Henry Clay’s “American System” Was Bad News for the American Economy *Then*, and Will Be Again [updated]

 

GUEST POST

This bizarre protectionist manifesto (above) was posted and now appears to have been scrubbed from the Daily Caller's website. No wonder.

The author—a former Senior Policy Advisor to JD Vance in the Senate—has recently been appointed as Trump's "Special Assistant for Domestic Policy." An archived link of his article gives a glimpse of what this "Special Assistant" and his bosses believe. In short, as Phil Magness and James Harrigan explain in this guest post, it's outright Neo-LaRouchie lunacy rooted in the mercantilist economic doctrines of 19th century arch-protectionist Henry Clay—and "American System" whose modern rehabilitators conveniently leave out the fact that every time it was tried in the 19th and early 20th centuries, Clay’s program unleashed a torrent of preventable policy disasters.”

In other words, it's protectionist junk all the way down that will lift no-one anywhere ....

Henry Clay’s “American System” Was Bad News for the American Economy Then, and Will Be Again

by Phil Magness & James Harrigan

Some ideas are so bad we are doomed to relive them with each successive generation. Until recently, economic central planning from the political right received far less attention than its well-known manifestations on the left. Think of all the repeated attempts to rehabilitate Marxism and socialism, despite their disastrous track record over the last century. Unfortunately, an emerging faction on the political right has decided to deploy economic planning of their own as an intended countermeasure against their progressive foes. For inspiration, they’ve resurrected a failed and long-forgotten idea from the 19th century: Henry Clay’s “American System.”

Clay’s program was first articulated in an 1824 speech, in which he proposed using the Constitution’s tax and regulatory powers to execute America’s first national foray into centralised economic planning. His basic idea was to enlist the might of the federal government to strategically develop certain sectors of the American economy by subsidising them with tax dollars, and penalizing their foreign competitors with high protective tariffs.

Clay maintained that import tariffs could be used to give American manufacturers a leg up over European goods, while also cultivating “infant industries” that he deemed to be in the young nation’s strategic interests. Topping off the package, Clay proposed a spending spree on federally subsidised “internal improvements,” such as roads and canals to facilitate internal commerce, and a strong central bank to facilitate the financing of large government programs through the issuance of sovereign debt. In total, the program amounted to a comprehensive attempt at economic planning around the mistaken belief that trade is a zero-sum game, and countries were locked in a continuous struggle to maximise their industrial outputs by subsidising themselves and taxing their perceived foreign competitors.

If all of this sounds vaguely familiar, it should. It’s part of the protectionist-tariff playbook we witnessed during the Trump presidency. Or maybe it’s better seen, as William Galston asserts, as representing “an effort to bring some ideological coherence to the impulses Donald Trump represents—nationalism, isolationism, social conservatism, and hostility to immigration.” Indeed, Robert Lighthizer, the former Trump cabinet official who is considered the architect of his international trade policy, recently called for the adoption of a “New American System” based on Clay’s 1824 proposal at a speech in Washington, D.C. Henry Clay’s scheme similarly assumed centre stage at a National Conservatism Conference in Miami, Florida, when historian Michael Lind depicted him as the true successor to the American founding, by way of Alexander Hamilton. Clay’s ideas have also found an institutional home at the American Compass, a think tank set up by Oren Cass, Mitt Romney’s former economic advisor. 

It would be difficult to overstate the rapid pace at which Clay’s ideas have surged out of obscurity and into political discussions on the right. Barely two decades ago, discussions of it were almost entirely relegated to the peripheral fringes of American politics. Today, Secretary of State Marco Rubio invokes Clay as a model for constructing a US industrial policy to counter the economic rise of China.

The fundamental problem with this line of reasoning is that it rests on bad economic history, overlaid with the logical fallacy post hoc ergo propter hoc.

The “new American System” advocates tell a version of US economic history that goes something like this: 

• In the early 19th century, the United States entered the world scene as an economic backwater facing insurmountable competition from the established industrial nations of Europe, and particularly Great Britain. 
• By the turn of the twentieth century, the United States had emerged as one of the world’s great industrial powers, even surpassing the Old World despite getting a later start. 
• The credit for this growth, they claim, goes to the “American System” policies that Clay championed: high protective tariffs, subsidized “internal improvements,” the gradual expansion of a powerful central bank, and all around economic planning.

Even the basic claims of this story are in error. however. As economist Douglas Irwin has shown, proponents of the theory that tariffs drove American economic growth “have tended to present statistics that overstate late nineteenth century US growth in comparison to other periods and countries.” After examining the empirical evidence, Irwin concludes, 

It is difficult to attribute much of a positive role for the tariff because import tariffs probably raised the price of imported capital goods, thereby discouraging capital accumulation.

He accordingly rules out the theory that trade protection, the main plank of Clay’s platform, caused the United States to become a world economic power.

But there are even-more-fundamental problems with the new “American System” theorists’ history. They get basic facts wrong about the nature of 19th century economic policy, while simultaneously obscuring or ignoring the many downsides of Clay’s program and its attempted implementation.

The Rise and Demise of the American System

Though once a popular political slogan, Clay’s American System fell into disrepute after a series of discrediting blows in the 19th and early 20th centuries. The first came in 1832, when President Andrew Jackson vetoed legislation to recharter the United States’ corruption-plagued central bank. The creation of the Federal Reserve in 1913 resuscitated this legacy, along with its tendency to engage in political manipulation of monetary policy, though the Bank War did manage to constrain the push for centralisation on that front for much of the 19th century.

Clay’s original tariff program endured a bit longer, finding legislative support at various points between 1824 and 1930. As the chart below shows, however, the 19th century was not an uninterrupted experiment in Clay-style protectionism. Clay only briefly got his way when a series of tariff measures between 1824 and 1828 jacked the average rate on dutiable goods to over 60 percent. The “Tariff of Abominations,” as the 1828 measure came to be known, sparked a political crisis that brought the country to the brink of disunion, after South Carolina attempted to nullify the high tax measure. As the graph shows, from 1833 until the Civil War, the United States charted a course of tariff liberalization, save for a brief interruption when Clay’s Whig Party attained power in 1842. In fact, in 1846 US Treasury Secretary Robert Walker orchestrated a major tariff liberalization to coincide with Great Britain’s famous repeal of the protectionist Corn Laws that same year.

The United States did not reimpose high tariffs in the Clay model with any degree of permanence until the second half of the nineteenth century. While this period did coincide with economic growth, the claim of a causal relationship ignores the fact that the American economic ascendance was already well underway, preceding those tariffs by several decades, and getting its start in a time of relative trade liberalisation on both sides of the Atlantic.

One of the main reasons Henry Clay struggled to get his American System launched in his own lifetime (1777-1852) was the political corruption it always attracted. In practice, the American System’s rationalization of trade protectionism provided cover for rampant graft and favoritism. From the moment of its inception, politically connected special interests seized control of federal tariff legislation and reshaped it to their own benefit. They lobbied for punitive tax rates on their competitors and pork-laden handouts for themselves, even if it meant overtaxing commerce at the expense of revenue itself. At several points in the 19th century, protectionist tariffs pushed the US tax system into the upper half of the Laffer Curve, where rates became so onerous that they undermined the intake of federal tax revenue. This was by design, as protectionist tariffs use taxes as a weapon to deter foreign goods from even entering the country.

The American System and Slavery

Clay’s American System also struggled to disentangle its doctrines from the institution of slavery. Its underlying theory held that the American economy could be “harmonised” and internally integrated through national economic planning. That meant deploying “internal improvements” and the tariff schedule to bind northern industry and southern agriculture together in economic symbiosis. Clay’s doctrines amounted to an early experiment in import substitution: the strategy of using tariffs and other commercial restrictions to divert raw-material production away from international markets and into a heavily subsidised domestic industry. In practice, this meant intentionally shifting southern cotton production away from transatlantic markets and into the textile mills of New England. In order for the American System to function as intended, it would have to subsidise plantation agriculture as well as northern industry.

Some of the American System’s proponents, including Clay himself, eventually recognized that a full “harmonisation” of the US economy under the American System would entail significant public expenditures to develop southern agriculture, thereby politically entrenching slavery in perpetuity. Clay (who, despite being a slave-owner, had reservations about the institution) therefore devised what is often referred to as the “Whig formula” for addressing slavery through a scheme of federally compensated gradual emancipation.

To facilitate this program, Clay appended the American System doctrine with another plank. In addition to paying for “internal improvements,” federal land sale revenue would be allocated to “colonise” or resettle the African-American population of the United States in faraway tropical locations such as Liberia or Central America. As Clay explained in an 1847 speech, federally subsidised colonisation “obviated one of the greatest objections which was made to gradual emancipation,” that being the “continuance of the emancipated slaves among us.” Following Clay, American System theorists such as economists Mathew Carey and his son Henry C. Carey began to champion the black colonisation movement as a “solution” to the problems that slavery presented to their tariff and subsidy scheme. In order to make the system work without plantation slavery, they would simply export the freed slaves abroad.

Aside from a few experiments such as the founding of Liberia, such schemes proved impractical, and eventually succumbed to political obstacles during the American Civil War. Clay’s tariff system nonetheless gained a foothold on the eve of the war, as protectionist interests exploited the chaotic “secession winter” legislative session of 1860-61 to cram the pork-laden Morrill Tariff Act through Congress—dramatically hiking tariffs from (declining) average rate of below twenty percent, to a suffocating imposition of almost fifty percent!

A Civil War Diplomatic Disaster

Although the 1861Morrill Tariff succeeded in finally installing an American-System-style tariff regime for the next half-century, it quickly turned into a diplomatic disaster. The new law’s steep protectionist rates alienated the British government, which would otherwise have been a natural anti-slavery ally to the Union cause. At the outbreak of the war, British abolitionist and free-trader Richard Cobden wrote his friend Charles Sumner, the US Senator from Massachusetts, to plead the importance of free trade to the anti-slavery cause. “In your case we observe a mighty quarrel: on one side protectionists, on the other slave-owners.” Citing the Morrill Tariff supporters’ publicly expressed reluctance to move against slavery, Cobden predicted the measure would imperil his efforts to steer Britain to the aid of the North. As he rhetorically asked his fellow abolitionist Sumner, “Need you wonder at the confusion in John Bull’s poor head?”

As part of the fallout, the Lincoln administration entered the White House facing an irate diplomatic landscape. In part alienated by the tariff, Britain adopted a stance of neutrality toward the two American belligerents. After successive missteps further soured the Lincoln Administration’s relationship with London, abolitionists such as Cobden had to mobilise opinion on the British homefront against the Confederacy by reminding people of slavery’s central role in the war. The diplomatic row, which began with an ill-conceived and opportunistic tariff bill on the eve of Lincoln’s inauguration, would plague US-UK relations for decades to come. Its wartime effect thrust the incoming administration into a needlessly hostile diplomatic situation, handicapping the Union’s war efforts from abroad.

As a domestic economic policy, the Morrill Tariff served a slew of special interests in the northeast by placing punitive taxes on their competitors. It did not finance the Union war effort (as is often incorrectly claimed by American System enthusiasts) as it was never intended for the purpose of raising revenue. The Morrill Tariff primarily aimed to deter commerce from abroad at the behest of domestic manufacturing, allowing them to capture increased prices on their own goods. As a war measure, it amounted to a self-inflicted wound by alienating Britain from the Union’s cause.

How Clay’s Tariffs Gave Us the Income Tax

After the Civil War, the tariff issue came to dominate American economic policy. Until 1909, the successors to Clay’s “American System” generally enjoyed the upper hand. That year, President William Howard Taft called for a routine revision to the federal tariff schedule that quickly devolved into a corrupt free-for-all of tariff favoritism and special-interest handouts.

Amidst the backlash against the Payne-Aldrich Tariff Act’s special-interest free-for-all, a coalition of free trade Democrats and breakaway Republican “insurgents” in the US Senate turned to a radical solution. Realising that they would never break the monied interests of the protectionist lobby, they proposed restructuring the entire federal tax system by shifting it away from the corruption-prone tariff schedule. The result was the 16th Amendment, a flanking move that tried to substitute the protective tariff system with the federal income tax. The amendment, one legislator boasted at the time, would serve as a “club to beat down the tariff” by separating the federal tax system from the entrenched protectionist lobby.

For a fleeting moment, the strategy worked. In 1913, Congress cut import tariffs to their lowest point since the 1850s, and imposed a modest income tax to make up for the loss of revenue. The special-interest groups quickly reconstituted though, and in 1922 they succeeded in exploiting an economic downturn in the agriculture sector to make the case for renewed protectionism. Since the income tax already provided the lion’s share of tax revenue, lawmakers no longer had to worry themselves about jacking up tariff rates to prohibitive levels. As a result of this post-World War I resurrection of Clay’s “American System,” the United States ended up with the worst of both worlds: high tariffs to raise the prices on imported goods at the behest of their domestic competitors, and a new federal income tax to extract revenue from them at every opportunity.

When Americans complete their income tax filings today, few realise that the interminable frustrations of this annual ritual have their origins in a now-obscure tariff bill. It was the corrupt overreach of Clay’s “American System,” though, that ultimately bequeathed us with the modern IRS.

Smoot-Hawley and the Collapse of Clay’s Doctrine

The legislative progeny of Henry Clay’s doctrines finally came to a catastrophic head in 1930 when Congress enacted the Smoot-Hawley Tariff. The measure passed in a desperate attempt to shield special interests from the 1929 stock market crash, although its legislative origin predated “Black Monday” – October 28, 1929 – by several months. The congressional record shows that Smoot-Hawley took its direct inspiration from Clay’s doctrines. The debate on the bill commenced in the House of Representatives earlier that May. Making the case for the protectionist side, Rep. Hamilton Fish (R-NY) declared that “the Republican Party has just one viewpoint, and that is to protect American labour and American industry, not through a competitive tariff but through a tariff that actually protects.” To reinforce his point, Fish quoted “a brief extract from a speech of Henry Clay in favor of a protective tariff…which has never been improved on and has constituted the Republican tariff doctrine for the past 70 years.” After quoting Clay’s American System speech from 1824, Fish offered his rationale for adopting a renewed protectionist policy in 1929. It reads like a talking point from Oren Cass’s American Compass today:

The prosperity of this Nation [claimed Fish] has been built up because the Republican Party has hewed to the line to protect American labor and American industry and to conserve the home markets from ruinous competition with the low-paid labour in foreign countries.;

In a prescient response, another representative challenged Fish by warning that a tariff hike could lead to economic turmoil, including triggering a harmful turn in already-uneasy unemployment numbers. If the tariff passed, was Fish ready to take “credit for the general condition of unemployment that now exists in the United States?” After dissembling over particular, contested tariff rates and the need to serve a multitude of special interest constituencies, Fish reiterated the philosophical justification for pushing ahead. He again invoked Henry Clay’s American System:

That principle was laid down by Henry Clay—the principle of protecting the home market. It is just the reverse of the English attitude. They export 90 percent and only absorb 10 percent of their products in their own home market: We consume in this country 90 percent of our home product and export 10 percent. The question is simply whether you prefer to conserve the home market and protect American wage earners or let the products of low-paid foreign labour destroy the home market for the American producer.

The stock market crash in October poured gasoline onto an already-burning fire as the Smoot-Hawley bill progressed through Congress. The pork-barrel free-for-all saw money changing hands between lobbyists and legislators on the floor of the committee rooms, as industry after industry attempted to purchase “protection” for itself from the unfolding economic recession. They thought they were weathering the storm by obtaining legislative favors. Instead, the cumulative hikes of Smoot-Hawley boosted tariff rates to a historic high of almost 60 percent on all dutiable goods entering the United States. The measure provoked a wave of retaliatory protectionism across the world. In just four short years, Smoot-Hawley had inadvertently triggered a global collapse in international commerce.

The effects may be seen in the famous “spiral” graph published by the League of Nations’ World Economic Survey in 1933. By pursuing the course advised under the “American System” doctrine, the United States directly helped to put the “Great” in “Great Depression.”

Repeating Old Mistakes

The National Conservative argument for the “American System” correctly observes that there were moments in United States history when the country largely adhered to Henry Clay’s suite of high protectionist tariffs, public works projects, and allegedly "strategic" industrial subsidies. They also choose to deemphasise, or may even remain ignorant of, the American System’s more ignominious legacies. You will seldom encounter, for example, a NatCon who seriously engages with the moral conundrum that slavery created for Clay’s import-substitution scheme before the Civil War. The American System’s colonisation plank is almost entirely absent from these discussions, and its propensity for attracting graft and corruption in its later iterations is almost always swept under the rug.

Instead, the version they present is an idealised form of seamlessly executed economic planning, albeit for “strategic” purposes in the “national interest” instead of the left’s usual litany of social justice causes. The inherent coordination problems of centralised economic planning do not simply melt away when it is directed at nationalist objectives instead of progressive, redistributive goals.

But there’s an even-more-fundamental problem with the American System narrative. Its modern rehabilitators conveniently leave out the fact that every time it was tried in the 19th and early 20th centuries, Clay’s program unleashed a torrent of preventable policy disasters.

In 1828, a protective tariff pushed the country to the brink of disunion while also demonstrating Clay’s own inability to extricate his program from the slave economy. In 1861, Clay’s economic philosophy triggered a diplomatic crisis with Britain that unwittingly alienated an anti-slavery ally from the Union cause. In 1909, the heirs of Clay’s economics became so thoroughly beholden to the corrupt dealings of the tariff lobby that a section of their own party revolted and ushered in the haphazardly designed federal income tax system that plagues us to this day. And in 1930, Clay’s political progeny steered the country directly into economic ruin by embracing an American-System-inspired tariff program as its main countermeasure to the unfolding Great Depression. While Clay’s latter-day advocates jump at every opportunity to credit him for late-19th-century American economic growth despite a weak empirical basis for the claim, they also conveniently omit the track record of real and tangible blunders that followed from a century of experiments in American System economic policy.

In the case of the Clay-inspired Smoot-Hawley Tariff, the resulting collapse in international trade proved so disastrous that it largely expunged the American System’s advocates from both political parties in the post-war 20th century. Starting with the Reciprocal Trade Agreement Act in 1934, Congress embarked on a slow-but-steady retreat from protectionism that continued until the early 2000s. The passage of time has, unfortunately, dampened our memory of Smoot-Hawley’s self-inflicted wounds, to say nothing of Clay’s 19th-century failings. Now the National Conservatives deceive themselves into believing that they have rediscovered hidden knowledge from our economic past: knowledge that will allow them to beat the central planners of the left by putting their own spin on central planning from the right. In reality, they risk haplessly stumbling into the same mistakes that discredited Clay’s American System in the eyes of the last generation to experience its results.

America’s progressive left have always, either tacitly or by expression, bought into the impulses of economic planning. The shocking thing happening now is that we have conservative participation in the American System too, and why wouldn’t we? Tariffs are a dyed in the wool political winner for anyone who wants to push them onto the American people—even as they're a loser economically. Those people never seem all that interested in getting past the emotive costume of tariffs. “Let the other guy, the foreigner, pay the bill for a change.” That tariffs are coming back around to steal all kinds of American wealth never quite makes the evening news.

So elements of the right have jumped onto this centrally-planned economic train. And why wouldn’t they? There are illusions of easy political wins to be had. And that’s all you really need to know.

* * * *

Phil Magness is a Senior Fellow at the Independent Institute and the David J. Theroux Chair in Political Economy. He has served as Senior Research Fellow at the American Institute for Economic Research, and as Academic Program Director at the Institute for Humane Studies and Adjunct Professor of Public Policy in the School of Public Policy and Government at George Mason University. He received his Ph.D. from George Mason University' s School of Public Policy.

He is the author of multiple books and essays including Social Science Quarterly (Summer 2019) “James M. Buchanan and the Political Economy of Desegregation,” Co-authored with Art Carden and Vincent Geloso; “The American System and the Political Economy of Black Colonization.” Journal of the History of Economic Thought, (June 2015); “Morrill and the Missing Industries: Strategic Lobbying Behavior and the Tariff of 1861.” Journal of the Early Republic, 29 (Summer 2009);  The 1619 Project: A Critique; and Colonization After Emancipation: Lincoln and the Movement for Black Resettlement.

James Harrigan is a former Senior Research Fellow at AIER. He is also co-host of the Words & Numbers podcast.
Dr. Harrigan was previously Dean of the American University of Iraq-Sulaimani, and later served as Director of Academic Programs at the Institute for Humane Studies and Strata, where he was also a Senior Research Fellow.
He has written extensively for the popular press, with articles appearing in the Wall Street Journal, USA Today, U.S. News and World Report, and a host of other outlets. He is also co-author of Cooperation & Coercion. His current work focuses on the intersections between political economy, public policy, and political philosophy.

This article was previously post at the AIER blog, and is republished here under a Creative Commons 4.0 License.

UPDATE:

So you now have the information to correct the bizarre a-historical assertion just made (below) by the Moron In Chief. So as a quick pop-quiz question, explain in 20 words or less why he is so mistaken. [HINT: In relation to tariffs and the production of wealth, you should probably use words like "despite" rather than "caused by."]

Anti-slavery sculpture is being cancelled

Memorial to the Royal Navy's West Africa Squadron, by Vincent Gray, 2024

 

A remarkable and historically important sculpture is being denied a home.

From 1807, when Britain abolished the slave trade, until 1867— two years after the US finally abolished slavery after a bloody civil war — the Royal Navy patrolled the West African coast intercepting slavers and freeing those enslaved.

For the first time in human history, a government took a stand against human slavery. Over its sixty years of operation, the Squadron is estimated to have freed 150,000 slaves!

And yet, in an era when statues themselves are being 'cancelled' — removed or destroyed because those memorialised acquired their prominence through participating or defending slavery — this monument to a remarkable act in defence of human liberty is being denied a home at its most obvious location: in Portsmouth, where the Squadron was based.

The owners of the local shopping centre, Gun Wharf Quays, located by the prominent landmark, the Spinnaker Tower, initially gave permission to site the sculpture there. But subsequently they rescinded it because the memorial ‘lacked authenticity and sensitivity’ and would remind people of ‘a dark part of the nation’s history.’
    Of course, the sculpture actually reminds us of a remarkable act of national generosity, a profound atonement for the role of some British in the slave trade of the 17th and 18th centuries. The establishment of a memorial to the West Africa Squadron does not hide the history of the slave trade nor seek to sanitise Britain’s role in first trading, and then preventing the trade of Africans. Nor would it preclude or prejudice the erection of a memorial to the slaves themselves. Slavery and freedom are part of the same historical narrative and both must be remembered. This sculpture remembers the slaves and the Royal Navy together, and will prompt thoughts and questions about both enslavement and emancipation.
    Portsmouth City Council and the Historic Naval Dockyard in Portsmouth, from where the Squadron sailed, have also declined the offer of the memorial. So has the National Maritime Museum at Greenwich, the Historic Dockyard Chatham (where some of the ships were built) and Gosport City Council (where the ships were victualled). As [Colin] Kemp writes [in seeking a permanent home for the statue], ‘The current mood seems only to be interested in apologies and reparations’ and will not recognise the moral action, after abolition, ‘in sending ships to patrol the coast of West Africa for 60 years’.

It's almost like the cancellers want to cancel history.

"Colonial empires do not come cheap."

"In recent years, we have seen a renewed interest in Britain’s imperialist past: the British Empire, the slave trade and the Caribbean slave labour plantations. More precisely, we have seen a revival of the idea that the wealth of the Western world – and Britain’s in particular – was originally built on slavery and colonial exploitation.
    "There is a lot to be said for a ‘warts-and-all’ approach to history, which does not gloss over or relativise the darker chapters of a country’s past. But the problem with the above narrative is that it is bad economics. ... [I]t is quite possible that the empire was a net loss-maker for Britain....

"In the eighteenth and nineteenth centuries, the great bulk of Britain’s economic activity was domestic. Even then, Britain’s most important trading partners in the eighteenth and nineteenth centuries were not its colonies but other industrialising powers, such as Britain’s Western European neighbours.
    "Colonial empires do not come cheap. The acquisition, defence and administration of overseas territories require huge upfront investments and ongoing maintenance costs. This is why, in the eighteenth and nineteenth centuries, Britain and other colonial empires had higher levels of military expenditure than their less imperialist neighbours and, consequently, a substantially higher tax burden.
    "The economic benefits of empires are often overstated. Empires boost trade between their constituent parts, but they are far from the only determinant of trade volumes. At least some trade between Britain and India, for example, would have occurred anyway, even if India had never been colonised, or even if it had been colonised by some other European power.
    "The cost–benefit analysis for other European colonial empires is similar. ....

"The transatlantic slave trade was no more important for the British economy than brewing or sheep farming, but we do not usually hear the claim that ‘brewing financed the Industrial Revolution’ or ‘sheep farming financed the Industrial Revolution.’

"Not all Western countries were major colonial powers.
    "Some had only minor colonial possessions, some had only short-lived colonial empires, some only acquired colonies very late in the day, and some never had any colonies. [Yet] those minor players in the colonial arms race industrialised at roughly the same speed as the major colonial empires, so if there was an ‘empire bonus,' it is not visible in the macro data.

"The claim that colonialism and slavery made the Western world rich is often accompanied by the claim that colonialism and slavery made the non-Western world poor. This companion thesis stands on stronger ground. There is indeed evidence for the long-term scarring effects of colonialism and slavery - [especially places that were once subject to short-termist colonialist extraction] — since these corrupted the institutional development of the affected regions."

~ Kristian Niemitz, from his new monograph 'Imperial Measurement: A cost–benefit analysis of Western colonialism' 

 

"The British Empire: a Force for Good"

 

"The British Empire: a Force for Good, a new book, is a refreshing antidote to the current zeal for decolonisation, [a movement] which encourages us to reimagine history as 'a morality play in which white men are the baddies.'
    "Author John McLean ... tells the stories of Britain’s 101 colonies established over 400 years, capturing the boldness and zeal of the pioneers who built the empire. ...
    "British colonies were the building blocks of the British Empire, spreading the English language, customs, law, property rights, and Christianity to more than 100 locations around the globe, creating much of the developed world that we live in today. That is one reason why McLean can write ... that the British Empire was a force for good.
    "McLean provides further evidence of this force for good in twenty pages on slavery, and on the sustained efforts Britain took, at great expense, to stamp it out.
    "Slavery was made illegal in Britain in 1772, the Slave Trade Act 1807 made it illegal for British ships to transport slaves, and from 1808 to 1867, Britain spent 1.8 percent of its GDP every year to seize slave ships and free slaves, McLean writes.
    "Britain’s role in reducing slavery is now hardly mentioned while former British territories where slavery had existed hundreds of years ago are claiming trillions in compensation ...
    "McLean [also] shows the extent to which independence was a disaster for many colonies. ... [the] story of armed conflict, atrocities, looting, and 'white flight' after Britain granted independence to numerous colonies [was] repeated many times. Such [he writes] is the legacy of [much] decolonisation."

~ Mike Butler from his review of 'The British Empire – a force for good' [Editor's note: the book is recommended as an antidote to much modern silliness, but with errors, most especially the chapter on American independence.]

 

"The dismal science ... "

"In my interview with economist David Henderson, I asked him how economics came to be called the 'dismal science.' The source, he explained, was Thomas Carlyle, the nineteenth-century historian and essayist. The surprising reason for his coining the phrase? Carlyle was attacking free-market liberals for advocating the end of slavery.
    "Free-market liberals argued that all men were equally deserving of freedom, so the slaves should be emancipated. Carlyle counter-argued — with strong agreement from Charles Dickens and John Ruskin, two other strong critics of free-market capitalism — that blacks were unequal to whites and so undeserving and incapable of freedom. Giving slaves freedom, they believed, would lead to dismal social consequences.

    "Here is a fine essay by David Levy and Sandra Peart with the sorry details: “The Secret History of the Dismal Science. Part I. Economics, Religion and Race in the 19th Century.”
    "The image, as Levy and Peart explain, shows Ruskin as a white knight slaying a black man dressed in gentlemen’s finery and holding a book entitled 'Wealth of Nations,' Adam Smith’s treatise being a major work in the free-market capitalist tradition."

~ Stephen Hicks, from his post 'The surprising origin of “the dismal science” [Slavery versus Free-market capitalism]'

PS: Notable, I think, that Carlyle has also been called one of the founding fathers of fascism, and was also a major influence on New Zealand's Governor Grey, who would frequently “quote Carlyle’s theory of despotism as the best of all systems of colonial government.”[1]

---

[1] Kennedy, A. New Zealand (1873), 143, 147; cited in Rutherford, Sir George Grey (1961), p.283 

BOOK REVIEW: 'The English Text of the Treaty of Waitangi' - PART FOUR: Cultural change takes time

 

"Contestation is the Treaty's only companion," says Supreme Court Justice Joe Williams.   This week at NOT PC I've been reviewing the book on the Treaty that Williams says has "shifted the debate's centre of gravity." No surprise when its 1.5kg in weight!

A shame that it is so flawed.

In previous parts of this review, we've learned that one of three undisputed Treaty framers was Permanent Colonial Under-secretary James Stephen, who dominated Britain's Colonial Office for three decades, and who wrote Britain's epoch-making 1833 anti-slavery Act. 

Fletcher argues, in part, that the English text of the Treaty as overseen by Stephen and his masters allows for Māori tribal government and custom to be be maintained, and that British sovereignty was not seen as inconsistent with this plurality in government and law. (Much as it is today in, say, Cook Islands and Niue under New Zealand sovereignty.)

The high-minded Stephen however was nothing if not a practical administrator. As we saw in Part 3, he could advocate for “different systems of law” for different folk, but not as a permanent measure. His advocacy was simply Stephen’s recognition of limitations for law of existing social and economic conditions -- especially so with the colonisation of a place previously unfamiliar with the rule of law. Cultural change, he understood, took time, and couldn't be forced from above.

His long-term aim remained however, what he saw as the God-given “equality before the law for all men” to which he had devoted his life.

As we'll see, Fletcher's misunderstanding of this point colours his own argument for the worse ...

James Stephen (1789-1859), who was permanent counsel to and then Under-Secretary for the Colonial Office. 

It was said that for nearly three decades he "literally ruled the colonial empire."

Bust of James Stephen, by Marochetti, now in the National Portrait Gallery, London

5. Gradualism

IT SEEMS TO ME THAT where Stephen understood that it would take time for sovereignty to extend across the land post-Treaty, and for English law to be fully suited to Māori – he understood that this was a gradual process with full equality before the law being the endpoint to be aimed for -- that Fletcher unfortunately has wholly misunderstood this point. That it would take time.

In his own blunt fashion, Native Secretary Donald McLean makes this point to assembled chiefs at the 1860 Kohimarama meeting, saying: “Some of you have said that the laws for the Maori are not the same as the laws for the Pakeha. This is in some measure true. Children cannot have what belongs to persons of mature age; and a child does not grow to be a man in a day.” [1]

A point on which Stephen himself is both so far-seeing – and often so explicit (and frequently enough cited by Fletcher himself): “In our relations with [Māori],” writes Stephen in 1843 to correct New Zealand’s pedantic attorney-general Swainson, “it is necessary to be circumspect, & just, & to keep as close to the law as circumstances will [presently] allow – a complete observance is [as yet] out of the question.” [2] [Emphasis mine.]

Those circumstances at the time limiting “a complete observance” encompassed both Māori understanding and appreciation of English law, and the colonial governments’ abject inability to enforce it with the meagre forces at their disposal. So what did the circumstances in 1843 allow? What was the fullest possible extension of English law to Māori? Stephen gave Swainson a likely laundry list:

I know of no reason why in all matter purely inter se [between or amongst themselves] – their marriages, inheritances, contracts, & so on, & even in the definition and punishment of their crimes – [Māori] should not live under their own law or customs, such customs only excepted, as are abhorrent from the universal laws of God --, as for example infanticide and cannibalism. And even in questions between the State and the Natives, I know not why they should not be governed by their own laws & customs to the utmost possible extent; gradually of course superseding them by our own law, as the natives may learn to understand and appreciate it. [Emphasis mine.] [3]

It is the greatest shame that Fletcher himself, who quotes this passage, fails to fully understand and appreciate it. Because the entire scaffolding of his argument for separate Māori jurisdiction or law as a permanent thing falls to the ground when one realises that Stephen, and the Colonial Office, never intended such a state of affairs to be permanent. They expected continual progress towards their end goal of equality. 

This should be obvious. (Would we still expect Māori to only be able to sell their land to a government agent?) But it appears to have escaped the author's attention. Thus, on every page in which Fletcher cites a passage from Stephen or the Colonial Office apparently advocating this "separatism" as a permanent measure (esp. pages 466, 471, 472, 476, 478, 479), we must as a reader add the full context in which Stephen or the Colonial Secretary makes his point, i.e, the idea emphasised above: “gradually of course superseding them by our own law.” For example:

• Colonial Secretary Russell’s December 1840 instruction to Hobson that Māori were to “be the objects of your constant solicitude” was intended as an instruction to the then-current governor, not for the next two-hundred years. [p. 466]
• Russell’s instructions also told Hobson that there was a category of Māori customs “however pernicious in themselves” that were nonetheless to be “gradually overcome by the benignant influence of example, instruction, and encouragement.” [p. 471, emphasis mine]
• Russell’s instructions “envisaged any interference with Māori being undertaken through the Protector and his assistants (rather than by judges, justices of the peace or constables),” suggesting, claims Fletcher, “that the reach of colonial authority may have been seen to be limited in this way.” [p. 471-72] To which we might mentally add the words “for the present."
• Giving guidance to acting governor Willoughby Shortland after a raid by a Ngāti Whakaue taua on Ngāi Te Rangi at Mayor Island, Russell’s successor Lord Stanley opined “there is no apparent reason why the aborigines should not be exempted from any responsibility to English law or to English courts of justice, as far as respects their relations and their dealings with each other.” To which we should again append the implicit words “at the present time.” [p. 472]
• Stanley all-but makes this explicit, answering a similar query from the next governor, Fitzroy, that he “would have to exercise discretion” [4] as to how much law he could (or should) enforce. [p. 473]. (How little could be enforced became quickly apparent after the Wairau massacre, to which this was a partial if belated response.)
• Stephen underpinned this opinion writing in a guide-note that “[i]n our relations with Māori it is necessary to … keep as close to [English] law as circumstances will allow – a complete observance is out of the question.” Again, append if you please the words “at present.” [p. 474]
• Stephen later corrected as “unfounded” the idea that “subjection to British sovereignty, & subjection to English law are convertible terms.” “At this moment” this notion he said was “nothing better” than “legal pedantry.” [p. 474, my emphasis]
• Indeed “at this moment,” as both Stephen and Stanley pointed out, the examples of India, Ceylon, the Cape Colony and Canada all showed that it wasn’t necessary to impress upon “local authorities the difficulty of extending the law of England to persons wholly ignorant of our language, manners, and religion.” Not, at least, until those persons weren’t. [p. 475]
• An 1846 recommendation was made by NZ’s Protector of Aborigines that “Native Customs … should be ‘legalized” (which Stephen did not endorse) and “enjoy much more self-government,” while having their number of Protectors “multiplied.” (An amusing example of minor bureaucratic empire-building.). Stephen came to the “practical conclusion” that “it was a great error … to attempt to govern these people, in their relations with each other, excepting only so far as necessary for the prevention of War and inhuman practices.” To enforce upon them the full panoply of English law would (and here we should again mentally add “at present”) would represent “that spirit of legal pedantry from which no English Society is ever emancipated.” To apply that spirit here, however, would reveal that this limitation of the law’s application is only a “practical conclusion,” for the circumstances at that time, not a legalistic one. [p. 476-477]
• A later Colonial Secretary Earl Grey clarified that it is only circumstances, not law, that would limit the fullest extent of English law. In allowing for Native Districts in his proposed (and rejected) 1846 Constitution Act, his accompanying instructions made clear that where Māori customs were not either “repugnant” to English law or “at variance with general principles of humanity,” then they may be retained “for the present.” [p. 478, my emphasis]
• Even by 1861, the then Secretary of State for the Colonies, the Duke of Newcastle, was still citing practical reasons rather than legalistic pedantry for recommending to then Governor Grey why he might “consider whether ‘a distinct legislation and administration’ in native districts, ‘in which the natives themselves should take a part,’ ‘would not better promote the present harmony and future union of the two races, then the fictitious uniformity of law which now prevails’.” [p. 479, emphasis mine]

This is not to say some kind of inter-tribal self-government couldn’t have become permanent if it had been established, protected in law, and seen to work -- and evolved in sophistication over time. But that’s different to saying that this Treaty does and did constitute a formal promise of permanent self-government. It wasn’t, and didn't, and when read in full context (which his own book makes possible) Fletcher’s adduced evidence does not say that it did....

DOWNLOAD THE COMPLETE REVIEW HERE [PDF], or READ ON BELOW ...

=> PART ONE, the Introduction to the series

=> PART TWO: Errors and Omissions

=> PART THREE: Getting Slippery With It

=> PART FOUR: Cultural Change Takes Time

=> PART FIVE: Getting Rights Right

=> CONCLUSION: Rangatiratanga as Liberty

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[1] Donald McLean, ‘Proceedings Of The Kohimarama Conference, Comprising Nos. 13 To 18 Of The "Maori Messenger,’ Friday July 13, 1860, https://nzetc.victoria.ac.nz/tm/scholarly/tei-BIM504Kohi-t1-g1-t1-body1-d5.html

[2] Stephen to Hope, 28 December, 1843, CO 209/22, 247a-b.  Quoted in Fletcher, p. 474

[3] Ibid 252b-254a. Also in Fletcher, p. 474.

[4] Fletcher’s summary of Stanley’s response.

Slavery

“What was peculiar about the West was not that it participated in the worldwide evil of slavery, but that it later abolished that evil, not only in Western societies but also in other societies subject to Western control or influence. This was possible only because the anti-slavery movement coincided with an era in which Western power and hegemony were at their zenith, so that it was essentially European imperialism which ended slavery. This idea might seem shocking, not because it does not fit the facts, but because it does not fit the prevailing vision of our time.”

~ Thomas Sowell, from his book Black Rednecks and White Liberals

"Smith was on the side of the angels..."

This week marks 245 years since the publication of The Wealth of Nations, one of the most important books ever written. An Adam Smith Institute commemorative email reminds us, at this time, that ignorance never sleeps:

Smith revolutionised our understanding of commerce. He explained how trade enriches our lives and his works laid the foundations of a whole new field of study: economics.
    Today though, Adam Smith’s legacy is under threat from those that would rewrite history.
    Smith’s grave and statue have been linked to “slavery and colonialism,” according to Edinburgh City Council.
    The grave and statue are being reviewed by the SNP-Labour Coalition Council’s Slavery and Colonialism Legacy Review Group. Their claim rests upon a quote by Adam Smith that said “slavery was ubiquitous and inevitable but that it was not as profitable as free labour“.
    This is an extraordinary mischaracterisation.
    Smith not only argued that slavery was morally reprehensible, but also provided intellectual ammunition to the abolitionist movement. The link Adam Smith has to slavery was as one of the authors of that vile practice’s destruction.
    Smith, writing in the 18th century, thought slavery would continue. He could not have foreseen humanity’s subsequent liberal turn.
    But it is abundantly clear that Smith thought slavery was grotesque. Smith wrote, in no uncertain terms, that slave owners’ “brutality, and baseness, so justly expose them to the contempt of the vanquished.”
    Smith also argued that slaves are inefficient workers, because they cannot keep the fruits of their labour. His arguments against slavery were used by abolitionists.
    Smith was on the side of the angels, holding humanist views well ahead of his time.

Hat tip to Brian Micklethwait, who points out that "the links, all in the original email, are well worth clicking on."

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"I begin with my conclusion: The 'public' school system is the most immoral and corrupt institution [in NZ] today, and it should be abolished."

"I begin with my conclusion: The 'public' school system is the most immoral and corrupt institution [in NZ] today, and it should be abolished. It should be abolished for the same reason that chattel slavery was ended in the 19th century: Although different in purpose and in magnitude of harm to its victims, public education, like slavery, is a form of involuntary servitude. The primary difference is that public schools force children to serve the interests of the state rather than those of an individual master.
    "These are—to be sure—radical claims, but they are true, and the abolition of public schools is an idea whose time has come. It is time for [all of us] to reexamine—radically and comprehensively—the nature and purpose of their disastrously failing public school system, and to launch a new abolitionist movement, a movement to liberate [more than three-quarters-of-a-million] children and their parents from this form of bondage.1"

~ C Bradley Thompson, from his post 'The New Abolitionism: Why Education Emancipation is the Moral Imperative of Our Time'

Note 1. On the nineteenth-century antislavery abolitionists, see C. Bradley Thompson, ed., Antislavery Political Writings, 1833-1860: A Reader (Armonk, NY: M. E. Sharpe, Inc., 2003)

[Hat tip Louise Lamontagne. Contextualised to NZ.] 

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"People who believe that slavery is an efficient system of production are people who are ready to impose 100% marginal rates of taxation in the belief that doing so is economically harmless." #QotD

"People who believe that slavery is an efficient system of production are people who are ready to impose 100% marginal rates of taxation in the belief that doing so is economically harmless.
    "Ancient Rome, Greece, Babylon, Egypt, India, China, and Africa too, all had slavery. None of them created the Industrial Revolution. Great Britain and the United States did create the Industrial Revolution, on a foundation of economic freedom and respect for individual rights. The great blemish of slavery played no greater positive role in the history of the US than it had played previously in the world, which is to say, virtually none....
    "Slavery is as much an economic benefit as holding up gas stations. Not only does the gas station owner lose what the robber gains, but both his motivation to produce and his means of producing are reduced. A world of robbery, which is what slavery is, is a world of great poverty.
    "This is why the standard of living of even the kings and emperors of the pre-industrial world was far below that of the average worker in any capitalist country today."

~ George Reisman, from his article 'Slavery vs. Capitalism: The 1619 Project Not Only Ignores Actual History, But Basic Economics'

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