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Introduction to ED-Related Political Culture and the Birth of American Populism

the Morris “Culture Dilemma”

Robert Morris was arguably as important to the the success of the American Revolution and the establishment of our Federal Republic as Washington, Adams and Jefferson. He was a true “founding father”. But he is seldom mentioned in textbooks, and the credit for the America’s first finance and banking system is given to his protege, Morris’s hit man, Alexander Hamilton. Hamilton, and Gouverneur Morris (who shall appear in later modules) worked for Morris and they were his assistants in the case study below. Morris, a very hesitant signer of the Declaration of Independence, was the Federalist who conceived and established the first working version of the American federal/state finance and banking system.  Morris had served his time, punched his patriotic ticket, and wanted to make some serious dough. He was perhaps America’s richest man, and he wanted more. Bankrupt a decade later (don’t ask–it heavily involved major ED-related adventures), he wound up in debtor’s prison between 1798 and 1802. He retired from public affairs and died in 1806. In this module we see him as a Founding Father, a Federalist, a Banker, and a Politician that semi-willfully triggered the Birth of American Populism. He also was a bit of the rogue who proverbially “swam with the sharks” and was indeed the worse for having done so. If Washington was our first economic developer, ought we make Morris our second?

Not to beat around the bush–Yes–at least I think so. What is indisputable was his role in the institutionalization of economic development’s primeval and primary task/strategy of installing the initial nation/state banking, finance, currency, and fiscal system. Morris, like Washington was a “nationalist”, believing in a strong federal government with commanding powers in finance, currency, interstate commerce, and a role in S&L ED. Morris’s nationalist bent stirred a larger than Populist reaction, from elements today referred to as Anti-Federalists with whom among other matters like protection of individual liberties (the Bill of Rights), strongly favored what today is referred to as “states rights” or devolution. They would have to wait for Andrew Jackson and so we push them off to the margins for now. It was these folk, however, that defeated Morris’s impost and rendered the Articles Bank of North American charter almost worthless–forcing Morris to rely on the Bank of Pennsylvania state charter.

The reason why Morris is seldom mentioned in textbooks is two-fold. His 1781-83 Articles initiative ultimately was mostly unsuccessful, although he did cope with the budgetary woes sufficiently to supply the Army and ensure its victory at Yorktown, he left behind, somewhat inadvertently, a messy and troublesome heritage with the soldiers of the Continental Army which it turns out provided a considerable amount of fuel to the Populist revolt that we will next describe. Hamilton, in true character, will take Morris’s reform and copy his Bank of New York and get the credit. Morris went on to debtors prison. But there is a second tale that is important to our understanding of Populism, the Tidewater elites, and to Community Development.

He, his values and actions, and his politics was a one-man metaphor for early industrial capitalism and the Articles proto-democracy. When current Progressives/Socialists talk of “profits and greed”, deindustrialization, luxury cities, poo-pooh Michael Bloomberg, and decry as neo-Liberal the global corporate elite, they are continuing in the critique of capitalism that was first launched against Robert Morris. To make matters difficult for me at least, is that Morris fits the stereotype. In fact, he is the then-living embodiment of it. William Hogeland aptly sums up the complex outlines of Morris’s personality, business practices, and personal ethics, which closely resembles his near-compatriot Ebeneezer Scrooge:

Morris was a master of American business within the British imperial system. He owned ships and warehouses and ran his own network of trading partners [that extended not only to London, but to the West Indies, New Orleans, and Imperial China]. He was bright [like Washington not formally educated ], corpulent, unabashedly greedy, and famously corrupt in the common way then called ‘the mercantile code’ which was not a code of ethics but a collection of sharp practices, including self-dealing, hidden networks, side bets, and mutual patronage p. 74. …. Morris and the Revolution financed each other. Throughout the war, he dedicated his own funds, ships and other resources to supplying the army. Appointed to Congress’s secret committees, he also used public funds for personal speculations, and awarded his own, and his partners’ firms and middlemen, millions of dollars in congressional contracts, commissions and outright disbursements (p. 79) [55]. [William Hogeland, Founding Finance: How Debt, Speculation, Foreclosures, Protests and Crackdowns Made Us a Nation (University of Texas Press, 2012),

Morris was the nation’s leading example, John Hancock aside, of what I refer as “a factor-logistics-lender”, what we would today label a non-bank lender. He was among the very closest of George and Martha’s personal friends–during the war Washington’s HQ was Morris’s private home, and Morris and his wife spent several Christmases with George and Martha at the former’s house. Morris’s primary Philadelphia residence was donated to the new Early Republic and served as the de facto White House for both Washington and Adams administrations. Frequent correspondents, Washington owed the sheer existence of his Army to the finances and outright donations of Morris. Morris, resident of Philadelphia, was the nuclei of that state’s Federalist grouping, and like Washington, Morris’s blurred business/political career created a Rolodex/database that was awesome.

But then he owned household slaves, did infrequently engage in some slave trading in his early years–although his closest protege, Gouverneur Morris was a strident Articles/Early Republic abolitionist. Morris was the recipient of Washington’s famous letter asking for Morris help in releasing a Virginia slave held in Philadelphia in an early example of what later became the Underground Railroad. In that letter Washington expressed his firm opposition to what today we might refer to as a “sanctuary city”, while stressing he (Washington) would support legislation for gradual emancipation of all slaves–confirming his serious moral concerns with the continued existence of slavery. There is no record Morris acted on or replied to with the request [56}. That letter opened the door to Robert Morris’s alleged link to the Quaker Underground Railroad, but that association conflates the formation of the Underground Railroad by Garrison, and Robert Morris, born. a decade after our Robert Morris’s death, in Salem, and Boston’s first Black Civil Rights lawyer.  What did matter to our case study/module was Morris and his “mercantile code” ethics.

As we shall discover, the mercantile code combined with his power, wealth, status, network, and centrality to the Articles government and the budding Federalist tribe set Morris apart as the embodiment of all the evils inherent in emerging capitalism. That some might consider him a bit “Trump”, he was totally the opposite of a disrupter or populist. Morris truly was “the system” and he was more Dickens’s Ebeneezer Scrooge, a personification/straw man for elite control over the fledgling American democracy. That image or perception was compounded by Morris’s own political values and actions which placed in in observable opposition to what he referred to as “egalitarianism”–our populist movement the subject of future modules–and a visible opponent of the majority in the post-1776 populist-dominated state legislature. Morris was not a neutral expert/technician/businessman, but a man with a political career and active opposition to the dominant political force in the state.

Again in Hogeland’s words, Morris, in the post-1785 period congruent with Shays Rebellion, feared these egalitarianists, having taken over the Pennsylvania state legislature “might now take over the whole country , threatening not only [Morris’s] interests as a lender and land speculator, but also those of the interstate finance class [our proto-Federalists] that might he believed make the United States a great commercial power” [56] Founding Finance, p. 75.  Morris determination to substitute the public/private state-chartered corporation for a legislature controlled paper currency system was the means to his end of place the primary responsibility for banking/finance and currency in the hands of the national government influenced by the Revolutionary War proto-Federalists elites, away from populist and otherwise more political state governments.

As Dickens’s would again say, the reader should be well-aware of this complex contextual backdrop which underlies the details and events described in this and other modules. The Egalitarian, anti-Federalist, emerging populist movements were impactful players in the nation/state-building and as we shall were serious actors in the proto-policy system of the Articles period, especially in Pennsylvania. That struggle over nation/state-building and banking/finance/currency institutionalization which carried the baggage of installing “finance and industrial capitalism” agencies and entities, would continue into the 1840’s, leaving a very considerable, if largely unaware, impact on the foundations of our contemporary S&L ED heritage. That struggle, among other salient features, would produce, in very short order, two very distinct approaches to American S&L ED, a mainstream business capitalist-compatible MED, and a people-oriented, elite/capitalist-challenging community development. That struggle continued so virulently through the centuries that we can, and will, acknowledge its impact on central ED strategies such as urban renewal, housing reform, and the exclusively public EDO as a chief ED structural vehicle. That tension-filled heritage has never left the structure and operation of the various public-private EDOs which have been entrusted with implementing strategies requiring the cooperation of private and public sectors. All that starts, or at least is in evidence, in this module and the others that follow.

The irony is the nation that came to be most associated with capitalism, was also a nation that was–from its start in 1780 or so–uncomfortable with it. Large elements of the American population wanted paradoxically to use capitalism for their maximum personal gain, but were deeply troubled with a government and public life dominated by it. Capitalism like Robert Morris was a “mixed bag”–and that is evident from the very beginning.

 

Populism = multi class, multi ethnic, across several Pol Culture, generally regional in temperament, i.e. a national populist movement is fragmented into different regional versons–See Ronald Formisanao 2nd Book and also his first book the Transformation of PC, left and right

 

 Must Reconcile Populism to our Various Political Cultures–and toss in migration

Segue Way to Scots-Irish and the Federalist Political Tribe

Module 7

The First Commercial Bank and the Love it Engendered from Scots-Irish and Pennsylvania “Border” Westerners–the First Populists

the Morris-led Bank of North America’s Struggle with the Pennsylvania Populist Legislature

Morris’s proposal, to fashion a hybrid public/private bank, was arguably the  best fiscal solution, but it required the national Articles government and one state to take the the lead. Drafting Pennsylvania, Morris, a resident and political delegate from Philadelphia–the capital of the Articles–was Morris only effective solution in the crisis. The Pennsylvania state legislature had other ideas on the matter.

How Does a Commercial Bank Trigger the Birth of American Populism?

The real purpose of this section is to definitively prove economics is not only the dismal science, but a long-winded and boring one. As we all know the key to any successful conceptual analysis is to “follow the money”–and that is the key to answering why–and how–Morris’s First Commercial Bank triggered a populist attack. The reason for the populist attack is why I entitled the module series “the Hip Bone is Connected to the Thigh Bone–and so on, of course. So that at least some might actually read this stuff, the normal textbook focuses almost exclusively on the National Bank and the glorious role its Secretary of Treasury played in the “making of America”.

The smushing of history may sell books and Broadway tickets, but there is a lot more going on with the institutionalization of the first (as you now know, second) national commercial bank–unfortunately it all involves economics, finance, and currency. They are all hopelessly connected to each other. When Hamilton created his national bank, few, if anybody, knows the U.S. Mint was in the same legislation, and that was the entity that made and issued the national currency: the American dollar. That is only the start, and as my module title suggests, the sad tale of connections doesn’t stop there. We need to understand “currency” in particular to grasp how the First Commercial Bank wandered into sparking a Populist Culture War–and how the Pennsylvania state legislature was the cutting instrument in the Cesarean-section Birth of American Populism.

Several economic “concepts” are connected to currency and one of them is that currency is used to pay for goods and services, of course, but also to pay for past goods and services–i.e. debt. Apparently there are two sides to a coin: heads or tales (sic). Debt, turned on its head, is credit or a loan, from somebody or something that has currency to lend–at an interest rate and under certain “terms and conditions”, the fine print at the end of your credit card statement. Secondly, currency comes in many forms, gold (yep) coins and paper dollars are two relevant to our discussion. Gold coin is limited, loosely, to the amount of gold in the National Mint-Treasury; it is fixed and given the logic of limited supply is likely to be much in demand and more safe and valuable. Paper dollars are made by a printing press, and a legislative authorization (that ultimately is what all the noise is about in “closing government”).

Paper money, with the full faith and credit or without it, is limited only by the unwillingness of the Mint to print it. Being less secure and more open-ended, it is perceived as less valuable and is “cheaper” than gold coins. Say it another way, and we must, gold is inflationary, i.e. goes up in value, and paper is “deflationary”. That means those who lend money “creditors” like gold coins and those on the other end of a loan, debtors, like paper money. If you pay back a loan its best to pay it with cheaper dollars, and if you are a lender, you want to be paid back in gold coin–which means the debtor has to exchange paper dollars for a gold coin. There is a slight problem with that transaction, however, a very real one in the Pennsylvania non-Philadelphia hinterland, there aren’t many gold coins in a rural agricultural economic base, and that means the debtor must scrounge to find the gold to exchange his paper money. That could likely be, at least ultimately if indirectly, the Bank of North America. Aha! The plot thickens finally.

Without all this, BTW, there is no “money to follow”.

One more detail, this one political. Which level of government should possess the power to issue currency? A nation-wide currency logically must be a national or federal government responsibility–and it is today, but not in the Articles period. Each state could print its own dollars. There was no national currency until Hamilton got into the picture in 1791-2. Morris’s BofNA used Pennsylvania dollars as a Pennsylvania chartered corporation. Paper dollars are the creation of the state legislature–controlled in these years, by Populist majorities. We have already been on record as talking about proto-Federalists as the “tribe” representing the affluent business. The plot gets even more thick. Currency is not bipartisan and the different forms of currency are definitely partisan. As Populists see it “due diligence”, is not neutral either–nor are exchange rates, or even interest rates. They are redistributive in reverse to them–extractive and exploitive.  Economics may be complicated, but it is not “neutral” as to how it affects its different constituencies. Maybe that applies to economic development as well? I digress, yet again. Sorry.

the State-Chartered Corporation: You Thought Economics Was Boring?

Using the only legal public/private entity available in the limbo that was Articles politics, the state-chartered corporation, with Pennsylvania taking the lead and incorporating the first North American commercial bank EVER, Morris abandoned the purely governmental bond issuance approach in favor of integrating public finance with the rapidly rising, and quite wealthy emerging American private sector–of which he, Morris, was its most powerful member. Aptly named, his solution, the Bank of North America, was in effect intended to be the semi-formal national bank of the Articles of Confederation. The can of worms that was opened by its creation, and subsequent actions included nothing less than triggering the birth of American populism, from its Revolutionary War womb. That it also launched a commercial private and public banking system in two other other states, and was the role model for Hamilton’s first national bank in 1791-2 and the subsequent Early Republic state banking system that copied it, only confirms the fundamental importance of this single act of nation/state building.

The reader may not realize it at this point, but by combining war debt, establishment of a commercial banking system, creation of a nation-building institution, and the birth of American populism in one module I am taking on a task not dissimilar from drinking the entire Pacific Ocean in one gulp. So cut me some slack please! I could layer each separate topic one at a time and hope somehow any reader than survived that encyclopedia of knowledge would somehow instinctively grasp how the topics converged on each other; few, if any, would, I fear. So this module only describes each of the major sub-topics briefly, hopefully sufficient to grasp its nature, and concentrate how they converged on each other–the “convergence” is the theme and task of the module.

In a nutshell, the payment of war debt, an essential obligation of a nation and the states, required the creation of the most fundamental institution of a capitalist economy and modern ED: a commercial bank. The establishment of the first series of commercial banks triggered a series of populist–ethnic–hinterland vs. coastal port, elite-mass, economic class, and political cultural clashes that fueled the first two major pre-1800 expressions of American cultural/class populism. In delving into that phenomenon we can see for the first time the not just the origins of populism, but what factored into its rise from dormancy and the deference culture. This history simply asserts those initial factors are relevant today in 2018, and I fully expect them to have meaning for the unforeseen future. The fires that ignited 1785 populism elected Donald J. Trump as President. That modern American ED was thrust from its very inception into this vortex, explains quite a bit as to how it evolved, and its present day configuration and disposition.

There are several moving parts besides war debt repayment, establishment of commercial banks, and populist outbursts (for the curious they are 1785-6 Shays Rebellion in Massachusetts, and 1794-6 Whisky Rebellion in Pennsylvania)  that figure into the convergence of national/state building-institutionalization and the rise of American populism. The first of these moving parts was that a new American class structure was rising out of the Revolutionary War turmoil, which in absence of strong and effective political institutions, were, in a loose and often spontaneous fashion, crystallizing into semi-formal political structures–most notably what I call the Federalist “Tribe”, or what textbooks call the Federalist Party (It was never sufficiently formal or organized to compare to a modern mass-based political party which did not really appear on the American scene until 1840 or so. The politics of war debt-banking-populist convergence played a major role, much like a Bunsen burner, in the founding of the Federalist Tribe. The opposing factions have since been grouped into something cleverly called the “Anti-Federalists”, a grouping which which was so decentralized, ad-hoc, and by nature ill-suited to any form of organization that it never even achieved the marginal coherence of its Federalist Tribe opposition.

What we are talking about is what political scientists call “political mobilization”, and there is little doubt that the interaction of war debt repayment, establishment of commercial banks/nation/state-building and polarizing reaction to both engendered substantial political mobilization. The only political structure of sufficient scale to accommodate this political mobilization were the respective state legislatures of the Thirteen Nations–the Articles of Confederation Congress was largely a bystander, and after 1785 was in organizational limbo, restricted to matters outside of state legislative prerogative or immediate interest–western lands, for example. It did not even have a formal capital city.

State legislatures and state elections, along with a new organizational form, the state/federal chartered corporation (and another new institution, the “newspaper as blog”) were the principal actors in the mosh pit-policy-making process that characterized the Articles period. The 1885-6 politics of war debt repayment, establishment of commercial banks/nation/state-building and polarizing reaction to both played out principally in the Massachusetts and Pennsylvania state legislatures, with delegates from the national Articles Congress kibitzing. In this module Pennsylvania necessarily is the focus of our attention, for reasons which shall become woefully apparent. Massachusetts will appear in the module reviewing another simultaneous populist reaction to the war debt repayment nexus, Shays Rebellion. A return to Pennsylvania, however will be in order, as we close the Federalist period to discuss yet a third major populist uprising, the Whiskey Rebellion.

 

The Populist Attack–Scots Irish were only one element of the Populists–but the dominant one in Pennsylvania

The artificially closed franchise of pre-1776 Pennsylvania policy systems had been abruptly overturned by the 1776 state Constitution which dramatically enlarged the potential electorate–shattering the foundations of colonial elite dominance.  Extreme property restrictions had rendered the City’s total electorate in 1776 to only 400 eligible voters, by definition the richest of the Philadelphia business elite had a monopoly on the colonial government. In an instant it was gone–and the new constitution, was an 180 degree turn. Rising expectations and diminished governmental authority that followed over the next year effectively reduced whatever  “site control” the weak populist-led state government had over large sections of the state. In the vacuum that followed several western counties perceiving the weakness and vacuum attempted succession from a state government dominated by coastal elites–even if they be radical populists.

Drift of several state’s western hinterland counties was evident in many states during this time period. For example, Three counties in extreme western North Carolina formed an independent state of their own–calling it Franklin (I would have preferred “Bob” myself). Drawing up a constitution, they later unsuccessfully applied for admittance as a state. Vermont was in similar turmoil, jockeying between New York, Great Britain and New Hampshire. In Pennsylvania, folks in three counties resident in the “Forks of the Ohio” area (Pittsburgh) wrote a constitution for a new state of Westsylvania, and started recruiting marksmen to defend themselves. The area’s dominant ethnic group was our famous Scots-Irish, with their distinctive border cultural proclivities–they were right at home in Westsylvania–which, in case the reader might wonder why the focus, these are the counties that started the Whiskey Rebellion a decade later.

For us the story, as always, starts in the period immediately previous to Morris’s launch of the Bank of North America. It starts in fact with the onset of the American Revolution in 1776. Somewhat understated in most textbooks, is the complex start down the path to revolution, and the 1776 Declaration of Independence adopted by the Thirteen state/nation Continental Congress in Philadelphia no less. From my perspective there was at least two distinguishable paths that led to revolution and the War of Independence: a path followed by the traditional financial/land-owning/urban port city business elites (of which Morris, Washington, and John Hancock were examples), and a mass, hinterland, non-elite populist path typified by Sam Adams, Thomas Paine,, Patrick Henry and the Sons of Liberty. It was from this element that most of Washington’s Revolutionary soldierly hailed. This bifurcation was superimposed, of course, by another bifurcation–the Loyalists who did not support the revolution or the War. Loyalists could be found in both path constituencies, and were frequently clustered in spots like New Jersey and New York City, as well as South and North Carolina and Georgia. . Lost in the mists of time, a great deal of the inspiration and muscle behind the Declaration and War of Independence flowed from the populist rebellion unleashed by British colonial rule.

Nowhere was this fragmentation and overlap of paths pro and con to the revolution more intense and disruptive than Pennsylvania–the state that approved the charter for Morris’s Bank of North America. To make a story that defies easy understanding short and relatively simple, 1776 Pennsylvania split along three core lines in reaction to the discussion and politics surrounding the Declaration’s Continental Congress: (1) Loyalists (many of whom would literally leave America by 1783); (2) moderate often wealthy business/land-owning elites centered around Philadelphia, and (3) hinterland (which contained most of the state’s population by far) agricultural, small town traditionalists (whose leadership was principally Scots-Irish, German and frontier Quaker land-owners. The issue which both moderates and populists shared was a resistance to externally-imposed taxes. Left unspoken was they did not share a common position on domestically-imposed taxes. Little appreciated, Philadelphia was the port of entry for most Scots-Irish immigrants, and had been so since that migration started a half-century earlier. Between 1767 and 1774 was arguably the “peak” of the Scots-Irish migration when an estimated two-thirds of the total Scots-Irish immigrant population (about 250,000) entered the U.S.  [88] Albion’s Seed, pp. 606-7. That these folk were in the late spring of 1776 being shelled by British frigates compels me to commence my online of the birth of populism with a description of them provided by David Hackett Fisher:

The speech of these people was English, but they spoke with a lilting cadence …. Many were desperately poor. But even in their poverty they carried themselves with a fierce and stubborn pride that warned others to treat them with respect. The appearance of these immigrants on the streets of Philadelphia [their port of entry] marked the start of yet another great folk migration from Britain to America. [11] David Hackett Fisher, Albion’s Seed (Oxford University Press, 1989), p. 606

The arrival in such numbers at a pivotal period of time meant the old deference culture was injected with a new population less willing to defer, and more willing to assert themselves into a policy process, by hook or crook, by anomic demonstrations, tar-and-feather, and toppling statutes if they could not vote. Quaker, Dutch, Germans or Yankees they were not. The new immigrant wave came from the border regions of Ireland, Scotland and northern England/Wales. Border regions, not ethnic DNA, “country of origin”, or even religion (they included Catholics as well as Protestants), and were multi-class although the poor were much more numerous. These were nothing other than refugees from geographies which were then known as “Debatable lands”–“a high-spirited, no-man’s land, with no customs barriers, no military service, no currency of its own … a free-rustling zone over which armed ‘reiver’ (raider) bands rode to steal cattle and sheep or settle clan vendettas with fire and the sword” [88] Graham Robb, the Debatable Land: the Lost World Between Scotland and England (Norton, 2018); quote taken from review by Neal Ascherson, “In Search of Britannia“, New York Review of Books, November 22, 2018, p.55.

Today many think of populists as Scots-Irish, which is tolerable if one recognizes Scots-Irish were (1) a label not an ethnicity; (2) not a movement of individuals only, but mostly of families, often with children; (3) the largest of all the immigrations that came to America previous to 1840; and (4) shared a socialization pattern and hundreds of years of heritage from the nebulous war-prone borderlands of the United Kingdom. This socialization and heritage, the values it inbred to basic questions of government and economics, not DNA was their shared characteristic. They, and their families, for hundreds of years previously, had lived in areas chronically torn by war and invasion, high taxes, military draft or plunder, and systematic repression/taxation by kings and Parliaments in far-away London. They were war-poverty refugees whose socialization had imbued in them ways of thinking, a value system and loyalties, and a stubborn resistance to external authority that was about to permeate into embryonic American S&L ED policy-making. It is these patterns of thought and values that constitute the wellspring of American populism–regardless of whatever ancestry or DNA one has. As one looks for populists today, one ought not restrict one’s search to West Virginia or Ohio, it can be found in many immigrants who later followed, some of whom come to America in “caravans” today. They were not in America to set up a “shining city on a hill”, but to escape from “high rents, low wages, heavy taxes, and short leases” as well as “famine and starvation”, the “rapacity of English landlords“, and what they hoped for was freedom and the attainment of material advantage denied them for eons in the past. [22] Albion’s Seed, p. 611–taken from actual surveys of Scots-Irish immigrants in 1774.

How Pennsylvania Scots-Irish Affected Pennsylvania and National Nation/State-Building/Institutionalization

This is our first major encounter with political culture and its effect on policy-making–and politics. I have already described this as the “birth of American populism” which certainly sets up some expectations. Further, previous modules with Washington and the internal improvement competition among states, we can see evidence the denizens and protagonists of the Revolutionary period  strongly sensed the huge cultural differences among regions, colonies-states, and their elites with serious policy overtones. The Scots-Irish, however, played in their own league. They played by their own rules, and didn’t play nice in the sandbox. In the Revolutionary period it is best to summarize them as simply wanting to be left alone, to live their own lives as they saw fit (mostly in an agricultural economy), with their own leadership–they really didn’t like authority from outside their Scots-Irish “bubble”, and really, really didn’t like to pay taxes, which in the end they had learned through sad experience only wound up in the hands of an oppressive elite. If ever there was a political culture that was hostile to nation/state-building and institutionalization, this was it.

Pennsylvania was not only a state, it was the nation’s de facto capital–and its elite was very wealthy indeed. As we saw above with the First Commercial Bank case study, nation and state-building institutionalization became intertwined within a policy system created by a semi-libertarian constitution that tilted strongly in the direction of Scots-Irish preferences. Eventually that policy system would be changed, but not before it left its heritage on our larger S&L ED policy history. In any case, this history potentially involves a considerable number of political cultures–and I have a strong preference not to complicate or make too abstract the “concept” of political culture, nor to restrict my self to an early, probably unappreciated, definition of what it is or how it develops and sustains itself. That will come in its good time.

Rather I intend to introduce the more crucial of these cultures one at a time, as they formally intrude into our narrative. At that point I will describe the elements of that culture which affect the story being told–nation/state-building institutionalization in this module–not the entire cultural “shebang”. Eventually things will come together, but like a good wine, not before its time. Two elements of the Scots-Irish political culture entered profoundly into the policy-making for the First Commercial Bank: (1) banks as the institution perceived as controlled by wealthy (presumed corrupt) business elites, that (2) were yet one more intrusion of powerful oppressive corrupt authority exerted by elites who lived in urban centers, far away from the homes and communities of the Scots-Irish. Since Washington D.C. did not yet exist, Philadelphia would have to do for the time being.

A Clue to the Reader of what will follow throughout this history: a good deal of the Scots-Irish populism flows less from income disparity, economics, racism, or poverty than from their perception of elite-mass as almost a zero-sum struggle. That burden has proven to be resistant to time, and elite/mass dynamics has consistently affected the making of S&L ED policy–and, I suspect, other policy areas as well. The concept of the Common Man, the American People, the Average Joe and Tiffany, and the Underdog has its roots in the Scots-Irish political culture. 

As the case study in the politics behind the First Commercial Bank, we see from the legislative perspective that the state-chartered public/private corporation, the structural/organizational vehicle used to house the first commercial bank, was the lightning rod for populist wrath–it would continue to be so to the present day. The state chartered corporation served as a “den of thieves”, sustained by public taxes, to exploit the Average Joe through loan/mortgage interest rates, and by defaults and foreclosures eventually seize the assets for their corrupt purposes. The federal and state “bank” will remain a major ED-related issue for the next half-century. In some states, Alabama comes to mind, it will be the single most important issue in Alabama politics for nearly twenty-five years. The bank and the state-chartered corporation will reflect its 1782 birth, reflecting its populist conception. I might confess, this bank-related discussion sounds a lot like what I read following the 2008 housing/mortgage crisis–only Fannie Mae and Freddie Mac, two hybrid quasi-public/private corporations (we have evolved after all) underscored the foreclosure debacle that triggered the Great Recession. But I digress, sorry.

Deceptive advertising, manipulation of laws and astute ability to influence administrative decisions and use government to compel compliance rises to the top–as does the corruption or flow of money (and power) to private elites to support their lifestyle. But there is something much deeper going on, that we see deeply impacting the economic base of the Scots-Irish community or political jurisdiction. As mentioned earlier, the clear preference of the Scots-Irish was to engage in agricultural occupations and to live in rural, hinterland-isolated-border, agricultural settlements. With an agricultural economic base, the ownership of land is the path to individual independence through which the individual can live the life of their choosing. In the late medieval system, barons had been replaced for noble-landowners, whose power lay in the House of Lords; they provided the funds and lending that financed homesteading and the small town English agricultural base. Banks were perceived to be their replacement in America. Banks in an agricultural economic base touched the common man directly, through land ownership, rather than indirectly thru entrepreneurs in a commercial, trade or manufacturing economic base. Banking decisions could impact, and be perceived as impacting, the daily life of the Average Joe–hint, that is not good if you are an economic developer.

The creation of the first commercial bank seemed to the Scots-Irish as deja-vu all over again. It augured a return to the oppressive creditor-debtor lifestyle and economics from which they had fled. For us, it alerts the reader that institutionalization of finance, banking, currency and the like (like health care and education today) was perceived as a threat by Scots-Irish–and as it played out over the following decade or so, the perception was more accurate than we realize today. The Scots-Irish wanted a lending system/currency to work “with” them, not extract from them–and in short order the only way Scots-Irish believed that lenders and a finance system would be compatible with their needs and goals, was that the system should be public–controllable through elections, if nothing else. A finance/lending system that ultimately managed its activities to support a larger private economy was not a Scots-Irish policy priority. We will delve deeper into this credit-debtor dynamic in the future module discussing phase II of the birth of populism: the Whiskey Rebellion.

The claim that the private economy would produce something called prosperity and economic growth did not calm Scots-Irish nerves. They were way more concerned with the “end of the month” realities than the future promise of new opportunities and enhanced lifestyle. When they wanted to see their community, they looked out their window, not at a map. Whatever was going on in the state legislature, the Scots-Irish in the agricultural hinterland perceived from the first commercial bank an existential threat to their way of life and individual aspirations. From this perspective, the proto-Federalists in Philadelphia were the devil incarnate. A rising national government only a re-imposition of  corrupt rule by rich powerful overlords. That is why tarring and feathering or local, some call it vigilante justice, is how they fought back. Federalists saw that as nothing but mobs of deplorables. You may have heard me refer to the First Big Sort (colonial ethnic migration); well, this is the First Cultural Polarization. In 1782 a culture-war entered into our policy-making picture.

Culture wars involve a nexus of issues, and banks and state-chartered corporations are only one element of the battle that would entangle the two proto-political parties (tribes, I call them) that will soon form. the Federalists and the Democrat-Republicans were sufficiently “big tent” the populists would be only one constituency of the latter, and only one opponent, albeit an important one of the former. Their battle would move in another direction as former Federalist Henry Clay launched his “American system” in 1820 (or so) moving away from the bank to prioritize an economic development strategy “internal improvements” or my DTIS. The populists would reassert themselves and counter with states rights, and a restrained federal role in S&L ED.  From this we can see some continuity and hint culture wars, while they certainly ebb and flow (depressions or panics/good times being an important factor), the existential struggle does not disappear. Rather, it takes new forms and priorities. Culture wars arise from the fault lines of a national society, and they not atypically assume some geographic dimension–and in our contemporary era deeply overlap with socio-economic class conflict.

Our first observation drawn from the first commercial bank is that culture wars more about existential and philosophical governance, economic, and social-lifestyle choices. Hence culture wars are more zero-sum than not, and seemingly since neither side develops a knock-out blow, continue for very long periods of time. Policies and strategies play a secondary role, although they will consume considerable media, political, and academic attention. Economic developers may take some caution when ED gets caught in a culture war crosshairs. Each side in a culture war is heading in a different direction, i.e. in academic talk they are pursuing different goals and endpoints. It’s hard to go simultaneously North and South with the same strategy or program. That, at least to me, may be reasonably resolved through federalism, and a national government willing to forsake “efficiency, economy, and morality” to allow individual states the ability to follow their own drummer. Good luck with that Mr. Coan.

Finally as we leave this subject the observations concerning populism expressed in this module are not meant to be the last word on that subject. The module does not purport to comprehensively describe or summarize what the reader can expect in future modules. Quite the contrary; this module is the first, the introductory, module on political culture and populism in action. Incomplete by intention, applied to only one policy/strategy context, and designed principally to alert the economic developer reading these series of modules that ED policy-making occurs in a very large context.My ED policy-making is not the “slot machine” form of ED we practice today–i.e. press the lever (the right strategy or paradigm) and ED follows. Economic development programs and strategies address larger needs and dynamics than, for example, simple job-creation, resolving inequality, innovation, or even economic growth. Economic development, as do most policy areas, rests of a large bed with many springs and worn fabric. The twists and turns of policy-making are attempts to find a comfortable, if temporary, spot so we achieve a larger ends. Intermediate goals/strategies such as those briefly listed, are intended to address much larger and deeper community and human needs.

As to populism, this module may stimulate some reaction in regards our contemporary world, i.e. Donald J. Trump. But while it may offer some insights, be wary. Populism, like everything else, evolves. You have read the alpha, not the omega.

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