WAR AND COMMERCIAL INDEPENDENCE, 1790-1815 (OVERVIEW )

Between 1790 and 1815 the United States struggled to be taken seriously as an international political and economic power, even as rapid internal growth began to change the character of the nation. When George Washington (1789–1797) was inaugurated as the first U.S. president in 1789, the United States was still dealing with the tremendous economic problems left by the American Revolution (1775–1783). U.S. citizens were still trying to define what kind of nation theirs would be. Over the next 25 years economic changes enriched U.S. society, influenced domestic politics, and eventually led the country back into war with Great Britain.

In 1790 the United States was overwhelmingly a farming society. Small, independent family farms dominated New England and the Mid-Atlantic states, while cities like New York and Philadelphia were growing into large, important trade centers. Compared to the North an even greater proportion of the southern population lived on farms. One important difference between the North and South was that southern agriculture was marked by the institution of slavery, which was on its way to being outlawed in the northern states. Although the Constitution stipulated that the slave trade would come to an end in 1808, as that date came and went African slaves were becoming seemingly indispensable, especially for the cultivation of tobacco, rice, and cotton. Southern plantation owners used slavery to produce these staple commodities that sold at home and abroad for large profits. A majority of southern whites owned no slaves, but the entire southern economy and society were influenced by the institution of slavery.

When George Washington took office, one of his first tasks was to deal with economic problems that had plagued the country throughout the 1780s. The leading figure in the reconstruction of the national economy was Secretary of the Treasury Alexander Hamilton (1789–1795), who was a prominent New York lawyer and a brilliant adviser to Washington. Hamilton was an exponent of turning the agrarian U.S. into a modern commercial state. After Congress put the country on firmer financial footing in 1789 by passing a series of import taxes that would provide a steady stream of revenue and protect U.S.-made goods from foreign competition, Hamilton proposed a comprehensive package of financial measures to further develop the national economy.

In January 1790 Hamilton issued a "Report on Public Credit," in which he proposed that the federal government assume the state debts left over from the Revolution and pay off all foreign and domestic national debts at face value. Congress agreed to pay $11 million in foreign debts and to repay all wartime investment certificates in full, despite the fact that many original investors had sold their certificates to financial speculators since the war. Following six months of debate in which the southern states had agreed to the deal even though they had already gone further towards paying off their debts, Congress approved the proposal to assume state debts.

In his Second Report on Public Credit, (December 1790) Hamilton also proposed the creation of the Bank of the United States. This proposal proved to be even more controversial than his First Report on Public Credit. The bank, which was to be backed by both public and private stockholders, faced opposition from Secretary of State Thomas Jefferson (1743–1826) and James Madison (1751–1836). The critics argued on the floor of Congress that the bank was an institution more in keeping with monarchy than U.S. democracy. Opponents of the bank claimed it would be an unconstitutional abuse of central government power and that the Constitution did not specifically give the federal government the power to create such an institution. Congress reluctantly passed authorization anyway, and the bank opened in 1791.

Hamilton's proposals exposed fundamental differences in how U.S. politicians perceived the national economy. Alexander Hamilton wanted to use federal government power to expand the economy. His "Report on Manufactures," (December 1791) recommended that the economy be increasingly based on trade and manufacturing, and protected by high tariffs. Jefferson, Madison, and their supporters thought that a manufacturing economy was bound to expose U.S. society to moral and political decay and corruption—significant concerns for the new nation. Jefferson believed that farmers were "the chosen people of God" and that decentralized agriculture would provide the most "virtuous" basis for U.S. government. Jefferson envisioned a society led by independent land-owning farmers, and Hamilton placed his hopes in trade and finance. Though Congress accepted many of Hamilton's economic proposals in 1792, and though his programs restored the country to remarkable financial health, debate surrounding the role of central government, power, and the economy in the United States would continue for decades.

Beyond the political debates, the economic life of average U.S. citizens began to change during the 1790s. Pioneers were pushing westward and looking for new land, and by 1800 500,000 settlers were living west of the Appalachian Mountains. Congress supported integrating western lands into the United States— the Northwest Ordinance (re-authorized in 1789) outlined the process for the Northwest Territory to be broken down into states. In addition southern territories joined the Union: Kentucky and Tennessee became states in 1792 and 1796, respectively.

Since many westerners were looking for land and economic opportunity, their presence often brought them into hostile contact with Indian nations determined to resist the United States' westward encroachment. Though the Northwest Ordinance specified that Indian land treaties had to be respected, many U.S. migrants ignored this provision and violence was often the result. In the early 1790s Congress deployed the first "peacetime" U.S. army to battle against an Indian confederacy led by Miami chief Little Turtle, who fought to maintain native land rights. Little Turtle's forces were defeated in 1794 after several years of successful resistance. The pattern of conflict over land and natural resources was established.

Many of the U.S. citizens who moved to the west in the 1790s were becoming involved in the money economy. Rather than growing, trapping, shooting or fishing for food and other necessities, the sale of labor or goods gradually changed from within the previous frontier subsistence and barter economy. Instead of merely producing enough product to live on or to trade with neighboring farmers, U.S. farmers slowly began to produce surplus goods to sell for cash. The growing availability of paper money combined with a greater demand for "store-bought" goods. As the market opened up more cash and products were available. Homesteaders used surplus profits from their farming to buy non-essentials. Westerners raised extra livestock and produced whiskey that they hoped to trade back east. Mid-Atlantic farm women produced surplus butter and hen eggs that they sold to neighbors or at produce markets in Philadelphia, New York, or at country cross-roads for cash. Domestic trade was on the rise everywhere.

The increased commercial activity put pressure on the federal government to enforce tax laws and support trade. In 1794 the government cracked down on western Pennsylvanians who violently resisted paying taxes on whiskey (which they sometimes used as a form of currency, since distilled alcohol was more convenient and portable than the bushels of corn from which it was derived). The "Whiskey Rebellion" that ensued was repressed without loss of life by Washington, Hamilton, and 12,000 militia.

Western farmers caught up in the "market revolution" wanted to use the Mississippi River (which was then controlled by Spain) to establish water-trade routes to New Orleans—and, thence, to the world market. U.S. envoy Thomas Pinckney negotiated a treaty with Spain in 1795 that allowed U.S. citizens free access to the Mississippi River. Only about 20 percent of U.S. citizens were engaged in commercial farming by 1820, but their influence exceeded their numbers.

In addition to commercial farming, manufacturing was also on the rise during the 1790s. Urban artisans produced manufactured goods, like shoes, that appealed to farmers in the interior. Merchants who financed and organized this form of "putting out" production managed to increase their profits, even before mechanization took over. Artisan families in Lynn, Massachusetts, for example, produced 400,000 pairs of hand-sewn shoes in 1800. Though most manufacturing was still manual, waterpower fueled the beginnings of mechanization that would push industry forward in the nineteenth century. In 1790 Samuel Slater, Moses Brown, and William Almy harnessed the power of the Blackstone River and used stolen British industrial plans to open the first mechanized textile mill in the United States in Pawtucket, Rhode Island.

Increased agricultural production, manufacturing, and domestic trade characterized the Atlantic economies in the 1790s, not just the U.S. Foreign trade rose dramatically. In 1794, over the objections of Thomas Jefferson and his supporters (who were pro-French), George Washington declared the U.S. neutral in the French wars with the European monarchies. U.S. merchants could trade simultaneously with the French and British. U.S. neutrality during the French Revolution and the Napoleonic Wars initially boosted the shipping and export businesses. At first the U.S. merchant fleet could sail through French and British waters without coming under attack.

Political leaders in the U.S. were divided over whether the United States should remain neutral in the wars. Washington's successor, John Adams, threatened to engage the country in an undeclared war with France in 1798 but trade continued. As ship-building improved, merchants along the eastern seaboard ranged farther and even began to trade in China and North Africa. U.S. exports included both manufactured and agricultural goods, and cotton and cloth exports escalated after the invention of the cotton gin in 1793. Total U.S. export revenue rose from $33 million in 1794 to $94 million in 1801 and taxed imports increased even more sharply over the same period.

In 1800 Thomas Jefferson (1801–1809), then head of the Democratic Republican Party, was elected President. Though the campaign had been bitter, this peaceful transfer of power supposedly signaled an end to Hamiliton's "federalist" brand of centralized government and financial power. The agrarian Jefferson was less eager than Hamilton to encourage banking and manufacturing and more interested in paying off the national debt. However Jefferson did seem to put aside his scorn for government programs in 1803 when he negotiated the purchase of the Louisiana Territory from France for $15 million. In accomplishing this momentous act (which doubled the size of the U.S.), Jefferson did what he accused Hamilton of doing: he gave the central government powers (in this case the power to annex additional land) that were not mentioned in the Constitution.

And even Jefferson could not ignore the fact that increased foreign trade required military protection. The North African Barbary States were in the habit of preying upon foreign shipping. They would stop and board ships, demand tribute, and take sailors hostage for random. Although the Constitution specifically gave the power to make war to the Congress, Jefferson sent the American Navy to attack Tripoli and other North African states. Although it turned out to be a drawn-out affair, the United States triumphed in a series of naval engagements off the coast of Tripoli between 1801 and 1805 and kept the lines of trade open. The fact that he had to stretch the Constitution to do that does not make him a traitor to his earlier states' rights politics. It just means that Hamilton's vision of a powerful central government pursuing programs that enhanced the economic health of the country would prove to have an important place in the future of the nation

Far more difficult to solve were the problems caused by the Napoleonic wars. In 1803 the wars between France and England resumed with a vengeance, and U.S. citizens were increasingly pulled into the hostilities as they tried to trade with both sides and to profit from the re-export trade. The French and British imposed naval blockades on one another, meaning that they would try to block all goods from entering each other's countries by sea. U.S. shippers who ignored the blockades faced capture (especially in the West Indies). Since being a sailor in the British Navy was possibly the worst job that a free man could have in the nineteenth century, many seamen deserted the British Navy. When the British came upon a U.S. merchant vessel they frequently boarded the ship and "impressed" a portion of its crew into service. In the process, an estimated 6,000 sailors with U.S. citizenship were impressed (kidnapped) into the British Navy between 1803 and 1812.

The question facing the U.S. government was how to respond to the French and British aggression. Congress passed a Non-Importation Act in 1806 that imposed a boycott on British imports, a strategy of political resistance that had been tried before the American Revolution. That same year, Jefferson's ministers negotiated the Monroe-Pinckney Treaty with Great Britain that was supposed to solve trade problems and the impressment of U.S. sailors. However Jefferson refused to submit the treaty to Congress for ratification because he felt the final terms favored the British too much. The British raised the stakes in June, 1807, when the H.M.S. Leopard fired on the U.S. ship Chesapeake after the British unsuccessfully tried to impress some of the Chesapeake's U.S. sailors. The British did not back down from its policy of impressment, and they imposed even harsher trade restrictions on U.S. ships.

Despite the British hostility, Jefferson remained committed to solving the problems through commercial measures rather than military action. In 1807 he urged Congress to pass an embargo that would totally ban all French and British exports and imports. Congress repealed the Embargo in 1809, but followed it with other sanctions—the Non-Intercourse Act (1809) and Macon's Bill, Number Two (1810). James Madison (1809–1817), elected President in 1808, tried to stay true to Jefferson's vision of economic resistance, but these measures did nothing more than ruin the U.S. economy, especially in the Northeast which depended more on trade and shipbuilding. The French and British paid little attention to the embargoes and sanctions, and the huge drop in U.S. exports and imports sent the United States into an economic depression.

Finally in 1812 a group of western and southern Democratic Republicans in Congress convinced their colleagues that economic sanctions were not working, and the United States declared war on Great Britain. The War of 1812 (1812–1814) established that the United States would not allow trade interference, but its economic effects were mixed. The war raged for three years with few U.S. military successes, and Congress was hesitant to raise taxes to pay for militia, army, and navy forces. The British burned the capital at Washington DC in 1814. In the midst of the war with Great Britain, U.S. forces defeated the Creek Indians and killed Tecumseh, an Indian leader who had united many tribes in resistance to U.S. expansion. Both the defeat of the Creek and the death of Tecumseh signaled the likelihood that westward expansion would continue after the war.

The war also encouraged the growth of domestic manufacturing—new, larger textile mills and factories sprang up all over the Northeast to replace unavailable foreign goods. By the end of the War of 1812 the United States had proven that it was able to defend itself, even though it had few militarily memorable moments in the war. Though the vast majority of U.S. citizens still lived on farms, they probably thought more about the economic world beyond their homes than their parents had. The people in the United States had witnessed the growth of a market economy over the previous 25 years. Although there were some ominous signs like increasing exploitation of slavery and the intractability of urban poverty, the country was poised to become a real economic and industrial power in the nineteenth century. A U.S. economy, based both on farming and commerce, had been firmly established.

Topic overview

By the end of the War of 1812 . . . Though the vast majority of U.S. citizens still lived on farms, they probably thought more about the economic world beyond their homes than their parents had. The people in the United States had witnessed the growth of a market economy over the previous 25 years. Although there were some ominous signs like increasing exploitation of slavery and the intractability of urban poverty, the country was poised to become a real economic and industrial power in the nineteenth century.

See also: Embargo, Alexander Hamilton, Thomas Jefferson, Louisiana Purchase, War of 1812