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Harmony by Autonomy:
Thomas Jefferson’s Plan for Saving the Constitution
Martha Claire Anderson
Trinity College
Abstract
At what point does federal economic oversight threaten the freedom promised by
the Constitution? This paper analyzes a letter written by Thomas Jefferson to Gideon
Granger in August of 1800. In it, he describes his ideal system for the United States
to ensure that the country moves no farther from the original ideals of the
Constitution. Jefferson’s plan focuses largely on the minimization of the national
government in exchange for more independent and localized systems. I analyze his
system of government regulation for both domestic and foreign economic affairs,
and the predictions he makes surrounding these two areas of government control.
Additionally, I highlight the truth behind some of his predictions for the United
States in moving away from his proposed plan, and study the implications of this for
defending a movement toward less federal oversight in the US economy.
I. Introduction
In Thomas Jefferson’s August 13, 1800 letter to Gideon Granger, he promotes an
economic system that he believes expresses the true values of the Constitution.
Jefferson sees the freedom granted by the Constitution as sacred, and he argues that
all of the country’s institutions should reflect this. The system through which
Jefferson believes this can be achieved calls for the minimization of the role
of national government on all fronts. On internal affairs, Jefferson suggests a
localization of government, arguing that the government will prove inefficient at
regulating domestic economic affairs from a national level. Jefferson promotes a free
market in international affairs, saying that political relationships and government
involvement will prove limiting to international commerce. In both of these cases,
the United States has greatly strayed from what Jefferson saw as the ideal system,
and evidence shows the accuracy of Jefferson’s predictions of issues that the nation
faces as a result.
Jefferson senses the United States’ movement away from his plan early on,
and sees this as a dangerous trend. Consequently, in describing the system he sees
as most fit for the nation he also makes predictions as to what will happen to the
general economic stability of the country if this movement away from his plan
continues. Jefferson accurately predicts the tension that will result from the debate
surrounding the size of government in economic affairs. His letter sheds light on
how deeply ingrained this tension is in American society, and this tension can
clearly be traced throughout American history. The topic is still debated today.
The accuracy of Jefferson’s predictions of economic instability resulting from
the expanding role of government gives his theories on the benefits of a minimized
national government additional merit. Further analysis into his theories and
predictions could potentially shed light on what direction the United States should
move in order to strengthen the economy and the nation as a whole. Jefferson’s
described system contributes positively to the argument for a minimized national
government and his letter warrants further analysis into the benefits of his system
and the potential costs of the country continuing to move away from it.
II. Domestic Policy
Jefferson’s promotion of localization of government comes from a theory that the
country is too large to have the government be truly capable of meeting the needs of
all its citizens from a national level. Given that the US population was only around
five million at the time of his letter, Jefferson would feel much more strongly about
this issue today. He writes that government at this distance is “unable to administer
and overlook all the details necessary for the good government of the citizen.” In
this sense, Jefferson is not denying the positive results government services can
have on the nation’s economy, but rather stating that these results can be greater
felt by citizens when government operates on a smaller scale. Jefferson argues that
government is better run at a more localized level, as state or local governments can
better know and address the specific economic needs of the people in their
jurisdiction.
States and their citizens have often identified with this notion of localization,
an aspect that Jefferson sought to use to the country’s economic advantage. As
Richard Dougherty points out, “The states prove that there is no need to revert to
dictatorship… [T]hey have all emerged from difficulties without abandoning ‘their
forms of government’” (2001, p. 530). State identity has proved a powerful concept
throughout history. States have been capable of answering the ends for which they
have been established. By contrast, economic regulation at the national level has
often proved as wasteful as Jefferson predicted, as government resources inevitably
get stretched too thin or are not implemented at the right place and time to equally
benefit the wide range of varying economic climates that exist within specific
regions of the United States.
Citizens often show recognition of their local community’s ability to meet
their needs and a distrust of a larger government’s ability to do so, showing a
parallel between Jefferson’s theories and American thought today. Despite this, the
nation still seems to tend toward a larger government, especially in times of
economic stress. An example of this was the 2008 recession, when a policy towards
convergence of many local governments in Connecticut led to protest, as citizens felt
that the policy “would not deliver the tax savings being promised and would end up
costing public servants their jobs, communities their identities and residents the
level of local service they had come to expect” (Kocieniewski, 2009). The example
shows that while leaning on larger government seems to be economically efficient,
the real costs citizens take on as a result can often prove otherwise. Jefferson’s
desire for the retreat of power to more localized levels is therefore not only
beneficial for the nation’s economy but also more desirable for citizens.
Jefferson takes a common idea of giving local government more economic
responsibility a step further by proposing abolishing national standing armies, a
national monetary system, or common law. These policies are prescribed with the
intent to let the state governments operate with as little oversight or intervention as
possible, further restricting the role of the national government strictly to foreign
affairs. It is in these specific aspects of Jefferson’s proposed system that he has
strayed the most from current American thought, as most citizens can point to the
stability and security that common law among states and the presence of a national
army have provided society.
Perhaps Jefferson’s most famous theory in this area is that surrounding the
national bank, which he believed would create a monopoly and increase the
incentive for government borrowing. Historian Donald Swanson describes
Jefferson’s fear of bank notes, saying he felt “a reliance on bank notes would create
economic instability and a permanent creditor faction dependent on the taxpayer”
(1993, p. 37). Jefferson’s theory has proved true to some degree, as the American
economy is now largely dependent on taxpayer money to remain operable. This
reliance has led to tension between the government’s need to raise taxes in order to
keep institutions running and the desire of many citizens to gain more economic
freedom from the government through fewer taxes. In this sense, the large
institutions which Jefferson sought to abolish have contributed to the lack of
harmony in today’s society that he was so wary of.
In Jefferson’s letter to Granger, he predicts that if the national government is
allowed the economic control over citizens that it has today, the government will fall
to “corruption, plunder, and waste.” Many economists can point to the waste of
resources that occurs because of the current reliance on large government to
regulate the economy. Glenn Hoover explains this idea, saying, “A government can
give its people only what it has first taken from them, decreased by the cost of
maintaining a swarm of functionaries” (1951, p. 146). Taxing and running socialwelfare programs from the national level only seems to invite increased waste, as
the money people feed into these programs undeniably gets cut from the costs of
maintaining a large government.
The evident waste of resources present in the United States today gives
added merit to the system Jefferson proposes. Paying into localized governments in
order to build infrastructure and support citizens from this standpoint would
ensure that this money went toward serving citizens in a more efficient and direct
way, without getting lost in the complexities of funding large, nationally run
institutions. The inefficiency of the current system is clear, as the United States has
come to be dependent on taxpayers to fund the massive institutions that Jefferson
was so afraid of. Americans often complain of the problems with these large
institutions and their failures, indicating a push among many citizens toward
Jefferson’s proposed system for managing internal economic affairs despite how far
the country has moved away from it.
III. Foreign Policy
While Jefferson’s proposed system promotes state independence for internal
governance, he also argues for a unified government regarding international
commerce. Jefferson argues for minimal government involvement in foreign affairs,
asserting that commerce is better regulated through the market itself than through
political relationships. He suggests, “Let our affairs be disentangled from those of all
other nations, except as to commerce which the merchants will manage better, the
more they are left free to manage for themselves.” This would further minimize the
role of the national government, which was already reduced strictly to foreign
concerns in Jefferson’s economic plan.
Minimizing the role of government in foreign affairs where possible would
ensure that market outcomes were neutral and not influenced by political
objectives. Jefferson saw this as deeply coinciding with the ideals of freedom found
in the Constitution, as to him, “the objectives of foreign policy were but a means to
the end of protecting and promoting the goals of domestic society, that is, the
individual’s freedom” (Hendrickson and Tucker, 1990, p. 139). If the government is
set up domestically to give the citizens as much economic freedom as possible,
foreign operations should be governed by the same ideals. A true international free
market would ensure this freedom, as citizens would be able to engage in
international commerce without interference from any political relationships the
country may have at the time.
While the United States has followed Jefferson’s plan of remaining unified in
foreign policy, the government has played a large role in regulating trade with other
nations. The United States has further strayed from Jefferson’s plan in creating
complex political relationships with other nations, which has often proved to
negatively affect commerce as he warned. Historian Drew McCoy highlights that this
tendency was significant from early on in American history, as after independence
from Great Britain, “not only did British merchants and capital dominate American
trade, thereby restricting foreign markets for American exports, but they directed it
into ‘artificial’ and politically dangerous channels of dependence” (1974, p. 635).
The mercantilism that existed in the United States during Jefferson’s time indicates
his knowledge of the danger that political relationships can pose to commerce. Even
positive trade agreements can indirectly hurt commerce by limiting what trade
occurs with countries outside of the agreement and thereby limiting truly free
market outcomes. This once again hurts the idea of a truly free American economy
that Jefferson sought to promote.
While the United States usually supports liberal trade agreements, political
relationships have often motivated the country’s economic pursuits, showing a
continued detour from the truly economically focused foreign policy approach that
Jefferson sought to achieve. Perhaps the most obvious example of US politics
interfering with foreign commerce was during the Cold War. As economist Cristoph
Scherrer points out, the Cold War was a time defined by “the original foundations of
the American commitment to a liberal world-market order: Economic superiority
and anti-communism” (2001, p. 573). While these goals may be valiant to pursue,
they nonetheless interfered in the economic outcomes of international commerce
during this time period, an example of this being the trade embargo the United
States placed on Cuba until just recently. The trade embargo that resulted from the
Cold War makes obvious how limiting political relationships can be to international
commerce, as Americans are just now regaining the economic opportunities they
lost in losing free trade with Cuba.
IV. Implications of the Movement Away from Jefferson’s Plan
Jefferson states in his letter that as long as there is still a movement away from the
principles of the system he proposes, our country will never be “harmonious and
solid.” This is because he directly ties this system to the principles of freedom
promised in the Constitution, and so believes citizens will always show a desire for
these principles despite the government actually playing a much larger role than
Jefferson desires. Jefferson sees this as potentially causing great tension and
instability in American society. Throughout American history, there have been
movements to gain more independence from the national government’s oversight at
different levels. This highlights Jefferson’s accuracy in predicting the tension that
occurs in society as a result of the government taking on a large role in regulating
economic affairs.
An early example of the tension that exists in American culture between the
pushes for small and large government is the secession of the Confederate states
during the American Civil War. The Confederate states fought for more economic
freedom from the federal government through less federal oversight of their
practices, particularly the use of slavery. This example highlights why this tension is
not easily fixable, as slavery is clearly wrong and so the government had reason to
step in and ban the practice. It is these extreme cases in American history where
there has been an obvious need for government intervention in economic practices
that have prompted responses from people such as economist Richard Sylla, who
argues, “A weak central government is not the best way to form a more perfect
union of the states” (2014, p. 173). There is often reason to support stronger
national government oversight of economic activities in order to prevent
wrongdoing, and yet this can go against the many aforementioned benefits of a more
localized and free economy.
Consider the issue of alcohol prohibition in the United States during the early
twentieth century. At the time, a surge in religious revivalism, progressivism, and
the entrance of the United States into World War I led many to believe that alcohol
must be controlled at the federal level. This culminated in the passing of the
eighteenth amendment to federally prohibit alcohol in 1917. While many of the
states that supported prohibition produced significant enforcement efforts, many
northern cities, especially towards the end of prohibition, allowed bootleggers and
organized criminals to take over the market without repercussion. An example of
this is found in Chicago, where some estimates say Al Capone made as much as sixty
million dollars in a year off of liquor sales (Anderson and Goff, 1994, p.273). The
states which were less supportive of prohibition in the first place still had a high
demand for alcohol, with consumers turning to illegal avenues and promoting
organized crime as a result. The lack of consensus in support for prohibition at the
federal level led to its eventual downfall and highlighted the issues that can arise
with too much federal oversight.
Although the product is much more controversial, similar issues exist today
in the market for marijuana, which is still illegal at the federal level but has been
legalized to varying levels in many states. This tension gives a new spin to the issues
that rose with alcohol prohibition—should the prohibition of marijuana be decided
federally or at more local levels? States like California and Colorado have been on
the forefront of the legalization movement, and have experienced impressive
economic growth in allowing the free market in marijuana to reign. However, this
growth has also been partially prevented as a result of the national government’s
ban on marijuana. The benefit that these states’ economies have received as a result
of loosening laws on marijuana and allowing for a free market supports Jefferson’s
proposed system and the theories behind it. The success on the state level of
legalizing marijuana markets is proof that the less central oversight in the economy,
the more it can be allowed to flourish. Giving localities free reign to implement a
market that will increase economic activity and therefore boost profits for the state
is clearly a movement toward the economic freedom Jefferson promoted.
Despite the movement toward Jefferson’s localization plan on the state level,
the national government has stood firm in its own regulations, causing backlash that
serves as further evidence of Jefferson’s prediction of instability. After California
legalized a market for medical marijuana in 1996, the results of the Supreme Court
case of Gonzales v. Raich posed a challenge to consumers, as it found that “medical
marijuana users can be prosecuted under federal law, but remain exempt from
prosecution under state laws” (Pickerill and Chen, 2008, p. 22). The federal laws
that surround marijuana pose a danger to its market, despite it being agreed upon
by the citizens of that state.
Keeping marijuana illegal at the federal level means that marijuana
businesses within these pro-legalization states have to go through certain loopholes
to operate their technically illegal businesses, such as only making transactions in
cash. It prevents marijuana dispensaries from getting the full rights that other
businesses have in the economy, and therefore reduces potential profits to both
these businesses and the economy as a whole. The case of marijuana markets shows
how America simultaneously moves toward and away from Jefferson’s ideals, as
many state governments want to open up the economy with less restrictive
oversight of this market while the national government’s overreach counters this
effort.
Conclusion
It is clear from the many available examples in the country’s history that Jefferson
expresses the value shared by many Americans that it is best for markets and
citizens to be left as free as possible. Additionally, where government oversight of
the economy is necessary, the more localized this government is the more effective
oversight could prove to be for both the citizens and the government. J. Mitchell
Pickerill and Paul Chen defend this theory in regards to the implementation of
economic policy, saying, “Not only does the limited scale of the implementation
protect other states by localizing the potential harm from failed implementation, but
the smaller scale may increase the implementation’s likelihood of success” (2008, p.
25). Giving states or more localized governments more freedom to agree upon and
implement their own economic policies minimizes the tension Jefferson accurately
predicted to be present in the United States. This is because it allows the policies to
be more specifically tailored to those localities specific desires and economic needs.
In turn this minimizes civilian anger toward the government caused by externalities
associated with the policies.
While most of the specific components of the system Jefferson proposes in
his letter to Gideon Granger have not been implemented by the United States, his
general support of maximized economic freedom is deeply ingrained in American
thought. Many of the predictions Jefferson has made surrounding moving away from
the original framing of the Constitution have proved accurate in the course of
American history. The implications of this are that perhaps the nation should push
for policies that give localized governments more power to control their own
economies. While there are many benefits to the services provided by the federal
government, analysis into Jefferson’s proposed system implies that localized
governments could better provide these services to citizens and with less wasted
resources as a result.
In contrast to many of the heavily centralized and bureaucratic countries
around the world, much of America’s economic success has stemmed from offering
much more freedom to its citizens. The federal government has stayed true to
Jefferson’s ideals in this sense, and leaves citizens much more autonomy than in
other nations. As long as the trend in the United States stays in this direction,
Jefferson’s idea of a “harmonious and solid” nation seems well within reach.
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