...Inquiry into the Principles of Political Economy (1767), the phrase "political economy" was taken up by Adam Smith in Wealth of Nations, where he defined it as "a branch of the science of a statesman or legislator" with two objects: "first, to provide a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public services." (1) Charles Brockden Brown encountered the discipline when, as a member of the New York Friendly Club, he read Wealth of Nations, a book that also would have been standard reading in the law curriculum he studied in the 1790s. (2) That he had the subject of political economy in mind when composing Arthur Mervyn; or, Memoirs of the Year 1793 is evident in the preface, where Brown noted that the "evils of pestilence ... have already supplied new and copious materials for reflection to the physician and the political economist." (3)

Beyond his academic knowledge of political economy, Brown observed business practices and their economic consequences first-hand as he watched his brothers undertake successful mercantile careers in the commercial milieu of Philadelphia. In Arthur Mervyn, Brown captures this environment in all of its complexity. James Justus memorably characterized the economic facet of the novel by noting its concern with

commissions, bills of exchange, claims and deeds, banknotes, notes and bonds, sued mortgages and mortgages entered up, forgeries and robberies, patrimonies and inheritances, generous loans and imprudent debts, premiums of insurance, equitable rates of interest and hazardous securities, obdurate creditors and debtors' prisons, executors' powers, competences and subsistencies, rewards, and warrants of attorney. (4)

Justus's comprehensive list nicely sums up the microeconomic aspect of the novel, but does not get at the macroeconomic level of inquiry implied by the phrase "political economy" as Brown used it in his preface. The question is whether Brown applied the larger lessons of the study of political economy to the commercial environment that Arthur Mervyn so effectively analyzes. Besides showing Arthur himself engaged in the project of acquiring revenue sufficient for his own subsistence, does Brown also investigate how Arthur's individual pursuit of wealth affects the prosperity and political health of the nation?

A strong case can be made that he does. In this essay, by reading the novel in light of the political and economic context of the 1790s, I intend to make several related points about Arthur Mervyn. (5) A number of incidents in the novel can be read as Brown's comment on the social costs of speculation, a financial practice that generated controversy and scandal in America during the 1790s. The economic liberalism pursued by speculators and embodied by the title character would have been judged wanting by Brown's original audience when viewed in light of the still influential ideology of classical republicanism and the restraints and duties it imposed on the civic-minded individual. And the yellow fever epidemic famously described in the novel might be seen as a judgment on economic liberalism, a vindictive invisible hand that punished the people of Philadelphia for their habits of conspicuous consumption.

Set in 1793, the events of Arthur Mervyn are not far removed from a crisis that took place in the government bond market in 1791-92. To pay for expenses incurred during the Revolutionary War, the national government had issued bonds to farmers, merchants, and veterans, who received them in lieu of payment for their goods or services. During the 1780s many of the original holders of these bonds, struggling financially, sold them at deeply discounted prices to speculators--buyers with ready money who took advantage of the original holders' destitution, gambling that the value of the bonds would eventually increase. When Alexander Hamilton proposed in 1790 to establish the nation's credit by funding the national debt at par, this meant that the original bonds would be exchanged on a dollar-for-dollar basis with new certificates. Concerned about the injustice that this measure would create, Congressman James Madison and others proposed distinguishing between the parties to whom the bonds were originally issued and the speculators who had opportunistically purchased them on the cheap. Congress ultimately implemented Hamilton's plan, which, as expected, proved a windfall to the speculators. In many cases, original holders of the bonds received nothing while wealthy merchants augmented their fortunes. Meanwhile, some government officials profited from inside knowledge, buying up the old bonds before word of their funding had been widely disseminated, thereby reaping huge rewards. This financial scandal made some people's fortunes, sent others to jail, and deepened divisions between the Hamiltonian and Jeffersonian political philosophies. (6)

As analyzed by Adam Smith in Wealth of Nations, the practice of speculating was connected with no particular value judgment. Smith merely observed that "sudden fortunes, indeed, are sometimes made in [great towns] by what is called the trade of speculation," describing speculators as merchants who gambled from year to year on particular commodities that held the promise of generating extraordinary profit. (7) But the word "speculation," sometimes referring specifically to the gambling in public securities that followed the funding of the national debt, and at other times applied more broadly to dealing in other commodities such as land, had strongly negative connotations in the United States in the 1790s. Benjamin Rush entered in his commonplace book a litany of complaints against the way the debt had been funded, lamenting that it had "robbed the soldier and the original holder of his property and [given] it to men who had neither earned nor deserved it" and "checked improvements in agriculture, commerce, and manufactures by drawing the capital of the country into speculation." Defending his funding scheme, even Hamilton conceded in a letter to President Washington that "paper speculation ... fosters a spirit of gambling, and diverts a certain number of individuals from other pursuits." (8)

Speculation was particularly troubling to Thomas Jefferson and his political supporters. Jefferson wrote to David Humphreys in 1791 that "A spirit of gambling in the public paper has lately seised too many of our citizens. Commerce, manufactures, the arts and agriculture will suffer from it if not checked." Jefferson warned President Washington that this "rage of gambling in the stocks of various descriptions" had the effect of "withdrawing our citizens from the pursuits of commerce, manufactures, buildings, and other branches of useful industry, to occupy themselves and their capitals in a species of gambling, destructive of morality, and which has introduced it's [sic] poison into the government itself." The bubble that resulted from the funding scheme in the fall and winter of 1791 burst...

NOTE: All illustrations and photos have been removed from this article.



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