Tom Paine’s Plan for the Public Finances by William Shepherd
© 2009 William Shepherd
William Shepherd is an English radical economist. Born at the end of the World War II, he was a regular contributor to Fourth World Review from 1987 to 2007 and the author of The Rise & Fall of the Swedish Green Party (1982-1997) published in 1989. He works as an Investigative Historian living in the English West Country and is co-founder of the public policy institute Cliff Edge Signalling Company (see www.cesc.net). This essay was first published in 2001 as part of a small pamphlet entitled England’s Landed Property.
Introduction
In September 1795 James Monroe wrote that ‘Paine’s illness was so grave that there was a danger that he would not survive more than a month or two.’ Tom Paine was indeed in poor health. He suffered from constant chest pains and now his jail fever had returned. In America rumours of his death began to circulate. In England William Cobbett reported that Paine was ‘living as a helpless invalid, suffering from a type of paralysis that took away the use of his hands’.
On November 26, 1795 Carl Cramer, a translator of Rights of Man, wrote of his distress at Paine suffering ‘incurably from the torture of an open wound in the side, which came from a decaying rib.’ But these well-meaning gentlemen underestimated Paine’s robust constitution and will to live. Attended by Dessault, a well-known Paris surgeon, Paine regained full strength.
Napoleon Bonaparte was expanding the influence of the military in French politics and Paine saw little future as a Deputy to the French Convention. So during his convalescence he took up his pen. In the judgement of his contemporaries the results were sensational. The firebrand radical pamphleteer was back…as the learned professor of political economy.
The evidence was in two pieces he wrote in the winter of 1795/96. The first, Thomas Payne, à la Législature et au Directoire, ou la justice agraire opposée à la loi et aux privilèges agraires... Agrarian Justice opposed to Agrarian Law and to Agrarian Monopoly...was a proposal for a citizen’s income funded by an inheritance tax. The second, The Decline and Fall of the English System of Finance was about the collapse of the Bank of England and the manner in which it would come about.
The Paine Plan
Paine’s decision to publish Agrarian Justice had been triggered by reading the Bishop of Llandaff’s sermon praising the division between rich and poor as ‘a sign of God’s wisdom’. In France following the austerity of the Jacobin dictatorship the salons were reopening and conversation flourishing. But with the new Directory’s abolition of the old economic controls imposed by the Committee of Public Safety, government spending and inflation were skyrocketing, brigandage was flourishing, and misery had become widespread. Deputies and high state officials protected themselves by calculating their salaries in myriagrams[2] of cheese, the army lived by pillage, and townspeople and villagers were rescued from starvation by food removed from the peasantry.
While France's citizenry was falling on hard times the rich were getting richer. For Paine this rising inequality was not just a French phenomenon. ‘Making one part of society more affluent, and the other part more wretched than would have been the lot of either in a natural state’ was a central problem of civilization. He likened the division between poor and rich to ‘dead and living bodies chained together,’ but insisted that the poverty was an artificial, humanly produced blight. God did not make rich and poor; only men and women. God created the earth and granted man the right to occupy it. But the rich had come to regard the acquisition of property as an end in itself, to be held forever ‘as if the Creator had opened a land office issuing title deeds in perpetuity’.
In his biography Tom Paine: a political life (Bloomsbury, London, 1995, 644 pages, ISBN 0747525439, £9.99) John Keane writes (pages 425-427) that Paine 'favoured the preservation of a private-property, market driven economy, but argued that its self-destructive dynamism…its tendency to generate wealth by widening the income gap between classes…could be tamed by institutionalizing the basic principle of each person’s entitlement[3] to full citizens’ rights.' Here is Tom Paine.
‘The accumulation of personal property,’ was the result of ‘paying too little for the labour that produced it; the consequence of which is that the working hand perishes in old age and the employer abounds in affluence.’ Private property might be God-given but was conditional upon the higher principle that the land and soil were ‘the common property of the human race’. The propertied few had a duty to help the poor, not by way of charity, but by accepting an inheritance tax that would redistribute and equalize income…echoes of Bernard Shaw’s insistence a hundred years later that ‘socialism is equal money’.
In Agrarian Justice Paine sets out his plan for a fund from which every man and woman reaching twenty-one years of age would be eligible for a compensatory one-time payment of fifteen pounds sterling, while every person reaching fifty years of age would receive an annual citizen’s pension of ten pounds[4]. Removal of one-thirtieth part of the value of an estate at death was sufficient to fund The Paine Plan.
Landed Property
It was generally accepted in the salons of the 1790s that apprentices and servants should be excluded from the right to vote on the ground that they were dependent on the will of their masters and would be afraid of disagreeing with them publicly. Paine stood this argument on its head by insisting that instead of denying the franchise to those who depended politically on the rich, the dependants should be granted monetary independence. The universal guarantee of a right to a basic citizen’s income would then require…contrary to the spirit of the new 1795 constitution…a universal franchise.
It would be wrong to see Tom Paine as a lone voice. Republican fervour was sweeping the North Atlantic world and ideas could cross from Paris to Philadelphia in a matter of days. Many English landlords, such as the Earl of Winchelsea, Lord Carrington, Lord Egremont and Lord Sheffield, were putting forward schemes for supplying labourers with cow pastures or encouraging their self-sufficiency in other ways.[5] In this they were following the recommendations of Nathaniel Kent, a land valuer and agriculturalist who was for a time bailiff to George III at Windsor.
In his Hints to Gentlemen of Landed Property (London, 1775, page 238), Kent proposed that every cottage should have half an acre of land attached to it, so that fruit and vegetables could be grown and a pig kept. More prosperous cottagers might also have three acres of pasture land on which to keep a cow for milk and to help feed their pigs. If workers could not afford to buy a cow outright, then one should be rented to them by the landlord. Cottages should be well-maintained for 'nothing can reflect greater disgrace upon a gentleman than a shattered miserable hovel at his gate, unfit for human creatures to inhabit.'[6]
During the 18th Century the English aristocracy with their habit of 'living on' and 'developing' their own land stood in sharp contrast to the way of the French aristocratic system.>[7] Indeed Montesquieu saw in the English system a model for monarchy itself...when contrasting this form of governance with republics and autocracies. Montesquieu saw that in England, the local aristocracy represented 'locality' against the centralising interests of the cities and of the monarchy itself.[8] Montesquieu's magnus opus, 'The Spirit of the Laws', was required reading, not only in the salons of 1795 Paris, but also in the coffee houses of Birmingham and Boston.
Money Wars
In The Decline and Fall of the English System of Finance Paine attacked the economic system of the English government. Paine predicted that within twenty years, the national currency of England would fail. Paine was well versed in monetary matters having published several essays on money and finance in America while editing American Crisis. He was also able to draw on the expertise of his banker friend Robert Smyth. England’s level of foreign debt was in excess of £400 million...some $ 75 billion[9] at current price levels...while the cash holdings of the Bank of England amounted to £1 million.
‘Bank notes,’ Paine wrote, ‘were not worth the paper on which they were printed’, adding for good measure that ‘…the pound sterling would become ever more overstretched.’ The reason was the ‘iron law’ that ‘the national debt was set to rise annually in continual progression.’
Paine had understood the workings of what Thomas Greco refers to as 'the growth imperative'.[10] The prediction came true the following year when the Bank of England suspended convertibility of bank notes.
On April 27, 1796, Paine presented copies of The Decline and Fall of The English System of Finance ‘to the French people’ and to both the Council of Five Hundred and the Council of Elders. A member of the Council of Elders enthusiastically proclaimed that the work should be placed under the eyes of everyone concerned with financial matters, prompting a majority of the Council to vote for its official printing and distribution. The Directory ordered one thousand copies, and took the view that Paine’s work was ‘the most combustible weapon which France could at this moment employ to overthrow and destroy the English government.’ It swiftly despatched these copies to the major financial centres of Europe with the intention of persuading investors to unload their English funds, thereby reducing England ‘to the nakedness and abandonment to which she must inevitably descend’.
A few weeks later, the Directory arranged the printing of a German-language edition to influence the financiers of Holland, Switzerland, and Germany, ‘whose interests are essentially linked to those of the Bank of London.’ The Directory sent a hundred copies of this German edition to the Ministry of Foreign Affairs to be distributed by French agents in foreign countries. Meanwhile more than a dozen editions...as well as five refutations...appeared in London, several editions came out in America, with translations into Italian and other languages, and two German authors published refutations in French. One particular writer, Mr. Joersson, himself in the pay of the English, accused the ‘writer attached to the opposition’ of plotting to reduce ‘an amiable and enlightened people’ to French ‘barbarism.’[11]
The Local Front
Two hundred years later we are stumbling onto a new political landscape. As global fascism barks and bites and the dogs of war tighten their grip, radicals will have to invent a new form of politics rooted in the place they live...village cricket rather than professional football to use one of J.B. Priestley's metaphors. Trying to decolonise national and global giantocracies will be futile. These and their big outside interests will carry on running roughshod over ordinary people just as long as local communities allow them to get away with it. Sir Halford Mackinder saw this struggle between 'locality' and 'interests' as the future of politics a hundred years ago when he wrote a short book entitled Democratic Ideals and Reality.
In the years ahead effective political action will take place on a vast number of local fronts rather than nationally or globally. ‘Only the local is real’...to quote G.K. Chesterton.
Local action will take many forms, but there will be two common threads running through the initiatives that succeed. They will embrace the principles of the open money movement and they will place at the centre of their local concerns the urgent need to reclaim the right of every family to live, work, build, coppice and farm their own few acres of land.
The offer of a gift of five acres and a cow to every able-bodied man on reaching his eighteenth birthday bears serious comparison to the manhood and womanhood allowance of The Paine Plan. Even a dour Scotch Chancellor of the Exchequer might regard it as cheap at the price...in comparison to the price of inventing a new industrial workplace or the annual cost of detaining a young man in idleness at His Majesty's pleasure.
It has taken us two hundred years to come full circle. Tom Paine, the radical’s radical, has hit the mark again. How soon before Agrarian Justice and Decline of the English System of Finance join Adam Smith’s Wealth of Nations in courses on political economy and geographical history? Our local fronts need a local curriculum. Let’s start with a Paine Plan in every village and parish across the land.
Background Notes
1. This was the Monroe of the 1823 Monroe Doctrine. Monroe had recently been appointed American minister in Paris and had done much to secure the release of his 'fellow American citizen', Tom Paine.
2. 1 myriagram = 10 kilograms; a lot of cheese.
3. Despite the self-interested claims of the doom-mongers, in the middle of the last century the world’s economy moved from an Age of Scarcity to an Age of Plenty (see Grunch of the Giants by Buckminster Fuller and World Game Handbooks by Medard Gabel). It is therefore timely for economists to give serious consideration to Tom Paine’s ideas of a universal entitlement. In the UK this might take the form of issuing 1946-53 style digital ration books to every family…a scheme that could be extended to include the poorest countries in the world, perhaps by some form of parish or county-based twinning between the rich and the poor families around the world bypassing governments and banking institutions.
4. In 1795 land in England could be rented for between five and seven shillings per acre per year and the rich used the exchanges of the City of London to swap one guinea of annual income for twenty golden sovereigns ...and vice versa. So the £15 of The Paine Plan would buy a married couple five acres and a cow...and leave them free and clear of any debts and encumbrances. We live from harvest to harvest... refrigeration and canning notwithstanding...so that all the rich can do with their riches is to buy future claims on 'Forward Living Capability'. This is produced from the fertility of the soil by properly farming the land. Hence the importance of the money exchanges...which provide the rich with a future income for their present capital...and the Finance Mechanism which rigs the terms of exchange between work, food and capital in favour of the rich. All investment is speculation upon the future fruits of the soil...and the power of the players intent on securing them. It is no accident that the old economists framed a society’s choices in terms of guns and butter. One of the best portrayals of this reality is in John Seymour’s recent novel...a best seller in German...Retrieved from the Future set in East Anglia after the failure of oil supplies and a bitter cold winter.
5. At the tail end of the eighteenth century, winter wages in Wiltshire were six shillings a week...the price of a wheelbarrow...and mutton could be bought at the local market for four pence a pound. A family with four or five young children under the age of eight could expect to pull in a pounds worth of wages between them from a month of harvest work...just enough to keep them in bread while they worked.
6. This reasoning is given a practical dimension in Leopold Kohr's 1964 article The Duke of Buen Consejo where he argues that the development (of beauty) should start with the rich man in his castle and would trickle down to the poor man at his gate...provided the lord (and his lady) lived in their castle.
7. This crucial connection between 'worked' and 'unworked' capital was central to R.H. Tawney's definitions of property and improperty... see Religion and The Rise of Capitalism and The Acquisitive Society.
8. Montesquieu argued that states had to remain very small and that large monarchies and republics could only be governed despotically. To Montesquieu, what we have come to call Fascism was a consequence of Giantism. Any state that became too large would become despotic.
9. Professor A.W. Skempton recommended a factor of 40 for converting prices from the mid-1700s to 1980 prices in his 1980 study at London University's Imperial College. Prices doubled between 1980 and 1992 and then increased by a further 25% in the period 1992-96. Historical price comparisons are notoriously difficult to make but the multiplier of 100 (40 x 2 x 1.25) adopted in 1996 for a short (unpublished) tract on the great eighteenth century civil engineer John Smeaton gives the right order of magnitude to the money numbers.
10. Two recent books throw light on the mechanisms behind monetary matters. Creating New Money: a monetary reform for the information age by Joseph Huber and James Robertson advocates seigniorage reforms calculated to appeal to Eurofanatics by dangling the carrot of abolishing the European Bank and issuing the euro from Brussels. Our radical Eurocrats would put the Money Power in its place and relegate private banking companies to departmental status at the European Institute for Chartered Accountants. In Money: understanding and creating alternatives to legal tender, Thomas Greco champions the cause of the open money movement... analogous to the ‘open source’ movement in the digital world. Tom believes that the monetary needs of healthy communities are best met from their own local mutual credit systems.
11. The use the French made of Paine's pamphlet condemned him as a traitor in the eyes of his fellow Englishmen. But Paine’s enemy was The Money Power. This powerful invisible force, ever fearful of too close a popular scrutiny, avoided attacking the message by conducting instead a scurrilous campaign against the messenger. Paine was portrayed as a traitor and his anti-religious diatribe The Age of Reason produced as evidence that he had moved beyond the pale of respectable society. Nearly every biographer of Tom Paine...and there have been some fifty of them...have accepted uncritically this view that The Age of Reason was Paine’s undoing. This is unlikely since Paine's views on The Old Testament and the priesthood were widely held among radicals and freethinkers. Indeed far from meeting a hostile audience, The Age of Reason was accorded much popular acclaim in taverns and salons across two continents.
