II. The Decline of American Liberalism--the Early Years

The socialist apostasy, however partial, proved more popular in Europe than in America—at first. At first, American liberals hewed closely enough to their individualist values to shake off any temptation they might have felt to adopt the socialist line. Still, as the late Arthur Ekirch contends in his classic work The Decline of American Liberalism,

[s]ince the time of the American Revolution, the major trend in our history has been in the direction of an ever-greater centralization and concentration of control—politically, economically, and socially. As a part of this drift toward "state capitalism" or "socialism," the liberal values associated with the eighteenth-century Enlightenment—and especially that of individual freedom—have slowly lost their primary importance in American life and thought.

"The American Revolution was liberal," Ekirch maintains, though this claim, even on his own terms, is debatable. As he himself notes, later in the same book, "any war, even one fought over some great moral principle, involves the use of methods essentially illiberal; [...] the very substance of liberalism [...] is bound to suffer in wartime." And "this incompatibility of war and liberalism" was certainly on display during the American Revolution, most notably in the treatment peaceable loyalists received at the hands of the revolutionaries and their supporters.²⁶⁰

Consider Kenneth Roberts's portrayal of the loyalist plight, in his 1940 novel of the revolution, Oliver Wiswell: "They had been harried, spied on, lied about, informed against, robbed and insulted; and they longed achingly for [British General William] Howe and his army, so that they might be freed from the oppressions and the restrictions of Congress, mobs, and committees." One Long Island loyalist tells Roberts's title character:

"This island is three-quarters Loyalist; but we can't do the things the rebels do. They send in militia from other colonies, or bring their mobs from New York. They have no homes here; no families; no belongings except what they have on their backs. We have! If we fight 'em, they seize our cattle, burn our barns and houses, and drive our families across the Sound. I can name hundreds of people, right in this neighborhood, who've been up to their necks in misery and ruin for over a year, just because they were known to be against rebellion."²⁶¹

It would appear, then, that at least some of the "liberals" involved in the American Revolution were themselves disinclined to respect the natural rights to life, liberty, and the pursuit of happiness of those who disagreed with the aims of the revolution. Nevertheless, as Ekirch notes, the revolutionaries' ideological leaders apparently "were not prepared for the conservative countermovement and nationalistic consolidation that followed the war."²⁶²

Thomas Jefferson, for example, believed, with virtually all liberals, that "[e]conomic paternalism in behalf of certain privileged groups was [...] the main source of the tyranny and political corruption that he saw in Europe. It was such a set of evils that American liberals desired, at all costs, to avoid." And yet, "the war itself had helped to breed a new aristocracy of talents and wealth eager to avail itself of the privileges lost by the departing loyalist upper class." The exigencies of "army contracting and supply" during the war assured that "[m]anufacturing increased" and that "business[...] began to look to the government for economic support." Little wonder, then, that "[a]fter the return of peace [...] the new generation of businessmen should strive to enlist the aid of the government in preserving and increasing their wartime gains." Unfortunately, from their point of view, "the government" under the Articles of Confederation was a relatively feeble thing, not even empowered to "levy uniform tariffs" to prop up the profits and the competitive position of the firms founded and run by these new businessmen.²⁶³

And so it was that in May of 1787, "fifty-five [...] men of considerable and varied property holdings, ranging from the possession of slaves and lands to investments in government securities and far-flung business enterprises" met in Philadelphia and "resolved to disregard the announced plan of submitting amendments" to strengthen the Articles of Confederation; instead, they decided "to prepare[...] an entirely new frame of government." Unsurprisingly, this "new frame," the U.S. Constitution of 1787, gave a new central government

broad and far-reaching powers over the economic life of the nation. [...] Congress was given exclusive authority to coin money and to regulate both foreign and interstate commerce. Thus the stage was set for the abandonment of laissez-faire liberalism and the substitution of a policy of economic nationalism or government paternalism.

At another point, Ekirch makes the same argument in a somewhat more measured way, contending that the Constitution provided, not an actual policy of paternalism, but merely "a skeleton for the further development of a strong paternalistic state." Still, the very first political party to control the machinery of government in the United States under the new Constitution, the Federalist party, was only too happy to do whatever it could to make such a paternalistic state a reality. Alexander Hamilton, whom Ekirch calls "easily the most significant" of the Federalist leaders and a firm believer "in the virtues of a strong rather than a weak government," was "[u]nhampered by intellectual loyalty to radical or Revolutionary principles," and was bent on seeing "his program of economic nationalism" imposed on the new nation.²⁶⁴

Hamilton's program called for a national bank which, after having "received a monopoly of government business," would "provide new capital for the business expansion that Hamilton deemed vital to United States prosperity," that business expansion to be protected from foreign competition by a high tariff wall. Hamilton—need it be said?—was the first great conservative in American politics. His party, the Federalist party, was the first conservative party, the first Right-wing party, in American political history. As Ekirch reminds us, "the Federalists[...] pursued a constantly illiberal course during their twelve years of power."²⁶⁵

They were not without opposition, of course. As Ekirch notes, even before that twelve-year period began, "conservatives were everywhere taking fright over the possibility of a resurgence of the old Revolutionary spirit of radicalism among the lower classes. Debtor farmers, prop-ertyless mechanics, and discontented ex-soldiers [...] were beginning to unite in their opposition to strong government and higher taxes."²⁶⁶ In 1786, as Gore Vidal tells the tale—not in one of his novels, but in an essay on American history in the New York Review of Books—a number of "Massachusetts veterans of the revolution [had] joined Captain Daniel Shays in his resistance to the landed gentry's" new "tax-levying central government," namely, the post-war governnent of Massachusetts. "The veterans thought that they had been fighting a war for true independence," says Vidal. "They did not want London to be replaced by New York," as more than a few of the conservatives in Boston had begun to propose be done, in order to safeguard against exactly such insurrections as Shays's rebellion.

"Their rebellion was promptly put down," Vidal writes.

But so shaken was the elite by the experience that their most important (and wealthiest) figure grimly emerged from private life with a letter to Harry Lee. "You talk of employing influence," wrote George Washington, "to appease the present tumults in Massachusetts. I know not where that influence is to be found, or if attainable, that it would be a proper remedy for the disorders. Influence is no government. Let us have one by which our lives, liberties and properties will be secured or let us know the worst at once." So was born [...] the Constitution of the United States.²⁶⁷

Once that constitution was in place, however, with Washington duly installed in the presidency and Hamilton duly installed in the Treasury Department, the protests continued. The cost of imposing Hamilton's "program of economic nationalism" on the new nation "required a revenue beyond the amount that could be collected from the moderate tariff duties approved by the First Congress," Arthur Ekirch explains.

The Secretary of the Treasury therefore suggested that Congress place an excise tax on whisky. Such a tax would hit the small farmers of the back country who had opposed the adoption of the Constitution and who remained dubious of the Federalist program, but it would avoid giving offense to the men of wealth and property whose support Hamilton deemed necessary to the success of the new national government. Distilling in the 1790s was a small-scale enterprise carried on chiefly by Westerners who were thereby able to change their bulky grain products into a form more easily transportable across the mountains to eastern markets. The tax, though small in monetary value—originally from nine to twenty-five cents a gallon—struck at the heart of the prosperity and manner of living of the frontier farmers and resulted finally in the summer of 1794 in full-scale, violent resistance in the western counties of Pennsylvania.²⁶⁸

This state of affairs was unacceptable to the Federalists, to say the very least. "For Washington," writes Vidal, in his recent book Inventing a Nation: Washington, Adams, Jefferson, "this Whiskey Rebellion was Shays's rebellion all over again. He must now, like Hotspur, summon his troops."²⁶⁹ Accordingly,

[t]he father of his nation drew his sword, ascended the throne and commanded the nation to forthwith provide him with twelve thousand men to put down the rebellion. Americans finally came to their senses. More than twelve thousand men rallied around Washington, who, with Hamilton at his side, rode straight to the heart of the rebellion in western Pennsylvania where twenty no doubt deeply embarassed moonshiners surrendered; recanted; and received a presidential pardon. Hamilton, now a general, headed back to New York to prepare for the election of 1796.²⁷⁰

Rothbard calls the Whiskey Rebellion "a non-violent, civil disobedient refusal to pay" a "hated tax." According to Rothbard, "the average American" of the time considered "the federal government's assumption of the power to impose excise taxes" very questionable indeed and "not[...] very different from the levies of the British crown." The tax was also resented, and with special ill will, by small distillers. For "in keeping with Hamilton's program, the tax bore more heavily on the smaller distilleries." In fact, "many large distilleries supported the tax as a means of crippling their smaller and more numerous competitors."

And this is only the beginning of Rothbard's dissent from what he calls "the Official View" of the Whiskey Rebellion. For

[t]he main distortion of the Official View of the Whiskey Rebellion was its alleged confinement to four counties of western Pennsylvania. From recent research, we now know that no one paid the tax on whiskey throughout the American "back-country": that is, the frontier areas of Maryland, Virginia, North and South Carolina, Georgia, and the entire state of Kentucky.

The fact is, Rothbard claims, that

President Washington and Secretary Hamilton chose to make a fuss about Western Pennsylvania precisely because in that region there was cadre of wealthy officials who were willing to collect taxes. Such a cadre did not even exist in the other areas of the American frontier; there was no fuss or violence against tax collectors in Kentucky and the rest of the back-country because there was no one willing to be a tax collector.

In point of fact, according to Rothbard's account, even if there had been willing tax collectors, "[n]o local juries could be found to convict tax delinquents" in almost "[t]he entire American back-country."²⁷¹

Not only did the Federalists work to impose Hamiltonianism to the best of their ability, "adopting a broad and elastic interpretation of the Constitution and using expanded powers of government and the vague concept of the general welfare for the benefit of a particular class—the commercial, propertied aristocracy," as Ekirch puts it; they also wrote, adopted, and enforced the notorious Sedition Act of 1798, which provided that

"if any person shall write, print, utter, or publish" or cause or aid anyone else to write or publish "any false scandalous and malicious writing" against the government, Congress, or President of the United States "with intent to defame" or "to stir up sedition," he should be punished by a fine not exceeding two thousand dollars and imprisonment not exceeding two years.²⁷²

So much for the liberal belief (codified in the First Amendment to the Constitution) in freedom of speech and expression! To impose criminal penalties for speech against government policies was to return to the oppressive practices of the ancien regime against which the liberals had led a rebellion only a few years before.