Democracy and Laissez Faire: the New York City State Constitution of 1846

Volume 1, Number 4 (1977 )

New York’s present monetary problems have a precedent, and possibly a solution, in the pages of the far-off past. Well back in its history, in the late 1830s, New York State was spending and providing money lavishly. By the early 1840s, the rapidly installing financial obligation had actually occasioned a severe financial crisis. To avoid the imminent possibility of bankruptcy and default, the state legislature in 1842 passed what was known as “the stop and tax law”, a levy of one mill on each dollar of taxable residential or commercial property. The new revenue helped the state meet its most pressing obligations. However, a lot more importantly in terms of the future, New york city decided to take actions to prevent another such financial catastrophe. Enthusiastic projects for internal improvements– primarily canal construction and loans for railway structure– were cut back or abandoned unless there was an affordable expectation that they might be funded from tolls or taxation. And the legislature likewise released a call for a constitutional convention. The brand-new Constitution embraced in 1846 placed rigorous limits on the state’s capability to obtain money. Hence individuals of New york city, dealing with problems similar to the state’s later predicament, found the response in an old-fashioned program of lowered spending and brand-new taxes. What is unexpected, nevertheless, is that such policies had the popular support of the most democratic and liberal elements in the state.

To understand the uncommon series of events which culminated in the New York State Constitution of 1846, one need to go back in history to the Jacksonian period and the political struggles between the Democrats and the Whigs. In New York the Jacksonian Democrats included a comprehensive constituency of extreme workingmen, Irish immigrants, farmers, intellectuals, and agents of the brand-new rising service or small capitalist class. The prevalence of the older landed upper class and wealthier classes, together with the most English or Anglo-Saxon elements in the population, gravitated toward the Whig Party. The Whigs, unified nationally by their opposition to Andrew Jackson’s Presidency, were the ideological successors in New york city State of DeWitt Clinton, five times guv and dad of the Erie Canal. Like Clinton, the Whigs supported the generous use of state funds for internal improvements along with for numerous cultural, humanitarian, and academic undertakings. The Whigs’ belief in favorable government and social reform reflected their paternalistic conception of politics and economics.

Rather different were the concepts of the Democrats who, in contrast to their Whig challengers, meant a stringent construction of the United States Constitution, restricting the governing power to its least fundamentals. Both nationally and in New York State, the Jacksonian Democrats followed the Jeffersonian agrarian maxim that the least government it the best federal government. In New York the leader of the Democratic Party was Martin Van Buren, head of the famous Albany Regency which managed the state governmental machinery through the majority of the 1830s and ’40s. The most radical Democrats, called Locofocos, were rather to the left of Van Buren and the Regency. They consisted of a fascinating collection of intellectuals and politicians who upheld an unfavorable, anti-statist democracy. As versus the paternalistic viewpoint of the Whigs, the Locofoco Democrats worried total laissez faire in government-business relations. For example, the intro in 1837 to the very first problem of the United States Publication and Democratic Evaluation, organ of the more radical Democrats, defined the celebration’s belief in democratic republicanism and majority guideline. But the editors included:

The very best federal government is that which governs least. No human depositories can, with security, be relied on with the power of legislation upon the basic interests of society so as to run directly or indirectly on the market and property of the neighborhood. Such power should be perpetually responsible to the most pernicious abuse, from the natural flaw, both in knowledge of judgment and pureness of purpose, of all human legislation, exposed continuously to the pressure of partial interests; interests which, at the same time that they are basically self-centered and dictatorial, are ever watchful. persevering, and subtle in all the arts of deceptiveness and corruption.

The majority of forthright of the extreme Democrats was William Leggett, a Locofoco associate in the 1830s of such New york city Democratic authors as James Fenimore Cooper, William Cullen Bryant, Theodore Sedgwick, and Parke Godwin. Leggett coupled adherence to the Jeffersonian natural rights philosophy with demands for the equivalent right to property, not its abolition. Governments had no warrant to interfere with private pursuits by using monetary benefits to any specific class or market. Specifically chartered banks, consisting of the Bank of the United States, were a favorite target of Leggett’s refuse. “Let the banks die,” he composed. “Now is the time for the total emancipation of trade from legislative thralldom.”

As a part of their general laissez-faire viewpoint and opposition to Whig paternalism, the Democrats were also suspicious of those social and humanitarian reform movements which infringed upon individual liberty and personal property. Hence they were hostile to the abolitionists even though this implied disregarding the concern of liberty for the black slave. Imprisonment for debt attracted little attention from either Democrats or workingmen up until public interest in the matter ended up being too strong to be overlooked. The workingmen’s parties were, however, in a peculiar position since wage earners desired preferential lender status through a mechanics’ lien law. Even public schools had trouble winning Democratic support because their cost included heavier tax. Charity schools and use of the Lancastrian system of student tutors rather won Democratic favor. A system of statewide public education would also hinder parents’ control over their children and may undermine spiritual liberty.

In Washington, Andrew Jackson, the Democrats’ hero, delighted in an anxious and questionable Presidency. His years in office from 1829 to 1837 formed an age in which simple credit, low-cost land, and internal improvements all added to an inflationary success. At the exact same time, Jackson’s own dispositions tended toward the restrictions on federal costs preferred by his buddy and political advisor Van Buren. As governor of New York in 1828, Van Buren had secured passage of the Security Fund System to protect the banks and guarantee the state of a source of credit and wealth to accompany the Erie Canal. The state-chartered New York banks called into question the requirement for the federal United States Bank, while the state-constructed Erie Canal rebuked the western states’ clamor for federal help for their own internal enhancements. Additionally, the Jeffersonian principle of states’ rights and opposition to federal centralized power, upheld by Van Buren and the New York Locofoco Democrats, was also able to acquire nationwide success by Jackson’s Bank of the United States and Maysville Roadway vetoes.

In 1836 the United States for the only time in its history lacked a national financial obligation; a year later the federal government was quickly in a position to disperse its surplus earnings to the states. However the Jacksonians, despite the President’s efforts to moderate or level out the economic boom, were not able to fend off its financial after-effects in the Panic of 1837. Van Buren, Jackson’s successor in the White House, fell a political victim to the Panic, and in New York in 1838 the Democrats were reversed by the Whigs who chose William H. Seward as guv. Governor Seward, it needs to be noted, was an admirer of DeWitt Clinton who had earlier helped inaugurate the transportation transformation in New york city. Upon completion of the Erie Canal in 1825, he had actually prompted further state expenditures for new canals, turnpikes, and eventually railroads, in addition to a generous policy of chartering banks and insurance provider. Now, in 1840, the Whigs under Guv Seward called for the appropriation of 4 million dollars for 10 years to develop extra canals and railways. Henceforth dubbed “the forty million dollar party”, the Whigs to their bad luck had neglected the negative effects of the Panic of 1837 on the state’s declining credit. Alarmed critics alerted that the expense of public works would soon increase the state debt to as much as 75 million dollars with yearly interest charges of 4.5 million. Already by 1842, when the Democrats gained back control of the legislature and passed the stop and tax law, the state debt which five years earlier totaled up to 7 million dollars had actually grown to 27 million dollars, and state bonds were unmarketable even at a discount rate of 20%. Rather of continuing to spend money for internal enhancements, the Democrats, at an expense of 40 million dollars in principal and interest, proposed to snuff out the state
financial obligation in twenty years. As an outcome of such conservative financial policies, within 2 months of the stop and tax law the state’s 7% bonds cost par, while 5% bonds reached that level in 15 month.

By the 1840s national viewpoint in regard to state aid for internal enhancements was undergoing a change. The former public interest for heavy state expenditures had run its course. Some of the brand-new states in the West remained in default on their bonds. State initiative and obligation had been required earlier for such enthusiastic endeavors as the Erie Canal, but after the return of prosperity in the 1840s private capital, just beginning to be collected by American production and industry, was readily available for financial investment. Railroads were now ending up being the most crucial ways of transport, but railroads with their unique rolling stock could not be considered public in the same sense as a canal, a river, or a turnpike. Although railroad home builders frequently relied on the states to assist raise the large quantities of capital they needed, the majority of their funds in New york city originated from private cost savings and from credit extended by American banks. Appropriately, while there was little foreign investment in, or municipal aid for, New York State railroads up until after the Civil War, the New York Central by 1853 had 2331 shareholders.

The decrease of public help and intervention in financial business was most significant in a few of the eastern states where the old colonial concept of the commonwealth came down with a surge of anti-government feeling. Although various financial and social groups continued to desire political intervention in behalf of their own self-interests, the fear of more state taxes and increasing state indebtedness obstructed heavy public expenses throughout the 1840s. Instead of continuing to take a positive, direct role in the economy, the state approved its economic powers to personal banks and stock companies. For example, the Free Banking Act gone by New York in 1838 abolished the old system needing unique legislation for each bank charter and in impact presented competition into banking. Under general incorporation laws, state charters were now approved to all way of enterprises which, in pursuing their own private ends, were largely without the public obligation associated with governmental firms and the earlier semiprivate corporation. Democratic reluctance to continue the specifically chartered corporation for a preferred few had actually dispersed the advantage of incorporation among numerous stockholders and had separated it from duty to the state.

Legislation totally free banking and general incorporation laws accordingly had the assistance not just of the business neighborhood however likewise of those opposed to all governmental aid and protection for picked business. Locofoco Democrats and workingmen united in the crusade versus financial monopoly and unique benefit, although labor often recognized its own true interest with that of the whole neighborhood. In any case, the state was generally too weak in an administrative sense to impose either its own definition of the public interest, or to provide its full support to various personal or special interest groups. Therefore laissez faire and the cry of equal rights for all and unique privileges for none was a more attractive political philosophy in the 1830s and ’40s than any Whiggish concepts of a paternalistic and pricey federal government.

It was in action to these views that the Democrats pushed ahead with their plans for preparing a new state constitution. William C. Bouck, the conservative or Hunker Democratic follower to Seward as governor in 1843 and 1844, preferred a moderate course on internal enhancements despite the Democrats’ stop and tax law of 1842. But when Silas Wright, a buddy of Van Buren and the staunchest disciple of Jeffersonian agrarian democracy in New York State, was put forward for the election of governor, Bouck and the conservative Hunker faction needed to pull back. Wright in his first annual governor’s message in January 1845 praised the stop and tax law for bring back the state’s credit. Three fifths of the state’s financial obligation charged to the General Fund, he explained, had been sustained by unwise loans to railways that had shown unable to pay their obligations. Wright likewise announced that he favored calling a constitutional convention.

In a series of short articles analyzing the progress of constitutional reform, which appeared at this time in the Democratic Review, John Bigelow, one of the party’s intellectuals, noted a few of the changes which he believed New york city and other states must embrace. These consisted of a provision that “The state must have no power to contract financial obligations, or loan its credit, other than in case of war, intrusion, or insurrection.” In the matter of a general incorporation law, Bigelow prompted: “The members of such Corporations, (not excepting those developed for education or charity) need to be separately accountable for the financial obligations, liabilities, and acts of such Corporation, and for the effects resulting therefrom.” In addition: “All laws or regulations disrupting the liberty of trade or market (such as license and assessment laws) ought to be abolished, and their enactment for the future prohibited.” Bigelow included as various proposals the abolishment of the death sentence and consent for females to manage their own home after marital relationship.

The New York Constitutional Convention, which met in the summertime of 1846, completed its labors in time for the citizens to authorize its handiwork that very same year. Although the anti-statist views of such Jeffersonian Democrats as Bigelow and Wright were subject to some modification and compromise, the New york city Constitution of 1846 embodied the laissez-faire position much better than any document in the state’s history. Just after all debts were paid through a sinking fund could the state proper any surplus for canal improvements and extensions not already mandated by law. Corporations consisting of banks were to be chartered under general laws instead of by special act. Investors were made liable to the quantity of their shares for all financial obligations and liabilities contracted by their banks. As an epitaph to the anti-rent wars which had actually reached a climax in 1846, the Constitution abolished all feudal periods and continuous leases. Male suffrage was made universal other than for Negroes who had to have an estate of the value of $250, unless the people in a referendum on the question voted otherwise. This curious and illiberal provision, which was authorized by the citizens, kept the provision in the 1821 Constitution in which the property credentials was gotten rid of for whites however not for blacks. The Negro vote, generally cast in favor of the old Federalist slaveowning class, had actually continued to be worked out in behalf of Clinton and after that the Whigs. Though never ever a big vote, it was opposed by the Democrats primarily since of labor’s impact.

In a retrospectwe post on constitutional federal government in the Democratic Review, Bigelow restated his libertarian views with the caution that “An excellent source of inequality in the conditions of guys in respect of wealth and comfort arises from the action of law. Too much federal government has a direct propensity to aid one male or one set of males in the ‘pursuit of joy’, and in the ‘getting, possessing, and protecting property’, if not at the cost of the rest, at least without rendering them the like assistance.” Sadly the Jacksonians, despite their defeat of the Bank of the United States, had not been able to slow the development of wealth and inequality in New York and a few of the larger cities in the East in the era prior to the Civil War. But their more radical laissez-faire views, as embodied in the stop and tax law and 1846 Constitution, disenchanted the wealthier business class which moved especially into the Whig Celebration. Work on the Erie Canal, which the Democrats had actually stopped in 1842, was resumed in 1847. Moreover, up until 1850 railroads needed to pay canal tolls to protect the state’s vested thinking about “Clinton’s ditch”. After that, canal tolls were lowered to provide competition to the growing volume of traffic carried by the railroad.

Historians of a later generation have actually grown familiar with interpreting democracy and liberalism in terms of the contemporary well-being state. The negative democracy of the New york city Democrats of the 1840s appropriately wins little contemporary approval. Democracy in the eyes of its later adherents has actually ended up being synonymous with power, preferably such power as might be worked out by a strong executive in the name of people. Some historians even question whether the negative state can be democratic and reason that laissez faire need to automatically favor an aristocracy of wealth. However what passes for the welfare state today rewards many of all its largest investors in the military-industrial complex. Beneficiaries of the welfare-warfare state’s largesse would be frightened by a return to the spirit of the 1840s or to any constant across-the-board application of laissez faire. On the other hand New york city’s Constitution of 1846 remains an intriguing, though passing, example of the enactment of Jeffersonian anti-statism into the fundamental law.

About the author

Click here to add a comment

Leave a comment: