by Robert Maynard
Thomas Jefferson derived his view of economics from a comprehensive study of the principles of Law and Government, including his time attending William and Mary College. That was the essence of the message delivered at the Ethan Allen Institute’s founder and current President John McClaughry in a talk entitled “Mr. Jefferson’s Economics” at the Institute’s annual Jefferson Day event held at the Sheraton Inn in South Burlington last night. McClaughry cautioned the audience about simply taking Jefferson’s ideas and positions on issues and broadly applying them to today’s concerns. He noted that times have changed a lot, but still thought that the basic principles held my Jefferson are sound and worthy of serious reflection even today. Reflection on these principles is the purpose of the annual Jefferson Day event.
The talk started out with the fact that Jefferson was not a strict economist in the narrow sense that we think of today. He was an avid student of the principles of history, law and government and applied those principles to the field of economics. From there the talk explored some of the thinkers that had an influence on Jefferson’s thinking on the subject. First there was John Locke and his Two Treatises on Government. From Locke’s work Jefferson adopted notions about the importance of property rights. Jefferson saw the right to acquire and own property as a basic human right. Next, there was Adam Smith and the Wealth of Nations, from which Jefferson adopted his support for free trade. Finally, there was James Harrington and the French Physiocrats. From the Physiocrats Jefferson adopted agrarianism and support for the notion of freeholder, or a farmer who owns his own land. Jefferson saw the virtue of self reliance and independence associated with small land owning farmers as critical to maintaining a free republic. This was important enough to him that he sought to put Harrington’s principles to use on a smaller scale in 18th Century Virginia, supposedly to create a model for the rest of the nation.
The set of characteristics that Jefferson saw as needed in each citizen of a free republic, if that republic was to remain free, was to be a citizen in politics, a freeholder in economics and a soldier in war. In addition to these concerns, he strongly advocated sound money and condemned deficit spending. McClaughry quoted Jefferson as saying “I believe that banking institutions are more dangerous to our liberties than standing armies.” In particular, Jefferson frowned on paper money not backed up by something of intrinsic value. He was a firm supporter of hard money such as gold and silver. He considered deficit spending to be unarguably immoral. McClaughry noted how Jefferson retired the nation debt during his time as President and eliminated virtually all direct federal taxes. Jefferson believed that public expenditures were to be kept to a minimum and that public debt should be paid off as soon as possible.
The rest of the talk was dedicated to questions and answers, which ranged from the similarities between Jefferson’s views and Madison’s views, to how Jefferson’s antagonism toward manufacturing softened in his later years. Despite the differences between our time and Jefferson’s, there was speculation among the audience during the question and answer period about how Jefferson would view some of the challenges we face toady, such as our crushing national debt. Such discussions continued on by an enthusiastic audience after the talk was finished. Among those who were in attendance was former Governor Jim Douglas, who introduced Mr. McClaughry at the start of the talk. Governor Douglas noted that the idea for an event dedicated to discussing Jefferson’s principles was first suggested in 1969 by then freshman legislature John McClaughry. He also recalled how some Democrats were less than pleased that Republicans would be co-opting a figure who they considered an ideological ancestor. In the end it would seem that the principles held by Thomas Jefferson should be of interest to Americans regardless of party affiliation and an event aimed at discussing those principles should be welcomed by all.