The connection of America’s “political economy” with its ideological origins drove political movements of the late eighteenth and early nineteenth centuries. Some observers worried that the growing market economy threatened Republicanism, as “revolutionaries were acutely aware of the moral dimensions of economic life.” Drew McCoy’s The Elusive Republic: Political Economy in the Jeffersonian America explores debate around and the influence of economics on post-Revolutionary America
The American economy proved an area of conflict among political leaders. Thomas Jefferson and James Madison promoted an agricultural economy in which household manufacturing played a key role. Foreign markets emerged as important in order to provide small farmers with a market for surplus crop production. However, Jeffersonians feared the importation of manufactured goods as well as the development of large scale manufacturing. Imported “luxuries” promoted corruption, decaying the virtuous citizenry needed for a Republic. Moreover, the Jeffersonian view suggested this type of manufacturing dehumanized the poor, creating inequalities. Federalists, most obviously Alexander Hamilton, believed that “luxuries” and large scale manufacturing signified the growth of civilization. The need to acquire luxuries served as a motivation for work and entrepreneurship. Hamilton viewed the creation of debt by large scale manufacturing as symptomatic of global trade of the time. Where Federalists believed the international markets remained dominated by Europeans, Jeffersonians hoped to reorient such trade through American economic policy but failed to grasp the overwhelming influence of mercantilism on markets.
Ironically, Jefferson’s Louisiana Purchase, which he hoped would maintain America’s youth, contributed to the exact economic forces he hoped to stem. Slavery expanded into the region depriving many yeoman farmers of land, while fueling the nation’s drive toward large scale manufacturing. By the War of 1812, opinions had shifted among Jeffersonians. The economic/political system proved to the corrupting factor rather than the economy itself, “The culprit was usually a mercantilist system of political economy.”