Our Divided Political Heart (26 page)

Balogh also points to one of the most sweeping actions ever undertaken by an American president—one, as it happens, who was deeply critical of federal power in principle. The Louisiana Purchase under Thomas
Jefferson doubled the size of the United States at the stroke of a pen (and with the expenditure of $11.5 million and the forgiveness of another $3.5 million in French debt). There “
was little debate about the constitutionality of Jefferson’s actions
,” Balogh wrote, even though in theory, “doubling the size of the republic through one executive action should have raised howls of protest from those who feared government consolidation.” When they actually took the executive reins, Balogh noted, the Jeffersonians turned out to be “
more amenable to using the latent authority
of the federal government than they had been when not in power.” George Will’s dictum that “Americans talk like Jeffersonians but expect to be governed by Hamiltonians” seemed to apply to Jefferson himself.

Government activity and private endeavor were intermingled throughout our early history precisely because the stark division between public and private sectors that we now take as “normal” was not normal at all in the United States of that time. As Balogh notes, corporations in the early republic were “
publicly crafted organizations granted special privileges
in order to meet public service requirements.” But the Supreme Court in the late nineteenth century sought “to establish strict boundaries between the public and private spheres” and turn corporations “into natural out-croppings of the economy, protected under the constitution from state interference with Fourteenth Amendment due process rights.”

“
Although most historical accounts extrapolate America’s modern history
from its supposed
laissez-faire
origins in the Gilded Age,” Balogh argues, “no period in America’s history was
less
representative of America’s past than the brief era that stretched from the end of Reconstruction in 1877 through the panic of 1893.” We assume that the Gilded Age’s highly individualistic notions of property defined by a sharp distinction between public and private were with us from the very beginning. They were not.

As Michael Sandel has noted, economic arguments before the Gilded Age were largely republican in character. They stressed a common good, not just laissez-faire. Describing the contest between Democrats and the Whigs in the Jacksonian era, Sandel wrote: “
In different ways, both parties shared Jefferson’s conviction
that the economic life of the nation should be judged for its capacity to cultivate in citizens the qualities of character that self-government requires.”

True, Sandel noted, by the 1830s “
few assumed, as Jefferson once did, that the agrarian life
was the only way to civic competence. But even as the parties turned their attention to the national bank, protective tariffs, land policy and internal improvements, both Democrats and Whigs retained contact with the formative ambition of the republican tradition.”

Contemporary conservatives are certainly not wrong in seeing enterprise and individual achievement as cornerstones of the early American republic. The Jeffersonians and the Federalists, the Jacksonian Democrats and the Whigs celebrated both, albeit in different ways, on behalf of different constituencies, and toward different policy ends. What today’s conservatives overlook is that these were not the only values, or even the primary values, that our republic celebrated, and that government—at the federal, state, and local levels—was an active agent in promoting national development and shared prosperity. To believe otherwise, they need to wish both Alexander Hamilton and Henry Clay out of existence.

Conservatives are fond of quoting
The Federalist
as an almost infallible guide to national self-understanding. They are especially fond of citing Federalist 10, which stressed the importance of “
curing the mischiefs of faction
,” and Federalist 51, on the importance of checks and balances. They are less given to citing Federalist 27, Hamilton’s call for a robust federal government that touched the lives of individual citizens. Hamilton understood human nature and believed that unless the new national government became part of everyday life, it would either wither away or be sustained only through the use of brute force.

Thus, he argued in Federalist 27 that “
the more the operations of the national authority
are
intermingled in the ordinary exercise
of government, the more the citizens are accustomed to meet with it in the common occurrences of their political life, the more it is familiarized to their sight and to their feelings, the further it enters into those objects which touch the most sensible chords and put in motion the most active springs of the human heart, the greater will be the probability that it will conciliate the respect and attachment of the community.” Hamilton continued:

Man is very much a creature of habit
. A thing that rarely strikes his senses will generally have but little influence upon his mind. A government continually at a distance and out of sight can hardly be expected to interest the sensations of the people. The inference is, that the authority of the Union, and the affections of the citizens towards it, will be strengthened, rather than weakened, by its extension to what are called matters of internal concern; and will have less occasion to recur to force, in proportion to the familiarity and comprehensiveness of its agency. The more it circulates through those channels and currents in which the passions of mankind naturally flow, the less will it require the aid of the violent and perilous expedients of compulsion.

This is not a vision of the national government as merely “
an agent for the states
,” as Rick Perry would claim, nor is it consonant with a national authority that would simply “
leave us alone
,” the anti-tax activist Grover Norquist’s favorite slogan. Hamilton favored a national government that would be “intermingled in the ordinary exercise of government” and be engaged in “matters of internal concern.” Today, you might say that he saw the federal government as a partner and a problem solver.

The battles between Hamilton and Jefferson over federal authority and states’ rights during George Washington’s presidency revealed differences not only over philosophy and policy but also over the proper interpretation of the Constitution the nation had just adopted. For those who insist that originalism is an easy matter of discovering the Founders’ intentions and applying them, one of the earliest battles in our democracy should give pause. Within just three years of the Constitution’s ratification, two of its leading authors and interpreters, Hamilton and James Madison, were deeply at odds over Hamilton’s proposal to create a national bank.

Hamilton put forward the idea for a bank in a report to Congress on December 14, 1790. As Gordon Wood notes, Hamilton’s “
bold and novel
” plan called for a bank that would be capitalized at $10 million, “which was far more than all the specie, that is, gold and silver, in the country.” A fifth of the capital would come from the government, the rest from stock that would be sold to private investors. Thus did the new republic begin its long
experience with public-private partnerships. Investors could “
pay for up to three-fourths of the shares with government securities
,” a way of liquidating the nation’s debt. In what might be seen as our earliest argument over the merits of a gold standard, Hamilton wanted notes from the Bank of the United States to become “
the principal circulating medium of money
for a society that lacked an adequate supply of gold and silver coin.” Only “
a fraction of their worth was available
in specie at any one time,” which made even some Federalists nervous. John Adams worried that “
every dollar of a bank bill
that is issued beyond the value of gold and silver in the vaults, represents nothing, and is therefore a cheat upon somebody.” (One can imagine Ron Paul citing Adams approvingly.)

Wood pointed to the great shortcoming of Hamilton’s design, which would prove to be a larger problem in the Federalist worldview. The bank “
would make money available only to large merchants
and others who wanted short-term loans, ninety days or less.” This, as Wood noted, reflected “Hamilton’s insensitivity to the entrepreneurial needs of . . . ordinary farmers and small businessmen” and suggested “how little he and other Federalists appreciated the real sources of the capitalist future of America.” A basic elitism would always be a difficulty for Hamiltonians and, later, for many Whigs, however visionary their programs.

But Hamilton’s proposal
was
both visionary and imaginative—and it was too much for Madison. He “
launched a passionate attack
,” Wood wrote, arguing “that the bank bill was a misguided imitation of England’s monarchical practice of concentrating wealth and influence in the metropolitan capital, and, more important, that it was an unconstitutional assertion of federal power. The Constitution, he claimed, did not expressly grant the federal government the authority to charter a bank.” Within Washington’s cabinet, Thomas Jefferson, the secretary of state, and Edmund Randolph, the attorney general, sided with Madison.

Washington asked Hamilton to reply to his critics. Wood’s description of Hamilton’s argument is profoundly enlightening, since Hamilton struck chords that can still be heard in our time. Hamilton, said Wood,

carefully refuted the arguments of Randolph and Jefferson
and made a powerful case for a broad construction of the Constitution
that resounded through subsequent decades of American history. He argued that Congress’s authority to charter a bank was implied by the clause in Article I, Section 8 of the Constitution that gave Congress the right to make all laws “necessary and proper” to carry out its delegated powers. Without such implied powers, Hamilton wrote, “the United States would furnish the singular spectacle of a
political society
without
sovereignty
, or of a people
governed
without
government
.” That may have been Jefferson’s ideal, but it was not Washington’s. On February 25, 1791, the president signed the bank bill into law.

The fight over the bank involved the first shots fired in the creation of a new party system. Jefferson “
began urging friends to support
the agricultural interest and pure ‘republicanism’ against the ‘stock-jobbers’ in Congress.” Madison accused Hamilton’s supporters of being not only “speculators” but also “Tories,” a loaded word so soon after the Revolution.

The project for which Hamilton is best known, even though it had less immediate significance in his time, was the
Report on Manufactures
, so admired by Javits, issued on December 5, 1791. Hamilton has since come to be regarded as a prophet for understanding that the future of the United States lay in manufacturing and that a nation could not be great, either in wealth or in political influence, if it remained reliant solely on agriculture. Jeffersonian Republicans were genuinely fearful that transforming the country from a land of independent yeoman farmers to one dominated by manufacturing employees would be less hospitable to republican virtue and self-rule. So Hamilton shrewdly insisted that the health of agriculture and the health of manufacturing went hand in hand, despite perceptions to the contrary. “Particular encouragements of particular manufactures may be of a Nature to sacrifice the interests of landholders to those of manufacturers,” he wrote; “
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 intimately connected.”

The encouragement of manufacturing, he argued, would lead to a healthier economy because it would be diversified. “
When all the different kinds of industry
obtain in a community, each individual can find his proper element, and can call into activity the whole vigour of his nature,” Hamilton argued.

But he did not make the case for manufacturing on abstract grounds alone. In the world as it was, European nations were encouraging their own manufacturing while hoping that the United States would be confined to agriculture. Hamilton asked what would happen if Europe eventually closed itself off to American farm products. If European nations were organizing closed markets, the United States was required to do the same:

The regulations of several countries
, with which we have the most extensive intercourse, throw serious obstructions in the way of the principal staples of the United States. In such a position of things, the United States cannot exchange with Europe on equal terms; and the want of reciprocity would render them the victim of a system, which should induce them to confine their views to Agriculture and refrain from Manufactures . . . If Europe will not take from us the products of our soil, upon terms consistent with our interest, the natural remedy is to contract as fast as possible our wants of her.

Hamilton proposed to turn the United States into a manufacturing nation through extensive intervention in the marketplace:

Certain nations grant bounties on the exportation
of particular commodities, to enable their own workmen to undersell and supplant all competitors, in the countries to which those commodities are sent. Hence the undertakers of a new manufacture have to contend not only with the natural disadvantages of a new undertaking, but with the gratuities and remunerations which other governments bestow. To be enabled to contend with success, it is evident, that the interference and aid of their own government are indispensable.

The historian John C. Miller described the assistance Hamilton was prepared to extend to promote manufacturing as “
calculated to stir the blood
of even the most lethargic and self-satisfied businessman.” Hamilton proposed
“
protective tariffs; bounties for the establishment
of new industries; premiums for improvements in quality; awards for the encouragement of inventions, particularly labor-saving machinery; and exemptions from duty of essential raw materials imported from abroad.” If this sounds like industrial policy, eighteenth-century style, it was. And Hamilton was unapologetic. “
In countries where there is great private wealth
, much may be effected by the voluntary contributions of patriotic individuals,” he wrote, “but in a community situated like that of the United States, the public purse must supply the deficiency of private resource. In what can it be so useful, as in prompting and improving the efforts of industry?”