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A Capital City: Washington, D.C., and the Political Economy of American Federalism, 1790-1831

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A Capital City: Washington, D.C., and the Political Economy of American Federalism, 1790-1831 A Capital City: Washington, D.C., and the Political Economy of American Federalism, 1790-1831 Dana John Stefanelli Ft. Lauderdale, Florida Master of Arts, University of Virginia, 2005 Bachelor of Arts, Florida State University, 1999 A Dissertation presented to the Graduate Faculty of the University of Virginia in Candidacy for the Degree of Doctor of Philosophy Corcoran Department of History University of Virginia August, 2013 2 Table of Contents Acknowledgements 3 Introduction A Center of Controversy 4 Chapter 1 The Seat of Government and America’s Capital: Funding the Construction of the Federal City 16 Chapter 2 Speculative Capital: Real Estate Investment in Washington City 59 Chapter 3 The First Reconstruction: Rebuilding Washington City after the War of 1812 89 Chapter 4 Three Years that Defined the Nation’s Capital: Federal Banking Policy in 1811, 1816, and 1821 121 Chapter 5 Political Channels: The Chesapeake and Ohio Canal and the Politics of Internal Improvement 170 Conclusion 207 Bibliography 210 3 Acknowledgements This project could not have been completed without the support and assistance of numerous individuals and institutions. First and foremost among these was the always insightful advice and enthusiastic support of this dissertation’s committee chair, Peter Onuf. When Peter and I first met I think we were both a little surprised we got along so well, and for me at least that relationship has become a fruitful collaboration. The committee’s other members—Mark Thomas, John James, and Kenneth Bowling—have been equally supportive and offered much helpful criticism and commentary. Although Ken was a relative latecomer to the project, his extensive knowledge of Washington, D.C., and his infectious enthusiasm for all things related to the city and for this project have been an invaluable resource. I’m also grateful for the feedback provided by scholars who read various chapter drafts along the way, including Brian Balogh, S. Max Edelson, Rosemarie Zagarri, Andrew O’Shaughnessy, Patrick Griffin, and the many participants in the University of Virginia’s Early American Seminar. The bulk of the research for this project was conducted at the National Archives and the Library of Congress in Washington, D.C., and I am grateful to the helpful staff at both repositories for their assistance. Grants from the White House Historical Association, the U.S. Capitol Historical Society, the Gilder Lehrman Institute of American History, and the Scholar’s Lab at the University of Virginia helped finance my research. The hospitality of Martin Ohman, Rachel Pierce, Scott Spencer, and Hedda Harari-Spencer enabled me to extend my research efforts to Philadelphia and Boston despite the limited power of my purse. To these friends and many others—Lawrence Hatter, James Wilson, Sean Nalty, Christopher Loomis, and Logan Sawyer to name a few—who provided moral and intellectual support over the years, I can only say thanks. Finally, my family, especially my parents, Jim and Gerri Stefanelli, and my wife, Laurie Holmes, have all been more supportive through this process than anyone could reasonably expect. Their confidence in me is a resource I could not do without. I hope someday I can justify their faith. And to my son, Sander, who has only just joined us on this little adventure, you certainly complicated the last few steps of this leg of the journey, but I’m glad you’re along for the trip. 4 Introduction A Center of Controversy That Washington, D.C., is a powerful city may seem like a trite observation. Occasionally called “the capital of the free world,” the city’s name is frequently deployed as shorthand to reference the authority of the United States government or, as the “Washington consensus,” the global hegemony achieved by North America and Europe in economic and diplomatic affairs. Despite Washington, D.C.’s prominent place in America’s public discourse, the municipality itself is not powerful or influential. Its role in governance is legally and circumstantially limited. Its lone delegate to Congress cannot vote to enact legislation and according to the U.S. Constitution the Federal District cannot have more presidential electors than the union’s least populous state. The division between the operations of the federal government and the city is so distinctive that its residents assume rhetorical allusions to “Washington” do not refer to them. This incongruous image of Washington reflects its history as the center city of a nation born in rebellion against central authority. America’s colonists had realized great benefits from their connection to London and its Parliament. As the world’s preeminent commercial entrepôt, London offered Americans a crucial source of credit and capital and a marketplace to exchange goods with continental Europe and the Far East through well-established channels. These relationships reduced transactions costs and conveyed upon colonial commerce the security benefits of Britain’s naval supremacy. Although Americans occasionally chafed against and often ignored inconvenient imperial commercial regulations, their association with a regime 5 that acted aggressively to advance the prosperity of its subjects conveyed economic benefits that Americans were reluctant to forgo. Despite the benefits of the imperial relationship, the aftermath of the French and Indian War convinced many Americans that London and its parochial interests were increasingly dominating governance of the empire to the detriment of the colonists.1 As John Adams observed, long parliamentary sessions, skewed representation, bribery and a growing corps of placemen and pensioners had produced “luxury, dissipation and effeminacy” that inured the imperial government to concerns outside its comfortable seat.2 Some leaders concluded the costs of this corrupted governance now outweighed the benefits. The ensuing political crisis and rebellion left Americans so skeptical of centralized governance that many opposed creating a single, stationary governing center for the United States. Even many politicians who believed the republic required a permanent center city avoided the politically-loaded term “capital,” and instead argued in favor of creating a fixed seat of government. The events of the 1780s convinced American leaders that the union needed a more powerful central government to address the republic’s many difficult economic and political challenges. America’s capital-scarce, export-driven economy required access to foreign markets for goods, services, credit, and customers. Before the Revolution, cultural, historic, and regulatory connections had ensured these needs were met by Britons, especially Londoners, or by colonists in other parts of the empire, particularly the West Indies. These relationships had 1 Jack P. Greene, Peripheries and Center: Constitutional Development in the Extended Polities of the British Empire and the United States, 1607-1788 (Athens: University of Georgia Press, 1986), 73-106. 2 Paul H. Smith, et al., eds., Letters of Delegates to Congress, 1774-1789, vol. 1, August 1774 - August 1775 (Washington, D.C.: Library of Congress, 1976-2000), 309. 6 reinforced the connection between individual colonies and the mother country but militated against the formation of close connections between the North American colonies. This transatlantic orientation proved persistent. After the war, states separated by vast distances and diverse commercial interests competed with each other to secure access to and advantages within overseas markets. American leaders began to fear the young and fragile union would break apart as Americans’ economic interests pulled them politically closer to European powers and away from the United States. Some states faced fiscal difficulties that heightened these concerns. In Massachusetts, Shay’s Rebellion demonstrated that Revolution- era indebtedness and the economic instability that followed the war could combine to prevent states from carrying out basic functions like tax collection and enforcing public order. States unable to meet their international financial obligations offered creditor nations a justification for aggressive collection measures. At the same time, the Confederation government’s funding woes made it difficult or impossible for it to intervene financially or militarily to prevent the disastrous consequences of the states’ incapacity. Centralist leaders like George Washington, James Madison, and Alexander Hamilton concluded this domestic instability and international incapacity posed real and immediate risks to the prosperity, integrity, and security of the union and the liberties of its citizens. In response, the framers of the United States Constitution gave the new federal government new revenue raising powers and the authority to resolve interstate differences in commercial policy. Despite these successes, whether and how officials would actually exercise these powers was uncertain. The union’s fundamental political problem remained—namely, the difficulties 7 inherent in securing agreement on any particular policy action when local, state, and regional rivalries continued to divide Americans.3 Centralists believed that integrating the economies of the states and sections was critical to resolving these persistent differences. They were confident that when Americans’ own prosperity depended on commercial relationships with their fellow citizens, the value of the union would become apparent and its integrity would be unassailable. The major obstacles to the success of these efforts
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