Wednesday, August 13, 2008

William Appleman Williams's "Contours of American History" II

William Appleman Williams, The Contours of American History. Chicago: Quadrangle Paperbacks, 1961. 513 pages. Available new and used from starting at $2.16.

"While periodically overshadowed by more conservative groups, some combination of Progressives has guided American policy during most of the century irrespective of whether Republicans or Democrats have been in control of the national government."

---p. 390.

This is a great book. It reveals as much about the psychology of the left as it does about American history, and its narrative enlivens us to much about American history. The author is unabashedly ideological. He develops a brilliant argument using significant historical evidence. The book reminds me of something my philosophy professor, Elfie Stock Raymond, said when I was a senior at Sarah Lawrence College: Freud was like a bull in a china shop. He spoke the unspoken that everyone had known but had the good taste to avoid saying. Likewise, Williams makes explicit the elitist, mercantilist and ultimately authoritarian nature of the left's ideology. He does so by developing a history of the idea of mercantilism that begins with Shaftesbury and 17th century England and ends with what he calls the syndicalism of mid twentieth century political structure. The key theme of the book is that mercantilism is a preferable social arrangement to laissez-faire and that syndicalism is a sub-optimal manifestation of mercantilism that evolved from the reassertion of elitist corporate power at the end of the laissez-faire period in the 1890s. He writes about (p. 480)

"the functional and syndicalist fragmentation of American society (and hence its individual citizens) along technological and economic lines. The personal and public lives of Americans are defined by, and generally limited to, their specific functional role. To an amazing extent, they share very little on a daily basis beyond a common duty as consumers and a commitment to anti-communism. The persistent cliche of being 'caught in the rat race' dramatizes that alienation, as does the attempt to 'play it cool' in order to maintain some semblance of identity and integration."

He also argues (p. 480) that the "persistence of a frontier-expansionist outlook--a conception of the world and past American history--which holds that expansion or ('growth' as Walter Lippmann put it in 1960) offers the best way to resolve problems and to create or take advantage of opportunities as well as 'private property' and 'humanity'" have been consistent American themes.

Williams believes that America faces a problem because of fragmentation,factions or special interest groups, which has been discussed going back to Shaftesbury through Madison, Lincoln, the early twentieth century's National Civic Foundation and Bernard Baruch and on into late twentieth century economists like Mancur Olson.

Americans attempted to solve the problem of fragmentation in two conflicting ways. First, (p. 481) through de-emphasizing private property in favor of social property (i.e. mercantilism) and through the co-operative building of a community; second, through accepting private property and conceptualizing the idea of a commonwealth based, for example on Calvin's conception of "a corporate Christian commonwealth", "the practice of feudal noblesse oblige" and expansion.

He then states of Shaftesbury's mercantilist outlook (p. 482):

"That outlook on the world was and remained the essence of all class consciousness among upper-class groups in England and the United States from the age of Elizabeth I...Shaftesbury...tried to organize political affairs on the basis of parties which included men of all functional interests (or factions) who accepted a broad conception of the general welfare and the means to achieve it. By thus coming together as men who shared an ideal of community--a Utopia--they would be able to override the tendency of functional activity to fragment and divide them...Jonathan Edwards integrated its various themes perhaps more successfully and infused them with a more noble vision of Christian community than any English or American philosopher either before or after his time..."

Williams views the frontier or expansionist impulse as leading to irresponsibility (p. 483) : "the urge to escape the responsibility of that ideal of a corporate Christian commonwealth was powerful, persistent, and without regard for the direct and indirect costs of such flight...Americans proceeded in the space of two generations to substitute the Manifest Destiny of empire for the Christian Commonwealth of Jonathan Edwards."

But I would argue that, rather than individualism reflecting a flight from responsibility, it is mercantilism and collectivism that is a reaction to the anxiety and insecurity that self-reliance creates in the weak of heart. Jefferson made this point in one his letters, when he argued that in every generation there are the weak and timid or conservatives (i.e., those who follow Williams's corporatist view) and those who are robust or liberal, i.e., individualists. Those who are meek and fearful of challenge resort to the conservative-socialist-mercantilist view. Those who value humanity and respect the human spirit are individualists.

James Madison, argues Williams, offered expansion as the antidote for faction. "By making escape so easy (the continent) produced an unrestrained and anti-intellectual individualist democracy that almost destroyed any semblance of community and commonwealth" (p. 483).

But alas, it was in the laissez-faire period of the late nineteenth century that millions fled here from the corporatist butchers of Europe, and their descendants, advocates of European community like Adolf Hitler and Josef Stalin. God bless the individualism of America, and God save us from the academic cranks who cry for community while the blood of their murdered millions spews from their collectivist throats like vomit.

Williams starts by arguing that neither Martin Luther nor Calvin held that economic success reflected godliness (p. 37). This contradicts the sociological arguments of Weber and Reinhard Bendix that claim that American capitalism issued from Protestantism. There was a debate within Cromwell's army. Some argued that property rights should be limited by political and social welfare rights while others emphasized property rights to a greater degree. "The liberal tradition stems from the triumph of laissez-faire individualism over corporate Christianity. Marx and other socialists reasserted the validity of the original idea in response to the liberal heresy. That is indeed one of the basic explanations of socialism's persistent relevance and appeal in the 20th century." Economic uncertainty in the early 1500s led England's leaders to adopt a centrally planned, mercantilist approach. "Englishmen were henceforward to argue about who should control the central government but not to dispute the validity of the national state or its active role in society.

According to Williams, the four chief mercantilist ideas were (pp. 40-1):

1. The state was the institution for achieving wealth and welfare
2. Good planning and policies led to economic success
3. The state had an obligation to serve society by accepting and discharging the responsibility for the general welfare (by delegating economic responsibility to private concerns, much as Republicans frequently advocate privatization)
4. A win/lose psychology: the chief way to become wealthy was to take wealth from someone else, or to quote Marcus P. Cato "it behooves the husbandman to be a seller and not a buyer".

Thus, (p. 41) "beginning with Elizabeth and continuing for a century and a half, the mercantilists sought to accomplish five tasks: erect the framework of a political and economic system; modify, centralize and consolidate the older but still useful units of society; encourage and direct the development of a new political economy; balance that evolution; and expand the resulting system abroad...Thus, the Parliament of 1563 passed legislation encouraging food production, a relief measure for the poor, an act designed to improve the navy as a means of securing more wealth, tariff regulation, and an elaborate Statute of Artificers calculated to put the nation to work in a rational and balanced manner, and called for a concerted effort to diversify and expand overseas trade..."

and (p. 41) "Mercantilism's emphasis on corporate responsibility is dramatized by the Statute of Artificers (1563) and various Poor Laws enacted throughout the age. The legislation concerning artificers was an effort to create and sustain some balance...Wage rates (and their relationship to prices), migration within the country, terms and conditions of employment and the principle of a seven-year apprenticeship were all written into an integrated system enforced by the strengthened national government. Poor laws complemented this involved legislation by prohibiting begging, placing pauper children in apprenticeship, establishing a system of collecting and distributing alms among the aged and infirm, and putting the poor to work in special enterprises...these laws were predicated upon the idea that poverty, instead of being a personal sin, was a function of the economic system, and that the general welfare was the responsibility of government."

Pre-Revolutionary War Puritan religious leaders emphasized social responsibility. "All agreed that a specific calling was subordinate to the general welfare; even men who had several callings were to choose among them 'not for it selfe, but for the good of whole bodie.'"

Central to mercanitilism was colonization (p. 46). "Colonization was a fundamental part of the view that wealth had to be taken away from others and integrated into a self-sufficient empire....Thomas Mun...worked out a magnificent synthesis of the mercantilist Weltanschauung. 'The main to possess goods; if you have them you will get money. He that hath ware hat money by the year....the ordinary means therfore to increase our wealth and treasure is by foreign trade, wherein we must ever observe the rule to sell more to strangers yearly than we consume of their value...Behold then, the true form and worth of foreign trade, which is the great revenue of the King...the school of our arts, the supply of our wants, the employment of our poor, the improvement of our lands...the terror of our enemies.'"

Williams argues that secularization led to the replacement of the "Christian Commonwealth" aspect of mercantilism by individualism and emphasis on property rights.

Anthony Ashley Cooper, the first Earl of Shaftesbury led a fight against individualism and in favor of mercantilism. Samuel Fortrey warned "'Private advantages are often impediments of public profit'" (p. 53) and Shaftesbury added, "Where the merchant trades for a great deal of Profit, the nation loses.' Openly attacked in 1662 by a group of London merchants who complained that the new navigation system was destructive of his Majesty's trading subjects...He and other mercantilists saw the challenge to their program inherent in the power of the largest joint stock companies and trading corporations."

Williams notes that republicanism was grounded in feudalism (Williams is favorable to the reciprocal rights and responsibilities as part of feudalism; he ignores the routine abuses of power, Crusades, murder, etc. that characterized feudalism): "American leaders were not only conscious of this heritage of their own constitution but they understood that the theory that small states were both necessary and more desirable conflicted with the explicit emphasis on expansion in mercantilism."

Mercantilism, though, did not work (p. 69): "This decay of the standards and performance of mercantilism served to strengthen and invigorate the continuing battle for laissez-faire." But Williams argues that domestic laissez-faire in England was accompanied by intensification of imperialism with respect to the colonies (p. 69): "This shift from the mercantilist conception of empire toward an imperialistic outlook became increasingly apparent after 1715. English investments were protected by strict controls over colonial currency established in 1751 and through a law of 1731 which made colonial property legally forfeit for debts. Articles such as copper, furs and special forest products were added to the list of goods reserved for England..."

The debate between laissez-faire and mercantilism came to a head in two books: Adam Smith's Wealth of Nations (1776) for laissez-faire and Sir John Steuart's Principles of Political Oeconomy for mercantilism (1767). "The books were the final statements in an argument that lasted nearly twenty years."

(p. 70) "At the crucial juncture of the Restoration, Shaftesbury realized that mercantilism could develop in one of two ways. It could sustain the image and the ideal of society and the general welfare, or it could slide back into a narrower and ultimately extreme emphasis on group and personal interest. Shaftesbury held fast to the broader ideal. His protege, Locke, turned toward a hedonistic individualism."

(p. 71) "As with Shaftesbury and Locke, Steuart and Smith shared one crucial assumption: whatever the local or domestic means of achieving welfare, it could not be accomplished without an empire. The key difference lay in the view shared by Shaftesbury and Steuart that conscious, positive policies were necessary to sustain the reality of corporate mutual responsibility within society and to improve the general welfare. The four protagonists also agreed, however, that self-interest was the main engine of human action" but Steuart "was convinced...that the exchange economy of the capitalist system suffered from an inherent tendency to get out of balance. As it did so, it produced unemployment, political unrest and the probability of social revolution...Steuart's acceptance of the responsibility to provide food, other necessities and employment, not only for those who actually exist, but also for those who are to be brought into existence" dramatized his reassertion--contrary to Locke and Smith--of the moral imperative that had been so strong in early mercantilism and that Shaftesbury had labored so hard to reinvigorate and sustain...Entertaining no thought of total regulation and quite willing to give individuals a broad area for independent action, Steuart nevertheless insisted that welfare was the product of policy, not of Providence nor of the automatic workings of Newton's Great Clock..."

p. 73 "James Madison, the commanding mind of the American gentry and the sage of the Founding Fathers, ultimately adopted and then adapted the mercantilism of Steuart as the morality and the policy by which to transform the feeble colonial confederation into a mighty republican empire."

Williams does a good job of describing the authoritarianism inherent in mercantilism and the corporatist society (pp. 95-6):

"Devoted to the ideal of a corporate community guided by a strong moral sense (the Puritans) developed a great talent for misinterpreting any opposition. From the outset, for example, they were prone to view the Indians as agents of the Devil waiting to test their convictions...This propensity to place Evil outside their system not only distorted the Puritans' own doctrine, it inclined them toward a solution which involved the extension of their system over others. Here was a subtle convergence of religious and secular ideas, for mercantilism also emphasized the necessity as well as the desirability of expansion in economic and political affairs. It externalized secular evil by arguing that domestic poverty could in the last analysis be overcome only by taking wealth away from others...Embarking upon a campaign of righteous persuasion which often became outright intimidation, and upon a bloody trail of persecution, the church fathers punished the courageous, exiled the bold and terrified the timid...this horrible travesty on the ideal of a corporate community culminated some 20 years later in the witchcraft trials".

Nevertheless (p. 98) both Massachusetts and Virginia "each had an outlook rooted in a religious conception of the good society as a balanced corporate system originally shared by their Puritan and Anglican ancestors in England."

(p. 99) "But this early devotion to the corporate ideal was weakened as Massachusetts and the other colonies in New England extended their boundaries and their prosperity. Religion was not abandoned but the wealthy 'river gods' of the Connecticut Valley and the merchants of Salem, Boston and Providence gradually redefined the meaning of the crucial term, the elect. From signifying membership in Calvin's corporate religious community it came to mean the upper class of that society...Jonathan Edwards assaulted their outlook." Williams describes the Great Awakening: "In defining religious commitment as an affair of the heart, in considering that only God is worthy of worship, in placing high value on the intellect and on education, in valuing and respecting self-government, and in asserting that there were positive, pragmatic consequences of being sober, honest, responsible and willing to work--in all these respects Edwards was a man who left his life as a monument to the positive side of Puritanism."

The American revolutionaries were mostly mercantilists, not advocates of Adam Smith and laissez-faire. Samuel Adams (p. 111-12): "launched a determined campaign to establish a corporate Christian and mercantilist American empire. Like his allies in Virginia, Adams was thus a revolutionary without being radical. Some of Adams's counterparts in other colonies stressed an extension of popular government more heavily than he did, for example, but none challenged the assumptions of the existing order....The Boston Society for Encouraging Industry and Employing the Poor (a mercantilist title if ever there was one) established a spinning school in 1769. The New York Society for the promotion of the Arts, Agriculture and Oeconomy began to grant premiums for domestic production and apprenticeship schools in 1765...." The first Continental Congress set up price regulations and the Massachusetts legislature called for American manufactures (p. 115).

Williams argues that Americans picked up mercantilism just as the British were shifting to laissez-faire. "American leaders were very conscious of the crucial role played by imperial expansion in the mercantilist conception of the state". Thus, American expansion and emphasis on the American frontier is an offshoot of mercantilism."

p. 124 " And paper-money inflation, which won the support of some groups, had been the avowed program of one group of English mercantilists since at least the 1690s. By the end of the war, the states were passing navigation acts and protective tariffs and granting bounties and subsidies to special sectors of the economy."

p. 124 "(Robert) Morris rather than Alexander Hamilton was the central figure in the creation of this first quasi-public bank. Morris wanted the bank to 'exist for ages' since in his view the 'salvation of our country' in attaching many powerful individuals to the cause of our country by the strong principle of self-love and the immediate sense of private interest."

p. 126 John Jay was " an American mercantilist deeply concerned to remove the difficulties in the way of the nation's development."

In 1783 Virginia ceded its western frontier. p. 128 "The cession by Virginia of its lands was in many respects the apex of the small-state theory of republicanism in America. The finest practical statements of that political and economic outlook were the related 1783-84 proposals by Jefferson...As finally passed, the Ordinance of 1784 divided teh trans-Appalachian west into ten relatively large states...But while his market and social interests as a planter and his education as a physiocrat strongly inclined Jefferson toward small states and local self government dominated by a benevolent aristocracy, he either sensed or rapidly became aware of the dilemmas...Territorial expansion was one way to resolve such difficulties...he rapidly modified his practice along mercantilist lines..."

p. 131 "From the beginning, Jay and many other early American leaders saw the law and some supreme judicial institution as the secular cement that would replace a state religion in such a corporate society. On the other hand, Jay's deep Anglicanism undoubtedly lay behind that general view..."

p. 133 "The militancy and throughness of Monroe's mercantilism is difficult to exaggerate." Monroe saw "...the double dilemma of American mercantilism: how to reconcile the political commtiment to republicanism and representative government with the necessity of expansion and at the same time effect a compromise between the landed and commercial interests."

p. 138 "This recognition of the need to control the existing west whyile the east gained strength and cohesion--a combination tht would tehn generate further expansion--played an important role in the rapid growth of the movement for a more powerful central government.

p. 139 "John Adams also explained similar truths to Jeferson and, along with Madison, seems clearly to have given the future sage of Monticello an intensive course in mercantilism. For that matter, Adams was a vigorous instructor to the entire American seaboard"

p. 142 "Several other developments strengthened and accelerated this mercantilist drive toward a powerful central government empowered to co-ordinate the landed and commercial manufacturing interests in one system and at the same time expand it in all directions. One of these was the increasing activity in manufacturing and an associated agitation for government aid. John Adams had reported in 1780 that Europe was worried lest American 'become the greatest manufacturing country and thus ruin Europe. Though America had not even approached that strength by 1786, there was a great deal of interest and activity. And the corporation, as a modification of the old joint-stock company, had already appeared as a means of solving the problems of capital accumulation and organization."

p. 144 "As had been the case with Shaftesbury at the time of the Restoration in England, many American mercantilists in the circumstances of 1786 began to be seriously worried that the strife between factions would combine with the particularism of the states to destroy the government and lead to a voluntary or forced return to some kind of colonial status."

p. 145 "As he awaited the meeting which had finally been arranged for at Annapolis, Madison began to grapple with the central dilemma posed by the contradiction between the expansionism of mercantilism and (of economic interest) and the political theory which asserted that republicanism could work only in a small state. He concluded that the existing low ratio between population and land would prevent lower-class rebellion or aristocratic tyranny for some years."

p. 160 "Madison ultimately realized that a crisis would occur when and if the citizen ceased to have significant leverage on the political economy. This happened in fact as the corporation replaced the individual in the narrow economic sense and subsumed the state as the elemnt of social decision-making in the broader sense. While he did not foresee that particular form which the crisis was to take, Madison did recognize two other dangers. Conflict was inherent in a feudal system of organization. 'And what,' he asked rehtorically, 'has been the progress and event of the feudal Constitution? In all of them a continual struggle between the head and hte inferior members, until a final victory has been gained in some instances by one, in others, by the other of them.'...Madison resolved both difficulties by standing feudal theory on its head. He simply asserted that a large state would weaken the influence of faction..."

p. 164 "(Madison) called on April 8, 1789 for the construction of an independent, balanced political economy...He recommended a mercantilist system to protect commerce, to sustain and extend the 'rapid advances in manufacturing' through duties running p to 50 per cent to rpvoide a revenue for the government, and to secure the fisheries, because they were 'perhaps the best nurseries for seamen of any employment...He even wanted a duty on beer that 'would be such encouragement as to induce the manufacture to take deep root in every state in the Union."

p. 164 "Tench Coxe, a leading political economist of his day, was agitating for a program to foster and encourage but not to force manufactures as a way of binding the north and south together and guaranteeing a prosperous influence."

Williams makes the interesting argument that Hamilton opposed the development of manufacturing in favor of banking and developing a trade relationship with Great Britain. (p. 164-5): "Despite their awareness that Hamilton's methods of centralizing the debts immediately favored the mercantile and banking factions, Madison and other mercantilists, and even some of the narrow agrarians, were willing to contribute this extra subsidy to the north because they realized teh necessity and the broader benefits of the actions...Madison also opposed Hamilton's Bank of the United States because he was not convinced that it was necessary...But both men feared that such a bank, managed as it would be by private entrepreneurs, would exert a preponderant influence on the economy and thereby usurp part of the effective power of the people and the government...In the matter of manufactures, however, Hamilton has received far more repute than he deserves. He never revealed, either in the famous report on the subject or in his other actions, the kind of support for American manufacturing with which he is credited or which might be expected of an American mercantilist."

p. 168 Jefferson's "Report on Commercial Privileges and Restrictions" of December 16, 1793 reflected Jefferson's move toward mercantilism.

p. 187 In the early 19th century , government assistance to business had become widely accepted. "South Carolina, for example, passed a typical law in 1808 for 'the establishment and encouragement' of manufactures. Pennsylvania helped finance various enterprises, granted cash subsidies to others, and proclaimed 'the duty and interest of all governments to prevent fraud, and promote the interests of just and useful commerce.' A typical writer in Massachusetts thought it 'manifestly erroneous' that people 'are the judges of their interests, and consequently should be allowed to regulate them unobstructed.' Such laissez faire was 'subsersive to the end and aim of all governments.' As the governor pointed out in 1809, the state had accepted the responsibility of 'making and executing just and practicable laws of inspection on manufactured articles.' John Adams summarzied the situation accurately in his comment that democrats and aritocrats all unite on the basic axioms of mercantilism. National debate centered on four issues: internal improvements, banking and monetary policy, commercial discrimination and aid to manufactures...Both of these, internal improvements and national finance, became the principal concern of Albert Gallatin. A vigorous defender of civil and religious liberties and a strong advocate of an educational system, since his service in the Pennsylvania legislature during the 1790s...His plan was simple: use the receipts from land sales to promote economic development, and then sustain, control and balance it through assistance to manufactures and by a national finance system. Gallatin's masterpiece was his majestic report of April 8, 1808 on a national transportation and communications network designed to strengthen the sense and reality of community...He proposed four main avenues: coastwise from Maine to Georgia, across the mountains through New York, Pennsylvania and Virginia into Kentucky and Tennessee; across the four mathor isthmian blocks; and into the Great Lakes region. Two years later, in 1810, he reported on manufactures. Stressing their vital importance to balanced growth and independence, he recommended a program of cash subsidies and other government aid to accelerate their development. But, as he realized, the long range solution would be provided by an expanding home market stable enough to encourage large investment, and by the establishment of economic independence vis-a-vis England's superior industrial system"

p. 189 "Jefferson accepted teh principle of such internal improvements, emphasizing education as well as canals, but he raised the issue of constitutionality. So did Madison, who feared that such a plan would unbalance his feudal system of republics. Both men put their case directly: if the Congress undertook a ten-year plan of the magnitude and with the consequences inherent in Galltain's program...then a process of interpreting the constitution would have started that could end only in monarchy or some other form of tyranny."

p. 190 Jefferson "worried lest the bank in time become an institution that cut across all regional and political lines. Doing so, he reasoned, it would subvert the authority of the states and hence replace or override them as an institution in the political economy. It would do so moreover, outside the constitutional framework. This would not only recast the entire balance of power that the constitution established, but the bank would effect the change as an institution which was not in any way directly responsible to the people. He feared the end result would be a kind of 'vassalage' imposed on both the individual and the government.

"...It was an astute analysis of the relationship between economic power and its social and political consequences, and our modern industrial corporations, together with the Federal Reserve Board itself have verified it."

p. 196. By 1816 Jefferson essentially gave up his "physiocratic dream": We must now place the manufacturer by the side of the agriculturalist"

p. 197 "Monroe concurred, stating flatly that since manufactures required the systematic and fostering care of the government, it was 'of great importance' to offer such assistance."

"Calhoun understood and admitted that ' what is necessary for the common good may apparently be opposed to the interest of particular sections.' But he insisted on the equity and the necessity of compromise...Probably no other American leader except John Quincy Adams looked so squarely into the central dilemma of mercantilism. And like Adams, Calhoun realized that the common good would give way to private interests and ambitions were the tension not controlled by everyman's commitment to the larger goal."

(p. 200) The second central bank was passed into law under President James Madison in 1816 and "their policy of loose credit helped bring on the panic and depression of 1819...Land speculation was literally fantastic." During the panic of 1819 "cotton prices were almost halved. People either left for the frontier or demanded help. Relief laws were passed throughout the west, and the entire country turned on the new bank as it tightened its credit...The bank became THE MONSTER..."

The panic of 1819 led to adoption of laissez-faire

Many, such as Monroe and Henry Clay continued to favor mercantilism.
"In four years the Adams administration spent almost as umuch on internal ipmrovements as had been allocated in the previous twenty-four. By 1826 the government was the largest single economic entrepreneur in the country" (P. 211)

Advocates of laissez faire included John Taylor of Caroline, President Martin van Buren, Senator Thomas Hart Benton and President Andrew Jackson.

p. 235 "Van Buren's operations in New York and Washington reveal and clarify the regional and national coalition between rising businessmen, yeoman farmers, southern planters and northern mechanics that is generally labeled 'Jacksonian Democracy'. It was an unstable alliance between a rising boureoisie on the make and a quasi-feudal landed aristocracy directed against the esbslished harbiners of an industrial order...Van Buren integrated teh mechanics and the aristocrats in a political machine (The Albany Regency) that was as autocratic and entralized as any the mercantilists ever organized...Van Buren's tie with eastern mechanics became even more important as manufacturing and commerce continued to institutionalize themselves in the factory and wholesaling systems centered in urban society

p. 305. Some examples of Whig/Republican government intervention during the Civil War period: "Having passed the tariff of 1864, given the farmer the Homestead Act of 1862 (along with formal representation in the government and educational aid) and subsidized the railroads, the radicals occupied the south and jammed through the 13th, 14th and 15th Amendments...Financial leaders, on the other hand, were less enthusiastic about the radical policy of soft oney. Bankers did not like having the government in the money business, and had opposed the National Banking Act of 1862. Their gains from inflation were small. Along with a good many of the rising corporation industrialists, such financial spokesmen were likewise cool to any wholesale equality for the Nego; the other side of that attitude was a desire, particularly strong among New York merchants, to restore their prewar economic connections to the south...."

p. 307 "As should be apparent, the merchant-planter-store system involved the railraods and the monetary system in every transaction. Consequently one group of businessmen and farmers joined the financial interests in favoring a deflationary monetary policy: they concluded that inflation hurt them more than it helped. A similar coalition, led by radicals like Stevens and generally based on the expanding iron and steel industry, preferred to keep the wartime greenback paper money system and even to expand it. They argued vigorously that contraction would retard economic development ('Businessmen are hungry for money,') operate unfairly against everyone except bondholders, adn hurt domestic manufacturers by undercutting the tariff. Since the per-capita money supply had declined from $30.35 in 1865 to $17.51 in 1876, the argument had considerable relevance. But the vote in the Congress on contraction revealed that the west was almost evenly divided (36 yes to 35 no) and the combination of a good harvest and foreign-crop failures temporarily damped the farmer's insurgency."

Large scale railroads led to demands for regulation..."Georgia and California reacted to this serious problem in 1879 by establishing permanent commissions staffed by experts to keep a running check on the lines...By way of avlidating an Illinois regulatory law in the cqase of Munn v. Illinois (1877) Chief Justice Morrison R. Waite explicitly invoked mercantilist precedents. citing the English common law as enunciated by Lord Chief Justice Hale during the period of Shaftesbury' influence in the 1670s, and examples taken from the era of Madison and Monroe, Waite reassertedthe principle tht 'property does become clothed with a public interest when used in a manner to make of it public consequence, and affect the community at large.' He also reiterated a cardinal principle that had been vigorously defended by Madison and Marshall. 'For protection against abuses by legislatures, the people must resort to the polls, not to the courts.'"

p. 325 In the late 19th century "the bulk of economic activity was carried on by small-to-medium-sized apitalists whose businesses were undramatic and even unimportant when considered individually. But they were often the first to introduce and perfect key innovations (as the refinement of iron into steel) which were then taken over by the big operators who proceeded to put many of the real innovators out of business. Most of them died unknown and have remained so, yet they carried the burden of industrialization and commercial development. hey also applied the principles of the laissez-faire market place to sports, as with baseball and prizefighting. This processing of games into enterprises was in some respects the classic proof of the triumph of business in America...The undeniable achievement of the laissez-faire entrepreneur, from Carnegie to the Wyoming dry goods merchant, is that he sustained the momentum of economic development through a long-wave depression (and an era of steadily falling prices) that lasted from 1873 to 1898. Up to 1893 at any rate, per capita income, real wages and gross national product all continued to increase. That tremendou surge of industrial strength changed the face, the food and the ideas of America and provoked serious re-evaluations of diplomacy in European and Asian capitals. It also extracted a terri ble cost in death and physical injury in psychic and emotional wounds, and a process of moral leaching that carried away a great amount of American idealism..."

p. 328 "Justice Stephen Johnson Field's strategy was to define the market place as a national rather than a state problem and then insist that the due process clause of the 14th amendment gave the Supreme Court the power and the duty to review all restrictions on private property. That meant that the market place of the system would remain one unit instead of becoming a wild and uneconomic conglomeration of many different (state) market places. It also meant that regulation would be milder because of the weaker position of the reformers in Congress. His first victory came when the New York high court accepted his dissenting argument against Jutice Waite in the Munn case as its majority view. In a test (In re Jacobs, 1885) of the state's right to regulate the atrocious conditions of cigar manufacturing, New York judges explicitly raised the specterof a return to mercantilist doctrine on social property. Such ideas--'from those ages when governmentl prefects supervised the rate of wages, the price of food, and a large range of other affairs'--were declared archaic. WThey disturbed the 'normal adjustments' of the market place, and also violated the due process clause which protected 'personal liberty' and private property...During the next two years, moreover, even Waite agreed that the 'right of continuous transportation from one end of the country to the other is essential' and admitted that the corporaton was entitled to 'equal protection' as an individual under the due process clause. Field's triumph was announced by his ideological colleague, Justice Rufus W. Peckham, in 1889, with a direct reference to Waite's earlier citation of Eglish mercantilist law: 'no reason exists for...[going] back to the seventeenth or eighteenth century ideas of paternal government.' It was further consolidated in 1897 in the Allgeyer v. Louisiana case, when the court stressed the right of the citizen to be free in the enjoyment of all his faculties' and tied the principle to the 'pursuit of happiness' clause in the Declaration of Independence.'"

The fallacy of confusing expansion with economic advance was characteristic of the 19th century, and we carry that error forward today. The repeated complaints about depression in the late nineteenth century despite massive immigration, increasing real wages and mild unemployment suggest a deeper psychological problem. "President Rutherford Hayes expalined in 1877 the long commercial depression...directed attention to the subject in a concerted manner. For that matter, some entreprenuers had already been talking to Grant's Secreaty of State Hamilton Fish about foreign policy as a way to 'relieve business distress'...Persistently reminded of the importance of expansion and the necessity of government assistance by such men as Charles Dalton of the textile industry and HK Slayton, a dry goods merchant, Senator John T. Morgan spoke for a growing consensus of congressmen as early as 1882. 'Our home market is not equal to the demands of our producing and manufacturing clases and to the capital which is seeking employment...we must enlarge the field of our traffic..." (p. 338)

Countries like India were viewed as targets. "Viewing the Navy as the key to such expansion, Congress began to debate a large construction program and in 1884 established the Naval War College. Senator John F. Miller of California, Chairman of the Senate Foreign Relatins Committee, provided a neat summary of the outlook. 'The time has come markets are necessary to be found in order to keep our factories running. Here lies to the sout of us our India...If we reach out and attempt to secure this great prize of commerce we shall excite the jealousy of other peoples..."

Williams' treatment of the gilded age transformation of individual entrepreneurship and small business to corporate enterprise and big business is characteristic of the naive assumptions of traditional, left-wing historians. He emphasizes the importance of the emphasis on planning. He writes (p. 356):

"It is almost impossible to overemphasize the importance of the very general yet dynamic and powerful--concept that the country faced a fateful choice between order and chaos. Not only did it guide men in the 1890s; it persisted through World War I, the Great Depression, World War II and emerged more persuasive than ever in 1943-44 to guide the entire approach to postwar opportunities and problmes. Only the anarchists and a few doctrinaire laissez-faire spokesmen seemed willing to accept the possibility of chaos. Arguing that it was both necessary and possible, most americans reformulated and reasserted their traditional confidence in their ability to choose and control their fate...But given a consensus on the sanctity of private property and confronted by the increasingly obvious failure of laissez faire, this faith could be verified only by controlling the market place..."

The problem for Williams is that he never produces evidence that laissez faire had failed.

McKinley and Roosevelt both made steps to accomodate the new corporatist orientation.

"Granting the assumptions of the system, Roosevelt most certainlyh dealt with these difficulties from the most relevant and potentially most successful point of view. His conception of leadership derived from the agrarian gentry, a group that had wielded power in an earlier society also characterized by consolidated economic power (in land) and by a similar vast and interrelated network of authority, influence and responsibility. Hanna understood the modern industrial system based on centralized power in the corporation, but lacked the tradition of class-conscious leadership...Roosevelt did not fully comprehend the industrial system, but he did have the image and ideal of class-conscious leadership."

In other words, in response to complaints by subsidized big businesses that their profits were too low, Williams argues for the reinstitution of feudealism headed by Lord Roosevelt and his inept entourage of corporate planners headed by Lieutenant Hanna.

p. 382. "Bankers and their lawyer spokesmen revealed a strikingly firm conception of a benevolent feudal approach to the firm and its workers. Both were to be dominated and co-ordinated from the central office. In that vein, they were willing to extend--to provide in the manner of traditional beneficence--such things as new housing, old age pensions, death payments, wage and job scheduules and bureaus charged with responsibility for welfare, safety and sanitation. Though he was not the most sophisticated of the industrialists, Charles M. Schwab of Bethlehem Steel revealed the essentials of a different outlook at an early date. Concluding from the Homestead Strike that labor "had som erights, whether others were willing to recognize it or not," Schwab also understood the necessity of making periodic, on-the-spot accomodations wtih labor in order to maintain steady production. Financiers, he complained, were always ready to treat thre men fairly as individuals and give them good liberal wages, but they did not grasp the value of unions either to the laborer or to the corporation itself."

pp. 384-6 Williams argues that syndicalism is how the American system developed. Under syndicalism, functions determine representation. "Political representation should arise within each segment and be coordinated at the top in the national governmetn. Individuals would thus participate in the relevant decisions and at the same time enjoy a sense of community and purpose within their particular group that would replace the alienation of an individual lost in a highly organized society...Herbert Hoover was the crucialfigure in the evolution of the approach. Describing society as composed of three major groups--labor, capital and the government--he struggled to balance and control the units so that they would not drive the system toward fascism (business control), socialism (labor dominance) or the tyranny of bureaucratic government. All such men, from Theodore Roosevelt through Hoover and later theorists, recognized that the central problem was to find som eideal that would generate the self-discipline an dpublic spirit essential to maintaining equity...As a basic component of both the fascist movement in Italy and the hard core of National Socialism in Germany, syndicalism provided the leaders of both parties and coutnries with many of their central ideas and programs. Since they rsorted to terror in establishing and maintaining th eapproach, and distorted it in other ways, the essentiqal characteristics common to American and European syndicalism are generally missed or discounted."

p. 391 In the twentieth century "the functional-syndicalist organization of the economy led most political groups to play both sides of the street. Corporations, fo example contributed money and leaders to both parties.

p. 439 In discussing the New Deal Williams writes:

"Though its own leaders admitted that it lasted barely five years (1933-37) and though it ended with candid admissions of failure from its major protagonists, the New Deal is often viewed as a major turning point in American history. A bit more perspective suggeests that it represented a reaction to a severe crisis in which most of the elements, attitudes and policies of the Progressive movmeent were finally consolidated in one short period under the leadership of a particularly dramatic politician. The New Deal saved the system. It did not change it."

I question the claim that the new deal saved the system. Prove it. If it didn't work, then how did it save the system? Progressivism caused the depression, Progressive ideas did nothing to improve the situation.

p. 446-7 "In April 1937, in the case of the National Labor Relations Board v. the Jones and Laughlin Steel Corporation, the Court upheld the Wagner Labor Act. By explicitly sanctioning unions because they were essential to give laborers opportunity to deal on an equality with the meployer, " chief Justice Hughes implicitly authorized the governmetn to intervene in the political economy to establish, maintain and institutionalize a rough kind of parity between the various functions...The Court's decisions upholding the Social Security Act and the State of Alabama's Unemployment Compensation Act were perhaps even more necessary to the functioning of that system. Holding that social security deductions were justified as an excise tax, and further in being used fo rthe general welfare, the judges underwrote that approach to old age and retirement benefits. The court went even further in the Alabama case. For in that instance the plaintiff charged that the taxes returned no benefit to those who paid them, thereby raising the question posed by the role of the government in accumulating capital from the taxpayer and allocating or investing it without his direct participation in the decisions...In a syndicalist sytem composed of interest-conscious functional groups which exert extremely poerful and effective pressure on political leaders, how does the citizen taxpayer either participate to any signficant extent in the formulation of proposals or protect himself against decisions taken in his name which subject him to double jeopardy in matters of economics or civil rights. The meaing of the decision in the Alabama case was very simple and very blunt: he does not. 'The only bneefit to which the taxpayer is contitutionally entitled, the Court pronounced in the words of Justice Harlan F. Stone's opinion, ' is that derived from his enjoyment of the privilege of living in a civilized soicety, established and safeguarded by the devoltion of taxes to a public purpose.' That meant that the citizen elected a representative who was his agent, but over whose action he had no substantial control. For electing a different man did not even modify the basic features of system, let alone change them. Thus the Alabama case sanctified a system and procedure of defining 'the public purpose' which not only left the citizen far removed from final decisions, but denied him any grounds for appeal through the courts. An ad hoc syndicalist system was thus formally held to be democratic in domestic affairs. In later years, during and after World War II, such vast powers of the government were further extended...It is of course essential to evaluate the combined significance of these decisions within the framework of the syndicalist approach that had been present in the Progressive Movement from the very beginning of the twentieth century, adn which the New Deal consolidated. Granted those assumptions, what the Court had done was to legalize a system ctreated by the large corporation adn the Progressive movement. In that system, the citizen was almost wholly dependent upon the definition of public welfare that emerged inside the national governmetn as a consensus among the leaders of the various functional-syndicalist elements of the political economy. The possibility that Hoover had projected in 1921-1922 had emerged as a reality: The United States was a syndicalist nationon a gigantic scale. Yet the citizen's political activity was carried on within a framework that was organized on an entirely differrent basis: i.e., geographic boundaries which had only the most casual and accidnetal relationship to the syndicalist structure of the political economy. That discrepancy left the citizen without any effective, institutionalized leverage on the crucial and centralized decisions affecting every phase of his life."

Williams's hope for a "truly class-conscious industrial gentry" (p. 449) is a ridiculous conlusion to an utterly brilliant analysis. Williams is trapped by his left wing ideology. His perceptive brilliance in analyzing the contours of American history is marred by his dependence on mercantilist and feudalist assumptions that are, as he so aptly points out, the essence of socialism.

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