Debt and Taxes 1780's

Constitution Series

The Anti-Federalists by Jackson Main, 1961, Edited Excerpts

The major political controversy during the 1780’s concerned the payment of public and private debts. Congress urgently needed money to pay the army and the interest on debt. The states were having trouble supplying their troops and meeting their financial obligations and were unable to pay Congress’s requisitions.

On one side were those counties with a high concentration of property, in which the creditor group was strong. On the other side were areas in which the middle class was more powerful and the debtors more numerous. The merchant-lawyer eastern group, generally creditors, supported all measures to strengthen the Congress; the western farming group, generally debtors and termed Radical, supported few, if any, such measures.

Critics asserted that the mass of the people were being taxed to benefit the few, money was taken from the poor and given to the rich – at a time of economic depression. It is not surprising that the less well-to-do were resentful, and that many demanded some other mode of paying the debt. Americans did not have to be reminded that control over taxation was the key to power, and that it had in the past and might now again result in despotism.

The Articles of Confederation

Constitution Series

The Anti-Federalists by Jackson Main, 1961, Excerpts

The Articles of Confederation grew out of Revolutionary America. The Articles of Confederation registered the general fear of a standing army. Congress was prohibited from maintaining a peacetime force except for internal defense. In war, Congress requested the states to provide troops, which were taken under Congressional direction, but all the officers below the rank of general were appointed by the states, and the taxes necessary to support an army were levied by the states.

That the Articles of Confederation denied to Congress the right to raise money by taxation was no accident, nor a product of ignorance, but a recognition that control of the public’s money could be “faithfully watched” only if the individual states had their separate treasuries. Equally important was the conviction that the power to tax must be retained by the people. “Taxation is the necessary instrument of tyranny. There is no tyranny without it.”  The Revolution had been fought primarily over the issue of taxation.

It was in accordance with such principles that under the Articles most powers were reserved to the states and there was no independent executive. Executive functions were performed by Congress through committees. Similarly, there was no judiciary except Congress itself, and that body appointed all officers. Under the Confederation, Congress could not abuse control over taxation and the army, for it had no such powers.

An Economic Interpretation of the Constitution of the United States by Charles A. Beard, 1913, Excerpts

There was a loose union of thirteen sovereign states under the Articles of Confederation. The national government consisted of one legislative house in which the states had an equal voting power. There was no executive department and no general judiciary. The central government had no power to regulate commerce or to tax directly.

The debtor class had developed a strong consciousness of identical interests in several states. Shay’s Rebellion in Massachusetts, the disturbances of Rhode Island, New Hampshire, and other Northern states, promoted the relief of debtors, such as the abolition of imprisonment and laws delaying the collection of debts, and other measures framed in behalf of debtors.

Large and important groups of economic interests, particularly those of the public creditors, were adversely affected by the system of government under the Articles of Confederation. They set to work to assemble a Convention to “revise” the Articles of Confederation.

Opium Wars - Plundering China

Opium Series

The Opium Wars were two wars fought in the mid-1800s that were the climax of a long dispute between Britain and China. In the second war, France fought alongside Britain.

History of the Precious Metals by Alexander Del Mar, 1902, Excerpt

In 1838 the Chinese government, desiring to destroy a traffic which corrupted the morals and promoted the degeneracy of its people, made the use of opium a capital crime, and destroyed British stock of opium at Canton. In 1899 Baron Ketteler, of the German legation at Peking, was killed by a Chinese fanatic. This incident, and the pretense of protecting their own legations, was made the occasion of an attack upon China by the combined forces of Germany, Great Britain, France, Austria, Italy, the United States, Russia, and Japan, in which upwards of one hundred Chinese cities were captured and plundered, upwards of 50,000 innocent people were destroyed.

The allies took the silver, jade, silks and furs, everything of value. The English gathered the furs, ornaments and furniture from every house in their quarter and sold them at auction. The Japanese devoted their energies to gold, silver, and munitions of war, which they shipped to Japan. The French took all they could find. The Germans came late, so they organized "punitive expeditions." A Peking dispatch says that the Chinese women, to escape the nameless bestiality of the Russians, drowned themselves by tens of thousands. The scene of wanton carnage, outrage and spoliation, defy description. The poor innocent children were slain without mercy. Gold, silver and lust were not the only incentives. Wanton murder was added to the other horrors of war upon a defenseless people, against whom war had never been declared.

By this conduct the Chinese hatred of the foreigner will be very justly intensified, and the Chinaman now hates the foreigner a thousand times more than he did when the Boxer troubles began.

Battle-scene from the First Chinese Opium War (1839-42)

The palace of shame that makes China angry

http://www.bbc.com/news/magazine-30810596

02 Feb 2015

There is a deep, unhealed historical wound in the UK's relations with China - a wound that most British people know nothing about, but which causes China great pain. It stems from the destruction in 1860 of the country's most beautiful palace, the old Summer Palace in Beijing. It's been described as China's ground zero - a place that tells a story of cultural destruction that everyone in China knows about, but hardly anyone outside.  The palace's fate is bitterly resented in Chinese minds and constantly resurfaces in Chinese popular films, angry social media debates, and furious rows about international art sales.  And it has left a controversial legacy in British art collections - royal, military, private - full of looted objects.

The Opium Wars: the British army was sent to force Chinese imperial rulers to open up their country further to Western trade and influence. French troops reached Beijing and the Summer Palace, where they began helping themselves to porcelain, silks and ancient books - or simply destroying what they found. British troops joined in when they arrived shortly afterwards. "Officers and men seemed to have been seized with temporary insanity," said one witness. "In body and soul they were absorbed in one pursuit which was plunder, plunder." Loot was an established part of army pay. The army tradition was to share out the spoils, with officers and other ranks taking their cut, and some of the cash used to compensate the families of dead or wounded soldiers.

Soon after the Summer Palace's destruction in 1860, the 8th Earl of Elgin made a triumphant entry to the center of Beijing, his procession symbolizing British and Western domination - and Chinese humiliation.

Greece: Shaking Off of Burdens

The innovation of Legal Tender in seventh century BC was adopted by the greater part of the Greek world. Towards the end of the seventh century BC, wealth and debt went extreme with complications, sort of like now.

Money and Man by Elgin Groseclose, 1961

The introduction of coined money [Legal Tender] produced what might be called in today’s parlance "boom times" in the Mediterranean. It was an era of expansion, of the development of frontiers, of the exploitation of natural resources. Cities flourished, trade was active, debtors and creditors appeared, banks were organized, and in the end there grew up a host of attendant evils resulting from an unbalanced economy based too largely on money.

Toward the end of the seventh century B.C., the Greek civilization, which had been riding the crest of a sudden prosperity, was being carried, irretrievably, it seemed, toward the dark headlands of distaste. The inexorable culmination to the era grew out of the growth of debt. In Attica, as in modern America, the incubus of debt had thrust its tentacles into the very vitals of society. The greater part of the peasants’ holdings had come under mortgage, the evidences of which were stone pillars erected on the land, inscribed with the name of the lender, the amount, the rate, and the maturity of the loan. A still more insidious form of debt was the chattel mortgage in which the farmer could pledge his own person or that of his wife or his children, for the repayment of a loan. These chattels, under Athenian law, could be sold off into slavery, and such was the extent of the existing credit structure that the greater part of the agricultural population was in danger of being converted into bondage.

A state of affairs developed in Greece toward the end of the seventh century B.C. similar to that in the Middle West in the nineteen twenties. Revolution was being talked, with mutterings about "redistribution of the land," and armed insurrection was imminent.

A History of Interest Rates by Sidney Homer, Rutgers University Press, 1963

In Attica, at the beginning of the sixth century B.C. the tenant farmers were under severe economic pressure and threatened rebellion. They were sometimes able to keep only the sixth part of their produce. Personal slavery of whole families for debt was permitted and became common. Freeman had to compete with slaves. In spite of the relief provided by extensive colonization, discontent grew. Pawn credit was widespread. Debt had become an insupportable burden. At this crucial point (594 B.C.) the poet and wiseman Solon was called upon by Athens to assume supreme legislative power for a limited period and revise her laws.

Money and Man by Elgin Groseclose, 1961

The moneyed classes, the aristocracy, and the merchants, sensed the growing dissatisfaction among the masses, and in the hope of staving off rebellion, put up Solon for archonship in 594 B.C. The oligarchy had tried their best to enforce this law of debtor and creditor, with its disastrous series of contracts, and the only reason why they consented to invoke the aid of Solon was because they had lost the power of enforcing it any longer, in consequence of the newly awakened courage and combination of people.

Inaugurated as archon, Solon moved with amazing speed, and before the country knew what was happening, it was going through a social, economic and political revolution that completely revamped the character of the Athenian state and still amazes historians.

Solon assumed extra-legal powers, and with a facility for "catch" expressions that took hold of popular fancy, issued immediately a revolutionary decree under the appealing name "Shaking Off of Burdens". This decree, going at once to the heart of the money problem, tore down all the mortgage pillars of Athens and abrogated at once all agricultural and personal loans. It liberated all those debtors who were actually in slavery under previous legal adjudication, and it forbade any Athenian to pledge his own person or that of any member of his family as security for a loan.

A History of Interest Rates by Sidney Homer, Rutgers University Press, 1963

Solon’s reforms were radical and for the most part they endured. He canceled many debts secured by land and scaled down others. All those enslaved for debt were freed; those sold abroad for debt were redeemed at state expense. Political power was reapportioned according to property. The drachma was devalued by about one quarter. Weights and measures were increased in size. Citizenship was granted to immigrants who were skilled artisans. Judging from these reforms and their acceptance, the economic crisis of 594 B.C. was severe indeed.

Money and Man by Elgin Groseclose, 1961

Of course it shattered the credit structure of Athenian economy. Deprived of the security behind their assets, and with obligations of their own to meet, the landlords and the money lenders were thrown into practical bankruptcy. In solution to this problem, the crumbling financial edifice, Solon provided a partial moratorium by means of a debasement of the currency. The money question solved temporarily - it was to come up again and again in Greek history - Solon was now able to lay the foundation for the enduring structure of reform which brought into being that cynosure of history - the Athenian democracy.

To prevent complete meltdown, the Greek State responded to the economic crisis and looming revolution with the carrot of democracy. However, the system was not a pure democracy, but a democracy representative of propertied individuals, individuals with the greatest ownership, individuals who derive the greatest interest income.

A People’s History of the United States by Howard Zinn, 1980

When economic interest is seen behind the political clauses of the Constitution, then the document becomes not simply the work of wise men trying to establish a decent and orderly society, but the work of certain groups trying to maintain their privileges, while giving just enough rights and liberties to enough of the people to ensure popular support.

To this day, the image of Solon graces the frieze of the United States Supreme Court building impressively supported by pillars of Greek columns.

Solon [Random House Dictionary]

a wise lawgiver.

Supreme Court Frieze

Confucius, Moses, and Solon