Overview of the Two Jefferson Administrations (1801-1808)

Jefferson’s approach to the Presidency reflected his preference the national government should not, unless required to, assume leadership in areas of public policy. The Kentucky and Virginia Resolutions clearly reflect his belief in the sovereignty of states in anything other than federal constitutional  enumerated powers. Economic development, however defined, was not an enumerated power. As to bending the definition of enumerated powers, in a simplistic sense that was the issue regarding his fight with Hamilton/Washington over “implied powers”. Jefferson previous to assuming office was also clear that any assertion of implied powers should be as narrow and as few as possible.

On top of this, Jefferson advocated a limited government–at all levels.  and on this belief he was more consistent. He desired to pay off the existing federal debt as rapidly as possible, and obviously did not wish to enlarge that debt by “excessive spending”. He cut national defense (the Navy’s budget, removed surplus employees (conveniently Federalists), and even fired hundreds of tax collectors. The hated whiskey tax, for example, was terminated, along with other taxes and fees. He also embarked on a famous attack on Adam’s “midnight” judicial appointments–not only because they were federalists, but also to limit the power of the Judiciary, the third branch. In Jefferson we can see the contemporary “the government is not the solution; it is the problem” mentality. This too carried over into economic development.

To the extent economic development was pursued, his inclination was that it be led by the private sector, private individuals, and not by government, and whenever possible not conducted by private-public partnerships as implemented by an EDO such as the federal/state chartered corporation. Jefferson had used a state-chartered corporation to establish a university; he also invested in and politically supported Washington’s (and others) canal and transportation chartered corporations, and had actively worked with the Washington D.C. (Federal District) Commission. That involvement must be tempered by the realization that in this time period there were few realistic structural/organizational alternatives. In his era of limited government, the private sector needed a structure to conduct its and public-related activities. From today’s perspective, even the Washington D.C. Commission was privately operated, and worked through contracted services–including slave labor.

This combination of values and expressed policy preferences does not seem to be much of a recipe for a strong aggressive role by the federal government in economic development–and in general that seems to be a fair description of how his administration handled the economic development policy area. In this, Jefferson’s D-R administration was a huge contrast to the Washington-Hamilton Federalist Tribe. If he was unwilling to repudiate that Federalist agenda as already enacted into law, public credit and banks for example, going forward it is reasonable to expect Jefferson’s ED agenda would be limited, and secondary to other policy areas. That Jefferson saw economic development, including and maybe especially, the provision of developmental transportation infrastructure as a state responsibility, explains his usually tortured and reluctant federal entry into that strategy and policy area.

As we shall see in the implementation of Gallatin’s powerful national developmental infrastructure plan, federal talk did not carry with it federal dollars, and events, in any case quickly moved it off the national agenda. Events, it turns out, were his chief problem in leaving ED to state policy agendas. Like Washington he came to realize that economic development was the other side of the coin in foreign trade, and westernization (access to and settlement) of the trans-Appalachian/east of the Mississippi River territories) was an important national defense strategy. Hostile external global politics and threat of war forced his participation in policies, legislation, and actions that translated into serious economic development implications, if not strategies. Accordingly, what economic development his administration engaged in, it was mostly through the back door of national defense and the conduct of foreign policy. Exceedingly reluctant to provoke other nations, he was not inclined to enter an arms race by building up the American navy. He embraced a non-intercourse act and then economic embargo instead. Both divided his own party and certainly agitated the Federalist and the merchant/trade/finance business sectors. It also negatively affected a federal budget based disproportionately on custom duties and tariffs.

Foreign Trade

Foreign policy and external relationships, of course, no matter Jefferson’s preference regarding where public policy should take place, was an obvious national prerogative and responsibility, as was national defense. During his administration, foreign policy easily was the most pressing concern of the fragile and insecure United States. The European world was at war, and our nation was bordered by France/Spain and Great Britain–the warring parties. Britain, our strongest economic trading partner, was perceived by many, including Jefferson, as a hostile power, whose tyranny we had just escaped. We escaped that tyranny in large measure through monetary, political and most of all military assistance from France. Washington’s policy of neutrality, was tenuously administered, but Jefferson semi-openly tilted his neutrality toward France–at least Great Britain perceived it as such. Relationships with Great Britain, ranging from impressment of sailors to boycotts and continental embargoes (imposed by both sides) created one crisis after another.

Most critically, Jefferson’s foreign policy, which when possible, assumed an anti-British tinge, meant the loss of practically the only disposable investment capital available to American entrepreneurs, manufacturers, and infrastructure. Yet, even newly-founded banks, as well as the national bank, relied heavily on British capital. As relationships with Great Britain deteriorated, British capital dried up. That forced a more rapid development of an American finance system, the formation of commercial banks, the issuance of stock for the formation and operation of business enterprises, the accelerated use of proto-stock exchanges, and creative opportunities to conduct trade (i.e. smuggling) which produced something akin to entrepreneurism.

Conversely, the inability to export agricultural produce crippled plantation-based agriculture, and drove that economic base into recession, if not depression. Since that business model depended on the import of luxury as well as necessary goods and tools, those economic bases were devastated. Trade between North and South far from robust previous to 1800, was not an easy solution. Coastal trade was expensive, dangerous especially in winter and stormy seas, and time-consuming. North-South roads were even worse, if they existed at all. Thus, semi-paradoxically, Jefferson’s chronic anti-trade policies forced both North and South into an accelerated development of the capacity to make their own goods and materials, providing entrepreneurial opportunities and creating local markets, and encouraging capital accumulation and commercial finance institutions and practices–i.e. Jefferson unwillingly (to a certain extent unwittingly) was using the federal government to expand the role of finance and manufacturing capitalism in the United States, while importantly constraining the expansion of agricultural economic bases. Talk about a back door!

These boycotts and embargoes drew Jefferson into using the power of the federal government to encourage American manufacturing and American-produced goods.


Jefferson’s policy on manufacturing is totally ignored today. Jefferson as we pointed out previously, was not a Never-Manufacturer. Always given to hyperbole in his writings, particularly after he retired, Jefferson in governance and in his own personal investment and gadget inventor proclivities was constantly involved in agricultural/manufacturing ventures. Whether he wrote of manufactures, the proletariat, or the cities in which both flourished as the dens and works of the devil and the decline of civilization and humanity (of which several quotes to that effect abound), his administration presided over the expansion of each. Make no mistake, Citizen Jefferson privately was no fan of industrialization, banks or Big Cities, but as President his administration wholeheartedly fostered their development. His First Annual Message to Congress in 1801, updated in his 1803 Message asserts his public position on the matter:

Agriculture, manufactures, commerce, and navigation, the four pillars of our prosperity are the most thriving when left to individual enterprise. Protection from casual embarrassments, however, may sometimes be interposed.    

The pressure to do so was gathering considerable momentum as early as 1803 when a memorial from Philadelphia’s “artists and manufactures” association (President Benjamin Rush and Vice-President Trench Coxe–Hamilton’s Deputy Sec. of the Treasury) asserted that most imported goods could be made domestically if Congress simply restricted “unjust competition” from foreign manufactures. The memorial called to attention that Congressional action on that matter should not be limited to items of a “coarse” nature, but to luxury goods which offered domestic entrepreneurs the greatest potential to make profits and hire workers [99] Joseph Dorfman, the Economic Mind in American Civilization (Viking Press, 1946), p. 324.

During his administration, the D-R House of Representatives maintained an exceedingly active Committee of Commerce and Manufactures, and that committee performed “yeoman” work in handling “memorials”, i.e. requests for legislation or exemptions from law such as the embargo or the tariff. In 1804, its Chair, New York’s Samuel Latham Mitchill wrote the committee received from many sectors and industries requests for Congressional action  to “patronize their employments, and to increase their profits [by exempting] various imported raw materials, [or] that [imported] manufactures be subject to heavier or prohibitive duties… [or] that drawbacks be withdrawn from articles of foreign manufacture [and] exported again, and that direct bounties (incentives) be given. Congress has already rightly given much aid along these lines to encourage domestic manufactures in coarse articles. If we do not excel in the manufacture in the finer articles of cotton, silk, wool, and the metals” [99] [99] Joseph Dorfman, the Economic Mind in American Civilization, pp. 324-5

Coxe, who by 1804, called himself “a Pennsylvania Democrat”, and who held an important federal position in Philadelphia (Purveyor of Public Supplies) wrote in an published essay (blog) that the national “promotion of domestic manufactures  was good in itself and would force England to restrain her restrictions on the freedom of American commerce” [99] Trench Coxe, “An Essay on the Manufacturing Interests of the United States (Philadelphia, 1804, cited in Dorfman, the Economic Mind in American Civilization, p 326. . That blog ironically brought him criticism as he was accused of using his office to use federal monies to pay for buttons, and other English goods for the U.S. Army. The larger point of this dialogue is hopefully obvious–that manufactures as a means of national defense was a sound and proper national ED strategy–and that a robust debate on the matter had followed from Jefferson’s non-Intercourse Act. Indeed, by the end of his administration in 1809, Jefferson himself endorsed and approved a protective tariff whose purpose was the protection “of such manufactures as are obviously capable of affording to the United States an adequate supply“–having earlier in 1808 endorsed “the increasing application  of’ our industry and capital to internal manufactures and improvements” and offered there was “little doubt … that the establishments formed and forming–will–under the auspices of cheaper materials and substance, the freedom of labor from taxation … [and urging] “protecting duties and prohibitions … [be made] permanent[3] [Bruchey, pp. 19-122].

Gilbert Chinard, a biographer of Jefferson is more outspoken. These messages “could only mean one thing the President was not ready to depart entirely and radically from Hamilton’s policy of giving encouragement to manufactures” and “If it is true that during Jefferson’s administration industrial and agricultural interests clashed for the first time in America, I fail to see that the President [Jefferson] made any effort to favor agriculture at the expense of industry“. [6] Gilbert Chinard, Thomas Jefferson, the Apostle of Americanism (2nd Ed) Ann Arbor Mich, 1957.


As far as Tidewater Virginia elites go,  Jefferson and his D-R compatriots were “westerners”–at least compared to Washington and his Potomac “Royalists”.  When his father settled in Albemarle County, visits by Native Americans happened periodically, and as Jefferson grew up the region was still considered “border”. Lacking proximate access to coastal ports that accounts for Jefferson’s interest in canals and Washington’s Patowmack project–and his interest in the yeoman farmer. Unlike Washington, however, Jefferson stayed pretty close to home, and did not seriously venture into the trans-Appalachian interior.

A cluster of issues, events, and global realities, however, triggered mostly reactive policy initiatives during his two administrations.  Between 1801 and 1808 there was a lot going on and something was always going wrong out in the western interior–and opportunity also reared its ugly head from time to time. For all practical purposes the reader might think of the trans-Appalachian interior as “unsettled and loosely-controlled geographic areas”. Jefferson’s administrations and several southern states (Virginia, Georgia and the newly-admitted Kentucky and Tennessee) were the vortex of westernization during his administrations.

We ought not forget that the period witnessed the start of a surge of diverse ethnic migrations, into the American interior–reaching to the Mississippi River. Indeed, lost in the fog of history, is that this is the period that the Cotton Belt started.  In 1801 Congress liberalized the naturalization law to encourage more immigration. Whatever his private feelings on westward migration, settlement of these territories, in hindsight,  in my view was semi-anarchistic, chaotic, brutal, incredibly difficult and often sad for many involved, especially Native Americans. To me it resembles Joshua’s and the Israelite conquest, excuse me migration, into Canaan. That is a part of the Bible most do not dwell on, and likewise American history textbooks, but our euphemisms “westernization” and “settlement” mask some pretty rough, morally ambiguous and conceptually complex processes and events. While formally under the legal control of the national government–Congress specifically–these western territorial governments had not established very much “site control” which is probably just as well, in that there was some tendency to opportunism and outright corruption. They called this the “wilderness” for a good reason.

For Jefferson much of his almost compelled interest in these areas was that they not only were they rapidly being settled, prone to war, but they were politically unstable–not in a partisan sense but rather could be considered as opportunities to form a separate nation. This is what Washington most feared, and that fear was far from paranoid. Bordered by Spain who controlled the Mississippi River, and by a combination of Spain and France that controlled a land mass that included New Orleans at its mouth, straight through to Florida and Disney World, these so-called friendly foreign powers were naturally wary of potential threats from the United States–if the USA had tenuous site control, European nations had considerably less. Great Britain, at war with France and Spain, controlled the upper western geographies around the Great Lakes and the United States’ Northwest Territory. Through its alliances with Native Americans, the English were associated with constant war, ambush and retaliation of new cities and migrant households. Only with Jay’s Treaty in 1795 did the English abandon their New York and Ohio forts. When the War came in 1812, these were the early battlegrounds. However troublesome the English were, the Native Americans were the principal source of conflict. for some reason they were not especially welcoming to white invasion, excuse me, migration.

The unsettled territories were, of course, already settled, albeit not very densely. Land use pattern and culture probably precluded any negotiated solution, even if anybody had been so inclined. There were numerous treaties, the “Indian Reservation” a product of Henry Knox, Washington’s Secretary of War, was already the federal government’s preferred solution. Federal, as well as state militia. expeditions were relatively common, bloody, destructive, and brutal. Led by generals such as “Mad Anthony Wayne” one might not expect that as civilizing techniques, they had little to do with civilization, but became cornerstones of the nasty and often brutal strategy called Indian Removal. This strategy, carried out by states as well as the federal government, was frequently employed after the Native Americans had been subdued militarily, and was exercise to make Native American land available for white European settlement. While Indian Removal is seldom considered as a formal ED strategy, it is fair to say it is a precondition for one–and thus, if only by guilt of association, Indian Removal has become a part of our ED history. The reality of the day, however, is that Indian Removal was viewed as economic development. As to Thomas Jefferson, despite ample sympathetic writing on the matter, his actual policy regarding Indian Removal was little different from Washington’s. Like Maria Theresa who cried while she invaded Poland, Jefferson lamented but did nothing to stop the removal or even limit the warfare. Consider for example his Louisiana Purchase–more to follow below.

Because the territories were wilderness, isolated wilderness at that–you couldn’t get there from anywhere–they were de facto autonomous and while governed by Congress were ungoverned in their day to day existence. Not surprisingly, many of these territories formed their own governments, and a State of Franklin had been attempted in western Tennessee as early as 1786. Most of these border areas were hotbeds for Whiskey Rebellion-like insurgencies–and fodder for D-R political campaigns. Older states often asserted land claims that would have extended to China if the Pacific Ocean had not gotten in the way, sometimes were reluctant to turn over these lands to the federal government. Georgia’s Yazoo Affair was a serious example of this and that compelled Congressional action during Jefferson’s administration. What usually happened, especially in the exceptionally loose federal control outside the Northwest Territory was massive land speculation, land sales bubbles, and incredible corruption that reached to the highest levels of government. We will deal with these in our various modules dealing the state settlement and establishment of state policy systems.

Adding to this chaos was, during Jefferson’s first term, an attempt by his Vice-President (Aaron Burr) and the Commander-in-Chief of the American Army to form an insurrection, make a deal with Spain, to create an independent nation in the western territories. By today’s standards this seems rather incredible, and not surprisingly Jefferson frowned on it when he found out about it. He immediately commenced impeachment proceedings on Vice-President Aaron Burr for treason. The trial, however, was badly managed. John Marshall, Chief Justice of the  Supreme Court–a Federalist– presided and found Burr innocent–although he was guilty as hell. Burr continued on as Vice-President until tossed from the D-R ticket in the 1804 election. While all this was going on, Ohio  (within the Northwest Territory) was admitted into the Union in 1803, and was required  to devote 5% of the proceeds resulting from sale of its government lands to fund roads. In that legislation Jefferson also inserted a clause that made those roads a part of what later was called “the National Road”. In 1806, Congress legislated that Maryland do the same.

Meriwether Lewis

As important and impactful as the Louisiana Purchase was to our history–parts of twenty-six states were added to the Union, doubling the land area of the United States–the process by which it happened is not central to our economic development focus. Upon examination, the purchase was not consciously planned, more an accident–with France having suffered through a yellow fever epidemic in Haiti fighting Toussaint L’Ouverture’s Haitian War for Independence–it no longer wanted to maintain control over Haiti and was disillusioned with the prospect of tying down hordes of soldiers needed to fight in Europe. Jefferson was handed the Purchase Agreement by his ambassador–not even knowing it was being negotiated. The tears and had-wringing that Purchase Agreement caused Jefferson considerable angst–he doubted whether the Presidency and the Constitution (implied powers deja vu) allowed him to do so. Not surprisingly, he came around and signed the Purchase–which despite its seeming merits was not viewed well by many Federalists, and D-Rs. Nevertheless, the Louisiana Purchase proved the single most important acquisition that transformed the fragile United States into a transcontinental nation.

Général_Toussaint L’ Ouverture

Without doubt the Purchase reduced the threat of a European invasion, and Texas aside, ended the threat of Americans forming a separate nation on our border. Most importantly the great port of New Orleans, which would soon become the export and trade capital of the King Cotton Deep South, was acquired. Overnight New Orleans became the largest urban settlement south of the Mason-Dixon line. Not content with that, Jefferson dispatched his Personal Secretary, a childhood friend and neighbor, Meriwether Lewis to find a route to the Pacific–with clear purpose of uncovering if possible a “water route” so trade, commerce and expansion could be possible. Lewis recruited William Clark to actually lead the expedition.  The Lewis and Clarke Expedition was critical in discovering what was “out there”, dispelling some myths, and providing the first maps of substance that would unleash trans-Mississippi migration.

Internal Improvements/Developmental Transportation Infrastructure Strategy (DTIS)

Jefferson’s most interesting contribution to MED was his policy on internal improvements, expanding into the Wilderness, and connecting it to the emerging Big City urban dots. To make this possible, Jefferson did not shrink from allowing, if not conducting a sustained policy of Indian Removal.  Although very sympathetic to Native Americans, he nonetheless pursued an Indian Removal policy only slightly more tempered than Washington’s. In actual fact, that policy was dominated–and set in motion–by his outstanding Secretary of Treasury, Albert Gallatin. Following this section will be a detailed elaboration of that plan and subsequent action–a break out even in our American ED history.

A second major contribution to ED came in the form of an 1802 establishment of the Corps of Engineers, to be co-located at a separately-approved military and engineering academy at West Point. The two entities partnered, with elite graduates, such as Robert E. Lee, assigned to duties with Corps. Lee served nearly two decades of his career in that capacity. Primarily river and harbor engineers–which included coastal fortifications such as Fort Sumter–and after the 1820’s dams and levees on the Mississippi, the Corp became the federal government’s Department of Internal Improvements [12] Martin Doyle, the Source: How Rivers Made America and America Remade Rivers (W. W. Norton & Company, 2018), pp. 7-8.

Jefferson’s 1806 Annual Message to Congress

In the second year of his second Administration (1806) Jefferson and Democrat-Republican Congress ventured deeply into DTIS connect the dots internal improvements. Above we mention in that year, Congress adopted legislation authorizing surveying to lay a route for a National Road from Cumberland to the Baltimore–so to connect it with the road surveying and land dedicated to roads in the new state of Ohio. Previous to that in his (written) Annual Message to Congress Jefferson solidified his conception of DTIS in the Democrat-Republican policy agenda.

Opening this message with several pages that stressed national defense issues and problems associated with Spain and France on the Mississippi, he ordered to the banks of the Mississippi five hundred cavalry and sent gunboats to the Mississippi and New Orleans. He took further action against “private militia” who were organizing on the borders to invade Spanish territory (the Burr/Wilkinson insurrection). Moving from national defense, he next brought up the contributions of the Lewis and Clark (and Pike) expeditions into the Wilderness. He then observed that the “treasury runneth over” (my quotes), and that once debt had been repaid surplus funds exist. He poses the question to himself “What should be done?” He rejects a reduction in the protective tariff which has produced the surplus, and rather argues the excess monies be applied:

to the great purposes of education, public roads, rivers, canals, and such other objects of public improvement as it may be thought proper to add to the constitutional enumeration of federal powers. By these operations new channels of communication will be open between the States; their lines of separation will disappear and their interests identified, and their union cemented by new and indissoluble ties. Education is here placed among the articles of public care, not that it would be proposed to take its ordinary branches out of the hands of private enterprise, which manages better so much of the concerns to which it is equal, but a public institution can alone provide those sciences which, through rarely called for, are yet necessary to complete the circle, all parts of which contribute to the improvement of the country, and some to its preservation. … I suppose an amendment to the Constitution, by consent of the States, necessary, because the objects [of public care] now recommended are not among those enumerated in the Constitution, and to which it permits the public monies to be applied [4]. http://avalon.law.yale.edu/19th_century/jeffmes6.asp

Awkward by the standards of modern English, Jefferson’s message in a nutshell outlines the cautious, complex reasoning,  yet firm commitment of Virginia Tidewater Democrat-Republicans to DTIS and internal improvements, and a subtle, conditioned willingness of the federal government to participate in public-private endeavors (presumably using the only vehicle existing: the state-chartered corporation).

It is worth note that the lead-in to the internal improvements strategy was national defense. The need to connect the dots amid a hostile and volatile foreign environment that sparked an internal “mutiny” by Burr and the Army’s Commander-in-Chief, as well as the need to tie the geographies together to forge a cohesive unity (Washington’s compelling bottom-line motivation) suggests why Jefferson and the Democrat-Republicans tempered their private discomfort with a larger public purpose: national survival.

It also by implication reaffirms their commitment to the “Two Regions” strategy which underlie the compromises that produced the Constitution. Unspoken is whether or not Jefferson, who through most of his Administration did not meaningful depart from George Washington’s views on manufacture and internal improvements, accepted Washington and his Federalist assertion of national leadership in those matters. A proposed constitutional amendment (never adopted) certainly suggests a permanent involvement at some level to these strategies.

The inclusion of education, certainly a precursor to the present day Innovation and Knowledge-based education paradigm, reflects its inclusion in the Articles of Confederation Northwest Ordinance, which when the Early Republic commenced in 1789, assumed as part of the fabric it inherited from the past.

The Senate responded to Jefferson’s Annual Message  in a directive to Albert Gallatin, Jefferson’s Secretary of the Treasury to:

plan for the application of such means as are within the power of Congress, to the purposes of opening roads and making canals, together with a statement [i.e. a Plan] of the undertakings of that nature, which, as objects of public improvement, may require and deserve the aid of Government {federal]. [5] Bruchey, pp. 119-20, citing Congressional missive.

The plan that Gallatin produced and submitted for execution, was partially attempted previous to the War of 1812. Funds for certain of its projects were authorized and subsequent action contemplated. The National Road in particular benefited from the Plan. The War ended its implementation, but the Plan survived and it became the basic backdrop for the implementation BY STATES AND THE PRIVATE SECTOR, for internal improvement for the next several decades.

Gallatin’s Plan

In 1808 Gallatin submitted his plan to Congress. Who is this “Gallatin”? By the time he was appointed to Jefferson’s cabinet in 1801, he had already made his mark in America. He was a Swiss immigrant, a surveyor by trade, who, as we describe in the module detailing George Washington’s Inward MED involvement, had crossed paths at a tavern with the Founding Father in the 1786 wilds of Kentucky. He in short order became a powerful D-R public official and elected leader in Pennsylvania–and by 1800 a national leader, a Congressman, and D-R Tribe spokesperson on affairs and matters money-related and economic development.

Previous to Gallatin’s Report, only two major canals of consequence had been completed–without public financial aid: the Santee from Charleston SC (1800), and the Middlesex from Boston to Lowell on the Merrimack River (1803) [6] Carter Goodrich, Government Promotion of American Canals and Railroads, 1800-1890 (Greenwood Press, 1960), pp. 20-1. State involvement in canal projects, at some level, was almost commonplace. Highways (turnpikes) and ferries were another matter–with extensive state and local involvement dating way back to the early 1700’s. As the reader may hazard an impression of the success of these efforts–that they had by no means connected the dots–and that connecting the dots remained a first priority in the minds of many, was the first subject tackled by the Report.

Gallatin assessed many such past projects with an eye as to how they could inform his report, and suggest issues which should be dealt with in his recommendations. Most of the insight and comments gleaned from analysis of past projects corresponded closely to what was probably a connect the dots paradigm of the period. National defense, internal prosperity, bind the Union, transcontinental expansion, and a means of internal communication as well as transportation. To the extent such projects crossed state boundaries, the need for federal involvement was imperative.

As for precedent for national leadership, Gallatin’s report asserted the sort of ongoing National Road, which Gallatin traced back to the Northwest Ordinance. How much of this is Gallatin personally, I would venture quite a bit. The analysis is not ambiguous in its ultimate course of action. The National Road, in particular, which in various forms had commenced as early as 1802 (under his tenure as Secretary), was the undisputed precedent for national leadership in internal improvements.

Also Gallatin’s Report emphasized the importance of technology and innovation as critical to the accomplishment of its goals and objectives. Included in his report are sections composed by Benjamin Latrobe (the father of American plumbing/hydraulics), and Robert Fulton, of steamboat fame. DTIS in the early, Early Republic context required large doses of innovation, experimentation and technology improvements if it was to be successful.

In 1805 Congress had further authorized federal monies for two canals, and more were advocated. [in a future model we will consider a more detailed description of these and other canals clamoring for public attention at the time; suffice it to say, Gallatin did not go into detail]. Gallatin’s near-opening line, “The general utility of artificial roads and canals is universally admitted” confirms our suspicion. Acknowledging that in some countries [Britain] “these improvements may often, in ordinary cases, be left to individual exertion, without any direct aid from government” that situation does not apply to his contemporary United States.

Stressing the need for internal communication, the “scale” or size of such improvements required of each project, the lack of domestic capital, and the sparse population which we earlier described as “there is no there, there”, it is very clear Gallatin is advocating such internal improvements constitute, as we have asserted, a particular form of infrastructure, developmental infrastructure that requires some level of government involvement. “The General [i.e. Federal} Government”, he states, “can alone remove these obstacles” with resources “sufficient for the completion of every practicable improvement. … No other single operation within the power of Government, can more effectively tend to strengthen and perpetuate that Union which secures external independence, domestic peace, and internal liberty“. Superman’s “Truth, Justice, and the American Way” couldn’t have said it more succinctly; the legitimization of the paradigm for internal improvements had been set in stone [7] [Goodrich, pp. 28-9].

As to the operating objective to be achieved by federal action is to “improve communications along the Atlantic seaboard, and to create means of communication that will reach the settlers beyond the mountains [Appalachian], and promote the development of the west[8] (Goodrich, p. 29). When contemporary economic developers think of the problems these folk faced, they are likely to think about the vast distances involved. True enough, but most of it was relatively flat–after you crossed the Appalachians. “Beyond the mountains”. Therein lies the problem that, like getting a rocket to the moon, challenged advocates for internal improvements for several decades. And, as we shall see in Theme 3, frustrated southern internal improvement projects–because as we shall see in this module, the North possessed a unique geographic advantage over the South–it’s called the Mohawk Valley.

Moon travel went from jets, to missiles, to rockets, and as we shall see Early Republic internal improvements started with canals (Gallatin’s mode), to steamboats, to railroads. But each had to confront overwhelming problems caused by geography–mountains and river flows. Henry Hudson merely searched for a northwest passage; internal improvement advocates had to invent engines, hydraulic locks/motors, and construction designs that could overcome Fall Lines, rapids, constant natural damage that necessitated chronic maintenance/repair, steep rocky grades, building tunnels through granite, and routes that defied profitability. There is literally “no there, there” on top of Old Smokey.

In short, for those of us that believe today’s technological challenges are different in kind and degree from those of the Early Republic, it is only because you have the advantage of hindsight, and the vast foundation of innovation on which today’s innovation rest. This is a pre-industrial time. Experiments then, as they do today, defied scalability, lacked market demand, and relied on other innovations before they could realize their full potential. And in the end, it usually came down to access to money. For those economic directors that think themselves as pioneers in innovation, entrepreneurship, disruptive technologies, look over your shoulder–you would see Albert Gallatin and his ilk.

Having said all this, I remind the reader Gallatin, his innovations, and his Plan was paid for by the national government. He left the implementation of the plan to states and localities–not because he wanted to, but because the War of 1812 got in the way, and the world was different by the time it ended. The legacy of Gallatin’s Plan was that it outlined where, and how several canals could cross through the mountains–it for instance anticipated the Erie Canal–which opened nearly twenty years after his report.

A series of private and private-public ventures built on his plan over the next three decades, and they did so, because as Peter Bernstein suggests, by “combining the interests of all [cities and states] in advance in one giant piece of legislation, the entire United States would be engaged in creating a single great system instead of a fragmented process in which the citizens of each state would be trying to get their hands on the money before some other state got there first[9] Peter Bernstein, Wedding of the Waters: the Erie Canal and the Making of a Great Nation” (W. W. Norton & Company, 2005), p. 112.

The Gallatin Plan was the nation’s first–perhaps only–true national economic development plan. And Gallatin being Secretary of the Treasury, with the support of his President and Congress, allocated money to its implementation. The report was not intended to spur debate, nor to sit on a shelf; it was intended to build canals that would be successful. He estimated costs, prepared a budget for each major project in his report (total cost about $20 million in 1808 dollars), and proposed to Congress an annual $2 million appropriation for each of the next ten years–which could be entirely covered by the then-current surplus raised by the tariff–no tax increase necessary, and no debt. Plan B was proceeds from sale of federal lands. Also, completed projects could be subsequently “sold” to private operators and investors.

Specifically, having identified the first-rate importance of a canal between the Hudson River and Lake Erie (actually two canals: one to Lake Ontario, and a second, bypassing Niagara Falls from Lake Ontario to Lake Erie). Recognizing that crossing the mountains was blocked by two Appalachian mountain ranges, and that barrier “in the present state of science” made the mountains impassable by canals, he then proposed an alternative.

Identifying four rivers that ran from the coast to the interior, he proposed canals and locks at key points to overcome specific barriers, returning to the river when and where possible–and connecting two separate river systems by canals. Instead of one long, and expensive, canal he proposed a hybrid river and canal system–that did not require “breaking-bulk”. The four river systems were the Allegheny/Susquehanna, the Potomac and the Monongahela, the Kanawha and the James (Virginia), and the Santee/Savannah.

On top of this, he proposed canals at critical breakpoints along the coast, from Massachusetts to Georgia, which permitted coastal trade to use canals and uninterruptedly be able to traverse safely the thirteen colony’s coastline–this, the reader might note, is an expansive present-day Intracoastal Waterway–a fifth hybrid water/canal system. And for good measure he referenced the ongoing National Road, and identified a second “vertical” highway running from Maine to Florida along the coastline–Route 1. Daniel Burnham, of “make no small plans” fame would have been proud. I am amazed he did not find a way to build a bridge to London.

There was a fly in the ointment, however. Without the constitutional amendment referenced in the previous section, the project necessarily would have to be constructed by the separate states and adjoining cities. No problem wrote Gallatin. We can deal with that. The promise associated with construction of any one of these projects would lead to intrastate cooperation, and the project cost–if federal monies proved constitutionally impossible–could be financed by the states, and/or by a public-private state-chartered corporation, which the state could subsidize by purchase of stock subscriptions–which, the Federal Government was already on record for participating, i.e. federal monies could be employed through the state-chartered corporation vehicle. To reduce the danger of local/state competition, the specifics of each route would be decided by Congress. Everybody had a piece of the action, a dog in the fight, and scissors to cut the ribbon.

As the reader no doubt knows, it all came to naught–WRONG!

Peruse, if the reader will, the concluding quote by Carter Goodrich which summarized the future after the war–and Jackson–took the feds out of the equation:

The four canals along the seaboard were all finally constructed, and today’s Inland Waterway, as well as highway and railroad connections follow the general direction of Gallatin’s proposals. On the more significant problem of connection with the west [crossing over the mountains] … the Erie Canal, and four of the five trunk-line railroads all took advantage of the openings suggested in the Report. Through changes in technology and economic circumstance [entered into the future equation, the subsequent reality] … corroborates the firmness of Gallatin’s grasp of geographic reality. [10] Goodrich, p. 33.

Jefferson’s Successors

A quick review of Jefferson’s successors will further confirm the durability of Jefferson’s commitment to internal improvements, despite the myth of pre-1828 Democratic-Republic opposition to them.

Madison on manufactures, Dorfman p. 326 *****

Monroe, in case you didn’t notice, approved in 1816 a Second Bank of the United States; the same year he signed the Tariff of 1816. His General Survey Bill contemplated a broad array of internal improvements with federal funding, and immediately authorized $300,000 (a formidable sum) to purchase the stock of the Chesapeake and Delaware Canal Company. He also signed into law the Tariff of 1824.

Even J. Q. Adams got into the ED act with his employment of Army engineers to survey railroad routes, clearance of the Ohio River, gave extensive land grants to Illinois and Indiana to build canals, made stock subscription purchase to the Louisville and Portland Canal, the Great Dismal Swamp Canal, and the Chesapeake and Ohio Canal. Anticipating Donald Trump, he raised tariffs in 1828. He also authorized a canal in Florida. Predictably, Adams, least of all this period’s presidents, endorsed internal improvements, and advocated the federal government ought take the lead in interstate projects. His first annual message to the Congress, asked Congress to debate:

‘the general principle’ of internal improvements ‘in a more enlarged extent’. The federal government should carry out ‘works important to the whole … and to which neither the authority nor the resources of any one state can be adequate’. Impartial and scientific judgement in the selection of objects [projects] would be provided by [a proposed] Board of Engineers for Internal Improvement. ‘The swelling tide of wealth’ from the sale of public lands would be made “to reflow in unfailing streams of improvement [a proposal to establish a revolving loan fund financed from public lands] from the Atlantic to the Pacific Ocean [12] Goodrich, p. 39.

Goodrich summarized this grandiose extension of the national government into S&L DTIS by stating “With the inclusion of the ideas of a great revolving fund, and of the planning agency, this may indeed be taken as the most ‘enlarged’ expression of the philosophy of internal improvements as a national system” [11] Goodrich, p. 39.

While Hamilton and Washington wanted a more aggressive role, the federal government run by Tidewater Democrats was no shrinking violent in regards to MED. It put its mouth where its money wasn’t.




Urban and State External MED Strategies

Connect-the=Dots (DTIS)–Developmental Transportation Infrastructure (Roads, Bridges, Rivers, Canals, Railroad, Airports, Highways



Regional Economic Integration

Population or People Migration

Competitive Hierarchies