Shay’s Rebellion: What is this Populism Thing and How Does it Relate to Economic Development?

Shays’ Rebellion is the Populist outburst that has made it into History textbooks. As observed several times previously, Shay’s was one of a series of Populist-like episodes that occurred in the run up, during and immediately following the American Revolution and the establishment of the Early Republic. There was one more to follow, the mid-1790’s Whiskey Rebellion in the western Pennsylvania counties home base to the anti-Morris Bank Populist episode. Oddly enough, the ones most intriguing are the episodes least known: the 1765 Stamp Act and North Carolina Regulatory Movement which commenced the same year and continued through 1771. Closely associated with the brewing discontent that led to 1776 and the War of Independence, their tie in to the subsequent development of American S&L policy systems and the evolution of Early Republic political attitudes/behavior have been less developed. The  Shays’ Rebellion, as the reader shall see, is simple enough to describe, but the controversy still rages over why it happened and what it means to the larger picture. If there is such a thing as “settled history” Shays’ rebellion is not it. Probably, the reason for Shays’ prominence is its tie in with reform of the Articles of Confederation that led to the Constitutional Convention and the new Early Republic in 1789. Important to several of this history’s interests, Shays’ Rebellion is it closes the loop on the Populist impact on the evolution of the Federalist Tribe consensus–the consensus that caused the birth of our modern American S&L economic development.

This modules “battle plan” is simple. First we shall briefly outline the Shays’ Rebellion events, providing the conventional interpretation of why they happened. Secondly, we outline the various interpretations of Shays’ Rebellion impact. Since it is above our pay grade to make any final assessment on that matter, I will simply conclude these interpretations have persisted so long likely because to some extent they all are valid, and demonstrate a complicated reality that naturally is associated with a major revolutionary movement and the birth of a new nation. The final module topic will be to link all this to the future evolution of American S&L ED, observing how Shays’, simple and complex as it was, impacted several key aspects characteristic of future American ED.

What and Why It Happened? The Conventional Story

After ears of brewing frustration and occasional anomic outbursts, a group of western Massachusetts hinterland residents got really mad in late 1785 and early 1786 at taxes imposed on them by the Massachusetts State Legislature (and Governor). They quickly were called “Regulators”, reminiscent of the North Carolina events. The story behind the taxes is essential to understanding the motivations behind the insurgents. The issue was the state Revolutionary War bonds which had been issued during the War. Like all state war bonds they radically depreciated in value, selling for pennies on the dollar. After rampid speculation, the Massachusetts state government had through the early to mid-1780’s bought the bonds from the speculators that had purchased them, many discounted, paying twice the going rate–and paying the interest. Having spent their funds to consolidate the debt, someone had to pay for it and so the state in 1786 approved an impost (import) and excise taxes on land, and a poll tax so the state could retire the entire dept in one year, 1786. It was not lost on the insurgents, especially the unpaid war veterans that they were being taxed to pay for payments to war bond speculators who were making very serious profits on their speculation. That this was perceived as an urban-rural issue was natural because the speculators resided, on the whole in Boston, Essex and Middlesex Counties, and were members of the budding Federalist Tribe. Much of the mechanations were the work of Governor Bowdoin, a large-scale speculator himself who profited from all this enormously–which itself polarized state legislative politics and generated elite opposition. The Shays folk were not the only ones disillusioned by this.

So the insurgents struck back. Rounding up the “usual suspects”, i.e. tax collectors mostly, they did the customary things to these fine folk, stripped them naked, tarred and feathered them, and left them in the middle of the forest. They also shut down foreclosure courts and said things not pleasing to the merchants and lenders in Boston and to the State Legislature. Still unhappy the agitated “populists”, mob if one prefers, organized by a disgruntled and unpaid revolutionary war veteran, whose attempt to start over was frustrated by farm mortgage debt and subsequent foreclosure triggered by inability to pay state taxes, led a host (numbers range from 600 to 2,000 to 4,000) to attack the Springfield Massachusetts federal armory to secure weapons. It is not clear what they intended to do with them.

They were, in the end, repulsed by a privately paid “militia” hired because the regular militia proved unreliable. It simply refused to take action against the Shays insurgents. Efforts to recruit another militia were unsuccessful. That militia, paid for by Boston merchants, The militia were needed because the Articles of Confederation government lacked the authority to mobilize and pay for federal forces to defend a federal armory–and Massachusetts State and the private sector had to do it for them (which actually was fiscally logical because it was the State and Boston lenders that had triggered the mess).

Daniel Shays and other ringleaders were captured, brought to trial, convicted, and subsequently pardoned (Shays himself had escaped, lost his farm, and left the state never to return). In the next year, the Massachusetts Legislature and new governor enacted legislation that acceded to much of what the protesters wanted.

The 1787 legislature passed a moratorium on debts and cut direct taxes “to a bone” . The burden of taxes formerly placed on polls and [land] shifted to indirect taxes. … The loss of revenue … hurt speculators severely … interest payments ceased [and] interest on state debt fell into arrears. The value of [its] securities fell on the Boston Market by 30%. … The average back county family still had a tax bill, but nothing like the earlier ones. … The annual rate in towns, such as Amherst, Pelham, and Colrain [the home base of Shays’ Rebellion] dropped from twenty-five shillings to less than two. [99] Richards, Shays’s Rebellion, p. 119. [Governor Bowdoin was tossed out of office by John Hancock]

In the meantime, it seems, there is disagreement on this, that various members of the Federalist Tribe who by 1787 had begun negotiation of Articles Reform and were implicitly writing a new constitution, got really bent out of shape by the Shays’ Rebellion–for its real, and perhaps imagined, existential threat to the new government they were trying to create. The fear of Shays” Rebellion it is argued played a significant role in the making of various compromises that produced the new constitution.

How all this enters into our narrative on the evolution of American S&L ED is that Shays’ Rebellion is one more episode involving currency, credit-debt, and its impact on non-elites. In many was it was fostered by the Newburgh Affair discussed in an earlier module, involving Morris, Hamilton, and even our friend George Washington. The mess than resulted from that episode was that the officers got paid, a lot, with good currency, while the soldiers, in the end, did not get paid, or paid in cents on their dollar. They certainly got no pension for their military service. When the enlisted veterans tried to start a new life, many on a new farm in the western hinterlands they need mortgages from lenders because they had no money. Hard times followed. Small hardscrabble homesteads are difficult to start, and when homestead farmers attempted to pay back the annual interest–which had to be paid in hard metal currency, not cheap paper dollars–they couldn’t. And then the state came in–almost out of the blue–with new taxes to pay for the Revolutionary War debt, owed to the more wealthy elite classes, the distressed farmers could not pay them either. So foreclosures resulted and the insurrection began.

The reader of past modules will recognize much of the same was going on in Pennsylvania at the exact same time (and elsewhere), but in Pennsylvania the franchise was open allowing western farmers the opportunity to elect a majority to the state legislature. The Pennsylvania State Legislature closed the Philadelphia bank that was behind currency and hard money, and created in its stead a state government land bank which attempted to bail out the distressed farmers. In Massachusetts as we shall soon discover, the franchise was relatively closed and the Puritan deference culture proved more resilient than the Quaker–Scots-Irish shutting out the opportunity to solve the matter politically.

In a nutshell that is the story we have been telling for the past modules in this mini-series. Two major themes rise from these modules: (1) each state being different, with different political cultures and state/local policy systems, resolved these issues in their own way, creating the their own distinctive foundation on which their future politics and ED history rests; and (2) a common dynamic, shared in each of the states, was that having successfully won the War of Independence, the leaders of that war, we call them our Founding Fathers, formed semi-consciously a early form of political organization we label as the Federalist Tribe (or Party in the textbooks) and during the Articles of Confederation period fabricated a consensus on what the new government,, economy and society would be like. At the 1787 Constitutional Convention these Founding Fathers wrote a new constitution  incorporating or installing the “institutional infrastructure” that logically followed as a new federal nation, which the thirteen sovereign states subsequently copied–or attempted to. The key infrastructure for ED involved banks, currency, and a private/public credit-debt system that evolved to become what we today refer to as capitalism, became the cornerstones of American Mainstream ED (MED)–and the Federalist Tribe which led installation over the next fifty years.

Unfortunately for the Federalists, they stirred up the non-elite natives. That is a third (3) theme we have developed in this module mini-series. The installation of a early capitalist financial and credit/debt system created a fault line in American politics, and within our practice of American ED, that we have yet to satisfactorily bridge or resolve. Calling the stirred up natives “Populists”, we have explored what they thought, why they thought it , and how they proposed to resolve it. What we have discovered is that whatever the individual configuration of groupings involved in the various episodes of each state, they were clearly a coalition of “masses”, i.e. non elites displeased by the actions and beliefs of their elite “masters”. Displeased with the elites they may have been, we must also acknowledge that while the masses were certainly disrupted by the new capitalism thing–they did not repudiate it. In the 1780’s they wanted to amend it, rejigger it, so that it worked for non-elites in the city, and in other ways for non-elites in the hinterland. Each had an alternative way of making capitalism work for them. The elites, as you many assume, preferred the elite forms–many of which however disruptive were not only logical, but inevitable. Larger, still unseen forces, were at work.

To some extent we have glossed over “the Who” these Populists, but instead have suggested they were composed of different groupings that came together in each of the various states to voice their opposition to the wealthy elites who were causing this ruckus. In Pennsylvania, the western hinterland being settled by a hodge-podge of Scots-Irish, former Quakers, Germans, and plain old English. In Shays’ Rebellion Massachusetts the protagonists were former army veterans, and good old Yankee Puritan hinterland residents. In both instances the object of their fury were the emerging urban business elite, predominately Federalists, that through the practice of capitalism accumulated sufficient wealth to lend to the western hinterland agriculturalists. The shared dynamic that united these Populists was their resistance to Early Republic installation of an (urban) capitalist financial, currency, credit-debt infrastructure on top of a predominately hardscrabble hinterland agricultural economic base. As we shall see in future modules, among the many consequences of this is that American ED will develop a second approach to economic development, one called community development (CD). Both MED and CD continue through our history and are “duking it out” today as we read this.

Shay’s Rebellion got its timing right–and it profoundly impacted this course of events and the future that followed. In the next section we will consider the various interpretations of Shays’ Rebellion–each of which offer us some insight into future ED impacts.

What is the “Meaning” of this Shays’ Rebellion “Thing”?

The sequence of events is not contested. What is unsettled concerning Shays Rebellion is how it fits into American history, i.e. the different historical prisms or perspectives that from time to time have explained its “meaning” or how it fits into the larger flow of American history and politics.

The section above is congruent with all these perspectives, and for the most part relies on the importance of mortgage default by western farmers, triggered by a very significant increase in state taxes which were raised to retire Massachusetts war debt, at face value of the bond. That these war bonds were then held by wealthy Bostonian the like of John Adams and Governor John Hancock (for the most part) elites, further infused the Rebellion with class implications–and certainly cast an angry shadow over the emerging Federal Tribe composed of Founding Fathers who one would naturally have been expected to purchase such bonds. That many bought such bonds at discounted valuation from the farmers  or intermediaries is an added complication. In short, Shays Rebellion was not too atypical of the normal debtor protest against what they perceived as excessive taxation and personal foreclosures of property, tinged with upper class exploitation.

What made it so important to American history is that many belief it frankly frightened the Founding Father revolutionary war elites–hunkered down in Philadelphia attempting to forge a consensus to reform the Articles. Shays Rebellion was a debacle as far as the Articles were concerned. Its Secretary of the Army, Massachusetts’s Henry Know  had no money or even soldiers–and lacked the authority to send federal troops anywhere, except to fight Native Americans, which BTW he did send 500 Continentals eventually to fight Shays Rebellion’s non-existing Native American attackers. The rebellion was over by the time they got there. The debacle made defense of the existing Articles very difficult–and led eventually to the decision to scrap the Articles and write a new constitution and create an entirely new and stronger federal government. For the most part that is why it is American history textbooks.

To my knowledge, there is only one important history, Joseph Ellis’s best selling the Quartet, which seriously disputes the conventional interpretation. To him Shays Rebellion is simply the last act of the American Revolution. Shays Rebellion “is best understood, not as a forerunner of the Populist Movement … but rather as an epilogue to the American Revolution. … Shays’s Rebellion really was, as Jefferson (safely ensconced in Paris) so famously put it ‘a little rebellion’ of minor significance”. Shays was nothing more to Ellis than a disaffected war veteran who looked on taxes as a “second coming of taxes imposed by the [British] Parliament“. While acknowledging that the delegates to the Constitutional Convention, in particular Madison, deluded by exaggerated press reports asserting the British were behind the Rebellion, “used” Shays’ to discredit and undermine those delegates who resisted reform of the Articles.  Madison asserted that Shays Rebellion was “anarchy” personified, which if successful would stimulate new British attempts (and other European powers, Spain, as well) to restore their hold over their former colonies. That Washington himself got caught up in line of thinking is not lost to Ellis. Ellis suggests that this “melodramatic excess“, caused by gross exaggeration by the New England press was used by both Madison and Washington to buttress their longstanding argument the Articles were so weak they invited foreign intervention [99] Joseph Ellis, the Quartet, pp. 100-4..

We do not need to wander into Ellis’s critique of the role Shays Rebellion played in Articles reform politics. Rather it is with his summary dismissal that Shays had any links with an incipient Populist Movement in America separates Ellis from most conventional interpretation of Shays. It is at odds with our interpretation as well. As I have painted it, Shays was one of the more important examples of a general wave of opposition throughout the Thirteen States triggered by a debt-credit crisis that got caught up in the nation/state-building institutionalization of capitalist forms (i.e. private-public partnerships) of commercial banks, hard currency not paper dollars, and use of the rule of law to enforce mortgage “contracts” on farmstead property. Implicitly conveying its urban commercial/industrial origins, it was ill-suited to the needs of hardscrabble hinterland agriculturalists. To me Shays represented one of the first attempts to redefine capitalism so that it could serve non urban, non commercial needs; the government-operated homestead land bank adopted in Pennsylvania is in my mind congruent with a second American ED approach, community development.

Whether or not any of this is congruent with Populism is a related, but separate matter. Shays, unlike the goings on in Pennsylvania, did not venture into alternative land banks, but rather went after rifles in a federal arsenal. Nevertheless, the first history of this event, written a year after Shays had ended (1778) by a Boston gentry, Harvard grad, Maine land speculator, and Clerk of the Massachusetts Assembly, George Richards Minot, characterized Shays as “a threat to his way of life“. He was worried “that the various hostile forces in Massachusetts, which in his eyes were many, combining against the governing elite“. In essence he saw Shays as nothing less than what Madison, Washington and the other Federalists asserted, that Shays was anarchy and an insurgency against the government, and those that “ran” the government. He saw it as an attack on government itself, and the people behind the government. Minot did not dispute the “conventional” explanation of why Shays revolted, in fact his is the first recorded instance of it–“they were deluded farmers, down on their luck … and a large segment of the population agreed with them“. What comforted him as the affair wrapped itself up was that the rebels had acknowledged their mistake, apologized for their attack on government and “accepted the rule of law”. Government responded properly, after putting down the insurrection, convicting its leaders–and pardoning them–it acceded to their wishes and canceled the taxes. He concludes:

Thus [the Shays Rebellion] was a dangerous internal war, finally suppressed by the spirited use of constitutional power, without the shedding of blood by the hand of the civil magistrate; a circumstance, which it is the duty of every citizen to ascribe to its real cause, the lenity of government, and not to their weaknesses; a circumstance too that must attach every man to the constitution, which from a happy principle of mediocrity, governs its subjects without oppression, and reclaims them without severity [99] George Richards Minot, the History of the Insurrections in Massachusetts In the Year MDCCLXXXVI (Isaiah Thomas Printer, 1778); cited in Leonard L. Richards, Shays’ Rebellion (University of Pennsylvania Press, 2002), pp. 158-62. .

Minot sent free copies to key Federalists including John Adams and George Washington–the latter responding congratulating Minot “on the intrinsic merit of his work”, as well as its “perspicuity and impartiality“. The problem was that Minot’s work was not impartial. It totally depreciated the motivations of the insurgents, ignoring most of their concerns, and summarized the event as an attack on government and its governing class. When the insurgents acknowledged their error after being duly suppressed and convicted, a lenient government absolved them and addressed their [unmentioned] concerns. That Minot represented the Federalist elites (indeed he became a Federalist, supported the new constitution)

The notion that what we are talking about is not only a class conflict, and more than an urban-rural dichotomy, but that government itself had been taken over by a particular “grouping” had its roots in the upheaval that accompanied the 1780 Massachusetts State Constitution which established entirely new state and local policy systems. Up to that point the Royal “colonial” system of government had ran the state. “Before the American Revolution, the royal governor and the Governor’s Council also had great power over the backcountry. But for the most part that was only on paper. Apart from the appointment of judges and justices of the peace, decisions made in Boston rarely had an impact  [on the hinterland communities as far as 180 miles away]. … consolidated power in the hands of a mercantile elite and the eastern part of the state. It shifted power from the rural backcountry to Boston, from the poor to the rich, and from town meetings to the state senate and the governor’s office.  [99] Richards, p. 74. After 1780,

Boston mattered greatly, on a daily basis–and local town meetings which used to matter, no longer were central–replaced by the deliberations and actions of the state government. Only a few scant years in the past that 1780 Constitution still had not yet been adjusted to by the hinterland residents. That much of the merchant elite behind this new constitution were folk today we think of as heroes and our Founding Fathers provides some sense of how the Revolutionary War elites had seized ahold of government in their war effort, and after the war were reluctant to see that power, status and opportunity pass from their hands is an element missing from Minot.

 

But many historians have looked deeper into the Rebellion and found other layers beneath this general narrative.

 

 

 

 

 

creditor vs. debtor the baggage imposed by the installation of industrial capitalism–and to which the rise of the cotton belt would necessarily have to adapt.

p.7

 

 

The Great Challenge: Establishing and Institutionalizing an Industrial, Capitalist Democratic Republic

If you are reading this book to understand American S&L ED in its purest form (Pure ED strategy and programs), the surprise may be that we first have to tackle, and understand, the political, or what we call the policy system that defined, approved and then implemented the ED policy–both private/non-government and governmental policy-making system. The British colonial state (colony) and local policy system was literally tossed out of the proverbial window by the 1783 Treaty of Paris, and the blessing and the curse of viewing ED as a the consequence of decisions and actions of an underlying policy system is that in 1783 the Articles governments, at all levels, saving what they could (or must) from the old colonial system, began to fabricate the new one. Since policy systems don’t usually change on a moment’s notice, they retain a great deal of the past, in fact the past may be considered as “the default”, and accommodate what they must of the new world lying on their doorstep. It should not be a great surprise, then, to the reader, that the foundations of the old system were retained and incorporated into the new. For example, towns and townships, and the basic structures of colonial government, continued.

The matter of creating a new independent democratic policy system from a detached, royalist, late-medieval policy system was further compounded by the Industrial Revolution, which had been evolving over the previous fifty years. A new economic system, maybe even more than the new political system, upset the old institutions, demanded new ones, and challenged, if not destroyed outright the previous established social order and demographic apple-carts. This was especially troublesome in the New World, as importation of capitalist industrial change up to 1783 was muted, but nevertheless, still evident. Industrial capitalism personified by the large-scale production enterprise, the factory, had not yet been imported–but within a handful of years (1792-4) it would be. The invention of the cotton gin in Georgia (1795) changed everything and radically transformed southern agriculture in the decade that followed. Today we think of our times as being especially tumultuous in terms of economic/political change, but whatever the case, the 1783 Articles–and later Early U.S> Republic in 1789–United States was every bit, if not much more in the midst of a real economic and political transformation. ED, a policy area of the highest priority, could not escape that tumult.

There is some advantage to all this seemingly tangent-like concern with the structures, processes, and institutions of policy-making–we can start at the very beginning, not at some artificial year or period convenient to both reader and writer. If we argue, and indeed I do, that today, our contemporary policy-making world, owes a great deal to historical evolution–in fact cannot properly be understood without coming to grips at some level with it–then starting at the beginning and seeing how  and why things unfolded as they did  provides a decent perspective in how we can better fix what ails us today–not dissimilar from ripping out the drywall and flooring to see what lies beneath, revealing the ungodly incremental tangle of wires, pumps, pipes, 2×4’s and mice droppings, all crisscrossing each other, exposing for the first time the rhyme and rhythm that underlies what is now broken. Do not fear, ours will be a superficial review, not a deep scholarly one with way-to-much detail to be grasped. I will dwell on a few key issues, structures, people, and concepts that are especially important to understanding what follows–and will attempt more to provide the context not the normative or philosophical implications of these matters. That is left to the reader, at her discretion.