Well, it really is an honor to be here at the Von Mises Institute.
Profits are not always honored in their own country, so perhaps you all don't know or fully realize the prestige of the Von Mises Institute
around the country and around the world, but I guarantee you it is known to many good people elsewhere.
I want to talk about John C. Galhoun. I've expanded that a little bit from Friedrich to John C. Galhoun's political economy.
He did have a political economy. There are two things I always get out of the way to begin with when I talk about Calhoun and one is that the proper pronunciation which he and his family used I'm sure is Calhoun in the old Scotch way and not Calhoun as we usually say now and the second thing that I always get out of the way the beginning because it always comes up is that John C. Calhoun was not the father of Abraham Lincoln
I don't know if that legend has gotten this far, gotten across the Chattahoochee, but
in North and South Carolina, whenever I make a talk about Calvin, somebody either asks
me or tells me invariably in every freshman class that Lincoln was Calvin's natural son,
and I assure you it is not true, it's one of those strange things that people like to
Believe, and it has a life of its own. But apparently it was a woman of the same name of Lincoln's mother who lived in Galhoun's vicinity.
That seemed to be how it got started. I think there was an assumption that Lincoln must have got his brains from somewhere because, you know, it was not obvious, and it's certainly not obvious in his immediate family where it came from.
And it seems to be some impression also that Calhoun and Lincoln looked alike, which is not true.
If you look at the pictures mostly, they were both tall and lanky and dark haired, but other than that, there's no resemblance.
And you look at the faces, that one side of Lincoln's face was deformed.
And Calhoun was actually, although what you always see of Calhoun, if there's a picture in your textbook,
of the old Brady daguerreotype, which was taken not long before he died and was sick.
And he looks like a fanatic, of course, he just stuck his finger in an electric socket,
if you've seen that picture. But that is very untypical, that's manipulation of symbols.
There are innumerable likenesses of Calvin, which show him to be a very handsome and charming man,
unlike Lincoln but I want to talk about Calhoun's political economy because it's a very it seems
appropriate for this group and it's a very ignored aspect of his importance you know one one way he's
put down is with the pictures another way that he's put down is that in American history he's
that he's dealt with is in terms of slavery and states' rights, and nothing else.
And in fact, Calhoun was a very important economist, probably the best economic thinker
among American public figures in the first half of the 19th century.
And much else, the historian of banking, Ray Hammond, says, after reading all the debates
about currency that took place in the 1830s and 40s, that Calhoun was the only public figure who knew what he was talking about, who really understood the issue.
So there's something important here to be pointed out about Calhoun.
I think it's maybe not too far of that to suggest that he was sort of a proto-Austrian even.
He had no particular school, and he was a public thinker and not an economist, but he did study these matters very deeply, as did all public matters, so that he would really understand them in his public positions.
and he's certainly an Austrian in the sense that he always emphasizes freedom and he always emphasizes the economics as a matter of human action with dimensions beyond the strictly economic and I believe if you will read, take his speeches in the middle period of his career between the time he was Vice President and the time that he was Secretary of State
1833, 1843, in which he gave speeches on all the major economic issues of the day, and
I think anybody who reads that as well will be forced to agree with me about his and Callaghan's
importance as an economic thinker and about the Austrian elements.
If you will recall your American history, in this period we're talking about, the early
19th century, the major issues of the time, with economic aspects, certainly with the
tariff, the banking and currency, the public lands, and internal improvements, I probably
don't have time here to talk about Gellin's positions on all of these issues, but maybe
One of the things I've learned in studying this period is that the historians don't know what they're talking about when it comes to economics.
Even the prestigious and accepted historians who deal with the issues of banking, for instance, the National Bank, they don't know what they're talking about.
They rehash the old political polemics.
They don't understand anything about the economics of what was actually going on.
The exception to that being the great late Murray Rothbard as a historian who did indeed understand what was going on in these complicated issues.
You cannot understand it by rehashing the political rhetoric because political rhetoric is often is designed to disguise or distort as it is
is to explain and understand. We all certainly know that to be true. It was true then.
In 1842, Callaghan made a speech on the federal budget, basically, the public economy, and he concluded by a kind of slogan
The Declaration of Platform, which was used by those who supported him as a kind of platform in seeking the democratic nomination of the president in 1843, which failed, but I want to read his platform or his campaign slogan.
Free Trade, Low Duties, No Debt, Separation from Banks, Economy, Retrenchment, Strict Adherence to the Constitution.
A wonderful platform, I would think, that we can use even today.
In regard to the tariff, of course the tariff is an issue that runs all through American history.
In the Constitutional Commission at Philadelphia, it was suggested that the government be given, the Congress be given the power to protect manufacturers a tariff.
This idea was rejected by the Philadelphia Convention and not written into the Constitution.
And yet, from the very beginning, they were attempts to do just that.
One of Hamilton's early reports, three or four evil reports that he made in the beginning of the government.
He was successful with most of them. He was not successful with the tariff notion, the notion that the taxes on imports should be high enough to exclude the foreign imports, to encourage the so-called American industry.
The Constitution also provides an export tax, very specifically, if you recall, and this was to prevent discrimination against the products of any particular state or region.
The Constitution does give the Congress, as it says, the right to lay duties and imposts, which is the tariff.
The right to lay duties and imposts for protection was not given, but the right to lay duties and imposts to levy a tax on imports was given to the Congress.
And this was supposed to be the main source of government revenue, and it was a customary source, and a fairly fair source of taxation because it was a tax on consumption basically.
and was designed to meet the needs of the government, which were quite modest in the beginning.
Back until the Civil War, the tariff had raised most of the federal revenue and there were very, very few direct taxes.
The tariff issue was pretty clear-cut in the earlier days, much more so than it is now, I think, because economic interests in this country were sectionalized to a great degree, so it was easy to tell what the influence was, or easier than it became later, to tell who was gaining and who was losing.
In 1816, after the war of 1812, a mildly protective tariff was passed, in which a good many Southerners
supported it, although John Randolph of Roanoke warned against it.
The argument was made, and there had been a good deal of industrial development during
the war of 1812, the argument was made that because of the acts of the government and
Before the War and the War, people had had to transfer their capital and labor in the North from mercantile to industrial, therefore the government owed them something, therefore a temporary, slightly protective tariff to help these industries that had grown up because of the government action.
The obligation was this was temporary and they would soon be on their feet and there would be no more need for a tariff.
It was also argued that the British were dumping this on the American market to, as it was said, strangle infant American industries in the grave.
And that American labor had to be protected. And it was argued, strangely, that the pair would bring prices down after a while by bringing in more competition into business.
What happened, of course, is the tariff did not go down, but it kept going up and up.
In 1828 it was raised, in 1824 again, in 1828 again, and the tariff became a political platform
for a number of people, including John Quincy Adams and Henry Clay, his so-called American system.
And a vast lobbying network developed, as you might expect, behind the tariff bills.
and a network to design the tariff bills in the ways that were convenient for certain interests.
There's a great Philadelphia free trader and free banker named Conte Ragout, R-A-G-U-E-T,
a good subject for somebody if you're looking for a research topic.
The libertarians have written about him some in terms of free banking. He's also a great free trader, and he describes in his journals and magazines published in the North at this time, the corruption of Congress by the terror lobbyists of different interests who were arranging the government tax bills for their own advantage, the taxes on imports.
And Condi Ragout, interestingly also, not only defended free trade, he also very vigorously defended South Carolina and the nullification of the tariff during this period.
In 1828, the tariff bill was so bad that it was referred to as the tariff of abominations.
And it was almost as complicated as the NAFTA treaty. I mean, it was an immensely long bill.
The point of the tariff originally had been this is a tax on imports. You levy a 10% tax on imports. It's easy to collect because you collect it if the ports were to come in and this raises the revenue for the government.
What we have here is an elaborate protective device which levies taxes on imports in accordance
with the competition that they give to domestic manufacturers and in accordance with what
political power the domestic manufacturers have.
Of course, you have a tremendous amount of law growing.
The 28 tera basically provided a 50% or close to 50% ad valorem tax on a great many imports.
In particular, the rough textiles that were bought in immense quantities in the south
for Sleeve Clothing, although many many other things as well. Galhoun estimated that it cost this
tariff added two thousand dollars per mile to the construction of railroads, which were just
beginning to take off at that time. Two thousand dollars was a lot of money in 1828. The manufacturing
The American interest had eclipsed the shipping interest in the North, pretty much by this time.
The mercantile interest in the North remained free trade, but they were becoming a minority.
So this question was definitely sexualized.
From 1816 until the Civil War, basically half the value of exports of the United States
was made up of cotton together with a few other staple crops for themselves like rice and tobacco and sugar.
Literally half of the American export economy was cotton. It was the most valuable commodity in America.
And the situation which southerners came to realize after 1828, Calhoun and many others,
that they were selling in a completely unpredicted world market.
They had to sell the world market.
The United States could not consume all the cotton.
And it was in great demand in Europe.
But the producer has no control over the market.
He's one of thousands or tens of thousands of cotton growers.
So that they are selling in a completely unpredicted world market
and buying a great many of their goods and manufactured goods in the domestic market
with a 50% protective tariff.
And this ain't exactly fair, it begins to occur to them, and in fact what this is is
a transfer of wealth from one set of people to another and a transfer of wealth from one
region to another.
This is where Callaghan began to think about the problem of majorities, the real majority
versus the miracle majority, because these bills, through log rolling, had passed the
Congress.
And in a narrowest technical sense, the Congress did have a right to lay duties and impose,
although it was certainly a violation of the spirit of the Constitution to use it for this
purpose.
If you look at the public discussion of the time, you'll find, as you always do with politicians, a lot of obfuscation.
Some proponents of the tariff, as always, argued that this was justice to American business and labor, and even that it had brought prices down.
And some argued that Southerners were deluded
and did not really understand the economy
and they were complaining about something
that didn't really exist.
And some even said,
you read the New England speeches
and you get these puritanical diatribes
about how Southerners are lazy and dissolute,
that they would just be hardworking and productive
like New Englanders and they wouldn't,
they wouldn't have to have these economic grievances and then there were the
politicians who straddled like Andrew Jackson who ran the president on his only
position on the tariff being that he was for a judicious tariff which of course
could be interpreted any way one chose and he had the support of both the
people who were for and against the tariff the Democratic Party was
There was supposedly four free trade, and a lot of it was, but there were always a certain number of politicians who would talk one way and vote another, as always happens, and the Northern Democrats tended to be squishy on the tariff issue.
The Southerners knew perfectly well that they were being ripped off, as well as the mercantile interest and the consumer in general, and they initiated various efforts, including the nullification of the terror of South Carolina, the counterfeits, once they realized that they couldn't do it in the political system.
And if you look at the Confederate Constitution of 1861, it forbids, absolutely forbids a protective tariff.
The tariff sort of, and the nullification which is often, you know, South Carolina defied the government, the whole country basically, and it's often said this was a failure and a limited act.
Act. In fact, it wasn't. They brought the tariff down. The Congress was forced to agree to bring the tariff down gradually over a 10-year period, which they did, and then they shot it back up.
The tariff sort of went back and forward during the antebellum period, and the Republican platform in 61, of course, was high tariff, and high tariff was basically the policy of the government until the time of Woodrow Wilson.
If you read Calhoun's speeches during this period, you will find very eloquent defenses of free trade and analyses of the economic situation.
And I suggest they compare very favorably with what was said by anybody else at the time, including Daniel Webster and Andrew Jackson, Henry Clay, John Quincy Adams,
Adams and any of the other great speakers who all dealt with this in political terms, not in economic terms.
I'll give you a couple of quotes. I think I'll quote a few brief things from Callaghan.
I put together a book of years ago called The Essential Callaghan, which is basically the best quote from Callaghan.
I'm hoping there will be a paperback in that thing, so don't buy it. It's too expensive.
They who say they cannot compete with foreigners at their own door without an advantage of
45% expect us to meet them abroad under disadvantage equal to their encouragement, a perversion
which by its advocates is called the American system.
The tariff's tendency is to make the poor poorer and the rich richer.
Posterity will scarcely believe that in a country with three institutions, the government
has pushed the principle of monopoly so far as to impose a tax on the foreign exchanges
of the country equal to nearly one-half the value of the entire export.
Free Trade is destined to work the greatest and most happy change which has ever taken
place. Its reaction on politics, morals and religion will be powerful and most salutary.
It is, in my opinion, emphatically the cause of civilization and peace.
At last is a statement he made to the Manchester Free Trade League, which made him an honorary
Every dollar we can prevent from coming into the public treasury or every dollar thrown back into the hands of the people will tend to strengthen the cause of liberty and unearth the arm of power.
Every cent removed from the hands of the government is so much added to the wealth of the people.
This to the Senate, the surplus money in the treasury is not ours.
It properly belongs to those who made it and from whom it has been unjustly taken.
I hold it an unquestionable principle that the government has no right to take assent from the people
beyond what is necessary to meet its legitimate constitutional wants.
And an appropriation bill. Why should the government pay the expenses of one class of men rather than another?
We all know that when a public building was once commenced, it was never finished under five times the original estimate.
In the midst of the vast profusion of means which the protective tariff poured into the treasury,
the government has lost all conception of economy and accountability.
A habit of profusion and extravagance has grown up utterly inconsistent with Republican simplicity and virtue.
It was impossible to force the minds of the public officers to the importance of the attendance to the public money because we had too much of it.
Fairly up-to-date, I would think.
If the money is saved from one objectionable object, it is sure to be applied to some other,
and perhaps even more objectionable.
If the sluice of expenditures is stopped in one place, it is certain to burst through in another.
All administrations are nearly alike, fairly prophetic, I would say, considering that he said that 150 years ago.
I don't want to go on too long and have some time for discussion. Let me talk maybe a little bit about the banking question, which is the currency question, which is another big issue in this time.
are extremely complicated and probably some people here understand it better than I do.
As you know, Alexander Hamilton got his national bank in 1791 after a struggle.
It was around 20 years.
The bank was partly owned and controlled by the government.
It had the right to issue notes as legal tender and to maintain the government's deposits,
which is a very profitable right.
This united the government and the banking system from the beginning, you might say.
Calhoun alone pointed out, and this was at the time when every 30s, 1830s, everybody was arguing about the national bank and what they should have.
Calhoun alone pointed out, that's not the point.
The national bank is not really the question.
The question is that the government is allied with the banking system.
Early in the government, Hamilton very quietly issued a directive, which never was legislation,
basically saying that the notes of banks would be accepted by the government
in payment for its dues for the customs purchases of the public lands.
So immediately the government and the bank are related, the whole banking system.
and nobody had really decided this except Hamilton, and this was the real issue.
As Calhoun pointed out, not whether you have a national bank or not, but the fact that the government, by dealing in this bank paper,
is in effect backing and supporting the banking system, and that was what needed to be debated.
And it was a great assumption of power on the part of the government.
It also greatly encouraged fractional reserve banking because these notes were accepted by the government that held them up and that encouraged people to expand.
And probably in this situation, the National Bank was actually an asset, Calvin argued, and he had been one of the designers of it.
Originally, although it hadn't worked out exactly like he wanted, but at least the national bank by its power to regulate the currency of all these other banks and then discount their paper could keep some semblance of a steady currency which is what some people resented about it.
As you know, there was a big debate. In 1816, the bank was established again for another 20 years, the National Bank, after having been out of existence for five years.
And in 1833, Andrew Jackson declared war on the National Bank, vetoed its re-charter, and then shortly after, removed the government's deposits of money from the National Bank.
in a completely arbitrary executive action. By law, the government's money was supposed to be in the national bank. Jackson had to go through three secondaries in the treasury before he found somebody to do it, but they moved the money out and put them in here and there.
Callahan's position at this point is very interesting, because he doesn't agree with any of the parties.
The Whigs are screaming about the fact that Jackson is a tyrant and doing illegal actions,
and they won't immediately restore the national bank, which is to them the cause of all prosperity and stability.
The Democrats and Jackson claim that they are for hard money, that they want to destroy the influence of banking.
But if you look carefully at what they're doing, they're not destroying the influence of banking,
or the connection of government with banking, or the circulation of dubious paper currency at all.
In fact, they're expanding it.
We have a whole system of so-called pet banks, state-chartered banks, which Jackson's people put the money in, and all these banks have been encouraged to, you know, issue paper widely, and it's immense corruption, and it's immense pressure for inflation, and it's an immense political patronage scam.
You have it curb banking at all, which is what they claim they're doing by breaking the power of the national bank.
And while some of the people then actually were for hard money, philosophically, dealing only against PC,
it's also clear that there were a lot of banking interests, for instance, those who backed Martin Van Buren in New York.
in New York, who wanted to break the bank in Philadelphia, which was a kind of a break
on their activities, not because they wanted to do hard money currency.
But the result of all this was a great deal of speculation, and three years before they
For selling off the public lands over this bank paper of dubious value everywhere, tremendous
speculation in public lands.
And three years before it happened, Calhoun very precisely predicted the panic in 1837.
And he said exactly what was going to happen because of this situation.
Where at the end of his term, Jackson became alarmed and he issued his species record,
which basically demanded the payment in gold and silver for purchase of the public lands
and not ink paper anymore and the whole speculative thing collapsed and the panic happened.
There were years of controversy back and forth again about this issue throughout the antebellum
period and so many other things.
and the things that was not really settled until the Republicans got in and kicked the South out of Congress and passed what they wanted to do, which was a kind of a national banking system.
But again, I think if you look at what Gallagher was saying and his analysis and his attempts to found a good policy here,
He appears as a real political economist in a very favorable light compared to the other people.
He also was very eloquent against the Hamiltonian system of public finance, the loan system.
It is the Congress's constitutional duty to regulate the currency.
You don't need the National Bank, as the Whigs say.
You don't need all this other system, as the Democrats say.
All you have to do is for the government to issue its own Treasury notes and payments,
which becomes a kind of currency.
It's backed by the standing of the government and it will circulate as a currency and that
sound currency and will give the country a medium of exchange and that's all you need.
But instead what happens is that every time is the old Hamilton system of loans, the government
raises loans from the private sector at huge interest returns.
But Calhoun is always arguing in the situation for treasury notes rather than loans, but he usually loses.
The loans, as he points out, this is another scam.
The government is borrowing money from people, paying them interest, and they're risking nothing.
They're basically just profiting on the government's credit.
The government, in other words, the government is letting people profit on its own credit,
which is certainly a harm to the taxpayer.
A couple of quotes along this line, and from the essential calendar,
We must curb the banking system or it will certainly ruin the country.
Remember anything about the SNL?
1837, they were arguing about this, the government money, and particularly the surplus funds, so-called, and what to do with them.
And Calhoun said, you know, give them back to the people.
And others said they wanted to distribute to the states for revenue or various other things.
He says, why should gentlemen recommend so extraordinary course, so unequal, so partial, to avoid returning the surplus to the people to whom it belongs?
Was it to prevent the people from being corrupted? Were the people alone capable of being corrupted? Were the government and the banks all pure, while the people alone were corrupted?
And on the currency question, it has been justly stated that the power to make a small piece of paper not worth one cent and the inscribing of a few signatures to be worth a thousand dollars is a power too high to be entrusted to mortal man.
In every case, of course, Galen failed, great southern agrarian Andrew Lytle says a statesman always fails, only politicians succeed because a statesman presents the ideal, but a statesman is indispensable anyway because you have to know what the ideal is even to get partway there.
and usually dishonest and superficial politicians succeeded where Callaghan failed.
Let me mention one more economic issue and then I'll stop.
And we can discuss if we want to.
This is the question of the public lands, which was again a big issue in those days.
The public lands were basically the national treasury.
If you recall, one of the main features of the Constitution, in fact, of the Articles of Conventration,
is that all the states turned over their western claims to Congress.
Most of this land belonged to Virginia and the other southern states.
It was all turned over as to be one common pool for the benefit of all Americans under the administration of Congress in a vast territory of land that, you know, even Jefferson fought with last Americans for a thousand years, at least for countless generations in the future.
The land was the future of the American people and the policy adopted from the beginning by Jefferson and the other southerners was that the lands be regarded as a trust and they be sold off at moderate prices for legitimate settlement and we would proceed west in a fairly orderly way and it was possible to acquire the ownership
of Land with a relatively small amount of capital, but you had to pay something.
The virtue of this being, and this has been the idea all along, that as long as the government
is getting money out of the public lands, you don't need any other taxes.
This is the fun.
They get money this way, and there's no need to live any other taxes on the American people
whatsoever.
And again, as always, the political operatives and the economic exploiters got into the period.
During the Jackson period, two ideas took hold, both of which, Kallen and I posed vigorously.
And one of the ideas was the homestead idea, or as Abraham Lincoln put it, 1860, vote yourself
a farm.
In other words, give away the land to anybody who could make a claim.
Of course, it's also giving away vast amounts of land to railroads and other business corporations as well.
It is certainly desirable to get the land settled and to develop, but it's desirable to do it as politically correct way is another question.
The Homestead idea was put forward but not really adopted until the Republicans got in, like so many other bad things in the 1860s.
Another idea was the so-called distribution, which the Whigs supported.
Take this revenue that the government is realizing from the public lands, and this is the biggest source of revenue other than the tariff of the federal government.
Take the revenue and distribute it back to the states, or distribute it to the states.
This is a typical pseudo-conservative, almost a neo-conservative type of policy, it seems
to me, done by the so-called conservative party of the time, the Whigs, will give this
money back to the states, the largest from the Federal Treasury.
Well, the hidden agenda here, of course, is if you dissipate all this revenue, and that
That creates a pressure for other taxes, including raising the tariff.
The government gives away the public land money, so it has its use to raise taxes in
other respects.
And of course, it would make the states dependent on the federal law, I guess.
And there was at least one distribution.
Calhoun very wisely got in an amendment to the distribution bill which provided that
that if the tariff went above a certain level, the distribution would stop, and that kicked
in in 1837 and shut down the distribution, but some of it had already been done, and
a number of states were encouraged to go into big debt for internal improvement projects
and this sort of thing, counting on this revenue, and a number of states, Pennsylvania, a number
and other states in the Midwest went into default and the bankruptcy, and a lot of projects were left half-finished and so forth.
Callahan's proposal in regard to the public land was simple, too simple and too honest to ever be adopted, of course, by the biologists.
He said, you know, take the lands, if they're not sold in 10 years on the market, simply turn them over to the states in which they're located.
The government can reserve part of the revenue, if it wishes to, for a revenue source, otherwise the states can dispose of these lands as they please for internal improvements or whatever else they wish.
This will strengthen the states, particularly the new western states, where most of the public lands are.
It will get the federal government out of the corrupt business of dealing with the public land.
Very possibly, the course of much of American history might have been different if Callaghan had went away on this particular point and some of the other points.
and I believe that idea has in fact been brought up again very recently in the West and you know it makes sense compared to the other system.
If you wanted two more quotes and then I'll quit, these are Calhoun's observations on the two-party system and on the political situation that has existed.
When it comes to be once understood that politics is a game, that those who are engaged in it
must act a part, that they make this or that profession not from honest conviction or intent
to fulfill it, but as the means of deluding the people and through that delusion to acquire
power.
When such professions are to be entirely forgotten, the people will lose all confidence in public
All will be regarded as mere jugglers, and the people will become passive and indifferent to the grossest abuses of power, on the ground that those whom they may elect under whatever pledges, instead of reforming, will but imitate the example of those they have expelled.
Couldn't help but think of George Bush and no new taxes.
The Federal Government is no longer under the control of the people, but of a combination of active politicians who are banded together under the name of Democrats or Whigs in whose exclusive object is in control of the honors and emoluments of the government.
They have the control of almost the entire press of the country and constitute a vast majority of Congress, and of all of the functionaries of the Federal Government.
With them, a regard for principles is a mere pretext. They are perfectly indifferent to this, and their whole effort is to make up on both sides such issues as they may think for the term to be the most popular, regardless of truth or the consequences.
Well, I'll stop there. I hope I persuaded you that Calhoun is a political economist of some standing.
I could talk from now until Sunday school next Sunday about Calhoun, but I won't.
Well, I started out with a basic question. I was told that as a young man, Calhoun was sort of a pro-interventionist, and I was wondering, first of all, was that true, and what would you attribute to those sort of penises? It was clear that, I mean, later on, it was not.
Hardly anybody was really a pro-interventionist in the early 19th century in the later terms.
You talk about a very limited government, but even so, no, to some degree, he was more
nationalistic than he was later, unless he had a slightly more expanded idea of what
and what the Federal Government could do, and that did not really involve intervention in the economy, it involved national defense, some other things that he was willing to interpret a little more broadly than some of the old Republicans, hardcore people in the early 19th century.
And he always believed that those things that the government was supposed to do, it should do, and do well.
If you're going to defend the country, then you don't skimp.
If that's your responsibility, you don't skimp on that, you do it and do it well.
But that's a different idea than expanding what the government does, it seems to me.
I don't know if I have an answer for that.
I thought it might have been due to this education of Cincinnati and New Orleans,
if it was more Hamiltonian.
South Carolina was always a bit more commercial and nationalistic at a later period than Virginia was.
So there's a little bit of difference in the emphasis on the federal government.
But not very much.
I asked you a couple of comments about the tariff. Charles Adams in his book, Good and Even, speaks to the issue that most of the tariff was blended in the South, and I don't know what percentage you would have a comment on that.
And then most of the revenue raised by the tariff was spent on internal improvements in the old government, so that it would be just a transfer of wealth. And do you have an idea of the percentage?
I can't quote your percentages, but it is true, and that's a point that I didn't make,
but now others make, that the money is spent from the North, basically, because the North
has a majority, and they're interested in their projects, their internal improvements,
so you also have this vast law-growing process going on there to build a second, hang on,
go ahead.
The question is, of course, if they didn't pay the tariff and you bought the goods, if the manufacturing or if you put that profit first under the tariff, so you didn't pay them a high profit, how much of this system understood, generally, prior to the Civil War? Is this something the Catalans and others, I mean, it's not, what is the man in the street understand that he's being taken by this, or is this too esoteric for them?
They all certainly understood it, and they certainly did everything to make sure that everybody understood it.
They certainly understood it in South Carolina.
You've got three-fourths of the people, three-fourths of the voters in South Carolina willing to defy the federal government if they wouldn't have understood it.
There was a constant educational process going on.
There is also a lot of smoke that people believe about it. Constant propaganda about what a good thing the tariff is.
I guess some people claim that was the rich man's war, which was an issue that only involved the rich, because it went right down to the base level.
Well yes, yes, it's an ex-Aryan consumer because Americans are importing a great deal of their, the things that they purchase.
And the point of the southerners is that they're making the whole economy possible in the sense they're providing the exports.
Dr. Wilson, with regard to the tariff debate, did Calhoun come up with an alternative tax plan which would institute a greater degree of equity?
Basically, the plan was that just the constitutional tariff for revenue only, which would be around 10%, yeah, you know, if the government had the right to lay these duties for revenue, so okay, so have a revenue tariff, and it's, you know, it can be calculated when the tariff becomes, ceases to being a revenue and becomes protected,
and really to be a fair, to be a revenue tariff, it has to be across the board, you know, these sort of things, you can't have all these special little, you know, 40% on some manufacturer's product and zero on his raw materials, certainly, which are all foods, but the tariff, you know, the general adage was tariff of revenue only, that was the book.
Do they realize that there was, I mean, they must have realized that there was this trade-off between, you know, selling the public land for money or raising the tariffs.
If you raise the tariff, you could lower the land prices or if you kept the land prices up, you could keep the tariff and still have raised the same amount of money.
Yes, but they're, you know, if you're interested in protecting industry, you're not interested in raising money.
They're two different things.
Oh no, 1833.
Yes, for a time there was.
Well, the tariff came down fairly slowly over a 10-year period.
And then you had the panic in there.
But yes, in fact, there was an increase in revenue.
And people explained that in various ways.
Those interested in tariff projections said it was because the tariff had worked and the American industry was getting more productive.
And bringing prices down. I mean, it's always, it's not easy to, it's easy to obscure cause and effect, but in fact, yes, the revenue did increase, but you know, also the economy was expanding, the population, everything was expanding.
I was going to say that a couple of things come across in my research that sort of demonstrates that his influence was gone as he sort of approached the Civil War period with respect to economic policy.
One of those was the spreading of internal improvements within the South, railroads and canals and road building and all the rest, of course due to prosperity but also public internal work projects.
And then the other thing that I came across was an entire booklet of tariff schedules of the Confederate government.
And that once they got in control, that they instituted a whole series of tariffs for revenue, for protection, discriminatory tariffs based on the type of product it was.
and it seemed like the whole notion of keeping tariffs down or avoiding the Northern Terror
went out the window as soon as they gained...
No, in fact, they were forbidden to have a predicted tariff by the Constitution,
but I think basically the federal government was desperate for revenue,
or substantial for real revenue, and the situation had no choice but to try to raise it.
In context of this discussion, I wondered whether it is really possible to organize a money-based economy, to be honest.
In that vein, I'm asking you, do you know of any economy, starting with Egyptians, going to the United States today, where money systems work ethically?
No, I'm sure there are plenty of people here who know more about that than I do.
Do you think we have the banking after a long period?
I won't disagree with you.
Do you expect to have ethical economy? Ethical about money system?
You see, I personally delude myself with if I had gold in my cell as my reserve, right,
I would be free and independent and protected immune from the abuse of government.
But, listening to this conversation, I said, gosh, in those days, in the early, early part of the 19th century, dollar was backed by gold, right?
And people found a way to bypass it.
No, actually there was no, you know, dollars were not backed by gold, they were gold.
That's right, that's right. Of course they were.
And there was no, actually no currency, government currency.
In theory, bank notes were, which were issued by banks, were backed by gold as the fractional system.
In a facetious way, you know.
Because I have not lost love for other people.
I drew other people in Germany.
It was very smooth.
It works very smooth today in Germany again, right?
Right? So therefore, this is a central authority to a certain amount of onus.
I'm not trying to sell adult paper or one or the other. I said, what in the hell should we do?
Well, I'm sure I don't know. I just sort of understand a little bit historically about what happened in the 19th century.
But I don't, I certainly have no idea what's right.
Can you talk about the Hamilton system of issuing the order that the national bank issued a note for land?
You're talking about only the one national bank that he created and they could write a check?
No, the point was that Hamilton said bank notes were accepted by the government, all bank notes.
Now presumably they can discount them or you know they don't have to accept them
at full value this is not stated but you know bank notes and any bank that gets
chartered by a state can issue notes so these notes are accepted by the government. So the point is you know right from the
very start sort of surreptitiously the government is involved in backing the
Banking System. This has nothing to do with the national bank as such.
He just directed the board to invest.
Which continued to be. That's really establishing legal tender laws
without actually passing any kind of legislation.
And Calhoun tried again, in 1816 when the bank was rechartered,
he tried to get in a provision
which at the same time the bank was rechartered and its bank notes were
more or less become legal tender, then the government would stop accepting these other
bank notes and separate itself, in other words, have a hard specie currency, hard money, like
these people claimed they were for, and again in the 1830s he tried that and it was defeated
by the waffling politicians who claimed to be for hard money but wouldn't go all the
basically the statement issued whatever paper they wanted no presumably the you
The market would give you some sort of valuation on the soundness of their paper, but nobody knew for sure.
All kinds of banknotes are circulating in the economy, but there isn't any national currency except for the gold and silver,
One of the things that holds in high regard for the southern statesmen, how he was general,
is that after the crisis of 1933 and his legislative attention, how you calculate the care of the
So by the late 1850s, the tariff falls to just about 90% to 120%. And we were talking about the time limit. Even today, no matter what the government does with marginal tax rates, they still hang around 19.5% in GDP.
In terms of, I'm an economist or a scholar, I'm pretty young. Can you somehow give me some insight on wisdom? How do these folks gravitate to this number? Are they willing to accept this number of times a year? I think we sort of get mesmerized by these kinds of methods, not all just because those folks didn't have to get to this kind of thing.
So it's something that comes out in the political process, something admitted by committees,
it's not what is good or right, it's what the most people can get to agree upon, I would
think.
I hope there's not some law that says that the government is 20% of everything under
any circumstance.
That's one of the evaluations of the fact that Luke Gingrich comparing himself to Henry Clay.
Not surprising. But the great thing about Gallagher is he really cared about what was right.
He's not just putting out a position to get elected or to promote his party.
I've been trying to determine what is true and right, what is really for the best interest of the country and for the future, which is what a statesman should do.
It's been a long time since we've seen a statesman.
Thank you very much for coming out.