STOCK MARKET WATCH -- Thursday, 5 July 2012

[Demeter]

33. How Radical Economics Led to U.S. Independence

http://www.bloomberg.com/news/2012-07-03/how-radical-economics-led-to-u-s-independence.html

Big historical events often come to seem inevitable, and little today seems more inevitable in retrospect than America’s declaring independence on July 4, 1776. So it can be startling to recall that well into the spring and early summer of that year, the Continental Congress meeting at the State House in Philadelphia was by no means committed to declaring independence. Until the last minute, powerful men in the Congress still hoped to negotiate a settlement with England. Even more surprising may be that without a crew of lower- class Philadelphia organizers, collaborating secretly with independence-minded gentlemen in the Congress, the declaration never would have occurred. Most outlandish of all: Those down- at-the-heels outsiders had ideas about economics and finance -- some today would call them “socialist” -- far more radically democratic than anything espoused by better-known founders.

Radical economics, in fact, was key to gaining American independence.

We often hear from historians that modern ideas about economic equality and financial fairness shouldn’t be read backward, anachronistically, into the thinking of great men like John Adams, Thomas Jefferson and others who signed the Declaration of Independence. Almost all those men were more concerned with preserving and advancing individual liberty than with passing laws making economic life more equal. The founders took for granted and even endorsed a degree of class difference among Americans that we don’t accept today...Most of them -- even Jefferson -- believed that people without sufficient property shouldn’t get to vote. In many states formed after independence, property qualifications prevailed for voting, with even higher qualifications for holding office. To the famous founders, wise political leadership was equated with economic privilege. But there were other thinkers on economics and finance in founding-era America who took another view. In Philadelphia, outsiders such as Thomas Young, James Cannon, Christopher Marshall, Timothy Matlack, and Thomas Paine (the only one well known to us) formed a group dedicated to gaining political participation for landless laborers, lower artisans, tenant farmers and others whom upscale revolutionary leaders had barred from representative government. The radicals’ goal in seeking poor and working-class access to the franchise was to legislate economic fairness. Some of what they wanted will sound familiar from our own debates about finance: debt relief, easier credit for working people, an end to widespread foreclosure and progressive taxation. To those radicals, independence looked like a chance to make their ideas into realities.

In the spring and early summer of 1776, coordinated largely by John Adams’s older second cousin Samuel Adams, a secret coalition -- upscale gentlemen in the Congress, lower-class insurgents outdoors -- disabled the elected government of Pennsylvania, the Congress’s host, led by the most powerful politician in the country, John Dickinson. Pennsylvania was so strategically and economically important -- already the “Keystone State” -- that without its support, independence couldn’t be declared. And although he was a committed patriot, Dickinson firmly opposed independence. So while John Adams battered Pennsylvania in the Congress with resolutions and preambles, the radicals outdoors organized the whole state’s working class. The coup, when it came, was military but bloodless. The rank and file of the state’s militia -- the privates, with the officers following their men -- supported by Adams’s resolutions in the Congress, refused to take further orders from Dickinson’s Pennsylvania assembly. Their reason? As unpropertied and less-propertied men, they were, they said, “not represented in that house.” That was a radical idea about the basis of representative rights. And although John Adams, for one, collaborated with the men who advanced it, he certainly didn’t share it.

Of course, we know how the larger story went. On July 2, with Dickinson now impotent, the Congress adopted a resolution for independence. Two days later, it issued the famous Declaration. Celebrating with hot dogs came much later. But there was another climax in the summer of 1776, less well-known but especially relevant to our current economic debate. The Pennsylvania radicals wrote a new constitution for their state, in which voting wasn’t qualified by property. Nor was holding office. For the first time, laborers, tenant farmers and others without financial privilege could take full part in government.

Some of the radicals’ economic hopes were surprisingly extreme. Some pushed for a provision in the state constitution limiting how much property any one person could own. That didn’t pass, but assemblies elected under the new Pennsylvania constitution began working on such things as price controls, devaluation of public debt and progressive taxes. They removed a bank charter on the grounds that it served only high financiers, not the whole people.

“Good God!” John Adams said when he read the Pennsylvania constitution. He wanted nothing to do with the radical economics he had helped enable. Yet without that radicalism, and without the Adamses’ collaboration with it, America wouldn’t have declared independence on July 4, 1776.

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(William Hogeland is the author of “Declaration: The Nine Tumultuous Weeks That Made America Independent” and the forthcoming “Founding Finance: How Debt, Speculation, Foreclosures, Protests, and Crackdowns Made Us a Nation.” The opinions expressed are his own.)