Were the Founders Economic Libertarians? Hardly.

Americans generally believe that our Founding Fathers sat down in Philadelphia to draft a constitution for a limited national government with highly restricted powers, and strong guarantees to protect individual liberty. In general, this is true. But Americans today, given four waves of libertarian activism, also believe that the Founders intended for the Federal and state governments they were creating to have very limited powers to intervene in the lives of citizens.

Certainly there is a strain of sentiment to this end within the Founding generation, expressed in particular by Anti-Federalist writers arguing against ratification. But I hope to show, in this essay, that the Founders were not themselves “libertarians” in our modern sense. Despite the efforts of legal scholars like Randy Barnett and Justice Clarence Thomas to portray the Founders as classical liberal individualists, historical documents and legal cases paint a very different picture of the first hundred years of the Republic, demonstrating a much more complex relationship between individual liberty and the power of governments at all level, than is commonly appreciated.

In many ways, government power was felt more strongly during the Republic’s first century, in regulating the economy, property rights, public health, and public morality than at any other time since. In a nutshell, I plan to show that laissez-faire “market liberalism” is a comparatively recent phenomenon in American history, and that New Deal regulation and social welfare policy is more akin to Founding policy than is commonly portrayed, especially by the political and economic right.

We are quite used to reading descriptions of colonial-era life, in which towns, cities, and colonial governments enforced laws designed to regulate public morality. Individuals could, and were, regularly “put in the stocks” or given publicly humiliating punishments for drunkenness, blasphemy, adultery, and a host of other individual behaviors which we now consider to be private matters. Colonial-era governments commonly practiced no formal “separation between church and state,” and thus the statute books are understandably full of laws regulating the morality of citizen’s behavior.

We tend to think of this kind of colonial-era mixing of public law and religious morality disappearing as the Thirteen Colonies became the United States. In some ways this is true, and one does see the new-found guarantees of religious freedom steadily erode the prevalence of laws regulating the most private of behaviors. However, as we all know, many states had laws against various forms of sexual activity, or interracial marriage, until the last half of the 20th century.

Less commonly understood is how deeply the law and police power of government reached into economic and civic life until almost a hundred years ago. In 1837 the Illinois Legislature chartered the new city of Chicago, granting the municipal government considerable power to regulate the economic, civic, social, and moral lives of its citizens. Historian William Novak catalogs 34 such grants of regulatory power, and I reproduce a few here by way of example:1

  • To regulate and determine the time and places of bathing and swimming…
  • To prevent the rolling of hoops, playing at ball, or flying of kites…
  • To compel all persons to keep the snow and ice and dirt from the sidewalks in front of the premises owned or occupied by them

Nor is government power chiefly employed in regulating public health and safety. Novak documents the pervasive powers of municipalities and towns to establish not just markets for commercial activity, but enforce that retail and wholesale sales of good occur only at established markets, establish standards and inspections for goods, and even prescribe and control prices which could be charged.

Salted fish had to be packed, according to 19th century Maryland law, in barrels “made of sound well-seasoned oak, ash or chestnut staves…not less than half an inch thick…well hooped…so as to hold pickle, the tierces to hold not less than forty-five gallons, and the half barrels not less than fifteen gallons.” The owners of taverns or inns were licensed by local and state governments, and had to enforce a long list of rules, many of which were ancillary to their main line of business. Standards existed for nearly type of product imaginable, placing restrictions on producers and sellers, and putting legislators in the business of regulating nearly every aspect of commercial activity, well into the late 19th century.

But even beyond the detailed regulation of weights, measures, and product quality standards (which by themselves certainly derail any contemporary arguments that the Founders would have thought the FDA and USDA’s inspection and licensing powers unconstitutional), government regulation reached into crucial areas of capitalism: pricing, and defining who may sell what goods to whom.

And throughout the first half of the 19th century, even in cities which we consider to be early bastions of “capitalist” expansion in America, authorities set prices by statute rather than relying upon the balance of supply versus demand. New York City’s statutes concerning the prices for hauling and carriage of goods ran three pages, and specified rates in excruciating detail:2

For loading, carting, and unloading every common load of European goods, wheat, meal, or flour in bags (twelve bags to the load) and of firewood….to any place within this city, not exceeding half a mile, one shilling and six-pence. And for every load of lime, bricks, staves, heading, hoops, hoop-poles, cocoa, bar-iron, pimento, slate, all kinds of dye-wood…[seven more lines of goods deleted]…not exceeding half a mile, one shilling and six-pence, and if housed, six-pence more for each load.

In addition to regulating the prices of goods and providing standards of quality, 19th century economic regulation often prescribed the time, place, and manner of trading and sales. In the 1830’s, Poughkeepsie and Buffalo, New York, were both incorporated with explicit legal charters to make laws respecting trade and markets. Both villages established public markets, and passed laws preventing the “selling by retail” of many goods outside the markets. In 1833, the New York Supreme Court validated local cases in which defendants had been cited by police for selling meat outside the market.3

Beyond time and place restrictions, governments regulated even the manner of commerce. Massachusetts law prevented the resale of meat and produce by individuals who were not the primary producer. Massachusetts Chief Justice Lemuel Shaw upheld the market bylaws against Barnabus Rice, convicted of vending poultry he bought from a farm in New Hampshire, for resale in Boston. Shaw denied that restrictions on trade and resale were “contrary to common right” or constituted “restraint of trade.” Shaw held that “the city have, at great expense provided accomodations; and they have a right so to control them, as best to promote the welfare of all citizens.”

The idea that economic regulation should be for the “welfare of all citizens,” even at the expense of restraining individual liberty and freedom of action, is ubiquitous in early to mid 19th century legal thought, statutes, and court opinions. In no case were such regulations challenged on constitutional grounds, within states, or at the Federal level, before mid-century.

The Founders, and the generations that immediately followed, were not economic libertarians and accepted “big government” regulation and policing of their private activities to an extent which would shock us even in the heyday of the modern regulatory and welfare state. If anything, we are far more libertarian than the Founders ever were.

Indeed, public regulation of private economic activity were crucial parts of American legal thought and the action of legislatures until well after mid-century and after the Civil War. Glimmers of “liberal” free-market policy begin to show up with the easing of time-and-place restrictions on economic activity.

The Louisiana legislature legalized private “markets, stores, or stands” in New Orleans for the very first time in 1866. But the movement to legalize and deregulate private economic activity was patchy and fitful for years to come. In 1875, the Louisiana Supreme Court upheld an injunction against a private market which was built too close to a public, regulated market. The defendant’s claim is interesting because it argues on wholly liberal grounds that the 14th amendment protected his right to trade as a “privilege and immunity of citizenship.” From such humble beginnings, the laissez-faire free-market ideology was born.

There is no denying that by the end of the 19th century, most vestiges of the old, heavily regulated economy were gone, replaced by the “laissez-faire” regulatory regime which characterized the Gilded Age and led to the roaring 20’s and eventually, the resurgence of regulation with the New Deal.

But it is important, when evaluating arguments given today for and against regulation or social welfare, to remember that the laissez-faire paradigm was not the world the Founders constructed and envisioned. The Founders believed strongly in growth and prosperity, but they were hardly free-market libertarians.

Indeed, it is modern libertarians who are out of step with the Founders on the wisdom, appropriateness, and constitutionality of sensible economic regulation and expenditures of tax money for the public welfare. The Founders would be amazed at the scale of the challenge we face today in policing our food supply, and regulating the complexities of electronic markets. But they would not disapprove of the motives or necessity of such regulation.

  1. William Novak, “The People’s Welfare: Law and Regulation in Nineteenth-Century America,” 1996, Univ. of North Carolina Press. Example comes from the introduction.
  2. Novak, 1996
  3. Village of Buffalo v. Webster, NY State Supreme Court, 1833

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