When the Depression Became the Great Depression: Going from Bad to Worse

The reader will know that the stock market crash of October 1929 is associated with the Great Depression. But how is it associated? Was it the cause of the Great Depression? Or was it a symptom of what was already going to happen — a sort of leading indicator?

For a century, economists and historians have debated those questions, without arriving at conclusive answers. They’ve also asked these kinds of questions: When did the Great Depression end? If the stock market crash caused it, was it the only cause? If the stock market crash didn’t cause it, what might have been the cause or causes? Could the Great Depression have been avoided?

While few definitive explanations have emerged, some hypotheses seem generally to be more plausible than others, e.g., it is now widely accepted that the stock market crash did not cause the Great Depression, but rather was a reflection of a nervousness or an awareness of some troubling economic trend in the making. The stock market functions primarily as a barometer of investor psychology. Stock prices go up when people have optimistic expectations. Stock prices go down when people have grim forebodings.

Another generally endorsed hypothesis is that, whatever the cause or causes of the Great Depression may have been, the depression didn’t have to be great. It could have been merely an ordinary depression, not a great one.

The Depression went from being merely a depression to being the Great Depression because of government intervention in the economy. Economies organically seek equilibrium. An event or situation, like a depression, which takes an economy out of equilibrium, will trigger the economy to rearrange itself in order to work its way back to equilibrium. When governments take action to fix ailing economies, these actions, despite their good intentions, get in the way of the natural process of returning to equilibrium.

The reader will be aware of President Roosevelt’s New Deal programs, a mixture of massive government spending, massive tax increases, and massive increases in government debt. While intended as a way to help the economy, FDR’s New Deal prevented the economy’s mechanisms from automatically compensating for any deviations from equilibrium and from thereby bringing the economy back to balance, as historian Ben Shapiro writes:

According to Professors Harold Cole and Lee Ohanian of UCLA’s Department of Economics, FDR’s policies prolonged the depression by at least seven years.

FDR tried and abandoned different strategies in quick succession. But all of his strategies shared a common element: the assumption that the government should intervene in the economy, rather than stand back and let the economy sort itself out. At one point Roosevelt persuaded many manufacturing companies to give their workers an outrageous 25% raise; in return, those companies were given permission to raise their prices substantially. Here was the core of the problem: the government should have no say in how much people are paid; it should have no say in which prices manufacturers charge for their products. The catastrophic results of FDR’s wage and prices controls were predictable, as Shapiro explains:

Not surprisingly, wages were 25 percent above market level, but unemployment was also 25 percent higher than it should have been. Demand stalled because of artificial boosts in prices.

Professor Ohanian clarifies why wage and price controls lead only to more problems:

High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns, as we’ve seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market's self-correcting forces.

Likewise, Professor Cole describes how the economy’s self-correcting mechanisms are stymied when the government tries to correct the problems:

President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services. So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies.

What drove FDR’s economic decision-making? Henry Morgenthau was one of FDR’s close personal friends; Morgenthau became friends with Roosevelt long before either of them entered politics, and twenty years before Roosevelt became president. Not only was Morgenthau Roosevelt’s friend until the latter died in 1945, he was also appointed by Roosevelt to a series of government positions, culminating in his appointment as Secretary of the Treasury by Roosevelt. He remained in that post for over a decade during Roosevelt’s presidency.

Despite good political and personal relationships with Roosevelt, Morgenthau described FDR as essentially uninformed about economics. During one of his political campaigns, FDR bragged about his education, saying “I took economics courses in college for four years.” The registrar at Harvard, however, revealed this to be untrue.

Accounts provided by a number of Roosevelt’s friends and appointees confirm that he often chose arbitrary numbers and used them to set economic policy, as Ben Shapiro reports:

FDR’s own economic ignorance is legendary. According to historian Amity Shlaes, FDR used to tinker with the price of gold arbitrarily. At one point, he raised the price of gold by 21 cents because he said it was a “lucky number, because it’s three times seven.” Henry Morgenthau, part of FDR’s brain trust, said later, “If anybody knew how we really set the gold price through a combination of lucky numbers, etc., I think they would be frightened.”

It remains plausible that there were few or no coherent systematic underpinnings for FDR’s economic policies, and that those policies did more harm than good, preventing what would have been a small depression from self-correcting. The New Deal policies made a short-term depression into the Great Depression, causing it to last longer and have more extreme impacts than it otherwise would have had, as Shapiro describes:

FDR’s policies greatly lengthened the Depression and made it far worse than it otherwise had to be.

It may be taken as an axiom that government actions in the economy — regulating, taxing, creating a national debt — prevent the economy’s own organic self-correcting mechanisms from doing what they do best: keeping the economy at a prosperous equilibrium point.

Jim Crow Governments Shackle Free Enterprise: Regulating Businesses Empowers Racism

Anyone familiar with the painful struggle for civil rights in the United States has read about “Jim Crow Laws.” What were these laws? They were regulations which enforced various forms of segregation and discrimination.

But why were they “laws”? They were the actions of a powerful government: a government powerful enough to impose regulations on where people lived, where they worked, where they shopped, and where they ate. They are examples of what the abolitionists hoped to avoid when they developed the concepts of a “limited government” and a “weak government” — those abolitionists who were agitating to end slavery already during the 1700s.

During the late 1800s and early 1900s, “segregation was imposed governmentally,” in the words of historian Ben Shapiro. It was not a social or cultural desire. It had to be imposed precisely because society and culture would not voluntarily go along with it.

It was especially necessary for governments to impose segregation on businesses. In the world of buying and selling, racial prejudice makes no sense. A business is not interested in the color of a person’s skin; it is interested in a person’s money. A consumer is not interested in a manufacturer’s gene pool; she or he is interested in the quality and price of a product.

Because a “free market” economy is intrinsically anti-racist, racists needed the government to control the businesses. If the country had a weak and limited government, it would not have been able to enforce a racist agenda. Progress toward justice and toward civil rights is the search for a weak government.

Free and unregulated markets are economies in which customers and businesses are free to make choices. In situations in which the government did not force businesses to segregate by means of Jim Crow Laws, they were already desegregating even before any civil rights legislation was enacted, as historian Ben Shapiro writes:

In February 1960, four black students in Greensboro, North Carolina, sat down at the counter at Woolworth’s. This was four years before the Civil Rights Act. By July 1960, Woolworth’s lunch counter desegregated itself, after losing $200,000. The market worked.

Racists have an affinity toward strong controlling governments: with such power, the racists can force segregation on society. Anti-racists have a desire for a weak and limited government: under such governments, businesses are free to buy and sell for motives of profit instead of motives of race.

“The bottom line is that racists cannot trust free markets to racially discriminate,” writes economist Walter Williams. “Racists need the force of government to have success.”

Williams goes on to report that “from the 1880s into the 1960s” it was not business, but government, that “enforced some form of segregation through what were known as Jim Crow laws.”

If a business ever acts in a racist manner, it usually is because the government forces it to do so. Business don’t often want to act in a racist way, because racial calculations don’t usually maximize profits.

Those few businesses which act in racist ways usually pay the price. For example, Lester Maddox owned and operated a restaurant in Atlanta, Georgia. He would not allow any African-Americans into the restaurant as customers. When three Black people walked up to the restaurant in April 1964 and asked to be seated, he responded by brandishing an ax handle, implying his willingness to use violence. Lester Maddox’s racist ways were not profitable, and soon he and his restaurant were out of business. Meanwhile, other restaurants in Atlanta who happily served any paying customer continued profitably. Although a failure in business, Lester Maddox was rewarded for his racist actions: the Democratic Party chose him as its leader and as governor of Georgia.

The example of Maddox is the example of a business whose racist ways of operating do not optimize profit; the business suffers as a result. By contrast, the Montgomery Bus Boycott shows how an anti-racist company, National City Lines (NCL), was forced by the government to act in racist ways. NCL was a private company which was hired by various cities to operate bus systems in those cities. NCL had been hired by Montgomery, Alabama to run the city’s buses. But the city government imposed a restriction on NCL. It insisted that the buses be segregated.

After examining the “sit in” actions at segregated lunch counters, Ben Shapiro looks at the bus example:

Then there’s the Montgomery bus boycott. In 1955, city ordinances required segregation on buses. Rosa Parks and the NAACP organized a massive boycott that resulted in 40,000 black people refusing to take the buses the day after Parks’ famous refusal to move to the back of the bus. The only reason that the bus company refused to abide by the demands of the boycotters is that they were in negotiations with the city, and the city ordinances prevented them from doing so.

Not only did the government of Montgomery inflict segregation on the passengers of the buses, but it regulated the bus company, forcing it to segregate, and thereby forcing it to act in a way which did not optimize profits. Left to their own devices, businesses will desegregate, because segregation is not the most profitable option. Businesses will segregate only when governments force them to do so, as Shapiro explains:

The market is better at uprooting such discrimination than the government is without invading the rights of private business owners to choose their clientele.

The real estate sector provides a clear example. Readers will know that the term “redlining” refers to the practice of marking some neighborhoods as “off limits” to Black homebuyers. This practice was often established by means of “covenants” in real estate deeds. Racists were able to keep African-American home-buyers out of neighborhoods only because the government enforced these real estate covenants. If the government were a limited government, which allowed free market real estate transactions, then it would not have been powerful enough to keep Black people out of these neighborhoods.

Freed from the restraints imposed by Jim Crow Laws, real estate agents and home sellers would have sold houses to African-Americans. Those who sell real estate seek only to sell to the highest bidder; sellers have no interest in skin color or gene pools.

The most powerful tool to promote justice and to advance civil rights is an unregulated business environment. When buyers and sellers are free to simply look for the “best deal,” then racism is quickly ignored in favor of profit.

Racism without a connection to a strong government is a nasty, evil, and toothless sentiment. It is ugly, but also relatively powerless. Racism in the presence of a strong government is empowered to inflict harm, pain, and suffering. When a society ordains a limited government, instead of powerful government, racism is prevented from having concrete effects.

Why Did It Take So Long? The Abolition of Slavery in the United States

There is no simple explanation for the history of slavery in the United States. From 1607, the time of the first permanent settlement in what would become the thirteen colonies and later the thirteen states, to 1863, the year of Lincoln’s Emancipation Proclamation, there is no easy narrative to decipher the events in North America. Rather, there is a complex series of occurrences.

And when a coherent unifying narrative is formed incorporating all of those occurrences, new data are discovered, demanding the formation of a yet more complicated narrative.

In 1652, not even half a century after Jamestown’s founding, the Rhode Island legislative body outlawed slavery in that colony. This achievement was the result of abolitionists, including Roger Williams, who had begun agitating for the abolition of slavery in Rhode Island in 1636. In the same year that this legislation was passed, 1652, Samuel Sewall was born, who carried the abolitionist agenda forward, this time in Massachusetts, authoring anti-slavery texts.

To call the anti-slavery agitators in the 1600s ‘abolitionists’ is somewhat anachronistic, because the word at that time was not often so used. Yet in substance they were exactly that.

Here is, then, a great mystery: Given the vigorous start which the abolitionist movement had by the mid 1600s, and given that more than half the population in each of the thirteen colonies, later thirteen states, was opposed to slavery, why did slavery persist for so long?

Even in the slave states, a majority of the population was not enthusiastic about slavery. Slaveholders and their sycophants defended the institution energetically, but they were less than half of the population in the slaveholding states. While the minority in those states enjoyed an economic advantage from slavery, the free majority understood slavery as undermining economic opportunities. Free men who did not own slaves, but who lived in slaveholding states, saw their income driven downward by the institution of slavery.

Yet slavery persisted.

The slaveholders were perhaps so deftly able to defend slavery because they had disproportionately large economic resources, they mastered the skills of political and legal maneuvering, and they did not eschew the use of violence in pursuing their goals.

A majority of the “founders wanted to abolish slavery,” as Ben Shapiro notes. The slaveholders and their supporters, despite being a distinct minority, found procedural ways to coerce the remainder of the new nation into allowing slavery, as Shapiro writes:

From its founding, the United States attempted to come to grips with slavery and phase it out. The state of Vermont was the first sovereign state to abolish slavery, in 1777. During the debate over the Declaration of Independence, Thomas Jefferson wanted to include a provision that would have condemned King George III for “wag[ing] cruel war against human nature itself, violating its most sacred rights of life and liberty in the persons of a distant people who never offended him, captivating and carrying them into slavery in another hemisphere, or to incur miserable death in their transportation hither.” Southern states demanded that this provision be removed in return for joining the revolution. Having no choice, Jefferson removed the clause.

By the time the new Constitution was written in 1787, the situation was still the same. The minority percentage of pro-slavery citizens in the United States refused the majority’s wish that the new government do away with slavery entirely. The abolitionists nonetheless found a way to weaken the pro-slavery bloc: the “three-fifths” clause.

This clause has been debated and misunderstood for over two centuries. The abolitionists refused to give the slaveholding states a one-for-one representation for their slaves in Congress. Why should a slaveholding state have a greater representation in Congress than a free state, when the slaves were not allowed to vote? Should the size of a state’s representation be based on the number of people in that state, or on the number of free people? If a state with slaves were to obtain a larger representation by including the number of slaves in the calculation, then the pro-slavery bloc would have an overwhelming and undefeatable hold on Congress, and slavery could never be abolished. Only by reducing the representation of the slaveholding states could the abolitionist cause find a foothold in the legislative process.

By not reducing the formula to zero, the new Constitution also created an inherent structural instability, a conceptual disequilibrium, which would guarantee that the issue of abolitionism would never go away. It would continually resurface until the matter was resolved once and for all.

John Brown, along with many of his family, was part of an abolitionist network which included David Hudson and a young Ulyses S. Grant.

In 1859, John Brown was instrumental in nudging the abolitionist movement away from its pacifist leanings. If the slaveholders were willing to use violence to defend slavery, John Brown and David Hudson reasoned, then the abolitionists and slaves together might use violence to end slavery, as historian Franklin Benjamin Sanborn wrote in 1878:

Old Squire Hudson, for whom the town so-called in Ohio was named, and who was the leading man in that section where Brown spent his boyhood, was not only an abolitionist fifty years ago, but that he favored forcible resistance by the slaves.

So it was, then, that over two centuries’ worth of abolitionism culminated in the Abraham Lincoln’s Emancipation Proclamation, and arduous but successful work of implementing that proclamation, along with the three amendments to the Constitution between 1865 and 1870, during the last two years of the Civil War and during the Reconstruction Era.

The “Three-Fifths Clause” — The Founders Plant the Seed for the Ultimate Abolition

The infamous “three-fifths clause” in the U.S. Constitution has been debated and misunderstood for decades and even centuries. Was this notorious bit of text a victory for the abolitionists or for the slave owners? Or was it, as it is often labeled, a compromise? Passion swirls around these questions.

The roots of this phrase and its insertion into the Constitution antedate the Constitutional Convention of 1787. By the 1640s, at the latest, there was already an energetic abolitionist movement in North America. By 1652, the Rhode Island legislative body eliminated slavery in that colony. By the time of the American Revolution, more than a century later, a majority of the residents in the majority of the thirteen colonies — soon to become the thirteen states — opposed slavery.

Yet another question arises: if abolitionism was a majority view, how did the minority — those who sought to maintain slavery — so effectively contend for so evil an institution? The answer is multipartite. Among the factors which allowed slavery to persist were: Slave-owners were often wealthy, and wealth can lead to disproportionate political influence; slave owners fiercely clung to their ideology; slave owners were, or became, adept at using the political and governmental systems.

Abolitionists, in the early decades of the movement, were loath to use violence in pressing their case.

The Revolutionary War had ended several years before the Constitutional Convention. The United States functioned during those years under the Articles of Confederation. That short-lived system of government had various flaws which caused the call for a convention which would, in turn, compose a revision of those articles, or, as it turned out, an entirely new constitutional document.

In those years between the end of the war and the Constitutional Convention, the tensions between the abolitionists and the slaveholders continued to simmer. In the treaty which ended the war, there was a clause which prevented the British from “causing any Destruction, or carrying away any Negroes or other Property of the American inhabitants.” A dispute arose about how to interpret this provision of the treaty. The abolitionists understood it to mean that the British were not to abduct or kidnap the “Negroes.” The slaveholders understood it to mean that any slaves who had run away from their owners and sought refuge behind the British lines, during the Revolutionary War, must be returned to their (former) owners.

In the course of the debate about the interpretation of this phrase in the treaty, Alexander Hamilton wrote:

In the interpretation of Treaties things odious or immoral are not to be presumed. The abandonment of negroes, who had been induced to quit their Masters on the faith of Official proclamations promising them liberty, to fall again under the yoke of their masters and into slavery is as odious and immoral a thing as can be conceived. It is odious not only as it imposes an act of perfidy on one of the contracting parties; but as it tends to bring back to servitude men once made free. The general interests of humanity conspire with the obligations which Great Britain had contracted towards the Negroes to repel this construction of the Treaty if another can be found.

Hamilton, taking the side of the majority, opposed anything, any text, or any interpretation of a text, which would transfer people from a state of freedom to a state of servitude. Hamilton, embracing the popular understanding that the purpose of a government is to protect the lives, freedoms, and properties of its subjects, understood them in that order: life, freedom, property. The only reason to impose any limitation on the principle of property rights is for the higher purpose of preserving life and freedom. Slavery was a violation of freedom, and so the freedom of the potential slave outweighed the property rights of the would-be slaveholder.

Alexander Hamilton was a powerful champion of property rights, but, as historian Ron Chernow writes, the principle of liberty was one of two things that, in Hamilton’s mind, justified any limitation on property rights — the other being the preservation of life:

This fierce defender of private property — this man for whom contracts were to be sacred covenants — expressly denied the sanctity of any agreement that stripped people of their freedom.

Rachel, Hamilton’s mother, had inherited slaves. She did not seek them out. As a child, he was often in the company of these slaves, who did not work for Rachel. They were employed elsewhere, as she hired them out for various tasks. Hamilton got to know these slaves, and was shaped in his thinking by his mother’s humane treatment of them. “This early exposure to the humanity of the slaves may have made a lasting impression on Hamilton, who would be conspicuous,” writes Chernow, “for his fierce abolitionism.”

It is no surprise that Hamilton joined the New York Society for Promoting the Manumission of Slaves, known by the shorter name of the “New York Manumission Society.” Not only was he a member of the society, but held a leadership position, and possibly was part of authoring some of the unsigned pamphlets issued by the society.

In February 1786, the society “lobbied the state legislature to halt the export of slaves from New York.”

That March, Hamilton’s name appeared on a petition that called upon the state legislature to end the New York slave trade and that deplored the plight of blacks exported “like cattle and other articles of commerce to the West Indies and the southern states.” The petition demanded the termination of a practice “so repugnant to humanity and so inconsistent with the liberality and justice which should distinguish a free and enlightened people.”

It is well-established, then, both that Hamilton was a dependable abolitionist, and that a majority of Americans, both before and after the Revolution, were abolitionists and had been for decades part of a significant abolitionist movement. All of this was the case prior to the beginning of the Constitutional Convention.

The question reappears: how did the “three-fifths clause” come about, and whom did it benefit? Describing the Constitutional Convention, James Madison wrote:

The States were divided into different interests not by their difference of size, but by other circumstances; the most material of which resulted partly from climate, but principally from their having or not having slaves. These two causes concurred in forming the great division of interests in the States. It did not lie between the large and small States: it lay between the northern and southern, and if any defensive power were necessary, it ought to be mutually given to these two interests.

The minority was so rigid in its defense of slavery that it was willing to destroy the new nation rather than risk the possibility of abolition. Perhaps they reasoned that, either as thirteen estranged states, or as again British colonies, they could retain slavery, even if it be at the cost of sacrificing all that had been gained in the Revolution. Ron Chernow explains:

As Madison conceded, the specter of slavery haunted the convention.

Chernow continues:

For many southerners, the slavery issue allowed no room for concessions, and they supported the Virginia Plan in exchange for protecting their peculiar institution. Charles Cotesworth Pinckney of South Carolina stated baldly, “South Carolina and Georgia cannot do without slaves.” The issue was so explosive that the word slavery did not appear in the Constitution, replaced by the euphemism of people “held to service or labor.”

On other issues, the citizens of the new nation disagreed, and yet could find compromises: taxation, legislation, foreign policy, etc. But the question of slavery proved intractable. Neither the abolitionists nor the slaveholders would compromise — until the Constitutional Convention. The debate as to whether or in which ratio slaves would be calculated into congressional representation that, according to some sources, it lasted four-and-a-half days.

At this point in time the “three-fifths clause” began to emerge — but how? The issue at hand was congressional representation. The number of representatives in the lower chamber — i.e., the House of Representatives — would be determined by the population of a state: but how to count that population? The slaveholders wanted the slaves to be counted, because in this way, the slaveholding states would have greater representation in Congress, and could thereby block the abolition of slavery. The desire of the slave-owning states to have slaves counted among the population, for the purposes of congressional representation, in no way acknowledged the humanity of the slaves: on the contrary, it was designed to ensure the perpetuation of the institution of slavery.

The abolitionist states, on the other hand, desired that the slaves not be counted among the population for the purposes of congressional representation, because the slaves would, as long as they remained slaves, never vote, and never enjoy the freedom of voicing their political opinions. The abolitionists, then, wanted to deny the enumeration of slaves, not in order to deny their humanity, but rather to ensure that the slaveholding states didn’t obtain an artificially large representation in Congress; lacking the numerical advantage, the slaveholding states would not be able to encourage the continuation of the institution of slavery into the future.

The abolitionist majority found itself outmaneuvered by the slaveholding minority. Yet, because they abolitionists refused to allow the slaveholders to obtain a perversely large congressional representation, they planted the seeds for the ultimate abolition of slavery: The “three-fifths compromise” created a sort of instability within the constitutional system, which ensured that the question of slavery and of its abolition would remain present in the minds of the body politic.

Unable to achieve the abolition of slavery at the Constitutional Convention in Philadelphia in 1787, the abolitionists assured the eventual abolition of slavery by building the paradox into the Constitution. The question of abolitionism was hardwired into the Constitution: as a question, not a statement — a question, because of the “three-fifths clause” which was neither a “one” nor a “zero” but an unsettling in-between sum which created a disequilibrium in the in the infant republic.

Alexander Hamilton was both a passionate abolitionist and a passionate advocate for a strong union among the thirteen states. He was confounded and perplexed.

Not only abolitionism, but also immigration, moved Hamilton, as Ron Chernow writes:

On August 6, the Philadelphia convention reconvened to begin the arduous task of refining the Constitution. Hamilton, back by August 13, dove into a debate that passionately engaged him: immigration. He opposed any attempt to restrict membership in Congress to native-born Americans or to stipulate a residency period before immigrants could qualify for it.

It was a few days later that the convention produced the “three-fifths compromise.” Hamilton was away from Philadelphia and away from the convention for several days at that time.

Hamilton’s upset over this tolerance of slavery may have been deeper than we know. There has always been some mystery as to his whereabouts after his August 13 statement on immigration. In fact, he had returned to New York for a meeting of the Manumission Society. Hamilton may have apprised members of the impending decision on slavery in Philadelphia, because they delivered a petition to the convention to “promote the attainment of the objects of this society.” After the slavery compromise in Philadelphia, Hamilton stepped up his involvement in the Manumission Society. The following year, even while pouring out fifty-one Federalist essays, serving in Congress, and campaigning to ratify the Constitution, he attended a meeting of the society that again protested the export of slaves from New York State and the “outrages committed in digging up and taking away the dead bodies of Negroes buried in the city.” Later in the year, Hamilton was appointed one of four counselors of the Manumission Society.

Yet Hamilton would ultimately embrace and defend the “three-fifths clause,” because it created an instability which ensured that the question of abolitionism would ultimately be addressed.

From the abolitionist point of view, the three-fifths clause politically destabilized the institution of slavery, ensuring that it would not enjoy a comfortable place in the republic, but rather always come to attention to be questioned and re-examined.

Slaveholding states wondered how their human property would be counted for congressional-apportionment purposes. Northern states finally agreed that five slaves would be counted as equivalent to three free whites, the infamous “federal ratio” that survived for another eighty years. The formula richly rewarded the southern states, artificially inflating their House seats and electoral votes and helping to explain why four of the first five presidents hailed from Virginia. This gross inequity was to play no small part in the eventual triumph of Jeffersonian Republicans over Hamiltonian Federalists. In exchange, southern states agreed that the importation of slaves might cease after 1808, feeding an illusory hope that slavery might someday just fade away. Without the federal ratio, Hamilton glumly concluded, “no union could possibly have been formed.” Indeed, the whole superstructure erected in Philadelphia rested on that unstable, undemocratic foundation.

The very irrationality of the “three-fifths clause” ensured that the topic of slavery would not go away. The clause presented a deliberately absurd concept. Its absurdity demanded correction.

The slaveholders could not defend it: if the slaves were three-fifths of a human being, why didn’t they get three-fifths of a vote? or have three-fifths of the rights of a citizen?

The Constitution’s built-in disequilibrium soon had the desired effect of making abolitionism an unavoidable topic. By 1790, “Slavery was gradually fading away in many parts of the” country, and in that year, several Quaker lobbying groups asked Congress to introduce and consider bills which would end the slave trade and even end slavery itself.

In 1787, there had seemed to be every chance that the institution of slavery would die a quiet, natural death. Some of the abolitionists hoped that it would simply fade away. Eli Whitney ensured that it wouldn’t. His mechanical cotton gin changed the economics of cotton and of the South. His invention transformed the combination of slave labor and cotton-based agriculture from marginally profitable to massively so. The cotton gin, invented in 1793 and patented in 1794, reframed the economics of slavery, and thereby reframed the debate about abolitionism.

When slavery suddenly became much more profitable, slaveholders suddenly became much more stubborn in their defense of slavery.

At the same time, slaveholders simultaneously increased in their political influence, because of their increasing wealth, and yet were clearly a numerical minority. With the cotton gin, the owners of large plantations and large numbers of slaves became a clearly-defined economic elite. The majority of the citizens of each state were, however, not slaveholders, and economically disadvantaged in competition with the few but powerful slave-owners.

This was a setback for the abolitionists, who had seemed on the verge of legislative breakthrough.

Historians properly do not engage in speculation about counterfactual scenarios. It is a known pattern that legislative initiatives, if they fail to succeed on the first try, are often reintroduced in Congress every few years. In this pattern, bills often gain additional support each time they are reintroduced, and many bills eventually pass in this way.

Had not Eli Whitney’s cotton gin appeared suddenly and spread rapidly, it is reasonable to wonder whether the Quakers might have reintroduced their bill from 1790 into congress repeatedly at intervals a few years later, gradually gaining support, and eventually passing. Did the cotton gin end the chance of peaceful legislative abolition of slavery?

In any case, the next steps in the narrative are well-known: Andrew Jackson founded the modern Democratic Party in 1828 to protect the institution of slavery, the Republican Party was founded in 1854 as an abolitionist party, and the Civil War resulted.

“The so-called three-fifths clause was an attempt to” undermine the institution of slavery, as historian Ben Shapiro writes. It nearly succeeded in 1790. The Quaker-sponsored bill is evidence. By steps, it did succeed: in 1854 and 1863.

The whole question of popular apportionment rested on whether to count slaves as full people for purposes of representation. To do so would have put the slaveholding south at a significant advantage: they would have counted slaves in their population, not allowed them to vote, then used their increased representation in order to re-enshrine slavery. As James Madison noted, the delegates from South Carolina fought for blacks to be counted as whole people so as to include them “in the rule of representation, equally with the Whites.” The three-fifths compromise was designed to curb the South’s expansionist tendencies with regard to slavery by preventing them from stacking the electoral deck. The Constitution also allowed slave importation to continue until 1808 — but Congress moved in 1807 to end it there.

While the slaveholders had long used violence to assert their claims, the abolitionists had been hesitant to do so. John Brown’s famous raid in 1859 changed that. The long-simmering passions of the abolitionists were about to appear, triggered by the secession of several states.

Then, of course, the United States fought a great and massive Civil War to free the slaves, in which over 620,000 Americans died, nearly half the total number of Americans to die in all wars combined. The economy of the United States was not built on slavery — in fact, the South’s economic power was dismal compared to that of the north, which is why the north was able to overcome the south during the Civil War.

The abolitionist states — those which had a Republican Party majority — were superior in economic power, in technology, and in devotion to the cause of abolitionism. The slaveholding states, where the Democrat Party had the majority, were economically and technologically inferior, and with only lukewarm devotion to the task of defending slavery. While the slave-owners were committed to preserving slavery because it brought them financial gain, they were numerically a small minority even in the slaveholding states. By contrast, the vast majority of the residents of the slaveholding states did not own slaves and did not directly benefit financially from the institution of slavery: indeed, there is a plausible argument that slavery was an economic harm to the non-slaveholding residents of the Confederate States. To be sure, there is also a hypothesis that while they did not benefit directly, they might have gotten some small indirect economic benefit from the institution of slavery. Yet whatever little gain they might thus have gotten, it was more than outweighed by the harm done to them.

In any case, the “three-fifths clause” was not a supportive foundation for slavery, but rather an intentionally wobbly base, on which it precariously sat, and from which it inevitably fell — according to the plan of the founders.

Was the American Revolution Really a Revolution, or Was It Merely an Independence Movement?

Generations of students have learned about the Revolutionary War and the American Revolution. Yet often the word ‘Revolution’ remains unexamined. What is a revolution, and which events in history are appropriately so called?

History books contain the Russian Revolution, the French Revolution, the Industrial Revolution, and several others.

Until the reader has a relatively clear definition for this word, it is a muddy affair to determine when and where to apply it. This is seen, e.g., in discussions of whether or not the events from the early to the late 18th century constitute the American Revolution, or whether those events were merely an independence movement.

On the one hand, the argument goes, the American Revolution did not effect a significant change in culture or society. In government, it made changes in the legislative, judicial, and executive branches, which could be described as tweaks or adjustment, but not a revolution. This line of argumentation concludes that movement, which culminated in the beginning of the war in 1775, the signing of the Declaration of Independence in 1777, the signing in 1783 of a treaty to end the war, and the composition, ratification, and implementation of the Constitution, was not a revolution.

To be sure, there is some truth in the above-outlined reasoning. But there is a different way to conceptualize the situation.

A counterargument happily cedes the point that society and culture didn’t change significantly during the American Revolution. For more than a century, the residents of the thirteen colonies had already been creating their own culture and society, different from that of England.

The counterargument recognizes that the American Revolution was primarily a political and economic change. In that way, it can be arguably labeled as a true revolution.

Prior to 1776, governments around the world drew their legitimacy — or their alleged legitimacy — from the principle of hereditary dynasticism. The king of England had the right to rule because he’d inherited it from his parents. The same was true of the king of France, the king of Spain, etc.

Prior to the American Revolution, the right to rule was the property of one family: the royal family. This principle was the foundation for the governments of most of the world’s states.

In 1776, for the first time in modern history — and for only one of a very few times in world history — a government was founded on the principles of liberty. The U.S. government was founded on ideas. Those ideas included things like majority rule, popular sovereignty (the idea that a government’s legitimacy arises from the consent of the people it governs), and freedoms of speech and religion. Among those ideas was the idea of limited government: that the citizens are justified in limiting a government’s power in order to protect their own freedom.

This counterargument, then, sees the American Revolution as truly revolutionary, because it instituted a form of government which was absolutely novel.

It will be left to the reader as an exercise to weigh the evidence for and against the above-outlined argument and counterargument.

Selling the Constitution: Alexander Hamilton Markets the New Government

Having achieved independence with the end of combat in 1781 and with the signing of the Treaty of Paris in 1783, the United States established itself as sovereign, and organized itself under a document known as the Articles of Confederation. This document had been ratified by all thirteen states between December 1777 and March 1781.

This form of government quickly showed itself to be impractical and ineffective. Among other shortcomings, the Articles of Confederation left the national government too weak to enforce the Treaty of Paris, too weak to prevent the British government from dumping onto American shores boatloads of criminals, and too weak to prevent individual states from forming their own separate foreign policies, outside of the united policies, with regard to other nations. It was too weak to solve the economic crisis caused by the large amount of debt from the war; the ripple effects of the debt through the economy triggered Shays’ Rebellion, a movement which represented farmers who were losing land and property to debt collectors.

In early 1787, Congress called for a convention to revise the Articles of Confederation. That convention began in May and ended in September of that year.

The new text produced by the convention did a bit more than “revise” the Articles of Confederation, as historian Ron Chernow writes:

For all its gore and mayhem, the American Revolution had unified the thirteen states, binding them into a hopeful, if still restive, nation. The aftermath of the Constitutional Convention, by contrast, turned ugly and divisive, polarizing the populace. Four days after Hamilton affixed his signature to the Constitution, The Daily Advertiser gave New Yorkers their first glimpse of it, and many blanched in amazement. This charter went far beyond Congress’s instructions to rework the Articles of Confederation: it brought forth a brand-new government. The old confederation had simply gone up in smoke. Marinus Willett, once a stalwart of the Sons of Liberty and now New York’s sheriff, echoed the consternation among Governor Clinton’s entourage when he lambasted the new Constitution as “a monster with open mouth and monstrous teeth ready to devour all before it.”

The Americans, having only recently gained their freedom by fighting against a powerful central government, were sensitive to any plan of government which seemed to establish another powerful central government. Why had they rebelled against the King and Parliament of Britain, if they were simply proceeding to re-enslave themselves to the same type of tyranny?

Was this new Constitution, produced by the convention in Philadelphia, establishing an undemocratic absolutism over the Americans? Or was it really, as the delegates to that convention claimed, given power for the purpose of protecting American freedom?

Those who supported the new text were called Federalists, and those who opposed the ratification of it were called the Anti-Federalists.

There was a large segment of the American public which opposed the new Constitution. In order to persuade them to accept, and then support, this Constitution, carefully-worded justifications and explanations would be needed to gain the public’s approval. An important piece of this marketing effort, perhaps the decisive piece, was a writing project known as the The Federalist Papers.

This project consisted of a series of essays published over a period of months in various newspapers. There were a total of 85 essays, written by three authors: Alexander Hamilton, James Madison, and John Jay. Hamilton wrote 51 of the essays, and organized the project. The first essay was released in October 1787, and the last one in August 1788. They were released together in book form in 1788.

Because Hamilton wrote a majority of the essays which together did a majority of the persuading, it is plausible to argue that he was the key factor in persuading the American public to cause their legislators to ratify the Constitution. If James Madison is often called the “Father of the Constitution” because he was influential in drafting the text, then perhaps Alexander Hamilton should be called the “Midwife of the Constitution” because he ushered it into the world.

The Federalist Papers seem to have effected a significant change in public opinion. Between December 1787 and May 1790, all thirteen states ratified the text.

In July 1788, New York became the eleventh state to ratify, and it was clear that it was only a matter of time until the Constitution would indeed be the operating system for a new government. The public, once largely skeptical, had in the meantime become enthusiastic about the Constitution, and about the man who sold it to the public, Alexander Hamilton.

Ron Chernow describes the celebration in New York City. People lauded Hamilton and cheered on the ratification of the Constitution:

The parade apotheosized the hero of the hour, the man who had snatched victory from the antifederalist majority. So exuberant was the lionization of Alexander Hamilton that admirers wanted to rechristen the city “Hamiltoniana.” It was one of the few times in his life that Hamilton basked in the warmth of public adulation. Sail makers waved a flag depicting a laurel-wreathed Hamilton bearing the Constitution while an allegorical figure representing Fame blew a trumpet in the air. This paled before the grandest tribute of all to Hamilton. Gliding down Broadway, pulled by ten horses, was a miniature frigate, twenty-seven feet long, baptized the “Federal Ship Hamilton.” The model ship rose above all other floats “with flowing sheets and full sails[,]... the canvas waves dashing against her sides” and concealing the carriage wheels moving the ship, noted one observer. The cart men fluttered banners that proclaimed, “Behold the federal ship of fame / The Hamilton we call her name; / To every craft she gives employ; / Sure cartmen have their share of joy.” When the Hamilton arrived near the Battery, it was received by congressmen standing outside Bayard’s Tavern. To represent the transition from the Articles of Confederation to the Constitution, the ship changed pilots amid a deafening cannonade. The parade marked the zenith of the federalist alliance with city artisans. Hamilton had never courted the masses, and never again was he to enjoy their favor to this extent. Riding high on the crest of the new Constitution, Hamilton and the federalists held undisputed sway in the city.

More than two centuries later, the questions posed by the Federalists and the Anti-Federalists remain. Is the Constitution a system which will maximize and protect individual freedom, political liberty, and economic liberty? Or is it an oppressive system which tyrannizes people by taxing them and regulating them? Of course, the Constitution as a system is only one part of the answer to those questions. The other part is the character of the people who serve in the various elected and appointed offices created by the Constitution, and the degree to which they act in accord with the text.

Segregation and “Jim Crow” Laws — The Results of Government

In the history of the United States, the bitter realities of segregation were both a harsh burden upon the victims and a result of government regulation left unchecked. Segregation was the result of legislation.

One example illustrates this principle. In the State of Kentucky, public schools were often, although not always, segregated in the late 1800s. Private schools had the opportunity to be integrated — including both secular institutions and parochial religious schools.

One private school in particular — Berea College — took advantage of that opportunity and functioned in a fully desegregated manner. In November 1903, a member of the Kentucky legislature, Carl Day, happened to be on the campus of Berea College. He witnessed firsthand how Black and White students socialized as equals.

Carl Day returned to the state legislature, conferred with his fellow members of the Democratic Party, and introduced a bill which would require all schools — public and private — to be segregated. The president of the Democratic Club, J.M. Early, gave speeches in favor of this proposed legislation.

Administrators, professors, and students from Berea College spoke in opposition to the bill, but to no avail.

In January 1904, Carl Day’s bill was passed by the legislature, and in March 1904, it was signed into law by Governor John Crepps Wickliffe Beckham. Governor Beckham was known as “J.C.W. Beckham” in many reports.

Left to their own devices, the people of Kentucky were content to have integrated institutions of higher learning. But the government imposed segregation. As historian Benjamin Shapiro writes:

Segregation was governmentally imposed, not socially imposed. The whole reason that government was necessary was so that those who would not abide by social racism were forced to do so. As black economist Walter Williams states, “whenever there is a law on the books, one’s immediate suspicion should be that the law is there because not everyone would behave according to the law’s specifications.”

Walter Williams goes on to identify parallels between “Jim Crow Laws” in the United States and “Apartheid” in South Africa. In both cases, society had no desire for complete and legally enforced segregation. In both cases, individuals in the private sector were willing to violate the government’s demands for segregation.

Racism requires the existence of government regulations in order to do its damage. Without such regulations, ordinary women and men are happy to do business with anyone of any race, if that person can strike a good deal. Walter Williams writes:

The bottom line is that racists cannot trust free markets to racially discriminate. Free markets, with their dispersion of power, have little respect for race. Racial solidarity could not prevent white South African businessmen from contravening laws that banned them from hiring blacks in jobs "reserved" for whites. In the U.S., Jim Crow laws were frequently ignored. In South Africa, the U.S. and elsewhere, the private desire for profits and other personal gain challenged racial loyalty. Racists need the force of government to have success.

After the “Reconstruction” Era began to wind down, around 1877, the Democratic Party in many of the states in the South were still bitterly angry that slavery had been abolished and that the Democratic Party had lost the war. Walter Williams explains that these states “enforced some form of segregation through what were known as Jim Crow laws.”

While American society was content to embrace integration and desegregation, historian Benjamin Shapiro explains that “segregation was imposed governmentally.”

The suffering imposed on African-American in South after the Civil War, up until the relief provided by the Civil Rights Act of 1957 and the Civil Rights Act of 1960, was imposed not by American society, but rather by governments which had gained too much power over the daily lives of ordinary people.