No matter what people might say about 19th-century America, one incontrovertible fact stands out: It was the most unusual society in history.
We know that there were bad founding principles of the country. No doubt about that. Slavery was the worst. There were others, like violation of women’s rights, land grants to the railroads, tariffs, canal building, and government-business partnerships or “crony capitalism.”
But there were also some good founding principles, ones that made America into the most unusual society in history. Let’s review them.
1. No income tax and no IRS. Imagine living in a society in which you are free to keep everything you earn. No taxation on your income at all. No withholding tax. No payroll tax. No FICA tax. Your gross salary — you keep it all. No income tax returns. No keeping track of deductions. No income tax preparers. No running to the Post Office on April 15. For some 125 years, Americans were free to keep everything they earned and decide for themselves what to do with their own money.
2. No Social Security, Medicare, Medicaid, education grants, public schooling, foreign aid, or other welfare-state programs. No welfare state whatsoever. No taxing of people and giving the money to other people. No governmental assistance to seniors or the poor. Charity was 100 percent voluntary.
3. No immigration controls, except for a cursory tuberculosis check at Ellis Island in New York City. If you were healthy and of sound mind, you were in, no questions asked. In the American southwest, there wasn’t even a TB test. There were no border controls at all. People were free to cross back and forth over the U.S.-Mexico border. It was the same on the West coast—people were free to enter the United States—not even a TB examination there.
4. No Federal Reserve System. The Constitution established a monetary system in which the official money of the United States was gold coins and silver coins. The Framers didn’t want a monetary system based on paper currency because they knew that federal officials would use such a system to plunder and loot people through monetary debasement. The Constitution expressly prohibited the states from making anything but gold and silver legal tender or official money.
These four things produced not only the most unusual society in history but also the most prosperous and most charitable nation in history.
Americans made a remarkable discovery. They discovered how societies can overcome poverty by achieving ever-increasing standards of living.
One key was savings. When people were free to accumulate unlimited amounts of wealth, they saved a large portion of it. One benefit of that was that when an emergency hit, people had savings to get them through it. Another benefit was that people deposited those savings into banks, which then loaned them out to employers to enable them to purchase tools and equipment, which then made workers more productive. Increased productivity led to higher revenues, which then led to ever-increasing wages for the workers, which they were free to keep in their entirety because there was no income taxation.
Another key was open immigration. More people brought about a division of labor that enabled people to specialize in the areas in which they were more productive. That division of labor increased productivity and the overall standard of living.
Sound money was another key to rising standards of living. People were able to confidently save their money and even invest it in long-term (i.e., 100-year) bonds issued by private corporations. Businesses were able to plan long term, and investors knew that government could not wipe out the value of their bonds through monetary debasement.
Another result of this unusual system was charity. America became the most charitable nation in world history. When people were free to accumulate unlimited amounts of wealth, they not only saved a large portion of it, they also gave away a large portion of it. The wealthy and the middle class built the churches, hospitals, libraries, museums, and the like. They donated to the poor and other worthy causes. Doctors and hospitals treated the destitute and the poor, including seniors, for free. No one died in the streets notwithstanding the rejection of Social Security, Medicare, Medicaid, and other socialist programs.
As Americans continue to suffer and even die during this coronavirus crisis, this would be a good time for some national soul-searching. One good question to ponder, discuss, and reflect on would be: What role did the abandonment of America’s good founding principles play in the plight in which Americans find themselves today?