Eight generations of the Boal family have lived in the house in Boalsburg, where you can see five signatures of Presidents of the United States, and the personal possessions of -- you heard me -- Christopher Columbus.
(2163)
John Dickinson and Robert Morris were good friends who pushed the Articles of Confederation through to ratification. Both of them had been active critics of Great Britain's treatment of the colonies, but both hesitated to sign the Declaration of Independence, and both later relented and fought for Independence. Dickinson's final position is less clear, but it was Morris who first saw the weakness of the Articles, and pressed on for their replacement by the Constitution.
(2226)
It could be said the framers of any constitution seek to remind future generations of the reasons for founding the nation.
(2231)Right Angle Club 2012
In progress.
Morris Quits His Business
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| Charles Dickens |
There are a dozen episodes from American revolutionary times which might be called pivotal, but a single debate in the Pennsylvania Legislature seems to have started our political parties in their present form. The two debaters, their topic, and its consequences all rise to dramatic, even operatic, heights. In another place, we intend to explore the clashing philosophies of the Eighteenth century, with Hegel and Hume at the apex, but two quotations from Adam Smith are more intelligible to ordinary readers. Charles Dickens nearly ran away with the topic in his novel A Tale of Two Cities, but Charles Brockton Brown and Hugh Henry Brackenridge were good enough and they were Pennsylvanians, present at the scene. John Adams and Thomas Jefferson debated for decades about which of them was the main protagonist. But all of that is background material for that operatic scene at Independence Hall, where the real David and Goliath were William Findlay and Robert Morris.
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| Robert Morris |
Robert Morris, it must be remembered, was probably the richest man in America, a signer of the Articles of Confederation, the Declaration of Independence, and the Constitution. He was one of three men, including Ben Franklin and George Washington, about whom it could be said that the Revolution could not have been won without them. He essentially invented American banking, had founded the first bank, the Pennsylvania Bank, invented investment banking, corporate conglomerates, American maritime insurance, and dozens of financial innovations. His merchant house probably had 150 ships sunk by the enemy. George Washington lived in his house for years.
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| William Findlay |
William Findlay, on the other hand, was a Scotch-Irish frontiersman with a flamboyant white hat, elected by others like him from the Pittsburgh area to promote inflation through state-issued debt paper, so as to finance land speculation in the West. He had no education to speak of, and no accomplishments to mention. He made no secret of his self-interest in land speculation, and therefore no secret of his opposition to rechartering the Bank of North America, which Morris had founded for the purpose of restraining inflation and speculation. Findlay wanted the bank to disappear, get out of his way, and he boldly denounced Morris for his self-interest in promoting a bank he owned stock in. He utterly denied that Morris had any motive other than the profit he would make for the bank, so they were equal in self-interest. Let's vote.
Prior to that time, Findlay had politically defeated Hugh Brackenridge, using the two strong arguments that Brackenridge had gone to Princeton, and written poetry; how could he possibly represent the hard-boiled self-interest of his frontier constituents?
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| Hugh Brackenridge |
Morris was positively apoplectic at this sneering at everything he stood for. As for the country's lack of trust in a man who had risked everything to save it, well, what have you done for us, lately? America had lately thrown off the King, but what it had really discarded was aristocracy. Every man was as good as every other man, and each had one vote. Under aristocratic ideals, a man was born, married and educated in a leadership class, expected to be utterly disinterested in his votes and actions, scrupulous to avoid any involvement in trade and commerce, where temptations of self-interest were abundant. Washington never accepted a salary for his years of service and even agonized for months when he was awarded stock in a canal company, wanting neither to seem ungrateful nor to make private profit. John Hancock, who came pretty close to having as much wealth as Morris, gave up his business when he was made Governor of Massachusetts. Benjamin Franklin was only accepted into public life when he retired from the printing business, to live the life of a gentleman. That's how it was, everywhere; every nation had a king, and depended on rich aristocrats to supply the leadership for war and public life. But, now, America had a republic where every man was equal. Morris, and the Federalists he represented, wanted to turn the clock back to an era that would never return.
Goaded too far, Morris impulsively resigned his business interests, to prove he had the nation's interest at heart in opposing inflation. It didn't help. Findlay won the vote, and the Bank of North America was closed.
http://www.philadelphia-reflections.com/blog/2178.htm
Morris Upended by a Nobody
The Revolutionary War ended militarily with the Battle of Yorktown in 1781, and diplomatically with the Treaty of Paris in 1783. The careers of Washington and Franklin appeared to be complete, while the economic and financial career of Robert Morris seemed likely to stretch for decades into the future. But as matters actually turned out for these three fast friends, it was Washington who was propelled into a new political career, Franklin soon died, and Morris got himself into a career-ending mess. The financial complexity and economic power of the United States did grow massively in the next several decades, but unfortunately Robert Morris was soon unable to exert leadership. At the end of Washington's eight years as President, the power of the Federalists, and particularly the three men most central to it, was coming to a close. John Adams had a tempestuous single term, and then Federalism was all over.
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| Robert Morris |
The end of the Eighteenth century marked the end of The Enlightenment and the beginning of the Industrial Revolution, accompanied by many national revolutions, not just the American one. This was a major turning point for world history. The momentum of these upheavals still continues, but it is clear that the Industrial Revolution of which the Morris banking revolution was an essential part swept the world far faster than the social and political revolution, in which he also played a pivotal role. In the banking and industrial revolution, it is universally agreed that Morris was almost always right. In the social and political world it is conversely agreed he was quite wrong. Essentially, Morris assumed that a small minority, an aristocracy of some sort, would rule any country. Within weeks of the ratification of the new Constitution, or even somewhat in anticipation of it, America made it clear that replacing an aristocracy of inheritance with an aristocracy of merit would not satisfy the need. Morris, born illegitimate and soon an orphan, was obviously in favor of promotion based on merit. John Adams defined leadership even more narrowly; he said a gentleman was a man who went to college, and he probably meant Harvard. Nobody extended the leadership class to include Indians and slaves, but the backwoodsmen of Appalachia made it clear that power and leadership at least included them. Thomas Jefferson was the visible leader of this expansion of franchise, but changed his mind several times. James Madison switched sides; Thomas Paine switched in the opposite direction. The leaders of Shay's Rebellion and the Whiskey Rebellion lacked coherence and consistency on this point; instead of agitating for a refined goal, they mostly seemed to be running around looking for a leader. William Findlay, on the other hand, knew what he wanted. The issue might be defined as follows: it was obvious that hereditary aristocracy was too small and too inflexible to suffice; but it was also obvious that every man a king was too inclusive. An expanded leadership class was needed, but its boundaries were indistinct and contentious. But to return to Findlay, who at least had a clear idea of what he wanted.
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| William Findlay |
William Findlay was a member representing Western Pennsylvania in the State Legislature, in 1785. It would be difficult to claim any notable accomplishment in his life; he was largely uneducated. The new leadership class must therefore include both the uneducated and the mediocre. The Legislature at that time met in the State House, Independence Hall, in Philadelphia, where no doubt the unconventional dress and manners of backwoodsmen did not pass without audible comment. Findlay made his own political goals quite explicit; he was for paper money to facilitate land speculation which could make him rich. Wealth was a goal, but it did not confer distinction. The rights of the Indians, the rights of the descendants of William Penn, the rights of the educated class and the preservation of property were all just obstacles in the way of an ambitious man who had carefully studied the rules. Everybody's vote was as good as everybody else's, and if you shrewdly controlled a majority of them, you could do as you please. If this meat axe approach had any rational justification, it lay in the essential selfishness of every single member of the Legislature, working as hard as he could to further his own interest. If someone controlled a majority of such votes, then the majority of the public were declaring in favor of the outcome. Those who believed in good government and the public interest were saps; the refinements of education mostly just created hypocritical liars. There was a strain of Calvinism in all this, and a very large dose of Adam Smith's hidden hand of the marketplace. If you were rich, it was proof that God loved you, if you were poor, God must not think much of you, or He wouldn't have made you poor. Findlay had the votes and meant to become rich; if his opponents didn't have the votes, they could expect soon to be poor. In this particular case, the vote coming up was a motion to renew the charter of the Bank of North America. Findlay wanted it to die.
It came down to a personal debate between Findlay, and Robert Morris. Morris had conceived and created America's first bank, the Bank of Pennsylvania. Today it would be called a bond fund, with Morris and a few of his friends putting up their own money to act as leveraging for loans to run the Revolutionary War. After a short time, it occurred to Morris that the money in a bank could be expanded by accepting interest-bearing public deposits and making small loans at a higher interest rate, which is the way most banks operate today. Accordingly, a new bank called the Bank of North America was chartered to serve this function, which greatly assisted in winning the Revolutionary War. There was no banking act or general law of corporations; each corporation had its individual charter, specifying what it could do and how it would be supervised. When the charter came up for renewal, Findlay saw his chance to kill it. Morris, of course, defended it, pointing out the great value to the nation of promoting commerce and maintaining a stable currency. The reply was immediate. Morris had his own money invested in the bank and only wanted to profit from it at the public expense. His protests about the good of commerce, and the public interest in stable money, were simply cloaks for this rich man's greed to make more money. Findlay made no secret of his interest in reverting to state-authorized paper money, which could then be used by the well-connected to buy vast lands in Ohio for speculation. There were enough other legislators present who could see welcome advantages, and by a small majority the charter was defeated.
At this point, Morris made a staggering mistake. After all, he was a simple man of no great background, largely uneducated but fortified by his ascent in society from waterfront apprentice to the highest of social positions, a friend of George Washington and Benjamin Franklin, acclaimed as a financial genius, the man who saved the Revolution, very likely the richest man in America. For many years, he had harbored not the slightest doubt of his personal genius, his absolute honesty, and total dedication to the welfare of his country. To have this reputation and accomplishment sneered at by a worthless backwoodsman, a man who would stoop to using the votes of other backwoodsmen to accomplish self-enrichment, was intolerable. Morris announced and actually did sell out his entire business interest as a merchant, at a moment when he fully understood the new nation was about to enjoy an unprecedented post-war boom. So much for his self-interest. It helps a great deal to understand that John Hancock and Henry Laurens had done the same thing in Boston and Charleston, against what we now see as a strange aristocratic tradition of prejudice against bankers and businessmen. In even the few shreds of aristocracy now surviving in Britain and Europe, the tradition persists that a true aristocrat is so independently wealthy that no self-interested temptations can attract him away from purest attention to the public good. The original source of this wealth was the King, who conferred high favor on those who served the nation well. A curious exception was made for wealth in the form of land, the only dependable store of tangible wealth, and transactions in land. Wealth was something which came from God and the King in return for public service. Land ownership was its tangible storage and transfer medium. Otherwise, grubbing around with trade and manufacture was beneath the dignity of a true gentleman.
We now know what was coming. Wealth was soon to be the reward of skill and merit, recognized by fellow citizens in the marketplace, by consensus. Findlay and his friends wholly accepted this conclusion, unfortunately skipping the merit part of it for several decades. In their view, you were entitled to the money if you had the votes. As the nation gradually recognized that rewards must be durable, and once granted were yours to have and to hold, the new nation gradually came to see the need for durable ownership of property. Unless or until the owner places it out at risk in the marketplace, legislative votes may not affect its ownership. Our system ever since has rested on the three pillars of meritorious effort, assessment of value by the free market, and respect for pre-existing property. That's quite a change from the Divine Right of Kings, and therefore quite enough material to keep two political parties agitated for a couple of centuries. And quite enough change to bewilder even so brilliant a victim as Robert Morris.
http://www.philadelphia-reflections.com/blog/2181.htm
Boalsburg
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| Boalsburg |
Five miles East of State College is Boalsburg, which is by far the most interesting place in Central Pennsylvania. First of all, the town itself is laid out around the most perfect surviving example of a Scotch-Irish diamond. The Scots in Northern Ireland were much resented by their Roman Catholic neighbors, and gladly accepted James Logan's offer to come to William Penn's haven of religious freedom, in return for their settling near the Indians. This was Logan's solution to the problem of keeping peace between the pacifist Quakers in Philadelphia, and the sensitivities of the Indians about settlers on their ancient lands. The Quakers wanted to avoid conflict with the Indians, wouldn't sell them either liquor or gunpowder, while Logan was under orders from Penn's descendants to sell the land. So, being Scotch-Irish himself, he felt confident his relatives would find ways of coping with the problem. Much of the turmoil of Pontiac's War and the French and Indian Wars, the marauding Paxtang Boys and King George's War, grew out of the resulting conflicts between the two notoriously combative groups. In any event, this decision explains why Scotch-Irish settled the frontier early, and surprisingly far west of the centers of Pennsylvania Dutch settlement. The Scotch Irish had a tradition of favoring the cross-roads of two main highways. Their habit was to cut off the four corners of an intersection, leaving a diamond-shaped park in the middle. Traditionally, the enlarged intersection would have a flagpole in the middle.
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| Boalsburg Diamond |
Naturally, the diamond was a good place to put a post office, a general store, or a tavern. A man named Boal put up an early tavern, and this diamond became Boalsburg. Boal is the name of a type of Madeira wine, which may have some relevance here, having to do with old stories of some Portugese debts which were paid off in the land of Center County. In any event, there is a log cabin near the diamond, with a dozen Boal tombstones in front of it. Quite a large and elegant restaurant is now more directly on the square. This town is a photographer's dream, and well worth anyone's drive around the main streets.
At some time, the Boal family moved out of the center of town to a mansion about half a mile away. From the looks of it, five or six additions were made to house family and servants, and it almost looks like five houses joined together. The carriage house has a couple of ancient carriages, one with and one without, leaf springs. The walls are hung with dozens of sabers and swords from many different wars, each with its story. There are muskets and rifles, dating back to the Revolutionary War.
The main house is modest for a mansion, but immoderate for a farm house. It has definitely been lived in, and it's built for comfort. The walls are covered with trophies and mementos, with five signatures of US Presidents identifiable. Lots of Boals seem to have married lots of European nobility, perhaps in one of these rooms. One old rake is quoted as saying he inherited three fortunes -- and spent 'em all. Over and over again the theme emerges: the Boals were a military family, often raising their own regiments. Across the road in what seems surely to have once been Boal property, is the Military Museum, with real battleship cannons at the gate. Memorial Day was started here after the Civil War, and it is the headquarters of the local National Guard Division; it's by far the most popular tourist attraction in town.
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| The Columbus Family Chapel |
But off in one corner of the side yard of the mansion is a little stone house, perhaps two stories high. It is a replica of the Columbus family chapel in Spain, copied stone for stone. The stories vary somewhat between guides, but apparently two or more relatives were descended from Christopher Columbus, and while one Boal was Ambassador to Bolivia, he married a lady in waiting to the Queen who was also descended. Possibly the Spanish Civil War had something to do with it, but in any event the personal belongings of the Columbus family were judged to be the property of the Boals, so they were moved here to the chapel replica. A decade or so ago, the chapel was broken into by thieves, and since that time security is considerably enhanced. Two pieces of wood are still shown as pieces of the True Cross of Jesus, with authentication going back to the 5th Century, and numerous hand written journals are there. The Goya paintings and tapestries, and a solid gold crucifix are among the pieces which are now somewhere else. The matter is one of considerable embarrassment. Most of the many pieces which remain, are seemingly of the nature of things which would be enormously valuable if you knew what they were, but just about worthless if you don't. In a sense, the best protection is the ignorance which surrounds them. The guide last month remembers one day when 27 visitors came to the Mansion, and many days when no one came. As he spoke, you could see at least five hundred cars parked in the Military Museum across the road. There may have been five cars parked in the diamond in the center of Boalsburg. It's sort of a shame that this would be true, just as it makes you grit your teeth to imagine the indifference the whole place would receive if you moved it to Times Square. But, let's face it, the main protection for these invaluable pieces of history lies in that general lack of interest in them.
http://www.philadelphia-reflections.com/blog/2163.htm
Ginseng Trading
Declaration of a state of war between Great Britain and its colonies almost immediately set loose some thinking about how to divert some of the commercial arrangements of the British Empire to other proprietors. In particular, the American merchants began to consider how to capture colonial trade with China, or at least look into what useful gossip they could pick up in the many dealings with sea captains in port, or traders in their counting houses. The waterfront has always been a tough place, and in the seaside taverns it can be particularly difficult to get trustworthy information, or form dependable commercial alliances. So it is not surprising that the captains and agents of Robert Morris found themselves in the company of many seafarers who later proved to be little short of pirates. England was conducting a lucrative trade with China, and the American colonies supplied much of the commodities. The Treaty of Paris suddenly transformed smuggling and near-piracy into open season for international trade, with much room for sharp practice.
On February 22, 1784 the Empress of China, a brand-new copper bottomed vessel built in Boston for a dubious trader named Daniel Parker, set sail from Manhattan for Canton. John Cleve Green was the captain, and ownership was a confused tangle of William Duer, John Holker, and a firm of Turnbull, Marmie and Company which was essentially a disguised agency of Robert Morris, with Morris the dominant owner.The ship had a cargo of two commodities: 250 casks of ginseng, and twenty thousand dollars in silver. The ship would return from China a year later, bearing tea, silks and porcelain. The world was in a post-war depression, and the numerous part owners of the venture were barely speaking to each other. But five years later it was recorded that 19 American vessels were tied up in the port of Canton. Just whose idea it was, and who gets the main credit for making it a success can be endlessly disputed, both inside and outside the courtroom. But this was in broadest outline, how the China trade began.
The rest of the story is mainly a botanical one.
http://www.philadelphia-reflections.com/blog/2183.htm
Children Playing With Matches
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| Playing with Matches |
There are still a lot of people secretly re-fighting the Vietnam War, which in retrospect was rebellion against the draft, and allegiance to the idea that America just doesn't start wars. But times change, and those who now suppose the secret sympathyizers with the anti-draft movement will automatically join a second call to rebellious duty, are probably going to be disappointed with how conservative the baby boomers have become. The boomers find themselves parents, defending their own authority from attack by their children. As King Lear ruefully observed in the same reversed situation, let them feel how sharper than a serpent's tooth it is. We now define our present world problem as overleveraging, not compulsory military service, and estimate it may take as long as fifteen years to sort itself out -- until yet another judgmental generation comes over the hill behind the rebels. The aggregate debts of the European Union, using present-value calculations, are said to be three times as large as the Gross Domestic Product of Germany; now, that's really a problem. When you consider the only sure cure for excessive leverage is "growth" , and that the code word of growth really means stuff wearing out, getting used up, and getting obsolete, it is not hard to see it taking 15 years to go away -- much more lasting than any draft dodger issue. When I go to restaurants they are crowded and expensive; people are living on their reserves, but there seem to be lots of reserves, so this problem will last a longer time.
But, four generations back, I can remember 1937 when there were no reserves, and plenty of homeless people actually froze to death. Plenty of people were then talking Communist who nowadays are talking McCarthyism, hoping no one notices the switch. I used to ride up and down the elevator of a hospital with Harry Gold, no less. So what worries me about the present uproar is that it comes too soon, before very many people are really scared enough to do really stupid things, then recognize their folly.
I think it was Abbie Hoffman, not Jerry Rubin, who climbed up into the visitors gallery of the New York Stock Exchange and threw handsful of dollar bills, salted with just enough hundred-dollar bills to bring trading to a halt. Big joke; just see who was scrambling on the floor. That's what the sixties seemed like to most of us; big joke. But out at Kent State some kids with crew cuts were in formation, under orders that at the last moment the gun barrels will come level -- and the live rounds slide home.
http://www.philadelphia-reflections.com/blog/2185.htm
Statement of Accounts, March 1785
After resigning his position as Financier of the United States, Robert Morris worked for five months laboriously summarizing and detailing his official activities, and then he paid for printing five hundred copies of it. The document had a five thousand word preamble and over two hundred printed pages of detailed accounts, a prodigious effort. And a rather unprecedented one in an environment of traditional national secrecy about its accounts, except for the pioneering efforts of Necker in France. His reward at first was an infuriating discovery five years later that the government had not released his report to the public, and continued throughout this time to investigate Morris's earlier activities on the Secret Committee. The standard of book keeping for a secret committee engaged in smuggling arms before the Declaration of Independence was understandably obscure, and to have it flogged for failing to uphold the improved standards of government accounting which Morris later devised for the new nation was such a mixture of ingratitude and slyness that the behavior seemed well beyond infuriating. Nevertheless, it must have been gratifying to end the report with a positive balance of $21,000 even after eight years of struggle, war and improvisation. The magnitude of this achievement was not lost on others in a position to see the contrast with earlier efforts, encapsulated by James Madison who committee report concluded, "It appears to the committee that the regular official examination has already been made, and it would be inexpedient to incur the expense of a re-examination."
Madison by this time was evolving into a political opponent of Morris, but Samuel Osgood was a declared opponent of his approach to government accounts. Osgood's assessment of his opposition to the approach was prefaced with a ringing statement of its effectiveness:"I will tell you very freely, that in mere money transactions, he has saved the United States a very large sum... I am also of the opinion that much more regularity has been introduced into the keeping of accounts than ever before existed. This is a matter in my mind of very great importance. And without the strictest attention to it, the several states ought not to trust Congress with a single farthing of their money."
The supreme irony of this situation was that by imposing strict accounting standards where none had previously existed, Morris was offering a club to his enemies, to beat him with. Instead of recognizing that Morris was both too diligent and too rich to bother with cheating, there emerged a duel in which his enemies took unusual behavior to be a sure sign of wickedness, while Morris absolutely courted personal disaster, supremely confident he was unchallengeable.
There are two enduring truths to both positions. It is absolutely true that a well informed public has a perfect right to do anything it pleases, regardless of the existing rules of government, regardless of the opinions of predecessors, heedless of the opinions of anyone else, past present or future. If a republic has supplanted a monarchy, the republic in a sense has the same divine rights. It's just unwise to act that way in anything but extreme circumstances.
On the other hand, it is also absolutely true that stability, peace and prosperity are most likely enhanced by avoiding the mistakes of the past, following the accepted rules of conduct, and avoiding the counsel of loud and unstable leaders. Once in a while a genius does appear and his discoveries should be adapted for future use as rules. Once in a while a treasured maxim needs to be discarded. In a limited way, these evolutions of the rules of the road are an application of Galileo's invention of the scientific method, applied to the Common Law by Sir Francis Bacon. And a second source of societal wisdom is the constant pressure of Society's Hidden Hand, as described by Adam Smith. The American Revolution was not so much an overthrow of a boisterous king, as it was the as-yet incomplete success of incorporating these two principles into a Constitutional system of government.
Considering the convulsive upheaval caused by these two principles, the 18th Century colonists must be forgiven for misjudging their own situation when confronted with a genius like Robert Morris. In barely a moment of time, Morris assembled these ideas into a vastly improved system of government management, immediately proved that it made the country rich, and demonstrated that he had the common sense to make himself rich using the same ideas. Even the idea usually attributed to his friend George Washington, that honesty is the best policy, sounds more like Morris than Washington, and certainly more like Morris than Alexander Hamilton. Only the likes of John Adams protested that honesty came from God. Morris did not deny that was possible, but certainly acted as though it was irrelevant.
Pay attention to the voice of consensus, be quick and alert to occasional innovation, and don't waste your time being crooked. With these three rules, Morris got rich and made his country rich, enraging those who do not think riches should be a universal goal. Don't want to be a millionaire? Plenty of other people will take your place.
Our two-party system began in Appalachia, and one poor soul found himself marooned there. Hugh Henry Brackenridge, a representative of Western Pennsylvania, cried out, "If they would let Mr. Morris alone, he would make Pennsylvania a great people. But they will not suffer him to do it!" Brackenridge was never elected again.
http://www.philadelphia-reflections.com/blog/2186.htm
Tammany: Philadelphia's Gift to New York
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| Tammany Hall |
Edward Hicks painted a scene over and over, depicting William Penn signing a treaty of peace with the Lenape Indians at Shackamaxon ( a little Delaware waterfront park at Beach Street and E. Columbia Ave.). This scene was apparently a reference to a larger and more finished depiction by Benjamin West. The Indian chief in the painting is Tammarend, chief of the Delaware tribe. Long before Hicks got the idea for the picture from Benjamin West, Tammarend was locally famous for having the annual celebrations of the Sons of St. Tammany named after him. These outings centered on the joys of local firewater, and thus may have had something to do with the evolutions of the Mummers Parade. George Washington presided over a lively Tammany party at Valley Forge, and local Tammany Hall clubs sprang up all over the country. The most famous offshoot had its headquarters on 14th Street in New York, as a club within the local Democrat party asserting Irish dominance over New York politics, allegedly using Catholic Church connections to control other immigrant groups. The identity of Tannerend seems to have got thoroughly mixed up along the way; the famous statue of "Tecumseh" at the Naval Academy in Annapolis, much revered by the cadets, is actually a depiction of Tammany.
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| Penn's Treaty With the Indians By Benjamin West |
At earlier times, Tammany was the vehicle Aaron Burr used to assert control of the now-Democrat Party, particularly in the contested Presidential election of 1804. Shooting Alexander Hamilton in a duel, along with disgrace and impeachment as Vice President necessitated Burr's rapid conversion into a non-person, both in New York and in Philadelphia. In Philadelphia, the uproar led to the dispersion of Tammany influence, while in New York other bosses, particularly Boss Tweed, took over the organization and consolidated its role as a small club which dominated a larger political party, which in turn pretty well took over the government of New York City, which in turn dominated the governance of New York State, and even occasionally leveraged itself into national politics. Eventually, Tammany fragmented sufficiently that Mayor Fiorello La Guardia was able to dislodge it from control, which in time led to its dissolution. In a larger sense however, the decline of New York's Tammany Hall began when in the late 19th Century it adopted the Philadelphia system of consolidating graft from local leaders into unified "donations" from local utilities. That greatly improved the efficiency of collections and disbursements, but undermined the need for an effective local organization of ward leaders.
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| Aaron Burr |
So, although Tammany was originally a Philadelphia creation perfected by New York, it continued to have connections to Aaron Burr in early days, and Philadelphia machine politics later on. But of course for seventy five years, around here it was Republican.
http://www.philadelphia-reflections.com/blog/2187.htm
Morris Defends Banks From the Bank-Haters
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| Robert Morris |
In 1783 the Revolution was over, but the new nation would not launch its new system of government until 1790. It was a fragile time, and a chaotic one. Just after the British abandoned their occupation of Philadelphia in 1778, Robert Morris had been given emergency economic powers in the national government, but the state legislatures were struggling in parallel to create their own models of governance, often in overlapping areas. Thus it came about that the Pennsylvania Legislature was still occupying the Pennsylvania State House now called Independence Hall, when it issued the charter for America's first true bank the Bank of North America in 1778, as it also was in 1784 when the charter came up for renewal. Morris was a member of the Assembly both times. Although he was not a notable orator, it was said of him that he seldom lost an argument he seriously wanted to win. Keeping that up for several years in a small closed room, will itself make you many enemies.
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| Tavern and Bank |
Morris was deeply invested in the bank, in many senses. He had watched with dismay as the Legislature squandered and mismanaged the meagre funds of the rebellion, issuing promissory notes with abandon and no clear sense of how to repay them, or how to match revenues with expenditures. There was rioting in the streets of Philadelphia, very nearly extinguishing the lives of Morris and other leaders, just a block from City Tavern. Inflation immediately followed, resulting in high prices and shortages as the farmers refused to accept the flimsy currency under terms of price controls. Every possible rule of careful management was ignored, and promptly matched with a vivid example of what results to expect. Acting only on his gut instincts, Robert Morris stepped forward and offered to create a private currency, backed by his personal guarantee that the Morris notes would be paid. The crisis abated somewhat, giving Morris time to devise The Pennsylvania Bank, and then after some revision the first modern bank, the Bank of North America. The BNA sold stock to some wealthy backers of which Marris himself was the largest investor, to act as last-resort capital. It then started taking deposits, making loans, and acting like a modern bank. Without making much of a point of it at the time, the Bank interjected a vital change in the rules. Instead of Congress issuing the loans and setting the interest rates as it pleased, a commercial bank of this sort limits its loans to a fraction or multiple of its deposits, and its interest rates are set by the public through the operation of supply and demand. The difference between what the Legislatures had been doing and what a commercial bank does, lies in who sets the interest rates and who limits the loans. The Legislature had been acting as if it had the divine right of Kings; the new system treated the government like any other borrower. As it turned out, the government didn't like the new system, and has never liked it since then. Today, the present system has evolved a complicated apparatus at its top called the Open Market Committee of the Federal Reserve, most of whose members are politically appointed. Several members of the House Banking Committee are even now quite vocal in their C-span denunciation of the seven members of the Open Market Committee who in rotation are elected by the commercial banks of their regions. Close your eyes and the scene becomes the same; agents of the government feel they have a right to control the rules for government borrowing, while agents of the marketplace remain certain governments will always cheat if you allow them to.
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| Seigniorage |
That's the real essence of Morris's new idea of a bank; other advantages appeared as it operated. The law of large numbers smooths out the volatility of deposits, and permits long-term loans based on short term deposits. Long-term deposits command higher loan prices than short-term ones can; higher profits result for the bank. And a highly counter-intuitive fact emerges, that making a loan effectively creates money; both the depositor and the borrower consider they own it at the same time. And finally there is what is called seigniorage. Paper money (gold and silver "certificates") deteriorates and gets lost; the gold or silver backing it remains safe in the bank's vault, where it can be used a second time, or even many times.
For four days, Morris stood as a witness, hammering these truisms on the witless Western Pennsylvania legislators. At the end of it, scarcely one of them changed his vote, and the bank's charter was lost. But at the next election the Federalists were swept back into majority, defeating the opponents of the bank. Although, as we learn democracy works, still not convincing them.
http://www.philadelphia-reflections.com/blog/2188.htm
Morris at the Constitutional Convention
True, George Washington was the presiding officer of the Constitutional Convention. But Pennsylvania was the host delegation, so the role of presiding host should have fallen to Benjamin Franklin, the President of Pennsylvania. However, Franklin was getting elderly and turned the job over to Robert Morris, who among other things was rich enough to host some necessary parties. The rules of decorum at that time thus kept Washington and Morris out of the floor debates. The proceedings were in any event kept secret, so even an occasional frown or encouraging smile is not recorded for history.
But Morris had been an active debater in the Assembly and other meetings, so he knew enough to line up a consensus in advance for the matters he thought were essential. Obviously, Morris was strongly in favor of giving the national government power to levy taxes, and Washington whose troops had suffered severely from the inability of the Continental Congress to pay them, also regarded this taxing power as the central reason for changing the rules. By making it the central argument for holding the convention at all, Washington, Franklin and Morris had made taxation power a foregone conclusion. And by giving them what they wanted from the outset, the rest of the convention was in a position to do almost anything else it wanted without open comment from the Titans. This situation had the effect of empowering James Madison, the only participant who had studied the inside details intensively, and cared about every comma.
Most of the convention delegates had considerable experience with state legislatures, and Franklin and Morris had spent decades struggling with the weaknesses of legislators. A wink or a quip in a tavern was as good as an hour's speech for reminding the delegates what they already knew about human nature. What was designed was a dual system of powers of taxation, with federal oversight of balanced state budgets combined with a federal power to tax on its own in emergencies or unforeseen situations. Since the members of the first few congresses after 1789 were largely the same people as the members of the constitutional convention, many of the details of this balance were worked out in a few years. State powers to tax and borrow were tightly constrained, only the federal government could tax and borrow without limit. Since government borrowing is merely the power to defer taxes until later, the borrower of last resort was the U.S. Congress, alone empowered to encumber the wealth of the whole nation in a federal pawn shop window called the funded National Debt. For almost two centuries, this pawn shop window seemed able to support any imaginable expense. Today, we monitor this as the ratio of national debt to Gross Domestic Product (GDP), and we have a clearer idea what ratio flirts with hopeless inability to pay it back. The system continues to lack a permanent definition of its limit, but the system is nevertheless still Morris's system, wrapped in a mountain of descriptive detail.
http://www.philadelphia-reflections.com/blog/2190.htm
Robert Morris, Land Speculator
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| Alexander Hamilton |
In 1782, Robert Morris the Superintendent of Finance of the United States, produced a paper called "On Public Credit", which was the model for Alexander Hamilton's more famous paper with the same name. His interest in the topic almost surely grew out of the idea of selling America's abundant land to finance the Revolutionary War. It was obviously a tempting idea, but a fairly unworkable one under wartime conditions, particularly since the great abundance of American land depressed its price for long-term speculators, compared with European land. A price of fifteen or twenty cents an acre required huge parcels of land to justify the problems associated with deriving a profit from it as an intermediary, and created a myriad of other problems dealing with the end user; in 1782 it just wouldn't work.
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| Henry George |
By 1792 it was perhaps workable because the boundaries of the nation were more clear, but generated the problems of a rolling frontier, associated with steep and volatile differentials of price and safety. If the end user was an impoverished immigrant, the seller was necessarily tangled in protracted periods of refinancing. The issues of slave territory and free territory close by generated local peculiarities of land use and optimum parcel size. Those who gave close attention to the complexities of the novel situation could see the close relationship between the credit of the nation, and the value of its land mass, the ultimate definition of what the nation really was. Thus in time, the single tax idea of Henry George would be an idea that kept coming up for discussion, long before Henry George made the concept of placing all taxes on immobile land became popular. The nation was the land it owned, and the land couldn't move. So Morris and Alexander Hamilton wrestled with devising ways to base the credit of the nation on its land wealth, without the complexities of doing so directly. In 1782 such ideas were only dreams, but by 1792 a clever person might work out ways to manage it.
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| Robert Morris |
As the opportunities of suddenly having undisputed ownership of most of a continent began to clarify, Morris was rearranging his own life. He had accomplished most of his vision of what the nation should be like, and had resolved his internal conflicts about the meaning of being a patrician in a democracy, by selling off his business. No matter how strange it may seem to us that being a shipping merchant was disrespectable, while real estate speculation was an acceptable gentleman's occupation, that was apparently how he saw it. His many associations put him in contact with many oppportunities, and soon he acquired the parcel of land in upstate New York abandoned by the exterminated Iroquois. Generally called the Genesee territory, the combination of smallpox and General Sullivan's famous march had greatly reduced the tangled arguments about title to the land, and the sales went very well, netting him roughly $350,000 unadjusted for inflation. If Morris had quit the business right then and there, he had a fair chance of living the rest of his life among the richest men in America.
Lest the impression persist that Morris got into financial difficulty entirely by real estate speculation, a letter he wrote to Gouvernor in 1790 celebrating the Genesee agreement exulted, "This bargain will not only be the means of extricating me from all the embarrassments in which I have become involved, but also the means of making your Fortune and mine."
http://www.philadelphia-reflections.com/blog/2191.htm
Bonds--Do They Have A Future?
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| Relic of the Past? |
Ever since we finally went off the gold standard completely during the Nixon Administration, the Federal Reserve has adjusted our money supply to create a fairly steady 2% inflation. If inflation is ever less than 2%, the Fed puts more money into circulation. Since many bonds are paying less than a 2% dividend, everybody who buys and holds them at par will lose money in "real" terms. That is, everyone who buys bonds when they are issued and sells them when they mature, will lose spending power. Since they fluctuate in the meantime, it is possible for a trader to buy them when they are undervalued by the market. That trader will possibly make money, but only because someone else lost money. Something like that occurred during the recent financial crash bailout, when interest rates declined from 3% to 2%, but were repurchased by the Fed as "Quantitative Easing", effectively giving speculators a 33% profit at government expense. But that doesn't happen often, and just guess who lost the money the speculators made. There is also that daunting question: when the time comes for the Federal Reserve to disgorge them, just who is going to buy all these cheapened bonds? In Japan, bonds paid a dividend of less than the current inflation rate for more than a decade; it's hard to think of a reason why the same thing could not happen in America, so it's also hard to imagine a reason why buy-and-hold investors should not abandon bonds, perhaps suddenly all at once, at some unknown time in the future. At that point, many of them will resolve never to try that, again. The whole idea is troubling.
It's particularly troubling in view of the lack of success, so far, of TIPS. These vehicles are new; perhaps the algorithm is set to ignore minor inflation and will over-respond to more major inflation, ultimately rewarding those who buy them. But at least so far, they are a disappointment. Furthermore, TIPS are quite cleverly designed to be inflation-protected, while unfortunately inflation usually does not follow a straight line but is volatile, or saw-toothed; the jury is still out. But the jury better hurry up, because investors are looking for net income after expenses, which include brokerage costs, taxes, and inflation. A long-term bond might have to pay a dividend approaching 4%, just to emerge with the same net value it started with; after five years of 4%, you could be 20% behind. And yet, the bond market with or without inflation protection is far larger than the stock market, and compares in size with any other kind of market. Who buys them, especially in these huge quantities?
Somebody must maintain statistics which answer this question, but as a guess, the main buyers are insurance companies, endowments, annuities, hedge funds, banks. The great argument for bonds is safety of principal, and although safety is in question anywhere there is inflation, whenever the topic is cash flow, safety is definitely an issue. Cash shortages are what cause bankruptcies, which are mainly useful in providing time to liquidate underlying wealth to pay restless creditors. The management of a non-profit organization must meet its payroll out of cash flow, so non-profits protect themselves from dissolution by having a regular flow of nominally secure bond dividends. Since most for-profit organizations also experience variable periods of time without profits, the situation is not greatly different from permanently nonprofit. That's particularly true if the for-profit organization has a vocal, activist stockholder group, who will protest fiercely if the management retains abundant cash. For such a predicament, holding bonds creates safety by some definition. The price of that safety is the long-term average loss on the bond portfolio; conversely, the net loss is the cost the company could afford to pay the activists to go away.
To restate the characteristics of the willing bond purchasers, they are governments and nonprofit entities, who have no common stock revenue alternatives, but regularly face a need to raise money. They also include borrowers and lenders at nominal interest rates like banks and insurance companies, who can afford to ignore inflation because their own liabilities are in nominal dollars, or come due at a date certain. And then, there are a host of beneficiaries of special-interest bond provisions, like "Flower bonds", state and municipal governments, foreign aid, student aid, etc. As an overall statement, natural bond buyers are those who either do not possess an equity (common stock) alternative to offer, or else are shielded in some way from inflation and tax costs of buying bonds. Speculators and traders are excluded from the discussion, because fixed-income trading is a zero-sum game, something you teach your children to avoid.
Things in the bond market were not always so bad; Robert Morris, Jr. was a genius for devising this market in 1784. But the equity market was then not so well developed, life expectancies were shorter, and inflation was not guaranteed by the Federal Reserve. The income tax had not been invented. It was possible to enjoy the promised benefits of lending in those days, for decades or even lifetimes. It was much harder to find investments of superior performance, without getting involved in business management. Meanwhile, the bond market just got huger and huger. Modifying or dismantling it in logical ways would have enormous disruptive effects. So enormous, we have just adopted the stance of kicking the can down the road.
Are we waiting for the bond market, the bond vigilantes, or speculators to find some vital vulnerable flaw, and topple it all into the ashcan of history? Or is there some better plan that no one has mentioned?
http://www.philadelphia-reflections.com/blog/2195.htm
Relocation
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| Moving Truck |
For many decades, at least since the Second World War, the Northeastern part of the country has been losing population. And business, and wealth. In recent years, New Jersey has been the state with the greatest net loss, and the Governor who is making the greatest fuss about it. Statisticians have raised this observation to the level of proven fact, although lots of people are even moving into New Jersey at the same time. This is a net figure, and it remains debatable what sort of person you would want to gain, hate to lose; so it's hard for politicians to be certain whether New Jersey's demographic shifts are currently a good thing or a bad thing.
Take the prison population, for example. Most people in New Jersey would think it was a good thing if the felons all moved to some other state, because it would imply less crime and law enforcement costs. But one of the major recent causes of a decline in violent crime seems to be the universal presence of a portable telephone in everyone's pocket. Just let someone yell, "Stick 'em up!" loud enough, and thirty cell phones are apt to emerge, all dialing 911. On the other hand, cell phones are the universal communication vehicle for sales of illicit drugs and other illegal recreations, and the increase in automobile accidents is a serious business for inattentive drivers. Add to this confusion the data that capital punishment is more expensive for the State than incarceration is, and you start to see the near futility of knowing what is best to have more, or less, of.
What the Governor and his Department of Treasury mostly want to know is whether certain taxes end up producing a good net revenue for the State. That is, whether more revenue is produced by raising certain taxes more than others, or whether some taxes are a big component of the Laffer Curve, causing revenue to be lost by driving business, or business owners, out of state, in spite of the immediate revenue gain. The studies which have been done are fairly conclusive that executives tend to be most outraged by property taxes, since they have a hidden effect on the sale price of the house, and the amount of money available for school improvements. At least at present levels, a Governor is better off taking abuse for raising income or sales taxes, even though the apparent tax revenue might be the same as a rise in property taxes. Since property taxes are mostly set by local municipal government, while sales and income taxes are usually set by state governments, a decision to raise one sort of tax or another can have unexpected consequences, or require obscure manipulations to accomplish.
Some politicians who believe their voting strength does not lie in the middle class, would normally want to hold up property values, not taxes, because the data show that higher home prices drive away the middle class and in certain circumstances are positively attractive to wealthy ones. Higher prices appeal to home sellers, at least up to a point. Wealthier people who are buying houses are likely to have an old one to sell; that's less true of first-time home buyers or people presently renting. Certain issues can even be reduced to rough formulas: a 1% increase in income tax would cause a 1% loss of population, but a 5% loss of people earning more than $125,000. A $10,000 increase in average home prices, on the other hand, causes a net loss of 1200 population, mostly with lower income. One important feature of tinkering with average home prices and property taxes is that these effects are "durable" -- they do not fade away over time.
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| Laffer Curve |
New Jersey is financially a bad state to die in, but the decision to move to Delaware, Florida or Texas is often made over a long period of years in advance of actually doing it. It has been hard to compile statistics relating changes in inheritance tax law to net migration of retirees, and to present such dry data in an effective manner to counteract the grumblings that rich people are undeserving of tax relief, or dead people are unable to complain. But rich old folks are very likely to own or control businesses, and if you drive them out of state, you may drive away a considerably larger amount of taxation relating to the business in other ways. This is the underlying complaint of Unions about Jobs, Jobs, Jobs; but state revenue also relates to sales taxes of the business, business taxes, employee taxes, real estate taxes on the business property, etc, etc. Sometimes these effects are noticeable by the region they affect; the huge population growth of the Lehigh Valley in recent years is mainly composed of former New Jersey suburbanites, who formerly earned their income in New York. The taxes of three different states interact, here.
The audience of a group I recently attended contained a great many people who make a living trying to persuade businesses to move into one of the three Quaker states of the Delaware Valley. The side-bar badinage of these people tended to agree that many of the decisions to re-locate a business are based on seemingly capricious thinking. The decision to consider relocation to the Delaware Valley is often prompted by such things as the wife of an executive having gone to school on the Main Line. Following that, the professional persuaders move in with data about tax rates, average home prices, and the ranking of local school quality by analysts. Having compiled a short list of places to consider by this process, it all seemingly comes back to the same capriciousness. The wife of the C.E.O. had a roommate at college who still lives in the area. And she says the Philadelphia Flower Show is the best there is. So, fourteen thousand employees soon get a letter, telling them we are going to move.
And, the poor Governor is left out of the real decision-making entirely, except to the degree he recognizes that home property taxes have the largest provable effect on personal re-location. And lowering the corporate income tax has the biggest demonstrable effect on moving businesses. But the largest un-provable effect is dependent on the comparative level of the state's inheritance tax.
http://www.philadelphia-reflections.com/blog/2197.htm
Weather Man
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| Paul Walsh |
Paul Walsh, our local weather man, recently addressed the GIC (Global Interdependence Center) at the Federal Reserve, and presumably because everyone talks about the weather, the meeting was well attended. While he is too experienced to get drawn into a global warming controversy, we get the general outline of his views. What we call the weather is largely a result of various clouds and wind currents blowing around the planet in response to the rotation of the planetary mixture of oceans and land masses. The familiar landscape visible to astronauts makes it easy to accept this view of things.
The global warming issue, however you explain it and where ever it may be going, is a weather cycle to be measured in centuries. Shorter cycles of about eight years in duration tend to result in American weather patterns sometimes blowing Canadian cold air toward the East Coast, and sometimes blowing California winter weather Eastward. In 2011-12 we seem to be experiencing a California winter, while the preceding two winters were unusually cold, reflecting Canadian conditions. What may or may not be happening with the hundred-year global warming cycle is not easily slipped into our daily conversations. It is probably quite irrelevant to global trends whether or not last year was a cold one, or whether our sidewalks are unusually slippery this morning.
Inquiries about the weather are the number one topic to be clicked on the Internet, reaching 17% of queries. That's nearly double the second largest category, and four times the number of inquiries about the stock market. Ordinary variations of the weather have been calculated to have an economic value of $384 billion, or 3.4% of the Gross Domestic Product (GDP). Insurance claims for more severe weather abnormalities run between ten and fifty billion dollars a year. The number of hurricanes and similar disasters is highly variable, sometimes running as high as fifty in a bad year.
Predictions are improving, but ridicule of weatherman errors is still highly embarrassing to the professionals in the business. A generation ago, it was almost impossible to get a one-minute warning of an approaching tornado, but nowadays we average fourteen minutes warning for them. That's almost long enough to be useful. Hurricanes seem to be increasing in frequency, but decreasing in average intensity. But insurance claims are getting steadily higher, largely because more people are building more structures in harm's way.
Small wonder that weathermen are a cautious lot about predictions. The present party line, in case you wanted to ask, is that predictions more than ten years in advance -- are just about impossible.
http://www.philadelphia-reflections.com/blog/2198.htm
Poor Richard's Wealth
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| Benjamin Franklin |
I rise to offer yet another toast to Benjamin Franklin. Like our two leading candidates for the Presidency of the United States, he leaves us uncertain whether he was a rich man pretending to be poor, or a poor man pretending to be rich. To clarify this mystery, I have mainly examined the circumstances of his retirement, and the contents of his last will and testament.
Although he reports that on arrival in Philadelphia at the age of seventeen, he spent his last pennies on a loaf of bread, he was able to retire from the printing business at the age of forty-two, planning to spend the rest of his life as a gentleman at ease. He was able to do so because he had assembled over fifty partners in the printing trade, scattered from Boston to Georgia; today, we would say he had sold franchises to his business. When he came to retire, he arranged to be paid off in eighteen installments, which ought to have lasted him to the age of sixty. That was well past the usual life expectancy at the time, but we can now see it would apparently have run out while he was still in London, acting as our ambassador to Parliament, leaving him without support for the last twenty-four years of his life. Apparently this was the reason for his seeking postmasterships, and acting in some overseas business capacity for Robert Morris, then one of the richest merchants in America.
Assuming he may have run out of money when he was sixty, we look to his final estate to see how he made out in his second career, whatever it was. His assets were in three general categories: land, bonds, and hard money. He bequeathed eleven houses, mostly in Philadelphia, to various relatives. He assigned ownership in thousands of acres of land in Nova Scotia, Georgia, and Ohio. Just what a bond was in Eighteenth century America is not exactly clear, but bonds of at least ten thousand pounds sterling were distributed, as well as ten thousand pounds of hard assets. And he forgave a large and undefined number of unpaid debts.
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| Poor Richard's |
He gave George Washington his gold-handled cane, which had been given to him by the Duchess Du Pont, for unknown reasons. His modesty was famous, but can be questioned when he gave one of his portraits to be hung in the Council Room of the government of Pennsylvania. He gave his sister a portrait of a French King, with four hundred and eight diamonds set in its frame. He instructed her not to make the diamonds into jewelry, because that would be ostentatious. And he instructed that his funeral be plain and simple, although it turned out to be one of the most elaborate parades and ceremonies of the age.
After a few months, Franklin reconsidered his will and wrote a famous codicil. Revoking the gifts to his grandchildren, he ordered that a thousand pounds be set aside for each of the cities of Boston and Philadelphia. His proposal was that this money be loaned to graduating apprentices in order to help them start their businesses, and after a hundred years he envisioned it would amount to hundreds of thousands of pounds, after two hundred years, it would be worth millions and could be used for public improvements. These funds were indeed established and the loaning did begin. Unfortunately after hardly fifty years had elapsed, so many apprentices had failed to repay their loans the experiment was discontinued. What had seemingly been lacking was sufficient will of the trustees to collect the loans with vigor.
Poor Richard may have been born poor at more than one time. But he certainly didn't stay poor, very long. A toast to Ben Franklin, on his birthday, in his club.
http://www.philadelphia-reflections.com/blog/2200.htm
Checks and Balances (??)
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| King George III |
Because America had recently revolted to rid itself of King George III, the Constitutional framers of 1787 sought to construct a government forever free from one-man rule. Inefficiency could be accepted but dictatorial central power, never. Pursuing many good ideas then turned out to be surprisingly more productive than marching single file, so the nation rallied behind the governing document which laid out what the plan is, and has loved it ever since. It is unrealistic however to expect a wind-up toy to keep working forever, and the Constitution is no different. After two centuries, some chinks have appeared, and in particular the recent behavior of the 111th Congress has revived some old worries about authoritarian leadership.
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| Founding Fathers |
Political parties existed in 18th Century England and Europe, but the founding fathers seem not to have worried about them much. Within ten years, however, Thomas Jefferson had created a really partisan party which provoked the creation of its partisan opposite. James Madison was slowly won over, but George Washington never budged. Although they were firm friends, when Madison's partisan position became clear to him, Washington essentially never spoke to him again. Andrew Jackson, with the guidance of Martin van Buren carried the partisan idea much further toward its modern characteristics, and then Franklin Roosevelt attempted to centralize government considerably more than the U.S. Supreme Court would permit. Because the issue of states rights versus federal power was often mixed with the more primary issue of individual personal and economic liberty, Abraham Lincoln, Theodore Roosevelt, John Kennedy and Lyndon Johnson must be included among the leaders who moved the original standards of personal freedom considerably back toward a position that George III might have accepted. Fine points of this history are not important to the present concern, which focuses more on the accumulated small changes which bring us to our present position. Wars and economic crises induced several presidents, nearly as many Republicans as Democrats, to consent to a migration of power advantage which never quite returned to baseline after each crisis. Primary among these migrations was the erosion of the original assumption of perfect equality among members of Congress. A new member of Congress today may tell his constituents he will represent them ably, but when he arrives for work he is figuratively given an office in the basement, and allowed to sit on empty packing cases. This is not accidental; every hotel in the country treats new arrivals with greater deference. Rather, the slight is an intentional warning from the true masters of power to bumptious new egotists, that they will get nothing in the new environment unless they earn it. Not a bad idea? This schoolyard bullying is a very bad idea.
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| Houses of Congress |
Partisan politics begins with vote-swapping, and evolves into a system of bestowing the votes of the members on their party leaders, and ultimately amounts to declaring betrayal if the member votes his own mind in defiance of the leader. The rules of the "body" are adopted within moments of the first opening gavel, but they took centuries to evolve and will only significantly change direction on those few occasions when newcomers overpower the old timers, and only then if some leader among the old timers takes the considerable trouble to organize them. In the vast majority of cases, after adoption the opportunity to change the rules is then effectively lost for two years. Even the Senate, with six-year staggered terms, has argued that it is a "continuing body" and need not reconsider its rules except in the face of a serious uprising on some particular point. Both houses of Congress place great weight on seniority, for the very good reason of training unfamiliar newcomers in obscure topics, and for the very bad reason of concentrating power in "safe" districts where political parties are able to exercise iron control of the nominating primaries. Those invisible bosses back home in the district, able to control nominations in safe districts, are the real powers in Congress. They indirectly control the offices and chairmanships which accumulate seniority in Congress; anyone who desires to control Congress must control the local political bosses, few of whom ever stand for election to any office if they can avoid it. In most states, the number of safe districts is a function of controlling the gerrymandering process, which takes place every ten years after a census. Therefore, in most states it is possible to predict the politics of the whole state for a decade, by merely knowing the results of the redistricting. The rules for selecting the members of the redistricting committee in the state legislatures are quite arcane and almost unbelievably subtle. An inquiring newsman who tries to compile a fifty-state table of the redistricting rules would spend several months doing it, and miss the essential points in a significant number of cases.
So that's how the "Will of Congress" is supposed to work; the recent process can be far less laudatory, and in fact calls into question the whole idea of balance of power between the three branches of government. We here concentrate on the Health Reform Bill and the Financial Reform Bill, which send the same procedural message even though they differ widely in their central topic. At the moment, neither of these important pieces of legislation has been subject to judicial review, so the U.S> Supreme Court is not yet encumbered with stare decisis of its own creation.
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| Three branches of government |
In both cases, bills of several thousand pages each were first written by persons who if not unknown, are largely unidentified. It is thus not yet possible to determine whether the authors were affiliated with the Executive Branch or the Legislative one; it is not even possible to be sure they were either elected or appointed to their positions. From all appearances, however, they met and organized their work fairly exclusively within the oversight of the Executive Branch. Some weighty members of the majority party in Congress must have had some involvement, but it seems a near certainty that no members of the minority party were included, and even comparatively few members of highly contested districts, the so-called "Blue Dogs" of the majority party. The construction of the massive legislation was conducted in such secrecy that even the sympathetic members of the press were excluded, and it would not be surprising to learn that no person alive had read the whole bill carefully before it was "sent" to Congress. It seems quite fair to surmise that no member of Congress except a few limited members of the power elite of the majority party were allowed to read more than scattered fragments of the pending legislation in time to make meaningful changes.
The next step was probably more carefully managed. No matter who wrote it or what it said, a majority of both houses of Congress had to sign their names as responsible for approving it. Because of the relatively new phenomenon of national televising of the whole procedure, the nation was treated to the sight of congressmen of both parties howling that they were only given a single day to read several thousand pages of previously secret material -- before being forced to sign approval of it by application of unmentioned disciplines enabled by the rules of "the body". When party members in contested districts protested that they would be dis-elected for doing so, it does not take much imagination to surmise that they were offered various appointive offices within the bureaucracy as a consolation. As it turned out, the legislation was only passed narrowly on a straight-party vote, so there can be little doubt of its impending failure if the corruptions of politics could have been set aside, with members voting on the merits. Nevertheless, since this degree of political hammering did result in a straight-party vote, it leaves the minority party free to overturn the legislation when it can. The prospect of preventing an overturn in succeeding congresses seems to be premised on "fixing" flaws in the legislation through the issuance of regulations before elections can open the way to overturn of the underlying authorization.
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| Bill become a Law |
The "regulatory process" takes place entirely within the Executive branch. Congress passes what it terms "enabling" legislation, containing language to the effect that the Cabinet Secretary shall investigate as needed, decide as needed, and implement as needed, such regulations as shall be needed to carry out the "Will" of Congress. Since the regulations for two-thousand page bills will almost certainly run to twenty thousand pages of regulations with the force of law, the enabling committee of Congress will be confronted with an impossible task of oversight, and thus will offer few objections. The Appropriations Committees of Congress, on the other hand, are charged with reviewing every government program every year, and have the power to throttle what they disapprove of, by the simple mechanism of cutting off the program's funds. Members of the coveted Appropriations Committees are appointed by seniority, come from safe districts, and are attracted to the work by the associated ability to bestow plums on their home districts. By the nature of their appointment process, unworried by the folks back home but entirely beholden to the party bosses, they have the latitude to throttle anything the leadership of their party wants badly enough to throttle. The outcome of such take-no-prisoners warfare is not likely to improve the welfare of the nation, and therefore it is rare that partisan politics are allowed to go so far.
The three branches of government have become unbalanced. These bills were almost entirely written outside of the Legislative branch, and the ensuing regulations will be written in the Executive branch. The founding fathers certainly never envisioned that sweeping modification will be made in the medical industry and the financial industry, against the wishes of these industries, and in any event without convincing proof that the public is in favor. This is what is fundamentally wrong about taking such important decisions out of the hands of Congress; it threatens to put the public at odds with its government.
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| Justice George Sutherland |
There is no need to go further than this, harsher words will only inflame the reaction further than necessary to justify a pull-back. And yet, the Supreme Court would do us a mercy if it doused these flames; the Supreme Court needs a legal pretext. May we suggest that Justice George Sutherland, who sat on the court seventy years ago, may have sensed the direction of things, short of a single word. Justice Sutherland recognized that although it is impractical to waver from the principle that ignorance of the law is no excuse, it is often possible for a person of ordinary understanding to read a law in its entirety and still be confused as to its intent. He thus created a legal principle that a law may be void if it is too vague to be understood. In particular, a common criminal may well be less able to make a serious analysis. Therefore, at least in criminal cases, a law may well be void for vagueness. In this case, we are not speaking of criminals as defendants, or civil cases of alleged damage of one party by a defendant. Here, it is the law itself which gives offense by its vagueness, and Congress which created the vagueness is the defendant. Since we have just gone to considerable length to describe the manner in which Congress is possibly the main victim, this situation may be one of the few remaining ones where a Court of Equity is needed. That is, an obvious wrong needs to be corrected, but no statute seems to cover the matter. The Supreme Court might give some thought to convening itself as a special Court of Equity, on the special point of whether this legislation is void for vagueness, and it only makes the injury worse by allowing the Executive Branch to diminish the vagueness (through corrective regulation) in its own preferred direction.
We indicated earlier that one word was missing in this bill of particulars. That would be needed, to expand the charge to void for intentional vagueness, an assessmment which is unflinchingly direct. It suggests that somewhere in at least this year's contentious processes, either the Executive Branch or the officers of the congressional majority party , or both, intended to achieve the latitude of imprecision, that is, to do as it pleased. Anyone who supposes the general run of congressmen voluntarily surrendeed such latitude in the Health and Finance legislation, has not been watching much television. Given the present vast quantity of annually proposed legislation, roughly 25,000 bills each session, the passage of a small amount of vague legislation might only justify voiding individual laws, whereas an undue amount of it might additionally justify a reprimand. However, engineering laws which are deliberately vague, might rise to the level of impeachment.
http://www.philadelphia-reflections.com/blog/1883.htm
How Could We Improve State Legislatures?
Nearly every student of government agrees, state government is the weakest part of the American system. Almost every federal congressman, at least, seems to hold that belief, while almost any lawyer would prefer to have his case in Federal court rather than before a state judge. Although the followers of Thomas Jefferson kept the nation in an uproar for forty years, pursuing his notion of government identical with the will of the people, the public opinion he prized nevertheless remains scornful of state government. Such scorn by itself can undermine legislative quality.
Students of government point to instability and unpredictability as main features of concern about state government. The legal profession values a central principle, called stare decisis: Leave the Law Alone. Stability, or order is desired so highly that dictatorship, corruption and poverty may be tolerated in order to achieve it. Conversely, inability to predict what is coming next is highly destabilizing, a sign of amateurism at the controls. Any decision is better than no decision, even a bad decision is better than no decision. The public hesitates to act in the face of indecisive governance, and dynamism drains from the environment. Most of the time it doesn't make much difference what a rule says as long as it is emphatic and prompt. And it's usually the case that bad decisions are quickly reversed. Test it yourself: how much difference does it make whether a street runs East, or West? But it would make a considerable difference if almost any street changed Eastward to Westward to Eastward again, several times capriciously. Suppose someone did make a bad mistake: Eastward to Westward and back to Eastward again. Everyone can now see that Westward was a dumb idea, you bonehead. It will be a very long time before anyone tries that, again.
A second general characteristic of state government is to be located in a small remote town. The capital of Michigan is in Lansing, not Detroit. In New York it is in Albany, not New York City, and in Pennsylvania it moved from Philadelphia to Harrisburg. Even in little Delaware it is in Dover, in Maryland it is in Annapolis rather than Baltimore. And so through most of the fifty states, we see the same pattern. No doubt it could be argued: getting away from big-city bosses and political machines is a positive, and stretching a network of highways through the open countryside to the new capital is a source of real estate development for the state. But it definitely creates weakness of the governing system to locate it in towns that have little newspaper coverage, no think tanks, few universities, and even poor airports, school systems, museums and civil society. These are generally one-industry towns, where the children of the bureaucracy all go to school with each other, along with the offspring of lobbyists. Voices in the past have been raised against the development of a ruling class, as might have been seen in Potsdam outside of Berlin and similar political suburbs. But we have just as surely developed a bureaucratic subclass in Bethesda, Maryland and Alexandria, Virginia. No doubt there are many other similar clusters, in other states. Where the children of bureaucrats are clustered in the schools near the Washington Post and the National Journal it can be argued they know the inside game of politics as well as the children of Boston know the inside baseball of the Red Sox, and there is a certain value to developing such a political artisan class. But in the vast majority of the country, the dominant problem is that the voters of the state have not the faintest idea of how their state government is functioning. The children of bureaucrats may still learn at the dinner table how to adopt "Yes, Minister" behavior or how to find lifetime bureaucratic jobs with accidentally high fringe benefits. The big flaw is the rest of the state does not realize the smallest part of how prevalent such behavior is in the capital. If the politician who is caught in a scandal is largely unknown to the general public, it is an advantage to the political class. With less notoriety, there is less scandal, possibly even lighter punishment from judges he has been involved in appointing. Rising above this sort of sorry behavior, the quality of legislation is surely diminished when there is diminished fame for doing a good job, diminished scorn for incompetence. To a certain extent, this pressure for mediocrity is augmented by the reduced importance of the subject material. The federal government is involved in foreign policy and monetary issues Constitutionally forbidden to the state legislature. Even at the bottom of the hierarchy of public notice, the activities of mayors and city councils have a more direct effect of the lives of the local voter than state government does, with importance shaved off at both the top and the bottom. Such activities really can possibly afford to be relegated to some rural small town with nothing to do except play poker and drink in the bar of the local hotel; it's a question which is cause, which is effect. The Constitution provides that the Federal government shall be limited to a dozen specified activities, while everything else is governed by the states. Unfortunately, two hundred years of chipping away at this government of limited powers have left the states with little scope to govern anything substantive except the insurance industry. That does not prevent most state governments from considering more than two thousand bills a session, but these are matters of little import, boring, boring.
The Progressive Movement of the early Twentieth century saw much the same problems, being handled by much the same sort of people; but they over-reacted to it. Like most reform movements, the Progressives wanted to make a big splash and then go home. A century later, it is difficult to assess how outrageously corrupt the Senatorial process may or may not have been at that time in the past. Somehow, the public became convinced the U.S. Senate was a terribly rotten organization because of the terribly rotten selection system for U.S. Senators. Consequently, the Seventeenth Amendment passed with little fanfare, taking the selection process away from "the states" and giving it to a statewide popular election. In states with large urban political machines, this change meant giving the nominating process to big-city bosses, taking it away from the legislatures. That is definitely a distinction without much difference. Most big-city political bosses are content to select obedient hacks for nomination to the legislature, but this is the source of most rotten boroughs, gerrymandering, corruption and mediocrity. In the areas of rural machine politics, the boss himself is more commonly attracted to the appointive legislative jobs. In New Jersey, the election law prohibits more than small campaign contributions to legislators, but permits unlimited contributions to the county boss. Either way, the progressive reform of 1913 has not had much progressive effect. One thing is very certain. When the method of selection of the state's U.S. Senator is left to the legislature, the resulting Senator is pretty certain to be a current member of the Legislature. And in the instant you aspire to being U.S. Senator, it becomes very clear you will greatly enhance your chances if you first run for the legislature. There were once likely to be half a dozen senatorial aspirants within the Legislature at any one time, so there was an appreciable improvement in the quality of the Legislatures. True, there was probably more grand-standing and maybe even vote-swapping in return for assistance on the Senatorial seat selection. But there was also much more attention paid in return to the state's interests, by the U.S. Senate. The state's voice on the national scene was considerably louder. The value of a legislative seat, and the later experience it provided, were much enhanced.
A measured assessment of the effects of the Seventeenth Amendment is long overdue. My own view is that ripping the selection process away from the state legislatures and substituting a second popularly elected national legislative house, was both an over-reaction and a careless gesture without much improvement. Because vested interests have been created, it is now nearly useless to ask the present Congress to study the matter. We have to hope that some very rich private citizen will see the need for a serious study of these issues, and both fund the effort as well as leave it alone. If it gets captured by ideologues, it will require a second study, or maybe even a third.
http://www.philadelphia-reflections.com/blog/2216.htm
Two Friends Create the Articles of Confederation
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| Letters of a Pennsylvania Farmer |
JOHN Dickinson had been active in resistance to England's treatment of its colonies, and as early as 1768 had written a book called Letters of a Pennsylvania Farmer which is credited with strongly influencing the colonies in the direction of resistance to the British Ministry. When it came time to write the Articles of Confederation, Dickinson was the lawyer selected for the task. His good friend Robert Morris was less outspoken in opposition to the Ministry's behavior, quite possibly because he was adept in finding work-arounds for his own personal business problems. And possibly he was trying to maintain a neutral negotiating posture, since in a hotly contested election with this as the main issue, Morris was elected by both sides in the argument. When July 4, 1776 forced the issue, both Dickinson and Morris refused to sign the Declaration, but within a few months, both of them were actively fighting for the Rebellion.
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| Thirteen |
The thirteen colonies united to fight the British King, but many of them were reluctant to unite for any other time or purpose. Rhode Island was perhaps the extreme example of this view of what Independence was supposed to mean, but the feeling existed to some degree in many colonies. Concern for the power of this feeling may have contributed an important reason the Articles placed heavy emphasis on declaring them to be perpetual. Recognition of this intent may have been an important reason why George Washington was later willing to sweep the issue aside, even though he of all people was most concerned to avoid the appearance of acting like a king. For this and other reasons, the Articles remained unratified for years. Finally, in 1781 Robert Morris became convinced that failure to ratify was encouraging a failure to cooperate, and successfully pushed ratification through the steps. At that time, Morris was effectively running the country, even providing his own credit and funds to do it. People were unwilling to oppose his wishes, but they were also unwilling to provide the taxes, supplies and troops that Morris thought were being blocked by failure to ratify. Ratification of the Articles accomplished very little except to convince Morris: the Articles were flawed and must be replaced.
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| The Goal: 1787 |
Little is known for certain about the evolution of thought in Morris' mind between 1781 and the Constitutional Convention in 1787, although a great deal is known about his other numerous activities. It is clear however, that his experience with the Pennsylvania Legislature had been dismal, while he came to see the insurmountable flaw in the current Federal government was its inability to raise taxes and consequently, to service national debt. The states were able to levy taxes under the Articles, but erratic in doing so, and resorting to inflation at the first sign of tax resistance. In Morris' view the key to effective government was to reverse the situation; let the national government tax, and let the states spend. The key to such a rearrangement would be to limit the national government to spending on a very limited list of vital purposes, but bedazzle the states with a substantially unlimited list if they could afford it. As the accounts to pay for the Revolutionary War were totalled up, it was apparent that the National Government had twice as much debt as the states. Therefore, it would at most need twice the taxing power to service such a debt, but presumably wars would be infrequent. Pay this one off, and potentially the need for future federal spending would be small. Indeed, under the presidency of James Monroe the national debt was completely paid off, although briefly. It was almost as if Robert Morris and his pupil Alexander Hamilton had a crystal ball.
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| The Wealth of Nations, also in 1776 |
Robert Morris was brilliant and had six years to fashion his strategy; he also had some help. For one thing, George Washington lived next door for much of that time. By then, almost no one dared confront Washington. Adam Smith had written his book The Wealth of Nations in 1776, and Morris gave this extraordinary book as presents to his friends. Morris had corresponded with Necker, the genius financier of France, and through his good friend Benjamin Franklin, gathered insights from the rather advanced British national finance. And James Madison brought in scholarship about politics and statecraft accumulated by Witherspoon, Hume and the Scottish enlightenment.
Once you grasped the central idea, in this environment the strategy almost worked itself out.
http://www.philadelphia-reflections.com/blog/2226.htm
Beginning Social Security Benefits
 Some should start benefits before age 65, others should delay it for ten years or more 
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| Dr. Fisher |
By mail or visit to the local Social Security office in your neighborhood, it is possible for anyone to determine how much you can expect to be paid in benefits, and at what age. In fact, it is a wise precaution to ask for this information every few years, just to be sure your payments are being credited properly, since hundreds of millions of payments are flowing into many millions of accounts, and you want to get things straight before years of problems accumulate. In the early years of the program, one of their biggest problems was that a great many people used the sample numbers on the illustration card instead of their actual "Social".
Assuming payments from your employers have been flowing properly, you currently have the option to retire at the age of 62 and start getting reduced benefits. You will get three extra years of payout, but you may need to pay income tax on some of it, and the payout will be less. My Pennsylvania Dutch uncle used to say it was bad arithmetic to take the money early. But my Scotch-Irish accountant advised everybody to take the money as soon as possible, because money in your pocket is real money, while future payments depend on your living long enough to get them. Who knows, you might get hit by a truck tomorrow. So, ultimately any decision about this matter is based on opinions which differ.
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| Social Security Benefits |
However, the arithmetic is available, once you know a few facts. The longer you wait, the larger the monthly payments will become. However, you can count on about 3% inflation during the interval, so the money might have less purchasing power. Some of the monthly payment will be free of income tax, some of it will be taxable at whatever your tax rate might be. If you spend the money, it's gone; but if you save it, it will grow at an after-tax rate which may or may not be greater than if you leave it with Social Security until you need it. The arithmetic isn't very hard, but if you look around on the Internet, somebody surely provides a fill-in-the-blanks tool which will calculate it for you.
If the arithmetic or your personal situation is such that you aren't going to spend your Social Security check as soon as you get it, here's what you do. Arrange for direct deposit into a world index fund, total market. Historically, that will grow at 8% compounded annually, and will pay about 1.8% taxable dividend. Now, do the math again, and see if you are better off leaving it with those nice folks on Social Security Boulevard, in Baltimore, instead of those nice folks at Vanguard or Fidelity.
The whole theory behind this maneuvering is that many people have half-time jobs or dual incomes, or income from sale of a house, which mean that for a few years after they retire they have more income than they will have later in life. For them, there is a choice between the two methods of saving the Social Security money for the time in life when they need it. Other people need every cent they can get, right now. If you are one of the lucky ones, try to be even a little luckier by using arithmetic and choosing between the options. If you are hit by a truck, it really won't matter what you do, so try to be an optimist.
http://www.philadelphia-reflections.com/blog/1165.htm
What Is the Purpose of a National Constitution?
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| American Revolution of 1776 |
BIG nations easily gobble up small ones, so small ones band together. The result may be indistinguishable, but the method of growth is vital. As George Washington famously observed, if you are strong the others leave you alone. But there are also advantages to remaining small, especially if the nation is already uniform in its religion, language and culture. There are even advantages to splitting smaller to reduce internal conflict, that "curse of bigness". Particularly in the past century, splitting up almost always gets considered when problems of governance are encountered. Reduced to a slogan, most nations admire a size they feel will lead to Peace and Prosperity, not necessarily at the same time. Both the American Revolution of 1776 and the present struggles of the European Union fit a formula: banding together for military security, then relaxing controls for greater independent prosperity. The American experience of a subsequent Civil War suggests the margin for error is narrow.
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| Britannia |
No doubt a region's geography imposes practical limits to both peace and prosperity. Possibly due to that, some nations have banded together for military reasons, then split apart in local quarrels more or less regularly. The thirteen colonies had been afraid to confront Britannia alone, but somewhat overconfidently took on that challenge as a confederation. At the opposite extreme, Rhode Island even refused to send delegates to the Constitutional Convention, for fear the other twelve would want to share its revenues from the coastal toll road going through their state. Similar possessiveness has not been reported about the narrow defile through the northern end of the State of Delaware, but one glance at the map is sufficient to suggest similar responses from the region which for decades protected the secrets of mushroom cultivation. Peace and prosperity. Getting bigger may discourage predators, but getting smaller offers sole possession. Since the United States was growing through most of its history, it had many chances to experience alternating episodes of too big and too small, learning the consequences repeatedly.
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| Thirteen American Colonies |
When their ideas of Union first gained traction, both the thirteen American colonies and the twenty-five or so members of the European Commonwealth were primarily interested in reducing military threats. In Eighteenth century America the idea was the simple one of achieving some sort of military parity with a common enemy. The European Union developed the more sophisticated strategy of reducing world wars by developing neighborly habits of trade and cooperation. By tangling the economies of old enemies in trading networks they hoped to make major wars too difficult to accomplish. Persistently increasing nation membership reduced the number of outsiders who might have grievances to resolve by force. The unexpected decline of the Soviet empire reduced the threat further. Pride may also have played a part in this; twenty-five is comfortably larger than thirteen, which up to that time was the largest nation merger to survive. That was taking a risk they may now regret, since wider membership necessarily encircles a wider disparity in language, culture and economic development. And wealth.
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| Justice Blackmun |
The American colonies all shared the same language. Even their enemy spoke English. The long evolution of subsequent U.S. Supreme Court interpretations often turns on subtle differences in meaning of simple words, since vigorous legal advocates marshall every argument weak or strong. Penumbras and emanations from the word "Privacy" in Roe v. Wade force the judges to decide whether the inclusion of abortion within a right of privacy is simply too far from common understanding of English, in a double sense. Both in the discovery of a right to privacy within a document which does not use the word, and in the inclusion of abortion within that, Justice Blackmun may well have overestimated the capacity of citizens to understand what they did not want to understand. How much more surely would he have overestimated public willingness to grasp his meaning in two-step translation from a foreign language. Since this famous decision is destined to stand or fall, depending on public tolerance for such wordplay, having almost every citizen confidently understanding English is a decided advantage in consensus about its wisdom. It seems almost unnecessary to point out how many European languages are derived from Latin or German, and how seldom such migrations of meaning have sharpened the precision of the originals.
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| Auto-de-fe |
By contrast with important language confusion, "hatreds between nations" are often mentioned as an obstacle to unification but seem largely bogus. Argot and slang are commonly invented to conceal the opinions of a minority group. Over thousands of years, this purpose of "jiving" a secret code among conspirators has been perfected exquisitely. It's hard to overcome, easy to teach children. But the memory of actual wars really dies out rather quickly, not least because atrocities are so hideous, mankind wants to forget them. I was seventy years old before someone told me I had ancestors burned at the stake. By whom? By someone who has also been dead for four hundred years, not likely to seem threatening. Over the fifty years since the Second World War, I have run into former German and Japanese soldiers; they now seem pretty benign. One American former prisoner of war was forced to stand at attention while his Japanese captor pulled out his gold teeth with pliers; he told this story with a faint smile. It is one of the benevolences of biology that we are born without memories, and a second is the impossibility of remembering the feeling of pain without first dramatizing the experience for future reference. Once actual onlookers stop grinding the grievance axe, it should be possible to get on with devising a European constitution, provided it contains the equivalent of our First Amendment.
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| Helen of Troy |
A workable constitution must contain a separation of church and state, because myths, epic poems, and traditions are synthetic, quite different from actual experiences. Helen of Troy may or may not have had a face that launched a thousand ships, but Homer's Iliad certainly glorified more hatred than she did; who can say whether the poem portrays the truth? That's the war side of things; the Odyssey is powerful in evoking the special virtues leading to prosperous nationhood. Because you can't argue or reason with epic myth, it is their many glorifications and condemnations which supply endurance to patriotic myths, easily reducing macroeconomists of the European Central Bank to tears of frustration. Because the best of these epics stand alone as powerful literature, their propaganda strength is difficult to deconstruct with mere logic. Quoting Arnold Toynbee, it is not weaknesses, but overextension of societies' finest qualities, which usually brings them down.
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| Euro Zone |
While true grievances seldom pose obstacles of their own, they do often misdirect political leadership from what is best for their countries. European Unification had a primary goal of eliminating future wars, but decided the peace goal was achievable only by indirection, and began first with monetary tools for prosperity. That takes a long time; America was still fumbling monetarily until the end of the Civil War. So while starting with small victories seems plausible, in fact it drains much of the idealism out of revolutions. Even worse, it here made the financial disaster of the Euro zone symbolic of hazards on the road to Prosperity, which itself seems merely preliminary to achieving Peace. At least when you struggle for national security, every day you survive is another victory. There is no room in past struggles for Americans to gloat over a superior approach to permanent Union. But a defeat is a defeat, and the Euro zone mess is a big defeat.
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| Congressman Ron Paul |
From a commentator's perspective, currency matters are very difficult to understand and explain. For contrast, the Battle of Normandy is thrilling and awe-inspiring; every death is the death of a hero. But rises in productivity, the risk implications of volatility, even the way the value of bonds goes down while their interest rate rises, seem hopelessly confusing to a beginner. Worse still, there exists real uncertainty. We now have currency which has no backing in precious metals, and is really just a book entry. That's useful for transactions, less certainly useful as a storehouse of value. Mr. Ron Paul is running for President of the United States on the basis of challenging the whole Federal Reserve concept, and the possibility must be admitted that he has a grain of truth in his speeches. We trust our economists and bankers to devise a workable system of exchange without gold and silver, and readily admit that Mr. Bernanke knows more than we do. But. The world economy nearly collapsed utterly a few years ago, and you know, Mr. Ron Paul might just have a valid point or two. There is no fit environment for enjoying the thrill of leading a monetary Crusade to a World Without War. For striking contrast, go to any Civil War movie and watch those teen aged soldier boys charge up the hill, ready to die for the Union.
http://www.philadelphia-reflections.com/blog/2231.htm
