Joyce Appleby: Getting Ready to Lead a World Economy: Enterprise in Nineteenth Century America

Roundup: Talking About History

[Joyce Appleby is Professor of History Emerita at the University of California, Los Angeles. Her most recent book is The Relentless Revolution: A History of Capitalism (W. W. Norton & Company, 2010).]

When Jefferson won the presidency in 1801, his victory had an economic impact as great as the political one. The establishment of the new government under the Constitution twelve years earlier had laid the foundation for an integrated market, but its character remained to be shaped. At the center of this critical economic moment were the competing visions of Jefferson and the Federalists.

Many of those supportive of the Constitution hoped that the country might grow more like Great Britain with its stability, refinement, and deference to leading families. But an unexpected opposition arose over just these goals, sparked by battles over free speech, democratic participation, and grassroots opportunity. Upon winning the election in 1800, Jefferson swiftly dismantled the Federalists’ fiscal program, reducing taxes and halving the size of the civil service which Secretary of the Treasury Alexander Hamilton had built up to provide energy and direction from the political center. Yet under the aegis of the Federalists, roads were constructed, debts paid off, postal services extended, customs established, and newspapers promoted. And thanks to Hamilton’s fiscal prowess, the United States became a safe place to stash money.

Most Europeans who bought Hamilton’s stock invested their earned interest in the country’s many private ventures. America became the first emerging market. Had the Federalists passed on their power to like-minded men in 1801, the course of economic development would have been guided by government officials attentive to the nation’s major creditors. A national elite would have informed policies for the country as a whole. The Bank of the U.S. would have controlled the flow of credit, and the pace of settlement would have slowed as land passed first to large speculators. Since the Federalists considered the differences between the talented few and the ordinary many as fixed by nature, they favored concentrating capital in the hands of those who knew best how to invest it....

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