Chapter 8: The Ruling Elite by Deanna Spingola: Mercantilism versus Agrarianism

 

Mercantilism versus Agrarianism

People who advocated mercantilism provoked the European wars, such as the Anglo- Dutch Wars and the Franco-Dutch Wars. The Dutch leaders promoted Jewish immigration because of their financial and business experience and skill. They also had highly developed international trade connections, which soon transformed Holland into the “center of Jewish wealth and influence. According to Arthur Hertzberg, the Dutch formulated the Doctrine of Mercantilism, a system in which the state exists to increase their wealth and control, and not for the benefit or financial liberation of its citizens.[286]

Mercantilism dominated the economic environment from the sixteenth to the eighteenth century. Mercantilism involves government intervention and state control of the economy. Internationally, mercantilism fueled imperialism and provoked European wars between nations seeking resource-rich colonies and new markets. In the mid-nineteenth century, monopoly capitalism evolved into corporatism by the beginning of the twentieth century. Richard Cobden, a manufacturer residing in Britain, advocated the ideas of Adam Smith, the classical economist who wrote The Wealth of Nations. Politicians in America developed an economic system called the American System, a variety of neo-mercantilism, and a replacement of federalism. Alexander Hamilton, Henry Clay, Abraham Lincoln and the Republican Party embraced and promoted the American System.

The ruling class was composed of the property owners, the wealthiest, more cultured and articulate, and those who engaged in trade. They were the mercantile aristocracy, founded upon profitable commerce. They possessed the means of production and distribution because of royal grants, or an inheritance. Their commerce consisted of the exchange of products and the accumulation of assets – land, ships, buildings, and other tangible possessions. They associated with the governors, the bankers, the lawyers, the doctors, and the professors who occupied a respectable position in an invariable society. The ministers, not favoring exclusion, reconciled their moral values, assumed the status of political subordination, and accommodated their new lords.[287]

The upper or elite classes lived in the cities – Boston, New York, Philadelphia,

Baltimore, and Charleston, all eastern ports where ships arrived from England carrying manufactured goods, luxuries, books, journals, and news from the capitals of Europe. They returned to Europe with agricultural products, furs, skins, and wood. The elite class, with resident servants, was socially equal to the English bourgeoisie. The richer, urban class developed and controlled the expanding capitalism of commerce and shared an indistinguishable psychology with the British, even considering themselves as Englishmen with a rich cultural heritage. The War of Independence did not diminish this sense of kinship. They continued to look to London for their intellectual stimulation. Despite the promises of equality drafted in the documents following the Revolutionary War, the elite retained their contempt for the common middle class.[288]

Advocates of mercantilism promote a protectionist government that expands the economy by controlling

and encouraging exports while discouraging imports through high tariffs and subsidies to domestic industries. Adam Smith and others later discredited the English system of Mercantilism. However, Henry Clay’s American or National System incorporated Hamilton’s objectives, embodying the American School of Economics. This system promotes protection of industry via selective high tariffs and industrial government subsidies, government investments in national infrastructure and internal improvements, particularly in transportation, and finally, a national bank.

There were opposing alternatives to Mercantilism, one of which was agrarianism, the system that the powers behind the French Revolution destroyed. In France, François Quesnay (1694-1774) laid the foundation of the Physiocrats’ economic theories in his book Tableau Économique (1758, Economic Table). Quesnay argued that people should distribute agricultural abundances through the economy as rents or wages. Moreover, government regulation hinders the economic development in every social class. Further, he said that taxes on the productive classes should be reduced and raised for the unproductive classes whose luxurious lifestyles distorts the income flow. His book stressed the importance of individualism and private property ownership, a critical component, unencumbered by oppressive taxation and government regulations.

Anne-Robert-Jacques Turgot (1727-1781) promoted the idea that self-interests motivated each segment of an economy to function appropriately. Individuals should have the liberty to determine what goods and commodities he desires and how much labor he was willing to expend to meet his objectives. An individual will work harder to benefit himself than he will by working for others. However, many other people supply each person’s needs. An effective system exists when there is a complementary relationship between one person’s requirements and another person’s desires. Trade restrictions and government regulations place numerous unnatural obstacles to achieving individual goals.

Quesnay and others dominated the movement and popularized the phrase laissez faire, referring to the minimization or elimination of government intervention in most or all aspects of society, including the economy. The physiocrats, a group of European economists, supported agriculture and land development. Their ideas preceded the school of classical economics, which Adam Smith generated through his publication of The Wealth of Nations in 1776. The physiocrats advocated the concept that productive work is the source of national wealth. Their philosophies utterly opposed other economic theories, particularly mercantilism, which focused on the ruler’s wealth, the accumulation of gold and the balance of trade.

Pierre Samuel du Pont further elaborated on these economic theories in his book, Physiocracy that encouraged low tariffs and free trade (without government intervention) among nations. Physiocracy was perhaps the first well-developed theory of economics and found great popularity during the second half of the 18th century. Du Pont initially supported the French Revolution, escaped execution and brought his entire family to the U.S. in 1799 where they hoped to found a model community of French exiles. In America, he developed strong connections to government and industry. He was especially close to Thomas Jefferson who had served as a diplomat in France. The Louisiana Purchase was Pierre Samuel du Pont’s idea.

Despite the fact that there were other economic options, there were also numerous acquiescent Freemasons in the first Congress. Out of twenty-six senators, thirteen of them were Freemasons: Oliver Ellsworth, James Gunn, William S. Johnson, Samuel Johnston, Rufus King, John Langdon, Richard Henry Lee, James Monroe, Robert Morris, William Paterson, George Read, and Phillip Schuyler, Hamilton’s father-in-law.[289]

The elite class had enjoyed years of political isolation from the beginning of their new life in America. The greater promises and riches resulting from the industrial revolution somewhat supplanted

mercantilism or at least it adopted alternative practices. This was particularly true with the discovery of gold and other natural resources. With industrialization, while opportunities opened up for the children of the lower classes and they could attend the universities, participate in the government, and open businesses, the elite still held the majority of the political power. However, the middle class contributed to a distinct nationalism that helped to transform society, at least for a time.[290]

Social Engineering