WEBVTT NOTE The Political Constituencies for Gold 1 00:00:00.000 --> 00:00:17.000 In 1896, America had a watershed in its electoral and political process, because in that year, the Democratic Party nominated William Jennings Bryan to be the candidate for president. 2 00:00:17.000 --> 00:00:29.000 William Jennings Bryan campaigned on a platform of opposition to the gold standard and in favor of an inflationary monetary policy. 3 00:00:29.000 --> 00:00:45.000 The result of that was that the Democratic Party, which up until that very moment had been equal to and usually superior to the Republican Party in electoral activity, 4 00:00:45.000 --> 00:00:53.000 suffered a major defeat from which it did not recover until 1932. 5 00:00:53.000 --> 00:01:00.000 Woodrow Wilson was elected in 1912 and 1916 as a minority president, 6 00:01:00.000 --> 00:01:08.000 and the Republicans were able to consolidate a huge constituency 7 00:01:08.000 --> 00:01:14.000 taken from the Democrats among the working class voters in the United States. 8 00:01:14.000 --> 00:01:21.000 Now, up until then, the Democratic Party had been the party of the gold standard. 9 00:01:21.000 --> 00:01:33.000 And when Brian and his followers went into the Democratic constituencies, they were laughed out of the halls. 10 00:01:33.000 --> 00:01:42.000 To give you one example, in Milwaukee, which had been a very, very strong constituency for the Democratic Party 11 00:01:42.000 --> 00:01:51.000 The Democratic Party, because it was a city mostly made up of German-Americans who were staunch supporters of the gold standard, 12 00:01:51.000 --> 00:02:02.000 the Democratic congressional candidate, Schiller, was asked if you were going to replace gold with silver, couldn't you replace it with other commodities? 13 00:02:02.000 --> 00:02:07.000 And he said, yes, of course, it could be anything. It could be timber, it could be silver, it could be copper. 14 00:02:07.000 --> 00:02:10.000 And someone in the audience said, how about sauerkraut? 15 00:02:10.000 --> 00:02:12.000 And he said, sure, it could be sauerkraut. 16 00:02:12.000 --> 00:02:20.000 And to a German-American audience, the idea that sauerkraut was a standard of value was laughed out of the hall, 17 00:02:20.000 --> 00:02:25.000 and the Republicans plastered the city with the slogans Schiller and sauerkraut. 18 00:02:25.000 --> 00:02:31.000 And for the first time, and then for decades after, the Milwaukee became a Republican stronghold, 19 00:02:31.000 --> 00:02:36.000 after being decades a Democratic stronghold. 20 00:02:36.000 --> 00:02:50.000 Now what was that tradition that was being betrayed by the nomination of William Jennings Bryan and the substitution of an anti-hard money platform? 21 00:02:50.000 --> 00:03:00.000 Let me quote two quotations from the main journal of the Democratic Party in the 19th century, the Democratic Review. 22 00:03:00.000 --> 00:03:13.000 The Democratic Review held that legislation was responsible for nine-tenths of all evil, moral and physical, by which mankind has been afflicted. 23 00:03:13.000 --> 00:03:29.000 John O'Sullivan, the editor of the Democratic Review, wrote, and as I quote from him, noticed certain Misesian and Hayekian themes already evident decades before they were born, 24 00:03:29.000 --> 00:03:37.840 Quote, the natural laws which will establish themselves and find their own level are the best laws. 25 00:03:37.840 --> 00:03:43.360 The same hand was the author of the moral as well as of the physical world. 26 00:03:43.360 --> 00:03:54.160 We cannot err in trusting to the same fundamental principles of spontaneous action and self-regulation, which produce the beautiful order of the world. 27 00:03:54.160 --> 00:04:19.160 In other words, the pro-gold standard political groups in America had already derived, through their study of the classical economists, a very, very fine understanding of how the economy works and the role of money in that economy. 28 00:04:19.160 --> 00:04:36.160 And part of the tradition which was very strong in the debates in the 19th century were the traditions that had come out of the experiences of the French Revolution and the American Revolution. 29 00:04:36.160 --> 00:04:50.160 If you read the literature, the party literature of that period, the hard money advocates kept referring back to the experiences of the French Revolution and the experiences of the American Revolution. 30 00:04:54.160 --> 00:05:00.160 That experience was the experience of the French Assignats. 31 00:05:00.160 --> 00:05:09.160 People were extremely aware of what had happened during the French Revolution when the French government introduced paper currency, 32 00:05:09.160 --> 00:05:14.160 where the paper currency continued to depreciate year after year. 33 00:05:14.160 --> 00:05:23.160 At one point, one issue of the currency, which was issued in the middle of the French Revolution, 34 00:05:23.160 --> 00:05:53.160 The French Revolution depreciated 82% within weeks after it was issued, and students of French history know that the reason that Napoleon was able to come to power and the reason that he was able to stay in power was that he was an advocate of the gold standard of private property rights enshrined in a new civil code and that the French have been notorious 35 00:05:53.160 --> 00:06:01.160 throughout the 19th and 20th century because the masses of the public in France have wanted hard money. 36 00:06:01.160 --> 00:06:07.160 They knew that experience coming out of the French Revolution and all during the 19th century. 37 00:06:07.160 --> 00:06:17.160 Whenever a candidate or a political movement arose that challenged the gold standard, that movement disappeared completely. 38 00:06:17.160 --> 00:06:26.000 And this tradition continued into the 20th century. 39 00:06:26.000 --> 00:06:37.040 Joseph Salerno referred to Raymond Toncourt's reforms in the 1920s, which were very important. 40 00:06:37.040 --> 00:06:43.160 And this spirit continued on in French political life, even after the brief interlude of the 41 00:06:43.160 --> 00:06:59.160 The Popular Front in 1936, within a year that was replaced again by the followers, successors of Poincaré, and but for World War II, the pro-hard money people would have remained dominant in French political life. 42 00:06:59.160 --> 00:07:22.560 It was World War II that opened the floodgates to Socialism and Communist constituencies in France and it took first Antoine Pinet in 1951 and then again after he, Prime Minister in 1951 and then as Finance Minister under de Gaulle in 1958 to bring a hard money tradition into France. 43 00:07:22.560 --> 00:07:29.160 but the constituencies for hard money are very fundamental in French political life 44 00:07:29.160 --> 00:07:35.060 and they've been recognized as such since the beginning of the 19th century, 45 00:07:35.060 --> 00:07:41.660 in other words, for almost 200 years. 46 00:07:41.660 --> 00:07:47.960 The other tradition that was very much in the forefront in the political debates 47 00:07:47.960 --> 00:07:56.960 Around Brian's Cross of Gold Speech in 1896 was the tradition that led to the American Revolution. 48 00:08:00.960 --> 00:08:09.960 At the end of the 17th and beginning of the 18th centuries, due to a series of worldwide war between France and England, 49 00:08:09.960 --> 00:08:13.960 both governments tried to finance these wars through inflation. 50 00:08:13.960 --> 00:08:23.920 One of the consequences of that in France was the famous Scottish economist, inflationary 51 00:08:23.920 --> 00:08:32.000 economist John Law. Had the government grant him monopoly powers with regard to finance 52 00:08:32.000 --> 00:08:41.400 and currency, he created the Mississippi Company, the resources of which were the still unsettled 53 00:08:41.400 --> 00:08:49.640 Mississippi Basin in Louisiana and this led to a great inflationary craze, the result 54 00:08:49.640 --> 00:08:57.760 of which was of course a great panic and collapse and a recognition that hard money is the very 55 00:08:57.760 --> 00:09:03.240 sound foundation of all political and economic life. 56 00:09:03.240 --> 00:09:11.160 The English experienced exactly the same thing, they similarly gave to the South Sea Company 57 00:09:11.160 --> 00:09:16.520 these powers which led to the South Sea Bubble, the breaking of the South Sea Bubble, the 58 00:09:16.520 --> 00:09:26.260 panic that ensued, strongly enforced in British life the concept of hard money. A new administration, 59 00:09:26.260 --> 00:09:32.640 new Whig administration came in under Robert Walpole and his associates Henry Pelham, Pelham's 60 00:09:32.640 --> 00:09:40.280 brother the Duke of Newcastle and Philip York the Lord Chancellor, the Earl of Hardwick. 61 00:09:40.280 --> 00:09:55.280 They pursued a policy of hard money and low taxes, and that led to a frenzy not of inflation, but of capital accumulation. 62 00:09:55.280 --> 00:10:02.280 And that capital accumulation was the basis of the Industrial Revolution. 63 00:10:02.280 --> 00:10:21.280 But for the policies introduced in 18 and 1720, there would not have been the capital accumulation and the respect for private property, the respect for investment that led to the Industrial Revolution. 64 00:10:21.280 --> 00:10:27.280 And one of the great consequences of that was the policies of the Duke of Newcastle, 65 00:10:27.280 --> 00:10:34.280 who was Secretary of State for the Southern Department, which included the American colonies for 40 years. 66 00:10:34.280 --> 00:10:37.280 And that policy was salutary neglect. 67 00:10:37.280 --> 00:10:44.280 He enforced no mercantilist laws regarding America. 68 00:10:44.280 --> 00:10:53.480 And when no laws were enforced, America flourished. It blossomed. The population in the 17th century 69 00:10:53.480 --> 00:11:03.120 under mercantilism was miniscule. Under salutary neglect, the population burst. Immigrants 70 00:11:03.120 --> 00:11:10.400 came from all over Europe to settle in America. New York and Pennsylvania were two of the 71 00:11:10.400 --> 00:11:39.400 America was the most settled because they were the least restrictive colonies, and the success of America due to this salutary neglect came into collision after 1760 with the government's attempt to reestablish mercantilism, to reestablish taxation, to undercut the freedom that had permitted this great flourishing. 72 00:11:39.400 --> 00:11:41.800 America was the wonder of the world. 73 00:11:41.800 --> 00:11:48.200 These colonies off somewhere where no one knew exactly where were drawing colonists from Europe. 74 00:11:48.200 --> 00:11:52.040 Everyone wanted to move and have a new chance. 75 00:11:52.040 --> 00:11:57.620 And the British new policy after 1760, due to the fact that the British had accumulated 76 00:11:57.620 --> 00:12:02.920 in the Seven Years' War the largest public debt in history and therefore were going to 77 00:12:02.920 --> 00:12:09.520 To milk the colonies to pay for it, led to the American Revolution. 78 00:12:09.520 --> 00:12:16.360 Now the Americans didn't have the best economic ideas, they had better economic ideas but 79 00:12:16.360 --> 00:12:22.760 not the best, and so one of the things some of them did was to conduct the American Revolution 80 00:12:22.760 --> 00:12:28.680 through inflation, through the basement of the continental dollars, and the Americans 81 00:12:28.680 --> 00:12:31.720 came out of that experience with a new lesson. 82 00:12:31.720 --> 00:12:36.880 Not only must you have low taxes and no government interference, you must not have any government 83 00:12:36.880 --> 00:12:40.320 control over the currency. 84 00:12:40.320 --> 00:12:55.480 The solution coming out of the American Revolution was to return to the hard currency concepts. 85 00:12:55.480 --> 00:13:22.080 As Murray Rothbard pointed out yesterday, there were still, as it were, behind the scenes advocates of funding money, Alexander Hamilton for example, and they introduced the first bank of the United States, and then later the second bank of the United States. 86 00:13:22.080 --> 00:13:35.280 The Second Bank of the United States led to the Great Panic of 1819, which was one of the great educational experiences like the American Revolution, 87 00:13:35.280 --> 00:13:48.160 because the American people learned again the importance of hard money, and the consequence of that, of the panic coming out of the inflation, 88 00:13:48.160 --> 00:13:54.760 coming out of the chartering of the second central bank was the New Democratic Party, 89 00:13:54.760 --> 00:14:01.760 a democratic party totally committed to hard money, the Jacksonian party. 90 00:14:01.760 --> 00:14:09.400 And for the whole 19th century that party stood very strongly for hard money. 91 00:14:09.400 --> 00:14:17.300 Now people have asked, how is it possible for a party to have this continuing majority 92 00:14:17.300 --> 00:14:21.980 in the American public on such a complicated issue as hard money. 93 00:14:21.980 --> 00:14:25.680 It's to us difficult to understand. 94 00:14:25.680 --> 00:14:30.980 We try to make people understand better about money and it's very difficult. 95 00:14:30.980 --> 00:14:38.940 And here we have an American public that we would think after 150 years is so much wiser 96 00:14:38.940 --> 00:14:44.780 than those primitive people of that period. 97 00:14:44.780 --> 00:14:53.260 At the least we know that the people of that period did not have the advantage of the public 98 00:14:53.260 --> 00:15:00.180 school system and we now have a population so well educated that the public education 99 00:15:00.180 --> 00:15:07.700 system is so ingrained that and yet we can't make them understand about hard money. 100 00:15:07.700 --> 00:15:12.300 It boggles the mind that the people who had never had the public school experience were 101 00:15:12.300 --> 00:15:16.900 Hard Money Voters in a Majority 102 00:15:16.900 --> 00:15:19.400 How did they get excited about hard money? 103 00:15:19.400 --> 00:15:24.100 They'd march around town, campaigns, bonfires, speeches. 104 00:15:24.100 --> 00:15:26.420 Well, it's because 105 00:15:26.420 --> 00:15:30.220 that wasn't the only issue that confronted them. There were other issues and 106 00:15:30.220 --> 00:15:32.520 those other issues 107 00:15:32.520 --> 00:15:37.580 get, when consistently presented, connected in with hard money. 108 00:15:37.580 --> 00:15:40.740 In fact, one of the other issues was 109 00:15:40.740 --> 00:15:45.140 Private Schools vs. Public Schools 110 00:15:45.140 --> 00:15:52.020 The Democratic Party was the party of personal liberty and economic freedom. 111 00:15:52.020 --> 00:15:57.820 Personal liberty meant the right to send children to whatever schools the parents wanted and 112 00:15:57.820 --> 00:16:05.500 for those parents not to be burdened with the extra payments to support other people's 113 00:16:05.500 --> 00:16:07.420 children going to other schools. 114 00:16:07.420 --> 00:16:14.100 The great debates in the 19th century over private versus public education was something 115 00:16:14.100 --> 00:16:19.180 that every family in America was concerned about. 116 00:16:19.180 --> 00:16:25.780 And those voters, through their, the Democratic Party leaders, were shown that the same principle 117 00:16:25.780 --> 00:16:35.860 of freedom of education was the same principle behind it as hard money, freedom from economic 118 00:16:35.860 --> 00:16:52.980 In the early nineteenth century, the United States found itself with two very, very different 119 00:16:52.980 --> 00:17:00.740 ideological traditions at war, and they had political connotations, political implications. 120 00:17:00.740 --> 00:17:13.200 One was a new theological approach associated with new evangelical churches which saw the 121 00:17:13.200 --> 00:17:16.100 possibility of a new man being created. 122 00:17:16.100 --> 00:17:24.080 That is, the idea of conversion, of rebirth in baptism was seen as something that could 123 00:17:24.080 --> 00:17:25.420 change human nature. 124 00:17:25.420 --> 00:17:35.420 Therefore, most of the religious denominations had a view of human nature that was set, human nature was unchanging. 125 00:17:35.420 --> 00:17:45.420 In the 19th century, new and very, very popular theological movements developed which saw that human nature could progressively develop. 126 00:17:45.420 --> 00:17:50.420 You could have human nature changing, human nature could get much better. 127 00:17:50.420 --> 00:17:58.420 and people then transferred that to using the government to improve human nature. 128 00:17:58.420 --> 00:18:07.420 In other words, the old verities such as supply and demand and the relationship between scarcity and resources didn't have to hold. 129 00:18:07.420 --> 00:18:18.420 That was a mere old-fashioned view of man. Man was driven to want rewards for his work, for instance. 130 00:18:18.420 --> 00:18:24.420 It was a very similar ideology to modern socialist ideology. 131 00:18:24.420 --> 00:18:28.920 That is, for instance, in Cuba, where they say incentives aren't necessary, 132 00:18:28.920 --> 00:18:32.920 material incentives aren't necessary, use ideological incentives, 133 00:18:32.920 --> 00:18:39.120 that Cuba will be the great industrial center of the Western world because, 134 00:18:39.120 --> 00:18:41.720 it hasn't been because people were driven by greed. 135 00:18:41.720 --> 00:18:47.120 Now under Castro, Cuba is driven by non-economic incentives 136 00:18:47.120 --> 00:19:17.120 The same type of ideas were operative at that time, and the democratic party, the Jacksonians, and the people that supported them, the constituencies that held to the traditional religious views, said that you cannot change man through government regulation, through a public school system, through a public school system, through a public school system, through a public school system, 137 00:19:17.120 --> 00:19:32.120 You cannot, as these new groups advocated, use a new monetary system to raise the economy to new heights. 138 00:19:32.120 --> 00:19:37.120 Why be limited to gold? That's an old-fashioned view. 139 00:19:37.120 --> 00:19:43.120 It's part of the old view that men are only motivated by material rewards. 140 00:19:43.120 --> 00:19:54.120 Let's print more money. Let's get the economy stimulated and this will change the economy and also contribute to changing man's nature. 141 00:19:54.120 --> 00:20:04.120 You will have a whole new way of looking at the world. And so throughout the 19th century you had ideological battles between these two cultural constituencies. 142 00:20:04.120 --> 00:20:32.120 One of the many, many examples of those cultural constituencies were the German Americans who stood constantly for human nature as an unchanging part of the world and therefore stood very strongly for hard money, for low taxes, for not using government for internal improvements, 143 00:20:32.120 --> 00:20:40.120 not using the government to form people's ideas and to educate them through the public school system. 144 00:20:40.120 --> 00:20:48.120 You had this constant battle of constituencies. 145 00:20:48.120 --> 00:21:01.120 And up until 1896, the hard-money constituency in the Democratic Party was the dominant constituency. 146 00:21:01.120 --> 00:21:16.120 And when William Jennings Bryan was nominated, this drove those constituencies out of the Democratic Party and into the Republican Party and drove some of the Republican supporters into the Democratic Party. 147 00:21:16.120 --> 00:21:20.120 But the net gain was in the Republican Party. 148 00:21:20.120 --> 00:21:28.280 One of the great mysteries to left-wing historians is that in the 1896 election, the workers, 149 00:21:28.280 --> 00:21:35.600 the industrial workers in New York, Pennsylvania, Michigan, Illinois, Ohio, they were the ones 150 00:21:35.600 --> 00:21:39.640 who gave the Republicans their smashing victory. 151 00:21:39.640 --> 00:21:43.200 How can that be, these socialists ask? 152 00:21:43.200 --> 00:21:45.640 Brian was truly the working man's candidate. 153 00:21:45.640 --> 00:22:03.320 No, that's not what they wanted. They wanted gold. The working men stood by the gold standard. 154 00:22:03.320 --> 00:22:09.480 And this is the great mystery to the left. They don't understand why the workers became 155 00:22:09.480 --> 00:22:14.580 became the mainstay of the Republican Party and kept the Republican Party in power until 156 00:22:14.580 --> 00:22:29.580 1932. It was those same cultural constituencies with their view of human nature, their critique 157 00:22:29.580 --> 00:22:38.580 of government intervention in anything, which gave the Republicans dominance. 158 00:22:38.580 --> 00:22:52.580 Now, there's always a great deal of hubris in political life, and just as the Democrats stupidly nominated William Jennings Bryan and opposed the gold standard, 159 00:22:52.580 --> 00:23:01.580 The Republicans, after World War I, moved in an equally bad direction. 160 00:23:02.580 --> 00:23:13.580 One of the many, many evils introduced by Woodrow Wilson, probably the truly evil president of the 20th century, 161 00:23:13.580 --> 00:23:16.580 because he was the intellectual, he knew what he was doing, 162 00:23:16.580 --> 00:23:28.580 He understood the principles that he was operating from and therefore could create not just pragmatic policies but a total ideology. 163 00:23:28.580 --> 00:23:35.580 And one of the aspects of that was the introduction of prohibition. 164 00:23:35.580 --> 00:23:44.580 And although introduced by the Democrats, who jumped on the bandwagon as its main proponents, the Republicans. 165 00:23:44.580 --> 00:23:56.580 The republicans decided they were going to save humanity from drinks, so they became the main proponents of prohibition. 166 00:23:56.580 --> 00:24:12.580 And all of these constituencies that had swung in 1896 to support the republicans on the gold standard issue, swung away because this was an equally important issue to them. 167 00:24:12.580 --> 00:24:18.140 to them. Gold standard wasn't being challenged by the Democrats any longer, but the Democrats 168 00:24:18.140 --> 00:24:25.260 having put in Prohibition became the main opponents of Prohibition. The Great Daily 169 00:24:25.260 --> 00:24:32.660 Machine in Chicago was founded in the early 1920s by Anton Cermak on the anti-prohibition 170 00:24:32.660 --> 00:24:40.700 issue. In the 1920s Chicago was a Republican city. Mayor Big Bill Thompson was a famous 171 00:24:40.700 --> 00:25:00.700 The New Deal victory was made through the Prohibition Issue, and supplemented by the tariff issue, the Smoot-Hawley Tariff, introduced into Congress in 1929 and passed in 1930, was the final tariff issue of the New Deal. 172 00:25:00.700 --> 00:25:12.700 The Smoot-Hawley Tariff introduced into Congress in 1929 and passed in 1930 was the final nail in the coffin for the Republican Party. 173 00:25:12.700 --> 00:25:26.700 But the main issue had been prohibition and the same constituencies that had supported the Republicans up until the 1920s were driven away by Republican attack on personal liberty. 174 00:25:26.700 --> 00:25:34.700 And the Democrats were able to show, to claim to be a party against government regulation. 175 00:25:34.700 --> 00:25:39.180 They were against regulation through prohibition, and they were against regulation through the 176 00:25:39.180 --> 00:25:41.300 terror. 177 00:25:41.300 --> 00:25:44.860 Once they were elected, of course, then they did something else. 178 00:25:44.860 --> 00:25:53.820 But it took a long time for those constituencies to wake up and to shift back to the Republican 179 00:25:53.820 --> 00:25:55.780 Party. 180 00:25:55.780 --> 00:26:02.900 and that only occurred after the Second World War. 181 00:26:02.900 --> 00:26:10.260 If we look at the political life in America after the Second World War, you will find 182 00:26:10.260 --> 00:26:21.300 that the American voting public, in the nine elections after the war, 1948 through 1950, 183 00:26:21.300 --> 00:26:29.420 at 1980 have voted nine times and in those elections they have elected the Republicans 184 00:26:29.420 --> 00:26:33.860 five times and the Democrats only four times. 185 00:26:33.860 --> 00:26:39.860 In other words, the national administration, the executive branch has been Republican more 186 00:26:39.860 --> 00:26:44.780 than it has been Democratic. 187 00:26:44.780 --> 00:26:48.820 There are many reasons why we don't recognize that, we don't feel that in our bones even 188 00:26:48.820 --> 00:27:03.320 American people have been electing Republican presidents more than Democratic presidents. 189 00:27:03.320 --> 00:27:11.020 They have been electing Democratic Congresses and Democratic legislatures while electing 190 00:27:11.020 --> 00:27:13.820 Republican presidents and Republican governors. 191 00:27:13.820 --> 00:27:14.820 Why is that? 192 00:27:14.820 --> 00:27:25.820 First of all, the main thrust in American politics since World War II has been the huge growth of suburban home-owning. 193 00:27:25.820 --> 00:27:36.820 And those people, many of whom had been Democratic voters in the 30s and through World War II, became Republican voters. 194 00:27:36.820 --> 00:27:40.820 They were voting against the tendencies of the Democrats towards inflation. 195 00:27:40.820 --> 00:27:50.820 As homeowners, home owning has been the single most important educational experience for voters, teaching them the effects of inflation. 196 00:27:50.820 --> 00:28:00.820 It's something they live with every day. They see the value of property changing. They see the taxes on their property changing. 197 00:28:00.820 --> 00:28:06.820 And it is the single most important political fact in American life. 198 00:28:06.820 --> 00:28:12.260 and the Republicans have been the beneficiaries of that. Why have they 199 00:28:12.260 --> 00:28:17.460 been the beneficiaries? Because these voters are voting against the 200 00:28:17.460 --> 00:28:28.860 Democrats. American political life is based on negative reference voting. That 201 00:28:28.860 --> 00:28:34.020 is people tend mostly to vote against. They feel threatened by politicians. Very 202 00:28:34.020 --> 00:28:42.800 Very few people are enthused about politicians, but they are experiencing threats from politicians. 203 00:28:42.800 --> 00:28:44.380 So they vote defensively. 204 00:28:44.380 --> 00:28:47.160 They vote against William Jennings Bryan. 205 00:28:47.160 --> 00:28:55.320 They vote against whoever down the line because they know that these people are advocates 206 00:28:55.320 --> 00:28:59.900 of inflation, of threats to their private property. 207 00:28:59.900 --> 00:29:08.900 They may not like the person they're voting for, but as long as that person isn't as bad as the person they're voting against, they will vote for them. 208 00:29:08.900 --> 00:29:24.900 And therefore, there has been a very, very large political constituency in favor of opponents of inflation. 209 00:29:24.900 --> 00:29:43.900 If you look at American political life, you will see the fact that in major states and in the presidency, the Republicans have occupied the State House or the White House more than the Democrats, while the Democrats have controlled the legislatures. 210 00:29:43.900 --> 00:29:51.900 Democrats have controlled Congress and state legislatures because those are different constituencies. 211 00:29:51.900 --> 00:30:02.900 The President and the Governors are elected by the same constituencies. That is, whole states. The President through the Electoral College, the Governors directly. 212 00:30:04.900 --> 00:30:11.900 Congressmen and legislators are elected by districts that are drawn on the basis of population. 213 00:30:11.900 --> 00:30:19.900 In democratic districts, quite often in urban democratic districts, only 10% of the people vote. 214 00:30:19.900 --> 00:30:25.900 Therefore, we really have a system of not just gerrymanders, but rotten boroughs. 215 00:30:25.900 --> 00:30:29.900 We have congressmen and legislators who don't represent anybody. 216 00:30:29.900 --> 00:30:36.900 Republican districts tend to have 80-90% voting. 217 00:30:36.900 --> 00:30:43.300 Now in the legislative elections that doesn't have much effect due to the rotten borough 218 00:30:43.300 --> 00:30:50.460 system, but those 90% voting in Republican districts way offset the 10% in the Democratic 219 00:30:50.460 --> 00:30:51.460 districts. 220 00:30:51.460 --> 00:30:57.300 And so they keep electing the president, they keep electing the governors while they can't 221 00:30:57.300 --> 00:31:06.860 get legislators because we have a rotten borough system of legislative elections. 222 00:31:06.860 --> 00:31:15.660 Another important aspect of this is the fact that there's been a huge growth in the independent voters. 223 00:31:15.660 --> 00:31:20.660 There's been a shift away from parties. 224 00:31:20.660 --> 00:31:31.660 In the 1980 election, among all voters, the Democrats had 49 percent, the Republicans 19 percent, the independents 32 percent. 225 00:31:31.660 --> 00:31:41.860 That is, people who identified as fully conceiving themselves as Democrats, Republicans, or as not, Democrats and Republicans, and therefore, Independents. 226 00:31:41.860 --> 00:31:52.620 But among the voters under 30 in 1980, 36% were Democrats, 12% Republicans, and 52% Independents. 227 00:31:52.620 --> 00:32:00.620 What it means is that Republican presidents and Republican governors have been and are elected by the independents. 228 00:32:01.620 --> 00:32:16.620 These are people who may even hate the Republican Party, who may not be able to stand the people who parade in front of them claiming to be representatives of this or that point of view. 229 00:32:16.620 --> 00:32:26.620 But these people are voting Republican presidents and Republican governors into office to keep out the Democrats, who are much worse. 230 00:32:26.620 --> 00:32:36.620 It's not that they like the Republican candidates. It's that they hate the Democratic candidates. 231 00:32:36.620 --> 00:32:43.620 And that's one reason that, unfortunately, within the present system these people cannot achieve what they want. 232 00:32:43.620 --> 00:32:56.620 They want. They cannot get a truly hard money political forum. All they can do is keep out the inflationary people. 233 00:32:56.620 --> 00:33:12.620 There is no party that represents what they stand for. If the Republican Party in all that it represents stood for them, they would call themselves Republicans rather than independents. 234 00:33:12.620 --> 00:33:15.620 In politics, demography is destiny. 235 00:33:17.620 --> 00:33:24.620 Those under 30 in 1980 have been joined by another cohort during the past four years. 236 00:33:26.620 --> 00:33:31.620 In another few years, they may be down to 2% people who call themselves Republicans, 237 00:33:31.620 --> 00:33:34.620 and we may have something like 70% who are independents, 238 00:33:34.620 --> 00:33:39.620 and yet these people may still not have a political forum, 239 00:33:39.620 --> 00:33:57.620 A mechanism to be represented in the political system. All they can do is come out every two years, every four years for president and every four years for governor, cast their vote against the Democratic candidate and go home and hope for the best. 240 00:33:57.620 --> 00:34:15.620 So you have a situation where there is a huge hard-money constituency in America, but all it can do is act defensively, keep out the most dangerous inflators, who usually are in the Democratic Party, 241 00:34:15.620 --> 00:34:27.620 Therefore, put the Republican Party into office and then fume every four years because the Republican Party does not do what they voted them in to do. 242 00:34:27.620 --> 00:34:41.620 Maybe we have to fault the public school system that these people have not gone out and formed a mechanism by either getting rid of the Republican leaders 243 00:34:41.620 --> 00:34:59.340 So the good news is that there is a very large and strong constituency for hard money. The 244 00:34:59.340 --> 00:35:05.980 bad news is that that constituency has no political mechanism to fully express its views. 245 00:35:17.980 --> 00:35:22.980 Before we begin to form a question, I'd like to take the privilege of the chair to make one remark. 246 00:35:22.980 --> 00:35:32.980 It seems to me that one of the lessons in Leonard's paper for us is that at least politically speaking, gold and alcohol do mix. 247 00:35:32.980 --> 00:35:38.380 And I wonder how many of us are aware of just how powerful a statement that might be. 248 00:35:38.380 --> 00:35:40.080 We've already got liquor by the drink. 249 00:35:40.080 --> 00:35:44.180 If we got the liquor lobby on our side, we might have a gold standard within two or three years. 250 00:35:44.180 --> 00:35:53.180 Let me comment on that because it's a very, very good remark. 251 00:35:53.180 --> 00:36:02.880 Unfortunately, quite often the liquor lobby, in various forms, for instance, in places where there are limitations on liquor, 252 00:36:02.880 --> 00:36:09.760 The bootleggers try to keep prohibition because they don't want national brands coming in. 253 00:36:09.760 --> 00:36:16.480 They elect the sheriffs who campaign against liquor to the religious communities that don't 254 00:36:16.480 --> 00:36:22.240 want liquor because the bootleggers want to not have the competition of the national brands 255 00:36:22.240 --> 00:36:23.240 coming in. 256 00:36:23.240 --> 00:36:25.840 So there's many facets to this situation. 257 00:36:25.840 --> 00:36:32.520 More importantly, about a year or two ago I was going from the University of Chicago 258 00:36:32.520 --> 00:36:39.520 to Midway Airport and as I went along, leaving Hyde Park and going through a district that 259 00:36:39.520 --> 00:36:46.600 looked much like either Dresden after the American bombing in 1945 or New York City 260 00:36:46.600 --> 00:36:58.640 I crossed the, you know, looked like about a hundred railroad tracks. It was a huge yard. 261 00:36:58.640 --> 00:37:04.280 And then I was in another part of Chicago. And this was in contrast to the other, which 262 00:37:04.280 --> 00:37:12.920 was terribly ugly and destroyed. This was beautiful. And block after block, what did 263 00:37:12.920 --> 00:37:19.480 What I noticed on practically each block there were three things that seemed to go together. 264 00:37:19.480 --> 00:37:25.080 Procure school, a saloon, and a savings bank. 265 00:37:25.080 --> 00:37:31.440 And these were exactly the same political constituencies that I was referring to earlier. 266 00:37:31.440 --> 00:37:38.200 The saloon, the savings bank, and the procure school seemed to be very, very much at the 267 00:37:38.200 --> 00:37:41.800 forefront of those political constituencies. 268 00:37:41.800 --> 00:37:51.800 And those people all had homes, you can see row after row for miles in any direction, of very, very well kept small private homes. 269 00:37:51.800 --> 00:37:59.800 These were homeowners who found the savings bank the most important part of an economic system 270 00:37:59.800 --> 00:38:06.800 because it provided the mechanisms of saving and therefore through saving of purchasing their homes 271 00:38:06.800 --> 00:38:12.600 and using the home purchase as their main form of investment for their own future. 272 00:38:12.600 --> 00:38:22.720 And many of these people in the last decade, decade and a half have been very confused 273 00:38:22.720 --> 00:38:30.480 by what's been happening, not the least by the fact that they invested decade after decade 274 00:38:30.480 --> 00:38:34.720 in not only in their homes but in savings accounts. 275 00:38:34.720 --> 00:38:40.600 And yet, due to the ravages of inflation, those savings don't amount to what they should 276 00:38:40.600 --> 00:38:42.600 have. 277 00:38:42.600 --> 00:38:48.060 And over the years, they've found that these parents have found, rather than appearing 278 00:38:48.060 --> 00:38:56.040 to be very wise and sound investors, due to inflation, they look stupid to their children 279 00:38:56.040 --> 00:38:59.960 because their investments were wiped out by inflation. 280 00:38:59.960 --> 00:39:08.720 In other words, inflation is one of the main sources of social disintegration. 281 00:39:08.720 --> 00:39:13.920 Some people like the populists like Vigory try to separate the economic and social issues. 282 00:39:13.920 --> 00:39:19.680 There's no separation and that's what the 19th century laissez-faire advocates understood. 283 00:39:19.680 --> 00:39:28.520 Personal liberty and economic freedom go together, that the family is destroyed by inflation, 284 00:39:28.520 --> 00:39:31.520 The educational system is destroyed by inflation. 285 00:39:31.520 --> 00:39:35.520 All of these institutions get destroyed by inflation. 286 00:39:35.520 --> 00:39:40.520 If you cannot control the money supply, if you cannot have hard money, 287 00:39:40.520 --> 00:39:46.520 it doesn't only wreck the price mechanisms, estimation of future investments. 288 00:39:46.520 --> 00:39:50.520 It also undermines all the social institutions of society. 289 00:39:50.520 --> 00:39:56.520 And if they're undermined, the whole society is destroyed. 290 00:39:56.520 --> 00:39:59.760 Yes, you had a question. 291 00:39:59.760 --> 00:40:06.680 I just enjoyed picking on that. I was pointing at it. The 20s went on for all of the territories. 292 00:40:06.680 --> 00:40:12.360 The Democrats all remained here. It was the central bank that was debauching. 293 00:40:12.360 --> 00:40:17.560 You had your twenty-nine contracts. By June the 30th, the market is mostly back. 294 00:40:17.560 --> 00:40:23.960 People have started examining what's going on. Then you go on with the so-called long depression. 295 00:40:23.960 --> 00:40:31.080 The Democrats had an achievement between gold and their bank, and obviously you couldn't say we failed, so they're happy to not vote. 296 00:40:31.080 --> 00:40:37.880 You take the rest of the century, what you have in the cards is not a Republican diaspora market. 297 00:40:37.880 --> 00:40:43.000 There is a Wilson because you have a diaspora, a Gold Moose market. 298 00:40:43.000 --> 00:40:49.000 You have Truman because of doing these topics, and at 60 you get to 10. 299 00:40:49.000 --> 00:40:57.120 Johnson, again, it's closer to there, Eisenhower was power. It wouldn't have the power to have president, except for the republicans. 300 00:41:19.000 --> 00:41:42.000 The Republican miscalculation that the Democrats tend to get in except in 32 and 36, so I mean the issue is that the Republican party, like the famous phrase about the feudalist conservative party in 19th century England is the stupid party. 301 00:41:42.000 --> 00:41:46.500 And that's one reason why people don't associate with the Republican Party. 302 00:41:46.500 --> 00:41:53.500 That's why only 12% of people under 30 in 1980 would call themselves Republicans. 303 00:41:53.500 --> 00:42:03.500 The Republican Party, in the rest of the country, being a Republican doesn't, you know, somebody might question your mental state. 304 00:42:03.500 --> 00:42:06.500 And they don't do that with the Democrats. 305 00:42:06.500 --> 00:42:08.000 Now, there are good reasons and bad reasons. 306 00:42:08.000 --> 00:42:14.000 The bad reasons are the press belittles the Republican Party for things that we think they're good for. 307 00:42:14.000 --> 00:42:23.000 But the Republican Party itself quite often makes itself foolish by taking on crusades that have nothing to do with the party. 308 00:42:23.000 --> 00:42:33.000 And it's a danger because President Reagan himself could take on that image thinking he has constituencies that don't exist. 309 00:42:33.000 --> 00:42:48.000 I don't know if I can resist, but there are great weaknesses in the Republican Party where they think they're strongest, they may not be as strong as they think in that, because they're not thinking about it, they can lose it. 310 00:43:03.000 --> 00:43:24.000 like the first agreement in 1929. Now, when we had the crisis in 1929, an official who lost their faith and just jumped out and said, well, we've got to change this, we've got to give it, so we didn't have a revolution at this point. 311 00:43:24.000 --> 00:43:35.000 So they said we got to get on something, didn't take away from that, we're just creating a revolution. Now, we're doing that through our role-players. I think Mr. Newton explained that yesterday. 312 00:43:35.000 --> 00:43:53.000 Now, we read work. We finance both physical construction, we read work, we read all those things. And how are we going to have access to the same gold standard? 313 00:43:53.000 --> 00:44:00.000 How do we get access to the people that implement it? And how do we get access to certain people? 314 00:44:00.000 --> 00:44:06.000 Who makes it? Are we implementing it? Who makes it? 315 00:44:23.000 --> 00:44:38.000 We have to abolish the connection between the government and money, just as we have separation of church and state, we need separation of education and state, and separation of money and state. 316 00:44:38.000 --> 00:44:51.240 and that... we have to put it in those terms, a separation of money and the state before people can fully grasp the dichotomy, 317 00:44:51.240 --> 00:45:00.240 that it's ridiculous to have the government in handling money just as it's ridiculous to have the government involved in theology.