Forrest McDonald argues that the Founding Fathers envisaged a new economic order based upon Lockean notions of private property and the creation of the largest contiguous area of free trade in the world (2006)
About this Quotation:
Forrest McDonald reminds us of the very important role that Lockean notions of property played in the thinking of the Founding generation and consequently on the kind of political, legal, and economic order they wanted to create. This view can be summarised as “that mankind has a God-given right to life, liberty, and property, and that legitimate governments are required to protect those rights.” A consequence of this belief is the resulting creation of what McDonald calls the “largest contiguous area of free trade in the world.” A significant area for political battle as the 19th century was then the level of tariff protection which would exist for trade outside of this free trade area. This struggle also occurred within the Zollverein and later the German Reich. Economic nationalists like Friedrich List (1798-1846) were in favor of considerable free trade within the Reich but high tariffs for external, foreign trade. One might say that this is also the position taken in the European Union today.
Other quotes from this week:
- 2009: John Stuart Mill uses an analogy with the removal of protective duties and bounties in trade to urge a similar “Free Trade” between the sexes (1869)
- 2008: John Adams predicts a glorious future for America under the new constitution and is in “reverence and awe” at its future prospects (1787)
- 2005: John Milton gave a speech before Parliament defending the right of freedom of speech in which he likened the government censors to an “oligarchy” and free speech to a “flowery crop of knowledge” (1644)
Other quotes about Economics & Free Trade:
- 2010: Richard Cobden outlines his strategy of encouraging more people to acquire land and thus the right to vote in order to defeat the “landed oligarchy” who ruled England and imposed the “iniquity” of the Corn Laws (1845)
- 2009: Ludwig von Mises on the impossibility of rational economic planning under Socialism (1922)
- 2009: Frank Taussig argues for the reverse of a common misconception about the relationship between high wages and the use of machinery (1915)
- 2009: Condy Raguet lays out a set of basic principles of free trade among which is the idea that governments cannot create wealth by means of legislation and that individuals are better judges of the best way to use their capital and labor than governments (1835)
- 2009: John Ramsay McCulloch argues that smuggling is “wholly the result of vicious commercial and financial legislation” and that it could be ended immediately by abolishing this legislation (1899)
- 2009: Adam Smith argues that retaliation in a trade war can sometimes force the offending country to lower its tariffs, but more often than not the reverse happens (1776)
- 2008: Jean-Baptiste Say argues that there is a world of difference between private consumption and public consumption; an increase in the latter does nothing to increase public wealth (1803)
- 2008: Nassau Senior objected to any government regulation of factories which meant that a horde of inspectors would interfere with the organization of production (1837)
- 2007: Ludwig von Mises argues that monopolies are the direct result of government intervention and not the product of any inherent tendency within the capitalist system (1949)
- 2007: Harriet Martineau condemns tariffs as a “vicious aristocratic principle” designed to harm the ordinary working man and woman (1861)
- 2007: Ludwig von Mises argues that the division of labor and human cooperation are the two sides of the same coin and are not antagonistic to each other (1949)
- 2007: Lord Macaulay writes a devastating review of Southey’s Colloquies in which the Poet Laureate’s ignorance of the real condition of the working class in England is exposed (1830)
- 2006: Jane Haldimand Marcet, in a popular tale written for ordinary readers, shows the benefits to workers of foreign trade, especially at Christmas time (1833)
- 2006: Adam Ferguson observed that social structures of all kinds were not “the result of human action, but not the execution of any human design” (1782)
- 2006: Montesquieu thought that commerce improves manners and cures “the most destructive prejudices” (1748)
- 2005: Bernard Mandeville concludes his fable of the bees with a moral homily on the virtues of peace, hard work, and diligence (1705)
- 2005: Bernard Mandeville uses a fable about bees to show how prosperity and good order comes about through spontaneous order (1705)
- 2005: Adam Smith argued that the “propensity to truck, barter, and exchange” was inherent in human nature and gave rise to things such as the division of labour (1776)
- 2004: Voltaire on the Benefits which Trade and Economic Abundance bring to People living in the Present Age (1736)
- 2004: Adam Smith on the natural ordering Tendency of Free Markets, or what he called the “Invisible Hand” (1776)
24 April, 2006
 | Forrest McDonald argues that the Founding Fathers envisaged a new economic order based upon Lockean notions of private property and the creation of the largest contiguous area of free trade in the world (2006) |
Forrest McDonald begins his speech to the Economic Club of Indianapolis by asking what kind of economic order did the Founding Fathers intend building:
If I should ask you what kind of economic order the Founding Fathers contemplated when they established the constitutional order, you would doubtless reply capitalism or a market economy. If I addressed that question to a similar number of professional American historians, the answer would be the same, the difference being that most of you would add "Thank God" and most of them would add "unfortunately."
In certain important particulars, your answer is supported by the historical record. For one thing, Americans were committed to John Locke’s proposition that mankind has a God-given right to life, liberty, and property, and that legitimate governments are required to protect those rights. In the Constitutional Convention of 1787 James Madison, Gouverneur Morris, and others listed the protection of property rights as the primary reason for instituting government; the sole dissenter was James Wilson.
For a second thing, the Constitution created the largest contiguous area of free trade in the world. Neither the states nor the Congress could levy taxes on the interstate movement of goods which the states had been theoretically able to do prior to the adoption of the Constitution.
The full passage from which this quotation was taken can be be viewed below (front page quote in bold):
If I should ask you what kind of economic order the Founding Fathers contemplated when they established the constitutional order, you would doubtless reply capitalism or a market economy. If I addressed that question to a similar number of professional American historians, the answer would be the same, the difference being that most of you would add "Thank God" and most of them would add "unfortunately."
In certain important particulars, your answer is supported by the historical record. For one thing, Americans were committed to John Locke’s proposition that mankind has a God-given right to life, liberty, and property, and that legitimate governments are required to protect those rights. In the Constitutional Convention of 1787 James Madison, Gouverneur Morris, and others listed the protection of property rights as the primary reason for instituting government; the sole dissenter was James Wilson.
For a second thing, the Constitution created the largest contiguous area of free trade in the world. Neither the states nor the Congress could levy taxes on the interstate movement of goods which the states had been theoretically able to do prior to the adoption of the Constitution. For yet another, the contract clause of Article I, section 10 - "No State shall… pass any… Law impairing the Obligation of Contracts" - was a commitment to unfettered capitalism insofar as it prohibited state legislative interference into market transactions. Mystery surrounds the contract clause: it was proposed by Rufus King (who was a delegate representing Massachusetts) late in August and was roundly rejected. Somehow the clause made its way into the finished document a couple of weeks later.
As to whether the Framers intended to create a capitalistic order, the weightier evidence balances to the contrary.