Democratick Editorials: Essays in Jacksonian Political Economy

By William Leggett

Ten years after Thomas Jefferson’s death in 1826, an outspoken young editor in New York City was reformulating and extending the Jeffersonian philosophy of equal rights. William Leggett, articulating his views in the columns of the New York
Evening Post,Examiner, and
Plaindealer, gained widespread recognition as the intellectual leader of the
laissez-faire wing of Jacksonian democracy…. [From the Foreword by Lawrence H. White.]

Book Cover

Translator/Editor

Lawrence H. White, ed.

First Pub. Date

1834

Publisher

Indianapolis: Liberty Fund, Inc. Liberty Press

Pub. Date

1984

Comments

Essays first published 1834-1837.

Copyright

Portions of this edited edition are under copyright. Picture of William Leggett courtesy of United States Library of Congress. Original contains the inscription: "Engraved by Sealey, from a Painting by T. S. Cummings, N A." and includes Leggett's signature below.

THEORY AND PRACTICE

Plaindealer, July 29, 1837.

It is a very common thing for the antagonists of the political doctrines maintained by this journal to admit that they are true in theory, but they assert they cannot be reduced to practice. Nothing can be falser than this position. There is no such thing, in morals or politicks (and politicks are, indeed, but a branch of morals) as impracticable truths. Whatever is true in theory it is our duty to reduce to practice; for the great end of human effort is the accomplishment of truth. Whatever is our duty is within the compass of our ability; for it is a condition of our nature that we are endowed with powers for the performance of all the moral obligations under which we are placed. To argue otherwise is to impeach the justice and beneficence, and to deny the order and harmony, displayed throughout the whole system of the universe.

“Nothing,” says Say, in his admirable work on Economy,
*37—”Nothing can be more idle than the opposition of theory to practice. What is theory, if it be not a knowledge of the laws which connect effects with their causes, or facts with facts? And who can be better acquainted with facts, than the theorist who surveys them under all their aspects, and comprehends their relation to each other? And what is practice without theory, but the employment of means without knowing how or why they act?” The people of this country have been employing means, in regard to banking, without understanding the theory; without viewing the whole chain of causes and effects, which, in its entire concatenation, constitutes the science of banking. Those who understood the theory, long since foretold the ruin that would result from the rash and ignorant employment of those means. They explained the principles in accordance with which alone the business of banking can be conducted so as to produce prosperous and equable results. We are told that this is true in the abstract, but utterly impracticable. It is clearly demonstrated, on the other hand, that the system which has been pursued was true neither in theory nor practice. It was founded on false principles. It had its origin in a gross violation of the great maxim of liberty, the equality of man’s rights. This is admitted by its champions; but they excuse the deep original sin on account of the good fruit which they alleged would be the consequence of the violation. That fruit is now pressed to our lips, and do we not find that it is bitter?

The exclusively privileged system of banking, then, is proved to be sound neither in the abstract nor concrete, neither in theory nor practice, neither in the inception nor execution. Would it not be the part of wisdom, in this emergency, to make trial of a system which is admitted, on all hands, to have the recommendation of theoretick truth? But we are met on the threshold with an assertion that this system “has been, from time immemorial, demonstrated to be utterly impracticable and visionary for the common affairs of life.” Alas! then, for the woful condition of humanity, which is thus forced to reject what it acknowledges to be true, and embrace what it knows to be false, and the progeny of which is ruin.

But when, where, and how, has experience demonstrated our theory to be impracticable? Our theory is, that men have equal rights; that government, which is the guardian of their equal rights, should confine itself within the narrowest circle of necessary duties, the mere protection of that equality, by preventing the encroachment of one man upon the rights of another; and that all beyond this should be left to the influence of publick opinion, and those natural principles of commercial intercourse which are called the laws of trade. This is our theory. This is the theory of a popular government. This is the theory of democracy. We ask again, when, where, and how, has it been demonstrated to be impracticable?

If we look back to ancient times, we shall find that those countries which made the nearest approaches to popular government exhibited a spectacle of the most diffused happiness and prosperity, and that the happiest and most prosperous portion of their history embraced that period when their approach to the popular principle was nearest. We say the period of the greatest happiness and prosperity, not of the greatest splendour. The distinction is a broad one. Autocracies, monarchies, aristocracies, and hierarchies, present spectacles of splendour; democracies the less dazzling, but more pleasing ones of equal and diffused happiness. The contemplation of despotick and kingly governments, from the distant points of historick observation, is like the contemplation of embattled and turreted cities from afar off. Their towers and domes, their palaces and spires, attract the eye, and impress the mind with a sense of grandeur; and it is not led to think of the squat dwellings of wretchedness and toil, and the gloomy dungeons of captivity, which are girt round by the lordly abodes of affluence and power. We survey a democratick government, from a point of distance, as we look on a fertile champaigne country, and find little to attract our attention, which soon tires of the dull uniformity. But on a nearer approach we find, if monotonous, it is at least the monotony of happiness, and that if nothing attracts the eye by the commanding stateliness of its height, nothing repels it by the abject lowness of its degradation. The fancy may be dissatisfied, but the heart acknowledges that the condition of democratick equality is best, since it accomplishes the chief desideratum of philosophy, “the greatest good of the greatest number.”

But it is not by a reference to ancient governments alone that we shall discover proofs of the correctness of the theory which shows the superiority of the popular principle of government. Look abroad through Europe at the present day, and tell us what is the result of your observations. Do you not find that each country has increased in general prosperity in the precise ratio that it has made advances towards the democratic principle? Do you not find that the most wretched country is that where the government is most absolute; and the most happy where it is most liberal? What else is it that constitutes the difference between a serf of Russia and a citizen of England? By the plain principles of inductive reasoning, then, as well as abstract and
a priori speculation, we are led to the conclusion that democracy, in its widest signification, is the most felicitous condition of mankind. America is the happiest country in the world, because it is the most democratick. To be happier, it only needs that the principles of democracy should be more inviolably observed. Every trespass upon the equal rights of men, by conferring exclusively on a few the privileges which belong by nature to all in common, is a breach of those principles. Every breach of principle is sure to be followed by punishment; and under this head we must place the distress we experience from the disruption of our chartered banking system. It will be well if we are effectually admonished by the lesson of experience.

Our theory of banking consists simply in the position, that it is an affair of trade, which ought to be left wholly to the laws of trade. How can it be said that experience has demonstrated this theory to be impracticable, when all experience proves the very opposite to be true? Do not enterprise and competition, in every pursuit in which they are left untrammelled by the laws, produce the most admirable results? The keels of our swift-cleaving vessels seam the ocean with their sparkling wakes; the mighty forest of the west bows and retires before the sturdy salutation of the woodman’s axe; and all the vast aggregate of human industry presents a spectacle of order and prosperity, without the intervention of law to regulate its details, designate its field of action, or stimulate or check its operations. Is there anything in the nature of banking which makes it an exception to the universal rule, that enterprise and competition are the best regulators of trade? What is this latent quality, this secret, this mystery, which makes banking so different from every other business, rendering it necessary to have rules of its own, and privileges and immunities; and requiring it to be tenderly cloaked up from the least breath of competition, and screened so that the winds of heaven shall not visit it too rudely? Banking is neither more nor less than an exchange of notes between one individual or association, having such known means as give the publick confidence in the ability to meet their obligations, and another individual, whose means are of a less publick or satisfactory kind, the one paying the other an equivalent for the advantage of the exchange. There is nothing mysterious in this; nothing that withdraws it from the ordinary sphere of trade, or requires special laws and exclusive privileges.

But we are happily not reduced to the necessity of arguing this matter by induction from the nature of banking, and the effect of freedom on other branches of traffick. The success of the principle of unrestrained competition is not a matter of inference only, but of fact. Of all the paper money countries of the world, Scotland is the only one where the banks rest on the basis of individual enterprise, unchartered, unprivileged, and exempt from no penalties or impediments to which other pursuits are subject. Yet Scotland is the only paper money country which escapes commercial revulsion. Bankruptcy has swept through England on more than one memorable occasion, with the desolating fury of a tornado, prostrating the loftiest fabricks, and shattering the firmest institutions. But the storm hurtled over Scotland without injury, for she was ensconced behind the impregnable barriers of free trade. The foresight of individual enterprise had descried, in good season, the gathering of the tempest, and was prepared for its rudest assault.

Let us see what countries will best bide the peltings of the pitiless financial storm which is now raging throughout the commercial world. Our life upon it—the holy cause of free trade and equal rights, dearer to us than life, upon it—that the free banking system of Scotland will stand erect and unshaken amidst the tempest, which will beat all other paper money systems to the earth! Is this demonstrating the impracticability of our theory?

37.

Jean Baptiste Say, French classical economist, was author of
A Treatise on Political Economy, the fifth American edition of which was published in 1832, from which this quote is likely taken.—Ed.

“SPECIE BASIS”

38.

In the free banking system of Scotland, which Leggett praises elsewhere, almost all banks operated with unlimited shareholder liability for bank obligations. They experienced no runs for specie, though their specie reserves were a small percentage of their note and deposit liabilities.—Ed.

THE CREDIT SYSTEM AND THE ARISTOCRACY

39.

Roughly, “it stands to reason that painted falsehood, in much it is more likely, occasionally conquers the naked truth.”—Ed.

40.

A reference to Daniel Raymond,
The Elements of Political Economy, the second edition of which was published in 1823.—Ed.

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Categories: William Leggett