Tuesday 19 April 2011
Thom Hartmann, Berrett-Koehler Publishers
Let monopolies and all kinds and degrees of oppression be carefully guarded against.
— Samuel Webster, 1777
Although the first shots were fired in 1775 and the Declaration was signed in 1776, the war against a transnational corporation and the nation that used it to extract wealth from its colonies had just begun. These colonists, facing the biggest empire and military force in the world, fought for five more years—the war didn’t end until General Charles Cornwallis surrendered in October 1781. Even then some resistance remained; the last loyalists and the British left New York starting in April 1782, and the treaty that formally ended the war was signed in Paris in September 1783.
The first form of government, the Articles of Confederation, was written in 1777 and endorsed by the states in 1781. It was subsequently replaced by our current Constitution, as has been documented in many books. In this chapter we take a look at the visions that motivated what Alexis de Tocqueville would later call America’s experiment with democracy in a republic. One of its most conspicuous features was the lack of vast wealth or any sort of corporation that resembled the East India Company—until the early 1800s.
The First Glimpses of a Powerful American Company
Very few people are aware that Thomas Jefferson considered freedom from monopolies to be one of the fundamental human rights. But it was very much a part of his thinking during the time when the Bill of Rights was born.
In fact, most of the Founders never imagined a huge commercial empire sweeping over their land, reminiscent of George R. T. Hewes’s “ships of an enormous burthen” with “immense quantities” of goods. Rather, most of them saw an America made up of people like themselves: farmers.
In a speech before the House of Representatives on April 9, 1789, James Madison referred to agriculture as the great staple of America. He added, “I think [agriculture] may justly be styled the staple of the United States; from the spontaneous productions which nature furnishes, and the manifest preference it has over every other object of emolument in this country.”1
In a National Gazette article on March 3, 1792, Madison wrote,
The class of citizens who provide at once their own food and their own raiment, may be viewed as the most truly independent and happy. They are more: they are the best basis of public liberty, and the strongest bulwark of public safety. It follows, that the greater the proportion of this class to the whole society, the more free, the more independent, and the more happy must be the society itself.2
The first large privately owned corporation to rise up in the new United States during the presidential terms of Jefferson (1801 to 1809) and Madison (1809 to 1817) was the Second Bank of the United States. By 1830 the bank was one of the largest and most powerful private corporations and, to extend its own power, was even sponsoring its directors and agents as candidates for political office.
In President Andrew Jackson’s annual message to Congress on December 3, 1833, he explicitly demanded that the bank cease its political activities or receive a corporate death sentence—revocation of its corporate charter. He said, “In this point of the case the question is distinctly presented whether the people of the United States are to govern through representatives chosen by their unbiased suffrages or whether the money and power of a great corporation are to be secretly exerted to influence their judgment and control their decisions.”3
Jackson succeeded in forcing a withdrawal of all federal funds from the bank that year, putting it out of business. Its federal charter expired in 1836 and was revived only as a state bank authorized by the State of Pennsylvania. It went bankrupt in 1841.
Although thousands of federal, state, county, city, and community laws of the time restrained corporations vastly more than they are today, the presidents who followed Jackson continued to worry out loud about the implications if corporations expanded their power.
In the middle of the thirty-year struggle, on March 10, 1827, James Madison wrote a letter to his friend James K. Paulding about the issue:
With regard to Banks, they have taken too deep and too wide a root in social transactions, to be got rid of altogether, if that were desirable....they have a hold on public opinion, which alone would make it expedient to aim rather at the improvement, than the suppression of them. As now generally constituted, their advantages whatever they be, are outweighed by the excesses of their paper emissions, and the partialities and corruption with which they are administered.4
Thus, while Madison saw the rise of corporate power and its dangers during and after his presidency, the issues weren’t obvious to him when he was helping write the U.S. Constitution decades earlier. And that may have been significant when the Bill of Rights was being put together.
The Federalists versus the Democratic Republicans
Shortly after George Washington became the first president of the United States in 1789, his secretary of the treasury, Alexander Hamilton, proposed that the federal government incorporate a national bank and assume state debts left over from the Revolutionary War. Congressman James Madison and Secretary of State Thomas Jefferson saw this as an inappropriate role for the federal government, representing the potential concentration of too much money and power. (The Bill of Rights, with its Tenth Amendment reserving powers to the states, wouldn’t be ratified for two more years.)
The disagreement over the bank and assuming the states’ debt nearly tore apart the new government and led to the creation—by Hamilton, Washington, and Vice President John Adams (among others, including Thomas and Charles Pinckney, Rufus King, DeWitt Clinton, and John Jay)—of the Federallist Party.
Several factions arose in opposition to the Federalists, broadly referred to as the Anti-Federalists, including two groups who called themselves Democrats and Republicans. Jefferson pulled them together by 1794 into the Democratic Republican Party (which dropped the word Republican from its name in the early 1830s, today known as the Democratic Party, the world’s oldest and longest-lived political party), united in their opposition to the Federalists’ ideas of a strong central government that could grant the power to incorporate a national bank and bestow benefits to favored businesses through the use of tariffs and trade regulation.
During the Washington and Adams presidencies, however, the Federalists reigned, and Hamilton was successful in pushing through his programs for assuming state debts, creating a United States Bank and a network of bounties and tariffs to benefit emerging industries and businesses.
In 1794 independent whiskey distillers in Pennsylvania revolted against Hamilton’s federal taxes on their product, calling them “unjust, dangerous to liberty, oppressive to the poor, and particularly oppressive to the Western country, where grain could only be disposed of by distilling it.”5
The whiskey distillers tarred and feathered a tax collector and pulled together a local militia of seven thousand men. But President Washington issued two federal orders and sent in General Henry Lee, commanding militias from Pennsylvania, Maryland, New Jersey, and Virginia. To demonstrate his authority as commander in chief, Washington rode at the head of the soldiers in their initial attack.
The Whiskey Rebellion was put down, and the power of the Federalists wasn’t questioned again until the election of 1800, which Jefferson’s Democratic Republican Party won, in a contest referred to as the Second American Revolution or the Revolution of 1800.
In the election of 1804, the Federalists carried only Delaware, Connecticut, and part of Maryland against Jefferson’s Democratic Republicans; and by 1832, as the Industrial Revolution was taking hold of America, the Federalists were so marginalized that they ceased to exist as an organized party, being largely replaced by the short-lived Whigs, who were themselves replaced by today’s Republican Party, organized in the 1850s.
Jefferson and Natural Rights
Back in the earliest days of the United States, Jefferson didn’t anticipate the scope, meaning, and consequences of the Industrial Revolution that was just starting to gather steam in Europe about the time he was entering politics in the Virginia House of Burgesses. He distrusted letting companies have too much power, but he was focusing on the concept of “natural rights,” an idea that was at the core of the writings and the speeches of most of the Revolutionary-era generation, from Thomas Paine to Patrick Henry to Benjamin Franklin.
In Jefferson’s mind “the natural rights of man” were enjoyed by Jefferson’s ancient tribal ancestors of Europe, were lived out during Jefferson’s life by some of the tribal peoples of North America, and were written about most explicitly sixty years before Jefferson’s birth by John Locke, whose writings were widely known and often referenced in pre-revolutionary America.
Natural rights, Locke said, are things that people are born with simply by virtue of their being human and born into the world. In 1690, in his Second Treatise of Government, Locke put forth one of the most well-known definitions of the natural rights that all people are heirs to by virtue of their common humanity. He wrote, “All men by nature are equal...in that equal right that every man hath to his natural freedom, without being subjected to the will or authority of any other man...being all equal and independent, no one ought to harm another in his life, health, liberty or possessions...”
As to the role of government, Locke wrote, “Men being...by nature all free, equal and independent, no one can be put out of his estate and subjected to the political power of another without his own consent which is done by agreeing with other men, to join and unite into a community for their comfortable, safe, and peaceable living...in a secure enjoyment of their properties...”
This natural right was asserted by Jefferson first in his Summary View of the Rights of British America, published in 1774, in which he wrote, “The God who gave us life gave us liberty at the same time; the hand of force may destroy, but cannot disjoin them.” His first draft of the Declaration of Independence similarly declared, “We hold these truths to be sacred and undeniable; that all Men are created equal and independent, that from that equal creation they derive rights inherent and unalienable, among which are the preservation of life, and liberty, and the pursuit of happiness.”6
Individuals asserted those natural rights in the form of a representative government that they controlled, and that same government also protected their natural rights from all the forces that in previous lands had dominated, enslaved, and taken advantage of them.
The Three Threats
Thomas Jefferson’s vision of America was quite straightforward. In its simplest form, he saw a society where people were first and institutions were second. In his day Jefferson saw three agencies that were threats to humans’ natural rights:
•Governments (particularly in the form of kingdoms and elite groups like the Federalists)
•Organized religions* (he rewrote the New Testament to take out all the “miracles” so that in The Jefferson Bible—which is still in print—Jesus became a proponent of natural rights and peace)
•Commercial monopolies and the “pseudo aristoi,” or pseudo aristocracy (in the form of extremely wealthy individuals and overly powerful corporations)
Instead he believed it was possible for people to live by self-government in a nation in which nobody controlled the people except the people themselves. He found evidence for this belief both in the cultures of Native Americans such as the Cherokee and the Iroquois Confederation, which he studied extensively; in the political experiments of the Greeks; and in histories that documented the lives of his own tribal ancestors in England and Wales.
Jefferson Considers Freedom against Monopolies a Basic Right
Once the Revolutionary War was over and the Constitution had been worked out and presented to the states for ratification, Jefferson turned his attention to what he and Madison felt was a terrible inadequacy in the new Constitution: it didn’t explicitly stipulate the natural rights of the new nation’s citizens, and it didn’t protect against the rise of new commercial monopolies like the East India Company.
On December 20, 1787, Jefferson wrote to James Madison about his concerns regarding the Constitution. He said bluntly that it was deficient in several areas:
I will now tell you what I do not like. First, the omission of a bill of rights, providing clearly, and without the aid of sophism, for freedom of religion, freedom of the press, protection against standing armies, restriction of monopolies, the eternal and unremitting force of the habeas corpus laws, and trials by jury in all matters of fact triable by the laws of the land, and not by the laws of nations.7
Such a bill protecting natural persons from out-of-control governments or commercial monopolies shouldn’t be limited to America, Jefferson believed. “Let me add,” he summarized, “that a bill of rights is what the people are entitled to against every government on earth, general or particular; and what no just government should refuse, or rest on inference.”
In 1788 Jefferson wrote about his concerns to several people. In a letter to Alexander Donald, on February 7, he defined the items that should be in a bill of rights. “By a declaration of rights, I mean one which shall stipulate freedom of religion, freedom of the press, freedom of commerce against monopolies, trial by juries in all cases, no suspensions of the habeas corpus, no standing armies. These are fetters against doing evil, which no honest government should decline.”8
Jefferson kept pushing for a law, written into the Constitution as an amendment, which would prevent companies from growing so large that they could dominate entire industries or have the power to influence the people’s government.
On February 12, 1788, he wrote to Mr. Dumas about his pleasure that the U.S. Constitution was about to be ratified, but he also expressed his concerns about what was missing from the Constitution. He was pushing hard for his own state to reject the Constitution if it didn’t protect people from the dangers he foresaw:
With respect to the new Government, nine or ten States will probably have accepted by the end of this month. The others may oppose it. Virginia, I think, will be of this number. Besides other objections of less moment, she [Virginia] will insist on annexing a bill of rights to the new Constitution, i.e. a bill wherein the Government shall declare that, 1. Religion shall be free; 2. Printing presses free; 3. Trials by jury preserved in all cases; 4. No monopolies in commerce; 5. No standing army. Upon receiving this bill of rights, she will probably depart from her other objections; and this bill is so much to the interest of all the States, that I presume they will offer it, and thus our Constitution be amended, and our Union closed by the end of the present year.9
By midsummer of 1788, things were moving along, and Jefferson was helping his close friend James Madison write the Bill of Rights. On the last day of July, he wrote to Madison,
I sincerely rejoice at the acceptance of our new constitution by nine States. It is a good canvass, on which some strokes only want retouching. What these are, I think are sufficiently manifested by the general voice from north to south, which calls for a bill of rights. It seems pretty generally understood, that this should go to juries, habeas corpus, standing armies, printing, religion, and monopolies.10
The following year, on March 13, he wrote to Francis Hopkinson about continuing objection to monopolies:
You say that I have been dished up to you as an anti-federalist, and ask me if it be just. My opinion was never worthy enough of notice to merit citing; but since you ask it, I will tell it to you. I am not a federalist....What I disapproved from the first moment also, was the want of a bill of rights, to guard liberty against the legislative as well as the executive branches of the government; that is to say, to secure freedom in religion, freedom of the press, freedom from monopolies, freedom from unlawful imprisonment, freedom from a permanent military, and a trial by jury, in all cases determinable by the laws of the land.11
All of Jefferson’s wishes, except two, would soon come true. But not all of his views were shared universally.
The Rise of an American Corporate Aristocracy
Years later, on October 28, 1813, Jefferson would write to John Adams about their earlier disagreements over whether a government should be run by the wealthy and powerful few (the pseudo-aristoi) or a group of the most wise and capable people (the “natural aristocracy”), elected from the larger class of all Americans, including working people:
The artificial aristocracy is a mischievous ingredient in government, and provision should be made to prevent its ascendancy. On the question, what is the best provision, you and I differ; but we differ as rational friends, using the free exercise of our own reason, and mutually indulging its errors. You think it best to put the pseudo-aristoi into a separate chamber of legislation [the Senate], where they may be hindered from doing mischief by their coordinate branches, and where, also, they may be a protection to wealth against the agrarian and plundering enterprises of the majority of the people. I think that to give them power in order to prevent them from doing mischief, is arming them for it, and increasing instead of remedying the evil.12
Adams and the Federalists were wary of the common person (who Adams referred to as “the rabble”), and many subscribed to the Calvinist notion that wealth was a sign of certification or blessing from above and a certain minimum level of morality. Because the Senate of the United States was appointed by the states (not elected by the voters, until 1913) and made up entirely of wealthy men, it was mostly on the Federalist side. Jefferson and the Democratic Republicans disagreed strongly with the notion of a Senate composed of the wealthy and powerful.
“Mischief may be done negatively as well as positively,” Jefferson wrote to Adams in the next paragraph of that 1813 letter, still arguing for a directly elected Senate:
Of this, a cabal in the Senate of the United States has furnished many proofs. Nor do I believe them necessary to protect the wealthy; because enough of these will find their way into every branch of the legislation, to protect themselves....I think the best remedy is exactly that provided by all our constitutions, to leave to the citizens the free election and separation of the aristoi from the pseudo-aristoi, of the wheat from the chaff. In general they will elect the really good and wise. In some instances, wealth may corrupt, and birth blind them; but not in sufficient degree to endanger the society.
Jefferson’s vision of a more egalitarian Senate—directly elected by the people instead of by state legislators—finally became law in 1913 with the passage of the Seventeenth Amendment, promoted by the Populist Movement and passed on a wave of public disgust with the corruption of the political process by giant corporations.
Almost all of Jefferson’s visions for a Bill of Rights—all except “freedom from monopolies in commerce” and his concern about a permanent army— were incorporated into the actual Bill of Rights, which James Madison shepherded through Congress and was ratified on December 15, 1791.
But the Federalists fought hard to keep “freedom from monopolies” out of the Constitution. And they won. The result was a boon for very large businesses in America in the nineteenth and twentieth centuries, which arguably brought our nation and much of the world many blessings.
But as we’ll see in the way things have unfolded, some of those same principles have also given unexpected influence to the very monopolies Jefferson had argued must be constrained from the beginning. The result has sometimes been the same kind of problem the Tea Party rebels had risked their lives to fight: a situation in which the government protects one competitor against all others and against the will of the people whose money is at stake—along with their freedom of choice.
As the country progressed through the early 1800s, corporations were generally constrained to act within reasonable civic boundaries. In the next chapter, we examine how Americans and their government viewed the role of corporations, up to the time of the Civil War and its subsequent amendments.
The First Amendment protected citizens from the predations of churches by guaranteeing freedom of religion in a new nation that still had states and cities that demanded obedience to and weekly participation in state-recognized churches or religious doctrine. The Ninth Amendment was a direct and clear acknowledgement of Jefferson’s concept of the natural right of humans to hold all personal powers that they haven’t specifically and intentionally given to their government of their own free will. It reads, in its entirety, “The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.”
James Madison, speech in the House of Representatives, April 9, 1789, in James Madison, The Writings of James Madison, vol. 5., ed. Gaillard Hunt (New York: G. P. Putnam, 1900): 342–45.
James Madison, “Republican Distribution of Citizens,” National Gazette, March 3, 1792, http://olldownload.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=875&chapter=63884&layout=html&Itemid=27.
Andrew Jackson, fifth annual message to Congress, December 3, 1833, http://millercenter.org/scripps/archive/speeches/detail/3640.
James Madison to James K. Paulding, March 10, 1827, http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=1940&chapter=119324&layout=html&Itemid=27.
A statement by Albert Gallatin, who later became secretary of the Treasury after the Federalists lost power.
This early draft of the Declaration of Independence can be viewed at http://www.ushistory.org/declaration/document/rough.htm.
Thomas Jefferson to James Madison, December 20, 1787, http://teachingamericanhistory.org/library/index.asp?document=306.
Thomas Jefferson to Alexander Donald, February 7, 1788, http://press-pubs.uchicago.edu/founders/documents/a7s12.html.
Thomas Jefferson to Mr. Dumas, February 12, 1788.
Thomas Jefferson to James Madison, July 31, 1788, http://teachingamericanhistory.org/library/index.asp?document=998.
Thomas Jefferson to Francis Hopkinson, March 13, 1789, http://www.let.rug.nl/usa/P/tj3/writings/brf/jefl75.htm.
Thomas Jefferson to John Adams, October 28, 1813, http://www.let.rug.nl/usa/P/tj3/writings/brf/jefl223.htm.
Copyright Thom Hartmann and Mythical Research, Inc.
Want a copy of the book? Receive "Unequal Protection: How Corporations Became 'People' - And How You Can Fight Back" as a thank-you gift with a donation of $35 or more to Truthout.