $2.7 million, or 31 percent, of various states’ debts. Of this group, eight men alone gobbled up over half of that amount ($1.5 million). By 1790 the largest security holders owned an estimated two-thirds of federal debts. Furthermore, most of the federal debt (according to some estimates, four-fifths) was held by wealthy northerners, and the high-debt states hailed from the North, apart from South Carolina.

One notable purchaser was assistant Treasury Secretary William Duer, Hamilton’s longtime friend, who speculated in land and other ventures. Duer was also close with Morris and William Constable, a prominent merchant who served as a director at Hamilton’s Bank of New York. Constable and Duer forecasted to their associates a rise in security prices, which, in their words, was “based on something better than general optimism.” Other individuals close to Hamilton who speculated included Senators Morris, Philip Schuyler (Hamilton’s father-in-law), Rufus King, and Oliver Ellsworth; and Congressmen Elias Boudinot and Jeremiah Wadsworth. Clearly, the old Morris clique hoped to make a killing.

However, in February 1790 Congressman Madison shockingly criticized the Report, stunning Hamilton and the ardent Federalists who expected to personally benefit. Madison’s motivations had less to do with the debt measure itself than with the distribution of the benefits. He previously argued that the national debt should be paid off in full and the state debts assumed at face value. Moreover, Madison worked with Hamilton at the Constitutional Convention regarding debt assumption, lobbied for Hamilton’s appointment to the Treasury, and in November 1789, when Hamilton asked for his old ally’s views on financial matters, wrote nothing that alarmed the New Yorker. But now Madison argued that assuming all debts at par would benefit a few speculators and was unjust to states that had already paid off their debts. In place of Hamilton’s scheme, Madison argued for a complex system of discrimination to make sure speculators did not unduly benefit.

Madison’s reversal was political. Virginians barely elected Madison to the House for a two-year term, and after a year they loathed him. Madison had sided with the North on tariffs and navigation acts, and infuriated many Antifederalists with his limp Bill of Rights, which the state had received in the fall of 1789 and was vigorously debating. Crucially, Hamilton’s plan would have furthered northern power at the expense of Virginia. Combined with the controversial discussion over the location of the permanent capital—which appeared to be headed somewhere outside of the South—the government was rapidly taking a pro-North position. For Virginia this was unacceptable, which meant it was unacceptable for Madison too, if he wanted to save his political hide and continue to serve in Congress.

Madison was not reversing his position on cronyism so much as reaffirming his belief in Virginia’s supremacy. When Madison earlier proposed that the Confederation pay off its debts in full and assume state debts, this was before northern speculators purchased securities and Virginia paid off its debt. In fact, in response to Hamilton, Madison proposed that Congress assume state debts where they stood at the end of the war to make sure Virginia gained, which would increase the debt more than what Hamilton desired. Madison wanted Virginia to get her slice of the pie. But to Hamilton and the Federalists, his position was “a perfidious desertion of the principles which he was solemnly pledged to defend,” and they accused him of fearing “Patrick Henry’s shade.” Gridlock descended over Congress as Madison’s discrimination proposals suffered humiliating defeats and Hamilton’s legislation stalled.

To make matters worse, the government’s paralysis over the permanent location of the nation’s capital grew worse. In the waning days of the Confederation Congress, Hamilton managed to keep New York City as the temporary capital. Now, “Hamiltonople” fought Pennsylvanians and southerners over the capital’s permanent location, with southerners especially adamant given the recent northern successes. Of course, many relevant players focused on the handsome profits they would make from their real estate speculations. Unsurprisingly, Senator Morris wanted the capital in a Philadelphia suburb, such as the aptly named Morrisville, proposing to invest $100,000 of Pennsylvania taxpayer funds in the cause. Even President Washington speculated in land around northern Virginia, where the capital could lie.

By the summer of 1790 the two contentious issues—debts and capital city—lay prostrate and unresolved, with both northerners and southerners rumbling threats of secession. Matters quickly changed when Secretary of State Thomas Jefferson invited Madison and Hamilton to dinner. Jefferson, who returned to the United States in November 1789, was still playing his role as the preeminent radical moderate, the Antifederalist-Federalist hybrid. The Virginian still desired the Empire of Liberty: he was strenuously anti-debt, opposed assuming state debts, and was previously willing to default on some foreign debts. However, at this crucial juncture he moderated and agreed with the Federalists. But like Madison he was not about to acquiesce to northern domination.

At dinner, the three men struck the nation’s second corrupt bargain. First, the federal government would assume state debts and pay all debts at face value. Second, President Washington received the privilege of choosing the capital’s permanent location on the Potomac (its temporary residence moved to Philadelphia), and there was a strong chance he would place it near his landholdings. Shortly there-after, Congress passed the Residence Act and the Funding Act. The libertarian Jefferson decided not to seize the opportunity but instead moderated to strengthen the new government. Power, as always, corrupts.

But there was still one libertarian unsatisfied: Patrick Henry. The radical was apoplectic over the Funding Act, especially the assumption of state debts. In November 1790 he introduced a resolution into the Virginia legislature, declaring assumption “repugnant to the Constitution, as it goes to the exercise of power not expressly granted to the General Government.” Against Federalist resistance, the resolution passed. The Virginia legislature then adopted an address blasting the Funding Act for encouraging British mercantilism, benefitting privileged speculators, injuring Virginia, and exceeding constitutional authority. The House version of the Address of 1790 even declared that “the consent of the State legislatures ought to be obtained before the said act can assume a constitutional form.” This provision bordered on nullification and threatened to severely weaken the new government. Unfortunately, the Senate struck it out at the last minute.

Clearly, Henry and the Virginia Antifederalists strategically interpreted the Constitution as a document of enumerated powers. This, of course, was the lie the Federalists used during the ratification debates. “Expressly” was nowhere in the Constitution or the pending Bill of Rights (still in the Virginia legislature), but that did not stop Henry. The Address of 1790 was the opening shot in the Antifederalist struggle to cease outright resistance and revolutionize the Constitution to weaken the central government. In Henry’s words to James Monroe in January 1791, “it is natural to care for the crazy machine, at least so long as we are out of sight of a port to refit.” The Virginia Antifederalists, set on their new strategy, agreed to ratify the Bill of Rights in 1791. Yet Henry would abandon the movement he was destined to lead, retiring in disgust from the Virginia House. He tried to form an alliance with Madison and Jefferson in late 1791, but Jefferson hated Henry and was decidedly lukewarm to the Address of 1790. Madison turned the offer down, leaving the old radical fuming. Instead of working with Henry, Jefferson championed the constitutional position by himself.

It is important to emphasize the compromise’s debt largesse, one reason Henry fumed at the deal. The Funding Act caused the fortunes of elites to explode by almost $60 million. Prominent beneficiaries included the aforementioned speculators Morris, Duer, Boudinot, King, and Schuyler as well as Ames, Philip Livingston, Pinckney, Washington, and Willing. The public debt surged to $80 million in 1792 and increased to $83 million by 1795, and interest payments helped augment spending by 48 percent (14 percent per year). When one recognizes that by 1795 the available records suggest 5 percent of security holders of $10,000 or more claimed ownership of 65 percent of the federal debt, and a quarter of a percent (0.25 percent) of security holders ($100,000 or more) held 30 percent, it becomes clear that Hamilton’s funding program was a massive redistribution racket that siphoned taxpayer money to the rich. Or, more specifically, the gains flowed to the old rich, the plan of the nationalists since the early 1780s.

Indeed, in the absence of any libertarian resistance, Henry’s protests notwithstanding, Hamilton was just starting to exploit the Constitution. The Federalists had achieved their first special-interest policy, a goal they wanted since the days of the Revolutionary War. Next on the plate was another leftover—a monopoly bank.

The Bank of the United States

After Congress adjourned in mid-1790, the government moved from New York City to Philadelphia. The transition was fitting, since Hamilton now wanted to charter a central bank in the city, drawing inspiration from the Bank of North America and the Bank of England. The central bank plan bore many similarities to his debt assumption program: both provoked heated political discussion related to the debate over the nation’s capital and benefited the northern financial elite. Significantly, the famous controversy over the Bank of the United States’ (BUS) constitutionality led to two distinct interpretations of the Constitution—strict versus broad construction—that fueled the forces of liberty and power by inhibiting or facilitating cronyism. Further-more, the Bank’s consequences—increasing corrupt bank charters on the state level and fostering a nationwide business cycle—influenced future special-interest legislation and reform efforts.

Hamilton introduced his Report on a National Bank to Congress in December 1790. The Senate referred the banking report to an extremely receptive committee: Morris, Schuyler, Ellsworth, South Carolina’s Pierce Butler, and Massachusetts’ Caleb Strong. All staunch Federalists, four presided with Hamilton at the Constitutional Convention and three owned stock in other banks. They unsurprisingly drafted a bill along Hamilton’s recommendations.

Essentially, the projected BUS would be a privileged corporation partially owned by the government, evoking bad memories of colonial British corporations. First, the institution received a twenty-year federal monopoly with the exclusive ability to open branches outside Pennsylvania. Second, Congress capitalized it at $10 million, a massive sum considering that the combined capital of existing banks totaled only $2 million. Third, the federal government planned to own one-fifth ($2 million), and another fifth ($2 million) of the Bank’s capital consisted of specie, and while the rest could be purchased with government bonds. This favoritism increased the price of government securities and tied rich speculators to the central government. Lastly, the federal government would deposit most of its money in the Bank, a munificent subsidy. In return for such cronyism, the Bank would make loans to the government and favored business interests. In short, similar to Hamilton’s debt plan, the proposed BUS subsidized northern commercial interests. More than that: it strikingly reestablished the alliance between banking interests and the federal government.

Hamilton’s Bank received a far more controversial reception than his concurrent Report on the Establishment of a Mint, which resulted in the 1792 Coinage Act that defined the American dollar in terms of specie and set the country on a dollar accounting system. While the Senate passed the bank bill without much difficulty in January 1791, it faced strong House opposition. Most criticism came from Madison, who understood Hamilton’s intentions. Madison clearly recognized that the bank bill was another attempt by northern elites to dominate the federal government and control its patronage. Southerners already worried that Pennsylvanians would attempt to keep the capital, and establishing a massive corporation in Philadelphia aided their cause. As a Virginia nationalist, Madison wanted nothing of it.

On the House floor, Madison argued that not only would the Bank benefit northern speculators, but it was also unconstitutional. In particular, the Constitution nowhere explicitly stated that the government could incorporate a bank, and it did not fit the criterion of the necessary and proper clause. Not only that: the bill violated the Bill of Rights’ Tenth Amendment (which Virginia had still not ratified), as powers of incorporation belonged exclusively to the states.

Although Madison displayed some consistency in the 1780s and 1790s regarding federally chartered banks, his position on the enumeration of powers conveniently shifted. In 1789 Madison argued that the president alone, not the Senate, possessed the constitutional power to remove appointed officials. He also disapproved including the word “expressly” in the Tenth Amendment for fears that it would shackle the Constitution. Now, Madison opportunistically read the Constitution very narrowly to thwart Hamilton. This tactic—arguing whatever was needed for a particular audience—was familiar to both constitutional theoreticians, who artfully employed it during the ratification debates, especially in The Federalist Papers.

However, despite the Virginian’s efforts, the House passed Hamilton’s bank plan in February by a significant margin, 39-20. This embarrassed Madison, since it showed that Prime Minster Hamilton controlled both the government and the North; thirty-three of the thirty-nine ayes came from the North while fifteen of the twenty nays hailed from the South. The fracturing of the Federalist forces started to draw new political battle lines.

While the Bank bill had passed both chambers, Washington still needed to sign it. The president was close to Hamilton, but still worried over Madison’s constitutional arguments. Moreover, he understood that the Bank might delay, if not prevent, the establishment of the nation’s capital in the South. The president could not refer the matter to the Supreme Court, because it was still setting up shop and would only make decisions by hearing legal cases. Although Washington had never vetoed legislation, he could exercise that option now, thereby transforming the power into an anti-crony tool. In light of this, Washington turned to three Virginians: Congressman Madison, Attorney General Edmund Randolph, and Secretary Jefferson. All three sided against the Bank, but Jefferson made the most radical and sophisticated argument.

Jefferson, who never presided at the Constitutional Convention or any ratification debate, articulated a strict interpretation of the Constitution. Of course, he would never acknowledge Henry’s previous efforts. Jefferson, the great theoretician, argued that nothing in the Constitution allowed for a bank charter, nor was there anything “necessary” about such an institution. For something to be “necessary and proper,” it had to actually be necessary, not just “convenient and proper.” Nor did it meet the “general welfare” clause, for that provision only concerned taxes. Jefferson also grounded his case on the proposed Tenth Amendment and argued the Constitution was an agreement by the states. Unfortunately, Jefferson moderated at the end. Although he thought the Bank should be vetoed, if Washington remained on the fence, Jefferson advised submitting to Congress—the executive must defer to the legislature.

After receiving the opinions of Madison, Randolph, and Jefferson, Washington turned to Hamilton. The Treasurer skillfully responded in a long document intended to overwhelm the president. Essentially, Hamilton maintained the ultra-Federalist position articulated by Gouverneur Morris and James Wilson: “necessary” meant whatever legislators want it to mean (i.e., convenient), implied powers existed alongside any enumerated powers, and the Constitution allowed anything that promoted the (subjectively decided) “general welfare.” In addition, Hamilton shrewdly used Madison’s own words in The Federalist Papers to show the change in the Virginian’s position. Overall, in contrast to Jefferson’s strict constructionism, Hamilton’s remarks formed the basis for what came to be known as the “broad” interpretation of the Constitution so instrumental in facilitating cronyism. The Treasurer even influenced the Supreme Court’s later rulings.

It cannot be emphasized enough that Hamilton’s broad constructionism was undoubtedly the logical motivation behind the Constitution. Hamilton was not perverting the document; he used it in the way the ultra-Federalists of Robert Morris, the main group that spearheaded statism, had intended. They had always wanted to provide vague and omnipresent power to the federal government, first in the Articles and now in the Constitution, for their own selfish ends. Jefferson, away in France and relying on Madison’s information, naïvely believed otherwise. In fact, on top of his and Hamilton’s earlier lies in The Federalist Papers, Madison now engaged in an outright fabrication: according to legal historian Mary Bilder, he “subtly created an alternative interpretation of the [Constitutional] Convention” by rewriting his notes to convince Jefferson that he supported limited government.

Despite Hamilton’s best efforts, Washington remained unconvinced, leaning toward a veto. But Hamilton and the northern Federalists kept one crucial ace up their sleeve: they could block Washington’s desire to amend the Residence Act. In late January 1791 Washington announced his decision for the site of the capital: he wanted the federal district to move slightly outside of the agreed-upon location and include 200 acres of his land, along with some buildings he owned in Alexandria. He had already dispatched three of his close chums, none of whom had any experience in city building, to survey the area. But the northern Federalists would not sign on without a price. If Washington wanted greater convenience and higher prices for his land, he must give northern Federalists their Bank. In the end, personal cronyism tipped him over into signing the bank bill in late February, and the president relegated the executive veto to minor matters. Congress amended the Residence Act, which reportedly increased the value of Washington’s property by an astounding 1000 percent. Once again, power corrupted.

Morris and other commercial elites quickly dominated the BUS. Stock subscriptions became available in July, but only in block shares of $400, effectively limiting purchases to the wealthy. Duer, who had resigned as assistant secretary in April 1790, led the speculative mania during the summer. In fact, speculation mounted so much that Hamilton had to use his BONY to prevent a crash. Thirty members of Congress bought shares, or roughly one-third of the legislature’s total membership and half of the congressmen who had voted for the Bank. Ownership concentrated in the large commercial cities—Boston, New York City, Philadelphia, and Charleston. In October, the shareholders elected directors: twenty of the twenty-five men hailed from Pennsylvania, New York, and Massachusetts. By 1795, two-thirds of directors resided in Philadelphia, associates of Morris’ BONA. Willing, Morris’ business associate, beneficiary of the Funding Act, and former head of the BONA, became president. A reestablishment of the partnership indeed!

Directors wanted to use the BUS’ exclusive interstate banking privilege to expand operations and increase profits. Some Federalists actually hoped that it would drive the existing banks—the Bank of North America, Bank of New York, Massachusetts Bank, Bank of Maryland, and Providence Bank—out of business. Aside from then securing a monopoly, this control would reduce states’ rights. However, Hamilton disapproved of branching because he believed it would overextend the Bank. Hamilton also knew that if the BUS opened a branch in New York it would bankrupt his BONY. The Treasury Department already maintained cozy relations with Hamilton’s BONY, and Hamilton wanted the two to monopolize together by holding each other’s stock. But in this case, Hamilton’s creature overruled him. The directors of the BUS quickly opened up branches in Boston, New York, Baltimore, and Charleston. Secretary Hamilton ended up saving his BONY largely by funneling local Treasury transactions and deposits to the institution.

Pro-central bank historians have long asserted that the judicious BUS restrained risky state banks. In reality, during the 1790s the BUS wildly inflated and encouraged state banks’ credit expansion. Normally, bank competition restrains credit expansion because of a feedback loop similar to the price–specie flow mechanism, called the adverse clearing mechanism: if one fractional reserve bank engages in credit expansion beyond its specie reserves, competing banks will redeem the notes and deposits, forcing the bank to contract credit. Unless specie reserves significantly increase, only government intervention, such as privileges to bank notes and deposits, restrictions on entry, sanctioning the suspension of note convertibility, and increases in non-specie reserves, will enable banks to expand credit for significant periods of time.

In the case of the BUS, government forces encouraged inflation. First, the Bank accumulated artificially large reserves because of its federal charter and monopoly on government deposits. Second, monopoly privileges allowed it to exclusively branch across state lines: the BUS could enter other banks’ local monopolies, but not the other way around. As time progressed, the Bank’s inflation led to credit expansion by state banks. This occurred because the BUS’ federal deposits often consisted of state bank notes. Instead of redeeming notes and restricting state banks’ credit expansion, the BUS accumulated them, thereby granting de facto loans to these institutions which they used to expand credit. The friendly environment for state banks’ credit expansion is seen in the fact that from 1791 to 1796 bank charters increased from six to twenty-two.

Partisanship and bribery existed in the chartering of local monopolies. Unsurprisingly, Federalists spearheaded this process and controlled many of the new state banks. In some states, opponents chartered their own banks to combat the burgeoning Federalist monopolies. In 1793, the former Antifederalist Albert Gallatin pushed for the Bank of Pennsylvania’s charter to create competition for the Federalist-controlled BUS. Gallatin argued that the state should invest its current surplus into one-third bank ownership to limit future taxes. Pennsylvanians agreed and the institution soon had five branches spread across the state. Opposition groups across the country looked forward to the day when they would control state legislatures and break Federalist bank monopolies.

Unsurprisingly, Hamilton and other Federalists supported the new soft money position: central banking, bank charters, and inflationary credit expansion. In stark contrast, Jefferson and likeminded critics of corruption formed the hard money and laissez-faire bulwark. Unfortunately, Enlightenment thinkers were generally unhelpful because they split over what constituted laissez-faire in monetary affairs and did not articulate a theory of free banking. Some theorists supported 100 percent reserves (notable examples include Joseph Harris, David Hume, and Jacob Vanderlint), while others, particularly Adam Smith, favored fractional reserve banking and even some aspects of the BOE (Hamilton actually alluded to Smith’s BOE apologetics in his Report). Accordingly, Jeffersonians favored some rudimentary form of no government involvement; championed the hard money position of hostility to fractional reserve banking; or simply supported their own charters to weaken the Federalists.

The BUS recklessly expanded credit when it first opened in December 1791. Throughout its existence the Bank channeled loans to favored interests: the government and large Federalist businesses, speculators, landowners, and merchants. This favoritism earned it the ire of southern planters and smaller interests. By the first two weeks of operation, the Bank had loaned $1 million to the private sector and $2 million to the government, and its surging inflation led to a hesitant public redeeming bank notes and deposits for specie. The Bank quickly contracted credit, collapsing security prices in March. This Panic of 1792 ruined Duer and other speculators who borrowed from the Bank. While Hamilton had bailed Duer out in the summer of 1791, he would not help his old friend again. The BUS learned its lesson and expanded credit at a much steadier, though still thoroughly expansionist, pace after 1792.

The federal-and state-induced credit expansion led to a massive inflation and an economic bubble. Estimates vary, but from 1791 to 1796 the money supply increased by 48 percent (8 percent per year). Predictably, the inflation led to higher prices. After gently declining from 1785 to 1791 by 8 percent, wholesale prices surged 72 percent from 1791 to 1796 (11 percent per year). Industrial production and real gross domestic product (GDP) figures, which are only available after 1790, increased by 49 percent (8 percent per year) and 44 percent (7.5 percent per year). The credit expansion artificially pushed down interest rates, ostensibly increasing the profitability of long-term investments, and a speculative mania in transportation, manufacturing, and real estate projects blossomed.

In addition, Great Britain and France, resuming war in 1793, stimulated exports and the shipping industry. From 1790 to 1793, total exports (including re-exports, or goods imported from one country and subsequently exported to another) increased by 29 percent (9 percent per year). But from 1793 to 1799 they increased by 201 percent (20 percent per year). Federalists gleefully took credit for the prosperity, though their Constitution and economic program had little to do with it. To the extent that Federalist policies increased economic growth, it came at the price of a future economic downturn.

Such a government-induced downturn was inevitable. The higher prices increased imports and set in motion the price–specie flow mechanism. When specie reserves flowed out of the country, banks contracted credit and ended the speculative investment boom. A bust resulted, and by 1797 business failures mounted. From 1796 to 1798 industrial production declined by 7 percent (3.5 percent per year), real GDP increased by only 6 percent (3 percent per year), and prices sharply dropped by 16 percent (8.5 percent per year).

In the midst of the Panic of 1797, Jefferson, well versed in hard money economics, articulated a rudimentary analysis of the credit-induced business cycle:

The banks may be considered as the primary source of this catastrophe. In order to increase their circulating paper and of course their profits, they issued it to every pretender in commerce, gave them thereby the appearance of capitals which these people did not possess, and . . . overspeculating themselves . . . in lands, in canal schemes, town lot schemes, manufacturing schemes and whatever could hit the madness of the day . . . in the height of their delirium, the balloon bursts, lets them drop from the clouds, and ends as such phrensies ought always to end.

In other words, the BUS’ loans to favored businesses engineered the nation’s first boom-and-bust business cycle, misleading businesses about the supply of savings and the profitability of investment projects. Jefferson knew that to stop future downturns, he needed to eliminate the BUS.

Morris elites dominated Hamilton’s Bank. The chartering of the BUS contributed to opposing constitutional doctrines, benefited the northern financial elite, and bound them to the federal government. Their next goal in the Hamiltonian Era promised to continue this trend.

The Report on Manufactures

By 1791, with the assumption of federal and state debts at face value and the establishment of a monopolistic national bank, the Hamiltonian fiscal program was well under way. The Treasurer soon devised additional special-interest legislation: subsidizing manufacturing businesses controlled by the Morris elite.

In his first annual message to Congress in January 1790, Washington promoted manufactures necessary for national defense. The House responded by requesting Hamilton to report on American manufacturing and provide policy recommendations. The Treasurer happily agreed, spending nearly two years developing his Report on Manufactures. Assistant Treasurer Tench Coxe of Philadelphia, ardent protectionist, brother-in-law of BUS President Willing, and a former Tory during the Revolutionary War, provided crucial assistance. In addition, Hamilton relied on his formidable Treasury bureaucracy that he had scattered across the country.

Contrasting with Jefferson, who praised Adam Smith, the Treasurer dismissed the Invisible Hand as unrealistic in an age of Colbertian mercantilism. He argued that two wrongs—combatting mercantilist restrictions with even more mercantilist restrictions—do make a right. Hamilton opined that the relatively agrarian United States economy needed government assistance to develop its infant manufacturing sector because unlike Great Britain, already engaging in large-scale production, the US’ relative advantage remained in agriculture. To the extent that Americans produced manufactures, it was accomplished by small “firms” composed of self-employed artisans and craftsmen.

Hamilton argued that the Visible Hand could propel American manufacturing to greatness with subsidies and tariffs—monopolistic privileges the Constitution sanctioned. Unlike some contemporaries, Hamilton did not want high protective tariffs, because they would assist smaller firms, hamper relations with Great Britain, and threaten government revenue by inducing smuggling. Instead, Hamilton wanted moderate tariffs that only protected elite manufacturing interests and raised enough revenue for debt assumption and lucrative subsidies to large firms. This was not the only competitive disadvantage Hamilton’s system hoisted upon smaller firms; he wanted an elaborate system of government inspection to ensure products adhered to an arbitrary standard of quality.

In 1791, around the same time he drafted his Report on Manufactures, Hamilton established a large manufacturing firm for wealthy northern interests. With the help of New Jersey Governor William Paterson, an ardent Federalist delegate to the Constitutional Convention, Hamilton steered a corporate charter through the New Jersey legislature in November and created the Society for Establishing Useful Manufactures (SEUM). The same New York City and Philadelphia elite who benefited from Hamilton’s earlier plans financed the SEUM: governor of the society Duer, Congressman Boudinot, Secretary of War Henry Knox, Federalist delegate at the New York ratifying convention Nicholas Low, and New York oligarchs Livingston and former Senator Schuyler. Many members of the New Jersey legislature also bought shares, and throughout its existence Hamilton took time away from his official duties to advise the company. The SEUM founded the town of Paterson (named after the governor) right outside of New York City. The legislature capitalized the corporation at $1 million, a sum far larger than any existing manufacturing firm.

New Jersey graciously granted the company a host of privileges. First, the charter bestowed on the SEUM a monopoly over using the corporate form to produce various manufactured goods, including cotton products, which it decided to concentrate on. Second, the SEUM’s stock, sold in expensive blocks of $100, could be bought with federal debt, increasing the prices of said debt and indirectly subsidizing the company through the government’s interest payments. Third, the legislature granted the SEUM exclusive rights to use the water power near Paterson, along with the power to use eminent domain. Fourth, New Jersey bought $10,000 of stock, a small amount relative to its size but a sign that the company might get larger subsidies from the state and Congress in the future.

Unsurprisingly, just two weeks after New Jersey chartered the company, Hamilton submitted his Report on Manufactures to Congress in December 1791. The Report provided an extensive account of manufacturing (he selectively highlighted the successful ventures), his philosophy of mercantilist intervention, and concrete policy recommendations. For the latter, Hamilton requested tariff increases on twenty-one manufactured goods (from roughly 5 to 10 percent) and tariff decreases on five inputs manufacturers used. In addition, Hamilton wanted to subsidize five goods: coal, raw wool, sailcloth, glass, and cotton products. Clearly, Hamilton envisioned funneling the subsidies for cotton production to the SEUM. In fact, many of the corporation’s promoters bought shares because they anticipated federal subsidies and knew the mammoth project could only succeed with such crony assistance. Hamilton even alluded to the corporation in his report when he wrote that “measures are already in train” for the “making and printing of cotton goods.” In other words, Hamilton wrote his Report on Manufactures to help subsidize the large New Jersey monopoly that planned to invest in cotton products. Smaller artisans and other commercial interests that had supported the Constitution quickly became disillusioned with Hamilton.

Unfortunately for Hamilton, his subsidy program encountered stiff resistance from Secretary of State Jefferson and Congressman Madison, who by this time had completely split with Hamilton. Jefferson and Madison now led the Antifederalist proponents of small government, regrouping under the emerging Republican Party, while Hamilton marshalled the reactionary Federalists. Hamilton justified subsidies’ constitutionality by broadly construing the general welfare clause. Jefferson and Madison strictly interpreted the clause, arguing that it only referred to the taxing power. In this battle, Congress sided with Madison and Jefferson, balking at the subsidies. It was Hamilton’s first real defeat, and thus a small victory for liberty.

However, Congress did follow up on Hamilton’s tariff recommendations. In March 1792 the legislature asked Hamilton for advice on raising revenue to aggress on frontier Indians. Hamilton complied, using it as an opportunity to advance tariff increases he thought would stimulate manufacturing. Southern congressmen, such as ex-Antifederalist John Mercer of Maryland, realized that Hamilton was using an alleged military emergency to execute his Report “by extensive duties operating as indirect [subsidies], under the pressure of providing for an Indian war.” But the military justification amplified the fears of enough congressmen that Hamilton won out. As in the bank bill, the vote on the Tariff of 1792 followed sectional lines: the House voted 37-20, with the North mostly for the tariff increases and the South against them. Congress passed eighteen of the twenty-one increases and three of the five decreases Hamilton recommended. Throughout the decade, Federalists continued to raise tariffs, and as a percentage of total imports they climbed from an average of 12.5 percent in 1790 to 24 percent in 1797 and 30 percent by 1800.

Trouble with Indians led to additional cronyism. At the behest of Washington, under the sway of mercantilist thought, the federal government constructed a factory system of trading posts where US agents could buy furs from Indians to compete with the British in the region. In 1795, Congress appropriated $50,000 for this purpose and soon increased appropriations to $300,000. The government inefficiently managed the factory system and experienced difficulty competing with British companies and private American firms.

Yet, Congress still granted no subsidies to the SEUM, dooming it to failure. The company already suffered a rocky start when Duer and others crashed to bankruptcy during the Panic of 1792. To make matters worse, New Jersey wisely followed Congress’ footsteps and refused to contribute further largesse. Hamilton indirectly subsidized the company out by getting the BONY to provide it loans, financed by government deposits to the bank. But it was not enough. Shorn of taxpayers’ money, the company spent too much on expensive machinery for its inexperienced labor force and did not save enough for operating costs. Poor management plagued the SEUM, because its founding members did not know how to profitably run a manufacturing company. The SEUM only completed its plant in 1794 and by 1796 had failed, a warning sign of the Panic of 1797. Patterson turned into a ghost town.

While Hamilton’s system of direct federal subsidies to privileged businesses failed, at least tariffs increased. The increase in tariffs was yet another way the federal government augmented its power and distributed crony benefits to northern business interests. Once again, the source lay in Hamilton’s fiscal program, which depended upon the Constitution.

Internal Improvements and Land Speculation

During the 1790s, Federalists wanted to use the Constitution to construct internal improvements and protect speculators’ land claims. The policies were intricately linked: speculators bought public lands and then pushed for government transportation projects, whether on the federal or state level, to raise the value of their holdings. Prominent Federalists engaged in this practice, including Morris, who stuck his hand into nearly every special-interest racket; Schuyler; and Washington. In his Report on Manufactures, Hamilton supported internal improvements and later used his broad constructionism to sanction crony land speculations.

Government aid on the state and local level to transportation projects had existed for many decades. Prior to 1790, towns built roads with a local labor tax that compelled citizens to devote a certain number of days to a project. Unsurprisingly, without any profit incentive and a transient labor force, the governments poorly built the roads and frequently delayed repairs. This infeasible system led to private turnpike charters creating corporations that built roads and collected profits by charging fees. Private enterprise provided most of the investment funds; state and local assistance played a secondary role. In addition to turnpikes, states granted charters to other transportation businesses, such as bridges and canals. With each passing year the number of charters increased, and by 1800 the states had chartered seventy-three turnpikes, seventy-one bridges, and sixty-five canals.

Investors, particularly the middling farmers and artisans in the Mid-Atlantic and New England, preferred turnpikes to canals. Southern commercial interests eschewed both, relying on the region’s navigable river systems. Typically, turnpikes suffered losses. First, state and local governments often attached restrictive regulations to charters that hampered productivity: maintenance laws, minimum mileage between tolls, price ceilings on toll rates, limits on charging for other services, restrictions on appealing to state legislatures for punishing toll evaders, and coerced free passes for select citizens. Second, investors from nearby commercial centers recognized that the turnpikes could be unprofitable because of the innate difficulty in monitoring users. They treated stock purchases as equivalent to paying for the roads, a cost covered by the additional revenue they estimated their businesses would accrue. On the other hand, private toll bridges generally earned profits because owners experienced little restraints on pricing and could easily monitor users.

Some transportation companies clearly abused their charter privileges. For example, in April 1792, New York chartered the Northern and Western Inland Lock Navigation Companies as part of a broad vision for a canal system linking the Hudson River with Lake Erie or Lake Ontario, bordering Canada. Each maintained eminent domain rights and $12,500 in state subsidies. The prominent Federalist Schuyler dominated the companies. Fifteen of the original thirty-six directors were land speculators, and their only goal was to maintain the appearance of credible businesses long enough to profitably speculate in land. One notable example, attorney Robert Troup, spent $3,000 acquiring interests in nearly two hundred thousand acres the canals planned to travel through. When construction began, the value of his holdings exploded to $130,000. Troup and other land speculators then sold their landholdings. Predictably, the inefficient and poorly managed companies, which continually clamored for more state money, received state bailouts in the late 1790s. Such shenanigans soured the public on partnerships between states and private firms; they recognized that these problems would only magnify with federal assistance.

Hamilton and other Federalist proponents of internal improvements argued that the Constitution’s general welfare clauses provided justification for subsidies and government construction of internal improvements, and the post roads were necessary and proper. Once again, broad constructionism performed the dirty work. However, though Congress subsidized coastal navigation and other small projects in the 1790s, controversy over the Report on Manufactures, the constitutionality of assistance, concerns over excessive government expenditure, and problems relating to regional favoritism proved insurmountable obstacles. The Republican Jefferson, well steeped in the free market economics that generally, though not always, shunned government subsidies, led the resistance. He understood that government investment corrupted politicians through favoritism and bribery, led to profligate spending, and required future taxes. Furthermore, Republicans’ strict constructionism reasoned that internal improvements were unconstitutional and required an amendment. But Jefferson had to fight some of his closest allies on the matter.

In 1796 the ex-Federalist Madison introduced a measure in the House to appropriate some of the Post Office’s surplus for a national survey of postal routes, “the commencement of an extensive work.” But Jefferson bitterly criticized the proposal and it died in the Senate. For the remainder of the decade Jefferson and the Republican Party remained hostile to federal internal improvements, considering them the embodiment of government cronyism. They stood in stark contrast with Hamilton, who in 1799 proposed federally funded transportation projects, which he coincidentally pushed for alongside other plans to reduce states’ rights.

Morris and his coterie also supported federal and state land policies that benefited speculators, and Hamilton predictably justified their constitutionality. With the advent of the Constitution, the Federalists did not change the Confederation’s land policies, because Hamilton thought selling land in large tracts to speculators would quickly bring in revenue. However, Jefferson’s Republicans wanted the land sold to actual homesteading settlers in small plots. Congress eventually passed a law in 1796 that raised the minimum price to $2 and maintained the large plot size of 640 acres. Crucially, it also allowed settlers to borrow on credit, which increased dependency on the government. While the high price kept land out of speculators’ hands, the price, along with the large plot size, still discouraged settlers and stymied western migration. Under the new policy sales remained small, at less than fifty thousand acres. This stunting of western migration boosted real estate values along the coast, property usually owned by the Federalists.

However, Federalists actively dispensed state land grants and used the federal government to legalize their plunder. The most prominent case concerned the infamous Yazoo land scandal. In the 1780s Georgia claimed ownership of a large swath of Indian land west of the state, the so-called Yazoo lands (the upper portion of modern Alabama and Mississippi). By 1789, the state legislature wanted to sell ownership to various land speculator companies, particularly the South Carolina Yazoo Company, the Tennessee Yazoo Company, and the Virginia Yazoo Company.

The three corporations wanted to buy the mostly unappropriated land, or Indian land, to make money, but the Virginia Yazoo Company also maintained an additional goal. Recall that some Antifederalist Virginians, notably Henry, contemplated relocating to the southwest to set up a new independent government. In December 1789 the Georgia legislature sold a massive twenty-five million acres to the companies for a bargain $200,000 (less than one cent an acre), payable in debt certificates. But in 1790 the deal with the three companies collapsed after Georgia demanded payment in specie and Washington, cognizant of Henry’s motives, made a treaty with the Creek Indians living in the region that invalidated the sale.

Although Henry and the original companies failed, speculators without any desire for independence reopened negotiations in a couple of years. In 1795, four new corporations—the Upper Mississippi Company, Tennessee Company, Georgia Mississippi Company, and Georgia Company—bribed the Georgia legislature to purchase a gargantuan thirty-five million acres of land for $500,000 (roughly 1.5 cents an acre). Many prominent Federalists invested in the companies, including the ineffable Senator Morris and his lackey, the Supreme Court Justice Wilson. These companies quickly sold their land claims to prospective buyers, particularly northern speculators, at handsome profits. For example, the Georgia Mississippi Company dispensed part of its grant for $1,138,000, over an original cost of $155,000, to the New England Mississippi Land Company.

The new Federalist speculators hoped to reap astounding profits when they resold their ill-gotten gains to actual settlers. But the people of Georgia, discovering that their bribed legislature sold millions of acres on bargain terms, nearly revolted. They voted existing representatives out of office and the new legislature of 1796 promptly repealed the act. Since the Federalists controlled the state machinery, the Yazoo scandal virtually destroyed the Federalist Party in Georgia and ruined the political career of Governor George Mathews.

Speculators ranted against the Georgia legislature. They did not care that their claims resulted from an illicit deal; the Federalists thought a private contract of any kind was irrevocable. They hoped to defend their claims by invoking the ever-reliable Constitution, particularly the contract clause. Of course, protecting government privileges was the clause’s original motivation at the Constitutional Convention, especially by Wilson—who later became a Supreme Court justice and acquired an interest in the Yazoo lands! In 1797, some speculators turned to the pre-eminent hermeneutician, Hamilton, and requested his opinion. The father ordained that the legislature had no right to rescind prior land grants and conjectured the Supreme Court would uphold his view. Thus, in Wilsonian fashion, Hamilton used the Constitution to protect the privileged claims of land speculators sold by a corrupt state legislature. In 1798 Congress organized the region below the Yazoo lands and above Spanish Florida as the Mississippi Territory, but problems relating to the Yazoo lands, which Georgia still claimed, remained unresolved. Eventually, the Hamiltonian Supreme Court sided with the speculators.

Overall, the early years of the Hamiltonian Era were a victory for Morris. With the libertarian Antifederalists out of the government, power hungry Federalists had nothing standing in their way. Treasury Secretary Hamilton used his broad constructionism to enact northern cronyism. Against Hamilton’s broad constructionism, Jefferson interpreted the Constitution strictly to limit favor granting. But Jefferson’s political support was still too weak, and Hamilton continued to pursue his program unchecked. He now turned to military cronyism.

______________

Thomas McCraw, The Founders and Finance (Cambridge, MA: Belknap Press, 2012), p. 90.

Irving Brant, James Madison, Father of the Constitution (New York: Bobbs-Merrill, 1950), p. 291. See also McCraw, Founders and Finance, p. 97; Herbert Sloan, Principle and Interest (New York: Oxford University Press, 1995), pp. 95–96, 103–04, 113; Gordon Wood, Empire of Liberty (New York: Oxford University Press, 2009), pp. 95–97; Robert Wright, One Nation Under Debt (New York: McGraw Hill, 2008), pp. 36–39.

Philip Burch, Elites in American History, vol. 1 (New York: Holmes & Meier Publishers, 1981), p. 76.

American Political Leaders (Washington, DC: CQ Press, 2000), pp. 104, 314; Burch, Elites in American History, 1, pp. 54–56, 75–76; McCraw, Founders and Finance, p. 336; Murray N. Rothbard, Conceived in Liberty, vol. 5, The New Republic: 1784–1791, ed. Patrick Newman (Auburn, AL: Mises Institute, 2019), pp. 81, 87; Leonard White, The Federalists (New York: Macmillan, 1948), p. 360; Alfred Young, The Democratic Republicans of New York (Chapel Hill: The University of North Carolina Press, 1967), pp. 176–77.

Fergus Bordewich, The First Congress (New York: Simon & Schuster, 2016), p. 208 and John Miller, The Federalist Era (New York: Harper & Brothers, 1960), p. 41.

Richard Beeman, The Old Dominion and the New Nation (Lexington: The University Press of Kentucky, 1972), pp. 58–64; Brant, James Madison, Father, pp. 306–07; Bordewich, First Congress, pp. 190–93, 207–12; Miller, Federalist Era, pp. 36, 46–47; John Miller, Alexander Hamilton and the Growth of the New Nation (New York: Harper & Row, 1959), pp. 239–40.

Miller, Alexander Hamilton, p. 248.

Bordewich, First Congress, pp. 149–50, 154, 230; Rothbard, Conceived in Liberty, 5, p. 283.

Bordewich, First Congress, pp. 174, 242–53, 269–70; Miller, Federalist Era, p. 47; Sloan, Principle and Interest, pp. 46–47, 153, 181.

Beeman, Old Dominion, p. 78.

Ibid., p. 80.

Thomas Kidd, Patrick Henry (New York: Basic Book, 2011), p. 223.

Beeman, Old Dominion, pp. 64–66, 77–82, 113–14; Jon Kukla, Patrick Henry (New York: Simon & Schuster, 2017), pp. 257–60, 356, 365–68; Dumas Malone, Jefferson and the Rights of Man (Boston: Little, Brown, 1951), p. 337; Norman Risjord, Chesapeake Politics (New York: Columbia University Press, 1978), pp. 408–09; Rothbard, Conceived in Liberty, 5, p. 301; Sloan, Principle and Interest, pp. 169–70.

E. James Ferguson, The Power of the Purse (Chapel Hill: The University of North Carolina, 1961), p. 284; Historical Statistics of the United States, Colonial Times to 1957 (Washington, DC, 1960), pp. 80, 91; Allan Kulikoff, “Such Things Ought Not to Be,” in The World of the Revolutionary American Republic, ed. Andrew Shankman (New York: Routledge, 2014), pp. 153, 164; Miller, Federalist Era, p. 50; Curtis Nettels, The Emergence of a National Economy (New York: Holt, Rinehart and Winston, 1962), p. 122; Wright, One Nation Under Debt, p. 308.

Hammond, Banks and Politics, p. 115; McCraw, Founders and Finance, pp. 110–13; Miller, Federalist Era, p. 56; Nettels, Emergence of a National Economy, pp. 128–29; Murray N. Rothbard, “The History of Money and Banking Before the Twentieth Century,” in A History of Money and Banking in the United States, ed. Joseph Salerno (Auburn, AL: Mises Institute, 2002), p. 68.

Bordewich, First Congress, pp. 59–63, 290–94; Miller, Federalist Era, pp. 57–58, 66–67; Rothbard, “History of Money,” pp. 65–68.

Bordewich, First Congress, pp. 293–95; Malone, Jefferson and the Rights of Man, pp. 337–44.

Mary Bilder, Madison’s Hand (Cambridge, MA: Harvard University Press, 2015), p. 239.

Bilder, Madison’s Hand, pp. 202–22; Bordewich, First Congress, pp. 293–300; Malone, Jefferson and the Rights of Man, pp. 344–50.

Bray Hammond, Banks and Politics in America (Princeton, NJ: Princeton University Press, 1957), pp. 122–27, 144; Burch, Elites in American History, 1, pp. 57, 77; Miller, Alexander Hamilton, pp. 246, 270–71, 273–77; Andrew Shankman, Crucible of American Democracy (Lawrence: University Press of Kansas, 2004), pp. 31–32.

Roger Lowenstein, America’s Bank (New York: Penguin Press, 2015), pp. 2–3.

Hammond, Banks and Politics, pp. 144, 197–202; Rothbard, “History of Money,” pp. 69–70.

Howard Bodenhorn, State Banking in Early America (New York: Oxford University Press, 2003), pp. 12–14; Hammond, Banks and Politics, pp. 164–65; Gregory May, Jefferson’s Treasure (Washington, DC: Regnery History, 2018), pp. 33–34; Young, Democratic Republicans, pp. 211–30.

Joseph Dorfman, The Economic Mind in American Civilization, vol. 1 (New York: Viking Press, 1946), pp. 301–04; Miller, Federalist Era, p. 62; Fritiz Redlich, The Molding of American Banking (New York: Johnson Reprint, 1968), p. 29; Murray N. Rothbard, An Austrian Perspective on the History of Economic Thought, vol. 1, Economic Thought Before Adam Smith (Auburn, AL: Mises Institute 2006), pp. 332–35, 428, 462–69; Richard L. Timberlake, Monetary Policy in the United States (Chicago: The University of Chicago Press, 1993), pp. 5, 8; Lawrence White and George Selgin, “Laissez-Faire Monetary Thought in Jacksonian America,” in Perspectives on the History of Economic Thought, ed. Donald Moggridge (Aldershot, UK: Edward Elgar, 1990), pp. 20–21.

Burch, Elites in American History, 1, pp. 57–58, 77–78; Nicholas Curott and Tyler Watts, “A Monetary Explanation for the Recession of 1797,” Eastern Economic Journal (June 2018): 384–86; Richard Sylla, Robert Wright, and David Cowen, “Alexander Hamilton, Central Banker,” Business History Review (Spring 2009): 73–86.

Curott and Watts, “Monetary Explanation,” pp. 384–87, 390–91; Joseph Davis, “An Annual Index of U.S. Industrial Production,” Quarterly Journal of Economics (November 2004): 1189; Historical Statistics of the United States, vol. 3, ed. Richard Sutch and Susan Carter (New York: Cambridge University Press, 2006), pp. 180–81; Louis Johnston and Samuel Williamson, “What Was the U.S. GDP Then?” Measuring-worth.com; Peter Rousseau and Richard Sylla, “Emerging Financial Markets and Early US Growth,” Explorations in Economic History (January 2005): 24.

Jeremy Atack and Peter Passell, A New Economic View of American History (New York: W.W. Norton, 1994), p. 77; Nettels, Emergence of a National Economy, pp. 324, 396.

Curott and Watts, “Monetary Explanation,” pp. 391–94; Davis, “Annual Index,” p. 1189; Historical Statistics, 3, p. 181; Johnston and Williamson, “GDP.”

Curott and Watts, “Monetary Explanation,” pp. 395–96.

Burch, Elites in American History, 1, p. 73; Thomas J. DiLorenzo, Hamilton’s Curse (New York: Three Rivers Press, 2008), pp. 101–06; Douglas A. Irwin, Clashing over Commerce (Chicago: The University of Chicago Press, 2017), pp. 68–73, 80–83; Miller, Alexander Hamilton, pp. 282–93; Miller, Federalist Era, pp. 63–65.

American Political Leaders (Washington, DC: CQ Press, 2000), pp. 104, 280; Burch, Elites in American History, 1, pp. 78, 255; Miller, Alexander Hamilton, pp. 160, 209, 300–01, 309; Nettels, Emergence of a National Economy, p. 124.

Dorfman, Economic Mind, 1, p. 292; Miller, Alexander Hamilton, p. 300; Nettels, Emergence of a National Economy, p. 124; Shankman, Crucible, pp. 35–40; Andrew Shankman, “A New Thing on Earth,” Journal of the Early Republic (Autumn 2003): 331–35.

Drew McCoy, The Elusive Republic (Chapel Hill: The University of North Carolina Press, 1980), p. 159.

Irwin, Clashing over Commerce, pp. 82–83; Miller, Alexander Hamilton, pp. 282–90, 308–09; Nettels, Emergence of a National Economy, p. 124; Shankman, Crucible, pp. 36, 39–40.

Irwin, Clashing over Commerce, p. 85.

Historical Statistics, 5, p. 510; Irwin, Clashing over Commerce, pp. 83–87; Jackson Main, The Anti-federalists (Chapel Hill: The University of North Carolina, 2004), p. 213.

Burton Folsom, Empire Builders (Traverse City, MI: Rhodes & Easton, 1998), pp. 9–11.

Miller, Federalist Era, p. 67; Miller, Alexander Hamilton, pp. 302, 308–10; Nettels, Emergence of a National Economy, p. 125.

Albert Fishlow, “Internal Transportation in the Nineteenth and Early Twentieth Centuries,” in The Cambridge Economic History of the United States, vol. 2, ed. Stanley Engerman and Robert Gallman (New York: Cambridge University Press, 2000), pp. 548–50; Daniel Klein and John Majewski, “Economy, Community, and Law,” Law & Society Review (Fall 1992): 472–75; Robert Wright, “Rise of the Corporation Nation,” in Founding Choices, eds. Douglas Irwin and Richard Sylla (Chicago: The University of Chicago Press, 2011), pp. 220–21.

Daniel Klein, “The Voluntary Provision of Public Goods?” Economic Inquiry (October 1990): 788–812; Klein and Majewski, “Economy, Community, and Law,” pp. 469–512; Daniel Klein and John Majewski, “Turnpikes and Toll Roads in Nineteenth-Century America,” EH.Net Encyclopedia, ed. Robert Whaples (February 2008); Wood, Empire of Liberty, p. 471.

John Larson, Internal Improvement (Chapel Hill: The University of North Carolina Press, 2001), pp. 26–28; Brian Murphy, Building the Empire State (Philadelphia: University of Pennsylvania Press, 2015), pp. 56–59, 68–72.

Joseph Harrison, “‘Sic Et Non’,” Journal of the Early Republic (Winter 1987): 339.

Manning Dauer, The Adams Federalists (Baltimore, MD: The John Hopkins Press, 1953), pp. 202–04; DiLorenzo, Hamilton’s Curse, p. 113; Harrison, “‘Sic Et Non,’” pp. 338–40; Larson, Internal Improvement, pp. 45–52.

Daniel Feller, The Public Lands in Jacksonian Politics (Madison: The University of Wisconsin Press, 1984), pp. 7–8; May, Jefferson’s Treasure, pp. 35, 126–28; Nettels, Emergence of a National Economy, pp. 146–49.

James Broussard, The Southern Federalists (Baton Rouge: Louisiana State University Press, 1978), p. 248; G. Herndon, “George Mathews,” The Virginia Magazine of History and Biography (July 1969): 324; Kidd, Patrick Henry, pp. 218–20; Miller, Alexander Hamilton, pp. 547–48; Nettels, Emergence of a National Economy, pp. 149, 154; Aaron Sakolski, The Great American Land Bubble (New York: Harper & Brothers, 1932). pp. 125–41.