Chapter 4: State’s Rights
4.2b Washington’s New Deal
While little discussed in today’s textbooks, George Washington held a virtually identical view of government as Hamilton—he was just less outspoken and more elegant about it. Some historians have considered Washington a mere front for Hamilton’s agenda—the public executive counterpart to Marshall’s later judicial back-door. But Washington often expressed views about “strong and energetic” government to rival the best of Hamilton’s in substance.1
Washington had brought the young man under his wing, making him his aide-de-camp. It was here that Hamilton reapplied his administrative abilities (first discovered as a bookkeeper in those warehouses when he was 12), and he realized he could actually have more control from behind the throne, so to speak, that from the spotlight. This was noticed by prominent historian Forrest McDonald (hardly a sympathizer with the antifederalists or State’s rights). He writes of Hamilton: “Much as he yearned to prove his worth on the battlefield, he was forced to realize that he could contribute far more as an administrator—for he was a man who could run things.”2 And this was just the beginning.
After ratification, Hamilton was ready to run with legislative papers and proposals. Despite a lethargic start (it took almost a month before enough members showed up to reach a quorum), on April 1, 1789, the first session of the first Congress opened. In a week, Madison was proposing new taxes on imports. Thus began the history of the federal government: let the taxing begin! The first actual statute enacted by Congress was the establishment of oaths for the members. The second was the Tariff of July 4, 1789. It was Hamilton’s plan, even though he was not yet even a member of the President’s cabinet. Nevertheless, the “Hamilton Tariff” went through, taxing imports, thus strengthening American manufacturing and weakening southern farmers by increasing the prices of the manufactured goods they needed. This was a grievance that remained for decades, and became a major cause of the Civil War.
Hamilton was thus already exercising significant control in Congress before his promotion to office. Of course, it had always been his plan. McDonald relates, “Hamilton contemplated an American adaptation of the British scheme of things—with Washington as George II and himself as Robert Walpole. But, like Washington, he had to await the event.”3 Hamilton retained this self-important and monarchical view of things for the duration, referring in 1792 to “my administration,” and to himself in the third person as “The Minister” in 1795.4
On September 11, 1789, Washington made the fateful appointment. It was confirmed the same day. Hamilton would be Secretary of the Treasury. But this is only part of that story. Washington had informed Hamilton he would get the job months before—only a few days after his inauguration.5 This gave Hamilton important time to influence Congress so as to create the position of Secretary of the Treasury with all the powers to his liking. And this he did. McDonald helps us here:
His hesitancy to make a final commitment, despite his preparations and his dreams, derived from a determination that the conditions of his appointment must be compatible with the success of his grand plan. From his point of view three conditions were vital. One he took for granted: that he would have the support of his friend and erstwhile collaborator James Madison, the ablest and most powerful man in the House of Representatives. The second, of which he was less confident, was that the treasury must be under the control of a single person with ample powers—unlike, for example, the impotent three-man Treasury Board that had attempted to administer the Confederation’s meager finances in 1784. The third, most important, and least certain condition was that the office must have some measure of independence from the executive and permit direct dealings with Congress.6
It would be the new creation by a centralized Congress of a position of power far beyond anything dreamed of in the Constitution, but nevertheless allowed by that fabric under the guise of all things necessary and proper. Hamilton created the blueprint for bureaucracy of finance which sits somewhere between the executive branch (to which it properly belonged), and the legislative branch in that it had direct influence on legislation and direct oversight of the Congressional purse, and Hamilton would be able to exercise some control outside of Washington’s leash. In short, Hamilton could write his own laws, and then call up military enforcement for them—both from the same seat.
This was just the type of Constitutional creativity Hamilton had always envisioned. He cared little for what final form the Convention would produce, as long as he could carve himself out a position such as this. Indeed, as he would later refer to the Constitution as a “frail and worthless fabric” propped up by his own powers,7it was his own ingenuity and prowess which he trusted to force his agenda ahead. Thus,
it was almost a matter of indifference to him how the national government was organized: what was important was to organize one and to endow it with as much power in relation to the powers of the states as possible. . . .
[For,] if a strong national government could be established on almost any plan at all, and if he could become minister of finance, he could personally activate the government to “provide for the happiness of our country.”8
By September 11, the position was created as he desired, Hamilton did become minister of finance, and two days later he was at work. He was soon immersed in financial arrangements with Holland and France, and sometimes with no oversight or knowledge of others. But the great gift came as Congress recessed for the fall: it demanded of Hamilton a report on how to improve public credit. The report was provided when Congress returned in January, and it put in play one of Hamilton’s long-term goals: federal assumption of State debts.
The measure was essentially socialistic in that it would cause unequal burden of repayment of these debts upon wealthier states. Indeed, in states that had already paid off large amounts of their debts, to be saddled with the arrears of their neighbors was criminal. But the poorer and the delinquent states were quite cheerful at the prospect; and it is no irony that this very scenario had been part of the Federalists’ bill of sale for the Constitution to those states. For just one example, Federalist William R. Davie tipped his socialist hand during the ratification debates in North Carolina, arguing,
The whole proportion, of this state of the public debts . . . must be raised from the people by direct and immediate taxation. But the fact is, sir, it cannot be raised, because it cannot be paid; and without sharing in the general impost, we shall never discharge our quota of the federal debt.9
Hamilton’s plan was strongly opposed by Madison and Jefferson. Nevertheless, in what must be the greatest political sellout of all time—in which is seen the shallowness, vanity, self-interest, and giddy exchange of principle for convenience—Hamilton was able to gain their vote in exchange for moving the U. S. Capitol to the Potomac River. Thus, in exchange for a guaranteed local influx of prestige and wealth from the capitol city, these men allowed the Federalist faction further to centralize power over national finance. This was classic “taking the cheese” if there ever was, and Hamilton was springing the trap.
After this came a systematic stream of reports and state papers from Hamilton to Congress. An increase in the Tariffs came in April, 1790. In December, Hamilton provided a second report on public credit, this time calling for a national bank—a proto-federal reserve. He finally won consent for it and it arrived in February, 1791. Hamilton had argued for the necessity of a national bank as early as April 30, 1781, in a letter to Robert Morris,10 so he had be waiting, planning, striving for this moment for a decade. In March of 1791 followed his call for a direct tax on liquors, which passed. This precipitated the tax-revolt known as the Whisky Rebellion which Hamilton and Washington personally helped squash at the head of their newly centralized 13,000-man army. But before they could do this, they had to pass two Militia Acts of 1792, in order empower the behemoth to conscript every able bodied male from 18 to 45, and then call them up at the President’s will.11 When not threatening otherwise innocent farmers from horseback, Hamilton and Washington furthered their collusion for protectionism and corporate welfare. The effort would eventuate Hamilton’s Report on the Subject of Manufactures calling for regulation of trade via more tariffs, and direct subsidies to favored industries, corporations, and projects.12
This idea of a corporate welfare world had been in mind for both Hamilton and Washington for some time. During that very first Congress, Washington addressed a joint session on January 8, 1790. His vision for America was in scope—by comparison to the old decentralized Puritan ideals—a New Deal and War State wrapped into one. He urged the need “To be prepared for war,” as “one of the most effectual means of preserving peace.” Toward this end, he encouraged the Congress to “promote such manufactories as tend to render them independent on others for essential, particularly for military supplies.” This call was answered by Hamilton’s Report on the subject. Note that it was a call not only to provide a government-funded stimulus plan for manufacturing, but especially to provide for it in regard to military supplies. Thus, Washington created the original military-industrial complex—in peacetime.
Not often recognized as a big-government big spender, in that first-ever State of the Union address Washington called for greater federal control and spending on nearly everything you can imagine: manufacturing, military supplies, defense (particularly the “comfortable support of officers and soldiers”), Indian suppression, agriculture, commerce, transportation, post office, and science and education, including a national university. And perhaps just in case the actual funds weren’t there, he expressed strong “support for public credit.” All this, he added, was for “the welfare of our country.” It was the nation’s first cutting of it’s teeth on Welfare-Warfare Statism, and those teeth just happened to be, by legend, wooden. In reality, they were rotten.
Now don’t get me wrong! I am not trying just to bash Washington. I mean, I love the fact that he went to church sometimes, and I love the pictures of him kneeling openly in prayer at Valley Forge—even though it’s probably a piece of historical fiction. I just have to point out how much centralized, subsidized, nationalized everything contradicts the basic freedoms espoused in the Declaration of Independence, and, well, the Bible. For, however sincerely he may have championed his faith, he did not extend it into all areas of life. As a result, he ended up with a form of tyranny. And the precedents of subsidy and regulation set by him and Hamilton, while different in degree, differ not at all in principle from the socialistic schemes we have today—and just the same, in the name of “welfare”!
It should not surprise us, then, when we see Marshall legislating Hamilton’s State papers from the bench, that the view we get is one of gradual national tyranny over state and local freedoms. It was designed to impinge upon us from every branch of the national government until all of American life was ruled by a Hamilton-propped “worthless fabric.”
In the light of Washington’s New Deal, it also should not surprise us to see that control especially extended over business, commerce, and finance. Indeed, power over both the purse and the means of filling it were perhaps the most central aims of many of the Federalists. The Judiciary was the security blanket for these. Thus, more limitation on State powers came in 1824 when Marshall ruled against the State of New York in Gibbons v. Ogden. He struck down a shipping monopoly granted to a New York company operating between New York and New Jersey; this he did on grounds that federal licensing statutes took precedence over state laws, and thus a state could not license monopolies for companies engaging in interstate commerce—an area expressly enumerated for the federal government in the Constitution.
Of course this had been a design of the nationalists all along, despite their denials to the contrary during ratification. In 1821, a Washington D.C. printer and politician named Joseph Gales printed extracts from Robert Yates’ notes upon the Constitutional Convention. Upon receiving a copy, Madison wrote a letter to Gales in which he dismissed Yates as partisan and prejudiced. In the letter, however, Madison notably confided one of his true purposes at the Convention, “which was among other things to take from that State the important power over its commerce.”13 Perhaps Madison felt safe in admitting his true designs some thirty-two years after the fact.
Madison was thus quite open about his anti-State agenda. Even though he later broke vociferously with Hamilton and helped author the Virginia Resolution of 1798 advocating the doctrine of interposition of States against intrusive federal laws. But this, helpful as it may be conceptually, was little-too-late on Madison’s part, especially when you consider the ambition with which he had earlier destroyed State’s rights during the Constitutional settlement.
While containing many nuances, qualifications and explanations—all ingenious in a way Madison, in that era, seems gifted above others—he gives a simple enough explanation of the new government: it was designed as a means to bypass State laws and act directly upon individuals within the States: “Hence was embraced the alternative of a Government which instead of operating, on the States, should operate without their intervention on the individuals composing them.”14
What these men—indeed this Triumvirate of Washington, Hamilton, and Madison—accomplished was a “revolution in government” conceived of early by some men, including Hamilton, and designed for the express cause of assuming every power of the States (except local taxation and local property disputes) by means of centralizing power in a type of coup. In an early letter to James Duane, Hamilton expressed his regret that “an excess of the spirit of liberty” left the States with too much freedom, and this must be remedied either by taking direct control of Congress and assuming authority over the States (which Hamilton believed Congress already had anyway), or by calling a Convention for the purpose of circumventing them.15
So, we have seen quite a bit now—probably more than you ever wanted to see—of how the original freedom of States’ rights was lost. Couple this with the lessons of lost localism covered in the last chapter and the picture is pretty gruesome. But this is not where it has to end. We can recover a vision of decentralized government, even at the State level—one which is devoid of all the nineteenth century baggage of slavery, etc. We can recover the vision, and we can think of some practical steps toward restoring State freedom today. We’ll discuss that in the next section.
Next section: Restoring States’ Rights
- See Richard B. Morris, “Washington and Hamilton: A Great Collaboration,” Proceedings of the American Philosophical Society 102/2 (Apr. 30, 1958), 107–116. [↩]
- Forrest McDonald, Alexander Hamilton: A Biography (New York: W. W. Norton and Co., 1979), 15. [↩]
- McDonald, 126. [↩]
- McDonald, 392n18. [↩]
- See McDonald, 128; Nathan Schachner, “Alexander Hamilton Viewed by His Friends: The Narratives of Robert Troup and Hercules Mulligan,” The William and Mary Quarterly, Third Series 4/2 (Apr. 1947), 220. [↩]
- McDonald, 128. [↩]
- to Goveurnour Morris, Feb. 27, 1802. [↩]
- McDonald, 96. [↩]
- Jonathan Elliot, ed., The Debates in the Several State Conventions on the Adoption of the Federal Constitution, 5 vol. (Philadelphia: J. B. Lippincott Company, 1907), 4:238–9. [↩]
- Hamilton to R. Morris, April 30, 1781, PAH, Syrett, ed., 2:620. [↩]
- By comparison, when Shays’ Rebellion erupted over a truly corrupt taxation scheme, the governor was unable to muster more than a few hundred to fight for his corrupt cause. This, because the Constitution was not yet around and the national government could not could not commandeer the other state militias; and, the state militia was only voluntary; thus, as in a biblical system, when the would-be soldier perceive a cause to be corrupt, they can refuse to fight. Not so much under Hamilton and Washington. [↩]
- See. Stanley Elkins and Eric McKitrick, The Age of Federalism (New York: Oxford University Press, 1993), 258. [↩]
- James Madison to Joseph Gales, August 26, 1821, The Records of the Federal Convention of 1787, 3 vol., ed. by Max Farrand (New Haven: Yale University Press, 1911), 3:447. [↩]
- Madison to Jefferson, October 24, 1787. [↩]
- Hamilton to Duane, September 3, 1780, PAH, Syrett, ed., 2:401. [↩]