LESSONS LEARNED #17: “The raison d’être of federalism is to keep big government small.” -Old Pithy.

Posted by PITHOCRATES - June 10th, 2010

ALEXANDER HAMILTON WAS a real bastard.  John Adams hated him.  Thomas Jefferson, too.  George Washington looked at him like a son.  Aaron Burr killed him.  Politics.  It can get ugly.

Hamilton’s father was having an affair with a married woman in a loveless marriage.  Fathered two children with her.  First James.  Then Alexander.  Both born on the British island of Nevis in the Caribbean.  His father then moved the family to the Danish island of St. Croix.  Shortly thereafter, Hamilton’s father abandoned his family.  Alexander was 10ish (there is some disagreement about his year of birth). 

At age 11ish, Alexander became a clerk at Cruger and Beekmen, an import-export firm.  There he learned about business and commerce.  People noticed his talent and ability.  Soon, they collected some money and sent him off to the American colonies for a college education.  Hamilton’s fondest memory of his childhood home was seeing St. Croix disappear into the horizon from the ship that delivered him to America.

Hamilton’s father did have some nobility in his lineage but he squandered it before it could do Alexander any good.  He was an illegitimate child (a real bastard).  His father abandoned him.  His mother died while he was young.  He had little but ability.  But that was enough to take him from St. Croix to the founding of a new nation.

Hamilton served in the Continental Army.  He served as General Washington’s aide-de-camp.  Hamilton was in the know as much as Washington.  His understanding of business, commerce and money made him acutely aware of the financial disarray of the Army.  And of the Continental Congress.  What he saw was a mess.

The Continental Congress was a weak central government.  It could not draft soldiers.  It could not impose taxes to pay her soldiers.  It could only ask the states for money to support the cause.  Contributions were few.  The congress tried printing money but the ensuing inflation just made things worse.  The Army would take supplies for subsistence and issue IOUs to the people they took them from.  The Congress would beg and borrow.  Most of her arms and hard currency came from France.  But they ran up a debt in the process with little prospect of repaying it.  Which made that begging and borrowing more difficult with each time they had to beg and borrow.

The army held together.  But it suffered.  Big time.  Washington would not forget that experience.  Or Hamilton.  Or the others who served.  For there was a unity in the Army.  Unlike there was in the confederation that supported the Army.

WARS ARE COSTLY.  And France fought a lot of them.  Especially with Great Britain.  She was helping the Americans in part to inflict some pain on her old nemesis.  And in the process perhaps regain some of what she lost to Great Britain in the New World.  You see, the British had just recently defeated the French in the French and Indian War (aka, the 7 Years War).  And she wanted her former possessions back.  But France was bleeding.  Strapped for cash, after Yorktown, she told the Americans not to expect any more French loans.

Wars are costly.  The fighting may have been over, but the debt remained.  The interest on the debt alone was crushing.  With the loss of a major creditor, America had to look elsewhere for money.  The Continental Congress’ Superintendent of Finance, the guy who had to find a way to pay these costs, Robert Morris, said they had to tax the Americans until it hurt they were so far in debt.  He put together a package of poll taxes, land taxes, an excise tax and tariffs.  The congress didn’t receive it very well.  Representation or not, Americans do not like taxes.  Of the proposed taxes, the congress only put the tariffs on imports before the states.

Rhode Island had a seaport.  Connecticut didn’t.  Rhode Island was charging tariffs on imports that passed through her state to other states.  Like to Connecticut.  Because they generated sufficient revenue from these tariffs, their farmers didn’t have to pay any taxes.  In other words, they could live tax free.  Because of circumstance, people in Rhode Island didn’t have to pay taxes.  Connecticut could pay their taxes for them.  Because of the Rhodes Island impost.  And the Robert Morris’ impost would take away that golden goose.

As the congress had no taxing authority, it would take a unanimous vote to implement the impost.  Twelve voted ‘yes’.  Rhode Island said ‘no’.  There would be no national tax.  ‘Liberty’ won.  And the nation teetered on the brink of financial ruin. 

DEFALTION FOLLOWED INFLATION.  When the British left, they took their trade and specie with them.  What trade remained lost the protection of the Royal Navy.  When money was cheap people borrowed.  With the money supply contracted, it was very difficult to repay that debt.  The Americans fell into a depression.  Farmers were in risk of losing the farm.  And debtors saw the moneymen as evil for expecting to get their money back.  The people demanded that their state governments do something.  And they did.

When the debtors became the majority in the state legislatures, they passed laws to unburden themselves from their obligations.  They passed moratoriums on the collection of debt (stay laws).  They allowed debtors to pay their debts in commodities in lieu of money (tender acts).  And they printed money.  The depression hit Rhode Island hard.  The debtors declared war on the creditors.  And threw property laws out the window.  Mob rule was in.  True democracy.  Rhode Island forced the creditors to accept depreciated paper money at face value.  Creditors, given no choice, had to accept pennies on the dollars owed.  No drawbacks to that, right?  Of course, you better pray you never, ever, need to borrow money again.  Funny thing about lenders.  If you don’t pay them back, they do stop lending.  The evil bastards.

Aristotle said history was cyclical.  It went from democracy to anarchy to tyranny.  Hamilton and James Madison, future enemies, agreed on this point.  A democracy is the death knell of liberty.  It is a sure road to the tyranny of the majority.  If you don’t honor written contracts, there can be no property rights.  Without property rights, no one is safe from arbitrary force.   Civilization degenerates to nature’s law where only the fittest and most powerful survive.  (In the social utopias of the Soviet Union and Communist China, where there were no property rights, the people’s government murdered millions of their people).

WINNING A WAR did not make a nation.  Before and after the Revolution, people thought in provincial terms.  Not as Americans.  Thomas Jefferson hated to be away from his country, Virginia.  Unless you served in the Continental Army, this is how you probably thought.  Once the common enemy was defeated, the states pursued their own interests.  (Technically speaking, they never stopped pursuing their own interests, even during the War).

In addition to all the other problems a weak Continental Congress was trying to resolve, states were fighting each other for land.  A localized war broke out between Pennsylvania and Connecticut over the Wyoming region in north east Pennsylvania.  And a region of New York was demanding their independence from that state.  Hamilton helped negotiate a peaceful solution and the confederacy admitted the new state, Vermont.

There were problems with the confederation.  And people were getting so giddy on liberty that that they were forgetting the fundamental that made it all possible.  Property rights.  States were moving closer to mob rule with no check on majority power.  And the smallest minorities held the legislation of the Confederate Congress (the Continental Congress renamed) hostage.  Land claims were pitting state against state with the Congress unable to do anything.  Meanwhile, her finances remained in shambles.  She had no credit in Europe.  And creditors wanted their money back. 

They were choosing sides.  And you can probably guess the sides.  Hamilton had no state allegiances, understood finance and capital, saw how an impotent congress was unable to support the Army during war, saw provincial interests hinder national progress and threaten civil war.  George Washington, Virginia’s greatest son, had long looked to the west and saw America’s future there.  Not Virginia’s future.  His war experience only confirmed what he believed.  America had a great future.  If they could only set aside their provincialism and sectional interests.  James Madison saw the tyranny of the majority in the Virginian State House first hand.  He liked partisanship.  He liked competing ideals debated.  He did not want to see a majority stampede their vision into law.

These were the nationalists.  Madison wanted a strong federal government to check the tyranny of the states.  Hamilton wanted to do away with the states altogether.  Washington wanted what was best for these several united states as a whole after so many labored for so long during the Revolutionary War.  Ultimately, he wanted to capitalize the ‘u’ and the’s’ in united states and make it a singular entity.

On the other side were many of the old 1776 patriots.  Many of who did not have any army experience.  Such as Thomas Jefferson.  In them, the Spirit of ’76 was alive and well.  The Revolutionary War was to free the states from the yoke of British oppression.  They remained provincials.  They did not spend up to 8 years in an army made up of soldiers from different states.  They had no sense of this nationalism.  They saw everything through the eyes of their state.  And a strong central government was just another yoke of oppression in their eyes.

THE ANSWER TO all of their concerns was federalism.  Shared sovereignty.  The states would give up a little.  And the new central government would take up a little.  The drafters of the Constitution set up a 3-branch government.  It included a bicameral legislature.  Membership in the House of Representatives would be proportional to a state’s population.  They would have power of the purse.  Including the authority to levy taxes.  In the Senate, each state would get 2 senators.  They would be chosen by the states’ legislatures (a constitutional amendment changed this to a popular vote).  This was to keep the spending of the House in check.  To prevent mob-rule.  And to check national power.  Each chamber would have to approve legislation for it to become law.  But each chamber did not need to have unanimous approval. 

That was in the legislature.  In the executive branch, the president would be head of state and execute the laws written by the legislature.  He would also conduct a uniform foreign policy.  The president could veto legislation to check the power of the legislature.  And the legislature could override the president’s veto to check the power of the president.  Where the law was in dispute, the judiciary would interpret the law and resolve the dispute.

At first glance, the people didn’t love the U.S. Constitution.  Those at the convention didn’t either, but they thought it was the best they could do.  To help the ratification process, James Madison, Alexander Hamilton and John Jay wrote a series of essays, subsequently published as the Federalist Papers making the case for ratification.  Those opposed wanted a Bill of Rights added.  Madison did not think one was necessary.  He feared listing rights would protect those rights only.  If they forgot to list a right, then government could say that it wasn’t a right.  He acquiesced, though, when it was the price to get the Virginian Baptists on board which would bring Virginia on board. 

Madison promised to add a Bill of Rights after ratification.  So the states ratified it.  And he did.  The final document fell between what the nationalists wanted and what the ‘states’ government’ people wanted. 

OVER THE FOLLOWING years, each side would interpret the document differently.  When Hamilton interpreted broadly to create a national bank, to assume the states’ debts and to fund the debt, the other side went ballistic.  Madison, the father of the Constitution, would join Jefferson in opposition.  For they believed the point of the constitution was to keep big government small.  Hamilton was interpreting the ‘necessary and proper’ clause of the Constitution to make government big.  Nasty, partisan politics ensued.  And continue to this day.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

LESSONS LEARNED #15: “Most people would rather hear a pleasant lie than an unpleasant truth.” -Old Pithy.

Posted by PITHOCRATES - May 27th, 2010

NO ONE LIKES bad news.  That’s why when someone says, “I’ve got good news and bad news, which do you want to hear first?” most people want to hear the bad news first.  Get the sting over.  Then hear the good news to help get over the sting of the bad.

People are so adverse to bad news they’ll even look for ways to ignore it as long as they can.  They’ll believe lies if the lies keep their pleasant little world pleasant.  Almost to any cost.  In 1944, the Germans were beaten.  There was a chance some soldiers would be home before Christmas.  So when some scattered reports came of movements on the German front towards the Eifel Region just east of the Ardennes, SHAEF (Supreme Headquarters Allied Expeditionary Force) discounted them.  Explained them away as nothing.  Because the Germans didn’t launch winter offensives.

Until 1944, that is.  The Schnee Eifel battle, at the beginning of the center prong of a 3-prong attack, was the greatest American defeat in 1944/1945 Europe.  But this was only one of many battles known as the Battle of the Bulge.  This German winter offensive through the Ardennes was the biggest American battle of World War II.  And bloodiest.  In all, the Germans killed about 20,000 American soldiers.  Some after they surrendered.  Kampfgruppe Peiper spearheaded the Sixth SS Panzer Division.  Joachim Peiper would eventually lead this force through the Baugnez crossroads near Malmedy.  And into infamy.  The Malmedy Massacre wasn’t the only war crime, though.  There were others.

In the movie Patton, General Patton predicted this German offensive.  And there was some truth in that.  Third Army DID predict this.  But it was his chief of intelligence, Colonel Oscar Koch, who figured this out.  Patton’s battlefield successes were the result of strong intelligence.  And Colonel Koch gave him some of the best intelligence available on the Western Front.  In November 1944, he gathered the intelligence, analyzed it and predicted a time and place.  Of course, SHAEF discounted his findings.  They were sure the Germans were beaten.  Besides, the Germans didn’t launch winter offensives.

THE BATTLE OF the Bulge was only a small part of World War II, the biggest and meanest war in the history of mankind.  Nations mobilized their military, economic, industrial, and scientific forces to wage total war.  Civilians died, too.  En masse.  Whether by bombing of enemy cities or by organized genocide in occupied lands, civilians felt the horrors of war as they never had before.

So how did such a horrific war come to be?  It’s complicated.  Did it have to be as bad as it was?  No.  At least, France could have stopped Hitler earlier.  Before his military buildup.  But to understand this story, you have to go back in time. 

THE GREAT WAR, World War I, was the culmination of a series of disputes over European power and control of the Balkans.

The Crimean War of 1853–1856, the Austro-Sardinian War of 1859 and the Austro-Prussian War of 1866 stirred the pot up in the Balkans.  The Franco-Prussian War of 1870-1871 established a new unified Germany as the dominant power of Europe as Great Britain and France were in decline (and ceded the Loraine-Alsace region from France to Germany).  And the Russo-Turkish War of 1877–1878 exploited the Balkan tempest.

Weaker nations formed treaties with stronger nations.  Entangling treaties.  Imperial interests in the Balkans of both the great and not so great powers further fermented the Balkan tempest.  Minority rule of the majority led to nationalist rebellion.  To quench this rebellion, the Austro-Hungarian Empire annexed Serbia.

This is a very cursory history but you get the picture.  There was a lot of anger.  And a lot of wrongs to right.  And territory to regain.  Or to simply gain.  And then on Sunday, the 28th of June 1914, Archduke Franz Ferdinand of Austria visited Sarajevo.  There a Yugoslav nationalist, Gavrilo Princip, assassinated him.  And then all of those entangling treaties kicked in and a world was at war.

IT WAS THE bloodiest and costliest war to date.  No one thought it would be, though.  You see, they learned a lot from the Prussians during the Franco-Prussian War of 1870-1871.  Which was swift and conclusive.  Unfortunately, they learned little from the American Civil War (1861-1865).  For 4 bloody years the Americans demonstrated warfare where technology was ahead of military tactics.  And World War I was to look more like the American Civil War than the Franco-Prussian War of 1870-1871.  Long.  And bloody.  A war of attrition where you don’t necessarily win a decisive battle.  The other side just runs out of soldiers to kill.

World War I (1914 to 1918) saw horrific killing fields.  Artillery bombardments that would last for days.  Attacks through barbed wire into raking machine-gun fire.  Poison gas.  The death toll was staggering.  Great Britain and her Imperial forces lost over a million killed, over 2 million maimed and wounded.  France lost slightly more killed and almost twice in maimed and wounded.  Civilians were not untouched by war, either.  Blockade starved civilian populations.

The War devastated and impoverished these two countries.  They won the war, but only barely.  The entry of America was just too much.  More soldiers and material.  The killing could go on indefinitely.  So all sides sued for peace.  With the Americans on the Allied side, though, they were in a position to dictate the terms of the peace.  And boy did they.

THE TREATY OF VERSAILLES was punitive.  In the run up to war, there were really no innocents.  But to the victors go the spoils.  Official blame for the war fell on Germany.  She lost territory (France got back the Loraine-Alsace region) and all her colonies.  And she had to pay reparations.  The Germans were pissed. 

The Allies hoped to mitigate their war losses by German tribute.  But it was too much.  Even a member of the British delegation at Versailles, economist John Maynard Keynes, thought so.  In an effort to restore Great Britain and France as the dominant European powers, the allies probably went too far.  The economic burdens on Germany were too great.  Then hyper-inflation met Great Depression.  Angry socialists, communists and nationalists tore the nation asunder.  Until a uniter came along.  Adolf Hitler.

HITLER ROSE TO power legally.  Then he consolidated his power ruthlessly.  He renounced the Versailles Treaty.  And did a lot of things that showed his ultimate intentions.  Including writing a book years earlier about his ultimate intentions.  Mein Kampf.  Which was pretty detailed.  To anyone who read it. 

One of his first provocative acts was to place a negligible military force into the Rhineland in 1936.  The German High Command was a little skittish about this idea for they did not believe they had sufficient strength to successfully fight off a French response.  The French had superior numbers in military power.  But they were financially weak.  They had poured a fortune into the line of fortresses known as the Maginot Line.  They could not afford all out war with Germany, too, and they thought a military conflict in the Rhineland may lead to that.  And after going through the horrors of the Great War, they had no desire to do it again.  Whether it was a question of could or would is still debated.  But had they, one wonders how such action would have altered the course of history.

Hitler continued in a string of actions, explaining away each as harmless with no higher purpose.  Great Britain and France were growing uneasy but accepted his statements.  They wanted to believe.  They would do just about anything to avoid a return to war.  Even give away another sovereign nation’s land.

THE SUDETENLAND WAS an area along the Czechoslovakia side of their border with Germany with German inhabitants.  Hitler wanted to reincorporate them into the German state.  He promised this would be his last territorial acquisition.  And, at Munich in September of 1938, Great Britain and France took him at his word.  With Czechoslovakia not even present at this conference, they concluded the pact that ceded the Sudetenland to Germany.  All’s well that ends well.

British Prime Minister Neville Chamberlain returned to London with a copy of the Munich Pact.  He would give a speech declaring they got “peace for our time.”  But they didn’t.  Hitler soon took the rest of Czechoslovakia.  With his two flanks protected, Hitler invaded Poland in 1939 and launched the world into war.  Again.  Only this time, it would be worse.

IT IS HARD to blame France and Great Britain’s reluctance to return to war with Germany after the devastation of World War I.  And those who do usually do so with the advantage of hindsight.  However, we know what the costs added up to in stopping Adolf Hitler in 1945.  And few would say that all out war with Germany in 1936 would have cost more.

Here’s the ugly truth.  The truth can be ugly.  And we hide from it at our own peril.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,