The new self-styled conservatives have been telling Americans that the Founders rejected central banks, that the Founders rejected business regulation, that the Founders rejected letting government into running businesses or providing services.
It’s time for a history lesson. Who was it that authorized the first central bank in the US? Alexander Hamilton proposed it, the First Congress approved it, and George Washington signed it. Most of the men involved had been members of the Constitutional Convention. James Madison opposed the Bank and lost. But when he was President, he signed the bill for its successor, saying that he had been wrong. That was an instructive message. Madison told his countrymen that the Constitution was not the property of the men in Philadelphia who wrote it and that whatever he and others may have thought about the original meaning of the document could be changed over time as the people preferred to understand the Constitution and do things in a different way.
How about involvement in regulating business? Actually, when the early governments chartered corporations, it was common practice to put one or more government representatives on the corporate board. That practice continued for half a century until the country substituted what lawyers call general incorporation statutes. The purpose of those public representatives of course was to give voice to the public interest on corporate boards.
And regulation? Everything was fair game including wages and prices.
Before, during and after the Constitutional Convention, American statesmen from George Washington on down were deeply involved in figuring out how to develop the resources of the continent and improve the circumstances of its people. Washington surveyed several rivers and joined with people in neighboring Maryland and Philadelphia to secure government backing for efforts to open a route to the trans-Appalachian west.
These men were schooled in the mercantilist tradition, not capitalism. They assumed that government had the job of improving the lot of its people, not just standing back and letting history take its course. There was talk about free trade but in the 18th century it most certainly did not mean freedom from appropriate regulation. It was largely directed at tariffs, and the trade wars with Britain that led to constant argument about whether we should respond with trade restrictions of our own or open up our trade.
The anti-regulatory ideology grew up in the mid-19th century, fostered by British ideas that themselves had germinated after our Revolution, and pushed by people who had a lot to gain. Americans began battling to regain control over industry almost immediately, as farmers complained about discriminatory railroad prices for shipping their goods, others complained about monopolies which had never been popular in the US, still others fought the brutal treatment of employees. Anti-regulatory capitalism dominated for perhaps half a century in the entire two and a quarter centuries of our history.
Of course we have always believed in free men and women running their own businesses without being told by the British or anyone else that productive, and wholesome, industries could not be pursued. But we never bought the idea that you could do any darn thing you wanted without concern for your neighbors or the law.
Just the opposite. For the founding generation, the guiding star was the public good. Individual rights did not include the right to thumb your nose at economic regulation for the benefit of the rest of the population.
The next time you hear someone telling you that the Founders of this country believed in freedom from government regulation, just laugh. Theirs is ignorance masquerading as expertise, delivered with all the self-confidence of people who have never bothered to find out what actually happened, and who either don’t understand or don’t care about what happens to everyone else.
– This commentary was broadcast on WAMC Northeast Public Radio on March 2, 2010