"Of all the questions which fall within the scope of the human mind, none are more perplexing than those which arise in the branch of Political economy. The facts are so numerous, so various, so entangled & difficult of access, and the combinations of these facts are so complicated, that differences of opinion are to be expected. If there be heads in this world capable of seeing all these facts, all the bearings on one another, of making all the combinations into which they enter, and drawing sound conclusions from the whole, no doubt that a wisdom of that grade may form a system of regulations for directing to the greatest advantage the public industry and interests. The difficulty of doing this however has produced the modern & general conviction that it is safest 'to let things alone'."
During the first Congress in 1790, soon after Jefferson became Secretary of State, he disagreed with Secretary of the Treasury Alexander Hamilton over two major economic issues—the handling of Revolutionary War debt and the development of a federal banking system—that were fundamental to the shape of the new nation. Nearly $11 million was owed to foreign powers and another $43 million was owed to Americans who had sold food, horses, and supplies to the Army, while state governments had accumulated another $25 million in debt during the war. Hamilton’s plan was for the federal government to assume the states’ debts, with $80 million in debt to be paid for by raising funds through a variety of federal taxes and land sales. Jefferson opposed the measure for giving the federal government too great a role in the economy. Ultimately, a compromise was reached: in exchange for moving the future national capital to a site on the banks of the Potomac River in Virginia, and for reducing Virginia’s net payments to the government to zero, Jefferson influenced Southern legislators to vote in favor of the “Assumption Act.”
The two men came into conflict again in December of 1790 when Hamilton proposed chartering and funding a national bank (the reference in this letter to “the nation which has pursued the regulating system with the most apparent success” is possibly a reference to Great Britain and the Bank of England). Hamilton advocated a Bank of the United States as a means of forging common interests between business and the federal government. Jefferson opposed it, concerned that a central bank would place too much power in the hands of the financial elite, and encourage people to abandon agriculture for speculation. Despite his reservations, however, in 1791 Congress adopted Hamilton’s plan with minor modifications. Years later, Jefferson came to envision “an equilibrium between occupations of agriculture, manufactures and commerce” (Malone, p.147), but he still exhibited a preference for a more independent, agrarian society. In his first inaugural address, Jefferson emphasized the importance of agriculture, calling commerce its lesser “handmaid.” Similarly, in this letter, it is the “Report of the Agricultural Committee” that he notes first and mentions reading “with pleasure.”
In sum, this letter is a perfect abstract of Jefferson's philosophical basis for opposing Hamilton's grand plans.
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