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America's Counter-Revolution
The Constitution Revisited

From the back cover:

This book challenges the assumption that the Constitution was a landmark in the struggle for liberty. Instead, Sheldon Richman argues, it was the product of a counter-revolution, a setback for the radicalism represented by America’s break with the British empire. Drawing on careful, credible historical scholarship and contemporary political analysis, Richman suggests that this counter-revolution was the work of conservatives who sought a nation of “power, consequence, and grandeur.” America’s Counter-Revolution makes a persuasive case that the Constitution was a victory not for liberty but for the agendas and interests of a militaristic, aristocratic, privilege-seeking ruling class.

Friday, March 11, 2016

TGIF: Conceived in Tyranny

If the American Revolution was in some large measure a tax rebellion, we should appreciate the bitter irony that the U.S. Constitution was in some large measure a reaction to a tax rebellion. It's another reason we can reasonably view the move toward the Constitution -- toward, that is, the concentration of power in a national government -- as a counter-revolution and something for libertarians to abhor.

Shays's Rebellion was the mass tax resistance that lit a fire under conservative nationalists who were already looking for ways to concentrate power in the central government. They had long been frustrated with the weak quasi-government of the Articles of Confederation (1781-89), which amounted to a one-house congress with no power to tax or regulate trade, and no executive or judicial branches. (This is not to say it had no powers worth objecting to.) To be sure, Americans of the day had various economic and social problems -- many caused or aggravated by active state governments --  but collapse and chaos were not at hand, whatever the nationalists said. They assumed that only a strong central government could promote trade and cure the fiscal and monetary woes, but that's because they saw the European states as their only model. They also wanted a standing army ready to advance, if necessary, what they saw as America's commercial and geopolitical interests. They knew they would not get that from the states.

The nationalists started making progress toward their objectives in the early 1780s, when the war wasn't going well and foreign loans were needed. But as the war wound down to a successful conclusion, the nationalists lost their primary case for government expansion -- especially the power to tax -- and by 1783 they were in retreat. The wealthy merchant Robert Morris, whom Congress had named Superintendent of Finance, could not manage even to persuade all the states to allow the confederation government a 5 percent tariff. (He had hoped for a general power to tax.)

But the nationalists did not give up their dream of creating a European-style fiscal-military state -- complete with aristocratic and monarchical elements -- albeit one tailored to the American suspicion of centralized government power. As John Jay, coauthor of the Federalist Papers and America's first chief justice, put it, “Men will not adopt & carry into execution, measures the best calculated for their own good without the intervention of a coercive power. I do not conceive we can exist long as a nation, without having lodged somewhere a power which will pervade the whole Union in as energetic a manner, as the authority of the different state governments extends over the several States.” (Quoted in Pauline Maier's Ratification: The People Debate the Constitution, 1787-1788, 2010.)

Then along came Capt. Daniel Shays. In 1786 a controlling faction of the Massachusetts legislature got the bright idea to retire its Revolutionary War debt in a mere 10 years. The legislators thought that they could copy their quick payoff program that followed the Seven Years' War, but they failed to take into account that the new per capita debt was far larger and that therefore the consequences of paying it off quickly would be devastating for the taxpayers. The policymakers "were rigid, unrealistic, and uncompromising in their effort to retire the public debt too rapidly given the magnitude of the state's obligations," Edwin J. Perkins wrote in American Public Finance and Financial Services: 1700-1815, 1994.

While other states showed mercy to the taxpayers by spreading out debt retirement, thereby keeping tax rates in check, or by implicitly taxing the people by issuing paper money instead of imposing direct taxes, Massachusetts was tone deaf to the people's circumstances. Its burdensome poll and property assessments drove western Massachusetts farmers, many of whom got foreclosure notices when they couldn't pay their mortgages after paying their taxes, to revolt. Shays' Rebellion used to be described as a class revolt of debtors against mortgage lenders, a leveler movement, but the case that it was essentially a tax revolt has been solidly made by eminent historians of the period, as well as by contemporary observers.

Perkins wrote: "Despite the resolve of the urgency faction to coerce citizens into meeting the state's financial obligations in short order, signals of impending difficulties emerged in the mid-1780s. Tax arrearages grew year after year. Of the $930,000 assessed against persons and property between 1780 and 1782, nearly half was past due as late as December 1785. Between 1782 and 1786 additional taxes of $3.3 million were scheduled for collection, yet by October 1787 more than $1.4 million, or 40 percent, were past due. Under the state's internal revenue system, the locally elected tax collector in each town was held personally liable for the quota assigned by the state treasurer; and after July 1786 county sheriffs became liable for arrearages as well. To escape governmental claims against their own assets, collectors and sheriffs were forced to file suit against tax delinquents and to seize farms, crops, livestock, and other property when payments were not forthcoming" (183).

As a result, "bands of rioters closed the courthouses in several inland towns during the second half of the 1786 in a sustained effort to prevent evictions and forced sales of properties," Perkins wrote. "Under the leadership of Daniel Shays, a disgruntled and embittered farmer, armed civilians numbering perhaps two thousand, marched on the federal arsenal at Springfield in January 1787. In the brief battle, cannon fire killed three rebels and drove off the rest, but they soon regrouped" (184).

When similar troubled had brewed in other states, the governments made conciliatory offers and the trouble subsided. Not in Massachusetts. Governor James Bowdoin called up over 4,000 troops and quashed the uprising within two months.

But that wasn't the end of it. "The elections of 1787 sent new blood to the legislature and a new governor, John Hancock.... Shaken by the threat to popular government, Hancock and legislative leaders belatedly abandoned the program of accelerated debt retirement and suspended the tax collections associated with that program. They sponsored tax reductions and private debt relief laws that gave middling citizens some breathing room. Tax assessments on persons and property dropped significantly from 1787 through 1790" (184). (Massachusetts would later benefit from Treasury Secretary Alexander Hamilton's 1790 federal debt-assumption program.)

Thus the rebels won.

Shays's Rebellion might not look so earth-shaking in retrospect, but it scared the hell out of the nationalists -- or at least they pretended it did -- and they saw in the popular uprising an opportunity to press their centralist agenda. "The adherence to an irresponsible, impractical, and ultimately unnecessary program of fiscal policy in this solitary, critical state," Perkins wrote, "contributed to the renewed movement for a more permanent and more centralized national government with enhanced taxing power" (174). According to Gordon S. Wood, "Shays's uprising in 1786 was only the climactic episode in one long insurrection, where the dissolution of government and the state of nature became an everyday fact of life. Indeed, it was as if all the imaginings of political philosophers for centuries were being lived out in a matter of years in the hills of New England" (The Creation of the American Republic, 1776-1787, 1998, 285).

Wood also reported that "So relieved by the rebellion were many social conservatives that some observers believed the Shaysites were fomented by those who wanted to demonstrate the absurdity of republicanism. Nothing so insidious has been proved, but many social conservatives did see the rebellion as encouraging the move for constitutional reform," i.e., centralization (412).

Since the conservative nationalists favored aristocratic republican rule over the liberal democracy favored by the radicals, the conservatives would have been understandably alarmed at what had happened in Massachusetts. "Not only the fact of the rebellion itself," Wood wrote, "but the eventual victory of the rebels at the polls brought the contradiction of American politics to a head, dramatically clarifying what was taking place in all the states" (465).

Sincere or not, this alarm was communicated to George Washington at his home in Mount Vernon. By this time Washington had been named by the Virginia assembly as a delegate to the coming federal convention in Philadelphia, but he was unsure whether he would go. Those reporting to him about Shays's Rebellion would have had reason to hope that by exaggerating the turmoil, they could motivate Washington, a nationalist who favored a strong central government, to go to Philadelphia, giving the convention and resulting constitution a prestige no one else could have bestowed.

"Everything [is] in a state of confusion," David Humphreys wrote Washington. "Discontent was 'not confined to one state or to one part of a state' in the northeast, Henry Lee told Washington in September 1786 but pervaded  'the whole,'" Maier wrote. "...Washington's correspondents -- above all Humphreys, [Henry] Knox, and General Benjamin Lincoln [who put down the rebellion], all old army officers -- sent Washington detailed reports slanted against the insurgents in Massachusetts." But, Maier added, "the problem was hardly as serious or as intractable as Knox had claimed. Washington, however, believed the frenzied reports he received." (By contrast, Rufus King calmly advised John Adams that the rebellion was a response to onerous taxes: "You will see this business greatly magnified and tories may rejoice, but all will be well.")

Wood noted, citing an observer, that "these rioters were not rabble.... They were country farmers under strong economic pressures, prompted by 'a certain jealousy of government, first imbibed in the beginning of our controversy with Britain, fed by our publications against the British government, and now by length of time became in a manner habitual and ready to rise whenever burthens press, at once concluding, that burthens must be grievances'" (325).

In other words, since the revolution had been in large part a tax rebellion, Americans were in no mood to substitute a Yankee taxman for a British taxman. In several states before 1789, controlled emissions of paper money functioned as a satisfactory alternative to direct taxation; that is, the currency depreciation was moderate and undisruptive. The resulting implicit transfer of purchasing power from the people to state governments had advantages (assuming government exists) -- for example, no taxman visited people's homes or seized property from delinquent taxpayers.

Much of the Anti-Federalist case against the proposed Constitution focused on the new national government's virtually unlimited power to tax. For a host of reasons, however, Americans' abhorrence of taxation was not enough to thwart ratification. Thus the United States that emerged in 1789 was born in reaction to a tax rebellion, which is not exactly a libertarian pedigree.

TGIF -- The Goal Is Freedom -- appears (of course) on Fridays. Sheldon Richman, author of the forthcoming America's Counter-Revolution: The Constitution Revisited, keeps the blog Free Association and is a senior fellow and chair of the trustees of the Center for a Stateless Society, and a contributing editor at Antiwar.com. Become a Free Association patron today!

6 comments:

David R. Henderson said...

Good article. Almost entirely things I didn’t know.

Sheldon Richman said...

Thanks, David.

Bill Bergman said...

Great stuff. Have you seen this? http://www.upenn.edu/pennpress/book/13777.html

Robert McDonald said...

Thanks for posting this. I enjoyed it, learned some new things, and appreciate the point it makes about how the nationalists, in the spirit of Rahm Emanuel, never let a good crisis go to waste. In to the farmers' increased tax burden, isn't it also true that many had racked up big debts during the Revolution? That they had borrowed money to expand their farms? That high inflation allowed them to get over easy because it devalued their debts until, after the Revolution, when the monetary printing presses came to a halt, inflation turned to deflation (or something like it) and increased the real value of their debts? If this is the case, then the farmers would have been double-whammy victims of government mismanagement.

Luke Avedon said...

One of the most interesting articles I ever did read.

Sheldon Richman said...

Thank you.