Historian Predicted America's Financial Collapse... in 1857

Guest post by J. R. Nyquist

The Great British historian, Lord Macaulay, predicted the future unraveling of the United States economy in a letter written in May 1857. Macaulay’s prediction was based on his analysis of American institutions. Discussing the life of Thomas Jefferson with an American author, Macaulay wrote, “You are surprised to learn that I have not a high opinion of Mr. Jefferson, and I am surprised at your surprise. I am certain that I never wrote a line, and … uttered a word indicating an opinion that the supreme authority in a state ought to be entrusted to the majority of citizens [counted] by the head; in other words, to the poorest and most ignorant part of society.”

According to Macaulay the United States was becoming increasingly democratic throughout the nineteenth century. And this tendency, he argued, was dangerous to liberty and to the country’s economic well-being. As Macaulay explained, “I have long been convinced that institutions purely democratic must, sooner or later, destroy liberty or civilization, or both.”

Macaulay pointed to the French Revolution and to the tendency of democratic movements to despoil the rich. “You may think that your country enjoys an exemption from these evils,” Macaulay wrote to his American correspondent. “I will frankly own to you that I am of a very different opinion. Your fate I believe to be certain, though it is deferred by a physical cause. As long as you have a boundless extent of fertile and unoccupied land, your laboring population will be far more at ease than the laboring population of the Old World, and, while that is the case, the Jefferson politics may continue to exist without causing any fatal calamity.”

Eventually, of course, the United States must fill up with people. It must lose its economic advantages. “[T]he time will come, noted Macaulay, “when New England will be as thickly peopled as old England. Wages will be as low, and will fluctuate as much with you as with us.” America will then be urbanized, with a large population of “artisans.” Then it will happen that large numbers of these artisans will sometimes find themselves out of work. “Then your institutions will be fairly brought to the test,” wrote Macaulay. “Distress everywhere makes the laborer mutinous and discontented, and inclines him to listen with eagerness to agitators who tell him that it is a monstrous iniquity that one man should have a million, while another cannot get a full meal.”

With the supreme power in the hands of a discontented multitude, what kind of government are they likely to elect? Would it be a government committed to “the security of property and the maintenance of order”? Or would it be a government that gets through hard times by robbing the rich “to relieve the indigent”?  Eventually, wrote Macaulay, the Jeffersonian bent of the United States will result in the destruction of property, the plundering of the wealthy. “It is quite plain that your government will never be able to restrain a distressed and discontented majority. For with you the majority is the government, and the rich, who are always a minority, absolutely at its mercy.”

As we see today, all levels of government in America are involved in relieving the distress of the poor and unemployed, and we also see that this is presently accomplished by taxing the rich as well as by taking on debt. Presently the United States has the most progressive income tax system in the industrialized world with the rich paying more than half of all income taxes. As for the accumulation of debt, the gross public debt of the United States exceeds 160 percent of GDP; and this figure necessarily represents the future despoliation of the rich through inflation and/or future taxation.

The process that Macaulay wrote about, therefore, is well on its way. “I seriously apprehend that you will, in some such season of adversity as I have described, do things which will prevent prosperity from returning,” wrote Macaulay to his American correspondent; “that you will act like people who should in a year of scarcity devour all the seed-corn, and thus make the next a year not of scarcity, but of absolute famine. There will be, I fear, spoliation. The spoliation will increase the distress. The distress will produce fresh spoliation. There is nothing to stop you. Your Constitution is all sail and no anchor.” As the process of unraveling continues, he added, “Either some Caesar or Napoleon will seize the reins of government with a strong hand, or your republic will be as fearfully plundered and laid waste by barbarians … as the Roman Empire….”

Today our barbarians are not represented by external tribes. Today the barbarian is an internal problem. In The Undiscovered Self, the psychiatrist Carl Jung wrote: “Separation from his instinctual nature inevitably plunges civilized man into the conflict between conscious and unconscious, spirit and nature, knowledge and faith, a split that becomes pathological the moment his consciousness is no longer able to neglect or suppress his instinctual side.” As Jung further explained, “the accumulation of individuals who have got into this critical state starts off a mass movement purporting to be the champion of the oppressed. In accordance with the prevailing tendency of consciousness to seek the source of all ills in the outside world, the cry goes up for political and social changes.” And what happens next, according to Jung? Society’s “underside comes to the top and the shadow takes the place of the light….”

Here is the psychological process at work inside every communist revolution. The movement of the oppressed against the rich becomes a pathological outbreak, with dire consequences. A criminal political class gains the upper hand. Plunder takes place on an unprecedented scale. “The Communist revolution has debased man far lower than democratic collective psychology has done, because it robs him of his freedom not only in the social but in the moral and spiritual sphere,” wrote Jung. Not only is the economy destroyed, but mankind sinks into immorality. This debasement, said Jung, could bring more than economic collapse. As Jung pointed out, “It needs only an almost imperceptible disturbance of equilibrium in a few of our rulers’ heads to plunge the world into blood, fire, and radioactivity.”

It seems perfectly clear that we are presently headed for spoliation as described by Macaulay. We are already acting like people who respond to scarcity by devouring our seed-corn, “and thus make the next a year not of scarcity, but of absolute famine.” And as Carl Jung explained, the debasement that follows is not merely economic, but spiritual as well. We see all the signs around us. We see the political situation developing apace. What Macaulay wrote makes perfect sense today, especially when we are watching his prediction unfold before our very eyes.

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