In Albion's Seed (1989), David Hackett Fischer described early regional differences among the four waves of English colonists that swept into America regarding the appropriate distribution of wealth. While the Puritans believed wealth was a sign of divine grace and poverty a signifier of depravity, they also passed sumptuary laws (which tried to regulate extravagance in dress or personal habits). They reproduced from England a predominantly rural, middle-class culture ruled by an elite bound by blood and marriage. The Quakers, too, preferred a public display of austerity but brought many servants (and thus more poverty) with them. The raucous Scots-Irish established a more aggressive form of rural individualism on the western frontier, battling each other and the Native Americans with equal enthusiasm. After initially relying upon indentured servants to grow tobacco, the aristocratic Cavaliers created a slave economy based upon race.
Slavery demonstrates the need to define "wealth" as more than immediate material well-being. Over the coming centuries, many slave owners provided some or all of their slaves with more creature comforts than many workers and servants received elsewhere in America or in England, but the slaveholders often sexually exploited their victims and destroyed families by selling off family members. The wives of the elite lived a life of luxury and had great power over servants and slaves, but women had few legal rights anywhere in the colonies and even less access to employment outside the home. Native Americans consistently lost wealth (despite obtaining access to western conveniences), population, and power. Overall, the four cultures of rural English capitalism created a more powerful political economy than their French or Spanish rivals, who never generated as many colonists and who generally preferred to gather beaver skins and mine gold and silver. Ironically, the continuing political and religious chaos in England made its colonies stronger as members of various losing factions fled to the New World.
Despite the initial differences among the British colonists, the four economies had much in common: in every colony the wealthy—unified not just by capital but also through extensive intermarriage—ran the government. For instance, two-thirds of New Jersey's 256 assemblymen between 1703 and 1776 were among the wealthiest 7 percent of the population. In the South the elite relied upon two forms of capital: land and slaves. By the eve of the Revolution, the richest 10 percent of Virginia's population had increased its share of the colony's wealth from 40 percent (starting in the middle of seventeenth century) to 70 percent (ending just before the American Revolution). All the colonial legislatures facilitated the transfer of open land to the powerful. By 1774, virtually all colonial lands were in private hands. Although the colonists had yet completely to conquer the frontier, their most powerful members already owned it. In her article "A New Look at Long-Term Trends in Wealth Inequality in the United States" (1993), Carole Shammas describes the distribution of wealth in 1774; her results demonstrate not only the economic weakness of women, slaves, and Native Americans, but also of many white males and a few unmarried females. The top 6 percent of the white male population controlled 59 percent of the wealth, while the bottom 60 percent had less than 10 percent. The rich and powerful gained more land when smaller farmers succumbed to debt. These reallocations of wealth help explain Shays's Rebellion (1786–1787) and Rhode Island's attempts to protect debtors by altering the terms of existing contracts and inflating its currency. The response of Fisher Ames, a Federalist Party leader, was eloquent:
We shall see our free Constitution expire, the state of nature restored, and our rank among savages taken somewhere below the Oneida Indians. If government do worse than nothing, should make paper money or a tender act, all hopes of seeing the people quiet and property safe, are at an end. Such an act would be the legal triumph of treason.
the constitution and hamilton's plan
These class tensions provided a major impetus for creating the new Constitution. James Madison explained in The Federalist that majorities were most likely to tyrannize either religious minorities or the wealthy. Wealth was important not just for the individual, he argued, but also for society: people should be encouraged to develop their faculties and the opulent provided an inspiring role model. Alexander Hamilton believed that the nation needed access to capital in times of crisis. Some anti-Federalists portrayed the Constitution as a plot to oppress the poor, but the country quickly rallied around the new system. After all, there were rich and poor on both sides of the debate—a fact that significantly undercut the famous claim of Charles Beard (which he later repudiated) in An Economic Interpretation of the Constitution (1913) that the Constitution was a simple plot by holders of depreciated governmental debt to cash in their holdings.
The general consensus over the Constitution's legitimacy did not resolve the enduring question of wealth distribution. Whether they relied upon principle or were motivated to undercut their rival Alexander Hamilton, Thomas Jefferson and James Madison unsuccessfully fought Hamilton's plan for the new federal government to fully reimburse existing holders of state and federal debt. The Virginians took a more communitarian approach: some of the proceeds should go the soldiers who fought and suffered during the war and received worthless scrip at the time—not all the windfall profits should go to speculators, many of whom had recently purchased the debt instruments from unknowing veterans. While Benjamin Franklin and Jefferson always worried that excessive concentration of wealth would undermine the Republic, Hamilton saw an alliance between the wealthy and the national government as a key component to future national greatness.
wealth and a democratic ethos
While the Constitution provided significant protection to the wealthy; it could not protect the status quo of an entrenched, informal aristocracy. A more egalitarian ethos, based upon the principles of the American Revolution, quickly extended universal suffrage to all white men. The average white male was not content with the right to vote. Andrew Jackson's rise to the presidency from the hills of Tennessee confirmed a new consensus about the distribution of wealth and power: white males from any background had an equal opportunity to become as rich (and as poor) as possible. The debate over slavery, which temporarily exploded in 1820 during the Missouri crisis, was deferred to a later, bloodier day, while Native Americans continued to suffer. Manufacturers began to emerge as a new elite that would transform the northern economy. However, these seismic developments obscure the continuing realities that most wealthy individuals were sons of prosperous or powerful families and that relatively few lower-class citizens could rise more than one rung in the social ladder during their lifetimes. It is difficult to find reliable data on wealth distribution during this period, which the economic historian Diane Lindstrom, in her article "Macroeconomic Growth" (1983), described as the "statistical dark ages" (p. 704). Nevertheless, she concluded that per capita income increased at approximately one percent per year from 1800 to 1840. Nor is there any indication of an interruption in the long-term trend of increased wealth disparity during the early nineteenth century: the top 5 percent of the population enhanced its share of the nation's bounty from 59 percent of the wealth in 1774 to 86 percent in 1860.
Fischer, David Hackett. Albion's Seed: Four British Folkways in America. New York: Oxford University Press, 1989.
Hamilton Alexander, James Madison, and John Jay. The Federalist. Edited by Clinton Rossiter. New York: Mentor, 1961.
Lindstrom, Diane. "Macroeconomic Growth: The United States in the Nineteenth Century." Journal of Interdisciplinary History 13 (1983): 679–706.
Nedelsky, Jennifer. Private Property and the Limits of American Constitutionalism: The Madisonian Framework and Its Legacy. Chicago: University of Chicago Press, 1990.
Sellers, Charles. The Market Revolution: Jacksonian America, 1815–1846. New York: Oxford University Press, 1991.
Shammas, Carole. "A New Look at Long-Term Trends in Wealth Inequality in the United States." American Historical Review 98 (1993): 412–432.
Tocqueville, Alexis de. Democracy in America. Edited by Phillips Bradley. New York: Vintage, 1945.
Weinberg, Meyer. A Short History of American Capitalism. 2002. Available at www.newhistory.org/CH03.htm.
James G. Wilson