Crime and Punishment in American History - Lawrence M. Friedman [71]
Taxes were, of course, another source of money for the state. It was forbidden to cheat on taxes, or not to pay them at all. From the standpoint of the twentieth century, nineteenth-century taxes were as light as a feather. There were taxes on property, a ragbag of excise taxes, and not much else. Still, tax evasion was at least a minor issue. Under Missouri law, for example, anyone who delivered to the assessor a “fraudulent list of taxable property” would be “taxed triple,” and could also be indicted and fined up to five hundred dollars.13 After the Civil War, the federal excise tax on whiskey did become a serious issue in “moonshine” country, and the low, simmering war between the moonshiners and the “revenuers” went on for decades.14
A free market is supposed to be based on voluntary agreements between traders—contracts, in other words. But even a “free” market presupposes certain rules of the game. Traders can be sharp, but not too sharp. The law defines certain conduct as cheating, and outlaws it. There are also rules against false sales, bad weights and measures, and so on: these are designed to prevent corruption and keep trading honest; cheating destroys expectations, and is a drag on the economy. A typical provision, from Tennessee, set up standards—a bushel, for example, had to contain 2,150.42 cubic inches. Every storekeeper and warehouser had to have his weights and measures “sealed” each year, on penalty of a fine; if a person was defrauded through improper weights, that person could collect treble damages. Using false weights was a misdemeanor; and the false instruments were subject to seizure.15 States had dozens of special weights-and-measures laws for particular commodities. Thus, in Rhode Island, when fish was sold “by measure” as manure, the standard measure was a barrel containing twenty-eight gallons, or a half-barrel with fourteen. These were to be “sealed by a sealer of weights and measures”; deviations were punishable by fine.16
Other rules struck at business fraud. Thus, under the Maryland code of 1878, it was a misdemeanor for a partner to commit “fraud in the management of the affairs of the partnership”; an officer or agent of a corporation was not to sign or “assent” to a fraudulent statement to the public or the shareholders with the intent “either to enhance or depress the market value of the shares.”17
At the time, not much came of such laws. Today, there are elaborate regulatory structures to keep public corporations honest, and to prevent them from fleecing investors. There are massive federal agencies that are supposed to monitor the stock market. Nothing of the kind existed in the nineteenth century, and the great robber barons, market manipulators, stock waterers, and corporate malefactors had a field day. Some of these men died poor, some died rich; Congress investigated them, newspapers excoriated them; during their battles with each other, they made heavy use of injunctions, writs, civil suits of all kinds; but the sword of criminal justice never touched Jay Gould, Daniel Drew, James Fisk, and the others of their ilk.
Economic Regulation
“Economic regulation” is a hopelessly vague phrase. But we can use it to describe laws that try to set down rules that businesses (or particular kinds of business) have to live by. Nowadays, much of this regulatory work is done by administrative agencies. This was much less so in the past. Enforcement was either through private lawsuits, or through the criminal justice system.
In general, the regulatory arm of government, federal and state, was much shorter (by a country mile) and weaker in the nineteenth century than today. The federal government was especially weak. It was like the brain of a dinosaur: a tiny ganglion, in Washington, D.C., inside a huge and extensive