Just as the authors of Cato’s Letters, John
Trenchard and Thomas Gordon, had decried the manner in which succeeding British
governments appeared intent on using the lure of luxury and material comfort as
a means of distracting the general population from objecting to – or even
noticing – the steady erosion of their fundamental liberties, so too did George
Clinton apply himself in the text of Cato V to the task of warning his fellow
countrymen that an increased attachment to the extravagance wrought by the
growth of commerce was bound to lead to the degeneration of the American
character. Granted, it would have been possible for Clinton to have come to
this same conclusion without having ever encountered Trenchard and Gordon’s
earlier commentaries. He was not, as aforementioned, a man of business himself,
and thus had no personal reasons for viewing the expansion of America’s
commercial economy with favor or fondness. That being said, the fact that he
chose to sign the pseudonym “Cato” to the same anti-constitutional missives in
which – in at least one of whose number – he expressed sentiments that aligned
rather closely with those given voice in Trenchard and Gordon’s aforementioned
commentaries would seem to indicate the presence of something more than
coincidence. Like the authors of Cato’s Letters before him, Clinton saw what
was transpiring in his homeland and sought to warn his fellow citizens as to
the dangers they faced as a result. Where the latter differed from the former,
however, was in the intention by which they issued their respective warnings.
Writing as they were in the early 1720s,
the single event which could be said to have most powerfully influenced the
efforts and sentiments of John Trenchard and Thomas Gordon was more than likely
the establishment of the Bank of England some thirty years prior in 1694. A
direct result of England’s decisive defeat by France at the Battle of Beachy
Head (1690) during the Nine Year’s War (1688-1697), the chartering of the Bank
was intended to permit the cash-strapped and credit-poor government of William
III (1650-1702) to raise sufficient funds to wholly rebuild the Royal Navy and
thereby reestablish England as a global power. By most conventional economic
measures, the effort succeeded spectacularly. Not only was the desired sum of
just over one million pounds raised in less than two weeks, but the resulting
course of government spending proved a tremendous boon to several key sectors
of the English economy. The shipbuilding industry was obviously the primary
recipient of government largesse, the increased demand for naval vessels
resulting in the need to employ a great many more craftsmen and laborers than
had ever before been the case. But so too did sailmakers enjoy a sudden
increase in demand for their products, along with the makers of rope, and
nails, timber, pitch, and cannons. Even farmers benefited, the Navy’s vastly
expanded personnel requiring an appropriate expansion in the nation’s yearly
agricultural output. War – or even the just the preparation for it – was
evidently very good for businesses of all manner of description, and the Bank
of England was the seat and source of the requisite funding. Despite the
economic growth that the institution fostered, however, there were certain
aspects to the way that Bank functioned that were cause for concern among the
era’s less sanguine observers.
For one thing, in spite of its exclusive ability to handle government loans and issue bank notes, the Bank of
England was not a public entity at its founding in 1694. Like a joint-stock
company or one of England’s colonies in far-off America, it was subject to a
charter issued in the name of the reigning monarch whose terms essentially
constituted an extension of the sovereignty of the Crown for the purpose of
achieving some desired objective. While the Bank could accordingly claim to
have the confidence of His Majesty’s Government – indeed, to possess some
portion of that government’s authority in the areas defined by its charter – it
remained in a legal sense a private corporation. What this meant in practice
was that one of the most powerful and influential institutions in the whole of
England – capable of raising vast sums of money in a period of days – was also
fundamentally unaccountable to either Parliament or the people. While the
government of the day was at least nominally beholden to the general population
– and was thus moved to pursue certain policies for the purpose of vindicating
and renewing the faith vested in it by the electorate – the shareholders and
officers of the Bank were not required to justify their actions to anyone but
themselves. They were free to accept or reject government loan requests, thus
shaping government conduct and public perception thereof. And they were free,
once they had accepted a request for a loan, to set the requisite interest rate
at whatever figure they desired. As these interest rates would then directly
impact the size of the government’s debt and either necessitate or obviate the
need for new or higher taxes, the directors of the Bank thus also possessed the
ability to unilaterally increase or decrease the financial burden felt by both
the inhabitants of England proper and of its various colonial possessions whose
economies had come to depend on access to taxable goods.
Having but recently witnessed the overthrow
of a monarch – i.e. James II (1633-1701) – whose attachment to the unilateral
prerogatives traditionally associated with his station were deemed valid cause
for his removal, it was little wonder that men like Trenchard and Gordon and
their Commonwealth Party associates would have recoiled at the thought of any
entity possessed of such unparalleled power being permitted to operate entirely
on its own recognizance. The Glorious Revolution (1688) was supposed to have
inaugurated a wholly new era in English political history defined by
constitutionalism and the absolute supremacy of Parliament. But if that was
truly the case, why was it that in most ways that counted the Bank appeared not
to acknowledge the superiority of anyone or anything but itself? Further
questions doubtless suggested themselves when the aforementioned critics of the
Bank of England took to considering how its presence had begun to affect the
way that government functioned and to whom it was truly beholden. If it was
possible for anyone with the requisite capital to become a shareholder of the
Bank, what was there to stand in the way of the bureaucrats, MPs, and even the ministers
whose responsibility it was to define and implement government spending
programs attaining said status and then single-mindedly pursuing such measures
as validated their investment?
Granted, the relationship between the
government and the Bank of England need not have been quite so direct for harm
to have been done to the public welfare. It might have been that the public
servants in question were merely the associates of shareholders, or their
allies or relatives. In point of fact, however, such associations were often
alarmingly blatant. The first Governor of the Bank of England, for example, one
John Houblon (1623-1712), served in that post over the same period of years
(1694-1697) that he was also Lord Mayor of the City of London (1695) and one of
the Lords Commissioners of the Admiralty (1694-1699). What this meant in
practice was that the one of the principle shareholders of the only body then
authorized to lend to the government and to issue paper money was also the
leader of a municipal corporation dominated by well-connected merchants and one
of the authorities responsible for administering an institution which was at
that time one of the principle sources of contemporary government spending. As
Governor of the Bank, there was nothing to stop Houblon from taking such
actions – i.e. advancing credit here, restricting the issue of currency there,
etc. – as would benefit his position as Lord Mayor of the City of London. And as
a Lord Commissioner of the Admiralty, there was also nothing to stop him from
recommending such requisitions – i.e. more ship, more sailors, more guns, more
supplies, etc. – as would serve him well as the Governor and a shareholder of
the Bank. Provided that Houblon made sure to spread the benefits of his efforts
around to enough of his contemporaries in government and at the Bank so as to
ensure their continued cooperation, there would not have been much reason for
him to fear being held to account for thus using what was ostensibly meant to
be an instrument of the public welfare for his own particular ends.
That men like Houblon possessed the means
to commit such actions without having to make account for themselves was
doubtless the principle objection which men like John Trenchard and Thomas
Gordon would have been given to voice. The status quo which had emerged
following the establishment of the Bank of England at the end of the 17th
century appeared entirely sanguine to the prospect of a strong connection
between successive administrations and the leadership of the Bank without any
manner of competent oversight. Indeed, as the years followed upon Houblon’s
retirement as Governor in 1697, men whose situations closely aligned with his
own repeatedly took his place. There was John Ward (1650-1726), Governor
between 1701 and 1703 and MP for the pocket borough of Bletchingley from 1701
to 1708; Nathaniel Gould (1661-1728), Governor from 1711 to 1713 and MP from
New Shoreham from 1710 to 1728; and John Rudge (1669-1740), Governor from 1713
to 1715 and MP for Evesham from 1708 to 1734. And while none of these men were
as exquisitely placed as Houblon had been to exploit their official
responsibilities in the name of personal gain, their status as MPs nonetheless
gave them a formal voice in the parliamentary budgeting process from whose
outcome they stood to benefit as the chief administrator of the sole authorized
government lender. Was that now the purpose of government? To allow men of
ambition and means to increase the public debt burden while lining their own
pockets? To run up a bill for services rendered that they would then enjoy the
sole pleasure of collecting?
It
may once again be taken for granted that the authors of Cato’s Letters – and their
allies in the Commonwealth Party – would have answered every question of this
like forcefully in the negative. The private enjoyment of the material comforts
which the Bank of England’s public dealings afforded – a category which at
length included the rise and fall of the South Sea Company – was not the
primary purpose which the British government ought to have been serving. The
essence of public administration was self-sacrifice, not self-interest; the
preservation of virtue, not the promotion of vice. But what was it, really,
that Trenchard and Gordon hoped to achieve? Well, in light of the fact that the
Bank of England had been incorporated within both of their lifetimes – Gordon
when he was but three, Trenchard when he was thirty-two – it would seem as
likely as not that they imagined it possible for the Bank to be disassembled
and the changes it had thus far wrought to British society to be substantially
undone. Thereafter, shod of the corrupting influence of such easy access to
capital, British political culture might have been able to resume its proper
course as portended by the Glorious Revolution. It was a possible outcome, to
be sure, but a likely one? While less than thirty years had indeed passed since
the creation of the Bank of England and the emergence of the British
“fiscal-military state,” a great deal had transpired in that brief
quarter-century. The War of the Spanish Succession (1701-1714) alone had demonstrated
the potential benefits of government access to a stable line of credit when
coupled to military expansionism and mercantilist economics.
Regardless of what actually caused the war
between Great Britain and its allies on one side and France and Spain on the
other during the first decade of the 18th century – various complex
dynastic and strategic considerations, in essence – the course and significance
of the conflict for British economy was relatively straightforward. Loans
advanced to the British Government facilitated the expansion and maintenance of
the Royal Navy and the British Army, which made possible the seizure of French
and Spanish territories in North America, the Caribbean, and the Mediterranean,
which gave British merchant firms access to all manner of taxable goods, which
in turn facilitated the ability of the British Government to service or retire
its aforementioned debts. While the loan obligations taken on by successive
administrations would, over time, become quite substantial – a principle cause
of both the South Sea Bubble and, at length, the Anglo-American crisis of the
1760s and 1770s – the benefits which Great Britain as a whole had come to enjoy
– i.e. access to the lucrative Spanish slave trade, fur trapping territories in
North America, strategic outposts at Gibraltar and Menorca, etc. – were
similarly substantial. Perhaps, even as late as the 1720s, the British
political and mercantile establishments could have been successfully weaned off
of their early-onset dependence upon the aforementioned cycle of debt and
conquest. Maybe the Bank could have been disassembled, or better regulated, or
brought under government control. It may not have been the likeliest outcome,
but it may also have been possible. Regardless of whether it was possible or
not, however, such a retreat from the course of fiscal-military adventurism
that had come to dominate mainstream British political thinking was almost
certainly what John Trenchard and Thomas Gordon sought to promote when they
penned Cato’s Letters in the early 1720s.
There would seem to be little cause to
doubt that George Clinton shared is this sentiment. As the cited text of Cato V
makes clear, he likewise believed that easy and excessive material wealth would
at length herald the moral decay of any society so afflicted. Where Clinton
seemed to disagree, however – or at the very least where his intentions were
somewhat more explicit – was in his evident conviction that the degeneration
wrought by a given society’s increasing love of luxury was more or less
inevitable. Granted, he did not say as much in the aforementioned text. Rather
than portray the social degeneration wrought by luxury as something that was
bound to overtake the United States of America, he wrote in broad terms about
human nature and the tendencies he perceived therein. “Opinions and manners are
mutable,” he said, “And may not always be a permanent obstruction against the
encroachments of government [.]” “The progress of a commercial society begets
luxury,” he said. “Americans are like other men in similar situations,” he
said. There would seem to be less doom-saying in this language than merely
well-founded caution. In spite of the accordingly measured tone to Clinton’s
concomitant admonitions, however, he nowhere offered respite to his countrymen
or took to explaining how it was he believed they might counter the trends that
his various assertions portended. Indeed, his intention – stated fairly
explicitly – was not that his fellow Americans should work to turn back the
ongoing transformation of their collective character, or that they should take
such steps as to erect an impenetrable barrier against the further
commercialization of the American economy. Rather, seeming to accept that such
transformations would take place – or not – according to their own inscrutable
logic, Clinton urged his countrymen to take such steps as to ensure, in the
event that the American people someday ceased to be, “Cautious, prudent, and
jealous in politics [,]” that the institutions of the American republic were structured
in such a way as to resist being warped in service of the worst aspects of the
human spirit.
No doubt this would have seemed to many of
Clinton’s countrymen a rather pessimistic outlook on the prospects that shortly
awaited the American people. Having but lately tasted victory in war, and in
the midst of enjoying the peace they had won as a result, why should the
citizens of the nascent American republic have been at all inclined to doubt
their own faculties, or make preparations for the day when their virtues
deserted them? Was their recent victory not the direct result of their love of
virtue? Was the peace they subsequently enjoyed not precisely what they had
fought for? Why should they fear becoming too avaricious for their own
collective safety when they wanted nothing more than what they already possessed?
Clinton, of course, was merely responding to what he saw. In part, this
included the increasing commercial development – and dominance – of his native
New York and the effects which he perceived it to be exerting on the political
culture therein. But it also very likely included what he knew of the history
of early Great Britain as filtered through the perspective of the
aforementioned Cato’s Letters. Trenchard and Gordon had been distressed by the
effects which the creation of the Bank of England had wrought upon English
society and culture as of the early 1720s and endeavored – by warning their
countrymen of the ills they were committing – to undo what had thus far been
done. Naturally, they did not know whether their efforts would succeed – though
one assumes they would not have bothered unless success appeared to be
relatively likely. But Clinton did know. Though he obviously shared with the
authors of Cato’s Letters a common disdain for the influence of luxury and
commerce on public affairs, he also understood better than they did that, once
begun, the commercial development of a given society tended not to recede.
Standing at the other end of the 18th
century from John Trenchard and Thomas Gordon, George Clinton could see where
they could not that the efforts of the Commonwealth Party – and other
like-minded critics of 18th century British political culture – had
done very little to arrest or even slow the evolution of the British economy
towards capital-intensive commerce. The trend towards mercantilism and mixed
public/private corporations had begun in the 17th century, it was
true, with the creation of joint-stock companies and trading ventures intended
to syphon the resources of distant locales into the British economy. But the
aforementioned incorporation of the Bank of England in 1694 touched off a new
era of privately-financed military expansionism and publicly-sanctioned
financial speculation that transformed the relationship between Britain’s
moneyed interests and the traditional political elite. Britain’s participation
in the Seven Years War (1754-1763) is very much a case in point. While the
ministry of the Duke of Newcastle (1693-1768) was certainly conscious of the
anxieties harbored by the inhabitants of British America in the years leading
up to the commencement of hostilities that France’s claims in the Ohio Valley
threatened their ability to expand westward into the continental interior, the
reason for Britain’s eventual participation in the ensuing conflict had far
more to do with financial gain than serving the professed needs of its subjects
in the colonies.
What the governing interests in Britain
wanted more than anything in the middle 1750s – more than prestige, more than
territory, more than a favorable balance of power – was unquestioned hegemony
in the realm of global trade. It was for this reason that Britain was willing
to ally itself with the Prussia of Frederick the Great (1712-1786). Unwilling
to commit large numbers of troops to a ground war on the European continent – where
its financial interests were limited and it stood to gain very little – Britain
instead opted to use its proven financial power to subsidize the deployment of
an existing ground force – i.e. Frederick’s masterfully organized and trained
Prussian army – for the purpose of tying down its rivals while British ships
raided their commerce. While France was busy defending itself from Prussian
attack in Europe, British forces could accordingly focus their attention on
seizing France’s colonial possessions in North America, the Caribbean, and
India, all of which represented incredibly lucrative sources of trade-based
revenue. Granted, this was all easier said than done. For several years following
the outbreak of war in 1754, Britain suffered defeat after defeat at the hands
of the French, first in North America and then in the Mediterranean. The
Newcastle Ministry subsequently collapsed, and the British political
establishment was for a time at a loss for leadership. The formation of a new
government involving Whig luminary William Pitt the Elder (1708-1778), however,
refocused military efforts on attacking France’s colonial periphery while
Britain’s allies in Europe kept up the pressure on France proper.
By 1759, Britain had experienced a
miraculous reversal of fortunes. The French fortress of Louisbourg – located in
what is now Nova Scotia – had fallen to the forces of Field Marshal Jeffery
Amherst (1717-1797) in the summer of 1758; General James Wolfe (1727-1759) had
taken France’s North American capital at Quebec (albeit at the cost of his
life) in September of the following year; and the successful conclusion of the
Siege of Madras in February, 1759 had effectively uprooted the French East
India Company and set in motion Great Britain’s eventual domination of the
Indian Subcontinent. When the dust finally settled four years later with the
signing of the Treaty of Paris (1763), the wisdom of Britain’s mercantilist
strategy was abundantly proven out. British gains included the vast majority of
France’s territory in the northeastern quarter of the American continent – thus
permitting British companies to take possession of the lucrative fur trade –
and the almost complete exile of French trading interests from India. The debts
which the Pitt-Newcastle Ministry had accrued were substantial, to be sure –
between funding Prussia’s military and expanding and maintaining the Royal Navy
– but the long-term benefits were similarly extensive. Not only did British
firms stand to benefit from their unchallenged ability to resell the natural
resources of India and Quebec to European consumers whose appetite for animal
pelts and exotic spices showed no signs of waning, but the ability of the
British government to tax these goods as needed represented a valuable revenue
stream whose dividends may at length had exceeded the debts which said
government yet owed. The Bank, of course, is what made all of this possible,
along with the insurance companies founded on its loans, the trading companies
it invested in, and the war-time industries its capital helped to expand.
Granted, the United States of America did
not possess any institutions that very closely compared to the Bank of England
at the time that George Clinton penned Cato V in the penultimate month of 1787.
The Bank of North America – discussed in a previous entry in the present series
– was most assuredly intended by its architects to perform the same function
for Congress as the Bank of England continued to do for Parliament – i.e.
provide a centralized source of public credit – but this objective had not been
proven out in practice. While, like its British counterpart, the charter of the
Bank of North America granted some degree of public authority to a group of
private shareholders for the purpose of raising capital that would then be
placed at the disposal of the charter-granting entity – an arrangement which, as
in Britain, resulted in members of Congress and its various committees buying
shares whose value could be made to increase based on decisions that were
theirs alone to make – the economic context from which it arose was radically
different. There were few manufactories in the United States in the late 18th
century; indeed, few industries of any kind which would have benefited from
access to large sources of development capital. Merchants and farmers made
purchases on credit, of course, and the needs of the recent war effort had sent
all of the various state governments into some degree of debt. But the war had
been over for almost five years as of 1787/88, effectively eliminating the urgent
need that had supported so much public borrowing between 1775 and 1783.
Pursuant to this loss of urgency – or perhaps a cause thereof – the Bank of
North America had itself been re-charted as a state bank in Pennsylvania in
1786. Thus lacking either the impetus or the means to replicate the course of
economic development previously followed by Great Britain, the nascent American
republic – circa 1788 – would accordingly seem to have been safe from falling
victim to the worst excesses of the same.
Then again, the fact that the United States
of America did not appear likely to follow the economic example set by its
former colonial master as of the late 1780s was no guarantee that it would
never do so at any point in the future. While the American republic was nowhere
near as commercially developed as Great Britain during that same period in the
late 18th century, the door was certainly open for the same
processes to occur. Yet still eager to replicate the course of economic growth
that the incorporation of the Bank of England had inaugurated in Britain, the
same people who had devised and sponsored the creation of the Bank of North
America – namely Alexander Hamilton and Robert Morris – may well have pursued a
second attempt at creating a centralized lending institution for the United
States of America. While the urgency lent to their cause by the Revolutionary
War had since abated, their remained a number of individuals and interests in
the various states – not the least of which was the merchant elite who called
New York City their home – who would doubtless have eagerly supported the
creation of any institution with the stated purpose of fostering economic
growth. Just so, the governments of states like Pennsylvania or Massachusetts –
both of which possessed sizable merchant sectors as of the late 1780s – may
have taken it upon themselves to create their own lending institutions on the
model of the Bank of England for the purpose of managing their respective
debts. Given sufficient success in facilitating the growth of the relevant
state economies, these prospective institutions may even have sought to expand
their operations into neighboring jurisdictions, at length becoming regional
sources of public and private capital.
Granted, the inhabitants of British North
America had never really expressed very much dissatisfaction at the fact that
their governments lacked access to the capital readily offered by the Bank of
England to the government of their colonial hegemon. And of course the rhetoric
of the Revolution had largely tended to prize virtue over vanity; liberty over
luxury. That being said – and as Clinton himself had stated – people are rarely
(if ever) entirely static in their priorities, convictions, or desires. The
1780s were not the 1770s, the United States of America was entering into an era
in its history bound to be shaped by different considerations than that from
which it had originally emerged, and the example set by Great Britain as to how
and why central banking could be useful was accessible to any and all who cared
to partake. It accordingly stood to reason that George Clinton had cause to be
concerned. Forced by the circumstances of their newfound independence to
reconsider their priorities and convictions as a community now untethered from
the British imperial economy, why shouldn’t the citizens of the nascent
American republic have sought after proven models of debt management? In light
of the abundant growth that the British economy had experienced over the course
of the 18th century, why shouldn’t the Crown’s former subjects in
America have sought to replicate some aspect of what the Bank of England had made
possible? If the general thrust of Clinton’s cited commentary in the text of
Cato V is any indication, he seemed to think that these questions could not be
answered in a manner convincing enough to stave off that outcome which he most
seemed to disdain. Namely, that the United States would at length become what
its most ardent critics in America had long said of Great Britain: corrupt, vain,
arbitrary, and sycophantic.
Bearing in mind what he perceived to be the
evident likelihood of this outcome, Clinton’s prescription was accordingly preventative
only in the sense that it sought to stave off the worst aspects of the pending
transformation of the American people’s moral character rather than to arrest
the transformation itself. “It is a duty you owe likewise to your own
reputation,” he counselled accordingly in the third paragraph of Cato V,
For you
have a great name to lose; you are characterized as cautious, prudent, jealous
in politics; whence is it therefore, that you are about to precipitate yourself
into a sea of uncertainty, and adopt a system so vague, and which has discarded
so many of your valuable rights.--Is it because you do not believe that an
American can be a tyrant? If this be the case you rest on a weak basis [.]
Recalling that the
context in which Clinton penned the Cato essays in the final weeks of 1787 was
the prospective ratification of a new governing charter for the United States of
America, the basis of his objection to the same was consequently rooted in what
he thought was likely to become of his countrymen going forward. If the number
if states sufficient to trigger the adoption of the proposed constitution
successfully voted to ratify the same, Clinton believed it would be on the
basis of a faulty assumption that the deficiencies inherent to the resulting
national government would be prevented from causing undue harm by the American
people’s overriding sense of virtue and justice. As, “Americans are like other
men in similar situations,” however, there in fact existed no guarantee that
the American people would remain just and virtuous in perpetuity, and that the
flaws embedded in the proposed constitution would not at length become a source
of injustice and tyranny.
For the sake of posterity, then, and for the reputation which the American people rightly
cherished, Clinton affirmed that while they yet remained, “Cautious, prudent,
[and] jealous in politics [,]” and while they were yet about to enter upon, “A
sea of uncertainty,” his countrymen ought to have taken such steps as would
ensure that their government would continue to function as it was designed
rather than fluctuate between promoting justice and sanctioning iniquity at the
whim of whomever had access to the levers of power. To put it another way, the
author of Cato V seemed to believe that it was better to erect such restraints there
and then while his fellow Americans were inclined to do so rather than depend
on future generations to see to the same when they were emphatically
disinclined. Allowing that this made for
a somewhat dour recommendation, it was most definitely also a very prudent one
that was based not only on the recent history of the Anglo-American world, but upon
a clear-eyed understanding of certain fundamental aspects of human nature.
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