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Bailyn and the
Origins
of
American Politics
Econ 311
Lecture #5
September 15
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• Wrapping up Callender
• We won’t have class next week, Sept. 22.
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Risk• “From these facts it is safe to conclude that corporations before 1830 were not able to raise any large amounts of capital without public assistance. This was not due to a lack
of
adequate
supplies
of
capital,
as
we
have
seen.
The
difficulty related rather to the means of securing control of the existing supply,‐ of inducing its owners to invest it in the various enterprises of the day. The nature of that difficulty will be apparent if we consider for a moment the position
and character
of
the
persons
who
did
the
saving
and
supplied the capital for the community at that time. So far as domestic capital was concerned, there was no large class of persons, who on account of large incomes were willing
to
devote
a
part
of
their
savings
to
risky
investments
or
to
those from which a return must be slow as well as uncertain. Such capital as existed was chiefly in the hands of small savers, who were naturally more interested in security than in the chance of large returns.” P. 151
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• In 1817, New York began construction on the Erie Canal.
• At first, the state was unable to borrow anything in England.
• Most of the lenders were in Upstate New York, land owners along
the canals.
Merchants
in
New
York
City
had
originally
been
against
the canal – they thought it would raise their taxes.
• As canal construction progressed, it became clear that the canal
would
be
a
financial
success,
and
investors
began
buying
state
bonds in
New
York
City,
and
eventually
in
London.
By
the
time
the
canal was completed in 1825, New York state bonds were trading regularly on the New York and London Stock Exchanges.
• Why
state
investment?
• Lenders did not have enough information to trust private firms, but they did trust states.
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• “Consequently, it was necessary, in order to secure his
capital, to
offer
him
a pledge
of
the
faith
and
credit
of
some individual or combination of individuals who were able to command his confidence, as well as to present a promising enterprise. Accordingly, we find
that English
foreign
investments
in
the
early
part
of
the
nineteenth century were made chiefly in public securities. The stock and bonds of private corporations
formed
in
foreign
countries,
unless
indorsed
by
the
government, played but a very small part on the London stock market until after the middle of the century. It was the public securities of the European
countries, the
Spanish
‐American
Republics,
and
the
American States, which were chiefly purchased by the English capitalists.” P. 152
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The Bottom Line• “With
these
facts
before
us,
the
chief
reason
for
making
use of the powers of the State in industrial affairs, which was noted at the beginning, becomes clear. The opening of the West gave rise to an enormous increase in the demand
for capital,
chiefly
to
provide
works
of
internal
improvement. To construct any of the more important of these works required several millions of capital,‐ an amount far greater than had been brought together in any industry in this country up to that time. For corporations to secure so
much
capital
it
was
necessary
to
bring
together
the
many small savings of this country; and to attract the large ones of foreigners. There was no body of private individuals in the country well enough known and with sufficient
influence in
the
business
world
to
establish
the
credit
of
a corporation so that it could command the confidence of
both these classes of investors. The only securities that could do this were public securities, or the securities of corporations which were guaranteed or assisted by the government.
“
P. 153
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States
and
Corporations• The corporation was an important form in
which capital could be assembled.
• State governments
possessed
the
power
to
create corporations, and the financial capacity to invest in them.
• State creation
of
and
investment
in
corporations was necessary to realize the gains from regional specialization Callender
identified.• But corporation were politically dangerous.
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• State investment in canals and RR
• 1825 – Ohio
• 1828 ‐ Pennsylvania
• 1828 ‐
Maryland, C&O
Canal
• B&O railroad
• 1836 ‐ Indiana
• New
York
and
Ohio,
again
• 1837 ‐ Michigan
• Illinois
• by 1841, states had borrowed almost $200 million. 2/3rds
of
this
debt
was
to
finance
investments
in
transportation.
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•
The
other
side
of
the
Callender story
is
investment
in
banks.
• This investment long precedes the investment in
transportation,
at
least
the
large
investments
that
start
in
the 1820s.
• State governments throughout the Northeast began
investing
in
banks
in
the
1790s.
• State investment in banks in the Northeast turned out to be very profitable. In fact, banks were so profitable that it was
the
banks
who
paid
the
states
for
their
charters.
States
did
not need to borrow money to invest in the banks.
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• In the
west
things
were
different.
Populations
were small and transportation costs were
high.
• Throughout the 1810s, 1820s, and 1830s
states in
the
west
and
south
borrowed
money
to begin banks.
• Louisiana borrowed over $20 million to invest in banks.
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• Bailyn
• Bailyn begins with a review of the historians:
• The British were evil and the Revolutionaries were heroes.
• The Revolution was inevitable.
• Letting the facts speak for themselves (doesn’t work)
• Andrews quote: the rise of assemblies
• The rise of the assemblies is persuasive, but according to Bailyn, it does not explain the dynamics of the revolutionary period or what the
revolutionaries
themselves
said
when
they
tried
to
explain
why
they were revolting.
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• The British,
in
England
and
America,
were
proud
of their accomplishments and their Liberty.
•
• The revolutionaries spoke of a conspiracy against
their liberties, and understanding this paranoid
sounding language
is
critical
to
Bailyn’s argument.
•
• And, as it turns out, similar language was
common in
Britain
as
well.
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• Bailyn’s starting point
is
British
political
thinking
of the 18th century and the fact that the colonists were British.
•
• The British, and the colonists, were proud of themselves and what they had accomplished,
particularly in
the
years
after
the
end
of
the
Civil
War and the deposition of James II, and the ensuing wars with the French.
•
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• They viewed the constitution as providing for mixed
government:
•
• Three powers
•
• Monarchy
• Aristocracy
• Democracy
•
• King
• LordsCommons
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• The Constitution was not a written constitution, but an agreed
upon arrangement,
supported
by
custom
and
precedent.
•
• This can be confused with the notion of checks and balances, but its was something different.
•
• p. 21“That liberty had been preserved and could be preserved indefinitely into the future by maintaining the balance in government of the basic socio‐constitutional elements of society: king, lords, and commons.
•
• The balance of mixed government enabled British society to put a limit in the arbitrary use of government power, at least that was how the thinking went.
•
• I have
posted
a paper
of
mine
about
these
questions,
“The
concept
of systematic corruption in American history” on ELMS. You don’t have to read it, it is there if you are more interested.
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• The balance in “mixed government” didn’t
work in
practice
like
it
did
in
theory.
The
three
independent groups were completely
intermixed.
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• The commons had not yet attained supremacy, the King maintained considerable
powers,
but
harmony
between
the
two
was
reached
by a series of links.
•
• In a general way these links could be called “influence”, opposition
leaders would
call
it
corruption.
•
• Placemen 200 out of 558
• Patronage
•
Rotten boroughs
•
• Control of Parliament was never secure, however.
•
•
Because
of
the
way
government
actually
worked,
the
Crown
was
always exerting influence and, apparently, acting in an unconstitutional manner.
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• “Between 1754 and 1790 the House of Commons consisted
of
558
Members,
elected
by
314
constituencies. The 245 English constituencies (40 counties, 203 boroughs, 2 universities)
returned
489
Members;
the
24
Welsh
constituencies and 45 Scottish constituencies returned on member each.”
•
• Two boroughs,
London
and
Weymount and
Melcombe Regis, had four members and five other boroughs one member each.
•
• Namier and Brooke (1964, 2),
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• In 1761, only 22 of the boroughs had over 1,000 voters; another 22 boroughs had between 500 and 1,000 voters; and 11 had about 500
voters.
Together these
55
boroughs
returned
112
out
of
the
405
borough representatives, or 28 percent. Of the 44 boroughs with populations over 500, 23 actually held an election in the elections of 1761.
•
• In “the
remaining
201
English
constituencies
only
18
[held
elections]; i.e. more than half of the larger boroughs were contested, and about one in ten of the rest of the constituencies.” In these non‐contested constituencies only two candidates announced, and no election was held.
• The 148
remaining
boroughs
were
narrow
constituencies
in
which
“The ideas of the time closely connected franchise and representation with property, and gradually the vote and the seat themselves tended to become realty, like advowson, sublime in its ultimate significance, beneficial in practice to its owner.” Many of the
narrow
boroughs
had
less
than
100
electors,
including
the
infamous Old Sarum with 7, non‐resident, electors.
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• This model did not extend to America, government was never like that here. Indeed, it may have been more independent and therefore, to the
eye, more
“mixed.”
•
• Conspiracies were everywhere, and parties were “factions.”
•
• This was in part a reflection of reality and in part an excess of the style of the
time.
But
it
gave
to
the
debate
a tinge
of
extremism,
that
could
blow
up in the American case into genuine paranoia in the 1770s.
•
• But it fed the opposition claims hat the monarchy and the kings ministers were engaged in an attempt to overthrow the constitution and of English
liberties.•
• If the balance failed, tyranny and slavery would follow.
•
•
And
it
seemed
as
though
that
was
happening
in
England
constantly.•
• The King was to stand above this, of course he didn’t.
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• The problem with maintaining and independent House
of Commons
was
that
the
British
were
at
war
with
the
French, off and on, from 1689 to 1815.
• This required a massive increase in the size of the British
Government.
Government
revenues
were
roughly 5% on GNP in 1700 and 20% of income in 1800.
• Coordinating that build up required the cooperation of the House of Commons, the King, and the King’s ministers.
• That cooperation formed the basis for the charges of corruption.
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• Corruption was thought of in a different way in the 18th century
than
it
is
today.
• Today we think of corruption as a public official abusing his or her office for private gain.
• Economics corrupts
politics.
• In the 18th century, they thought of corruption as stemming from politics.
• A ‘faction’ would create economic privileges for specific individuals and groups. Those privileges would be manipulated to get control of the political system.
• Politics corrupts economics.
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Systematic Corruption
• This corruption worked through the creation
of economic
privileges
by
organized
political
groups.
• Thus organized political interests (parties) and
organized economic interests (corporations)
were thought
to
be
inherently
corrupt.
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• There was a constant battle between power and liberty,
and at
the
root
of
power’s
power,
so
to
speak,
was
the
manipulation of economic privilege for political gain.
• The colonists were already primed to see politics in this light from years, decades, indeed a century of following
British politics
closely.
• They were also inclined to see how government interacted with their lives in terms of economic privileges. Indeed, that was the major benefit of the Navigation Acts to the
colonists,
the
privileges
to
engage
in
trade
that
the
Acts
conferred, as well as privileged access to the British market.
• Americans were poised to believe that the British government had become corrupted by a alliance of the Crown and Commons in a way that would eliminate the independence
of
Parliament
and
threaten
their
liberties.
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• Causes of the Revolution
•
• The French and Indian War, or as the Europeans call it, the Sevens Years War.
• Read Crucible of War , Fred Anderson if you are interested
in the
war
and
its
effect
in
America.
• The precipitating event was the Battle of Jumonville Glen, in May of 1854.
• George Washington was leading a group of Virginia militia
and Indians
from
the
Mingo
tribe.
• Washington’s troops ambushed the French, and in the aftermath of the battle, the Mingo Indians attacked the French, killing Jumonville.
• The
incident
set
off
another
round
of
fighting
between
the
English and the French, all over the world as it turned out.
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The Economic Origins of the Revolution
• There has been a long debate about the
causes of the revolution. One persistent
question has been whether the colonists revolted because of the economic burdens
imposed
by
membership
in
the
British
Empire.• There do not appear, however, to have been
significant economic burdens.
• Thus the
“ideological”
origins
of
the
Revolution.