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John Brown was executed by the state of Virginia with the approval of the national government. It was the national government which, while weakly enforcing the law ending the slave trade, sternly enforced the laws providing for the return of fugitives to slavery. It was the national government that, in Andrew Jackson's administration, collaborated with the South to keep abolitionist literature out of the mails in the southern states. It was the Supreme Court of the United States that declared in 1857 that the slave Dred Scott could not sue for his freedom because he was not a person, but property.

Such a national government would never accept an end to slavery by rebellion. It would end slavery only under conditions controlled by whites, and only when required by the political and economic needs of the business elite of the North. It was Abraham Lincoln who combined perfectly the needs of business, the political ambition of the new Republican party, and the rhetoric of humanitarianism. He would keep the abolition of slavery not at the top of his list of priorities, but close enough to the top so it could be pushed there temporarily by abolitionist pressures and by practical political advantage.

Lincoln could skillfully blend the interests of the very rich and the interests of the black at a moment in history when these interests met. And he could link these two with a growing section of Americans, the white, up-and-coming, economically ambitious, politically active middle class. As Richard Hofstadter puts it:

Thoroughly middle class in his ideas, he spoke for those millions of Americans who had begun their lives as hired workers-as farm hands, clerks, teachers, mechanics, flatboat men, and rail- splitters-and had passed into the ranks of landed farmers, prosperous grocers, lawyers, merchants, physicians and politicians.

Lincoln could argue with lucidity and passion against slavery on moral grounds, while acting cautiously in practical politics. He believed "that the institution of slavery is founded on injustice and bad policy, but that the promulgation of abolition doctrines tends to increase rather than abate its evils." (Put against this Frederick Douglass's statement on struggle, or Garrison's "Sir, slavery will not be overthrown without excitement, a most tremendous excitement") Lincoln read the Constitution strictly, to mean that Congress, because of the Tenth Amendment (reserving to the states powers not specifically given to the national government), could not constitutionally bar slavery in the states.

When it was proposed to abolish slavery in the District of Columbia, which did not have the rights of a state that was directly under the jurisdiction of Congress, Lincoln said this would be Constitutional, but it should not be done unless the people in the District wanted it. Since most there were white, this killed the idea. As Hofstadter said of Lincoln's statement, it "breathes the fire of an uncompromising insistence on moderation."

Lincoln refused to denounce the Fugitive Slave Law publicly. He wrote to a friend: "I confess I hate to see the poor creatures hunted down . .. but I bite my lips and keep quiet." And when he did propose, in 1849, as a Congressman, a resolution to abolish slavery in the District of Columbia, he accompanied this with a section requiring local authorities to arrest and return fugitive slaves coming into Washington. (This led Wendell Phillips, the Boston abolitionist, to refer to him years later as "that slavehound from Illinois.") He opposed slavery, but could not see blacks as equals, so a constant theme in his approach was to free the slaves and to send them back to Africa.

In his 1858 campaign in Illinois for the Senate against Stephen Douglas, Lincoln spoke differently depending on the views of his listeners (and also perhaps depending on how close it was to the election). Speaking in northern Illinois in July (in Chicago), he said:

Let us discard all this quibbling about this man and the other man, this race and that race and the other race being inferior, and therefore they must be placed in an inferior position. Let us discard all these things, and unite as one people throughout this land, until we shall once more stand up declaring that all men are created equal.

Two months later in Charleston, in southern Illinois, Lincoln told his audience:

I will say, then, that I am not, nor ever have been, in favor of bringing about in any way the social and political equality of the white and black races (applause); that I am not, nor ever have been, in favor of making voters or jurors of negroes, nor of qualifying them to hold office, nor to intermarry with white people.. . .

And inasmuch as they cannot so live, while they do remain together there must be the position of superior and inferior, and I as much as any other man am in favor of having the superior position assigned to the white race.

Behind the secession of the South from the Union, after Lincoln was elected President in the fall of 1860 as candidate of the new Republican party, was a long series of policy clashes between South and North. The clash was not over slavery as a moral institution-most northerners did not care enough about slavery to make sacrifices for it, certainly not the sacrifice of war. It was not a clash of peoples (most northern whites were not economically favored, not politically powerful; most southern whites were poor farmers, not decisionmakers) but of elites. The northern elite wanted economic expansion-free land, free labor, a free market, a high protective tariff for manufacturers, a bank of the United States. The slave interests opposed all that; they saw Lincoln and the Republicans as making continuation of their pleasant and prosperous way of life impossible in the future.

So, when Lincoln was elected, seven southern states seceded from the Union. Lincoln initiated hostilities by trying to repossess the federal base at Fort Sumter, South Carolina, and four more states seceded. The Confederacy was formed; the Civil War was on.

Lincoln's first Inaugural Address, in March 1861, was conciliatory toward the South and the seceded states: "I have no purpose, directly or indirectly, to interfere with the institution of slavery in the States where it exists. I believe I have no lawful right to do so, and I have no inclination to do so." And with the war four months on, when General John C. Fremont in Missouri declared martial law and said slaves of owners resisting the United States were to be free, Lincoln countermanded this order. He was anxious to hold in the Union the slave states of Maryland, Kentucky, Missouri, and Delaware.

It was only as the war grew more bitter, the casualties mounted, desperation to win heightened, and the criticism of the abolitionists threatened to unravel the tattered coalition behind Lincoln that he began to act against slavery. Hofstadter puts it this way: "Like a delicate barometer, he recorded the trend of pressures, and as the Radical pressure increased he moved toward the left." Wendell Phillips said that if Lincoln was able to grow "it is because we have watered him."

Racism in the North was as entrenched as slavery in the South, and it would take the war to shake both. New York blacks could not vote unless they owned $250 in property (a qualification not applied to whites). A proposal to abolish this, put on the ballot in 1860, was defeated two to one (although Lincoln carried New York by 50,000 votes). Frederick Douglass commented: "The black baby of Negro suffrage was thought too ugly to exhibit on so grand an occasion. The Negro was stowed away like some people put out of sight their deformed children when company comes."

Wendell Phillips, with all his criticism of Lincoln, recognized the possibilities in his election. Speaking at the Tremont Temple in Boston the day after the election, Phillips said:

If the telegraph speaks truth, for the first time in our history the slave has chosen a President of the United States. . . . Not an Abolitionist, hardly an antislavery man, Mr. Lincoln consents to represent an antislavery idea. A pawn on the political chessboard, his value is in his position; with fair effort, we may soon change him for knight, bishop or queen, and sweep the board. (Applause)

Conservatives in the Boston upper classes wanted reconciliation with the South. At one point they stormed an abolitionist meeting at that same Tremont Temple, shortly after Lincoln's election, and asked that concessions be made to the South "in the interests of commerce, manufactures, agriculture."

The spirit of Congress, even after the war began, was shown in a resolution it passed in the summer of 1861, with only a few dissenting votes: "... this war is not waged . . . for any purpose of... overthrowing or interfering with the rights of established institutions of those states, but... to preserve the Union."

The abolitionists stepped up their campaign. Emancipation petitions poured into Congress in 1861 and 1862. In May of that year, Wendell Phillips said: "Abraham Lincoln may not wish it; he cannot prevent it; the nation may not will it, but the nation cannot prevent it. I do not care what men want or wish; the negro is the pebble in the cog-wheel, and the machine cannot go on until you get him out."

In July Congress passed a Confiscation Act, which enabled the freeing of slaves of those fighting the Union. But this was not enforced by the Union generals, and Lincoln ignored the nonenforcement. Garrison called Lincoln's policy "stumbling, halting, prevaricating, irresolute, weak, besotted," and Phillips said Lincoln was "a first-rate second-rate man."

An exchange of letters between Lincoln and Horace Greeley, editor of the New York Tribune, in August of 1862, gave Lincoln a chance to express his views. Greeley wrote:

Dear Sir. I do not intrude to tell you-for you must know already-that a great proportion of those who triumphed in your election ... are sorely disappointed and deeply pained by the policy you seem to be pursuing with regard to the slaves of rebels,... We require of you, as the first servant of the Republic, charged especially and preeminently with this duty, that you EXECUTE THE LAWS. ... We think you are strangely and disastrously remiss . .. with regard to the emancipating provisions of the new Confiscation Act....

We think you are unduly influenced by the councils ... of certain politicians hailing from the Border Slave States.

Greeley appealed to the practical need of winning the war. "We must have scouts, guides, spies, cooks, teamsters, diggers and choppers from the blacks of the South, whether we allow them to fight for us or not.... I entreat you to render a hearty and unequivocal obedience to the law of the land."

Lincoln had already shown his attitude by his failure to countermand an order of one of his commanders, General Henry Halleck, who forbade fugitive Negroes to enter his army's lines. Now he replied to Greeley:

Dear Sir: ... I have not meant to leave any one in doubt. .. . My paramount object in this struggle is to save the Union, and is not either to save or destroy Slavery. If I could save the Union without freeing any slave, I would do it; and if I could save it by freeing all the slaves, I would do it; and if I could do it by freeing some and leaving others alone, I would also do that. What I do about Slavery and the colored race, I do because it helps to save this Union; and what I forbear, I forbear because I do not believe it would help to save the Union. . .. I have here stated my purpose according to my view of official duty, and I intend no modification of my oft-expressed personal wish that all men, everywhere, could be free. Yours. A. Lincoln.

So Lincoln distinguished between his "personal wish" and his "official duty."

When in September 1862, Lincoln issued his preliminary Emancipation Proclamation, it was a military move, giving the South four months to stop rebelling, threatening to emancipate their slaves if they continued to fight, promising to leave slavery untouched in states that came over to the North:

That on the 1st day of January, AD 1863, all persons held as slaves within any State or designated part of a State the people whereof shall then be in rebellion against the United States shall be then, thenceforward and forever free. . . .

Thus, when the Emancipation Proclamation was issued January 1, 1863, it declared slaves free in those areas still fighting against the Union (which it listed very carefully), and said nothing about slaves behind Union lines. As Hofstadter put it, the Emancipation Proclamation "had all the moral grandeur of a bill of lading." The London Spectator wrote concisely: "The principle is not that a human being cannot justly own another, but that he cannot own him unless he is loyal to the United States."

Limited as it was, the Emancipation Proclamation spurred antislavery forces. By the summer of 1864, 400,000 signatures asking legislation to end slavery had been gathered and sent to Congress, something unprecedented in the history of the country. That April, the Senate had adopted the Thirteenth Amendment, declaring an end to slavery, and in January 1865, the House of Representatives followed.

With the Proclamation, the Union army was open to blacks. And the more blacks entered the war, the more it appeared a war for their liberation. The more whites had to sacrifice, the more resentment there was, particularly among poor whites in the North, who were drafted by a law that allowed the rich to buy their way out of the draft for $300. And so the draft riots of 1863 took place, uprisings of angry whites in northern cities, their targets not the rich, far away, but the blacks, near at hand. It was an orgy of death and violence. A black man in Detroit described what he saw: a mob, with kegs of beer on wagons, armed with clubs and bricks, marching through the city, attacking black men, women, children. He heard one man say: "If we are got to be killed up for Negroes then we will kill every one in this town."

The Civil War was one of the bloodiest in human history up to that time: 600,000 dead on both sides, in a population of 30 million-the equivalent, in the United States of 1978, with a population of 250 million, of 5 million dead. As the battles became more intense, as the bodies piled up, as war fatigue grew, the existence of blacks in the South, 4 million of them, became more and more a hindrance to the South, and more and more an opportunity for the North. Du Bois, in Black Reconstruction, pointed this out:

.. . these slaves had enormous power in their hands. Simply by stopping work, they could threaten the Confederacy with starvation. By walking into the Federal camps, they showed to doubting Northerners the easy possibility of using them thus, but by the same gesture, depriving their enemies of their use in just these fields....

It was this plain alternative that brought Lee's sudden surrender. Either the South must make terms with its slaves, free them, use them to fight the North, and thereafter no longer treat them as bondsmen; or they could surrender to the North with the assumption that the North after the war must help them to defend slavery, as it had before.

George Rawick, a sociologist and anthropologist, describes the development of blacks up to and into the Civil War:

The slaves went from being frightened human beings, thrown among strange men, including fellow slaves who were not their kinsmen and who did not speak their language or understand their customs and habits, to what W. E. B. DuBois once described as the general strike whereby hundreds of thousands of slaves deserted the plantations, destroying the Smith's ability to supply its army.

Black women played an important part in the war, especially toward the end. Sojourner Truth, the legendary ex-slave who had been active in the women's rights movement, became recruiter of black troops for the Union army, as did Josephine St. Pierre Ruffin of Boston. Harriet Tubman raided plantations, leading black and white troops, and in one expedition freed 750 slaves. Women moved with the colored regiments that grew as the Union army marched through the South, helping their husbands, enduring terrible hardships on the long military treks, in which many children died. They suffered the fate of soldiers, as in April 1864, when Confederate troops at Fort Pillow, Kentucky, massacred Union soldiers who had surrendered-black and white, along with women and children in an adjoining camp.

It has been said that black acceptance of slavery is proved by the fact that during the Civil War, when there were opportunities for escape, most slaves stayed on the plantation. In fact, half a million ran away- about one in five, a high proportion when one considers that there was great difficulty in knowing where to go and how to live.

The owner of a large plantation in South Carolina and Georgia wrote in 1862: "This war has taught us the perfect impossibility of placing the least confidence in the negro. In too numerous instances those we esteemed the most have been the first to desert us." That same year, a lieutenant in the Confederate army and once mayor of Savannah, Georgia, wrote: "I deeply regret to learn that the Negroes still continue to desert to the enemy."

A minister in Mississippi wrote in the fall of 1862: "On my arrival was surprised to hear that our negroes stampeded to the Yankees last night or rather a portion of them.... I think every one, but with one or two exceptions will go to the Yankees. Eliza and her family are certain to go. She does not conceal her thoughts but plainly manifests her opinions by her conduct-insolent and insulting." And a woman's plantation journal of January 1865:

The people are all idle on the plantations, most of them seeking their own pleasure. Many servants have proven faithful, others false and rebellious against all authority and restraint. .. . Their condition is one of perfect anarchy and rebellion. They have placed themselves in perfect antagonism to their owners and to all government and control.. . . Nearly all the house servants have left their homes; and from most of the plantations they have gone in a body.

Also in 1865, a South Carolina planter wrote to the New York Tribune that

the conduct of the Negro in the late crisis of our affairs has convinced me that we were all laboring under a delusion.... I believed that these people were content, happy, and attached to their masters. But events and reflection have caused me to change these positions.. .. If they were content, happy and attached to their masters, why did they desert him in the moment of his need and flock to an enemy, whom they did not know; and thus left their perhaps really good masters whom they did know from infancy?

Genovese notes that the war produced no general rising of slaves, but: "In Lafayette County, Mississippi, slaves responded to the Emancipation Proclamation by driving off their overseers and dividing the land and implements among themselves." Aptheker reports a conspiracy of Negroes in Arkansas in 1861 to kill their enslavers. In Kentucky that year, houses and barns were burned by Negroes, and in the city of New Castle slaves paraded through the city "singing political songs, and shouting for Lincoln," according to newspaper accounts. After the Emancipation Proclamation, a Negro waiter in Richmond, Virginia, was arrested for leading "a servile plot," while in Yazoo City, Mississippi, slaves burned the courthouse and fourteen homes.

There were special moments: Robert Smalls (later a South Carolina Congressman) and other blacks took over a steamship, The Planter, and sailed it past the Confederate guns to deliver it to the Union navy.

Most slaves neither submitted nor rebelled. They continued to work, waiting to see what happened. When opportunity came, they left, often joining the Union army. Two hundred thousand blacks were in the army and navy, and 38,000 were killed. Historian James McPherson says: "Without their help, the North could not have won the war as soon as it did, and perhaps it could not have won at all."

What happened to blacks in the Union army and in the northern cities during the war gave some hint of how limited the emancipation would be, even with full victory over the Confederacy. Off- duty black soldiers were attacked in northern cities, as in Zanesville, Ohio, in February 1864, where cries were heard to "kill the nigger." Black soldiers were used for the heaviest and dirtiest work, digging trenches, hauling logs and camion, loading ammunition, digging wells for white regiments. White privates received $13 a month; Negro privates received $10 a month.

Late in the war, a black sergeant of the Third South Carolina Volunteers, William Walker, marched his company to his captain's tent and ordered them to stack arms and resign from the army as a protest against what he considered a breach of contract, because of unequal pay. He was court-martialed and shot for mutiny. Finally, in June 1864, Congress passed a law granting equal pay to Negro soldiers.

The Confederacy was desperate in the latter part of the war, and some of its leaders suggested the slaves, more and more an obstacle to their cause, be enlisted, used, and freed. After a number of military defeats, the Confederate secretary of war, Judah Benjamin, wrote in late 1864 to a newspaper editor in Charleston: ". . . It is well known that General Lee, who commands so largely the confidence of the people, is strongly in favor of our using the negroes for defense, and emancipating them, if necessary, for that purpose. . . ." One general, indignant, wrote: "If slaves will make good soldiers, our whole theory of slavery is wrong."

By early 1865, the pressure had mounted, and in March President Davis of the Confederacy signed a "Negro Soldier Law" authorizing the enlistment of slaves as soldiers, to be freed by consent of their owners and their state governments. But before it had any significant effect, the war was over.

Former slaves, interviewed by the Federal Writers' Project in the thirties, recalled the war's end. Susie Melton:

I was a young gal, about ten years old, and we done heard that Lincoln gonna turn the niggers free. Ol' missus say there wasn't nothin' to it. Then a Yankee soldier told someone in Williamsburg that Lincoln done signed the 'mancipation. Was wintertime and mighty cold that night, but everybody commenced getting ready to leave. Didn't care nothin' about missus - was going to the Union lines. And all that night the niggers danced and sang right out in the cold. Next morning at day break we all started out with blankets and clothes and pots and pans and chickens piled on our backs, 'cause missus said we couldn't take no horses or carts. And as the sun come up over the trees, the niggers started to singing: Sun, you be here and I'll be gone
Sun, you be here and I'll be gone
Sun, you be here and I'll be gone
Bye, bye, don't grieve after me
Won't give you my place, not for yours
Bye, bye, don't grieve after me
Cause you be here and I'll be gone.
 

Anna Woods:

We wasn't there in Texas long when the soldiers marched in to tell us that we were free. ... I remembers one woman. She jumped on a barrel and she shouted. She jumped off and she shouted. She jumped hack on again and shouted some more. She kept that up for a long time, just jumping on a barrel and back off again.

Annie Mae Weathers said:

I remember hearing my pa say that when somebody came and hollered, "You niggers is free at last," say he just dropped his hoc and said in a queer voice, "Thank God for that."

The Federal Writers' Project recorded an ex-slave named Fannie Berry:

Niggers shoutin' and clappin' hands and singin'! Chillun runnin' all over the place beatin' time and yellin'! Everybody happy. Sho' did some celebratin'. Run to the kitchen and shout in the window:

"Mammy, don't you cook no more.

You's free! You's free!"

Many Negroes understood that their status after the war, whatever their situation legally, would depend on whether they owned the land they worked on or would be forced to be semislaves for others. In 1863, a North Carolina Negro wrote that "if the strict law of right and justice is to be observed, the country around me is the entailed inheritance of the Americans of African descent, purchased by the invaluable labor of our ancestors, through a life of tears and groans, under the lash and yoke of tyranny."

Abandoned plantations, however, were leased to former planters, and to white men of the North. As one colored newspaper said: "The slaves were made serfs and chained to the soil. . . . Such was the boasted freedom acquired by the colored man at the hands of the Yankee."

Under congressional policy approved by Lincoln, the property confiscated during the war under the Confiscation Act of July 1862 would revert to the heirs of the Confederate owners. Dr. John Rock, a black physician in Boston, spoke at a meeting: "Why talk about compensating masters? Compensate them for what? What do you owe them? What does the slave owe them? What does society owe them? Compensate the master? . . . It is the slave who ought to be compensated. The property of the South is by right the property of the slave. . . ."

Some land was expropriated on grounds the taxes were delinquent, and sold at auction. But only a few blacks could afford to buy this. In the South Carolina Sea Islands, out of 16,000 acres up for sale in March of 1863, freedmen who pooled their money were able to buy 2,000 acres, the rest being bought by northern investors and speculators. A freedman on the Islands dictated a letter to a former teacher now in Philadelphia:

My Dear Young Missus: Do, my missus, tell Linkum dat we wants land - dis bery land dat is rich wid de sweat ob de face and de blood ob we back. . . . We could a bin buy all we want, but dey make de lots too big, and cut we out.

De word cum from Mass Linkum's self, dat we take out claims and hold on ter um, an' plant um, and he will see dat we get um, every man ten or twenty acre. We too glad. We stake out an' list, but fore de time for plant, dese commissionaries sells to white folks all de best land. Where Linkum?

In early 1865, General William T. Sherman held a conference in Savannah, Georgia, with twenty Negro ministers and church officials, mostly former slaves, at which one of them expressed their need: "The way we can best take care of ourselves is to have land, and till it by our labor. . . ." Four days later Sherman issued "Special Field Order No. 15," designating the entire southern coastline 30 miles inland for exclusive Negro settlement. Freedmen could settle there, taking no more than 40 acres per family. By June 1865, forty thousand freedmen had moved onto new farms in this area. But President Andrew Johnson, in August of 1865, restored this land to the Confederate owners, and the freedmen were forced off, some at bayonet point.

Ex-slave Thomas Hall told the Federal Writers' Project:

Lincoln got the praise for freeing us, but did he do it? He gave us freedom without giving us any chance to live to ourselves and we still had to depend on the southern white man for work, food, and clothing, and he held us out of necessity and want in a state of servitude but little better than slavery.

The American government had set out to fight the slave states in 1861, not to end slavery, but to retain the enormous national territory and market and resources. Yet, victory required a crusade, and the momentum of that crusade brought new forces into national politics: more blacks determined to make their freedom mean something; more whites-whether Freedman's Bureau officials, or teachers in the Sea Islands, or "carpetbaggers" with various mixtures of humanitarianism and personal ambition-concerned with racial equality. There was also the powerful interest of the Republican party in maintaining control over the national government, with the prospect of southern black votes to accomplish this. Northern businessmen, seeing Republican policies as beneficial to them, went along for a while.

The result was that brief period after the Civil War in which southern Negroes voted, elected blacks to state legislatures and to Congress, introduced free and racially mixed public education to the South. A legal framework was constructed. The Thirteenth Amendment outlawed slavery: "Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction." The Fourteenth Amendment repudiated the prewar Dred Scott decision by declaring that "all persons born or naturalized in the United States" were citizens. It also seemed to make a powerful statement for racial equality, severely limiting "states' rights."

Excerpted from A People's history of the United States.

Those who view debt with a smiley face as the royal road to wealth accumulation and tend to be forgiven if their default is large enough almost invariably come from the top rungs of the economic hierarchy.  Then there are the rest of us, who get scolded for our impecunious ways, foreclosed upon and dispossessed, leaving behind scars that never fade away and wounds that disable our futures.

Think of this upstairs-downstairs class calculus as the politics of debt.  British economist John Maynard Keynes put it like this: “If I owe you a pound, I have a problem; but if I owe you a million, the problem is yours.”

After months of an impending “debtpocalypse,” the dreaded “debt ceiling,” and the “fiscal cliff,” Americans remain preoccupied with debt, public and private.  Austerity is what we’re promised for our sins. Millions are drowning, or have already drowned, in a sea of debt — mortgages gone bad, student loans that may never be paid off, spiraling credit card bills, car loans, payday loans, and a menagerie of new-fangled financial mechanisms cooked up by the country’s “financial engineers” to milk what’s left of the American standard of living.  

The world economy almost came apart in 2007-2008, and still may do so under the whale-sized carcass of debt left behind by financial plunderers who found in debt the leverage to get ever richer.  Most of them still live in their mansions and McMansions, while other debtors live outdoors, or in cars or shelters, or doubled-up with relatives and friends — or even in debtor’s prison. Believe it or not, a version of debtor’s prison, that relic of early American commercial barbarism, is back.

In 2013, you can’t actually be jailed for not paying your bills, but ingenious corporations, collection agencies, cops, courts, and lawyers have devised ways to insure that debt “delinquents” will end up in jail anyway.  With one-third of the states now allowing the jailing of debtors (without necessarily calling it that), it looks ever more like a trend in the making.

Will Americans tolerate this, or might there emerge a politics of resistance to debt, as has happened more than once in a past that shouldn’t be forgotten?

The World of Debtor’s Prisons

Imprisonment for debt was a commonplace in colonial America and the early republic, and wasn’t abolished in most states until the 1830s or 1840s, in some cases not until after the Civil War.  Today, we think of it as a peculiar and heartless way of punishing the poor — and it was.  But it was more than that.

Some of the richest, most esteemed members of society also ended up there, men like Robert Morris, who helped finance the American Revolution and ran the Treasury under the Articles of Confederation; John Pintard, a stock-broker, state legislator, and founder of the New York Historical Society; William Duer, graduate of Eton, powerful merchant and speculator, assistant secretary in the Treasury Department of the new federal government, and master of a Hudson River manse; a Pennsylvania Supreme Court judge; army generals; and other notables.

Whether rich or poor, you were there for a long stretch, even for life, unless you could figure out some way of discharging your debts.  That, however, is where the similarity between wealthy and impoverished debtors ended.

Whether in the famous Marshalsea in London where Charles Dickens had Little Dorritt’s father incarcerated (and where Dickens’s father had actually languished when the author was 12), or in the New Gaol in New York City, where men like Duer and Morris did their time, debtors prisons were segregated by class.  If your debts were large enough and your social connections weighty enough (the two tended to go together) you lived comfortably.  You were supplied with good food and well-appointed living quarters, as well as books and other pleasures, including on occasion manicurists and prostitutes.

Robert Morris entertained George Washington for dinner in his “cell.” Once released, he resumed his career as the new nation’s richest man.  Before John Pintard moved to New Gaol, he redecorated his cell, had it repainted and upholstered, and shipped in two mahogany writing desks.

Meanwhile, the mass of petty debtors housed in the same institution survived, if at all, amid squalor, filth, and disease.  They were often shackled, and lacked heat, clean water, adequate food, or often food of any kind.  (You usually had to have the money to buy your own food, clothing, and fuel.)  Debtors in these prisons frequently found themselves quite literally dying of debt.  And you could end up in such circumstances for trivial sums.  Of the 1,162 jailed debtors in New York City in 1787, 716 owed less than twenty shillings or one pound.  A third of Philadelphia’s inmates in 1817 were there for owing less than $5, and debtors in the city’s prisons outnumbered violent criminals by 5:1.  In Boston, 15% of them were women.  Shaming was more the point of punishment than anything else.

Scenes of public pathos were commonplace.  Inmates at the New Gaol, if housed on its upper floors, would lower shoes out the window on strings to collect alms for their release.  Other prisons installed “beggar gates” through which those jailed in cellar dungeons could stretch out their palms for the odd coins from passersby.

Poor and rich alike wanted out.  Pamphleteering against the institution of debtor’s prison began in the 1750s.  An Anglican minister in South Carolina denounced the jails, noting that “a person would be in a better situation in the French King’s Gallies, or the Prisons of Turkey or Barbary than in this dismal place.”  Discontent grew.  A mass escape from New Gaol of 40 prisoners armed with pistols and clubs was prompted by extreme hunger.

In the 1820s and 1830s, as artisans, journeymen, sailors, longshoremen, and other workers organized the early trade union movement as well as workingmen’s political parties, one principal demand was for the abolition of imprisonment for debt.  Inheritors of a radical political culture, their complaints echoed that Biblical tradition of Jubilee mentioned in Leviticus, which called for a cancellation of debts, the restoration of lost houses and land, and the freeing of slaves and bond servants every 50 years.

Falling into debt was a particularly ruinous affliction for those who aspired to modest independence as shopkeepers, handicraftsmen, or farmers.  As markets for their goods expanded but became ever less predictable, they found themselves taking out credit to survive and sometimes going into arrears, often followed by a stint in debtor’s prison that ended their dreams forever.

However much the poor organized and protested, it was the rich who got debt relief first.  Today, we assume that debts can be discharged through bankruptcy (although even now that option is either severely restricted or denied to certain classes of less favored debt delinquents like college students).  Although the newly adopted U.S. Constitution opened the door to a national bankruptcy law, Congress didn’t walk through it until 1800, even though many, including the well-off, had been lobbying for it.

Enough of the old moral faith that frowned on debt as sinful lingered.  The United States has always been an uncharitable place when it comes to debt, a curious attitude for a society largely settled by absconding debtors and indentured servants (a form of time-bound debt peonage).  Indeed, the state of Georgia was founded as a debtor’s haven at a time when England’s jails were overflowing with debtors.

When Congress finally passed the Bankruptcy Act, those in the privileged quarters at New Gaol threw a party.  Down below, however, life continued in its squalid way, since the new law only applied to people who had sizable debts.  If you owed too little, you stayed in jail.

Debt and the Birth of a Nation

Nowadays, the conservative media inundate us with warnings about debt from the Founding Fathers, and it’s true that some of them like Jefferson — himself an inveterate, often near-bankrupt debtor — did moralize on the subject.  However, Alexander Hamilton, an idol of the conservative movement, was the architect of the country’s first national debt, insisting that “if it is not excessive, [it] will be to us a national blessing.”

As the first Secretary of the Treasury, Hamilton’s goal was to transform the former 13 colonies, which today we would call an underdeveloped land, into a country that someday would rival Great Britain.  This, he knew, required liquid capital (resources not tied up in land or other less mobile forms of wealth), which could then be invested in sometimes highly speculative and risky enterprises.  Floating a national debt, he felt sure, would attract capital from well-positioned merchants at home and abroad, especially in England.

However, for most ordinary people living under the new government, debt aroused anger.  To begin with, there were all those veterans of the Revolutionary War and all the farmers who had supplied the revolutionary army with food and been paid in notoriously worthless “continentals” — the currency issued by the Continental Congress — or equally valueless state currencies.

As rumors of the formation of a new national government spread, speculators roamed the countryside buying up this paper money at a penny on the dollar, on the assumption that the debts they represented would be redeemed at face value.  In fact, that is just what Hamilton’s national debt would do, making these “sunshine patriots” quite rich, while leaving the yeomanry impoverished.

Outrage echoed across the country even before Hamilton’s plan got adopted.  Jefferson denounced the currency speculators as loathsome creatures and had this to say about debt in general: “The modern theory of the perpetuation of debt has drenched the earth with blood and crushed its inhabitants under burdens ever accumulating.”  He and others denounced the speculators as squadrons of counter-revolutionary “moneycrats” who would use their power and wealth to undo the democratic accomplishments of the revolution.

In contrast, Hamilton saw them as a disinterested monied elite upon whom the country’s economic well-being depended, while dismissing the criticisms of the Jeffersonians as the ravings of Jacobin levelers.  Soon enough, political warfare over the debt turned founding fathers into fratricidal brothers.

Hamilton’s plan worked — sometimes too well.  Wealthy speculators in land like Robert Morris, or in the building of docks, wharves, and other projects tied to trade, or in the national debt itself — something William Duer and grandees like him specialized in — seized the moment.  Often enough, however, they over-reached and found themselves, like the yeomen farmers and soldiers, in default to their creditors.

Duer’s attempts to corner the market in the bonds issued by the new federal government and in the stock of the country’s first National Bank represented one of the earliest instances of insider trading.  They also proved a lurid example of how speculation could go disastrously wrong.  When the scheme collapsed, it caused the country’s first Wall Street panic and a local depression that spread through New England, ruining “shopkeepers, widows, orphans, butchers… gardeners, market women, and even the noted Bawd Mrs. McCarty.”

A mob chased Duer through the streets of New York and might have hanged or disemboweled him had he not been rescued by the city sheriff, who sent him to the safety of debtor’s prison.  John Pintard, part of the same scheme, fled to Newark, New Jersey, before being caught and jailed as well.

Sending the Duers and Pintards of the new republic off to debtors’ prison was not, however, quite what Hamilton had in mind.  And leaving them rotting there was hardly going to foster the “enterprising spirit” that would, in the treasury secretary’s estimation, turn the country into the Great Britain of the next century.  Bankruptcy, on the other hand, ensured that the overextended could start again and keep the machinery of commercial transactions lubricated.  Hence, the Bankruptcy Act of 1800.

If, however, you were not a major player, debt functioned differently. Shouldered by the hoi polloi, it functioned as a mechanism for funneling wealth into the mercantile-financial hothouses where American capitalism was being incubated.

No wonder debt excited such violent political emotions.  Even before the Constitution was adopted, farmers in western Massachusetts, indebted to Boston bankers and merchants and in danger of losing their ancestral homes in the economic hard times of the 1780s, rose in armed rebellion.  In those years, the number of lawsuits for unpaid debt doubled and tripled, farms were seized, and their owners sent off to jail.  Incensed, farmers led by a former revolutionary soldier, Daniel Shays, closed local courts by force and liberated debtors from prisons.  Similar but smaller uprisings erupted in Maine, Connecticut, New York, and Pennsylvania, while in New Hampshire and Vermont irate farmers surrounded government offices.

Shays’ Rebellion of 1786 alarmed the country’s elites.  They depicted the unruly yeomen as “brutes” and their houses as “sties.”  They were frightened as well by state governments like Rhode Island’s that were more open to popular influence, declared debt moratoria, and issued paper currencies to help farmers and others pay off their debts.  These developments signaled the need for a stronger central government fully capable of suppressing future debtor insurgencies.

Federal authority established at the Constitutional Convention allowed for that, but the unrest continued.  Shays’ Rebellion was but part one of a trilogy of uprisings that continued into the 1790s.  The Whiskey Rebellion of 1794 was the most serious.  An excise tax (“whiskey tax”) meant to generate revenue to back up the national debt threatened the livelihoods of farmers in western Pennsylvania who used whiskey as a “currency” in a barter economy.  President Washington sent in troops, many of them Revolutionary War veterans, with Hamilton at their head to put down the rebels.

Debt Servitude and Primitive Accumulation

Debt would continue to play a vital role in national and local political affairs throughout the nineteenth century, functioning as a form of capital accumulation in the financial sector, and often sinking pre-capitalist forms of life in the process.

Before and during the time that capitalists were fully assuming the prerogatives of running the production process in field and factory, finance was building up its own resources from the outside.  Meanwhile, the mechanisms of public and private debt made the lives of farmers, craftsmen, shopkeepers, and others increasingly insupportable.

This parasitic economic metabolism helped account for the riotous nature of Gilded Age politics. Much of the high drama of late nineteenth-century political life circled around “greenbacks,” “free silver,” and “the gold standard.”  These issues may strike us as arcane today, but they were incendiary then, threatening what some called a “second Civil War.”  In one way or another, they were centrally about debt, especially a system of indebtedness that was driving the independent farmer to extinction.

All the highways of global capitalism found their way into the trackless vastness of rural America.  Farmers there were not in dire straits because of their backwoods isolation.  On the contrary, it was because they turned out to be living at Ground Zero, where the explosive energies of financial and commercial modernity detonated.  A toxic combination of railroads, grain-elevator operators, farm-machinery manufacturers, commodity-exchange speculators, local merchants, and above all the banking establishment had the farmer at their mercy.  His helplessness was only aggravated when the nineteenth-century version of globalization left his crops in desperate competition with those from the steppes of Canada and Russia, as well as the outbacks of Australia and South America.

To survive this mercantile onslaught, farmers hooked themselves up to long lines of credit that stretched back to the financial centers of the East.  These lifelines allowed them to buy the seed, fertilizer, and machines needed to farm, pay the storage and freight charges that went with selling their crops, and keep house and home together while the plants ripened and the hogs fattened.  When market day finally arrived, the farmer found out just what all his backbreaking work was really worth.  If the news was bad, then those credit lines were shut off and he found himself dispossessed.

The family farm and the network of small town life that went with it were being washed into the rivers of capital heading for metropolitan America.  On the “sod house” frontier, poverty was a “badge of honor which decorated all.”  In hisDevil’s Dictionary, the acid-tongued humorist Ambrose Bierce defined the dilemma this way: “Debt. n. An ingenious substitute for the chain and whip of the slave-driver.”

Across the Great Plains and the cotton South, discontented farmers spread the blame for their predicament far and wide.  Anger, however, tended to pool around the strangulating system of currency and credit run out of the banking centers of the northeast. Beginning in the 1870s with the emergence of the Greenback Party and Greenback-Labor Party and culminating in the 1890s with the People’s or Populist Party, independent farmers, tenant farmers, sharecroppers, small businessmen, and skilled workers directed ever more intense hostility at “the money power.”

That “power” might appear locally in the homeliest of disguises.  At coal mines and other industrial sites, among “coolies” working to build the railroads or imported immigrant gang laborers and convicts leased to private concerns, workers were typically compelled to buy what they needed in company scrip at company stores at prices that left them perpetually in debt.  Proletarians were so precariously positioned that going into debt — whether to pawnshops or employers, landlords or loan sharks — was unavoidable.  Often they were paid in kind: wood chips, thread, hemp, scraps of canvas, cordage: nothing, that is, that was of any use in paying off accumulated debts.  In effect, they were, as they called themselves, “debt slaves.”

In the South, hard-pressed growers found themselves embroiled in a crop-lien system, dependent on the local “furnishing agent” to supply everything needed, from seed to clothing to machinery, to get through the growing season.  In such situations, no money changed hands, just a note scribbled in the merchant’s ledger, with payment due at “settling up” time.  This granted the lender a lien, or title, to the crop, a lien that never went away.

In this fashion, the South became “a great pawn shop,” with farmers perpetually in debt at interest rates exceeding 100% per year.  In Alabama, Georgia, and Mississippi, 90% of farmers lived on credit.  The first lien you signed was essentially a life sentence.  Either that or you became a tenant farmer, or you simply left your land, something so commonplace that everyone knew what the letters “G.T.T.” on an abandoned farmhouse meant: “Gone to Texas.”  (One hundred thousand people a year were doing that in the 1870s.)

The merchant’s exaction was so steep that African-Americans and immigrants in particular were regularly reduced to peonage — forced, that is, to work to pay off their debt, an illegal but not uncommon practice.  And that neighborhood furnishing agent was often tied to the banks up north for his own lines of credit.  In this way, the sucking sound of money leaving for the great metropolises reverberated from region to region.

Facing dispossession, farmers formed alliances to set up cooperatives to extend credit to one another and market crops themselves.  As one Populist editorialist remarked, this was the way “mortgage-burdened farmers can assert their freedom from the tyranny of organized capital.”  But when they found that these groupings couldn’t survive the competitive pressure of the banking establishment, politics beckoned.

From one presidential election to the next and in state contests throughout the South and West, irate grain and cotton growers demanded that the government expand the paper currency supply, those “greenbacks,” also known as “the people’s money,” or that it monetize silver, again to enlarge the money supply, or that it set up public institutions to finance farmers during the growing season.  With a passion hard for us to imagine, they railed against the “gold standard” which, in Democratic Party presidential candidate William Jennings Bryan’s famous cry, should no longer be allowed to “crucify mankind on a cross of gold.”

Should that cross of gold stay fixed in place, one Alabama physician prophesied, it would “reduce the American yeomanry to menials and paupers, to be driven by monopolies like cattle and swine.”  As Election Day approached, populist editors and speakers warned of an approaching war with “the money power,” and they meant it.  “The fight will come and let it come!”

The idea was to force the government to deliberately inflate the currency and so raise farm prices.  And the reason for doing that?  To get out from under the sea of debt in which they were submerged.  It was a cry from the heart and it echoed and re-echoed across the heartland, coming nearer to upsetting the established order than any American political upheaval before or since.

The passion of those populist farmers and laborers was matched by that of their enemies, men at the top of the economy and government for whom debt had long been a road to riches rather than destitution.  They dismissed their foes as “cranks” and “calamity howlers.”  And in the election of 1896, they won.  Bryan went down to defeat, gold continued its pitiless process of crucifixion, and a whole human ecology was set on a path to extinction.

The Return of Debt Servitude

When populism died, debt — as a spark for national political confrontation — died, too.  The great reform eras that followed — Progessivism, the New Deal, and the Great Society — were preoccupied with inequality, economic collapse, exploitation in the workplace, and the outsized nature of corporate power in a consolidated industrial capitalist system.

Rumblings about debt servitude could certainly still be heard.  Foreclosed farmers during the Great Depression mobilized, held “penny auctions” to restore farms to families, hanged judges in effigy, and forced Prudential Insurance Company, the largest land creditor in Iowa, to suspend foreclosures on 37,000 farms (which persuaded Metropolitan Life Insurance Company to do likewise).  A Kansas City realtor was shot in the act of foreclosing on a family farm, a country sheriff kidnapped while trying to evict a farm widow and dumped 10 miles out of town, and so on.

Urban renters and homeowners facing eviction formed neighborhood groups to stop the local sheriff or police from throwing families out of their houses or apartments. Furniture tossed into the street in eviction proceedings would be restored by neighbors, who would also turn the gas and electricity back on.  New Deal farm and housing finance legislation bailed out banks and homeowners alike.  Right-wing populists like the Catholic priest Father Charles Coughlin carried on the war against the gold standard in tirades tinged with anti-Semitism.  Signs like one in Nebraska — “The Jew System of Banking” (illustrated with a giant rattlesnake) — showed up too often.

But the age of primitive accumulation in which debt and the financial sector had played such a strategic role was drawing to a close.

Today, we have entered a new phase.  What might be called capitalist underdevelopment and once again debt has emerged as both the central mode of capital accumulation and a principal mechanism of servitude.  Warren Buffett (of all people) has predicted that, in the coming decades, the United States is more likely to turn into a “sharecropper society” than an “ownership society.”

In our time, the financial sector has enriched itself by devouring the productive wherewithal of industrial America through debt, starving the public sector of resources, and saddling ordinary working people with every conceivable form of consumer debt.

Household debt, which in 1952 was at 36% of total personal income, had by 2006 hit 127%.  Even financing poverty became a lucrative enterprise.  Taking advantage of the low credit ratings of poor people and their need for cash to pay monthly bills or simply feed themselves, some check-cashing outlets, payday lenders, tax preparers, and others levy interest of 200% to 300% and more.  As recently as the 1970s, a good part of this would have been considered illegal under usury laws that no longer exist.  And these poverty creditors are often tied to the largest financiers, including Citibank, Bank of America, and American Express.

Credit has come to function as a “plastic safety net” in a world of job insecurity, declining state support, and slow-motion economic growth, especially among the elderly, young adults, and low-income families.  More than half the pre-tax income of these three groups goes to servicing debt.  Nowadays, however, the “company store” is headquartered on Wall Street.

Debt is driving this system of auto-cannibalism which, by every measure of social wellbeing, is relentlessly turning a developed country into an underdeveloped one.

Dr. Jekyll and Mr. Hyde are back.  Is a political resistance to debt servitude once again imaginable?

Steve Fraser is a historian, writer, and editor-at-large for New Labor Forum, co-founder of the American Empire Project, and TomDispatch regular. He is, most recently, the author of Wall Street: America’s Dream Palace. He teaches at Columbia University. This essay will appear in the next issue of Jacobinmagazine.

[This essay will appear in the next issue of Jacobin.  It is posted at TomDispatch.com with the kind permission of that magazine, and re-posted at Common Dreams with subsequent permission.]

Shakespeare’s Polonius offered this classic advice to his son: “neither a borrower nor a lender be.”  Many of our nation’s Founding Fathers emphatically saw it otherwise.  They often lived by the maxim: always a borrower, never a lender be.  As tobacco and rice planters, slave traders, and merchants, as well as land and currency speculators, they depended upon long lines of credit to finance their livelihoods and splendid ways of life.  So, too, in those days, did shopkeepers, tradesmen, artisans, and farmers, as well as casual laborers and sailors.  Without debt, the seedlings of a commercial economy could never have grown to maturity.

Ben Franklin, however, was wary on the subject. “Rather go to bed supperless than rise in debt” was his warning, and even now his cautionary words carry great moral weight.  We worry about debt, yet we can’t live without it.

Debt remains, as it long has been, the Dr. Jekyll and Mr. Hyde of capitalism.  For a small minority, it’s a blessing; for others a curse.  For some the moral burden of carrying debt is a heavy one, and no one lets them forget it.  For privileged others, debt bears no moral baggage at all, presents itself as an opportunity to prosper, and if things go wrong can be dumped without a qualm.

Those who view debt with a smiley face as the royal road to wealth accumulation and tend to be forgiven if their default is large enough almost invariably come from the top rungs of the economic hierarchy.  Then there are the rest of us, who get scolded for our impecunious ways, foreclosed upon and dispossessed, leaving behind scars that never fade away and wounds that disable our futures. 

Think of this upstairs-downstairs class calculus as the politics of debt.  British economist John Maynard Keynes put it like this: “If I owe you a pound, I have a problem; but if I owe you a million, the problem is yours.”

After months of an impending “debtpocalypse,” the dreaded “debt ceiling,” and the “fiscal cliff,” Americans remain preoccupied with debt, public and private.  Austerity is what we’re promised for our sins. Millions are drowning, or have already drowned, in a sea of debt -- mortgages gone bad, student loans that may never be paid off, spiraling credit card bills, car loans, payday loans, and a menagerie of new-fangled financial mechanisms cooked up by the country’s “financial engineers” to milk what’s left of the American standard of living. 

The world economy almost came apart in 2007-2008, and still may do so under the whale-sized carcass of debt left behind by financial plunderers who found in debt the leverage to get ever richer.  Most of them still live in their mansions and McMansions, while other debtors live outdoors, or in cars or shelters, or doubled-up with relatives and friends -- or even in debtor’s prison. Believe it or not, a version of debtor’s prison, that relic of early American commercial barbarism, is back. 

In 2013, you can’t actually be jailed for not paying your bills, but ingenious corporations, collection agencies, cops, courts, and lawyers have devised ways to insure that debt “delinquents” will end up in jail anyway.  With one-third of the states now allowing the jailing of debtors (without necessarily calling it that), it looks ever more like a trend in the making.

Will Americans tolerate this, or might there emerge a politics of resistance to debt, as has happened more than once in a past that shouldn’t be forgotten?  

The World of Debtor’s Prisons

Imprisonment for debt was a commonplace in colonial America and the early republic, and wasn’t abolished in most states until the 1830s or 1840s, in some cases not until after the Civil War.  Today, we think of it as a peculiar and heartless way of punishing the poor -- and it was.  But it was more than that.

Some of the richest, most esteemed members of society also ended up there, men like Robert Morris, who helped finance the American Revolution and ran the Treasury under the Articles of Confederation; John Pintard, a stock-broker, state legislator, and founder of the New York Historical Society; William Duer, graduate of Eton, powerful merchant and speculator, assistant secretary in the Treasury Department of the new federal government, and master of a Hudson River manse; a Pennsylvania Supreme Court judge; army generals; and other notables.

Whether rich or poor, you were there for a long stretch, even for life, unless you could figure out some way of discharging your debts.  That, however, is where the similarity between wealthy and impoverished debtors ended.

Whether in the famous Marshalsea in London where Charles Dickens had Little Dorritt’s father incarcerated (and where Dickens’s father had actually languished when the author was 12), or in the New Gaol in New York City, where men like Duer and Morris did their time, debtors prisons were segregated by class.  If your debts were large enough and your social connections weighty enough (the two tended to go together) you lived comfortably.  You were supplied with good food and well-appointed living quarters, as well as books and other pleasures, including on occasion manicurists and prostitutes. 

Robert Morris entertained George Washington for dinner in his “cell.” Once released, he resumed his career as the new nation’s richest man.  Before John Pintard moved to New Gaol, he redecorated his cell, had it repainted and upholstered, and shipped in two mahogany writing desks.

Meanwhile, the mass of petty debtors housed in the same institution survived, if at all, amid squalor, filth, and disease.  They were often shackled, and lacked heat, clean water, adequate food, or often food of any kind.  (You usually had to have the money to buy your own food, clothing, and fuel.)  Debtors in these prisons frequently found themselves quite literally dying of debt.  And you could end up in such circumstances for trivial sums.  Of the 1,162 jailed debtors in New York City in 1787, 716 owed less than twenty shillings or one pound.  A third of Philadelphia’s inmates in 1817 were there for owing less than $5, and debtors in the city’s prisons outnumbered violent criminals by 5:1.  In Boston, 15% of them were women.  Shaming was more the point of punishment than anything else.

Scenes of public pathos were commonplace.  Inmates at the New Gaol, if housed on its upper floors, would lower shoes out the window on strings to collect alms for their release.  Other prisons installed “beggar gates” through which those jailed in cellar dungeons could stretch out their palms for the odd coins from passersby.

Poor and rich alike wanted out.  Pamphleteering against the institution of debtor’s prison began in the 1750s.  An Anglican minister in South Carolina denounced the jails, noting that “a person would be in a better situation in the French King’s Gallies, or the Prisons of Turkey or Barbary than in this dismal place.”  Discontent grew.  A mass escape from New Gaol of 40 prisoners armed with pistols and clubs was prompted by extreme hunger. 

In the 1820s and 1830s, as artisans, journeymen, sailors, longshoremen, and other workers organized the early trade union movement as well as workingmen’s political parties, one principal demand was for the abolition of imprisonment for debt.  Inheritors of a radical political culture, their complaints echoed that Biblical tradition of Jubilee mentioned in Leviticus, which called for a cancellation of debts, the restoration of lost houses and land, and the freeing of slaves and bond servants every 50 years.

Falling into debt was a particularly ruinous affliction for those who aspired to modest independence as shopkeepers, handicraftsmen, or farmers.  As markets for their goods expanded but became ever less predictable, they found themselves taking out credit to survive and sometimes going into arrears, often followed by a stint in debtor’s prison that ended their dreams forever. 

However much the poor organized and protested, it was the rich who got debt relief first.  Today, we assume that debts can be discharged through bankruptcy (although even now that option is either severely restricted or denied to certain classes of less favored debt delinquents like college students).  Although the newly adopted U.S. Constitution opened the door to a national bankruptcy law, Congress didn’t walk through it until 1800, even though many, including the well-off, had been lobbying for it.

Enough of the old moral faith that frowned on debt as sinful lingered.  The United States has always been an uncharitable place when it comes to debt, a curious attitude for a society largely settled by absconding debtors and indentured servants (a form of time-bound debt peonage).  Indeed, the state of Georgia was founded as a debtor’s haven at a time when England’s jails were overflowing with debtors.

When Congress finally passed the Bankruptcy Act, those in the privileged quarters at New Gaol threw a party.  Down below, however, life continued in its squalid way, since the new law only applied to people who had sizable debts.  If you owed too little, you stayed in jail. 

Debt and the Birth of a Nation

Nowadays, the conservative media inundate us with warnings about debt from the Founding Fathers, and it’s true that some of them like Jefferson -- himself an inveterate, often near-bankrupt debtor -- did moralize on the subject.  However, Alexander Hamilton, an idol of the conservative movement, was the architect of the country’s first national debt, insisting that “if it is not excessive, [it] will be to us a national blessing.”

As the first Secretary of the Treasury, Hamilton’s goal was to transform the former 13 colonies, which today we would call an underdeveloped land, into a country that someday would rival Great Britain.  This, he knew, required liquid capital (resources not tied up in land or other less mobile forms of wealth), which could then be invested in sometimes highly speculative and risky enterprises.  Floating a national debt, he felt sure, would attract capital from well-positioned merchants at home and abroad, especially in England.

However, for most ordinary people living under the new government, debt aroused anger.  To begin with, there were all those veterans of the Revolutionary War and all the farmers who had supplied the revolutionary army with food and been paid in notoriously worthless “continentals” -- the currency issued by the Continental Congress -- or equally valueless state currencies.

As rumors of the formation of a new national government spread, speculators roamed the countryside buying up this paper money at a penny on the dollar, on the assumption that the debts they represented would be redeemed at face value.  In fact, that is just what Hamilton’s national debt would do, making these “sunshine patriots” quite rich, while leaving the yeomanry impoverished.

Outrage echoed across the country even before Hamilton’s plan got adopted.  Jefferson denounced the currency speculators as loathsome creatures and had this to say about debt in general: “The modern theory of the perpetuation of debt has drenched the earth with blood and crushed its inhabitants under burdens ever accumulating.”  He and others denounced the speculators as squadrons of counter-revolutionary “moneycrats” who would use their power and wealth to undo the democratic accomplishments of the revolution.

In contrast, Hamilton saw them as a disinterested monied elite upon whom the country’s economic well-being depended, while dismissing the criticisms of the Jeffersonians as the ravings of Jacobin levelers.  Soon enough, political warfare over the debt turned founding fathers into fratricidal brothers.  

Hamilton’s plan worked -- sometimes too well.  Wealthy speculators in land like Robert Morris, or in the building of docks, wharves, and other projects tied to trade, or in the national debt itself -- something William Duer and grandees like him specialized in -- seized the moment.  Often enough, however, they over-reached and found themselves, like the yeomen farmers and soldiers, in default to their creditors. 

Duer’s attempts to corner the market in the bonds issued by the new federal government and in the stock of the country’s first National Bank represented one of the earliest instances of insider trading.  They also proved a lurid example of how speculation could go disastrously wrong.  When the scheme collapsed, it caused the country’s first Wall Street panic and a local depression that spread through New England, ruining “shopkeepers, widows, orphans, butchers... gardeners, market women, and even the noted Bawd Mrs. McCarty.”   

A mob chased Duer through the streets of New York and might have hanged or disemboweled him had he not been rescued by the city sheriff, who sent him to the safety of debtor’s prison.  John Pintard, part of the same scheme, fled to Newark, New Jersey, before being caught and jailed as well.

Sending the Duers and Pintards of the new republic off to debtors’ prison was not, however, quite what Hamilton had in mind.  And leaving them rotting there was hardly going to foster the “enterprising spirit” that would, in the treasury secretary’s estimation, turn the country into the Great Britain of the next century.  Bankruptcy, on the other hand, ensured that the overextended could start again and keep the machinery of commercial transactions lubricated.  Hence, the Bankruptcy Act of 1800.

If, however, you were not a major player, debt functioned differently. Shouldered by the hoi polloi, it functioned as a mechanism for funneling wealth into the mercantile-financial hothouses where American capitalism was being incubated.

No wonder debt excited such violent political emotions.  Even before the Constitution was adopted, farmers in western Massachusetts, indebted to Boston bankers and merchants and in danger of losing their ancestral homes in the economic hard times of the 1780s, rose in armed rebellion.  In those years, the number of lawsuits for unpaid debt doubled and tripled, farms were seized, and their owners sent off to jail.  Incensed, farmers led by a former revolutionary soldier, Daniel Shays, closed local courts by force and liberated debtors from prisons.  Similar but smaller uprisings erupted in Maine, Connecticut, New York, and Pennsylvania, while in New Hampshire and Vermont irate farmers surrounded government offices. 

Shays' Rebellion of 1786 alarmed the country’s elites.  They depicted the unruly yeomen as “brutes” and their houses as “sties.”  They were frightened as well by state governments like Rhode Island’s that were more open to popular influence, declared debt moratoria, and issued paper currencies to help farmers and others pay off their debts.  These developments signaled the need for a stronger central government fully capable of suppressing future debtor insurgencies.

Federal authority established at the Constitutional Convention allowed for that, but the unrest continued.  Shays' Rebellion was but part one of a trilogy of uprisings that continued into the 1790s.  The Whiskey Rebellion of 1794 was the most serious.  An excise tax (“whiskey tax”) meant to generate revenue to back up the national debt threatened the livelihoods of farmers in western Pennsylvania who used whiskey as a “currency” in a barter economy.  President Washington sent in troops, many of them Revolutionary War veterans, with Hamilton at their head to put down the rebels. 

Debt Servitude and Primitive Accumulation

Debt would continue to play a vital role in national and local political affairs throughout the nineteenth century, functioning as a form of capital accumulation in the financial sector, and often sinking pre-capitalist forms of life in the process. 

Before and during the time that capitalists were fully assuming the prerogatives of running the production process in field and factory, finance was building up its own resources from the outside.  Meanwhile, the mechanisms of public and private debt made the lives of farmers, craftsmen, shopkeepers, and others increasingly insupportable.

This parasitic economic metabolism helped account for the riotous nature of Gilded Age politics. Much of the high drama of late nineteenth-century political life circled around “greenbacks,” “free silver,” and "the gold standard."  These issues may strike us as arcane today, but they were incendiary then, threatening what some called a “second Civil War.”  In one way or another, they were centrally about debt, especially a system of indebtedness that was driving the independent farmer to extinction.

All the highways of global capitalism found their way into the trackless vastness of rural America.  Farmers there were not in dire straits because of their backwoods isolation.  On the contrary, it was because they turned out to be living at Ground Zero, where the explosive energies of financial and commercial modernity detonated.  A toxic combination of railroads, grain-elevator operators, farm-machinery manufacturers, commodity-exchange speculators, local merchants, and above all the banking establishment had the farmer at their mercy.  His helplessness was only aggravated when the nineteenth-century version of globalization left his crops in desperate competition with those from the steppes of Canada and Russia, as well as the outbacks of Australia and South America.

To survive this mercantile onslaught, farmers hooked themselves up to long lines of credit that stretched back to the financial centers of the East.  These lifelines allowed them to buy the seed, fertilizer, and machines needed to farm, pay the storage and freight charges that went with selling their crops, and keep house and home together while the plants ripened and the hogs fattened.  When market day finally arrived, the farmer found out just what all his backbreaking work was really worth.  If the news was bad, then those credit lines were shut off and he found himself dispossessed.

The family farm and the network of small town life that went with it were being washed into the rivers of capital heading for metropolitan America.  On the “sod house” frontier, poverty was a “badge of honor which decorated all.”  In his Devil’s Dictionary, the acid-tongued humorist Ambrose Bierce defined the dilemma this way: “Debt. n. An ingenious substitute for the chain and whip of the slave-driver.”

Across the Great Plains and the cotton South, discontented farmers spread the blame for their predicament far and wide.  Anger, however, tended to pool around the strangulating system of currency and credit run out of the banking centers of the northeast. Beginning in the 1870s with the emergence of the Greenback Party and Greenback-Labor Party and culminating in the 1890s with the People’s or Populist Party, independent farmers, tenant farmers, sharecroppers, small businessmen, and skilled workers directed ever more intense hostility at “the money power.”

That “power” might appear locally in the homeliest of disguises.  At coal mines and other industrial sites, among “coolies” working to build the railroads or imported immigrant gang laborers and convicts leased to private concerns, workers were typically compelled to buy what they needed in company scrip at company stores at prices that left them perpetually in debt.  Proletarians were so precariously positioned that going into debt -- whether to pawnshops or employers, landlords or loan sharks -- was unavoidable.  Often they were paid in kind: wood chips, thread, hemp, scraps of canvas, cordage: nothing, that is, that was of any use in paying off accumulated debts.  In effect, they were, as they called themselves, “debt slaves.” 

In the South, hard-pressed growers found themselves embroiled in a crop-lien system, dependent on the local “furnishing agent” to supply everything needed, from seed to clothing to machinery, to get through the growing season.  In such situations, no money changed hands, just a note scribbled in the merchant’s ledger, with payment due at “settling up” time.  This granted the lender a lien, or title, to the crop, a lien that never went away.

In this fashion, the South became “a great pawn shop,” with farmers perpetually in debt at interest rates exceeding 100% per year.  In Alabama, Georgia, and Mississippi, 90% of farmers lived on credit.  The first lien you signed was essentially a life sentence.  Either that or you became a tenant farmer, or you simply left your land, something so commonplace that everyone knew what the letters “G.T.T.” on an abandoned farmhouse meant: “Gone to Texas.”  (One hundred thousand people a year were doing that in the 1870s.) 

The merchant’s exaction was so steep that African-Americans and immigrants in particular were regularly reduced to peonage -- forced, that is, to work to pay off their debt, an illegal but not uncommon practice.  And that neighborhood furnishing agent was often tied to the banks up north for his own lines of credit.  In this way, the sucking sound of money leaving for the great metropolises reverberated from region to region.

Facing dispossession, farmers formed alliances to set up cooperatives to extend credit to one another and market crops themselves.  As one Populist editorialist remarked, this was the way “mortgage-burdened farmers can assert their freedom from the tyranny of organized capital.”  But when they found that these groupings couldn’t survive the competitive pressure of the banking establishment, politics beckoned.

From one presidential election to the next and in state contests throughout the South and West, irate grain and cotton growers demanded that the government expand the paper currency supply, those “greenbacks,” also known as “the people’s money,” or that it monetize silver, again to enlarge the money supply, or that it set up public institutions to finance farmers during the growing season.  With a passion hard for us to imagine, they railed against the “gold standard” which, in Democratic Party presidential candidate William Jennings Bryan’s famous cry, should no longer be allowed to “crucify mankind on a cross of gold.”

Should that cross of gold stay fixed in place, one Alabama physician prophesied, it would “reduce the American yeomanry to menials and paupers, to be driven by monopolies like cattle and swine.”  As Election Day approached, populist editors and speakers warned of an approaching war with “the money power,” and they meant it.  “The fight will come and let it come!”

The idea was to force the government to deliberately inflate the currency and so raise farm prices.  And the reason for doing that?  To get out from under the sea of debt in which they were submerged.  It was a cry from the heart and it echoed and re-echoed across the heartland, coming nearer to upsetting the established order than any American political upheaval before or since. 

The passion of those populist farmers and laborers was matched by that of their enemies, men at the top of the economy and government for whom debt had long been a road to riches rather than destitution.  They dismissed their foes as “cranks” and “calamity howlers.”  And in the election of 1896, they won.  Bryan went down to defeat, gold continued its pitiless process of crucifixion, and a whole human ecology was set on a path to extinction.

The Return of Debt Servitude

When populism died, debt -- as a spark for national political confrontation -- died, too.  The great reform eras that followed -- Progessivism, the New Deal, and the Great Society -- were preoccupied with inequality, economic collapse, exploitation in the workplace, and the outsized nature of corporate power in a consolidated industrial capitalist system.

Rumblings about debt servitude could certainly still be heard.  Foreclosed farmers during the Great Depression mobilized, held “penny auctions” to restore farms to families, hanged judges in effigy, and forced Prudential Insurance Company, the largest land creditor in Iowa, to suspend foreclosures on 37,000 farms (which persuaded Metropolitan Life Insurance Company to do likewise).  A Kansas City realtor was shot in the act of foreclosing on a family farm, a country sheriff kidnapped while trying to evict a farm widow and dumped 10 miles out of town, and so on.

Urban renters and homeowners facing eviction formed neighborhood groups to stop the local sheriff or police from throwing families out of their houses or apartments. Furniture tossed into the street in eviction proceedings would be restored by neighbors, who would also turn the gas and electricity back on.  New Deal farm and housing finance legislation bailed out banks and homeowners alike.  Right-wing populists like the Catholic priest Father Charles Coughlin carried on the war against the gold standard in tirades tinged with anti-Semitism.  Signs like one in Nebraska -- “The Jew System of Banking” (illustrated with a giant rattlesnake) -- showed up too often.

But the age of primitive accumulation in which debt and the financial sector had played such a strategic role was drawing to a close. 

Today, we have entered a new phase.  What might be called capitalist underdevelopment and once again debt has emerged as both the central mode of capital accumulation and a principal mechanism of servitude.  Warren Buffett (of all people) has predicted that, in the coming decades, the United States is more likely to turn into a “sharecropper society” than an “ownership society.”

In our time, the financial sector has enriched itself by devouring the productive wherewithal of industrial America through debt, starving the public sector of resources, and saddling ordinary working people with every conceivable form of consumer debt.

Household debt, which in 1952 was at 36% of total personal income, had by 2006 hit 127%.  Even financing poverty became a lucrative enterprise.  Taking advantage of the low credit ratings of poor people and their need for cash to pay monthly bills or simply feed themselves, some check-cashing outlets, payday lenders, tax preparers, and others levy interest of 200% to 300% and more.  As recently as the 1970s, a good part of this would have been considered illegal under usury laws that no longer exist.  And these poverty creditors are often tied to the largest financiers, including Citibank, Bank of America, and American Express.

Credit has come to function as a “plastic safety net” in a world of job insecurity, declining state support, and slow-motion economic growth, especially among the elderly, young adults, and low-income families.  More than half the pre-tax income of these three groups goes to servicing debt.  Nowadays, however, the “company store” is headquartered on Wall Street.

Debt is driving this system of auto-cannibalism which, by every measure of social wellbeing, is relentlessly turning a developed country into an underdeveloped one.  

Dr. Jekyll and Mr. Hyde are back.  Is a political resistance to debt servitude once again imaginable?

© 2013 Steve Fraser

Steve Fraser is Editor-at-Large of New Labor Forum and co-founder of the American Empire Project (Metropolitan Books). He is, most recently, the author of Wall Street: America’s Dream Palace. He teaches history at Columbia University.

Shakespeare’s Polonius offered this classic advice to his son: “neither a borrower nor a lender be.”  Many of our nation’s Founding Fathers emphatically saw it otherwise.  They often lived by the maxim: always a borrower, never a lender be.  As tobacco and rice planters, slave traders, and merchants, as well as land and currency speculators, they depended upon long lines of credit to finance their livelihoods and splendid ways of life.  So, too, in those days, did shopkeepers, tradesmen, artisans, and farmers, as well as casual laborers and sailors.  Without debt, the seedlings of a commercial economy could never have grown to maturity.

Ben Franklin, however, was wary on the subject. “Rather go to bed supperless than rise in debt” was his warning, and even now his cautionary words carry great moral weight.  We worry about debt, yet we can’t live without it.

Debt remains, as it long has been, the Dr. Jekyll and Mr. Hyde of capitalism.  For a small minority, it’s a blessing; for others a curse.  For some the moral burden of carrying debt is a heavy one, and no one lets them forget it.  For privileged others, debt bears no moral baggage at all, presents itself as an opportunity to prosper, and if things go wrong can be dumped without a qualm.

Those who view debt with a smiley face as the royal road to wealth accumulation and tend to be forgiven if their default is large enough almost invariably come from the top rungs of the economic hierarchy.  Then there are the rest of us, who get scolded for our impecunious ways, foreclosed upon and dispossessed, leaving behind scars that never fade away and wounds that disable our futures. 

Think of this upstairs-downstairs class calculus as the politics of debt.  British economist John Maynard Keynes put it like this: “If I owe you a pound, I have a problem; but if I owe you a million, the problem is yours.”

After months of an impending “debtpocalypse,” the dreaded “debt ceiling,” and the “fiscal cliff,” Americans remain preoccupied with debt, public and private.  Austerity is what we’re promised for our sins. Millions are drowning, or have already drowned, in a sea of debt -- mortgages gone bad, student loans that may never be paid off, spiraling credit card bills, car loans, payday loans, and a menagerie of new-fangled financial mechanisms cooked up by the country’s “financial engineers” to milk what’s left of the American standard of living.   

The world economy almost came apart in 2007-2008, and still may do so under the whale-sized carcass of debt left behind by financial plunderers who found in debt the leverage to get ever richer.  Most of them still live in their mansions and McMansions, while other debtors live outdoors, or in cars or shelters, or doubled-up with relatives and friends -- or even in debtor’s prison. Believe it or not, a version of debtor’s prison, that relic of early American commercial barbarism, is back. 

In 2013, you can’t actually be jailed for not paying your bills, but ingenious corporations, collection agencies, cops, courts, and lawyers have devised ways to insure that debt “delinquents” will end up in jail anyway.  With one-third of the states now allowing the jailing of debtors (without necessarily calling it that), it looks ever more like a trend in the making.

Will Americans tolerate this, or might there emerge a politics of resistance to debt, as has happened more than once in a past that shouldn’t be forgotten?  

The World of Debtor’s Prisons

Imprisonment for debt was a commonplace in colonial America and the early republic, and wasn’t abolished in most states until the 1830s or 1840s, in some cases not until after the Civil War.  Today, we think of it as a peculiar and heartless way of punishing the poor -- and it was.  But it was more than that.

Some of the richest, most esteemed members of society also ended up there, men like Robert Morris, who helped finance the American Revolution and ran the Treasury under the Articles of Confederation; John Pintard, a stock-broker, state legislator, and founder of the New York Historical Society; William Duer, graduate of Eton, powerful merchant and speculator, assistant secretary in the Treasury Department of the new federal government, and master of a Hudson River manse; a Pennsylvania Supreme Court judge; army generals; and other notables.

Whether rich or poor, you were there for a long stretch, even for life, unless you could figure out some way of discharging your debts.  That, however, is where the similarity between wealthy and impoverished debtors ended.

Whether in the famous Marshalsea in London where Charles Dickens had Little Dorritt’s father incarcerated (and where Dickens’s father had actually languished when the author was 12), or in the New Gaol in New York City, where men like Duer and Morris did their time, debtors prisons were segregated by class.  If your debts were large enough and your social connections weighty enough (the two tended to go together) you lived comfortably.  You were supplied with good food and well-appointed living quarters, as well as books and other pleasures, including on occasion manicurists and prostitutes. 

Robert Morris entertained George Washington for dinner in his “cell.” Once released, he resumed his career as the new nation’s richest man.  Before John Pintard moved to New Gaol, he redecorated his cell, had it repainted and upholstered, and shipped in two mahogany writing desks.

Meanwhile, the mass of petty debtors housed in the same institution survived, if at all, amid squalor, filth, and disease.  They were often shackled, and lacked heat, clean water, adequate food, or often food of any kind.  (You usually had to have the money to buy your own food, clothing, and fuel.)  Debtors in these prisons frequently found themselves quite literally dying of debt.  And you could end up in such circumstances for trivial sums.  Of the 1,162 jailed debtors in New York City in 1787, 716 owed less than twenty shillings or one pound.  A third of Philadelphia’s inmates in 1817 were there for owing less than $5, and debtors in the city’s prisons outnumbered violent criminals by 5:1.  In Boston, 15% of them were women.  Shaming was more the point of punishment than anything else.

Scenes of public pathos were commonplace.  Inmates at the New Gaol, if housed on its upper floors, would lower shoes out the window on strings to collect alms for their release.  Other prisons installed “beggar gates” through which those jailed in cellar dungeons could stretch out their palms for the odd coins from passersby.

Poor and rich alike wanted out.  Pamphleteering against the institution of debtor’s prison began in the 1750s.  An Anglican minister in South Carolina denounced the jails, noting that “a person would be in a better situation in the French King’s Gallies, or the Prisons of Turkey or Barbary than in this dismal place.”  Discontent grew.  A mass escape from New Gaol of 40 prisoners armed with pistols and clubs was prompted by extreme hunger. 

In the 1820s and 1830s, as artisans, journeymen, sailors, longshoremen, and other workers organized the early trade union movement as well as workingmen’s political parties, one principal demand was for the abolition of imprisonment for debt.  Inheritors of a radical political culture, their complaints echoed that Biblical tradition of Jubilee mentioned in Leviticus, which called for a cancellation of debts, the restoration of lost houses and land, and the freeing of slaves and bond servants every 50 years.

Falling into debt was a particularly ruinous affliction for those who aspired to modest independence as shopkeepers, handicraftsmen, or farmers.  As markets for their goods expanded but became ever less predictable, they found themselves taking out credit to survive and sometimes going into arrears, often followed by a stint in debtor’s prison that ended their dreams forever. 

However much the poor organized and protested, it was the rich who got debt relief first.  Today, we assume that debts can be discharged through bankruptcy (although even now that option is either severely restricted or denied to certain classes of less favored debt delinquents like college students).  Although the newly adopted U.S. Constitution opened the door to a national bankruptcy law, Congress didn’t walk through it until 1800, even though many, including the well-off, had been lobbying for it.

Enough of the old moral faith that frowned on debt as sinful lingered.  The United States has always been an uncharitable place when it comes to debt, a curious attitude for a society largely settled by absconding debtors and indentured servants (a form of time-bound debt peonage).  Indeed, the state of Georgia was founded as a debtor’s haven at a time when England’s jails were overflowing with debtors.

When Congress finally passed the Bankruptcy Act, those in the privileged quarters at New Gaol threw a party.  Down below, however, life continued in its squalid way, since the new law only applied to people who had sizable debts.  If you owed too little, you stayed in jail. 

Debt and the Birth of a Nation

Nowadays, the conservative media inundate us with warnings about debt from the Founding Fathers, and it’s true that some of them like Jefferson -- himself an inveterate, often near-bankrupt debtor -- did moralize on the subject.  However, Alexander Hamilton, an idol of the conservative movement, was the architect of the country’s first national debt, insisting that “if it is not excessive, [it] will be to us a national blessing.”

As the first Secretary of the Treasury, Hamilton’s goal was to transform the former 13 colonies, which today we would call an underdeveloped land, into a country that someday would rival Great Britain.  This, he knew, required liquid capital (resources not tied up in land or other less mobile forms of wealth), which could then be invested in sometimes highly speculative and risky enterprises.  Floating a national debt, he felt sure, would attract capital from well-positioned merchants at home and abroad, especially in England.

However, for most ordinary people living under the new government, debt aroused anger.  To begin with, there were all those veterans of the Revolutionary War and all the farmers who had supplied the revolutionary army with food and been paid in notoriously worthless “continentals” -- the currency issued by the Continental Congress -- or equally valueless state currencies.

As rumors of the formation of a new national government spread, speculators roamed the countryside buying up this paper money at a penny on the dollar, on the assumption that the debts they represented would be redeemed at face value.  In fact, that is just what Hamilton’s national debt would do, making these “sunshine patriots” quite rich, while leaving the yeomanry impoverished.

Outrage echoed across the country even before Hamilton’s plan got adopted.  Jefferson denounced the currency speculators as loathsome creatures and had this to say about debt in general: “The modern theory of the perpetuation of debt has drenched the earth with blood and crushed its inhabitants under burdens ever accumulating.”  He and others denounced the speculators as squadrons of counter-revolutionary “moneycrats” who would use their power and wealth to undo the democratic accomplishments of the revolution.

In contrast, Hamilton saw them as a disinterested monied elite upon whom the country’s economic well-being depended, while dismissing the criticisms of the Jeffersonians as the ravings of Jacobin levelers.  Soon enough, political warfare over the debt turned founding fathers into fratricidal brothers.  

Hamilton’s plan worked -- sometimes too well.  Wealthy speculators in land like Robert Morris, or in the building of docks, wharves, and other projects tied to trade, or in the national debt itself -- something William Duer and grandees like him specialized in -- seized the moment.  Often enough, however, they over-reached and found themselves, like the yeomen farmers and soldiers, in default to their creditors. 

Duer’s attempts to corner the market in the bonds issued by the new federal government and in the stock of the country’s first National Bank represented one of the earliest instances of insider trading.  They also proved a lurid example of how speculation could go disastrously wrong.  When the scheme collapsed, it caused the country’s first Wall Street panic and a local depression that spread through New England, ruining “shopkeepers, widows, orphans, butchers... gardeners, market women, and even the noted Bawd Mrs. McCarty.”   

A mob chased Duer through the streets of New York and might have hanged or disemboweled him had he not been rescued by the city sheriff, who sent him to the safety of debtor’s prison.  John Pintard, part of the same scheme, fled to Newark, New Jersey, before being caught and jailed as well.

Sending the Duers and Pintards of the new republic off to debtors’ prison was not, however, quite what Hamilton had in mind.  And leaving them rotting there was hardly going to foster the “enterprising spirit” that would, in the treasury secretary’s estimation, turn the country into the Great Britain of the next century.  Bankruptcy, on the other hand, ensured that the overextended could start again and keep the machinery of commercial transactions lubricated.  Hence, the Bankruptcy Act of 1800.

If, however, you were not a major player, debt functioned differently. Shouldered by the hoi polloi, it functioned as a mechanism for funneling wealth into the mercantile-financial hothouses where American capitalism was being incubated.

No wonder debt excited such violent political emotions.  Even before the Constitution was adopted, farmers in western Massachusetts, indebted to Boston bankers and merchants and in danger of losing their ancestral homes in the economic hard times of the 1780s, rose in armed rebellion.  In those years, the number of lawsuits for unpaid debt doubled and tripled, farms were seized, and their owners sent off to jail.  Incensed, farmers led by a former revolutionary soldier, Daniel Shays, closed local courts by force and liberated debtors from prisons.  Similar but smaller uprisings erupted in Maine, Connecticut, New York, and Pennsylvania, while in New Hampshire and Vermont irate farmers surrounded government offices. 

Shays' Rebellion of 1786 alarmed the country’s elites.  They depicted the unruly yeomen as “brutes” and their houses as “sties.”  They were frightened as well by state governments like Rhode Island’s that were more open to popular influence, declared debt moratoria, and issued paper currencies to help farmers and others pay off their debts.  These developments signaled the need for a stronger central government fully capable of suppressing future debtor insurgencies.

Federal authority established at the Constitutional Convention allowed for that, but the unrest continued.  Shays' Rebellion was but part one of a trilogy of uprisings that continued into the 1790s.  The Whiskey Rebellion of 1794 was the most serious.  An excise tax (“whiskey tax”) meant to generate revenue to back up the national debt threatened the livelihoods of farmers in western Pennsylvania who used whiskey as a “currency” in a barter economy.  President Washington sent in troops, many of them Revolutionary War veterans, with Hamilton at their head to put down the rebels. 

Debt Servitude and Primitive Accumulation

Debt would continue to play a vital role in national and local political affairs throughout the nineteenth century, functioning as a form of capital accumulation in the financial sector, and often sinking pre-capitalist forms of life in the process. 

Before and during the time that capitalists were fully assuming the prerogatives of running the production process in field and factory, finance was building up its own resources from the outside.  Meanwhile, the mechanisms of public and private debt made the lives of farmers, craftsmen, shopkeepers, and others increasingly insupportable.

This parasitic economic metabolism helped account for the riotous nature of Gilded Age politics. Much of the high drama of late nineteenth-century political life circled around “greenbacks,” “free silver,” and "the gold standard."  These issues may strike us as arcane today, but they were incendiary then, threatening what some called a “second Civil War.”  In one way or another, they were centrally about debt, especially a system of indebtedness that was driving the independent farmer to extinction.

All the highways of global capitalism found their way into the trackless vastness of rural America.  Farmers there were not in dire straits because of their backwoods isolation.  On the contrary, it was because they turned out to be living at Ground Zero, where the explosive energies of financial and commercial modernity detonated.  A toxic combination of railroads, grain-elevator operators, farm-machinery manufacturers, commodity-exchange speculators, local merchants, and above all the banking establishment had the farmer at their mercy.  His helplessness was only aggravated when the nineteenth-century version of globalization left his crops in desperate competition with those from the steppes of Canada and Russia, as well as the outbacks of Australia and South America.

To survive this mercantile onslaught, farmers hooked themselves up to long lines of credit that stretched back to the financial centers of the East.  These lifelines allowed them to buy the seed, fertilizer, and machines needed to farm, pay the storage and freight charges that went with selling their crops, and keep house and home together while the plants ripened and the hogs fattened.  When market day finally arrived, the farmer found out just what all his backbreaking work was really worth.  If the news was bad, then those credit lines were shut off and he found himself dispossessed.

The family farm and the network of small town life that went with it were being washed into the rivers of capital heading for metropolitan America.  On the “sod house” frontier, poverty was a “badge of honor which decorated all.”  In hisDevil’s Dictionary, the acid-tongued humorist Ambrose Bierce defined the dilemma this way: “Debt. n. An ingenious substitute for the chain and whip of the slave-driver.”

Across the Great Plains and the cotton South, discontented farmers spread the blame for their predicament far and wide.  Anger, however, tended to pool around the strangulating system of currency and credit run out of the banking centers of the northeast. Beginning in the 1870s with the emergence of the Greenback Party and Greenback-Labor Party and culminating in the 1890s with the People’s or Populist Party, independent farmers, tenant farmers, sharecroppers, small businessmen, and skilled workers directed ever more intense hostility at “the money power.”

That “power” might appear locally in the homeliest of disguises.  At coal mines and other industrial sites, among “coolies” working to build the railroads or imported immigrant gang laborers and convicts leased to private concerns, workers were typically compelled to buy what they needed in company scrip at company stores at prices that left them perpetually in debt.  Proletarians were so precariously positioned that going into debt -- whether to pawnshops or employers, landlords or loan sharks -- was unavoidable.  Often they were paid in kind: wood chips, thread, hemp, scraps of canvas, cordage: nothing, that is, that was of any use in paying off accumulated debts.  In effect, they were, as they called themselves, “debt slaves.” 

In the South, hard-pressed growers found themselves embroiled in a crop-lien system, dependent on the local “furnishing agent” to supply everything needed, from seed to clothing to machinery, to get through the growing season.  In such situations, no money changed hands, just a note scribbled in the merchant’s ledger, with payment due at “settling up” time.  This granted the lender a lien, or title, to the crop, a lien that never went away.

In this fashion, the South became “a great pawn shop,” with farmers perpetually in debt at interest rates exceeding 100% per year.  In Alabama, Georgia, and Mississippi, 90% of farmers lived on credit.  The first lien you signed was essentially a life sentence.  Either that or you became a tenant farmer, or you simply left your land, something so commonplace that everyone knew what the letters “G.T.T.” on an abandoned farmhouse meant: “Gone to Texas.”  (One hundred thousand people a year were doing that in the 1870s.) 

The merchant’s exaction was so steep that African-Americans and immigrants in particular were regularly reduced to peonage -- forced, that is, to work to pay off their debt, an illegal but not uncommon practice.  And that neighborhood furnishing agent was often tied to the banks up north for his own lines of credit.  In this way, the sucking sound of money leaving for the great metropolises reverberated from region to region.

Facing dispossession, farmers formed alliances to set up cooperatives to extend credit to one another and market crops themselves.  As one Populist editorialist remarked, this was the way “mortgage-burdened farmers can assert their freedom from the tyranny of organized capital.”  But when they found that these groupings couldn’t survive the competitive pressure of the banking establishment, politics beckoned.

From one presidential election to the next and in state contests throughout the South and West, irate grain and cotton growers demanded that the government expand the paper currency supply, those “greenbacks,” also known as “the people’s money,” or that it monetize silver, again to enlarge the money supply, or that it set up public institutions to finance farmers during the growing season.  With a passion hard for us to imagine, they railed against the “gold standard” which, in Democratic Party presidential candidate William Jennings Bryan’s famous cry, should no longer be allowed to “crucify mankind on a cross of gold.”

Should that cross of gold stay fixed in place, one Alabama physician prophesied, it would “reduce the American yeomanry to menials and paupers, to be driven by monopolies like cattle and swine.”  As Election Day approached, populist editors and speakers warned of an approaching war with “the money power,” and they meant it.  “The fight will come and let it come!”

The idea was to force the government to deliberately inflate the currency and so raise farm prices.  And the reason for doing that?  To get out from under the sea of debt in which they were submerged.  It was a cry from the heart and it echoed and re-echoed across the heartland, coming nearer to upsetting the established order than any American political upheaval before or since. 

The passion of those populist farmers and laborers was matched by that of their enemies, men at the top of the economy and government for whom debt had long been a road to riches rather than destitution.  They dismissed their foes as “cranks” and “calamity howlers.”  And in the election of 1896, they won.  Bryan went down to defeat, gold continued its pitiless process of crucifixion, and a whole human ecology was set on a path to extinction.

The Return of Debt Servitude

When populism died, debt -- as a spark for national political confrontation -- died, too.  The great reform eras that followed -- Progessivism, the New Deal, and the Great Society -- were preoccupied with inequality, economic collapse, exploitation in the workplace, and the outsized nature of corporate power in a consolidated industrial capitalist system.

Rumblings about debt servitude could certainly still be heard.  Foreclosed farmers during the Great Depression mobilized, held “penny auctions” to restore farms to families, hanged judges in effigy, and forced Prudential Insurance Company, the largest land creditor in Iowa, to suspend foreclosures on 37,000 farms (which persuaded Metropolitan Life Insurance Company to do likewise).  A Kansas City realtor was shot in the act of foreclosing on a family farm, a country sheriff kidnapped while trying to evict a farm widow and dumped 10 miles out of town, and so on.

Urban renters and homeowners facing eviction formed neighborhood groups to stop the local sheriff or police from throwing families out of their houses or apartments. Furniture tossed into the street in eviction proceedings would be restored by neighbors, who would also turn the gas and electricity back on.  New Deal farm and housing finance legislation bailed out banks and homeowners alike.  Right-wing populists like the Catholic priest Father Charles Coughlin carried on the war against the gold standard in tirades tinged with anti-Semitism.  Signs like one in Nebraska -- “The Jew System of Banking” (illustrated with a giant rattlesnake) -- showed up too often.

But the age of primitive accumulation in which debt and the financial sector had played such a strategic role was drawing to a close. 

Today, we have entered a new phase.  What might be called capitalist underdevelopment and once again debt has emerged as both the central mode of capital accumulation and a principal mechanism of servitude.  Warren Buffett (of all people) has predicted that, in the coming decades, the United States is more likely to turn into a “sharecropper society” than an “ownership society.”

In our time, the financial sector has enriched itself by devouring the productive wherewithal of industrial America through debt, starving the public sector of resources, and saddling ordinary working people with every conceivable form of consumer debt.

Household debt, which in 1952 was at 36% of total personal income, had by 2006 hit 127%.  Even financing poverty became a lucrative enterprise.  Taking advantage of the low credit ratings of poor people and their need for cash to pay monthly bills or simply feed themselves, some check-cashing outlets, payday lenders, tax preparers, and others levy interest of 200% to 300% and more.  As recently as the 1970s, a good part of this would have been considered illegal under usury laws that no longer exist.  And these poverty creditors are often tied to the largest financiers, including Citibank, Bank of America, and American Express.

Credit has come to function as a “plastic safety net” in a world of job insecurity, declining state support, and slow-motion economic growth, especially among the elderly, young adults, and low-income families.  More than half the pre-tax income of these three groups goes to servicing debt.  Nowadays, however, the “company store” is headquartered on Wall Street.

Debt is driving this system of auto-cannibalism which, by every measure of social wellbeing, is relentlessly turning a developed country into an underdeveloped one.  

Dr. Jekyll and Mr. Hyde are back.  Is a political resistance to debt servitude once again imaginable?

The period following WWII in eastern Europe is considered to be a black one, best forgotten. All the pre-war governments had been quasi-fascist dictatorships which either succumbed to the Nazi onslaught (Poland) or actively cooperated with the Germans (Hungary, Romania, Bulgaria). The Soviet liberation was greeted with trepidation by many – with good reason for the many collaborators. Within a few years of liberation, eastern Europe was ruled by austere regimes headed by little Stalins.

As in France and Italy, women who consorted with the Germans were treated with contempt. There was a rash of rape as millions of Soviet soldiers filled the vacuum left before the post-war occupation structures were established. The Soviet soldiers had been motivated by an intense hatred of the Nazis, and their revenge was worse than that of the American, British etc soldiers, none of whom at lost their loved ones and homes or had faced invasion of their homelands. The chaos did considerable damage to post-war relations and soured the prospect of building socialism to many who otherwise would have given the new order that was imposed on them a chance. ‘Imposed’ is certainly the operational word, as the Soviets gave security and policing to their local communist allies.

As in all wars, there were no winners (except those lucky soldiers who emerged unscathed with lots of booty). The east European communists had been decimated by Stalin’s pre-war purges. The liberal and rightwing forces were persecuted. War does not discriminate between good and bad property. As in all upheavals, farsighted bad guys step forward, play along on the winning side, and reap their rewards.

Given this deadly scenario and the subsequent Cold War, it is surprising just how much positive resulted from the Soviet occupation of eastern Europe, and despite author Anne Applebaum’s unremitting anti-communism (her Gulag won the Pulitzer Prize in 2003), it keeps peaking through her Iron Curtain.

Applebaum focuses on Poland, Hungary and East Germany, clearly because they experienced uprisings following Stalin’s death in 1953 (sparked by liberal reforms that spun out of control instigated by – of all people – NKVD chief Lavrenti Beria). They are very different cultures and their post-war experiences are very different, despite following a scenario written in Moscow, including both the good (social welfare and anti-capitalism) and the bad (‘red terror’ and dogmatic imitation of Stalinism).

She drew on dozens of personal interviews of east Europeans who were either key figures in the period of ‘high Stalinism’ as she calls it or simply people who lived their lives, worked and supported (or didn’t) the regime they lived under, and now in their waning years, were glad to reflect on what happened, how they functioned. Appelbaum’s husband is Polish Foreign Minister Radoslaw Sikorski, and her treatment of Poland is particularly detailed.

Yes, people were persecuted unjustly, though it was mostly leading political figures who suffered, or people who refused to read the writing on the wall and spoke out (heroically or foolishly, a judgment call) during the wave of purges which began in the late 1940s. Two cardinals’ experiences are of interest: the Polish Stefan Wyszynski and the Hungarian Jozsef Mindszenty.

The former compromised with the communists, and only went to prison briefly in September 1953, telling a fellow priest: “Workers, peasants, intellectuals, all kinds of people from all over the nation are in prison, it’s good that the primate and priests are in prison too, since out task is to be with the nation.” He remained under house arrest until 1956.

Mindszenty refused any compromise with the authorities, instead firing off insults guaranteed to infuriate them. He demanded in that the Hungarian church receive US aid directly at a time when the gathering Cold War made this impossible. He publicly pontificated: “The American donations were a sign of the all-embracing solidarity of the world Church. World Bolshevism did not like them at all.” As a result of one broadside after another, he was given a life sentence for treason in a 1949 show trial that generated worldwide condemnation, including a UN resolution. Freed in the Hungarian Revolution of 1956, he was granted political asylum and lived in the US embassy in Budapest for 15 years, and finally allowed to leave the country in 1971.

Wyszynski’s 1950 secret agreement with the authorities allowed the Church to keep much of its property, separated church from politics, prohibited religious indoctrination in public schools, and allowed authorities to select a bishop from 3 candidates presented. This pact is arguably better than the agreement, say, the French church has. And Karol Wojtyla was selected by the communists as bishop.

What comes through in the interviews is just how positive the whole post-war period was for the majority of the people, how the communist program gave great opportunities to the vast majority in education, work and health care. How despite the ‘high Stalin’ show trials and inanities of the period, such as the slavish naming of a new socialist town Sztalinvaros in Hungary, a then-young worker on a woman’s brigade now remembers trudging through the mud and living in damp barracks “with immense nostalgia”, though she later became somewhat disillusioned as an activist. (She protested – and was chastised for it – against the campaign to convince workers to go into debt to buy ‘Peace Bonds’ which she saw as just a hidden tax.)

Just as the communists created myths and enshrined them in their history books at the time, the victors in the Cold War are now writing their own version of history. Yes, Warsaw’s wedding cake Palace of Culture, a ‘gift’ from Stalin, and nearby dreary apartment blocks, spoiled the skyline. But the communists also had the old city in Warsaw meticulously reconstructed.

And how to explain Alexander Dymschitz, head of the cultural division of the Soviet Military Administration in post-war Berlin, who insisted that artists get the coveted “first” ration card, a larger piece of bread and more meat and vegetables? Asked why, Dymschitsz declared, “It is possible that there is a Gorki among you. Should his immortal books remain unwritten, only because he goes hungry?”

The whole socialist ‘experiment’ in eastern Europe lasted only four short decades, and considering the animosity of the West (and many locals), was a remarkable success in raising economic and cultural standards. Applebaum sneers at the trials of “wreckers” and saboteurs, but from day one, the US and its by-then subservient client states in western Europe repressed their own communists, and the CIA waged an undeclared war on the socialist bloc, parachuting in émigrés to blow up bridges, wreck equipment and even spread crop diseases.

Applebaum’s meticulous research stopped when it comes to any of this, though there is lots of documentation. For example, the CIA funded Ukrainian fascist leader Mykola Lebed (a Nazi collaborator and murderer of Jews and Poles) from 1949–91 to carry out black ops against the Soviet Union from his front organization Prolog in New York. According to CIA director Allen Dulles, he was “of inestimable value to this Agency and its operations”.

The most spectacular instance of US subversion in the Cold War was the 1980s CIA plan to sabotage the economy of the Soviet Union. A KGB turncoat gained access to Russian purchase orders and the CIA slipped in the flawed software, which triggered “the most monumental non-nuclear explosion and fire ever seen from space”. The KGB never practised this kind of black ops, despite hysterical propaganda to the contrary.

Neither does Applebaum admit the real state of opinion in eastern Europe about this whole period. An October 2010 poll in Berlin among former East Germans revealed that 57% defend the overall record of the former East Germany and 49% agreed that “the GDR had more good sides than bad sides. There were some problems, but life was good there.” Only 30% of Ukrainians approve of the change to democracy (vs 72% in 1991), 60% of Bulgarians believe the old system was better. The disastrous effects of the collapse of the Soviet Union on life expectancy, especially of men, which fell from 64 to 58, is well known.

Compare this with the 60% of Americans in 2010 who said they feel the country is on the wrong track (albeit down from 89% in 2008 during the closing days of Bush II rule).

Iron Curtain also ignores the devastating effect of the collapse of the socialist bloc had on the world at large. By unleashing the free market from the 1980s on, inequality between the richest and poorest nations increased from 88:1 (1970) to 267:1 (2000). The US was henceforth able to invade countries everywhere at will, as indeed it has done, killing millions of innocent people and patriots now dismissed as the ‘enemy’. But this is of no concern to Applebaum from her comfortable perch in Thatcherite London at the Legatum Institute, nor of her staunchly anti-communist hubbie in Warsaw. Nor of other rewriters, financed by the likes of Soros’s Open Institutes.

What is most irritating in Iron Curtain, apart from its cliched Churchillian title, is its assumption that all readers will accept that the term ‘totalitarian’ applies – uniquely – to the socialist bloc, that “totalitarian education would eliminate dissent; that civic institutions, once destroyed, could not be rebuilt; that history, once rewritten, would be forgotten.” A 1956 US National Intelligence Estimate made just months before the collapse of the Hungarian communist order, predicted gloomily (and a tad enviously) that over time dissidence in eastern Europe would be worn down “by the gradual increase in the number of Communist-indoctrinated youth”.

The alert reader, unburdened by “Intelligence”, will find many such glaring hints that ‘totalitarian’ really has much more to do with the West, with its seductive materialist ‘me’ culture, fashioning people oblivious to the welfare of their society. Post-WWII western Europe was promised apple pie in the sky, and got it thanks to the Marshall Plan aimed at winning the new Cold War. Once the socialist bloc was no longer, the apple pie disappeared, as we see in the collapse of living standards across Europe (the US as well), there being no competition anymore to the real totalitarian system, where protests are easily absorbed.

Not so the dictatorships of eastern Europe, which were brittle, far from totalitarian. The spontaneous re-emergence of unsanctioned institutions in Hungary after the death of Stalin is particularly impressive. The “totalitarian personalities” that Applebaum conceives of are rather found every day in Walmart queues or on 4th of July celebrations.

While young Poles, Germans and Hungarians were at the forefront of their new socialist orders, they were also – just as in the West – at the forefront of rebellion against what many saw as the stifling status quo. For the most part, Polish bikiniarze or Hungarian jampecek, the counterparts of American rockers and British teddy boys, hadn’t experienced the horrors of the war, had little sense of the 1930s as a period of communist ferment, and found western mass consumer culture much more appealing than the modest socialist one stressing personal responsibility and solidarity with the victims of imperialism around the world.

Jazz and western styles became ideological tools, especially in East Germany, with RIAS (Radio in the American Sector) broadcasting from West Berlin, and West Germany sheet music made available for the East’s dance bands. At a German composers’ conference in 1951, an East German musicologist denounced “American entertainment kitsch” as a “channel through which the poison of Americanism penetrates and threatens to anaesthetize the minds of workers”, embodying “the degenerate ideology of American monopoly capital with its lack of culture, its empty sensationalism and above all its fury for war and destruction.” We are supposed to laugh at this, but this critique sounds even more cogent today, and could be taken from a Salafist newspaper in Egypt or a leftist tract in the US.

When the baby boom hit especially Czechoslovakia in the 1960s, it resulted in an explosion of creative energy, and a delayed unraveling of the by-then tattered ‘high Stalinism’ there, but once again context intervened. In retrospect, if the Prague Spring had been allowed to blossom, Czechoslovakia would have been quickly absorbed by the West, and the Cold War eastern dominoes would have fallen much sooner.

But 1968 was the high point of European social democracy, and who knows what might have resulted from a melding of the two systems at that time? That the fall came in 1990 at the height of neoliberalism meant that capitalism at its totalitarian worst called all the shots, and there is little to crow about by the 99% of us – East or West. Alas, this is far from the minds of the neoliberal victors as they churn out their history books.

The ten things you need to know on Sunday 13 January 2013...

1) WITHDRAW FROM THE EU? 'MAD,' SAYS PM

It feels like the early 1990s, with the papers full of Europe stories this morning. The best one is in the Mail on Sunday, where it seems the prime minister's allies have been briefing against his Europhobic backbenchers. That'll go down well, won't it?

The Mail on Sunday's Simon Walters reveals:

"David Cameron thinks it would be 'mad' for Britain to leave the EU and is secretly backing a move by Tory MPs to warn of the perils of cutting all our ties with Brussels.

"The Prime Minister was also 'pleased' at US President Barack Obama sending a clear signal that the White House is opposed to the UK leaving the European Union."

".. [T]hose close to Mr Cameron say he does not believe withdrawal is 'realistic or desirable'."

Meanwhile, as the Huffington Post reports:

"David Cameron could slash Ukip's support by more than a third if he promises an in-out referendum on EU membership, according to a poll.

"Research by ComRes for the Sunday People found 63% of the public want a vote on whether Britain should remain in the union.

"Some 33% said they would cast their ballot in favour of a full withdrawal - including two thirds of Ukip supporters, 27% of Tories, 25% of Labour voters, and 17% of Liberal Democrats.

"However, more people - 42% said they were against leaving the EU."

The poll also shows that Ukip could push the Tories into third place in 2014's European elections - Cameron's Conservatives would fall to 22%, one point below Ukip. Uh-oh.

2) THE KEN AND MANDY SHOW

It's not just the Spice Girls who are getting back together again to perform their greatest hits. From the Observer:

"Tory grandee Ken Clarke is joining forces with Labour peer Lord Mandelson in a historic cross-party bid to turn back the rising tide of Euroscepticism.

"The two political heavyweights will share a platform to call for an abandonment of plans to disengage from the European project. Clarke, who attends cabinet as a minister without portfolio, is determined to fight back against the clamour for Britain to step back from the European Union or withdraw entirely.

"Along with Liberal Democrat Lord Rennard, Clarke and Mandelson will spearhead a new organisation, the Centre for British Influence through Europe (CBIE), which will support a cross-party 'patriotic fightback for British leadership in Europe'. The organisation will hold its launch event at the end of the month."

Hmm. Will it affect public opinion? Tory Eurosceptics, like the Spectator's James Forsyth, don't seem too scared of interventions from the likes of Clarke, Mandelson and - yesterday - Heseltine:

"Eurosceptics need to get organised and start pointing out that the people claiming that renegotiation will lead to the sky falling in are, by and large, the same people who were pushing for Britain to join the single currency. If this message is rammed home to the public, then it should be a lot easier to persuade them to take these warnings with a pinch of salt."

"The Britain in Europe crowd was wrong on the most fundamental public policy issue of our time. They need to be reminded of this fact every time they enter the Europe debate."

Ouch.

3) ON THE FRONT FOOT

Ed Miliband has had a strong and high-profile start to 2013 - and will be buoyed by the latest polls (see Public Opinion Watch, below).

The Independent on Sunday reports on Miliband's

".. plans to protect tenants from 'rogue landlords'.

"In a keynote speech on the future of his party, Labour's leader revived calls for a national register of landlords - and greater powers for councils to bar the worst."

Miliband was on the Andrew Marr programme this morning, where he said "'One Nation' is about the way I want to govern this country...about responsiblity going all the way to top of society".

On Europe, he said he thought it was "incredibly dangerous what David Cameron is doing..sleepwalking us towards the exit door of the European Union".

On the economy and the deficit, he refused to give any pledges on reversing Tory cuts - to child benefit or anything else - but highlighted the importance of tackling tax avoidance and changing the law to prevent multinations from dodging tax in the UK.

He also resisted calls to support "means-testing" on welfare and said "the tax system is a fairer way" of redistributing from rich to poor and pointed out the "best way" to cut the welfare bill is to cut unemployment.

On the leaders' TV debates, the Labour leader didn't seem too keen on having Ukip's Nigel Farage join the 'big three' but said he was "relishing these TV debates...I hope they happen".

On Ed Balls, he said Balls was "doing a great job" as shadow chancellor - Miliband even reminded viewers of Balls' prescient speech on austerity at Bloomberg's HQ in August 2010. Now there's an endorsement!

"There is no vacancy for shadow chancellor," declared Ed.

4) O BROTHER, WHERE ART THOU?

David Miliband isn't coming back to Labour's front bench anytime soon, says the Sunday Telegraph's Patrick Hennessy:

"Mr Miliband, who lost his party’s leadership election to his younger brother in 2010, was said last week to be giving 'serious thought' to coming back to the political front line - with the post of shadow chancellor claimed to be in his sights.

"However, it can be revealed that Ed Miliband has no plans to replace the current shadow chancellor, Ed Balls, or to hand his brother the job of masterminding Labour’s preparations for the next general election campaign."

The Sunday Telegraph story says the elder Miliband's supporters were briefing journos that David might return because they're 'spooked' by the meteoric rise of the shadow business secretary Chuka Umunna.

5) UKIP MEMBERS: IN THEIR OWN WORDS?

The Sunday Mirror seems to have set out to prove David Cameron right that Ukip is a party of "fruitcakes, loonies and closet racists', containing "some pretty odd people". The paper reports:

"On the [party's official online] forum, senior Ukip member Dr Julia Gasper branded gay rights a 'lunatic's charter' and claimed some homosexuals prefer sex with animals. She added: 'As for the links between homosexuality and paedophilia, there is so much evidence that even a full-length book could hardly do justice to the ­subject.'

"The former parliamentary candidate and UKIP branch chairman in Oxford now faces the sack over her comments.

"Tackled about her remarks yesterday, she said: 'I'm not going to talk about them. It's none of your business.'

"Lecturer Dr Gasper is just one of many Ukip members who use the forum to vent their controversial views.

".. Another member complained about the impact of immigration on the NHS, writing: 'I am informed by past media that Black Caribbean and not Black African have a higher instance of schizophrenia.

"'I wonder if this is due to inbreeding on these small islands in slave times or is it due to smoking grass.'"

BECAUSE YOU'VE READ THIS FAR...

Watch this video of a puppy trying to eat an orange.

6) 'KING OF WHITEHALL'

Fascinating piece on top civil servant Sir Jeremy Heywood by James Forsyth in the Mail on Sunday today:

"Sir Jeremy is regarded by friend and foe alike as the most formidable operator in Whitehall," he writes, adding: "Aides who want to give Cameron advice without Heywood's knowledge have been reduced to trying to surreptitiously slip a note into the Prime Minister's Red Box."

Forsyth writes:

"Steve Hilton, Cameron's senior adviser, once tried to wrest control of the box from Heywood by demanding that all the box notes had to go through him as well. Yet the sheer weight of material put paid to this effort. Hilton has since gone on sabbatical, partly in frustration at the extent of Heywood's influence."

He concludes:

"Heywood knows that he is playing a long game. In conversation, he sometimes pointedly refers to the 'current Government'.

"It is a reminder that he intends to be at the centre of power far longer than any politician."

Meanwhile, the Sunday Times reports on how Hilton:

".. has revealed his 'horror' at the powerlessness of Downing Street to control government decisions, admitting the prime minister often finds out about policies from the radio or newspapers — and in many cases opposes them.

"Steve Hilton, who remains one of Cameron’s close confidants, said: 'Very often you’ll wake up in the morning and hear on the radio or the news or see something in the newspapers about something the government is doing. And you think, well, hang on a second — it’s not just that we didn’t know it was happening, but we don’t even agree with it! The government can be doing things ... and we don’t agree with it? How can that be?'

"He described how No 10 is frequently left out of the loop as important policy changes are pushed through by 'papershuffling' mandarins."

7) NORTHERN IRISH GLOOM

It ain't getting any better. The Sun reports:

"A total of 29 cops were hurt in riots over flying the Union flag in Northern Ireland yesterday.

"Police used water cannon and baton rounds after being bombarded with bricks and fireworks as they tried to separate loyalists and republicans.

".. Chief Constable Matt Baggott said cops acted with 'exceptional courage'. Politicians from Belfast, Dublin and London will discuss the protests this week."

8) ROUGE ALERT

From the BBC:

"French President Francois Hollande has ordered security stepped up around public buildings and transport because of military operations in Africa.

"He was responding to the risk of Islamist attack after French forces attacked militants in Mali and Somalia.

"France's anti-terrorism alert system known as "Vigipirate" is being reinforced immediately, with security boosted at public buildings and transport networks, particularly rail and air. Public gatherings will also be affected.

"The alert will remain at red, the second-highest level at which emergency counter-attack measures are put in place."

Is it wrong of me to point out that the chaos and instability in Mali is a direct result of, and spillover from, the west's intervention in Libya, which France pushed hardest for?

Meanwhile, the HuffPost UK reports:

"David Cameron has agreed to help transport foreign troops and equipment to Mali amid efforts to halt an advance by Islamist rebels in a conflict that has already claimed 120 lives."

9) 'GOTCHA' - THE SEQUEL

From the Sunday Telegraph:

"Defence chiefs have drawn up new contingency plans designed to prevent hostile action by Argentina towards the Falkland Islands.

"A series of military options are being actively considered as the war of words over the islands intensifies.

"It is understood that additional troops, another warship and extra RAF Typhoon combat aircraft could be dispatched to the region ahead of the March referendum on the Falkland Islands' future."

The paper adds, however, that

".. the British government believes that Buenos Aries currently lacks both the political will and military capability to recapture the islands."

Phew. That's alright then.

10) KENNEDY JOINS.. KENNEDY CONSPIRACY THEORISTS

Conspiracy theorists of the world: you have a new and important ally!

From the Mail on Sunday:

"Robert F. Kennedy Jr. is convinced that a lone gunman wasn't solely responsible for the assassination of his uncle, President John F. Kennedy, and said his father believed the Warren Commission report was a 'shoddy piece of craftsmanship.'

".. He said that he, too, questioned the report.

"'The evidence at this point I think is very, very convincing that it was not a lone gunman,' he said, but he didn't say what he believed may have happened."

Oliver Stone will be delighted.

PUBLIC OPINION WATCH

From the Sunday Times/YouGov poll:

Labour 44
Conservatives 31
Lib Dems 11
Ukip 8

That would give Labour a majority of 124.

From the Observer/Opinium poll:

Labour 41
Conservatives 31
Ukip 12
Lib Dems 7

That would give Labour a majority of 116.

140 CHARACTERS OR LESS

@PeterHain @Ed_Miliband commanding on Marr programme ludicrous to expect detailed Labour tax and spend now: no idea scale of mess we will inherit 2015

@paulwaugh Memories of 'tax bombshell' Saatchi campaign runs deep in Lab psyche. EdM's remarks about 92 prove it. #marr #kinnockyears

@Mike_Fabricant When Hezza attacks David Cameron about Europe, and Norman Tebbit attacks DC about morality, I know we are getting it about right.

900 WORDS OR MORE

Andrew Rawnsley, writing in the Observer, says: "David Cameron should take tips from John Major about Europe."

Janet Daley, writing in the Sunday Telegraph, says: "A system intended to promote social solidarity has had the opposite effect."

John Rentoul, writing in the Independent on Sunday, focuses on Sir Jeremy Heywood: "A civil servant too effective for his own good."

Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Since the kindling of the conflict inside Syria in 2011, it was recognized, by friend and foe alike, that the events in that country were tied to a game plan that ultimately targets Iran, Syria’s number one ally. [1] De-linking Syria from Iran and unhinging the Resistance Bloc that Damascus and Tehran have formed has been one of the objectives of the foreign-supported anti-government militias inside Syria. Such a schism between Damascus and Tehran would change the Middle East’s strategic balance in favour of the US and Israel.

If  this cannot be accomplished, however, then crippling Syria to effectively prevent it from providing Iran any form of diplomatic, political, economic, and military support in the face of common threats has been a primary objective. Preventing any continued cooperation between the two republics has been a strategic goal. This includes preventing the Iran-Iraq-Syria energy terminal from being built and ending the military pact between the two partners.

All Options are Aimed at Neutralizing Syria

Regime change in Damascus is not the only or main way for the US and its allies to prevent Syria from standing with Iran. Destabilizing Syria and neutralizing it as a failed and divided state is the key. Sectarian fighting is not a haphazard outcome of the instability in Syria, but an assisted project that the US and its allies have steadily fomented with a clear intent to balkanize the Syrian Arab Republic. Regionally, Israel above all other states has a major stake in securing this outcome. The Israelis actually have several publicly available documents, including the Yinon Plan, which outline that the destruction of Syria into a series of smaller sectarian states is one of their strategic objectives. So do American military planners.

Like Iraq next door, Syria does not need to be formally divided. For all intents and purposes, the country can be divided like Lebanon was alongside various fiefdoms and stretches of territory controlled by different groups during the Lebanese Civil War. The goal is to disqualify Syria as an external player.

Since 2006 and the Israeli defeat in Lebanon in that year there was renewed focus on the strategic alliance between Iran and Syria. Both countries have been very resilient in the face of US designs in their region. Together both have been key players for influencing events in the Middle East, from the Eastern Mediterranean to the Persian Gulf. Their strategic alliance has undoubtedly played an important role in shaping the geo-political landscape in the Middle East. Although critics of Damascus say it has done very little in regard to substantial action against the Israelis, the Syrians have been the partners within this alliance that have carried the greatest weight in regards to facing Israel; it has been through Syria that Hezbollah and the Palestinians have been provided havens, logistics, and their initial strategic depth against Israel.

From the beginning the foreign-supported external opposition leaders made their foreign policy clear, which can strongly be argued was a reflection of the interests they served. The anti-government forces and their leaders even declared that they will realign Syria against Iran; in doing so they used sectarian language about returning to their “natural orbit with the Sunni Arabs.” This is a move that is clearly in favour of the US and Israel alike. Breaking the axis between Damascus and Tehran has also been a major goal of Saudi Arabia, Jordan, and the Arab petro-sheikhdoms since the 1980s as part of a design to isolate Iran during the Iraq-Iran War. [2] Moreover, the sectarian language being used is part of a construct; it is not a reflection of reality, but a reflection of Orientalist conjecture and desires that falsely stipulate that Muslims who perceive themselves as being Shia or Sunni are inherently at odds with one another as enemies.

Among the prostrating Syrian opposition leaders who would execute the strategic goals of the US has been Burhan Ghalioun, the former president of the Istanbul-based and foreign-sponsored Syrian National Council, who told the Wall Street Journal in 2011 that Damascus would end its strategic alliance with Iran and end its support for Hezbollah and the Palestinians as soon as anti-government forces took over Syria. [3] These foreign-sponsored opposition figures have also served to validate, in one way or another, the broader narratives that claim Sunnis and Shiites hate one another. In synchronization the mainstream media in the countries working for regime change in Damascus, such as the US and France, have consistently advertized that the regime in Syria is an Alawite regime that is allied to Iran, because the Alawites are an offshoot of Shiism. This too is untrue, because Syria and Iran do not share a common ideology; both countries are aligned, because of a common threat and shared political and strategic objectives. Nor is Syria run by an Alawite regime; the government’s composure reflects Syrian society’s ethnic and religious diversity.

Israel’s Stake in Syria

Syria is all about Iran for Israel. As if Tel Aviv has nothing to do whatsoever with the events inside Syria, Israeli commentators and analysts are now publicly insisting that Israel needs to deal with Iran by intervening inside Syria. Israel’s involvement in Syria, alongside the US and NATO, crystallized in 2012. It was clear that Israel was working in a conglomerate comprised of the US, Britain, France, Turkey, NATO, Saudi Arabia, Qatar, Jordan, Lebanon’s minority March 14 Alliance, and the NATO-supported usurpers that have taken over and wrecked the Libyan Arab Jamahiriya.  

Although it should be read with caution, it is worth noting the release of the hacked correspondence of Strategic Forecast Incorporated’s Reva Bhalla to her boss, George Friedman, about a December 2011 meeting in the Pentagon between herself (representing Stratfor), US, French, and British officials about Syria. [4] The Stratfor correspondence claimed that the US and its allies had sent in their military special forces to destabilize Syria in 2011 and that there actually were not many Syrian anti-government forces on the ground or, as Bhalla writes, “there isn’t much of a Free Syrian Army to train.” [5] The Daily Star, which is owned by Lebanon’s Hariri family which has been involved in the regime change operations against Syria, soon after reported that thirteen undercover French officers were caught by the Syrians conducting operations inside Homs. [6] Instead of a categorical no to the information about the captured French officers, the French Foreign Ministry’s response to the public was that it could not confirm anything, which can be analyzed as an omission of guilt. [7]

Days earlier, Hezbollah’s Al-Manar station revealed that Israeli-made weapons and supplies, ranging from grenades and night binoculars to communication devices, were captured alongside Qatari agents inside the insurgent stronghold of Baba Amr in Homs towards the end of April and start of March. [8] An unnamed US official would later confirm in July 2012 that the Mossad was working alongside the CIA in Syria. [9] Just a month earlier, in June, the Israeli government began publicly demanding that a military intervention be launched into Syria, presumably by the US and the conglomerate of governments working with Israel to destabilize Syria. [10]

The Israeli media has even begun to casually report that Israeli citizens, albeit one has been identified as an Israeli Arab (meaning a Palestinian with Israeli citizenship), have entered Syria to fight against the Syrian Army. [11] Normally any Israelis, specifically those that are non-Jewish Arabs, which enter Lebanon or/and Syria are condemned or prosecuted by Israeli authorities and Israeli news reports focus on this aspect of the story. Yet, it has not been so in this case. It should also be mentioned that the Palestinian opponents of Israel living inside Syria are also being targeted, just as the Palestinians living in Iraq were targeted after the US and UK invaded in 2003.

Syria and the Objective of Making Iran Stand Alone

The journalist Rafael D. Frankel wrote a revealing article for the Washington Quarterly that illustrates what US policymakers and their partners think about in Syria. In his article Frankel argued that because of the so-called Arab Spring that an attack on Iran by the US and Israel would no longer trigger a coordinated regional response from Iran and its allies. [12] Frankel argued that because of the events inside Syria an opportunity has been created for the US and Israel to attack Iran without igniting a regional war that would involve Syria, Hezbollah, and Hamas. [13]

Frankel’s line of thinking was not lost on circles in either NATO or Israel. In reality his line of thinking springs forth from the views and plans of these very circles. As a psychological enforcement of their ideas, his text actually found its way to NATO Headquarters in Brussels in 2012 for reading material. While the latter, Israel, released its own intelligence report about the subject.

According to the Israeli newspaper Maariv, the intelligence report by Israel’s Ministry of Foreign Affairs has concluded that Syria and Hezbollah will no longer be able to open a second front against Israel should it go to war with Iran. [14] During the Israeli report’s release, one senior Israeli official was quoted as saying “Iran’s ability to harm Israel in response to an attack on our part declined dramatically.”[15]

Many news wires, papers, and writers with hostile positions towards both Syria and Iran, such as The Daily Telegraph, immediately replicated the Israeli report’s findings about Iran and its regional allies. Two of the first people to reproduce the findings of the Israel report, Robert Tait (writing from the Gaza Strip) and Damien McElroy (who was expelled from Libya in 2011 by that country’s authorities during the war with NATO), summarize how significant the findings of the report are by effectively outlining how Iran’s key allies in the Levant have all been neutralized. [16]

The Israeli report has triumphantly declared that Syria has turned within and is too busy to join ranks with its strategic ally Iran against Tel Aviv in a future war. [17] The ramifications of the Syrian crisis have also placed Iran’s Lebanese allies, particularly Hezbollah, in an unsteady position where their supply lines are under threat and they have been politically damaged through their support of Damascus. If anyone in Lebanon should side with Iran in a future war the Israelis have said that they will invade through massive military operations on the ground. [18]

The new Egyptian government’s role in aiding US objectives under President Morsi also becomes clear with what the Israeli report says about his supportive role: “The foreign ministry report also predicted that Egypt would stop Hamas, the Palestinian Islamist movement, from helping Iran by launching rocket attacks from the Gaza Strip.” [19] This adds credence to the view that Morsi was allowed by the US and Israel to broker a peace between the Gaza Strip and Tel Aviv, which would prevent the Palestinians there from standing with Iran during a war. In other words the Egyptian truce was setup to bind the hands of Hamas. The recent announcements about moves by Morsi’s government to engage Hezbollah politically can also be scrutinized as an extension of the same strategy applied in Gaza, but in this case for unbinding Iran from its Lebanese allies. [20]

There is also clamouring for steps to be taken to de-link Hezbollah, and by extension Iran, from its Christian allies in Lebanon. The German Marshall Fund showcased a text essentially saying that the Lebanese Christians that are allies to Hezbollah, Syria, and Iran need to be presented with an alternative political narrative to replace the one where they believe that Iran will ultimately run the Middle East as a great power. [21] This too is tied to further eroding Iran’s alliance system.

Mission Accomplished?

The conflict in Syria is not merely an Israeli affair. The slow bleeding of Syria has other interested parties that want to smash the country and its society into pieces. The US is foremost among these interested parties, followed by the Arab dictators of the petro-sheikhdoms. NATO has also always been covertly involved.

NATO’s involvement in Syria is part of the US strategy of using the military alliance to dominate the Middle East. This is why it was decided to establish a component of the missile shield in Turkey. This is also the reason that Patriot missiles are being deployed to the Turkish border with Syria. The Istanbul Cooperation Initiative (ICI) and NATO’s Mediterranean Dialogue are components of these plans too. Additionally, Turkey has ended its veto against the further integration of Israel into NATO. [22]

NATO has been reorienting itself towards asymmetrical warfare and greater emphasis is now being put on intelligence operations. NATO strategists have increasingly been studying the Kurds, Iraq, Hezbollah, Syria, Iran, and the Palestinians. In the scenario of an all-out war, NATO has been preparing itself for overt military roles in both Syria and Iran.

Iraq is being destabilized further too. While Iran’s allies in Damascus have been weighed down, its allies in Baghdad have not. After Syria, the same conglomerate of countries working against Damascus will turn their attention to Iraq. They have already started working to galvanize Iraq further on the basis of its sectarian and political fault lines. Turkey, Qatar, and Saudi Arabia are playing prominent roles in this objective. What is becoming manifest is that the differences between Shiite Muslims and Sunni Muslims that Washington has cultivated since the Anglo-American invasion of Iraq in 2003 are now been augmented by Kurdish sectarianism.

It appears that many in the Israeli political establishment now believe that they have succeeded in breaking the Resistance Bloc. Whether they are correct or incorrect is a matter of debate. Syria still stands; the Palestinian Islamic Jihad (which was by far the most active Palestinian group fighting Israel from Gaza in 2012) and other Palestinians will side with Iran even if Hamas will have its hands tied by Egypt; there are still Tehran’s allies in Iraq; and Syria is not the only supply line for Iran to arm its ally Hezbollah. What is also very clear is that the siege against Syria is a front in the covert multi-dimensional war against Iran. This alone should make people reconsider the statements of US officials and their allies about having concerns for the Syrian people merely on the basis of humanitarianism and democracy.

NOTES

[1] Mahdi Darius Nazemroaya, “Obama’s Secret Letter to Tehran: Is the War against Iran On Hold? ‘The Road to Tehran Goes through Damascus,’” Global Research, January 20, 2012.

[2] Jubin M. Goodarzi, Syria and Iran: Diplomatic Alliance and Power Politics in the Middle East (London, UK: I.B. Tauris, 2009), pp.217-228.

[3] Nour Malas and Jay Solomon, “Syria Would Cut Iran Military Tie, Opposition Head Says,” Wall Street Journal, December 2, 2011.

[4] WikiLeaks, “Re: INSIGHT – military intervention in Syria, post withdrawal status of forces,” October 19, 2012: <http://wikileaks.org/gifiles/docs/209688_re-insight-military-intervention-in-syria-post-withdrawal.html>.

[5] Ibid.

[6] Lauren Williams, “13 French officers being held in Syria,” The Daily Star, March 5, 2012.

[7] Ibid.

[8] Israa Al-Fass, “Mossad, Blackwater, CIA Led Operations in Homs,” trans. Sara Taha Moughnieh, Al-Manar, March 3, 2012.

[9] David Ignatius, “Looking for a Syrian endgame,” The Washington Post, July 18, 2012.

[10] Dan Williams, “Israel accuses Syria of genocide, urges intervention,” Andrew Heavens ed., Reuters, June 10, 2012.

[11] Hassan Shaalan, “Israeli fighting Assad ‘can’t go home,’” Yedioth Ahronoth, January 3, 2013.

[12] Rafael D. Frankel, “Keeping Hamas and Hezbollah Out of a War with Iran,” Washington Quarterly, vol. 35, no. 4 (Fall 2012): pp.53-65.

[13] Ibid.

[14] “Weakened Syria unlikely to join Iran in war against Israel: report,” The Daily Star, January 4, 2013.

[15] Ibid.

[16] Damien McElroy and Robert Tait, “Syria ‘would not join Iran in war against Israel,’” The Daily Telegraph, January 3, 2013.

[17] “Weakened Syria,” The Daily Star, op. cit.

[18] “Syria and Hezbollah won’t join the fight if Israel strikes Iran, top-level report predicts,” Times of Israel, January 3, 2013.

[19] McElroy and Tait, “Syria would not,” op. cit.

[20] Lauren Williams, “New Egypt warms up to Hezbollah: ambassador,” The Daily Star, December 29, 2011.

[21] Hassan Mneimneh, “Lebanon ― The Christians of Hezbollah: A Foray into a Disconnected Political Narrative,” The German Marshall Fund of the United States, November 16, 2012.

[22] Hilary Leila Krieger, “Israel to join NATO activities amidst Turkey tension,” Jerusalem Post, December 23, 2012; Jonathon Burch and Gulsen Solaker, “Turkey lifts objection to NATO cooperation with Israel,” Mark Heinrich ed., Reuters, December 24, 2012; “Turkey: Israel’s participation in NATO not related to Patriots,” Today’s Zaman, December 28, 2012.