Saturday, July 19, 2008

How Many Zeroes in a Billion?

Clayton Mackey, my next door neighbor and Republican activist of West Shokan, New York, has forwarded the following to me.*

How many zeros in a billion?

The next time you hear a politician use the word 'billion' in a casual manner, think about whether you want the 'politicians' spending YOUR tax money.

A billion is a difficult number to comprehend, but one advertising agency did a good job of putting that figure into some perspective in one of it's releases.

A. A billion seconds ago it was 1959.

B. A billion minutes ago Jesus was alive.

C. A billion hours ago our ancestors were living in the Stone Age.

D. A billion days ago no-one walked on the earth on two feet.

E. A billion dollars ago was only 8 hours and 20 minutes, at the rate our government is spending it.

While this thought is still fresh in our brain...let's take a look at New Orleans... it's amazing what you can learn with some simple division.

Louisiana Senator, Mary Landrieu (D) is presently asking Congress for 250 BILLION DOLLARS to rebuild New Orleans . Interesting number...what does it mean?

A. Well... if you are one of the 484,674 residents of New Orleans (every man, woman, and child) you each get $516,528.

B. Or... if you have one of the 188,251 homes in New Orleans , your home gets $1,329,787.

C. Or... if you are a family of four...your family gets $2,066,012.

Washington, D. C < HELLO! > Are all your calculators broken??

Accounts Receivable Tax
Building Permit Tax
CDL License Tax
Cigarette Tax
Corporate Income Tax
Dog License Tax
Federal Income Tax Federal Unemployment Tax (FUTA) Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges (tax on top of tax)
IRS Penalties (tax on top of tax)
Liquor Tax
Luxury Tax
Marriage License Tax
Medicare Tax
Property Tax
Real Estate Tax
Service charge taxes
Social Security Tax
Road Usage Tax (Truckers)
Sales Taxes
Recreational Vehicle Tax
School Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Tax
Telephone M inimum Usage Surcharge Tax
Telephone Recurring and Non-recurring Charges Tax
Telephone State and Local Tax
Telephone Usage Charge Tax
Utility Tax
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax


Not one of these taxes existed 100 years ago...and our nation was the most prosperous in the world. We had absolutely no national debt...

We had the largest middle class in the world... and Mom stayed home to raise the kids. What happened? Can you spell "P-O-L-I-T-I-C-I-A-N-S"?

And I still have to press '1' for English.

I hope this goes around the USA at least 100 times.

What the heck happened?????

*The e-mail was without attribution. If the author objects to my posting it, please inform me and I will remove it.

The Republicans' Whiggish Error

In Louis Hartz's Liberal Tradition in America* Hartz argues that all American ideology is ultimately liberal, to include the Progressives and the New Deal. Hartz's book was written right around the same time as William F. Buckley's God and Man at Yale. It would be interesting to hear how Hartz might have updated his argument in light of the predominance of European left wing and New Left ideology in today's universities. It is true that the elements of New Left ideology that seem to carry forward are in large part those that fit democratic liberalism, such as diversity. Nevertheless, it is also true that Americans have been increasingly indoctrinated in anti-liberal and anti-democratic rhetoric, such as support for ill-defined regulatory systems that benefit economic elites; emphasis on credentials developed by universities that economically support the same New Left ideologues; and a monetary system that is supportive of economic elites, to include the major universities, whose endowments have mushroomed under the Republicans, at the expense of the common working man, whose hourly wage has been decimated by the Keynesian economic policies that university professors have advocated since the 1930s.

Hartz's book is brilliant and perhaps it does not receive more attention is because of the increased emphasis on New Left solutions, and perhaps because he did not anticipate increased deference to elites by an American public that has been increasingly educated to do so. However, as a description of the main run of American history, to include the present, the book makes excellent points.

The history of the Whigs suggests why the Republican Party of the millennium has failed to capture the public's imagination. The Republicans cannot be an elitist party, that is, they cannot pander to the wealthy at the expense of the public. If they do the voters will, as they have, reject them. One of a number of turning points was Bill Frist's refusal to carry forward a law that would have limited federal support for states which permit private use eminent domain. Their failure do so in light of the case of New London v. Kelo captured the (in the early 19th century American sense) impulse of the Whigs.

In order to be successful, the Republicans must inspire the public with what Hartz calls the Alger myth. Americans are in large part desirous of economic opportunity. The Democrats have sacrificed the image of opportunity on the altar of special interest group politics and advocacy of wealth transfers to professional interest groups, real estate developers and Wall Street in the name of the poor. The Republicans cannot cloak the substance of their ideology in purely altruistic raiment because then America would have not two but one party, the Democratic. Nor can they, as they have done, adopt the 19th century Whiggish elitism that is contemptuous of the public. Rather, the Republicans must cloak their ideology in the raiment of economic opportunity. An ideology that capitalizes on such opportunity is believable only if it emphasizes and nurtures private property rights of individuals as against the state and special interests. As well, the Republicans must fathom the source of economic opportunity, which is free enterprise, without which entrepreneurs cannot execute new ideas.

Under George Bush and Bill Frist the Republican Party became a Whig Party, a party of economic elitism. The methodology it adopted was Federalist and Whiggish (in the nineteenth century American sense). It maintained and strengthened regulation; it supported central bank monetary expansion; and it sacrificed private property rights in the interest of frivolous, inept and too often corrupt big business, Wall Street and real estate schemes which have helped to bankrupt the nation.

Hamilton believed that there is a class of people, large commercial operators, who are best equipped to guide the economy. He was wrong. As all who have worked in the real world of industry know the best ideas come from the man or woman on the production line, not the executive. One example is that of Ray Kroc, the builder of McDonald's, who did not create most of the chief concepts that made McDonald's successful (with the exception of a strong emphasis on uniformity and quality of execution), from the concept of scientific management of fast food production to Ronald McDonald, to the firm's use of cash flows, to real estate investment in the stores, to the Big Mac to the Filet O Fish, almost all of McDonald's chief ideas came from franchisees or Kroc's employees.

If so, then why have the Republicans chosen to revert to the Hamiltonian fantasy of a big business elite that is able to guide the economy with freshly minted Federal Reserve counterfeit rather than the reality that the development of new ideas depends on entrepreneurs? The Kelo case brought the Republicans' Whiggish error home.

To quote Hartz (pp. 94-5):

"American Whiggery...could have transformed the very liability of the American liberal community into a tremendous asset. For if the American democrat was unconquerable, he was so only because he shared the liberal norm. And this meant two things: one, that he was not a real threat to Whiggery; and two, that Whiggery had much to offer him in the way of feeding his capitalist impulse. Thus what Whiggery should have done, instead of opposing the American democrat, was to ally itself with him...It should have made a big issue out of the unity of American life, the fact that all Americans were bitten with the capitalist ethos which it was trying to foster. It should, in other words, have developed some sort of theory of democratic capitalism which fit the Tocquevillian facts of American life.

"But this, as we know, is precisely what Whiggery failed to do until it saw the light in 1840, and indeed, in any large sense until the post-Civil War days of Horatio Alger and Andrew Carnegie. Over most of its early history, it pursued a thoroughly European policy, and instead of emphasizing what it had in common with the American democrat, it emphasized precisely what it did not have in common with him. Instead of wooing this giant, it chose, quite without any weapons, to fight him. This would be a high species of political heroism were it not associated with such massive empirical blindness. One can admire a man who will not truckle to the mob, even though the mob is sure to beat him, provided there is actually a mob in the first place. But in America there was no mob: the American democrat was as liberal as the Whigs who denounced him. Consequently the suicidal grandeur of Fisher Ames is tinged with a type of stupidity which makes admiration difficult. At best one can find in the Whigs a kind of quixotic pathos....They pursue the usual conservative strategies but are baffled and dumbfounded at every turn..."

*Louis Hartz, The Liberal Tradition in America. New York: Harcourt, Brace and World, 1955.

Letter to Senator Chuck Schumer Concerning Commodities Regulation

I oppose your recent proposal to regulate commodities speculation. The reason for the recent run up in oil prices is ultimately due to Federal Reserve Bank monetary policy, which since 1932 has been inflationary. The US Senate has oversight authority over the Fed, and you have chosen to do nothing. Hence, you are part of the problem, Senator Schumer. Now, rather than tell the truth, specifically, that the sub-prime crisis, oil and food price run ups and the stock market bubbles of the past 10 years are all due to policies about which the Senate, including yourself, has remained silent, you posture with an incompetently conceived, joke solution.

Common sense suggests that commodities speculation can have only a temporary effect on prices because futures contracts have 3 or 6 month terms, and if the speculators are bidding up prices excessively there will be reductions in end-user demand upon delivery, causing a fall in prices.

On the other hand, stupidly conceived regulation (and I do not believe that the Senate is capable of any other kind) can have crippling effects by misleading economic actors, causing waste and favoring specific economic interests, such as Wall Street, to which I have no doubt you are especially beholden.

As a result of these considerations, I assure you that I consider you to be bad at representing the public and I do not hope for your reelection.

Friday, July 18, 2008

Conformity, Rigidity and Decline

Max von Weber developed the thesis that America's Protestant roots led to a focus on capitalism because several Protestant sects view success in the world as evidence of divine grace. Reinhard Bendix developed Weber's spirit of capitalism thesis further in his Work and Authority in Industry in which he saw a historical pattern in the American interpretation of divine election's being carried forward in an ideological justification of managerial power despite the nation's democratic value system. Managers and big businessmen are entitled to social approval and legitimacy because of an evolving ideological justification. Bendix argued that the religious justification became a moral one, then shifted into social Darwinism and a biological justification. The ideological justification of managerial power then focused on psychological variables such as positive thinking. Frederick W. Taylor's scientific management was but one additional step on the road of ideological justification of business power. Taylor's scientific management, which holds that an industrial engineer is necessary to design work and control workers in turn evolved into the human relations school which argued that managers could understand workers' emotions and so constitute an elite, continuing the religious interpretation of divine election as applicable to management.

However, as Bendix emphasizes in his comparative study, managerial authority is justified in alternative ways around the world. The existence of managerial power is in part the result of economic and business necessity, for business cannot be managed democratically. Organizations can be managed democratically if there is little need for coordination. As coordination needs incrase, the possibility of democratic governance diminishes. Thus, capitalism, which depends on free market coordination and so does not require direction is most consistent with democracy, while socialism, in which government officers must direct the economy as well as the civil and military state functions tht exist under capitalism, tends toward dictatorship and suppression of diversity. Universities require little coordination because the work of scholarship is individual or collaborative on a small-group basis, hence universities can be run relatively democratically, but collaboration and coordination on a large scale is required of large manufacturing firms, so they must be run on an authoritarian basis. Thus, one of the most important writers on the subject of unity of command was not an American Protestant but a French Catholic, Henri Fayol. Fayol, a mining executive, emphasized authority, discipline, unity of command and unity of direction in his book General and Industrial Management, published in 1917. But Fayol's principles of management focus on large-scale industrial enterprise, and so may be less important to small firms, firms where coordination is not necessary (such as in universities, think tanks, firms with heavy emphasis on individual salesmanship or consulting firms). Thus, as Thompson has pointed out, technology is likely to influence the method of control. Thompson argued that there are three basic kinds of technologies, pooled, sequential and reciprocal. In sequential technologies tasks are performed in a required order and planning is critical. An example would be an assembly line. In pooled task interdependence the workers work separately but are guided by a central office. Coordination demands are minimal. Examples would be many service industries, sales offices where the salesmen work separately and universities. In reciprocal interdependence work may be broken into units that must interact flexibly. Thompson argued that sequential processes require the most control and should be grouped by process. In contrast, work requiring pooled processes need to be coordinated at a high level and coordination may not be possible. Reciprocal technologies such as involving teamwork need to be coordinated at a low level. If there are multiple reciprocal technologies then complexity necessitates decentralization.

Thus, the nature of authority relations may be imbued with a religious sense but may also shift with changing technology. The demands of government and the economy may shift in response to changing technology. As innovation changes the pace and rate of interaction, the nature of authority relations, public intervention in the market place, political control and the flexibility of government agencies might need to change along with it. Regulatory systems that mandate standard practices may be inappropriate in an economy where the flexibility of pooled or small group reciprocal relations requires rapid change. Yet because of the religious quality of authority structures, political factions may insist on ritualized patterns that seem important to them.

Americans in part believe in a natural aristocracy, one that is created by markets. But the religious aspect of Americans' value system may permit the emphasis on markets to be replaced by tradition. Because a businessman was successful in the past, there is a tendency to believe that he is entitled to success in the present and future as well, even if his decisions fail to correspond to reality. Thus, public conformity tends to support regulatory and financial systems even when the technology to which they respond have changed, have moved from sequential to pooled and reciprocal. The United States is no longer a manufacturing country, but its financial and regulatory regimes assume the importance of large firms, rigid production requirements and the need for government-supplied financing.

In Louis Hartz's Liberal Tradition in America Hartz argues that because America lacks a feudal tradition, it has never been drawn to socialism. Rather, he argues that Progressivism and New Deal social democracy are variants of Lockian liberalism. American society was based on Locke and was free prior to the American revolution, so Americans did not overthrow a feudal past. Rather, the American revolution reinforced values that were already present (p. 10):

"Here is a Lockean doctrine which in the West as a whole is the symbol of rationalism, yet in America the devotion to it has been so irrational that it has not even been recognized for what it is: liberalism. There has never been a liberal movement or a real liberal party in America: we have only had the American Way of Life, a nationalist articulation of Locke which usually does not know that Locke himself is involved...Ironically, 'liberalism' is a stranger in the land of its greatest realization and fulfillment. But this is not all. Here is a doctrine which everywhere in the West has been a glorious symbol of individual liberty, yet in America its compulsive power has been so great that it has posed a threat to liberty itself. Actually, Locke has a hidden conformitarian germ to begin with, since natural law tells equal people equal things, but when this germ is fed by the explosive power of modern nationalism, it mushrooms into something pretty remarkable. One can reasonably wonder about the liberty one finds in Burke.

"I believe that this is the basic ethical problem of a liberal society: not the danger of the majority which has been its conscious fear, but the danger of unanimity, which has slumbered unconsciously behind it: the 'tyranny of opinion' that Tocqueville saw unfolding as even the pathetic social distinctions of the Federalist era collapsed before his eyes...The decisive domestic issue of our time may well be the counter resources a liberal society can muster against this deep and unwritten tyrannical compulsion it contains. Given the individualist nature of the Lockean doctrine, there is always a logical impulse within it to transcend the very conformitarian spirit it breeds in a Lockean society..."Amricanism" oddly disadvantages the Progressive despite the fact that he shares it to the full, there is a strategic impulse within him to transcend it...In some sense the tragedy of these movements has lain in the imperfect knowledge that they have had of the enemy they face, above all in their failure to see their own unwitting contribution to his strength."

American conformitarianism has accepted a regulatory reform and institution of elites that is impractical because technology and the pace of market change has rendered them obsolete. As Americans sense a deterioration, not only in the average hourly real wage but also in the volatility of the housing and stock markets, they sense that there is something amiss; that systems have not responded to their expectations. But the systems have become institutionalized to a degree that has never existed in America before. Previously, because Americans lived in a laissez faire world, only the courts, the local governments and a few federal systems such as the post office were institutionalized rigidly. Now, much of American life, not only in the public sector in areas like Social Security have become rigidly institutionalized and unable to change, but also in the private sector. Firms are no longer permitted to fail.

Wednesday, July 16, 2008

Inflation Explodes, Trouble Ahead for Stock Market

According to the New York Times, "The Consumer Price Index, which measures prices of a batch of common household products, rose 1.1 percent in June, the Labor Department said. That increases caps a year where inflation has surged to proportions seen by some as threatening the stability of the American economy. In the last 12 months, the price index has risen 5 percent, the biggest annual jump since May 1991."

If you multiply the 1.1% rate in June, it comes out to 13.2%, a rate big enough to remind me of the post-Vietnam years of the late 1970s. This augurs ill for the stock market because the inflationary monetary expansion in which the Republicans have engaged since '82 is coming home to roost. These cycles take 25 years and perhaps more, to complete, hence generalizations about good or bad economic results over a 1-24 year period are impossible to make.

If the Fed takes action to slow inflation by reducing interest rates it will take several years, there will be unemployment, New York City is going to hell in hand basket (if you recall the near-bankruptcy in the mid 1970s during a similar correction you know what I'm talking about), and the stock market is in for a rough ride that makes this year's look like a ride on Mary Poppins's umbrella.

The country's planning elite, the Wall Street crew and the captains of industry, Jim Cramer, Alan Greenspan and the Fed have brought the coming recession to you courtesy of their inability to run the monetary system.

Gold is down today probably related to the correction in the oil market and to the realization that the Fed is going to correct. Hence the dollar is stronger. Our economy has had so much loose cash that has been created by the Fed and diverted into immoral and incompetent hands that there are all kinds of crazy things going on, and the public will pay while the hedge fund managers who have extracted billions from the 25 years of inflation will sit back on their verandas and enjoy the show.

Social Mythology and Public Dismay

In his 1972 article "Myth of the New Deal"* "New Left" historian Ronald Radosh writes:

"The New Deal reforms were not mere 'incremental gestures'. They were solidly based, carefully worked out pieces of legislation. They were of such a character that they would be able to create a long-lasting mythology about the existence of a pluralistic American democracy, in which big labor supposedly exerts its countering influence to the domination that would be otherwise undertaken by big industry.

"One cannot explain the success of the New Deal by pointing to its rhetoric. The populace responded to FDR's radical rhetoric only because it mirrored their own deeply held illusions. They could not comprehend how the reforms that changed their lives only worked to bolster the existing political economy, and they did not realize that many sponsors of the reforms came from the corporation community themselves. The integration of seemingly disparate elements into the system was successful. Labor did not get its share and it did benefit from the development of a permanent war economy and the military-industrial complex. Many of those who lived through and benefited from the New Deal most likely view its accomplishments in much the same way as Schlesinger or Carl Degler. One can never be sure whether they reflect the explanations offered by the 'vital center' historians or whether these historians merely reflect the false consciousness of their own epoch."

Radosh wrote this in the early 1970s, just as Richard Nixon changed the monetary regime by abolishing the international gold standard and just as employers were about to shift their supportive stance toward labor unions, which Radosh documents in his article, to a more anti-labor stance. I have previously blogged that there was a major shift in the pattern of stock returns as related to real wages around 1971. Between 1932 and 1971, net of cumulative inflation, stock returns were about 5.9% compounded, and between 1971 and 2008 they were also around 5.9% compounded. However, from 1932 to 1971 real wages increased 2.6% compounded, while from 1971 to 2008 real wages declined -1.1% compounded. The 1971-2008 period was characterized by high inflation (the highest 40-year period of inflation in America's history) but real stock returns were held constant at 5.9% net of inflation. As well, the post-1971 period was characterized by manufacturing's exiting the country, a decline in the quality of education, and declining unionization. The one variable that the Progressive and New Deal policies have ultimately held constant is corporate stock returns net of inflation. Real wages, unemployment, inflation rates and public welfare gyrate, but in the end real stock returns find their way back to the baseline real 5.9% level.

At the time Ronald Radosh wrote his article in New History of Leviathan it could still be argued that the statist Progressive and New Deal ideologies integrated social justice concerns. This is no longer the case. Rather, it is apparent from my earlier blog that Radosh's argument is actually understated. The New Deal labor union edifice was easily overturned because of declining manufacturing presence, globalization, declining scale in post-modern American industry and employer resistance to unions. Hence, unions' ability to represent workers has diminished just as inflation escalated. Unions lack the resources to organize small shops, and it is more profitable for them to concentrate on government workers who enjoy monopolistic privileges and can impose costs on taxpayers. The one variable that has been fairly steady since Franklin D. Roosevelt's election in 1932 has been returns on the Dow Jones Industrial Average, net of inflation. Since 1971 workers' real wages have declined, but returns on the Dow have remained strong even in spite the past eight years' stagnation, a period characterized by relentlessly increasing inflation as the mismanagement and incompetence characterized by the Progressive and New Deal regimes has become evident in corporate scandals, inept real estate investment and taxpayer-financed subsidies to millionaire investment bankers through the Fed's low interest rate regime and through direct subsidies to incompetently run firms like Bear Stearns.

*Ronald Radosh, "Myth of the New Deal" in Ronald Radosh and Murray N. Rothbard, editors, A New History of Leviathan: Essays on the Rise of the American Corporate State, New York: EP Dutton, 1972, p. 186

Monday, July 14, 2008

Government Is the Problem: Phil Orenstein on Immigration Reform

Over at Democracy Project Phil Orenstein chronicles the inability of a highly skilled mechanical engineer in his high-tech manufacturing firm to obtain a visa to stay in the US. Instead, Gianluca Mattaroccia, the Italian techie, is returning to Italy with a six figure salary offer. Phil notes that while legitimate immigrants with unique skills that are in demand globally cannot obtain a visa, those willing to come to the USA illegally but who lack skills and wish to mooch off welfare are welcomed with open arms. Phil's article points out that combined with America's bad educational system, dominated by progressive educationists who fail to provide the basics, our immigration laws do not work because they are ineptly administered:

"While American schools have succumbed to progressive pedagogies that focus more on social justice education and feel good outcomes than on competency, there is certifiable proof that Chinese schools have left us far behind, according to Andrew Wolf in the New York Sun. As we keep dumbing down proficiency tests year after year to make the results appear better and Mayor Bloomberg and Chancellor Klein look like heroes, our children and businesses suffer. Thus our own students graduate with less proficiency compared to foreign students who possess more competence with 21st century skills. The answer isn’t to kick out the smarter, more proficient foreign workers and students, so we can go on fooling ourselves that our schools aren’t failing.."

Phil suggests an argument against immigration restrictions, not because of the pros or cons of limiting low-wage immigration in order to protect low-wage American workers, but because the US government lacks the competence to administer an immigration program intelligently. I think that there is much merit in this idea. What scares me is that these bozos want to control what goes on on the operating table, your refrigerator, and your living room.

Isn't it time to roll back government bureaucracy?

Additional Correspondence Re Obama Birth Certificate

Drake suggests the following approach. We will see if it works.

PO Box 130
West Shokan, New York 12494
July 14, 2008

Dr. Chiyome L. Fukino, MD
Director of Public Health
State of Hawaii Department of Health
Honolulu, Hawaii 98601-3378

Dear Ms. Fukino:

This is an additional request for information under the Hawaii Open Records Law. As my other letter indicates, your department has broken § 338-18 by refusing to provide, as the law requires, Barack Obama’s birth certificate to every American because every American has a direct and tangible interest in seeing the information first hand.

As a result, I will request some alternative information:

1. What is the proper format of the "CERTIFICATE NO."? One certificate I have seen is formatted "### ####-######" Are all formatted this way? Are the certificate numbers ordered chronologically as certificates are issued? If so, what would be the number range for a child born in 1961

2.What is the complete list of categories under the "RACE" fields?

3.How many different formats for the certificate has the department used since 1961? Are the certificates printed on pre-formated paper (with borders and coloration already printed) or is the entire certificate (background, borders, and text) printed all at once.

4.Would the department please supply a blank template for each of the different formats it has employed since 1961? If necessary it may also note "VOID" on each such template to ensure against fraudulent use.

5.What is meant by the field label "DATE ACCEPTED BY REGISTRAR"? Has the department ever used the label "DATE ACCEPTED BY STATE REGISTRAR"? What is the difference?

6.What is the significance of the text "OHSM 1.1 (Rev.11/01) LASER" at the bottom of the form? It it the technical designation for a particular type of format/template used? If so, would the department please supply a list of all such technical designations that have been used since 1961 and indicate the templates to which they correspond?

7.How are birth certificates embossed with the state seal. Are they always embossed on the back of the certificate? Ever on the front? Are they always signed to designate official status?

8. Would the department please send a copy of the currently governing intra-departmental manual for the production and recordation of birth certificates as well as the manual in effect during 1961 if they are free of charge? If not, please advise as to the cost.


Mitchell Langbert, Ph.D.

Cc: Janice Okubo, Governor Linda Lingle

Sunday, July 13, 2008

Birth Certificate: Barack Obama's 17th Century Roots in Flushing, Queens Provide a Clue

As I recently blogged, § 338-18 of the Hawaii Revised Statutes permits someone to obtain someone else's birth certificate if they are:

(5) A person having a common ancestor with the registrant.

Someone just e-mailed with a brilliant suggestion:

"Since anyone with a common ancestor can request a certificate, why not find someone with an ancestor in common with Obama and ask that person to request his birth certificate? Dick Cheney, for example. (Just kidding, but supposedly they do share an ancestor.)"

I obtained the Baltimore Sun article to which my correspondent referred in her e-mail. The article concerns genealogist, William Adams Reitweisner, who has compiled Senator Obama's genealogy. The article mentions George Washington Overall, Mary Duvall and Christopher Columbus Clark. Mr. Reitweisner's analysis is here. Senator Obama's family goes back 11 generations in America and includes quite a few ancestors from 17th century New York and New Jersey, including a Simon de Ruyne, who was born in Flushing in 1645.

The following is a list of Mr. Obama's ancestors from Mr. Reitweisner's analysis. Mr. Reitweisner cautions that the list is a "first draft". The most recent Obama ancestors are listed first.


State of Hawaii Department of Health
Honolulu, Hawaii 98601-3378

and inform them that under § 338-18 of the Hawaii Revised Statutes you are entitled to obtain a copy of Mr. Barack Obama's birth certificate because you share an ancestor in common. Please forward the copy to me, other bloggers and the newspapers. The list includes:

Ralph Waldo Emerson Dunham
Ruth Lucille Armour
Rolla Charles Payne
Leona McCurry
Jacob William Dunham
Mary Ann Kearney
Harry Ellington Armour
Gabriella Clark
Charles T Payne
Della Wolfley
Thomas Creekmore McCurry
Margaret Belle Wright
Jacob Mackey Dunham
Louise Eliza Stroup
Falmouth Kearney
Charlotte Holloway
George W Armour
Nancy Ann Childress
Christopher Columbus Clark
Susan C Overall
Benjamin F Payne
Eliza Black
Robert Wolfley
Rachel Abbott
Harbin Wilburn McCurry
Elizabeth Edna Creekmore
Joseph Samuel Wright
Frances A Allred
Jacob Dunham
Catherine Goodnight
John Stroup
Eliza Jane Clemmons
Joseph Kearney
Josiah Holloway
Martha Mallow
William Armour
Sarah Poland
John Milton Childress
Nancy Conyers
Thomas Clark
Elizabeth Davis
George Washington Overall
Louisiana Duvall
Francis Thomas Payne
Harriet Bowles
John S Black
Sarah Taylor
George Wolfley
Nancy Perry
Jonathan Abbott
Adah Wright
Edward McCurry
Christine Wilson
Thomas Creekmore
Mary Edna Ellis
Obediah C Wright
Malinda Jones
Samuel Thompson Allred
Anna Bunch
Samuel Dunham
Samuel Goodnight
Magdalena Berkheimer
William Stroup
Ann Thomas
Armel Showell Holloway
Anna Maria Godfrey
John P Childress
Catherine Ament
Robert OVerall
Annie Browning
Gabriel Duvall
Mary Grable
Jesse Payne
Rebecca Crenshaw
David Jesse Bowles
Elizabeth Thomas Martin
John Block
George Taylor
Mary Thomas
Ludwig/Lewis Wolfley
Anna Maria Toot
Robert Perry
Sarah Ellen Hoskins
Abraham Wright
John McCurry
Lydia Williams
John Wilson
Ruth Wilburn
John Allred
Phoebe Thompson
Nathaniel Bunch
Johathan Dunham
Mary Smith
Christian Gutknecht/Goodnight
Maria Magdelana Grunholtz
Leonhard Berkheimer
John Stroup
Mary Stehle
Elijah Holloway
Elizabeth Showell
Robert Childers
Nancy Pryor
Phillip Ament
Maria Elisabeth Schmidt
John Overall
Frances Whitledge
James Browning
John Miles Duvall
Anne Roselle Philomena Tarleton
Jesse Bowles
Hannah Perkins
Thomas Martin
Susannah Walker
Johann Conrad Wolfley
Anna Catherine Shockey
George Toot
Henry Perry
Richard Hoskins
James Wilborn
Mary Isabel Teague
Solomon Allred
Charles Bunch
Mary Bellamy
Benjamin Dunham
Mary Rolph
Shubael Smith
Prudence FitzRandolph
Hanss Gutknecht
Anna Barabara Kieffer
Johann Michael Grunholtz
Magdalena Mitscher
Johann Philipp Straub
Ulrich Stehle
John Hollowy
Frances (Woodford or Bradford)
Henry Childers
Susannah Goolsby
Philip Ament
Susannah Margaret Forrisen
Jacob Schmidt
Anna Maria Lambert
John Overall
Mary Elliott
William Whitledge
Frances Overall
John Browning
Elizabeth Demarest
James Hickman
Hannah Lewis
Jacob Duvall
Mary Miles
James Tarleton
Ann Henning
David Bowles
Sarah Hughes
Stephen Perkins
Mary Hughes
David Toot
William Hoskins
Samuel BUnch
Mary Hudson
John Bellamy
Susan Roe
Joanathan SIngletary alias Dunham
Mary Bloomfield
John Rolph
Mary Sculliard
Smauel Smith
Elizabeth Peirce
Samuel FitzRandolph
Mary Jones
Bartholomew Grunholz
Daniel Mitscher
John Holloway
Mary Gordy
Jacob Matthias Lambert
Anna Rosina Rees
William OVerall
Mary Jones
Thomas Whitledge
Sybil Harrison
Francis Browning
Elizabeth Lloyd
Jan Demarest
Alice Earle
Edwin Hickman
Eleanor Elliott
David Lewis
Anne Terrell
Mareen Duvall
Elizabeth Jacob
James Tarleton
Constantine Perkins
Anne Pollard
John Bunch
Rebecca Harrison
John Hudson
Elizabeth Harris
John Bellamy
WIlliam Roe
Richard Singletary
John Smith
Susannah Hinckley
Nathaniel FitzRandolph
Mary Holley
Jeffrey Jones
John Holloway
Adrian Gordy
Mary Disharoone
William Overall
Jane Baldridge
John Jones
Burr Harrison
Sarah Burdette
Jan Demarest
Dobora Heyet
Edward Earle
Elsie Vreeland
Thomas Hickman
Martha Thacker
William Terrell
Susan Waters
Mareen Duvall
John Jacob
Ann Cheney
John Bunch
Temperance Bates
William Hudson
Elizabeth Jennings
William Harris
Samuel Hinckley
Sarah Soole
Edward FitzRandolph
Elizabeth Blossom
Joseph Holly
Rose Allen
James Baldridge
Jean Demarest
Jacomina de Ruyne
Edward Earle
Hannah Baylis
Enoch Vreeland
Dirckhe Meyer
Thomas Hickman
Mary Pascal
Henry Thacker
Eltonhead Conway
Richard Cheney
John Bunch
George Allen
David Demarest
Marie Sohier
Simon de Ruyne
Magdalena van der Straaten
John Baylis
Michael Vreeland
Fytje Hermans
Jan Meyer
Tryntje Grevenraedt
Edwin Conway
Martha Eltonhead

Again, if you have an ancestor on the above list, you can obtain Barack Obama's birth certificate and provide bloggers and newspapers with a copy from:

Chiyome L. Fukino, MD
Director of Public Health
State of Hawaii Department of Health
Honolulu, Hawaii 98601-3378

Here is the article from the Baltimore Sun:

IT IS A question that few thought a man aiming to be America's first black President would ever have to answer: did your family once own slaves?

But that question is now likely to be asked of Senator Barack Obama, who is bidding for the 2008 presidential nomination of the Democratic Party, in part on the appeal of his bi-racial background.

As the son of a black Kenyan father and a white Kansan mother, Obama has seemed to embody a harmonious vision of America's multiracial society. However, recent revelations have thrown up an unexpected twist in the tale.

Obama's ancestors on his white mother's side appear to have been slave owners.

William Reitwiesner, an amateur genealogical researcher, has published a history of Obama's mother's family and discovered that her ancestors have a distinctly shadowy past.

Reitwiesner traced Obama's great-great-great-great-grandfather, George Washington Overall, and found that he owned two slaves in Kentucky: a 15-year-old girl and a 25-year-old man.

He also found out that Obama's great-great-great-great-great-grandmother, Mary Duvall, also owned a pair of slaves listed in an 1850 census record. They were a 60-year-old man and a 58-year-old woman. In fact, the Duvalls were a wealthy family whose members were descended from a major landowner, Maureen Duvall, whose estate owned at least 18 slaves in the 17th century.

The news comes at a time when Obama is engaged in a fierce battle with Senator Hillary Clinton to woo black voters in their bids to get the Democratic presidential nomination. It also comes ahead of appearances by both Clinton and Obama today in Selma, Alabama, to mark the anniversary of a famous 1965 civil rights march. This is hardly the best time to be exposed as the descendant of slave owners.

Reitwiesner has posted his research, which he warns is a efirst draft', on his website,

However, the news is unlikely to be a serious political problem for Obama,
despite the fact that some black commentators have accused him of not being a real black American. Nor is he likely to be alone in finding out that his white ancestors once owned the ancestors of his fellow black Americans.

America, like Britain, is caught in the grip of a frenzy of genealogical research. Dozens of websites have sprung up, allowing fast and easy access to all sorts of historical records and prompting many Americans to research their family trees.

That can throw up some very surprising results. In fact, last week Obama
was not even the only black politician to find out some unusual personal history. The civil rights campaigner, the Reverend Al Sharpton was stunned to discover his slave ancestors were owned by the late politician Strom Thurmond, who once ran for President on a staunchly racist segregationist platform. The pair might even be related. The news prompted Sharpton to issue a statement about his private agony at the revelation. eWords cannot fully describe the feelings I had when I learned the awful truth. Not only I am the descendant of slaves, but my family had to endure the particular agony of being slaves to the Thurmonds.'

Obama's campaign team have handled the news of his family's slaving past a bit more casually and a lot less emotionally, issuing a statement saying such a family background was erepresentative of America'. That is certainly true. Slavery was the economic bedrock of the American economy in the South before the Civil War. It would come as no surprise that anyone tracing their family roots back to the pre-war South would find that his descendants had owned slaves.

But more edifying discoveries can come from looking at the past too. Another of Obama's ancestors, his great-great-great-grandfather, Christopher Columbus Clark, fought for the Union army in the Civil War. As a result Obama can also lay claim to relatives who risked their lives to end slavery. eWhile a relative owned slaves, another fought for the Union,' said Obama Enhanced Coverage LinkingObama spokesman Bill Burton in a statement. Perhaps it is just another case of ObamaEnhanced Coverage Linking Obama's complex past showing that he can have it both ways.

Stanley Elkins's and Eric McKitrick's Age of Federalism

Stanley Elkins and Eric McKitrick. The Age of Federalism. New York: Oxford University Press, 1993. 925 pages. Available at for $25.51, used and new from $6.88.

This is an important history book. It should be required reading for all Americans as we cannot understand the political dynamic in our country without a grasp of the Federalist period. Elkins and McKitrick pack this majestic study with rich and detailed information about the major players' biographies, the intellectual history behind Federalism and most of all the politics of the Federalist era.

My own interest in reading this book involved three questions: (1) to what degree is modern social democratic liberalism linked to the ideas of the Federalists; (2) to what degree has there been a continuity in the history of elitism in America (for example, were the Progressives and New Deal social democrats intellectually linked to the Federalists); and (3) to what degree did Federalism fail because of its emphasis on centralization or, to what degree did the Articles of Confederation fail because of excessive decentralization. The answer to (3) is that Federalism was replaced by Jeffersonian republicanism not on the basis on the workability or lack thereof of the Federalist ideology but because of the political ability of Jefferson and his followers, the political weaknesses and perhaps mental imbalance of John Adams and internecine fighting among the Federalists. The Federalists were elitist and did not learn how to cloak their elitism the way that the Progressives and social democrats did. With respect to substantive policy positions, the Federalists were very much in line with the Progressives and social democrats of the 20th century. The difference was the packaging, not the substance.

To answer the third question in another way, the Articles of Confederation had decentralized the American national government in ways that the Constitution corrected, and although the anti-statist philosophy of Jefferson and the anti-Federalists, rooted in English Whiggery, led to some initial opposition to the Constitution, there is little reason at this point to regard the problems with the Articles of Confederation as relevant to 21st century political debate. There was excessive decentralization, but that level of decentralization is not going to occur again unless there is a collapse of the United States government. In particular, the federal government did not have the power to tax the population directly under the Articles of Confederation and so could not have supported an army or federal law enforcement of any kind. As a result, a minor problem like Shay's rebellion was difficult to address. As well, the absence of a unified trade or defense policy made the nation weaker. Hamilton, Madison and Jay under the name of Publius addressed these questions in the Federalist Papers, and they are not controversial.

Foreign policy and defense are areas to which public goods arguments of the twentieth century apply. Thus, the Articles of Confederation did fail because of excessive decentralization, but the degree of decentralization was extreme by today's standards so that there is considerable room for decentralizing. It was, after all, Jefferson and the Republicans (or Democratic Republicans) who ultimately triumphed against the Federalists. In effect, the degree of federalism that Hamilton, Washington and John Adams implemented made a republican, anti-federalist policy workable. Even in the case of Jefferson's presidency (which is not the subject of this book) Jefferson famously took several federalist turns in areas like the Embargo Act and the Louisiana Purchase. Unless you are a dogmatic libertarian you will agree that a realistic federal government is useful and necessary.

The answers to the first and second questions begin with 18th century England, and the answer seems clear to me that there is a close link among Federalism, Progressivism and the social democratic ideology of the New Deal. Elkins and McKitrick do an excellent job of discussing the intellectual and political history. The intellectual roots of Federalism were in eighteenth century England, specifically in opposition to the ideas of Sir Robert Walpole and his "Court" ideology which the landed Whigs perceived to be corrupt. Walpole rose to power in the 1720s and built on institutions, especially the Bank of England, that had been established in the late 17th century.

"The system of public finance which thus had its birth during the reign of William III was subsequently brought to a state of considerable maturity and stability by the ministries of Walpole and Henry Pelham under the fist two Georges. But it also provided a key term in the emerging tensions of Court and Country: government money" (p. 14).

Elkins and McKitrick go on to write (p. 14):

"William III's policy of war against the France of Louis XIV, while it had the public's general support, proved vastly more expensive than anything of the sort the nation had previously undertaken. With current taxes and ad hoc private loans clearly inadequate to meet unprecedented and continuing costs, William's Treasury officials arranged with a group of London's wealthiest merchants for the first of a series of exceptionally large loans, to be secured by specific future taxes, in return for which the financiers would be granted a charter with monopoly privileges for certain forms of banking. The resulting Bank of England (1694) would handle government deposits, assist in organizing future borrowing by government, do private commercial business, and issue notes which could circulate as public currency. (Two other great chartered monopolies, the East India and South Sea Companies, would also for a time, handle large portions of the public debt.) This transformation in public finance brought long-term consequences in two broad spheres, one in the nation's business life and the other in the workings of government itself. A financial revolution of this order had of necessity to be accompanied by an administrative revolution.

"Extended periods of war, which would recur at more or less regular intervals throughout the eighteenth century, together with the growing public debt needed for maintaining them--a debt which nonetheless would prove more than adequately supportable by a very sound base of government credit--combined to bring into being a vastly expanded money market, new forms of investment, and a substantially new trading class concerned primarily with the movement of public securities and allied varieties of of negotiable paper, and with the kinds of transactions which made them profitable. Meanwhile, these same factors--an intermittent war footing and greatly increased sums available for expenditure by government--required a much expanded bureaucracy in the Treasury, Admiralty and War offices for handling them. The purposeful allocation of this patronage and other forms of royal preferment in such a way as to assure government of dependable majorities for its policies in the House of Commons was brought to something of a fine art by Sir Robert Walpole."

The opposition to the growing state, somewhat corrupt in making political appointments and expanding government (sound familiar?) was what Elkins and McKitrick call the "Country" philosophy of the Whigs. They characterize the debate between Walpole's centralizing strategy and the free market opposition as between Court and Country. Perhaps it is not coincidental that 280 years later the election of George Bush has been characterized as a contest between largely rural "red" states and largely urban "blue" states dominated by college educated professionals linked to the central banking system through employment in big business, Wall Street, government, health care and the legal system.

Elkins and McKitrick argue (p. 15):

"To the extent that the resulting Country opposition had a community of sentiment and purpose, it derived from a somewhat indeterminate mixture: a sense of exclusion, suspicion of the news kinds of power and new ranges of influence that money seemed to be opening up in London and Westminster, and hostility to men who appeared to be threatening the standards and values of which rural squires who had customarily seen themselves as the hereditary custodians. The Country voice, to which were added those of a variety of literary types, was loud in judgment.

"A perilous new era, as the Country saw it, had arrived, one in which the decisions and choices that most affected the nation's liberties, well-being and morals were more and more removed from the hands in which they had traditionally been safest--from the body that is, of the nation's landed proprietors--and were now lodged elsewhere and out of reach. Though the Glorious Revolution of 1688-9 had supposedly blown away the last traces of the divine right of kings, the Crown's executive power had nevertheless taken on a new weight, exercised in new ways and now appeared more pervasive and menacing than ever. The houses of Parliament could no longer be seen as an independent force in government or as the guardians of liberty and virtue in the nation's life, because the base upon which virtue in public service was presumed to rest--landed property and freehold tenure as the safest guarantee of independent judgment and action--was being sapped by the power of money. While the burden of a rising national debt and costs of continuing wars were being principally borne by the gentry through the land tax and excise, men in the City whose wealth was based not on the real value inherent in land but on the ephemeral values of paper and credit were enriching themselves at the nation's expense. Meanwhile, the royal ministry, with its enhanced latitude of initiative and action, and with this new class at its beck and call, was perverting the independent will of Parliament and purchasing its subservience to the Crown's own will through offices, honors, and perquisites. The sacred balance of the constitution, the venerable equilibrium of king, lords and commons, was teetering over an abyss of corruption."

"...Country spokesmen (Whigs) sounded a continuous call for a return to cheap, simple and honest government. They attacked the excise and land tax as impoverishing the nation, wars and funded debts for the same reason (and because both the burdens and the profits fell on all the wrong people), the standing army because of what it boded for the nation's liberties, and all these things because of their potential for corrupting the nation's virtue. Meanwhile, in defense of the balanced constitution and genuine mixed government they kept bringing up Place Bills to limit the Crown's patronage powers and to keep down the numbers of pensioners and placemen sitting in Parliament, and they called for more frequent elections in order to check the range of temptations laid before a too entrenched membership of the House of Commons...

"The response of Court-minded--or non-Country minded--publicists to the Country polemics was not made in a language that challenged in any fundamental way the principles the Country stood for. Indeed, they professed by and large to hold all the same principles, other things being equal. They put their emphasis, however, on the practical and technical considerations in government, foreign relations and economic life that must modify too literal construction of those principles..."

(Note Martin J. Sklar's article on Woodrow Wilson, "Woodrow Wilson and the Political Economy of Modern United States Liberalism" in Murray Rothbard's and Ronald Radosh's New History of Leviathan*. Much like the "Court's" strategy in 18th century England (p. 7):

"Perhaps the greatest source of historical misconception about Woodrow Wilson is the methodological compartmentalization of his mentality into two distinct components, the "moralistic" and the "realistic" or "commercialistic", as if they were discrete and mutually exclusive...wherever Wilson is perceived to have spoken or acted for 'the little man','democracy','liberty','individual opportunity'and the like, he was 'liberal' and moralistic; wherever he is preceived to have spoken or acted for corporate interests, economic expansion abroad and the like, he was 'conservative,' 'commercialistic,' 'expedient,' or realistic." Perhaps Wilson made the transition from Elkins's and McKitrick's Country to Court in his own lifetime.)

Going back to Elkins and McKitrick:

"...Court supporters could be as ready as anyone to deplore the burdens of war, to admit the possibility of the debt getting out of hand, or to acknowledge that standing armies needed watching, or to concede that money, commerce and virtue did not always go together. Nevertheless, the world of the eighteenth century had become immensely widened in scope for the interests of the British nation. A far-flung network of overseas trade, a colonial empire and a due weight in the power relations of Europe all required an active foreign policy and a professional military and naval establishment for giving effect to it. Moreover, such commitments and responsibilities would scarcely even be thinkable without a dependable system of public finance to support them.

"Thus while such received civic humanist values as those concerning luxury, corruption and virtue may not have been exactly repudiated, Court language certainly showed a decidedly revised slant on them. For instance, whatever the virtue once inherent in citizen militias in preference to standing armies, it was now out of the question to send off such a body to be destroyed in France or anywhere else. As for the public debt, the very size of it and the sound credit of the government on which it rested could be seen as testimony to the patriotism and good faith of the class willing to invest their money in it. And as the nation prospered and commerce flourished, luxury itself need not be thought of as leading to certain corruption if it brought refinement and amenity to the common life. So the emergent financial system, the government structure that administered it, the men of affairs who both supported and profited from it, and the beneficent consequences for the nation that could be claimed to flow from it were all defended in strong accents...

"...Virtually nobody was yet prepared to argue that regular parties might be a good thing; Court and Country each charged the other with stirring up faction; and many a country gentleman shied away from joining in any sustained and systematic effort to discredit the Court's established policies...

"...There appears to be a striking parallel between the Court-Country divisions of Georgian England and those that subsequently appeared in Washingtonian America.

"The principal concerns of the Country viewpoint in England re-emerged with an exceptional degree of similarity in the new republic and gave form at virtually every turn to the opposition temper which developed in very short order in response to the policies and actions of the new federal government...As the Hamiltonian program revealed itself over the next two years--a sizable funded debt, a powerful national bank, excises, nationally subsidized manufactures, and eventually even a standing army--the Walpolean parallel at every point was too obvious to miss. It was in resistance to this, and everything it seemed to imply, that the Jeffersonian persuasion was erected."

Jefferson's republican philosophy was largely a response to Hamilton's big government approach. According to it "a predominantly agricultural society was seen as the kind inherently most virtuous, the freest from corruption, the kind best constituted for resisting decay, and the one most to be desired for the American republic." At the root of Jefferson's emphasis on an agricultural America was a mistaken belief in Malthusian economics. In Jefferson's and Madison's view:

"What was above all to be avoided was an unholy alliance of commerce, manufacturing, money and public credit fostered by an intrusive and interfering government. The right kind of commerce could flourish in a world of free trade such as that envisioned by Adam Smith in his famous indictment of mercantilism. Such a world, as the Americans knew all too well, did not yet exist."

Hamilton aimed to implement the British "Court" system in America. But (p. 27) "it was Jeffersonian Republicanism and not Hamiltonian Federalism that would provide the opening political opener for the emergence and growth of nineteenth century middle class capitalism. In contrast to Federalism, which was elitist, Jeffersonian Republicanism was inclusive and it attracted small artisans in the cities as well as entrepreneurs. In contrast, Federalism was elitist and its elitism led to its rejection.

Elkins and McKitrick argue that historians have overlooked Hume's importance to Hamilton's thinking because Hume was not so famous an economist as Smith. Hume, they argued, emphasized development economics to a greater degree than did Smith (p. 107). They write:

"In the economic essays of David Hume, published in 1752, one finds a theoretical projection of the optimum conditions for economic development: a rudimentary but shrewd forerunner of what would in our own day come to be called developmental economics...Hume's case for a commercial society goes well beyond simply the argument for national strength. In 'Of Refinement in the Arts' he insists not only that such a (commercial) society allows a nation to be strong in times of crisis but that it is, by its very nature, a good society...Here then was a very strong case for an urban, commercial society. Its common man of virtue was not the yeoman farmer but the skilled city artisan...'Of Money' and 'Of Interest' explore the relation between the available supply of money at any given time and the general level of productivity of the entire economy. In them, Hume challenges certain common suppositions. An increase in the money supply, according to conventional wisdom, should lead to a directly proportional increase in prices. But this would only happen, says Hume, if 'every man' were to have the same sum 'slipt into his pocket in one night.' If however, the increase were concentrated in relatively few hands, the conditions would be created whereby it would be used to increase the community's real wealth, which is not money but the production of commodities. More physical goods would thereupon be available, and thus prices would not rise in direct relation to the increase of money. The same argument is made with regard to the interest rate, which in the eighteenth century was regarded as the barometer of the community's economic health. It was commonly supposed that the interest rate rose or fell in direct proportion to the amount of money available--the more plentiful, the lower the interest and vice versa--but Hume denies that it worked in any such direct or mechanical way. The key variable is again the degree and manner in which liquid capital is concentrated, the assumption being that it will be in the hands of the most energetic and enterprising men in the community. These are the merchants, the men who are able to exercise the most rational choices as to the alternative uses for money, and it is this very process of directing money into the most productive channels whether through direct investment or lending at interest--rather than the simple quantity of it--that governs the interest rate.

(p. 112) "...Hamilton knew that despite an enormous expansion of the public debt since 1750 England's credit was stronger than ever, and even more significantly, that its economic growth during that same period had been phenomenal. America, meanwhile, unlike Great Britain, did not intend to be plagued by a string of interminable wars, and could thus steadily reduce rather than increase its public debt. Meanwhile, a funded debt combined with a national bank would not only open for the United States sources of credit that were not previously available but would also provide a stable circulating currency that could be expanded to meet the requirements of trade. A generation of merchant-enterprisers would thereby be given access to the capital needed to realize the vast potential of a whole continent endowed with untapped resources and an industrious, expanding population. Even if the public debt were not reduced--of it were reduced only very slowly, which was probably what Hamilton had in mind--the taxes for supporting it would constitute a steadily diminishing burden on a population growing both larger and richer..."

"So central, indeed, was the public credit to the country's well being, as Hamilton saw it, that every means must be taken to protect it. A war with any country would threaten that credit; another serious dispute with Great Britain would destroy it...Another way of putting this would be that America's prosperity and that of Great Britain were inseparable.

Hamilton's principal design reached its completed form in "Report on the Public Credit of January 9, 1790". Elkins and McKitrick emphasize that Hamilton's mind projected fluidly.

(p. 115) "In Hamilton's scheme of things the dynamic force was beyond doubt the merchant class. These were the men who could and would use capital to create more capital--who would build the ships, develop the markets, provide the goods and make the decisions that affected the uses to which the community's resources would be put...Hamilton's faith in the capacity of the merchant class to perform a creative role in the nation's life could rest on a persuasion that this class was the receptacle for a wide variety of knowledge, experiment and ideas...Parallel with Hamilton's projection for America as a society was one for the United States as a government. The government required a sound system of taxation, undoubted stability of credit both national and international, an orderly funding of the several complicated layers of public indebtedness that had grown out of the Revolution."

Many of the early Federalist debates concerned how to "fund" the public revolutionary war debt. "The capital created by a funded debt to become 'an accession of real wealth rather than merely an 'artifical increase of Capital', it must serve "as a New power in the operation of industry' and this would occur only if it went through the hands of men who would use it to build ships and factories, launch business ventures and augment commerce.

Key problems were whether to honor the Continental debt at par, whether to assume the state war debts, how to do the accounting for and settle the Revolutionary War accounts among the states. Hamilton proposed that the federal government assume the states' war debts and a settlement of accounts whereby no state could lose (p. 120). Honoring the debt at par or 6 percent was not possible, but Hamilton proposed a compromise of 4% interest, lowering the interest rate somewhat but to a moderate degree. He set up an excise tax on whiskey to accomplish this. A national bank would provide a dependable ciruclating currency and would manage the financial transactions of the Treasury (p. 123). Moreover, relations with Great Britain would be improved in order to improve trade and so make tariff income more stable.

The authors go on to write (p. 227) : "We cannot account with final precision for all the origins of Hamilton's bank plan, though certain of the main sources are clearly enough identified. In this instance, unlike that of his first Report on Public Credit, Hamilton's direct theoretical inspiration did not come from David Hume. Hume recognized that banks could be useful in providing credit for an expanding economy, but he also believed that they were an inflationary influence and that they encouraged unduly the export of specie. Hamilton could look, however, to a number of recognized authorities such as Postlethwayt and and Adam Anderson, or a favorable theoretical exposition of banks and their functions. He made considerable use of Adam Smith...There was a very close correlation, moreover, between Hamilton's final plan and the charter of the Bank of England, and in all likelihood he worked with a copy of the British statute at his elbow." One of the chief influences on Hamilton was William Pitt (p. 227-8).

The bank's opponents made arguments similar to those of libertarians like Howard S. Katz today (p. 229): "'This bank,' said Stone of Maryland, "will raise in this country a moneyed interest at the devotion of Government; it may bribe both States and individuals.' Jackson of Georgia thought it was 'calculated to benefit a small part of the United States, the mercantile interest only..' He called it a 'monopoly...of the public oneys for the benefit of the corporation to be created. But the kind of country-party fundamentalism with regard to banks that was to become so prominent in the politics of a lter generation was not nearly so sharp here. Men were against it but were not entirely sure why..."

Jefferson wanted to augment the number of representatives in the House since "the only corrective of what is corrupt in our prsent form of government will be the augmentation of the numbers in the lower house so as to get a more agricultural representation, which put that interest above that of stock jobbers." In 1791-2 the Republican opposition to the Federalists emerged "in reaction to the rising influence of the Treasury over Administration policy" (pp. 257-8). "Madison's attempt to prevent the establishment of a national bank" had not been fruitful. "Only two major items remained to complete Hamilton's program. One was congressional approval of a plan for direct assistance to domestic manufacturing through a system of tariffs and bounties. The other was the establishment of a model manufacturing corporation--financed and organized on a sufficient scale that it might take full advantage of government bounties and new labor-saving machinery, and compete successfully with European manufactures...Hamilton's subsequently famous Report on the Subject of Manufactures was submitted to Congress on December 5, 1791. Hamilton took the occasion to prepare a major policy statement, a labor which occupied him for well over a year. As much a work of theory as a series of particualr recommendations, the Report on Manufactures was intended to establish the ground for a systematic fostering of industry by government...In his commitment to the advantages of a mixed economy, together with his concern for the productivity of the nation as a whole there is a ring of modernity. The one writer of the eighteenth century whose experience and perceptions were in certain ways analogous to Hamilton's was David Hume...The Report on Manufactures, with its acute sensitivity to the many benefits that increased manufacturing might bring to an overwhelmingly agricultural economy, is in some respects the most Humean of all Hamilton's papers."

Hamilton argued against both Jefferson's and the Physiocrats' emphasis on agriculture and against Smith's laissez faire argument (p. 259). Hamilton argued that laissez faire overlooks "the deadening force of habit and custom. People do not easily make a spontaneous transition to new pursuits, nor are cautious sagacious capitalists normally disposed to sink their money in uncertain ventures. Thus, the incitement and patronage of government were needed both to overcome old habits and to embolden reluctant investors.

"The theoretical sections of the report reaches its culmination with Hamilton's effort to show that scarcity of capital is not a valid objection to a wide-scale launching of industrial enterprise. Among the remedies are the introduction of banks, with their powerful tendency to extend the active Capital of Country, as well as the attractions of America for foreign investors, both having already been demosntrated by experience. Hamilton's principal counter-arguemnt, however, is a defense of the funded debt, the existence of which relieves from all inquietude on the score of want of Capital. He insists that the funded debt, though not in itself an augmentation of the country's real wealth, is nonetheless a powerful instrument for bringing such augemntation about. The taxes required for servicing the debt may, if the debt is not excessive, serve as a stimulus to greater exertions throughout the community...

"Hamilton now makes the general assertion -- which in a modern developing state would be taken as a matter of course -- that a mixed economy is ' more lucrative and prosperous' than a purely agricultural one...Hamilton concludes by recommending a combination of tariffs, bounties and premiums on specific manufactured products. The proposals themsevles were modest, but the overall intention was an explicit policy of active government support of industrial growth for the benefit of the entire economy...It would picutre Hamilton as conjuring up a kind of 'neo-mercantilism'. Mercantilism was a conscious policy of controlling the economy for purposes of state; Hamilton's purpose was a temporary stimulation of key sectors in an effort to mobilize the energies of the entire community...His ends were...complex and wnet well beyond simpleprotection.

Madison, who opposed Hamilton's statist governmental structure, began his opposition in Congress by attacking a bill that came up on February 3, 1792 for the encouragement of cod fisheries. "The word 'bounty' set off an uproar" (p. 276) as monopolistic interferences in the marketplace. As well, speculation in stock of the Bank of the United States led to the Panic of 1792 and increasing scepticism about Federalism.

"Duer and Macomb had secretly made it up between them that their partnerhsip would be of one year's duration and that they would 'be concerned in making Speculations in the Debt of the United States and in the Stock of the Bank of the United States and Bank of New York to the 31 December 1792.' They anticipated a rising market and may even have attempted to corner it. They made extensive contracts for future delivery and to pay for them began borrowing sums large and small at extravagant interest, from all classes in the city. They also laid hands on most of the cash surplus of the SUM (Society for Establishing Useful Manufactures, the embryonic industrial incubator that Hamilton had aimed to establish and to gain governmental support for it), of which both were leading directors. This furious activity was contagious, and by February, New York City was in a speculative frenzy. Other eastern cities were affected as well. Stocks, however, did not rise as fast as expected, and by March Duer, his credit exhausted was in deep trouble...Duer's failure led to other failures and by early April the city was in the grip of the fall of 1792 things were on the mend...Duer went to debtor's prison on March 23...Duer remained in jail, hopelessly insolvent, for the rest of his days...The atmosphere, nonetheless, had been heavily poisoned. A tendency to ascribe the most extensive evils to Treasury influence and to see in it a steady perversion of public morals was now very widespread. Many had come to believe--Jefferson and Madison among them--that Hamilton himself was enmeshed in corruption. There was a direct relation between such convictions and the eruption of open partisanship that occurred in the spring and summer of 1792. The last shred of likelihood, moreover, of general support for a program of encouragement to manufactures had been blow away forever.

"A major casualty of the Society for the Establishment of Useful Manufactures. Though it was not until aferwards that the Society even got going, and although it continued operations until 1796, the Panic had nonetheless dealt it a mortal blow....For more than a generation in the future no large-scale manufacturing enterprises of any sort would be successfully launched in America. Clearly something was missing from the Humean-Hamiltonian projection of a happy mercantile-industrial commonwealth which needed only the capacity to concentrate capital under the benevolent eye of government...the failure of such indispensable elements as management and technology...At the same time, something more than a country-party fundamentalism was involved in the Jeffersonian-Madisonian rage at 'gambling scoundrels' and in the Virginians' hatred of Hamilton and all that he stood for...It was all well and good to establish the public credit in such a way as to engage the resources of teh community's most energetic men, thus making the public debt an instrument whereby capital might be concentrated for future development...What is to stop the spirit of speculation from becoming an end to itself?

"Seth Johnson wrote to Andrew Craigie in 1791:

"The best support and surest resource of a nation:

"'is in the industry and frugality of its Citizens--whatever in any way tends to lessen or destroy those useful habits must be considered highly prejudicial--The present rage for Speculation by producing in some a sudden and great acuisition of wealth, allures others, of all ranks, from those regular habits of business thro' which the acquirement of property tho slow is Certain, to engage in what, like gaming depends on chance--They feel all the anxiety and eagerness attendant on deep play.

In 1792, Philip Frenau, writing as Brutus in his National Gazette in Philadelphia wrote (p. 283):

"'that a system of finance has issued from the Treasury of the United States and has given the rise to scenes of speculation calculated to aggrandize the few and the wealthy, by oppressing the great body of the people, to transfer the best resourcews of the country forever into the hands of the speculators, and so fix a burthen on the people of the United States and their posterity, which time, instead of diminishing will serve to strengthen and encrease...with unilimited import and excise laws pledged for its support and copied from the British statute book.'"

In 1792 Jefferson (p 287-8):

"had several private conversations with the course of which he seems to have put few checks on his detestation of Hamilton's Treasury and the debaucheries to which he thought its policies were leading. He believed that the Treasury 'possessed already such an influence as to swallow up the whole Executive powers"; that it had contrived a system for luring the citizens into 'a species of gambling, destructive of morality, & which had introduced it's poison into the government itself"; and the the Report on Manufactures, which he hoped would be rejected, went beyond any measure yet advanced for turning the Repbulic into an unlimited government...and that 'there was a considerable squadron in both (houses)whose votes were devoted to the Paper and stock jobbing interest."

Elkins and McKitrick (p. 301) emphasize the elitist nature of Hamilton's ideology:

"Nothing he did was undertaken in a spirit basically hostile to the interest of a very special class in American society, those men in whose hands he still believed the nation's future prosperity rested. Nothing had altered for him the Humean vision of the merchant-enterpriser, the man of large affairs, as the type whoe creative energies would transform the continent. True, the Virginians viewed that type through very different eyes, and the words they applied to him were not honorific ones. But otherwise they were really not wrong when they repeated in endless ways that Hamilton was usuing the financial power of the United States -- as he had determined to do from the beginning, for the benefit of speculators."

Libertarian interpretations of history often assume that Progressivism was imposed afresh in response to advocacy of business interests in the late nineteenth and early twentieth centuries. However, it is more accurate to view Progressivism as an atavistic reappearance of 18th century Hamiltonian Humeanism. To the degree that Keynesian economics was a similarly atavistic and reactionary reappearance of Humean economic theory, it may be argued that there have been two cycles of American history. The Hamiltonian Federalist cycle from 1790 to 1800, which led to the Jeffersonian revolution of 1800. Then, the Progressive-New Deal cycle which reimposed Federalism first in the very Hamiltonian name of economic efficiency and management of the large "trusts" and then in the cloak of social democracy, with central banking being strengthened to new heights in 1932.

*Murray Rothbard and Ronald Radosh, editors, A New History of Leviathan: Essays on the Rise of the American Corporate State. New York: EP Dutton & Co., 1972.

Elitism in American History

Progressivism and social democracy are democratic liberal doctrines that introduce the possibility of an activist, authoritarian state that they aim to limit. Progressives of the early twentieth century management of large business enterprise, although many such as Herbert Croly and Theodore Roosevelt argued for expansion of state action into the social welfare realm. The social democrats under the New Deal discarded the Progressives' interest in efficiency and instead focused on social welfare. Hence, American public policy debate became that that countered those interested in greater efficiency with those interested in increasing welfare transfers. The advocates of greater efficiency tended to emphasize management solutions in the tradition of the Mugwumps. Hence, their emphasis on low taxes was accompanied by an interest in limiting waste in government. These views seem to overlap with the Jeffersonian philosophy of limiting centralized federal government but the Progressives' most basic belief was that efficiency in overseeing big business could not be achieved without centralization of state power. Hence, their philosophy is fundamentally statist and centralizing and so is very much in the Federalist tradition. The social democrats too are descendants of Federalism. The anti-Federalist Jeffersonians and their Jacksonsian descendents believed that centralized institutions such as the central bank and Hamiltonian schemes to support business expansion were opposed to the interests of taxpayers and small holders. It is true that in Jefferson's day there were relatively few workers, but those supported Jefferson. Jefferson opposed the same common law that was used in the Philadelphia Cordwainers' case against unions, and the Jacksonian democracy saw a renewed support for the union cause in the form of the decision of Commonwealth v. Hunt, which changed American legal attitudes in unions' favor. However, the eighteenth century's anti-Federalists nineteenth century's Jeffersonians had a very different point of view from the twentieth century's social democrats. First, the anti-Federalists and Jeffersonians opposed the central bank. Second, they opposed government support for business. Third, they opposed taxation (the Federalists advocated taxes such as the Whiskey tax, not the anti-Federalists). Thus, the spirit of pro farmer and by extension pro worker laissez faire was fundamental to the earliest political debates in America. The elitism of the Federalists was associated with support for big business and big government. The claim that the state's power would be used to support workers and the poor had not occurred to the Federalists at that point. Part of the reason was that the Federalists were individualists who opposed political parties and factions, hence manipulative or political doctrines such as social democracy would not have occurred to them. There were indeed early rumblings of interest in governmental support for workers, such as during Jefferson's 1807-08 Embargo Acts, which caused unemployment in the cities. Some workers demonstrated for expansion of city employment to counter the unemployment that resulted from the embargoes.

The elitist philosophy of Federalism did not die with the Federalist movement in 1800. Federalism died in part because of internal fighting among Hamilton, Adams, Charles Cotesworth Pinckney and other prominent Federalists. Much of their struggle had to do with the abrasive personalities of Hamilton and Adams and their unwillingness to think in terms of a unified party (Hamilton preferred Jefferson to Adams and Adams preferred Jefferson to Hamilton and Pinckney). However, the Jeffersonian Democratic-Republicans eventually broke into two parties, the Whigs of Henry Clay and the Democrats of Andrew Jackson. Of these, the Whigs trailed the Federalists and were precusors to today's Republicans while the the Jacksonians retained the anti-Federalist impulse, were pro-worker, pro-union and anti-elitist. The Whigs believed in big government and support for business, and in central banking. In contrast, the Democrats believed in states' rights and were relatively, but not perfectly laissez faire in orientation. Hence, the history of elitism can be traced directly from the Federalists to the Whigs to the Republicans. It is tragic that the anti-elitist philosophy of Jacksonian democracy became associated with slavery because of its states rights emphasis. Without the issue of slavery, the American debate would have been more clearly along class lines, with the general public supporting Jacksonian democracy and laissez faire, and the business and plantation elites supporting Federalist, Whiggish and then Republican big government and centralization. But the states rights and slavery issue confounded this alignment to a degree.

The transformation in the party orientation of elitism began to occur in the late nineteenth century. In 1884 the elite Republican Mugwumps bolted the Republican Party in favor of the candidacy of Grover Cleveland. Cleveland was a traditional Jeffersonian-Jacksonian candidate, favoring the gold standard and low taxes. The Mugwumps, supported the laissez faire philosophy, perhaps contributing to its identification with the wealthy. However, the Mugwumps also supported rationalization of government and civil service. Even more important, the Mugwumps represented the college-educated elite of the late nineteenth century. Whereas only about five percent of the American public had attended college in the 1880s, over 50 percent of the Mugwumps had attended college. The Mugwumps were very interested in shoring up professionalism in academia, education, social work, law and medicine. They were the first professional interest movement in American history. Thus, some Mugwumps did favor some forms of government intervention, such as improvement of housing standards, and virtually all favored the Pendleton Act and attempts to improve the management of government at the federal as well as the state level. The Mugwumps were predecessors to the Progressives and were the earliest advocates of enhanced focus on rationalizaton of government and support for the professional (and implicitly) economic interests of the professional classes. Thus, American reform took the form of an alliance between professionals interested in narrow interests of their specific professions coupled with rationalization of government. The impulse toward social democracy came in part from the fixation on professional problems, not from a socialistic or equalitarian impulse. Thus, specialists in housing reform and social work began the emphasis on government intervention to improve municipal housing. It was a narrowly defined professional response. The response had two implications: one broad and one narrow. The broad response was to legitimate needs in the cities that the economy would address only slowly as productivity improved and people became wealthier. The narrow response was that the professions gained in power, prestige and access to resources as the broad response gained currency. Hence, the pattern of government programs that combined rationalization with social welfare began to take root with the Pendleton Act. American elites, both in business and in the professions, found that they had much at stake in state largess, and so the American political debate, which became increasingly a debate among elite economic interests (business and rationalizers versus the professions) began to take the shape that it has today.