WEBVTT

NOTE Abraham Lincoln and the Triumph of Mercantilism in America

1
00:00:00.000 --> 00:00:06.000
The second topic I picked is called Abraham Lincoln and the Triumph of Mercantilism.

2
00:00:06.000 --> 00:00:12.000
It is sort of the second of my Lincoln lectures. I guess we got one or two more tomorrow.

3
00:00:12.000 --> 00:00:20.000
And I think the starting point here is to understand that at the beginning of the American Republic,

4
00:00:20.000 --> 00:00:27.000
there always was a group of men in politics who wanted to bring to America

5
00:00:27.000 --> 00:00:34.440
the type of political economic system that existed in England and it was known

6
00:00:34.440 --> 00:00:39.920
as mercantilism. I'm going to give you a few definitions of that and the most

7
00:00:39.920 --> 00:00:49.360
famous person associated with this is Alexander Hamilton and Hamilton did many

8
00:00:49.360 --> 00:00:52.460
things in his involvement in politics. He was one of the authors of the

9
00:00:52.460 --> 00:00:58.140
Federalist Papers, he fought in the American Revolution, he was the first U.S. Treasury

10
00:00:58.140 --> 00:01:03.900
Secretary but one of the things he did, and he was quite a brilliant guy, is he wrote

11
00:01:03.900 --> 00:01:11.860
a series of reports that were very influential with George Washington and quite a few other

12
00:01:11.860 --> 00:01:20.220
people urging essentially the adoption of various aspects of what we economists call

13
00:01:20.220 --> 00:01:27.420
Mercantilism, and he wrote the most famous is probably called The Report on Manufacturers,

14
00:01:27.420 --> 00:01:34.100
and this is where he made a case for using tax dollars to subsidize businesses for road

15
00:01:34.100 --> 00:01:38.020
and canal building, and maybe a few other things.

16
00:01:38.020 --> 00:01:44.900
He wrote a report on public debt, there's a whole book called Hamilton's Blessing, calling

17
00:01:44.900 --> 00:01:51.500
The Public Debt, a blessing, making such arguments that, well, thank goodness for the ability

18
00:01:51.500 --> 00:01:56.580
for the central government to go into debt, otherwise we may not have been able to finance

19
00:01:56.580 --> 00:02:01.820
our way into World War I, or way in World War II, and all these wonderful achievements

20
00:02:01.820 --> 00:02:07.380
of ours, and so he made that case, public debt.

21
00:02:07.380 --> 00:02:13.060
One of Hamilton's arguments for public debt, by the way, was it's mostly the more affluent

22
00:02:13.060 --> 00:02:18.660
The government and wealthy people who will buy government bonds and therefore the affluent

23
00:02:18.660 --> 00:02:22.460
and wealthy people of the country will have an interest in the government.

24
00:02:22.460 --> 00:02:27.940
They will have an interest in the expansion of the government to make sure the government

25
00:02:27.940 --> 00:02:33.780
can raise enough taxes to pay off the interest and principal on their bonds.

26
00:02:33.780 --> 00:02:41.140
So he wanted to tie the most successful in the people in the country to the government.

27
00:02:41.140 --> 00:02:45.300
and that was, I think it was his main argument for why we need a public debt.

28
00:02:45.300 --> 00:02:52.300
And then he also wrote a report on banking, urging central banking, and this was used

29
00:02:52.300 --> 00:02:57.360
to justify what was called the Bank of the United States, which was really a predecessor

30
00:02:57.360 --> 00:02:59.240
of the Fed.

31
00:02:59.240 --> 00:03:06.300
And so Hamilton, in this regard, I think, was a mercantilist, because what was mercantilism?

32
00:03:06.300 --> 00:03:12.580
I'll give you a, this is not a textbook example, but this is a definition, but I'll give you

33
00:03:12.580 --> 00:03:18.900
a definition that Murray Rothbard once threw out for mercantilism.

34
00:03:18.900 --> 00:03:26.180
He said it is, mercantilism, quote, which reached its height in the Europe of the 17th

35
00:03:26.180 --> 00:03:33.760
and 18th centuries was a system of statism which employed economic fallacy to build up

36
00:03:33.760 --> 00:03:40.560
a Structure of Empirical State Power, Special Subsidy and Monopolistic Privilege to Individual

37
00:03:40.560 --> 00:03:44.760
Groups or Groups Favored by the State.

38
00:03:44.760 --> 00:03:49.680
Protectionism of course was a key element of mercantilism and Hamilton himself, in his

39
00:03:49.680 --> 00:03:54.240
report on manufacturers, made the case for protectionism.

40
00:03:54.240 --> 00:04:00.640
It's gone down in history as the infant industry argument, where you argue that new industries,

41
00:04:00.640 --> 00:04:13.140
The infant industry is needed to be subsidized by being protected from competition, and I think this is a misnomer, the infant industry.

42
00:04:13.140 --> 00:04:22.140
If you understand the fact that Hamilton was a brilliant man, he was one of the authors of the Federalist Papers, who understood politics more than Alexander Hamilton.

43
00:04:22.140 --> 00:04:30.140
He was in politics. He was a politician. His friends were all politics. He knew George Washington personally for many years.

44
00:04:30.140 --> 00:04:52.140
He understood politics. How could a man that wise, in the way of politics, possibly believe that you could pass protectionist laws, tariffs, and so forth, that would not then create a powerful political force in favor of keeping those laws and making them permanent?

45
00:04:52.140 --> 00:05:05.140
How could a man with that kind of knowledge of politics think that politics would not prevail in making these industries permanently protected or permanent forces for protectionism?

46
00:05:05.140 --> 00:05:14.140
And for that matter, how could a man that wise in politics think that a bank run by politicians would not be political?

47
00:05:14.140 --> 00:05:19.140
It would promote the public interest. It would not promote special interests.

48
00:05:19.140 --> 00:05:25.140
And so I've always thought it would be just a sheer impossibility that Hamilton himself actually would believe that.

49
00:05:25.140 --> 00:05:28.140
Well, maybe he did. It could be wrong.

50
00:05:28.140 --> 00:05:35.140
But it just seems totally incongruous with the idea that he was an extraordinarily politically savvy guy.

51
00:05:35.140 --> 00:05:43.140
But he made these sort of naive arguments that you could pass laws that would benefit a special interest like manufacturers,

52
00:05:43.140 --> 00:05:46.140
keeping them from foreign competition from them,

53
00:05:46.140 --> 00:05:51.140
and that they therefore would not lobby to make those laws permanent, which they have done.

54
00:05:51.140 --> 00:05:55.140
The steel industry was singled out from the very beginning, for example,

55
00:05:55.140 --> 00:05:58.140
as a need of the infant industry protection.

56
00:05:58.140 --> 00:06:04.140
And lo and behold, one of the first things George W. Bush did in 2001

57
00:06:04.140 --> 00:06:07.140
was to impose 50% tariffs on steel.

58
00:06:07.140 --> 00:06:11.140
So apparently, in over 200 years, the steel industry hasn't grown up.

59
00:06:11.140 --> 00:06:17.380
for 150 years, anyways, there's still a bunch of crybabies in need of tariff protection.

60
00:06:17.380 --> 00:06:22.260
And it's just hard for me to believe Alexander Hamilton, a man that smart, would not have

61
00:06:22.260 --> 00:06:23.740
foreseen this.

62
00:06:23.740 --> 00:06:29.140
So I think he was making the case for protectionism, not infinite industry protection, just protection

63
00:06:29.140 --> 00:06:32.740
in general, you know, as far as that goes.

64
00:06:32.740 --> 00:06:34.180
But that's where this started.

65
00:06:34.180 --> 00:06:40.820
He was one of the people who wanted some form of the British system to be imported into

66
00:06:40.820 --> 00:06:46.900
in the United States, which is terribly ironic, because it was just that system that was a

67
00:06:46.900 --> 00:06:54.900
major reason for the American Revolution, you know, the Boston Tea Party and the slogan

68
00:06:54.900 --> 00:07:01.060
of taxation without representation, that was a protest against the British mercantile system

69
00:07:01.060 --> 00:07:07.300
that King George III was attempting to use to plunder the American colonists with.

70
00:07:07.300 --> 00:07:11.740
And so here comes a group of men after the revolution saying, well, maybe we should adopt

71
00:07:11.740 --> 00:07:15.660
some of these same kinds of policies here.

72
00:07:15.660 --> 00:07:19.360
And Hamilton was the champion of that in his era.

73
00:07:19.360 --> 00:07:26.300
After his demise, several years later, Henry Clay took up the mantle.

74
00:07:26.300 --> 00:07:31.080
He became the champion of those things, central banking, protectionist tariffs, corporate

75
00:07:31.080 --> 00:07:33.740
welfare for selected businesses.

76
00:07:33.740 --> 00:07:39.420
And then after Henry Clay, Lincoln became the champion of that cause, and the Republican

77
00:07:39.420 --> 00:07:42.340
Party in general.

78
00:07:42.340 --> 00:07:49.500
There was another definition of mercantilism that I would offer.

79
00:07:49.500 --> 00:08:00.220
This one is from Edgar Lee Masters, who was the one-time law partner of Clarence Darrow,

80
00:08:00.220 --> 00:08:30.220
The famous American lawyer of the 1920s, Clarence Darrow, and Edgar Lee Masters became a famous playwright, he's the author of the Spoon River Anthology, among other things, and he was from Chicago, Illinois, and he wrote a book called Lincoln the Man, in his retirement I guess, and it was for years, it was published I think first in the 1930s, and it was the book critical of Lincoln back in those days,

81
00:08:30.220 --> 00:08:40.720
and recently republished by a foundation, and he gave a definition of mercantilism in the context of Henry Clay's version of it.

82
00:08:40.720 --> 00:08:50.220
As I said, Henry Clay picked up this mercantilist mantle from Hamilton, and here's how Edgar Lee Masters describes this system of Clay's.

83
00:08:50.220 --> 00:08:58.220
His support for protectionist tariffs, the use of tax dollars to give corporations subsidies and central banking.

84
00:08:58.220 --> 00:09:04.460
He says, Henry Clay was the champion of that political system which doles favors to the

85
00:09:04.460 --> 00:09:09.020
strong in order to win and to keep their adherence to the government.

86
00:09:09.020 --> 00:09:13.740
His system offered shelter to devious schemes and corrupt enterprises.

87
00:09:13.740 --> 00:09:19.880
He was the beloved son, figuratively speaking, not the real son, of Alexander Hamilton.

88
00:09:19.880 --> 00:09:26.900
With his corrupt funding schemes, his superstitions concerning the advantage of a public debt

89
00:09:26.900 --> 00:09:32.820
and that people taxed to make profits for enterprises that cannot stand alone.

90
00:09:32.820 --> 00:09:38.180
His example and his doctrines led to the creation of a party, he's talking about the Whig Party,

91
00:09:38.180 --> 00:09:43.740
the American Whig Party, that had no platform to announce because its principles were plunder

92
00:09:43.740 --> 00:09:46.940
and nothing else.

93
00:09:46.940 --> 00:09:51.420
And I suppose that's a good idea, if your principles are to plunder your neighbor, you

94
00:09:51.420 --> 00:09:57.780
We should probably keep it quiet and don't announce it too broadly.

95
00:09:57.780 --> 00:10:04.580
And so that's another definition and one more was a United States Senator from Virginia

96
00:10:04.580 --> 00:10:07.940
named John Taylor, and I'm going back in time now.

97
00:10:07.940 --> 00:10:13.240
This was late 19th or late 18th century.

98
00:10:13.240 --> 00:10:20.240
And John Taylor wrote a book called Tyranny Unmasked, which was a book all about protectionism.

99
00:10:20.240 --> 00:10:27.240
The tyranny was the tyranny of protectionist tariffs and the economic plunder that they imposed, for the most part.

100
00:10:27.240 --> 00:10:34.240
And it's kind of wordy and a little too verbose, you know, as far as the writing style of tyranny and mascos.

101
00:10:34.240 --> 00:10:38.240
It's been reprinted by the Liberty Fund in Indianapolis.

102
00:10:38.240 --> 00:10:46.240
But John Taylor was a very wise man. He understood political economy of the type we understand today.

103
00:10:46.240 --> 00:10:50.880
And here's what he said about this same system. He said about the British mercantilism.

104
00:10:50.880 --> 00:10:56.800
He said, it is undoubtedly the best which has ever appeared for extracting money from the people,

105
00:10:56.800 --> 00:11:02.960
and commercial restrictions, that is, tariffs, are its most effectual means for accomplishing this object.

106
00:11:02.960 --> 00:11:09.600
No equal mode of enriching the party of government and impoverishing the party of the people has ever been discovered.

107
00:11:09.600 --> 00:11:14.080
And I think he was right on the money on that, too.

108
00:11:14.080 --> 00:11:44.080
and so that's mercantilism was basically a system of laws and regulations that benefited a relatively small group of politically connected businesses at the expense of consumers and everybody else that's basically what British mercantilism is and this was the American version of it in American history some of the some of the people who advocated this in addition to Clay John Quincy Adams when he was president he he was an advocate of that Henry Clay Lincoln of course the opponent

109
00:11:44.080 --> 00:12:02.080
The very last thing James Madison did as President of the United States was to veto a bill that would have allocated $5 million to give to private corporations for the building of canals and railroads.

110
00:12:02.080 --> 00:12:17.080
A father of the Constitution, as he is known to many people, issued a statement saying that he can find nowhere in the Constitution where it would be allowed to use tax dollars for the activities of private corporations.

111
00:12:17.080 --> 00:12:24.080
James Monroe, as President, vetoed similar legislation, as did Andrew Jackson, and he bragged about it.

112
00:12:24.080 --> 00:12:30.080
And as did President John Tyler, who became President in 1841, who did the same thing.

113
00:12:30.080 --> 00:12:38.080
And you might have noticed by the names I mentioned here, all the opponents, as presidents I mentioned, were from southern states, mostly from Virginia,

114
00:12:38.080 --> 00:12:48.080
Virginia and Tennessee. And it's in keeping with what I said about tariffs this morning, that the opposition, for the most part, to this whole plan, mercantilism,

115
00:12:48.080 --> 00:12:57.080
which is not only protectionist tariffs, but corporate welfare for road canal and railroad building companies and the central bank, was always mostly from the south.

116
00:12:57.080 --> 00:13:03.080
The southern politicians were mostly where the deep suspicion was of this sort of thing.

117
00:13:03.080 --> 00:13:07.080
And the proponents were mostly from the northern states.

118
00:13:07.080 --> 00:13:11.080
And there's kind of an interesting story about this.

119
00:13:11.080 --> 00:13:15.080
It was Hamilton and his Federalists who first championed this.

120
00:13:15.080 --> 00:13:20.080
And then Hamilton, of course, died in a duel with Aaron Burr in 1804.

121
00:13:20.080 --> 00:13:24.080
And then by the 1820s, Henry Clay was picking up on this.

122
00:13:24.080 --> 00:13:31.240
picking up the Hamiltonian mercantilist mantle, but he wasn't succeeding, so we went all through

123
00:13:31.240 --> 00:13:39.080
the 1820s and all through the 1830s and president after president kept vetoing all of this.

124
00:13:39.080 --> 00:13:46.120
Andrew Jackson defunded the Bank of the United States in the early 1830s.

125
00:13:46.120 --> 00:13:54.040
Free trade reigned for the most part until 1857 after the Tariff of Abominations episode.

126
00:13:54.040 --> 00:13:57.800
There were some state and local governments that subsidized canal building and railroad

127
00:13:57.800 --> 00:14:04.600
building, but it was such a corrupt mess in every single state in America that used tax

128
00:14:04.600 --> 00:14:11.440
dollars to give to corporations to build these things, that by 1860, Massachusetts was the

129
00:14:11.440 --> 00:14:20.480
only state left that had not altered its constitution to prohibit using tax dollars for any purpose

130
00:14:20.480 --> 00:14:25.600
for a corporation to give any corporation tax dollars for any purpose. Massachusetts

131
00:14:25.600 --> 00:14:29.640
was the only state that still permitted that because state after state after state had

132
00:14:29.640 --> 00:14:35.980
done this and it had been so inefficient and so corrupt that it just created a financial

133
00:14:35.980 --> 00:14:41.840
debacle everywhere that this was tried. And so, and there were no big federal programs

134
00:14:41.840 --> 00:14:45.880
like this. There were a lot of politicians who wanted these and there were some southern

135
00:14:45.880 --> 00:14:48.440
Some politicians, of course, involved in this.

136
00:14:48.440 --> 00:14:52.240
They wanted a federally funded railroad to go through the southern states.

137
00:14:52.240 --> 00:14:53.760
A lot of them did.

138
00:14:53.760 --> 00:14:57.920
And so there was a big dispute over that, over where this railroad would go if it were

139
00:14:57.920 --> 00:15:00.600
ever to be built with federal tax dollars.

140
00:15:00.600 --> 00:15:07.280
But an interesting story was in 1840, when Lew Rockwell's favorite president, William

141
00:15:07.280 --> 00:15:09.800
Henry Harrison, was elected.

142
00:15:09.800 --> 00:15:14.920
He's Lew's favorite president because he died a month after he took office, and so he could

143
00:15:14.920 --> 00:15:36.920
The Whigs led by Henry Clay thought they were finally in the catbird seat because a Whig was elected president.

144
00:15:36.920 --> 00:15:40.920
Henry Clay was sort of domineering. He thought he could control the Congress.

145
00:15:40.920 --> 00:15:45.920
So he could get a central bank through, he thought. He could get a protectionist tariff back.

146
00:15:45.920 --> 00:15:49.920
He could get the tariff of abominations put through again.

147
00:15:49.920 --> 00:15:54.920
And they were going to start subsidizing the building of railroads and canals and roads.

148
00:15:54.920 --> 00:16:02.920
But it turned out that the Vice President, John Tyler, who took over when Harrison died,

149
00:16:02.920 --> 00:16:32.920
Henry Clay was a states rights Jeffersonian, he was from Virginia and he vetoed everything, he vetoed the bank bill, he vetoed internal improvements, he was a free trader and so Henry Clay orchestrated the burning of John Tyler in effigy in front of the White House and they kicked him out of the Whig party and so John Tyler no longer had a political party affiliation even though he was president of the United States for the rest of the next three and a half years.

150
00:16:32.920 --> 00:16:39.640
So, Henry Clay just threw one big fit over all of this, and to add to insult to injury,

151
00:16:39.640 --> 00:16:46.920
the Bank of the United States finally died out, and in its place was put something called

152
00:16:46.920 --> 00:16:52.720
the Independent Treasury System, which Jeffrey Hummel, who wrote a very good book called

153
00:16:52.720 --> 00:16:57.160
Emancipating Slaves and Slaving Free Men, and there's a lot of economics in it.

154
00:16:57.160 --> 00:17:02.160
It's a book on the Civil War, but Jeff knows a lot of economics, and Austrian economics

155
00:17:02.160 --> 00:17:06.880
and so it's very highly recommended but he argues that this is so-called

156
00:17:06.880 --> 00:17:13.640
independent treasury system which lasted roughly from the early 1840s until 1862

157
00:17:13.640 --> 00:17:18.960
when it was replaced by Lincoln's National Currency Acts was it was called

158
00:17:18.960 --> 00:17:23.460
the era of free banking and it was the closest America ever came at least in

159
00:17:23.460 --> 00:17:30.000
that century to a free market in money. It wasn't perfect, it was money backed

160
00:17:30.000 --> 00:17:35.600
by Gold and Silver, but it was probably the most stable monetary system we've ever had,

161
00:17:35.600 --> 00:17:40.080
even though it wasn't perfect. There were some problems. There's no perfection on Earth,

162
00:17:40.080 --> 00:17:45.200
of course. But anyway, Hummel makes a good case that it was probably the most stable monetary system

163
00:17:45.200 --> 00:17:50.000
America has ever had, but that was replaced during the Lincoln administration, which I'll talk about

164
00:17:50.000 --> 00:17:58.800
tomorrow, by the National Currency Act. So that was kind of a funny story. When I started researching

165
00:17:58.800 --> 00:18:13.800
I read a biography of John Tyler and the biographer, the man named Oliver Chitwood, said that really the main reason they picked Tyler as vice president is that Tyler too rhymed with the word tippy canoe.

166
00:18:13.800 --> 00:18:21.800
For those of you who went to American public schools, you might have learned that the campaign slogan was tippy canoe and Tyler too.

167
00:18:21.800 --> 00:18:27.800
Harrison was apparently a famous general in the Battle of Tippy Canoe way back when.

168
00:18:27.800 --> 00:18:34.700
around 1813, something like that, and so that was the campaign slogan. So Tyler's

169
00:18:34.700 --> 00:18:39.060
biographer says that's the main reason he was chosen as vice president, and they

170
00:18:39.060 --> 00:18:44.860
never thought he would actually become president, but he did. And so they

171
00:18:44.860 --> 00:18:51.140
failed again, so they failed to achieve this. Lincoln himself was always a

172
00:18:51.140 --> 00:18:55.060
proponent of all these things. In my book, I quote him when he went the first time

173
00:18:55.060 --> 00:19:11.060
The first time he ever ran for political office, he made a speech to the people in Springfield, Illinois explaining why he was getting involved in politics.

174
00:19:11.060 --> 00:19:19.060
This was in 1832. He said this, I presume you all know who I am. I am humble Abraham Lincoln.

175
00:19:19.060 --> 00:19:25.060
I've been, it's kind of like think of Bill Clinton standing there saying, I'm humble Bill Clinton.

176
00:19:25.060 --> 00:19:30.060
I've been solicited by many friends to become a candidate for the legislature.

177
00:19:30.060 --> 00:19:37.060
Anyway, my politics are short and sweet like the old woman's dance.

178
00:19:37.060 --> 00:19:44.060
I am in favor of a national bank, in favor of the internal improvement system, and a high protective tariff.

179
00:19:44.060 --> 00:19:48.060
And those are the reasons Abraham Lincoln gave for getting involved in politics.

180
00:19:48.060 --> 00:19:52.660
and he stuck with that for the next 28 years until becoming elected president.

181
00:19:52.660 --> 00:19:55.780
Now that's one of the reasons why I got involved in this whole area

182
00:19:55.780 --> 00:19:59.900
is that it never made sense to me that a man involved in politics off and on

183
00:19:59.900 --> 00:20:01.460
for 28 years

184
00:20:01.460 --> 00:20:06.580
with these economic issues, these three economic issues, fighting tooth and nail

185
00:20:06.580 --> 00:20:09.980
in the trenches of the Whig party and then the Republican party

186
00:20:09.980 --> 00:20:11.680
would be elected president

187
00:20:11.680 --> 00:20:16.020
and then just forget about it. It has nothing to do with why I'm in politics.

188
00:20:16.020 --> 00:20:17.620
That never made sense to me.

189
00:20:17.620 --> 00:20:22.260
and the reason is that it is nonsense.

190
00:20:22.260 --> 00:20:25.780
This was always a big part of why he was a Republican.

191
00:20:27.460 --> 00:20:29.580
But some of Lincoln's early antics,

192
00:20:29.580 --> 00:20:33.420
he made speech after speech about tariffs.

193
00:20:33.420 --> 00:20:35.100
As I said this morning, he claimed that he made

194
00:20:35.100 --> 00:20:38.300
more pro-tariff speeches than any other topic.

195
00:20:38.300 --> 00:20:40.660
He also stumped for candidates who were,

196
00:20:40.660 --> 00:20:43.180
presidential candidates who wanted a central bank

197
00:20:43.180 --> 00:20:46.360
and he was a big proponent of internal improvements.

198
00:20:46.360 --> 00:21:16.360
In Internal Improvements, he was a natural politician, and when he got into the state legislature in Illinois, he quickly became a leader of the Whig Party in Illinois, and he got the Illinois legislature, he was more responsible than anyone else, to get them to put about 11 million dollars into a vast program in 1836-37 to ostensibly build roads and canals all throughout criss-crossing the state. He wanted to make Illinois the

199
00:21:16.360 --> 00:21:22.280
The New York City of the West, and things like this, and if you read about this, which

200
00:21:22.280 --> 00:21:29.700
is available in quite a few Lincoln biographies, is that the $11 million was spent, nothing

201
00:21:29.700 --> 00:21:35.800
was finished, nothing, not a single canal, not a single road, much of the money was simply

202
00:21:35.800 --> 00:21:43.920
stolen or disappeared down a rat hole, and the state went deep in the debt for years,

203
00:21:43.920 --> 00:22:13.920
and maybe decades where the people of Illinois were on the hook for all of this and it was just a financial disaster for the state of Illinois but it turned out it was a great boon to Abraham Lincoln's career, political career because he was on record as being able to deliver the goods to the corporate community that he pretty much served for most of his involvement in politics. He did get 11 million dollars out of the legislature and ended up in

204
00:22:13.920 --> 00:22:19.920
And so, to whoever got all this money, it was not a bad deal at all.

205
00:22:19.920 --> 00:22:24.920
To the taxpayers, it was a rotten deal, but to all these companies that got all this money,

206
00:22:24.920 --> 00:22:28.920
and this was a pretty good deal.

207
00:22:28.920 --> 00:22:37.920
And so, to understand Lincoln's further involvement in this, of who he was, and his crusade for mercantilism,

208
00:22:37.920 --> 00:22:49.420
As I said, the American version of mercantilism always focused on Hamiltonianism, on this combination of corporate welfare, protectionist tariffs, and central banking.

209
00:22:49.420 --> 00:22:53.920
And of course, the tariffs in the central banking were to be used to pay for all the corporate welfare.

210
00:22:53.920 --> 00:22:57.420
That was the idea. That's where all the money would come from.

211
00:22:57.420 --> 00:23:06.920
And I'll talk later about how foreign military intervention was also on the back of their minds, and why they needed a central bank.

212
00:23:06.920 --> 00:23:11.800
But by 1860, the Illinois Central Railroad was one of the largest corporations in the world.

213
00:23:12.360 --> 00:23:16.120
And there's a book about Lincoln's role with the railroads. It's called Lincoln and the Railroads

214
00:23:16.120 --> 00:23:23.880
by John W. Starr, spelled with two R's. He's a junior, John W. Starr Jr. And in the company

215
00:23:23.880 --> 00:23:30.200
History, History of the Illinois Central, cited by John Starr, he says this, Mr. Lincoln was

216
00:23:30.200 --> 00:23:36.200
He was continuously one of the attorneys for the Illinois Central Railroad

217
00:23:36.200 --> 00:23:41.200
from his organization in 1849 until he was elected president.

218
00:23:41.200 --> 00:23:45.200
So he was always there as a key player in the Illinois Central.

219
00:23:45.200 --> 00:23:51.200
He was such an insider, such a corporate insider that he traveled throughout the Midwest

220
00:23:51.200 --> 00:23:55.200
in a private rail car with a private free pass,

221
00:23:55.200 --> 00:24:25.200
was an entourage of Illinois central executives following in tow and that's that was the real Lincoln that was not the Lincoln if you're an American you were taught that Abe Lincoln wore shoddy clothes and he was a rail splitter whatever that is grew up in a log cabin which by the way just about everybody did in that part of the country that in that time period was as though he was the only person in North America who grew up in a log cabin everyone did in the in the West at that point in time

222
00:24:25.200 --> 00:24:33.000
time. But he wore expensive suits, you know, he was a corporate big way. And in one case,

223
00:24:33.000 --> 00:24:37.680
Lincoln successfully defended the Illinois Central against McLean County, Illinois, which

224
00:24:37.680 --> 00:24:43.400
wanted to tax the corporation's property. And this is the one good thing you might ever

225
00:24:43.400 --> 00:24:47.880
hear me say about Lincoln. He wanted a tax case that got the Illinois Central off the

226
00:24:47.880 --> 00:24:54.240
hook for paying more taxes. And he sent the Illinois Central a bill for $5,000. For one

227
00:24:54.240 --> 00:25:24.240
in the 1850s and that was a huge sum of money put it in comparison I know at the time of the war broke out I know the governor of Illinois was being paid something like 3,500 a year as governor of Illinois so $5,000 for one case is a big chunk of money back then and the man who he gave the bill to was a vice president of the Illinois Central named George B McClellan who would later be the commander

228
00:25:24.240 --> 00:25:54.240
General of the Army of the Potomac, the same George McClellan, and this story is told in this book by John W. Starr, Lincoln in the Railroads, and what happened according to Starr is that McClellan told Lincoln that his board of directors back in New York City would never pay a $5,000 bill to a country lawyer from Illinois, even though he was a downtown Chicago lawyer, he wasn't a backwoods farmer.

229
00:25:54.240 --> 00:26:05.240
And so what happened was Lincoln went out and gathered statements by his fellow attorneys

230
00:26:05.240 --> 00:26:10.160
attesting to the fact that a $5,000 fee sounded perfectly suitable.

231
00:26:10.160 --> 00:26:11.160
Imagine that.

232
00:26:11.160 --> 00:26:15.920
Imagine getting lawyers claiming that an astronomical fee sounds okay to them.

233
00:26:15.920 --> 00:26:20.760
He showed up in court and the opposition lawyers for the Illinois Central, he sued them for

234
00:26:20.760 --> 00:26:21.760
the fee.

235
00:26:21.760 --> 00:26:40.760
The Illinois Central lawyers did not show up and so the judge gave him the fee by default because nobody showed up for the Illinois Central and John Starr's book, he very strongly insinuates that this was some sort of scheme by McClellan and Lincoln to rip off the board of directors of the Illinois Central for this $5,000.

236
00:26:40.760 --> 00:27:10.760
He doesn't say there was a kickback to McClellan, he doesn't say that in the book, but he very strongly suggests that this was some kind of scheme between the two of them to pull the wool over the eyes of these men back in New York City who were the board of directors of the Illinois Central so that Lincoln could get his fee, and so he did, and he got his fee. So Lincoln was a lobbyist, essentially, for the railroad industry. In addition to the Illinois Central, he represented the Chicago and Alton Railroad, the Ohio and Mississippi,

237
00:27:10.760 --> 00:27:15.760
Rock Island Railroad, the Chicago and Mississippi Railroad.

238
00:27:15.760 --> 00:27:22.920
He was such a big wig in the railroad industry that the New York financier Erastus Corning

239
00:27:22.920 --> 00:27:27.080
offered him the job of general counsel to the New York Central Railroad at a salary

240
00:27:27.080 --> 00:27:29.080
of $10,000 a year.

241
00:27:29.080 --> 00:27:34.840
This was in the 1850s, which was a huge salary, annual salary at that time in history.

242
00:27:34.840 --> 00:27:35.960
And he turned it down.

243
00:27:35.960 --> 00:27:39.400
He turned down the job of general counsel of the New York Central Railroad.

244
00:27:39.400 --> 00:27:53.400
I grew up in Pennsylvania, where I attended public schools, and I was taught that Lincoln spent most of his life pacing back and forth in agony worrying about the poor slaves in Alabama.

245
00:27:53.400 --> 00:27:57.400
This is all new to me, all this stuff.

246
00:27:57.400 --> 00:28:03.320
and Lincoln in one of his trips in the private rail car with the entourage he

247
00:28:03.320 --> 00:28:07.080
had them stop in Council Bluffs, Iowa where he had just purchased some real

248
00:28:07.080 --> 00:28:12.000
estate and to this day this piece of land is known as Lincoln's Hill in

249
00:28:12.000 --> 00:28:17.720
Council Bluffs, Iowa and he bought this real estate on the advice of an old

250
00:28:17.720 --> 00:28:22.600
business associate of his named Grenville Dodge. Grenville Dodge would

251
00:28:22.600 --> 00:28:29.600
would become the chief engineer of the government subsidized transcontinental railroads during

252
00:28:29.600 --> 00:28:35.400
and after the war, and he and Grenville Dodge decided that Council Bluffs, Iowa would be

253
00:28:35.400 --> 00:28:41.520
a good spot for the eastern terminus of the government subsidized transcontinental railroad

254
00:28:41.520 --> 00:28:44.320
if it were ever to be built.

255
00:28:44.320 --> 00:28:50.720
And so Lincoln, who was very familiar with Springfield, Illinois and Chicago, Illinois,

256
00:28:50.720 --> 00:28:56.720
He did not invest in real estate in Chicago, he invested in real estate in Council Bluffs, Iowa, of all places.

257
00:28:56.720 --> 00:29:06.720
And then when he became president, in June of 1861, when the war was on, Fort Sumter was April of 1861, the war was on,

258
00:29:06.720 --> 00:29:12.720
he called a special session of Congress to get the ball rolling on a Pacific Railroad bill.

259
00:29:12.720 --> 00:29:18.720
So it was a very high priority for him to divert, I'm using the word divert,

260
00:29:18.720 --> 00:29:48.720
Many millions of dollars to building a railroad to California even though there was a war on and they were asking for 75,000 and 150,000 volunteers and financing an army at that time and it took about a year for this to get all hashed out but they did of course pass the Pacific Railroad bill and in that bill the President of the United States is given the ability to determine where they'll start

261
00:29:48.720 --> 00:29:53.720
Yes, as to where he chose to start the building of the Transcontinental Railroad.

262
00:29:53.720 --> 00:29:55.720
Any wild guesses?

263
00:29:55.720 --> 00:29:57.720
Right, Council Bluffs, Iowa.

264
00:29:57.720 --> 00:30:00.720
I guess I gave too many hints to that.

265
00:30:00.720 --> 00:30:02.720
So he chose Council Bluffs, Iowa.

266
00:30:02.720 --> 00:30:08.720
So maybe this is why he turned Erastus Corning down with his mere 10,000 bucks a year

267
00:30:08.720 --> 00:30:14.720
for the job as General Counsel for the New York Central Railroad.

268
00:30:14.720 --> 00:30:20.720
So he must have made a lot of money doing that, as did a lot of other people.

269
00:30:20.720 --> 00:30:29.720
There's a good book about this by Dee Brown, D-E-E, it's a man's name.

270
00:30:29.720 --> 00:30:33.720
I know some women named Dee, and so for a while before I knew who Dee Brown was,

271
00:30:33.720 --> 00:30:37.720
I didn't know if it was a man or woman, but Dee Brown passed away last year.

272
00:30:37.720 --> 00:30:41.720
He was a historian of the American West, and he wrote a book called

273
00:30:41.720 --> 00:30:51.720
Here That Lonesome Whistle Blow, The History of the Transcontinental Railroads in America

274
00:30:51.720 --> 00:30:55.720
When Lincoln signed this specific railroad bill, he said,

275
00:30:55.720 --> 00:31:10.720
He assured the fortunes of a dynasty of American families, the Brewsters, the Bushnells, the Alcotts, the Harkers, the Harrisons, the Trowbridges, the Landworthies, the Reeds, the Ogdens, the Bradfords, the Noises, the Brooks, the Cornell, and dozens of others.

276
00:31:10.720 --> 00:31:16.640
and so there was and he surely did establish a great many fortunes of

277
00:31:16.640 --> 00:31:22.520
people who are involved in the financing and building of this railroad and he

278
00:31:22.520 --> 00:31:27.580
also D Brown also says that this northern clique of politically

279
00:31:27.580 --> 00:31:33.220
connected businesses D Brown writes that they quote arouse the suspicions of the

280
00:31:33.220 --> 00:31:38.200
South by lobbying for such huge sums of tax dollars and that's that's an

281
00:31:38.200 --> 00:32:04.200
John Fremont, a West Point-trained engineer from Northern California, conducted a big engineering study that concluded that the western terminus should be in Northern California, not Central California.

282
00:32:04.200 --> 00:32:16.760
Fabius Stevens, Congressman from Pennsylvania, Lee Brown writes that he, quote, received

283
00:32:16.760 --> 00:32:22.200
a block of Union Pacific stock in exchange for his vote on the Pacific Railroad bill,

284
00:32:22.200 --> 00:32:26.860
and he also demanded, as a condition of his vote, the insertion of a clause requiring

285
00:32:26.860 --> 00:32:32.160
the all iron used in the construction and equipment of said railroad to be American

286
00:32:32.160 --> 00:32:38.840
Manufacture, and of course Thaddeus Stevens was an iron manufacturer from Pennsylvania.

287
00:32:38.840 --> 00:32:44.960
There's another Republican congressman called Oakes Ames, Dee Brown writes, who with his

288
00:32:44.960 --> 00:32:51.560
brother Oliver manufactured shovels in Massachusetts and became a loyal ally of the Union Pacific

289
00:32:51.560 --> 00:32:59.720
Bill and helped to pressure the 1864 Pacific Railway Act through the war-corrupted Congress,

290
00:32:59.720 --> 00:33:04.160
And it must have taken a lot of shovels to dig railroad beds from Council Bluffs, Iowa

291
00:33:04.160 --> 00:33:05.600
to California.

292
00:33:05.600 --> 00:33:11.080
And so here's a major manufacturer of shovels saying, I'll vote for that, I'll vote for

293
00:33:11.080 --> 00:33:14.300
that bill, just buy my shovels.

294
00:33:14.300 --> 00:33:20.080
During the Grant administration, the Republican speaker of the representatives, who was later

295
00:33:20.080 --> 00:33:28.880
Grant's vice president, Shiler Colfax, visited the Western Railroad Roots because they were

296
00:33:28.880 --> 00:33:32.000
for Holding a Party in His Honor.

297
00:33:32.000 --> 00:33:36.440
He had served as the Speaker of the House and of course that meant he diverted a lot

298
00:33:36.440 --> 00:33:40.200
of money to the owners and managers of these railroads.

299
00:33:40.200 --> 00:33:44.520
And here's what Brown says when he shows up to this, it was supposed to be a ceremony

300
00:33:44.520 --> 00:33:50.740
in his honor, and he shows up, he says, quote, he preferred cash above honors and back in

301
00:33:50.740 --> 00:33:55.800
Washington he eagerly accepted a bundle of Crédit Mibollier stock, that was the name

302
00:33:55.800 --> 00:34:01.240
of the Company, the crooked company they created, from his fellow congressman, Oakes Ames, and

303
00:34:01.240 --> 00:34:04.700
thus became a loyal friend of the Union Pacific.

304
00:34:04.700 --> 00:34:11.400
General John Dix, D-I-X, who was one of Lincoln's generals, Brown says, spent most of his time

305
00:34:11.400 --> 00:34:16.440
during the war strutting about Washington in the general's uniform, but was in reality

306
00:34:16.440 --> 00:34:21.480
the Washington lobbyist for the railroads, and that was pretty much his job.

307
00:34:21.480 --> 00:34:30.120
Bill Sherman himself was sold land at below market prices in the same area.

308
00:34:30.120 --> 00:34:38.200
After the war, Lincoln's old business associate, Grenville Dodge, who was the chief engineer

309
00:34:38.200 --> 00:34:44.920
of the whole project, he proposed making slaves of the Indians instead of killing them, and

310
00:34:44.920 --> 00:34:50.920
he proposed forcing them, quote, to do the grading with the army furnishing a guard to

311
00:34:50.920 --> 00:34:54.720
to make the Indians work and keep them from running away, end quote.

312
00:34:54.720 --> 00:34:57.080
Lincoln's big buddy, Grenville Dodge.

313
00:34:57.080 --> 00:35:01.880
But of course, the US Army decided to kill all the Indians instead of making them slaves

314
00:35:01.880 --> 00:35:08.440
and to put the remaining ones on reservations, concentration camps known as reservations.

315
00:35:08.440 --> 00:35:15.360
And of course, the campaign of genocide against the Plains Indians that took place beginning

316
00:35:15.360 --> 00:35:20.560
three months after the Civil War ended and run by Generals Sherman, Grant and Sheridan

317
00:35:20.560 --> 00:35:25.840
and Custer was very much another subsidy to the railroad industry.

318
00:35:25.840 --> 00:35:30.560
Sherman himself said that was the main reason for eradicating all the Indians so they could

319
00:35:30.560 --> 00:35:33.320
build a railroad throughout the West.

320
00:35:33.320 --> 00:35:39.160
In my book, I contrast this a bit to the one transcontinental railroad that was privately

321
00:35:39.160 --> 00:35:45.640
funded, the Great Northern by James J. Hill, who bragged in his biography that he used

322
00:35:45.640 --> 00:35:47.920
not a penny in government money.

323
00:35:47.920 --> 00:35:54.120
He even purchased the rights away, even across Indian land, with cattle, sheep, money, whatever

324
00:35:54.120 --> 00:36:00.880
the Indians would trade for, and of course he was much more humane and he was much more

325
00:36:00.880 --> 00:36:02.600
efficient in what he did.

326
00:36:02.600 --> 00:36:07.320
He built a much more efficient railroad, it was a shorter route and he made money.

327
00:36:07.320 --> 00:36:12.200
All the government-subsidized railroads at one point were bankrupt and were just mired

328
00:36:12.200 --> 00:36:17.640
hopelessly in inefficiency and bureaucracy, but his wasn't, the Great Northern wasn't,

329
00:36:17.640 --> 00:36:19.700
and it was a big money maker.

330
00:36:19.700 --> 00:36:24.680
And so you see whenever they would run into trouble, meaning they didn't own the land,

331
00:36:24.680 --> 00:36:27.740
the Transcontinental Railroad subsidized by the government would just call in the army

332
00:36:27.740 --> 00:36:28.740
and have them kill everybody.

333
00:36:28.740 --> 00:36:33.880
They even shot at the white farmers who were giving them trouble, who didn't want their

334
00:36:33.880 --> 00:36:38.580
land eminent domain for the railroad.

335
00:36:38.580 --> 00:36:42.480
And so that's what they did, that's what they did.

336
00:36:42.480 --> 00:36:49.440
And so that really was a form of mercantilism, the whole Indian Wars, that lasted from 1865

337
00:36:49.440 --> 00:36:50.440
until 1890.

338
00:36:50.440 --> 00:36:58.960
In my book I quote Sherman in a letter to his son, shortly before Sherman died in 1890,

339
00:36:58.960 --> 00:37:02.880
bemoaning the fact that his armies did not manage to kill every last Indian in North

340
00:37:02.880 --> 00:37:03.880
America.

341
00:37:03.880 --> 00:37:08.320
They let a few escape, and he thought that was one of his big failures, he was telling

342
00:37:08.320 --> 00:37:32.520
I refer to this as the great triumph of mercantilism in America when this battle over protectionist

343
00:37:32.520 --> 00:37:37.920
tariffs and corporate welfare was waged from the time of Hamilton, with little success

344
00:37:37.920 --> 00:37:41.900
That's the story I told you about John Tyler and William Henry Harrison, that was a big

345
00:37:41.900 --> 00:37:47.220
failure for the Whigs, and then the Republicans came along and they finally succeeded putting

346
00:37:47.220 --> 00:37:51.680
all this into place, but it took a war for this all to happen.

347
00:37:51.680 --> 00:38:00.240
With the southern states gone, this was all rushed into place and put into place immediately.

348
00:38:00.240 --> 00:38:03.960
So we did have the National Currency Act, which I'm going to talk about tomorrow, or

349
00:38:03.960 --> 00:38:10.040
or maybe the day after tomorrow when I talk about the revolution of 1913 and we did have

350
00:38:10.040 --> 00:38:16.480
protectionist tariffs that lasted for decades and decades and we did have corporate welfare

351
00:38:16.480 --> 00:38:22.160
run amok and most of you, maybe all of you, I don't know, have read a little bit about

352
00:38:22.160 --> 00:38:25.040
the massive corruption of the grant administrations.

353
00:38:25.040 --> 00:38:28.260
Most American students, if they can remember anything, they were taught in junior high

354
00:38:28.260 --> 00:38:33.120
school or high school, American students anyway, about the grant presidency.

355
00:38:33.120 --> 00:38:38.120
Remember, the corruption attached to the railroad building of the Transcontinental Railroads.

356
00:38:38.120 --> 00:38:41.120
Well, that should not have been a surprise to anybody.

357
00:38:41.120 --> 00:38:51.120
That's exactly what happened whenever the states funded road and canal building or railroad building in the decades prior to the war.

358
00:38:51.120 --> 00:38:55.120
But this happened on a much bigger, much more colossal scale.

359
00:38:55.120 --> 00:39:02.120
And another thing that happened, I'm going to give you another quote from a historian named Leonard Currie.

360
00:39:02.120 --> 00:39:11.120
He wrote a book called, Blueprint for Modern America, about the domestic legislation during the war to prevent southern independence.

361
00:39:11.120 --> 00:39:28.120
And here's what he says about this. He says, you know, once this Pacific Railroad bill was passed, and it finally, finally became acceptable to use tax dollars to massively subsidize corporations, mercantilism became acceptable.

362
00:39:28.120 --> 00:39:42.120
He says this, he says, throughout the remainder of the 19th century and beyond, corporate interests, apparently insatiable, returned again and again to demand direct and indirect federal subsidies.

363
00:39:42.120 --> 00:39:51.120
To ensure preferential treatment and non-interference, national legislative and executive offices were corrupted and representative government made a mockery.

364
00:39:51.120 --> 00:40:00.120
The corruption of the grant era was sparked by the activities of those two companies and individuals connected to the Pacific Railway scheme.

365
00:40:00.120 --> 00:40:09.120
And, of course, the floodgates were opened to all this type of corruption that we see everywhere.

366
00:40:09.120 --> 00:40:15.120
And, in fact, I just saw yesterday on Lew Rockwell's website that there's a new book on this very topic.

367
00:40:15.120 --> 00:40:18.120
It's called The Big Rip-Off. Some of you may have read that.

368
00:40:18.120 --> 00:40:37.120
I can't even remember the author now, but I read the blurb for it, what's that? Tim Carney? Yeah, the big rip-off, and the blurb for it anyway says it's about all the rip-offs of the consumer created by this unholy alliance between business and government.

369
00:40:37.120 --> 00:40:46.120
Well, that's old-fashioned mercantilism. That's what the quote I gave you from Murray Rothbard about 17th and 18th century England, that's what it was.

370
00:40:46.120 --> 00:40:52.120
We did have a battle over this in the United States until the 1860s, but that battle was lost.

371
00:40:52.120 --> 00:40:56.120
It was won at gunpoint, and ever since then, this is what we've had.

372
00:40:56.120 --> 00:41:00.120
We've had mercantilism of one form or another, and it spread to other countries.

373
00:41:00.120 --> 00:41:03.120
Two other countries imitated us with this.

374
00:41:03.120 --> 00:41:07.120
And so, that's what I mean by the triumph of mercantilism in America.

375
00:41:07.120 --> 00:41:14.120
That's how it came about. That's this whole rotten system that Tim Carney has apparently written a whole book about now.

376
00:41:14.120 --> 00:41:18.120
These are the origins of it. It happened this way.

377
00:41:18.120 --> 00:41:21.120
And it's the triumph of Hamiltonianism.

378
00:41:21.120 --> 00:41:27.120
And so I've been mulling over sending my publisher a book proposal called Hamilton's Curse.

379
00:41:27.120 --> 00:41:31.120
Because as a counter to this book called Hamilton's Blessing.

380
00:41:31.120 --> 00:41:37.120
Because I think there have been too many worshipful books being written lately about Hamilton.

381
00:41:37.120 --> 00:41:43.120
And so that's always a red flag to me whenever any political figure or biographer is coming out.

382
00:41:43.120 --> 00:42:11.120
James J. Hill

383
00:42:11.120 --> 00:42:15.120
He has an autobiography that he's written.

384
00:42:15.120 --> 00:42:18.120
There's a great little book by Burton Folsom.

385
00:42:18.120 --> 00:42:20.120
I think it's called The Myth of the Robber Barons.

386
00:42:20.120 --> 00:42:24.120
It has a chapter on the building of the transcontinental railroads.

387
00:42:24.120 --> 00:42:31.120
And it's really a stark difference between privately financed railroad building

388
00:42:31.120 --> 00:42:36.120
and the government subsidized transcontinental railroads of the 19th century.

389
00:42:36.120 --> 00:42:40.120
The transcontinental railroads that were subsidized by the government,

390
00:42:40.120 --> 00:42:53.120
In order to get the votes, imagine, I'll write a map. Here's where they were built. Here's Council Bluffs.

391
00:42:53.120 --> 00:43:13.520
Oh, Lincoln Land, and here's San Francisco, and here's the Rocky Mountains, the government

392
00:43:13.520 --> 00:43:22.280
subsidized railroads, tended to be kind of like this, with lots of appendages, because

393
00:43:22.280 --> 00:43:27.200
Right over here was the hometown of Congressman X and here's Congressman Y and Congressman

394
00:43:27.200 --> 00:43:33.120
Z, who all said, as a condition of my voting for this, we need to run a line to my town

395
00:43:33.120 --> 00:43:34.120
over here.

396
00:43:34.120 --> 00:43:41.820
And so economic efficiency wasn't the priority, the priority was using politics to get taxpayers'

397
00:43:41.820 --> 00:43:45.720
money so we could all get rich building this railroad.

398
00:43:45.720 --> 00:43:50.000
And the squiggly line that I wrote, well, one of the things that Burton Folsom writes

399
00:43:50.000 --> 00:43:56.480
about in his account of the building the transcontinental railroads is that they

400
00:43:56.480 --> 00:44:02.440
did use sometimes wildly secured as circuitous routes they were you know not

401
00:44:02.440 --> 00:44:07.400
efficient at all because they got paid a subsidy by the mile they got a lot

402
00:44:07.400 --> 00:44:12.360
subsidy in terms of subsidized low interest loans and land grants by the

403
00:44:12.360 --> 00:44:16.840
mile so the more miles the more subsidies and he even writes about how

404
00:44:16.840 --> 00:44:24.160
Well, they, in the Rockies, in the wintertime, they built, you know, as long as the men could

405
00:44:24.160 --> 00:44:27.220
stand it in the cold weather and the snow and everything, as long as they could stand

406
00:44:27.220 --> 00:44:31.140
it and be there, they would be working, and he writes about how there might have been

407
00:44:31.140 --> 00:44:36.920
a ten-foot ice pack that they would build railroad tracks on top of, and then the spring

408
00:44:36.920 --> 00:44:40.120
melt would come, and the whole thing would collapse.

409
00:44:40.120 --> 00:44:44.560
But that was a good thing, because they just get paid double, they get paid again to build

410
00:44:44.560 --> 00:45:14.520
James J. Hill, the man who found a pass through the Rocky Mountains that was discovered by

411
00:45:14.520 --> 00:45:20.240
Lewis and Clark, and no one since then, what was that, 1803, no one since then had found

412
00:45:20.240 --> 00:45:24.840
this pass through the Rockies, but James J. Hill hired a man who found it, and it knocked

413
00:45:24.840 --> 00:45:29.180
about a hundred miles off of his roots, and you know, if your interest is making profit

414
00:45:29.180 --> 00:45:32.520
and being efficient, that's the kind of thing you're going to do.

415
00:45:32.520 --> 00:45:37.600
So James J. Hill built this, and in his autobiography he brags that he did it without a dime in

416
00:45:37.600 --> 00:45:42.640
government money, and he's deeply resentful of the fact that all his competitors got all

417
00:45:42.640 --> 00:46:12.640
and all these big subsidies from the government that he had and he still had to compete against them but he still out competed against them because any change, any business decision to change the route literally required an act of congress so once you're involved in this taking money from the government for your business you have to understand that the government is going to control your business and so they became so hopelessly mired in red tape and delays that they couldn't run these things. It wasn't until after these subsidies dried up that the

418
00:46:12.640 --> 00:46:22.640
The American railroad industry really thrived, once it became privately financed in the latter part of the 19th century, that's when the American railroad business became really thriving.

419
00:46:22.640 --> 00:46:29.640
It wasn't with all this corruption and inefficiency that happened during this time.

420
00:46:29.640 --> 00:46:33.640
But that's a great story to read about James J. Hill.

421
00:46:33.640 --> 00:46:36.640
Of course, a lot of the leftists really hate him.

422
00:46:36.640 --> 00:46:42.280
I've written a few things on him myself, because he's a counter example to this story of pervasive

423
00:46:42.280 --> 00:46:46.760
market failure, that the market will not provide the capital, well the market did provide the

424
00:46:46.760 --> 00:46:52.360
capital to build a transcontinental railroad, and it did it much better than the government

425
00:46:52.360 --> 00:46:59.360
Other comments or brilliant commentaries?

426
00:46:59.360 --> 00:47:26.760
There's an economist who used to teach at Columbia named Carter Goodrich who wrote several

427
00:47:26.760 --> 00:47:36.600
The railroad industry began in the 1820s, the idea of a railroad, and there were almost

428
00:47:36.600 --> 00:47:38.800
no railroads in the U.S. in the 1820s.

429
00:47:38.800 --> 00:47:44.240
The British did it first, before we did here in the United States, but in the 1830s, 40s,

430
00:47:44.240 --> 00:47:50.700
and 50s there were state governments that had subsidized one way or another the building

431
00:47:50.700 --> 00:47:58.180
of Railroads and Roads and Canals for that matter, but it had become such a corrupt scheme

432
00:47:58.180 --> 00:48:05.020
like this that they had all not only passed laws but amended their constitutions to prohibit

433
00:48:05.020 --> 00:48:13.220
the use of tax dollars for corporations and according to Carter Goodrich, by 1860 Massachusetts

434
00:48:13.220 --> 00:48:17.560
was the only state left that had not done that, that had not amended its constitution

435
00:48:17.560 --> 00:48:23.840
to Prohibit the Use of Tax Dollars for Corporate Welfare, as we would call it now.

436
00:48:23.840 --> 00:48:28.540
But this didn't phase the Whigs and then the Republicans at all.

437
00:48:28.540 --> 00:48:36.120
This was a huge 35-year record of massive corruption and financial debacle, and they

438
00:48:36.120 --> 00:48:38.920
just went ahead and said, we want more of it.

439
00:48:38.920 --> 00:48:44.820
Because like I said earlier, to them, they were buying political power from the money

440
00:48:44.820 --> 00:48:49.820
Money, the elite of the country, the New York Banking, the Railroad Corporation, that's

441
00:48:49.820 --> 00:48:54.100
not a bad thing, that'll keep us in power forever.

442
00:48:54.100 --> 00:48:57.900
That's what the Whigs were all about, and Abraham Lincoln was a Whig for a much longer

443
00:48:57.900 --> 00:49:02.140
period of time than he was a Republican, and so to them it was let the good times roll.

444
00:49:02.140 --> 00:49:05.140
To the taxpayers it was an atrocity.

445
00:49:05.140 --> 00:49:09.700
But the Whigs always thought that if they could somehow connect themselves with the

446
00:49:09.700 --> 00:49:14.760
money, the elite of the country through politics, that was their key to perpetual political

447
00:49:14.760 --> 00:49:34.760
The Republicans remained in power essentially until Woodrow Wilson came along, even though Grover Cleveland was sort of an outlier, but even when Grover Cleveland, a Democrat, was president, the Republican policies more or less prevailed with a few exceptions for the whole remainder of the 19th century and end of the 20th century.

448
00:49:34.760 --> 00:49:41.000
century. I quote an historian named Richard Benzell who wrote a book called Yankee Leviathan

449
00:49:41.000 --> 00:49:47.720
as saying the only comparable monopoly in political power he can think of is perhaps

450
00:49:47.720 --> 00:49:52.920
the Bolsheviks in Russia or the political party in Mexico that was, what was it, 75

451
00:49:52.920 --> 00:49:56.480
years the same party was in power, something like that. It's the only comparable thing

452
00:49:56.480 --> 00:50:01.480
to the Republicans of the late 19th century. So it worked. It worked marvelously for them.

453
00:50:01.480 --> 00:50:24.480
The word wig itself in the context of the American wig party is a fraud because the British wigs were classical liberals for the most part, libertarians, and the American wig party were interventionists.

454
00:50:24.480 --> 00:50:27.680
There was never any connection at all to...

455
00:50:27.680 --> 00:50:30.860
Well, there was some, because there were different kinds of Whigs.

456
00:50:30.860 --> 00:50:33.020
There were Northern Whigs and Southern Whigs,

457
00:50:33.020 --> 00:50:36.680
and not all Whigs were protectionist, but that's what it did turn into.

458
00:50:36.680 --> 00:50:40.640
By the time the party imploded in around 1852,

459
00:50:40.640 --> 00:50:43.640
because it was unsuccessful in doing all these things

460
00:50:43.640 --> 00:50:46.360
that Lincoln finally succeeded in doing.

461
00:50:46.360 --> 00:50:52.040
But it had the wing of the Whig Party that was the interventionist wing,

462
00:50:52.040 --> 00:50:56.920
I think dominated and took over, but they weren't always unanimously interventionist.

463
00:50:56.920 --> 00:51:03.040
There were, just like any other political party, I guess, you've got Ted Kennedy Democrats

464
00:51:03.040 --> 00:51:08.120
are different than say a Democrat from Alabama, at least they used to be that way anyway.

465
00:51:08.120 --> 00:51:11.480
And so the Whigs were kind of different.

466
00:51:11.480 --> 00:51:19.840
But then the Republicans took up that mantle and they were much more powerful in adopting

467
00:51:19.840 --> 00:51:25.840
I think mercantilism is their mantle, to be sure.

468
00:51:25.840 --> 00:51:31.840
Any other brilliant commentaries or words of wisdom or questions or anything?

469
00:51:31.840 --> 00:51:36.840
No? Well, I guess we can't just sit here and look at each other, I guess.

470
00:51:36.840 --> 00:51:38.840
Maybe we'll call it a day then.

471
00:51:38.840 --> 00:51:41.840
And thanks for coming, and we'll see you tomorrow.

472
00:51:41.840 --> 00:51:44.840
And I guess the bar is open, isn't it?

473
00:51:44.840 --> 00:51:46.840
No, just kidding, we don't have a bar here.

474
00:51:46.840 --> 00:51:48.840
Thank you very much.