The Era of Good Feelings

LECTURE LEARNING OBJECTIVES

1. Explain why the Federalist Party collapsed after the War of 1812 and why the “Era of Good Feelings” was less harmonious than its name suggests.
2. Describe the three parts of the postwar nationalist program (a protective tariff, a national bank, and federally funded internal improvements) and explain why Henry Clay later packaged them as the “American System.”
3. Analyze how the Marshall Court used McCulloch v. Maryland, Dartmouth College v. Woodward, and Gibbons v. Ogden to strengthen national authority and protect a national market.
4. Explain the Missouri Crisis as a struggle over political power and the future of slavery, including how the three-fifths clause shaped representation.
5. Evaluate the causes and consequences of the Panic of 1819, and explain how it turned banking into a moral and political issue.

Grounded in the Chapter 11 Lecture 1 materials and expanded with primary evidence and modern scholarship on the collapse of the Federalists, James Monroe’s presidency, the Tariff of 1816, the Second Bank of the United States, the Bonus Bill and the Erie Canal, the Marshall Court’s great commercial cases, the Tallmadge Amendment and the Missouri Compromise, and the Panic of 1819 and its political aftermath.

Introductory Framing

The lecture follows a clear arc. It opens with a party disappearing: by the end of the War of 1812 the Federalists were no longer a serious force, and the Jeffersonian Republicans governed almost alone. It then points out an irony. Once their rivals were gone, the Republicans began adopting policies that looked a lot like the old Federalist playbook: a national bank, a protective tariff, and federal spending on roads and canals. The lecture follows that program into Congress, where the plan for internal improvements ran into constitutional doubts and regional jealousy, and into the Supreme Court, where Chief Justice John Marshall wrote national power into constitutional law. Then the story turns darker. In 1819 two crises arrived almost at once: a bitter fight over whether Missouri would enter the Union as a slave state, and the first nationwide financial panic in American history. The lecture ends with Americans angry at the Bank of the United States, the seed of the Bank War that Andrew Jackson would fight in the 1830s.

Historians read this period in several ways. Daniel Walker Howe treats it as a moment of deliberate nation-building, when leaders tried to tie a sprawling country together with money, markets, and transportation. John Lauritz Larson shows how arguments about what the Constitution allowed often masked arguments about which region would benefit. R. Kent Newmyer presents Marshall as a statesman in judicial robes who used legal doctrine to build a national framework. Robert Pierce Forbes and Matthew Mason show that the Missouri Crisis was about both political balance and the morality of slavery, and that the two cannot be neatly separated. Historians of the Panic, from Murray Rothbard to Andrew Browning, show how a financial collapse turned ordinary families against banks and pushed them into politics.

This essay avoids two easy stories. One treats the years after 1815 as a calm interlude of unity between the partisan 1790s and the party battles of the Jackson era. The other treats every postwar quarrel as a straight road to the Civil War. The evidence suggests something in between: a real burst of national confidence that, almost immediately, raised hard questions about power, money, and slavery that the political system could manage but not settle.

Key Terms: Nationalism, Sectionalism, and the Era of Good Feelings

Three terms run through this lecture. Nationalism, in this context, means the belief that the United States should act as one nation with a strong central government able to build its economy, defend its borders, and bind its regions together. After the War of 1812, nationalism was popular: Americans had survived a second war with Britain, celebrated Andrew Jackson’s victory at New Orleans, and felt that the republic had proved itself.

Sectionalism is loyalty to one’s own region, the North, the South, or the West, over the nation as a whole. Sectional interests were real. New England had shipping and growing textile mills; the South grew cotton for export with enslaved labor; the West needed roads, canals, and credit to reach markets. A policy that helped one section could hurt another.

The Era of Good Feelings is the nickname for the years of one-party rule under President James Monroe (1817–1825). The phrase comes from a Boston newspaper, the Columbian Centinel, which used it in July 1817 to describe Monroe’s friendly reception during a tour of New England, the old Federalist heartland. The name stuck, but it is a little misleading. The absence of a second national party did not mean the absence of conflict. As this lecture shows, the conflict simply moved: into factions inside the Republican Party, into the courts, and into fights between sections.

Setting the Scene: 1815, a Party Vanishes

In the first weeks of 1815, three Federalist messengers rode toward Washington, D.C. They carried the resolutions of the Hartford Convention, a meeting of New England Federalists who had gathered in Connecticut in December 1814 and January 1815 to protest “Mr. Madison’s War.” The convention had talked about states’ rights, proposed constitutional amendments to limit Southern power and the power to make war, and hinted that New England might act on its own if its grievances were ignored. Its timing could not have been worse. Before the messengers could make their case, news arrived that Andrew Jackson had crushed a British army at New Orleans on January 8, and soon after that the Treaty of Ghent had ended the war. The Federalists now looked like grumblers, or even traitors, at the moment of national celebration.

The party never recovered. In 1816 the Republican James Monroe, a Virginian and veteran of the Revolution, easily defeated the Federalist Rufus King of New York. Federalists still held some local offices, and the party survived for a few years in states such as Massachusetts and Delaware, but it never again ran a serious national candidate. In 1820 Monroe ran for reelection essentially unopposed and won every electoral vote but one.

Monroe tried to govern as a president above party. In the summer of 1817 he toured the Northeast, including Federalist New England, dressed in the old-fashioned style of the Revolutionary generation. Crowds turned out to cheer him, and it was during this tour that the Columbian Centinel, a paper that had long been Federalist, announced an “era of good feelings.” His cabinet gathered talent from across the country: John Quincy Adams of Massachusetts as secretary of state, John C. Calhoun of South Carolina as secretary of war, and William H. Crawford of Georgia at the Treasury. Each of them, along with Speaker of the House Henry Clay of Kentucky, hoped to be president next, which is one reason the good feelings did not last.

The Irony of Republican Nationalism

The lecture’s first big point is an irony. Jefferson’s Republicans had built their party in the 1790s by attacking Alexander Hamilton’s Federalist program: his national bank, his close ties to merchants and creditors, and his broad reading of the Constitution. Yet after 1815, with the Federalists gone, Republicans adopted much of that program themselves. The war had taught hard lessons. The government had struggled to borrow money after the charter of the first Bank of the United States expired in 1811. Troops and supplies had moved slowly over bad roads. American manufacturing, which had grown while British imports were cut off, now faced a flood of cheap British goods. In his annual message of December 1815, President Madison, Jefferson’s closest ally, asked Congress to consider a new national bank, tariff protection for manufacturers, and a system of roads and canals.

A good way to think about it: the Republicans kept the name of their own team but borrowed their rival’s playbook because, in the circumstances of 1815, it seemed to work. That shift also changed what Americans argued about. The question was no longer whether the nation should build, but who had the power to build and who would benefit.

The Nationalist Program and the American System

In 1816 two young congressmen who would later become bitter enemies worked side by side for the same goals. Henry Clay of Kentucky, the charismatic Speaker of the House, and John C. Calhoun of South Carolina, then a fierce nationalist, helped push the key pieces of the postwar program through Congress. Clay had opposed rechartering the first national bank in 1811; now he told the House that the war had changed his mind.

1) The Protective Tariff

The Tariff of 1816 placed duties of roughly 25 percent on most imported cotton and woolen cloth, with extra protection for the cheapest cotton goods. A tariff is a tax on imports. A protective tariff is designed not mainly to raise money but to make foreign goods more expensive so that American-made goods can compete. American manufacturers, many of them small mills that had sprung up during the war, wanted time to grow. In 1816 the measure drew support from every section, including from Calhoun and other Southerners who hoped the South might develop industry too. Some New England shipping interests, represented by a young Daniel Webster, opposed it, because they made their money carrying and selling foreign goods. Within a decade those positions would reverse: New England would build mills and want protection, and the cotton South would come to see the tariff as a tax on Southern consumers for the benefit of Northern factory owners.

2) The Second Bank of the United States

The Second Bank of the United States, chartered by Congress in April 1816 for twenty years, was a giant institution for its time, with $35 million in capital. The federal government owned one-fifth of its stock and appointed one-fifth of its directors; private investors owned the rest. Headquartered in Philadelphia, with branches in major cities, it held the government’s deposits, moved federal money around the country, and issued banknotes that were accepted nationwide. Just as important, it could discipline the hundreds of state-chartered banks whose paper notes made up most of the money supply. If a state bank printed too many notes, the national bank could collect them and demand payment in specie (gold or silver coin), forcing the state bank to be careful. In theory, the Bank would bring order to a chaotic currency and a steady supply of credit to a growing economy.

3) Internal Improvements

The third piece was internal improvements, the period’s term for roads, canals, cleared rivers, and harbors. In an age before railroads, hauling goods overland was so slow and expensive that it could cost as much to move a ton of goods thirty miles inland as to ship it across the Atlantic. A farmer in Ohio could grow wheat, but without a road or canal he could not sell it profitably in the East. Calhoun put the nationalist vision memorably when he urged Congress to fund roads and canals in February 1817:

How the Three Parts Work Together

The lecture uses the image of a three-legged stool. The tariff protects American factories from foreign competition. Those factories depend on a stable bank to finance production and investment. Both industry and finance depend on roads, canals, and ports to move goods and connect markets. Farmers in the West would sell food to workers in Northern mill towns; those workers would buy American cloth and tools instead of British ones; and the government’s tariff revenue would help pay for more roads and canals. Remove one leg, the argument went, and the stool falls over.

It was Henry Clay who later gave this program its famous name. In a two-day House speech on a new tariff bill in March 1824, still in the shadow of the Panic, Clay argued that Americans had depended too long on foreign markets and foreign goods, and that the remedy was a home market in which American farms and factories would trade with each other:

From then on, the tariff, the Bank, and internal improvements were known together as Clay’s American System, and they became the economic core of the National Republicans and, later, the Whig Party. It is accurate to say that the measures of 1816 were the building blocks of the American System, but the named, packaged program dates from the mid-1820s.

Internal Improvements: The Nationalist Dream Stalls

On March 3, 1817, his last full day in office, President James Madison did something that surprised many of his allies. Congress had passed the Bonus Bill, Calhoun’s plan to set aside the $1.5 million “bonus” the new Bank paid the government for its charter, along with the government’s future dividends on its Bank stock, as a permanent fund for roads and canals. Madison had asked for internal improvements himself. Yet he vetoed the bill.

His reason was constitutional. The Constitution lists Congress’s powers, and building roads and canals is not among them. Madison did not think the power to regulate commerce or to provide for the general welfare could be stretched that far, and he warned that reading the general welfare clause so broadly would give Congress a power to legislate on almost anything. He supported the goal and pointed toward a constitutional amendment as the proper path.

His successor, James Monroe, shared the same doubts. In 1822 he vetoed a bill to collect tolls on the federally built Cumberland Road, and he too called for an amendment. No such amendment ever passed.

The federal government did not stay out of transportation entirely. It had already funded the Cumberland Road, better known as the National Road, which reached Wheeling on the Ohio River in 1818, and the General Survey Act of 1824 sent army engineers to plan roads and canals. Congress also bought stock in some canal companies. But the grand, permanent national system that Calhoun imagined never came. The states and private companies did most of the building.

The Erie Canal

The most famous example is the Erie Canal. When Congress and Madison failed to act, New York’s DeWitt Clinton persuaded his state to build a canal itself. Digging began on July 4, 1817, and critics mocked the project as “Clinton’s Ditch.” Thousands of laborers, many of them Irish immigrants, dug with picks, shovels, horses, and simple machines across 363 miles from Albany on the Hudson River to Buffalo on Lake Erie. When it opened in October 1825, Governor Clinton traveled by boat from Buffalo to New York City and poured a keg of Lake Erie water into the Atlantic, a ceremony called the “Wedding of the Waters.” The canal cut the cost of shipping goods between Buffalo and New York City by roughly 90 percent, earned back its construction cost from tolls within about a decade, and helped make New York City the commercial capital of the country. Other states rushed to copy it, often borrowing heavily to do so.

Who Pays? Who Benefits?

The lecture insists that the fight over internal improvements was never only about the text of the Constitution. Westerners and many Northerners wanted federal money for roads and canals that would connect them to markets. Many Southerners resisted. The South’s great rivers already carried cotton to the sea, so federal projects seemed likely to benefit other regions at Southern expense. And some Southern leaders worried that a federal government strong enough to build canals anywhere might one day claim the power to interfere with slavery. Even New Yorkers, once they had paid for their own canal, were not eager to help rival states build competing routes.

John Marshall Reshapes American Government

If Congress and the presidents hesitated to expand national power, the Supreme Court did not. Its leader was John Marshall of Virginia, a tall, untidy, sociable man who had served at Valley Forge and come out of the Revolution convinced that the nation needed a strong central government. President John Adams, a Federalist, appointed him chief justice in 1801, just before Jefferson took office. Marshall then served for thirty-four years, until his death in 1835, through the presidencies of Jefferson, Madison, Monroe, John Quincy Adams, and most of Andrew Jackson’s. His party disappeared; his influence did not. Even after Republican presidents had appointed most of the justices, Marshall continued to lead the Court and often wrote its major opinions himself.

Before Marshall, the federal judiciary was weak, and many Americans assumed that the states were the main centers of government. Marshall set out to change that. The lecture asks students to watch for a pattern in three landmark cases, each answering a basic question: Can Congress create a national bank? Can states break contracts? Who controls trade between the states? In each case, Marshall chose national power and the security of property over state power.

McCulloch v. Maryland (1819)

The first case began in Baltimore. In 1818 Maryland, like several other states resentful of the new national bank, passed a tax on any bank operating in the state without a state charter. It was aimed squarely at the Baltimore branch of the Second Bank of the United States. The branch’s cashier, James W. McCulloch, refused to pay. (McCulloch was no hero: he and other officers of the Baltimore branch were soon exposed for using the branch’s money in a speculative scheme that cost the Bank more than a million dollars.) Maryland sued, and the case reached the Supreme Court, where Daniel Webster was among the lawyers arguing for the Bank.

Marshall’s unanimous opinion, delivered on March 6, 1819, answered two questions. First, did Congress have the power to charter a bank? The Constitution never mentions banks. But Marshall argued that the Constitution gave Congress broad goals, such as collecting taxes, borrowing money, and regulating commerce, and that the “necessary and proper” clause allowed it to choose reasonable means to reach them. These are called implied powers. A constitution, he reasoned, could not spell out every detail and still serve as a lasting framework of government:

Second, could a state tax an institution created by Congress? Marshall said no. If states could tax the Bank, they could tax it out of existence, and the Constitution makes federal law supreme over state law. His most famous line made the point: “the power to tax involves the power to destroy.” The deck shortens this to “the power to tax is the power to destroy,” which captures the idea but is not Marshall’s exact wording.

The decision infuriated defenders of states’ rights, especially in Virginia, where Judge Spencer Roane attacked it in a series of newspaper essays and Marshall, writing under a pen name, answered him. It also arrived at an awkward moment. In the spring of 1819 the Bank was becoming the most hated institution in the country, for reasons we will see when we reach the Panic.

Dartmouth College v. Woodward (1819)

The second case concerned a small college in the New Hampshire hills. Dartmouth College had been founded under a charter granted in 1769 in the name of King George III. In 1816, after a feud between the college’s president and its trustees, New Hampshire’s Republican legislature passed laws changing the charter, renaming the school Dartmouth University, and placing it under state-appointed overseers. The old trustees sued William H. Woodward, the college officer who had sided with the state and held its records and seal. Daniel Webster, a Dartmouth graduate, argued their case. A well-known story, recorded years later by a listener, has Webster closing with tears in his eyes: “It is, Sir, as I have said, a small college. And yet there are those who love it!” The story may have been polished in the retelling, but it shows how personal the case felt.

In February 1819 Marshall ruled for the trustees. The Constitution forbids states to pass any law “impairing the obligation of contracts.” A corporate charter, he reasoned, was a contract, and New Hampshire could not rewrite it on its own. The ruling protected private institutions, including the business corporations that would multiply in the coming decades, from sudden changes by state legislatures. Investors could count on the rules not being rewritten every election.

The ruling had an important limit, which the deck overstates. Justice Joseph Story, in a concurring opinion, pointed out that a state could reserve the right to alter or repeal a charter at the time it granted one. States quickly took the hint. They began writing reservation clauses into new charters and, later, into their constitutions and general incorporation laws. And in Charles River Bridge v. Warren Bridge (1837), Marshall’s successor, Roger Taney, ruled that charters would be read narrowly, so that a corporation could not claim privileges its charter did not plainly grant. Dartmouth made corporate charters secure, but it did not make them permanent or untouchable.

Gibbons v. Ogden (1824)

The third case began on the water. New York had granted Robert Livingston and the inventor Robert Fulton an exclusive right, a monopoly, to run steamboats in the state’s waters. Aaron Ogden, a former governor of New Jersey, ran steam ferries between New Jersey and New York City under a license from the monopoly’s holders. His former partner, Thomas Gibbons, ran competing boats under a federal coasting license issued under a 1793 act of Congress. One of Gibbons’s captains was a young Cornelius Vanderbilt, who dodged New York process servers while undercutting Ogden’s fares. Ogden sued, and the New York courts sided with the monopoly.

In March 1824 the Supreme Court reversed them. Marshall first defined commerce broadly, as more than buying and selling: it included navigation and the movement of people and goods across state lines.

Marshall then held that New York’s monopoly conflicted with the federal coasting license that Congress had authorized. Because valid federal law is supreme, the state monopoly could not be enforced against Gibbons’s boats. The steamboat business opened up, fares fell, and steamboats multiplied on American waters.

Students often learn that Gibbons gave the federal government “exclusive” power over interstate commerce, and the deck says so. That goes too far. Webster, arguing for Gibbons, had claimed that the commerce power belonged to Congress alone. Marshall wrote that there was “great force” in that argument, but he deliberately did not rest his decision on it. He decided the case on the narrower ground that the New York law collided with an act of Congress. Only Justice William Johnson, in a separate opinion, said Congress’s power was exclusive. In later decades the Court allowed states to regulate many local aspects of commerce when Congress had not acted. What Gibbons did establish was a broad definition of commerce and the principle that valid federal regulation overrides conflicting state law.

Winners and Losers

Looking across the three cases, the lecture asks who gained and who lost. The federal government gained authority. Businesses and corporations gained secure contracts and a national market less broken up by state monopolies. Nationalists gained a legal framework for a unified country. State governments lost some freedom of action, and states’-rights advocates, especially in the South, saw in Marshall’s decisions a dangerous concentration of power. If Congress could charter a bank by implication, they asked, what else might it claim the power to do? The answer many Southern leaders feared most was interference with slavery.

The Argument over Missouri

On February 13, 1819, a first-term congressman from New York named James Tallmadge Jr. rose in the House of Representatives. The House was considering a bill to let the Missouri Territory write a constitution and become a state. Missouri lay along the Mississippi and Missouri Rivers in the Louisiana Purchase, and by the 1820 census about 10,000 of its roughly 66,000 people were enslaved. Most members assumed it would enter as a slave state. Tallmadge proposed two amendments. The first would ban bringing any more enslaved people into Missouri. The second would free all children born there after statehood once they reached age twenty-five. Together they would have made Missouri, gradually, a free state.

Missouri would not have been the first state carved from the Louisiana Purchase. That was Louisiana, admitted as a slave state in 1812. Missouri would be the second, and the first lying wholly in the vast territory north of Louisiana. That is part of why it mattered so much: whatever Congress decided there could set a precedent for the rest of the Purchase.

The debate exploded. Southern members were stunned that Congress might impose conditions on slavery in a new state. Thomas W. Cobb of Georgia warned that the restrictionists were kindling a fire “which all the waters of the ocean cannot put out, which seas of blood can only extinguish.” Tallmadge answered with defiance:

The House, where the more populous free states held a majority, passed both amendments by narrow, almost entirely sectional votes: 87 to 76 on banning further introduction of slavery, and 82 to 78 on gradual emancipation. The Senate rejected both. That result did not happen because the South controlled the Senate. When the votes were taken in February 1819, there were eleven free states and ten slave states, so free-state senators actually held a slight majority. The amendments failed because several Northern senators, including both senators from Illinois, voted with the South. Congress adjourned in March with Missouri still waiting.

When Congress returned in December 1819, the stakes were plain. Alabama was admitted that month as a slave state, making the Union an even eleven free states and eleven slave states, with twenty-two senators on each side. Missouri would break the tie. Meanwhile Northern towns held anti-Missouri meetings and sent petitions, and Senator Rufus King of New York, the old Federalist, gave long speeches arguing that Congress had every right to bar slavery from new states.

It’s About Power, and About Slavery

The lecture argues that the Missouri debate was about political power. To see why, we need to understand the three-fifths clause of the Constitution. When the framers decided how to divide seats in the House of Representatives among the states, they agreed that each state’s population for apportionment would be its free population plus three-fifths of “all other Persons,” meaning enslaved people. The same count shaped each state’s number of electoral votes, since a state’s electors equal its House members plus its two senators. In other words, three-fifths of a state’s enslaved population was added to its population count for apportioning House seats and electoral votes. The clause did not declare that an enslaved person was three-fifths of a human being; it was a formula for dividing political power. The enslaved people being counted had no vote and no voice. Their enslavers gained the extra representation.

That extra representation was significant. The clause gave the slave states more House seats and more electoral votes than their free population alone would have earned. Many Northerners believed it explained why Virginians had held the presidency for all but four of the republic’s first thirty-two years, and Federalists had complained for years that Jefferson owed his 1800 victory to electoral votes based on enslaved people. Every new slave state meant two more senators likely to defend slavery and a House delegation enlarged by the three-fifths count.

The balance looked like this. The North, with its faster-growing free population, already controlled the House. The Senate, where each state had two votes regardless of population, was the South’s best defense, and by the end of 1819 it stood exactly even. Each new state could tip the balance.

Robert Pierce Forbes argues that many political leaders treated the crisis as a problem of balance, something to be managed rather than a moral question to be decided. But the debate was also about the morality of slavery itself. Northern restrictionists invoked the Declaration of Independence and the injustice of slavery; some Southerners responded by defending slavery more openly as a permanent institution rather than a regrettable inheritance. Black Americans followed the debate closely. Testimony at the 1822 trial of Denmark Vesey, a free Black carpenter in Charleston accused of planning a large uprising, claimed that he had cited the Missouri debates as a sign that the enslaved had friends in the North. Power and morality were tangled together, and that is what made the crisis so dangerous.

The Missouri Compromise (1820)

A way out appeared from the far Northeast. The District of Maine, long part of Massachusetts, had voted to become a separate state. In early 1820 the Senate tied Maine’s admission to Missouri’s, so that neither could enter without the other. Senator Jesse B. Thomas of Illinois then added the key provision: slavery would be “forever prohibited” in the rest of the Louisiana Purchase north of latitude 36°30′, Missouri’s southern border, except in Missouri itself. Henry Clay, as Speaker, helped steer the pieces through the House, which approved them in separate votes in early March 1820. The vote to admit Missouri without restriction passed by only three votes. A small group of Northern congressmen provided the margin, and the Virginian John Randolph mocked such men as “dough faces,” a name for Northerners who bent to Southern demands that stuck for decades.

President Monroe signed the measures in March 1820, and Maine entered the Union as a free state on March 15, 1820. The Missouri Compromise had three parts: Missouri would come in as a slave state, Maine as a free state, and slavery would be barred from the Louisiana Purchase territory above 36°30′. Once Missouri entered, the Union would stand at twelve free states and twelve slave states.

Even then the crisis was not quite over. Missouri’s new constitution, written in 1820, directed the legislature to pass laws keeping free Black people and people of mixed race from moving into the state. Many Northerners objected that free Black citizens of their states were citizens of the United States, whom no state could exclude. In 1821 Clay arranged a second compromise: Missouri would be admitted on condition that its constitution never be used to deny the privileges of any citizen of another state. The condition was vague and largely ignored, but it was enough. Missouri became the twenty-fourth state on August 10, 1821.

A Fire Bell in the Night

The compromise cooled the crisis, but older statesmen heard it as a warning. Thomas Jefferson, then seventy-seven and living at Monticello, wrote to a Maine congressman:

Jefferson feared that a geographical line dividing the country by slavery, once drawn, would never be erased. In the same letter he described slavery with a famous image: “we have the wolf by the ear, and we can neither hold him, nor safely let him go.” Jefferson himself enslaved more than a hundred people, and his letter worried more about the Union and white safety than about the enslaved. John Quincy Adams, Monroe’s secretary of state, saw the same danger. In his diary he called the Missouri question “a mere preamble—a title-page to a great tragic volume.”

Reading the Map

The lecture asks students to study a map of the line. Three things stand out. First, most of the remaining Louisiana Purchase lay north of 36°30′, so if the line held, most future states from that territory would be free. Only the area that became Arkansas and the Indian Territory (later Oklahoma) lay south of it. Second, Southern leaders could see that in the long run they were losing the race of population and territory, which made many of them more determined to protect slavery’s place in national politics. Third, the line itself became a fixture of American politics. For more than thirty years politicians argued over whether to extend it to new territory, until the Kansas-Nebraska Act of 1854 repealed it.

The Panic of 1819: America’s First Depression

While Congress argued about Missouri, the economy collapsed. The years just after the war had felt like a boom. Europe, worn down by more than twenty years of war, bought American grain and especially cotton at high prices; in 1818 cotton sold for more than 30 cents a pound. Settlers poured west into Ohio, Indiana, Illinois, Alabama, and Mississippi and bought public land from the federal government. Under the land laws of the time, a buyer could pay a quarter of the price down and the rest in installments over several years, so many bought more land than they could afford, expecting high crop prices to pay the balance. The number of state banks roughly doubled in a few years, and they printed paper notes and lent freely. The Second Bank of the United States, under its first president, William Jones, lent freely too, and some of its branches were badly managed, as the Baltimore scandal showed.

The Perfect Storm

The lecture identifies three causes that came together. The first was international. As European farms recovered after the Napoleonic Wars, Europe needed less American grain, and prices fell. The second came from Latin America. Wars of independence against Spain disrupted the silver mines of Mexico and Peru, which had supplied much of the precious metal that circulated in the Atlantic economy. Less gold and silver meant less backing for paper money. At the same time the United States was making payments on the debt from the Louisiana Purchase, much of it held in Europe, which drew still more specie out of the country. The third cause was domestic: banks had expanded credit far beyond what their reserves could support, and much of that credit had gone into land speculation, inflating a bubble.

The trigger was cotton. Early in 1819 cotton prices in Liverpool collapsed, eventually falling by roughly half. Merchants and planters who had borrowed on the strength of high cotton prices could not repay. Banks began calling in loans. The bubble burst.

The Bank’s “Solution”

The Second Bank of the United States made things worse, at least in the short run. Its directors had already begun to tighten credit in the summer of 1818. In March 1819 they brought in a new president, Langdon Cheves of South Carolina, to save the institution. Cheves cut the Bank’s lending, reduced its notes in circulation, and pressed state banks to pay what they owed it in specie. The policy worked for the Bank, which survived and returned to health. But each demand for gold and silver forced state banks to call in their own loans or close their doors. Across the West and South, banks failed, and the paper money people held became worth a fraction of its face value, or nothing at all.

The Human Toll

For ordinary families, the Panic was a disaster. Farmers who had bought land on credit could not make their payments, and debtors lost farms, houses, and tools at sheriff’s sales, often for a fraction of what they had paid. In most states people who could not pay their debts could be jailed, and debtors’ prisons filled. City workers lost their jobs as workshops and factories closed, and charitable societies opened soup kitchens.

The most famous statistic comes from Philadelphia. In 1819 the publisher and economic writer Mathew Carey helped lead a citizens’ committee that surveyed the city’s manufacturing. The committee could collect information from only thirty branches of manufacturing, and it admitted that its figures were not exact. In those thirty trades, it reported, employment had fallen from an average of 9,425 workers in 1814 and 1816 to just 2,137 in 1819, leaving about 7,300 people idle. That is a drop of more than three-quarters, the source of the deck’s “75 percent” figure. But it describes selected trades, not the whole city’s workforce. Carey also had a political purpose: he was a leading advocate of protective tariffs and used the numbers to argue that cheap British imports were destroying American industry. The figures remain powerful evidence of hard times, as long as we remember what they measured.

Political Consequences

Hard times pushed ordinary people into politics in a new way. Many Westerners and Southerners blamed the Bank of the United States, which seemed to have saved itself by ruining everyone else. Several states struck back. Ohio taxed each Bank branch in the state $50,000 a year, and in September 1819, when the Bank refused to pay, state agents entered its branch in Chillicothe and carried off more than $100,000 from the vault. The Supreme Court eventually ruled against Ohio in Osborn v. Bank of the United States (1824), following McCulloch. Kentucky and other states passed “relief laws” that delayed the collection of debts. When Kentucky’s highest court struck down its relief laws, the legislature tried to abolish the court and create a new one, setting off years of “Old Court” and “New Court” conflict. Congress responded more modestly. The Land Act of 1820 ended credit sales of public land and lowered the minimum price to $1.25 an acre, and a relief act in 1821 let indebted buyers keep part of the land they had bought.

The Panic also shaped arguments that would last for decades. Some Americans, like Carey, concluded that the nation needed higher tariffs to protect its industry. Others concluded that paper money and banks were the problem, and that only gold and silver were honest money. Years later the hard-money writer William M. Gouge summed up how many people remembered Cheves’s rescue of the Bank:

Gouge was writing in 1833, in the middle of Andrew Jackson’s war on the Bank, so his line tells us as much about the 1830s as about 1819. The same is true of the Bank’s most famous nickname. Critics called it “the Monster” above all during the Bank War; in the Senate debates over its recharter, Thomas Hart Benton of Missouri, whose state had suffered badly in the Panic, warned that the flourishing cities of the West were mortgaged to the Bank and “in the jaws of the monster.” Many of those who fought the Bank in the 1830s, including Benton and Jackson himself, had formed their views in the hard times after 1819. Jackson, a Tennessee planter and land speculator who had once been badly burned by debt, had long distrusted banks and paper money as tools of privilege.

Conclusion: Good Feelings, Hard Feelings

Return to the summer of 1817, when James Monroe toured New England and a Boston newspaper announced an era of good feelings. Within two years the same country had watched the Supreme Court strike down a state tax on a national bank, heard congressmen threaten civil war over Missouri, and seen thousands of families lose their farms and jobs in a panic many blamed on that same bank.

All three stories grew from the same root. After 1815 Americans believed in national growth. The nationalist program, the Marshall Court, and the westward rush of settlers onto land bought on credit all expressed that confidence. But growth raised questions that one-party government could not answer. Who had the authority to build: Congress, the courts, or the states? Who would pay and who would benefit: the manufacturing North, the cotton South, or the borrowing West? And would the nation’s expansion also be the expansion of slavery? The Era of Good Feelings ended not because Americans stopped believing in growth, but because growth forced them to disagree about everything that came with it. In the next lecture, those disagreements help produce a new party system and a new politics built around the “common man,” and we will ask what that democracy looked like from the bottom up.

Interpretive Synthesis: The Nation and Its Sections

Between 1815 and the early 1820s, the United States tried to become one nation economically and politically. The collapse of the Federalists left the Republicans in sole command, and they adopted a nationalist program of a protective tariff, a new national bank, and federally supported transportation, later packaged by Henry Clay as the American System. Congress and two presidents balked at a national system of roads and canals, leaving the states to build the Erie Canal and its imitators. The Marshall Court moved more boldly, confirming implied powers and federal supremacy in McCulloch, protecting corporate charters in Dartmouth, and opening the nation’s waterways in Gibbons.

Then 1819 revealed the limits. The Missouri Crisis showed that the expansion of the nation was also a question about the expansion of slavery, magnified by the three-fifths clause and the balance of the Senate. The Missouri Compromise kept the peace by drawing a line, which also made the nation’s division visible. The Panic of 1819 showed that the new national economy could fail ordinary people as quickly as it had enriched speculators, and it made the Bank of the United States a symbol of privilege.

So why did agreement about growth produce such sharp fights? Because growth required decisions about power and distribution that no consensus could make painless. The open question is how to weigh the forces. Was sectional conflict mostly about economic interest, mostly about slavery, or about slavery precisely because slavery was the South’s greatest economic interest? The evidence from this lecture supports a careful answer: economic, constitutional, and moral arguments were braided together, and the people who lived through 1819 could not pull them apart any more easily than we can.

Research Notes and Historiographical Guide

Course materials / lecture script, outline, and slide deck. Supply the core narrative in this order: Federalist collapse and the Era of Good Feelings, the American System and the three-legged stool, the failure of federal internal improvements, the Marshall Court’s three cases and their winners and losers, the Missouri Crisis and the three-fifths clause, the Missouri Compromise and its map, and the Panic of 1819 with its human and political consequences. The essay expands that framing and corrects several details flagged in the instructor notes.

Daniel Walker Howe, What Hath God Wrought. The best single synthesis of the period; reads the postwar program as deliberate nation-building and the Missouri Compromise as a pause that did not heal the sectional wound.

George Dangerfield, The Era of Good Feelings. The classic narrative of Monroe’s presidency and the tensions beneath its harmony.

John Lauritz Larson, Internal Improvement. Shows how constitutional arguments about roads and canals often carried regional rivalry and distrust of central power.

R. Kent Newmyer, John Marshall and the Heroic Age of the Supreme Court. Marshall as a nation-builder through law, with careful readings of the major cases.

Morton J. Horwitz, The Transformation of American Law, 1780–1860. Argues that nineteenth-century law increasingly favored entrepreneurs and corporations; useful for the “winners and losers” slide.

Robert Pierce Forbes, The Missouri Compromise and Its Aftermath; Glover Moore, The Missouri Controversy; Matthew Mason, Slavery and Politics in the Early American Republic. Forbes emphasizes the politics of balance; Moore remains the standard narrative; Mason shows how deeply slavery shaped politics even before Missouri.

Garry Wills, “Negro President”; Leonard L. Richards, The Slave Power. On the political effects of the three-fifths clause.

Murray N. Rothbard, The Panic of 1819; Andrew H. Browning, The Panic of 1819; Bray Hammond, Banks and Politics in America. Rothbard emphasizes credit expansion and policy responses; Browning offers a recent narrative of the Panic’s human and political effects; Hammond traces the long politics of banking.

Selected Primary and Contemporary Sources

• James Madison, Seventh Annual Message, December 5, 1815; veto message on the Bonus Bill, March 3, 1817.
• John C. Calhoun, speech on the Bonus Bill, House of Representatives, February 4, 1817.
• Columbian Centinel (Boston), July 12, 1817, “Era of Good Feelings.”
• McCulloch v. Maryland, 17 U.S. 316 (1819); Dartmouth College v. Woodward, 17 U.S. 518 (1819); Gibbons v. Ogden, 22 U.S. 1 (1824).
• Annals of Congress, 15th Congress, 2nd Session (February 1819), debates and votes on the Tallmadge Amendment.
• Thomas Jefferson to John Holmes, April 22, 1820; John Quincy Adams, diary entries on the Missouri question, 1820.
• “American Manufactures,” report of the Philadelphia citizens’ committee on the state of manufactures, October 2, 1819.
• Henry Clay, speech on the tariff (“the American System”), House of Representatives, March 30–31, 1824.
• William M. Gouge, A Short History of Paper Money and Banking in the United States (1833).

Selected Scholarship

• Browning, Andrew H. The Panic of 1819: The First Great Depression. Columbia: University of Missouri Press, 2019.
• Dangerfield, George. The Era of Good Feelings. New York: Harcourt, Brace, 1952.
• Forbes, Robert Pierce. The Missouri Compromise and Its Aftermath: Slavery and the Meaning of America. Chapel Hill: University of North Carolina Press, 2007.
• Hammond, Bray. Banks and Politics in America from the Revolution to the Civil War. Princeton, NJ: Princeton University Press, 1957.
• Horwitz, Morton J. The Transformation of American Law, 1780–1860. Cambridge, MA: Harvard University Press, 1977.
• Howe, Daniel Walker. What Hath God Wrought: The Transformation of America, 1815–1848. New York: Oxford University Press, 2007.
• Larson, John Lauritz. Internal Improvement: National Public Works and the Promise of Popular Government in the Early United States. Chapel Hill: University of North Carolina Press, 2001.
• Mason, Matthew. Slavery and Politics in the Early American Republic. Chapel Hill: University of North Carolina Press, 2006.
• Moore, Glover. The Missouri Controversy, 1819–1821. Lexington: University of Kentucky Press, 1953.
• Newmyer, R. Kent. John Marshall and the Heroic Age of the Supreme Court. Baton Rouge: Louisiana State University Press, 2001.
• Richards, Leonard L. The Slave Power: The Free North and Southern Domination, 1780–1860. Baton Rouge: Louisiana State University Press, 2000.
• Rothbard, Murray N. The Panic of 1819: Reactions and Policies. New York: Columbia University Press, 1962.
• Wills, Garry. “Negro President”: Jefferson and the Slave Power. Boston: Houghton Mifflin, 2003.

Instructor Notes on Accuracy and Teaching

Historical accuracy: The essay follows the deck’s order while correcting or qualifying several points: Louisiana (1812), not Missouri, was the first state from the Louisiana Purchase; the Senate was evenly balanced (eleven free and eleven slave states once Alabama entered in December 1819), not under Southern control, and Northern defectors helped defeat Tallmadge; Gibbons v. Ogden struck down the New York monopoly because it conflicted with a federal license and did not rule that federal commerce power is exclusive; Dartmouth protected charters as contracts but left states free to reserve the right to amend or repeal them; “I cannot find this power” is a paraphrase, not Madison’s words; the Philadelphia unemployment figure comes from Mathew Carey’s committee survey of thirty selected trades; Clay’s “American System” as a named program dates to about 1824; Marshall’s exact words are “the power to tax involves the power to destroy”; and “the Monster” as a nickname for the Bank belongs mainly to the 1830s Bank War.

Historiographical balance: The interpretation follows the lecture’s nation-building framing (Howe, Newmyer) while giving weight to Larson’s point that constitutional arguments carried regional interests, Horwitz’s attention to who benefited from Marshall’s law, and the debate between reading the Missouri Crisis as a contest for political balance (Forbes) and as a moral struggle over slavery (Mason). It avoids both a story of calm unity and a straight line to the Civil War.

Narrative potential: Strong teachable scenes include the Hartford Convention messengers arriving after New Orleans, Monroe’s 1817 tour, Calhoun urging Congress to “conquer space,” Madison’s last-day veto, Clinton pouring Lake Erie water into the Atlantic, McCulloch the scheming cashier, Webster and the “small college,” Vanderbilt dodging process servers in New York harbor, Tallmadge daring the South to fight, Jefferson’s fire bell, Ohio agents carrying off the Chillicothe branch’s money, and families watching their farms sold at sheriff’s sales.

Historical-thinking spine: Context explains the postwar nationalism of 1815 and the collapse of the Federalists; Cause links the war’s lessons to the nationalist program and links credit, cotton, and world markets to the Panic; Consequence appears in the Marshall Court’s national framework, the Missouri line, and the anti-Bank politics of the 1820s and 1830s; Evidence can be modeled through Madison’s veto, Marshall’s opinions, the Tallmadge debate, Jefferson’s letter, and Carey’s survey. The open question about power, interest, and morality keeps the analysis from collapsing into a single verdict.