Thursday, December 18, 2025

How Religious Freedom in America Was Founded on Privatization and Decentralization

 A common myth about American history is the one in which a handful of so-called “founding fathers” in the 1780s declared that America would create a “wall of separation” between religious institutions and government institutions. After that, the First Amendment to the US constitution was instrumental in ensuring that religious institutions would be totally separate from American political institutions. Or so the story goes.

Much of this myth is premised on the idea that the spread of religious freedom in America was a top-down process. In this narrative, the process was guided by non-Christian secularists like Thomas Jefferson who were especially influenced by the ideology of the French Enlightenment. 

This historical narrative is wrong in nearly every way. For example, it is not at all the case that the First Amendment was central to the process of disestablishment—the process of abolishing the “official” churches who held favored positions within most state governments. Rather, this process was carried out overwhelmingly in the state legislatures—and some of this was done before the First Amendment was even written. Nor is it true that the process of disestablishment was guided primarily by the thinking of the so-called “Enlightenment.” Rather, it was mostly Christian activists who sought to end disestablishment as a means of clearing the way for the non-established Christian groups who had not benefited from taxpayer funding or regulatory favoritism. Disestablishment was, in other words, a means of privatizing the churches and creating a “free market” in religious practice. Most who favored disestablishment thought it would lead to the spread of religious practice, not its abolition or restriction. 

It was not until the twentieth century, when most American jurists and policymakers had thoroughly adopted truly secularist views, that the First Amendment came to be seen as a legal tool to dictate to state and local governments how they ought to regulate the relationship between church and state. 

Disestablishment: A State-Level Process 

Popular narratives have long focused almost exclusively on the federal government in the realm of religious freedom, and this has usually obscured the decentralized reality of disestablishment. As Michael Baysa puts it: ”The disestablishment of religion in America has a long and storied history that, at times, becomes muddled with the histories of the first amendment of the United States Constitution; Thomas Jefferson’s famous language of the “separation of church and state”; anti-Anglicanism during the Revolutionary War; and court cases over the freedom of religious exercise.”[1]

When we’re talking about the spread of religious freedom during the late eighteenth and the nineteenth century, the story is overwhelmingly one that plays out at the state level. 

After all, there never was any established national Church in America at all. Consequently, there is no process of disestablishment at the federal level to describe. Rather, the First Amendment was largely the product of anti-federalists and other decentralists who wanted guarantees that the federal government would not intervene at all in state laws related to religion. This is why the First Amendment states that  “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” It is only the national legislature, Congress, that is limited by this text. This established that policy related to the churches was to be exercised outside the purview of the federal government.

In this context, it made perfect sense when President Andrew Jackson refused to issue a national proclamation of prayer and thanksgiving—as some presidents before him had—insisting that a federal proclamation “might disturb the security which religion now enjoys in the country, in its complete separation from the political concerns of the General Government.” Again, note the concern here is a connection between religion and the “general” (i.e., federal) government.[2] There was no question as to whether or not state governments could issue such proclamations. It was widely accepted that they could. 

Moreover, many of the states had already begun the process of disestablishment before the Bill of Rights was even ratified in 1791. New York and North Carolina disestablished in the 1770s, and Virginia did so in the 1780s. South Carolina followed in 1790. Indeed, by the time Andrew Jackson was sworn in in 1829, only Massachusetts retained an established church. That ended in 1833. 

The process overturned what had been a well established colonial practice of establishment churches. Prior to the American revolution, 

In America, government churches provided services in all but three of the 13 colonies. In New York, New Jersey, Maryland, and the southern colonies, the established church was Anglican. This church was disestablished after the Revolution. Within New England, excepting Rhode Island, the established churches were Congregational.[3]

The disestablishment process that took place from the 1770s to the 1830s was all done without any mandate or oversight from the federal government under the auspices of the First Amendment.  This process is described in detail in a 2019 book, Disestablishment and Religious Dissent: Church-State Relations in the New American States, 17761833, edited by Carl H. Esbeck and Jonathan J. Den Hartog.

The editors first note that the process was very diverse in nature, stating “Each colony had unique and differing traditions of church-state relations rooted in the colony’s peoples, their countries of origin, church affiliations, and theological principles.”[4]

The issue of secularization or disestablishment at the federal level was simply not a pressing issue. Esback and Den Hartog continue: 

There was never a national disestablishment. Neither the federal government, instituted in 1789 in New York City, nor the Articles of Confederation, approved in 1781 near the end of the revolutionary fighting, ever had anything resembling an established church. So there was nothing to dismantle. Rather disestablishment was entirely a state-by-state affair.[5]

One would certainly not know this from the usual sloganeering and popular history frequently employed in the context of religious freedom. Contrary to the usual narrative, there is no federal history of disestablishment that has been, as Esbeck and Den Hartog put it, “repeated as axioms in grade-school social studies classroom right on through textbooks for university undergraduates.”[6]

Disestablishment took many forms and the way it was carried out varied from state to state. Perhaps the most important factor in disestablishment was ending taxpayer-funded financial support for the state church. These funds were used to pay salaries for church personnel and to pay rents. State laws favoring established churches also were used to regulate religious creeds, clerical appointments, and the keeping of legal records on matters such as marriages and deaths. Established churches generally enjoyed a pride of place in controlling legal records and managing tax-funded poverty relief programs. 

In some cases, state government even mandated attendance of worship services of the established church. This could be enforced by fines or other sanctions as had been the case in England when so-called “dissenters” were sanctioned for being absent at official church services. 

Often, the laws establishing and protecting the state church were not all repealed at once, but gradually over a period. Some remnants of these laws lingered until the mid-twentieth century, but by the 1830s, disestablishment was clearly the dominant legal trend when it came to religion with the American states. 

Importantly, this all occurred totally separate from federal policymaking. It is likely that by the early nineteenth century, the United States was the most freewheeling place on earth in terms of the relative level of freedom in religious worship. 

Why Christian Groups Wanted Disestablishment

Because the process of disestablishment is so often mashed up with commentary on the secularist religious views of a handful of policymakers at the federal level, one is often left with the impression that disestablishment must be the product of the importation of “Enlightenment thinking” through theorists like Thomas Jefferson. There is little evidence, however, that this was the common, motivating view among advocates for disestablishment in general. 

Rather, disestablishment was widely advocated by religious leaders from Christian groups outside the established church: “A majority of the colonists who agitated for disestablishment were religious dissenters who, although in agreements concerning the general tenets of Protestant Christianity, still materially differed form the established Protestant church of their state. Their beliefs motivated them to seek freedom for reasons that are rooted in Christianity, as they understood the teachings of the faith.”[7]

As with many political and legal trends that accelerated during the revolution, the drive for religious freedom via disestablishment has its roots in the historical experience of the English Civil Wars and the seventeenth century. At that time, Religious “dissenters”—those who refused to attend the services of the established Church of England—had become a growing political force in England and in English colonies. Those who refused to actively participate as members of the established church were subject to fines and other sanctions. This was applied to the Puritans, Quakers, and other Christian groups (including Catholics, of course) outside the seventeenth century “mainstream.” Many fled to the English colonies in North America. Pennsylvania, Rhode Island, and Maryland “were explicitly founded as havens for dissenters,” for example, and many other colonies contained sizable minorities that also remained suspicious of the established churches for similar reasons.[8]

Moreover, once the American Revolution began, those colonies where Anglicanism was the established church were subject to disestablishment as a wartime measure. That is, the state legislatures in these areas, controlled by revolutionary “Patriots” sought to further separate the colony from the British state by ending any and all privileges enjoyed by institutions of the Church of England. After all, Anglican clergy were often the most enthusiastic opponents of the American revolution, and areas with substantial numbers of active Anglicans were often hotbeds of loyalist activity.[9] Not surprisingly, American separatists began targeting Anglican institutions as de facto instruments of British state power. 

After the revolution, Christian groups continued to support disestablishment because the non-established group believed themselves more likely to thrive in an environment of free-choice in religious worship. Moreover, non-established churches very reasonably felt themselves wronged for being forced, via taxation, to pay for competing religious groups. In an effort to simply side step so much of the political conflict that had arisen from the existence of state churches, many post-Revolution Americans simply wanted to stop funding the state churches and to allow true competition among religious groups, unregulated by civil authorities. 

[Read More: “The Fall and Rise of Puritanical Policy in America“ by Mark Thornton.] 

Within the context of economics, we might also refer to this process as “privatization” or creating a more free-market in religious participation.  Many who advocated for it did no not do so to lessen religious devotion in the states that were engaging in disestablishment and privatization of religion. Many assumed the process would increase religious participation by allowing taxpayers to put their money toward their preferred churches outside state control. 

Moreover, some church leaders concluded that religious institutions unattached to public funding were more able to hold to doctrines and principles that may have been unpopular among the masses. True privatization meant the ability to set the terms of membership

In Massachusetts, for example, the most conservative Congregational ministers sought to separate church from state because, increasingly, they believed that the right of a religious community to set the terms for membership trumped the benefits of tax support. With tax support came the obligation to serve all members of the community and to accept the decisions of the majority. The result, according to one minister in 1828, was to enslave the church to a “civil master.” 

Ultimately, many who believed privatization would lead to more religious devotion were arguably proven right, at least during the nineteenth century. Following privatization, the end of “local monopoly powers of churches ... increased communities’ demand for preachers.”[10] This expansion was made possible by private funds. Indeed, the effects of early privatization of religion in America may even be felt today, since, as Kelly Olds notes, “Many scholars believe that the privatization of religion is one of the main reasons that the religious services sector in America is so much larger than that in Europe today.”[11] Europe, of course, arrived very late to the process of privatizing churches, and even today, the “church tax” persists in some countries. 

Given all this, we can surmise it would be a mistake to attempt to pigeon-hole American disestablishment as a product of the Enlightenment in Europe and its ideals of mandatory secularization. 

The Centralization and Federalization in America

Today, the old ideals of decentralizing and privatizing religious worship have been abandoned for a new model in which federal judges and federal government dictate to state and local governments what constitutes “religious freedom.” This deformation of earlier notions of religious freedom originates in 1947 with the US Supreme Court case of Everson v. Board of Education.[12] At that time, the court invented a new legal interpretation of the First Amendment, and “incorporated” the Bill of Rights’ establishment clause as binding on the states through the Fourteenth Amendment. 

This is why today federal judges have hijacked the issue of religious freedom and the federal government has the last say in what a community school in small-town America is allowed to teach in the classroom. It’s why the federal government decides for itself whether or not state taxes can be spent on religious institutions. So much for “Congress shall make no law...” as the foundation of the First Amendment. Today, no religious institution, ritual, or prayer group at a city park’s picnic ground is safe from federal intervention. This signals an enormous change from the ideals of religious freedom during Jefferson’s time. What was once imagined as a means for limiting state power now serves as an excuse for the central state to exercise its police power in every corner of America. 

  • 1

    Baysa, Michael. Journal of the Early Republic 41, no. 1 (2021): 135. https://www.jstor.org/stable/27105348.

  • 2

    From a letter to the Synod of the Reformed Church, June 12, 1832, reprinted in John Spencer Bassett, ed., Correspondence of Andrew Jackson, vol. 4 (Washington, D.C.: Carnegie Institution, 1929). 

  • 3

    Kelly Olds, “Privatizing the Church: Disestablishment in Connecticut and Massachusetts,” Journal of Political Economy 102, No. 2 (April 1994): 278. 

  • 4

    Carl H. Esbeck and Jonathan J. Den Hartog, Disestablishment and Religious Dissent: Church-State Relations in the New American States, 17761833 (Columbia, MO: University of Missouri Press, 2019)p. 4.

  • 5

    Ibid., p. 4.

  • 6

    Ibid., p. 8.

  • 7

    Ibid., p. 11.

  • 8

    Michael W. McConnell, “Establishment and Disestablishment at the Founding, Part I:Establishment of Religion,” Wm. & Mary L. Rev. 44, (2003): 2110-2111. https://scholarship.law.wm.edu/wmlr/vol44/iss5/4

  • 9

    Ibid., p. 2125.

  • 10

    Olds, “Privatizing the Church,” p. 280. 

  • 11

    Ibid., p. 277.

  • 12

    Carl H. Esbeck, “The Establishment Clause: Its Original Public Meaning and What We Can Learn From the Plain Text,” Federalist Society Review, 26 (2021).

 

CPI Price Inflation Slows as Oil Prices Fall and Rents Flatten

After a long delay, the federal Bureau of Labor Statistics today reported its price inflation report for the first time since the September report. According to the report, price inflation, as measured by the CPI slowed in November, both year over year, and from September to November. (Most October CPI data was not collected due to the federal shutdown.) 

Measured year over year, CPI inflation in November was up by 2.7 percent, falling from September’s YoY increase of 3.0 percent. During the same period, the CPI rose by 0.20 percent from September to November. By comparison, the CPI rose by 0.31 percent from August to September. 

Removing volatile food and energy prices, the so-called core CPI showed similar changes. Year over year, the core CPI also slowed to 2.6 percent in November, falling from September’s YoY increase of 3.0 percent. Core CPI growth also slowed, growing by 0.16 percent from September to November, as compared to 0.23 percent growth from August to September. 


This downward movement in CPI growth—which remains positive and well above the Fed’s two-percent target—reflects, in part, falling oil prices which has helped to drive down gasoline prices as measured in the report. Year over year, the CPI index for gasoline has been down ten of the last 12 months, for example. And the oil price has fallen by more than twelve dollars per barrel over the past year. 


Another factor has been a slowdown in rents in recent months. For example, the CPI for rent was up by 4.3 percent, year over year, during November of last year. This past November, rent growth had slowed to 2.95 percent. We can expect further downward pressure in rents and home prices—which will eventually also slow CPI growth—as BLS data catches up with current and ongoing downward movement in both rents and home prices. 

For example, the National Association of Realtors showed a negative year-over-year change in median listing price for November. For the 12-month period ending in August, eight out of twelve months showed negative growth in prices for new houses sold

This all reflects a general softening of demand as the global economy slows. As Jerome Powell noted at the most recent FOMC press conference, the labor market has slowed significantly in the United States, and new hires have virtually disappeared from the economy—the “job finding rate” has fallen to very low levels. Moreover, layoffs in October and November rose to levels not seen since 2009

This helps explain, in part, why the Fed has continued to loosen monetary policy even as CPI inflation has failed to move back to the Fed’s two-percent target over the past year. Remember, for example, that it was back in September of last year when Powell claimed CPI inflation was moving swiftly back toward two percent. At the time, Powell was justifying the Fed’s cut to the target interest rate even as CPI inflation remained near 3 percent. (The cut was clearly politically motivated, but Powell had tom come up with some sort of excuse for the move.)

Powell and the Fed were clearly wrong, given that 14 months later, the CPI inflation rate is still closer to 3 percent than two percent. (The Fed’s preferred inflation measure, PCE, was still 2.8 percent in the most recent report, and the latest Cleveland Fed estimate still shows 2.61 percent.)

Yet, the Fed likely believes it can get away with lowering interest rates during a period of elevated inflation because the slackening economy will put downward pressure on demand, and therefore on prices. We’re already seeing it in oil prices and real estate prices. Economic weakness is also seen in rising delinquency rates, mounting bankruptcies, and similar measures. 

This will mean falling prices in spite of continued monetary inflation. In other words, as we see price inflation growth flatten, it will be due to larger economic softening, and not to imagine Fed efforts to return to “price stability.” 

Unfortunately, all this means ordinary people will have no chance of regaining any of the lost purchasing power—especially purchasing power lost due to supercharged price inflation that occurred during 2022 and 2023. The Fed will not allow prices to fall, no matter how much demand falls. That is, were the Fed to back off on its efforts to further fuel additional monetary inflation, price deflation would provide relief to consumers via falling prices. That won’t happen because the benefits of deflation will instead be nullified by continual monetary inflation from the Fed. As workers are forced to scrimp and cut back due to stagnation in employment and real wages, workers will still have to face rising prices. Powell, after all, admitted during December FOMC press conference that “conditions in the labor market appear to be gradually cooling, and inflation remains somewhat elevated.” This is also called stagflation. We can already guess what “solution” to the problem the Fed will choose. The answer is always “more monetary inflation.” 

Originally published by the Mises Institute.