1819

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Dartmouth College and the Divine Right of Democracies

"It is... a small college. And yet there are those who love it!" -- Daniel Webster during oral arguments before the US Supreme Court. [1]

The legislature, by virtue of a vote, is not allowed to modify an existing contract between private parties. Dartmouth College was chartered by the King of England before the United States came into existence, but after a recent dismissal of the college president by the trustees of the college, the New Hampshire legislature decides to convert Dartmouth into a public institution. The legislature essentially "nationalizes" the college by altering its charter and appoints William Woodward as its new president. Dartmouth takes the state to court and Daniel Webster defends them. Webster argues that the charter of Dartmouth College constitutes a private contract between itself and the King of England. The US Supreme Court agrees and establishes the precedence that the state cannot alter a private contract or charter without a substantially good reason and such interference cannot harm the members of the charter. [2]

My Take by Alex Shrugged
Later rulings established that even when conditions to a charter allow the state to modify a charter later, the state is not allowed to do harm. The court admitted that the state had a right to revoke a charter, but "the power to destroy does not imply a right to cripple or to maim." I am reminded of a Congressman telling a reporter that the laws Congress passes are automatically constitutional. He was suggesting that a democratic vote conveyed an objective correctness to a law. In days gone by a king might argue the same thing by divine right. However, we are not divine, nor are our esteemed legislators sent to Washington, D.C. by God's divine will. They are sent by the voter's will and they should remember that their power is limited to the power that the people can wield. If I don't have a right to do something then neither does the legislature since they derive their power from the people. [3] [4]

The Panic of 1819

The world economy is still in chaos after the end of the Napoleonic Wars. After all... if governments are no longer spending millions on gunpowder, muskets and ships, those industries must cut back while they find new markets to exploit. Workers must find other things to do and it takes a considerable time to adjust. The American economy has been going down the crapper even faster due to the dubious help of government policy. Excessive land speculation fueled by the easy money policies of the 2nd Bank of the United States have set up the USA for a fall. When the Bank of the US pulls back and shrinks the money supply (and thus returns to more conservative lending practices) the state banks panic and call in their loans. Well... the investments those loans represent have not yet ripened (if they ever will). The loans fail, the banks fall and down it all comes. Americans look around and ask themselves what the heck the government has been up to lately. Apparently, nothing good. Trust in government has gone bye-bye. [5] [6] [7] [8]

My Take by Alex Shrugged
People trusted government quite a bit, but that all ended with the Panic of 1819. I remember when the reputation of President George H. W. Bush took a hit during the Savings and Loans crisis. In those days savings and loans (or thrifts) were limited in the kind of investments they could make. But with the economy on the upswing, and a bright future ahead, the thrifts were losing depositors to more risky investments... like money market funds. Many of the thrifts became technically insolvent which means they should have notified the regulators and transferred their remaining deposits to a solvent bank, but with changes in the banking laws and lax monitoring by regulators, some thrifts took a chance on riskier investments with a big payback in hope of turning their situation around. When the Federal Reserve began charging higher interest rates for their money, the thrifts were caught in a death spiral. Their risky investments could not make up for the higher cost of money AND the technical insolvency. Over 200 billion dollars was lost. What about depositor insurance? The insurance company was insolvent too. I blame Congress for easing up on bank regulations without considering the consequences and adjusting for them in the law. Most people blame President Bush the Elder since he was in the hot seat at the time. [9]

In Other News

  • A child's workday is reduced to 12-hours. No night work and no child under 9 may be hired. Enforcement remains a problem. [10] [11]
  • The SS Savannah is the 1st steamship to cross the Atlantic. It uses steam for a short while. Most of the trip uses wind-power. [12]
  • Singapore becomes a British colony. They are challenging the Dutch commercial presence in the same region. [13]

This Year in Wikipedia

Year 1819, Wikipedia.

See Also

References

  1. Daniel Webster. en.wikiquote.org (2016). Retrieved on 29 June 2016. “It is, Sir, as I have said, a small college. And yet there are those who love it! Oral argument before the Supreme Court of the United States, March 10, 1818, in Dartmouth College v. Woodward, 17 U.S. 518 (1918).”
  2. Dartmouth College v. Woodward - Wikipedia (2016). Retrieved on 29 June 2016. “The decision, handed down on February 2, 1819, ruled in favor of the College and invalidated the act of the New Hampshire Legislature, which in turn allowed Dartmouth to continue as a private institution and take back its buildings, seal, and charter. The majority opinion of the court was written by John Marshall. The opinion reaffirmed Marshall's belief in the sanctity of a contract (also seen in Fletcher v. Peck) as necessary to the functioning of a republic (in the absence of royal rule, contracts rule).”
  3. "Constitutional Law. Due Process of Law. Right of Legislature to Alter Charter of Private Corporation". Harvard Law Review (The Harvard Law Review Association) 31 (6): 892-893. April 1918. http://www.austinlibrary.com:2138/stable/1327719. 
  4. Alex Shrugged notes: I apologize for being so vague about the Congressman in question. I am giving you my impression of a video clip I saw several years ago. My memory of the event may be fuzzy but my impression of what the Congressman meant remains crystal clear.
  5. Panic of 1819 - Wikipedia (2016). Retrieved on 29 June 2016. “Though driven by global market adjustments in the aftermath of the Napoleonic Wars,[7] the severity of the downturn was compounded by excessive speculation in public lands,[8] fueled by the unrestrained issue of paper money from banks and business concerns.”
  6. Peterloo Massacre - Wikipedia (2016). Retrieved on 28 June 2016. “The end of the Napoleonic Wars in 1815 had resulted in periods of famine and chronic unemployment, exacerbated by the introduction of the first of the Corn Laws. By the beginning of 1819, the pressure generated by poor economic conditions, coupled with the relative lack of suffrage in Northern England, had enhanced the appeal of political radicalism. In response, the Manchester Patriotic Union, a group agitating for parliamentary reform, organised a demonstration to be addressed by the well-known radical orator Henry Hunt.”
  7. Grun, Bernard. The Timetables of History: A Horizontal Linkage of People and Events. Simon and Schuster, 386-387. 
  8. Thomas Crapper - Wikipedia (2016). Retrieved on 29 June 2016. “Thomas Crapper (baptised 28 September 1836; died 27 January 1910) was a plumber who founded Thomas Crapper & Co in London. Contrary to widespread misconceptions, Crapper did not invent the flush toilet. He did, however, do much to increase the popularity of the toilet, and developed some important related inventions, such as the ballcock.”
  9. Savings and loan crisis - Wikipedia (2016). Retrieved on 29 June 2016. “In 1979, the Federal Reserve System of the United States doubled interest rates that it charges its member banks in an effort to reduce inflation. The building or savings and loans associations (S&Ls) had issued long-term loans at fixed interest rates that were lower than the interest rate at which they could borrow. In addition, the S&Ls had the liability of the deposits which paid higher interest rates than the rate at which they could borrow. When interest rates at which they could borrow increased, the S&Ls could not attract adequate capital, from deposits to savings accounts of members for instance, they became insolvent. Rather than admit to insolvency, lax regulatory oversight allowed some S&Ls to invest in highly speculative investment strategies. This had the effect of extending the period where S&Ls were likely technically insolvent. These adverse actions also substantially increased the economic losses for the S&Ls than would otherwise have been realized had their insolvency been discovered earlier.”
  10. Factory Acts - Wikipedia (2016). Retrieved on 29 June 2016. “The 1819 Cotton Mills and Factories Act (59 Geo. III c66) stated that no children under 9 were to be employed and that children aged 9–16 years were limited to 12 hours' work per day.”
  11. Cotton Mills and Factories Act 1819 - Wikipedia (2016). Retrieved on 29 June 2016. “The Act required that cotton mills and factories be properly ventilated and basic requirements on cleanliness be met. Apprentices in these premises were to be given a basic education and to attend a religious service at least once a month. They were to be provided with clothing and their working hours were limited to no more than twelve hours a day (excluding meal breaks); they were not to work at night.”
  12. SS Savannah - Wikipedia (2016). Retrieved on 29 June 2016. “SS Savannah was an American hybrid sailing ship/sidewheel steamer built in 1818. She is notable for being the first steamship to cross the Atlantic Ocean, a feat that was accomplished from May to June 1819, although only a fraction of the distance was covered with the ship under steam power. The rest was sailed by wind power.”
  13. Founding of modern Singapore - Wikipedia (2016). Retrieved on 29 June 2016. “Modern Singapore was founded in 1819 by Sir Stamford Raffles as a British colony. This was distinct from its earlier probable use as a port in ancient times during the dominance of Srivijaya, and later, Melaka in the region.”

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