Page 197 - American Stories, A History of the United States

example, speculators rushed to rural areas to buy loan certificates from unsuspecting citizens
7.1 Quick Check at bargain prices. To backcountry farmers, making money without physical labor appeared
How did Hamilton justify the immoral, un-republican, and un-American. When the greed of a former Treasury official
creation of the Bank of the led to several serious bankruptcies in 1792, ordinary citizens began to listen more closely to
United States?
7.2 what Madison, Jefferson, and their associates were saying about corruption in high places.
Setback for Hamilton

7.3 In his third major report, Report on Manufactures, submitted to Congress in December
1791, Hamilton revealed the final details of his grand design for the economic future
of the United States. This lengthy document suggested ways the federal government
7.4 might stimulate manufacturing. To free itself from dependence on European imports,
Hamilton observed, the country had to develop its own industry—textile mills, for
example. Without government intervention, however, the process would take decades.
7.5 Americans would continue to invest in agriculture. But protective tariffs and industrial
bounties would accelerate the growth of a balanced economy. With proper planning,
the United States would soon hold its own with Britain and France.
In Congress, the battle lines were drawn. Hamilton’s opponents—not yet a disci-
plined party but a loose coalition of men who shared Madison’s and Jefferson’s mis-
givings about the secretary’s program—ignored his economic arguments. Instead, they
engaged him on moral and political grounds. Madison railed against the dangers of
“consolidation,” which threatened to concentrate power in the federal government,
leaving the states defenseless.
Jefferson attacked the Report on Manufactures from a different angle. He assumed—
largely because Europe’s urban poverty had horrified him—that cities breed vice. The
government, Jefferson argued, should not promote their development. He believed that
Hamilton’s proposal guaranteed that American workers would leave the countryside
and crowd into urban centers: “I think our government will remain virtuous for many
centuries as long as they [the people] are chiefly agricultural … When they get piled
Quick Check upon one another in large cities, as in Europe, they will become corrupt as in Europe.”
Why did Congress reject Southern congressmen also saw tariffs and bounties as vehicles for enriching Hamil-
Hamilton’s Report on ton’s northern friends at the planters’ expense. The recommendations in the Report on
Manufactures?
Manufactures were soundly defeated in the House of Representatives.

charges of Treason: The battle Over

Foreign Affairs

7.3 How did foreign affairs affect domestic politics during the 1790s?
D uring Washington’s second term (1793–1797), war in Europe thrust foreign

affairs into the forefront of American life. The impact of this development on
domestic politics was devastating. Officials who had disagreed on economic
policy now began to identify their interests with either Britain or France,
Europe’s most powerful nations. Political differences, however trivial, were suddenly
cited as evidence that one group or the other had entered into treasonous correspon-
dence with external enemies eager to compromise the independence and prosperity of
the United States.
Formal political organizations—the Federalists and Republicans—were born in this
poisonous atmosphere. The clash between the groups developed over how best to pre-
serve the new republic. The Republicans (Jeffersonians) advocated states’ rights, strict
interpretation of the Constitution, friendship with France, and vigilance against “the
avaricious, monopolizing Spirit of Commerce and Commercial Men.” The Federalists
urged a strong national government, central economic planning, closer ties with Britain,
and maintenance of public order, even if that meant calling out federal troops.
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