RETURN The Republic Established 

Political controversy in the new republic centered on the contest between those who favored a strong central government which would actively participate in managing the economic development of the country and those who feared such a centralization of power. The federalist position was strongly promoted by Alexander Hamilton, who succeeded in getting Congress to establish a national bank, the Bank of the United States in 1792, which he hoped would be able to marshall large pools of financial capital with which to promote the development of American business enterprises. He also favored protective tariffs to stimulate the development of American manufacturing industry. Such an approach went down well in New York and most of New England. It was opposed, however, by many who spoke for rural and southern people fearful of the power being concentrated in the hands of bankers and other remote and inaccessible figures living in the great cities of the east. The anti-federalist position was ably led by Thomas Jefferson who favored an arms-length relationship between government and business and an essentially laissez-faire position on such issues. With the support of European ethnic minorities in the middle Atlantic states, most southerners, and a growing industrial labor force in the north, Jefferson prevailed, gaining the Presidency in 1800. 

Once in office, Jefferson and his Democratic-Republican followers set about dismantling the federalist-inspired apparatus of pro-active government, although his major accomplishment was the purchase of Louisiana from the French in 1803, virtually doubling the territory of the US and extending it to the Rocky Mountains. This was an important achievement, for, by obtaining title to the lands west of the Mississippi, Jefferson secured the interior from any possible foreign occupation of what was to become the great American western frontier. It fell to Jeffersonís successor, James Madison, to get rid of Hamiltonís Bank of the United States, whose charter was allowed to lapse in 1811. The following year the conflict between federalists and their opponents was re-ignited by issues of foreign policy, with the federalists opposing any escalation of the simmering conflict over trade with Britain. They lost and the United States once again declared war (the War of 1812) against Britain. Although the outcome of the conflict was ambiguous (American forces which invaded Canada were routed and Indians in the west fought effectively in alliance with the British while Andrew Jackson won a face-saving battle when the British tried to capture New Orleans) it was seen to be a repudiation of the federalist cause which thereafter ceased to be an effective force in American politics. Ironically, with the federalist opposition gone, the Jefferson Democratic-Republicans self-destructed as a result of internal conflicts and a new set of political allegiances began to emerge. 

With the end of war in 1814 the American economy was poised for a period of expansion. Although there is some uncertainty as to when the rate of growth began to accelerate, it probably occurred in the 1820s or 1830s. The cotton growing industry of the south boomed and large-scale cotton production spread rapidly through the fertile coastal plains of the Gulf coast. In the north, small independent farmers flooded into the rich corn and wheat producing areas of the Mid-West. The commercial viability of the latter region was enhanced by completion of the Erie Canal in 1825 which provided direct water transportation from the Great Lakes to New York, an effective alternative to reliance on the route down the St. Lawrence through British North American territory. The native population was relentlessly pushed out of the region east of the Mississippi, driven west or confined to reservations. Chicago emerged as the capital of the new Mid-West, providing transportation and commercial services to the frontier and a link to growing manufacturing centers of the east. As the frontier of agricultural settlement moved west, new states were rapidly created and brought into the union. 

During the first half of the 19th century economic growth in the US was dramatic, but uneven. A business cycle began to emerge, with prices and output rising strongly in the 1830s, slowing in the 1840s and recovering with even greater strength in the 1850s. Adding force to the often unbridled optimism which seemed to drive entrepreneurs during the period, the gold rushes and silver production from the western states helped expand the money supply, easing credit and encouraging investment. Although the statistical evidence is incomplete, it seems likely that the incomes of the vast majority of Americans increased substantially during this period of expansion. Recent empirical work by Robert Fogel on nutrition and the expectation of life in America over this period suggests that the improvement of living standards in the first half of the 19th century may not have been as real as some traditional accounts would suggest. Fogel presents evidence that the life expectancy of American-born while males increased during the colonial period, reaching a high of more than 56 years in 1780, but then declined quite rapidly until the middle of the 19th century, falling below 48 years by 1850. He also shows, using data from military recruiting records, that the average height in inches of American-born white males fell over the years from 1820 to 1880, declining from over 68 inches to 66.5. [See R. Fogel, "Nutrition and the Decline in Mortalilty since 1700," in S. Engerman and R. Gallman, eds., Long-Term Factors in American Economic Growth, Chicago, University of Chicago Press, 1986, Table 9.A.1.] 

Extensive growth of the American economy during the years to 1859 was supported by substantial increases in the territory available for development. Indeed, this territorial expansion was substantial enough to encourage some to believe that it was the nationís "manifest destiny" to assume control of all North America. In 1818 the 49th parallel was agreed to as the border between British North America and the US from the Lake of the Woods just west of Lake Superior to the Rocky Mountains on the west. The following year Spain gave up its claims to Florida and the Oregon territory and ceded these regions to the US. Texas, which had seceded from Mexico in 1836, was annexed to the US in 1845 and the following year the US invaded and went to war with Mexico over a continuing dispute concerning the Texas border. The conflict proved costly for Mexico which was forced to concede nearly 50 per cent of its territory (some 3 million square km., including Alta California and much of New Mexico) in return for trivial financial compensation. In 1846 the US acquired control of the Pacific Northwest by an agreement with Britain which located the US boundary with British North America in the Oregon territory at the 49th parallel. In 1853 the US purchased more territory from Mexico extending southward the boundaries of Arizona and New Mexico. By 1860 the union comprised 33 states stretching across the continent and from the Rio Grande to the 49th parallel. 

Population growth was also dramatic during the first half of the 19th century. Between 1820 and 1860 more than 5 million immigrants arrived in the United States. This high rate of immigration, combined with a high rate of natural increase to expand the population from less than 10 million in 1820 to more than 31 million in 1860. As communication facilities improved this population base provided a large and well-integrated domestic market, the needs of which could be met largely by domestic producers. Internal transportation costs were dramatically reduced by the investments made in canals and other improvements. The Erie Canal which linked Buffalo on Lake Erie to the Hudson River route to New York, for example, reduced the cost of transporting a ton of goods from New York to Buffalo from about 100 dollars to less than 8 dollars. (It was financed, interestingly, by state taxes and other local government fund-raising activities.) Whether the further growth of the economy would be best served by more or less government funding of investments in infrastructure, through protective tariffs, and other devices such as manipulation of money and credit, remained a major political issue of the day. 

The domestic political developments of the first half of the 19th century in the US brought about a restructuring of the political parties which had originally coalesced around the federalist and Jeffersonian differences in the early congressional sessions of the new republic. When President Andrew Jackson vetoed a new effort to re-establish the Bank of the United States in the 1830s he provoked a reorganization of the old federalist coalition which was reborn as the Whig party, committed to re-establishment of a national bank and protective tariffs. The Whigs were in favor of protective tariffs and other measures to stimulate economic activity (as well as action by state governments to restrict the consumption of alcohol and to strengthen the foundations of American society through such measures as indoctrinating immigrant children in American values and principles). Against the Whigs emerged a new incarnation of the Jefferson Democratic Republicans, now more clearly defined simply as Democrats, who stood opposed to central banks, tariffs, and anything else which dictated to people how they should work and live. The political party structure which was to dominate American political life was fully developed by the middle of the 19th century.