WEBVTT NOTE John C. Calhoun on Free Trade 1 00:00:00.000 --> 00:00:04.000 Well, it really is an honor to be here at the Von Mises Institute. 2 00:00:04.000 --> 00:00:16.000 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 3 00:00:16.000 --> 00:00:23.000 around the country and around the world, but I guarantee you it is known to many good people elsewhere. 4 00:00:23.000 --> 00:00:29.000 I want to talk about John C. Galhoun. I've expanded that a little bit from Friedrich to John C. Galhoun's political economy. 5 00:00:29.000 --> 00:00:59.000 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 6 00:00:59.000 --> 00:01:06.000 I don't know if that legend has gotten this far, gotten across the Chattahoochee, but 7 00:01:06.000 --> 00:01:11.320 in North and South Carolina, whenever I make a talk about Calvin, somebody either asks 8 00:01:11.320 --> 00:01:20.320 me or tells me invariably in every freshman class that Lincoln was Calvin's natural son, 9 00:01:20.320 --> 00:01:26.520 and I assure you it is not true, it's one of those strange things that people like to 10 00:01:26.520 --> 00:01:35.520 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. 11 00:01:35.520 --> 00:01:53.520 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. 12 00:01:53.520 --> 00:01:59.520 And it seems to be some impression also that Calhoun and Lincoln looked alike, which is not true. 13 00:01:59.520 --> 00:02:07.220 If you look at the pictures mostly, they were both tall and lanky and dark haired, but other than that, there's no resemblance. 14 00:02:07.220 --> 00:02:14.420 And you look at the faces, that one side of Lincoln's face was deformed. 15 00:02:14.420 --> 00:02:21.320 And Calhoun was actually, although what you always see of Calhoun, if there's a picture in your textbook, 16 00:02:21.320 --> 00:02:26.200 of the old Brady daguerreotype, which was taken not long before he died and was sick. 17 00:02:26.200 --> 00:02:30.120 And he looks like a fanatic, of course, he just stuck his finger in an electric socket, 18 00:02:30.120 --> 00:02:35.480 if you've seen that picture. But that is very untypical, that's manipulation of symbols. 19 00:02:36.440 --> 00:02:43.720 There are innumerable likenesses of Calvin, which show him to be a very handsome and charming man, 20 00:02:43.720 --> 00:02:56.040 unlike Lincoln but I want to talk about Calhoun's political economy because it's a very it seems 21 00:02:56.040 --> 00:03:06.200 appropriate for this group and it's a very ignored aspect of his importance you know one one way he's 22 00:03:06.200 --> 00:03:10.280 put down is with the pictures another way that he's put down is that in American history he's 23 00:03:10.280 --> 00:03:15.960 that he's dealt with is in terms of slavery and states' rights, and nothing else. 24 00:03:15.960 --> 00:03:21.560 And in fact, Calhoun was a very important economist, probably the best economic thinker 25 00:03:21.560 --> 00:03:28.560 among American public figures in the first half of the 19th century. 26 00:03:28.560 --> 00:03:35.400 And much else, the historian of banking, Ray Hammond, says, after reading all the debates 27 00:03:35.400 --> 00:03:46.320 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. 28 00:03:46.320 --> 00:03:51.800 So there's something important here to be pointed out about Calhoun. 29 00:03:51.800 --> 00:04:01.840 I think it's maybe not too far of that to suggest that he was sort of a proto-Austrian even. 30 00:04:01.840 --> 00:04:19.520 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. 31 00:04:19.520 --> 00:04:49.520 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 32 00:04:49.520 --> 00:04:56.600 1833, 1843, in which he gave speeches on all the major economic issues of the day, and 33 00:04:56.600 --> 00:05:03.720 I think anybody who reads that as well will be forced to agree with me about his and Callaghan's 34 00:05:03.720 --> 00:05:14.560 importance as an economic thinker and about the Austrian elements. 35 00:05:14.560 --> 00:05:20.360 If you will recall your American history, in this period we're talking about, the early 36 00:05:20.360 --> 00:05:28.560 19th century, the major issues of the time, with economic aspects, certainly with the 37 00:05:28.560 --> 00:05:39.600 tariff, the banking and currency, the public lands, and internal improvements, I probably 38 00:05:39.600 --> 00:05:43.840 don't have time here to talk about Gellin's positions on all of these issues, but maybe 39 00:05:43.840 --> 00:05:56.840 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. 40 00:05:56.840 --> 00:06:06.840 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. 41 00:06:06.840 --> 00:06:09.840 They rehash the old political polemics. 42 00:06:09.840 --> 00:06:14.840 They don't understand anything about the economics of what was actually going on. 43 00:06:14.840 --> 00:06:25.840 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. 44 00:06:25.840 --> 00:06:35.840 You cannot understand it by rehashing the political rhetoric because political rhetoric is often is designed to disguise or distort as it is 45 00:06:35.840 --> 00:06:45.840 is to explain and understand. We all certainly know that to be true. It was true then. 46 00:06:45.840 --> 00:06:59.840 In 1842, Callaghan made a speech on the federal budget, basically, the public economy, and he concluded by a kind of slogan 47 00:06:59.840 --> 00:07:18.840 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. 48 00:07:18.840 --> 00:07:32.540 Free Trade, Low Duties, No Debt, Separation from Banks, Economy, Retrenchment, Strict Adherence to the Constitution. 49 00:07:32.540 --> 00:07:37.840 A wonderful platform, I would think, that we can use even today. 50 00:07:37.840 --> 00:07:44.840 In regard to the tariff, of course the tariff is an issue that runs all through American history. 51 00:07:44.840 --> 00:07:57.840 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. 52 00:07:59.840 --> 00:08:04.840 This idea was rejected by the Philadelphia Convention and not written into the Constitution. 53 00:08:05.840 --> 00:08:11.840 And yet, from the very beginning, they were attempts to do just that. 54 00:08:14.840 --> 00:08:23.040 One of Hamilton's early reports, three or four evil reports that he made in the beginning of the government. 55 00:08:23.040 --> 00:08:39.540 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. 56 00:08:39.540 --> 00:08:55.540 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. 57 00:08:55.540 --> 00:09:05.540 The Constitution does give the Congress, as it says, the right to lay duties and imposts, which is the tariff. 58 00:09:05.540 --> 00:09:15.540 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. 59 00:09:15.540 --> 00:09:31.540 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. 60 00:09:31.540 --> 00:09:39.540 and was designed to meet the needs of the government, which were quite modest in the beginning. 61 00:09:39.540 --> 00:09:49.540 Back until the Civil War, the tariff had raised most of the federal revenue and there were very, very few direct taxes. 62 00:09:49.540 --> 00:10:18.540 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. 63 00:10:18.540 --> 00:10:32.220 In 1816, after the war of 1812, a mildly protective tariff was passed, in which a good many Southerners 64 00:10:32.220 --> 00:10:37.700 supported it, although John Randolph of Roanoke warned against it. 65 00:10:37.700 --> 00:10:41.420 The argument was made, and there had been a good deal of industrial development during 66 00:10:41.420 --> 00:10:47.380 the war of 1812, the argument was made that because of the acts of the government and 67 00:10:47.380 --> 00:11:07.380 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. 68 00:11:07.380 --> 00:11:14.380 The obligation was this was temporary and they would soon be on their feet and there would be no more need for a tariff. 69 00:11:14.380 --> 00:11:28.380 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. 70 00:11:28.380 --> 00:11:41.380 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. 71 00:11:41.380 --> 00:11:49.380 What happened, of course, is the tariff did not go down, but it kept going up and up. 72 00:11:49.380 --> 00:11:57.380 In 1828 it was raised, in 1824 again, in 1828 again, and the tariff became a political platform 73 00:11:57.380 --> 00:12:03.380 for a number of people, including John Quincy Adams and Henry Clay, his so-called American system. 74 00:12:03.380 --> 00:12:10.380 And a vast lobbying network developed, as you might expect, behind the tariff bills. 75 00:12:10.380 --> 00:12:18.380 and a network to design the tariff bills in the ways that were convenient for certain interests. 76 00:12:25.380 --> 00:12:32.380 There's a great Philadelphia free trader and free banker named Conte Ragout, R-A-G-U-E-T, 77 00:12:32.380 --> 00:12:37.380 a good subject for somebody if you're looking for a research topic. 78 00:12:37.380 --> 00:13:02.380 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. 79 00:13:02.380 --> 00:13:15.380 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. 80 00:13:15.380 --> 00:13:21.380 In 1828, the tariff bill was so bad that it was referred to as the tariff of abominations. 81 00:13:21.380 --> 00:13:28.380 And it was almost as complicated as the NAFTA treaty. I mean, it was an immensely long bill. 82 00:13:28.380 --> 00:13:42.380 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. 83 00:13:42.380 --> 00:13:53.020 What we have here is an elaborate protective device which levies taxes on imports in accordance 84 00:13:53.020 --> 00:14:01.020 with the competition that they give to domestic manufacturers and in accordance with what 85 00:14:01.020 --> 00:14:03.860 political power the domestic manufacturers have. 86 00:14:03.860 --> 00:14:07.400 Of course, you have a tremendous amount of law growing. 87 00:14:07.400 --> 00:14:25.680 The 28 tera basically provided a 50% or close to 50% ad valorem tax on a great many imports. 88 00:14:25.680 --> 00:14:33.280 In particular, the rough textiles that were bought in immense quantities in the south 89 00:14:33.280 --> 00:14:39.920 for Sleeve Clothing, although many many other things as well. Galhoun estimated that it cost this 90 00:14:39.920 --> 00:14:47.840 tariff added two thousand dollars per mile to the construction of railroads, which were just 91 00:14:47.840 --> 00:14:57.040 beginning to take off at that time. Two thousand dollars was a lot of money in 1828. The manufacturing 92 00:14:57.040 --> 00:15:03.040 The American interest had eclipsed the shipping interest in the North, pretty much by this time. 93 00:15:03.040 --> 00:15:09.040 The mercantile interest in the North remained free trade, but they were becoming a minority. 94 00:15:09.040 --> 00:15:14.040 So this question was definitely sexualized. 95 00:15:14.040 --> 00:15:24.040 From 1816 until the Civil War, basically half the value of exports of the United States 96 00:15:24.040 --> 00:15:33.040 was made up of cotton together with a few other staple crops for themselves like rice and tobacco and sugar. 97 00:15:33.040 --> 00:15:42.040 Literally half of the American export economy was cotton. It was the most valuable commodity in America. 98 00:15:42.040 --> 00:15:51.040 And the situation which southerners came to realize after 1828, Calhoun and many others, 99 00:15:51.040 --> 00:15:56.040 that they were selling in a completely unpredicted world market. 100 00:15:56.040 --> 00:15:58.040 They had to sell the world market. 101 00:15:58.040 --> 00:16:01.040 The United States could not consume all the cotton. 102 00:16:01.040 --> 00:16:04.040 And it was in great demand in Europe. 103 00:16:04.040 --> 00:16:07.040 But the producer has no control over the market. 104 00:16:07.040 --> 00:16:12.040 He's one of thousands or tens of thousands of cotton growers. 105 00:16:12.040 --> 00:16:15.040 So that they are selling in a completely unpredicted world market 106 00:16:15.040 --> 00:16:22.040 and buying a great many of their goods and manufactured goods in the domestic market 107 00:16:22.040 --> 00:16:28.080 with a 50% protective tariff. 108 00:16:28.080 --> 00:16:35.440 And this ain't exactly fair, it begins to occur to them, and in fact what this is is 109 00:16:35.440 --> 00:16:39.640 a transfer of wealth from one set of people to another and a transfer of wealth from one 110 00:16:39.640 --> 00:16:42.680 region to another. 111 00:16:42.680 --> 00:16:49.800 This is where Callaghan began to think about the problem of majorities, the real majority 112 00:16:49.800 --> 00:16:56.080 versus the miracle majority, because these bills, through log rolling, had passed the 113 00:16:56.080 --> 00:16:57.080 Congress. 114 00:16:57.080 --> 00:17:03.520 And in a narrowest technical sense, the Congress did have a right to lay duties and impose, 115 00:17:03.520 --> 00:17:09.240 although it was certainly a violation of the spirit of the Constitution to use it for this 116 00:17:09.240 --> 00:17:10.700 purpose. 117 00:17:10.700 --> 00:17:20.700 If you look at the public discussion of the time, you'll find, as you always do with politicians, a lot of obfuscation. 118 00:17:20.700 --> 00:17:34.700 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. 119 00:17:34.700 --> 00:17:38.780 And some argued that Southerners were deluded 120 00:17:38.780 --> 00:17:40.620 and did not really understand the economy 121 00:17:40.620 --> 00:17:42.460 and they were complaining about something 122 00:17:42.460 --> 00:17:44.420 that didn't really exist. 123 00:17:44.420 --> 00:17:45.920 And some even said, 124 00:17:48.940 --> 00:17:50.700 you read the New England speeches 125 00:17:50.700 --> 00:17:53.620 and you get these puritanical diatribes 126 00:17:53.620 --> 00:17:57.940 about how Southerners are lazy and dissolute, 127 00:17:57.940 --> 00:17:59.860 that they would just be hardworking and productive 128 00:17:59.860 --> 00:18:02.700 like New Englanders and they wouldn't, 129 00:18:02.700 --> 00:18:07.740 they wouldn't have to have these economic grievances and then there were the 130 00:18:07.740 --> 00:18:14.100 politicians who straddled like Andrew Jackson who ran the president on his only 131 00:18:14.100 --> 00:18:20.420 position on the tariff being that he was for a judicious tariff which of course 132 00:18:20.420 --> 00:18:25.420 could be interpreted any way one chose and he had the support of both the 133 00:18:25.420 --> 00:18:31.220 people who were for and against the tariff the Democratic Party was 134 00:18:31.220 --> 00:18:48.220 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. 135 00:18:48.220 --> 00:19:14.220 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. 136 00:19:14.220 --> 00:19:24.220 And if you look at the Confederate Constitution of 1861, it forbids, absolutely forbids a protective tariff. 137 00:19:28.220 --> 00:19:40.220 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. 138 00:19:40.220 --> 00:19:58.220 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. 139 00:19:58.220 --> 00:20:17.220 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. 140 00:20:17.220 --> 00:20:29.220 If you read Calhoun's speeches during this period, you will find very eloquent defenses of free trade and analyses of the economic situation. 141 00:20:29.220 --> 00:20:43.220 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, 142 00:20:43.220 --> 00:20:52.220 Adams and any of the other great speakers who all dealt with this in political terms, not in economic terms. 143 00:20:52.220 --> 00:20:58.220 I'll give you a couple of quotes. I think I'll quote a few brief things from Callaghan. 144 00:20:58.220 --> 00:21:06.220 I put together a book of years ago called The Essential Callaghan, which is basically the best quote from Callaghan. 145 00:21:06.220 --> 00:21:11.220 I'm hoping there will be a paperback in that thing, so don't buy it. It's too expensive. 146 00:21:11.220 --> 00:21:25.120 They who say they cannot compete with foreigners at their own door without an advantage of 147 00:21:25.120 --> 00:21:31.700 45% expect us to meet them abroad under disadvantage equal to their encouragement, a perversion 148 00:21:31.700 --> 00:21:37.460 which by its advocates is called the American system. 149 00:21:37.460 --> 00:21:42.900 The tariff's tendency is to make the poor poorer and the rich richer. 150 00:21:42.900 --> 00:21:48.580 Posterity will scarcely believe that in a country with three institutions, the government 151 00:21:48.580 --> 00:21:55.340 has pushed the principle of monopoly so far as to impose a tax on the foreign exchanges 152 00:21:55.340 --> 00:22:04.220 of the country equal to nearly one-half the value of the entire export. 153 00:22:04.220 --> 00:22:08.900 Free Trade is destined to work the greatest and most happy change which has ever taken 154 00:22:08.900 --> 00:22:17.900 place. Its reaction on politics, morals and religion will be powerful and most salutary. 155 00:22:17.900 --> 00:22:23.780 It is, in my opinion, emphatically the cause of civilization and peace. 156 00:22:23.780 --> 00:22:29.740 At last is a statement he made to the Manchester Free Trade League, which made him an honorary 157 00:22:29.740 --> 00:22:41.740 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. 158 00:22:41.740 --> 00:22:46.740 Every cent removed from the hands of the government is so much added to the wealth of the people. 159 00:22:46.740 --> 00:22:52.740 This to the Senate, the surplus money in the treasury is not ours. 160 00:22:52.740 --> 00:22:58.740 It properly belongs to those who made it and from whom it has been unjustly taken. 161 00:22:58.740 --> 00:23:04.740 I hold it an unquestionable principle that the government has no right to take assent from the people 162 00:23:04.740 --> 00:23:10.740 beyond what is necessary to meet its legitimate constitutional wants. 163 00:23:10.740 --> 00:23:17.740 And an appropriation bill. Why should the government pay the expenses of one class of men rather than another? 164 00:23:17.740 --> 00:23:26.740 We all know that when a public building was once commenced, it was never finished under five times the original estimate. 165 00:23:26.740 --> 00:23:31.740 In the midst of the vast profusion of means which the protective tariff poured into the treasury, 166 00:23:31.740 --> 00:23:36.740 the government has lost all conception of economy and accountability. 167 00:23:36.740 --> 00:23:44.740 A habit of profusion and extravagance has grown up utterly inconsistent with Republican simplicity and virtue. 168 00:23:44.740 --> 00:23:55.740 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. 169 00:23:55.740 --> 00:24:01.740 Fairly up-to-date, I would think. 170 00:24:06.740 --> 00:24:11.740 If the money is saved from one objectionable object, it is sure to be applied to some other, 171 00:24:11.740 --> 00:24:14.740 and perhaps even more objectionable. 172 00:24:14.740 --> 00:24:20.740 If the sluice of expenditures is stopped in one place, it is certain to burst through in another. 173 00:24:20.740 --> 00:24:33.740 All administrations are nearly alike, fairly prophetic, I would say, considering that he said that 150 years ago. 174 00:24:33.740 --> 00:24:45.740 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. 175 00:24:45.740 --> 00:24:53.740 are extremely complicated and probably some people here understand it better than I do. 176 00:24:53.740 --> 00:24:59.740 As you know, Alexander Hamilton got his national bank in 1791 after a struggle. 177 00:24:59.740 --> 00:25:01.740 It was around 20 years. 178 00:25:01.740 --> 00:25:05.740 The bank was partly owned and controlled by the government. 179 00:25:05.740 --> 00:25:10.740 It had the right to issue notes as legal tender and to maintain the government's deposits, 180 00:25:10.740 --> 00:25:14.740 which is a very profitable right. 181 00:25:14.740 --> 00:25:20.740 This united the government and the banking system from the beginning, you might say. 182 00:25:23.740 --> 00:25:32.740 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. 183 00:25:32.740 --> 00:25:35.740 Calhoun alone pointed out, that's not the point. 184 00:25:35.740 --> 00:25:38.740 The national bank is not really the question. 185 00:25:38.740 --> 00:25:42.740 The question is that the government is allied with the banking system. 186 00:25:42.740 --> 00:25:51.740 Early in the government, Hamilton very quietly issued a directive, which never was legislation, 187 00:25:51.740 --> 00:25:59.740 basically saying that the notes of banks would be accepted by the government 188 00:25:59.740 --> 00:26:05.740 in payment for its dues for the customs purchases of the public lands. 189 00:26:05.740 --> 00:26:11.740 So immediately the government and the bank are related, the whole banking system. 190 00:26:11.740 --> 00:26:16.940 and nobody had really decided this except Hamilton, and this was the real issue. 191 00:26:16.940 --> 00:26:24.740 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, 192 00:26:24.740 --> 00:26:32.240 is in effect backing and supporting the banking system, and that was what needed to be debated. 193 00:26:32.240 --> 00:26:37.740 And it was a great assumption of power on the part of the government. 194 00:26:37.740 --> 00:26:52.740 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. 195 00:26:52.740 --> 00:26:59.740 And probably in this situation, the National Bank was actually an asset, Calvin argued, and he had been one of the designers of it. 196 00:26:59.740 --> 00:27:25.740 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. 197 00:27:25.740 --> 00:27:39.740 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. 198 00:27:39.740 --> 00:27:51.740 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. 199 00:27:51.740 --> 00:28:10.740 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. 200 00:28:10.740 --> 00:28:18.740 Callahan's position at this point is very interesting, because he doesn't agree with any of the parties. 201 00:28:18.740 --> 00:28:25.740 The Whigs are screaming about the fact that Jackson is a tyrant and doing illegal actions, 202 00:28:25.740 --> 00:28:33.740 and they won't immediately restore the national bank, which is to them the cause of all prosperity and stability. 203 00:28:33.740 --> 00:28:40.740 The Democrats and Jackson claim that they are for hard money, that they want to destroy the influence of banking. 204 00:28:40.740 --> 00:28:47.740 But if you look carefully at what they're doing, they're not destroying the influence of banking, 205 00:28:47.740 --> 00:28:55.740 or the connection of government with banking, or the circulation of dubious paper currency at all. 206 00:28:55.740 --> 00:28:58.740 In fact, they're expanding it. 207 00:28:58.740 --> 00:29:20.740 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. 208 00:29:20.740 --> 00:29:29.740 You have it curb banking at all, which is what they claim they're doing by breaking the power of the national bank. 209 00:29:29.740 --> 00:29:41.740 And while some of the people then actually were for hard money, philosophically, dealing only against PC, 210 00:29:41.740 --> 00:29:48.740 it's also clear that there were a lot of banking interests, for instance, those who backed Martin Van Buren in New York. 211 00:29:48.740 --> 00:29:59.520 in New York, who wanted to break the bank in Philadelphia, which was a kind of a break 212 00:29:59.520 --> 00:30:05.660 on their activities, not because they wanted to do hard money currency. 213 00:30:05.660 --> 00:30:14.340 But the result of all this was a great deal of speculation, and three years before they 214 00:30:14.340 --> 00:30:21.820 For selling off the public lands over this bank paper of dubious value everywhere, tremendous 215 00:30:21.820 --> 00:30:25.680 speculation in public lands. 216 00:30:25.680 --> 00:30:30.060 And three years before it happened, Calhoun very precisely predicted the panic in 1837. 217 00:30:30.060 --> 00:30:38.620 And he said exactly what was going to happen because of this situation. 218 00:30:38.620 --> 00:30:43.460 Where at the end of his term, Jackson became alarmed and he issued his species record, 219 00:30:43.460 --> 00:30:50.260 which basically demanded the payment in gold and silver for purchase of the public lands 220 00:30:50.260 --> 00:30:58.020 and not ink paper anymore and the whole speculative thing collapsed and the panic happened. 221 00:30:58.020 --> 00:31:05.860 There were years of controversy back and forth again about this issue throughout the antebellum 222 00:31:05.860 --> 00:31:06.860 period and so many other things. 223 00:31:06.860 --> 00:31:17.860 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. 224 00:31:17.860 --> 00:31:28.860 But again, I think if you look at what Gallagher was saying and his analysis and his attempts to found a good policy here, 225 00:31:28.860 --> 00:31:38.860 He appears as a real political economist in a very favorable light compared to the other people. 226 00:31:38.860 --> 00:31:50.860 He also was very eloquent against the Hamiltonian system of public finance, the loan system. 227 00:31:50.860 --> 00:31:59.860 It is the Congress's constitutional duty to regulate the currency. 228 00:31:59.860 --> 00:32:06.860 You don't need the National Bank, as the Whigs say. 229 00:32:06.860 --> 00:32:08.860 You don't need all this other system, as the Democrats say. 230 00:32:08.860 --> 00:32:13.860 All you have to do is for the government to issue its own Treasury notes and payments, 231 00:32:13.860 --> 00:32:15.860 which becomes a kind of currency. 232 00:32:15.860 --> 00:32:24.220 It's backed by the standing of the government and it will circulate as a currency and that 233 00:32:24.220 --> 00:32:30.900 sound currency and will give the country a medium of exchange and that's all you need. 234 00:32:30.900 --> 00:32:35.900 But instead what happens is that every time is the old Hamilton system of loans, the government 235 00:32:35.900 --> 00:32:44.900 raises loans from the private sector at huge interest returns. 236 00:32:44.900 --> 00:32:52.900 But Calhoun is always arguing in the situation for treasury notes rather than loans, but he usually loses. 237 00:32:52.900 --> 00:32:59.900 The loans, as he points out, this is another scam. 238 00:32:59.900 --> 00:33:04.900 The government is borrowing money from people, paying them interest, and they're risking nothing. 239 00:33:04.900 --> 00:33:09.900 They're basically just profiting on the government's credit. 240 00:33:09.900 --> 00:33:14.900 The government, in other words, the government is letting people profit on its own credit, 241 00:33:14.900 --> 00:33:19.900 which is certainly a harm to the taxpayer. 242 00:33:19.900 --> 00:33:31.900 A couple of quotes along this line, and from the essential calendar, 243 00:33:31.900 --> 00:33:37.900 We must curb the banking system or it will certainly ruin the country. 244 00:33:37.900 --> 00:33:42.900 Remember anything about the SNL? 245 00:33:42.900 --> 00:33:50.900 1837, they were arguing about this, the government money, and particularly the surplus funds, so-called, and what to do with them. 246 00:33:50.900 --> 00:33:55.900 And Calhoun said, you know, give them back to the people. 247 00:33:55.900 --> 00:34:02.900 And others said they wanted to distribute to the states for revenue or various other things. 248 00:34:02.900 --> 00:34:13.900 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? 249 00:34:13.900 --> 00:34:25.900 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? 250 00:34:25.900 --> 00:34:44.900 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. 251 00:34:44.900 --> 00:35:13.900 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. 252 00:35:13.900 --> 00:35:22.900 and usually dishonest and superficial politicians succeeded where Callaghan failed. 253 00:35:22.900 --> 00:35:28.900 Let me mention one more economic issue and then I'll stop. 254 00:35:28.900 --> 00:35:32.900 And we can discuss if we want to. 255 00:35:32.900 --> 00:35:38.900 This is the question of the public lands, which was again a big issue in those days. 256 00:35:38.900 --> 00:35:43.900 The public lands were basically the national treasury. 257 00:35:43.900 --> 00:35:50.900 If you recall, one of the main features of the Constitution, in fact, of the Articles of Conventration, 258 00:35:50.900 --> 00:35:58.900 is that all the states turned over their western claims to Congress. 259 00:35:58.900 --> 00:36:04.900 Most of this land belonged to Virginia and the other southern states. 260 00:36:04.900 --> 00:36:22.900 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. 261 00:36:22.900 --> 00:36:52.900 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 262 00:36:52.900 --> 00:37:00.180 of Land with a relatively small amount of capital, but you had to pay something. 263 00:37:00.180 --> 00:37:04.420 The virtue of this being, and this has been the idea all along, that as long as the government 264 00:37:04.420 --> 00:37:08.620 is getting money out of the public lands, you don't need any other taxes. 265 00:37:08.620 --> 00:37:09.620 This is the fun. 266 00:37:09.620 --> 00:37:16.900 They get money this way, and there's no need to live any other taxes on the American people 267 00:37:16.900 --> 00:37:20.900 whatsoever. 268 00:37:20.900 --> 00:37:26.500 And again, as always, the political operatives and the economic exploiters got into the period. 269 00:37:26.500 --> 00:37:35.700 During the Jackson period, two ideas took hold, both of which, Kallen and I posed vigorously. 270 00:37:35.700 --> 00:37:44.340 And one of the ideas was the homestead idea, or as Abraham Lincoln put it, 1860, vote yourself 271 00:37:44.340 --> 00:37:45.340 a farm. 272 00:37:45.340 --> 00:37:54.340 In other words, give away the land to anybody who could make a claim. 273 00:37:54.340 --> 00:38:03.340 Of course, it's also giving away vast amounts of land to railroads and other business corporations as well. 274 00:38:03.340 --> 00:38:12.340 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. 275 00:38:12.340 --> 00:38:22.340 The Homestead idea was put forward but not really adopted until the Republicans got in, like so many other bad things in the 1860s. 276 00:38:22.340 --> 00:38:28.340 Another idea was the so-called distribution, which the Whigs supported. 277 00:38:28.340 --> 00:38:37.340 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. 278 00:38:37.340 --> 00:38:43.380 Take the revenue and distribute it back to the states, or distribute it to the states. 279 00:38:43.380 --> 00:38:49.540 This is a typical pseudo-conservative, almost a neo-conservative type of policy, it seems 280 00:38:49.540 --> 00:38:56.820 to me, done by the so-called conservative party of the time, the Whigs, will give this 281 00:38:56.820 --> 00:39:01.580 money back to the states, the largest from the Federal Treasury. 282 00:39:01.580 --> 00:39:07.300 Well, the hidden agenda here, of course, is if you dissipate all this revenue, and that 283 00:39:07.300 --> 00:39:11.740 That creates a pressure for other taxes, including raising the tariff. 284 00:39:11.740 --> 00:39:17.380 The government gives away the public land money, so it has its use to raise taxes in 285 00:39:17.380 --> 00:39:18.380 other respects. 286 00:39:18.380 --> 00:39:25.060 And of course, it would make the states dependent on the federal law, I guess. 287 00:39:25.060 --> 00:39:29.100 And there was at least one distribution. 288 00:39:29.100 --> 00:39:34.500 Calhoun very wisely got in an amendment to the distribution bill which provided that 289 00:39:34.500 --> 00:39:39.220 that if the tariff went above a certain level, the distribution would stop, and that kicked 290 00:39:39.220 --> 00:39:46.700 in in 1837 and shut down the distribution, but some of it had already been done, and 291 00:39:46.700 --> 00:39:53.940 a number of states were encouraged to go into big debt for internal improvement projects 292 00:39:53.940 --> 00:39:58.380 and this sort of thing, counting on this revenue, and a number of states, Pennsylvania, a number 293 00:39:58.380 --> 00:40:07.380 and other states in the Midwest went into default and the bankruptcy, and a lot of projects were left half-finished and so forth. 294 00:40:07.380 --> 00:40:18.380 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. 295 00:40:18.380 --> 00:40:28.380 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. 296 00:40:28.380 --> 00:40:44.380 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. 297 00:40:44.380 --> 00:40:53.380 This will strengthen the states, particularly the new western states, where most of the public lands are. 298 00:40:53.380 --> 00:40:59.380 It will get the federal government out of the corrupt business of dealing with the public land. 299 00:40:59.380 --> 00:41:12.380 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. 300 00:41:12.380 --> 00:41:27.380 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. 301 00:41:27.380 --> 00:41:37.380 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. 302 00:41:37.380 --> 00:41:45.180 When it comes to be once understood that politics is a game, that those who are engaged in it 303 00:41:45.180 --> 00:41:52.220 must act a part, that they make this or that profession not from honest conviction or intent 304 00:41:52.220 --> 00:41:58.220 to fulfill it, but as the means of deluding the people and through that delusion to acquire 305 00:41:58.220 --> 00:41:59.220 power. 306 00:41:59.220 --> 00:42:04.620 When such professions are to be entirely forgotten, the people will lose all confidence in public 307 00:42:04.620 --> 00:42:22.620 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. 308 00:42:22.620 --> 00:42:29.620 Couldn't help but think of George Bush and no new taxes. 309 00:42:29.620 --> 00:42:46.620 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. 310 00:42:46.620 --> 00:42:55.620 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. 311 00:42:55.620 --> 00:43:13.620 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. 312 00:43:13.620 --> 00:43:27.620 Well, I'll stop there. I hope I persuaded you that Calhoun is a political economist of some standing. 313 00:43:27.620 --> 00:43:33.620 I could talk from now until Sunday school next Sunday about Calhoun, but I won't. 314 00:43:33.620 --> 00:43:56.620 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. 315 00:43:56.620 --> 00:44:05.460 Hardly anybody was really a pro-interventionist in the early 19th century in the later terms. 316 00:44:05.460 --> 00:44:12.860 You talk about a very limited government, but even so, no, to some degree, he was more 317 00:44:12.860 --> 00:44:21.140 nationalistic than he was later, unless he had a slightly more expanded idea of what 318 00:44:21.140 --> 00:44:42.140 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. 319 00:44:42.140 --> 00:44:48.640 And he always believed that those things that the government was supposed to do, it should do, and do well. 320 00:44:48.640 --> 00:44:51.640 If you're going to defend the country, then you don't skimp. 321 00:44:51.640 --> 00:44:57.640 If that's your responsibility, you don't skimp on that, you do it and do it well. 322 00:44:57.640 --> 00:45:06.640 But that's a different idea than expanding what the government does, it seems to me. 323 00:45:06.640 --> 00:45:08.640 I don't know if I have an answer for that. 324 00:45:08.640 --> 00:45:13.640 I thought it might have been due to this education of Cincinnati and New Orleans, 325 00:45:13.640 --> 00:45:15.640 if it was more Hamiltonian. 326 00:45:18.640 --> 00:45:24.640 South Carolina was always a bit more commercial and nationalistic at a later period than Virginia was. 327 00:45:24.640 --> 00:45:30.640 So there's a little bit of difference in the emphasis on the federal government. 328 00:45:30.640 --> 00:45:32.640 But not very much. 329 00:45:32.640 --> 00:45:47.640 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. 330 00:45:47.640 --> 00:46:00.640 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? 331 00:46:00.640 --> 00:46:05.200 I can't quote your percentages, but it is true, and that's a point that I didn't make, 332 00:46:05.200 --> 00:46:11.240 but now others make, that the money is spent from the North, basically, because the North 333 00:46:11.240 --> 00:46:16.560 has a majority, and they're interested in their projects, their internal improvements, 334 00:46:16.560 --> 00:46:25.560 so you also have this vast law-growing process going on there to build a second, hang on, 335 00:46:25.560 --> 00:46:26.560 go ahead. 336 00:46:26.560 --> 00:46:49.560 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? 337 00:46:56.560 --> 00:47:03.560 They all certainly understood it, and they certainly did everything to make sure that everybody understood it. 338 00:47:03.560 --> 00:47:05.560 They certainly understood it in South Carolina. 339 00:47:05.560 --> 00:47:14.560 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. 340 00:47:14.560 --> 00:47:17.560 There was a constant educational process going on. 341 00:47:17.560 --> 00:47:31.560 There is also a lot of smoke that people believe about it. Constant propaganda about what a good thing the tariff is. 342 00:47:31.560 --> 00:47:40.560 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. 343 00:47:40.560 --> 00:47:50.560 Well yes, yes, it's an ex-Aryan consumer because Americans are importing a great deal of their, the things that they purchase. 344 00:47:50.560 --> 00:48:00.560 And the point of the southerners is that they're making the whole economy possible in the sense they're providing the exports. 345 00:48:00.560 --> 00:48:13.560 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? 346 00:48:13.560 --> 00:48:41.560 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, 347 00:48:41.560 --> 00:49:06.560 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. 348 00:49:06.560 --> 00:49:15.560 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. 349 00:49:15.560 --> 00:49:27.560 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. 350 00:49:27.560 --> 00:49:36.560 Yes, but they're, you know, if you're interested in protecting industry, you're not interested in raising money. 351 00:49:36.560 --> 00:49:38.560 They're two different things. 352 00:49:48.560 --> 00:49:50.560 Oh no, 1833. 353 00:49:57.560 --> 00:50:02.560 Yes, for a time there was. 354 00:50:02.560 --> 00:50:09.560 Well, the tariff came down fairly slowly over a 10-year period. 355 00:50:09.560 --> 00:50:11.560 And then you had the panic in there. 356 00:50:11.560 --> 00:50:14.560 But yes, in fact, there was an increase in revenue. 357 00:50:14.560 --> 00:50:17.560 And people explained that in various ways. 358 00:50:17.560 --> 00:50:26.560 Those interested in tariff projections said it was because the tariff had worked and the American industry was getting more productive. 359 00:50:26.560 --> 00:50:48.560 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. 360 00:50:48.560 --> 00:51:12.560 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. 361 00:51:12.560 --> 00:51:28.560 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. 362 00:51:28.560 --> 00:51:37.560 And then the other thing that I came across was an entire booklet of tariff schedules of the Confederate government. 363 00:51:37.560 --> 00:51:52.560 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. 364 00:51:52.560 --> 00:52:02.560 and it seemed like the whole notion of keeping tariffs down or avoiding the Northern Terror 365 00:52:02.560 --> 00:52:06.560 went out the window as soon as they gained... 366 00:52:06.560 --> 00:52:11.560 No, in fact, they were forbidden to have a predicted tariff by the Constitution, 367 00:52:11.560 --> 00:52:16.560 but I think basically the federal government was desperate for revenue, 368 00:52:16.560 --> 00:52:21.560 or substantial for real revenue, and the situation had no choice but to try to raise it. 369 00:52:21.560 --> 00:52:37.560 In context of this discussion, I wondered whether it is really possible to organize a money-based economy, to be honest. 370 00:52:37.560 --> 00:52:52.560 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? 371 00:52:52.560 --> 00:52:56.560 No, I'm sure there are plenty of people here who know more about that than I do. 372 00:52:56.560 --> 00:53:00.560 Do you think we have the banking after a long period? 373 00:53:00.560 --> 00:53:02.560 I won't disagree with you. 374 00:53:02.560 --> 00:53:08.560 Do you expect to have ethical economy? Ethical about money system? 375 00:53:08.560 --> 00:53:18.560 You see, I personally delude myself with if I had gold in my cell as my reserve, right, 376 00:53:18.560 --> 00:53:25.560 I would be free and independent and protected immune from the abuse of government. 377 00:53:25.560 --> 00:53:38.560 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? 378 00:53:38.560 --> 00:53:42.560 And people found a way to bypass it. 379 00:53:42.560 --> 00:53:49.560 No, actually there was no, you know, dollars were not backed by gold, they were gold. 380 00:53:49.560 --> 00:53:52.560 That's right, that's right. Of course they were. 381 00:53:52.560 --> 00:53:56.560 And there was no, actually no currency, government currency. 382 00:53:56.560 --> 00:54:04.560 In theory, bank notes were, which were issued by banks, were backed by gold as the fractional system. 383 00:54:04.560 --> 00:54:06.560 In a facetious way, you know. 384 00:54:06.560 --> 00:54:09.560 Because I have not lost love for other people. 385 00:54:09.560 --> 00:54:12.560 I drew other people in Germany. 386 00:54:12.560 --> 00:54:14.560 It was very smooth. 387 00:54:14.560 --> 00:54:18.560 It works very smooth today in Germany again, right? 388 00:54:18.560 --> 00:54:26.560 Right? So therefore, this is a central authority to a certain amount of onus. 389 00:54:28.560 --> 00:54:34.560 I'm not trying to sell adult paper or one or the other. I said, what in the hell should we do? 390 00:54:34.560 --> 00:54:40.560 Well, I'm sure I don't know. I just sort of understand a little bit historically about what happened in the 19th century. 391 00:54:40.560 --> 00:54:46.560 But I don't, I certainly have no idea what's right. 392 00:54:48.560 --> 00:54:57.560 Can you talk about the Hamilton system of issuing the order that the national bank issued a note for land? 393 00:54:57.560 --> 00:55:03.560 You're talking about only the one national bank that he created and they could write a check? 394 00:55:03.560 --> 00:55:12.560 No, the point was that Hamilton said bank notes were accepted by the government, all bank notes. 395 00:55:12.560 --> 00:55:17.640 Now presumably they can discount them or you know they don't have to accept them 396 00:55:17.640 --> 00:55:24.480 at full value this is not stated but you know bank notes and any bank that gets 397 00:55:24.480 --> 00:55:30.520 chartered by a state can issue notes so these notes are accepted by the government. So the point is you know right from the 398 00:55:30.520 --> 00:55:36.040 very start sort of surreptitiously the government is involved in backing the 399 00:55:36.040 --> 00:55:40.040 Banking System. This has nothing to do with the national bank as such. 400 00:55:40.040 --> 00:55:44.040 He just directed the board to invest. 401 00:55:44.040 --> 00:55:48.040 Which continued to be. That's really establishing legal tender laws 402 00:55:48.040 --> 00:55:52.040 without actually passing any kind of legislation. 403 00:55:52.040 --> 00:55:56.040 And Calhoun tried again, in 1816 when the bank was rechartered, 404 00:55:56.040 --> 00:56:00.040 he tried to get in a provision 405 00:56:00.040 --> 00:56:04.040 which at the same time the bank was rechartered and its bank notes were 406 00:56:04.040 --> 00:56:10.000 more or less become legal tender, then the government would stop accepting these other 407 00:56:10.000 --> 00:56:15.920 bank notes and separate itself, in other words, have a hard specie currency, hard money, like 408 00:56:15.920 --> 00:56:22.240 these people claimed they were for, and again in the 1830s he tried that and it was defeated 409 00:56:22.240 --> 00:56:28.560 by the waffling politicians who claimed to be for hard money but wouldn't go all the 410 00:56:28.560 --> 00:56:54.720 basically the statement issued whatever paper they wanted no presumably the you 411 00:56:54.720 --> 00:57:06.120 The market would give you some sort of valuation on the soundness of their paper, but nobody knew for sure. 412 00:57:06.120 --> 00:57:18.720 All kinds of banknotes are circulating in the economy, but there isn't any national currency except for the gold and silver, 413 00:57:18.720 --> 00:57:37.720 One of the things that holds in high regard for the southern statesmen, how he was general, 414 00:57:37.720 --> 00:57:43.720 is that after the crisis of 1933 and his legislative attention, how you calculate the care of the 415 00:57:43.720 --> 00:58:02.720 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. 416 00:58:02.720 --> 00:58:27.720 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. 417 00:58:32.720 --> 00:58:40.080 So it's something that comes out in the political process, something admitted by committees, 418 00:58:40.080 --> 00:58:47.400 it's not what is good or right, it's what the most people can get to agree upon, I would 419 00:58:47.400 --> 00:58:48.400 think. 420 00:58:48.400 --> 00:58:53.600 I hope there's not some law that says that the government is 20% of everything under 421 00:58:53.600 --> 00:58:54.600 any circumstance. 422 00:58:54.600 --> 00:59:00.600 That's one of the evaluations of the fact that Luke Gingrich comparing himself to Henry Clay. 423 00:59:04.600 --> 00:59:10.600 Not surprising. But the great thing about Gallagher is he really cared about what was right. 424 00:59:10.600 --> 00:59:17.600 He's not just putting out a position to get elected or to promote his party. 425 00:59:17.600 --> 00:59:27.600 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. 426 00:59:27.600 --> 00:59:32.600 It's been a long time since we've seen a statesman. 427 00:59:32.600 --> 00:59:34.600 Thank you very much for coming out.