The New Nation, By Merrill Jensen
(Keep in mind the proper, as opposed to popular, use of the term “federalist” throughout.)
To the detriment of the nationalists, the United States had won the war for independence before they were able to consolidate their power in a stronger, coercive central government. This section of Jensen’s book examines the attempts made to secure centralized power during the last two years of the war, and the ultimate failure of the nationalists – well, failure until the convention in Philadelphia several years later.
By 1781, the nationalist group was finally in a position, within the framework of the Articles of Confederation, to implement their agenda.
Their program was stated clearly by James Duane. “There are,” he wrote Washington, “some political regulations…I have exceedingly at heart and which are now drawn near to conclusion…the principal measures to which I allude are the establishment of executives or ministers in the departments of finance, war, the marine and foreign affairs, the accomplishment of the Confederation: and procuring to Congress an augmentation of power and permanent revenues for carrying on the war.”
This program was carried on with smoothness and precision. (Page 54, 55)
The nationalists wanted several departments, each led by single individuals; the federalists did not trust such power to individuals, but to committees of Congress. By 1781 – at the verge of military victory – this federalist group found itself on the short end of political power.
In early 1781 Congress created the “Department of Foreign Affairs,” a “Secretary of War,” and a “Department of Finance.” Each department came with a secretary – none more powerful than Robert Morris in Finance, who was even more powerful than the Congress. For all practical purposes, Congress made Morris a dictator.
In some cases, backroom deals and even foreign intervention were found to be useful in ensuring the “right” person filled the job. It took several months to fill some of the posts – given the fight put up by the true federalists. (Page 55, 56)
The position of secretary of war is interesting. After several months of fighting and debate, Benjamin Lincoln got the job.
His generalship in the South had been so bad that the British had captured his whole army without any particular effort on his part to save it. In fact the only successful military exploit he ever engaged in was during Shays’ rebellion when he marched mercenary troops against his fellow citizens in western Massachusetts. His conquest of the disorganized farmers who lived there was an unquestioned victory. (Page 56)
The story of Robert Morris is also interesting. There is so much discussion these days about the revolving door between Washington and Wall Street. Robert Morris didn’t bother with a door; he held both seats at once:
He must be allowed to continue his own private business; he must appoint all officers in the department; he must have absolute power to appoint and dismiss anyone having to do with the spending of money. Unless he had such powers he insisted the “the business of reformation” could not be managed. (Page 57, emphasis added)
Congress agreed to these conditions, although not without opposition:
They saw in him the spearhead of a movement to overthrow the federal government and to establish a dictatorship. His fulsome protestations of disinterested patriotism did not convince his enemies, nor even many of his friends. (Page 57)
To give Morris the title of financier of the revolution is inappropriate. Jensen suggests the myth is absurd, “if for no other reason than the fact that he did not take office until the revolution was virtually over.” He took office in September 1781, about one month before Yorktown! At the end of the Confederation, he stilled owed money to the United States. In 1790, the books of the government showed him to be the largest individual debtor. (Page 57, 60, emphasis added)
Meanwhile, the Articles of Confederation were finally ratified – the nationalists were not overjoyed, given the decentralized political nature established. They immediately went to work to rectify this shortcoming:
…as soon as the Articles were ratified, a committee of three outstanding nationalists – James M. Varnum, James Duane, and James Madison – was appointed to prepare a plan for “carrying into execution in the several states all acts or resolutions passed agreeably to the Articles of Confederation.” (Page 59)
This committee came up with a doozy:
The amendment they proposed would allow Congress to use the army and navy to enforce its decisions upon the states, seize their vessels, and prohibit their trade. (Page 59)
Their report was suppressed and their recommendation not ratified, however their activity continued through other channels. Again, the key man was Robert Morris.
Three days after Morris took office, he presented his scheme for the Bank of North America. He had a difficult time finding subscribers for the shares. To make a long story short, he used funds borrowed from overseas on behalf of the United States to capitalize the bank; he then used these capital base afforded by the co-opted government funds to begin to lend to the government! (Page 61, 62)
He brought in his closest friends as partners. Together they controlled more than half the bank’s stock. Once the war was concluded and Congress shifted back to those that favored a subservient central government, the bank ceased to operate. (Page 63)
War was the health of the state, even in 1781, and the nationalists were well aware of this opportunity! Gouverneur Morris wrote to General Greene:
“…we have that great friend to sovereign authority, a foreign war.” But if the war were to stop he said that he had little hope that the “government would acquire force.” (Page 66)
Robert Morris and George Washington agreed with this view: desiring the central government that war would bring, while at the same time wishing for an end to the war. (Page 66)
Other actions were taken. The nationalists looked at the possibility of bringing together the army – with its members that were owed back pay and who also dreamt of the possibility of life-long pensions – and the creditors: an early type of military-industrial complex almost two centuries before Eisenhower’s warning.
They began this work in early 1783. Members of the military held official meetings with Congress…
…but…also engaged in unofficial meetings with some of the nationalist politicians, including Robert Morris, Gouverneur Morris, Alexander Hamilton, and James Wilson. Such men saw in the clamors of the creditors, and the discontent of the officers, an opportunity to unite the two groups to secure national revenue, and even, perhaps, the kind of government they had been unable to get by either constitutional amendment or interpretation. (Page 69)
It was these backroom and unofficial meetings that the agenda was established. The army decided to throw their lot in with Congress for the settlement of accounts, and not the individual states – the desire was to establish a permanent national revenue. This was backed with a threat regarding the possible actions that disgruntled soldiers might take absent Congressional action. (Page 69, 70)
The key figure, according to Jensen, was Washington. He refused to believe that the discontent within the army was as significant as presented:
…he charged that the whole affair was a plot of the politicians in Philadelphia, a charge that was sound, for the army officers alone would not have planned or even dreamed of carrying out such a scheme, nor had that been their intention when they sent the delegation of three to Congress. (Page 71)
…in a dramatic speech to the officers [Washington] defeated the scheme, for without him and the officers who were sure to follow him, nothing could be done. (Page 72)
Those in favor of national revenue worked through other means as well, proposing that Congress have the power to levy a five percent impost on foreign goods. Further, Congress should assume the debt accumulated by the states in fighting the war, and making population rather than land value the basis for apportioning expenses. (Page 74)
Thomas Jefferson was in favor of the national assumption of debt: “…the conversion of state into federal debts was one palatable ingredient at least in the pill we were to swallow.” (Page 75)
Many saw such a scheme as a plan to undo the revolution – keep in mind the two main factions of the revolutionaries; yet these ideas seemed “in the minds of some to prevail over every other consideration…” according to Jonathan Arnold of Rhode Island. (Page 76)
The calamity regarding the settlement of accounts with the soldiers butted up against the reality of the formal end of hostilities. Washington suggested interim measures – including three months’ pay in order that the soldiers returning home would not be reduced to beggar status.
For Hamilton, who was, behind the scenes, agitating for the army to take a more aggressive position, Washington was quite direct. Washington viewed Hamilton’s letters “with astonishment and horror…the idea of redress by force, is too chimerical to have had a place in the imagination of any serious mind in this army.” (Page 79)
Washington and many officers were suspicious that they were being used for the purposes of establishing central revenues – with Robert Morris suspected of being at the bottom of the scheme. (Page 79)
By June 1783, the army disbanded without final settlement of accounts – the nationalists could no longer hold the army together. With the end of the war, the nationalists also returned to civilian life – without war, they had little chance to secure the coercive central stated of their dreams.
The nationalists had realized ever since the battle of Yorktown that the end of the war would mean an end of their greatest hope for constitutional revolution. Their arguments for centralization and the supposed efficiency and economy that would result depended heavily on the continuation of the war, and they knew it. (Page 66)
The nationalists who ruled Congress from 1781 to 1783 had not achieved their ends. Their constitutional theories, their proposed amendments, and even the desperate hope of actual military revolt had all been shattered by the winning of independence itself, without the adoption of any of the measures which they had insisted were indispensable for the winning of it. In a way, they had discredited Congress among the people by their insistence on gathering power to it. The people, so far as they had fought for independence, had not fought for the independence of a vague entity known as the United States, but for the independence of their own particular states. (Page 83, emphasis added)
A strong centralized government was not necessary to win the war against what was then the most powerful military in the world.
Yet, in this story, the lines of debate for the coming years are in plain view. The nationalists, from before the firing of the first shot, had every intention for “independence” to mean independence from England such that the sheep could be sheared by the local oligarchs, whereas the federalists fought for truly independent states.
And with this comes the end of the war period and the beginning of life as several independent states within an independent nation, a period that would last for only a few short years.