Mutiny in the army, the British still on the frontier, national debt out of control, a weak national government, attacks up and down the Atlantic Ocean and lots of other issues to provide headaches to the ‘founders’. Do you want to be in charge of this new country? Probably not. Well, maybe. Some of you are pretty ambitious, right?
DEMOBILIZING THE ARMY (222) Conspiracy? Really? Yes, it’s true. Congress actually flees and gets 3 months pay to the soldiers to stave off the crisis temporarily. What questions does this raise? Is it possible or even probably that the military could take over control of the government? Yes, definitely. Although political values didn’t support this in the former colonies, these were new days. The unexpected could happen.
OPENING THE WEST (223) What did Congress do right? Well, if you refer to territorial expansion, that went fine. Remember that land speculation was one of the most profitable businesses in the colonies, especially since millions moved west in the next few decades. It was also one of the largest sources of government revenue: the sale of western land to speculators, who then sold it to frontiersmen. This raises more issues and questions. One was slavery. The Northwest Ordinance would have profound effects on political, economic and social development of the northern midwest. Another was Native Americans. They would not be an obstacle to new American citizens who wanted more land. That land also came in New York state with the Fort Stanwix Treaty (1784). How that treaty was negotiated would become a pattern in the years ahead. Finally, you have Europeans, like the Spanish. They still controlled Florida, but how could the Americans protect their own porous western border? Was Jay’s Treaty smart foreign diplomacy? It sure ticked off lots of Americans.
WRESTLING WITH THE NATIONAL DEBT (226) $35 million in debt is not all that bad, considering where our debt is right now, but back then it was enough of a hole to stop all of the founders in their tracks. Owing the money to Europe was bad enough. Having Europe as competitors for land and trade was even worse. Then Robert Morris comes in. This is where things get tricky, and your book barely mentions it. It was the crisis between creditors (wealthy people like the founders) and debtors. It was at this time that states, because of heavy debts owed by individuals, began offering debt-relief, hurting creditors. Professor Woody Holton describes it here:
After 1783, Holton explains, the states faced colossal war debts on which the interest alone required more revenue than the colonies collected before independence. Most states resorted to regressive “direct taxes” on real estate and polls (only adult men). The main beneficiaries were speculators who had purchased government-issued IOUs from soldiers and war suppliers for a fraction of their official worth, then collected 6 percent interest on the full face value, yielding as much as a 30 percent annual return. That was a great deal if you could swing it, as Abigail Adams, Holton’s surprise speculator, understood. John, the future president, wanted to invest in land; not Abigail. Collecting interest was a lot less trouble than working land, and — though she didn’t say it — interest and capital gains weren’t taxed, while land was.
To add to the problem, a severe trade deficit in the mid-1780s drained the country’s gold and silver. The resulting deflation made it harder to pay private debts, which became, in real terms, larger than the original loans. Delinquents could see their farms auctioned off, then spend time in debtors’ prison. The rural population did not submit quietly. Throughout the country, farmers resisted tax collectors, forced courts to close (or burned them down) to prevent foreclosures and demanded paper money and tax relief.
Circumstances called for (in modern terms) a loosening of the money supply, and Holton argues that paper money was a reasonable response. Seven states printed currency (though only three made it legal tender for all debts), and every state provided some tax or debtor relief. The goal was to let people pay their taxes and encourage economic development, but the paper currency lost value in a few states, particularly Rhode Island, which tried to force creditors to accept it. To defenders of fiscal responsibility, Rhode Island showed what too much democracy produced: a situation in which only a fool would lend money to anyone.
Madison, however, understood debtor relief as a majoritarian violation of property rights. That has implications for Holton’s claim that the Founders were for investment, not civil liberties. In fact, they were necessarily for both, since a good investment climate demands, as Madison put it, both “security of private rights, and the steady dispensation of Justice.”
The desire to protect creditors and property rights was, no doubt, a powerful force for constitutional change. Article I, Section 10 of the Constitution prohibits states from issuing anything but gold and silver legal tender or “impairing the Obligation of Contracts,” and Holton shows that several Founders considered it their favorite part of the document. More important, he argues that the Founders buried a host of undemocratic devices in the Constitution to ensure that the new government would not repeat what they described as the states’ “excessive” or “licentious” democracy. No federal official would have to face the voters every year, as almost all state legislators did at the time, for example. Only members of the House of Representatives would be elected directly by the people, and large electoral districts all but guaranteed the election of prominent, often wealthy, candidates.
Why did “we the people” agree to these constraints and ratify the Constitution? Holton says the Federalists manipulated state conventions, persuaded doubters that the new government would lower taxes and misled people with outright lies. More attention to the state ratification debates would, I think, suggest another answer: Many delegates saw full well the undemocratic provisions in the Constitution. But even the Constitution’s critics wanted to be part of a “respectable nation” that could pay its bills and defend its peoples’ interests more effectively than the Confederation had. Many voted for ratification in the hope that amendments would soon modify the Constitution’s more objectionable provisions.
See?
SURVIVING IN A HOSTILE ATLANTIC WORLD (227) The US was the new kid on the block. New and weak. London didn’t have to sink American ships. All it had to do is cause a trade war by blocking our exports and flooding us with imports. Sounds like China today, hm? This is really bad news for any nation, and the British were smiling the whole time. They knew it.
About Administrator
