hello everyone and welcome to lesson 3a the first lesson here of unit 3. and this is northern transformation so some of the major questions we'll be talking about we're going to talk about what was economic nationalism uh we're going to talk about how economic nationalism influenced u.s economic development then we're going to talk about the famous mcculloch versus maryland case and how that set the stage for the industrial revolution and then finally we're going to talk about the role the federal government played in spurring along this industrial revolution but before we do that we need to understand the political context of the times right so we want to start off with talking about the first party system the first part of your system came up essentially after the ratification of the constitution you have the emergence of basically these different factions which were connected to the dominant political personalities of the time the federalist party which was led by alexander hamilton this was a party descendant from the pro-constitutionalist federalist party they favored a powerful federal government as well as a loose interpretation of the constitution they were very traditional as well as conservative they believed in the politics of deference right that people in the commoners class the working class should respect and defer to the politics and political decisions made by the elite ruling class right this is you know where you get the idea of property requirements in order to be able to vote right the people who own property somehow are better equipped to make political decisions than everybody um else were also very suspicious of democracy right and we talked about a number of ways that the constitution which was large in large part written by the federalists um why that was uh you know kind of an anti-democratic constitution on the other side you have democratic republicans led by thomas jefferson as well as james madison the democratic republicans favored a small central government more of an emphasis on states rights and state sovereignty and a strict reading of the constitution meaning that if something wasn't a power written into the constitution and given to congress that that was given to the states so a lot of the popularity or the rising popularity of the democratic republicans stemmed from their rejection of deference their rhetoric about empowering the common man right so set them in stark contrast to the federalists so what brought about the death of the first party system well the election of 1800 which you see depicted up here on the left this was seen as a victory for the common man over wealthy elites a lot of jefferson's electoral college votes came from states in the west where there was not a strong federalist presence and a lot of these newer states places like kentucky tennessee as well as states that had large frontier areas like virginia north carolina georgia a lot of these states did not have a very strongly entrenched federalist party so the election of 1800 again seen as a victory for the democratic republicans you also the war of 1812 played into this and during the war of 1812 the new england states which at that time as you see from the image there in the top left was the federalist stronghold felt that they were bearing most of the brunt of fighting the war of 1812 sending their soldiers because they for the most part had the highest population concentrations paying for it they paid the most in taxes and so these new england states convened what became known as the hartford convention in 1814 and during this convention the new england states floated a possibility or discussed the plan that they would secede in order to from the united states in order to bring about an end to the war because the war up to that point was going very badly for the united states the british had um seized washington d.c and burnt the white house and destroyed other buildings in the capital and the war just really wasn't turning in the favor of the americans but ultimately they decided not to secede down there in the bottom right you see that's an image of general andrew jackson at the battle of new orleans and shortly after um you know this nadir of the war where everything was going poorly you have andrew jackson's victory at new orleans you have the treaty of ghent was signed between the united states and england to bring an end to the war and the end of the war and a seeming american victory really um essentially uh discredited the federalist party right because they were seen as not sufficiently patriotic enough that they were out of touch and by 1820 the federalists were really no longer a viable national party and that meant that the only remaining national party was the democratic republicans so this is what led to the era of good feelings because you only have one political party left everybody basically coalesced around these ideas of creating national unity in the years after the war of 1812. and as we'll see in this lecture it's important to understand that there still is some internal fighting over specific policies right so everybody just because it's only one political party didn't mean that everybody agreed on every issue but there were some issues that they agreed on and we'll talk about the main issue which was american economic nationalism american economic nationalism was the embodiment of how national politics worked during the era of good feelings and it basically represented a belief a shared belief across the political spectrum that the federal government should actively work to boost the national economy and that the american economy should serve national interests and this is something that had a wide range of political support it was supported by james madison by henry clay as well as john c calhoun on the right and a big part of this american economic nationalism was support for the second bank of the united states right which was founded in 1816. and this was modeled after alexander hamilton's first bank of the united states and had many of the same responsibilities collect collecting federal taxes holding on to government funds making loans not only to the federal government but also state governments as well as private borrowers and there's a belief that the large size of the second bank of the united states would help to stabilize the american economy the second part of this american economic nationalism was the tariff of 1816. the tariff of 1816 was the first protective tariff of u.s manufacturing in united states history and this was a 20 to 25 percent tax placed on imported manufactured goods because the way a tariff works is it increases the cost of purchasing something made in another country for the consumers making the american product cheaper by comparison so then they buy american right so tariffs are good in this case for american industry you also have the bonus bill of 1817. the bonus bill was a proposal that would earmark all of the tariff revenue for the united states as well as an additional 1.5 million dollars that would be spent on internal improvements things like canals national roads and so forth if the bonus bill would have passed it would have marked the peak of democratic republican economic nationalism it was very popular in the mid-atlantic as well as the western states but it was largely opposed in the south as well as along the east coast a lot of those older states especially you know closer to the coast thought that the bonus bill would drain their population into newly formed competing states right thinking that if it was easier to get there via this elaborate network of infrastructure that you would have this massive population exodus into these new states now james madison who was an economic nationalist and who supported a lot of these bill's goals actually wound up vetoing it his veto message he explained that he felt the federal government had no constitutional power to facilitate internal improvements he was also opposed to the pork barrel spending that was packed into the bill pork barrel spending is essentially when people pass a bill and they add a lot of other kinds of provisions into the bill in order to get senators or congressmen to agree to support it um you know giveaways little pet projects that they may have in their own home state so he was opposed to the pork barrel spending felt it was wasteful um in madison's veto message a quote uh special interest issues like internal improvements inexorably corrupted the legislative process meaning that this debate about whether to include internal improvements and how to fund them corrupted the entire debate around the bill right and made people greedy and looking for all of this uh handouts and pork barrel spending another big part of american government's governance at this time was judicial nationalism so the chief justice of the supreme court at this time was chief justice john marshall john marshall john marshall was a federalist who favored a strong central government um he also saw the constitution as a quote unquote living document meaning that the constitution was written vaguely with the intention of written intentionally vague by the founders um in order to uh leave it open to interpretation under new circumstances so that brings us to the case of mcculloch versus maryland which was adjudicated in 1819. so the state of maryland issued a tax on the branch of the second national bank that was located in baltimore and the bank refused to pay the tax so this got challenged in local court went all the way up to the supreme court so the key questions that the marshall court had to wrestle with was it constitutional for the u.s government to even establish a national bank could a state levy taxes within its border within its borders on federal property and then finally did states have sovereignty over the federal government because they ratified the constitution so marshall uh issued his ruling using a loose construction or the implied powers of the constitution and the court in this case issued an anonymous a unanimous opinion which was written by chief justice marshall basically his decision said that the federal government has a right to establish a national bank per the quote necessary and plot proper clause in the constitution he also said that because the people ratified the constitution in other words people voted in these constitutional conventions that it wasn't the states who had ratified the constitution right therefore the people in this case represented by the federal government have sovereignty over the states right and as a result of that the states cannot have the right to tax the federal government so because this case upheld federal sovereignty it essentially preemptively made a case against nullification and interposition which would become a big deal in the years to come in the book talks about that during the nullification crisis so that brings us to the federal government and the market revolution so how does the federal government boost this so-called market revolution well one thing they did was that the federal government paid out a lot of subsidies to the canals to build railroads as well as national roads and the government was actually paying money to companies that were monopolizing the construction of these pieces of infrastructure as well as supporting or not opposing monopolies around transportation so the federal government is putting a significant amount of money despite the failure of the bonus bill putting a significant amount of money in investment and these companies who are doing this work would also seek out other investors right foreign capital americans right who would invest in this infrastructure another thing the federal government does is it participates in corporate boosterism in other words the government supported corporations by making them a legal entity that can exist by law right and so when you allow incorporation by law you allow people to pull their resources and then it creates limited liability to individuals right so in other words when people invest money into a business they only lose what they invest right they don't if a business goes under they can't come for your personal wealth only what you invested in the company the government also took a number of different actions to establish corporate legal status so in the 18th century corporations could be created only if they were determined to be for the public good so the definition of a corporation is going to expand however in the 19th century so now goods and products are seen as beneficial to society meaning that companies that make consumer goods could be considered to be serving the public good and this is going to lead to an explosion of corporations in america right in 1800 there were only 20 corporations in america by 1830 there were 1800 corporations and you see the rise um in the number of banks right because the expansion of banks coincided with the expansion of corporations um because you need an increasing number of banks in order to be able to meet this rising demand for capital right businesses entrepreneurs they want loans they want these they need capital in order to be able to invest and build their uh their business so um between 18 17 and 1819 the number of banks in the united states doubled right so banking as well as the number of corporations are rising the government also takes several actions around contract law for example before and we had talked about this and we were talking uh previously the moral economy was the main ruling factor right so there was this idea that they were fair prices for staple goods and in the 18th century fair value was enforceable by law now however there's a conflict between equity and fair value and enforcement of contracts and basically the way this plays out is that it eventually federal courts decide that courts are allowed to enforce all contracts so this is good for businesses right because businesses can be confident that if they entered into a contract with another corporation or a private citizen that the courts will enforce those contracts in their favor right so corporations are making more taking more risks now that they uh have contract law on their side uh other federal policies that help boost uh corporations are labor laws during the 1830s during the market revolution you have the formation of america's first trade unions right and they would have these meetings where they would discuss um you know the possibility of taking labor action improving conditions etc and many states as well as the federal government would pass laws to outlaw strikes and when states passed laws to prohibit striking the court system backed them up you also have the increased use of eminent domain where the government can seize land from you as long as they pay you a fair market value if it's determined that seizing that land serves the public interest right so you have federal enforcement of eminent domain and then finally you also have debt law so in 1819 the supreme court of the united states issued a ruling that prevented individual states from providing debt relief for citizens right meaning that some states before this to help people out if they were in a tough time when somebody was in debt the state could provide debt relief right could forgive some of their loans but of course this is bad for banks bad for um you know the financial system because then people couldn't rely on people paying their bills or if people had paid for something from a corporation um and taking it on credit if they couldn't pay back that's bad for the business's bottom line so this also marks the end to stay laws and essentially state laws when people um are evicted right and they're forced out on the streets a state law would prevent you know people who are back uh who were behind on rent or behind on their mortgage from being kicked out into the streets right so um when supreme court rules in favor of the enforcement of contracts prevents states from um you know relieving the debt of individual citizens and puts an end to these so-called state laws again that's good for corporations good for banks not good for the working-class citizens who if they lost their job for whatever reason became injured disabled in the course of their work they could be now kicked out into the streets so that's the end of lesson 3a thanks for listening and we will talk to you soon