YET FOR ALL his talk of doing things the same way again, Clay learned much from the war. He had entered politics a traditional Republican, enamored of the small-government, states’ rights philosophy of the party’s founder, Jefferson. But his Republicanism had included a belligerent streak, which accounted for his emergence as the leader of the war hawks. The belligerent streak by itself tested the Republican philosophy, for war is an exercise of government power beyond almost any other, and the power exercised is that of the central government, not the states. The experience of this particular war convinced Clay of the need for a broader view of government power.
The revelation was most striking in the realm of finance. Clay had been a boy when Congress first debated and then approved a national bank, the Bank of the United States. Brainchild of Alexander Hamilton, the bank became an adjunct of the federal treasury and the manager of federal funds, as well as the overseer of what at the time passed for monetary policy. Republicans decried the bank as unconstitutional and illustrative of the stranglehold the propertied classes would impose on the ordinary people of America if allowed. Corporate charters in those days typically expired after a set period; the bank’s 1791 charter ran out in 1811. By then the Republicans controlled Congress and the presidency, and they surprised no one by refusing to renew the charter.
Then came the War of 1812, which changed many Republican minds, including Henry Clay’s. The war created strains the treasury had never experienced, and those strains were transmitted to the state banks that held the treasury’s accounts. In many cases the state banks buckled, throwing the system of revenues and expenditures into disarray. By war’s end even Clay, who had staunchly opposed renewal of the national bank’s charter, concluded that a new national bank was necessary.
The rethinking required justification, because it represented a complete reversal of his former stance. Clay acknowledged his change of mind, although he imputed it to altered conditions. “The Constitution, it is true, never changes; it is always the same,” he told the House in 1816. “But the force of circumstances and the lights of experience may evolve to the fallible persons charged with its administration.” In 1811, America had been at peace; the modest resources and powers of state banks had sufficed for the nation’s fiscal needs. Within a year the country had gone to war, and suddenly the government found itself having to make unprecedented transfers from one region to another—from the East Coast, for example, where taxes were collected, to the Western frontier, where the army was deployed. Without a national bank, the funds had to be transferred from one state bank to another and another, with the chain of institutions being no stronger than its weakest link. As the weak links gave way, evil ripples racked the system as a whole. The war effort suffered badly. Soldiers weren’t paid; suppliers were shortchanged; lenders ran away from the government. “The state of the currency was such that no thinking man could contemplate it without the most serious alarm,” Clay said. “It threatened general distress, if it did not ultimately lead to convulsion and subversion of the government.”
The nation had survived the war, but it might not survive another without reform of its finances, Clay said. Beyond this, he cited aspects of the constitutional argument for a national bank that had seemed uncompelling to him previously. In Clay’s time the federal government issued only metal money: gold and silver coins, called specie. Paper currency was the responsibility of banks, which promised to redeem their notes in specie. But some banks’ promises were more reliable than others, and the value of their notes differed accordingly. The promise of the Bank of the United States had been the most reliable of all; its notes had served as a national currency. Clay now judged the bank’s reputation and notes necessary to the nation’s general welfare. “The want of a general medium is every where felt. Exchange varies continually not only between different parts of the Union but between different parts of the same state, and even different parts of the same city.” The fluctuations and uncertainty inhibited commerce and investment and weakened the Union. Reestablishing the national bank would have the opposite, beneficial effects.
CONGRESS WAS PERSUADED, and in 1816 it established the second Bank of the United States, with a new twenty-year charter. Clay then turned to a second item in what he was beginning to conceive as his nation-building agenda. Republicans had long looked skeptically on federal spending for internal improvements, as roads, bridges, canals and other aspects of transportation were collectively called. Their objections were both constitutional and fiscal. The constitutional complaint was that road building exceeded the federal charter; if people wanted public roads, they should look to the states. The fiscal complaint was that federal roads required federal taxes, which shouldn’t be higher than absolutely necessary.
Most Republicans continued to oppose a federal role in internal improvements, but not Henry Clay. And he dissented from the orthodoxy on grounds that made the states’ rights men especially queasy. “What was the object of the convention in framing the Constitution?” he asked the House rhetorically, referring to the Philadelphia meeting in 1787. “The leading object was Union.” Clay cited a letter written by George Washington that accompanied the Constitution as it was sent to the states for ratification, in which Washington had proclaimed as the greatest of American interests “the consolidation of our Union, in which is involved our prosperity, felicity, safety, perhaps our national existence.” Speaking in his own voice, Clay continued, “Union and peace were the great objects of the framers of this Constitution, and should be kept steadily in view in the interpretation of any clause of it. And where it is susceptible of various interpretations, that construction should be preferred which promotes the objects of the framers of the Constitution.” Turning to his specific subject, Clay read from the Constitution itself: “Congress shall have power to establish post offices and post roads.” That is, Congress could appropriate funds to build post roads, it could award contracts, it could purchase land for the roads, and so on. To this none could reasonably object, Clay said. Nor could a reasonable man object when, once the post roads had been built, they were opened to people and purposes other than mail carriers and the transport of mail.
Returning to his theme of Union, Clay observed that nothing promoted union like easy transport and communication. Already the states that traded with one another, whose inhabitants traveled from one to the other, felt an affinity not shared by those who didn’t. The larger the realm of trade and travel, the broader the affinity. Moreover, said Clay, members of Congress must think not merely about the current generation and the country as it then existed but about future generations and the country as it would become. “We are not legislating for this moment only, or for the present generation, or for the present populated limits of these states; but our acts must embrace a wider scope, reaching northwestwardly to the Pacific and more southwardly to the river Del Norte”—the Rio Grande. “Imagine this extent of territory covered with sixty, or seventy, or an hundred millions of people.” Clay hoped that the moral sentiments that bound Americans together now would persist. But one day they might weaken. Congress must plan for that moment. “The man who does not look forward to another state of things, when physical causes will have their influence, is unworthy of having a place here.” Physical causes—the force of gravity on flowing streams, the discouragement of distance—would tear the nation apart unless the government moved to counteract it. Well-built roads, bridges and canals would counteract the rending forces. “Could then a better basis for the union, a stronger tie to connect the various parts of the country together, be conceived?”
Clay remarked that better roads would provide for the common defense by facilitating the transport of troops and provisions in the event of war. Nothing was more obviously authorized by the Constitution, whose preamble used that very phrase—“the common defense.” Clay considered how certain campaigns of the recent war would have differed had American troops been able to move more swiftly from one threatened spot to another. Military intelligence, the knowledge of where an enemy was and where he might strike, would be more rapidly disseminated over better roads.
Clay reminded his fellow members, many of whom were lawyers, that they should interpret the Constitution not as lawyers but as public servants. “You are not to look at that instrument with the eye of an ingenious advocate, who is seeking to screen from merited punishment a convicted felon. You are to take into the view the great destinies of our country.”
CLAY’S QUEST FOR internal improvements would be a continuing battle. Congress had funded the Cumberland Road, from the Potomac River to the Ohio, in the first decade of the nineteenth century; the road was extended in later installments. But other projects, including those in a measure Clay promoted in 1817, to be underwritten by profits from the new Bank of the United States, failed to overcome resistance from unreconstructed Republicans, from Easterners who refused to support projects that benefited the West primarily, and from stakeholders in businesses that benefited from existing transportation routes and modes.
The third front in Clay’s nation-building campaign saw fighting that proved the most dangerous of all. The American Revolution had originated in disputes over taxes, including import duties, or tariffs. Tariffs were an attractive source of revenue for governments, for two reasons. They were essentially sales taxes and consequently could be avoided by those most stubbornly opposed, by the expedient of not purchasing the goods on which the tariff was levied. And they could be conveniently collected at a few ports of entry. But tariffs were complicated as well. They could be devised to maximize revenue, or they could be designed to discourage imports. In the latter case rates would be high, deterring importers; in the former they would be lower, encouraging imports while taking a small bite from each.
Henry Clay favored high rates. His goal was not revenue but deterrence, although he phrased it more positively, as protection of American producers, principally manufacturers, from foreign competition. He justified protection as a way to diversify and strengthen the American economy, as well as to reduce the entanglements that had spawned the recent war. America had historically been a supplier of raw materials to Britain and other countries, he told the House. This arrangement had suited America when its population was small and its talents few. But times had changed. The country had grown to nearly ten million inhabitants, and its talents had multiplied commensurately. “A new epoch has arisen, and it becomes us deliberately to contemplate our own actual condition, and the relations which are likely to exist between us and the other parts of the world.” Evidence of the new order abounded. Cotton glutted the market, with American production outpacing European consumption. Tobacco had passed its peak, with prices falling similarly. So long as American producers depended on European consumers, the problem would get worse. The American economy must become more self-contained, more self-reliant. Instead of selling raw cotton to England to be made into cloth and clothing that England then sold back to America, American planters should sell their cotton to American textile makers, who would produce the finished goods to sell to American consumers.
Clay compared the national economy to a household. Isaac Shelby was a Revolutionary War hero, the first governor of Kentucky and a beloved figure in the state’s history. Clay held him up as a model of economic self-reliance. Taking his listeners on a mental visit to Shelby’s Lincoln County farm, Clay explained, “You will behold every member of his family clad with the produce of their own hands and usefully employed, the spinning wheel and the loom in motion by day-break. With what pleasure will his wife carry you into her neat dairy, lead you into her store-house and point to the table cloths, the sheets, the counterpanes which lie on this shelf for her daughter Sally, or that for Nancy, all prepared in advance, by her provident care, for the day of their respective marriages.” Clay contrasted this thriving model with the sorry state of the farmer who produced solely for commerce, made nothing for himself or his family, and so relied on merchants and manufacturers. “You will find him perhaps in the tavern, or at the shop at the cross-roads. He is engaged with the rum-grog on the table, taking depositions to make out some case of usury or fraud. Or perhaps he is furnishing to his lawyer the materials to prepare a long bill of injunction in some intricate case. The sheriff is hovering about his farm to serve some new writ. On court days (he never misses attending them) you will find him eagerly collecting his witnesses to defend himself against the merchants’ and doctors’ bills. Go to his house, and after a short and giddy period, when his wife and daughters have flirted about the country in their calico and muslin frocks, what a scene of discomfort and distress is presented to you there.”
Clay’s metaphor got the better of him here; he wasn’t contending that Americans should spin their thread and weave their cloth themselves individually. But they should spin and weave for themselves collectively, and not depend on British textile makers. Clay identified three inventors as having created the modern era of economics: Richard Arkwright, the father of the spinning frame; Eli Whitney, crafter of the cotton gin; and Robert Fulton, builder of the first successful steamboat. The second and third were Americans, and Clay thought this proportion indicative of America’s industrial promise. But the promise had to be nurtured. The American government must protect young industries from predatory competition. The appropriate means was the tariff.
The most advanced economic thinking of the day took the opposite view. Adam Smith had won converts in Britain to free trade, and their views were echoed by American shippers and others interested in trade for trade’s sake. When American industry matured, Clay said, free trade might be appropriate. But for now its chief result was to enrich British producers at the expense of American consumers. And at the cost of American self-reliance. “The truth is, and it is in vain to disguise it, that we are a sort of independent colonies of England—politically free, commercially slaves,” Clay said. Advocates of free trade asserted that it made Americans better off by bringing them foreign goods produced more cheaply than Americans could produce those goods. This reasoning was facile and myopic, Clay rejoined. “If the governing consideration were cheapness, if national independence were to weigh nothing, if honor nothing, why not subsidize foreign powers to defend us? Why not hire Swiss or Hessian mercenaries to protect us?” Clay observed that the advocates of free trade didn’t practice themselves what they preached to others. The British demanded the right to sell their manufactures in America while barring American grain from being sold in Britain. Nor was Britain alone. “All other countries but our own exclude by high duties, or absolute prohibitions, whatever they can respectively produce within themselves.” The free traders were not realists but utopians. “They tell us of what has never existed, does not exist and perhaps never will exist.”
The advocates of free trade argued that it would make the world more peaceful. Clay saw scant evidence of this effect. Just the opposite had occurred in the genesis of the late war. America’s overseas trade had prompted the British to try to stifle it, compelling America’s eventual belligerent response. Trade competition begot trade wars, which spawned wars of lead and powder. “Foreign commerce is the great source of foreign wars,” Clay summarized. And once war broke out, a country that relied on trade would find that trade cut off, as had happened to the United States in the war against Britain. Dependence on foreign commerce was dangerous. Conversely, cultivation of domestic commerce would have positive effects. Southern producers of cotton currently looked to Liverpool for their markets. Let them look to Philadelphia and New York. Mutually beneficial ties would knit North to South.
The protected world of Clay’s vision clashed against the unprotected world he actually witnessed. He recounted a visit to New England. “In passing along the highway, one frequently sees large and spacious buildings, with the glass broken out of the windows, the shutters hanging in ruinous disorder, without any appearance of activity, and enveloped in solitary gloom. Upon inquiring what they are, you are almost always informed that they were some cotton or other factory, which their proprietors could no longer keep in motion against the overwhelming pressure of foreign competition.”
The pressure wouldn’t ease, Clay said, nor the American economy fulfill its natural promise, until the government took steps to protect American industry.