Mr. Summers is a member of the staff of The Foundation for Economic Education.
Those who are ignorant of history often make the same mistakes that plagued their forebears. A case in point is government economic planning—the planned economy. Today the planned economy is touted as a brilliant new idea, while history books are filled with the unfortunate results of previous planned economies.
The American colonial period offers several classic examples. The first British settlements, Jamestown and Plymouth, were founded on collectivist principles, with the settlers being clothed and fed out of common stores. Since workers received the same rations as idlers, little work was done, and famine killed half the early settlers. Only after the common stores were abandoned, and the colonists were free to engage in private enterprise, did Jamestown and Plymouth prosper.
The founding of Georgia offers another example of the unfortunate results of government economic planning, no matter how well-intentioned the planners may be. In 1732 James Oglethorpe and his partners received a charter from King George II to found Georgia as a haven for debtors and victims of religious persecution, with the trust providing the settlers’ passage and supplies for one year. The colony was also to serve as a military buffer between the British in South Carolina and the Spanish in Florida; military duty was required of each settler. The first colonists, led by Oglethorpe, landed in early 1733 and founded the city of Savannah.
As so often happens, Oglethorpe and his fellow trustees tried to achieve their humanitarian goals through economic regulations. Land use regulations limited individual holdings to 500 acres, with each family receiving a grant of 50 acres. Parcels could not be divided, sold, rented, traded, mortgaged, or willed; they could be inherited only by a son willing to work the land. Otherwise, parcels reverted to the trustees. The unfortunate result of these regulations was that each colonist was shackled to his parcel, without hope of obtaining mortgage capital, and with little incentive to improve or even maintain his land, especially if he didn’t have a son.
When the citizens of Hampstead, in 1738, complained that they had been assigned infertile pine barren, their petition was considered in Oglethorpe’s London home:
"He said he knew the land at Hampstead perfectly well, and it was indeed most of it pine barren, but with pains might be rendered very fruitful as other pine land had been rendered by others; that if these people were humoured in this, there would not be a man in the Colony but would desire to remove to better land, who yet have at present no thoughts of it. That the disorder this would occasion in the Colony is unexpressible. That we ought to consider that if these men were allowed to remove to a new land, they would expect a new allowance of provision for a year, which we are not in a condition to give, and the same would be expected by others."¹
The combined policies of welfarism, collectivism, and land use regulation stifled the settlers’ initiative. Captain Pury reported to the trustees on his return from Georgia in 1733: "There being many lazy fellows in the number, and others not able to work, those who work stoutly think it unreasonable the others should enjoy the fruits of their labor, and when the land is cleared, have an equal share and chance when lots are cast for determining each person’s division."²
Land use control was only one thread of a web of regulation. The "Rules for the year 1735" are a good example of the trustees’ penchant for detailed planning:
"The Trustees intend this year to lay out a county, and build a new town in Georgia.
"They will give to such persons as they send upon the charity, To every man, a watch-coat; a musket and bayonet; a hatchet; a hammer; a handsaw; a shod shovel or spade; a broad hoe; a narrow hoe; a gimlet; a drawing knife; an iron pot, and a pair of pot-hooks; a frying pan; and a public grindstone to each ward or village. Each working man will have for his maintenance in the colony for one year (to be delivered in such proportions, and at such times as the Trust shall think proper) 312 lbs. of beef or pork; 104 lbs. of rice; 104 lbs. of Indian corn or peas; 104 lbs. of flour; 1 pint of strong beer a day to a man when he works and not otherwise; 52 quarts of molasses for brewing beer; 16 lbs. of cheese; 12 lbs. of butter; 8 oz. of spice; 12 lbs. of sugar; 4 gallons of vinegar; 24 lbs. of salt; 12 quarts of lamp oil, and 1 lb. spun cotton; 12 lbs. of soap."³
In case anyone doubted the wisdom of these plans, the trustees unanimously declared in July 1735: "The Board will always do what is right, and the people should have confidence in us."4
The man in charge of doling out provisions, Thomas Causton, had almost life and death power over the settlers. As the trustees’ agent he promptly announced that the colonists "had neither lands, rights or possessions; that the trustees gave and that the trustees could freely take away."5 Naturally, the pressures on Causton and his opportunities for personal gain were enormous, and he was soon accused of bribery, profiteering, and short rationing.
The regulations even extended into the moral realm. In 1735 the Board declared that "no Rum, Brandies, Spirits, or Strong Waters" could be imported, that such liquor be destroyed, and that the sale of liquor was illegal. The prohibition on rum imports crippled trade with the West Indies, a leading source of rum and an important market for Georgia lumber.
Perhaps the most fantastic of the trustees’ plans was the cultivation of silk. The trustees tried to encourage silk production with a guaranteed minimum price and bounties for silk delivered in England. In addition, each settler was required to plant at least 50 white mulberry trees (the silkworms’ main diet) on every 50 acres; settlers with 500 acres had to plant at least 2,000 trees. When the trustees finally permitted a representative assembly in 1751, no one could become a representative who did not have at least 100 white mulberry trees on every 50 acres; no one could become a deputy who did not produce at least 15 pounds of silk on every 50 acres and who did not have at least one female member of his family instructing others in silk reeling.
The main flaw in this scheme was that the silk worms didn’t like Georgia and proved it by dying in droves. In May 1742 alone nearly half the silkworms in Savannah died. The production of silk limped along until the American Revolution, when the silk factory was converted into a ballroom.
Gradually, under intense pressure from the colonists, the trustees abandoned their plans. In 1738 they permitted daughters to inherit land; in 1739 they allowed settlers to will their parcels; in 1740 they permitted leases; in 1741 the maximum holding was increased from 500 to 2,000 acres; in 1742 prohibition was repealed. Finally, in 1752, a year before their 21-year charter was to expire, the trustees returned the charter to the Crown.
But the damage had been done. It was estimated in 1740 that as many as five-sixths of the settlers had fled the colony. "The poor inhabitants of Georgia," one settler lamented, "are scattered over the face of the earth; her plantations a wild; her towns a desert; her villages in rubbish; her improvements a by-word, and her liberties a jest; an object of pity to friends, and of insult, contempt and ridicule to enemies."6
The end of economic planning brought prosperity to Georgia. By 1775, the population had increased eight-fold compared with 1752; imports had increased eight-fold and exports thirty-four-fold compared with 1753.7
There are two lessons to be learned from the Georgia planned economy. First, government economic planning, no matter how well-intentioned, is not a new idea, but has been tried and proved a disaster. Second, the Georgia settlers voted with their feet by escaping to neighboring colonies, much as our forebears escaped European dictatorship and our contemporaries escape the taxes and regulations of New York City. If the entire United. States becomes a planned economy, where will the victims go?
1 Daniel J. Boorstin, The Americans: The Colonial Experience (Vintage Books, New York, 1964) pp. 89-90.
2 Ibid., p. 90.
³ Ibid., p. 87.
4 Ibid., p. 88.
5 Ibid., p. 87.bribery, profiteering, and short rationing.
6 Ibid., p. 95.
7 Encyclopedia Britannica (1906 ed.), Vol. X, p. ³94.