At the time, Americans looked askance at private corporations because they enabled investors to limit personal liability for business debts and actions. Entrepreneurs, most Americans believed, should pay their obligations like everyone else or go to debtor’s prison. No less a patriot than Robert Morris, the financier of the American Revolution, would land in prison after a particularly spectacular business failure in 1798. Laws providing for the forgiveness of debts through bankruptcy did not yet exist. Virginia, Maryland, and most other states only permitted the formation of corporations for public purposes—such as toll roads, bridges, and canals—but the state’s legislature had to approve each one individually. Corporations must serve the people, Americans thought.
Washington did not want to go to prison if his navigation project defaulted on its debts, of course, so he needed Virginia and Maryland to incorporate a limited-liability company for it. That concern stood foremost in his mind when he initially wrote to Jefferson that he would consider leading the project only if doing so would not conflict with “that line of conduct with which I mean to glide gently down the stream of life.”60 Negotiating a satisfactory arrangement with two states would give Washington an object lesson in the value of assigning control over interstate commerce to the national government.
Pennsylvania posed another problem. While the Potomac segment of the proposed transit fell entirely in Virginia and Maryland, the trans-Appalachian portion to the Ohio River passed through Pennsylvania. Led by Morris, Philadelphia business leaders wanted to open the Schuylkill and Susquehanna Rivers for navigation, which would funnel western trade through their city. They could restrict the western reach of Potomac River navigation by having Pennsylvania bar the transit of goods across its land. “How an application to [the Pennsylvania] Legislature would be relished,” Washington wrote in his initial letter to Harrison, “I will not undertake to decide; but of one thing I am almost certain, such an application would place that body in a very delicate situation.”61
Accordingly, in subsequent letters about the project, Washington focused on the Potomac part and assumed that westerners would take care of the rest. In a private note, he even sketched out how, with two portages, they could get from the Ohio to the Potomac without passing through Pennsylvania. “Weak as they are at present, they would meet us half way,” Washington wrote of westerners. “This is no Utopean Scheme,” he affirmed. “It wants but a beginning.”62 Despite this boast, without one government possessing authority over interstate commerce, local interests could raise as many obstacles to Washington’s project as the Great Falls of the Potomac did.
WITH A ROUGH PLAN IN MIND, Washington turned to getting approval from the Virginia and Maryland legislatures for a private toll route on the Potomac. To display support and obtain investors, an open invitation went out to “Gentlemen” of both states to attend a meeting on November 15, 1784, in Alexandria to discuss the project. “The objects of this meeting,” the notice explained, “will be to form a company, and determine on the propriety of preferring a petition to their respective Assemblies, praying to be incorporated and favoured with such immunities, as to them may seem proper for such an undertaking.”63
The results of this meeting delighted Washington. Not only did it attract a sizable number of potential investors, but they sent petitions to both legislatures urging the formation of a navigation company. Reflecting the same sense of national purpose that motivated Washington in pushing for the project, one newspaper account of the meeting noted, “The work of the Navigation of the Potomack is, perhaps, a Work of more political than commercial Consequences, as it will be one of the grandest Chains for preserving the federal Union.” Also in accord with Washington’s thinking, the newspaper added, “The Commerce and Riches, that must of Necessity pour down upon us, are too obvious to mention.”64 In this vein, in a letter to Madison discussing the meeting and responses to it, Washington made an observation that revealed much about his view of people and society: “The motives which predominate most in human affairs is self-love and self-interest.”65 In Washington’s mind, the Potomac River project was a viable and worthwhile enterprise precisely because it benefited private investors and the country as a whole. That was how he had seen the American Revolution and that would be how he would see the Constitution: viable and worthwhile because they served both common and individual interests.
If Washington had any doubts about his political clout, the next few weeks should have put them to rest. At the time of the Alexandria meeting, both the Virginia and Maryland legislatures were in session. Washington shuttled between them. Despite resistance in Virginia from interests favoring a James River route and in Maryland from interests favoring navigation on the Susquehanna River to Baltimore, he got his way.
When it looked like the two states might pass different bills, and thus not create a single company, Washington urged that they appoint commissioners to agree on terms. “This would prevent dissimilar proceedings, as unproductive as no bill—save time—and bring matters at once to the point,” he wrote to Madison on December 3.66 No sooner asked than done. Virginia tapped Washington and two others. Maryland named an all-star delegation that included three signers of the Declaration of Independence and a Revolutionary War general.
Washington chaired the meetings, which quickly produced a bill granting everything he wanted. Each state legislature then passed the bill within days of receiving it. Under Washington’s leadership, an issue that had languished in these two frequently feuding assemblies for more than a decade blew threw them both in less than two months. By the first week of 1785, the Potomac Company was chartered in both states. Each state also bought shares in the company and set aside funds to build the portage road.
With Washington drumming up interest, private funds flowed into the new company. He enthusiastically hyped the investment. “Men who can afford to lay a little while out of their money,” he wrote to one potential investor, “are laying the foundation of the greatest returns of any speculation I know of in the world.”67 At the outset of the subscription campaign, he even wrote to Robert Morris—the richest person he knew but also the sponsor of a rival project—touting the benefits of investing in the Potomac Company. “I would hazard all the money I could raise upon the navigation of the [Potomac] river,” Washington advised him. “I have no idea of a better opening . . . to make a fortune.”68 While Morris wisely declined and pushed on with his own project, others opened their purses.
Within six months, Washington could claim, “Of the £50,000 Sterling required for the Potomac navigation, upwards of £40,000, was subscribed before the middle of May, & increasing fast.”69 He bought five of the company’s five hundred shares and was given fifty more by Virginia. At their first meeting in May, shareholders elected Washington as the company’s president and Maryland’s Thomas Johnson as its vice president.
For Washington, the presidency of the Potomac Company became a consuming occupation, though one that he pursued while also managing his plantation and investment properties. His retirement became even busier than before. “The earnestness with which he espouses the undertaking is hardly to be described,” Madison commented about Washington’s work for the Potomac Company, “and shows that a mind like his . . . cannot bear a vacancy.”
Washington threw himself into deciding between cutting sluices through rapids or digging bypass canals around them, hiring supervisors and workers, and even overseeing the means of operation. On field trips, he frequently canoed down the river’s wildest rapids in search of the best place for a channel or to inspect work in progress. “Retirement from the public walks of life has not been so productive of the leisure & ease as might have been expected,” Washington wryly remarked to Benjamin Franklin.70
By the fall of 1785, when Washington sent this remark to Franklin, the company had separate teams of about fifty workers each cutting navigable channels through two of the Potomac’s major rapids. The task involved blasting, digging, and pulling out rocks and b
oulders—and could be dangerous. Some men were blown to bits; many quit.
The company initially used newly arrived indentured servants from Europe for unskilled jobs, but so many of them ran away or died that it increasingly turned to black slaves. No free Americans wanted to do this work on the company’s terms, but slaves eventually got it done. One of them, George Pointer, later recalled, “Yearly in the month of October, General Washington would come to view the progress of the works, and well I recall that at every Squad of workmen he passed, he would give a dollar to.”71 Later, the company turned to constructing bypass canals with lift locks around the river’s two biggest falls.
Progress was sluggish, though: too slow for Washington. “In a boat we passed down the Seneca [rapids] to the place where the workmen were blowing Rocks,” he wrote in one diary entry. “To me it seemed as if we had advanced but little, owing to the fewness, and sickliness of the hands.”72 Still, Washington remained optimistic about the project. During this period, visitors to Mount Vernon often commented that he would talk about little else. “The General sent the bottle about pretty freely after dinner, and gave success to the navigation of the Potomac for his toast, which he has very much at heart,” one guest recalled. “When once he has begun anything, no obstacle or difficulty can come in his way.”73
In fact, in his work on Potomac River navigation, Washington had more success moving human obstacles than physical ones. The project was far from finished in 1789, when he resigned as the Potomac Company’s president to take the helm of the new American government, and the completed waterway never fulfilled his hopes for it. No one made a fortune on Potomac Company stock; the Erie Canal became the main waterway to and from the West; railroads soon replaced canals in linking the union. Intractable physical impediments, like sheer falls, shallow rapids, and steep slopes, doomed Washington’s grand vision for Potomac navigation.
Yet if he could not move mountains, the project proved he could move men. Before he stepped down, Washington followed up on his initial success in getting the company incorporated and funded, with a singular triumph in clearing away political obstacles to its operation through the adoption in 1785 of the landmark Potomac River Compact.
THE PROSPECT OF COMMERCIAL TRAFFIC on the Potomac brought to the fore long-simmering jurisdictional disputes between Virginia and Maryland. Under their colonial charters, Maryland claimed the river, but Virginia controlled its southern bank. The waterway might obscure or alter the boundary. Certainly it would cross it. Further, under the Articles of Confederation, each state was a republic unto itself. It could have its own rules and regulations, taxes and tariffs, and currency. Some states levied imposts on goods from other states. Unless the states cooperated, traveling along an interstate boundary like the Potomac River could impose problems for people and products.
Dealers in goods and services found it easier to stay in one state whenever possible. This situation hobbled the development of national markets even as it protected local businesses from interstate competition. So long as states remained sovereign over commerce, their lawmakers could regulate trade in ways that favored their state over the nation.
Late in 1784, Virginia and Maryland appointed commissioners to address political barriers to Potomac River commerce. They convened for a week of meetings at Alexandria on March 20, 1785, in the midst of a bitter early-spring snow squall. Ever watchful over matters impacting the Potomac Company, Washington soon invited them to move their deliberation to the warmth of nearby Mount Vernon.
A gracious and interested host who liberally lubricated his guests with good wine, Washington made sure that the commissioners reached agreement on critical matters of tolls, tariffs, and trade. They also agreed on shared contributions for navigational aids, common fishing rights, and cooperation in protecting travelers and prosecuting piracy. Virginians gained free access to a river formally within Maryland’s domain. Recognizing that “it wou’d be of great Convenience to the Commerce & Dealings between the Citizens of the two States,” the commissioners even recommended that coins “shou’d pass at the same Value” in Maryland and Virginia.74
The legislatures of both states ratified the thirteen clauses of this so-called Mount Vernon Compact—though not without some opponents objecting that, under the Articles of Confederation, Congress must approve any “treaty” between individual states. Madison served as floor manager for the compact in the Virginia legislature and received credit for its passage. Inspired by Washington’s national vision, historian Joel Achenbach observed, “[t]he two states realized that this was not a zero-sum world after all.”75 Both could benefit from interstate cooperation, and those benefits could multiply if more states participated.
“We are either a United people, or we are not,” Washington wrote to Madison shortly before Virginia’s approval of the compact, and “if the former, let us, in all matters of general concern act as a nation.”76 Only a national government responding to constituent concerns from across the country could do so, he believed. State governments inevitably represented state interests.
Emboldened by this success, and allegedly at Washington’s urging, Madison promptly called for a second convention on interstate commercial relations. At the time, trade disputes like those dividing Maryland and Virginia afflicted many states. Pennsylvania, Delaware, and New Jersey battled over their respective rights to use the Delaware River, for example, while New York, New Jersey, and Connecticut clashed over tariffs imposed by New York on goods entering New York Harbor bound for neighboring states and from those states entering New York. Within days after Virginia approved the Mount Vernon Compact, Madison proposed that its legislature authorize a general meeting on commercial regulations with delegates from all the states. Accordingly, in January 1786, Virginia issued a formal call for other states to send delegates to a convention at Annapolis in September authorized to consider “the trade and commerce of the United States [and] to consider how far an uniform system in their commercial intercourse and regulations might be necessary to their common interest and permanent harmony.”77 Pennsylvania, New York, New Jersey, and Delaware joined Virginia in sending delegates to Annapolis under these terms. In their resolutions, these five states differed only on whether the states or Congress had the ultimate authority to implement any resulting agreements.
Twelve delegates from these states assembled in Annapolis on September 11, 1786, including Madison and Governor Edmund Randolph of Virginia, John Dickinson representing Delaware, and Hamilton from New York. Four other states appointed delegates but they had not yet arrived and no one in Annapolis knew if they were coming. Four states did not name delegates. Those present chose Dickinson, an ardent nationalist with strong ties to Pennsylvania as well as Delaware, as the convention’s chair, but they knew that they could not proceed with delegates from so few states. The issue over whether Congress or the states had authority over interstate compacts hung over their deliberations. If Congress needed to approve their work, the delegates feared, then nothing could get done anyway.
Further complicating matters, the proposed treaty with Spain had exploded over the right of Americans to use the Mississippi River. Spain, which controlled the river’s mouth and western bank, wanted it closed; westerners and southerners demanded it open; northerners and easterners cared most about access to Spanish ports in the Americas. To the detriment of American trade with Spanish America, the dispute over using the Mississippi had stalled treaty negotiations between the two nations for years.
Only days before the Annapolis Convention, over the howls of southern members, Congress voted, seven states to five, to authorize Foreign Affairs Secretary John Jay to accept Spain’s terms on the Mississippi. Treaty proponents argued that the United States lacked power to negotiate a better deal. Its opponents suspected that the northern states might be just as happy if closing the Mississippi inhibited development in the South and West. Indeed, some southerners saw it as a blatant attempt to use congressional authority over treaties for sec
tional advantage. They wanted to bring Congress into the negotiations and enforce a two-thirds rule for approving treaties. The Mississippi question and congressional power over treaties, already on the table because of their relationship to interstate commerce, became major issues at Annapolis. The treaty threatened to split the union, its opponents charged, and lose the West. Ultimately, Congress rejected the treaty.
Even before the delegates met, Madison, Hamilton, and other nationalists thought that any convention limited to commercial issues could not resolve the problems facing America, especially since, under the Articles of Confederation, Congress and all the states would need to approve whatever it did. Congress, they maintained, was part of the problem. It represented state rather than national interests. Only a thorough revision of the Articles, drafted by a specially called convention and ratified in a manner that would neither have to pass Congress nor require the approval of every state, could achieve the desired results. Nationalists in attendance wanted this first meeting to serve mainly as a prelude to a second one that, a month before going to Annapolis, Madison depicted as “a plenipotentiary convention for mending the Confederation.”78 As amended, they wanted that new constitution to establish a national government rather than a league of sovereign states. In fact, Hamilton had come to this view much earlier. As a twenty-five-year-old army officer in 1780, he had privately dismissed the Articles of Confederation as inadequate; suggested granting Congress supreme authority over such national matters as commerce, finance, and the military; and urged creating strong executive offices.
The Return of George Washington Page 7
