With respect to your second question, Athens is the most obvious example of a democracy that "consumed itself." While the hoplite democracy of Cleisthenes kept power in the hands of a smaller stratum of Athenian society, participation in the process was expanded and the poor decisions made by the Athenian citizenry in the Peloponnesian War, especially the two invasions of Sicily, greatly contributed to that city losing the war.

Perhaps there is someone who can speak more authoritatively on John Adams, but like most educated men of the time (and educated men stretching back to the Middle Ages and before) saw democracy as naturally volatile because the whims of the people can be fickle and are prone to rash decisions. The quote you offer suggests that a voting block could alienate a man from his property through the political process.