Was America Born Capitalist?

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From The Los Angeles Review of Books:

LARB presents an excerpt from Daniel T. Rodgers’s As a City on a Hill: The Story of America’s Most Famous Lay Sermon, out this month from Princeton University Press.

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Was America born capitalist? it is often asked. Ever since Max Weber proposed a causal relationship between early Protestants’ longing for order and rational control and the spirit of modern capitalism, the question has consumed the attention of generations of sociologists and historians. Weber’s ideal types were too abstract, it is now clear. The careful accounting and control of the self that the Puritans so conspicuously valued was only one of the cultural traits on which capitalist economies have thrived. Others, like the risk-taking and labor exploitation on which the tobacco and slave economy of early Virginia was founded, could be successfully capital-generative as well. Capitalism’s identifying features lie as much in its institutions of trade, property law, and labor as in the inner ethos that captured Weber’s imagination.

Measured in these ways, there can be no doubt that Puritan New England was a by-product of capitalism in its expansive, early modern phase. John Winthrop’s settlement arose within one of the great commercial empires of the early modern world. Unlike the Spanish conquest a century earlier, in which arms, expropriation of easily obtained wealth, and missionary zeal took the vanguard roles, the English colonization of the Americas was a merchants’ endeavor. Trading corporations — the Virginia Company, the Massachusetts Bay Company, the Providence Island Company, the Plymouth Company — undertook the work of settlement throughout British America, capitalized by investors’ purchase of their joint stock.

Economic transactions saturated the daily life of Winthrop’s New England as well. Private property in land was relatively easily sold and purchased. Production was primarily for markets: local markets for most New England farmers, long-distance markets in timber, fish, and grain for others. Debt, too, left its mark all across these money-scarce economies. Debt cases pervade the early records of the Massachusetts General Court, just as they saturated early modern English society, etching the economy with complex lines of trust, reputation, and obligation. The rules of lending, repayment, and loan forgiveness that Winthrop outlined in the long second section of his “A Model of Christian Charity” were, in the context of New England’s everyday economic life, anything but abstract.

Finally, the world the New England Puritans made was not only a world of trade and commerce but a world in which wealth was a sign of value. Wealthier men like Winthrop played a vastly outsized role in public affairs in the Massachusetts colony. Land distribution was sharply skewed in favor of the wealthy as well. A society without ranks and order, as the “Model” made clear, was no dream of the New England Puritans.

And yet, deep as their immersion in market institutions and presumptions was, early New England Puritans did not accept market morals whole. “A Model of Christian Charity” itself was born at a moment of high tension between commercial interests and social ends, when an investors’ quarrel over risk and lending had threatened to undo the Massachusetts settlement project before it had truly begun. Disputes over buying and selling erupted aboard the ships during the ocean voyage, and they did not go away thereafter. The concerns with self-love that Winthrop poured into his model of charity spilled over into every aspect of colonial New England life. To the extent that the “Model” stands at one of the foundation points of the American story, Winthrop’s concern to establish the proper place of markets within the moral imperatives of charity must be recognized to stand there, just as prominently, too.

Matters of price and commerce weighed heavily on John Winthrop in the winter and spring of 1629–’30 as many of the key phrases that he would rework in “A Model of Christian Charity” began to crystallize in his mind. Recruited as the Massachusetts Bay Company’s governor in late October as the head of a yet-unfunded expedition scheduled to sail on the first of March, he was immediately sucked into a whirlwind of business concerns. There were emigrants to be recruited if the project was to realize its envisioned scale. There were ministers who had to be persuaded to leave their settled parishes for a church order that was, as yet, anything but clearly defined. Artisans of many different sorts were needed. There were persons of wealth to recruit as well. There were ships to be hired and stocked with the beer, water, biscuits, and dried meat that the ocean voyage would require. Arrangements for the sale of his own lands had to be made.

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The most pressing point of business was the challenge of finding adequate capital for the enterprise. Like all the other English colonization ventures in the Americas, the Massachusetts Bay Company was organized as an investment corporation. Merchants with wealth and a special degree of tolerance for risk, both for God’s sake and for their own, had invested sums on which they anticipated return. For the first two years after its organization in 1628, the company had managed the work of a small community of settlers at Salem, supplying them with clothing, tools, provisions, arms, and the services of a resident governor, minister, and doctor, in expectation that trade in fish, timber, and beaver skins would repay their investments and allow the settlement to prosper.

But the first two years’ trial had not been a success. By the time that serious consideration began of reorganizing the company as a self-governing colony in New England, managed by its emigrants rather than its London-based investors, its capital stock was deeply in debt. Some of the supplies and cattle sent over had miscarried. Many of the servants (transported at extraordinary charge, a company report complained) had not proved as useful as expected. Trade had not been as profitable as expected. Not all those who had pledged to participate in the share offerings had actually done so. Altogether, an accounting in late 1629 concluded, fully one-third of the initial capital had been lost. The company’s governor alone was owed 1,200 pounds; other primary investors were in similar straits. Before the seat of the company’s government could move to New England, separating its English investors from the management of their investments, some sort of reckoning would have to be made.

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Finally, with the matter at a standstill, three options were placed before the company’s members. The first was that every shareholder agree to double his original investment — a fantastical scheme, given the risks, that was quickly rejected. The second was that the company fold up its affairs, selling off all its property, distributing what it could realize among its shareholders, and essentially abandoning the colony project. The third proposal was more realistic than the other two, but to many individual investors it was much more painful. It proposed that the capital stock of the company be reorganized, that the value of all existing shares be written down by two-thirds, and that a smaller group of undertakers assume control, pledging to pay the original shareholders back on their now sharply reduced value at the end of seven years. Without that debt forgiveness, without some act of self-sacrifice, the settlement venture would not move forward.

Link to the rest at The Los Angeles Review of Books

PG suggests that the Puritans are generally misunderstood in modern America. Partly due to The Crucible, an Arthur Miller play about the Salem, Massachusetts, witch trials, which took place about sixty years after the early crises of The Massachusetts Bay Company, and the depiction of the Puritan ministers of Salem as oppressive dictators in a rigid theocratic society, the story of Puritans as founding capitalists is far less known.

The intention of Miller that The Crucible represent a critique of the House of Representatives’ Committee on Un-American Activities aggressive investigations (and the similar Senate committee investigations chaired by Senator Joseph McCarthy) searching for communist spies and collaborators in the mid-1950s also undoubtedly affected Miller’s depiction of Puritans.

Back to The Los Angeles Review of Books:

You have already given your money to God, Winthrop counseled the company’s members in his December 1 address. Of what advantage would it be to haggle over 100 pence or 50 pounds? For the sake of God’s glory and the plantation’s welfare, you should be ready “not only [to] lend it, but lose it.” And then came the line that Winthrop would rework just after the “city upon a hill” sentence in “A Model of Christian Charity”: “Consider your reputation, the eyes of all the godly are upon you, what can you do more honorable for this City, and the Gospel which you profess, than to deny your own profit, that we may say Londoners can be willing to lose that the Gospel etc.” This pattern of reuses from Winthrop’s appeal to the colony’s investors gives no clear-cut answer as to when Winthrop found the time for the “Model’s” final composition, but it leaves no doubt about the moral issue that initially stood at its center. Whatever else the “Model” would become, its initial occasion was commerce and, more pointedly, the pyramids of debt and obligation that a market economy opened up. Triggered by a deeply fraught meeting in London, its subject was the labyrinth where commerce and morality cut across, blurred, and confronted each another.

Winthrop’s fellow voyagers carried all these concerns with markets and morals, self-interest and the public good, directly into their new settlement. They absorbed the energy of the colony from the beginning. The prices men began to ask for labor were a particularly tender issue. From the beginning, the colony’s governing bodies followed their fluctuations with concern. Alarmed that carpenters, sawyers, bricklayers, and thatchers were taking advantage of the first summer’s building boom by inflating their wage expectations, the colony’s General Court ordered a ceiling on house builders’ charges in August 1630; it set them free again the next March, only to reimpose a maximum price per board on sawyers again in September. When wages surged once more in the fall of 1633, the General Court imposed a general scale of wages on artisans, agricultural workers, and common laborers before letting this, too, lapse when the demand for labor subsided.

Unexpected fluctuations in the prices of goods brought a similar response. Price legislation was a repeated reaction to sharp swings from the norm. Corn and beer were subject to price controls from time to time. In 1638 a committee of 29 of the colony’s leading figures was tasked with sorting out the general problem of “oppression” in wages and prices, though it failed to bring in the report it had been mandated to make. A more pointed order in 1640, when the emigration stream from England suddenly came to a halt and cash dried up in response, decreed that corn, wheat, and rye might pass as money at specified rates until accustomed conditions returned. In the meantime, when debts were to be satisfied, their no longer realistic nominal values would be subject to third-party arbitration, lest “a great part of the people in the country be undone.”

Combined with all the details and challenges of establishing a market economy in isolated settlements is the larger theological view that motivated the Puritans.

From Wikipedia:

“A City upon a Hill” is a phrase from the parable of Salt and Light in Jesus’s Sermon on the Mount. In Matthew 5:14, he tells his listeners, “You are the light of the world. A city that is set on a hill cannot be hidden.”

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This scripture was cited at the end of Puritan John Winthrop’s lecture or treatise, “A Model of Christian Charity” delivered on March 21, 1630 at Holyrood Church in Southampton before his first group of Massachusetts Bay colonists embarked on the ship Arbella to settle Boston. Winthrop warned his fellow Puritans that their new community would be “as a city upon a hill, the eyes of all people are upon us”, meaning, if the Puritans failed to uphold their covenant with God, then their sins and errors would be exposed for all the world to see: “So that if we shall deal falsely with our God in this work we have undertaken and so cause him to withdraw his present help from us, we shall be made a story and a byword through the world”. Winthrop’s lecture was forgotten for nearly two hundred years until the Massachusetts Historical Society published it in 1838. It remained an obscure reference for more than another century until Cold War era historians and political leaders made it relevant to their time, crediting Winthrop’s text as the foundational document of the idea of American exceptionalism.
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On 9 January 1961, President-Elect John F. Kennedy quoted the phrase during an address delivered to the General Court of Massachusetts:

… I have been guided by the standard John Winthrop set before his shipmates on the flagship Arabella (sic) three hundred and thirty-one years ago, as they, too, faced the task of building a new government on a perilous frontier. “We must always consider”, he said, “that we shall be as a city upon a hill—the eyes of all people are upon us”. Today the eyes of all people are truly upon us—and our governments, in every branch, at every level, national, state and local, must be as a city upon a hill—constructed and inhabited by men aware of their great trust and their great responsibilities. For we are setting out upon a voyage in 1961 no less hazardous than that undertaken by the Arabella (sic) in 1630. We are committing ourselves to tasks of statecraft no less awesome than that of governing the Massachusetts Bay Colony, beset as it was then by terror without and disorder within. History will not judge our endeavors—and a government cannot be selected—merely on the basis of color or creed or even party affiliation. Neither will competence and loyalty and stature, while essential to the utmost, suffice in times such as these. For of those to whom much is given, much is required …

On November 3, 1980, Ronald Reagan referred to the same event and image in his Election Eve Address “A Vision for America”

I have quoted John Winthrop’s words more than once on the campaign trail this year—for I believe that Americans in 1980 are every bit as committed to that vision of a shining “city on a hill,” as were those long ago settlers …

These visitors to that city on the Potomac do not come as white or black, red or yellow; they are not Jews or Christians; conservatives or liberals; or Democrats or Republicans. They are Americans awed by what has gone before, proud of what for them is still… a shining city on a hill.

and in his January 11, 1989, farewell speech to the nation:

I’ve spoken of the shining city all my political life, but I don’t know if I ever quite communicated what I saw when I said it. But in my mind it was a tall, proud city built on rocks stronger than oceans, wind-swept, God-blessed, and teeming with people of all kinds living in harmony and peace; a city with free ports that hummed with commerce and creativity. And if there had to be city walls, the walls had doors and the doors were open to anyone with the will and the heart to get here. That’s how I saw it, and see it still.

U.S. Senator Barack Obama also made reference to the topic in his commencement address on June 2, 2006 at the University of Massachusetts Boston:

It was right here, in the waters around us, where the American experiment began. As the earliest settlers arrived on the shores of Boston and Salem and Plymouth, they dreamed of building a City upon a Hill. And the world watched, waiting to see if this improbable idea called America would succeed.

More than half of you represent the very first member of your family to ever attend college. In the most diverse university in all of New England, I look out at a sea of faces that are African-American and Hispanic-American and Asian-American and Arab-American. I see students that have come here from over 100 different countries, believing like those first settlers that they too could find a home in this City on a Hill—that they too could find success in this unlikeliest of places.

Link to the rest at Wikipedia