The Great Turning

by David C Korten

  To Insure Domestic Tranquility

  The decision to establish a strong federal government following the successful conclusion of the Revolution was prompted in consequential measure by Shay’s Rebellion of 1786–87. Farmer patriots who had fought on the side of liberty for worthless government IOUs had, in the classic pattern of Empire, returned home to face bankruptcy and foreclosure on their farms at the hands of financiers whose patriotic service in the war had been limited to profiteering.4

  Their resentment gave rise to an armed rebellion in defiance of court-issued foreclosure orders. Authorities called on the local militia to defend the courts and the law of the land. The citizen militia, however, was composed largely of armed farmers who sided with their neighbors. A group of wealthy Boston merchants eventually financed an army to put down the uprising.

  The advocates of popular sovereignty considered Shay’s Rebellion an exhilarating example of an active and organized citizenry seeking a redress of grievances against an abusive establishment—much as the minutemen had come forth in opposition to the British Crown. The elite establishment considered Shay’s Rebellion to be an unsettling example of the dangers of mob rule and convened a Constitutional Convention in 1787 to create a strong federal government with the power to raise an army to impose domestic order. Article I, Section 8 of the U.S. Constitution gives the Congress the power to “provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions.” It is telling that executing the law and suppressing insurrection both come before repelling invasions in order of priority.

  The bold vision of liberty and justice for all spelled out in the Declaration of Colonial Rights and the subsequent Declaration of Independence and signed earlier by members of the Continental Congress in a moment of revolutionary fervor was nowhere in evidence in the original 184Constitution. Those who drafted it were no longer concerned with protecting their rights against a distant king, but rather with securing their power in the new nation. This post-Revolution reality brought forth a division within the ranks of the delegates to the Constitutional Convention, personified by two men: Thomas Jefferson and Alexander Hamilton.

  Jefferson’s Democracy versus Hamilton’s Plutocracy

  Jefferson, a leading voice for democracy, had an abiding faith in the wisdom of ordinary people and believed that democracy properly rests on the bedrock of economic democracy and a strong middle class. Much like Aristotle, he championed a nation of land-owning family farmers and independent artisans who would own the land and tools essential to their crafts and livelihoods. Jefferson’s greatest fear was that America might come to mirror Europe’s deep divisions between a hereditary class of pretentious and unproductive aristocrats and a hereditary class of the desperately poor. In his ideal, all men would be men of property. He once said, “I am not among those who fear the people. They and not the rich are our dependence for continued freedom.”5

  In his reference to those who fear the people, Jefferson no doubt had in mind Alexander Hamilton, the unabashed champion of elite rule, who once asserted:

  All communities divide themselves into the few and the many. The first are the rich and well born, the other the mass of the people. The voice of the people has been said to be the voice of God; and however generally this maxim has been quoted and believed, it is not true in fact. The people are turbulent and changing; they seldom judge right. Give therefore to the first class a distinct permanent share in the government.6

  Suspicious of the masses, Hamilton equated democracy with mob rule and felt that to become a strong nation America must concentrate power in a class of wealthy aristocrats able to organize and lead the nation to imperial greatness. At the Constitutional Convention Hamilton proposed that a president and a senate be chosen for life.7

  Underlying the differences between Jefferson and Hamilton is the basic truth that those who do not own property live in subservience to those who do. The U.S. Constitution represented a partial compromise 185between Jeffersonians and Hamiltonians, but the latter largely prevailed. The United States would be a constitutional plutocracy —more politely, a republic—a democracy of elites in which the propertied classes establish priorities and agendas and from time to time compete among themselves in open elections for the favor of lesser classes. In the end, the Constitution proved an artful exercise in securing the rights and privileges of property while granting enough liberty to the common man to discourage rebellion.

  CONSTITUTIONAL PLUTOCRACY

  George Mason, a delegate from Virginia, led the demand that the Constitution include a “bill of rights.” Mason lost the battle in the Constitutional Convention. Freedom from England had been won, and the majority of the delegates now felt that the constitutional provisions securing slavery, free trade among the states, creditors’ rights, and an electoral system that assured them control of the institutions of government provided all the protection they needed. They felt no need for a bill of rights.8

  Guarantees for Slavery, Free Trade, and Creditors

  The Constitutional Convention was strongly influenced by three sets of propertied interests. Northern industrialists wanted a single market with uniform rules established at the federal level, and a common external tariff system free of interference by state regulators, so that they could secure unrestricted access to a unified market. They got the interstate commerce clause of the Constitution, which effectively guarantees an integrated national market beyond the reach of state legislators, much as contemporary trade agreements guarantee global corporations global access to national economies, free from interference from national legislators and regulators.

  Northern financiers wanted to secure their right to collect on debts owed to them irrespective of the state in which the obligation was contracted. They won provisions giving the federal government the power to prohibit the individual states from granting relief to indebted farmers, issuing their own currencies, allowing debts to be repaid in anything but gold and silver, or making any laws invalidating contracts 186such as mortgages and loans.9 These provisions secured the rights of creditors and assured the classic pattern of wealth transfer from the working classes to the owning classes.

  Southern plantation owners sought to secure the institution of slavery. They got provisions barring Congress from prohibiting the importation of slaves before 1808 and prohibiting one state from providing sanctuary to a slave or bonded laborer from another.

  Only Cloud Minders Need Apply

  The elite bias is also evident in other provisions of the original Constitution. For example, state legislatures, which as noted above comprised white male landowners, would appoint the state’s two senators. An Electoral College comprising members similarly appointed by the state legislatures would choose the president.

  The ultimate guarantee of elite privilege was the constitutional provision for a powerful high court composed of justices appointed for life by the president, with the power to overturn virtually any act of the legislative and executive branches of government. As a practical matter, appointments to the Supreme Court are available only to graduates of elite law schools, which at the time were open only to sons of the propertied class. As demonstrated by the U.S. Supreme Court’s appointment of George W. Bush as president in 2000, the law is whatever a majority of the sitting justices choose to say it is. There is no mechanism for appeal or dissent no matter how arbitrary or contrary to established law or the public interest its decisions may be.

  The authority of the Supreme Court has at times served the cause of justice, as when a relatively progressive court advanced the cause of civil rights for African Americans and Native Americans in the late twentieth century. The overall record of the court, however, is one of persistent bias in favor of elite interests over broader public interests.

  Concession to Public Outrage

  The proposed Constitution as put forward for ratification by the states was widely criticized by patriots who saw it quite correctly as a de
sign for plutocracy rather than for democracy. The Federalists—persons of wealth and authority who stood most to benefit from the Constitution as drafted—organized a well-funded campaign to get it ratified as quickly as possible. In a pattern familiar to this day, they circulated false 187reports to discredit opponents. Advertisers put pressure on newspapers that opposed ratification.10

  In the end, most states did ratify, but only with the assurance that a Bill of Rights would be added later. The Constitution was amended accordingly on December 15, 1791, but it took many years and amendments for the Constitution to clearly establish that the protections of the Bill of Rights apply to all persons, not just white men of property.11

  The Thirteenth Amendment abolished slavery in 1865. In 1868, the Fourteenth Amendment declared that all persons born or naturalized in the United States and subject to its jurisdiction were citizens and thereby entitled to the equal protection of the law. In 1870, the Fifteenth Amendment declared that no citizen could be denied the right to vote because of race, color, or previous condition of servitude. It was not until 1920, nearly 150 years after the founding, that the Nineteenth Amendment recognized women as persons entitled to the full rights of citizenship by prohibiting any denial or abridgement of the right to vote based on sex. From our contemporary perspective these advances seem painfully slow, yet within the context of five thousand years of Empire they came with remarkable speed.

  THE FEDERALIST PROGRAM

  The contrasting visions of Hamiltonian plutocracy and Jeffersonian democracy played out in the subsequent political division between the Federalist Party of Hamilton, Washington, and Adams and the Democratic-Republican Party of Jefferson, Madison, and Monroe. Merchants and financiers backed the Federalists. Planters, farmers, and artisans favored the Democratic-Republicans.12

  Profiteers before Patriots

  Alexander Hamilton, the champion of plutocracy, served as the first U.S. secretary of the treasury under President George Washington (1789–97). When the administration of George Washington took office, the costs of the Revolutionary War had put the new nation in financial crisis. Hamilton seized the moment.

  In the name of securing the government’s creditworthiness, he sponsored a program to redeem all wartime debts of both federal and state governments at face value—including notes issued to soldiers in lieu of 188pay. Providing due compensation to soldiers and others who had borne the burdens of the war would seem to be a noble act, except that by this time the original debt holders had sold most of the debt papers for a pittance to speculators. Indeed, prior to the public announcement of Hamilton’s plan, wealthy Federalist supporters and officeholders with insider knowledge scoured the country for federal and state debt instruments, bought them up at deep discounts from the unknowing, and then redeemed them at face value for tidy profits when the plan was implemented.13

  Adding insult to injury, Hamilton raised the funds to pay for the debt redemption by levying a tax on whiskey production, which placed the burden primarily on small farmers in the backcountry, many of whom had been the original holders of scrip issued for military service. The understandable outrage sparked the armed Whiskey Rebellion of 1794 in western Pennsylvania. No longer dependent on local militia, President Washington ordered 13,000 troops into the area to put it down.

  Private Profit from Public Credit

  Hamilton also founded the privately owned First Bank of the United States (1791–1811), chartered for twenty years by the Congress to serve as a repository for federal funds, to act as the government’s fiscal agent, and to make loans to both governments and private interests. Some say it was a stroke of financial genius that set the stage for the United States to become a world economic power. Others revile it as a major fraud against the public.

  The bank’s charter, issued in 1790, called for a total capitalization of $10 million, of which $2 million was to come from government and $8 million from private investors. The government put in its contribution. The private shares were quickly bought, but many of the private subscribers made only small down payments and never paid the balance.14 It appears that the private investors who placed little or none of their own capital at risk reaped significant profits as the beneficial owners of an enterprise financed almost entirely by public money and credit.

  When the bank’s charter came up for renewal, the renewal application was rejected and the bank expired in 1811.15 It was followed by the Second Bank of the United States (1816–36), and ultimately by the Federal Reserve System, established in 1913, which is likewise run by private bankers under the guise of being a public institution and which accomplishes 189much the same outcome of creating private wealth from public assets and credit through a more sophisticated and less transparent process.16

  Criminalizing Dissent

  When the Federalist John Adams succeeded the Federalist George Washington to become the second U.S. president (1797–1801), with the Democratic-Republican Thomas Jefferson as his vice president, the nation was experiencing wrenching political tension. Religious fundamentalists had revived the witch trials and were railing against atheists —who by the reckoning of the fundamentalists included deists such as Tom Paine, Thomas Jefferson, and others who professed a belief in God but rejected the fundamentalists’ claims to exclusive truth.

  Adams persuaded the Federalist Congress to pass the Alien and Sedition Acts—a forerunner of the Patriot Act of Bush II—to suppress political dissent and undermine support for Jefferson’s party. The Sedition Act made it a criminal offense to publish false or malicious writings against the government or to incite opposition to any act of Congress or the president. The Sedition Act was used to arrest twenty-five men, most of them editors of newspapers sympathetic to Jefferson, and force the closure of their newspapers. Adams also packed the federal judiciary with extreme conservatives—foremost among them Chief Justice John Marshall, who throughout his term from 1801 to 1835 stood steadfast for protecting the interests of property.17

  THE JEFFERSONIAN PROGRAM

  Partly in response to public outrage against the Alien and Sedition Acts, Jefferson won the presidency in 1800, in spite of warnings from Federalist opponents that his victory would evoke the “just vengeance of an insulted heaven,” with “dwellings in flames, hoary hairs bathed in blood, female chastity violated… children writhing on the pike.”18

  As president, Jefferson brought a halt to the excesses of the Adams regime, nullified the Alien and Sedition Acts, and signed into law the Act of 1808, ending the importation of slaves.19 The Democratic-Republicans, with wide support from white working men, began to break the Federalist hold on state and local governments, increased the proportion of local officials subject to direct election, began to provide for public education, eliminated imprisonment for debt, and stopped enforcing indenture 190contracts for craft apprentices. Jefferson’s party was successful in all but three states in winning voting rights for every white male citizen irrespective of whether they were property owners. All but two states moved to choosing presidential electors by direct election rather than leaving their selection to state legislators.20

  In the end, however, Jefferson’s program featured Empire with a more friendly and democratic face. For all the acrimonious and sometimes violent tension between the parties, the underlying power structure and bias for elite privilege remained remarkably stable. Federal policies continued to allow slavery, favor big industrialists and financiers, and advance the forceful appropriation of Native lands by the U.S. Army.21

  The defining act of Jefferson’s administration was to negotiate the Louisiana Purchase from France in 1803, thereby doubling the size of the United States, providing a safety valve for the pent-up tensions of America’s deep class conflict, and removing potential imperial competitors from the nation’s immediate borders. In an early demonstration of the gift of American politicians for Orwellian doublespeak, Jefferson dubbed the expanding U.S. nation “An Empire for Liberty.”

  WESTWARD EXPANSION

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p; Hardy pioneers were attracted to the newly opened frontier by the promise of freedom from rent collectors, legalized loan sharks, and other institutions of imperial bondage. Yet the predators were quick to follow, and the newly established free farmers all too soon found themselves back in debt, yielding to the local bank its annual pound of flesh — until a bad harvest brought default and the bank claimed everything. The passions that might otherwise have been channeled into open revolt were defused by the continuing promise of yet more virgin territory just beyond the horizon. The United States became a nation of restless, rootless vagabonds, bags always packed and one foot on the wagon.22

  After the Louisiana Purchase came the War of 1812, which opened the way for expansion into Florida, Canada, and Indian territories further to the west.23 When Mexico won its independence in a revolutionary war against Spain, its territory included what are now the states of Texas, New Mexico, Utah, Nevada, Arizona, California, and part of Colorado.