Government is, or ought to be, instituted for the common benefit, protection, and security of the people, and not for the particular emolument or advantage of any single man, family, or set of men who are only part of the community.
— 1776 Constitution of Pennsylvania

Who is to blame for the lapse of common sense that allowed America to fail in its pursuit of appropriate technologies that briefly took off in the 70s? That seems to be the gist of the current series of irritated posts by John Michael Greer. In the second installment of his quest for the roots of nihilism, JMG takes potshots at those of us who recognize that America is ruled by an elite, many of whom are unelected and unresponsive to popular will. Apparently, we are to blame for the failure of will and sanity that could have ushered in the eco-technic future!

I have been meaning to write for some time about a little book that has become my personal “book of the year,” and which shines a light — as no other book I have seen — at the roots of present American political malaise. Jolted into action by what I perceive as Greer’s unfair or mistaken attack on clear-seeing Americans, I want to recommend Terry Bouton’s Taming Democracy to your attention. It documents in engaging detail the last four decades of the 18th century as they played out on the ground in Pennsylvania, then among the most democratically-minded of the colonies turned states.

A paradigm-changing book. I am sorely tempted to rail at my old political philosophy professor who fed us the standard-issue propaganda about the clever Federalists and the Founding of America. This book is a wake up call, and a heartbreak. So packed with good stuff you may want to buy it and underline. (And I hate damaging books by underlining! Buy two. :)) For those who already have a book list for the year piled ceiling high, I offer here a partial synopsis of the book. The lessons of that time form one of the pieces of the puzzle this blog is assembling.

The sorry tale covers Pennsylvania in the 1760s and 70s – still under British dominion – and the 1780s and 90s, when the War of Independence wound down, new government was crafted, the economy fell apart, and the first rebellions against the new order were crushed. But let’s begin at the beginning.

Landowning by ordinary people brought a measure of political say-so to the colonists. In Pennsylvania, all white males who owned 50 acres of land could vote. That meant 50-75 % of adult white men. In comparison, only some 15 % could vote in Britain. To be sure, most families lived hard-scrabble lives, and office holding was open only to the rich. Power in those pre-revolutionary days was “concentrated in the hands of unelected and largely unaccountable men: the king, royal officials, proprietors like the Penn family, and a host of home-grown gentlemen who thought they were cut from finer cloth than the common folk.”

During the 18th century, there were signs that common people’s independence was eroding, and the rich came to own a greater and greater share of wealth. “By 1760s, the top 10% of the population [of Philadelphia] owned nearly half of the city’s wealth.” The country fared better, but there too, the landless population was growing. “And the problem was soon to become far worse. During the 1760s and 1770s, Britain enacted a set of policies that would bring prolonged hardship to the colonies and widen inequality across Pennsylvania.”

What were those policies? They were the kind the elites use to impoverish and squeeze people to this day. “Britain enacted a set of policies encompassing trade, finance, and taxation that created a profound scarcity of money that brought hardship across the land.” They began to eliminate paper money, demanding specie (gold and silver) from the colonists. They wanted to punish the colonists for allowing paper money to depreciate during the French-Indian War, and forbade more paper money while gradually taking it from circulation. (The state had been forced to print money because they had little hard currency, and Britain demanded that the war be fought without providing the wherewithal. Catch 22.) Why was there a shortage of specie? Because Britain assured that hard money flowed mostly one way, through trade laws favoring Britain. Perpetual indebtedness of the colonists to the mother country resulted. Catch 22.

There were no private banks in the colonies. Private banking was commonly perceived as inimical to common interests and opposed. Loans were provided through state land banks which lent against real estate at low interest. In Pennsylvania, this system worked very well from 1723 to 1764, and the scrip held its value until the inflation caused by the French-Indian War. The system actually worked so well that much of Pennsylvania’s infrastructure and other governmental expenses were covered by the interest collected, without the need to resort to taxation. But the new crown demands disabled this system.

Taxes were to be paid only in gold and silver just as the money supply was shrinking. Then the infamous Stamp Act was enacted which taxed anyone filing an official document or printing a newspaper. Luxury items like tea, and whiskey, functioning as currency of last resort, were taxed. Pennsylvanians of all strata were growing angrier and more frustrated. The results of these policies were calamitous. As both merchants and farmers were unable to settle even small accounts, first lawsuits and then foreclosures and bankruptcies swept over the land, and trade and jobs disappeared. By 1774, the top 10% owned 70% of the wealth. Poverty rates skyrocketed. Not surprisingly, the finger of blame pointed at unelected British officials and “a minority of rich men.” Preachers toured the countryside speaking against those who “worshiped material possessions above God.” This soul-searching affected gentlemen as well as commoners, and Pennsylvanians grew firmer in their resolve to make power and wealth more equal. They came to believe that it was economic equality that made political equality possible.

There was a widespread and growing conviction that a healthy self-governing republic was unlikely to succeed in societies “with great disparities of wealth because the affluent would use their economic power to dominate the political system.” The best protection against such corruption was the relatively even distribution of wealth. It was not that most Pennsylvanians sought a land reform, or wanted to reduce everyone to the same level. They stressed that some inequality was natural, inevitable, and even beneficial, as people of different talents complemented one another and fostered general prosperity. On the other hand, they were quite clear that the government had no business amplifying such inequalities and enabling the rich to come together monopolizing the resources of the land and extracting wealth from the common people.

As the Revolution got under way, the gentry’s Committees of Correspondence were pushed to take a more radical stance by common men organizing into militias. The gentlemen were often drawn into assuming militia leadership more by fear of common men leading than by patriotism. In May 1776, the Quaker-dominated ruling class of Pennsylvania, unable and unwilling to support the revolutionary effort, was unceremoniously ousted, and independence was declared. That summer, Pennsylvanians of many classes convened to craft a new constitution. Ben Franklin was among them, pushing for more radical reforms than some were ready for.

This constitution was meant to end the rule of “great and over-grown rich Men” who used the government to help themselves. There were debates regarding the possibility of enabling the government to equalize wealth by confiscating property from the very rich, but even though equalizing wealth was a common sentiment, the delegates had the good sense not to implement such draconian means.

The document allowed nearly all adult men to vote, including free blacks who were taxpayers. There were no longer any property requirements for holding an office. It was thought that allowing men without property to vote put up protection against the corrupting influence of the rich. The constitution offered strong protection for civil liberties such as we are familiar with from the later Bill of Rights. Remarkably, it also added the right to revolution: “the community hath an indubitable, unalienable, and indefeasible right to reform, alter, or abolish government in such manner as shall be by that community judged most conducive to the public weal.” Most offices were elected, not appointed. A unicameral legislature was instituted, along with a president’s office without a veto, to prevent the abuses of a system like the British where the House of Lords and royal veto handily defeated most initiatives from the House of Commons. Short election cycles and term limits were meant to weed out career politicians, and to keep office holders faithful to their constituents. Transparency was stressed as the meetings of the legislature were open, and public records of the deliberations were kept. Public schools were called for so that people were able to function as informed citizens. This constitution enjoyed wide support across the state among the common people as well as the gentlemen, who welcomed the modest influx of ordinary people into power even if they criticized some aspects of the new system.

By the end of the War of Independence (‘75-’83) the situation had changed profoundly, and the elites began to work hard to stem the tide of democracy. Bouton lists many possible reasons, from the upheavals of war, to decreasing deference toward the gentlemen which was resented, to the rise of war-created nouveau riche social climbers who were eager for the perks of their new status. Many among the new elites sank deeply in debt to overseas creditors during their spending sprees or overextended speculative land acquisitions, and they feared losing the favor and trust of European bankers by permitting the “inferior sorts” to run things. And perhaps most of all, it had to do with the underdogs suddenly finding themselves in the shoes of the rulers, and assuming the previous rulers’ habits, tastes and strategies.

The rest of the book documents in great and saddening detail the unraveling of the dream of equality and the vigorous but ultimately futile fight of common Pennsylvanians against the rising coalition of the rich and powerful. Enacting nearly identical laws that Britain had used to impoverish and immiserate the populace, they were not too ashamed to hoist a new Stamp Act on the people. Like the British before them, they blamed the currency depreciation on popular mismanagement, a call formerly hotly decried as tyranny. When money dried up and debts, even as small as a few dollars, could not be paid, another wave of economic misery swept the land, along with bankruptcies and foreclosures. In some counties, 60-70% of taxpayers were served with foreclosure, and in one county more than 100% were. Farmers lost land over their inability to raise 3 dollars in gold or silver. The people fought back through local governments which were more likely to protect their own, via protest and petitions, by forcibly freeing prisoners and taking over garrisons, even by blocking roads, but after the widely unpopular Constitution of the United States was ratified (via a slew of dirty tricks they don’t teach in schools) their chances for victory diminished rapidly, and were finally squelched as federal armies twice marched through Pennsylvania in the ‘90s.

What has made perhaps the most shocking impact on my consciousness is the story of the war debt. It begins with Robert Morris, a prominent Framer of the Constitution, a Daddy Warbucks and financial manager of the revolution. Morris was an aggrandizer writ large:

If his passions led at times to overindulgence, Morris was a man who made things happen. As a merchant, he was the king among princes, so aggressive in his dealings that he took risks no others would dare – such as when he single-handedly tried to corner the nation’s tobacco market. When he built his dream mansion, it was so palatial in scope that it was never completed… When he invested in land, Morris leveraged his fortune to buy at least 6 million acres… Even when he ate, he could not stop at the average portion… He envisioned gentlemen taking control of government, using it to enrich themselves, and then scaling back democracy so that it did not threaten their interests.

He planned to combine the interests of the moneyed men into one general money connection. Once this was accomplished, the government could be turned into a vehicle for “opening the purses of the people” for the benefit of “respectable Citizens of Fortune and Character” such as himself. This would make the country great! He started America’s first private bank which turned into a disaster and undermined the war effort. Widely hated and only kept afloat by the discretion of gentlemen who well knew the truth but feared losing their investments, the bank was eventually stripped of it charter by Pennsylvanians who argued that the charter was unconstitutional. It was, they said, “illegal to incorporate bodies for the sole purpose of gain.” The revolution was not fought for the advancement of the “principles of avarice.”

But Morris’ audacity was shown in all its glory in the plan he concocted to turn nearly worthless war IOUs – originally issued as pay for soldiers, or given to farmers and craftsmen who provisioned the Continental Army — into a vehicle for massive wealth redistribution to the rich. He explained to Congress how gentlemen should be encouraged to buy these IOUs for pennies on the dollar over several years, while the original holders despaired of getting anything close to their value out of them. Then the government should step in and redeem the IOUs for top dollar. The holders would have spent little and reap huge rewards. These funds would then provide the rich with the funds to better exercise their “talents.” And so it happened. “By 1790, over 96% of Pennsylvania’s share of the war debt was held by just 434 families.” Though the people of Pennsylvania came up with a plan that would have paid off the debt by spreading the costs and benefits all around, this plan was never seriously considered. And the taxpayers were stuck with paying for this largess to the rich speculators. Like the British had done, new laws were enacted forcing people to pay taxes in gold and silver, so that these speculators could cash in their IOUs for hard money. A prolonged economic depression resulted once again, and eventually, even some of the rich were swept away in a real estate bubble that burst toward the end of the century.

And so the new policies became as oppressive at the old policies of the British, and spread the same misery over the land. Some estimate that the depression lasted from 1774 till 1805… 30 years. And when people complained or protested, they were blamed for being ill-informed or lazy, and ignored or crushed.

The radical Pennsylvania constitution was superseded in 1790. The effort to prevent the government from transferring powers to private corporations that were free from popular control was lost. The attempts to find remedies via voting and electing “our” people into office came to naught as the elected representatives were nearly always corrupted or coopted by the perks of life in Philadelphia. Local governance was undermined by centrally assigned appointees. And the possibility for defense from economic injuries via state-level remedies was severely curtailed by the new federal Constitution. Pennsylvanians nearly stopped voting, and after the federal troops crushed their rebellions, pretty much gave up.

I don’t know about you, but what I see is this:

  • economic depressions are engineered with more or less the same strategies; they serve to impoverish the many so that the few can pick up foreclosed properties and other valuables on the cheap; they are not accidental or mere mismanagement
  • the political system, even in those rare moments when “our” people are elected, is not equal to redress the people’s injuries: it was constituted in 1787 precisely to make such redress near-impossible; America is not really a federalist system as states lost their self-determination in key (particularly financial) matters with the ratification of the Constitution
  • the government serves primarily to transfer wealth to the rich and powerful because it is thought (by the rich and powerful) that they are better, wiser, and more talented than the rest of us and therefore it is in the interest of all to gladly suffer such transfers; we are currently witnessing the efforts to roll back certain modern exceptions to this
  • while Americans won political independence from Great Britain, they remained enserfed economically by their European (primarily British and French) creditors and bankers, passing the enserfment down the economic ladder; this is still true today while the bankers are global
  • Americans (even small farmers) ran on debt even in those early days; how did this get started in a subsistence economy?
  • the wisdom of the common “uneducated” people and their ability to discern the root causes of their economic troubles and to fight the good fight to keep monopolistic practices at bay is quite impressive; the schemes of the rich often turned into (sometimes self-admitted) mismanaged disasters for which they then assiduously blamed someone else
  • the vision of the Founders of America, when counting both the Framers and the common people, if combined, could have resulted in a country with a very different future, a very different present for us today; as things turned out, however, the structural problems that made life miserable for people 220 years ago are echoed again and again in later struggles, and remain unresolved to this day
  • the Federalists, hated and reviled by many for betraying the revolution, faded from history, thereby ushering in a period when America had only one party (the so-called Era of Good Feelings, 1816-24), but their schemes remain, and the fact that the aggrandizers of today have brought the country to its knees is not something we ought to be surprised by, considering this very old and sad story of hope, shining common sense, and betrayal.