American History Lesson 68: Whiskey Rebellion

In this lesson I learned about the Whiskey Rebellion. This lesson had two main parts, a familiar theme, and the new elements of the story. Let’s begin with the familiar theme.

It starts with a distant central government imposing internal taxes, specifically against producers. Now the bigger producers pay the taxes, but off in Appalachia, the west, smaller producers, some distilling out of their homes, are outraged by the taxes. They rally the local citizens, and the local citizens threaten the tax collectors. Soon there is violence against the tax collectors, they are tarred and feathered. Needless to say taxes are not collected. So the government reduces the taxes, but it is too late, the rebellion spreads. Liberty poles are set up, government leaders are hanged in effigy, and a tax collector’s home is burnt down. A huge army of protestors forms, 7,000 in number.

If this sounds familiar that’s because it’s exactly what the British did to the colonists. Except the American government has grown even more powerful than Parliament.

Now this is where the new elements come in. The head of the government happens to be a military man, he had been a former militia commander in Western Pennsylvania. By law he is the Commander-in-Chief of the militias, the force which won the Revolution, and by law he is allowed to draft in order to suppress domestic revolt. There are draft riots, but eventually a huge army is assembled, 14,000 men in total. For the only time in our nation’s history, the Commander-in-Chief leads the army himself. The rebellion evaporates, realizing they have no chance to defeat the forces of their own government. However the majority of the public are pleased.

This is where the law of unintended consequences takes over. A new political party begins forming, with Thomas Jefferson as the primary leader, and Hamilton symbolic of the opposition. In 1800 it wins the election, and this is caused by the defection of Hamilton, who was the one who dreamed up the whiskey tax and called for armed suppression of the revolt in the first place. The reason for this was because of how the electoral college worked, there was a tie between Jefferson, whom Hamilton disliked, and Burr, whom Hamilton hated, so he broke the tie in Jefferson’s favor. Immediately Hamilton suffered the greatest political reversal in American history, as it would turn out, the man who called for armed suppression of the revolt would end up the political victim of his actions.

The internal tax was eventually repealed, only to be re-imposed in 1812 by a man named Albert Gallatin, who had previously been one of the rebels himself. Politics does strange things, but no one can ever break the law of unintended consequences entirely. A culture of resistance still exists in Appalachia, it remains to this day.

American History Lesson 67: First Bank of the United States

In this lesson I learned about the First Bank of the United States. The idea to have a privately owned central bank was brought up by Hamilton, of course, who drew influence from the Bank of England. The government would hold 20% ownership over the Bank, leaving 80% to be owned privately. Of that 80%, 70% was taken up by nonvoting foreign ownership. The Bank guaranteed 8% on bank stock, which was a tremendous deal, and it would loan to individuals, national government, as well as states with congressional approval.

While trying to get the act through Congress, Hamilton faced some opposition. Attorney General Edmund Randolph challenged the Bank’s constitutionality, as did Jefferson and Madison. Washington however gave Hamilton one week to be persuaded. What ensued was a letter called the Doctrine of Implied Powers, which Hamilton crammed with any argument he could think of. Despite the fact that most of it is made up of incoherent nonsense, they triumphed because the Constitution’s language lends itself to an expansion of national government power.

Dr. North then brought up some arguments that the critics missed. The First Bank of the United States was a privately owned profit seeking business that was created by the government and given a monopoly by the government. In fact, the bank would have the same authority as a government agency. However it was used to line the pockets of investors, including some members of congress, and many unnamed foreign investors.

Ultimately, it was the Constitution that did not protect against this monopoly. The gibberish that was the doctrine of implied powers became dominant in American constitutional history. And from then on the government would never get smaller.

American History Lesson 66: Public Debt

In this lesson I learned about public debt. There are really only three ways to fund civil government. Through taxes, visible or invisible, borrowing from the public, or monetary inflation.

First let’s look at Great Britain’s example, which was the greatest example at the time Hamilton was in office. Great Britain had no open defaults, though there may have been some secret defaults, the British government never said they wouldn’t pay back loans. Britain had a ready market for debt, people had great confidence that they would get a good return, and with low interest rates, there was very little risk associated with lending. Finally Britain had stable wartime finances, giving them the ability to outlast all their opponents economically with only one exception, America.

So what was America’s experience with public debt? Under the Articles of Confederation, no taxation by the national government was allowed, because of this even though it could borrow money there was real question surrounding whether or not it could pay it back. There was massive wartime debt by all governments, federal and state, and the response to it was massive monetary inflation by all governments. The federal issued currency, the Continentals, were inflated so much they were practically worthless, but different states had varying degrees of success with their currencies.

By 1790, the time Hamilton made it into office, there were $75 million dollars in debt, including state debt. This was all held by speculators, some who had bailed the government out in time of war, hoping to get something back later, and others who had bought government IOUs dirt cheap from people who had run out of money. One big difference now was the national government had the power to tax in the form of tariffs. Meanwhile the state governments always had the power to tax.

Hamilton’s response to this was to set forth the mercantilist views of commerce and prosperity that had been refuted by Adam Smith in 1776. That we should have perpetual public debt rather than paying it off, because this would increase trade, promote agriculture and manufacturers, lower interest rates and increase the value of developed land. Of course he had no way of proving it, he just said it. He spoke for the speculators, arguing that nothing should be paid to the original owners of government bonds, and that it was their fault for selling them. It was supposedly the fault of the original owners of government bonds that the government not only didn’t pay them back but devalued their bonds. Alexander Hamilton said perpetual government debt was the price of liberty. What it was, was the price of a revolution, a revolution that had been entirely undermined by a government, albeit an American government, that was far bigger than Parliament could imagine.

American History Lesson 64: Constitution, Part 2

In this lesson I learned about the rest of the Articles and the Bill of Rights.

Article III (dealing with Judiciary)

1. Judicial power of the United States
2. No election of judges (Judges appointed by President and approved by Senate, not elected, making the judge practically untouchable unless he commits a truly horrible crime)
3. Lifetime appointments (One the judge is appointed, they are in for life, and they are not likely to change their opinions.)
4. Congress reserves authority over the Supreme Court (Congress can overturn any law that the Supreme Court says is a law)
5. Jury Trials are guaranteed

Article IV (dealing with interstate cooperation)

1. Rights of citizens across borders
2. Extradition of accused criminals
3. Fugitive slave law (Slaves escaping to another state can be returned to owners by owner’s claims)
4. Guarantee of republican government in each state

Article V (Amendment procedures)

Article VI

1. Continuity of Confederation debt (If you lent money to the Confederation, you would get it back)
2. Constitution and treatise: supreme law
3. No religious test oaths for federal offices (This secularized federal government, 14th Amendment secularized civil government)

Bill of Rights

• Amendment 1: Congress may not regulate speech, press, assembly, or religion (Originally only a restriction on Congress, not states, until the 14th Amendment)
• Amendment 2: To support the militia, fun ownership may not be prohibited
• Amendment 3: No housing of soldiers in homes
• Amendment 4: Warrants for search and seizure (Does not apply to anything covered by the Patriot Act. No real limitation on what governments can do if issue is terrorism)
• Amendment 5: Grand juries, no double jeopardy, no self-incrimination
• Amendment 6: Speedy trial by jury
• Amendment 7: Trial by jury for common law
• Amendment 8: No excessive bail
• Amendment 9: Retention of unnumerated rights by the people
• Amendment 10: Retention of powers not delegated to the U.S. in the Constitution: states and people

American History Lesson 63: Constitution, Part 1

In this lesson I learned about the preamble as well as the first and second articles of the Constitution.

What follows below is the Constitution’s original preamble. Though the first three words are familiar, the rest of it is far less inspiring.

We the people of the States of New Hampshire, Massachusetts, Rhode-Island and Providence Plantations, Connecticut, New-York, New-Jersey, Pennsylvania, Delaware, Maryland, Virginia, North-Carolina, South-Carolina, and Georgia, do ordain, declare, and establish the following Constitution for the Government of Ourselves and Our Posterity. ~ The Constitution’s Original Preamble

As run of the mill as it was, this preamble in fact announced the beginning of a revolution. According to the old constitution, the Articles of Confederation, the manner in which the new constitution was ratified, was illegal. The Constitution established a new country on a new basis, but under the illusion of the old name, the United States of America. The sovereign was also changed to those three words, “We the people” from what had previously been, all though vaguely described, God. Obviously this preamble names specific states, giving them a degree of sovereignty. It also still kept the government’s tasks to a minimum, only citing that it was for their self governments and future generations.

Of course this is not the preamble that most people know. This is because it was not good enough for the members of the Committee on Style and Arrangement, which included Hamilton and Madison. Without explanation the preamble was changed to:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

This preamble completely removed the illusion that the states had any sovereignty. They weren’t even mentioned. Rather the sovereignty was shifted over to the “People of the United States” whoever they were. This was literally a declaration of independence from the state government. Also added was a statement of faith, which included positive corporate sanctions or basically promised goals.

For the actual Articles, I’m just going to list out what Dr. North thought was worth mentioning in terms of what they did.

Article I (dealing with Congress)

1. Slaves counted for representation in the House as 3/5 of a person (This gave the south a more dominant position in the House of Representatives)
2. One-third of the Senate would be rotated every election (This prevented public opinion from affecting the whole Senate, it could already affected the House)
3. Impeachment would be determined by the House, but the actual Trial would be determined by the Senate (Two-thirds of members would be required to convict the president)
4. Immunity from lying and slander in speeches
5. The ability to regulate the value of money
6. No limit on fiat-money by national government
7. Control over the militia (The founding fathers knew it was really the militia which really won the Revolutionary War)
8. A standing Army and Navy (This gave the central government lots of power)
9. No Habeas Corpus in the case of rebellion or invasion (A person could be arrested by the government and not be told why, the government didn’t have to press charges)
10. Free trade between states

Article II (dealing with the President)

1. There would be electors instead of a direct election
2. The president would have a salary (This was so anyone legally eligible to be a president could be the president without having to be rich or needing help from rich men)
3. An oath of allegiance to nothing in particular (The only reason the hand is put on the Bible is because Washington did it)
4. The president would be the Commander-in-Chief of the Army, Navy, and most importantly at the time, the Militia
5. Could be convicted of high crimes and misdemeanors (Not really defined besides treason and bribery)

American History Lesson 62: Constitution vs. Articles of Confederation

In this lesson Dr. North compared the Constitution to the Articles of Confederation. He first talked about each individually, talked about their differences, and then compared their covenantal structure.

The Articles of Confederation didn’t allow congress the power of taxation. Only states had that power. When the states did consider giving that power to congress, the action was vetoed by Rhode Island, as it took the full consent of every state in order to amend the Articles. This would be the thing that would finish off the Articles. Now again only the states had the power of taxation, and they had it in the form of tariffs specifically. However state tariffs were falling, a main reason being that it was expensive to travel by land, making cross border trading expensive. So under the Articles, free trade was essentially unhindered, and it spread all across each state. Land ordinances were operating and settlers could buy farmland in the untamed west. As congress had relied on contributions from states to support itself, the land ordinances provided a steady stream of revenue. Speaking of the national government though, it was the weak national government that the revolutionaries had demanded in 1775. It stayed consistent with the reasons for the Revolution, so the old revolutionaries supported it.

However the self-proclaimed federalists, which were actually nationalists opposed the Articles, and the individualists were divided. The fact that the Constitution was passed tells us that the nationalists won and this was due mostly to public opinion. The defenders of the Articles were not as eloquent as the young men who opposed it, and the argument that “you can’t beat something with nothing” won the public over. The Articles put sovereignty in the hands of the states, but as we’ll see, that will change.

The Constitution made the central government far more powerful than Parliament in 1775. Sure Parliament had absolute power, but they didn’t dare to use it after the Revolution. This new central government had control over commerce. Yes, so did Parliament, but when they tried controlling commerce it led to the Revolution. It would have control over local courts, which Parliament had also, but which it also couldn’t use because the colonists would become rowdy and violent when they tried implementing acts such as the Stamp Act and the Townsend Act. It had the power of direct taxation, which Dr. North said would be demonstrated by the whiskey tax later on. It had a standing army where Parliament’s army sat in the cities for most of the year. It restricted states to using commodities such as silver and gold for their currencies but put no such restrictions on the central government, giving it the power of fiat money. It gave direct authority over individuals, as seen with taxation. It had control over militias. And finally it gave power over interstate commerce.

So what are the important differences between the Articles of Confederation and the Constitution? Originally, the states came together to form a federation, under the Articles, it recognized the states as sovereign. When the Constitution was implemented it took some of that sovereignty away, forcing it to share it with the people, meaning that the states were no longer autonomous. This Dr. North says, is the fundamental difference, and the one that would eventually lead to the Civil War. The Constitution would put in place an executive power, a president, whereas in the Articles no such power was present. Then there’s the difference of bicameralism. The Articles only had congress, which was filled on the basis of population. The Constitution on the other hand used bicameralism, a two house system where legislatures would elect two men to repesent each legislature in senate.

The differences are easy to spot when you look at the covenantal structure of the two documents. In terms of sovereignty, the Constitution names people, literally right in front, as sovereign, while the Articles name a deistic god. In terms of authority, the Constitution puts forth the president, while the Articles put forth no one. In terms of law, the Constitution detailed many powers of central government, while the Articles name only a few. In terms of sanctions, the Constitution describes a standing army, while the Articles use militias as the enforcers. Finally in terms of succession, the Constitution calls for amendment by the people, but all the Articles have shown is a veto by Rhode Island.

The public went along with the Constitution and the expansion of government because “you can’t beat something with nothing.” What they didn’t know was that it was the product of secret deliberations, openings made by the framers of the Constitution so they could change it to suit their needs. How could they? At first glimpse they were masters of rhetoric, beating out their opponents. Ultimately, this is the triumph of the thing seen over the thing not seen. Of government power over the miracle of the market.

American History Lesson 61: Shays’ Rebellion

In this lesson I learned about Shays’ Rebellion. Dr. North started by talking about what he called the great deceptions. The first deception took place in 1754 when the Indian known as the Half-king deceived George Washington in to attacking a French troop. This was the event which led to the French and Indian War. The second deception took place in 1786 when Henry Knox deceived Washington. We’ll look in detail at this second great deception.

During the Revolutionary War all the colonies had paid their troops directly, with the exception of Massachusetts, which handed out IOU’s instead of pay. Now these IOU’s acted as money, but that was was actually a problem. Because instead of giving the troops silver, of which there was a limited amount, the state could just print as many IOU’s as they wanted, causing inflation, vastly devaluing the IOU’s. Desperate to get something, families sold these IOU’s to speculators for what would’ve been pennies on the dollar. Then the speculators waited, they waited till the end of the war. Then, for the paper notes they bought for practically nothing, they got the state to pay interest in silver, whereas previously nobody could have hoped to get paid back anything meaningful for them.

Luckily at the time, John Hancock was governor of Massachusetts. Hancock knew the sacrifice some of these men had made for their country, and he knew what had happened to them, so he refused to collect the taxes to pay these speculators. However in 1786, he didn’t run for re-election because of gout. This created an opening for his opponent, Bowdoin, whom the House elected that year, and when the legislature started demanding payment in silver, he answered them. Taxes were collected from the families of soldiers who had put their lives on the line, some of whom never came back, and these taxes were being used to pay speculators.

Outraged, one-third of the towns revolted, and I’m not talking about farmers with pitchforks, though most of the soldiers were farmers, this was a matter of legal governments revolting. Nonetheless few militia members would take up arms because they knew what had happened to the rebels, led by a man named Shay. Knox however described the revolt as a property revolt, this is what he told Washington, and Washington trusted him. This was not a property revolt though, this was a tax revolt, and in Dr. Norths opinion, it was far more justified economically and morally than the American Revolution itself. There would be no men such as Samuel Adams among them, gifted in rhetoric and ready to explain their cause, but they did protest. The state legislature, however, would not listen to them. The revolutionaries had realized from 1775 to 1781 that they had trusted the wrong leaders. They found out the real cost of the revolution, and that the state used hyperinflation as a way of paying it off. Because of this they were skinned by speculators who had taken control of legislature.

In 1787, the nationalists deceived the public in the same way Knox had deceived Washington. They told Knox’s lies to everyone, the people outside of Massachusetts didn’t know what had actually happened. Historians have believed the winners of 1788, because the victors write the history books. It took 215 years for the truth to get out.

Shay’s rebellion is known as the event which brought about the Constitutional Convention. Without it Washington would not have attended the Convention, and without Washington the Convention would have failed. Yet the history books do not acknowledge the fact that Washington was deceived.

American History Lesson 60: Liberty! Part 5

In this lesson I watched Liberty! The American Revolution Part V.

American History Lesson 59: The Confederation

In this lesson I learned about the Confederation. Dr. North focused on comparing what is normally discussed in textbooks to what actually happened.

He started by discussing the memory hole, a place a person in power could drop information and evidence into in George Orwell’s 1984. The Confederation was effectively dropped into the memory hole, being barely discussed in most textbooks. There were few monographs on it, Dr. North bringing up only two examples. The first monograph he brought up was The New Nation by Merrill Jensen, and it was written in 1950, a long time ago. Jensen took the view that the period of the Confederation was productive and that there was no major crisis that could not have been solved by the existing civil government. The second monograph he brought up was The Forging of the Union by Richard Morris, and it was written in 1987, also quite a while ago. Morris took the view that there were many problems during the Confederation period and that they weren’t being dealt with. His view represented that of all the other historians, they all viewed the Confederation critically, with the exception of Jensen. North said that he had never seen discussion of the Articles of Confederation as to whether it was consistent with the Revolution, which he provided in the prior lessons.

With the critics of the Confederation that were willing to write about it, there is a focus on the Recession. Indeed this was what Morris focused on in his monograph. However Morris never discussed how the Recession came about, he never discussed the theory of the boom/bust cycles as monetary. There was a boom as inflation took place during wartime and a bust when it stopped, that was what happened then, and that is what has happened in many other cases where governments inflated during wartime. The recession was inevitable, no matter what constitution was put in place. Yet critics have ignored that fact, and failed to prove that another constitution was necessary to end the Recession. There was no discussion on the British exclusion in the Caribbean. Islands in the Caribbean governed by Parliament which were previously open for trade with the colonies were locked out after the peace treaty, causing economic collapse. A market that was previously open to the colonies suddenly wasn’t so of course there was a contraction. There is discussion of Shays’ rebellion as if it were representative of what was going on in all the colonies, which it wasn’t. Shays’ rebellion is the crucial event in the coming of the Constitution, but until the 2000s nobody had went into a detailed study of who was involved in the rebellion and why it started. Finally there is discussion of state tariffs. This is a legitimate mistake of the colonies to limit free trade by imposing tariffs across state borders. However how else were they going to get taxes, they weren’t getting any other taxes, so they used tariffs. They were also using them because they were noninvasive, not requiring access to everybody’s income.

Then Dr. North brought up a forgotten document, subtitled Young Men of the Revolution, which was written by Elkins and McKitrick in 1961. These sociologists argued that a key factor nobody had looked at was the age of men who were associated with the constitution. As you could probably tell from the title of their work, most of those men were young. Not all of them were young, Samuel Adams and Patrick Henry were older, but they opposed the Constitutional Convention. The reason their age is so important is because they did not have political careers waiting for them. They had gotten their “15 minutes of fame” on the world stage, but after the peace treaty, they had to go back home as nobodies. The most they could manage was state politics, they couldn’t get onto the national level because there was no national level anymore, the new government was powerless. This goes back to the fourth thing men want, fame.

So there came a call for centralization, which went against everything the revolution stood for. The whole reason for the revolution was to fight against a government which they said was too centralized and too powerful. Now they were calling for, basically what Parliament was calling for in 1774. They were calling for what Governor Hutchinson had called for, and what Hutchinson called for was the reason the revolution started. So by calling for centralization they were making a call to abandon the rhetoric of the revolution, saying that Parliament and Hutchinson, were right in the first place. This was a battle over political sovereignty, that’s what the revolution was, and that’s what would take place after the constitution.

The main question to ask yourself is was the Revolution wrong-headed? Was Parliament right about the taxation of commerce? That’s what the government began to tax under the constitution, and that’s what the Articles of Confederation would not have allowed. Were the revolutionaries wrong about the autonomy of the colonial legislatures? That’s exactly where political sovereignty resided in the Articles. Were the revolutionaries wrong in identifying God as the nation’s sovereign? Because that’s where the Articles got their power, whereas in the Constitution no such power is invoked. Were the revolutionaries wrong in not trusting a national fiat currency? They had been wiped out by the Continental, but the constitution allowed fiat currency.

There are only two things, two triumphs acknowledged by the critics of the period of the Confederation, the Land Ordinance of 1785, and the Northwest Ordinance of 1787. This is because they don’t really relate to central government and they carried on through the new government established by the Constitution.

There were some actual disadvantages though. Again because of the state tariffs there were no free trade zones. It would only be with the ratification of the Constitution that America would become the largest free trade zone. There was no source of income for the central government to repay all of the wartime debt it took on. Then there was the problem of having no easy amendment procedures. All colonial legislatures had to agree on the amendment in order for it to be passed, which was practically impossible. Because of this there was a lack of succession with the Articles, and this meant that sooner or later they would be violated, whether that be with the introduction of a new constitution, or the lack of anyone willing to defend it.

American History Lesson 58: Articles of Confederation (2)

In this lesson I learned more about the Articles of Confederation. Dr. North put the Articles through his covanental structure, of sovereignty, authority, law, sanctions, and succession. Through this structure, he found that the Articles of Confederation stayed consistent with the Revolution’s view of Parliament’s authority. There were no internal taxes or taxes specifically on individuals, only external taxes in the form of tariffs. That was the only reason why tariffs were to be allowed, to prevent the overreach of government into individual freedom. There was to be no infringement of colonial legislatures in the same way the revolutionaries believed the Parliament should not intervene in colonial legislatures. There would be no executives in national government, or at least no intervention from them in state legislature. If a national governor tried to intervene in state legislature they could simply cut off the funding, leaving congress without any source of revenue. Likewise no national bureaucrats with executive authority would be allowed into state legislature.