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“The Spirit of the Nation Forbids It”

Nationalism and Corruption from Jefferson to Jackson

FOR HOW FIERCE the battle between Republicans and Federalists raged during the 1790s, it is amazing that the latter’s vision of America would so thoroughly triumph in a relatively short order. It is more amazing still that the Republicans would be key players in the Federalist policy victory. Yet that is precisely what happened. If the James Madison of 1789 can be reconciled to the Madison of 1791, as argued in the prior chapter, it is harder to reconcile him to the Madison of 1816, whose attitude toward the national government was often indistinguishable from many of the Federalists he had once so vehemently opposed.

After the Republican victory in 1800, the Federalists were to limp slowly off the political scene, with Alexander Hamilton suffering a brutal end, slain in a duel with Vice President Aaron Burr in 1803. The Republicans were then faced with the very problems that plagued Hamilton. For all their philosophical scruples, they had no novel answers on how to grow and manage the new nation, and they ultimately relied upon the insights he had laid out more than a decade before: a powerful national government based on a generous interpretation of the Constitution could yield a more perfect union by guiding national policy—foreign and domestic—toward a series of sensible goals like economic growth and sovereign independence.

Indeed, both the Federalists and Republicans—in their ways—committed to a kind of American empire. Hamilton, as we saw in Federalist #10, proposed an economically powerful America that could rival the European powers, and his policies were designed to bring that about. The Republicans hated the Hamiltonian program, which they saw as expanding the powers of government too far. Even so, once in power they were similarly drawn to what Thomas Jefferson had once called an “Empire of Liberty.” The Republicans envisioned a nation that filled in the vast expanses of the North American continent, and to bring that about they too advanced a program that stretched the powers of the Constitution well beyond their original limits. They called for protective tariffs, territorial acquisition, federal internal improvements, and even a Second Bank of the United States.

But the original insights of the old Republican opposition were no less valid, even if they were impractical for managing an empire: growing the powers of the government without modifying its structures ran the risk of corruption. It undermined the principle of checks and balances, and limited the capacity of the government to self-correct, to make sure that only the public interest was being served, rather than private and parochial interests.

Thus, it should come as no surprise that the upsides of Hamiltonianism—sensible economic policy; vigorous foreign policy—also brought the downsides—corruption. Governmental perfidy became rampant during the James Monroe administration of 1817 to 1825, but it was during the tenure of Andrew Jackson that it transformed into outright lawlessness. Jackson believed that he was a defender of the old Republican faith, but in reality he supported a big government when and as it suited his political agenda, and worse he was more than happy to enforce or not enforce the law according to similar dictates. In Nicholas Biddle, the president of the Second Bank of the United States, he met a foe every bit as crafty and deluded as he, and the lawless battle between the two dragged the American economy into a needless recession.

The political battles of the 1790s were some of the most polarizing and divisive that the country has ever seen. Hamilton’s economic agenda of the early part of the decade set the stage, but the outbreak of war between Britain and France—the country’s two largest trading partners—meant that foreign affairs would dominate much of George Washington’s second term. The Federalists narrowly carried the day in 1796, with Vice President John Adams barely edging former Secretary of State Jefferson in the Electoral College. Political intrigue by the French gave the pro-British Federalists the advantage in the 1798 midterm elections, after which they controlled nearly 60 percent of all House seats and better than two-thirds of the Senate.

But the Federalists overplayed their hand, expanding the military and passing the grossly un-republican Alien and Sedition Acts, politicized laws that trampled on the Bill of Rights to target their Republican opposition. That, plus the abatement of war fever, led to a Republican resurgence in 1800, with Jefferson narrowly winning the presidency and the Republicans taking control of the entire Congress.

This would mark the beginning of the end for the Federalist Party. Ironically enough, it was strong trade with Britain that facilitated economic prosperity and thus the Republicans’ political victories during the first term of Jefferson. The breakdown of relations with Britain in Jefferson’s second term and Madison’s first term helped bring about a Federalist mini-revival in the Northeast, but none of this was enough to give them control of either chamber of Congress, let alone the presidency. During the War of 1812, economic tumult hit the Northeast particularly hard, and radical Federalists in New England floated the idea of secession during the Hartford Convention in 1814, which further delegitimized Hamilton’s old party.¹ With the conclusion of the war in 1816, the country rejoiced and the Federalists were finished, not even running a presidential candidate in 1820.²

With the decline of the Federalists, New England was essentially left on the outside looking in. Control of the country shifted to a coalition of the South and West, helmed for twenty-four years by the “Virginia Dynasty.” Jefferson served two terms as president, to be followed by his friend Madison for another two, then for another two by Monroe, a sometimes friend, sometimes foe of Madison but always a close confidant of Jefferson. To this day, the Republican dominance of government for the first quarter of the nineteenth century is unmatched in American history in terms of length and breadth.³

This dominance of the government meant that the Republicans alone had to face the very problems that had bedeviled the Federalists during the 1790s. And of course, these were tribulations that Republicans did not have to endure at that point, seeing as how they were a minority coalition. Jefferson and Madison could cite chapter and verse of republican philosophy to decry the Bank of the United States, but that is not to say they had an alternative to stabilize the currency, promote credit, or facilitate tax payments. They did not.

This goes a long way to explaining why, after acquiring control of the government, they slowly but surely adopted much of the Federalist program, and even expanded the scope of government beyond what the Hamiltonians had proposed. And as for the republican ideals of the 1790s? Implicitly, the Republicans adopted a vaguely aristocratic attitude: as long as the government was controlled by sensible Republicans (such as they), the country need not fear the kind of corruption that was supposed to have been ruining the body politic in the decade prior.

The Republican comfort with governmental power began to grow in Jefferson’s first term. His first annual message to Congress called for the reduction of taxes, a cut in the military, and a plan to retire the national debt, all consistent with the Republican policy of the 1790s. However, Jefferson ultimately made no moves against the Bank. Over the course of his term, he made noises within his cabinet about ending the Bank’s monopoly on federal deposits, but his secretary of the treasury, Albert Gallatin, consistently stayed his hand. An enormously influential Republican who had served as Republican House leader after Madison departed the lower chamber, the Swiss-born Gallatin was a close confidant of Jefferson and probably the only major party leader with a firm grasp of how public credit actually functioned. He saw the utility of the Bank and consistently sidestepped the issue whenever Jefferson pressed him to take action on it.⁴

Interestingly, the Jefferson administration also spent more on internal improvements than either of its Federalist predecessors, despite the Republican insistence on economy in government. The Republicans could have their cake and eat it too: economic prosperity meant they could cut taxes while also spending more than Washington or Adams had on domestic projects. Yet Jefferson’s most extraordinary expansion of government power, especially the authority of the president, came in the realm of foreign affairs.

The Louisiana Purchase is the most striking example. After the successful coup by former slaves in Haiti, Napoleon Bonaparte effectively gave up his pretensions to a French empire in North America, and looked to divest his nation of its expansive holdings on the continent. The Republicans, naturally, were more than happy to cut a deal, but Jefferson worried about the constitutional implications. There was nothing in the founding document to empower the government not only to acquire new territory, but also integrate foreign peoples such as those living in New Orleans. The president floated the idea of an amendment so empowering the government, but concerns about whether the fickle Napoleon would have second thoughts made that inadvisable.

In the end, Jefferson cast aside his constitutional scruples, implicitly adopting the very same sort of rationale that Hamilton had argued in his defense of the Bank to Washington some twelve years prior: that this power, while not explicitly enumerated, was nonetheless implicit in the very nature of sovereignty itself.⁵ According to John Quincy Adams, Jefferson’s action was “an assumption of implied powers greater in itself and more comprehensive in its consequences than the assumptions of implied powers in the twelve years of the Washington and Adams administrations put together.”⁶

The prosperity the nation enjoyed during Jefferson’s first term turned out to be fleeting, premised largely upon Great Britain indulging American traders with unique access to its markets. But as the Napoleonic Wars once again heated up, Britain cracked down, and soon so also did Napoleon. How would America handle this two-sided squeeze? Madison, who by this point was serving as Jefferson’s secretary of state, suggested an embargo: America would not trade with either country as long as they violated her rights as a sovereign and independent nation.

Madison believed that this would inflict more pain on the European powers than the Americans, but he was sorely mistaken. American commerce suffered and, worse, the federal government instituted what historian Forrest McDonald calls a “15 month reign of oppression and repression that was unprecedented in American history.”⁷ In response to the embargo, many merchants simply ignored the law, prompting Jefferson to come down on state governors with a vehemence that was uncharacteristic of the eighteenth-century champion of states’ rights. What’s more, Jefferson proposed that the government be empowered to seize cargo without a warrant or promise of a trial, even on the barest suspicion of violation; he also suggested that the army and navy be empowered to enforce the Embargo Act. Such a failure of public policy was this initiative, and so contrary to the republican principles that led to Jefferson’s triumph in 1800, that the Republicans replaced it with the less onerous Non-Intercourse Act early in Madison’s tenure, and historians have since judged it a black mark on Jefferson’s record.⁸

It is easy to castigate Jefferson for his hypocrisy in both instances, but that would overlook the tension at the heart of the early nineteenth century, between American aspirations to greatness and her republican ideals. This was hardly resolved by the defeat of the Federalists in 1800; instead, the burden, and priorities, of the empire shifted to the Republicans. Hamilton primarily envisioned an Atlantic-focused empire, or at least his policies were primarily concerned with carving out America’s role in the world vis-à-vis the European powers. Meanwhile, the Republicans were much more focused on expanding into and developing the interior of the continent, an Empire of Liberty already mentioned above.⁹ Regardless of emphasis, the word “greatness” is an apt description of both policy agendas, and their quests for greatness invariably came into conflict with the republican limits implied by the Constitution.

It was the Republican quest that precipitated the most ill-conceived war the United States would find itself in during the whole of the nineteenth century, the War of 1812. By the end of Madison’s first term, diplomacy had failed to induce England or France to respect America’s trading rights, and a new generation of Republican politicians—men like Henry Clay of Kentucky and John C. Calhoun of South Carolina—had entered the government with a hunger for glory. For them, nothing could be better than the acquisition of Canada from the British.¹⁰ Thus, the United States declared war on Great Britain on June 18, 1812.

Unfortunately, the county lacked the institutions necessary to carry on an effective war effort. The Bank’s charter expired in 1811, and while Gallatin—whom Madison retained as secretary of the treasury—urged a renewal, the president was largely silent on the matter and Congress narrowly rejected it. As the conflict with Great Britain approached, Republicans assumed that acquiring loans to run the government during wartime would be an easy matter, but they were wrong.¹¹ So hard up during the war was Gallatin that he actually proposed an executive charter of a new bank without the assent of Congress.¹² Worse, the destruction of the Bank brought into being a large number of local banks chartered to fill the void. These institutions lent with gross irresponsibility, and the proliferation of bank notes during the early years of the war led to the eventual suspension of specie payments and devastating levels of price inflation.¹³

The military was also woefully underprepared for war with Britain. An integral aspect of the Republican ideology was the virtue of the volunteer militia. Standing armies were a Jeffersonian bugaboo, and the Republicans believed that citizen soldiers could do the work just as well without threatening the republican quality of the nation.¹⁴ They were wrong, and as a consequence the American invasion of Canada was a complete failure. Worse, after Napoleon abdicated in the spring of 1814, the British were free to counterattack. Washington was burned to the ground, and it was only for improbable victories at Plattsburgh and Baltimore that America did not have to cede any territory when the peace was finally signed.¹⁵

Jackson’s victory in the Battle of New Orleans—coming a few weeks after the Treaty of Ghent was negotiated—salvaged American pride, but the reality was that the country accomplished none of its initial goals. Fortunately, the final conclusion of Britain’s long conflict with Napoleon meant that the pressure on American commerce was removed.¹⁶ Historians have since judged this conflict to be largely fruitless, but Americans of that day and age did not see things that way. They felt that it was a vindication of their sovereign rights as an independent nation, and a laudable demonstration of the American will. Amidst all this enthusiasm, Monroe was elected to succeed Madison in 1816, winning every state except Connecticut, Delaware, and Massachusetts.

Yet the “victory” in the War of 1812 ultimately brought discord within the Republican coalition. A growing nationalist faction within the party began pushing for an expansion of federal authority, beyond that which Jefferson had sanctioned. Leaders like Clay, Calhoun, and Quincy Adams—with the backing of Monroe (and, for the most part, Madison)—began to recognize the limits of strict Republicanism, and promoted a decidedly Hamiltonian program of protective tariffs to encourage American industry, a Second Bank to stabilize the nation’s finances, internal improvements to bind the country together, and an expanded military.¹⁷ Perhaps Monroe summarizes this Republican change of heart better than anybody:

By the war we have acquired a character and rank among other nations which we did not enjoy before. We stand pledged to support this rank and character by the adoption of such measures as may evince on the part of the United States a firm resolution. We cannot go back. The spirit of the nation forbids it.¹⁸

This is more than a little reminiscent of Hamilton’s call to national greatness in Federalist #11. Indeed, if the former secretary of the treasury had not been killed by Burr some twelve years earlier, he might have responded, “I told you so!”

In that famous dinner conversation between Adams, Jefferson, and Hamilton, the last expressed not only a level of comfort with corruption in government, but thought it integral to its proper function. As we noted in Chapter One, he declared of the British Constitution, “Purge it of its corruption, and give to its popular branch equality of representation, & it would become an impracticable government.”

The Republicans of the 1810s and ’20s thought they could have a Hamiltonian-sized government without the corruption, but they were wrong. Though many historians have remembered the twenty or so years after the War of 1812 as the dawning of American nationalism, it also marked the rise of rampant political corruption, which reached such a level by Jackson’s second term that it challenged the very concept of the rule of law.¹⁹ This was the price that America had to pay for accepting a more expansive notion of government without insisting on institutional reforms.

The most infamous example during this period came during the election of 1824. The story of the “corrupt bargain” between Clay and Quincy Adams has been told again and again. Clay, then the speaker of the House, had it in his power to decide who would be the next president, and after a private meeting chose Quincy Adams, who in turn named him secretary of state. While there is no direct evidence of a quid pro quo, the sequence of events rightly prompted nationwide outrage. Historian Harry Watson makes the point that an explicit bargain was not necessary for the outcome to be offensive: “to preserve their consciences in the expected proprieties of the day, the two men probably failed to state the bargain explicitly, but their gentlemen’s agreement had violated the standards of strict Republican morality.”²⁰ But that breach of the public trust had less to do with the growth of government than the decay of the first party system, about which we will have more to say in Chapter Three.

Government growth nevertheless bred many innovative forms of perfidy, which unfortunately would become models for future generations of politicians on the make. Congress, unsurprisingly, had its fair share of scoundrels. The Republican embrace of internal improvements led to congressional logrolling (where legislators agree to support each other’s pet projects), such as with the omnibus rivers and harbors legislation of 1826.²¹ This meant in practice that Clay’s “American System”—a harmonization of sectional interests into a unified whole—achieved much less coherence than promised.²²

Protective tariffs had a similar effect, facilitating regional payoffs and political corruption beyond what was previously possible. The most egregious example involved the aptly named “Tariff of Abominations” in 1828. Recognizing a growing national demand for a new protective tariff, Jackson’s allies in Congress sought to have it both ways. Jackson’s political base in the South did not want a new tariff, but the Mid-Atlantic swing states, especially Pennsylvania, desperately desired new protection; so Martin Van Buren and Silas Wright of New York and James Buchanan of Pennsylvania conspired to draft a tariff so extreme that (they thought) it would inevitably fail. Their tariff proposal layered gift upon gift for this industry and that sector of the economy, especially those situated in the Keystone State. Southern members of the House allowed the bill to pass through the lower chamber, believing that it would be struck down in the Senate, as it contained duties deemed too onerous for New England. But the Southerners miscalculated; after some amendments to make the tariff palatable to the Northeast, it passed through the Congress and was signed into law by President Quincy Adams. The Jacksonians reaped a huge political windfall and the Mid-Atlantic won an enormous economic payoff, but the southern economy suffered.²³

Members of Congress not only played fast and loose with the legislature’s taxing and spending powers, they also gladly collected kickbacks from powerful men in society. Perhaps the most notorious, but certainly not the only, legislator on the take was Daniel Webster, the famous orator who for half a century defended American nationalism with an unmatched eloquence. Webster, nevertheless, was an avid speculator with a taste for the finer things in life. He was persistently hard-pressed for money and was more than happy to use his influence for personal gain, as well as tip his friends and family off about public policy that could prove profitable.²⁴ He was not alone. Clay was on the payroll of the Second Bank and Missouri senator Thomas Hart Benton was a legal representative for John Jacob Astor.²⁵ Even presidents were on the hook: Monroe borrowed a tidy sum from Astor during the War of 1812 and was persistently unable to pay back his wealthy benefactor. No matter! Astor eventually leaned on President Monroe to rescind an order prohibiting foreigners from engaging in the fur trade, something that greatly aided his American Fur Company.²⁶

Corruption was rampant in the executive departments as well, especially the Department of War and the all-important Treasury Department, which had oversight over the Second Bank and its state satellites.²⁷ The Second Bank in particular was a cesspool of corruption in its early years. Modeled after its predecessor, most of its directors were picked by private shareholders while the government named a minority.²⁸ The Madison administration chose five solid Republicans for the board and worked behind the scenes to have a Republican crony selected as president.²⁹ That duty fell to William Jones, former secretary of the navy and interim secretary of the treasury. In the latter position, he had proven himself wholly incapable of his duties, but in the former had demonstrated a keen understanding of how the political game worked, doling out patronage to friends, family, and political allies with great skill.³⁰ That, plus his Republican bona fides as well as his residence in Philadelphia (where the Second Bank was headquartered) made him a natural choice. His ignorance of public finance was not a concern.

The administration of Jones, a “corrupt and venal man” as historian Robert Remini describes him, stands in stark contrast to that of Hamilton during his tenure at the Treasury Department.³¹ In the 1790s, Republicans cried bloody murder about the potentially devastating corruption that could emanate from the Bank, but while venality did spring forth from it, the capable management of Hamilton meant that its broader effects were generally limited. This went a long way to proving the viability of Hamilton’s assumption that a natural aristocracy could handle a large governmental operation, managing and controlling corruption with an eye toward the public good. But what happens when a party functionary is at the helm, rather than a natural aristocrat? The public found out in the first few years of the Second Bank’s operation, as Jones was totally out of his depth, and on the take.

For starters, he and the Second Bank’s directors allowed a clique of stockjobbers to take control of the Baltimore branch, which was robbed of more than $1 million before the truth came out.³² The president of the branch, one of the directors, and the cashier formed a company intent on cornering the market on bank stock with an eye to inflating its price.³³ They purchased something on the order of $4.5 million worth of bank stock, financed in part by loans from the Second Bank itself: $1.7 million from the Baltimore branch and $2 million from the Philadelphia headquarters. They also farmed out nominal ownership of the shares to thousands of dummy investors to get around rules limiting how many votes any single investor could have. Ultimately, as few as fifteen people in Baltimore owned three-fourths of the stock there.³⁴ Jones noticed none of this, nor any of the stockjobbing going on all across the country; indeed, he even accepted an $18,000 gift from officers at the Second Bank, which had been made on rampant speculation.³⁵

Worse than this was Jones’s gross mismanagement of the nation’s economy. In theory, the Second Bank’s monopoly over federal deposits gave it control over the state banks, and therefore capacity to regulate credit and even the broader business cycle. In practice, nominating a political hack whose tenure at the Treasury Department was a model of incompetence meant that the Second Bank was part of the problem in the postwar economy.

Following the War of 1812, American exports boomed to meet a growing demand for staples in Europe. Banks all across the country lent generously, and thus a credit-fueled bubble quickly followed. It finally burst in late 1818 when the price of cotton plummeted on the Liverpool exchange, and the forthcoming Panic of 1819 plunged the country into a nasty recession.³⁶ The Second Bank was not the primary culprit for the panic, but it did shoulder some of the burden. If Jones had been an able and sensible manager of the national credit, he could have foreseen what was coming and acted in advance to tighten credit and gain control over the irresponsible practices of the state banks. Instead, he did precisely the opposite, fueling the credit bubble. In August 1817, he waived the requirement that the second installment of payments for Second Bank stock be remitted in specie, or hard coin, enabling investors to retain their shares with very little money down.³⁷ He also did not mandate that the branch banks have fixed capital, meaning that there was no rational credit plan emanating from Philadelphia. Bank branches in the South and West, managed by men whose ignorance of finance matched Jones’s, happily authorized loans that could never practically be paid back.³⁸ By July 1818, the Second Bank’s demand liabilities were $22.4 million compared to just $2.4 million worth of specie in its vaults, double the legal limit.³⁹

At that point, the game was up and the Second Bank initiated a painful contraction of credit that contributed to a depression in prices. Exports, valued at $83 million in 1818, fell to $54.5 million in 1821; import prices fell from $120 million to $54.5 million.⁴⁰ As historian George Dangerfield notes, “Trade stagnated; the price of staples swooned downwards; real property depreciated and its rents or profits vanished; merchants, even the most reputable, were ruined; and in the larger cities, unemployment spread like a plague.”⁴¹

Under enormous political pressure, Jones resigned in 1819, and his successor—Langdon Cheves of South Carolina—continued the contraction. By 1820, the Second Bank notes in circulation amounted to $3.5 million, down from $8 million in 1818. Cheves restored the Second Bank’s financial soundness, but the damage to the broader economy was great. According to contemporary economist (and hard money advocate) William Gouge, “The bank was saved, and the people were ruined.”⁴² Modern economic research has confirmed this analysis, concluding that Cheves’s contraction was more severe than necessary. By April 1819, the Bank was fundamentally sound, but the contraction continued until Cheves was pushed out in 1823, to be replaced by Biddle of Pennsylvania.

Biddle comes across the pages of history much as Hamilton does: cosmopolitan, intelligent, broad-minded, ahead of his time, and exceedingly arrogant. Both men believed in a natural aristocracy and felt as though they were rightful members of it, and both were, more or less, correct. Unlike his predecessors, Biddle understood the beneficial role the Second Bank could play in the national economy, and he set about realizing that goal. To his everlasting credit, he was quite successful, taking the concept of a central bank farther than had been accepted even in England by that point.⁴³ From the time Biddle took control of the Second Bank in 1823 until Jackson’s reelection in 1832, it expanded its loans many times over, especially in the South and West.⁴⁴ Even still, it managed successfully to restrain the state banks and even get in front of an economic panic that was brewing in England by 1825.⁴⁵ Little wonder that, by the time of the Second Bank’s request for recharter in 1832, it had achieved broad popularity. Gallatin, by that point the éminence grise of Republican finance, gave it his blessing.⁴⁶

Yet Biddle was not above the political fray, even though he personally claimed no interest in partisan gamesmanship. The fact is that Biddle had a lot of friends in high places, in no small part because he purchased them. The case of Webster has been noted above, as were Calhoun and Clay, all of whom Biddle courted assiduously. Various other members of Congress were also lubricated with generous loan terms as well as the privilege of receiving advances on their salaries.⁴⁷ Newspapermen were also eligible for loans that were not strictly above board.⁴⁸ Additionally, the primary responsibility of Biddle was to the Second Bank itself, despite his pretensions to being a magnanimous agent of national prosperity. Recent economic scholarship notes that the Second Bank made a tidy sum in the domestic exchange market, and it questions whether it really facilitated it or just profited off this emerging form of commerce.⁴⁹

Nevertheless, contemporary sentiment regarding the Second Bank was generally positive by the end of the 1820s, and has more or less been vindicated by modern scholarship. Unfortunately for the Second Bank—and, as it turned out, the country at large—there was one implacable foe standing in its path. Jackson—“Old Hickory,” the “Hero of New Orleans,” the “Sharp Knife” as the Native Americans called him—wanted nothing more than to destroy the Second Bank, and as with so much else, he ended up getting his way.

In his three-volume biography of Jackson, Remini sets up his entrance into national politics as a tonic for the “Age of Corruption” we have been discussing. He argues that Old Hickory saw himself fundamentally as a reformer, in the mold of Jefferson and the old guard Republicans (who by that point fancied themselves as the “Quids,” or a third force aligned against the remaining Federalists and the National Republicans), carving out the rot that had grown within the institutions of government. Indeed, examining Jackson’s two most noteworthy policy messages—his vetoes of the Maysville Road spending bill and of the recharter for the Second Bank—it is clear that he saw himself as a Republican committed to limited, constitutional government as a bulwark against corruption.

Yet a fair examination of the historical record demonstrates that, while Jackson may have been reacting to the venality of his age, he approached the office of president with a level of capriciousness that had not been seen before his day, and perhaps not after, either. As we shall see, Jackson’s sins against the republican virtues he presumed to defend were certainly greater than those that got Andrew Johnson and Bill Clinton impeached, and his crimes against the Native Americans were far worse than anything Richard Nixon ever did.

Jackson often comes across as a kind of American caesar. Deeply committed to the rule of law and the empowerment of the common folk, he nevertheless conflated, time and again, those virtues with his own interests. Indeed, as historian Daniel Walker Howe ably demonstrates, “It was his personal authority, rather than that of the federal government or even the presidential office, which Jackson zealously maintained.”⁵⁰

His character was fully evident well before he ever assumed the presidency. His past deeds included holding the city of New Orleans under martial law until well after news of the Treaty of Ghent was made known; extorting fraudulent treaties from the Native Americans, in which the latter were forced to give up tens of thousands of acres; disobeying orders by attacking Spanish positions in Florida, then declaring martial law; and even profiting from his military adventures (his family and friends received advance notice of his Florida conquest, with an advisory that land prices in Florida would soon be going upward).⁵¹ As chief executive of the United States from 1829 to 1837, Jackson’s record does not so much justify his self-perception as a Republican reformer combating corrupt practices, but rather portrays a fundamentally lawless ruler using corruption to combat (equally corrupt) politicians whose interests diverged from his own.

At the core of the republican ideology is the idea that similarly situated people should be treated similarly; deviation from this norm suggests the existence of corruption, be it technically legal or not. And on that measure Jackson was enormously deficient, in small ways and large. On the small end of the scale was his hypocrisy on internal improvements. In the statement accompanying his veto of the Maysville Road—a favored project of his political rival Clay—Jackson worries that the Constitution did not permit such an expenditure, which “concedes to the government an unlimited power.”⁵² Instead, he claims to favor only internal improvements based on the principle that they benefit the nation as a whole. Otherwise, the country ran the risk of

promot(ing) a mischievous and corrupting influence upon elections by holding out to the people the fallacious hope that the success of a certain candidate will make navigable their neighboring creek or river, bring commerce to their doors, and increase the value of their property. It thus favors combinations to squander the treasure of the country upon a multitude of local objects, as fatal to just legislation as to the purity of public men.⁵³

If ever there was a fair articulation of the Republican concern about internal improvements, this was it, but Jackson failed to live up to his own rhetoric. The fact of the matter is that government spending on internal improvements skyrocketed during Jackson’s tenure, reaching an average cost of nearly $0.13 per person, more than any other president in the antebellum period.⁵⁴ And this spending did not follow pure Republican principle; rather, federal appropriations during this period had the distinct flavor of pork barrel politics to it. Jackson and his party loyalists in Congress often distributed funds for internal improvements based on the political salience of the appropriation.⁵⁵

Jackson was also an inconsistent advocate of national authority, with the only clear dividing line being what was and was not his political priority. The story of Jackson staring down the South Carolina nullifiers is well known. The Palmetto State’s Ordinance of Nullification of 1832 declared the tariff laws recently passed into law null and void in South Carolina. Jackson—whose political coalition had been responsible for the abusive Tariff of Abomination—reacted with righteous indignation. He warned South Carolina that it had no authority to do that, and promised “that if a single drop of blood shall be shed there in opposition to the laws of the United States, I will hang the first man I can lay my hand on engaged in such treasonable conduct, upon the first tree I can reach.”⁵⁶

Jackson, of course, was right to be outraged by South Carolina’s blatantly illegal actions. What is less known, however, is how happily he excused the equally lawless maneuvers by the states of Georgia and Mississippi in their efforts to oust the Native Americans from their legal property. Sharp Knife had stronger opinions on Native American affairs than any of his recent predecessors in the White House; while the latter acknowledged that removal of the native tribes to an area west of the Mississippi was advisable, Jackson made this a priority of his administration.⁵⁷ The trouble for Jackson was that the tribes of the region had treaties with the federal government that protected their lands from state encroachment. It was such a treaty with the Creek nation that prompted Quincy Adams to send the federal attorney to Georgia to warn that, if the state’s agents entered Creek territory to conduct an illegal survey, they would be arrested. While not as celebrated as Jackson’s victory over the South Carolina nullifiers, Adams’s justification rested on the same basis: the supremacy of federal laws over the states.⁵⁸ But Jackson had no time for any of this. Clearing the Native Americans out was a priority for him, and he used the states as the bad cop to his good cop. Taking on the pretensions of a benevolent father, Jackson warned the Native American tribes that he could not stop the states from abusing the treaties, and urged them to remove to the West.⁵⁹ Never mind, of course, that he simultaneously was threatening to hang South Carolinians who violated the tariff laws.

In Jacksonian America, “princeps legibus solutus est”: the sovereign is not bound by the law.⁶⁰ Biddle would learn this the hard way.

If the experience of the War of 1812 taught the Republicans that their nationalistic pretensions were incompatible with their Republican scruples, then the Bank War between Biddle and Jackson served to dramatize the point. By 1832, America had chartered a national bank to promote the economy and empowered a kinglike president to pursue (his vision of) the national good. Neither of these institutions was entirely in keeping with the principles of the past generation; certainly, both ran more than a modest risk of the corruption that the Republicans of the 1790s found intolerable. When they were arrayed against one another, as in the Bank War, the result was economic hardship and rampant lawlessness. If Hamilton would have had cause to gloat in 1816, certainly Jefferson would have been due a similar indulgence in 1834.

As noted above, the Second Bank was popular by the time Jackson entered the White House in 1829, and not just in New England and Philadelphia, where one presumes the economy favored such an institution. Biddle’s efforts to expand credit to the South and West created a broad base of support in those regions as well. When the recharter came up for a congressional vote in 1832, it received support from all sectors of the country, and testimonials in favor of the Second Bank streamed in from the South and West.⁶¹

Indeed, it was the popularity of the Second Bank that Biddle thought he could leverage against Jackson, who had expressed his disregard for the institution as early as his first annual presidential message. Jackson’s own financial difficulties had led him to distrust banks in general, and prefer only specie as the circulating medium.⁶² He further believed that the Second Bank represented everything that was wrong with the “Era of Good Feelings”; it concentrated power within the hands of a few, unelected moneymen who had the authority to make or break millions of ordinary Americans. On this matter, as with so many others, it is clear how the lines between Jackson’s own prejudices and his sense of the national interest were so easily blurred.

Biddle knew that Jackson was indisposed to his institution, but he also knew that Old Hickory was looking to roll up an enormous reelection victory in 1832, which required the support of pro-Second Bank Pennsylvania. Thus, he contemplated submitting a bill for recharter in 1832, four years before the existing charter expired, in the hopes that political pressure on Jackson would force it through. On this matter Clay, who was running for president on the National Republican ticket and looking for an issue to campaign on, encouraged him. On the other hand, the administration’s friends of the Second Bank, above all Secretary of the Treasury Louis McClane, warned him that the request would provoke Jackson’s anger. In the end, the most persuasive advice came from House Ways and Means Committee Chairman George McDuffie, an ally of Calhoun, who predicted Old Hickory would never assent to a recharter, and the time to strike was now, when members of Congress would be feeling the heat in advance of the election.⁶³

It is difficult to square Biddle’s political gamesmanship on the recharter with the principles of republican virtue. It certainly was not to be found in the Second Bank’s charter that its president had the authority to pressure politicians the way Biddle so clearly did. And from Old Hickory’s perspective, it was downright outrageous. Though the historical record suggests that Biddle was not in fact in cahoots with Clay, he nevertheless submitted a petition for recharter shortly after the National Republicans formally declared themselves in favor of the Second Bank.⁶⁴ This raised Jackson’s dander, and he would not rest until this enemy was destroyed.

The Congress overwhelmingly voted to recharter the Second Bank, but Jackson sent back a veto message that has served as clarion call for class warriors ever since:

It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth can not be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society-the farmers, mechanics, and laborers-who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government. There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing. In the act before me there seems to be a wide and unnecessary departure from these just principles.⁶⁵

This message has been quoted widely over the years, even making an appearance in Ted Kennedy’s famous Dream Will Never Die speech at the 1980 Democratic convention. Regardless, its constitutional claims had essentially been rendered moot by the Supreme Court; its economic reasoning was rubbish (an “unctuous mixture of agrarianism and laissez faire” is how historian Bray Hammond puts it); and its provenance was pure hypocrisy, coming as it did from the president who had done more than any predecessor to pervert the rule of law to his own ends. For better or worse, it set a new precedent that presidents could veto bills simply because they did not like them; prior to the Second Bank veto, the operative rule was that the president was obliged to sign into law all constitutionally valid measures of Congress.

It also marked the start of a truly lawless period of American government, as Jackson and Biddle both violated their legal and moral responsibilities in a vain quest to destroy each other. Biddle launched the first salvo by committing the Second Bank thoroughly to the defeat of Jackson in the upcoming presidential campaign. He poured thousands upon thousands of dollars of the Second Bank’s money into the battle, prompting New York senator and Jackson ally William Marcy to fret, “The U.S. Bank is in the field and I cannot but fear the effect of $50,000 or $100,000 expected in conducting the election in such a city as New York.”⁶⁶ Biddle even went so far as to distribute 30,000 copies of Jackson’s veto message, foolishly believing that it would aid the Second Bank’s cause.

In the end, Jackson won reelection easily, albeit it with a smaller share of the vote than he had carried four years prior. That should have been the end of the matter: Jackson was reelected; the recharter was defeated; and the existing charter was set to expire before the end of Old Hickory’s second term. But none of this was enough for Jackson, who wanted to see the Second Bank brought to its knees. To do that, he and his Kitchen Cabinet of intimate advisors adopted a plan to remove existing federal deposits from the Second Bank. Most of his official cabinet opposed that, including Secretary of Treasury William Duane, whom Jackson had installed because McLane had been too pro-Second Bank for the president.

By law, only the secretary of the treasury could remove the deposits, and only if he feared that they were not safe. But a recent inquiry had shown that the Second Bank was perfectly safe, with $79 million in assets to just $37 million in liabilities. The House of Representatives had even voted 109-46 to affirm that the deposits were secure. Duane had told Jackson that he would resign his office so the president could appoint somebody to carry out the order, but when the time came, the secretary refused to step down. So, Jackson fired him, replacing him with Roger Taney in an executive coup reminiscent of the “Saturday Night Massacre” during the Nixon administration.⁶⁷

For Jackson, the legal niceties of the Second Bank charter were irrelevant. He had fought the Second Bank in the election, had won handily, and now had a mandate from the people to do exactly what he pleased, the law be damned. The Senate, controlled by Clay and the National Republicans, disagreed, and censured him by a vote of 26-20, the first and only such Senate act against a president.⁶⁸

This, of course, did not deter Jackson, who instructed Amos Kendall, a key Kitchen Cabinet advisor, to find state banks willing to take on the public funds. Kendall was explicit that one of the criteria for selecting banks was that they were friendly to the administration, and an analysis of the historical record has demonstrated that approximately 79 percent of all “pet” banks selected to house government deposits were controlled by Jacksonians, with most of the rest being held by independents or National Republicans friendly to the administration. And so, in violating the law, Jackson not only destroyed his greatest political enemy, he also found a new form of patronage to secure his coalition.⁶⁹

But Biddle had one last arrow in his quiver: a credit contraction. Inevitably, the federal assault on the Second Bank would have provoked some kind of response from the latter, if for nothing else than it was unsure of just how far Jackson was willing to go.⁷⁰ Nevertheless, historians have generally concluded that Biddle took matters farther than he needed to; what’s more, there is Biddle’s own admission to being motivated by politics to inflict economic pain on the country.⁷¹ He wrote to one correspondent, “The relief, to be useful or permanent, must come from Congress and from Congress alone. If that body will do its duty, relief will come – if not, the Bank feels no vocation to redress the wrongs inflicted by these miserable people. Rely upon that. This worthy President thinks that because he has scalped Indians and imprisoned judges, he is to have his way with the bank. He is mistaken.”⁷² To another, he wrote: “Nothing but the affidavits of suffering abroad will produce any effect in Congress. . . . Our only safety is in pursuing a steady course of firm restriction – and I have no doubt that such a course will ultimately lead to restoration of the currency and the recharter of the bank.”⁷³

Thus, between January 1834 and October 1834 the Second Bank’s reserve ratio rose from 0.371 to 0.670, and its specie reserve increased from $10 million to $15.6 million. The effect of this action was to drive the economy into a relatively mild recession, something on the order of the contraction experienced in 1949.⁷⁴ In the end, what stopped the Second Bank’s squeeze was the widespread acknowledgment that the institution was sound, even with the deposits removed, and thus in a position to give relief, especially to New York investors. Still, even as Biddle loosened credit restrictions, he refused to help the banks in Washington and Baltimore, whose misfortunes traced back to the mismanagement of local pets (run by friends of Taney, no less).⁷⁵

Biddle’s lesson failed to take hold in the public mind, and his contraction meant the destruction of whatever credibility the Second Bank still had. Biddle slinked off the national scene; he secured for it a state charter in Pennsylvania, but it failed during the Panic of 1837. So complete was Jackson’s victory, the United States would not implement anything approaching a sensible monetary policy until the Civil War.

Historians have remembered the period that spans Jefferson’s inauguration in 1801 to the close of Jackson’s presidency in 1837 in different ways. It has been called Jeffersonian Democracy and Jacksonian Democracy; it has been said to mark the rise of the market economy, the first full flowering of American nationalism, the birth of Manifest Destiny, and so on.

Here, we have examined it from a different perspective, tracking the demise of the Republicans’ orthodoxy, their embrace of a more expansive government, and the corresponding rise of governmental corruption. The Republican Party had been organized to stop this growth of government, the loosening of the constitutional structures, and ultimately the corruption that followed; yet by the end of Monroe’s tenure, they had accepted all of the Federalist agenda, and more.

Thus, less than a generation after his death, Hamilton’s ideological triumph was all but complete. The reason for his victory should be clear enough by now: the Republican opposition of the 1790s was never more than that. It was a critique, a dire prophecy of doom and gloom, a jeremiad; it was not a positive program to deal with the nation’s challenges. For all of its faults, at least Hamilton’s agenda realistically addressed the problems facing America. How to establish real independence vis-à-vis the European powers? How to grow the national economy? How to bind the states into a permanent union? These are the questions that Hamilton obsessed over. His Republican opponents were not so burdened because, as an opposition party, they did not have the obligations of governance. When they finally got their hands on the levers of power, and faced the challenges that the former secretary of the treasury did, they discovered—sooner or later—the wisdom of the Hamiltonian perspective.

But—and herein lies the central paradox at the heart of American political corruption—none of this means the initial Republican critique of Hamilton was wrong. It simply means it was not suited to the demands of a would-be American empire. The Republicans, as we saw in Chapter One, were deeply concerned about retaining the balance among different forces in society for the sake of the public good; this was at the front and center of Madison’s thinking. When Hamilton found its straightforward interpretation to be ill-suited for his national program, the Republicans warned that his innovations threatened the balance and would ultimately lead to corruption as factions within society would gain leverage to implement their own selfish ends. As we saw in Chapter One, that is precisely what occurred.

And, as we saw in this chapter, it occurred again when the Republicans mimicked Hamilton’s program. Congress quickly turned internal improvements and protective tariffs into opportunities for electoral gamesmanship. Graft became an increasingly common phenomenon in the fast-expanding executive departments. Bad management, stockjobbing, political payoffs, and needless economic pain characterized the early management of the Second Bank of the United States. Jackson—the closest thing America has ever had to a caesar—shoved the Native Americans aside without regard to their treaty rights. And, worst of all, the Bank War between Jackson and Biddle was a fundamentally lawless test of wills that drove the country straight into an economic recession.

All of this can be traced—either indirectly or, in many cases, directly—to the growth of government beyond the Madisonian vision of the Constitution. Americans may have decided that they had no choice but to grow the government, that the demands of an Empire of Liberty required a more expansive view than that drawn up in Philadelphia in 1787. Nevertheless, in so doing, they effectively threw off a key tenet of Madison’s thinking, that a considered delineation of political power across well-designed institutions was necessary to prevent corruption and protect a true republic. In other words, the problem was not so much that they abandoned their old ideas of limited government; it was, rather, that they did not update the government’s institutions to handle these new powers responsibly.

Indeed, Jefferson’s demurral from seeking a constitutional amendment for the Louisiana Purchase is illustrative. It was inconvenient for him to pursue such a structural update to the original design; better instead to seize the power before the unpredictable Napoleon changed his mind. While on the extreme end of the spectrum, this was not an isolated incident. In case after case during this period, we see Republicans behaving just as the Federalists did. The political externalities of national greatness were so pressing, they refused to consider whether the old structures of government could exercise these new powers responsibly.

Indeed, they could not. As a consequence, corruption came to the United States of America—and as we shall see, it was here to stay.