Page 3 of
3 THE SHAPE OF
US POPULISM, Part 1 A rich free-market legacy - for
some By Henry C K
Liu
was validated by the behavior of
Nicholas Biddle, a member of the Philadelphian
financial elite, who had been president of the
Second Bank since 1823, and who, after 1829, with
the Jackson White House threatening the future of
the Bank, began seeking political support by
lending large sums without collateral to key
Congressmen and influential newspaper owners and
editors without pressing them for repayment.
Jackson then appointed Roger Taney as
Treasury Secretary (in office 1833-34) who
transferred government funds from the Second Bank
of the United States to state banks on ground of
the Bank had become a risky institution. The Bank
ran on though the
remains of its existing
charter and restructured as a state banks after
the charter expired in 1836.
Tocqueville warning Alexis de
Tocqueville, French sociologist, published
Democracy in America in 1836, which
observed with clear insight that the "primary
fact" behind American democracy was a "general
condition of equality". People in America, he
observed, were "on a greater equality in point of
fortune and intellect, or, in other words, more
equal in their strengths than any other country in
the world, or any other age of which history has
preserved its remembrance."
Tocqueville
admired the energy and versatility of the
Americans he encountered, their high Protestant
moral standards and their willingness and ability
to achieve social progress by forming voluntary
associations instead of being dependent on
government. Such qualities were the natural result
of an environment of abundance in which individual
self-help could produce a good living without
interference from government or private
oppression.
Or the other hand, with equal
insight, Tocqueville warned of the danger of
Americans being pushed into an economic system
excessively intent on making money, and that their
wholesome founding culture was consequently in
danger of being too commercialized. He predicted,
with amazing accuracy, that the initial equality
among Americans might eventually be endangered by
the domination of a new industrialist/financier
class.
To Tocqueville, political democracy
cannot exist without economic democracy which is
always threatened by concentration of wealth.
Throughout its history and up to the present time,
the disconnection between political democracy and
economic democracy remains the weak spot in
American society. The problem is not merely a
disparity of wealth, but more fundamentally, an
unequal gap of opportunities and market power.
The Civil War and big
business Prior to the Civil War which began
in July 1861, big business had not enjoyed such
clear-cut favoritism from government. The agrarian
leaders who controlled the Federal government
during 1801 and 1861 had regarded individual
property in land as more deserving of government
protection than corporate property.
The
logic for this belief is that a corporation, by
virtue of its nature as an exclusive collection of
real persons, is more powerful than any single
real person. By granting such an exclusionary
collection of select individuals the same
protection the Constitution granted to each and
every real individual citizen is a distortion of
democratic principles of equal protection. It is
particularly inequitable when the rights of
exclusionary collectivism are protected as the
expense of the rights of communal collectivism.
Moreover, the basic raison d'etre of
government is its role of protecting the weak,
those who could not otherwise protect themselves.
Giving powerful corporations the same government
protection intended for each powerless private
individual separately amounts to a perversion of
individual rights as well as the principle of
equally before the law, and constitutes a direct
threat to the principles of democracy.
After 1835, with Roger Taney (in office
1835-64) appointed by Andrew Jackson (in office
1829-37) to succeed John Marshall as Chief Justice
(in office 1801-35), the Supreme Court took a
different position to rein in Federalist
centralization. Whereas Marshall had extended the
"implied power" of the Federal government over the
states, Taney ruled to protect those powers of the
states that the Constitution had not specifically
granted the Federal government, upholding state
rights to regulate commerce within their borders
and to adopt and enforce economic policies of
their own to suit local conditions and traditions
for the benefit of citizens within their separate
jurisdictions. Whereas Marshal has ruled
religiously to uphold the sanctity of contracts
and the right of private property, Taney ruled for
the right of states to regulate private property
rights to promote common welfare.
In 1837,
the Charles River Bridge Company, chartered in
1786 by the Commonwealth of Massachusetts, having
made enormous profits from tolls on a bridge
between Boston and Cambridge, claimed that the
terms of its charter forbade the construction of a
competitive bridge. The people of Massachusetts
authorized a second bridge to relieve traffic
congestion and to abolish tolls as the cost of the
first bridge had been more than paid for the by
its monopolistic tolls. The shareholders of the
monopoly brought suit to stop the second bridge.
Taney ruled in an epoch-making decision,
declaring that the public interest was more
important than the alleged property rights of the
private bridge corporation. In his ruling, Taney
wrote: "While the rights of private property are
sacredly guarded, we must not forget that the
community also has rights, and that the happiness
and well-being of every citizen depends on their
faithful preservation."
Taney died in
1864, the year the Civil War ended, and was
replaced by Salmon P Chase, former Treasury
Secretary under Lincoln and former leader of the
Free Soil Party, which opposed the expansion of
slavery into the western territories.
Progress as illegitimate child of
politics Progress is often the illegitimate
child of politics. The same ironic metamorphosis
would apply to Richard Nixon, lifelong
anti-communist, who would be able to achieve as
President a historic opening to communist China in
1973 as a grand strategy in superpower
geopolitics, after a quarter of a century of
ideological estrangement between the two nations,
while a similar attempt by a liberal Democrat,
such as John F Kennedy, would have to face
domestic accusation of being soft on Communism.
It would take anti-abolitionist Abraham
Lincoln (in office 1861-1865), who gained
attention early in his political career as a
pragmatic segregationist cloaked under the
high-minded rhetoric of democratic ideals, to
finally overcome his previous political
rationalization and to make peace with his
personal morals to issue the Emancipation
Proclamation in 1862.
Lincoln came into
national prominence in the Lincoln-Douglas debates
during the 1858 Senate campaign by shrewdly
trapping his opponent, Stephen A Douglas
(1813-1861), into introducing the anti-slavery
Freeport doctrine, permitting the new territories
to exclude slavery in the name of popular
sovereignty. The compromise proposed by Douglas,
in spite of the Dred Scott decision by the Taney
Supreme Court a year earlier in 1857 ruling that
slavery could not constitutionally be excluded
from any territory, cost Douglas much popular
support, particularly among pro-slavery Southern
Democrats, even after his insistence on his
personal indifference to the immorality of
slavery.
Lincoln, the man who had oppose
the exclusion of slavery in the new territories
with his perversely righteous and dubiously
motivated declaration: "A house divided against
itself cannot stand", and who would declare
himself to be personally opposed to racial
equality, would end up abolishing slavery for the
whole nation four years later as a political
expedience brought about by a poorly conducted,
ongoing civil war, notwithstanding his earlier
belief that while "Negroes" should enjoy the right
to life, liberty and pursuit of happiness promised
to all men by the Declaration of Independence, the
extinction of slavery could only be a gradual and
lengthy process, with no near-term target date.
American attitude toward the issue of
slavery in her history is clouded by a fundamental
conflict between its self-image and historical
facts. The majority of Americans continue to be
abolitionists in public and pro-slavery in
private. It shows up in every debate on social
issues even today.
War saved the Union,
destroyed democracy The Civil War, which
lasted from 1861 to 1865, saved the United States
from being partitioned by secession, a fact
conveniently overlooked by those in Washington who
now support secessionist movements around the
world, the latest being the secession of Kosovo
from Bosnia.
Still, the Civil War was not
followed, as Lincoln had hoped, by fraternal love,
mutual forgiveness and reconciliation. Most
Southerners at the end of the fighting in 1865
were resigned to the need to accept the supremacy
of the Federal government and the abolition of the
institution of slavery and to move on to the
urgent task of rebuilding their war-torn home
region where all the fighting had taken place.
But not withstanding Lincoln's inspiring
words of "with malice towards none; with charity
toward all", Southern sentiments of reconciliation
were not reciprocated by a hostile North, where an
attitude to treat the South as a conquered
territory, the root institutions of which required
wholesale reconstruction, lasted more than a
decade after war ended. It was not until 1877 that
the Union was finally restored along a path
towards terms that would be both fair and
acceptable to the South.
After Appomattox,
where Robert E Lee surrendered to Ulysses S Grant
on April 9, 1865, with Lincoln assassinated five
days later on April 15, the returning Confederate
soldiers found their home country in an
indescribable state of ruin and disorganization.
The communication and transportation
infrastructure was totally destroyed by the
vengeful armies of Sherman and Sheridan. The final
phases of the war had degenerated from a patriotic
undertaking on the part of the North to subdue the
South's will to secede, to a frenzied orgy of
savage destruction.
The war debt
accumulated by the Confederate government that had
absorbed all the savings of the South became
worthless in defeat and all Southern banks and
insurance companies that held such debt
instruments were left insolvent.
The
devastation of the Southern economy did not end
with the war. The Federal Treasury confiscated all
properties of the Confederate government. Federal
agents, many of whom were dishonest, exploited the
confiscation order to loot the Southern
agricultural economy to enrich themselves
personally while they transferred wealth northward
to support the costly transition of the war
economy of the North in peace time. With the
defeat of the South went the defeat of popular
democracy and the triumph of big business
corporatism.
Next: Long-term
effects of the Civil War
Henry C
K Liu is chairman of a New York-based private
investment group. His website is at
http://www.henryckliu.com.
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