October 16, 2020 Reading Time: 5 minutes

What is the relationship between money and liberty? In answering this question, I do not want to limit myself to abstractions. Instead, I want to explore how monetary institutions are related to political freedom in a specific time and place. While there are undoubtedly timeless principles about money, freedom, and the relationship between them, I want to put these principles to work, which requires applying them in a specific context. 

As an American citizen, I am primarily concerned with American money and American liberty. To get the most out of the ensuing discussion, I first have to elaborate on the nature of the American political experiment.

Russell Kirk’s The Roots of American Order is a fascinating survey of the intellectual and historical traditions that shaped America. “Old and intricate, these roots give life to us all,” Kirk writes. “We can distinguish two sorts of roots, intertwined: the roots of the moral order, of order in the soul; and the roots of the civil social order, of order in the republic.” These two kinds of order are necessarily complementary. The United States is an experiment both in revolutionary freedom and communal virtue. In other words, our public institutions reflect an ongoing quest for ordered liberty. Without understanding the sources of ordered liberty, we cannot come to grips with our own institutions. This includes economic institutions, such as those pertaining to money, which are much more closely connected to political and moral concerns than we might think.

“Seeking for the roots of order,” Kirk continues, “we are led to four cities: Jerusalem, Athens, Rome, and London.” In other words, American ordered liberty rests on four related yet distinct pillars. The first is the Judeo-Christian religious tradition. The second is the classical Greek intellectual tradition. The third is the Roman legal tradition. And the fourth is the English constitutional tradition.

“The tap-root of American order runs deep into a Levantine desert; it began to grow some thirteen centuries before the birth of Jesus of Nazareth. Through Moses, prophet and law-giver, the moral principles that move the civilization of Europe and America and much more of the world first obtained clear expression.” 

So Kirk introduces the first of the sources of American order: the story of Israel. The journeys of Abraham, Isaac, and Jacob; the enslavement in Egypt; the liberation and subsequent conquest of Canaan; the period of prophets and kings; the Assyrian and Babylonian captivities; the return and subsequent yokes under the successors of Alexander the Great, and eventually Rome; each of these saw great religious and moral developments that revolutionized how human beings understand reality and our place within it. The Law, Prophets, and Writings of Israel witness to our common humanity, pointing to a moral absolute that both speaks to and transcends time and place. The Christ-event took this further, with revolutionary implications for social and political order. Ideas we take for granted, such as the inviolability of the human person and the inherently limited nature of political authority, cannot be separated from Israel and Christendom.

“In philosophy, in warfare, in the early sciences, in poetry, in grace of manners, in rhetoric, in high cunning, the people who called themselves the Hellenes excelled all civilized folk who had preceded them in time,” Kirk continues. Importantly, while the ancient Greeks were an intellectual influence on America at the time of the Founding, their political experience was something the Founding Fathers desperately wanted to avoid. 

“To most of the men who drew up the American Constitution, the ancient Greek commonwealths offered few precedents worth following—except in the sense that the blunders of Greek political experience provided some salutary negative lessons.” Classical Greece was perpetually beset by political chaos, from wars to rebellions to tyrannies. But in arts and letters, the Greeks reigned supreme in the hearts and minds of the Founders. 

Both philosophy and imaginative literature were a non-negotiable part of a liberal education for the men who gathered in Philadelphia. Especially important were Plato’s meditations on law and justice, as well as Aristotle’s analysis of balanced commonwealths.

“The grandeur that was Rome…worked strongly upon the imagination of the men who founded the United States. Between the Roman Republic and their own republican creation they perceived parallels, and other similarities would be discerned as America grew.” Roman history strongly informed the political institutions embraced by America’s political Founders. Rome’s republican period was their lodestar. 

The structural features of the US Constitution intended to prevent political domination were directly inspired by the political balance of Republican Rome. These features were also intended to prevent America from degrading, as Rome did. The Founders regarded Rome’s transition from Republic to Empire with distaste, even as they admired the personal virtues of emperors such as Marcus Aurelius.

“Some three hundred years ago, Britain was tormented by the clash of hostile religious persuasions, political theories, and material interests. Out of those civil wars of the seventeenth century there emerged at the end much of the constitutional pattern and the religious toleration that America knows today.” 

Thus we come to the last of the four great tributaries that feed American ordered liberty. The Glorious Revolution of 1688-9 and ensuing constitutional settlement created in England a government of divided powers. Although the parties to the great struggle between Crown and Parliament did not intend it, they arrived at an effective political equilibrium, which fascinated the greatest minds of that era. Montesquieu, for example, was an admirer of English institutions, and his analysis of the separation of powers in The Spirit of the Laws was widely known and appreciated by early American statesmen. 

Also, we must remember that Americans were proud of their English heritage and liberties, and in their mind only fought the Revolution to preserve these liberties against perceived usurpation. It is not without cause that the American Revolution is sometimes described as a revolution “not made, but prevented.”

Jerusalem, Athens, Rome, London—these are the antecedents of ordered liberty in America. Each tradition left its mark on American social and political institutions, and continue to influence them today. Again, it would be a great error to exempt economic institutions from this claim. Commerce and its organization were necessarily political concerns in the eyes of America’s Founders. 

Hence the institutions for the propagation of commerce were regarded as valid objects of political action. They were also viewed as an extension of morality. Witness the significant economic controls placed on economic activity during the Colonial period, much of which carried over to the newly formed state governments in the late 18th and early 19th centuries. 

Regardless of what we think of these traditions and practices, we cannot comprehend the history and development of American institutions without reference to them. To understand money, we must understand the entire institutional chain: from money to banking and finance, to law and politics, to the ultimate sources of social authority. The story of money in America is itself a chapter in the story of ordered liberty in America.

Alexander William Salter

Alexander W. Salter

Alexander William Salter is the Georgie G. Snyder Associate Professor of Economics in the Rawls College of Business and the Comparative Economics Research Fellow with the Free Market Institute, both at Texas Tech University. He is a co-author of Money and the Rule of Law: Generality and Predictability in Monetary Institutions, published by Cambridge University Press. In addition to his numerous scholarly articles, he has published nearly 300 opinion pieces in leading national outlets such as the Wall Street JournalNational ReviewFox News Opinion, and The Hill.

Salter earned his M.A. and Ph.D. in Economics at George Mason University and his B.A. in Economics at Occidental College. He was an AIER Summer Fellowship Program participant in 2011.

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