Connecting the Dots: The Foundation of American Empire
A Review by
Douglas S. Harvey, Ph.D.
The Whiskey Rebellion: George Washington, Alexander Hamilton, and the Frontier Rebels Who Challenged America’s Newfound Sovereignty. New York: Scribner, 2006. 302 pp. with biblographical essay and index
Declaration: The Nine Tumultuous Weeks When America Became Independent, May – July 4, 1776. New York: Simon and Schuster, 2010. 273 pp. with biblographical essay and index
Founding Finance: How Debt, Speculation, Foreclosures, Protests, and Crackdowns Made Us a Nation, Discovering America Series 5. Austin: University of Texas Press, 2012. 274 pp. with biblographical essay and index
Autumn of the Black Snake: The Creation of the U.S. Army and the Invasion That Opened the West. New York: Farrar, Strauss, and Giraux, 2017. 447 pp. with biblographical essay and index
Contrary to popular political pundit monkey chatter, the current political economy of the U.S. is not the result of the Bush Republicans, the Obama/Clinton Democrats, or even the Liberal/Conservative schism stemming from the New Deal era. The creation of the early American republic left numerous issues unresolved and set in motion machinery that has manifested itself in government by Wall Street bankers and war profiteers; a foreign policy dominated by militarism; and an economy hooked on war. By employing a potent combination of a close reading of the sources, good writing, and intellectual honesty, author William Hogeland connects the dots on the origins of corporate American hegemony.
William Hogeland is not a professional historian as defined by the discipline – no history Ph.D., no Ivy League pedigree, no professional association credentials, etc. He nevertheless demonstrates a deep knowledge of the literature on the American founding period and a commitment to a close reading of it, both primary and secondary. Hogeland does what many historians of the early republic have failed to do: he “connects the dots” from 1754 to 1795. The result has the effect of bringing this history out of the Ivory Tower, cutting through the mythical cloud of the “Founding Fathers,” and making it relevant to today.
The Forks of the Ohio in southwest Pennsylvania was a crucial point in American history. The Allegheny River flows down from the snow-laden, lake-effected forests south of Lake Erie and joins the Monongahela flowing up from the Virginia highlands to create the Ohio River. At this confluence today, the city of Pittsburgh looms over a space that witnessed the birth of the American Empire. This region was isolated from the Atlantic world – several daunting mountain ridges removed from the eastern seaboard. It was the southwestern territory of the Iroquois Confederacy, the major power of the region, until the late eighteenth century. The French, whose presence was felt for upwards of two centuries in North America, established themselves at the Forks by 1754. The Ohio Company, a real estate project launched by Virginia speculators, sent twenty-two-year-old George Washington to the Forks and beyond. Washington, realizing the immense value of the “Ohio Country,” dreamt of the wealth and status to be gained from speculation here. The Ohio Company objected to the French presence and Washington led a perfunctory effort to eject them. This clash triggered the French-Indian War, one of the largest wars in history at that time.
The debt created by this war, and the British attempt to have the colonists share in its maintenance, led to another conflict: a civil war in the British Empire that birthed the United States of America. This war was also expensive, and the new republic found itself in debt to an international array of merchant-bankers, including and especially American bankers led by the corpulent Robert Morris of Philadelphia.
In The Whiskey Rebellion, a story that covers the years from the end of the Revolution to 1795, Hogeland describes the result of the hegemonic dreams of the early republic’s economic elites. For his part, Washington had dreamt not of independence from Britain, but of rising in colonial society and becoming one of the planter elite, complete with a high officer’s commission. These imperial wars of the late eighteenth century were a vehicle for his rise. By the time he was an iconic general and President of the United States, the struggle for power in this quarter of North America was not only a struggle for imperial expansion, but a class struggle within the fledgling nation-state. An elite class of merchant-bankers had dominated British society since at least the Glorious Revolution of 1688. For those elites on the near shore – the bondholders of the new republic’s debt – the American Revolution had been about seizing control of the colonial economy and American expansion. There were those in the white working class, however, who dissented from this view. They felt that the Revolution had been about their right to rule the political economics of the new republic. Their idea of public finance – land banks, local currency, and the like – as opposed to banker financing, was anathema to the elites.
This rebellion, which encompassed most of the western country, had more to do with control of the public purse than it did with whiskey. It was a rebellion against the taxing power in new U.S. Constitution, which was not an expression of a democratic republic led by “We the People,” but an instrument legalizing the dominance of the merchant-banker class. The growth of this class over the previous eight hundred years is overlooked by Hogeland, and it would have been helpful to at least given it a nod. Nevertheless, Hogeland thoroughly explores the mechanisms whereby the merchant-bankers seized control of the Revolution. Robert Morris, (equivalent of the modern-day Jamie Dimon, Lloyd Blankfein, and Lawrence Summers rolled into one), and his wunderkind Alexander Hamilton, with the aid of the military’s loyalty to their fellow traveler Washington, were the central players.
The crux of The Whiskey Rebellion is complicated but critical to understanding the power and motivation of the merchant-bankers. To wit: bankers make money on interest from their loans as creditors; governments are the biggest debtors; the quickest way to send a government deep into debt is war. When war between the colonies and the Mother Country seemed inevitable, Morris and fellow financiers saw an opportunity for profit-taking. The Continental Congress, the quasi-government of the fledgling United States, tried to get financiers to assist their cause. They were unsuccessful until they offered six percent interest on bonds, the interest on which would be paid in Bills of Exchange. These Bills of Exchange were based on the accumulated wealth of established European merchant-bankers and could be exchanged for specie, i.e., gold and silver coin. Morris had secured a loan from France that facilitated the move. This was as secure as any form of exchange could be. Furthermore, these government bonds (the receipt of the loan to the government) could be purchased with paper money, known as “continentals,” that had been issued to the soldiers. This paper had quickly lost its value but much of it had been snatched up, often at a miniscule percentage of its face-value, by speculators, many of whom were friends of Morris. Regardless of how cheaply the continentals had been obtained, their full face-value was honored when purchasing government bonds. Eventually, the Continental Congress also allowed pieces of paper known as “chits” – IOUs for war requisitions in the field – to be used for bond purchasing. The chits were originally held by farmers or their families and had become commodified, like the continentals, and were often subsequently purchased by speculators at a small percentage of their face-value. That this paper could be used at full face value was all insider information, not that any rank-and-file holder of continentals and chits could have afforded the bonds. Hogeland identifies this practice as a part of the “Mercantile Code,” the long-established practice in the Atlantic and even global economy of ruthless profiteering. Instead of being arrested for insider trading, Morris was made Superintendent of Finance, supported by Washington’s personal secretary, Alexander Hamilton. Morris was then able to use public funds for his own investment schemes ranging from international trade to land speculation. For Morris and his cronies, the war was to generate debt that would pay interest to the bondholding class, who would then control national finance.
The working class generally understood that there was a form of “people’s finance” that did not involve the merchant-banker class. Land banks and paper money could finance both agricultural and artisan endeavors at little or no cost, a horrifying scenario to Robert Morris and his circle. What Morris and company truly needed was the power to prohibit this type of financing, and get access to the “purse” of the wealth-producing working class, i.e., a tax enforced by a national authority. This tax, to be used to pay interest to the bondholders, would be paid by those who had had to sell their continentals and chits for pennies on the dollar out of a desperate need for hard cash. They would finance their own indebtedness and subjugation, in essence – hence the rebellion.
The author elaborates on the nature of the resistance to this tax placed on whiskey. Not only could the tax be presented to eastern voters as a luxury tax, but it was set up to drive out small producers on behalf of large producers. Small business was not welcome in the merchant-banker faction, and the 1791 “Tax on Spirits” illustrated this. To westerners, a region where the lack of cash meant that whiskey was often the local form of exchange, the tax was a monstrosity. Radical preacher and political activist Herman Husband of Bedford County, Pennsylvania, veteran of the North Carolina “Regulation” of the late colonial period, referred to the whole merchant-banker faction as “The Beast.” He had his own ideas about public finance and governmental structure, all of which deprived the economic elites of their power. At its height, the Whiskey Rebellion, or as some prefer, the Pennsylvania Regulation, mustered a militia of some seven thousand westerners. Opponents to the whiskey tax ranged from marginally employed landless farm workers to the future Jeffersonian Secretary of the Treasury and Swiss immigrant Albert Gallatin.
At the height of the rebellion, a legitimate unit of the state militia based at Mingo Creek destroyed the plantation of the region’s superintendent of tax collection (and largest distiller), John Neville, a friend and ally of Morris and Hamilton. Many tax collectors and their supporters were threatened, cajoled, tarred-and-feathered, and/or had their property destroyed or damaged. While Hogeland is not the first to tell the story, his is the most class-conscious and the first to aim his narrative at a general audience.
In Declaration, Hogeland zeroes in on the three-month period from April to June, 1776 when the Second Continental Congress went from voting against independence to voting for it. This included a radical coup of the Pennsylvania legislature that threw the balance of colonial assemblies to the independence faction. Hogeland delves deeply into the sources to reveal a complex set of political alliances orchestrated by Samuel Adams. “Liberals” (i.e. merchant/bankers) like Samuel and his cousin John Adams joined with “radicals” like Thomas Young, James Cannon, and Christopher Marshall who then used each other to usurp the proprietary government of Pennsylvania and get a “yes” vote for independence. This is Hogeland’s thesis. His class interpretation of the event is refreshingly clear-headed in a period so often immersed in triumphalist mythology. Once independence was achieved, the struggle between these two classes would re-emerge stronger than ever.
The term “Whig” is frequently used as a label for the “Founding Fathers.” Hogeland accentuates the fact that these Whigs were of the merchant-banker class and desired to escape the fetters of British hegemony so they would then be positioned to control the economy of the fledgling republic. Working class advocates wanted the democratic republic that had been proposed over a century earlier at the end of the English Civil War by soldiers in the New Model Army. Thomas Young, the radical doctor from New York was one of these advocates. Young learned from Samuel Adams how the Committees of Correspondence could be turned into town meetings and then into shadow legislatures.
Another of the “democratical” faction – to employ the word used at the time for “radical” – was James Cannon. Cannon promoted an alternative for poor relief in Philadelphia. Named the United Company of Philadelphia for Promoting American Manufactures, or simply the American Manufactory, Cannon organized those left unemployed by the boycott of British goods to make domestic cloth. Poverty haunted the backcountry as well, and Cannon began linking the two. In Philadelphia, the result was the City Committee, which entwined artisans from across the area with members of the American Manufactory.
After Lexington and Concord, militias, generally known as “Associators,” boomed. Both official and unofficial, there were thirty-one companies in Philadelphia alone plus fifty-three in rural Pennsylvania. These militias were largely democratic, often electing their own officers. Pennsylvania was not the only colony dependent on them for protection, thus imbuing them with a good deal of significance. By the end of 1775, Pennsylvania militias were electing representatives to a “Committee of Privates,” again modeled on the New Model Army.
Add to this radical lineup Declaration’s version of Herman Husband, radical evangelical Christopher Marshall. Marshall was a Quaker and an apothecary (he owned one of the largest pharmacies in the colonies). Marshall believed that true Christianity would be best represented by a democratic system whose raison d’être was not to protect the interests of the propertied, but serve the working classes. As Hogeland notes, the Whigs had Magna Carta, Harrington, Sidney, and Milton while the artisan class had the New Model Army, the Putney Debates, and the Levellers of the 1640s for inspiration. The producing classes had failed to gain power after the English Civil War; they hoped to succeed in the new American republic.
With the colonists and Mother Country engaged in war and independence still undeclared, the liberals and radicals joined to push for forming colonial governments unencumbered by London oversight. The target of this, of course, was Pennsylvania, whose proprietary government assembly, led by Edmund Randolph, was at odds with King-in-Parliament to be sure, but was nevertheless opposed to independence. As went Pennsylvania, this coalition understood, so would go the mid-Atlantic region. Hogeland closely outlines this coup of the proprietary government and the successful “declaration” of independence.
Founding Finance has replaced The Whiskey Rebellion as one of the books I use to teach U.S. history. The main reason is because the early chapters of Founding are, in part, a recap of The Whiskey Rebellion and Declaration. In addition to recapping, Hogeland, writing during the 2011-2012 face-off between the Tea Party and Occupy Wall Street movements, explores the extent to which the dissent on both left and right get their history wrong. Both movements dropped names, quotes, and paraphrasings from the founding period; but both take this history out of its context and try to use it for contemporary political ends without knowing the original circumstances.
The subtext to all of Hogeland’s work, but to Founding Finance in particular, is not only do we get our history wrong, our historians often get it wrong. Chapter Five, “History on the Verge of a Nervous Breakdown,” is devoted to a review of the institutionalized misreading of founding history. In 1913, Charles Beard rekindled the founding-era issue of Big Capital usurping the halls of power in his An Economic History of the Constitution of the United States. Subsumed under nineteenth-century triumphalist Whig history, Beard brought back to light the prospect that the conveners at the Philadelphia convention were protecting their own interests. Much ink was subsequently spilled trying to re-bury this narrative, and Hogeland reviews the more influential historians in this effort. Richard Hofstadter, Gordon Wood, and Edmund Morgan, for example, are taken to task for basing their arguments on something called the “Brown Study,” a denial of elitist motivation behind the U.S. Constitution, which has since been proven to have been a tissue of lies. Nevertheless, the damage was done, and the core of the “founding finance” story, which explains much about how the U.S. government and the monied elite worked hand-in-glove in the early republic, was lost. Playing egregiously fast and loose with history is also true when it comes to Alexander Hamilton’s biographers, many of whom simply ignore the rumblings of the working class who were trying to disrupt the whiz kid’s financial plans. These histories become increasingly “more about less” and approach, in some cases, the level of triumphalist pablum. This is the contribution of the independent Hogeland – he need not answer to the careerist pecking order, and there is no need to guard the institutionally accepted historical narrative. Today’s history spends more time striving to maintain an “American heritage” than it does providing cogent explanations of the history itself. Hogeland writes that it “fails to benefit from what’s especially illuminating about the popular and narrative modes. I don’t think English heritage is what Shakespeare was after in King Lear. I miss the terror and pity.” (101) The “terror and pity,” i.e., the elements that allow us all to connect with the story, are precisely what is missing from the histories of the early republic. In its place, in extreme cases, is a fictional “Kumbaya” sing-along.
So went the struggle for power after the Revolution, and so goes the struggle for control of the narrative today. And speaking of today, the U.S. military has a presence, according to Armed Forces radio, in some 170 countries around the world. How came this to be? When did it begin and why? That beginning is the topic of Autumn of the Black Snake, the fourth book in Hogeland’s oeuvre.
At this point in this narrative, the reader may have grasped that while setting up feudal kingdoms in the New World did not work for English aristocrats, a colonial elite emerged that took on the project for themselves. Land speculation and debt were their primary vehicles. Once centralized control was established with the ratification of the Constitution in 1788, the only thing lacking was a standing army to carry out and enforce their will. Virginia planters had been the first to make a serious effort at expanding their interests beyond the Appalachian Mountains. Given that they were a type of feudal master of their own kingdom – the plantation – this is quite logical. Hogeland revisits the aforementioned Virginia consortium known as the Ohio Company and its utilization of the ambitions of a plantation family’s younger son in this expansion. The son’s name, of course, was George Washington.
Washington looms large in each of these works, but it is in Black Snake where the culmination of his life’s ambitions is made manifest. From his earliest western travels as an errand-boy for the Ohio Company to his role as general and President, Hogeland reviews and accentuates certain aspects of Washington’s life pertinent to the thesis of the book: the first war for American expansion was contrived and carried out at the behest of land speculators, Washington chief among them. Hogeland strays close to the mythical narrative of Washington at times, referring to him as “the greatest man in the world.” Thankfully for those of us weary of the mythical Washington, Hogeland’s close reading of the sources brings him back to evidentiary history. Washington was a ruthless land speculator – that was how he made his fortune, with help from his slaves at Mount Vernon, of course. He epitomized American mythology: a military man ambitiously accumulating wealth, status, glory, and a legacy. The fact that Washington had rejected a Cromwellian “Lord Protector” office as head of the army has dominated this legacy. Hogeland looks at the under-remembered, all-too-human Washington revealing that the man’s ambition set the pattern for American military and economic expansion. Then, as now, this expansion comes at the expense of others.
In Hogeland’s treatment of this first American war of expansion, he gives nearly equal time to those upon whom it fell hard. Little Turtle, the Delaware leader, and Blue Jacket, the Shawnee war chief, are made human and given source-generated character. Their foe in this war of expansion, General “Mad” Anthony Wayne is also given a full-spectrum type of treatment, from his early successes in the French-Indian War, to his failures in the Revolution and as a peacetime planter and merchant. Blue Jacket was influenced by the post-French and Indian War resistance movement led by Ottawa leader Pontiac and his spiritual advisor Neolin. He nevertheless rejected Neolin’s call for austerity and cultural revival – as much as anyone, the Shawnee leader enjoyed accumulating wealth made possible by trading in the Atlantic economy. Intelligent, but not deeply so, Blue Jacket gave in to superficial strategies against Wayne’s professionally-trained army, the third American army to go against the “Ohio Country Indians.” Little Turtle, seen as the more insightful of the two, understood why the Ohio Country natives had been able to resist the earlier invasions of their country: the Indians did not let those armies resupply themselves. The difference between these two leaders would prove decisive.
But why did Washington (and Hamilton, et al.) organize a standing army when so many opposed such armies in favor of state militias? The answer is simple, Hogeland argues: real estate. Not only did the economic elites want to buy speculative paper and have it honored at full face value plus interest, the expense of which would be covered by taxes on those who had been forced, by impoverishment, to sell that speculative paper in the first place. They also wanted the “power of the purse” (taxing power) and a standing army to enhance their land speculation efforts in the West. And they would buy the bonds (loan the money at interest) to make it happen. In other words, the purpose of the first war for American expansion, like the French-Indian War before it, and American militarism today, was to make the rich richer at the expense of others – expense in blood, treasure, land, and resources. As Hogeland states quite clearly, Washington’s crackdown on the so-called “whiskey rebels” made “military adventure, wealth concentration, and great nationhood an integrated whole” (Black Snake, 215).
Some historians will take exception to Hogeland’s popular history approach to topics more complicated and nuanced than the standard popular fare. Hogeland’s effort to include nuanced historiography can work against his efforts to reach a wider-than-usual audience for historical monographs. The layperson may find the historiography tiresome, while historians may grow frustrated with his rhetorical devices keyed on maintaining the public’s attention. The author’s idiosyncratic way of citing sources, slightly varied in each of the four books, are the most disconcerting for professional historians. But if one follows the source threads from secondary through to primary this methodology, while perhaps not ideal, maintains his credibility.
Hogeland’s perspective on what might be termed the historical “catechism” of revolutionary America is quite refreshing. His literary background means his close-reading skills are well-developed – even more so than the average historian. This close reading of the sources and his detachment from disciplinary careerist concerns may be the strongest attributes in the creation of this oeuvre. His historiographical research is a shot of clarity for the discipline’s insiders should they choose to incorporate it, which they should.
There are other things to criticize, and the reader will no doubt find their own issues. But this work is too important to let a few quibbles keep it down. These are useful books for teaching the early American republic, and they are useful in understanding the origins, at least in the English-speaking New World, of American hegemony. That they connect the dots between the strivings of the merchant-banker class, the role of radicals in achieving independence from Britain, the control of the national debt by financial elites, and the rise of the American military to serve expansionist ends, make them indispensable for a clear-eyed study of the early American republic.
 The iconic work in this regard is Michael Tigar’s Law and the Rise of Capitalism, Revised Edition, (New York: Monthly Review Press, 2000; originally published with co-author Madeleine R. Levy, 1977).