Sunday, December 28, 2014

Roosevelt and the Grape

The political history of Prohibition is complex. Before the Eighteenth Amendment took effect in January 1920, a nation-wide ban on most alcoholic beverages had been enacted and took effect at the end of June 1919.

Oddly, the ban had been legislated on the rationale that the nation’s grains were needed for the war effort. But the war ended in November 1918, more than six months before the moratorium came into force.

In addition, some individual counties and states wrote their own local bans into law.

Wineries, breweries, and distilleries were economically destroyed; distributors of beverages and operators of restaurants and bars were badly damaged in their ability to earn a living. By contrast, organized crime - “gangsters” and the Mafia - flourished.

In March 1933, legislation allowed for the manufacture, sale, and consumption of certain types of beer and wine. In December 1933, the constitutional amendment was repealed, making beer, wine, and distilled liquors fully legal.

But the economy could not instantly fix the devastation done to several different sectors. One historian, Leon D. Adams, writes:

Would the government, which had destroyed the industry, help to restore it? Some members of President Franklin D. Roosevelt’s administration thought it should. There was ample precedent for Federal assistance; the Department of Agriculture had encouraged winegrowing for more than a century, operating experimental vineyards and breeding wine grapes until Prohibition intervened. As late as 1880, the only Federal census statistics of state-by-state grape production were given in gallons of wine made, because the chief purpose of planting vineyards was to grow wine. This was always the case in other countries; nine tenths of the world’s grapes are grown for wine. Shipping of fresh grapes as a dessert fruit was unimportant until after refrigerated freight cars were adapted for fruit shipments about 1887, and the raisin industry remained small until the 1890s.

American vintners were honored by seeing their product served and consumed at official state banquets:

Promptly at Repeal, Eleanor Roosevelt began serving American wines in the White House, restoring the custom that had prevailed until “Lemonade Lucy,” the wife of President Rutherford B. Hayes, stopped it in 1877.

Given that the Roosevelt administration was spending massive amounts of money on various “public works” and “make work” projects, it seemed reasonable if a small sum were spent to encourage the nation’s winegrowing industry. Compared to other massive expenditures on Roosevelt’s projects, agricultural help for the vineyards was an insignificant amount. The science of winemaking, reports Leon D. Adams, found at least one friend in the Department of Agriculture.

Dr. Rexford Guy Tugwell, a member of Roosevelt’s famed “Brain Trust,” made elaborate plans to restore winegrowing as a nationwide industry. Tugwell, who then was the assistant secretary of agriculture, even favored exempting wine and beer from taxation in order to hold down the consumption of hard liquor. In 1933 he sent the Agriculture Department’s Dr. Charles A. Magoon to Europe to collect the newest wine yeast cultures. At Tugwell’s direction, two complete model wineries were built, one at the Government’s giant agricultural research center in Beltsville, Maryland, and the other at the Meridian, Mississippi, research station which served the southeastern states. Both wineries were fully equipped with crushers, presses, underground vats, and there was a brandy still at Beltsville.

But after a massive investment of taxpayer dollars, Democrat Congressman Clarence Cannon of Missouri organized resistance to government’s wine efforts. Both research locations and their equipped went unused.

Saturday, December 27, 2014

The Presidents and the Grape

Quite early in American history, attempts were made to grow vitis vinifera, a family of common European grapevines, in the thirteen colonies, starting with Virginia. Thomas Jefferson, with his many scientific interests including botany and agriculture, tried to get the vine to grow.

Importing wine from Europe was costly. Americans had already begun to brew their own beer, distill various liquors, and make a form of apple wine. But grape wine still eluded them.

George Washington apparently did not devote much effort to establishing wine production in America, content with imported wine and domestic beer. He did distill his own liquor. Historian Leon D. Adams write:

Virginia, as we have seen, was the first of the colonies to cultivate grapes for wine. The attempts to grow Vinifera, which began in 1619 under Lord Delaware, continued in Virginia for almost two centuries. Some of the vineyards succeeded in producing quantities of wine before plant diseases and insect pests killed the European vines. About 1716, historian Robert Beverley won a wager of seven hundred guineas from his neighbors by producing seven hundred gallons in a single vintage from his three-acre vineyard at Beverley Park in King and Queen County. But Beverley apparently made the wine from native wild grapes, which he cultivated together with his few French vines. The only Virginia wines of any note in the eighteenth century were the red and white Rapidan, made by a colony of Germans who settled on the Rapidan River in Spotsylvania County after 1770. George Washington planted a garden vineyard at Mount Vernon, but there is no record of his having made any wine, although he made cider and distilled considerable quantities of applejack. In 1773, Dr. Filippo Mazzei of Tuscany brought Italian winegrowers with ten thousand European vine cuttings in a chartered ship to establish winegrowing in Virginia. Most of Mazzei’s cuttings were planted at Monticello, the estate of Thomas Jefferson, in what is now Albemarle County. For thirty years Jefferson continued trying to grow Vinifera, even importing some of his vines directly from Chateau d’Yquem, and he is said once to have even imported some French soil. An advocate of wine as a temperate beverage, he hoped to establish grape growing as an American industry, and while minister to France from 1785 to 1789, he made his own scientific studies of viticulture and winemaking. Jefferson finally admitted his failure with Vinifera when he recommended in 1809 that native vines, such as the Alexander, be planted instead.

Eventually, successful winemaking would succeed with other types of grapes in the thirteen colonies. The vitis vinifera would find its American home in California.

In due course, vitis vinifera would form hybrids with some of the native North American breeds, and these hearty plants were able to survive outside of California. Later vintners would also graft vitis vinifera onto the roots of native breeds. In the end, forms of vitis vinifera would grow in places like Michigan and New York.

Wednesday, December 17, 2014

North America: Early Settlers Decide for Independence

By the time that the tyrant, George III of England, provoked, by means of his cruel injustices, the colonists in North America into open conflict with the British Empire, those thirteen colonies, and the other regions they controlled in the interior of the continent, were inhabited by diverse groupings of people.

They faced a profound question: would they actively support America’s bid for independence from England?

During the second half of the eighteenth century, enthusiasm for independence fluctuated among the residents of the thirteen colonies. At times, the majority was probably in favor of it; at times, the majority seemed indifferent or even hostile to the idea.

Polling data as it is known in the twenty-first century was not collected in those days. Estimates of support are made from what evidence exists. Such approximations are not exact.

It is, however, clear that support for independence varied from region to region, and varied within region by ethnic and religious groupings. Historian Thomas Sowell writes:

While other Americans split into Tory supporters of England and revolutionaries for independence in 1776, German Americans split into pacifists and revolutionaries. Mennonites and other German religious sects would not fight, but some paid extra taxes instead or engaged in medical or other duties consistent with their status as conscientious objectors. However, the largest denominations among Germans, the Lutherans and the Reformed, had no prohibitions against the military, and many Germans from these groups fought in the revolution.

Support for the independence effort varied with the colonial army’s victories or losses, with the economic impact of the war, and with shifting political moods. Stirring texts, like Thomas Paine’s Common Sense and The American Crisis stoked the passion for independence; news of betrayal and defection, like that of Benedict Arnold, muted such fervor. Larry Arnn writes:

In the period leading up to the American Revolution, loyalists or Tories contested with revolutionaries, and these two groups alternated having the upper hand between 1763 and 1776, and even later, after the war had begun. The people were making up their minds about something fundamental, and a consensus was slow in forming.

Ultimately, the spirit of independence took permanent hold. A unique turning-point in world history, the United States would find the legitimacy for its founding, not in the hereditary claims of a royal dynasty, but in the consent of the governed.

Working out this Lockean vision, the inhabitants of the new nation reconceived citizenship and participation. Mark Levin describes this notion:

In the civil society, the individual has a duty to respect the unalienable rights of others and the values, customs, and traditions, tried and tested over time and passed from one generation to the next, that establish society's cultural identity. He is responsible for attending to his own well-being and that of his family. And he has a duty as a citizen to contribute voluntarily to the welfare of his community through good works.

In making a decision for independence, then, the residents of North America were making more than a decision about the sovereignty of a particular territory. They were making a decision about personal political liberty and the personal responsibliity which is necessary to maintain it.

Monday, December 15, 2014

Coolidge, at Home and Abroad

The Coolidge presidency is marked by both foreign policy triumphs and domestic successes. In the area of foreign policy, Coolidge knew that his experience was limited. While he understood the global issues well, he knew that he needed to rely on experienced appointees who had the detailed expertise in diplomacy.

Among the foreign policy victories were the Dawes Plan and the Kellogg–Briand Pact. Both were aimed at calming troubled international relationships. Coolidge saw that WWI, which had just ended, had not exhausted the serious tensions in global relationships. Coolidge’s foreign policy initiatives were designed to ease tensions and avoid another world war.

In the early 1920s, people on both sides of the Atlantic, and around the world, were thinking about recovering from the war, and getting life back to normal. But Coolidge and other farsighted leaders could see that the motives for armed conflict had not exhausted themselves on the battlefields of WWI, and that international relations needed to be carefully managed to avoid another outbreak of massive violence.

When Coolidge took office in August 1923, the diplomatic and economic situation in Europe was teetering on the brink of collapse, and collapse might mean the outbreak, or resumption, of hostilities. Coolidge looked to Charles Dawes to find a way to stabilize the situation.

The overly-punitive reparations demanded by the French and British at the Versailles discussions in 1918/1919 needed to be moderated. If Germany declared bankruptcy and defaulted on its payments of these reparations, the situation would grow dire. In fact, Germany did so default.

The United States would lend, under the terms of the Dawes Plan, eight hundred million (800,000,000) gold marks to Germany to help it meet its obligations. Thereafter, the plan regulated the amount of payments per year to keep the financial burden on Germany manageable.

The Dawes Plan avoided a crisis and stabilized Europe, both economically and diplomatically. The Plan was accepted by the European nations in August 1924, and Coolidge rewarded Dawes by making him vice president.

Building on the gains of the Dawes Plan, Coolidge’s Secretary of State, Frank Kellogg, worked to build an international agreement. In early 1927, the French had proposed a similar but more limited idea, which had a lukewarm reception. Kellogg’s idea was bolder and went further. It created a framework for negotiations to avoid military conflict. Historian Amity Shlaes writes:

The treaty itself had crystallized in Kellogg’s mind as the administration had tried to decide what to make of Briand’s irritating bilateral plan. Briand had proposed that plant in the newspapers in April 1927, and for months after, Kellogg had made a show of ignoring him. But perhaps, Kellogg had begun to think, one could use Briand’s document as a basis for a treaty among the great powers, a “universal undertaking not to resort to war.” That “might make a more signal contribution to world peace by joining in an effort to obtain the adherence of all the principal powers of the world to a declaration renouncing war as an instrument of policy.” Such a declaration, he wrote in one State Department paper, “could not but be an impressive example.” With the word “example,” Kellogg knew, he might lure not only Briand but also Coolidge.

The Kellogg-Briand Pact was formally approved in August 1928. Although some observers criticized the treaty as ineffective because it lacked an enforcement mechanism, the next decade lacked major military conflicts.

Aside from the Spanish Civil War and Japan’s aggression in China, it seems that the Kellogg-Briand Pact delayed the next World War for ten years, but strict causality in this case is impossible to prove.

While managing these achievements in foreign policy, Coolidge was achieving equally great, or even greater, things in domestic policy.

The Coolidge presidency achieved amazing feat: reduction in national debt, reduction in taxes, reduction in government spending, and practical elimination of the deficit. By certain statistical metrics, Coolidge can be quantified as one of the most economically successful presidents. Citizens in all income categories enjoyed increased standards of living. All regions of the country and all industrial and business sectors experienced growth.

His enthusiasm for the free market was coupled with his sense of civic responsibility. Goodwill in the private sector, fueled by a sense of charity and duty, could accomplish as much and more than public sector programs. Historian David Greenberg writes:

Coolidge famously summarized this philosophy in his January 1925 declaration to the American Society of Newspaper Editors: “The chief business of America is business.” Although sometimes caricatured as a sign of Coolidge’s obeisance to corporations, the statement actually contained a more subtle though still pro-business message. No apologist for raw laissez-faire, Coolidge believed that public-spiritedness was needed to counter the corrupting temptations of the profit motive. He was reminding the editors that they had to remain high-minded if they commercially driven newspaper business was to benefit the public. “The chief ideal of the American people,” he explained, “is idealism.” And Coolidge’s economic outlook was indeed idealistic.

Meticulous in detail, personally supervising the use of office supplies in the White House, Coolidge was debt-averse in the extreme. This passion for avoiding financial obligations was part theoretical economics, and part family culture from his boyhood.

Attacking the debt and paying it down was Coolidge’s highest policy priority, domestic or foreign. Historian Robert Ferrell writes:

Coolidge liked the idea of living within one’s means. Perhaps ever since his father in 1880 refused to advance him a penny until the election of Garfield, he had thought about debt. As soon as he finished reading law in Northampton, he balanced income with outgo. After marriage in 1905 the Coolidge family always came up with a surplus. As president he watched over the national debt, bringing it down from $22.3 billion in 1923 to $16.9 billion in 1929, a major achievement of economy. Coolidge considered the national debt to be the same as a private debt. In his day, there was none of the intricate calculation that would later grace - or disgrace, depending on the observer and his or her political party - government account keeping, whereby the government debt became subject to management and became a positive good, a vital necessity for the nation’s economic well-being. No one ventured that a rising gross national product would shrink the debt in a relative sense, or that what shrinkage did not occur relatively could occur through inflation. To Coolidge, the debt was an unadulterated debit, an evil, something to be rid of. Retiring the debt was “predominant necessity of the country.” Retiring the debt was “the very largest internal improvement … possible to conceive.”

The significance of Coolidge’s achievements can be seen when one searches for another United States president who simultaneously reduced debt, deficit, spending and taxes, while growing the economy for all income brackets, regions and industrial sectors.

Thursday, November 13, 2014

Coolidge: the Morality of Wealth

Calvin Coolidge mixed intellectually intriguing amounts of morality and economics. He wanted to remove governmental restraints on business activity because such action would help people.

He wanted to lower taxation because it would allow ordinary families and ordinary citizens to have more a chance of succeeding economically.

Although Coolidge worked well with the Secretary of the Treasury, Andrew Mellon, he differed in temperament from Mellon. Coolidge was content, even as the President of the United States, to live in thrifty middle-class lifestyle.

Even in the White House, Coolidge sharpened his own pencils and was content to eat plain food.

Coolidge believed that thrift was a moral virtue. The government should be thrifty, taking as little money from the people as possible, and spending as litte of the people’s money as possible. Individual private citizens should spend as little as possible, avoid debt, and save as much as possible. For Calvin Coolidge, this was the intersection of ethics and economics.

Historian Amity Shlaes recounts how Coolidge sought to provide jobs and better incomes for the ordinary citizen:

The president was set to speak in December, when Congress returned. That would be the moment to launch a tax bill. The recession was over, and revenues were pouring into the Treasury; $300 million, Mellon was reckoning, would be the annual surplus for fiscal year 1924, more than he had imagined. Instead of 58 percent, the top income tax rate would have to go down to 31 percent, a combination of a lowered 6 percent base rate and a lower “supertax,” or surtax, of 25 percent. A good share of the rate cuts came at the top of the tax schedule. This was not merely to favor the rich, as many said. The tax rate cuts at the top were designed to favor enterprise. If people got to keep more of their money, they would hire others, Mellon said.

The word ‘materialist’ - in the sense of being “more concerned with material things than with spiritual, intellectual, or cultural values.” - cannot be applied to Coolidge. A truly spiritual man, Coolidge saw money and possessions as merely vehicles by which one could express selfishness or selflessness. When Coolidge sought to encourage business, it was as a means to improving the lives of the average American citizens.

Productivity, including economic productivity, would bring not only material comfort, but personal satisfaction and fulfillment to the ordinary citizen. David Greenberg writes about Coolidge:

Business, likewise, was for him benign, not predatory. In the early decades of the twentieth century, Progressive Era reforms had countered some of the worst depredations of the unfettered capitalism of the Gilded Age. By the 1920s, a view was emerging that capitalists’ new sense of social responsibility would preclude the need for aggressive federal intervention in the marketplace. Coolidge shared this view. A believer in the regnant economic orthodoxy of Say’s Law - the notion, propounded by the French economist Jean-Baptiste Say, that supply creates its own demand - Coolidge held that industrial productivity, by generating prosperity, would serve the general good. Indeed, he equated the public interest no wtih some consensus brokered to satisfy competing social factions but with something close to the needs of industry itself. He wanted, as he once said, “to encourage business, not merely for its own sake but because that is the surest method of administering to the common good.”

Thus it was, that during the Coolidge presidency, business became the beneficent friend of the average citizen - not a vehicle to give exclusive privilege to the upper classes - but rather an opportunity for families to experience a sense of success, and the satisfaction which comes from productivity: making a contribution to society.

Wednesday, November 12, 2014

Progressivism - Not Much Help

Woodrow Wilson was the icon for the Progressive movement which peaked sometime between 1900 and 1920. Historians describe the movement in a variety of ways, but it centers around the notion that the government can trim individual civil liberties in order to implement programs which it has chosen.

Obviously, the interpretive question on which various views emerge is how the government can choose, should choose, or does choose which programs are so important that they justify damaging personal freedoms. Some historians use the word ‘statism’ to characterize Progressivism.

Among the casualties of the Progressive era were women and African-Americans.

Woodrow Wilson was president of Princeton University prior to being elected, in November 1912, president of the United States. At Princeton, he worked explicitly to reduce the number of Black students applying to the university, and reduce the number being admitted.

While Wilson was at the university, Theodore Roosevelt was president. Roosevelt had appointed several African-Americans to federal offices. Wilson made public and well-documented comments, referring to Roosevelt’s appointees by means of vile and racist epithets.

As president, Wilson made no effort to hide his racism. He segregated federal employees who had been desegregated and integrated after the Civil War - specifically, e.g., in the Post Office.

Progressives hoped to get credit for giving the vote to women, because the Nineteenth Amendment to the United States Constitution was ratified in August 1920, during Wilson’s presidency and during the Progressive era.

During the 1912 campaign, Wilson had opposed women’s suffrage, while Roosevelt supported women’s right to vote. After winning the election, Wilson’s opposition to the women’s vote softened. Eventually, after women publicly picketed in front of the White House, Wilson made statements supporting the women’s vote, but his support was lukewarm and unenthusiastic - one senses that it arose from political necessity, not personal conviction.

More to the point, the Nineteenth Amendment changed little. By the time the amendment was ratified, women were already voting in 41 of 48 states - and had been doing so for a number of years.

The Nineteenth Amendment was more symbolic than effective, but it gave the Progressives a chance to claim that they were doing something for women. In fact, however, Wilson was not the only Progressive to oppose women’s suffrage.

Many who opposed the Progressive movement were active supporters of women’s suffrage, like Henry Browne Blackwell.

In the United States, women enjoyed full legal suffrage in Wyoming starting in 1869, in Idaho and Utah from 1896, and in Colorado starting in 1893. Shortly after the new century began, full suffrage existed for women in Oregon, Washington, Montana, California, Nevada, Arizona, Oklahoma, Kansas, New York, Michigan, and South Dakota - all long before the passage of the Nineteenth Amendment.

Not only had all of that taken place without the Nineteenth Amendment, but most of the remaining states were in the process of introducing women’s suffrage. For example, in Texas and Arkansas, women were already voting in primary elections since 1917 - three years prior to the constitutional amendment.

In Minnesota, Iowa, Missouri, Wisconsin, Kentucky, Indiana, Ohio, Maine, and Vermont, women were voting in presidential elections before the federal amendment was ratified.

The majority of women in the United States had voting rights prior to August 1920. Only seven states denied women’s suffrage, and had the Nineteenth Amendment not been ratified, the inevitable change would have happened in some other way.

The Nineteenth Amendment is, then, an empty symbol - but one which served the purposes of Progressive propaganda.

While hoping to get some credit for expanding the civil liberties of women, the essential principle of Progressivism is that the government has the right to cut personal freedom as it sees fit.

Scholar William Voegeli frames the Progressive idea this way: “The Progressives of a century ago” including Woodrow Wilson, and even including some who worked a few decades after what has traditionally been marked as the end of the Progressive era,

worked to transform a republic where the government had limited duties and powers into a nation where there were no grievances the government could or should refrain from addressing, and where no means of responding to those grievances lie outside the scope of the government’s legitimate authority.

Instead of limiting the government’s power over the individual, the Progressives limited the individual’s liberties so that the government could manage society.

What were the results of such managing? The record shows that African-Americans and women paid the price for the Progressive desire to have the government engineer various aspects of society. Yet the Progressives wanted, at the same time, to be praised for helping women get the vote.

Tuesday, November 4, 2014

Paine's Vision of Representative Government

Among the thinkers and writers who shaped the independence movement which established the United States as a sovereign nation, the understanding of representative government was central. This established a sharp contrast between them and, for example, Jean-Jacques Rousseau.

The government was to be the instrument and extension of the expressed will of the citizens. The government was not to lead, rule, or reign over the people.

The will of the citizens is not, in this sense, some vague and metaphysical notion like Rousseau’s ‘general will,’ but rather a concrete, empirical, and quantifiable result of balloting - a Lockean understanding of majority rule.

In fact, words like ‘lead’ or ‘rule’ or ‘reign’ are scarce in the writings of the revolutionaries who sought political independence for the thirteen colonies. When those words do occur, it is often in a disapproving description of the British monarchy.

A study of the U.S. Constitution reveals that the words ‘lead’ and ‘reign’ do not occur in it at all. The word ‘rule’ appears only as a noun and not as a verb. The word ‘government’ occurs several times, but the verb ‘govern’ occurs only once: the militia is to be governed in that clause, not the citizens.

The word ‘represent’ (along with ‘representative’ and other forms) occurs forty times.

Instead, the residents of North America sought to establish a republic with freely-elected representatives. The citizens neither wanted nor needed a government to lead them; rather, they arranged for a government to which they would delegate the practical matters of operating a post office or standardizing weights and measures.

For Thomas Paine, the essence of government is representation. He expressed this in a letter to Abbe Sieyes in July 1791. Paine had been, at first, an enthusiastic observer of the French Revolution. He hoped that its outcome would be similar to that of the American Revolution. He would be bitterly disappointed when the French Revolution descended into tyrannical oligarchy, denying the very freedoms it had originally claimed to seek, and executed thousands of innocent civilians.

The Abbe Sieyes was a leader within the French Revolution, and politically wily enough that he was one of a very few such leaders who managed to escape being executed by his fellow revolutionaries. Paine wrote to him:

By republicanism, I do not understand what the name signifies in Holland, and in some parts of Italy. I understand simply a government by representation.

More two hundred years after Paine’s letter, modern political discourse in the United States is full of calls for “leadership,” for someone to “lead the nation,” and for someone to “lead the American people.”

By contrast, two centuries ago, the vision of the founders was for a government to represent, not lead, the citizens. The president was to lead, not the people, but the government as it carried out the will of the electorate.

Approximately a year after this letter to Abbe Sieyes, Thomas Paine again had occasion to express himself regarding forms of government. In May 1792, the British government issued a royal proclamation against seditious writings. The proclamation was triggered largely, almost exclusively, by the popularity of Paine’s book, the Rights of Man.

The book, written while Paine was still a supporter of the French Revolution, was popular in England. It echoed many of the arguments against monarchy, and for representative government, found in Paine’s other writings. But its popularity, and the fact it directed these arguments to events in nearby France instead of faraway America, made the British authorities view it as more dangerous.

The overthrow of the French monarchy raised the fear among English aristocrats that something similar could happen in Britain. The brisk sales of Paine’s book frightened them.

In response to the proclamation, Paine wrote:

I have, as an individual, given my opinion upon what I believe to be not only the best, but the true system of Government, which is the representative system, and I have given reasons for that opinion.

Largely summarizing from Rights of Man, Paine outlines four points against monarchy and for a representative republic. He argues that concentrating power in one person makes war more likely, that monarchs rule in the inexperience of youth and in the senility of dotage, that monarchies have no mechanism for removing incompetent kings, and that both the alleged constitutional structure of, and the legislation issuing from, a monarchy are arbitrary and merely by fiat:

First, Because, in the representative system, no office of very extraordinary power, or extravagant pay, is attached to any individual; and consequently, there is nothing to excite those national contentions and civil wars, with which countries under monarchical governments, are frequently convulsed, and of which the History of England exhibits such numerous instances.
Secondly, Because the representative is a system of Government always in maturity; whereas monarchical government fluctuates through all the stages, from non-age to dotage.
Thirdly, Because the representative system admits of none but men, properly qualified, into the Government, or removes them if they prove to be otherwise. Whereas, in the hereditary system, a nation may be encumbered with a knave or an idiot, for a whole life-time, and not be benefited by a successor.
Fourthly, Because there does not exist a right to establish hereditary government, or in other words, hereditary successors, because hereditary government always means a government yet to come, and the case always is, that those who are to live afterwards have always the same right to establish government for themselves, as the people had who lived before them; and, therefore, all laws attempting to establish hereditary government, are founded on assumption and political fiction.

Having outlined his argument, Paine asserts that the royal proclamation against his book is damaging to the well-being of the people, keeping them in intellectual and political darkness:

If these positions be truths, and I challenge any man to prove the contrary; if they tend to instruct and enlighten mankind, and to free them from error, oppression, and political superstition, which are the objects I have in view, in publishing them, that Jury would commit an act of injustice to their country and to me, if not a act of perjury, that should call them false, wicked, and malicious.

Despite Thomas Paine’s vigorous response to the royal proclamation - or perhaps because of it - his book was seen as criminal by the British government. Paine himself narrowly escaped arrest, and those who printed and published his book faced legal action. Philip Foner writes:

What began as a defense of the French Revolution evolved into an analysis of the basic reasons for discontent in European society and a remedy for the evils of arbitrary government, poverty, illiteracy, unemployment, and war. Paine spoke out effectively in favour of republicanism as against monarchy and went on to outline a plan for popular education, relief of the poor, pensions for aged people, and public works for the unemployed, all to be financed by the levying of a progressive income tax. To the ruling class Paine’s proposals spelled “bloody revolution,” and the government ordered the book banned and the publisher jailed. Paine himself was indicted for treason, and an order went out for his arrest. But he was en route to France, having been elected to a seat in the National Convention, before the order for his arrest could be delivered. Paine was tried in absentia, found guilty of seditious libel, and declared an outlaw, and Rights of Man was ordered permanently suppressed.

Paine’s writing was largely polemic, not systematic. Because he wrote regarding specific situations - now America, now France - he was not attempting to construct a philosophy of government or politics, and did not maintain the internal consistency in which writing which one would expect if he were designing a system of concepts intended for universal application.

British philosopher A.J. Ayer notes some of the resulting internal tensions in Paine’s texts:

Very often, Paine writes as if there were only two systems of government, the hereditary and the representative. In one passage, as we have seen, he mentions three, the governments of priestcraft, conquerors, and reason; apparently placing them in historical order and identifying reason with representation and conquerors with monarchs. Sometimes he remembers that some monarchies have been elective, and in the second part of Rights of Man, he sharply dissents from the opinion of his friend, Abbe Sieyes, that while both forms of monarchy are bad, the elective is worse. Shortly afterwards, continuing to ignore the government of priestcraft, he nevertheless increases the total number of forms of government to four, ‘the democratical, the aristocratical, the monarchical, and what is now called the representative.’ He explains that he does not include republicanism among them, for what is indeed the good reason, that republicanism is not a particular form of government but being ‘wholly characteristical of the purport, manner, or object for which government ought to be instituted, and on which it is to be employed’, that is, the public good, it signifies the rejection of monarchy. He goes on to question the right of Poland, ‘an hereditary aristocracy, with what is called an elective monarchy’, and of Holland, ‘which is chiefly aristocratical, with an hereditary stadtholdership’, to style themselves republics, thereby leaving himself free to conclude that ‘the government of America, which is wholly on the system of representation, is the only real republic in character and in practice, that now exists’. One must bear in mind that both parts of Rights of Man were written before the deposition of Louis XVI.

Paine argued that a representative government is not only morally superior, but historically more durable. Paine’s assertion that a representative form of government outlasts other forms carries his line of thought deeply into the realm of propositions which are empirically verifiable.

Reading sympathetically, we may take Paine’s thesis as a generalization liable to individual exceptions. Otherwise, his thesis might be quickly demolished by a nod to the Roman Empire or one of several Chinese dynasties. Summarizing, A.J. Ayer states:

It could be argued that Paine’s four types of government strictly amounted once again to three, since the representative type is depicted by him as an extension of the democratical. He does not invariably claim that the democratic type was historically prior to all the others, and would indeed have been mistaken if he did. Historical priority must surely be granted to associations, the government of which, while one may not choose to call it monarchic, was at least patriarchal or possibly matriarchal. There is, however, one passage in which he allows himself to assert that departures from democracy, other than its development into representative government, were not only a moral and political but also an historical decline.

The passage which Ayer then cites is one in which Paine notes that direct democracies, in some form, were known in the ancient world. But these democracies, Paine reports, disappear when they grow too large, victims of their own success: they either become monarchies or are swallowed up by monarchies. If these ancient democracies had possessed the insight to institute a representative system, Paine argues, they would have maintained their liberty while growing. In his book, the Rights of Man, Paine writes:

Representation was a thing unknown in the ancient democracies. In those the mass of the people met and enacted laws (grammatically speaking) in the first person. Simple democracy was no other than the common hall of the ancients. It signifies the form, as well as the public principle of the government. As those democracies increased in population, and the territory extended, the simple democratical form became unwieldy and impracticable; and as the system of representation was not known, the consequence was, they either degenerated convulsively into monarchies, or became absorbed into such as then existed. Had the system of representation been then understood, as it now is, there is no reason to believe that those forms of government, now called monarchical or aristocratical, would ever have taken place. It was the want of some method to consolidate the parts of society, after it became too populous, and too extensive for the simple democratical form, and also the lax and solitary condition of shepherds and herdsmen in other parts of the world, that afforded opportunities to those unnatural modes of government to begin.

Despite Paine’s internal inconsistencies on the abstract conceptual level, he is consistent on the concrete matter of arguing for a system of freely elected representatives - a ‘republic’ in his understanding of the word. In this, he was thoroughly in the company of those who led the movement for independence in the second half of the eighteenth century in North America.

Wednesday, October 15, 2014

A Brief History of Taxation

If one examines the history of tax policy in the United States, such examination must be done from a perspective which takes into account that taxation was a major factor in the independence movement which led to the nation’s founding.

Following the country’s founding in 1776, and the finalization of the Constitution in 1789, political structures, including tax policies, were formed with an eye to keeping the central government weak. Freedom could be protected only by limiting the power of the federal government.

Originally, the constitutional system was so construed that, while Congress could levy taxes, the task of collecting taxes was left to each state individually; this was understood as a mechanism of protecting people from the central government.

The taxes originally authorized by Congress were indirect rather than direct: tariffs on foreign trade and excise taxes on specific products. So structured, these taxes had little discernable impact on the average citizen.

The famous Whiskey Rebellion of 1794 was a group of producers who opposed a federal excise tax. It established two important precedents: first, that the central government would use force to collect taxes; second, that social opposition to taxes would be an important factor in American politics.

In the late 1790s, the federal government experimented with direct taxes - in this case, property taxes on land and buildings - to finance its defense against the belligerent government of the French Revolution. The 1802 election cycle, featuring Jefferson’s ascent to the presidency, was the end of this exploration, and the government returned to indirect taxation.

For the war of 1812, Congress again experimented with taxes, raising excise taxes and customs duties, and borrowing money by issuing bonds. By 1817, these measures were repealed.

Between 1817 and 1861, the federal government effectively imposed no internal revenue. Its income was derived from customs duties and the sale of public land. To be sure, it can be argued that customs duties ultimately have some effect on finances of the private citizen, even if very indirect.

Because the consumption of imports was elective and, for practical reasons, limited to a small segment of the population, the effects of tariffs, while real, were probably too small to be detectable.

The sale of public land as a model for generating revenue to the central government is obviously not infinitely sustainable, but for that time period, it not only relieved the ordinary citizen from being held captive to the tax system, it also placed more raw material and opportunities for production into the economy and thereby generated growth.

So for 44 years, the average citizen enjoyed a level of freedom arguably not seen since. Matt Kibbe writes:

This is a far cry from the way the founding fathers initially envisioned the system of taxation for their new country. For more than a hundred years after its founding, the United States government was funded purely with tariffs, excises, and receipts from the sale of federally owned landed. Direct taxes, such as the now-familiar income tax, were out of the question.

In the 1860s, the costs of the war drove Congress to experiment with income tax, licensing fees, and fees for legal documents. Although these taxes would be repealed at the war’s end, the dangerous precedent had been set. Matt Kibbe continues:

Sadly, this simpler state of affairs was not to last. The Civil War brought an unprecedented level of expenses, and new taxes were an easy way to collect revenue in a hurry. The Revenue Act of 1861 established the Internal Revenue Service and created the first incarnation of what we would recognize as the modern income tax.

Over a period of several years, the Civil War taxes were dismantled. By 1868, the main source of revenue for the federal government was excise taxation on alcohol and tobacco. By 1872, personal income tax had been abolished. From 1868 to 1913, almost 90% of the revenue to the federal government came from excise taxes and customs duties.

In the 1890s, the Supreme Court ruled that income taxes were unconstitutional because they fell disproportionate to the states. Under the leadership of Woodrow Wilson, the progressivist movement was eager for more revenue to enact its social experimentation. Although there was no pressing war or military need, the progressive movement lobbied for a constitutional amendment to ensure that income taxes would be levied.

Reflecting on the experimentation with income tax during the Civil War, Matt Kibbe reflects:

This was originally intended to be a “temporary” measure to finance the war, but history has shown that there are few things more difficult than ending a temporary government program. In 1913, Congress ratified the Sixteenth Amendment to the Constitution, making the individual income tax a permanent feature of the law. Then, the top tax rate was less than 1 percent, and the tax code totaled twenty-seven pages in length.

The sixteenth amendment did, however, more than unleash income taxes on citizens. The precedent created a constitutional relaxation of the limits on government. Previously held in check, the central government soon discovered that it could inflict not only income taxes, but a broad range of taxes and fees and assessments on the citizens.

Since 1913, not only have both the nominal and real amounts of revenue confiscated by the federal government grown rapidly, taking an ever larger percent of the nation’s wealth out of the economy, but the types and numbers of taxes have grown quickly as well.

Friday, August 22, 2014

1776: Was It Really about Taxes?

When hostilities began, in April 1775, in the American Revolution, or as some scholars frame it, in the American War of Independence, an exact notion of the reason for the war was lacking - or, perhaps more accurately, there were competing notions about the exact reason for the war.

A collection of phrases reflects the slightly different motives held by different segments of the population: “freedom of speech” or “no taxation without representation” or “freedom of the press” or “religious freedom” or “live free or die” and many others. Different emphases included political freedom, spiritual freedom, and economic opportunity.

It was important for the leaders of the revolution to harmonize these goals - and to show that there was a common essence which these goals shared. Political freedom, religious freedom, and economic freedom are, finally, variations on freedom.

Economic freedom is the only possible foundation for economic opportunity and prosperity.

In addition to uniting the varying motivations for independence, the American leaders also addressed the significant segment of the population which either opposed, or was uncertain about, independence.

Thomas Paine’s writing influenced many as he explained the revolution and the ideas behind it. His style was energetic, the length of most of his writings short, and his diction accessible to the general reading public. His texts were precisely the sort of language which was comfortable for the average reading citizen. Among his many writings was a series of newspaper articles published under the title The Crisis.

In one installment in this series, written in Philadelphia in October 1780, Paine explores the role of taxation as a motivation for the independence movement. He argues cogently that independence makes financial sense. After presenting long lists of taxes and expenses, and calculating the average of these over the population of the thirteen colonies, he summarizes:

I have placed before the reader, the average tax per head, paid by the people of England; which is forty shillings sterling.

And I have shown the rate on an average per head, which will defray all the expenses of the war to us, and support the several governments without running the country into debt, which is thirteen shillings and fourpence.

In short, Thomas Paine calculates that even with the cost of the war, and including the ongoing cost of running the government after independence is achieved, that the average resident of the colonies will pay many fewer taxes.

If a man were the crassest of materialists, and had no love but money, he would then support the revolution. Paine certainly does not endorse pure greed as the supreme guiding principle in life, but makes the argument as a sort of reductio ad absurdum. He points out the greater benefit of liberty which independence will bring.

One further point remains: without making the greed of the crass materialist into one’s guiding principle in life, one must still note that economic freedom is to be desired because it is a necessary precondition to those more noble-sounding forms of liberty. Without economic freedom, including the lower taxes explained by Paine, the other freedoms are meaningless and impossible.

Without free markets and minimalistic taxes, there is no true freedom of speech, freedom of the press, freedom to assemble, freedom of association, or freedom of religion. Without the material means to instantiate themselves, the intellectual liberties are unintelligible. Paine explains:

The peace establishment then will, on an average, be five shillings sterling per head. Whereas, was England now to stop, and the war cease, her peace establishment would continue the same as it is now, viz. forty shillings per head; therefore was our taxes necessary for carrying on the war, as much per head as hers now is, and the difference to be only whether we should, at the end of the war, pay at the rate of five shillings per head, or forty shillings per head, the case needs no thinking of. But as we can securely defend and keep the country for one third less than what our burden would be if it was conquered, and support the governments afterwards for one eighth of what Britain would levy on us, and could I find a miser whose heart never felt the emotion of a spark of principle, even that man, uninfluenced by every love but the love of money, and capable of no attachment but to his interest, would and must, from the frugality which governs him, contribute to the defence of the country, or he ceases to be a miser and becomes an idiot. But when we take in with it every thing that can ornament mankind; when the line of our interest becomes the line of our happiness; when all that can cheer and animate the heart, when a sense of honor, fame, character, at home and abroad, are interwoven not only with the security but the increase of property, there exists not a man in America, unless he be an hired emissary, who does not see that his good is connected with keeping up a sufficient defence.

Paine takes effort to calculate as a dispassionate disinterested economist. Surely this is a pose: Thomas Paine was a passionate advocate of independence. But his pose is taken to persuade his reader - he argues that even if one were indifferent, or even opposed, to the cause of independence, then sheer financial reckoning should persuade the undecided reader to side with independence.

Suppose Britain was to conquer America, and, as a conqueror, was to lay her under no other conditions than to pay the same proportion towards her annual revenue which the people of England pay: our share, in that case, would be six million pounds sterling yearly. Can it then be a question, whether it is best to raise two millions to defend the country, and govern it ourselves, and only three quarters of a million afterwards, or pay six millions to have it conquered, and let the enemy govern it?

Paine then proceeds to examine the other side of the calculation: if economic forces dictate that a resident of the thirteen colonies would benefit from independence, then similar calculations dictate that England would want to keep the colonies as subjects merely to reap a profit from them. Having saddled the colonies with its economically inefficient army, in the name of protecting them, England wanted to not only cover its costs, but to gain a surplus from the colonies - no matter that the colonies had manifested that they could defend themselves better and at lower cost.

Britain did not go to war with America for the sake of dominion, because she was then in possession; neither was it for the extension of trade and commerce, because she had monopolized the whole, and the country had yielded to it; neither was it to extinguish what she might call rebellion, because before she began no resistance existed. It could then be from no other motive than avarice, or a design of establishing, in the first instance, the same taxes in America as are paid in England (which, as I shall presently show, are above eleven times heavier than the taxes we now pay for the present year, 1780) or, in the second instance, to confiscate the whole property of America, in case of resistance and conquest of the latter, of which she had then no doubt.

Paine clearly advocated independence because he believed it was just; but in this particular installment of The Crisis, he took on the persona of one whose assessment of American independence was purely material. His rhetorical technique, in this episode of his series of articles, was addressed to the those who were perhaps undecided regarding the cause of independence, and designed to persuade them.

Friday, July 18, 2014

Washington, Franklin, and Foreign Wars

Why do we have governments? What is the purpose of government? This question occupied, in a theoretical way, writers like Thomas Hobbes and John Locke.

To be sure, their considerations weren’t purely theoretical: Hobbes lived through both the Thirty Years’ War and the English Civil War, while Locke experienced the Glorious Revolution. But neither of them was in a position to shape the institution of a government ex nihilo.

Hobbes, perceiving human nature as selfish and violent, asserted that the purpose of government was to provide peace and security. Locke, with a bit more optimistic assessment of human nature, viewed the task of a government as protecting the lives, freedoms, and property of its citizens.

Shortly after - Hobbes published his Leviathan in 1651, and Locke’s Treatises appeared in 1689 - events in North America made the question considerably less theoretical and much more practical. In founding a new government, America’s founding fathers relied on their reading of Hobbes, Locke, and other political thinkers.

In addition to determining, in a concrete and specific way, the purpose of government, it was also important to determine what a government should not do. While a government is good or bad to the extent that it does, or does not, serve its proper purpose, it is also good or bad to the extent that it refrains from, or engages in, activities which are outside its proper purpose. Matt Kibbe writes:

We all agree that the first legitimate role of government forces is to protect the lives of individual citizens. But things get more complicated when it comes to defending against “enemies foreign and domestic.”

According to the Lockean views adopted by the founders of the United States, it is within the government’s proper tasks to defend the country militarily when the country is directly threatened by external powers. But what about indirect threats? What about responding to military threats, not on our own territory, but on the territories of a state with which we may have an alliance?

President George Washington worked to formulate a decision procedure by which Americans might decide which conflicts directly involved the country’s interests, and which did not. That question was urgent then, and is urgent over two hundred years later.

One principle he set forth was that the country should avoid excessive attachment to, or antipathy toward, any other nation. The excess, he felt, would arise from passion, not reason, and lead to decisions blinded by emotion.

Thus misled, we might find ourselves surprised by an unexpected attack, drawn into a war involving another’s interests but not our own, or forgoing a beneficial alliance for no good reason. Matt Kibbe frames Washington’s view this way:

In his 1796 Farewell address, George Washington warned Americans not to “entangle our peace and prosperity in the toils” of foreign ambitions, interests, and rivalries. “It is our true policy to steer clear of permanent alliances with any portion of the foreign world.”

A “permanent” alliance would be an irrational one. Nations like Germany, England, Japan, and China have, over the decades, oscillated between being our friends and being our enemies.

The economic cost of war, Washington warned us, is to be carefully considered. Until 1930, the vast majority of nation’s debt was war-related. The Civil War and WWI created both debt and higher taxes. Because debt harms the economy, and the wars created debt, it can be said that those wars harmed economic mobility and economic opportunity, reducing the potential size of the middle class. Matt Kibbe writes:

Our first president was hardly an isolationist, and his foreign policy views were guided, in large part, by common sense and pragmatism. One of his key considerations was the budgetary implications of overly ambitious foreign entanglements. “As a very important source of strength and security, cherish public credit,” Washington counseled. “One method of preserving it is to use it as sparingly as possible, avoiding occasions of expense by cultivating peace.

One may well ask how Washington would have viewed the nation’s involvement in Korea, Vietnam, the Middle East, and other places. Even WWI and the Spanish-American war might be suspect from Washington’s point of view.

In the year 2014 alone, Obama has sent U.S. soldiers into Iraq and the Ukraine. In 2011, he ordered the United States Air Force to bomb Libya. Upon taking office in early 2009, he increased troop levels fivefold in Afghanistan: the U.S. military presence there had numbered approximately 20,000 men until Obama increased it to over 100,000.

To discern whether these actions were justifiable by Washington’s standard would require a nuanced and detailed examination. Matt Kibbe, Distinguished Senior Fellow at the Austrian Economic Center in Vienna, Austria, writes:

You might interpret Washington’s skepticism, in a modern context, as warning against open-ended nation-building quagmires. Can we really establish a constitutional democracy in Iraq? Can we successfully mediate the violent disputes of warring factions in civil wars like the one going on today in Syria? Better yet, should we?

Among the many changes, from George Washington’s time to ours, is that our geographical situation no longer offers us a safe haven. We can be easily attacked in ways not possible two or three centuries ago. This requires that we recalibrate our understanding of threat.

The principle of nonaggression means that we should only declare war on nations demonstrably seeking to do us harm. The men and women who volunteer for our military should not be put in harm’s way by their commander-in-chief without a clear and just purpose, without a plan or without an endgame. This is just common sense.

While our notion of threat may need to be updated, our notion of alliance does not. The litmus test remains this: an alliance should be created or maintained only to the extent, and only as long as, it is in our nation’s interests:

In an era in which our enemies are no longer just confined to nations, the other key question is the balance between security at home and the protection of our civil liberties, particularly our right to privacy and our right to due process. Massive expansions of the government’s surveillance authorities under the Patriot Act and recent amendments to the Foreign Intelligence Surveillance Act have civil libertarians of all ideological stripes worried that the government has crossed essential constitutional lines.

Since Washington’s day, there has always been a tension between war and a citizen’s liberties. In the 1770’s and 1780’s, there were heated debates about conscripting both men and materials from citizens. During WWI, freedom of speech was curtailed in shocking ways. Now, the NSA and other government branches are being used, allegedly in the national interests, to intercept private communications between U.S. citizens.

One distinction needs to be articulated: if some agency of the U.S. government intercepts private communications between individuals who are not U.S. citizens, no civil liberties have been violated, and no U.S. citizen need be concerned. But intercepts of communications between U.S. citizens are matters of grave concern, and in such cases one must ask about warrants and FISA courts.

Returning to the Lockean hypothesis that the task of a government is to protect the lives, properties, and freedoms of its citizens, it is the task of each nation’s government to protect its citizens. If a Spaniard’s cell phone calls are being intercepted by a French intelligence agency, it is the task of the Spanish government, not of the French government, to be concerned about this. If a Swede’s emails are being read by a Polish intelligence agency, the Swedish government, not the Polish government, may have some duty to consider protecting the Swede from “unreasonable search.”

Defending America against the unchecked aggression of our enemies is a first responsibility of the federal government, but respecting the rights of individual citizens and checking the power of unelected employees at the National Security Agency is an equally important responsibility.

A few years before George Washington penned his “farewell address,” Ben Franklin offered some thought on the complexities of economics, freedom, and the role of government.

The situation in which Franklin wrote was this: In 1755, the colony of Pennsylvania was under attack. Franklin was a duly elected member of the legislature in that colony, and the legislature, as the voice of the people, intended to levy a tax upon all the colonists in Pennsylvania. The governor of that colony, however, wanted to exempt from taxation the lands owned by the Penn family.

The revenues from the taxes were urgently needed to continue the conduct of a defensive war.

Franklin noted that it is an “essential liberty” of the voters to levy, through the acts of their representatives, a tax upon the colony. It would be a violation of electorate’s “essential liberty” to impose that tax if one family, by fiat, could exempt itself from that tax.

To complicate matters, the war was raging as the Pennsylvania legislature argued with the governor about its right to levy taxes. The governor, hoping to pressure the legislature, intimated that by delaying the tax until the Penn family’s exemption could be eliminated, the legislature was compromising the safety of colonist in vicinity of the fighting.

The governor argued that the legislature, including Franklin, could “purchase a little temporary safety” by conceding the exemption to the Penn family. Franklin countered that this would be damaging to the rights of the electorate; the voters had the power to levy taxes, and a single family could not simply exempt itself by fiat. Franklin wrote to the governor:

In fine, we have the most sensible Concern for the poor distressed Inhabitants of the Frontiers. We have taken every Step in our Power, consistent with the just Rights of the Freemen of Pennsylvania, for their Relief, and we have Reason to believe, that in the Midst of their Distresses they themselves do not wish us to go farther. Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety. Such as were inclined to defend themselves, but unable to purchase Arms and Ammunition, have, as we are informed, been supplied with both, as far as Arms could be procured, out of Monies given by the last Assembly for the King’s Use; and the large Supply of Money offered by this Bill, might enable the Governor to do every Thing else that should be judged necessary for their farther Security, if he shall think fit to accept it.

While the Penn family, in 1755, did not possess a role in the government that allowed it to make tax regulations, it did have the type of unofficial relationship and influence which could result in the governor taking up its cause. As Matt Kibbe notes, any “unnatural concentration of power” found “outside government” is the result of some relationship between such a non-governmental power and some power within the government.

Thus it is that monopolies, in their truest and most damaging forms, are the products of government. Monopolies arise and endure only when natural market forces have been distorted by government intervention. In a truly free market, monopolies will eventually face some competition. This fact reveals the irony in “anti-monopoly” or “trust-busting” legislation.

We should always be skeptical of too much concentrated power in the hands of government agents. They will naturally abuse it. Outside government, an unnatural concentration of power - such as the extraordinary leverage wielded by mega-investment banks or government employees unions - is always in partnership with government power monopolists.

From the era of Benjamin Franklin to the present, complex questions of international military involvements can be analyzed not only in terms of the nation’s interests in terms of physical security, but also in terms of economic freedom and financial health.

Thursday, June 26, 2014

The Coolidge Economy

When Calvin Coolidge suddenly and unexpectedly became President of the United States in 1923, he had a carefully articulated and precisely planned economic policy, although he did not expect that he would have the opportunity to implement it. President Warren Harding’s sudden death placed Coolidge into the position of having to make fiscal decisions, and he was prepared to do because of his systematic understanding of economics.

Coolidge retained Harding’s appointee, Andrew Mellon, as Secretary of Treasury. Despite the abrupt nature of his ascent to the presidency, Coolidge was confident, because he had not only worked out his economic policy over the previous years, but his experience as governor of Massachusetts had given his practical experience in taxation and budgeting.

While we have brief motion pictures and sound recordings of other presidents, Coolidge was perhaps the first president to make frequent and deliberate use of radio broadcasts and film newsreels. The confident expertise which Coolidge exuded was caught on film at an early press conference. Historian Amity Shlaes writes:

The extent to which the new administration would prioritize economy became clear at one of the first press conferences, one that Mellon, finally on U.S. soil, was able to attend. Coolidge, more relaxed than they had ever seen him, led his cabinet to pose outdoors on the White House lawn before a crowd. As the cameras of Fox News and others rolled, Coolidge seated himself in the center chair, and Secretary Hughes placed himself to the president’s right, legs spread out wide. The seat to the new president’s left waited open for Mellon. But Mellon was seconds slow to arrive. In that moment, the camera caught Coolidge’s eagerness. The presidential eyes hunted for the Treasury secretary. The president’s arm motioned. The tap of the hand was a swift but unmistakable, invitation and command.

What was Coolidge’s economic policy? He used the word ‘economy’ in the sense of behaving ‘economically’ - i.e., spending as little as possible. The core of his fiscal policy was reducing government spending. This would lead to reduced deficits, reduced debts, and reduced taxation. Reduced taxation would ease the burden on the middle and working classes, raise wages, and create jobs. These ideas don’t sound new to modern readers, but in the 1920s they were novel.

A convincing speaker, Coolidge argued for his plan, and got support from a wide variety of voters. Even significant members of the opposition party supported the plan. Historian David Greenberg writes:

The 1926 Mellon bill provided for across-the-board income tax cuts, zeroed out the gift tax, halved the estate tax, and slashed surtaxes on the wealthy by 20 percent. Supporting it were several trade associations, banks, local chambers of commerce, and a business lobby formerly called the American Bankers’ League, which had renamed itself the American Taxpayers’ League. The Democrats, adrift and cowed by their 1924 election losses, folded their hand; Senator Furnifold Simmons, one of Coolidge’s chief antagonists, from 1924, backed the new bill, he said, “to make businessmen realize that the Democratic Party is not bent on taxing them or their enterprises exorbitantly.” And with the financial outlook now rosy and the federal budget running a surplus, tax cuts were an easy sell. Coolidge even began to worry that Congress had cut taxes too much and that deficits would return. He warned lawmakers that after the easy work of cutting taxes, they would also have to rein in spending - threatening to veto various appropriations bills if they defied him.

Coolidge rightly understood that tax cuts must be accompanied by spending cuts; otherwise, an increasing deficit and debt would result - the very opposite of the anticipated outcome of such policies. Several of his successors have attempted but failed to replicate his results: they have cut taxes but not spending. These later presidents did what they did, either because they were thwarted in their intended spending cuts by the opposition party, or because they did not fully understand the necessity of such cuts.

Reducing tax was, for Coolidge, not merely an exercise in applying some abstract economic hypothesis. Rather he understood tax cuts to be incremental increases in freedom and in human dignity. If a worker pays 10% or 20% of his income in taxes, this means that for 10% or 20% of his time, he was working for naught, which is tantamount to having his time stolen from him.

Lower taxes freed the ordinary worker to access the fruit of his labor. Lower taxes gave the worker a choice about what would be done with the fruit of his labor. Rather than have the government decide how to spend his money, the worker would be free to spend his own money as he pleased, or to save it, or to give it away. Tax policy was, for Coolidge, social policy. He strengthened the American economy, but he also saw these actions as improving the lives of citizens. Historian Robert Ferrell writes:

If Calvin Coolidge prided himself on one single aspect of his presidential years, it was his policy of fiscal economy. “I favor the policy of economy,” he declared, “not because I wish to save money, but because I wish to save people.” The “people” part of the equation was perhaps a rhetorical flourish, yet people were involved; he may have been speaking of their labor, which he would save by not spending it. In any case, he saw absolute, positive good in fiscal economy, and therefore he not merely balanced the budget but obtained a surplus during every one of his presidential years (as Harding had done before him).

In terms of specific numbers, the Coolidge tax cuts, and their effect on the economy, are described by historian Thomas Sowell:

What actually followed the cuts in tax rates in the 1920s were rising output, rising employment to produce that output, rising incomes as a result and rising tax revenues for the government because of the rising incomes, even though the tax rates had been lowered. Another consequence was that people in higher income brackets not only paid a larger total amount of taxes, but a higher percentage of all taxes.

Who should get the credit for the improvement in the economy? Many historians point to Andrew Mellon, but Mellon was retained by Coolidge, and Mellon’s proposals would not have become law without Coolidge’s support.

Did America’s prosperity during these years, produced by Coolidge and Mellon, come at the cost of the economic collapse of the 1930s? Probably not. The Great Depression was created when what could have been a temporary self-correction in the economy was turned into a chronic condition by certain taxes and tariffs which distorted natural market forces, by the mere existence of the Federal Reserve System, and by well-intentioned but counterproductive attempts to intervene in the economy.

It was careful analysis which led Coolidge and Mellon to their policies, and careful implementation of those policies led to an era of prosperity for citizens of all classes.

Tuesday, May 6, 2014

The Economic Pain of the Great Depression

By the late 1930's, the misery of the Great Depression had been growing for several years. Unemployment in the United States was worse in 1938 than it was in 1937, and the stock market remained a disaster. What began as a temporary correction in late 1929 was extended for a decade.

Roosevelt's celebrated New Deal programs included four steps: the creation of a large amount of debt as the government borrowed huge sums of money; a significant increase in taxation; a high degree of regulation on almost every aspect of the economy; and a series of "make work" programs which created government jobs.

In August 1937, after the nation and its economy had suffered extensive damage inflicted upon it by the New Deal programs, many of the country's employers were unable to offer meaningful work. Historian Amity Shlaes writes:

Companies were also marking new lows. Leonard Ayres, the executive at Cleveland Trust who had called on Alf Landon with Anderson in 1936, tried to get a grasp on the story by comparing the profitability of corporations in the current decade to that in the preceding one. He found that close to two of three had been profitable from the midteens through the 1920s. Since the Depression, however, that ratio had dropped below one in three, so that "for nearly a decade now the great majority of corporations have been losing money instead of making it," he would note. The editors at the Economist in London were also watching, trying to put what was happening to the United States in perspective. In 1930, the per capita national income of the United States had been one-third larger than that of Britain, the magazine wrote. At the end of the 1930s, it was about the same. The problem, the magazine would conclude several years later, was "institutional obstructions to a free flow of capital." The 1930s, all in all, the magazine would decide, were a strange decade; maybe, as it wrote, the United States really had forgotten how to grow.

It was a decade of misery. Several other countries had been able to find a slow steady path to recovery, but in the United States, the indicators got steadily worse. The Great Depression was worldwide, but took a different shape in each country. In America, the New Deal programs, well-intentioned as they might have been, prevented recovery.

Wednesday, April 16, 2014

Coolidge's Lasting Contributions

Calvin Coolidge accomplished feats which proved to strengthen the United States long after he left office. In matters of domestic policy, his victories were in the matter of race relations and in the matter of carefully managing the money which belonged to the citizens; in matters of foreign policy, he eased tensions among the nations by means of the Dawes Plan and the Kellogg-Briand Pact.

Long before occupying the White House, Coolidge was an acknowledged expert at fiscal policy. He was resourceful at finding ways to reduce government spending. Historian Amity Shlaes writes:

It was as president that Coolidge's saving proved so exceptional. Coolidge hacked away at the federal budget with a discipline tragically missing in his well-intentioned predecessor, Warren G. Harding. Coolidge vetoed fifty bills and turned down new spending, even for projects such as farm subsidies and construction of rural roads that would have immensely benefitted the region from which he hailed.

By foregoing the short-term gains which might arise from federal funds for agriculture or road-building, Coolidge made possible larger and longer-term gains which were reaped when these sectors were allowed to grow organically. Likewise, the growth of electrification under Coolidge was greater precisely because he did not enact something like the Rural Electrification Act. While many citizens obtained electrification under Coolidge between late 1923 and early 1929, relatively few people gained electrification after March 1933, despite Congress's approval of Roosevelt's Rural Electrification bill.

Coolidge was constantly working to reduce the nation's debt. The result was that taxpayer dollars were not being used to pay interest. Coolidge understood that having a debt reduced the nation's productivity, and that paying interest was a waste of money. During Coolidge's administration, unemployment was low and went lower.

Between August 1923 and March 1929, the economy encouraged invention and growth. Inventors found opportunities to bring new technologies to market. Average citizens were able to obtain these new goods and the standard of living increased for Americans of all classes.

Coolidge served for sixty-seven months, finishing out Harding's term after Harding died in early August 1923 and remaining until March 1929. Under Coolidge, the federal debt fell. Under Coolidge, the federal budget was always in surplus. Under Coolidge, unemployment was 5 percent or even 3 percent. Under Coolidge, Americans wired their homes for electricity and bought their first cars or household appliances on credit. Under Coolidge, the economy grew strongly, even as the federal government shrank. Under Coolidge, the rates of patent applications and patents granted increased dynamically. Under Coolidge, there came no federal antilynching law, but lynchings themselves became less frequent and Ku Klux Klan membership dropped by millions. Under Coolidge, a man from a town without a railroad station, Americans moved from the road into the air.

Perhaps Coolidge's one regret was Congress's refusal to pass the antilynching bills which he encouraged. He worked around this partisan opposition by finding other ways to advance African-American civil rights. He was the first incumbent president to give a commencement address at a historically Black college when he spoke at Howard University in 1924.

In sharp contrast to Woodrow Wilson, who was an enthusiastic supporter of the KKK, Coolidge made fun of the Klan, and was clear in his speeches that would support the right of African-Americans to vote, even as he supported their other civil rights.

Wednesday, March 19, 2014

Imperialism - Or Not

Many nations have built empires over the centuries: the Persians, Greeks, and Romans did it in ancient times; the Spanish and British did it in more recent centuries. An empire is a collection of kingdoms or countries, under the leadership or control of the imperial nation.

The United States, however, did not get into the empire-building business. Having worked to gain its independence from an imperial power, the United States asserted, in the words of the Monroe Doctrine, that its role would be to prevent imperial interference in, or takeovers of, independent nations.

To be sure, history books typically make the claim that, while the United States did not build a traditional empire, it did engage in economic imperialism. While this claim is impressive, it is also specious. The trade relations which the United States formed during the last half of the nineteenth century and the first half of the twentieth century were largely voluntary and mutually beneficial.

The results of the Spanish-American War in 1898, a bit of the alleged American imperialism, were in fact deliberate steps to prevent the formation of an empire. Discussions of the territories involved - Guam, Cuba, Puerto Rico, and the Philippines - centered around the notion that these entities were to be put on a path to independence.

Newspapers inside the U.S. at the time reveal that discussions of sovereignty for these former Spanish colonies were front and center. On June 11, 1904, The New York Times, under the headline "President Planning Filipino Home Rule," published the following:

Secretary Taft received the Philippine Commissioners at the War Department today, and in the course of a speech intimated that in the even of Mr. Roosevelt being elected President the Filipinos might soon enjoy home rule.

Taft was, at the time, Secretary of War, but had served as Governor-General of the Philippines until late 1903. Roosevelt was at the time finishing up McKinley's term, and would soon be elected to the Presidency on his own. There was a strong anti-imperialist movement in the United States, and leaders of that movement, including Lyman Abbott, lobbied the government to ensure that the Philippines would not become part of an American empire, but instead would be independent.

The fact that Dr. Abbott, the acknowledged champion of the idea "The Philippines for the Filipinos," comes here at this time as the invited guest of the President, and that he publicly declares that he aims to set in motion public sentiment favorable to the self-government of the Philippines, however, is taken to mean that he believes the President may be won over to this view in question, and there is a disposition to expect that not long after Roosevelt enters on his term as President of the United States in his own right by virtue of his election, should the November election result favorably to him, he will take a position indicating the ultimate relinquishment of the Philippines as an absolute dependency.

As it turned out, it took a little longer to grant full sovereignty to the Philippines. Woodrow Wilson's racist views delayed the matter, as did World War One and World War Two. But in 1934, Congress approved a measure to put the Philippines on a ten-year path to independence, and despite the hardship of WWII in the Pacific, the United States kept that promise, and the Philippines did indeed become a free nation because of America's work in liberating it from the Japanese.

But the eventual granting of Philippine independence was already a foregone conclusion in 1904. The New York Times continues:

It is known that in this view of the expedient disposition of the problem Secretary Taft share the hope that there may be ultimate self-government by the Filipinos.

Thus it becomes clear that the United States, far from engaging in any form of imperialism, worked in fact to establish the Philippines as an independent nation-state, a goal clearly articulated by American policy makers in the late 1890's, written into law by Congress in 1934, and realized in the 1940's. As Dinesh D'Souza writes:

The United States was itself once a colony of Great Britain. After World War II, the United States used its influence to compel Britain and France to grant independence to many of their colonies, giving America an anti-colonial reputation. Even now Americans don't think of themselves as colonialists; on the contrary, we see ourselves as champions of self-government and liberty.

Not only the Philippines, but also Cuba established itself as an independent nation-state after the Spanish-American War. Again, voices inside the United States prevented the formation of an empire.

Saturday, February 1, 2014

Saving the Economy, Again

The narrative of any nation can be told as a series of dangers which threaten the country, and a series of escapes by which the land and its people are returned to safety. Typically, histories conceptualize those dangers armies attacking the nation from without, subversives destabilizing the nation from within, weather inflicting floods or droughts, or diseases and plagues which sicken and kill the people in large numbers. Often a hero organizes the rescue.

At least since Karl Marx, but even earlier, we know also that economic dangers play a motivating role in history. While a doctrinaire Marxist claims economics as the chief or even sole engine of history, it is less controversial to hypothesize that economics are among the main movers.

In 1920, the United States found itself enduring economic hardship. Although the war had been over for more than a year, its lingering effects included massive debt and an anemic trade relationship with Europe. But the war was not the only reason for a weak economy. Damage had been done to the nation’s financial system even prior to the war. The Wilson administration had eagerly implemented the sixteenth amendment, violated the property rights of American citizens by cruel and bitter taxation. Woodrow Wilson had also intervened into the sphere of personal choice by private citizens: the Federal Trade Commission, allegedly organized to protect consumers, reduced competition between businesses and thereby increased prices; the Federal Reserve System exerted control over the economy, reducing choice and creating risks which would eventually lead to the Great Depression.

While it is easy to condemn these actions in hindsight, it must be remembered that some members of the “progressive movement” - the movement which instituted these actions - were perhaps sincere, if gravely mistaken, in their desire to do something helpful for the average American. Not all of them were cynically manipulating the laws and the economy in order to gather power to themselves.

The net result was that by mid 1920, the ordinary citizen was not enjoying the hoped-for blessings of peace. The war was over, but the economy was crippled. In fact, America’s involvement in the war had been direct for only one year, and indirect involvement had been, if anything, profitable for the American economy in the years prior to the nation’s official entry into the war in 1917. Describing Wilson’s postwar economic misery, Amity Shlaes writes:

The country was expecting a revival, but instead the economy worsened before Americans’ eyes. Debt plagued many companies. Even Henry Ford was struggling under a giant burden of debt. Frederick Gillett told Amherst alumni at the Hotel Commodore in New York that February that “the present is one of the most critical times in the whole history of our country.” The federal war debt was $21 billion alone and the entire federal debt more like $25 billion; ten times the debt before the war. State and federal taxes both had escalated in recent years. Senator Borah had once said he could not imagine the top rate on income tax going over 20 percent; now the top rate was over 70 percent.

Two poisons were killing the economy: debt and taxes. 1920 was an election year, and, of course, the economy would be a major issue in the political campaigns. What the American voters wanted to was to move forward - to get past the burdens of high taxes, to get past the task of paying of the national debt, and to move into the prosperity which lay beyond. It is in part a rhetorical flourish to cast this as a “return” to the past, while simultaneously depicting it as a move into the future. In either case, or in both cases, citizens knew that they were bearing the burden of Wilson’s progressivism, with its high tax rates and micro-management of their personal decisions.

In this context the word “normalcy” was born. Although the word had been in use since at least 1857, Warren Harding is often credited with at least popularizing, if not inventing the word. Ordinary voters wanted a life not filled with wartime urgency, not burdened by taxes and by national debt, and free from interfering government regulations. On May 14, 1920, Harding, campaigning for the presidency, catapulted the word into fame. In Boston, at the Home Market Club, several speakers addressed the crowd, including Calvin Coolidge. Harding spoke later in the day. Coolidge and Harding expressed similar views, but Harding’s speech would be the one to became famous as he introduced the word. Amity Shlaes recounts the event:

Harding went at the same matters more deftly. He defended the free market more robustly and assailed “the false economics which lure economic control to utter chaos. The world,” Harding said, “needs to be reminded that all human ills are not curable by legislation.” Rather than shouting or demanding discipline, Harding appealed to common sense. It was daunting to see how Harding’s gracious humor could melt even the stiff Boston crowd. “If I lived in Massachusetts I should be for Governor Coolidge for President,” he jovially allowed. “Coming from Ohio, I am for Harding.” Harding’s rhetorical style was often criticized, but this time the alliteration soothed rather than distracted.

The speech which Harding delivered that day became a turning-point in American political rhetoric, and a turning point in United States history. Harding’s use of the word ‘normalcy’ connected the best of the past with the best of the future. The nation had lived through a roller-coaster ride of progressivist interventionist policies. Even if well-intentioned, those policies had produced the political and economic equivalent of nausea: too much roller-coaster.

Such was the state of the nation in 1920. The successful campaign of Harding for the presidency was a sign of the voters’ desire for “normalcy” - a chance for moving forward from Wilson’s nightmarish bureaucracy, a chance for moving forward into an environment in which each citizen would have a chance - a chance for political expression, a chance for economic opportunity. Harding, as president, began to unfold that opportunity. Harding’s premature death, and an overplayed scandal of much publicity and little substance, got in the way of Harding’s concept of expanding freedom.

In terms of policy, the Harding administration and the Coolidge administration can be seen as largely continuous. In terms of the politics with which those policies were implemented, there was a significant difference in style. Which one was more effective remains a matter of research for historians. But the cumulative efforts of both offered a sense of hope to the average citizen. Opportunities seemed suddenly plentiful, after the barren days of the Wilson administration. Historian David Greenberg writes:

Apart from taxation, Coolidge also made strides in his second term in minimizing the regulation of business and finance. In his fourth annual message to Congress, on December 7, 1926, he issued a call “for reducing, rather than expanding, government bureaus which seek to regulate and control the business activities of the people.” To the objection that workers, consumers, and other citizens needed safeguards, the president replied, “Unfortunately, human nature cannot be changed by an act of the legislature. … It is too much assumed that because an abuse exists it is the business of the national government to remedy it.”

The mechanisms by which Coolidge and Harding created opportunities for citizens were simple in principle: cut taxes, cut spending even more, and reduce the national debt. These principles created prosperity for all Americans.

In creating economic benefits for all Americans, Coolidge and Harding went sharply against the grain of the Wilson administration. While Woodrow Wilson had worked to keep Blacks out of universities, mercilessly mocked the Republican Party’s habit of appointing African-Americans to significant federal posts, and re-segregated civil service jobs such as those in the Post Office to keep “Negroes” from working near other people, Coolidge and Harding both spoke courageously in favor of anti-lynching laws. While Woodrow Wilson referred publicly to Blacks in racial epithets which are too crude to mention in this blog, Coolidge was the first sitting United States president to give a commencement address at a “Historically Black College” or “Historically Black University” when he spoke at the graduation ceremonies at Howard University. African-Americans understood Coolidge’s bold stance against the KKK and voted for him in large numbers in 1924. Coolidge’s campaign mocked the Klan with its deliberately misspelled slogan, “Keep Kool with Koolidge!”

Historian Robert Ferrell explains how the Harding and Coolidge policies created wealth, jobs, and prosperity for all citizens, of all races, of all classes, in all parts of the country:

In holding down government expenditures and saving enough money to retire the debt, Coolidge employed several devices, one of which was the Bureau of the Budget. The very fact that the bureau’s statisticians and accountants were screening the proposed expenses of cabinet departments and the independent agencies gave comfort to the parsimonious president. The bureau’s experts also could watch for special proposals by those well-known spendthrifts, the members of Congress. When the president presented his annual budget he could feel fairly sure that it was as low as he properly should go, and not a crazy quilt of special-interest propositions.

The Coolidge and Harding administrations successfully used free market policies to combat racism, to offer opportunities to Americans of every class and region, and to generate prosperity for the nation generally. The laissez-faire policies of Coolidge and Harding cannot be blamed for the Great Depression: although the exact causes of the Depression are still debated, they seem to emanate generally from Wilson’s Federal Reserve Board and from tariff and taxation policies which distorted the organic and natural trends of the market.

In any case, Wilson’s policies left the nation in economic shambles in 1920. Harding and Coolidge are properly seen as revitalizing not only the nation’s economy, but also revitalizing civil liberties in general.

Wednesday, January 1, 2014

Woodrow Wilson, Herbert Hoover, and Race

The presidency of Woodrow Wilson marked a low point for African-Americans and their struggle for civil rights. Prior to taking office, Wilson, as president of Princeton University, had worked to deter Blacks from applying to Princeton; if they applied, he worked to ensure that they were not admitted. Addressing Princeton alumni, Wilson criticized President Theodore Roosevelt for appointing African-Americans to federal offices; Wilson used a crude racial epithet to describe Roosevelt's appointees.

Occupying the White House after Theodore Roosevelt - Wilson took office in March 1913, Roosevelt left in March 1909, with Taft serving a term in between - Wilson sought to undo the Republican Roosevelt's integration. In fact, Wilson would not only undo Roosevelt's appointments of Blacks to federal offices, but Wilson would also go on to undo the integration of the federal civil service which had been in place since Reconstruction. Wilson imposed segregation on various agencies within the government, e.g. the post office, which had been integrated for decades.

Beyond removing African-Americans from federal posts, and beyond re-segregating the civil service, Wilson went further. He publicly praised the KKK. This horrified not only Blacks, but millions of Americans - people of all races, religions, and ethnic background. His affirmation of the Ku Klux Klan was the final bit of evidence which confirmed that Woodrow Wilson was a hate-filled and bigoted racist.

Just as Wilson had worked to undo the desegregation of Teddy Roosevelt and William Taft, so Wilson's successors - Harding, Coolidge, and Hoover - worked to reintroduce integration to the federal government and civil rights to the Blacks. Harding and Coolidge both advanced a legislative agenda which included antilynching bills. Hoover worked to reintegrate federal agencies. Historian Jonathan Bean writes:

In 1913, Democratic president Woodrow Wilson ordered the segregation of government offices. Moorfield Storey and other officers of the NAACP protested, but Wilson responded: "[B]y putting certain bureaus and sections of the service in the charge of negroes we are rendering them more safe in their possession of office and less likely to be discriminated against." Perhaps because he had spent most of his adult life outside the United States, Secretary of Commerce Hoover was uninterested in racial issues; moreover, thinking in terms of rigid classes violated his individualist philosophy. Hoover's Red Cross work during the Great Flood of 1927 opened his eyes to racism in the South. The following year he responded positively when the NAACP asked him to desegregate the Commerce Department.

The narrative, then, is this: on the state level, the civil rights gained by the Blacks during Reconstruction began to evaporate during the late 1800's, as Democrats regained control of southern states from the Republicans. On the federal level, the civil rights gained by African-Americans during Reconstruction began to evaporate during the Democrat administration of Woodrow Wilson; Blacks began to regain ground on the federal level during the Republican administrations of Harding, Coolidge, and Hoover. African-Americans would have to wait longer to regain that ground on the state level, as the Democrat party held the southern states under racist domination even when the Republicans had influence on a federal level.