Among our Founding Fathers, George Washington is often cited as being. “First in War, First in Peace and First in the Hearts of our Countrymen”. To this I would as “First in American Capitalism” and “First in American Economic Development”
George Washington’s Patowmack (Potomac) Canal: Midwife of the American Constitution
In this module I start the case that George Washington was America’s first modern, i.e. capitalist, economic developer. He grew up in the very beginnings of industrial capitalism, and appears to have bought into it at a very early age. One realizes this all the more when one appreciates that capitalism in America commenced from a different economy and level of economic development than Great Britain, whose thousand years of history and development previously developed reserves of capital, and had laid meaningful political and economic institutionalization that could support and sustain meaningful economic growth.
Not so, of course, in the newly-settled wilderness of the New World. Washington realized early that capital needed to finance industrialization had to be domestically accumulated, i.e. America’s potential could be unleashed only if its residents controlled their own affairs, and did not rely on what today we call “foreign direct investment” and governance by outsiders. He recognized early on that such capital could be accumulated using the New World’s greatest asset: a continent of sparsely settled land that could be assembled and then sold to new immigrants and mobile residents. To make that possible he quickly grasped that such settlement required an initial infrastructure–principally safer, more timely and inexpensive access into hinterland and the continental interior. This led him–as early as 1770–into his committed advocacy of developmental transportation infrastructure (DTIS) as the initial first priority in American ED. DTIS following his vision, and resting on his persuasive advocacy and personal–and honest-commitment to the ED strategy, provided core legitimacy to what evolved to be America’ First ED Paradigm.
As this module describes, Washington’s early leap into ED was abruptly “disrupted” by the drift and then entry into a war of American Independence. As any eighth grade youngster should already know, he led our forces through that war–and mixed bag as a general through he was–led it to eventual success and the commencement of peace talks in early 1783. While awaiting its final conclusion, General Washington wasted no time in anticipating his return to civilian life, to his previous commitment to DTIS as a now-independent nation initial economic development strategy. After only two short years laying the foundation and developing a plan for how that strategy could be effectively implemented, he quickly came to the conclusion that America’s first national government required fundamental reform, and even reorganization. Pursuing his personal DTIS project, the Patowmack Canal in Virginia/Maryland, he understood the Articles of Confederation were not adequate to sustain meaningful economic development. His efforts at reforming the Articles in rapid order became an rethinking of the Articles that within a year produce a new constitution–our Constitution, and its acceptance as the new national government for the old thirteen colonies.
As such, George Washington served as the Midwife of the American Constitution and his DTIS strategy and project was responsible. That strategy, and the centrality of ED and economic growth further prompted him to understand the need for a coherent political force, the first political party (although he would not call it that) the Federalist Party, whose agenda rested on ED and the building of institutions of governance and economy that were required if that strategy be effectively implemented. Elected, without opposition so great was his moral weight and under-hyped political leadership, he was elected President and proceeded to implement that political agenda in his two administrations.
We will deal with his years in the Presidency in a later set of modules, and in Theme 2, but in this module, and in several that follow, we will describe his ED/DTIS path that led him into the political thicket of Articles reform: the Patowmack Canal. That project fleshed out his fledgling DTIS strategy, and as we shall soon see, uncovered the need for additional ED strategies if DTIS was to be successful. Innovation and the development of new transportation technologies, the need for private venture (equity) capital, the realities of what “developmental” truly meant in terms of required governmental involvement, and the partnership of the private sector in what today call a public/private partnership. For the latter set of concerns, Washington seized upon a medieval organizational structure, and adapted it, imperfectly as it turned out, to serve modern ED needs. In so doing, he legitimized America’s first major EDO: the state-chartered corporation. He also stumbled upon what would be the core ED-related requisite strategy required to implement DTIS: nation/state/city-building which installed the institutions necessary for governance and economy.
His impact on the nation’s economic development did not go unrecognized. The Early Republic “think tank” devoted to “internal improvements” that evolved from his success and leadership in DTIS s, : the Pennsylvania Society for the Promotion of Internal Improvements (founded in 1824-1825, including in its members individuals such as Nicholas Biddle, President of the Second National Bank), looking back over the past history of American internal improvements attributed the “internal improvement movement” founder to be none other than “in the states of Virginia and Maryland upon the Potomac under the auspices of the illustrious Washington,” “with noble emulation of the public spirit [spread] to other states according to their natural advantages” [1].
Background to the Patowmack Canal Project
Washington as Economic Developer
I think his hair looks like Trump’s
In this module, a brief presentation of President George Washington’s role as an active private economic developer prepares the reader for his city-building of Washington DC and for his leadership in implementing the Federalist Tribe’s great agenda during his Presidential administrations. I will also argue that his private economic development activities, the Patowmack Canal in particular, led to his leadership in reforming the Articles of Confederation which in short order led to the writing of our American Constitution. Washington, despite his “heavy” rather boring, face on a pedestal current image, was an interesting character. His was a pre-industrial age; the American national economy was agricultural, with an associated trade/export and finance agglomeration. The Mount Vernon plantation was by today’s criteria, an example of a private EDO in that economic system.
But in this module we do not write about the plantation. In my view that was secondary to his real day job: a major financial investor who opened up the (Midwestern) wilderness for settlement and city-building. In that role (especially when, as described in As Two Ships, combined with his profound interest in early canal-building) Washington was a transition figure in the opening up of the “Wilderness”–from Pittsburgh and Shenandoah Valley to Ohio and eastern banks of the Mississippi River. The closest he came to being an agent of early American industrialization, however, was his leadership/support of Alexander Hamilton–but that is another story altogether.
A page from Washington’s Code book listing his agents
Pre-President Washington had been a colonial economic developer, as well as planter and general. In the first role he falls off his pedestal, and in return a bit of his personality is revealed. Washington, like Trump, was a real estate speculator. He owned land from Virginia, to Pittsburgh into the Ohio Valley, into New York, as well as parcels around today’s Washington D.C. He owned extensively in West Virginia and Kentucky. At his death, it is claimed that he was America’s richest man (his estate, not including Mount Vernon, was valued by Washington around $780,000 in 1798 dollars—Mount Vernon plus stocks and bonds, not including slaves, added about a half million more).
I’ll leave it mathematicians to figure what that comes to in 2018 dollars [v]. In any case, the bulk of his fortune derived from real estate in mostly unsettled (by Europeans) geographies. He captured the nation’s richest man title when his compatriot Robert Morris, another major real estate speculator, went bankrupt and sold his land to Dutch investors who formed the Holland Land Company (it was composed of most of Upstate New York, stretching to Rochester-Buffalo [vi]). Washington on the other hand obviously prospered–speaking volumes about his real estate prowess.
Fort Pitt 1759
He was a Mason. Masons served as his network/Rolodex /following for clients, investors, and property management. At the time commentators claimed he owned at least 100,000 acres directly, and 15 million indirectly through his investor-subsidiaries [v]. His first known purchase was in 1750 (450 acres in western Virginia). He bought 15,000 acres around Fort Pitt (downtown Pittsburgh, Point State Park) and acquired land bounties to amass nearly 40,000 acres. He continued to invest heavily throughout his lifetime, and invested aggressively in canal-building as well. If you are still in the mood another Washington ED tale [xi]
His “Art of the Deal” apparently consisted of three principles: buy (or claim as bounty for public service) as much good land as possible, trade poor land for better land whenever possible, and never sell for cash”.[v] He preferred renting the land which tenants would improve by their labor. He speculated on land across Virginia’s Blue Ridge Mountains, into Ohio and Kentucky. This was risky under the best of circumstances; Indians still dominated most of it during his lifetime. It adds, however, for those who know their history, another dimension to Mad Anthony Wayne and Fallen Timbers. Indeed, Washington’s curious and complex relationship with Native Americans is important to understanding early American S&L ED [xx]. His Secretary of War (Henry Knox), for example, laid the foundation and approved the “sovereign nation–reservation” system (for want of a better word). [See footnote iv below}
Gordon Woods cites a letter in which 1795 President Washington wrote: “If I do not sell my lands on the Ohio and the great Kanawha (West Virginia) in a lump—or at least by whole tracts they will not be sold at all by me. These will sell for fifty percent more at this time than I would have sold them for two years ago”[v]. Hmm … Sounds like we need a special prosecutor.
Washington DC– As President, Washington was determined to build a new nation’s capital–to replace New York City and Philadelphia. This was not America’s first city-building by any means, but it was the first actually done by a sitting President. Also the methods, and the design (Pierre L’Enfant) became a viable model for other early city-builders in the Mid-Atlantic and Ohio. The story in the next paragraphs outlines Washington’s role as Washington D.C.’s first city-builder and transition figure of American ED.
When Washington died, he was believed to be America’s richest man. By 1770 Washington was among the nation’s largest landowners. In addition to Mount Vernon’s 8,000 acres he owned considerable acreage in Virginia, along the Potomac (Maryland), and over 33,000 acres in Pennsylvania’s Ohio River Valley–including Pittsburgh’s downtown. He already ranked pretty high when he participated in the writing of our Declaration of Independence in 1776. The salient observation was Washington had accumulated considerable reserves in land assets [2] which served as collateral for his projects–but perhaps more importantly established him not only as a general, but a substantial private business leader. His network of business contacts may easily have outdistanced his political cultures–albeit in an age when business and political overlapped greatly. His Rolodex was massive, and his letter-writing (lost to history) equally huge allowed him to work in the shadows, more persuasive than public hectoring. His fascination with cross-Appalachian settlement is evident in his vocal opposition to the 1763 Royal Proclamation which forbade such settlement. That proclamation, and his earlier failure to receive a military promotion in the British army in 1755 may have been defining events in his politics which in the 1760’s moved consistently towards opposition to British colonial rule.
Well-traveled throughout the Thirteen Colonies, arguably he was among the very few of American elites who had not only been to each, but into the wilderness areas as well. His pre-war advocacy of transportation infrastructure to promote ED (DTIS) resulted from one such interior expedition. Upon his return from an extended 1774 trip into Maryland, Pennsylvania and Ohio hinterlands (there were previous excursions as well), Washington personally proposed to the House of Burgesses (Virginia’s colonial legislature of which ) that at public expense a passageway be installed along a specified route into the hinterland. That project would be too expensive was the legislative reaction. So Washington immediately countered with an amended proposal that the Legislature empower private individuals through a state chartered corporation to conduct the enterprise. Washington’s proposed route, however, ignored the Potomac (concentrating on the James River around Richmond), and northern Virginia (Potomac-based) legislators opposed his amendment. So a final bill was drafted to include the Potomac River–but it never made it to the vote [3]. The amendment, it appears had the votes to assure passage, but the session term expired–and events in Boston altered the Virginia, indeed national, agenda. Continental Congresses, “Give me Liberty or Give Me Death” speeches, and Washington quickly left for Philadelphia. By 1775 Washington was fully consumed with the forthcoming American Revolution. The rest of the story is well-known.
The ED project that stirred his juices, as he wound-down his military obligations during the Peace negotiations, was his long-neglected Potomac/James Rivers DTIS opening Virginia’s hinterland. By that point a combined river and canal system extending deep into (West) Virginia seemed the only feasible mode of transportation. As the largest Potomac River landowner, he wanted such a canal to open up western hinterlands for economic growth, population migration, and his personal profit. As a younger man he advocated the James River and the construction of a Kanawha Canal. The James, wholly in Virginia, was the easier route because Pennsylvania’s/Maryland’s cooperation, required for a Potomac venture was uncertain. In any event, the basic geographical reality he confronted was that America’s Atlantic coastal rivers flowed from high in the Appalachian Mountains to its coastal port cities (west to east–from high to low). As one might suspect, rivers also flowed from the westward side of the Appalachians, which meant extending the project scope to include a different river system that flowed into the interior–and frequently touched the mother-of-all American rivers: the Mississippi. One had to connect at least two river systems to penetrate into the interior.
The idea of a single canal up, over, and down the Appalachian was dead on arrival. So the James River, Kanawha or Patowmack Canal is a bit of a misnomer. Canals were employed only in troubled spots; for the most part, the river itself was used. With a few exceptions, one major, when we refer to a canal it was a hybrid river/canal system from the start–and remained so for its entire existence (although in later years rail could substitute for canal). Canals were necessary to deal with trouble spots on the river, which for the most part occurred around the infamous “Fall Line”. As rivers descended, they often encountered areas in which the descent was more rugged and dramatic, while in most other areas the descent did not create insurmountable problems. The Fall Line was obvious a stretch of geography which ran along the entire mountain chain where the descent was dramatic, causing rapids, rocky interrupted waterways, and extremely shallow depths. Portage, avoided the river entirely, and carrying boats and cargo on one’s back was the usual recourse to the Fall Line. For this reason a series of small urban centers ran from Pennsylvania to Georgia along the Fall Line; they were “break-bulk” transshipment centers where one switched from one vehicle to another and where cargoes had to be transferred manually. The Patowmack project had to at minimum overcome this Fall Line issue–that is where the canals would be built. Canal and lock technology, imperfect and relatively expensive, was on the whole adequate for the Fall Line in 1780. Instinctively, Washington sensed he was traveling to the moon without a rocket ship.
Washington’s 1783 Mohawk Valley Tour
In July 1783, two months before the 1883 Treaty of Paris that ended the Revolutionary War was signed, Washington, still General Washington, toured the Mohawk Valley. Starting at Albany and proceeding on to Lake Erie by July, overawed by its vastness and raw economic potential, he recorded in his diary to “view a tract of the country which is so celebrated for the fertility of its soil, and the beauty of its situation“. Focusing a great deal of his attention on military matters, particularly around Fort Schuyler, whose namesake the “real” Gen Schuyler was a member of the tour. The latter quickly bought the land the fort was on, and area around it–lending credence that the Mohawk tour also included non-military agendas. The original intent seems to have been to purchase a mineral springs near present-day Saratoga–which General Schuyler also acquired after Washington demurred. On Aug 1, they reached Otsego Lake (Cooperstown) where he no doubt slept at the Baseball Hall of Fame. Anyway, he wrote a letter to the Marquis de Chastellux (general and liaison of the French Army to Washington) which he made admitted what was in the back of his mind during the trip:
Washington also bought land as well. The trip lasted 19 days and ended around Buffalo.
BTW on the was an Italian Count (cultivated by Washington as a potential investor), Alexander Hamilton who was to Schuyler’s son-in-law–and about 35 others notably including a certain George Clinton (who named two of his children, George and Martha Washington Clinton), who later became New York’s first Governor and Senator, and incidentally the fourth Vice-President of the United States (Jefferson and Madison’s), and a founder of the Democratic-Republican Party–opponent of one Alexander Hamilton. George Clinton’s future personal secretary was his nephew, the son of his brother General James Clinton who rode with Washington in the Army’s final NYC victory parade, the future Governor Dewitt Clinton–builder of the Erie Canal–but that is a separate story to be told later. Dewitt Clinton did not go on the tour; he was fourteen at the time.
On the tour Washington wrote a letter to a personal friend, a French Marquis–the French military liaison to the Revolutionary War American army. The letter sets the stage for the tour as an important input into a more sophisticated and robust DTIS, but also one in which bolstered his personal enthusiasm and commitment to it importance. Washington noted:
I could not help taking a more extensive view of the vast inland navigation in these United States, and could not but be struck by the immense extend and importance of it, and the greatness of that providence which has dealt it favors to us with so … profuse a hand. Would to God we may have the wisdom enough to improve them. I shall not rest contented until I have explored the western country, and traversed those lines or a great part of them, which have given bounds to a new empire. [4]
As Washington stressed in his letter to the Marquis, he was fearful the nation would not embrace his passion to open up the western territories and realize their immense economic potential. Washington finished the tour convinced the newly independent United States, and its Articles of Confederation, was directly threatened by the still open and vast expanse of America’s continental hinterlands-almost all, save the present day east of the Mississippi Mid-West and South Central territories, were held by foreign powers. Unless and until that land was secured, and economic prosperity generated from it, the United States was politically vulnerable.
So in his mind it was imperative that these territories should be quickly settled, and that required access to migrating populations, and transportation of goods and produce to and from these territories from coastal port-cities. The raw power of the rugged Appalachian Mountains stood In the way of this access and made transportation of goods and produce and overcoming that became in his mind a matter not only of personal profit and economic growth, but of national survival. In 1784 roads and turnpikes could provide access to migrating populations, but goods and produce was another matter. These heavy bulk products would never make across the mountains unless an affordable and cost effective mode of transportation into the interior were available. Probably already truly committed to canals and rivers, Washington almost became obsessed by it in the subsequent several years.
Washington fervently believed the Potomac River was superior “to open and make easy” access to the west. “The navigation of this river is equal, if not superior to any in the nation. This will become the great avenue into the Western Country” [5].
Return to Virginia and Mount Vernon: Washington’s Aborted Retirement
A few months after the tour, General Washington stood down from his command (December 23, 1783 in Annapolis, the temporary national capital) and returned to Mount Vernon. His interest in the long-postponed canal project quickly returned, if not put on steroids, by his tour of the Mohawk Valley, and he entered into a letter-writing conversation with his friend (among many others) Virginia neighbor and close friend, a fellow who was also interested in canals and opening up the western hinterlands, motivated by his own ownership of Potomac land: Thomas Jefferson.
Jefferson responded to the former General in March 1784, that “nature then has declared in favor of the Potomac (River) and through that channel offers to pour into our lap the whole commerce of the western world. But, unfortunately the Hudson [route to the west] is already open and known in practice; [while] ours is still to be opened“. Washington responded “With you I am satisfied that not a moment should be lost in recommencing this business [of opening the Potomac], as I know the [New] Yorkers will lose no time to remove every obstacle in the way of the other communication [Hudson canal opportunity] [6].
In yet another letter, in which Washington wondered if he should leave his retirement and Mount Vernon to tackle this pressing need and opportunity, Jefferson saw his opening and responded the contemplated project would not be easy and that “a most powerful object always arises to propositions of this kind, that public undertakings are carelessly managed and much money spent to little purpose“. To break that potential threat to the project he tentatively asked Washington if Washington’s “superintendence of this work break in too much of the sweets of retirement and repose. If they would I would stop here … But [if you accepted the burden] what a monument of retirement it would be” [7]
In a return letter to Jefferson, Washington thanked Jefferson that advice from such a “financially disinterested man of discernment and liberality views the public benefits of the project as I do, who have lands … the value of which would be enhanced by the project”. He agreed with Jefferson that ‘from trade our citizens would not be restrained, and therefore it behooves us to place it in the most convenient channels [public-private entity], under proper regulations, freed as much as possible from those vices which luxury {Then-current phraseology for today’s inequality–see Articles debate module], the consequence of wealth and power, mutually introduces [8].
Washington assumed the burden of opening up the west through a network of rivers and connecting canals. Virginia’s canals, it turned out, got the head start, contrary to both Washington and Jefferson’s fear of the New Yorkers. Since Atlantic coastal rivers flowed west to east, from the Appalachians to the ocean, i.e. horizontally, American coastal geography created an inherent zero-sum contest between North and South, and the five or six coastal ports. True or not, “being first” was perceived as creating a winning momentum. But there was a lot to do before he got start digging., Washington had to get his “ducks in order”–plan the route, figure our what infrastructure was needed, and how to build it–and who was going to pay for it. Keep in mind, unlike the other rivers, the Potomac did not enjoy the luxury of having a major coastal port. For the canal to be effective, Washington and his allies would have to build one. The first step, in any case, was to survey the area and visually determine what went where. In modern parlance, Washington was now developing his plan, marshaling his technology, and developing his business model and budget for the entity entrusted with the task.
Washington’s 1784 Appalachian Tour
So on September 1st 1784 (hoping to beat the winter) Washington took off, leaving his precious Mount Vernon harvest to others, and headed off into the wilderness of western Virginia, Maryland, and Kentucky. Accompanying him were three men, one his doctor, James Craik, former Chief Physician of the Revolutionary Army–on Dec 12, 1799 it was Craik that administered to Washington on his deathbed.
By the 24th he had reached deep into (West) Virginia borderlands, two hundred miles away from Mount Vernon, at the intersection (headwaters) of the Ohio, Monongahela, and Potomac. Washington’s immediate interest was connecting these rivers with the Ohio, where he owned considerable acreage. The trip meant river travel, portages and carrying boats, and simply going on foot for considerable distances. This is deep into the Appalachians. The route was rather comprehensive, and by October 4, it was estimated he traveled about 680 miles–Washington was then 52 years old.
At some point in late September, Washington held a meeting, a planning session, at a minuscule tavern in a minuscule community called George’s Creek deep in the Appalachians (Maryland). Earlier Washington had build Fort Cumberland in that valley (1754), surveyed it with Braddock’s Army, and he would return to it during the 1794 Whiskey Rebellion. In the evening, a small crowd gathered at the tavern, which was also the area’s land agent’s office (and home). Local hunters and surveyors were invited (they knew the area best), and there Washington interviewed each and discussed the route and the features of the terrain that were salient to his purposes.
No consensus seemed to emerge, and discussion was going in circles when a young surveyor loudly spoke out in a French-German accent that he had the route. When Washington expressed skepticism, the young surveyor pushed back: “Oh, [the route} is plain enough”, detailing his proposed route to a clearly unhappy Washington. It is related that Washington put down his pen, stared back angrily, generating further discussion among the attendees–in the midst of which Washington again put down his pen, turned to the young surveyor and simply said “You are right, sir“. After sleeping in the tavern for the night, the next morning, Washington offered the surveyor a job to manage his western Virginia landholdings, which the surveyor turned down. Martin Doyle adds further detail to the episode [9].
The surveyor, a recent Swiss immigrant had made his way into the interior to survey for his own land purchases which would be critical for roads and river-borne access. His intent, like Washington’s, was to buy it beforehand, and have it ready and waiting for future sale. The surveyor was Albert Gallatin. Gallatin’s role in American S&L ED is substantial–his will be the nation’s first federal/national level economic development plan–a plan that was not put on the shelf but aggressively implemented over the following thirty years. Albert Gallatin, became Democratic-Republican Secretary of the Treasury for fourteen-years under three presidents (1801-1814), serving on the 1812-ending Treaty of Ghent, and founding the Second Bank of the United States. We will return to Gallatin in a future module.
Washington Builds His Canal: 1784 with his State Chartered Corporations
On Nov 16 1784, along with Lafayette, Washington directly proposed to a Virginia State Legislative Committee, chaired by Thomas Paine, his bill for calling for the approval of an entity to survey and appoint a commission (i.e state chartered corporation) to promote/conduct his “internal improvement” project, as further detailed in a letter he sent to Governor Harrison. At that time, Washington expressed to Lafayette, a man he considered his adoptive son, what Lafayette took as his sincere rationale behind his proposed project:
I wish to see the sons and daughters of the world in peace and busily employed in the more agreeable amusement of fulfilling the first and great commandment–Increase and Multiply; as an encouragement to which we have opened the fertile plains of the Ohio to the poor, the needy, and to the oppressed of the earth … The ways [to accomplish this]are preparing, and the roads will be made easy, through the channels of the Potomac and James River” [10].
In the letter to the Governor, Washington pressed for near emergency funding for his new project. Pennsylvania he asserted was likely to press ahead and capture the opportunity of opening up the Ohio by developing the Susquehanna despite a “heavy cost” because …
such a people … possessed of the spirit of commerce, who see, and will pursue their advantages, may achieve almost anything’. That New York will also attempt to capture the trade by means of the Hudson [is also certain] … ‘no person who knows the temper, genius, and policy of those people as well as I do can harbour the smallest doubt… But in Virginia there is jealousy lest one part of the state obtain an advantage over the others, as if the benefits of trade were not diffusive and beneficial to all” [11].
On December 15th the bill, fleshed out by the Legislature, to open and extend the navigation of the James River, permitting subscriptions to finance the state chartered corporation to conduct the endeavor. Along with a second bill, duplicating the the first by empowering a similar state chartered corporation for the Potomac River, the two bills were approved on January 5, 1785 [12]. On its terms the legislation authorized/required each state to purchase 10% of the shares in each corporation. With the aggressive support of Madison, and Governor Harrison, legislative passage overcame numerous legislative concerns–indeed the legislature purchased additional shares, beyond the legislation and gifted them to Washington in appreciation for his war-time leadership and service. That gift, as we shall see below, opened up a can of worms for a man who regarded himself as a national role model. Facing equally rough going across the Potomac, his friend, and signer of the Declaration of Independence, Governor Charles Carroll steered it through the Maryland legislature. Pennsylvania’s cooperation, however, was another matter entirely.
As he stated in his letter to the Governor, Pennsylvania seemed on the brink of starting its own canal project. Its chief proponent was among Washington’s closest of friends–the man who almost single-handedly financed the Revolution, and literally bought food/ammunition at critical times for his troops at Valley Forge. Reputed to be America’s richest man, Philadelphia’s Robert Morris also had his own ideas about opening up the West–for his home base Pennsylvania and Philadelphia. It is not impossible that he was attracted to that venture by his conversations with Washington during the war, but at war’s end, state patriotism and his personal profit made him see an opportunity. Washington knew all this, and he attempted to deal with Morris core motivations by offering Morris a stake in the forthcoming Patowmack venture.
That stake Washington said would allow Morris to reap to become the “first great trader to set up a branch of his mercantile house [sort of bank/insurance/logistics company] at Alexandria“. Alexandria, Washington argued “would by means of cheap water transportation provided by the canal obtain the great traffic of the surrounding area on which Baltimore on the land route now lives. But a large capital–that is capital houses, large wholesale stores, as well as commercial spirit–is required in the town. The local traders cannot compete with the with the great towns because they are small traders forced to import or purchase their goods in the country areas on credit, consequently retail dealers in the interior go to Baltimore and Philadelphia for the purchase of their import and sales of their staples [exports] [13]. Morris never took up on the offer, and he built his canal after all–incorporating his state-chartered corporation (Delaware and Schuylkill Navigation Company) only in 1792, however, and his seventeen mile canal was never fully completed because Morris hit upon hard times, went bankrupt, and imprisoned in debtor’s prison for eighteen months. That however, is another story for another module.
In any event Washington was subsequently elected President (and CEO) of both corporations created by the Virginia/Maryland legislation. The more important of the two was the Patowmack Canal Corporation on the Potomac, which will shall focus on in the remainder of this module. Both corporations had a long, semi-successful existence (described more fully in Theme 3’s case study of Virginia’s Early Republic DTIS strategy). The corporation was what remained of his earlier 1774 efforts to open up a Virginia-based passageway to the West. Renaming the company to Patowmack Canal Company, he effectively abandoned his earlier James River efforts and concentrated on the Potomac, the shortest route into Ohio found anywhere in the nation. To him “Nature then has declared in favor of the Patowac (Potomac), and through that channel offers to pour into our lap [he was writing to Jefferson] the whole commerce of the western world“. [14]
Hard to believe as it might be, Washington as President of the Corporation did continue to play an active role in the management of the canal during the period after 1786, when political/Articles’s reform took him elsewhere. He delegated to be sure, but even as President he kept an eye on the project. That involvement continued through his Presidency, and upon retirement in 1796, as an active shareholder he was still involved–to the end. On December 10, 1799 he voted his 73 Patowmack shares (apologizing for being in absent because he was too sick to travel) for the last time, dying two days later [15]. During the 1790’s, five locks would be constructed and an effective, although incomplete, “passageway” was achieved. This was done while Washington was away, serving as President of the United States (he remained on the Board of Directors); still it was a meaningful achievement for the project, which, after its initial lean years, offered a great dividend and enjoyed reasonable volumes of shipping[16] .
Connecting the two river systems was another area where canals were employed, often considerably longer than the Fall Line canal. That discussion, however, takes us into different time periods and will be considered in later modules.The State of Virginia, in one of what would be a seventy-five year long periodic spasm in funding private canal-building, acquired 340 of the 701 shares in Washington’s ($150,000) Corporation. It also acquired 70, half of the shares, in the James River Company ($70,000) as well. In a sort of “BTW” it also purchased $17,000 in stock for the Great Dismal Swamp Canal (total $100,000)–and granted it the first known tax abatement as identified by the U.S. Supreme Court [17]. Knowing Washington’s interest in canal-building, the Virginia legislature granted Washington personally, then a private citizen, 150 shares of the James River and Potomac canal companies “in return for his services to the state and [his dedication] to the cause of canal-building” . This gift threw Washington into a total dither—should he accept them or not?
As Wood describes Washington’s reaction, it is clear the decision was a very serious matter to Washington, critical to his personal integrity and appropriateness. Accordingly, Washington widely sought reaction and advice. Personally, he deeply believed in canal-building, not only to make money, but also to unify the nation by making travel and commerce easier. But he also believed to accept the shares would seem a public gift—a gift which compromised his most treasured asset, his “disinterestedness” (no conflict of interest). “Few decisions in Washington’s career caused more distress than this one”[18]. Thomas Jefferson convinced him to decline the shares “donating” them instead to the college that eventually became Washington and Lee. The donation valued at $20,000 was said to be the largest gift made to a university as of 1796.
Washington’s Behind the Scene Role in the American Constitution
The problem with the Potomac as the opening to the West was it required the cooperation of two rival and competing states, with a past history that included an invasion of Maryland by Virginia at the time of the Glorious Revolution. The two states “did not get along”. The Potomac River was a border between the two states and its use clearly required their cooperation–which Washington never came close to getting.
So he involved officials of the national government of the Articles of Confederation, and even tried to secure the Article’s Congressional approval of two state chartered corporations (Virginia and Maryland) state-chartered corporation’s use of the River for its hybrid river and canal waterway. In a letter to Jefferson in 1784, he wrote that a “treaty” for interstate commerce on the Potomac was impossible because of the “incertitude which prevails in Congress (Article of Confederation), and the non-attendance of its members“.
In frustration, he enlisted support of a close friend, James Madison, a Virginia legislator at the time. Madison secured approval by the legislature of a joint meeting between delegates from Virginia and Maryland to negotiate an agreement on the use of the River for interstate commerce. Another Maryland friend-legislator secured equivalent legislation from the Maryland legislature. Unfortunately for Washington, Virginia limited the discretion allowed its delegates–and in both instances future legislative ratification was required by both state legislatures and the Articles of Confederation Congress.
Delegates were named and, with one day’s notice, Washington invited them to Mount Vernon to negotiate the agreement. A far-reaching agreement was, in fact, negotiated in March 1785 (less than two months after the formation of the Patowmack Canal Company)–and called the Mount Vernon Compact. Its terms could have been sufficient for Washington’s purposes, and both state legislatures subsequently ratified the Compact. But–and there is always a But–the Articles of Confederation Constitutions required that an interstate meeting required their approval–beforehand, which, had not been secured. Washington was furious. And given the status of Washington all sorts of noise arose. Other states expressed “concern” about the Compact, fearing most likely it would give these two states an advantage in opening the West (Pennsylvania was the most outspoken), opposition in the two state legislatures gathered steam and found a variety of deficiencies, some legitimate, to reconsider their earlier approvals.
Madison seized the bit, and secured approvals from both Virginia and Maryland to call, on behalf of both states, to a “convention” to be held in Annapolis in early 1786, the purposes of which were to “consider how far a uniform system in their commercial regulations may be necessary to their common interest“. Twelve delegates, representing five states arrived in September 1786 for a conference and after three days of discussion resolved that the matter was crucial, that interstate commerce was essential to both the security of the new nation and economic growth, but that the attendees lacked authority to negotiate an agreement on behalf of all the states in the Articles. The Convention Report, drafted by Alexander Hamilton, called for a convention of all states to be held eight months later in Philadelphia. Its purposes would be to amend the Articles of Confederation to resolve issues associated with “commercial intercourse and regulation“, “having as its object the Trade and Commerce of the United States” and it asks the delegates to the proposed Convention:
to take in consideration the situation of the United States, to devise such further provisions as shall appear to them necessary as to render the Constitution [of the Articles] of the Federal Government adequate to the exigencies of the Union, and to report such an act for that purpose to the United States in Congress assembled, as when agreed to by them, and afterwards confirmed by the legislatures of every state, shall effectually provide for the same [Hamilton’s Report from the Annapolis Convention [19].
Delegates from each state met in Philadelphia in July 1787. Having resolved issues that could not be handled satisfactorily under the existing Constitution of the Articles, the delegates (meeting in secret) decided to form an entirely new form of government, around an entirely new Constitution. Today that Convention is known as the Constitutional Convention–and the Constitution it produced, subsequently ratified, was the original Constitution of our American Republic. I might add that George Washington was elected to “preside” over this Constitutional Convention, and he moderated its discussion.
Footnotes:
[1] Carter Goodrich, Government Promotion of American Canals and Railroads 1800-1890 (Greenwood Press Publishers, 1960), p. 21.
[2] Washington’s methods for obtaining much of this land, through free bounty by the colony of Virginia for his participation in the war includes some troublesome aspects in my assertion of personal integrity as a principal hallmark of this man. He was very much politically responsible for the Governor’s issuance of the bounties to the soldiers. Secondly, Washington purchased the bounties from many of the soldiers for a discount, claiming that they were for parcels that were hilly or rocky and unsuitable for purchase by others–the veracity and accuracy of such being unable to prove, but is not above suspicion. Similarly John Adams purchased the mortgages for American Revolutionary War veterans to lands in western Massachusetts, when they later went into bankruptcy. This speculation by Boston elites in the troubles of western Massachusetts veteran landowners was a major factor underlying Shays Rebellion.
[3] Wayland Fuller Dunaway, History of the James River and Kanawha Company (Columbia University Press, 1922), p. 12.
[4] http://threerivershms.com/washington.htm
[5] Quoted from Washington and Jefferson correspondence by Peter Bernstein, Wedding of the Waters:. the Erie Canal and the Making of a Great Nation (W. W. Norton, 2005), p. 69.
[6] Quoted from Washington and Jefferson correspondence by Peter Bernstein, Wedding of the Waters: the Erie Canal and the Making of a Great Nation (W. W. Norton, 2005), p. 64.
[7] Quoted from Washington and Jefferson correspondence by Peter Bernstein,Wedding of the Waters, p.70.
[8] Joseph Dorfman, the Economic Mind in American Civilization, 1606-1865, Volume I (Viking Press, 1946), pp. 249-50. March 29, 1784 letter to Jefferson, included in Washington’s Writings, XXVII, October 10, 1784, pp. 373-7.
[9] Martin Doyle, the Source: How Rivers Made America and America Remade Rivers (W. W. Norton & Company, 2018), pp 20-1.
[10] Joseph Dorfman, the Economic Mind in American Civilization, p. 251; Letter to Lafayette, July 25, 1785, Washington’s Writings, XXVIII, 206-7.
[11] Joseph Dorfman, the Economic Mind in American Civilization, p.250; Letter to Governor Harrison, Washington’s Writings, XXVII, pp. 473-4.
[12] Wayland Fuller Dunaway, History of the James River and Kanawha Company (Leopold Classic Library, 2018; Original edition, 1922), pp 23-31. This is the most definitive treatment of Washington as a practicing economic developer, in the transition Articles’ period when Washington before became President.
[13] Joseph Dorfman, the Economic Mind in American Civilization, p. 251; Letter to Morris, February 1, 1785, Washington’s Writings, XXVIII, pp. 49-55.
[14] Quote from Mount Vernon https://www.mountvernon.org/library/digitalhistory/digital-encyclopedia/article/the-potomac-company/.
[15] Peter Bernstein, Wedding of the Waters : the Erie Canal and the Making of a Great Nation (W. W. Norton & Company, 2005), p. 75
[16] For the best description of early Virginia attempts, including Washington’s, to use the Potomac to open up the west see Cora Baker Foster, “Early Chapters in the Development of the Potomac to the West” .Records of the Columbia Historical Society, published by Historical Society of Washington D.C., pp. 96-322 (jstor.org/stable/40067035) and Dunaway’s History of the James River and Kanawha Company, cited above. These sources can fill in the detail not included in this module.
[17] Carter Goodrich, Government Promotion of American Canals and Railroads 1800-1890, p.23.
[18] Gordon Wood, Revolutionary Characters (Penguin 2006) p. 44-5.
[19] http://teachingamericanhistory.org/library/document/annapolis-convention-resolution/
Ron W. Coan 