Conceived in Liberty (47 page)

Made wary by its thundering failure, the theocracy no longer attempted a comprehensive planned economy in Massachusetts Bay.
From then on, it was content to engage in annoying, but not fatal, hit-and-run harrassments of the market. Penalties were made discretionary, and in 1636 wage and price regulations were transferred by the provincial government to the individual towns, as suggested by the leading Puritan divine, Rev. John Cotton. The General Court was supposed to exercise overall supervision, but exerted no systematic control. Control by each town, as had been anticipated, was even more ineffective than an overall plan, because each town, bidding against the others for laborers, competitively bid wages up to their market levels. The General Court wailed that all this was “to get the great dishonor of God, the scandal of the Gospel, and the grief of divers of God’s people.” A committee of the most eminent oligarchs of the Bay colony was appointed to suggest remedies, but could think of no solution.

Of the towns, Dorchester was perhaps the most eager to impose wage controls. During the Pequot War, and again in 1642, it combined maximum wages with conscription of any laborer unwilling to work and to work long enough at the low rates. Hingham also enacted a maximum-wage program in 1641, and Salem was active in prosecuting wage offenders.

In 1635, the year of the repeal of the wage and price plan, the Massachusetts authorities tried a new angle: under the cloak of a desire to “combat monopolizing,” the Massachusetts government created a legal monopoly of nine men—one from each of the existing towns—for purchasing any goods from incoming ships. This import monopoly was to board all the ships before anyone else, decide on the prices it would pay, and then buy the goods and limit itself to resale at a fixed five percent profit. But this attempt to combine monopoly with maximum-price control failed also. The outlawing of competing buyers could not be enforced and the import monopoly had to be repealed within four months. What ensued was far better but was still not pure freedom of entry. Instead, licensing was required of all importers, with preference usually given to friends of the government.

Generally, the merchants were the most progressive, wordly, and cosmopolitan element in Massachusetts life. The merchants were able to gain political control of the growing commercial hub of Boston by the mid-1630s. But the rest of Massachusetts remained in the hands of a right alliance of Puritan zealots and landed gentry who dominated the magistrates’ council and the governorship. During the decade of the 1630s only two out of twenty-two magistrates were merchants, one of these being the Hutchinsonian leader William Coddington. This reflected the occupational differences of their native England. The gentry had, by and large, been minor gentry in rural England, while the merchants usually hailed from London or other urban centers. In contrast to the authoritarian and theocratic gentry, the merchants had a far more individualist and independent spirit and often opposed the Massachusetts oligarchy.
It was no accident that almost all the merchants championed the Hutchinsonian movement—including Coddington, John Coggeshall, and the Hutchinson family itself. In spite of the earlier failures, Massachusetts tried to resume its harassment and regulation of the merchants, but even more sporadically than in the case of wages. Millers were fined for charging what were arbitrarily termed “excessive” prices for their flour. A woodmaker was fined in 1639 for charging the Boston government “excessive” prices for making Boston’s stocks, and, as Professor Richard Morris notes, the General Court “with great Puritan humor sentenced him, in addition, to sit in the stocks he himself had made.”
*
Heavy fines and Puritan denunciations were also the lot of merchants supposedly overcharging for nails, gold buttons, and other commodities. The Puritan church was quick to condemn these merchants, and insisted on penitence for this “dishonor of God’s name” in order to regain membership in the church.

The most notable case of persecution of a merchant occurred in 1639. Robert Keayne, a leading Boston importer and large investor in the Massachusetts Bay Company, and the devout brother-in-law of Rev. John Wilson, was found guilty in General Court of gaining “excess” profit, including a markup of over one hundred fifty percent on some items. The authorities displayed once more their profound ignorance of the functions of profit and loss in the market economy. Keayne was especially aggrieved because there was no law on the books regulating profits. In contrast, the Maine court, in the case of
Cleve
v.
Winter
(1640), dismissed charges against a merchant for setting excessive prices, on the grounds that it was not legitimate to regulate a man’s profit in trade. So a sounder strain of thought did exist despite the official view.

Massachusetts’ sister colonies also tried to impose a theocratic planned economy. As we might have expected, the effort of New Haven Colony, founded in distaste for the alleged laxity of Massachusetts Puritanism, was the most comprehensive. New Haven’s Act of 1640 established fixed profit markups of varying grades for different types of trade: three pence in the shilling, for example, for retail of English imports, and less for wholesale. Prices were supposed to be proportionate to risk for colonial products. Above all, a highly detailed list of maximum-wage rates for each occupation was issued. A year later, an ambitious new schedule was decreed, pushing down wage rates even further.

But even fanatical New Haven could not conquer economic law, and only nine months later the authorities were forced to admit defeat, and the entire program was repealed. After that resounding failure, no further comprehensive controls were attempted at New Haven, although there were a few sporadic attempts to regulate specific occupations.

Comprehensive wage control was also attempted in Connecticut. An abortive regulation of wages was imposed in early 1640, but repealed later the same year. The following year Connecticut, again alarmed about “excessive” and rising wages (with men “a law unto themselves”), enacted a maximum-wage scale for each occupation. However, instead of the heavy fines imposed by Massachusetts, the only prescribed penalty was censure by the colony’s General Court.

Because the monetary medium of Connecticut was corn, wheat, or rye, maximum-wage legislation, to be effective, depended on
minimum
rates of exchange of these commodities in terms of shillings—otherwise, maximum wages in shillings would be effectively negated by declines in the shilling prices of corn. Minimum corn, wheat, and rye prices were, accordingly, fixed at legal tender for wage and other contracts. A slight reduction of wheat and corn prices, however, was allowed in 1644, and, finally, in 1650 Connecticut also abandoned the foolhardy attempt to plan the price and wage structure of the colony’s economy.

*
Richard B. Morris,
Government and Labor in Early America
(New York: Columbia University Press, 1946), p. 74.

The economic policy dominant in the Europe of the seventeenth and eighteenth centuries, and christened “mercantilism” by later writers, at bottom assumed that detailed intervention in economic affairs was a proper function of government. Government was to control, regulate, subsidize, and penalize commerce and production. What the
content
of these regulations should be depended on what groups managed to control the state apparatus. Such control is particularly rewarding when much is at stake, and a great deal
is
at stake when government is “strong” and interventionist. In contrast, when government powers are minimal, the question of who runs the state becomes relatively trivial. But when government is strong and the power struggle keen, groups in control of the state can and do constantly shift, coalesce, or fall out over the spoils. While the ouster of one tyrannical ruling group
might
mean the virtual end of tyranny, it often means simply its replacement by another ruling group employing other forms of despotism.

In the seventeenth century the regulating groups were, broadly, feudal landlords and privileged merchants, with a royal bureaucracy pursuing as a superfeudal overlord the interest of the Crown. An established church meant royal appointment and control of the churches as well. The peasantry and the urban laborers and artisans were never able to control the state apparatus, and were therefore at the bottom of the state-organized pyramid and exploited by the ruling groups. Other religious groups were, of course, separated from or opposed to the ruling state. And religious groups in control of the state, or sharing in that control, might well pursue not only strictly economic “interest” but also ideological or spiritual ones,
as in the case of the Puritans’ imposing a compulsory code of behavior on all of society.

One of the most misleading practices of historians has been to lump together “merchants” (or “capitalists”) as if they constituted a homogeneous class having a homogeneous relation to state power. The merchants either were suffered to control or did not control the government at a particular time. In fact, there is no such common interest of merchants as a class. The state is in a position to grant special privileges, monopolies, and subsidies. It can only do so to
particular
merchants or groups of merchants, and therefore only at the expense of other merchants who are discriminated against. If X receives a special privilege, Y suffers from being excluded. And also suffering are those who would have been merchants were it not for the state’s network of privilege.

In fact, because of (a) the harmony of interests of different groups on the free market (for example, merchants and farmers) and (b) the lack of homogeneity among the interests of members of any one social class, it is fallacious to employ such terms as “class interests” or “class conflict” in discussing the market economy. It is only in relation to
state
action that the interests of different men become welded into “classes,” for state action must always privilege one or more groups and discriminate against others. The homogeneity
emerges from
the intervention of the government in society. Thus, under feudalism or other forms of “land monopoly” and arbitrary land allocation by the government, the feudal landlords, privileged by the state,
become
a “class’ (or “caste” or “estate”). And the peasants, homogeneously exploited by state privilege, also become a class. For the former thus constitute a “ruling class” and the latter the “ruled.”
*
Even in the case of land privilege, of course, the extent of privilege will vary from one landed group to another. But merchants were not privileged
as a class
and therefore it is particularly misleading to apply a class analysis to them.

A particularly misleading form of class theory has often been adopted by American historians: inherent conflicts between the interests of homogeneous classes of “merchants” as against “farmers,” and of “merchant-creditors” versus “farmer-debtors.” And yet it should be evident that these disjunctions are extremely shaky. Anyone can go into debt and there is no reason to assume that farmers will be debtors more than merchants. Indeed, merchants with a generally larger scale of operations and a more rapid turnover are often heavy debtors. Moreover, the same merchant can
shift rapidly from one point of time to another, from being a heavy net debtor to net creditor, and vice versa. It is impermissible to think in terms of fixed persisting debtor classes and creditor classes tied inextricably to certain economic occupations.

The merchants, or capitalists, being the peculiarly mobile and dynamic groups in society that can either flourish on the free market or try to obtain state privileges, are, then, particularly ill-suited to a homogeneous class analysis. Furthermore, on the free market no one is fixed in his occupation, and this particularly applies to entrepreneurs or merchants whose ranks can be increased or decreased very rapidly. These men are the very opposite of the sort of fixed status imposed on land by the system of feudalism.

*
The differences between the Marxian attribution of “classes” to the market, and the confining of the concept to the “caste” or “estate” effects of state action, have been brilliantly set forth by Ludwig von Mises. See his
Theory and History
(New Haven: Yale University Press, 1957), pp. 112ff; and
Socialism
(New Haven: Yale University Press, 1951), pp. 328ff. Contrast the confusion in Lenin’s attempt to defend the Marxian jumble of estate and non-estate groups by the same concept of class. See V. I. Lenin, “The Agrarian Programme of Russian Social-Democracy,”
Collected Works
(Moscow: Foreign Languages Publishing House, 1961), 6:115.

To return to the New England scene, the flourishing but harassed Massachusetts merchants received a severe economic shock in 1640. Much of the capital and credit for expanding their commerce had come from the wealthier emigrants from England, but by 1640 the great exodus had dried up. Realization of this change further cut off the vital flow of English credit to Massachusetts merchants, since the credit had been largely predicated on a continuing flow of immigrant funds. In addition, the fur trade was already declining from the drying up of nearby sources and the restrictions of the licensing system. A result of these factors was a severe economic crisis in 1640 with heavy declines in prices—of cattle, land, and agricultural products. Credit and confidence also collapsed, and the consequent calling in of debts aggravated the crisis. (There can be little doubt that the panic was also aggravated by the crisis in the English economy in 1640, a crisis sparked by Charles I’s seizure of stocks of bullion and other commodities.) As is usual in an economic panic, the debtors faced a twofold squeeze: falling prices meant that they had to repay their debts in currency worth more in purchasing power than the currency they had borrowed; and the demand to pay quickly at a time when money was hard to obtain aggravated their financial troubles.