A SURVEY OF ECONOMIC INTERESTS IN 1787
The whole theory of the economic interpretation of history rests upon
the concept that social progress in general is the result of contending
interests in society—some favorable, others opposed, to change. On this
hypothesis, we are required to discover at the very outset of the
present study what classes and social groups existed in the United
States just previous to the adoption of the Constitution and which of
them, from the nature of their property, might have expected to benefit
immediately and definitely by the overthrow of the old system and the
establishment of the new. On the other hand, it must be discovered which
of them might have expected more beneficial immediate results, on the
whole, from the maintenance of the existing legal arrangements.
The importance of a survey of the distribution of property in 1787 for
economic as well as political history is so evident that it is strange
that no attempt has been made to undertake it on a large scale. Not even
a beginning has been made. It is, therefore, necessary for us to rely
for the present upon the general statements of historians who have
written more or less at length about the period under consideration; but
in the meanwhile it can do no harm to suggest, by way of a preface, the
outlines of such a survey and some of the chief sources of information.
I. In the first place, there were the broad interests of real property
which constituted, in 1787, a far larger proportion of all wealth than
it does at the present time. The size, value, and ownership of holdings
and their geographical distribution ought to be ascertained. In the
absence of a general census, the preparation of such an economic survey
would entail an enormous labor, and it could never be more than
approximately complete. Neither the census of 1790 nor the assessment
for direct taxes under the law of 1798 covers this topic. The assessment
rolls of the several states for taxation, wherever available, would
yield the data desired, at least in part; but a multitude of local
records would have to be consulted with great scrutiny and critical
care.
II. In order to ascertain the precise force of personalty in the
formation and adoption of the Constitution, it would be necessary to
discover not only the amount and geographical distribution[27] of money
and public securities; but also the exact fields of operation in which
personalty looked for immediate and prospective gains. A complete
analysis of the economic forces in the Constitution-making process would
require the following data:—
1. The geographic distribution of money on hand and loaned and the names
of the holders. It is apparent that much of the material from which
evidence on these points may be obtained has disappeared; but an
intensive study of the tax returns of the states, the records of the
local assessors, wills probated, mortgages recorded, and suits in courts
over loans and mortgages, would no doubt produce an immense amount of
illuminating information.
2. The geographic distribution and ownership of the public securities.
Fortunately the unpublished and unworked records of the Treasury
Department at Washington throw great light on this fundamental problem.
Shortly after the federal government was established the old debt was
converted into a new consolidated, or funded, debt; and holders of
public securities, state and continental, brought their papers to their
local loan office (one for each state) or to the Treasury to have them
recorded and transformed into the stocks of the new government.
The records of this huge transaction (which was the first really great
achievement of nascent capitalism in the United States), if they had
been kept intact, would constitute, perhaps, the most wonderful single
collection on economic history ever possessed by any country. Were they
complete, they would form a veritable Domesday Book of the politics
during the first years of the new government. But unfortunately they are
not complete. The records of Hamilton’s administration at the Treasury
itself seem to have largely disappeared, and the records of the loan
offices in the several states are generally fragmentary, although in one
or two instances they are indeed monumental.
A complete set of these financial documents should show: (1) the owners
of certificates of the old government as issued, during the Revolution
and afterward, to original holders; (2) the transfers of certificates
from original holders to other parties; (3) the names of those who held
certificates in 1787, when the Convention was called to frame the
Constitution; (4) the records of transactions in stocks between the
announcement of the Convention’s work and the adoption of Hamilton’s
funding system; (5) the names of those who brought in securities for
funding into the new debt; (6) the names of those for whom the brokers,
whose names appear on the loan office books, were, in fact, operating.
None of the records preserved at the Treasury Department presents all of
the evidence required for the scientific study of a single state. Nearly
one-third of the operations were at the Treasury and of these only a
meagre fragment seems to have escaped the ravages of time. In the
documents of some of the commonwealths, however, it is possible to
ascertain the names of hundreds of patriots who risked their money in
original certificates or received certificates for services rendered.
The books of a few loan offices are so kept that it can be easily
discovered who brought in securities to be funded into the new debt and
also to whom these securities were originally issued.
In some states the ledgers were carefully preserved and it is possible
to find out the names and addresses of the holders of securities funded
at the local loan office and the amount held by each person. The ledgers
of Connecticut, for example, offer a rich field for the study of the
names and geographical distribution of public creditors, and the tracing
of these interests through their myriad local ramifications would afford
an interesting and profitable undertaking. But unfortunately multitudes
of the most significant operations are forever lost; it is to be
particularly deplored that the “powers of attorney” for the period are
not forthcoming. Unless the Government at Washington follows the example
of enlightened administrations in Europe and establishes a Hall of
Records, the precious volumes which have come down to us will be worked
only with great difficulty, if they do not disintegrate and disappear
altogether.[28]
3. The geographic distribution of small mortgaged farms and their
connection with various schemes for depreciation of the currency and
impairment of the obligation of contract. No doubt work in local records
would yield valuable results in this field.
4. Owners and operators in western lands. Speculation in western lands
was one of the leading activities of capitalists in those days. As is
well known, the soldiers were paid in part in land scrip and this scrip
was bought up at low prices by dealers, often with political
connections. Furthermore, large areas had been bought outright for a few
cents an acre and were being held for a rise in value. The chief
obstacle in the way of the rapid appreciation of these lands was the
weakness of the national government which prevented the complete
subjugation of the Indians, the destruction of old Indian claims, and
the orderly settlement of the frontier. Every leading capitalist of the
time thoroughly understood the relation of a new constitution to the
rise in land values beyond the Alleghanies. This idea was expressed, for
example, by Hugh Williamson, a member of the Convention from North
Carolina and a land speculator in a letter to Madison.[29] The materials
for the study of land operations exist in enormous quantities, largely
in manuscript form in Washington; and a critical scrutiny of the
thousands of names that appear on these records, in their political
relations, would afford results beyond all measure. Here, too, is the
work for a lifetime.
5. The geographic distribution of manufacturing establishments and the
names of owners and investors. On this important topic a mass of printed
and manuscript materials exists, but no attempt has yet been made to
catalogue the thousands of names of persons with a view to establishing
political connections. To produce the materials for this study, searches
must be made in the local records from New Hampshire to Georgia. Wills
probated, transfers of property, law suits, private papers,
advertisements in newspapers, shipping records, Hamilton’s
correspondence in the Manuscript Division of the Library of Congress,
unclassified Treasury Records and correspondence, and innumerable other
sources must be searched and lists of names and operations made.
Pending the enormous and laborious researches here enumerated, the
following pages are offered merely as an indication of the way in which
the superficial aspects of the subject may be treated.[30] In fact, they
sketch the broad outlines of the study which must be filled in and
corrected by detailed investigations.
THE DISFRANCHISED
In an examination of the structure of American society in 1787, we first
encounter four groups whose economic status had a definite legal
expression: the slaves, the indented servants, the mass of men who could
not qualify for voting under the property tests imposed by the state
constitutions and laws, and women, disfranchised and subjected to the
discriminations of the common law. These groups were, therefore, not
represented in the Convention which drafted the Constitution, except
under the theory that representation has no relation to voting.
How extensive the disfranchisement really was cannot be determined.[31]
In some states, for instance, Pennsylvania and Georgia, propertyless
mechanics in the towns could vote; but in other states the freehold
qualifications certainly excluded a great number of the adult males.
In no state, apparently, had the working-class developed a consciousness
of a separate interest or an organization that commanded the attention
of the politicians of the time. In turning over the hundreds of pages of
writings left by eighteenth-century thinkers one cannot help being
impressed with the fact that the existence and special problems of a
working-class, then already sufficiently numerous to form a considerable
portion of society, were outside the realm of politics, except in so far
as the future power of the proletariat was foreseen and feared.[32]
When the question of the suffrage was before the Convention, Madison
warned his colleagues against the coming industrial masses: “Viewing the
subject in its merits alone, the freeholders of the Country would be the
safest depositories of Republican liberty. In future times a great
majority of the people will not only be without landed, but any other
sort of property. These will either combine under the influence of their
common situation; in which case,[33] the rights of property and the
public liberty will not be secure in their hands, or, which is more
probable, they will become the tools of opulence and ambition; in which
case there will be equal danger on another side.”[34]
So far as social policy is concerned, however, the working-class problem
had not made any impression on the statesmen of the time. Hamilton in
his report on manufactures,[35] dismisses the subject with scant notice.
He observes that one of the advantages of the extensive introduction of
machinery will be “the employment of persons who would otherwise be
idle, and in many cases, a burthen on the community, either from bias of
temper, habit, infirmity of body, or some other cause, indisposing or
disqualifying them for the toils of the country. It is worthy of remark,
that, in general, women and children are rendered more useful, and the
latter more early useful, by manufacturing establishments, than they
would otherwise be. Of the number of persons employed in the cotton
manufactories of Great Britain, it is computed that four-sevenths,
nearly, are women and children; of whom the greatest proportion are
children, many of them of a tender age.” Apparently this advantage was,
in Hamilton’s view, to accrue principally to the fathers of families,
for he remarks: “The husbandman himself experiences a new source of
profit and support, from the increased industry of his wife and
daughters, invited and stimulated by the demands of the neighboring
manufactories.”
Passing beyond these groups which were politically nonexistent, except
in so far as those who possessed the ballot and economic power were
compelled to safeguard their rights against assaults from such quarters,
we come to the social groupings within the politically enfranchised
mass. Here we find no legal class distinctions. Social distinctions were
very sharp, it is true, as every student of manners and customs well
knows; but there were no outward legal signs of special class
privileges.
GROUPS OF REAL PROPERTY HOLDERS
Nevertheless, the possessors of property were susceptible of
classification into several rather marked groups, though of course they
shade off into one another by imperceptible gradations. Broadly
speaking, there were the interests of real and personal property. Here,
however, qualifications must be made. There was no such identity of
interest between the large planters and the small inland farmers of the
south as existed in England between the knights and yeomen. The real
property holders may be classified into three general groups: the small
farmers, particularly back from the sea-coast, scattered from New
Hampshire to Georgia, the manorial lords, such as we find along the
banks of the Hudson,[36] and the slaveholding planters of the south.
1. The first of these groups, the small farmers, constituted a
remarkably homogeneous class. The inland section was founded and
recruited by mechanics, the poorer whites, and European (particularly
Scotch-Irish) immigrants. It had peculiar social and political views
arising from the crude nature of its environment, but its active
political doctrines were derived from an antagonism to the seaboard
groups. One source of conflict was connected with the possession of the
land itself. Much of the western country had been taken up by
speculators and the settlers were either squatters or purchasers from
large holders. This is illustrated by the situation in Virginia, where,
as Ambler points out, “liberality in granting her unoccupied lands did
not prove to be good policy. True, large numbers of settlers were early
attracted to the state, where they made permanent homes, but much of the
land fell into the hands of speculators. Companies were formed in Europe
and America to deal in Virginia lands, which were bought up in large
tracts at the trifling cost of two cents per acre. This wholesale
engrossment soon consumed practically all the most desirable lands and
forced the home seeker to purchase from speculators or to settle as a
squatter.”[37] As the settler sought to escape from the speculator by
moving westward, the frontier line of speculation advanced.
In addition to being frequently in debt for their lands, the small
farmers were dependent upon the towns for most of the capital to develop
their resources. They were, in other words, a large debtor class, to
which must be added, of course, the urban dwellers who were in a like
unfortunate condition.
That this debtor class had developed a strong consciousness of identical
interests in the several states is clearly evident in local politics and
legislation.[38] Shays’ Rebellion in Massachusetts, the disturbances in
Rhode Island, New Hampshire, and other northern states, the activities
of the paper-money advocates in state legislatures, the innumerable
schemes for the relief of debtors, such as the abolition of
imprisonment, paper money, laws delaying the collection of debts,
propositions requiring debtors to accept land in lieu of specie at a
valuation fixed by a board of arbitration,—these and many other schemes
testify eloquently to the fact that the debtors were conscious of their
status and actively engaged in establishing their interest in the form
of legal provisions. Their philosophy was reflected in the writings of
Luther Martin, delegate to the Convention from Maryland, who disapproved
of the Constitution, partly on the ground that it would put a stop to
agrarian legislation.[39]
2. The second group of landed proprietors, the manorial lords of the
Hudson valley region, constituted a peculiar aristocracy in itself and
was the dominant class in the politics of New York during the period
between the Revolution and the adoption of the Constitution, as it had
been before the War. It was unable or unwilling to block the emission of
paper money, because the burden of that operation fell on the
capitalists rather than itself. It also took advantage of its
predominance to shift the burden of taxation from the land to
imports,[40] and this fact contributed powerfully to its opposition to
the Constitution, because it implied a transference of the weight of
taxation for state purposes to the soil. Its spokesmen indulged in much
high talk of state’s rights, in which Federalist leaders refused to see
more than a hollow sham made to cover the rural gentry’s economic
supremacy.
3. The third group of landed proprietors were the slave-holders of the
south. It seems curious at the first glance that the representatives of
the southern states which sold raw materials and wanted competition in
shipping were willing to join in a union that subjected them to
commercial regulations devised immediately in behalf of northern
interests. An examination of the records shows that they were aware of
this apparent incongruity, but that there were overbalancing
compensations to be secured in a strong federal government.[41]
Money-lending and the holding of public securities were not confined to
the north by any means; although, perhaps, as Calhoun long afterward
remarked,[42] the south was devoid of some of the artifices of commerce
which characterized New England. Neither were attempts at relieving
debtors by legislative enactment restricted to Massachusetts and Rhode
Island. The south had many men who were rich in personalty, other than
slaves, and it was this type, rather than the slaveholding planter as
such, which was represented in the Convention that framed the
Constitution. The majority of the southern delegates at Philadelphia in
1787 were from the towns or combined a wide range of personalty
operations with their planting. On this account there was more identity
of interest among Langdon of Portsmouth, Gerry of Boston, Hamilton of
New York, Dayton of New Jersey, Robert Morris of Philadelphia, McHenry
of Baltimore, Washington on the Potomac, Williamson of North Carolina,
the Pinckneys of Charleston, and Pierce of Savannah than between these
several men and their debt-burdened neighbors at the back door. Thus
nationalism was created by a welding of economic interests that cut
through state boundaries.
The southern planter was also as much concerned in maintaining order
against slave revolts as the creditor in Massachusetts was concerned in
putting down Shays’ “desperate debtors.” And the possibilities of such
servile insurrections were by no means remote. Every slave-owner must
have felt more secure in 1789 when he knew that the governor of his
state could call in the strong arm of the federal administration in case
a domestic disturbance got beyond the local police and militia. The
north might make discriminatory commercial regulations, but they could
be regarded as a sort of insurance against conflagrations that might
bring ruin in their train. It was obviously better to ship products
under adverse legislation than to have no products to ship.
GROUPS OF PERSONAL PROPERTY INTERESTS
A second broad group of interests was that of personal property as
contrasted with real property. This embraced, particularly, money
loaned, state and continental securities, stocks of goods, manufacturing
plants, soldiers’ scrip, and shipping. The relative proportion of
personalty to realty in 1787 has not been determined and it is
questionable whether adequate data are available for settling such an
important matter.[43]
PERSONALTY IN MONEY.—Although personalty in the form of money at
interest or capital seeking investment did not constitute in 1787
anything like the same amount, relative to the value of real estate,
which it does to-day, it must not be thought that it was by any means
inconsiderable in any state. The tax returns of New Hampshire for 1793
report the value of all buildings and real estate as £893,327:16:10 and
the amount of money on hand or at interest as £35,985:5:6. The
Massachusetts tax returns of 1792 show £196,698:4:6 at interest and
£95,474:4:5 on hand. The Connecticut returns for 1795 show £63,348: 10:1
at interest.[44]
Money capital was suffering in two ways under the Articles of
Confederation. It was handicapped in seeking profitable outlets by the
absence of protection for manufactures, the lack of security in
investments in western lands, and discriminations against American
shipping by foreign countries. It was also being positively attacked by
the makers of paper money, stay laws, pine barren acts, and other
devices for depreciating the currency or delaying the collection of
debts. In addition there was a widespread derangement of the monetary
system and the coinage due to the absence of uniformity and stability in
the standards.[45]
Creditors, naturally enough, resisted all of these schemes in the state
legislatures, and failing to find relief there at length turned to the
idea of a national government so constructed as to prevent laws
impairing the obligation of contract, emitting paper money, and
otherwise benefiting debtors. It is idle to inquire whether the rapacity
of the creditors or the total depravity of the debtors (a matter much
discussed at the time) was responsible for this deep and bitter
antagonism. It is sufficient for our purposes to discover its existence
and to find its institutional reflex in the Constitution. It was to the
interest of the creditors to see the currency appreciate, to facilitate
the process for securing possession of forfeited mortgaged property, and
to hold the rigor of the law before the debtor who was untrue to his
obligations. Whether the creditors were driven into class consciousness
by the assaults of their debtors or attained it by the exercise of their
wits is, for scientific purposes, immaterial.
PERSONALTY IN PUBLIC SECURITIES.—Even more immediately concerned in the
establishment of a stable national government were the holders of state
and continental securities. The government under the Articles of
Confederation was not paying the interest on its debt and its paper had
depreciated until it was selling at from one-sixth to one-twentieth of
its par value.[46] Grave uncertainties as to the actions of legislatures
kept state paper at a low price, also, even where earnest attempts were
being made to meet the obligations.
The advantage of a strong national government that could discharge this
debt at its face value is obvious; and it was fully understood at the
time. The importance of this element of personalty in forcing on the
revolution that overthrew the Articles of Confederation is all the more
apparent when it is remembered that securities constituted a very large
proportion of the intangible wealth. In Massachusetts, for example, it
is set down in 1792 at a sum greater than all the money at interest and
on hand in the state.[47]
The amount of the public securities of the United States and of the
several states at the establishment of the new government was estimated
by Hamilton, in his first report on credit, as Secretary of the
Treasury.[48] The foreign debt, that is, money borrowed abroad, was
fixed at $10,070,307 and arrears of interest up to December, 1789, were
estimated at $1,640,071.62, making a total of $11,710,378.62. The
domestic continental debt, including the registered debt, army
certificates, etc., amounted to $27,383,917.74, to which was added
arrears of interest to the amount of $13,030,168.20, making a total of
$40,414,085.94. The amount of the state debts was unknown in 1790, but
Hamilton placed it at about $25,000,000, which appears to have been
rather high. The issue, later authorized to cover them, was $21,500,000
and the amount actually paid out was $18,271,786.47.[49]
The enormous total of the national debt after state and national
securities were funded is shown by Hamilton’s report of January 16,
1795:—
Foreign Debt $13,745,379.35
Funded domestic debt 60,789,914.18
Unsubscribed debt 1,561,175.14
────────────────────────────────────
Total unredeemed debt $76,096,468.67
In addition to this sum, there was an amount of $1,400,000 due to the
Bank of the United States on account of the loan from that institution,
but this was more than counterbalanced by the value of the stock.[50]
It is evident from this statement that a vast mass of state and
continental securities was scattered throughout the country in 1787. The
degree of its concentration or distribution cannot be determined until
the Domesday Books of the Treasury Department have been carefully
studied, and their incompleteness makes an absolute statement
impossible. The value of this paper in the hands of the holders in the
spring when the Convention met cannot be ascertained with mathematical
precision, for prices varied from state to state. Furthermore, the
prices obtained by the holders of public paper after Hamilton’s funding
system had gone into effect can only be roughly estimated, for it
depends upon the market in which they were sold. For example, 6 per
cents were bringing 17 shillings in the pound on March 5, 1791, and 22
shillings in the pound on October 3, 1792. On these dates, deferred
sixes were 9/1 and 13/7, respectively, and 3 per cents were 9/1 and
13/1, respectively.[51]
If we leave out of account the foreign debt, it appears that some
$60,000,000 worth of potential paper lay in the hands of American
citizens in the spring of 1787. This paper was changing hands all of the
time at varying prices. The common selling price in good markets before
the movement for the Constitution got under way ranged from one-sixth to
one-tenth its face value; and some of it sold as low as twenty to one.
In fact, many holders regarded continental paper as worthless, as it
might have been had the formation of the Constitution been indefinitely
delayed. It seems safe to hazard a guess, therefore, that at least
$40,000,000 gain came to the holders of securities through the adoption
of the Constitution and the sound financial system which it made
possible. This leaves out of account the large fortunes won by the
manipulation of stocks after the government was established and
particularly after the founding of the New York Stock Exchange in
1792.[52]
It should be pointed out, however, that this was not all gain for the
original holders of public paper, that is, for those who had loaned the
Revolutionary government money or had rendered it services during the
War. Nevertheless, they would have lost all their continental securities
under the prevailing methods of the Congress. As Pitkin points out, “The
interest of the debt was unpaid, public credit was gone, the debt itself
was considered of little value, and was sold at last by many of the
original holders for about one-tenth of its nominal value.”[53] From
this point of view, the appreciation due to the adoption of the new
government was so much clear gain, even to original holders; and in some
states more than one-half of the paper had passed into the hands of
speculators at low figures.
The significance of this huge national debt and of the enormous gain
made in the appreciation of securities can be understood only in
comparison with other forms of wealth at that time. Unfortunately, our
statistics for the period of the formation of the Constitution are
meagre, but under an act of Congress passed in 1798 a valuation of lands
was made for the purposes of direct taxation. The surveys were made
between the years 1798 and 1804. The following table[54] exhibits the
value of lands (not including houses, which amounted to more than
$140,000,000 in addition) in each of the states at the close of the
eighteenth century, and also the amount of money paid out by the loan
offices of the respective states for the year 1795 in discharging the
interest on the public debt and the payment of 2 per cent towards the
reimbursement of the 6 per cent stocks held in the several
commonwealths:—
═══════════════════════╤═══════════════════════╤═══════════════════════
│ │ INTEREST, ETC.,
│ VALUE OF LANDS │ DISBURSED[55]
───────────────────────┼───────────────────────┼───────────────────────
New Hampshire │ $19,028,108.03│ $20,000.00
Massachusetts │ 59,445,642.64│ 309,500.00
Rhode Island │ 8,082,355.21│ 31,700.00
Connecticut │ 40,163,955.34│ 79,600.00
Vermont │ 15,165,484.02│
New York │ 74,885,075.69│ 367,600.00
New Jersey │ 27,287,981.89│ 27,350.00
Pennsylvania │ 72,824,852.60│ 86,379.19
Delaware │ 4,053,248.42│ 2,980.00
Maryland │ 21,634,004.57│ 74,000.00
Virginia │ 59,976,860.04│ 62,300.00
North Carolina │ 27,909,479.70│ 3,200.00
South Carolina │ 12,456,720.94│ 109,500.00
Georgia │ 10,263,506.95│ 6,800.00
Kentucky │ 20,268,325.07│
Tennessee │ 5,847,562.00│
───────────────────────┼───────────────────────┼───────────────────────
Total │ $479,293,263.13│ $1,180,909.19
═══════════════════════╧═══════════════════════╧═══════════════════════
Footnote 55:
No table showing the capital amount of the loan office books of the
states after the funding was complete was discovered, so that interest
payment is given here.
To the total amount of payments made through the loan offices must be
added the payments made at the Treasury on the securities registered
there, bringing the total annual interest and capital disbursements to
$2,727,959.07.
It seems safe to assume from the table that $400,000,000 would cover the
total taxable value of all the lands in the thirteen states in 1787.[56]
Very probably the estimate should be much lower, but letting the figures
stand at this amount, it will be seen that an advance of $40,000,000 in
securities would have represented one-tenth of the total taxable value
of all the land in the thirteen United States at the time of the
formation of the Constitution.
To put the matter in another way: The amount gained by public security
holders through the adoption of the new system was roughly equivalent to
the value of all the lands as listed for taxation in Connecticut. It was
but little less than the value of the lands in New Hampshire, Vermont,
and Rhode Island. It was about equivalent to one-half the value of the
lands in New York and to two-thirds the value of the lands in
Massachusetts. It amounted to at least ten dollars for every man, woman,
and child in the whole United States from New Hampshire to Georgia.[57]
The significance of the figures showing the annual interest disbursement
also when the debt had been funded becomes evident only by comparison.
Tench Coxe, as commissioner of the revenue, estimated the amount of
goods, wares, and merchandise exported from the United States between
October 1, 1791, and September 30, 1792, at $21,005,568. In other words,
the annual interest on the domestic debt was more than one-tenth the
total value of the goods exported annually. The average imports for each
of the three years ending March 4, 1792, was $19,150,000, so that the
interest on the domestic debt was more than one-tenth of the value of
the goods imported into the United States.[58]
One of the most potent effective forces of these public securities was
the Society of the Cincinnati which was composed of the officers of the
Revolutionary Army organized into local branches in the several states.
Like other soldiers, the members of this order had been paid for their
patriotic services partly in land warrants and depreciated paper; but
unlike the privates, they were usually men of some means and were not
compelled to sacrifice their holdings to speculators at outrageously low
prices. The members of this Society appear in large numbers on the loan
office records of the several states preserved in the Treasury
Department; and many, if not all, of the state branches had funds
derived from this source.
The political influence of the Society was recognized in the Convention.
When the popular election of President was under consideration, Gerry
objected to it. “The ignorance of the people,” he said, “would put it in
the power of some one set of men dispersed through the Union and acting
in concert to delude them into any appointment. He observed that such a
Society of men existed in the Order of the Cincinnati. They were
respectable, United, and influential. They will in fact elect the chief
Magistrate in every instance, if the election be referred to the
people—His respect for the characters composing this Society could not
blind him to the danger and impropriety of throwing such a power into
their hands.”[59] In this view Colonel Mason concurred.[60]
An observant French chargé d’affaires, writing to his home secretary of
state for foreign affairs in June, 1787, calls attention to the weight
of the Order of the Cincinnati in the movement for a new government, but
remarks that their power has been greatly exaggerated. “Les Cincinnati,”
he says, “c’est à dire les officiers de l’ancienne armée américaine,
sont intéressés à l’éstablissement d’un Gouvernement solide, puisqu’ils
sont tous créanciers du public, mais, considérant la foiblesse du
Conseil national et l’impossibilité d’être payés par la présente
administration, ils proposent de jeter tous les États dans une seule
masse et de mettre à leur tête le gai. Washington avec toutes les
prérogatives et les pouvoirs d’une tête couronné.” He also says that
they threaten a revolution by arms in case the Convention fails, but
adds that this project is too extravagant to merit the least
consideration.[61]
This society was, however, compactly organized. Correspondence among the
members was frequent, extensive, and frank. Almost uniformly, they were
in favor of a reconstruction of the national government on a stronger
basis.[62] They were bitter in their denunciation of the popular
movements in the states; particularly Shays’ revolt in Massachusetts.
War had given them a taste for strong measures, and the wretched
provisions which had been made for paying them for their military
services gave them an economic interest in the movement to secure a
government with an adequate taxing power. Moreover, they were
consolidated by the popular hostility to them on account of their
“secret” and “aristocratic” character.
PERSONALTY IN MANUFACTURING AND SHIPPING.—The third group of personalty
interests embraced the manufacturing population, which was not
inconsiderable even at that time. A large amount of capital had been
invested in the several branches of industry and a superficial study of
the extensive natural resources at hand revealed the immense
possibilities of capitalistic enterprise. The industrial revolution was
then getting under way in England and the fame of Arkwright was being
spread abroad in the land. In the survey of the economic interests of
the members of the federal Convention, given below, it is shown that a
few leading men were directly connected with industrial concerns,
although it is not apparent that the protection of industries was their
chief consideration, in spite of the fact that they did undoubtedly
contemplate such a system. But outside of the Convention vehement
appeals were made by pamphleteers for protection, on the score that the
discriminatory measures of Great Britain were disastrous to American
economic independence.
As early as April, 1785, a memorial from prominent merchants and
business men of Philadelphia was laid before the legislature of the
state lamenting that Congress did not have “a full and entire power over
the commerce of the United States,” and praying that the legislature
request Congress to lay a proposal conferring such a power before the
states for their ratification. The memorialists assured the legislature
that there was a “disposition in the mercantile interest of Pennsylvania
favorable thereto.”[63] Among the signers were T. Fitzsimons and George
Clymer, who were destined to sit in the constitutional Convention as
representatives of the state of Pennsylvania and of the mercantile
interest which they had so much at heart.
The supporters of the Constitution were so earnest and so persistent in
their assertion that commerce was languishing and manufactures perishing
for the lack of protection that there must have been some justification
for their claims, although it is impossible to say how widespread the
havoc really was. The exaggeration of danger threatened by a tariff
reduction is not peculiar to our times; it was sharply marked in older
days. That the consumer suffered from the lack of the protection sought
in 1787 by merchants and manufacturers is not apparent. Indeed the
“mechanics and manufacturers of New York” in their humble petition to
Congress for relief in 1789 complain that “their countrymen have been
deluded by an appearance of plenty; by the profusion of foreign articles
which has deluged the country; and thus have mistaken excessive
importation for a flourishing trade. To this deception they [the
petitioners] impute the continuance of that immoderate prepossession in
favor of foreign commodities which has been the principal cause of their
distresses, and the subject of their complaint.”[64]
That innumerable manufacturing, shipping, trading, and commercial
interests did, however, look upon the adoption of the Constitution as
the sure guarantee that protection could be procured against foreign
competition, is fully evidenced in the memorials laid before Congress in
April, May, and June, 1789, asking for the immediate enactment of
discriminatory tariff laws.[65]
The first of these petitions was from Baltimore in particular and
Maryland generally, and was communicated to the House of Representatives
on April 11, 1789, a few days after that body had settled down to
business. The second was laid before the House a week later by a
committee representing the mechanics and manufacturers of New York. On
May 25, 1789, the shipwrights of Philadelphia laid their pleas before
Congress; and on June 5, the tradesmen and manufacturers of Boston put
in their appearance. These petitions for protection from the four great
trading and shipping centres of the country, Baltimore, Philadelphia,
New York, and Boston, which had been most zealous in securing the
establishment of the new government, are in themselves eloquent
documents for the economic interpretation of the Constitution.
The first of these, from Baltimore, bears the names of two members of
the federal Convention from that state, Daniel Carroll and James
McHenry, and the names of two or three hundred other citizens of that
community, the analysis of whose politico-economic connections would
doubtless repay the detailed scrutiny which the painful labor would
entail. The petition cites the sad state of decline in which
manufacturing and trading interests have been since the close of the
Revolution and the ineffectual attempts of the states acting alone to
remedy the evils. “The happy period having now arrived,” the
memorialists exultingly exclaim, “when the United States are placed in a
new situation; when the adoption of the General Government gives one
sovereign Legislature the sole and exclusive power of laying duties upon
imports; your petitioners rejoice at the prospect this affords them,
that America, freed from the commercial shackles which have so long
bound her, will see and pursue her true interest, becoming independent
in fact as well as in name; and they confidently hope that the
encouragement and protection of American manufactures will claim the
earliest attention of the supreme Legislature of the nation.”
The Maryland petitioners are conscious of no narrow motives in asking
for relief at the hands of the government: “the number of her poor
increasing for want of employment; foreign debts accumulating; houses
and lands depreciating in value; trade and manufactures languishing and
expiring”—these are the evidences of need for the expected legislation.
They, therefore, ask for duties on all foreign articles that can be made
in America, which will give “a just and decided preference to their
labors.” And lest Congress might not understand the precise character of
the relief for which they ask, they append a long list of articles,
which are, or can be, manufactured in Maryland, and on which protection
is needed—including ships, hardware, clocks, boots, shoes, saddles,
brushes, food-stuffs, and raw iron, to mention only a few.
The second petition, from the mechanics and manufacturers of New York,
recites how the memorialists had expected great prosperity on the
successful issue of the Revolution and had seen their hopes blasted “by
a system of commercial usurpation, originating in prejudices, and
fostered by a feeble government.” They had struggled in vain against
dire adversity and “wearied by their fruitless exertions, your
petitioners have long looked forward with anxiety to the establishment
of a government which would have the power to check the growing evil,
and extend a protecting hand to the interests of commerce and the arts.
Such a government is now established. On the promulgation of the
Constitution just now commencing its operations, your petitioners
discovered in its principles the remedy which they had so long and so
earnestly desired. They embraced it with ardor, and have supported it
with persevering attachment.” Lest Congress might not have the
information necessary for the formulation of a protective tariff on
correct principles, the petitioners subjoined a list of articles
manufactured in the state and susceptible of protection.
The petitioners from Philadelphia, humbly seeking protection for
shipping, lament that the tonnage built at that harbor has fallen to
about one-third the amount constructed before the Revolution, and call
attention to the fact that the British navigation act totally prevents
them from building for English customers. They add that they “have
waited, with anxious expectation, for the sitting of the honourable
Congress under the new Constitution of the United States, firmly relying
that every exertion would be used to reinstate so necessary and useful a
branch of business.” Like the representatives from Baltimore and New
York, they append for the information of Congress a list of suggestions
as to the best method of protecting American shipping interests.
Finally come the manufacturers and ship builders of Boston.
Ship-building with them has also declined since the Revolution, and the
revival of manufacturing in the north depends upon adequate protection
from the federal government. Accordingly they request that “heavy duties
may be laid on such articles as are manufactured by our own citizens,
humbly conceiving that the impost is not solely considered by Congress
as an object of _revenue_, but, in its operation, intended to _exclude_
such importations, and, ultimately, establish these several branches of
manufacture among ourselves.” Rope-makers, hatters, pewterers,
soapboilers, and tallow-chandlers, wool card-makers, ship-carvers,
sailmakers, cabinet-makers, coachmakers, tailors, cordwainers, glue and
starch makers, brass-founders, and coppersmiths are among the
memorialists.
In the processions which celebrated the adoption of the Constitution in
Boston, Philadelphia, Baltimore, Charleston, and New York, the several
local manufacturing concerns were extensively represented by floats and
banner-men, which shows that they were not unaware of the gain that had
been made in their favor by the establishment of the new system. But it
must not be supposed that the consolidation of interests in support of
the Constitution was purely local in character. On the contrary it was
nationwide.
Immediately after the Revolution the local groups were being welded into
a national interest by correspondence committees. Before the formation
of the Constitution, Boston merchants were sending out appeals to other
merchants in the several states to join in a national movement for
protection; and before the new government went into effect, they were
active in stirring up united action among the merchants and
manufacturers of the whole country. In 1788, a committee of the
association of Boston merchants and manufacturers sent out a circular to
“their brethren in the several seaports of the union,” asking for
cooperation in this grave juncture.[66] To this Boston appeal are
appended the names of John Gray, Gibbins Sharp, Benjamin Austin, Jr.,
Larson Belcher, William Hawes, and Joshua Witherle—all of whom signed
the petition addressed to Congress the following year asking for
protection.[67]
During the struggle over the reconstruction, the advocates of a
constitution made use of the argument that the consumption of foreign
luxuries, manufactured stuffs, was one of the chief causes of the
economic distress which was said to prevail; and declared that national
legislation was the only source of relief from this heavy importation. A
writer in the _American Museum_ for February, 1787, complains that “the
articles of rum and tea alone, which are drank in this country, would
pay all its taxes. But when we add sugar, coffee, gauzes, silks,
feathers, and the whole list of baubles and trinkets, what an enormous
expense! No wonder you want paper currency. My countrymen are all grown
very tasty. Feathers and jordans must all be imported. Certainly,
gentlemen, the _devil_ is among you. A Hampshireman, who drinks forty
shillings worth of rum in a year and never thinks of the expense, will
raise a mob to reduce the governor’s salary.”[68]
The Connecticut Courant, of November 12, 1787, in an argument for
ratification declares: “In the harbour of New York there are now 60
ships of which 55 are British. The produce of South Carolina was shipped
in 170 ships, of which 150 were British.... Surely there is not any
American who regards the interest of his country but must see the
immediate necessity of an efficient federal government; without it the
Northern states will soon be depopulated and dwindle into poverty, while
the Southern ones will become silk worms to toil and labour for Europe.”
It is worthy of remark, however, that the gloomy view of economic
conditions persistently propagated by the advocates of a new national
system was not entertained by all writers of eminence and authority. One
of the members of the Convention, Franklin, early in 1787, before the
calling of that assembly, declared that the country was, on the whole,
so prosperous that there was every reason for profound thanksgiving.[69]
He mentioned, it is true, that there were some who complained of hard
times, slack trade, and scarcity of money, but he was quick to add that
there never was an age nor a country in which there were not some people
so circumstanced as to find it hard to make a living and that “it is
always in the power of a small number to make a great clamour.” But
taking the several classes in the community as a whole, prosperity,
contended Franklin, was widespread and obvious. Never was the farmer
paid better prices for his products, “as the published prices current
abundantly testify. The lands he possesses are continually rising in
value.” In no part of Europe are the laboring poor so well paid, fed, or
clothed. The fishing trade, he thinks, is in a rather bad way, and
mercantile branches are overcrowded; but he is not distressed by the
extensive importation of English goods, because this is nothing new, and
America has prospered in spite of it.
It may very well be that Franklin’s view of the general social
conditions just previous to the formation of the Constitution is
essentially correct and that the defects in the Articles of
Confederation were not the serious menace to the social fabric which the
loud complaints of advocates of change implied. It may be that “the
critical period” was not such a critical period after all; but a phantom
of the imagination produced by some undoubted evils which could have
been remedied without a political revolution. It does not seem to have
occurred to those historians, who have repeated without examination
Fiske’s picturesque phrase that it is a serious matter to indict a whole
system, an entire epoch, and a whole people. It does not appear that any
one has really inquired just what precise facts must be established to
prove that “the bonds of the social order were dissolving.” Certainly,
the inflamed declarations of the Shaysites are not to be taken as
representing accurately the state of the people, and just as certainly
the alarmist letters and pamphlets of interested persons on the other
side are not to be accepted without discount. When it is remembered that
most of our history has been written by Federalists, it will become
apparent that great care should be taken in accepting, without reserve,
the gloomy pictures of the social conditions prevailing under the
Articles of Confederation. In fact, a very learned, though
controversial, historian, Henry B. Dawson, in an article published more
than forty years ago makes out quite a plausible case (documented by
minute research) for the statement that the “chaos” of which historians
are wont to speak when dealing with the history of the years 1783–87,
was a creation of their fancies.[70]
However this may be, and whether or not Franklin’s view is correct,[71]
it cannot be denied that the interests seeking protection were extensive
and diversified. This is conclusively shown by the petitions addressed
to public bodies, by the number of influential men connected with the
movement, and by the rapidity with which the new government under the
Constitution responded to their demands.
CAPITAL INVESTED IN WESTERN LANDS.—Although companies had been formed to
deal in western lands on a large scale before the Revolution, it was not
until the close of the War that effective steps were taken toward
settlement. At that time, says Professor Haskins, “the number of
emigrants, the cheapness of the lands, and the lack of an established
system of sale in small quantities offered many inducements for the
formation of great land companies whose opportunities for speculation
were increased by the depreciated currency and general ignorance
concerning the West.... ‘All I am now worth was gained by speculations
in land,’ wrote Timothy Pickering [a member of the Pennsylvania
ratifying convention] in the same year [1796]; and many eminent men
could have said the same, often with a later experience quite similar.
Land speculation involved Washington, Franklin, Gallatin, Patrick Henry,
Robert Morris, and James Wilson, as well as many less widely known.”[72]
The situation was this: Congress under the Articles of Confederation
adopted a policy of accepting certificates in part payment for lands;
and it was hoped by some that the entire national debt might be
extinguished in this way. However, the weakness of the Confederation,
the lack of proper military forces, the uncertainty as to the frontiers
kept the values of the large sections held for appreciation at an
abnormally low price. Those who had invested their funds in these lands
or taken stocks in the companies felt the adverse effects of the
prevailing public policy, and foresaw the benefits which might be
expected from a new and stable government. Their view was tersely put by
Williamson, a member of the Convention from North Carolina, in a letter
to Madison on June 2, 1788: “For myself, I conceive that my opinions are
not biassed by private Interests, but having claims to a considerable
Quantity of Land in the Western Country, I am fully persuaded that the
Value of those Lands must be increased by an efficient federal
Government.”[73]
The weight of the several species of property in politics is not
determined by the amount, but rather by the opportunities offered to
each variety for gain and by the degree of necessity for defence against
hostile legislation designed to depreciate values or close opportunities
for increments. When viewed in this light the reason for the special
pressure of personalty in politics in 1787 is apparent. It was receiving
attacks on all hands from the depreciators and it found the way to
profitable operations closed by governmental action or neglect. If we
may judge from the politics of the Congress under the Articles of
Confederation, two related groups were most active: those working for
the establishment of a revenue sufficient to discharge the interest and
principal of the public debt, and those working for commercial
regulations advantageous to personalty operations in shipping and
manufacturing and in western land speculations.[74]
It should be remembered also that personalty is usually more active than
real property. It is centralized in the towns and can draw together for
defence or aggression with greater facility. The expectation of profits
from its manipulation was much larger in 1787 than from real property.
It had a considerable portion of the professional classes attached to
it; its influence over the press was tremendous, not only through
ownership, but also through advertising and other patronage.[75] It was,
in short, the dynamic element in the movement for the new Constitution.