Skip to comments.Rethinking the Articles of Confederation
Posted on 05/14/2005 6:24:31 PM PDT by Remember_Salamis
Rethinking the Articles of Confederation by Scott Trask August 8th, 2003
An assumption that dominates American historical studies is that the wealth and prosperity of the country would be much less without the existence of a powerful central government. This theme is but part of a larger, and now international, orthodoxy that larger political jurisdictions, as long as they are "democratic," foster liberty and economic growth while smaller ones stifle it.
In Europe, elites hold up an all-European government as the golden road to a brighter and wealthier future. Others go further, such as Atlantic Monthly correspondent Robert D. Kaplan, and argue that eventual "world governance" by "global elites" is both inevitable and desirable. Kaplan, whose books are read by high-ranking government officials and journalists, believes that free markets, democracy, and liberty shall thrive under a world regime.
The truth is far different. All of history attests that the centralization and concentration of power breed despotism. In the history of European civilization, liberty and civilization have thrived when political power has been dispersed and checked. Contrast the Greek city states with the polyglot Alexandrian empire, the Roman Republic with the world-sprawling Roman Empire, medieval Europe with 20th century Europe. The nature of man being what it is, irresponsible, unchecked power has been, and always will be, abused, and there is no better way of rendering state power oppressive than by concentrating rather than dispersing it.
If your children attend a public or private university in this country, they will be taught that President Roosevelt "saved" capitalism from itself with his New Deal legislative program in the 1930s. They will also be taught as unquestionable truth that the Federalists rescued the fledgling national economy from imminent collapse during the decade following the War of Independence (1780s), a decade ominously described by statist historians (are there any other kind?) as "the critical period." They learn that these years were a tumultuous and tragic follow-up to the Revolution. Without a strong central authority, the country was convulsed and confused by violent internal rebellion, economic stagnation, the petty rule of "bad men" (i.e. local-minded and self-interested), and national weakness in the face of predatory commercial rivals. Into this despairing void, stepped a shining band of broad-minded, far-seeing, disinterested, nationalist leaders who realized the impotent and inept government of the Confederation had not the powers to deal with the crisis or guide the country into the regulated, centrally managed future. Consequently, they led a constitutional revolution which discarded the Articles of Confederation and replaced it with a broad charter of national power, falsely described as federal, that by taxing, regulating, and promoting (i.e. subsidies!) rescued the economy and laid the solid foundation for America's future growth and prosperity. Students graduate thinking that were it not for the federal Constitution, we would all be sitting on the front porch of our cabin spitting tobacco, drinking home-made whiskey, and kicking our dog Blue.
The prevailing historical interpretation of the country under the Articles of Confederation is an example of the harm that has resulted from the ignorance of economics among generations of historians. Let us consider the work of Richard B. Morris, the Columbia University historian, whose book The Forging of the Union, 17811789 (1987) is considered the standard history of that decade. Morris ascribes the postwar depression (178488) to four causes: the "dumping" of low-cost British goods upon the American market (imagine the gall of those sneaky Brits; you beat 'em in war and then they do this to us?); the closing of the British West Indies and other foreign markets to American goods; an unregulated money supply (it is not clear if Morris thinks the problem was too much, or not enough, money; apparently, he seems to think that only the Solons and Greenspans destined to run the federal government knew the right amount); and the lack of a national government with national taxing and regulatory powers (the horror, the horror).
For Morris, the calling of a constitutional convention was a necessity recognized by nearly all. "Businessmen, mechanics, and artisans witnessed a Confederation government incapable of controlling the money supply, of paying interest on the public debt, or of regulating and encouraging foreign and domestic commerce. Little wonder that these groups recognized the grim necessity for setting up a stronger central government."
The economy was beginning to thrive again in 1788, the year the Constitution was ratified, and Morris naturally awards credit to the new government for the change. "The ratification of the federal Constitution seems to have laid a basis for economic recovery." It never occurs to him that the recession was bound to end sometime, or that its end was due to causes unrelated to the creation of a new national authority.
Our best guides to the critical decade of the 1780s are two of the few American historians who understand economics and are true liberalsWilliam Graham Sumner and Murray Rothbard. Although Sumner was a nationalist and antidemocrat who favored the new constitution for other reasons, he understands as well as Rothbard that the depression of the 1780s was not due to the lack of a powerful central government. Both explain that after the war, there was a great pent-up demand for British goods, which were preferred to all others, including domestic, both for their quality and their cheapness.
There was also an abundance of specie in the country, due to French and British disbursements, the Havana trade, and French and Dutch hard-money loans. However, there was also a large quantity of paper money still afloat. As the paper money was serving as the principal circulating medium, the merchants shipped much of the nation's specie abroad to help pay for their large importations of capital and consumer goods. Lacking credit cards, the American consumer was soon "tapped out," and merchants found themselves holding large stocks of unsold merchandise.
At the same time, there were many manufacturers and mechanics whose businesses had been profitable only during the autarkic wartime conditions. Now that peace and commerce had resumed, they were in trouble. An additional negative factor was the British decision to place the Americans on the outside of their colonial system after the war. The Americans found the British West Indies closed to them, the North Atlantic fisheries forbidden, and the British home market tightly restricted. (Of course, the British hurt themselves by these restrictions, for the Americans could not buy from them if they could not sell to them; but they were acting according to the logic of mercantilism and probably revenge.) A final factor was the capital losses sustained and the debts incurred during the war. The capital losses had to be made up and the debts paid.
In summation, the Americans were suffering the natural aftereffects of a long war financed by debt and inflation, and exacerbated by the continuing circulation of inconvertible paper currency. As Sumner records, "misery was great throughout the country, owing to paper money and debt and the losses of the war." The postwar depression was a necessary period of hardship during which Americans readjusted to new trade patterns and economic realities, paid debts, and repaired the damage and neglect wrought by war. No government could have legislated or regulated away these facts of life.
Americans, flush with soaring hopes unleashed by the Revolution, wanted to believe otherwise, but there was no political substitute for hard work, reconstruction, self-denial, and patience. Regrettably, as is the case so often in our history, many sought political panaceas to escape economic realities. Mechanics and manufacturers petitioned their state legislatures for protective tariffs to exclude lower cost British-made goods. Ship builders and owners lobbied for navigation laws to exclude British shipping from American ports, and southern exporters and northern merchants pleaded for retaliatory legislation to force open closed British markets. Farmers demanded that paper money be issued and lent on the security of land. Only a few years after independence, Americans were trying to replicate the main features of the British colonial and mercantile system from which they had just freed themselves.
With his usual perspicuity, Sumner observes how the collapse in prices and the prostration of business following a period of currency inflation led to a movement for protective tariffs, setting a recurring pattern. Here was the first time, but by no means the last, "in which currency errors become intertwined with errors as to foreign trade, a junction which has run through all our history to the present moment  and which has been productive of mischief." The panic and depression of 1819 would give birth to a protectionist movement culminating in the high tariffs of 1824 and 1828. The panic of 1837 and the depression of 183943 would revive protectionism again, leading to the tariff of 1842.
Sumner also observes that whenever the economy has floundered, many blame foreign trade for somehow draining the country of its wealth. For instance, James Madison warned in 1786 of "the present anarchy of commerce." He blamed the "unfavorable balance" of trade for "draining us of our metals" and furnishing "pretexts for the pernicious substitution of paper money." Madison had it exactly backwards. It was the habit of using paper money that was driving the nation's specie abroad, as coin would not circulate alongside paper of similar denomination. Madison's solution to commercial "anarchy" was a national government with the power to regulate commerce and the money supply. Not surprisingly, Madison would be one of the authors of the tariff of 1789. As president he would sign the tariff of 1816 and the charter for the second national bank.
State Mercantilism during the 1780s
In 1785 and 1786, New Hampshire, Rhode Island, Massachusetts, and Pennsylvania passed tariffs averaging 15 percent on foreign manufactures. They also levied taxes on imported "luxuries" to slow the drain of specie. During the next two years, they extended duties to more products and raised rates as high as 25 percent. Sumner's comment on such legislation is devastating and perceptive: "At the return of peace, [new American manufactures] were prostrated, and a cry began to be made . . . that the country could not stand free trade, and that it must do as England had always done, that is, imitate the old restrictive system. The real demand was that some way should be found by law to continue upon the American people, by their own act, the evils which the war had inflicted upon them." The evils to which he was referring were high prices and restricted markets.
When discriminatory duties failed to revive the flagging northern economy, supporters blamed their lack of uniformity and application across the confederation, for the southern states had very low tariffs and their citizens continued to buy cheaper and better-made British goods. The economic historian Curtis P. Nettles, who was a good historian but a bad economist, noted with reproach that the southern legislatures "did not impose adequate protective duties for the benefits of the exports of the northern area. It followed, therefore, that only a federal tariff law could provide the kind of protection sought by many manufacturers."
There is ample evidence that northern manufactures supported the federal Constitution because they hoped through uniform national tariffs to capture the southern market. Alexander Hamilton's early correspondence as treasury secretary under Washington is full of complaints that Americans continued to buy from abroad and pleas for duties. Thus, while the Constitution set up a free-trade zone within the states, it also created a closed or captive market, in which Americans would be free to buy within but not without.
Historians like Morris and Nettles contend that without a federal Constitution trade between the states would have been hindered by a multiplicity of restrictive state tariffs and commercial regulations. Rothbard was one of the few to see that such could not have been the case due to geographical proximity, as well as cultural, linguistic, and ethnic ties among the states. The American confederation was destined to become a free-trade area, even without a consolidated union. Hamilton, in Federalist No. 12, all but admitted, and complained, that such would be the case. He worried that the multiplicity of state jurisdictions would keep tariffs too low and variable for the raising of sufficient revenue or the provision of industrial promotion.
The relative situation of these States; the number of rivers with which they are intersected, and of bays that wash their shores; the facility of communication in every direction; the affinity of language and manners; the familiar habits of intercourseall these are circumstances that would conspire to render an illicit trade between them a matter of little difficulty and would insure frequent evasions of the commercial regulations of each other. The separate States or confederacies would be necessitated by mutual jealousy to avoid the temptations to that kind of trade by the lowness of their duties. (Hamilton)
In other words, under the Confederation government, no one state, or even a group of states, could raise tariffs very high on imported goods or inter-state goods for fear of provoking smuggling or losing trade to other states. For instance, if New York City raised the cost of imported goods too high through tariffs, Connecticut could buy such goods from Boston, and New Jersey could buy from Philadelphia. However, under a central government empowered to lay uniform national rates, tariff rates could be tripled without consequence.
It is therefore evident, that one national government would be able, at much less expense, to extend the duties on imports beyond comparison, further than would be practicable to the States separately, or to any partial confederacies. Hitherto, I believe, it may safely be asserted, that these duties have not upon an average exceeded in any State three per cent. In France they are estimated to be about fifteen per cent, and in Britain they exceed this proportion. There seems to be nothing to hinder their being increased in this country to at least treble their present amount. (Hamilton)
The futility of enacting mercantilist legislation within a confederated polity was also demonstrated with regard to the navigation laws. In 1784, northern legislatures began penalizing British shipping by laying additional duties upon goods imported in British bottoms. New Hampshire, Massachusetts, and New York doubled tariffs on goods arriving in British ships while Rhode Island tripled them. To make sure that a British ship would be as rare a sight in their port as a Chinese junk, New Hampshire, Massachusetts, and Rhode Island went so far as to prohibit British ships from transporting American exports. However, despite their severity, none of these laws proved effective, and within two years of their passage the states moved to repeal them. Nettels explained why such laws "proved to be defective when used by only a few states."
Apparently, it encouraged British shippers to go to nearby states and use them as bases for distributing European goods and for obtaining American produce. The readiness of Connecticut to receive British vessels without subjecting them to penalties forced Rhode Island virtually to suspend its act, lest it lose trade to its western neighbor. So also the assembly of New Hampshire moved to suspend its law until New York and Connecticut should adopt similar acts. Otherwise, much of New Hampshire's trade would be diverted from Portsmouth to the Connecticut River route. Massachusetts repealed its law in July, 1786, because, as Governor Bowdoin explained, other states, refusing to cooperate, had tried to use it for one-sided advantage. (Nettles)
In other words, under the Confederation, navigation laws were fruitless. Sumner believed this realization furnished a powerful motive for northern shippers to support the new constitution. "The Eastern States wanted the Constitution chiefly in order to get such a law [i.e. a uniform navigation law]."
Funding the Federal and State Debts
The War of Independence saddled the country with an enormous debt. In 1784, the total federal debt was nearly $40 million. Of that sum, $8 million was owed to the French and Dutch. Of the domestic debt, government bonds, known as loan-office certificates, composed $11.5 million, certificates on interest indebtedness $3.1 million, and continental certificates $16.7 million. The certificates were noninterest bearing notes issued for supplies purchased or impressed, and to pay soldiers and officers. To pay the interest and principal of the debt, Congress had twice proposed an amendment to the Articles granting them the power to lay a five percent duty on imports, but amendments required the consent of all thirteen states. Rhode Island and Virginia rejected the 1781 impost plan while New York rejected the 1783 revised plan. Without revenue, except for meager voluntary state requisitions, Congress could not even pay the interest on its outstanding debt. Meanwhile, the states regularly failed, or refused, to meet the requisitions requested of them by Congress.
While most historians have seen these failures as evidence of the imbecility of the Confederation government and the selfishness of the states, at least one, Sumner, regarded the "no" votes as justifiable and praiseworthy. In his view, the opposition believed that Congress could not be trusted to use its new revenue only to pay interest on the debt and gradually retire the principal. They believed that much of the funds would go to the building up of an unnecessary civil service bureaucracy. "Between 1783 and 1789, the Continental Congress year by year demanded of the people sums of money for a peace establishment far beyond what was necessary, and . . . the people, by refusing the funds, forced the retrenchment or abandonment of the main features of a great civil establishment, which in fact was not needed." Hurrah.
Due to the delay and uncertainty of final payment, the value of the certificates depreciated significantly. The loan-office variety fell to as low as 20 cents on the dollar while the continental certificates fell to ten cents. Most Americans who had received the certificates were farmers, storekeepers, small merchants, and veterans of modest wealth. They needed cash to run their businesses or farms, to feed a family, or just survive. Holding them for "a rise" was simply not an option. They had to sell them for whatever they could get. Hence, by the mid-80s, a few wealthy speculators held most of the continental certificates. A far larger percentage of the loan-office certificates remained with their original owners, but even they tended to become concentrated in fewer hands.
Although public security holders had a direct and obvious monetary interest in a new national authority with the authority to raise funds to pay the interest and principal in specie, historians have vigorously debated the significance of this motive in the movement for a national Constitution. The progressive historian Charles A. Beard shocked, shocked, the nation in 1913 with the publication of his Economic Interpretation of the Constitution of the United States. He pointed out that those who wanted a new national government were personally interested in the outcome, standing to benefit financially if it was ratified. Beard pointed out that "large and important groups of economic interests were adversely affected by the system of government under the Articles of Confederation, namely, those of public securities, shipping and manufacturing, money at interest; in short, capital as opposed to land." After failing to strengthen the Articles through amendments, the leaders of these groups united behind an effort to institute a new government with the powers to raise taxes, fund the debt, enact tariffs and navigation laws.
One would have thought that Beard had simply stated the obvious truth of the matter, however obscured until then by iconography and mindless patriotism. The correspondence of Alexander Hamilton, one of the leading men behind the movement for a national constitution, alone would seem to confirm Beard's thesis. In a 1781 letter to Robert Morris, he contended that "a national debt . . . will be to us a national blessing. It will be a powerful cement of our union." As treasury secretary of the new government in 1790, he advocated the federal assumption of outstanding state debts on the grounds of "its tendency to strengthen our infant government by increasing the number of ligaments between the government and the interests of individuals."
Furthermore, besides seeing this political benefit, Hamilton believed funding the revolutionary debts at full value, and assuming those of the states, would create "a capital in the public obligations which was before dead, and . . . convert it into a powerful instrument of mercantile and other industrious enterprise." Sumner ridicules Hamilton's idea that funding the government debt would create capital in the form of bonds. Such bonds represented nothing but the government's promise to draw upon the real capital of the country through taxation.
Hamilton was not only a nationalist but an Anglophile mercantilist who believed that England's funded debt, national bank, protective tariffs, and navigation acts were the foundation of that kingdom's commercial, manufacturing, and naval prosperity. He wanted to replicate not only the key features of the British constitution but the entire edifice of British mercantile, fiscal and financial architecture. Sumner concluded that Hamilton's writings "show a remarkable amount of confusion in regard to money, capital, and debt, in the mind of a man who has a great reputation as a financier."
The last two generations of historians have rejected Beard's thesis as conspiratorial and simplistic. One of the best of them, Forrest McDonald, a neo-Federalist, even wrote an entire book, We the People (1992) supposedly refuting Beard and vindicating the disinterested, generous, noble intentions of those behind the writing and ratification of the Constitution. While McDonald succeeds in pointing out where Beard overstated his case or failed to account for the full complexity and mixture of motives behind the nationalist movement, he utterly fails to discredit the Beard thesis. Rather, his research tends to confirm it at many points. Security holders were a major force behind the Constitution in Connecticut, Massachusetts, and other eastern states.
Meanwhile, social democratic historians, finding economic history to be boring and hard, and primary research rather time consuming, would rather spend their time projecting their egalitarian fantasies upon the framers, whom they contend were really closet feminists and abolitionists who cleverly slipped a "loaded" constitution upon the unsuspecting but charmingly credulous nation. They created an "Alien-like" document that in time could be used to force racial and gender equality, and welfare programs, upon a profoundly evil, patriarchic, and racist society, a kind of Bolshevik-style revolution from above.
Nettels summarizes the five benefits that Hamilton and his fellow national mercantilists believed would accrue from long-term government bonds. (My critique follows in italics.) First, the bonds would provide a secure, interest bearing investment. True, but only at the price of diverting capital from private enterprise to public projects. Second, businessmen could use them as collateral for loans. True, but their very security would encourage less circumspection on the part of lenders and of course obligate the taxpayer to recoup the losses from bad loans. Third and fourth, they could be used to buy capital goods and discharge debts abroad. Yes, but so what? Bills of exchange and specie could do the same, and could do so without obligating taxpayers to pay the sum involved. Fifth, by serving as a substitute currency for large payments, they would increase the supply of currency at home. Here is the seeming ineradicable fallacy that multiplying currency increases wealth and prosperity.
Rothbard began but never completed the fifth volume to his American history series Conceived in Liberty. In the fascinating and brilliant fragment that remains, he suggests that the confederation Congress should have divided up the federal debt among the states according to their population. He cites the historian E. James Ferguson who points out, "The idea was supremely practical," and "it accorded with [confederal] nature of the Union and the predilections of the States." It even began to be carried out in practice. By the end of 1786, New York, Pennsylvania and Maryland had assumed nearly $9 million of federal securities (by exchanging them for state securities), almost one-third of the total. The nationalists were not about to consent to such a resolution, for it would deprive them of the support of the investor classes. Ferguson again: "Congress would have been left with depleted functions and little reason to claim enlarged powers. Creditors would have attached themselves to the states, and no ingredients would have remained to attract the propertied classes to the central government."
Rothbard writes: "By the end of 1786, then, the Nationalist program was in full rout." Congress had failed to secure a federal impost or a navigation act. "Its requisitions were failing and its eagerly assumed public debt was rapidly being whittled away by the states, and it could not even meet any of the payments on its $10 million of foreign debt. Lacking independent federal revenue, the natural course would have been the disintegration of federal credit and power, and a full resumption of the decentralized policies that had been the initial consequence and the long-range promise of the American Revolution."
Some have pointed to the likelihood that had the states assumed the federal debt many would have retired it at its depreciated, current market value, for some states (e.g., Virginia) were retiring their state debts this way. They contend that this would have been unjust to the original creditors. Yet, as Rothbard points out, most of the continental debt was no longer in the hands of its original owners. Funding at its full face value would simply have conferred a vast subsidy upon the wealthy investor classes. In other words, it would have constituted an enormous transfer of wealth (through taxation) from the mechanic and agrarian classes to the merchants and speculators who had bought up the debt for a fraction of its face value. The farmer and soldier who had been paid for his capital and labor with a depreciating certificate, which they would have to sell to live, would then be doubly wronged, first by confiscation, then by taxation. Only the original owners of the loan-office certificates were entitled to full compensation.
Shay's Rebellion and the Ratification of the Constitution
Alas, the nationalists took advantage of a propitious rebellion, that of Daniel Shays, a former Continental Army officer. Shay and other local leaders led an uprising of distressed farmers from western Massachusetts groaning under the load of heavy taxes assessed to pay the interest and principal (at face value in specie) of the state's wartime debt. During an economic depression, with farm prices low and foreign markets closed, the state government was taxing the farmers (payable in hard money only) to pay wealthy eastern creditors who had lent depreciated paper (accepted at full face value) to the state government for bonds during the war.
The farmers either could not or would not pay, and when they failed to do, state judges were quick to confiscate their farms. The farmers organized into a militia and marched on the courts, which they closed. Seeing an opportunity, the nationalist leaders were quick to misrepresent the grievances and aims of the insurgents. They claimed that the Shaysites, and similar groups in other states, were radical inflationists, communists, and levelers out to defraud their creditors and redistribute property, instead of being, what in truth they were, property-owning, anti-tax rebels who wanted to keep their farms.
Obviously, the nationalists wanted to scare the country into supporting a more vigorous government. George Washington was terrified. "We are fast verging toward anarchy and confusion," he wrote. His nationalist friends did their best to heighten his terror. Henry Knox wrote Washington of the Shaysites that "their creed is that the property of the United States" having been freed from British exactions "by the joint exertions of all, ought to be the common property of all." This was utterly false, but it did the trick. Washington agreed to be the presiding officer at the constitutional convention. Later, Madison in Federalist No. 10 warned that without the strong arm of a vigorous central government, the states would be vulnerable to movements motivated by "a rage for paper money, for an abolition of debts, for an equal division of property" and for other "improper or wicked project[s]." The Massachusetts historian Mercy Otis Warren, a contemporary of these events, warned of "discontents artificially wrought up, by men who wished for a more strong and splendid government."
We know the consummation. The nationalists were able to exploit the situation sufficiently to secure a federal convention to be held in Philadelphia during the summer of 1787. Exceeding their instructions (which were only to draw up a few amendments), the delegates decided to throw out the Articles altogether and write a new national constitution which was subsequently ratified by the states (but not without considerable opposition and probably a national majority opposed to it). Rothbard described it as the triumph of "a radically nationalist program that would recreate as much as possible the pre-liberal situation existing before the Revolution. . . . In short, they were able to destroy much of the original individualist and decentralist program of the American Revolution." We live with the consequences today.
Thus do we see how the period of the Articles of Confederation was not characterized by chaos and increasingly bad economic times, as historians tend to assume. Rather, the Articles proved themselves to be a perfectly viable structure for a free society, encouraging trade and prosperity and adherence to the highest ideals of 1776. The driving forces for the creation of the central government with the Constitution involved economic imbalances and debts leftover from the war with Britain. The federalists, ideologically attached to protectionist and nationalist theories, exploited both real and false fears in the hope of resolving these imbalances, but they ended up by recreating what the founding generation had struggled so hard to overthrow ten years earlier.
The strong central authority they created would in time reproduce every statist feature of the British systempolitical corruption, perpetual debt, debilitating taxation, consolidated power, and a global empire. Such was not the promise of the Revolution.
Historian Scott Trask is an adjunct scholar of the Ludwig von Mises Institute.
Scott Trask is an adjunct scholar of the Ludwig von Mises Institute.
Tighten it up, Scott.
Ping. How does this measure against your book on the same subject?
My brain hurts.
It is also true that the Convention itself grew out of questions of national survival. There was a shooting war between Virginians and Marylanders in 1785 over fishing rights in the Chesapeake Bay. The successful conclusion of those negotiations, conducted at Mount Vernon, led Virginia to issue an invitation to all states to attend a Convention in Annapolis in 1786.
Only five states managed to send delegations to Annapolis, with Maryland not officially in attendance even though the meeting was in its own capitol. Still, the Convention issued a final report which was an invitation of all states to attend the Philadelphia Convention, equipped with the authority to "do what was necessary" to make the federal government "meet the exigencies" of the times.
In short, there is a great deal of truth in the article above, but it leaves out a significant part of the history of the times and the political/legal dynamics which brought about the Philadelphia Convention.
Thanks for asking.
It's my understanding that the Con-Con was originally intended to introduce a few amendments to the Articles of Confederation (three or four, I'm not sure).
Looking back, most of the "anti-Federalist's" predictions about where the Constitution would bring the country have came true. Patrick Henry's biggest beef with the Constitution was the General Welfare Clause, claiming that it was an open door to unlimited government; how prophetic.
One problem was the threat of government bankruptcy. The nation owed $160 million in war debts and the Congress had no power to tax and the states rarely sent in more than half of Congress's requisitions. The national currency was worthless. To help pay the government's debt, several members of Congress proposed the imposition of a five percent duty on imports. But because the Articles of Confederation required unanimous approval of legislation, a single state, Rhode Island, was able to block the measure.
The country also faced grave foreign policy problems. Spain closed the Mississippi River to American commerce in 1784 and secretly conspired with Westerners (including the famous frontiersman Daniel Boone) to acquire the area that would eventually become Kentucky and Tennessee. Britain retained military posts in the Northwest, in violation of the peace treaty ending the Revolution, and tried to persuade Vermont to become a Canadian province.
The economy also posed serious problems. The Revolution had a disruptive impact especially on the South's economy. Planters lost about 60,000 slaves (including about 25,000 slaves in South Carolina and 5,000 in Georgia). New British trade regulations--the Orders in Council of 1783--prohibited the sale of many American agricultural products in the British West Indians, one of the country's leading markets, and required commodities to be shipped on British vessels. Massachusetts shipbuilders, who had constructed about 125 ships a year before the war, built only 25 ships a year after the war. Merchants, who had purchased large quantities of British goods after the war, found it difficult to sell these commodities to hard-pressed Americans. States protected local interests by imposing tariffs on interstate commerce.
That's a fuller and fairer view of things than Trask's. He sees the importance of navigation laws, but leaves out the reason why they were regarded as important. Britain had already imposed crippling restrictions on US shipping. Here's what this Trask writes about the motivation for new federal navigation laws: In 1784, northern legislatures began penalizing British shipping by laying additional duties upon goods imported in British bottoms. That's it. Nothing about the prior British measures that had led to real economic hardship in the Northeastern states. You can see his basic distortion -- abuse Americans who wanted greater unity as statists while ignoring the real threats and dangers that they were responding too. That's just not honest. Someone who writes that way forfeits all credibility.
Trask's writing about the tariff twists things as well: There is ample evidence that northern manufactures supported the federal Constitution because they hoped through uniform national tariffs to capture the southern market. It would be nice if he showed us the evidence. If the products of the whole country could be excluded by other powers, it was natural to abolish internal trade restrictions and respond in kind against foreign goods. But industry was at a relatively rudimentary stage in the 1780s. Handicrafts and home production were the norm, not modern industry. Even if production were more advanced in one part of the country, it wasn't like the North had any crushing advantage that couldn't be overcome.
In the 1790s New Englanders did like Hamilton's Federalist Party which followed a protectionist policy, but when Madison got protective tariffs in the 1810s Southerners supported him, and New Englanders were opposed for fear that protection would hurt their shipping interests. Trask attributes later conditions to the 1780s. There was some desire to protect domestic production, but it wasn't a matter of large scale industry and it wasn't more dominant in any particular region of the country. The great cotton boom hadn't yet distorted regional development, so a Virginian like Washington had no problem favoring protection for American industry in anticipation that his own region would benefit.
Nor was the desire for federal tariffs one of the most important factors leading to the Constitution. I don't see any footnotes here, but Trask's references to Sumner may be to a polemical set of lectures on the history of the tariff. If Sumner was looking at the Constitution through the narrow window of protectionism, he would naturally choose to view the making of the Constitution as a function of tariff history. It's the same way that these guys look at the Civil War -- they cut passages out of books on protectionism and economic history and paste them together, and ignore other sources and issues. Real scholars are bound to look at things differently.
Obviously, the nationalists wanted to scare the country into supporting a more vigorous government. George Washington was terrified. "We are fast verging toward anarchy and confusion," he wrote. His nationalist friends did their best to heighten his terror.
This is why I hate these guys. They decide the answers beforehand and then assume those who disagree are liars and manipulators. That there might have been legitimate cause for concern in the 1780s is simply dismissed out of hand. If Shay's Rebellion was limited in its ends and means, the next uprising might not be. The country had just seen a massive upheaval a decade before and even those who'd led the last revolution doubted whether it could survive another one. If you put yourself in the shoes of Washington and others the fears aren't so exaggerated.
Years ago I might have gotten taken in by a hack like Trask. But the same Internet that makes it possible for all of us to read his article at the same time provides plenty of sources that we can use to verify his claims. So far as I can tell, they don't hold up.
Maybe...but it's a good thing...
*this* is the stuff.
The "sad but true" truth is that over time, the claims of the "anti-federalists" have turned out true. The Federalists had high hopes and noble ambitions, but they were naive to the true nature of Leviathan.
Antifederalist No. 7 - Adoption of the Constitution Will Lead To Civil War
The AntiFederalist Papers ^ | December 6, 1787 | Philanthropos
Posted on 05/15/2005 4:32:57 PM PDT by Remember_Salamis
Antifederalist No. 7 - Adoption of the Constitution Will Lead To Civil War Philanthropos December 6, 1787
The time in which the constitution or government of a nation undergoes any particular change, is always interesting and critical. Enemies are vigilant, allies are in suspense, friends hesitating between hope and fear; and all men are in eager expectation to see what such a change may produce. But the state of our affairs at present, is of such moment, as even to arouse the dead ... [A certain defender of the Constitution has stated that objections to it] are more calculated to alarm the fears of the people than to answer any valuable end.
Was that the case, as it is not, will any man in his sober senses say, that the least infringement or appearance of infringement on our liberty -that liberty which has lately cost so much blood and treasure, together with anxious days and sleepless nights-ought not both to rouse our fears and awaken our jealousy? ... The new constitution in its present form is calculated to produce despotism, thralldom and confusion, and if the United States do swallow it, they will find it a bolus, that will create convulsions to their utmost extremities. Were they mine enemies, the worst imprecation I could devise would be, may they adopt it.
For tyranny, where it has been chained (as for a few years past) is always more cursed, and sticks its teeth in deeper than before. Were Col. [George] Mason's objections obviated, the improvement would be very considerable, though even then, not so complete as might be. The Congress's having power without control-to borrow money on the credit of the United States; their having power to appoint their own salaries, and their being paid out of the treasury of the United States, thereby, in some measure, rendering them independent of the individual states; their being judges of the qualification and election of their own members, by which means they can get men to suit any purpose; together with Col. Mason's wise and judicious objections-are grievances, the very idea of which is enough to make every honest citizen exclaim in the language of Cato, 0 Liberty, 0 my country!
Our present constitution, with a few additional powers to Congress, seems better calculated to preserve the rights and defend the liberties of our citizens, than the one proposed, without proper amendments. Let us therefore, for once, show our judgment and solidity by continuing it, and prove the opinion to be erroneous, that levity and fickleness are not only the foibles of our tempers, but the reigning principles in these states. There are men amongst us, of such dissatisfied tempers, that place them in Heaven, they would find something to blame; and so restless and self- sufficient, that they must be eternally reforming the state. But the misfortune is, they always leave affairs worse than they find them.
A change of government is at all times dangerous, but at present may be fatal, without the utmost caution, just after emerging out of a tedious and expensive war. Feeble in our nature, and complicated in our form, we are little able to bear the rough Posting of civil dissensions which are likely to ensue. Even now, discontent and opposition distract our councils. Division and despondency affect our people. Is it then a time to alter our government, that government which even now totters on its foundation, and will, without tender care, produce ruin by its fall? Beware my countrymen! Our enemies- -uncontrolled as they are in their ambitious schemes, fretted with losses, and perplexed with disappointments-will exert their whole power and policy to increase and continue our confusion. And while we are destroying one another, they will be repairing their losses, and ruining our trade.
Of all the plagues that infest a nation, a civil war is the worst. Famine is severe, pestilence is dreadful; but in these, though men die, they die in peace. The father expires without the guilt of the son; and the son, if he survives, enjoys the inheritance of his father. Cities may be thinned, but they neither plundered nor burnt. But when a civil war is kindled, there is then forth no security of property nor protection from any law. Life and fortune become precarious. And all that is dear to men is at the discretion of profligate soldiery, doubly licentious on such an occasion. Cities are exhausted by heavy contributions, or sacked because they cannot answer exorbitant demand. Countries are eaten up by the parties they favor, and ravaged by the one they oppose. Fathers and sons, sheath their swords in anothers bowels in the field, and their wives and daughters are exposed to rudeness and lust of ruffians at home. And when the sword has decided quarrel, the scene is closed with banishments, forfeitures, and barbarous executions that entail distress on children then unborn. May Heaven avert the dreadful catastrophe!
In the most limited governments, what wranglings, animosities, factions, partiality, and all other evils that tend to embroil a nation and weaken a state, are constantly practised by legislators. What then may we expect if the new constitution be adopted as it now stands? The great will struggle for power, honor and wealth; the poor become a prey to avarice, insolence and oppression. And while some are studying to supplant their neighbors, and others striving to keep their stations, one villain will wink at the oppression of another, the people be fleeced, and the public business neglected. From despotism and tyranny good Lord deliver us.
"PHILANTHROPOS," (an anonymous Virginia Antifederalist) appeared in The Virginia Journal and Alexandria Advertiser, December 6, 1787, writing his version of history under the proposed new Constitution.
Over the course of 220 years that's hardly surprising. Republics have tended to have short lives. Ours has lasted longer and worked out better than most.
The Federalists had high hopes and noble ambitions, but they were naive to the true nature of Leviathan.
The Founders were anything but naive about politics. Things would have gone to hell a lot sooner if the Anti-Federalists had had their own way.
Contrast what's happened in our country to the fate of new republics in Latin America, Africa, the Balkans or the Middle East. It looks like we did very well.
Madison & co. were naive in giving the Central Government the authority to tax. They should have known, especially with the heavy influence of Locke, Hobbes, and others on their thought, that feeding Leviathan will merely allow it to grow larger and faster. That is the nature of Government. The Leading antifederalists (Patrick Henry, John Jay, and Gerorge Clinton prominently) knew this and opposed it on those very grounds. Thomas Jefferson, who originally called himself and antifederalist, later "neither federalist nor antifederalist", and eventually accepted the Constitution, knew these things as well.
The antifederalists also saw the dangers of establishing a Supreme Court to arbitrate and interstate or State-National issues. The antifederalists knew the dangers of a judicial tyranny, and instead favored these cases to be settled in a unicameral Congress (with equal representation from all the states).
The post-Revolutionary War Recession was over by the time the Constitution was implemented, so claims by historians that the Cosntitution fixed American economic problems are unfounded.
Indeed, the likelihood is that Americans would be less free than they are now. It's an adolescent fantasy that only the federal government can be oppressive and that state government is the font of all liberty. State governments can be quite repressive and meddlesome, and are even more intrusive if they're given a free hand.
If you object to the feds having too much power to reach into your pocket, your quarrel is with 1913 and the Income Tax Amendment, not with the Constitution of 1787. Federal power to fund the country through excise and import taxes was no great loss of liberty to "Leviathan."
I'm agnostic about the Supreme Court. The court has too much power today. There might well have been a better way of adjudicating differences. But making the states the judges of all conflicts is a recipe for chaos. You can look abroad to countries that gave various sections or groups a veto power and see how badly that worked out.
Recessions usually do end. Just what comes next and how "robust" the recovery is can vary. I don't know any more about the economy in the 1780s beyond what I've posted, but it's enough to make clear that Trask is an unreliable commentator.
You're missing the beauty of Competitive Federalism. If the overwhelming majority of "government services" are provided at the subnational level and all citizens have the right to emigrate and shift capital between them, citizens and capital will shift to those states that provide the most liberty (or shift to states with the most generous handouts for the undesirable citizens). If a subnational entity used too much coercion or grew to large, its most productive and wealthy citizens would move to other states, leavign the state an unproductive husk.
This theory has been referred to as "tax competition" when in reference to international trade.