To supply the labor for steam-powered production, the British economy moved large segments of its population out of agriculture and into factory production. Since the factory worker did nothing but work in the factory, British capitalists needed new sources for feeding and clothing that new workforce, and they found those sources in American agriculture. Only a few Americans were prepared for this. Before 1800 in the United States, only farmers in the hinterlands of the major ports, such as Philadelphia, Charleston, and Chesapeake Bay, were seriously committed to raising crops to sell for cash on foreign markets, if only because for others the costs of getting those products to markets for sale was greater than any profit that could be reaped from the selling. An ordinary stagecoach ride from Boston to New York cost between $10 and $11 in 1820—two weeks’ wages—and that said nothing about the cost of shipping produce or driving cattle to market; five weeks were needed to move that stagecoach from Nashville to Washington. Most American farmers were still organized around a household economy that sold little except small surpluses off the farm and which relied on barter and extended loans for the few manufactured goods it needed. 17
But by the 1830s, the allurements of selling agricultural produce to British and foreign markets had become too great to resist, largely because access to those markets had become too easy to ignore. The steam engine, which had made large-scale manufacturing possible among England’s “dark, satanic mills,” produced an unlooked-for by-product when inventors such as John Fitch and Robert Fulton bolted steam engines onto riverboats to push them up and down rivers; and then bolted steam engines onto platforms that rolled on iron tram rails. The steamboats and the railroads became the chief force in driving down the costs of access to markets, and slowly, American farmers moved away from multicrop farming and livestock raising for their own subsistence and toward single-crop agriculture, where their produce could be sold for cash, and the cash used to buy manufactured clothing or tools made in other people’s factories.18
It was at this point that the hinge between democratic republicanism and liberal capitalism began to squeak. Republicanism was based upon liberty, and liberty was based upon independence, but who could consider American farmers independent if their well-being now hung on the price their crops or meat or poultry might get on a faraway exchange market? And how independent could a shoemaker be when he was forced to close up his shop because cheaply manufactured British shoes cost less than his handmade ones, and take a wage-based job in a factory or mill built on the British model? On the other hand, how independent would America remain if it stuck its economic head in the sand, persisted in the old patterns of household agriculture, and became a relative weakling among the emerging capitalist economies of Europe?
These questions were posed, in the name of protecting the Republic, by republicans who now found themselves differing seriously from one another. Beginning with Alexander Hamilton and the Federalist Party, liberal republicans argued that American independence depended on the strength and competitiveness of its economy on the world capitalist markets. Hamilton, in particular, favored direct federal government intervention in the American economy to encourage manufacturing development, trade (through publicly financed roads, bridges, and canals), and finance (by chartering a national bank, which could lend money to entrepreneurs). Power, if used judiciously, could actually protect and promote liberty. Classical republicans, championed by Thomas Jefferson and represented in the Democratic Party, argued that the Constitution gave the federal government no such powers of economic intervention. Even if it did, encouraging Americans to join the system of world markets would only mortgage the American republic to foreign interests and encourage Americans to thirst for money and power over their fellow citizens. Classical republicans wrapped themselves in the toga of the Roman republic and reminded modern Americans that in ancient Rome, materialism and self-interest on Adam Smith’s scale were unknown:
Then none was for a party;
Then all were for the state;
Then the great man helped the poor,
And the poor man loved the great:
Then lands were fairly portioned;
Then spoils were fairly sold:
The Romans were like brothers
In the brave days of old.19
Jeffersonian Democrats especially opposed calls for government-financed public works, or “internal improvements,” since it was obvious that the new roads, bridges, and canals could serve only one purpose—to make it easier for farmers to reach distant markets, and for the markets to tempt American farmers into their grasp. It also went without saying that “internal improvements” could be financed only through federal taxation, and farmers who grew or manufactured only for their own households would never be able to find the money to pay those taxes without surrendering their cherished independence and growing what the market would pay them for in cash. Power was toxic, and no amount of it was safe for liberty. “The market is a canker,” warned a contributor to the New England Farmer in 1829, “that will, by degrees, eat you out, while you are eating upon it.”20
The Democrats reserved their greatest venom for the two newest instruments of capitalist finance, the bank and the chartered corporation. America had known no banks until the very end of the American Revolution and had only eighty banks by 1810. By 1840, however, there were nearly a thousand of them, including a congressionally chartered “monster” Bank of the United States in Philadelphia, organized in 1816 with an initial capitalization of $35 million. Democrats hated the banks because the banks were the chief processing agents of the markets: they extended credit for investment (which Democrats attacked as “phony” wealth) and either made windfall profits from manufacturers and farmers when those investments succeeded or else seized the property of those whose enterprises failed. Liberty and virtue dwelt in the hearts of independent farmers sitting under their
