Charles Rappleye, in an op-ed published by the L.A. Times on August 12 (I just caught up with it via the Bangor Daily News), might seem at first glance to be saying pretty much what I’d been saying in my New Deal 2.0 post of August 1 (also on AlterNet and Salon) regarding the framers of the Constitiution and the issue of public debt — a subject especially relevant to specious Bachmann/Norquist/Tea Party efforts to construct balanced budgets and zero debt as constitutionally essential.
Liberals will tend to like Rappleye’s piece for suggesting that enlightenment minds of the kind liberals admire had a logical, well-informed rationale for founding the nation on a public debt supported by taxes. The piece thus flies in the face of certain right-wing preconceptions, and it may be taken as giving modern liberalism at least as strong a claim as the Tea Party’s on the founding generation’s values regarding financial issues so hotly debated today.
But beyond noting that contrary to the populist right’s view, the Constitution was in fact created largely in order to fund a national debt via federal taxation (an assertion outrageous enough for Constitution-romanticizers both left and right), Rappleye and I take directly opposing views of the significance of that founding debt, and especially of the domestic goals of the confederation Congress’s financier, Robert Morris, a mentor of Alexander Hamilton, in yoking a large public debt to national aims, indeed to the aim of having a nation at all.
Employing a tone of knowledgable, disinterested, slightly amused, “above the fray” superiority, which I find all too typical of commentary that we might borrow a term from Leslie Fieldler and call “liberaloid,” Rappleye must lionize Robert Morris (Rappeleye is the author of a Morris biography that does so on a larger scale), playing up certain features of Morris’s goals and ideas, downplaying others, and declining to give the economic context that, from a modern liberal point of view anyway, would substantially darken the Morris-Hamilton founding-finance story.
Rappleye’s description of “the debt in question” is characteristic of the approach:
“… that owed by the American rebels to the governments of France and Holland, key allies that had provided funds to support Washington’s army. Those loans were necessary because the currency issued by the Continental Congress in the early stages of the war had been exhausted, first through unrestrained spending and finally through inflation and loss of confidence. Funds were also owed to American businessmen who had purchased domestic bonds in an effort to prop up a faltering Congress.”
He emphasizes the foreign debt and makes the domestic debt a mere “also.” That familiar ploy erases a domestic conflict, all-important to framing the Constitution, between the small, upscale, well-connected group of “American businessmen who had purchased domestic bonds” and the mass of ordinary Americans who would never own a bond. The erasure of the conflict is especially salient because the conflict was very much on the minds of all concerned at the time, not least Robert Morris, whose daily effort was to crush the American popular-finance movement and elevate the bondholders. Rappeleye creates a blur with his vaguely expressed idea that the bondholders invested “in an effort to prop up a faltering Congress.” While Morris and the other investors (yes, “other” — Morris was not only Congress’s Superintendent of Finance but also perhaps the biggest investor in the congressional debt he “superintended”) portrayed their bondholding in terms of patriotic sacrifice, the investing class had actually turned up its nose when Congress first offered bonds in 1776, at a measly 4%, payable in Congress’s poorly managed currency. The investors came in only when Morris arranged for a French loan to underwrite federal bonds at 6%, payable in bills of exchange issued by big European banking houses and backed by their metal reserves, as good as gold. And he got Congress to accept its crap currency in exchange for the bonds! Quite a payday — for the banking and creditor class.
So, yes, Morris did manage to attract investors — by and large the friends of Robert Morris. He kept the French deal secret but leaked it to his cronies, establishing a blue-chip sector of founding public debt held by high-finance government insiders. Morris then spent a decade trying to get that debt funded via national taxes, “opening the purses of the people,” as Morris put it, in order to pay a small group of investors reliable 6%, in the equivalent of metal, tax free.
The point isn’t to excoriate Morris or his protégé Hamilton or the U.S. Constitution through which they ultimately achieved their finance goals. (For more on Morris and Hamilton from this point of view, as well as more on the ordinary people who opposed them, see my “Founding Finance” posts for New Deal 2.0; see also Terry Bouton’s great book Taming Democracy — Rappleye slams it; it’s realistic and thorough in a way Rappleye declines to be — as well as Robert McGuire’s To Form a More Perfect Union and E.J. Ferguson’s landmark The Power of the Purse.) The important point is that both liberaloid and rightist claims on founding positions are always, by nature, unnuanced, thus false, because the realities of founding positions don’t support anyone’s hopeful foregone conclusions regarding politics today.
The brain trust — and they were that — who framed the Constitution in order to grow the nation by funding a domestic national debt sought deeply regressive taxation and the consolidation of wealth. Modern liberalism’s ancestry might give modern liberals pause, but few today who look to the founding for political inspiration want to delve into the dire founding conflicts among Americans that marked the entire period, preoccupied the founders themselves, and helped define our nation. I think that’s too bad.