Jefferson’s idea of democracy and republicanism were influenced by the French Revolution. This also meant that he had a deep distrust of Hamilton. “Hamilton was indeed a singular character,” Jefferson would write years later, “a compromise between the two systems of royalism and republicanism.” This meant that he was mistrustful of Hamilton’s proposals on manufacturing.
Jefferson was beside himself with fury when, on December 5, 1791, Hamilton submitted the third of his major reports to Congress as Secretary of the Treasury, a Report on the Subject of Manufactures. The most obvious question, which the creation of a Bank of the United States had posed was: In whose interest is a national bank going to operate? Hamilton’s answer to that question was the Report on Manufactures. “The expediency of encouraging manufactures in the United States,” Hamilton asserted, “which was not long since deemed very questionable, appears at this time to be pretty generally admitted.”
The United States could not forever remain an agricultural nation, Hamilton argued, depending on exporting its agricultural surpluses to Europe and using the proceeds to purchase manufactured goods from abroad. Britain’s unwillingness to open its ports, especially in the West Indies, to American trade, was proof of the folly of that.
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Debt and Banking
To attain real independence, the United States needed to develop its own manufacturing base and let its agricultural profits stay at home to buy American-manufactured goods. Manufacturing would promote foreign immigration, stimulate “the spirit of enterprise,” and above all, render the United States “least dependent on the combinations, right or wrong, of foreign policy.”
And how did Hamilton propose to encourage manufacturing? Simple: “the funded debt.” The Bank of the United States would become the chief guarantor of investments in manufacturing. Hamilton fully anticipated that this plan would generate “a question concerning the constitutional right of the government of the United States to apply this species of encouragement.”
But Hamilton waved this away as easily as he had waved away a similar objection to the Bank, on the basis of the Necessary and Proper Clause, only this time he cited the Constitution’s authority for encouraging manufacturing from the Preamble to “provide for the common defense and general welfare.”
Learn more about Alexander Hamilton’s reports.
These proposals maddened Jefferson, who had raised no stop sign to the progress of the first two of Hamilton’s reports. But now, they raised the hackles, not only of Jefferson but of every agrarian—like John Randolph of Roanoke, who believed that American farm interests were now going to be fleeced for the benefit of manufacturing. Agriculture made every farmer an independent owner of his own production, according to Jefferson’s view.
To Jefferson, manufacturing reduced workers to mere employees, living on wages, while their employers—the owners—tricked unsuspecting farmers into borrowing to buy goods they didn’t need. Worse still, manufacturing would require start-up capital which Hamilton was already starting to acquire, and that would require banks, which Hamilton had already designed. And both of these would create a class of financiers who dealt in invisible and presumably fraudulent wealth on paper and in ledger books.
The Threat of Business Interests
The end result would be the multiplication of speculators, monarchists, aristocrats, and Tories. John Randolph of Roanoke complained :
The agriculturalist has his property, his land, his all while the commercial speculators live in opulence, whirling in coaches and indulging in palaces. Alert, vigilant, enterprising and active, the manufacturing interests are collected in masses and ready to associate at a moment’s warning for many purposes of general interest to their body. Do but ring the fire bell, and you can assemble all the manufacturing interests of Philadelphia in fifteen minutes.
In the face of such evil, Jefferson saw no corrective as he put it in a letter to the equally disgruntled George Mason except in “the augmentation of the numbers in the lower house, so as to get a more agricultural representation, which may put that interest above that of the stock-jobbers.”
The idea that a republic could be composed of “interests” as far removed from each other in principle as agriculture and manufacturing was fearful in the minds of many of the makers of the new government. Not that varieties of special “interests” didn’t exist—it was that, according to the classical model of virtuous republicanism, they shouldn’t exist. Or if they did, they should be deplored because “interests” promoted conflict rather than consensus.
Madison, in Federalist 51, had suggested that, although “interests” would exist in the United States, the sheer number of them would cancel out each other’s influence and prevent any one “interest” from gaining the upper hand. But notice, he was by no means applauding the existence of conflicting “interests” as a good, but rather as a manageable evil. In a monarchy, of course, “interests” ran wild—the “interests” of the court for pomp, luxury, and power over others ran against the interests of the country for simplicity, thrift, and religion. And the collision of those “interests” produced corruption, instability, and political factions or to use the more popular term—parties.
Learn more about Thomas Jefferson, the party leader.
Jefferson’s Opinion of Parties
At best, parties were mere engines of patronage. At worst, they were conspiracies against the common good. Jefferson had been so averse to the notion of parties in politics that in March of 1789, he had written Francis Hopkinson from Paris to denounce political parties:
I have never submitted the whole system of my opinions to the creed of any party of men whatever, in religion, in philosophy, in politics, or in anything else, where I was capable of thinking for myself. Such an addiction is the last degradation of a free and moral agent. If I could not go to Heaven but with a party, I would not go there at all.
But that was then; this was now. And now required Jefferson to begin the formation of the first American political party to resist Hamilton’s innovations in debt, banking, and manufacturing.
Common Questions about Jefferson’s Mistrust of Hamilton’s Report on Manufacturing
According to Alexander Hamilton, to attain real independence, the United States needed to develop its own manufacturing base, which would promote foreign immigration, stimulate “the spirit of enterprise,” and above all, render the United States “least dependent on the combinations, right or wrong, of foreign policy.”
To Thomas Jefferson, manufacturing reduced workers to mere employees, living on wages, while the owners tricked unsuspecting farmers into borrowing to buy goods they didn’t need. Worse still, manufacturing would create a class of financiers who dealt in invisible and presumably fraudulent wealth on paper and in ledger books.
For Thomas Jefferson, the collision of “interests” produced corruption, instability, and political factions or parties. At best, parties were mere engines of patronage. At worst, they were conspiracies against the common good.