The One Percenters Always Helped Rule America. They Weren’t Always So Self-Serving.
Although “taxation without representation” was the buzz phrase of the American colonies’ rebellion, the first Continental Congress in 1774 was highly unrepresentative, made up almost exclusively of the very wealthy — men who were between 10 and 20 times as rich as the average American, and whose wealth was inherited.
The exceptions were two leading firebrands, Samuel Adams of Massachusetts and Patrick Henry of Virginia. Knowing of Adams’ impoverished state, the Boston Sons of Liberty commissioned for him a special suit with gold knee buckles, so that he would not appear to his fellow delegates as too poor and therefore have his ideas dismissed. As for Henry, the other delegates compared his outfit to that of a threadbare rural minister and refused to put him on the important committees.
As I explain in my new book, The Founding Fortunes: How the Wealthy Paid For and Profited From America’s Revolution, that first Congress’s rich delegates, and their successors to Continental Congresses throughout the Revolutionary War, frequently acted as though they represented not only their wealthy constituents but also the vast majority of their neighbors who were much poorer. These Congresses did feature some self-dealing by delegates in contracts to supply the armed forces; that was tolerated because these merchant-delegates were the only purveyors with the resources and the credit to advance for the cause. The same delegates did look out for the poor by agreeing to price controls on everyday items being sold to civilians, and by working to reduce gouging and monopolistic practices.
The war upended the wealthy’s previous pattern of becoming rich through ties to the British mercantile system. By war’s end, more trading was taking place between the states, small-scale manufacturing had begun, and new entrepreneurs had started to prosper from the expansion of settlement into previously virgin areas. Those who profited from these activities changed the character of the ruling class. That first became apparent in state legislatures, where the proportion of the wealthy declined from 46 percent before the war to 22 percent after it, and the members from prominent old families declined from 40 percent to 16 percent.
Before the Revolution, there had been almost no “self-made” wealthy. At the Constitutional Convention of 1787, half of the delegates were self-made men.
They were not as wealthy in proportion to the average American as the delegates to the first Continental Congress, but were still five to 10 times richer. At the Convention, their interests created a governing system that completely intertwined the rights of individuals with the rights of creditors. The Senate was conceived of as a bastion of the wealthy and as a balance to a House of Representatives populated by the lower classes. Benjamin Franklin even suggested not paying senators to ensure that only the wealthy took such posts. Alexander Hamilton wanted a virtual House of Lords. The “balance of powers” was not only a philosophy of governance, it was a way of balancing the clout of rich and poor.
The resulting Constitution was as helpful to wealth holders, entrepreneurs, and creditors as any of them could have hoped for. Yet it also reaffirmed the basic American principles of fairness and of equality of economic opportunity, both intended to aid those on the lower rungs of the economic ladder in climbing towards greater wealth. Perhaps the Constitution’s most radical aspect was its rejecting of the laws in use in Europe and Great Britain that effectively prevented the lower classes from acquiring property or capital, which ensured that poverty would continue from generation to generation. In the U.S., equality of opportunity for advancement was built into the legal framework.
In the first Congress convened under the Constitution, in 1789, the legislators, still a relatively wealthy bunch, proved themselves just as committed as their predecessors were to three important fairness principles. First, that they represented their poor neighbors as well as their rich ones; second, that they must look out for the well-being of the poor; and third—in accordance with the first two—that all taxation must be progressive, falling more heavily on the wealthy than on the poor.
Those principles were in evidence in the Congress’s first debate, which James Madison touted to Thomas Jefferson as “a favorable symptom of democracy.” The subject was a proposed tariff on “imported goods, wares, and merchandise,” which Hamilton sought so it could generate nearly all the income needed for government operations. The bill’s floor managers were Madison, one of the largest landowners in Virginia, and Jeremiah Wadsworth, the wealthiest man in Connecticut. The delegates placed the highest import fees on items used exclusively by the wealthy, such as carriages, and the lightest on such necessities of everyday life as salt and sugar.
Congress also approved, at Hamilton’s request, subsidies and rewards to immigrant skilled workers. A steady stream of 10 to 20 thousand from the British Isles, mostly from the lower classes, risked imprisonment in Great Britain for illegally crossing to America; they did so because they believed that in America it would be possible to one day fulfill their dreams and open their own workshops or stores or small manufactories, which the laws and traditions back home would never permit them to do.
In 1798, when there was a need for a direct tax on property to fund an army to counter a possible invasion by Revolutionary France, America’s wealthy legislators passed a highly progressive tax, one that exempted all property valued at under $100— the majority of dwellings in the country—and levied steadily higher fees on properties that had many windows and on plantations that had many slaves, which meant that the legislators themselves would be paying the highest tabs.
In the early years of the Republic, some wealthy individuals and syndicates undertook the first lobbying effort in American history, to convince the Congress to give them preferred access to public lands that were for sale. They succeeded in obtaining huge tracts and realized large profits by re-selling or leasing smaller plots to individuals, at prices that were too high to allow the small farmers to prosper. But within a few years the Congress reversed its mistake, passing revised land-settlement bills that curtailed the amount of land syndicates could buy and re-sell, and reduced the per-acre price to individual settlers. These actions benefited tens of thousands of families, mostly poor, that headed west to fashion new farms and from them more prosperous and comfortable lives.
Today, the Senate and House are both bastions of the One Percent. While not every legislator is a multi-millionaire, each branch contains dozens of them, and every senator and representative earns an annual salary of $174,000, more than three times the national average. The gap separating the country’s high net-worth individuals from those struggling to make ends meet in America continues to widen—and with it, the importance of the needs that were so palpable to congressional delegates during the Founding Fathers’ era. Equality of opportunity for all Americans to advance up the economic ladder still needs to be assured by today’s wealthy legislators, as does the need to work to protect and augment the well-being of their less fortunate constituents, no matter their party affiliation or the affluence of their particular election district.
If the Founders, that original group of patriotic One Percenters, could embrace and champion these ideas, why not today’s patriots?
Tom Shachtman is the author of more than 35 books, including the newly-published The Founding Fortunes: How the Wealthy Paid For and Profited From America’s Revolution.
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