Power to Shape Tools

Collective Tools and the Demise of Agrarianism #3

America emerged from the Civil War as an industrial powerhouse. The war consolidated manufacturing, logistics, and the policy of the Federal Government into a concentrated unit of power. Corporations, the size of which no one had ever seen, embraced challenging infrastructure and energy projects. The war was the lid on the coffin of American agrarianism and the final nail was driven hard thirty years later when historian F.J. Turner declared the frontier “closed,” having no more tracts of land to settle.

Ironically, despite the demise of agrarianism, the number of acres under cultivation more than doubled between 1870 and 1900.¹ These were different farms from those of agrarian America. These new farms were the first iteration of the industrial farming we know today — backed by debt, designed to grow commodities for distant markets, and extractive by nature. These new farms were a microcosm of broader changes as America grew into an industrial powerhouse.

In this essay, I argue that the combined power of public debt and fractional reserve banking created monopolies whose tools came to control rather than enhance men’s work. This argument continues on the theme of the first two essays in this series where I argued 1. that public debt changed men’s character, encouraging them to forsake responsibility and self-sufficiency for reliance and, 2. that unbacked paper-money changed men’s interactions with the earth, incentivizing extractive tendencies. In the era following the Civil War, the institutions that perpetuated public debt and profited from unbacked paper-money, now built tools that solidified their monopoly over the direction of the economy.

Power to Shape Tools

One of the powers used most liberally by the federal government during the war, was the power to print money. Called the greenback, this paper money was declared legal tender for all debts public and private. This new paper money was the result of the National Banking Act of 1863 which “forbade the issuance of any state bank notes giving a monopoly to the government” in the unbacked paper-money scheme.² This act required and end to state and regional note issuance in favor of the Federal Government’s greenback. Prior to the Banking Act, the total paper dollars in circulation sat at $510 million. By the end of the war, that number rose to $743 million.³ Over 200 million dollars were created from thin air. As in the previous eras, it was the government, banks, and powerful monopolies who first received access to the new paper money. The common people experienced the true loss as the value of their greenbacks fell everyday.

It now became apparent that first access to new money supplies ensured a degree of tenure and even power. Obviously the government enjoyed primary access, and with such a primary position, the power to sanction technological and economic “development.” Having won the battle to keep the Union secured, the federal government had a great desire to tie the Union together — to ensure that the disparate regions of the vast nation rely on one another for economic well-being.

This ambition couldn’t be accomplished with cottage-level manufacturers, but instead needed partners equal to the task. To ensure an alignment of vision and maintenance of power, the federal government embarked on a subsidies program for the outworking of their vision. These subsidies were given to railroad companies and manufacturing corporations in the form of direct funding, generous loans, and massive land grants.⁴ These corporations used the subsidies to create tools which directed the flow and speed of economic growth.

Among a myriad of ill issues I won’t cover here, subsidies entrench the subsidized corporation as a monopoly and ensures that any innovation as a result of the subsidy serves the needs of the monopoly rather than the broader market. For example, the growth in the number of cultivated acres came because rail companies sold land (via loans) to homesteaders along their Western rail lines. This served the purpose of the rail company as it created cash flow from mortgages and the farms produced commodities which shipped on their rail lines. However, many acres highly susceptible to erosion and degradation were put to the plow because of rail subsidies. This land left many homesteaders disappointed in their stake and many abandoned the land unable to pay the debt they owed.

This is vastly different from agrarian America. The subsistence lifestyle of the early agrarian was successful because the ownership of the land (in most cases) was separated from its productive requirements. That is, agrarians didn’t have to force the land to yield beyond subsistence in order to make mortgage payments. J.T. Kellie, a Nebraskan homesteader during this era, drives this point home: “we have raised enough grain this year to feed us and all our decedents for 100 years yet have to sell every bushel of it to pay expenses.”⁵ The rail subsidy tuned farmers like Kellie into serfs, serving the subsidized corporations.

Subsidies, as a tool of the government, have the same nature as public debt — both are a force to siphon value and independence from common citizens and direct the resulting consolidated power to narrow goals decided by a few people. This leaves common people boxed into a system where their responsibility, creative potential, and independence are removed. Instead, they are required to avail themselves of tools designed to serve those in power, i.e. land loans, devalued currency, and specialized “efficient” machinery.

At the time of America’s founding, power was concentrated in the family unit —Jefferson’s independent yeoman farmer supporting the shared responsibility of the republic. When the family unit has the seat of power, they design tools that enhanced personal autonomy and creativity. Many artisans and craftsmen build similar items, indeed share the same tools, but each has the autonomy to bring their individual creative expression to bear on the process.

On the other hand, when the collective, such as the joint force of government and corporations, holds power it designs tools that grow and maintain its power. The question is not whether the power to design tools exits — it does. The question is who has the power to design tools.

Ivan Illich, in his book Tools for Conviviality, argues against the collective having the power to create tools. Illich argues for tools designed by individuals and family units which he calls “convivial tools” and defines them thus: “Convivial tools are those which give each person who uses them the greatest opportunity to enrich the environment with the fruits of his or her vision.”⁶ Illich goes on to describe how a society should think about creating such tools:

“A convivial society should be designed to allow all its members the most autonomous action by means of tools least controlled by others. People feel joy, as opposed to mere pleasure, to the extent that their activities are creative: while the growth of tools beyond a certain point increases regimentation, dependence, exploitation, and impotence.”⁷

It is the tools designed by governments and monopolies, with their narrow focus on growth and efficiency, which place rigid confines around people and their work.

Another interesting aspect of a convivial society, or a society where the power resides in the family unit, is that the tools are not complex. Illich again: “The techniques used are easily understood by observing the artisan at work, but the skills employed are complex and usually can be acquired only through a lengthy and programmed apprenticeship.”⁸ Convivial tools increase the independence of the artisan to the degree that he masters the skills necessary to use them. This is opposed to centralization and specialization where, “More of what each man must know is due to what another man has designed and has the power to force on him.”⁹

Illich’s analysis applies both to industrial tools as well as political and financial tools. The farmers who found themselves at the end of the rail line trying to grow corn on borrowed land were limited by tools they were required to use in order to participate in the market economy.

What Came of it

In this era, the tension caused by these industrial tools was expressed in the fight between capital and labor. Workers and Unions looked to the government to regulate monopolies and enforce better working conditions. Instead, they should have insisted on sound money economics and the destruction of subsidies to corporations. But they were unable to perceive the root cause of the tension. The corporations that rose to power on easy credit and generous subsidies could now afford lobbyists who protected their interests at the government level.

One politician, though, did understand the root cause of the issue. Ignatius Donnelly, running on the peoples’ platform in 1892, insisted that the monetary policy must be reformed. In his campaign platform he stated: “The national power to create money is approbated to enrich bondholders; a vast public debt payable in legal tender currency has been funded into gold-bearing bonds, thereby adding millions to the burdens of the people.”¹⁰ He went further and insisted that land should not be owned by corporations, speculators or foreign owners — it is the heritage of the people who live and work on it, and should be held by those people, not mortgaged to banks and corporations.

Donnelly’s platform highlights this point: when the government has the power to create paper-money and issue credit from thin air, it robs the people of independence and impoverishes the primary wealth of the land that is a gift from God.

Echoing Donnelly’s point about debt, LL Polk, a Southern farmer and journal editor gave an address in 1887 summarizing the destruction that chasing paper wealth brought to farmers:

“With the old-fashioned, wise and only safe policy for the southern farmer abandoned, viz.: the raising of our home supplies on our own farms—we drifted away from the sheet anchor of our safety and independence. Habits of reckless extravagance and improvidence grew on us, debt, the iron-gloved tyrant, was robbed of his terror, the wretched slavery of liens and mortgages was involved and welcomed, ruinous profits on the necessaries as well as the luxuries of life were freely promised if not paid, stock was neglected, diversification of crops abandoned…”¹¹

Luna Kellie, the wife of the J.T. Kellie quoted above stated flatly that Nebraska “is now a state of renters…” “He who owns the land owns the man who works it.”¹² In this era, more than ever before, a farmer had to throw himself into the market system to make a go of it. In order to sell any surplus into the market economy, he had to bring his costs down to meet the demands of the market. This meant investing in the technology to make him efficient enough to compete, which meant debt. This farmer was now subjected to forces outside of his control — a slave to a system he couldn’t escape.

What Comes Next:

The next essay in this series, published in two weeks, will discuss the birth of the Federal Reserve — the worst yet of the tools designed by the collective force of government corporate monopolies. Its creation coincides with the neo-agrarian movement which gave the greatest hope of bringing back a semblance of agrarianism to America.

1. Edwin Hagenstein, Sara M Gregg, and Brian Donahue, American Georgics, (New Haven: Yale University Press, 2011), 150.

2. Murry Rothbard, A History of Money and Banking in the United States…, (Auburn: Ludwig von Mises Institute, 2002), 122.

3. Murry Rothbard, A History of Money and Banking in the United States…, 129.

4. Edwin Hagenstein, Sara M Gregg, and Brian Donahue, American Georgics, 150.

5. Ibid., 192.

6. Ivan Illich, Tools For Conviviality, (London: Marion Boyars Publishing, 1973), 21.

7. Ivan Illich, Tools For Conviviality, 20.

8. Ibid., 58.

9. Ibid., 58.

10. Edwin Hagenstein, Sara M Gregg, and Brian Donahue, American Georgics, 188.

11. Ibid., 183.

12. Ibid., 195.

Image in public domain via: https://en.wikipedia.org/wiki/File:Winslow_Homer_(American,_1836%E2%80%931910),_Farmer_with_a_Pitchfork._Oil_on_board.jpg