Jefferson 2.0: Economic advice for the ages

By Chuck Springston
What economic advice might Jefferson offer Virginia today?
What economic advice might Jefferson offer Virginia today?
Political pundits spent every minute of the past six months interpreting Virginia’s hotly contested gubernatorial race between Terry McAuliffe, a Democrat, and Ken Cuccinelli, a tea party Republican. But as the dust settles and the campaign signs are plucked from the ground, McAuliffe will take office facing tough economic issues.

     Many residents of Virginia work either for the federal government or a government contractor, and the commonwealth feels the impact of budget cuts more than most states. McAuliffe, like most governors, will undoubtedly consult with an assortment of experts and political leaders, perhaps even former governors.
     What advice or philosophical guidance might Virginia’s most famous governor, Thomas Jefferson, have to offer? We decided to ask the commonwealth’s second governor and the country’s third president for his views on economic policy.
      While unavailable for an in-person interview, Jefferson responded in writing to our questions.*

     Mr. Jefferson, one of the major economic-policy issues today is the federal government’s annual budget deficit, which forces the government to borrow money and accumulate a large national debt. What are your views on government debt?

     TJ: I consider the fortunes of our republic as depending, in an eminent degree, on the extinguishment of the public debt because, that done, we shall have revenue enough to improve our country in peace and defend it in war without recurring either new taxes or loans. But if the debt should once more be swelled to a formidable size, we shall be committed to the English career of debt, corruption and rottenness, closing with revolution. The discharge of the debt, therefore, is vital to the destinies of our government. [Letter to Treasury Secretary Albert Gallatin, Oct. 11, 1809]

     During your time in office, the federal government cut taxes and still produced budget surpluses that reduced the national debt. How did you do it?

     TJ: The suppression of unnecessary offices, of useless establishments and expenses, enabled us to discontinue our internal taxes. These had already begun that process of domiciliary vexation which, once entered, is scarcely to be restrained from reaching successively every article of produce and property. The remaining [tax] revenue on the consumption of foreign articles is paid cheerfully by those who can afford to add foreign luxuries to domestic comforts, being incorporated with the transactions or our mercantile citizens. It may be the pleasure and pride of an American to ask: What farmer, what mechanic, what laborer, ever sees a tax-gatherer of the United States? [Second inaugural address, March 4, 1805]

      You also balanced the budget by cutting defense spending. Why did you do that?

      TJ: Our duty is to act upon things as they are and to make a reasonable provision for whatever they may be. Were armies to be raised whenever a speck of war is visible in our horizon, we never should have been without them. Our resources would have been exhausted on dangers which have never happened, instead of being reserved for what is really to take place. [Sixth annual message, Dec. 2, 1806]

      When government policies create a surplus of revenue after paying off the debt, what would you like to see done with the money?

      TJ: The revenue thereby liberated may be applied, in time of peace, to rivers, canals, roads, arts, manufacturers, education and other great objects within each state. In time of war [that revenue], aided by other resources reserved for that crisis, may meet within the year all the expenses of the year, without encroaching on the rights of future generations by burdening them with the debts of the past. War will then be but a suspension of useful works, and a return to a state of peace, a return to the progress of improvement. [Second inaugural address, March 4, 1805]

      You once said the United States should focus its economy on agriculture production and stay away from manufacturing enterprises. Why?

      TJ: Those who labor in the earth are the chosen people of God, if ever he had a chosen people, whose breasts he has made his peculiar deposit for substantial and genuine virtue. Corruption of morals in the mass of cultivators is a phenomenon of which no age nor nation has furnished an example. While we have land to labor then, let us never wish to see our citizens occupied at a work-bench or twirling a distaff [a device used in spinning fiber into yarn]. Carpenters, masons, smiths are wanting in husbandry, but for the general operations of manufacture, let our workshops remain in Europe. The mobs of great cities add just so much to the support of pure government as sores do to the strength of the human body. [“Notes on the State of Virginia,” 1787]

     But you later changed your position on manufacturing. What happened since your initial criticism of a manufacturing economy?

     TJ: We have experienced [as a result of conflicts between European countries that effectively prevented American ships from engaging in trade] what we did not then believe—that there exists both profligacy and power enough to exclude us from the field of interchange with other nations; that to be independent for the comforts of our life we must fabricate them ourselves. We must now place the manufacturer by the side of the agriculturist. Shall we make our own comforts or go without them at the will of a foreign nation? Experience has taught me that manufacturers are now as necessary to our independence as to our comfort. [Letter to Benjamin Austin, Jan. 9, 1816]

     Some people think the government should protect American jobs from overseas competition by imposing tariffs or restrictions on imports. What do you think?

     TJ: Instead of embarrassing commerce under piles of regulated laws, duties and prohibitions, could it be relieved from all its shackles in all parts of the world, could every country be employed in producing that which nature has best fitted it to produce and each free to exchange with others mutual surpluses for mutual wants, the greatest mass possible would then be produced of those things which contribute to human life and human happiness. Where the circumstances render it expedient to levy revenue by way of impost [a customs tax] freedom [of trade] might be modified, in that particular, by mutual and equivalent measures. [Secretary of State Jefferson’s final report on the country’s commerce with foreign nations, Dec. 16, 1793]

     Some countries put restrictions on products coming from the U.S. or subsidize their companies so they can sell products cheaper in America. What should the U.S. do then?

     TJ: Should any nation suppose it may better find its advantage by continuing its system of prohibitions, duties and regulations, it behooves us to protect our citizens, their commerce and navigation by counter-prohibitions, duties and regulations. [Report on commerce with foreign nations, Dec. 16, 1793]

     What role do you think government should have in the regulation of private business?

     TJ: A wise and frugal government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned—this is the sum of good government. [First inaugural address, March 4, 1801]

     What about government involvement to boost the economy through programs that assist businesses?

     TJ: Agriculture, manufacturers, commerce and navigation—the four pillars of our prosperity—are then most thriving when left most free to individual enterprise. If, in the course of your observations or inquiries, they should appear to need any aid, within the limits of our constitutional powers, your sense of their importance is sufficient assurance they will occupy your attention. [First annual message, Dec. 8, 1801]

     During your time, as American manufacturing grew, large industrial organizations formed. How do you view the rise of big corporations?

     TJ: I concur in doubting whether great establishments by associated companies are advantageous in this country. It is the household manufacture which is really precious. This, however, is for coarse and middling goods only. For the finest fabrics, we must depend on the associated establishments or on foreign countries. [Letter to Charles Willson Peale, May 8, 1816]

     You said government should not take bread from the mouth of labor, but how should it treat people who can’t find the labor needed to put bread in their mouths?

    TJ: [While traveling in France] I fell in with a poor women walking at the same rate with myself and going the same course. Wishing to know the condition of the laboring poor, I entered into a conversation with her. She told me she was a day laborer, that she had two children to maintain and to pay rent (which would consume the hire of 75 days), that often she could get no employment and of course was without bread. As we had walked together near a mile and she had so far served as my guide, I gave her on parting 24 sous. She burst into tears of gratitude, which I could perceive was unfeigned because she was unable to utter a word. She had probably never before received so great an aid.
     This little attendrissement, with the solitude of my walk, led me into a train of reflections on the unequal division of property which occasions the numberless instances of wretchedness which I had observed in this country [France] and is to be observed all over Europe. The property of this country is absolutely concentrated in a very few hands.
    I asked myself what could be the reason that so many should be permitted to beg, who are willing to work, in a country where there is a considerable proportion of uncultivated lands?
     I am conscious that an equal division of property is impracticable. But [considering] the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property [equally among a deceased owner’s many heirs, rather than giving everything to the eldest son].
     Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point and to tax the higher portions of property in geometrical progression as they rise.
     The earth is given as a common stock for man to labor and live on. If for the encouragement of industry we allow it to be appropriated, we must take care that other employment will be provided to those excluded from the appropriation. [Letter to James Madison, Oct. 28, 1785]             

     A final question: Based on your experience, do you have any guidelines for policymakers today?

     TJ: The maxim to be applied will depend on the circumstances which shall then exist; for in so complicated a science as political economy, no axiom can be laid down as wise and expedient for all times and circumstances. [Letter to Benjamin Austin, Jan. 9, 1816]

    *Note to the reader: In some cases, spelling, capitalization and punctuation have been modernized. Additionally, some sentences, clauses and phrases have been cut from a statement for brevity and clarity if their absence doesn’t distort the meaning.

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