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.

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.

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.

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.

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.

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.

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.