Yes, We Can Ignore the Laws We Don't Like. It's Patriotic. - An American and Libertarian History Lesson
February 13, 2010
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I've stated before that history is purely subjective. This is not an original thought. History is the collection, ordering and interpretation of facts, but it is impossible to accomplish this task objectively. How do you objectively decide which facts are important and which are not, and in which order they should be arranged, and from which sources the most reliable facts come from. No one has ever presented history in an objective fashion?
That's why it is so important to look outside of the mainstream for alternative and revisionist reviews of history you think you know. Revisionist is often used in a perjorative sense, but that's unfair. Gore Vidal was a revisionist, as was Howard Zinn. A revisionist merely offers an alternative subjective view of history that differs from the traditional subjective view (which unfortunately is taken to be objective and gospel in most cases.)
This post is a response to TMFBent's Just Ignore the Laws You Don't Like. It's Patriotic post from earlier this month that mocks a modern day attempt to assert states' rights and supporters of states' rights movements. Perhaps we have read not only the taken-as-gospel history that he has, but also the revisionist history he ignores.
David in Qatar
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From How Capitalism Saved America by Thomas DiLorenzo, pp. 72 - 78:
State Sovereignty Versus Mercantilism
Not only did the states delegate relatively few powers to the central government while retaining ultimate sovereignty for themselves (repeatedly referring to themselves as "free and sovereign states" in the founding documents), but they explicitly reserved all other powers to the people, or the states, in the Tenth Amendment to the Constitution. The Tenth Amendment was an integral part of what was known as the system of "dual sovereignty." Under this system, the central government was given certain powers to check the tyrannical proclivities of the states (politicians are politicians, no matter what level of government they serve in), and at the same time the states were given equivalent powers to check oppressions by the federal government. As Gottfried Dietze has explained, "Federalism, instituted to enable the federal government to check oppressions by the governments of the states, and vice versa, appears to be a supreme principle of the Constitution." (1)
But not all founders wanted to check the power of the federal government. A group of politically ambitious men wanted a strong central government that could institute the corrupt British mercantilist system in America, knowing that such a system would inevitably provide substantial political power to those who governed it. Alexander Hamilton was the best-known advocate of this viewpoint, as he favored the mercantilist policies of protectionist tariffs, taxpayer subsidies for private road and canal building corporations, and a government-run monetary system that could finance such patronage.
Hamilton played a hand in essentially destroying his own Federalist Party by using his influence as secretary of the treasury to have Congress enact several extremely unpopular tax increases. First there was the 25 percent tax on whiskey, which led to the Whiskey Rebellion in Pennsylvania and was considered by many Americans to be a betrayal of the Revolution. Then came a national property tax, which led to the Fries Rebellion. Both rebellions had to be put down by a federal army. In an attempt to repulse such antitax protests, the Federalist Party under President John Adams enacted the Alien and Sedition Acts, which made it a criminal act for anyone "to oppose any measure or measures of the government of the United States." Stiff fines and prison sentences awaited anyone who would write or publish "scandalous" or "malicious" articles in opposition to the government. But only members of Thomas Jefferson's Republican Party were ever prosecuted under the Alien and Sedition Acts, which were written so as to expire on the very day that President Adams left office.
The Alien and Sedition Acts have long been recognized as an affront to free speech, but it is important to recognize that one of the main purposes was to serve the Federalist Party's interventionist economic agenda. Jefferson responded to the acts with his Kentucky Resolve of 1798, which said:
"Resolved, that the several States composing the United States of America are not united on the principle of unlimited submission to their General Government; but that by compact under the style and title of a Constitution for the United States and of Amendments thereto, they constituted a General Government for special purposes, delegated to that government definite powers reserving each State to itself, the residuary mass of right to their own self government; and that whensoever the General Government assumes undelegated powers, its acts are unauthoritative, void, and of no force."
Applying the principle of dual sovereignty that was such an important part of the Federalist Papers, Jefferson created the principles of state interposition and nullification: the states and the people reserved the right to judge for themselves whether particular acts of the central government were constitutional or not. (James Madison's Virginia Resolve of 1798 served the same purpose.)
In this instance, it was the Alien and Sedition Acts that were at issue. In the future, nullification, interposition, and even the threat of secession would be used to fend off repeated attempts to introduce mercantilism to America and thereby effectively overturn an important part of the American Revolution.
Perhaps no one more clearly stated the link between states' rights and opposition to mercantilism than John Taylor, a contemporary of Jefferson's and a U.S. senator from Virginia. In his book Tyranny Unmasked, Taylor articulated a deep mistrust of Hamilton and what historian F. Thornton Miller calls the "advocates of mercantilist economics." As Miller writes in his introduction to the 1992 republication of Tyranny Unmasked, Taylor believed that states' rights were an indispensable tool for opposing mercantilist policies. (2) Indeed, Taylore wrote in his book that British mercantilism was "undoubtedly the best [example] which has ever appeared for extracting money from the people; and commercial restrictions, both upon foreign and domestick commerce, are its most effectual means for accomplishing this object. No equal mode of enriching the party of government, and impoverishing the party of the people, has ever been discovered." (3) He denounced "protectionist duties, bounties, exclusive privileges, and heavy taxation" - essentially the Hamiltonian / Federalist agenda - as a recipe for economic depression; argued that taxpayer subsidies to corporations would lead to "an ocean of extravagace" that would impoverish the taxpayers; and stated that a government-run central bank would create "economic gangrene." (4) Taylor "opposed government intervention in the economy and wanted a natural economy, a free market system," writes Miller, and he also believed that "assertive state rights were necessary to preserve liberty," particularly economic liberty. (5)
The principles of states' rights that Taylor and others enunciated were used to protect economic liberty on numerous occasions prior to 1865, when state sovereignty was effectively destroyed as an effective check on the central government. (6) After the War Between the States there would be no more attempts by states to nullify federal laws that were thought to be based on mercantilist exploitation.
In response to British confiscation of American ships and seamen, President Thomas Jefferson imposed a trade embargo on all shipping in 1807. The heavily trade-dependent New England states interposed, citing the Kentucky Resolve, and denounced the embargo as "unjust, oppresive, and unconstitutional" and "not legally binding." (7) The New Englanders defied the embargo law through rampant smuggling, and free trade mostly prevailed.
New Englanders also feared that their political enemies - the Jeffersonians - would do to them what they had attempted to do to Virginia and other southern states when they were in power: use the powers of the federal government to impose disproportionate taxation on other states while directing the lion's share of the benefits of government to their own states. Governor Roger Griswold of Connecticut articulated this fear after Jefferson's election in 1800, saying that "the balance of power under the present government is decidedly in favor of the Southern states" and claiing that New England would end up "paying the principal part of the expenses of government" without receiving commensurate benefits. (8) "There can be no safety for the Northern states" from this impending economic plunder, warned Griswold, unless there was "a separation from the confederacy." (9) In fact, New Engladers plotted for more than a decade to secede from the Union, culminating with the Hartford Convention of 1814, where they ultimately decided not to secede.
The citizens of the states also played an important role in defeating another mercantilist institution, central banking. Alexander Hamilton championed the first Bank of the United States, which led immediately to an inflatin crisis, suffered from severe mismanagement, and was plagued by corruption. (10) So fearful of how this bank could threaten the economic livelihood of the citizens of the states, a number of states attempted to tax it out of existence. In 1819, for example, the Ohio legislature enacted a $50,000 annual tax on each of the two Ohio branches of the bank. The bank refused to pay, so the Ohio government sent armed marshals to collect two years' worth of taxes, or $100,000. (11) Kentucky, Tennessee, Connecticut, South Carolina, New York, and New Hampshire all enacted similar policies of harassment. Ultimately all of this agitation at the state level was successful, for President Andrew Jackson, an implacable foe of the central bank, vetoed the rechartering of the bank. The bank ceased its operations as a depository of federal funds beginning in 1833.
Perhaps the clearest example of how the founders' system of dual sovereignty was used to defeat mercantilism and preserve a more or less free-market economy was South Carolina's "nullification" of the so-called Tariff of Abominations in 1832. In 1825 the South Carolina legislature condemned the entire Hamiltonian / mercantilist agenda in what historian Chauncey Boucher calls "a set of anti-bank, anti-internal improvement [i.e., anti-corporate subsidy], and anti-tariff resolutions." (12) Three years later, under the leadership of Representative Henry Clay of Kentucky, the U.S. Congress raised the average tariff rate to almost 50 percent, with the tax on some items, such as woolen cloth, approaching 200 percent. Trade-dependent South Carolina, which, like most other southern states at the time, was an agricultural society that manufactured very little for itself, saw this as potentially devastating economically. Not only would imported cloting, shoes, tools, and other items become much more expensive, but also, since South Carolinians exported most of what they produced and had to compete in foreign markets, they would not be able to pass on much, if any, of these higher costs to their customers. In other words, they interpreted the tariff as an act of economic exploitation that would benefit only norther manufacturers, who would be protected from competition, mostly at their (South Carolinians') expense. Virginia, Georgia, North Carolina, and Alabama joined South Carolina in condemning the tariff.
In November of 1832 South Carolina adopted an "ordinance of nullification" declaring the Tariff of Abominations to be "null, void, and no law, nor binding upon this State, its officers, or citizens" and refused to collect the increased tariff. (13) The federal government was forced to back down, and a lower compromise tariff rate was adopted. Once again, the citizens of the states were successful in resisting mercanilist exploitation and defending economic freedom and capitalism, in the spirit of the American Revolution. By 1857, the average tariff rate had been reduced to a mer 15 percent.
Yet the tariff issue arose again when the Republican Party gained influence in the late 1850s. In the 1859-1860 session of the House of Representatives, the Republicans fought for the Morrill Tariff, which would more than double the average tariff rate. The debate over the Morrill Tariff was a replay of the Tariff of Abominations episode some thirty years earlier. The main proponents of the tariff were northern manufacturers and unions, wheeas the vast majority of the opposition came from the trade-dependent southern states. Eight-seven percent of northern congressmen voted for the Morrill Tariff, but only 12.5 percent of southern congressmen did. (14) The U.S. Senate passed the Morrill Tariff just days before the inauguration of Abraham Lincoln, a staunch protectionist for his entire political career who supported it.
Although the American Revolution was fought in large part as a revolt against the stifling mercantilist policies of the British government, and although the founders had specifically aimed to guarantee economic liberties to the citizens, it was at this point that effective political opposition to mercantilism in America ended. By the second year of the Lincoln adminstration the average tariff rate had more than tripled, to over 47 percent, and it remained that high or higher for most of the next fifty years. During the War Between the States, the National Currency Acts cemented central banking into place, and the federal government granted vast subsidies to railroad corporations, which led other industries to lobby feverishly for similar subsidies in the following decades. (15) The revolt against mercantilism that commenced with the Revolutionary generation was ended, and Hamiltonian mercantilism has prevailed, in varying degrees, ever since.
Notes
1. Gottfried Dietze, America's Political Dilemma: From Limited to Unlimited Democracy (Baltimore: Johns Hopkins University Press, 1968),.67.
2. F. Thornton Miller, introduction to John Taylor, Tyranny Unmasked (Indianapolis: Liberty Fund, 1992), xvi.
3. Taylor, Tyranny Unmasked, 11.
4. Ibid., 19.
5. Miller, introduction to Taylor, Tyranny Unmasked, xxi.
6. Thomas J. DiLorenzo, The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War (New York: Three Rivers Press, 2003); and Forrest McDonald, States' Rights and the Union ( Lawrence: University Press of Kansas, 1999).
7. James J. Kilpatrick, The Sovereign States (Chicago: Henry Regnery, 1957), 130.
8. Henry Adams, Documents Relating to New-England Federalism, 1800-1815 (Boston: Little, Brown, 1877), 376.
9. Ibid.
10. Robert V. Remini, Andrew Jackson and the Bank War (New York: Norton, 1967).
11. Kilpatrick, The Sovereign States, 152.
12. Chauncey Boucher, The Nullification Controversy in South Carolina (New York: Greenwood Press, 1968), 1.
13. Ibid., 183.
14. Robert A. McGuire and T. Norman Van Cott, "The Confederate Constitution, Tariffs, and the Laffer Relationship," Economic Inquiry 40, no. 3 (Summer 2002): 428-38.
15. See DiLorenzo, The Real Lincoln
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