The Patriot Post® · James Monroe, the Financial Panic, and More!

The War of 1812 had highlighted the need for easy movement between regions and unity’s impact on military security. James Monroe inherited that concern. As the nation expanded and additional territorial lands met the requirements for statehood and applied for admission to the Union, the need for internal improvements was obvious. Relatively primitive roads on the frontier, aided only by water transport, made the movement of goods and military assets difficult.

Infrastructure was critical, but how was Monroe to proceed since the Constitution made no specific mention of a national transportation system? Historically, roads and other transport programs had been the responsibility of the states and had been funded by state assemblies or “donated” time by citizens. Monroe suggested that Congress should consider drafting a constitutional amendment granting itself power for internal improvements, but the legislative branch countered that no amendment was necessary since it had “implied” power under the Elastic Clause.

By 1822, the issue came before the people with the passage of a bill to repair the Cumberland Road while authorizing the collection of tolls to pay for the improvements. Monroe vetoed the bill on principle, believing that the states should be involved in the collection of the tolls, not the federal government. After thoroughly researching the concept by interviewing state and federal officials, including several U.S. Supreme Court justices, Monroe backed down. He signed the legislation, allocated funds for surveys, and projected budgets for the proposed road repairs and extensions. Eventually the Cumberland Road, which originally ran from Cumberland, Maryland, to Wheeling, Virginia (today West Virginia), would be extended to Zanesville, Ohio, and a precedent had been established.

Perhaps the hesitancy to fund the road expansions was rooted in the Panic of 1819, which had reminded the president and the nation that financial stability was, well, not assured. The first major economic depression since the early days of the republic frightened everyone. Several state banks stopped paying on their notes and dissolved. The Second Bank of the United States, always controversial, became increasingly conservative, which resulted in less available funds, business closures, increased unemployment, and a widespread panic. Foreclosures threatened people’s most important investments, their homes and businesses.

What action did President Monroe take? Actually, none. He believed that ebbing and falling were natural cycles in the economy and that the federal government — other than the national bank — had little authority to take any action on that front. If left alone, the economy would recover. His only involvement was to authorize the secretary of the treasury to relax payments and foreclosures on any national lands purchased by individuals.

Interestingly, one of the changing segments of national politics was the lessening of political parties and their power. The Federalists had been successful during Madison’s administration in passing the rechartering of the bank and a protective tariff, but their opposition to the War of 1812 had painted them as more interested in their own financial issues than national interests. Monroe, echoing President George Washington’s Farewell Address, believed that political parties did not benefit the nation and that government would work more effectively without the divisiveness and adversarial relationships.

Was he correct? Perhaps, but, as the two-party system’s influence lessened, Monroe was blindsided by the fact that he did not have a “ready group” of supporters who would automatically — well, somewhat automatically — vote for his programs because he was “their man.” Instead, he had to spend a tremendous amount of time creating new coalitions based on specific issues and interests.

But it would be in the realm of foreign affairs where President Monroe and his Secretary of State John Quincy Adams would create lasting policy and increase the nation’s footprint.

Disputes remaining from the War of 1812 were resolved peacefully. The Rush-Bagot Treaty (1817) demilitarized the Great Lakes and allowed both the United States and Great Britain to have one 100-ton vessel, armed with a single 18-pound cannon, on the most critical lakes — Chaplain and Ontario. The following year, the Convention of 1818 created a fixed 49th parallel boundary between the U.S. and Canada from Minnesota to the Rocky Mountains. Coupled with the boundary settlement was an agreement that both the U.S. and Britain would occupy the Oregon Territory.

And then issues in Florida grabbed the president’s and the nation’s attention. Cue Andy Jackson…