An Economic Interpretation of the Constitution of the United States/Chapter II

by Charles A. Beard

Chapter II
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 personality in the formation and adoption of the Constitution, it would be necessary to discover not only the amount and geographical distribution^[1] of money and public securities; but also the exact fields of operation in which personality 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 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 in 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.^[2]

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 and acre and were being held for a rise in value. The chief obstacle in the way of 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 Alleghenies. 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.^[3]

5. The geographic distribution of manufacturing establishments and the names of owners and investors. On this important topic a mass of printed and manuscript material 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, trans- fers 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.^[4] In fact, they sketch the broad outlines of the study which must be filled in and corrected by detailed investigations.

The Disenfranchised

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, disenfranchised 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 disenfranchisement really was cannot be determined.^[5] In some states, for instance, Pennsylvania and Georgia, propertyless merchants 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.^[6]

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 safest depositories of Republican liberty. These will either combine under the influence of their common situation; in which case,^[7] 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."^[8]

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,^[9] dismisses the subject with scant notice. He ob- serves 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 non-existent, 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 graduations. 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,^[10] and the slaveholding planters of the south.

1. The first of these groups, the small farmers, constituted a remarkable homogeneous class. The inland section was founded and recruited by mechanics, the poorer whites, and European (particularly Scotch-Irish) immigrants. It had particular 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. Mush 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 a good policy. True, large numbers of settlers were 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 force the home seeker to purchase from speculators or to settle as a squatter."^[11] 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.^[12] 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.^[13]

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,^[14] 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 over to cover the rural gentry's economic supremacy.

3 The third group of landed proprietors were the slaveholders 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.^[15]

Money lending and the holding of public securities were not confined to the north by any means; although, perhaps, as Calhoun long afterward remarked,^[16] 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 personality, 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 personality operations with their planting. On this account there was mode 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 Pinckeys of Charleston, and Pierce of Savannah than between these several men and their debt burdened neighbours 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 regulation, 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 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 personality to reality in 1787 has not been determined and it is questionable whether adequate data are available for settling such an important matter.^[17]

Personality in Money. - Although personality 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.^[18]

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 manufacturers, 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.^[19]

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 other with 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 currency appreciate, to facilitate the process for securing possession of forfeited mortgaged property, and to hold the rigour 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.

Personality 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.^[20] Grave uncertainties as to the actions of legislature 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 personality 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.^[21]

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.^[22] 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 $13,030,168.2, 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 $21,5000,000 and the amount actually paid out was $18,271,786.47.^[23]

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	$13,754,379.35
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.^[24]

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 7, 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.^[25]

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 it 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 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.^[26]

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."^[27] 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 the 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^[28] exhibits the value of lands (not including houses, which amounted to more than $140,00,000 in addition) in each of the estates 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:-

	Value of Lands	Interest, Etc, Disbursed[29]
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

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 1781.^[30] Very probably the estimate could be much lower, but letting the figures stand at this amount, it 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 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 Stated from New Hampshire to Georgia.^[31]

The significance of the figures showing the annual interest disbursement also 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.^[32]

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."^[33] In this view Colonel Mason concurred.^[34]

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 interéssés a l'éstablissment 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 prosent de jeter tous les États dans une seule masse et de mettre a leur tête le gal. 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.^[35]

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.^[36] They were bitter in their denunciation of the popular movements in the States, particularly Shay's 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.

Personality in Manufacturing & Shipping.- The third group of personality interests 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 favourable thereto."^[37] Among the signers were T. Fitzsimmons and George Clymer, who were destined to sit in the constitutional Convention as representatives of the State of Pennsylvania an do 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. 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 country-men 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."^[38]

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 the Congress in April, May, and June, 1789, asking for the immediate enactment of discriminatory tariff laws.^[39]

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 claims 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 Carrol 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 labour 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 ardour, 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 re-instate 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, soap-boilers, and tallow-chandlers, wool card-makers, ship-carvers, sail-makers, cabinet-makers, coach-makers, tailors, cord-wainers, 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 bannermen, 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.^[40] 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.^[41]

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."^[42]

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.^[43] 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 labouring 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 advocate of change implied. It may be that II 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 anyone has really inquired just what precise fact 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 picture of the social conditions prevailing under the Articles o 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 cast (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.^[44]

However this may be, and whether or not Franklin's view is correct,^[45] 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 a, 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."^[46]

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 biased 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."^[47]

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.^[48]

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 in attached to it; its influence over the press was tremendous, not only through ownership, but also through advertising and other patronage.^[49] It was, in short, the dynamic element in the movement for the new Constitution.

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1. The question of geographic distribution will be considered below, Chap. X.
2. A few years ago a Negro attendant at the Treasury sold a cart-load or more of these records to a junk dealer. He was imprisoned for the offence, but this is a small consolation for scholars. The present writer was able to use some of the records only after a vacuum cleaner had been brought in to excavate the ruins.
3. See below, p. 50.
4. See Curtis, the Constitutional History of the United States, Book I, Chaps II-VII; Fiske, Critical Period of American History; McMaster, History of the People of the United States, Vol I; Channing, History of the united States, Vol III.
5. See below, Chaps. IV and IX.
6. Working men in the cities were not altogether indifferent spectators. See Becker, Political Parties in New York. They would have doubtless voted with the major interests of the cities in favour of the Constitution as against the agrarians had they been enfranchised. In fact, this is what happened in New York. See below, Chap. IX.
7. "If the authority be in their hands by the rulle of suffrage," struck out in the Ms. See also the important note to this speech in Farrand, Records, Vol. II. P. 204, note 17.
8. Farrand, Records, Vol II. P. 203.
9. December 5, 1791. State Papers: Finance, Vol I, p. 126.
10. Roosevelt, Gouvernor Morris, pp. 14 ff.
11. Ambler, Sectionalism in Virginia, p. 44.
12. Libby has shown the degree of correspondence between the rural vote on paper money measures, designed for the relief of debtors, and the vote against the ratification of the Constitution. Op cit., pp. 50 ff.
13. See below, p. 205.
14. The landholders were able to do this largely because New York City was the entry port for Connecticut and New Jersey. The opportunity to shift the taxes not only to the consumers, but to the consumers of neighboring states, as too tempting to be resisted.
15. For a paragraph on nascent capitalism in South Carolina, see W.A. Schaper, "Sectionalism in South Carolina," American Historical Association Report (1900), Vol. I. See the letter of Blount, Davie, and Williamson to the governor of North Carolina, below p. 169.
16. It is not without interest to not that about the time Calhoun made this criticism of New England capitalist devices he was attempting to borrow several thousand dollars from a Massachusetts mill owner to engage to railway enterprise in the south.
17. See, however, State Papers: Finance, Vol. I, pp. 414 ff.
18. Ibid, Vol I, pp. 442 ff.
19. See the picturesque description of the monetary system of lack of system in Fiske, Critical Period of American History.
20. See below, p. 146.
21. State Papers: Finance, Vol. I, p. 451; see also below, pp. 261-2.
22. State Papers: Finance, Vol. I, p. 19.
23. W. De Knight, History of the Currency, p. 21.
24. State Papers: Finance, Vol. I, p. 325.
25. Ibid, Vol. I, p. 231.
26. Callender, not a very reliable authority on most matters concerning Hamilton, claims that twenty-five million dollars was made by the founding of the public debt, and that about ten million dollars more was made out of the state debt assumption process. He further declared that a public debt of eighty million dollars had been created of which only about thirty millions was all that was necessary. Gallatin held also that the unnecessary debt created by the assumption act amounted to about eleven million dollars. Callendar, A History of the United States for 1796, pp. 224 ff. The ethics of redeeming the debt at face value is not here considered although the present writer believes that the success of the national government could not have been secured under any other policy than that pursued by Hamilton. Callendar claims that those who held it were, in large measure, speculators and that they made huge fortunes out of the transaction. By a stroke of the pen the federal government created capital to the amount of millions in the hands of the holders.
27. A Statistical View of the Commerce of the United States, p. 31.
28. Tables from Pitkin, A Statistical View of the Commerce of the United States, pp. 367-368, and An Account of the Receipts and Expenditures of the United States for the Year 1795, p. 65.
29. No table showing the capital amount on the loan office books of the states after the funding was complete was discovered, so that the interest payment is given here.
30. Undoubtedly a large appreciation had taken place between 1787 and 1800.
31. "The public securities of the United States of America were a dead, inactive kind of property, previous to the establishment of the constitution of the new government; then they became the object of avarice. They before had an existence as to value, on the slender hope of having something done for them at some distant future period; and obtained a motion only from the sagacity of the few, who happened to be right in their conjectures respecting the then future events of American financeering. Upon the adoption of the new system of government they assumed all the properties of a rising credit, and became an immense active capital for commerce." James Sullivan, An Inquiry into the Origin and Use of Money (1792) Duane Pamphlets, Library of Congress.
32. Tench Coxe, A View of the United States of America (1795), p. 360. Tucker, Progress of the United States (1843), p. 205.
33. Farrand, Records, Vol II, p. 114.
34. Ibid, Vol II, p. 119.
35. Ibid, Vol. III, p. 43.
36. A large majority of the officers of the army of the Revolution were in favor of the new Constitution. The Cincinnati were mostly among its warmest advocates; and as they were organized and were, many of them, of exalted private and public worth and could act in concert through all the States, their influence was foreseen and feared by its opponents." Blair, The Virginia Convention of 1788, Vol I. P. 36, note 41.
37. American Museum, Vol I, p. 3213. Other signers were C. Pettit, J. Ross, I. Hazelhurst, M. Lewis, T. Coxe, R. Wells, , J. M. Nesbit, J. Nixon, J. Wilcocks, S. Howell, and C. Biddle.
38. State Papers: Finance, Vol I., p. 9.
39. American State Papers: Finance, Vol I, pp. 5 ff.
40. Carey, American Museum, Vol. IV, p. 348. See also Winsor, Memorial History of Boston, Vol. IV, p. 77.
41. For illustrative evidence that the protection of manufactures and shipping was being widely agitated previous to the adoption of the Constitution, and that an extensive consciousness of identity of interest was being developed among the individuals concerned, see the articles in The American Museum, Vol. I, on American Manufactures; Winsor, Memorial History Boston, Vol. IV, Chap. III. See memorials in The American Museum, from Philadelphia mercantile interests (April 6, 1785), Vol. I, p. 313; from Boston merchants, ibid., Vol. I, p. 320. For the merchants' movement in New York, see the Magazine of American History, April, 1893, pp. 324 ff.
42. Vol. I, p. 117.
43. M. Carey, The American Museum, for January, 1787, Vol. 1. pp. 5 II.
44. The Historical Magazine (1871), Vol. IX, Second Series, pp. 157 ff.
45. For an interesting and novel view of the state of commerce under the Articles of Confederation, see Channing, History 0f the United States, Vol. III, pp. 422 ff.
46. Haskins, The Yazoo Land Companies, p. 62. American Historical Association Papers for 1891. See also the lists printed in A.M. Dyer, First Ownership of Ohio Lands (1911).
47. Documentary History of the Constitution, Vol. IV, p. 678.
48. But see Madison's view as to the chief reason for calling the Convention, below, p. 178.
49. A study of the newspapers of the period shows a large number of prominent advocates of the Constitution among the merchants and brokers advertising in the, Federalist press.