THE GREAT EXPERIMENT

Part III: Property, Liberty, and the American Economy

What Does Independence Mean?

America had created a new government.

Now came another question.

What kind of country would it become?

The Constitution established institutions.

It divided power.

It gave Congress authority to tax, borrow money, regulate interstate and foreign commerce, establish bankruptcy laws, coin money, establish post offices and post roads, and protect certain rights of authors and inventors.

But a Constitution could not plant a field.

It could not open a shop.

It could not build a merchant ship.

It could not guarantee that a farmer would make money from his harvest.

It could not determine whether America's future would be dominated by agriculture, commerce, manufacturing—or some combination of all three.

Those questions would be answered by millions of individual decisions, changing technology, geography, markets, government policy, and political argument.

And the arguments began almost immediately.

The founding generation had fought over political independence.

Now Americans would begin arguing over something just as important:

economic independence.

What does it mean to own property?

What relationship exists between property and liberty?

Should America remain primarily a nation of farmers?

Should government encourage manufacturing?

Should the country establish a national bank?

How should debt be treated?

How much power should the federal government exercise over economic life?

What happens when creditors and debtors want different things?

What happens when merchants, manufacturers, farmers, and landowners want different things?

And what happens when one person's property claim conflicts with another person's liberty?

The Founders did not give America one answer.

Once again, they gave us an argument.

Property Was More Than Land

When we hear the word property, it is easy to picture a house or a piece of land.

For Americans of the founding era, property could certainly mean land.

But economic life was much larger than that.

Property could include farms.

Homes.

Tools.

Livestock.

Ships.

Goods.

Businesses.

Money.

Contracts.

Debts owed.

Intellectual creations.

And, in one of the darkest realities of the period, enslaved human beings were legally treated as property.

Property therefore sat at the intersection of some of the largest questions confronting the new republic.

Who could own?

Who could sell?

Who could inherit?

Who could contract?

Who could borrow?

Who could lend?

Who could participate fully in economic life?

And what responsibility did government have to protect those arrangements?

The Constitution itself dealt with many economic questions.

Congress received authority over taxation, borrowing, commerce, bankruptcy, currency, patents and copyrights.

States were prohibited from coining money and from passing laws impairing contractual obligations.

The new framework was not indifferent to economic life.

Economic rules were built into the constitutional system from the beginning.

But that did not mean Americans agreed about how those powers should be used.

Madison Saw the Conflict Coming

James Madison understood something fundamental about a free society.

People would not have identical economic interests.

In Federalist No. 10, Madison identified what he considered one of the most persistent sources of political factions:

the unequal distribution of property.

Those who possessed property and those who did not could develop different interests.

Creditors and debtors could have different interests.

Landowners, manufacturers, merchants, and people connected to finance could have different interests.

Madison did not describe these divisions as some temporary problem that America would eventually outgrow.

He treated competing interests as a normal feature of civilized society.

That created a problem for republican government.

If people vote according to their interests, what prevents a powerful majority—or a powerful faction—from using government for itself?

Madison's answer was not to eliminate property.

Nor was it to eliminate disagreement.

Instead, he looked toward the structure of the republic.

A large society would contain many interests.

Those interests would compete.

Representation would filter public decisions through elected institutions.

Different parts of government would possess different responsibilities.

The challenge was not to create a country without economic factions.

It was to create a political system capable of governing a country full of them.

A Nation of Farmers?

Thomas Jefferson imagined an America in which agriculture occupied a particularly important place.

To Jefferson, people who worked their own land represented more than an occupation.

Agriculture could support a form of personal independence.

A person who possessed land and could produce from it was less dependent upon employers, financiers, crowded cities, or distant economic institutions.

That vision fit the physical reality of the early United States.

America possessed enormous stretches of land.

Most people lived in rural areas.

Agriculture dominated much of everyday economic life.

Expansion westward appeared to offer future generations access to land and opportunity.

Jefferson therefore tended to see an agricultural republic as favorable to independence and republican citizenship.

But there were problems beneath that vision.

Land was not simply empty and waiting for Americans to occupy it.

Native nations already inhabited enormous portions of the continent.

Expansion meant conflict, treaties, displacement, warfare, purchase, coercion, and competing claims to sovereignty and ownership.

And plantation agriculture in the South depended heavily upon enslaved labor.

The image of the independent farmer was therefore only one part of a much more complicated reality.

Hamilton Saw Another America

Alexander Hamilton looked at the country's future and saw different possibilities.

Agriculture mattered.

But Hamilton did not believe America should depend primarily upon agriculture.

He wanted the United States to develop manufacturing.

Commerce.

Finance.

Public credit.

Domestic industry.

A stronger national economy.

And a greater ability to produce goods Americans otherwise depended upon foreign countries to supply.

As Secretary of the Treasury, Hamilton developed an ambitious economic program.

He addressed the national debt.

He supported federal assumption of state Revolutionary War debts.

He advocated a national bank.

And in his 1791 Report on Manufactures, he argued for encouraging American manufacturing.

Hamilton's reasoning went beyond making businessmen wealthier.

He believed a diversified economy could strengthen the country itself.

Domestic manufacturing could create additional markets for agricultural products.

It could expand employment.

It could encourage immigration and technological development.

And it could reduce American dependence upon foreign nations for important supplies.

Hamilton therefore saw economic development as connected to national independence.

The Revolution had achieved political independence from Britain.

Hamilton wanted the United States to possess the economic strength necessary to preserve that independence.

Jefferson and Hamilton Were Looking at the Same Country

This is where the story becomes particularly important.

Hamilton and Jefferson were not debating whether America should prosper.

Both wanted the country to succeed.

They disagreed about what kind of prosperity would best preserve the republic.

Hamilton saw advantages in manufacturing, commerce, finance, public credit, and energetic national economic policy.

Jefferson placed greater faith in agriculture, decentralized economic independence, and limits on concentrated governmental and financial power.

Hamilton worried about national weakness.

Jefferson worried about concentrated power.

Hamilton saw national institutions as tools that could strengthen the country.

Jefferson worried that broad interpretations of federal authority could allow the national government to move beyond the powers the Constitution had actually granted it.

Their disagreement was not simply economic.

It was constitutional.

And soon one institution would bring that disagreement into the open.

The Bank

Hamilton proposed the creation of a national bank.

To Hamilton, the bank could help organize federal finances, handle government funds, facilitate payments, extend credit, and strengthen the country's financial system.

But there was a problem.

The Constitution did not explicitly say:

Congress may create a national bank.

Jefferson seized upon that fact.

He argued that the federal government possessed delegated powers and that the Constitution should not be interpreted so broadly that Congress could do essentially anything it considered useful.

Hamilton answered with a broader theory.

The Constitution granted Congress specific responsibilities.

If establishing a bank was a legitimate means of carrying out those constitutional responsibilities, Hamilton argued, Congress could possess the implied authority to establish it.

The argument reached President Washington.

He had advisers on opposite sides.

Jefferson opposed the bank.

Hamilton defended it.

Washington ultimately signed the legislation establishing the First Bank of the United States in 1791.

But the disagreement did not disappear.

It established one of the great recurring questions of American constitutional history:

When the Constitution gives government a responsibility, how much freedom does government have in choosing the means to carry it out?

Hamilton and Jefferson gave different answers.

And both answers would echo far beyond the bank.

Economic Policy Became Constitutional Policy

This is something easily missed when we look backward.

Arguments about banks, manufacturing, debt, and commerce were not merely arguments over economics.

They were arguments about the meaning of the Constitution itself.

Suppose a policy might strengthen the economy.

That still left another question:

Does the federal government have constitutional authority to do it?

Suppose Congress possessed authority.

Another question remained:

Should Congress use it?

And even if government could legally act and decided that it should:

Who would benefit, who would pay, and what consequences might follow?

Those are three different questions.

Constitutional authority.

Policy judgment.

Economic consequence.

The founding generation argued about all three.

Debt Was Not Just a Number

Debt was another source of disagreement.

The Revolution had left debts at both the national and state levels.

Government securities had changed hands.

Some original holders had sold them, sometimes for far less than their face value.

Hamilton wanted the federal government to establish strong public credit by honoring its obligations.

He also proposed that the federal government assume certain state Revolutionary War debts.

Supporters saw this as a way to establish national credit and organize the country's finances.

Critics worried about who would benefit.

Should people who had purchased securities cheaply receive their full value?

Would assumption reward financial speculators?

Would states that had already paid down more of their debts effectively be disadvantaged?

And would placing more financial responsibility in the national government increase federal influence?

Again, there was no single founding answer.

A financial question quickly became a political question.

A political question became a constitutional question.

And a constitutional question became a disagreement over what kind of country America was becoming.

Creditors and Debtors

Madison had already recognized the basic conflict.

Creditors want debts repaid.

Debtors may seek relief.

Those interests can collide.

The problem had appeared before the Constitution and continued afterward.

Economic downturns could leave farmers and other debtors unable to meet obligations.

Creditors could demand enforcement of contracts.

State legislatures sometimes faced pressure to provide debtor relief.

But relief for one side could impose losses on another.

If government weakened contracts too easily, creditors could lose confidence.

If government enforced every obligation without regard to circumstances, debtors could face ruin.

The Constitution itself restricted states from passing laws impairing the obligation of contracts.

It also empowered Congress to establish uniform bankruptcy laws.

The new system therefore recognized both the importance of contractual stability and the reality of financial failure.

These were not theoretical problems.

They affected people's farms.

Homes.

Businesses.

Savings.

Investments.

And futures.

Economic independence could be created through property.

It could also be lost through debt.

Money Itself Was a Political Question

What counts as money?

Who creates it?

Who determines its value?

Those questions were enormously important in the eighteenth century.

Under the Constitution, Congress received the power to coin money and regulate its value.

States were prohibited from coining money and from making anything other than gold and silver coin a tender in payment of debts.

These provisions reflected painful experiences with unstable currencies and competing monetary arrangements.

A functioning national economy required trust.

A dollar promised today had to mean something tomorrow.

Contracts had to mean something.

Credit had to mean something.

Government obligations had to mean something.

Hamilton's financial program sought to build that credibility.

His opponents worried about what kind of financial system—and what concentrations of power—might emerge along with it.

Again, strengthening one part of the system could create concerns somewhere else.

Commerce Connected the States

The Constitution's Commerce Clause gave Congress authority over commerce with foreign nations and among the states.

That power helped transform the economic relationship among the states.

Under the Confederation, states had been able to pursue conflicting commercial policies.

The Constitution gave the national government a larger role in creating a common economic framework.

For merchants, that mattered.

For farmers trying to sell goods beyond their state, it mattered.

For ports, shipping, imports, exports, and foreign trade, it mattered.

The country was beginning to operate not merely as thirteen neighboring economies, but increasingly as a national market.

Yet the question of where interstate commerce ended and state authority began would become one of the longest-running constitutional debates in American history.

The Founders established the power.

They did not settle every future meaning of it.

Manufacturing or Agriculture?

It is tempting to turn Hamilton and Jefferson into two simple opposing boxes.

Hamilton: manufacturing.

Jefferson: farming.

History was more complicated.

America needed agriculture.

It needed commerce.

It increasingly developed manufacturing.

Farmers depended upon markets.

Merchants depended upon goods.

Manufacturers depended upon raw materials and customers.

Ports depended upon inland production.

Western settlements needed access to eastern and international markets.

Washington himself described different regions of the country as economically connected, with agricultural, commercial, and manufacturing interests benefiting from Union.

The disagreement was therefore not whether only one occupation should exist.

It concerned emphasis.

Development.

Government involvement.

Constitutional authority.

And what kind of economic structure Americans believed would best support independence and republican government.

Government Could Shape Markets Without Owning Them

The early economic debates also reveal something important.

The choice was not simply between:

government controls everything

and

government does nothing.

The Constitution itself created rules affecting economic activity.

Government collected taxes and duties.

It borrowed money.

It regulated interstate and foreign commerce.

It coined money.

It protected contracts against certain state interference.

It established bankruptcy rules.

It granted time-limited protections to authors and inventors.

The early federal government dealt with debt.

It established a bank.

It collected customs duties.

It created a monetary system.

At the same time, most farms, shops, ships, tools, businesses, and productive property remained in private hands.

The actual founding-era argument was therefore much more interesting than a modern slogan.

What should individuals decide for themselves?

What rules are necessary for a functioning economy?

Which level of government should establish those rules?

And what constitutional authority permits it?

Different Founders drew those lines differently.

Property and Liberty

Property mattered because economic control could affect personal independence.

A farmer who owned land possessed something from which food and income could be produced.

A craftsperson who owned tools possessed the means to practice a trade.

A merchant's inventory represented livelihood.

A person's savings represented accumulated labor and future security.

Contracts allowed people to make commitments across time.

Property could provide independence from others.

But property could also create power over others.

Large landholdings could produce economic influence.

Debt could create dependency.

Financial institutions could concentrate capital.

And, most starkly, the legal treatment of human beings as property demonstrated that a claim of ownership could directly destroy another person's liberty.

That contradiction forces us to be careful whenever we discuss property and freedom in the founding era.

For some Americans, property helped secure independence.

For others, the property system itself could be part of their exclusion or oppression.

The Deepest Contradiction

Nowhere is that clearer than slavery.

Enslaved people worked farms.

They worked plantations.

They practiced skilled trades.

They worked in homes.

They produced goods.

Their labor generated wealth.

Yet the law denied them ownership of their own labor and, fundamentally, control over their own lives.

They could be bought and sold.

Families could be separated.

The wealth produced through enslaved labor became part of the American economy.

Several prominent Founders—including Washington, Jefferson, and Madison—enslaved people.

Others opposed slavery or participated in efforts against it.

Some states moved toward abolition while slavery remained deeply entrenched elsewhere.

The contradiction cannot be reduced to a footnote.

A country speaking about liberty, property, independence, and self-government simultaneously maintained a system in which people themselves were treated as property.

That contradiction would become impossible for the nation to contain peacefully forever.

Women and Economic Independence

The founding-era promise of independence was also limited by sex.

Women participated extensively in the economy.

They worked farms.

Managed households.

Operated businesses.

Produced goods.

Bought and sold in markets.

Worked in family enterprises.

And in some circumstances owned or inherited property.

But the legal status of married women under the common-law doctrine of coverture sharply restricted independent legal and property rights.

The exact rules varied by place and circumstance, particularly for widows and unmarried women.

But political citizenship and economic independence were not distributed equally.

When we talk about the Founders' ideas of property and independence, we therefore have to ask:

Independence for whom?

That question does not erase the founding ideals.

It helps us understand how incomplete their application was.

Native Land and American Expansion

There was another fundamental property question.

Land.

Americans looked westward and saw enormous possibilities for settlement, agriculture, speculation, and expansion.

But much of that land was already inhabited and claimed by Native nations.

That created conflicts involving sovereignty as well as property.

Who owned the land?

Who possessed the authority to sell it?

Could individual states negotiate over it?

Could private speculators acquire it?

Did authority belong to the federal government?

What rights did Native nations possess?

As the United States expanded, these questions became increasingly consequential.

The story of American property ownership therefore cannot be told only as a story of settlers acquiring empty land.

The land was not empty.

Economic opportunity for one population could mean displacement and loss for another.

That too was part of the developing American system.

Franklin Complicates the Picture

Benjamin Franklin is useful precisely because he reminds us not to force every Founder into one of two camps.

Franklin had been a printer.

Publisher.

Inventor.

Entrepreneur.

Scientist.

Diplomat.

Public official.

His life crossed commerce, labor, invention, public service, and intellectual life.

He understood the possibilities of private enterprise.

But he also participated in civic institutions and public projects.

His career does not fit neatly into a modern ideological label.

Neither does the founding generation as a whole.

That is exactly why we should resist trying to turn eighteenth-century arguments into twenty-first-century political categories.

The questions are more valuable when we allow them to remain historically real.

Washington Had to Govern Between Competing Visions

George Washington occupied an unusual position in these debates.

Hamilton served as his Secretary of the Treasury.

Jefferson served as his Secretary of State.

Their disagreements unfolded inside Washington's own administration.

The President heard competing arguments from two of the most influential thinkers of the founding generation.

Hamilton pushed toward a stronger national financial system and a broader understanding of federal economic authority.

Jefferson pushed back against what he regarded as excessive concentration of national power and expansive constitutional interpretation.

Washington often approved major elements of Hamilton's financial program, including the national bank.

But Washington was not simply Hamilton.

Nor was he Jefferson.

His overriding concern frequently involved whether the Union could function and survive.

In his Farewell Address, Washington described different regions and economic interests as mutually connected through the Union.

Agriculture.

Commerce.

Manufacturing.

East.

West.

North.

South.

Different interests, but one country.

That was another vision of the economic experiment:

not making every part of America the same, but making their different interests capable of existing together.

Then Political Parties Began to Form

The disagreements did not remain inside Washington's Cabinet.

They spread.

Hamilton's supporters increasingly aligned around what became the Federalist Party.

Jefferson and Madison became leaders of the emerging Democratic-Republican opposition.

America's first party system was taking shape.

This is important because organized political disagreement was not some distant development that appeared generations after the Founders.

It emerged among the founding generation itself.

Men who had worked together during the Revolution and the creation of the new government now disagreed over what that government should do.

They argued over:

Federal power.

Economic policy.

Foreign relations.

Constitutional interpretation.

Banking.

Debt.

And the country's future.

The Constitution had not created political agreement.

It had created the arena in which political disagreement could occur.

There Was No Single Founding Economic Philosophy

That may be the most important lesson of this part of the story.

It would be inaccurate to say:

The Founders wanted government completely removed from the economy.

The Constitution itself granted substantial economic powers to government.

It would also be inaccurate to say:

The Founders wanted the national government directing the entire economy.

Private ownership, private enterprise, state authority, local institutions, and individual economic activity remained fundamental features of American life.

Nor can we simply say:

The Founders believed America should be agricultural.

Hamilton clearly envisioned a major role for manufacturing and commerce.

Or:

The Founders believed America should become industrial.

Jefferson and others placed extraordinary importance on agriculture and decentralized independence.

There was no single founding economic blueprint.

There were competing visions.

And those competing visions helped shape the system.

Maybe That Was the Point

Madison had already recognized that society would contain different interests.

Farmers.

Manufacturers.

Merchants.

Creditors.

Debtors.

Landowners.

People without property.

Different regions.

Different occupations.

Different priorities.

The American system did not require all of them to become one.

It required them to govern together.

That is a very different idea.

Government would make rules.

Citizens would argue over those rules.

Different interests would compete for representation.

Courts would interpret laws.

States and the federal government would exercise different powers.

Elections would change officeholders.

Constitutional arguments would continue.

And when Americans believed government had crossed a line, they would challenge it through politics, courts, legislation, amendments, protest, petition, and public debate.

The experiment was never based on eliminating disagreement.

It was based on giving disagreement somewhere to go.

So What Did Economic Freedom Mean?

For the founding generation, there was no single answer.

For Jefferson, independence was strongly connected to an agricultural citizenry and limits on concentrated power.

For Hamilton, national independence required financial credibility, commerce, manufacturing, and institutions capable of supporting economic development.

For Madison, differences in property and economic interest were unavoidable realities that republican institutions had to manage.

For Washington, the country's different regional and economic interests could become sources of mutual strength if the Union held them together.

Other Americans saw these questions differently still.

Farmers had their concerns.

Merchants had theirs.

Laborers had theirs.

Creditors and debtors could stand on opposite sides of the same law.

Small states and large states had different interests.

Northern and Southern economies were developing differently.

Women participated in economic life while facing significant legal restrictions.

Native nations confronted an expanding republic hungry for land.

And enslaved Americans lived inside the greatest contradiction of all—a nation discussing property and liberty while denying them ownership of themselves.

That was the American economy at the beginning of the experiment.

Complicated.

Unequal.

Expanding.

Full of possibility.

Full of contradiction.

And already being argued over.

The Question Was Never Simply Government or No Government

The deeper historical question was:

What kind of government?

With what powers?

At what level?

For what purpose?

Under what constitutional authority?

Paid for by whom?

Benefiting whom?

And restrained by what?

Those questions were present at the beginning.

They appeared in debates over taxes.

Debt.

Banks.

Commerce.

Contracts.

Currency.

Manufacturing.

Agriculture.

Land.

And property.

And soon they would become even more concrete.

Because a growing country needed to move.

Farmers needed to get crops to markets.

Merchants needed routes between cities.

Mail needed to cross enormous distances.

Western settlements needed connections with the East.

Ports needed access to the interior.

Commerce crossed state boundaries.

Roads had to be built.

Rivers had to be navigated.

Canals would soon be proposed.

And someone had to decide:

Who builds it?

Who pays for it?

And who has the constitutional authority to do it?

Those questions take us into the next chapter of the Great Experiment.

NEXT — PART IV

WHO PAYS, WHO BUILDS, AND WHO DECIDES?

Taxes, Roads, Commerce, and Government Power

America was growing.

Growth required money.

It required transportation.

It required communication.

It required rules governing commerce between states.

But every new national project raised the same questions that had existed since the Revolution:

Who should pay?

Which government should act?

Where does national authority end and state authority begin?

From taxes and tariffs to roads, canals, commerce, and internal improvements, Part IV follows one of America's oldest arguments:

When Americans agree that something should be done, who gets to decide how it is done?

THE GREAT EXPERIMENT CONTINUES.

The People. The Voice. The Future.

Politics 1776