interference. If people manage to become prosperous, good. If they starve, or have no
place to live, or no money to pay medical bil s, they have only themselves to blame; it is not
the responsibility of society. We mustn't make people dependent on government—it is bad
for them, the argument goes. Better hunger than dependency, better sickness than
dependency.
123
But dependency on government has never been bad for the rich. The pretense of the
laissez-faire people is that only the poor are dependent on government, while the rich take
care of themselves. This argument manages to ignore al of modern history, which shows a
consistent record of laissez-faire for the poor, but enormous government intervention for
the rich.
The great fortunes of the first modern mil ionaires depended on the generosity of
governments. In the British colonies of North America, how did certain men obtain mil ions
of acres of land? Certainly not by their own hard work, but by government grants. The
British Crown gave one semifeudal proprietor control of al of the land of Maryland. How did
Captain John Evans of New York get an area of close to half a mil ion acres? Simply because
he was a friend of Governor Fletcher, who granted three-fourths of the land of New York to
about thirty people.7
After the Revolutionary War, the new Constitution of the United States was drafted by fifty-
five men who were mostly wealthy slave-owners, lawyers, merchants, bondholders, and
men of property. Their guiding philosophy was that of Alexander Hamilton, George
Washington's closest adviser and the first secretary of the treasury. Hamilton wrote, "Al
communities divide themselves into the few and the many. The first are the rich and wel -
born, the other the mass of the people … . Give therefore to the first class a distinct
permanent share in the government."
The Founding Fathers, whether liberal like James Madison or conservative like Alexander
Hamilton, felt the same way about the relationship of government and the wealthy classes.
Madison and Hamilton col aborated on a series of articles (The Federalist Papers) to
persuade voters in New York to ratify the new Constitution. In one of these articles
(Federalist #10) Madison urged ratification on the grounds that the new government would
be able to control class conflict, which came from "the various and unequal distribution of
property." By creating a large republic of thirteen states, the Constitution would prevent a
"majority faction" from creating trouble. "The influence of factious leaders may kindle a flame within their particular States, but wil be unable to spread a general conflagration
through the other States."
What kind of trouble was Madison worried about? He was blunt. "A rage for paper money,
for an abolition of debts, for an equal distribution of property, or for any other improper or
wicked project." Like the other makers of the Constitution, he wanted a government that
would be able to control the rebel ion of the poor, the kind of rebel ion that had just taken
place in western Massachusetts when farmers, unable to pay their debts, refused to let the
courts take over their farms.
The Constitution set up a government that the rich could depend on to protect their
property. The phrase "life, liberty, and the pursuit of happiness," which appeared in the Declaration of Independence, was dropped when the Constitution was adopted, and the new
phrase, which became part of the Fifth Amendment and later the Fourteenth Amendment,
was "life, liberty, or property."8
In 1987 the Mobil Oil Corporation celebrated the adoption of that phrase in ads appearing in
eight major newspapers, reaching 50 mil ion people:
Why was property so important as to be included with life and liberty as a
fundamental right? Because the Framers saw it as one of the great natural
rights … to keep what one had earned or made—that ought to be forever
secure from the tyranny of governments or any covetous majority.
That phrase "covetous majority" goes back to Madison's feared majority wanting "an equal division of property, or … any other improper or wicked project."
124
The new government of the United States began immediately to give aid to the rich.
Congress passed a Fugitive Slave Act to enforce the provision in the Constitution that
persons "held to Service or Labor in one State" who escaped into another "shal be delivered up" to the owner.
"Why make the slave-owner dependent on the government?" a slave, holding to the
conservative idea of rugged individualism, might ask. "You want your slave back? You're on
your own."
The first Congress also adopted the economic program of Alexander Hamilton, which
provided money for bankers setting up a national bank, subsidies to manufacturers in the
form of tariffs, and a government guarantee for bondholders. To pay for al those subsidies
to the rich, it began to exact taxes from poor farmers. When farmers in western
Pennsylvania rebel ed against this in 1794 (Whiskey Rebel ion), the army was sent to
enforce the laws.
This was only the beginning in the history of the United States of the long dependency of
the rich on the government.9 In the decades before the Civil War, great fortunes were made
because state legislatures gave special help to capitalists. The builders of railroads and
canals, needing large sums of money, were not told Raise your own capital. They became
dependents of the government, using their initial capital not to start construction, but to
bribe legislators. In Wisconsin in 1856 the LaCrosse and Milwaukee Railroad got a mil ion
acres free, after distributing about $900,000 in stocks and bonds to seventy-two state
legislators and the governor.
Altogether, in the decade of the 1850s, state governments gave railroad speculators 25
mil ion acres of public land, free of charge, along with mil ions of dol ars in loans. During the
Civil War, the national government gave a gift of over 100 mil ion acres to various railroad
capitalists.
The first transcontinental railroad was not built by laissez-faire. The railroad capitalists did it with government land and money. The great romantic story of the American railroads owes
everything to government welfare. The Central Pacific, starting on the West Coast, got 9
mil ion acres of free land and $24 mil ion in loans (after spending $200,000 in Washington
for bribes). The Union Pacific, starting in Nebraska and going west, got 12 mil ion acres of
free land and $27 mil ion in government loans.10
And what did the government do for the 20,000 workers—war veterans and Irish
immigrants—who laid five miles of track a day, who died by the hundreds in the heat and
the cold? Did it give their families a bit of land as payment for their sacrifice? Did it give
loans to the 10,000 Chinese and 3,000 Irish, who worked on the Central Pacific for $1 or $2
a day? No, because that would be welfare, a departure from the principle of laissez-faire.
The historical practice in the United States of aid to the rich and laissez-faire for the poor
was particularly evident in the 1920s, when the secretary of the treasury was Andrew
Mel on. One of the wealthiest men in America, he sat atop a vast empire of coal, coke, gas,
oil, and aluminum. Mel on cut taxes for the very rich, whose hig
h living gave the decade its
name "The Jazz Age." Meanwhile, many mil ions of Americans lived in poverty, with no aid
from the government.11
125
When the nation's economy col apsed after the stock market crash of 1929, a third of the labor force lost their jobs. Hunger and homelessness spread al over the country, and the
historian Charles Beard wrote an essay cal ed "The Myth of Rugged American
Individualism."12 He noted the hypocrisy of those who said the poor should make it on their
own. He recounted the ways in which the government had aided the business world:
regulation of the railroads and donation of hundreds of mil ions of dol ars to improve rivers
and harbors and to build canals. Government also granted subsidies to the shipping
business, built highways, and gave huge gifts to manufacturers (at the expense of
consumers) through higher and higher tariffs.
Beard pointed to the use of the nation's military force to help business interests around the
world, a most crass violation of the laissez-faire philosophy. In our time, the dependence of
very rich corporations on the military power of the United States and on its secret
interventions in other countries has become very clear. In 1954, the CIA organized the
overthrow of the elected president of Guatemala to save the properties of the United Fruit
Company. In 1973 the U.S. government worked with the IT&T Corporation to overthrow the
elected socialist leader of Chile, Salvador Al ende. Al ende had not been friendly enough to
the foreign corporations that exploited Chile's wealth for so long.
In 1946 a secret air force guideline (which became public knowledge when it was
declassified in 1960) said that the aircraft companies would go out of business unless the
government made sure they got contracts. Since that time certain major aircraft companies
have depended total y for their existence on government contracts: Lockheed, North
America, and Aero-jet.
The giant businesses depend on the government to arrange tax schedules that wil , in some
cases, permit them to pay no taxes, in other cases, to pay a much smal er percentage of
income than the average American family. For instance, five of the top twelve American
military contractors in 1984, although they made substantial profits from their contracts,
paid no federal income taxes. The average tax rate for those twelve contractors, who made
$19 bil ion in profits for 1981, 1982, and 1983, was 1.5 percent. Middle-class Americans
paid 15 percent.13
Al through the nineteenth and twentieth centuries, landlords have depended on the
government to suppress the protests of tenants (for instance, the antirent movement of the
1840s in the Hudson River Val ey of New York) and to enforce evictions (as in the thousands
of evictions during the Depression years). Employers have depended on local government's
use of police and the federal government's use of soldiers to break strikes—as in the railway
strikes of 1877, the eight-hour-day strikes of 1886, the Pul man rail boycott of 1894, the
Lawrence textile strike of 1912, the Colorado coal strike of 1913, the auto and rubber and
steel strikes of the 1930s, and hundreds more. If those employers were truly "rugged
individualists," as they asked their workers to be, they would have rejected government aid.
Furthermore, employers with the money to hire lawyers and to influence judges have
depended on the courts to declare strikes and boycotts il egal, to limit picketing, and to put
strike leaders in jail (as when Eugene Debs, the leader of the Pul man strike and boycott of
1894, was jailed for six months because he would not cal off the strike).
Through the nineteenth century, according to legal historian Morton Horwitz, the courts
made clear their intention to protect the business interests. Mil owners were given the legal
right to destroy other people's property by flood to carry on their business. The law of
"eminent domain" was used to take farmers' land and give it to canal companies or railroad companies as subsidies. Judgments for damages against businessmen were taken out of the
hands of juries, which were unpredictable, and given to judges. Horwitz concludes,
126
By the middle of the nineteenth century the legal system had been reshaped
to the advantage of men of commerce and industry at the expense of
farmers, workers, consumers, and other less powerful groups within the
society … . It actively promoted a legal redistribution of wealth against the
weakest groups in the society.14
Yet when someone advocates "a legal redistribution of wealth" on behalf of the poor, the cry goes up against "government interference" and for "rugged individualism."
After the Civil War, the Fourteenth Amendment's phrase "life, liberty, or property," which turned out to be useless to protect the liberty of black people, was used in the courts to
protect the property of corporations. Between 1890 and 1910, of the cases involving the
Fourteenth Amendment that came before the Supreme Court, 19 were concerned with the
lives and liberties of blacks and 288 dealt with the property rights of corporations.15
The working conditions in American industry during that much-praised time of speedy
industrialization were horrible and also legal. (The Senate's Committee on Industrial
Relations reported that in the year 1914 alone, 35,000 workers were kil ed in industrial
accidents and 700,000 injured.) This led to thousands of strikes, and to demands for
protective legislation.
But when the New York legislature passed a law limiting bakery workers to a ten-hour day,
six-day week, the U.S. Supreme Court in 1905 declared this law unconstitutional, saying it
violated "freedom of contract."16 It took the economic crisis of the 1930s and the turmoil it produced to get the Supreme Court to reverse its stand and approve a minimum wage law
in Washington, D.C. The Court in 1937 decided that the freedom of contract was not as
important as the freedom to be healthy.17
However, the Supreme Court has been careful to keep intact the present distribution of
wealth and the benefits in health and education that come from that wealth. In 1973 it
decided a case where poor people in Texas, seeing that much less money was al ocated for
the schools in a poor county than in a rich one, sued for the right of poor children to equal
funds for their education. The Court turned down their plea, saying that these children
(mostly Mexican-American) were not completely denied an education, but just denied an
equal education, and education was not a fundamental right guaranteed by the
Constitution.18
Clearly, the same would apply to the right to food and medical care, which, like education,
are not specifical y mentioned in the Constitution as fundamental rights. One constitutional
lawyer, however, has argued that the Fourteenth Amendment's requirement that no state
can deprive any person of "life" ("life, liberty, or property") could be used to provide an equal right of the poor to food, medical care, a job. Professor Edward V. Sparer of the
University of Pennsylvania Law School has said:
We guarantee income to farmers for not producing crops. We guarantee
subsidies to railroads and to oil companies. ‘It seems to me only reasonable
that we should guarantee the subsidy of life to those who are starving and to
those without shelt
er or medicine—reasonable not only on humanitarian
grounds, but because there is a 14th Amendment, which guarantees equal
protection of the laws.19
Most of the accumulation of wealth is strictly legal. And if any question comes up about the
legality of corporate behavior, lawyers are available to straighten out any accuser. The
columnist Russel Baker once wrote, "There are plenty of rich men who have no yachts and
others who have no Picassos… . Every last one of them, however has a lawyer… . Having a
lawyer is the very essence of richness… . What we have here is a class structure defined by
degree of access to the law."20
127
When the rich commit the truly grand larcenies, which become too flagrant to ignore, their lawyers work out deals with the government and no one goes to jail, as would happen to a
petty thief. For instance, in 1977 the Federal Energy Administration found that the Gulf Oil
Corporation had overstated by $79 mil ion its costs for crude oil obtained from foreign
affiliates. It then passed on these false costs to consumers. The fol owing year the
administration announced that to avoid going into a court of law, Gulf would pay back $42
mil ion. Gulf cheerful y informed its stockholders that "the payments wil not affect earnings since adequate provision was made in prior years."21 One wonders if a bank robber would
be let off if he were to return half his loot.
Jimmy Carter was president at that time. It seemed that liberal Democrats did not behave
terribly different from conservative Republicans where wealthy corporations were involved.
Adam Smith's famous book The Wealth of Nations, published around the time of the
American Revolution, is considered one of the bibles of capitalism. He spoke candidly on the
class character of governments:
Laws and governments may be considered in this and indeed in every case as
a combination of the rich to oppress the poor, and preserve to themselves the
inequality of the goods which would otherwise be soon destroyed by the
attacks of the poor, who if not hindered by the government would soon
reduce the others to an equality with themselves by open violence.22
Around the same time, Jean Jacques Rousseau wrote his Discourse on the Origin of
Inequality, an imaginative account of how government and laws came into existence, and