James Madison and the Economic Nationalism


Criticize the role of James Madison and the Economic Nationalism


James Madison and the Economic Nationalism


James Madison was a staunch supporter of economic nationalism who ended up becoming the fourth president of the United States between 1809 and 1817. According to Banning (1998), Madison was enthusiastic about the establishment of national supremacy through legislative business. Madison intended to have the national supremacy established by first returning the original authority that the constitution had conferred upon Congress. This authority had been lost after it stopped all money-printing activities, thereby becoming dependent upon various states.

Madison also sought to entrench economic nationalism in the US through the recognition of the powers that were implied within the Articles of Confederation (Read, 1995). These articles also provided for the powers that the Congress could exercise without their validity being challenged. The last avenue used by Madison was that of amending the Articles of the Confederation in a way that conferred new powers upon the US Congress. This paper criticizes the role that James Madison played in efforts towards the entrenchment of economic nationalism in the US.

Contribution of James Madison to Economic Nationalism in the US

According to Banning (1998), the most enduring portrait of Madison is that of a staunch opponent of the idea of independence within various states. He is painted as someone who favored the formation of a union of all the states. Banning (1998) points out that in this portrait, it is his contribution to the economic nationalism theme that made him the leader of the so-called “Nationalists of 1781-1783”. However, Banning (1998) quickly adds there are some elements of this portrait that are enormously misleading.

Banning (1998) argues that this familiar view put to the fore several obstacles to a clear understanding on the nature and evolution of Madison’s ideas. It also overlooks the fact that there were some major differences among economic nationalists during the early 1780s. These differences had far-reaching implications on the success that was achieved in the reforms made towards the end of the decade.

There are conflicting analyses of how Madison rose to prominence through Congress. Some scholars argue that during this rise, Madison was defending the special interests of the people of Virginia in Congress. They argue that those interests were instrumental in shaping his views about congressional authority. The need to fight for those special interests made him oppose the extensions of this authority. However, although Madison was at first keen to defend the special interests of his state, he later on started favoring more federal powers. According to Banning (1998), this is the view that was shared by majority of the politicians in Congress.

It is also evident that prior to 1782, Madison was reluctant to accept the need for radical administrative reforms, particularly centralizing measures in the US (Gutzman, 1995). There are many instances when he was reluctant to accept fully the radical ideas that his allies campaigned for during rallies. On the basis of this view, some scholars simply conclude that Madison was not a nationalist in the early 1780s. They argue that he was not enthusiastic about radical reforms at the national level.

There are also many arguments in favor of the view that Madison had a fierce confrontation with Alexander Hamilton, leading to divisions among the federalists in 1989. This division culminated in the warring parties that dominated the US political landscape during the 1790s. In other words, during his early political career, Madison is presented as a reluctant federalist who proposed a nationalizing program only after retiring from Congress. The doubts that he carried within him during his early career are thought to have influenced his subsequent career. For many, this explains the fact that the desires and assumptions he presented at the Constitutional Convention differed with those of the centralizing vision held by nationalists. The more determined nationalists whose views appeared to differ from those of Madison had at first teamed up with the superintendent of finance in the context of the old confederation. Later on, they associated themselves with the secretary of the treasury in the context of the new republic.

A turning point in Madison’s career came when he was appointed as a delegate to Congress. During this time, the crisis of the revolution was evident, and the Confederation’s history had reached a gloomy juncture. North America was going through a very severe winter that had not been witnessed in a generation. Congress was facing a financial crisis and was unable to fully provide for the Confederation’s army. The resorted to devaluing the continental dollar. It also embarked on a financial plan that involved generating new bills of credit in every state. In this way, the Congress was evidently acting in a state of desperation. Even then, Congress was criticized for delays in reaching these decisions. Congress had swung into action only after realizing that the army was being threatened with destruction owing to high inflation.

Madison was well aware of these challenges, and it is for this reason that he started thinking about the best way out of the financial crisis (Riemer, 1954). It is most probably at this point that his ideas on economic nationalism started taking shape. When he became a delegate of Congress, he started looking at the problems facing the Confederation from the point of the view of the central government. Indeed, Madison at some point stated that the Revolution had reached a critical moment because of the financial crisis. The main problems included an empty treasury, threat of disbandment of the army, and exhaustion of public credit. On its part, Congress complained that the American people were extorting money from it. In return, the people lamented that Congress had become improvident.

Madison was worried that in such a situation, Congress could only make recommendations to the states, and that it was up to the states to decide on whether or not to comply. In this regard, James Madison expressed the view that the best option was for states to collect the old money and establish funds as part of the credit for new money. In Madison’s view, failure to do this would lead to the failure of the Union.

The change of tact towards the support of economic nationalism may have been caused by the fact that Madison had to come face-to-face with the problems of the nation on a daily basis as a Congressman. It appears that he never forgot the desperation that the Confederation was going through during those years. If he had not left Virginia to become a delegate of the Congress, he would never have been able to appreciate the problems that were being encountered at the level of the Confederation.

The problems of the Confederation made Madison to continue sharing a sense of national humiliation and crisis during his pursuit of principles of economic nationalism (Banning, 1984). This quest was evident when he pointed out to the “alarming public situation” in reference to the fact that the army was being kept from starving by drafts on states in request for unpaid requisitions (Ford, 1994). According to the new finance plan, the drafts were set to cease within a short time (Schoen, 2003). Madison warned that if they ceased, the people had to depend entirely on the Confederate’s new emissions. The problem in this regard was that the Congress was unable to make these emissions prior to the collection and destruction of the older continental paper by the states.

Madison’s ideas on economic nationalism appeared to have been fully formed when he confidently opposed the tendency by Congress to exercise indefinite power in the emission of money (Schoen, 2003). In Madison’s view, the states had full command of all the wealth and resources of the continent. Madison further argued that the decision to stop the presses implied that the continent had effectively become fully dependent on states just in the same way the King of England was on the British Parliament (Schoen, 2003). In this way, Madison was addressing the impotence of the government at the national level.

Madison was also interested in ensuring that the national government was given the power to veto state laws. In this way, the national government could manage to have leverage on the resources of the states, thereby putting an end to the majority tyranny that continued to exist in many states. This meant that there was a need to consolidate extensive powers within the national government, construct constitutional charters, and establish an extended republic that had the ability to easily diffuse majority factions.

However, some critics point to the changing policy positions held by Madison. They point out that the views that he held during the 1780s appeared to change during the 1790s. One major example that is normally pointed out is that of Madison’s opposition of discrimination between the original and present holders of the national revolutionary debt. Madison also favored the unilateral assumption of the debts incurred by states as well as the establishment of a national bank (Gibson, 2002). However, on each of these three issues, Madison changed tact and took the opposite position during the 1790s (Gibson, 2002).

Moreover, as pointed out earlier, during the 1780s, Madison feared that the centrifugal powers of the state and the emergence of majority factions within the states had rendered the federal administration powerless. For Madison, the solution to this problem was the establishment of an extended republic characterized by multiplicity of interests (Ferguson, 1969). He also felt a need to augment the powers of the federal government as well as the construction of broad constitutional charters.

However, during the 1790s, Madison seemingly changed position by expressing concerns that federal power was encroaching on the powers of states and that a minority faction was emerging within the executive branch (Sheldon, 2010). According to him, the solution to this problem was strict construction of constitutional provisions that guaranteed residual sovereignty for all states. He also expressed the need for people to consolidate their common interests as a way of summoning opposition to the newly formed government.

This duality of views regarding Madison’s goals as far as economic nationalism is concerned has led many scholars to conclude that there are two distinct strands of political thought that make up the “Madisonian system” (McCoy, 2000). The first strand is in the form of a pluralist system in which the national government’s powers are extended and in which majority factions are thwarted. The second strand is the Jeffersonian part system that focuses on curbing this power and summoning popular majorities. In economic nationalism literature, there are deep divisions, with some scholars supporting one strand and other scholars supporting the other.

Madison’s views on economic nationalism

James Madison made far-reaching contributions to the debate as well as the practice of economic nationalism. First of all, he approved of a Confederate system characterized by executive efficiency (Beer, 1978). Madison also supported, albeit with less consistency, the centralization of power at the federal level. One of the ways through which this goal could be reached was through the establishment executive departments (Beer, 1978).

In 1871, Congress requested all states for authority to start levying five percent duty on all foreign imports. Congress also sought to put into consideration whether the Articles that had just been ratified were adequate as far as the governance structure of the Confederate was concerned. During these deliberations, James Madison came out as a crusader of the nationalistic push. It is unfortunate that he failed in efforts to have Congress endorse the use of federal power in coercing delinquent states. Following this setback, Madison decided to embark on a campaign of expanding federal authority through the doctrine of implied powers of Congress (Stokes, 1994).

Madison’s views regarding economic nationalism were also evident in the way in which he handled the issue of making an amendment intended to grant Congress the forthright authority to undertake trade regulation. This motion did not sail through. Madison was opposed to both the motion on trade regulation and the one on imposing a five percent levy on all imports. To explain the reasons for his opposition, Madison prepared a proposal that he considered a better alternative. In this proposal, he failed to support the extension of Congressional authority to the extent that many of his colleagues would have liked. According to Hobson (1979), the colleagues would have liked to have the authority of Congress extended with regard to the issue of superintendence of commerce.

The main reason for opposing the five percent levy and the trade regulation provisions was that the proposals made did not specify the uses to which the funds obtained would be put. The language that Madison used in his writings shows that he was not opposed to the imports as well as the collection of duties under the authority of Congress. Instead, he was opposed to the use of the funds collected for any purpose that is different from the one specified at the beginning of the levying activity.

There are many other instances in which Madison’s views tended to be in support of nationalistic sentiments as far as economic issues were concerned. For instance, in one of the committees in which he served, Madison wrote a report in which he recommended the creation of an amendment that would authorize Congress to make use of force in compelling delinquent states to commit fully to their federal obligations. According to Madison, this coercive power was already implicit in the Articles of the Confederation. All that remained for the provisions to be implemented.

In Virginia, people were expressing complaints about lack of adequate support from Congress. Madison was quick to share in their frustrations. Nevertheless, he insisted that coercion was needed because of the ‘shameful deficiency’ that was being seen with regard to some of the most resource-rich states (Leibiger, 2010). The anger was fuelled by the fact that many other states that were fully committed to their federal obligations were becoming exhausted and were vulnerable to military exactions.

Madison’s suggestions in the face of economic crises

During the crisis of the 1780s, Madison was convinced that there was a need for constitutional reform with the aim of combating European regulations that were a major impediment to oceanic trade. These regulations were also depressing the national economy. Moreover, they led to the enactment of legislation that started endangering commitment at the republican level. The legislation also brought about changes that were dangerous for the continued growth of a new republic. Madison held the view that it was possible to force the British to embrace a world in which free trade thrived.

Up to this point, it is evident that Madison was in support of ‘commerce’ if the term meant imparting civilization and bringing about benefits of trade such as raising the level of comfort. To this extent, he was making every effort to encourage commerce. However, in contemporary thinking, commerce had another set of implications. It could also be taken to mean extensive changes on the economic front. This intensive change could be in the form of a transition from a predominantly agricultural economy to an urban economy that focuses on manufacturing products for export. Madison was alarmed by the suggestion that the US needed to move rapidly towards an economy based on manufacturing and urbanization.

There are two main reasons why Madison was alarmed by this suggestion regarding rapid transformation into manufacturing. First, he was aware that the extent of material prosperity that the US enjoyed was the envy of majority of the ‘advanced’ European economies. Secondly, Madison was under profound influence from the strands of economic thought that were dominant during the 18th century. These strands of economic thought propounded the notion that the transition to a heavily commercialized economy or manufacturing could easily erode freedom in the American society.

Even Adam Smith agreed that as nations transitioned from savagery to agriculture and then to advanced commercialization, one would expect the benefits to continue being dangerously unequal. In a highly commercialized and advanced economy, it is common to find luxury and idleness among the richest people. Such an economy tends to replace independent craftsmen with laborers who are forced by circumstances to operate as mere components of the production process inside congested factories and sweatshops. To Madison, there was a need for a critical consideration to be directed towards such consequences of intensive change in the economic landscape.

It should be recalled that at first, Madison had not made a decision to offer firm support to a comprehensive constitution reform. He waited until he gained the conviction that it would be futile and dangerous for states to put in place separate regulations. In this regard, there were many dangers to be contended with. For instance, the efforts by several states to interfere in the affairs of the union would trigger bitterness between the states. Such states would continue being bitter that the federal government was doing nothing to address their plight.

Madison was completely dedicated to efforts to ensure that a general center of power was put in place that would counteract the far-reaching influence of commerce. Madison hoped to use this power to coerce the British into relaxing navigation laws. According to Madison, this was the best way forward in efforts to ensure the preservation of the Union. Moreover, Madison felt that this would create a basis for a sustainable republican society across the US. In this society, American producers would benefit from ready outlets for all their agricultural products. Moreover, as Banning (1983) points out, they would avoid overcrowding, exploitative legislation, as well as intensive economic growth that could easily pose a threat to the sustenance of a healthy civic life. It is for this reason that he struggled a great deal to ensure that a federal tax imposed on exports was saved. He did this by moving a motion that permitted them to be enjoined in a two-thirds vote, which he considered a lesser evil when compared to a total prohibition. At this point, Madison parted from the point of view of most southerners, who were opposed to efforts to enforce majority control over commerce.

It has been said many times that Madison’s political economy should not be regarded as narrow and “southern-oriented” (Dorn, 1991). First of all, Madison was able to anticipate western growth that would inevitably bring transformation in Virginia, changing it into a ‘planting’ and a shipping state (Buchanan, 1987). Madison’s argument was that through natural development, all Atlantic states would be rendered homogenous within a short period (Appleby, 1986). Secondly, he propounded the argument that the complexity of the federal government would greatly reduce the probability of abuse of commercial power. The abuse would also be unlikely if majority of inland states retained agriculture as the main economic activity. The same phenomenon was expected to transpire if many new states were admitted from the West (McCoy, 1974).

James Madison was convinced that the economic interests of the state of Virginia would be safely addressed because European regulations would easily be dismantled by an agricultural, republican majority. He hoped that the European regulations would be replaced by a national economy characterized by harmonization and gradual convergence of the interests of producing and shipping states.


In summary, James Madison’s strand of economic nationalism played a critical role in shaping up the Union to become what it is today. At first, Madison’s ideas were largely focused on the interests of Virginians. However, after becoming a delegate in Congress and experiencing first-hand the crisis that the Union was going through, Madison’s ideas “broadened up” and he was able to propound economic ideas based on nationalistic thinking.

However, there are conflicting views regarding whether Madison’s ideas were nationalistic or not. This duality of views regarding Madison’s goals has led many scholars to conclude that there are two distinct strands of political thought that make up the “Madisonian system”. In one strand Madison is seen to be in support of a pluralist system characterized by extended powers of the national government, in which there is a need to thwart majority factions. The second strand is characterized by the need to curb the powers of the national government through continued summoning of popular majorities.

Nevertheless, there is no doubt that Madison was concerned about the likelihood of abuse of commercial power. Madison borrowed from Adam Smith’s ideas in propounding the view that as societies moved from the savagery to agriculture and then to urban-based manufacturing, inequalities between the rich and poor increased dramatically. Instead of sudden, accelerated urbanization and industrialization, Madison preferred a trend towards natural development. He held the view that through natural development, all Atlantic states would be rendered homogenous within a short period. He also argued that the complexity of the federal government would greatly reduce the probability of abuse of commercial power.


Appleby, J. (1986). Republicanism in Old and New Contexts. The William and Mary Quarterly, 43(1), 20-34.

Banning, L. (1983). James Madison and the Nationalists, 1780-1783. The William and Mary Quarterly, 40(2), 227-255.

Banning, L. (1984). The Hamiltonian Madison: A Reconsideration. The Virginia Magazine of History and Biography, 92(1), 3-28.

Banning, L. (1998). The Sacred Fire of Liberty: James Madison and the Founding of Federal Republic. New York: Columbia University Press.

Beer, S. (1978). Federalism, Nationalism, and Democracy in America. The American Political Science Review, 72(1), 9-21.

Buchanan, J. (1987). The Constitution of Economic Policy. The American Economic Review, 77(3), 243-250.

Dorn, J. (1991). Madison’s constitutional political economy: Principles for a liberal order. Constitutional Political Economy, 2(2), 163-186.

Ferguson, E. (1969). The Nationalists of 1781-1783 and the Economic Interpretation of the Constitution. The Journal of American History, 56(2), 241-261.

Ford, L. (1994). Inventing the Concurrent Majority: Madison, Calhoun, and the Problem of Majoritarianism in American Political Thought. The Journal of Southern History, 60(1), 19-58.

Gibson, A. (2002). The Madisonian Madison and the Question of Consistency: The Significance and Challenge of Recent Research. The Review of Politics, 64(2), 311-338.

Gutzman, K. (1995). A Troublesome Legacy: James Madison and “The Principles of ’98”. Journal of the Early Republic, 15(4), 569-589.

Hobson, C. (1979). The Negative on State Laws: James Madison, the Constitution, and the Crisis of Republican Government. The William and Mary Quarterly, 36(2), 215-235.

Leibiger, S. (2010). Founding Friendship: George Washington, James Madison, and the Creation of the American Republic. London: Cambridge University Press.

McCoy, D. (1974). Republicanism and American Foreign Policy: James Madison and the Political Economy of Commercial Discrimination, 1789 to 1794. The William and Mary Quarterly, 31(4), 633-646.

McCoy, D. (2000). The Last of the Fathers: James Madison and the Republican Legacy. Princeton: Princeton University Press.

Read, J. (1995). “Our Complicated System”: James Madison on Power and Liberty. Political Theory, 23(3), 452-475.

Riemer, N. (1954). The Republicanism of James Madison. Political Science Quarterly, 69(1), 45-64.

Schoen, B. (2003). Calculating the Price of Union: Republican Economic Nationalism and the Origins of Southern Sectionalism, 1790-1828. Journal of the Early Republic, 23(2), 173-206.

Sheldon, G. (2010). The Political Philosophy of James Madison. New York: Columbia University Press.

Stokes, G. (1994). Nationalism, responsibility, and the people-as-one. Studies in East European Thought, 46(1), 91-103.

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