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Friday, October 6, 2006

History Lesson Lost

Call me nostalgic, but I still have a thing for the Articles of Confederation. Maybe it’s the enticement of forbidden fruit. In the government schools I attended little if anything was said about the eight years during which the United States of America were governed under the Articles. The curriculum writers must have had a good reason for not devoting class time to that period. What didn’t they want us to know?

If we heard anything about those eight years, it would have been that the period was a mess: provincialism, mobocracy, depression, trade barriers at the state borders, an impotent national government that had to beg the states for money. Thank goodness — the teacher probably said — that wiser heads prevailed and the impractical decentralization of the Articles was replaced by the Constitution, which gave the national government badly needed potency while simultaneously restraining it from violating our liberties. This conundrum was captured by James Madison in Federalist 51: “You must first enable the government to control the governed; and in the next place oblige it to control itself.”

Maybe what the schools didn’t want us to know was that life under the Articles wasn’t so bad after all. Americans got alone fine without a central taxing authority or distant bureaucracy. They enjoyed economic growth, and the transition from a collection of colonies to a confederation of sovereign states was reasonably smooth. It wasn’t perfection, of course, but what is? It also wasn’t a period of laissez faire, so many of the problems experienced, such as inflation, were attributable to grants of privilege and government intervention in economic affairs.

Even interstate protectionism is more legend than fact. Economic historian Jeffrey Rogers Hummel handily disposes of that myth: “Indeed, subsequent accounts have blown this rationale [for strengthening the central government] up into an utterly fanciful picture of competing trade barriers between the various states disrupting the American economy. The two factual instances on which this overblown picture is largely based involve New York and Connecticut, which taxed foreign goods entering from neighboring states — an economically insignificant restriction. The prevailing rule prior to the Constitution was complete free trade among the states (emphasis added).” In fact, Alexander Hamilton said he favored a strong central government in part because it was the only way to sustain a high tariff against the rest of the world. Competition among the states tended to lower barriers to foreign products.

If life under the Articles was reasonably good, why were they scrapped in favor of a plan for a more powerful central government? Merrill Jensen, the respected revisionist historian of the period, offers an explanation in his book The Articles of Confederation: An Interpretation of the Social-Constitutional History of the American Revolution, 1774-1781, first published in 1940. Jensen explains that the negative impression of the confederation period was fostered at the time by those who favored nationalism (over true federalism) and centralized power. Those forces prevailed, and as we know, the victors write the history. “[P]osterity has seldom questioned their partisan interpretation,” Jensen writes.

The Articles of Confederation have been assigned one of the most inglorious roles in American history. They have been treated as the product of ignorance and inexperience and the parent of chaos; hence the necessity for a new constitution in 1787 to save the country from ruin. In so interpreting the first constitution of the United States and the history of the country during its existence, historians have accepted a tradition established by the Federalist Party. They have not stopped to consider that the Federalist Party was organized to destroy a constitution embodying ideals of self-government and economic practice that were naturally abhorrent to those elements in American society of which that party was the political expression.

Jensen goes on to describe the deep division that existed in the British North American colonies and, after the Revolution, in the states. Groups of people are rarely of one mind, and the colonies and states were no exception. As to be expected, a privileged elite came to dominate the government of each colony; power and land were handed out as royal favors, and the recipients became entrenched. In the northern and middle colonies, merchants comprised the most powerful group. In the south that rank was held by the large planters. These people came to think of themselves as the wise aristocracy destined to govern, and they were not eager to give up power to the radical democrats who were the first to push for independence from Britain. When possible, merchants and planters secured their positions by denying the vote to men who held no or too little property or by denying farmers in outlying areas full representation in the legislatures or sometimes any representation at all. Taxation without representation was thus practiced by one group of colonists against another. The victims of this policy were not happy about it and were determined to change the system.

Holding political power was the key to retaining wealth and economic influence against upstart rivals. Jensen notes that in Pennsylvania for example, “the merchants had tried by various means to overthrow the system of markets and auctions in order to get a monopoly of the retail trade. . . . The merchants likewise tried to check the activity of wandering peddlers.” Then as now, businessmen preferred cartels to free and unpredictable competition. When one recognizes the politically powered land speculation that was rampant, one can see how economic interest could have had a hand in shaping political visions. The holders of political power were not invincible, however, and in some colonies democratic and agrarian challengers succeeded in winning control.

Radicals and Conservatives

The upshot is that the contending groups — the “radicals” and the “conservatives” — had different economic and political interests and thus different views about independence from Great Britain. When British usurpations made independence an imperative even for many conservatives, these groups disagreed about how the new nation should be governed. The mercantile interests tended to favor nationalist centralization, which was seen as the best way to maintain power and to hold back the radical democrats. The mass of people who felt themselves imposed on by those interests tended to favor decentralization because they believed they had a better chance for justice with local self-government. Thus what Jensen calls the “internal revolution” was at least as important as the external one against the British. Indeed, the revolution against Britain was seen by the radicals as a means to success in the revolution against domestic aristocracy. The conservatives understood this too. Jensen writes,

The interpretation of the Revolution is often confused by the insistence that all revolutionists were radicals. Probably most radicals were revolutionists, but a large number of revolutionists were not radicals. The conservatives were those who — whether they desired independence or not — wanted to maintain the aristocratic order in the American colonies and states. The radicals were those who wanted changes in the existing order, changes which can be best described as democratic, though the term is necessarily relative.

The Articles of Confederation, Jensen writes, were the radicals’ triumph over the conservatives in the Continental Congress, a constitutional expression of the philosophy of the Declaration of Independence. But the conservatives did not give up their nationalist aspirations. After years of denigrating the confederation and attempting to amend the Articles, they finally got their way in 1787 and used the Constitutional Convention to scrap them in favor of a strong central government. The Antifederalists warned about its dangers, but to no avail.

The framers’ anti-democratic tenor is often taken as a sign of their liberalism. However, Jensen’s approach sheds a different light on the matter. Whether democratization is good or bad depends on the context. When it is an assault on individual sovereignty, it is bad. But when it is a move against aristocracy and mercantilism, it is good. According to Jensen the proponents of democracy and local self-government were disfranchised, overtaxed small farmers trying to resist the entrenched mercantilist elite. They may not have been consistent libertarians, but they were more libertarian than their adversaries. Thus the attack on democracy can be seen as a defense of aristocracy. It doesn’t look so good in that light.

Dispersed power has long been a pillar of liberalism. Decentralization entails smaller jurisdictions, competition, and easier exit. The Articles of Confederation, though hardly perfect, embraced those principles. The plan that took its place exchanged those principles for the promise of checks and balances within a strong central government. It’s fascinating to ponder how things would have turned out had that exchange not taken place.

  • Sheldon Richman is the former editor of The Freeman and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America's Families and thousands of articles.