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Ways of the World

Carol Stone, business economist & active Episcopalian, brings you "Ways of the World". Exploring business & consumers & stewardship, we'll discuss everyday issues: kids & finances, gas prices, & some larger issues: what if foreigners start dumping our debt? And so on. We can provide answers & seek out sources for others. We'll talk about current events & perhaps get different perspectives from what the media says. Write to Carol. Let her know what's important to you:

Saturday, July 23, 2011

The U.S. Government Debt Negotiations in Crisis

This is our third attempt at this article. We want to talk to you about the federal government debt and budget crisis. Maybe by the time you are reading this commentary, concrete decisions will have been made by Congressional leaders and the President, and the imminent threats of default, downgrade and disorder will have passed. We hope so.

Back in April we wrote about this situation here because Standard & Poor's, the credit rating company, had red-flagged U.S. Government debt for their "credit-watch", the period of doubt and concern that would precede a downgrade. Since then, talks have been held and plans have been proposed, but up to now, just 10 days before the Treasury predicts it will run out of cash, officials on both sides of the political aisle have refused to make even modest concessions on basic principles which are needed to bring an agreement in the middle. Everyone who seems about to do so is immediately branded as a traitor who is selling out, and then either the President or the Speaker of the House stomps out of the meeting room in disgust.

This is clearly no way to run a country.

We like the Gang of Six plan, which was announced Tuesday. We have misgivings about some of its items, but it's a fine and firm step in the right direction. Three fairly liberal Democratic Senators and three fairly conservative Republican Senators crafted a seven-page statement of concrete steps they agree on, which can be taken to cut spending and enhance revenues. Some parts of the their plan simplify the tax code, also a benefit. The President has said he would agree on a short-term increase in the Debt Ceiling so that the associated formal legislation could be drafted and enacted. This sounds reasonable to us. But who are we and what do we know?

What we do know is that the FAA yesterday announced its contingency plans if it has to shut down because its funding disappears next week. Air-traffic controllers are deemed "essential" and would be kept on, but other personnel would be furloughed as early as this coming Friday. This is just the first of such specific, detailed arrangements among government departments that will have to be made rapidly until we hear that the negotiations have achieved some kind of truce.

We know that the U.S. Conference of Mayors, meeting this weekend in Los Angeles, is expressing dismay and discouragement over the budget cuts they have to make, even as Washington "dithers", to quote one of them. Mayors from both political parties and from both small towns and big cities all face the same circumstances: they have already made sizable layoffs and their uncertainty grows with every day there is no federal budget agreement.

We know that financial markets haven't a clue what will happen if this unprecedented debt situation is not resolved quickly. We cannot say enough about what a key role U.S. Government debt has in everyone's finances. Rates on Treasury notes and bonds form the base for interest rate levels for many types of assets and credits around the world and in your own town. Companies keep amounts of cash on hand to pay various bills and expenses; a consulting firm that helps companies manage this cash prudently and flexibly has said that they aren't sure what to advise. The rules companies follow tend to let them keep unlimited amounts of their cash in Treasury securities. No one ever dreamed that the U.S. Government would default or be late with interest or bond payments, or that the debt would have anything other than the very highest credit rating. Banks want to know if the Federal Reserve will demand extra collateral for routine loans the Fed makes to them, if Treasury securities no longer have the highest rating. We know only that the Treasury and Federal Reserve officials began to meet just in the last few days to draft their contingency actions.

If this turmoil is still going on by the time you read this article, contact your Congressional Representative and your Senators. Tell them how important it is to come to an agreement. The gains some leaders think they are holding out for could well be eaten up by the chaos that will ensue in the financial system if this controversy is not settled – yesterday.

Saturday, July 09, 2011

The Great Awakening and the American Revolution

Our annual Independence Day articles highlight the interrelationship of the American Revolution and the social position of ordinary people in the world. What was "revolutionary" was not just a war and government independence, but recognition by society's traditional leaders and by ordinary people themselves that they indeed had a substantive role to fill in the way the world works. In our previous pieces, we've considered [2008] actions by households and families, especially wives, in combating the Townsend Duties – the "taxation without representation". Then [2009], we were startled to learn about a grass-roots movement in western Massachusetts, led by a blacksmith, among other locals, which overthrew the regional British government well before the Declaration of Independence or even Lexington and Concord. Last year [2010], we followed the rise of Ben Franklin, a printer's son with only modest formal education, to successful publisher and then statesman.

Long before any of these developments, there had been the Great Awakening of the 1740s. We had always thought that had been a period of religious revival, but we had not extrapolated its impact to the rest of society. New publications, one in particular by Thomas Kidd of Baylor University[1] drew our attention to that aspect back in the spring, and we knew immediately that this was something else "revolutionary" we wanted to share with you here.

At the outset, it's important to understand that in the early Colonial Period, religion in most colonies was not free. Yes, people had emigrated from their homelands to North America due to religious persecution, but in many communities here, the newcomers still established just one church. This is meant in the technical sense of the word "establishment": only one church was allowed by law and it was financed with a mandatory tax, often called "the tithe". In Massachusetts and Connecticut, it was the Congregational Church, in New York the Dutch Reformed, and in Virginia and some other southern regions, the Anglican Church. Only Pennsylvania had multiple denominations at first. As an example of how this played out, in the 1720s the Connecticut legislature enacted a "Toleration Act" exempting Anglicans, Presbyterians and Quakers from the tax that supported the Congregational Churches, but local officials were so restrictive in the licensing requirements, that by 1730 there were just one Anglican and one Presbyterian church and no Quaker meetings.

Another restriction on church expansion was a rigid requirement that clergy have a degree from a recognized English or European university; in America, only Harvard and Yale had qualified divinity schools. So prospective clergy had to come from families that could afford the education and the travel. There was no Anglican bishop here, and among other complications that created, there could be no Anglican ordinations here. There was a shortage of clergy everywhere, and many ministers served several congregations in far-flung towns and rural areas.

Restlessness among church leadership and people was thus already growing when George Whitefield, an Anglican minister, traveled to America in the late 1730s. He was not the very first of the Great Awakening preachers, but he popularized the experience, becoming perhaps the first "celebrity" in America. Whitefield was gifted with a booming voice and grandiose style. While he certainly preached in churches, he began holding meetings outdoors because his crowds were growing. In 1739, he went on a "barnstorming . . . tour . . . that evoked a mass response of dimensions never before witnessed in America." [2] Whitefield spoke to large crowds in Philadelphia and New York before arriving in Boston in September 1740. He gave his first sermon there in "fashionable Brattle Street Church" and spoke in several other churches. On a Saturday afternoon, something like 15,000 people gathered on Boston Common to hear him, and at the concluding meeting of his three-week visit, possibly 20,000 or more. The population of Boston at that time was about 17,000. [3]

The message of Whitefield's sermons emphasized that everyone could be "saved" who was Born Again. The expectation of universal salvation through New Birth was a new theme. It spoke to everyone, not just clergy and Established Churches. Moreover, Whitefield and his compatriots also blared out, everyone, even clergy, had to express the experience of New Birth in order to be saved. Education alone and ordination were not enough to qualify. Nor were good works the key. The key was the grace of salvation. Further, each person found this for themselves. It was not conferred in some official confirmation ceremony, nor was the intercession of some intermediary official required. More, anyone who had been saved might want to share the story of this life-changing experience with any gathering of people. That is, "preaching" could, in this setting, be done by ordinary lay people. Extensive formal education and passage through a battery of qualifying tests and screenings would not be necessary to lead a service or even organize a church.

As you might think, such arrangements were disconcerting to officials of Established churches. In many communities, the more open and flamboyant worship styles were not well received by church hierarchy. So people and clergy who adopted them often separated from established churches, some indeed forming organizations known as Separate Churches. "New Light" preachers tended to berate "Old Light" ministers who would not express a "Born Again" experience. Some preachers extended this criticism to any of the well-to-do. Such messages could be seen as the beginnings of social justice as a theme.

At the same time, all of this had great appeal to common people. It was an outlet that spoke directly to them, and it chastised those of higher social standing. So it enabled the challenge of authority from below. Ordinary people could speak to public audiences. Even Blacks and women got up in front of meetings. The preachers reached out the African-Americans and conducted missions to Native Americans. The preachers meant it when they said "anyone" might be saved. The people gained self-respect, fellowship and a support system.

This "Awakening" had obvious implications for churches. The emerging Baptist denomination expanded greatly. Also, those with more sedate styles, such as the Anglicans, made gains as people whose proclivities toward formality prompted them to become more active in those kinds of worship. Such multiplicity of churches and worship made it apparent by the 1770s and 1780s that there was no longer a consensus about Established Churches and a characteristic of the American Revolution was the move to "disestablishment" and the eventual adoption of the First Amendment.

The implications of the Great Awakening for the American Revolution also seem obvious to us here by now. People challenged authority. Existing monopolies of leadership and power were broken. The burst of revival meetings dissipated after some years, but the changes to social relationships were permanent. One writer distills it down nicely: "Rather than believing that God's will was necessarily interpreted by the monarch or his bishops, the colonists viewed themselves as more capable of performing the task. The chain of authority no longer ran from God to ruler to people, but from God to people to ruler." [4]


[1] Thomas S. Kidd. God of Liberty: A Religious History of the American Revolution. New York: Basic Books. 2010.

[2] Gary B. Nash. The Urban Crucible: the Northern Seaports and the Origins of the American Revolution. Cambridge, MA: Harvard University Press. Abridged Edition 1986, page 128.

[3] Nash, loc. cit. and page 33.

[4] "Significance of the Great Awakening: Roots of Revolution." Accessed July 1, 2011.

Other works we consulted:
Patricia U. Bonomi. Under the Cope of Heaven. New York: Oxford University Press. Original 1986; Updated 2003. A social history, disputes the previously held view that religion had been relatively unimportant in the colonies. This work is now widely quoted as a classic discussion of the Great Awakening.

Christine Leigh Heyrman. "The First Great Awakening: Divining America." TeacherServe@, National Humanities Center Accessed June 25, 2011.


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