Money and Freedom

Not only in American history, but in the histories of all different parts of the world, there is a curious connection between the freedom of speech and the right to use your own property as you see fit. It might seem odd that this link between the expression of beliefs on the one hand, and material objects on the other hand, is so pervasive in the human experience. But as unlikely as this bond between immaterial ideas and physical possession may appear, the modern world is based, as Mark Levin writes, on the intellectual heritage of philosophers and scholars, whose work coalesced into our modern outlook, which

is a way of understanding life, society, and governance. The Founders were heavily influenced by certain philosophers, among them Adam Smith (spontaneous order), Charles Montesquieu (separation of powers), and especially John Locke (natural rights); they were also influenced by their faiths, personal experiences, and knowledge of history (including the rise and fall of the Roman Empire).

“Edmund Burke, who was both a British statesman and thinker, is often said to be the father of modern” revolutionary theory: he was able to clearly express the distinction between the American Revolution and the French Revolution, and clearly and accurately predicted the trajectory of the latter before it happened.

He was an early defender of the American Revolution and advocate of representative government. He wrote of the interconnection of liberty, free markets, religion, tradition, and authority.

This bond between freedom of speech and economic freedom lies at the heart of the American Revolution. The Founding Fathers - the Continental Congress, the authors of the Declaration of the Independence, the Constitution, the Bill of Rights, and The Federalist Papers - believed

in the dignity of the individual; that we, as human beings, have a right to live, live freely, and pursue that which motivates us not because some man or some government says so, but because these are God-given natural rights.

In this way, the more abstract freedoms are joined to the more concrete freedoms. Among the abstract freedoms are freedom of speech, freedom of religion, freedom of assembly, and freedom of belief; naturally, these can all be phrased differently - represented by different words - but they all revolve around ideas and the communication of ideas. Among the concrete freedoms we find freedom from “taxation without representation,” freedom from being forced to yield property or its use (quartering British troops), and the freedom to buy and sell at freely-agreed-to prices.

It is our task to remove the outdated circumstances which surrounded the ideas of the Founding Fathers, and place those ideas, without corrupting them, into new circumstances. What are the contemporary analogues of The Sugar Act of 1764, The Stamp Act of 1765, The Townshend Acts of 1767, The Tea Act of 1773, The Coercive Act of 1774, and the Quebec Act of 1774? How did these legislations harm us then, and which legislations harm us now in the same way?

When we can free society from government’s intrusion, we allow people to speak and act freely, and the ordinary citizen

also recognizes in society a harmony of interests, as Adam Smith put it, and rules of cooperation that have developed through generations of human experience and collective reasoning that promote the betterment of the individual and society. This is characterized as ordered liberty, the social contract, or civil society.

Thomas Paine eloquently distinguished between government and society, as John Locke had done a generation earlier. Although not perfect, the equilibrium toward which a society moves, when unencumbered by government intervention, is continuously self-correcting, and the best achievable in this world.

Roosevelt's New Deal

History books usually use the phrase 'New Deal' to refer to a bundle of legislation and programs initiated by FDR during his first term, between 1933 and 1936. The New Deal can be subdivided into a First New Deal and a Second New Deal. The many different organizations and government offices created by the New Deal were a bewildering maze of abbreviations and acronyms, and possibly gave rise to the term "alphabet soup" as people attempted to understand them.

The Civilian Conservation Corps (CCC), which was closely linked to the Soil Conservation Service (SCS), and provided unskilled manual labor opportunities, primarily for young men, and primarily in rural settings. These projects were linked to the preservation of natural resources, e.g., planting trees as windbreaks to reduce soil erosion. The National Youth Administration (NYA) was an urban counterpart to the CCC and offered jobs in the cities, but the NYA also offered jobs to girls as well as boys. Historian Jonah Goldberg notes that the CCC was operated like the army:

Perhaps no program better represented the new governmental martial outlook than the Civil Conservation Corps, or CCC. Arguably the most popular program of the New Deal, the CCC mobilized some 2.5 million young men into what could only be called paramilitary training. CCCers mostly worked as a "forestry army," clearing dead wood and the like. Enlistees met at army recruiting stations; wore World War I uniforms; were transported around the country by troop trains; answered to army sergeants; were required to stand at attention, march in formation, employ military lingo - including the duty of calling officers "sir" - read a CCC newspaper modeled on Stars and Stripes, went to bed in army tents listening to taps; and woke to reveille.

More jobs were created, for men as well as boys, by the Works Progress Administration (WPA), the Public Works Administration (PWA), the Federal Emergency Relief Administration (FERA), and the Civil Works Administration (CWA). The WPA was the largest of the New Deal programs; it created jobs by constructing public buildings and utilities; its focus was on smaller projects and unskilled workers. The WPA was a "grownup" version of the NYA. The PWA worked on bigger projects - dams and bridges - and did not hire workers directly, but rather gave contracts to construction companies who then created jobs. The CWA's task was to create a short burst of employment in order to get men back to work; their main projects were pipelines, schools, roads, playgrounds, and airports. FERA was the "mother agency" which created the others, but did some direct work itself. Confusingly, these agencies did not all start or end at the same time, sometimes changed their names, gave birth to other programs, absorbed other programs, replaced other programs, and eventually went out of existence. Not only was the public faced with the dizzying "alphabet soup" of acronyms, but they were all constantly changing. In any case, these programs also invigorated the arms industry:

The Public Works Administration paid for the aircraft carriers Yorktown and Enterprise as well as four cruisers, many smaller warships, and over one hundred army planes parked at fifty military airports. Perhaps one reason so many people believed the New Deal ended the Depression is that the New Deal's segue into a full-blown war economy was so seamless.

The Tennessee Valley Authority (TVA) was designed to create jobs by building a system of hydroelectric dams, electrical power generating plants, and a long-distance high-voltage power grid to bring electricity to much of the rural south. Operating as it did with federal subsidies, it was able to offer the service at a relatively low price, which put downward price pressure on the private utility providers in the region. Like the CCC, it had a military tone:

Almost every program of the early New Deal was rooted in the politics of war, the economics of war, or the aesthetics of war coming out of World War I. The Tennessee Valley Authority, or TVA, the signature public works project of the New Deal, had its roots in a World War I power project. (As FDR explained when he formally asked Congress to create the thing, “This power development of war days leads logically to national planning.”) The Supreme Court defended the constitutionality of the TVA in part by citing the president's war powers.

The Agricultural Adjustment Administration (AAA) was most famous for paying farmers not to grow crops, but had other activities as well. The AAA slaughtered six million pigs, which were not butchered for sale, but simply buried. It also directed that ripe crops in the field, ready for harvest, were either burned, plowed under, or left to rot. All of these actions were aimed at reducing the food supply so that farmers could get better prices for the crops they sold. Paradoxically, the AAA was shrinking supply to raise prices, while the TVA was dumping subsidized supply into the market to lower prices. More than half of the AAA's programs were eventually ruled unconstitutional by the Supreme Court, because it placed fees and taxes on the companies who processed agricultural products, and used that revenue to subsidize farmers, which violated principles of fair commerce.

Because one of the central goals of the early New Deal was to create artificial scarcity in order to drive prices up, the Agricultural Adjustment Administration ordered that six million pigs be slaughtered. Bountiful crops were left to rot. Many white farmers were paid not to work their land (which meant that many black tenant farmers went hungry). All of these policies were enforced by a militarized government.

The Social Security Administration (SSA) was created during the New Deal, and is still with us today as one of the more significant government programs. Created to address the needs of those who were too old to work, or physically unable to continue working, it was not meant to finance the semi-recreational concept of retirement which developed in later decades.

The Federal Deposit Insurance Corporation (FDIC), which followed on the heals of the Emergency Banking Act (EBA) and the Economy Act (EA), attempted to restore stability and confidence in the financial system by assuring ordinary depositors that their savings were safe.

The National Labor Relations Board (NLRB) was formed to strengthen organized labor by recognizing the right of unions to have "closed shops" - all workers in factory must join the union if a majority of the workers votes for it - and by forcing management to negotiate with union bargaining teams (management is required to recognize the union as the legitimate bargaining representative, and is required to bargain). Understandably, union leaders were enthusiastic about Roosevelt's New Deal, and about Hugh Johnson, appointed by Roosevelt to operate some New Deal programs:

The President's NRA Day Parade boasted fifty thousand garment workers, thirty thousand city laborers, seventeen thousand retail workers, six thousand brewery hands, and a Radio City Music Hall troupe. Nearly a quarter-million men and women marched for ten hours past an audience of well over a million people, with forty-nine military planes flying overhead. Because of events like this, writes Arthur Schlesinger Jr., Johnson and Roosevelt achieved their goal of "transforming a government agency into a religious experience." A member of the British Independent Labour Party was horrified by such pageantry, saying it made him feel like he was in Nazi Germany.

Perhaps the program which most symbolizes the spirit of Roosevelt's New Deal was the National Recovery Administration (NRA). The NRA attempted to micro-manage the American economy by writing thousands of regulations for nearly every aspect of business and industry. The response from the public was negative, and the Supreme Court eventually rejected much of the NRA's activity as unconstitutional. Roosevelt was forced to re-think his strategy, and the NRA's failure gave way to the 'Second New Deal' which attempted to be less invasive. The Supreme Court's nullification of the NRA was based on the famous "sick chicken" case (if poultry was raised, butchered, and sold inside one state, then the state, not the federal government, has jurisdiction for questions of safety and sanitary conditions). By the time the NRA was overturned by the Supreme Court, it had lost much of its popularity, but in its early days, it had been promoted by the media and the government:

Not surprisingly, victims of the Blue Eagle received little sympathy in the press and even less quarter from the government. Perhaps the most famous case was Jacob Maged, the forty-nine-year-old immigrant dry cleaner who spent three months in jail in 1934 for charging thirty-five cents to press a suit, when the NRA had insisted that all loyal Americans must charge at least forty cents.

For promotional purposes, the NRA had adopted as its symbol a blue eagle. This imagery continued the military tone of other New Deal programs:

It's difficult to exaggerate the propagandistic importance FDR invested in the Blue Eagle. "In war, in the gloom of night attack, soldiers wear a bright badge on their shoulders to be sure their comrades do not fire on comrades," the president explained. "On that principle those who cooperate in this program must know each other at a glance."

In response to the Supreme Court's nullification of the NRA and AAA, Roosevelt proposed his "court packing" scheme in 1937, to add judges to the Supreme Court - implicitly meant were judges friendly to Roosevelt's programs. The "court packing" plan was rejected inasmuch as it conflicted with the constitutional concepts of separation of powers.

The Fair Employment Practices Commission (FEPC) was created by Roosevelt's executive order 8802, and represented a step forward for the civil rights of African-Americans. Arising as it did in 1941, it is generally considered to be too late to be part of the New Deal, and is instead considered to be part of the arms build-up which allowed America to survive the Japanese attack.

We have reviewed here only a representative of the many New Deal programs. Other initiatives included the Reconstruction Finance Corporation (RFC), Homeowners Loan Corporation (HOLC), the Securities and Exchange Commission (SEC), Federal Crop Insurance Corporation (FCIC), Rural Electrification Administration (REA), Resettlement Administration (RA), Farm Security Administration (FSA), and the Indian Reorganization Act (IRA). Many of these agencies had overlapping jurisdictions, and others supervised each other, compounding the confusion.

In sum, the New Deal presented staggering number of agencies and programs, which continually morphed, gave birth to each other, and replaced each other. It was difficult to keep track of them. Eventually, the Supreme Court reminded Roosevelt that there were constitutional limits on his power. The net effect of the New Deal, by increasing taxes and public debt, was to prolong the depression, and to turn a temporary depression into the Great Depression.

The Mind of an Assassin

Who was the man who killed President William McKinley? Born in Alpena, Michigan, he also spent part of his childhood in Detroit, and on a family farm in or near Warrensville, Ohio. His family's heritage was from eastern Europe; they were Roman Catholics and generally voted Republican. Leon abandoned his family's traditions, and began embracing socialism and anarchism, after finding himself lacking in social skills and generally treated as an outcast by other young people. He spent huge amounts of time in his family's attic, reading radical books.

His life's trajectory moved ever further away from things normal and healthy. As Ann Coulter explains,

Leon Czolgosz, who killed President William McKinley in 1901, was a socialist and anarchist (okay, that's redundant) who was captivated upon hearing a speech by radical socialist Emma Goldman the year he shot McKinley. If memory serves, Goldman's inspirational speech had something to do with "hope" and change."

Coulter's quirky humor in recounting this bit of history reveals the ironic patterns: despite potential conflicts between socialism and anarchism, radicals like Goldman and Czolgosz continually worked at formulating the perfect blend of the two. Violence thoroughly permeated this movement: Goldman and her boyfriend, Alexander Berkman, attempted to murder Henry Clay Frick in 1892, who was not even a government official, but merely a businessman. They planned this murder as an act of terrorism - many anarchists of the era organized random acts of violence to keep the public in a state of anxiety. Frick survived the attempt, and Goldman's boyfriend went to jail.

The attempted murder of Frick, along with a pattern of similar anarchist bombings and assassinations around the world - the King of Italy had been murdered in 1900 - inspired Leon Czolgosz, a misfit and a malcontent.

Native American Citizenship

The original residents of North America, after suffering losses in property and rights, gained back those lands and freedoms in a series of legislative steps. Among the several measures taken, the Dawes Act (with its later emendations) and the Indian Citizenship Act of 1924 stand out.

The Dawes Act was written by a Republican senator, Henry L. Dawes. Because the Republicans had the majority in the Senate at the time, he was able to get his legislation approved in 1887. The basic intention of the Republican Party in passing this bill was to ensure that Native Americans ("Indians") had permanent legal ownership of their land. The Dawes Act was amended by subsequent pieces of legislation over the next two decades.

The 1887 legislation had mixed results. One the one hand, it clearly established legal ownership for Indians. On the other hand, it created a tangled of regulations regarding who had legal jurisdiction over that land, and weakened the role of tribal governments.

Further progress was made with the Indian Citizenship Act of 1924. With both the House of Representatives and the Senate featuring Republican majorities, and with Republican President Calvin Coolidge in the White House, it was finally possible to grant full citizenship to Native Americans.

Coolidge: Loved and Hated

Many older U.S. History textbooks still look at the presidency of Calvin Cooldge (1923 - 1929) unfavorably. This outdated view of one of America's greatest leaders is a hangover from the radicalism of the 1960's, when many leaders were denigrated simply because they were leaders. Contemporary historians take a more nuanced view of Coolidge. Ann Coulter writes that

Coolidge cut taxes, didn't get the country in any wars, cut the national debt almost in half, and presided over a calm, scandal-free administration, a period of peace, 17.5 percent growth in the gross national product, low inflation (.4 percent) and low unemployment (3.6 percent).

But let Coolidge speak for himself. On August 11, 1924, he gave a speech, in which he analyzed what would be necessary for the nation to make the kind of progress which would benefit all Americans at all income levels. He said:

This country needs every ounce of its energy to restore itself. The costs of government are all assessed upon the people. This means that the farmer is doomed to provide a certain amount of money out of the sale of his produce, no matter how low the price, to pay his taxes. The manufacturer, the professional man, the clerk, must do the same from their income. The wage earner, often at a higher rate when compared to his earning, makes his contribution, perhaps not directly but indirectly, in the advanced cost of everything he buys.

Coolidge saw that government was a burden upon people, and that taxation would slow the nation's ability to foster its own growth. To create prosperity for the ordinary person, government should get out of the way, lower taxes, and curtail its activities. Such a policy allows the economy to grow at maximum pace. The president continued:

The expenses of government reach everybody. Taxes take from everyone a part of his earnings and force everyone to work for a certain part of his time for the government.

President Coolidge saw that we cannot tax only a part of the population. It is an illusion to think that we can “tax the rich” or “tax the north” or “tax the south” or “tax the young” or “tax the old” — a tax on anyone will result in a burden for everyone. If one person pays taxes, that is money taken out of the productive economy, and the ripple effect goes through all sectors of the nation.

When we come to realize that the yearly expenses of the governments of this country - the stupendous sum of about 7 billion, 500 million dollars — we get 700 million dollars — is needed by the national government, and the remainder by local governments. Such a sum is difficult to comprehend. It represents all the pay of five million wage earners receiving five dollars a day, working 300 days in the year. If the government should add 100 million dollars of expense, it would represent four days more work of these wage earners. These are some of the reasons why I want to cut down public expense.

Government expenses in Coolidge's day were small compared to later years, but in either case, the government represented a huge drag on the any productive worker. The amount of time — for money is time — consumed by the government, when measured in the labor of ordinary people, is breathtaking. Millions of working women and men are denied the wages which are rightfully theirs, because the taxes confiscate them. Coolidge's economic insights made him a excellent leader. What was a minor fluctuation in the economy became the Great Depression because later leaders did not follow Coolidge's example.

The Moral Equivalent of War

It has always been difficult to have enough patience with our constitutional system. Visionary leaders want to make sweeping changes immediately, but our system is deliberately designed to slow everything down. Why? Moving slowly is a good way to safeguard our freedom. Those who lack the necessary patience often look fondly at wartime situations. In the urgency of war, big decisions are made conclusively by a leader and implemented swiftly. Progressives, like Woodrow Wilson, wonder why we can't bring that same decisiveness to other activities. Because they see this military behavior as paradigmatic, they generate phrases like "the war on poverty" or the "war on narcotics" as they try to generate that same authoritarian leadership - a leadership which would run roughshod over constitutional processes, and over civil rights. George Will writes that

War, said James Madison, is “the true nurse of executive aggrandizement.” Randolph Bourne, the radical essayist killed by the influenza unleashed by World War I, warned, “War is the health of the state.”

Both sides agree — war inflates executive power. But is that a good thing? Progressives think so. A strong executive can boldly re-engineer society. It doesn't matter whether or not society wants to be re-engineered, or if we have to trim personal liberty in the process: this is the essence of progressivism.

The armed services' ethos, although noble, is not a template for civilian society, unless the aspiration is to extinguish politics. People marching in serried ranks, fused into a solid mass by the heat of martial ardor, proceeding in lockstep, shoulder to shoulder, obedient to orders from a commanding officer — this is a recurring dream of progressives eager to dispense with tiresome persuasion and untidy dissension in a free, tumultuous society.

While there may be a justification for unilateral executive power in the form of a military officer commanding troops, there is no justification for it in a civilian government. It endangers the very freedom which the government is supposed to protect.

Progressive presidents use martial language as a way of encouraging Americans to confuse civilian politics with military exertions, thereby circumventing an impediment to progressive aspirations — the Constitution, and the patience it demands. As a young professor, Woodrow Wilson had lamented that America’s political parties “are like armies without officers.” The most theoretically inclined of progressive politicians, Wilson was the first president to criticize America’s founding. This he did thoroughly, rejecting the Madisonian system of checks and balances — the separation of powers, a crucial component of limited government — because it makes a government that can not be wielded efficiently by a strong executive.

Woodrow Wilson, and other progressives, don't want to wait for the legislative process, and believe that their plans for society are so important, and so correct, that they can't risk diluting them with compromise.

Franklin Roosevelt agreed. He complained about "the three-horse team of the American system": "If one horse lies down in the traces or plunges off in another direction, the field will not be plowed." And progressive plowing takes precedence over constitutional equipoise among the three branches of government. Hence FDR’s attempt to break the Supreme Court to his will by enlarging it.

Franklin Roosevelt learned from Woodrow Wilson. There could be no debate, and no compromise, for his plans. But the mistake Roosevelt and Wilson made was in failing to see that personal liberty is the core value of our constitutional system. Nothing justifies compromising individual freedom. But FDR and Wilson believed that nothing, not even respect for freedom, justified compromising their attempt to re-design societies or economies.

In his first inaugural address, FDR demanded "broad executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe." He said Americans must "move as a trained and loyal army" with "a unity of duty hitherto evoked only in time of armed strife." The next day, addressing the American Legion, Roosevelt said it was "a mistake to assume that the virtues of war differ essentially from the virtues of peace." In such a time, dissent is disloyalty.

To the ears of someone who understands the American notion of liberty, Roosevelt's words are shocking. A carefully designed separation of powers was put into place to prevent sudden unilateral action: FDR would cheerfully brush it all aside and gather dictatorial power to himself. In fact, the word 'dictator' was seen as something rather good by the progressives: among people like Woodrow Wilson in 1912 and FDR in 1932,

Yearnings for a command society were common and respectable then.

The media of that era echoed this desire for dictatorship:

Walter Lippmann, then America’s pre-eminent columnist, said: “A mild species of dictatorship will help us over the roughest spots in the road ahead.” The New York Daily News, then the nation's largest-circulation newspaper, cheerfully editorialized: “A lot of us have been asking for a dictator. Now we have one ... It is Roosevelt ... Dictatorship in crises was ancient Rome’s best era.” The New York Herald Tribune titled an editorial “For Dictatorship if Necessary.”

The demand for dictator-like powers

expresses progressivism's impatience with our constitutional system of concurrent majorities. To enact and execute federal laws under Madison’s institutional architecture requires three, and sometimes more, such majorities. There must be majorities in the House and Senate, each body having distinctive constituencies and electoral rhythms. The law must be affirmed by the president, who has a distinctive electoral base and election schedule. Supermajorities in both houses of Congress are required to override presidential vetoes. And a Supreme Court majority is required to sustain laws against constitutional challenges.

One route which progressives use when circumventing constitutional systems is the perception that there is a current crisis requiring immediate action. Whether or not there is a crisis, the perception will justify the executive grasping the powers which properly belong to the other two branches of government so that he can deal decisively with the perceived danger. This was famously summed up by Rahm Emanuel:

You never want a serious crisis to go to waste. And what I mean by that: it's an opportunity to do things that you think you could not do otherwise.

From the Roman Republic to twentieth century Europe to twenty-first century America, this has been a political strategy - "this is a crisis - give me the power to rule absolutely so that I can get things back in order." Narratives beginning with phrases like these rarely have happy endings.

Breaking a Non-Monopoly

Rockefeller’s Standard Oil Company is often described as a “monopoly” which was “broken up” by the Supreme Court under pressure from Teddy Roosevelt. It was never a true monopoly, meaning that it never had 100% of the market. It wasn’t broken up by the Supreme Court or by Roosevelt; its market share had already fallen by the time the 1911 ruling was issued.

Standard Oil’s market share peaked at over 50%. There are various ways to measure market share: production, final retail sales, gallons pumped, etc. There is no doubt the that company was huge, and its large market share allowed it to impact prices. But given the presence of competitors, Standard Oil did not have complete control over the market.

When a company is as big as Standard Oil, two problems arise: there is a lot more room for waste and inefficiency, which means that your competitors have a chance of underpricing you; being the biggest, you are the primary target for all competitors. Both of these factors began to take Standard Oil down, before the federal government took any action. Thomas Woods writes:

the federal government moved to dissolve Standard Oil during Theodore Roosevelt’s presidency. But by the time the federal government dissolved Standard Oil in 1911, the company’s market share had already been reduced to 25 percent as a result of normal market competition.

Different historians give different numbers regarding Standard Oil’s market share, but all agree that its market share fell significantly, and long before the Supreme Court ruling began to appear likely.

historian Gabriel Kolko notes that from 1899, Standard Oil had “entered a progressive decline in its control over the oil industry, a decline accelerated, but certainly not initiated, by the dissolution.” Standard’s decline, Kolko explains, was “primarily of its own doing - the responsibility of its conservative management and lack of initiative.”

If a market is free enough - unfettered by regulation - it will keep itself in order, even to the point of dismantling companies which threaten to approach monopoly status. By contrast, only with the the help of government intervention and regulation can a company become a true monopoly with 100% market share.