WEBVTT

NOTE Martin van Buren: What Greatness Really Means

1
00:00:00.000 --> 00:00:26.000
For the last two years, I've mainly been giving talks on the Civil War, based on my book Emancipating Slaves and Slaving Free Men, which I'm happy to say has sold out here, but if anybody wants a copy, come and see me after the presentation and I can arrange a special deal to send you an autographed copy.

2
00:00:26.000 --> 00:00:39.000
When the Mises Institute issued a call for papers, however, I knew that there was going to be a lot of competition in the realm of Lincoln bashing.

3
00:00:39.000 --> 00:00:53.000
And in fact, I'm contributing with my impeached Lincoln button here, but I wanted to give myself a comparative advantage among the speakers.

4
00:00:53.000 --> 00:00:59.280
So I decided to do something unusual, which is talk about a good president.

5
00:00:59.280 --> 00:01:05.760
And I think I'm the only speaker in these two days who's going to be praising presidents

6
00:01:05.760 --> 00:01:10.840
outside of the first talk by Professor's veteran Galloway.

7
00:01:10.840 --> 00:01:15.560
The title you have in the program is Martin Van Buren, What Greatness Really Means.

8
00:01:15.560 --> 00:01:22.480
The title I'm now using is Martin Van Buren, The American Gladstone.

9
00:01:22.480 --> 00:01:35.080
And what I'm going to argue is that not only was Van Buren a good president, not only was

10
00:01:35.080 --> 00:01:42.200
Van Buren a great president, but he was the greatest president in all of American history.

11
00:01:42.200 --> 00:01:49.000
Now some of you may have never even heard of Van Buren, so let me give you some background.

12
00:01:49.000 --> 00:01:56.920
Van Buren was first elected president in 1836. He served one term from 1837 to 1841. He was

13
00:01:56.920 --> 00:02:05.040
defeated for re-election in 1840. Prior to his election, he had been the heir apparent

14
00:02:05.040 --> 00:02:11.040
of President Andrew Jackson and in fact had served as Jackson's first secretary of state

15
00:02:11.040 --> 00:02:18.480
and then was a minister to England and then during Jackson's second term was vice president.

16
00:02:18.480 --> 00:02:22.240
Now why do I say that Van Buren is the greatest president in American history?

17
00:02:22.240 --> 00:02:27.760
Well, I can give you a couple of reasons why I didn't pick Van Buren.

18
00:02:27.760 --> 00:02:33.720
I didn't pick Van Buren because he was a New Yorker of Dutch ancestry, even though I'm

19
00:02:33.720 --> 00:02:37.400
a New Yorker of Dutch ancestry.

20
00:02:37.400 --> 00:02:44.080
And I didn't pick Van Buren because he spent his entire early political career in New York

21
00:02:44.080 --> 00:02:50.080
The DeWitt Clinton that you heard about yesterday in Tom DiLorenzo's talk.

22
00:02:50.080 --> 00:02:58.080
I picked Van Buren as the greatest president because of both his foreign policy and his domestic policy.

23
00:02:58.080 --> 00:03:07.080
So let me start with foreign policy because this is probably the area where a president's personal traits

24
00:03:07.080 --> 00:03:14.760
Policy, because this is probably the area where a president's personal traits can make

25
00:03:14.760 --> 00:03:19.880
the most significant difference in history's trajectory.

26
00:03:19.880 --> 00:03:26.320
And as you all know by now after hearing the talks for the last two days, mainstream historians

27
00:03:26.320 --> 00:03:32.000
tend to have a weakness for presidents who drag the country into war.

28
00:03:32.000 --> 00:03:39.200
And that's because being a wartime president permits displays of decisiveness and energy

29
00:03:39.200 --> 00:03:43.000
and these kinds of things impress mainstream historians.

30
00:03:43.000 --> 00:03:50.920
I on the other hand think presidents should merit recognition for avoiding war.

31
00:03:50.920 --> 00:03:56.520
And Martin Van Buren has the unique distinction in American history of having avoided two

32
00:03:56.520 --> 00:04:00.000
wars.

33
00:04:00.000 --> 00:04:06.040
But Ann Buren, if he had wanted, could have had a war with Mexico over Texas.

34
00:04:06.040 --> 00:04:13.660
The Texas Revolution, when American settlers revolted against the central government, occurred

35
00:04:13.660 --> 00:04:17.660
in 1836 at the end of Andrew Jackson's term.

36
00:04:17.660 --> 00:04:22.400
And when the Lone Star Republic was set up, expectations were high on both sides of the

37
00:04:22.400 --> 00:04:27.280
border that Texas would be immediately annexed to the United States.

38
00:04:27.280 --> 00:04:33.360
And in fact, that's what Andrew Jackson wanted. In fact, his protege, Sam Houston, was one

39
00:04:33.360 --> 00:04:39.120
of the leaders of the Texas Revolution. But there were two problems with Texas annexation.

40
00:04:39.120 --> 00:04:46.600
First of all, Mexico did not recognize Texas independence. And secondly, Texas sanctioned

41
00:04:46.600 --> 00:04:55.880
slavery and abolitionists were raising a hue and cry about the spread of slavery, the political

42
00:04:55.880 --> 00:05:13.880
and the power of the slaveocracy, and the admission of Texas into, or the annexation of Texas, threatened to bring about sectional strife within the country and possibly divide the Democratic Party, the party of Jackson and Van Buren.

43
00:05:13.880 --> 00:05:20.880
So Jackson went along with Van Buren, who, as I mentioned, was Jackson's heir apparent,

44
00:05:20.880 --> 00:05:26.880
in postponing recognition of Texas independence until after the 1836 election was over.

45
00:05:26.880 --> 00:05:37.880
But then Jackson began to menacingly press American claims against Mexico as a pretext for provoking war.

46
00:05:37.880 --> 00:05:49.280
Van Buren however did not want war in the southwest and so once Van Buren is

47
00:05:49.280 --> 00:05:55.080
inaugurated there's immediate reversal of policy. Van Buren begins to rebuff

48
00:05:55.080 --> 00:06:00.280
Texas overtures and finally announces that Texas annexation is out of the

49
00:06:00.280 --> 00:06:07.520
question while he is president and at the same time he deftly and patiently

50
00:06:07.520 --> 00:06:13.640
negotiates with Mexico over the claims issue and reaches a settlement so that

51
00:06:13.640 --> 00:06:20.100
by the time Van Buren leaves office the possibility of war has

52
00:06:20.100 --> 00:06:27.380
significantly diminished and it only re-emerges later during his successor's

53
00:06:27.380 --> 00:06:32.440
term when President Tyler, the machinations of both President Tyler and

54
00:06:32.440 --> 00:06:39.160
and John C. Calhoun bring Texas annexation back into the political limelight.

55
00:06:39.160 --> 00:06:45.720
But Van Buren's commitment to peace remains constant even after he's no longer president

56
00:06:45.720 --> 00:06:51.200
because by the time he's running, he's defeated for election in 1844 and then he's the frontrunner

57
00:06:51.200 --> 00:06:57.220
for the Democrat, I mean 1840, defeated for re-election in 1840, and then he's the frontrunner

58
00:06:57.220 --> 00:07:02.100
for the Democratic nomination in 1844, but Texas has now become a big issue.

59
00:07:02.100 --> 00:07:08.200
And even though he knows that it will cost him politically, Van Buren comes out against

60
00:07:08.200 --> 00:07:15.120
annexation of Texas unless it can be done maintaining friendly relations with Mexico.

61
00:07:15.120 --> 00:07:22.880
In fact, his statement said, we have a character among the nations of the earth to maintain.

62
00:07:22.880 --> 00:07:27.860
While the lust of power with fraud and violence in the train has led other and differently

63
00:07:27.860 --> 00:07:30.860
and how they constituted governments to aggression and conquest,

64
00:07:30.860 --> 00:07:36.860
our movements in these respects have always been regulated by reason and justice.

65
00:07:36.860 --> 00:07:41.860
And of course, as many of you know, as a result he was defeated

66
00:07:41.860 --> 00:07:45.860
at the Baltimore Convention of the Democratic Party,

67
00:07:45.860 --> 00:07:52.860
and instead the Democrats nominated an ardent expansionist, James Knox Polk of Tennessee,

68
00:07:52.860 --> 00:07:55.860
who was then elected president and conducted the very war

69
00:07:55.860 --> 00:08:04.260
War that Van Buren had tried so hard to avoid. So that's the first war that Van Buren avoided

70
00:08:04.260 --> 00:08:10.740
at least during his administration. The second war was a potential war with Britain over

71
00:08:10.740 --> 00:08:19.260
Canada. Bill Marina yesterday mentioned that there had always been U.S. aspirations to

72
00:08:19.260 --> 00:08:24.540
annex Canada. Two attempts at conquest, the first during the American Revolution, the

73
00:08:24.540 --> 00:08:38.540
and at other times there was informal support on the part of Americans for revolts, such as the revolts that eventually brought Texas into the United States or Florida into the United States.

74
00:08:38.540 --> 00:08:45.540
And no sooner had Van Buren been inaugurated than revolts broke out in both Upper and Lower Canada.

75
00:08:45.540 --> 00:09:03.540
The Canadian authorities were able to quickly disperse organized resistance, but private American citizens lent support with recruits and provisions, and thus border incidents throughout Van Buren's term kept anti-British feeling at a fever pitch.

76
00:09:03.540 --> 00:09:10.060
Any one of these incidents could have provoked war, but Van Buren

77
00:09:10.060 --> 00:09:14.900
responded with two strong proclamations of neutrality and he immediately sent

78
00:09:14.900 --> 00:09:22.500
General Winfield Scott to the border. Scott was a giant man and he traveled up

79
00:09:22.500 --> 00:09:27.140
and down the border 800 miles in full dress uniform using little more than his

80
00:09:27.140 --> 00:09:32.900
personal influence to calm inflamed passions. Now no longer were passions

81
00:09:32.900 --> 00:09:42.900
When things calmed with respect to these revolts, then another incident broke out on the border, and this one was even more dangerous.

82
00:09:42.900 --> 00:09:51.900
The frontier between Maine and New Brunswick had been in dispute since 1783.

83
00:09:51.900 --> 00:09:57.900
And during Van Buren's term, Canadian lumberjacks began timber operations in the disputed region.

84
00:09:57.900 --> 00:10:10.900
Well, immediately Maine called out its militia, and the Maine and the New Brunswick militia marched to the Aroustic River in a bloodless conflict that has become known as the Aroustic War.

85
00:10:10.900 --> 00:10:25.900
Congress felt that war was so eminent that they authorized 50,000 volunteers, extended militia drafts to six months, and appropriated $10 million for war.

86
00:10:25.900 --> 00:10:29.740
But Van Buren again decided that he would prefer peace.

87
00:10:29.740 --> 00:10:31.980
He sent Scott to the trouble spot.

88
00:10:31.980 --> 00:10:34.260
Scott negotiated a truce.

89
00:10:34.260 --> 00:10:38.180
And eventually, the outstanding issues between Canada

90
00:10:38.180 --> 00:10:41.260
and the United States were settled in a treaty with Britain

91
00:10:41.260 --> 00:10:45.100
in 1842 under President Tyler.

92
00:10:45.100 --> 00:10:50.300
And what makes Van Buren's opposition to war,

93
00:10:50.300 --> 00:10:51.900
what makes Van Buren's commitment

94
00:10:51.900 --> 00:11:01.000
to Peace and Neutrality so exemplary is that he was facing advice from many people in his

95
00:11:01.000 --> 00:11:07.460
own party suggesting that he should get the United States involved in the war in order

96
00:11:07.460 --> 00:11:16.460
to distract attention from domestic difficulties, which leads us to Van Buren's domestic policies.

97
00:11:16.460 --> 00:11:22.340
Because Van Buren's domestic policies are dominated by an event that took place two

98
00:11:22.340 --> 00:11:27.680
months after he assumed office, the Panic of 1837.

99
00:11:27.680 --> 00:11:35.180
In the Panic of 1837, the country's 800 banks ended up suspending specie payments, which

100
00:11:35.180 --> 00:11:41.780
means they no longer would provide gold and silver in return for bank notes and deposits.

101
00:11:41.780 --> 00:11:46.260
And the country sank into a recession.

102
00:11:46.260 --> 00:11:55.160
Van Buren responded by calling a special session of Congress to meet in September of 1837,

103
00:11:55.160 --> 00:12:03.940
and in his message to the Congress, he presented a bold and acute program to handle the Depression,

104
00:12:03.940 --> 00:12:10.460
not with government intervention, but with government retrenchment.

105
00:12:10.460 --> 00:12:13.540
Let me read to you a couple of quotations from this message.

106
00:12:13.540 --> 00:12:22.540
By the way, this presidential message, in my opinion, is the most economically astute writing of a president ever penned.

107
00:12:22.540 --> 00:12:27.540
Van Buren understood the causes of the depression.

108
00:12:27.540 --> 00:12:32.540
He presented a proto-Austrian business cycle theory explanation,

109
00:12:32.540 --> 00:12:40.540
but he also recognized that the major factor in business fluctuations in the business cycle at that time

110
00:12:40.540 --> 00:12:45.540
was International Species Flows as orchestrated by the Bank of England.

111
00:12:48.540 --> 00:12:52.540
As for solutions, this is what Van Buren had to say.

112
00:12:52.540 --> 00:12:56.540
All communities are apt to look to government for too much.

113
00:12:56.540 --> 00:13:00.540
Even in our own country, where its powers and duties are so strictly limited,

114
00:13:00.540 --> 00:13:06.540
we are prone to do so, especially at periods of sudden embarrassment and distress.

115
00:13:06.540 --> 00:13:12.540
Van Buren then goes on to say, to yield to this temptation, however, would be a mistake because,

116
00:13:12.540 --> 00:13:22.540
all former attempts on the part of government to assume the management of domestic or foreign exchange have proved injurious.

117
00:13:22.540 --> 00:13:31.540
Instead, he said, what was needed was a system founded on private interest, enterprise and competition

118
00:13:31.540 --> 00:13:36.820
without the aid of legislative grants or regulations by law.

119
00:13:36.820 --> 00:13:41.580
And then at another point he says, one that embodied the Jeffersonian maximum of, quote,

120
00:13:41.580 --> 00:13:46.220
that the less government interference with private pursuits, the better for the general

121
00:13:46.220 --> 00:13:49.380
prosperity, close quote.

122
00:13:49.380 --> 00:13:57.360
He therefore ended the message by refraining, quote, from suggesting to Congress any specific

123
00:13:57.360 --> 00:14:04.020
Plan for Regulating the Exchanges of the Country, Relieving Mercantile Embarrassments, or Interfering

124
00:14:04.020 --> 00:14:08.560
with the Ordinary Operation of Foreign or Domestic Commerce, because their adoption

125
00:14:08.560 --> 00:14:15.480
would not promote the real and permanent welfare of those they might be designed to aid."

126
00:14:15.480 --> 00:14:19.920
Well at this point you might be wondering why did he call Congress into session at all,

127
00:14:19.920 --> 00:14:21.600
if he wasn't going to propose a program.

128
00:14:21.600 --> 00:14:30.440
And the answer is, he wanted to cut government, cut taxes, cut spending, and then there's

129
00:14:30.440 --> 00:14:34.200
a final feature to the program that we'll get into at a moment.

130
00:14:34.200 --> 00:14:40.040
But I want to emphasize how remarkable this call for cutting government is, because it's

131
00:14:40.040 --> 00:14:46.200
at a period when government is at already a significant low in American history.

132
00:14:46.200 --> 00:14:54.200
Today, federal government expenditures are about one third of the total economy's output, one third of GDP.

133
00:14:54.200 --> 00:15:01.200
During the 1920s, prior to the Great Depression, they were at about four percent of GDP,

134
00:15:01.200 --> 00:15:08.200
which is significantly lower than today, but significantly higher than when Van Buren assumed office,

135
00:15:08.200 --> 00:15:14.200
because when Van Buren assumed office, total federal expenditures were less than two percent of GDP,

136
00:15:14.200 --> 00:15:20.640
That's the level of the 1920s. In fact, few people realized that at that time the Federal

137
00:15:20.640 --> 00:15:26.300
Government only had two sources of revenue. There were no internal taxes. The only sources

138
00:15:26.300 --> 00:15:33.880
of revenue were a tariff and the sale of public lands. So this was a period in which most

139
00:15:33.880 --> 00:15:40.480
people not only paid no taxes to the Central Government, most American citizens would have

140
00:15:40.480 --> 00:15:50.480
And yet Van Buren said, we still need to cut.

141
00:15:50.480 --> 00:16:06.480
The most important expenditure he cut had resulted from Andrew Jackson paying off the national debt in 1835.

142
00:16:06.480 --> 00:16:36.480
with the national debt and this is the first and only time in American history that the national debt was entirely paid off so a huge government surplus was burgeoning and Congress decided to distribute the surplus to the states now this by the way was a part of the WIG program that Tom forgot to mention the WIGs were in favor of a national bank, high protective tariffs, internal improvements and also a 19th century version of what we today call revenue sharing

143
00:16:36.480 --> 00:16:38.480
and the distribution of federal money to the states.

144
00:16:38.480 --> 00:16:46.480
And because of the surplus, the Whigs had managed to get that through at the tail end of Jackson's administration.

145
00:16:46.480 --> 00:16:53.480
But with the Depression, revenue is falling and Van Buren gets the distribution entirely repealed.

146
00:16:53.480 --> 00:17:01.480
So expenditures start to go down and then he's even more stringent than Jackson with respect to appropriating money for internal improvements.

147
00:17:01.480 --> 00:17:18.480
Federal Government Expenditures on Internal Improvements go down so that during Van Buren's four years in office, Federal Government Expenditures fell in the midst of a depression from $30.9 million in 1836 to $24.3 million in 1840.

148
00:17:18.480 --> 00:17:23.480
Now that's over a 20% fall in nominal terms.

149
00:17:23.480 --> 00:17:30.480
In real terms it's not quite as much because this was a period not when prices were rising but prices were falling.

150
00:17:30.480 --> 00:17:39.480
In real terms, it's only about a 10% cut, but then if you adjust for the growth of the economy or population, it's still a higher cut.

151
00:17:39.480 --> 00:17:46.480
You know, nowadays when we talk about cutting government, we talk about first derivative cuts, cutting the rate of growth.

152
00:17:46.480 --> 00:17:53.480
And Murray Rothbard always used to say that he longed for the days when we had cut cuts.

153
00:17:53.480 --> 00:18:01.080
Well, in Van Buren's administration, no matter how you look at it, spending was cut.

154
00:18:01.080 --> 00:18:10.480
Real terms, nominal terms, per capita, as a percent of GDP, spending was cut, and at the same time, taxes were cut as well.

155
00:18:10.480 --> 00:18:19.880
So everything is going down during Van Buren's administration.

156
00:18:19.880 --> 00:18:27.480
The centerpiece of Van Buren's special message to Congress, however, was a courageous call

157
00:18:27.480 --> 00:18:32.840
for what came to be known as the Independent Treasury.

158
00:18:32.840 --> 00:18:36.800
And this was the capstone of Andrew Jackson's campaign against the bank.

159
00:18:36.800 --> 00:18:41.920
You all heard yesterday how Jackson destroyed the second bank of the U.S., what he and

160
00:18:41.920 --> 00:18:44.040
his advisors called the monster.

161
00:18:44.040 --> 00:18:48.520
But once the bank was destroyed, a problem arose.

162
00:18:48.520 --> 00:18:54.280
And the problem was where should the government deposit its funds?

163
00:18:54.280 --> 00:18:57.480
Where should it keep its money?

164
00:18:57.480 --> 00:19:03.040
And the temporary solution under Jackson was to put the money in state chartered banks.

165
00:19:03.040 --> 00:19:09.200
Now the drawback of that solution is that first of all those state chartered banks who

166
00:19:09.200 --> 00:19:13.500
get government deposits are in essence getting a government subsidy because they're getting

167
00:19:13.500 --> 00:19:15.520
government business.

168
00:19:15.520 --> 00:19:21.080
And this creates a further drawback because not very many politicians were willing to

169
00:19:21.080 --> 00:19:27.280
give state chartered bank subsidies without also regulating them.

170
00:19:27.280 --> 00:19:32.760
And so the radical advocates of laissez-faire and hard money in the Democratic Party wanted

171
00:19:32.760 --> 00:19:40.040
to bring about what they said in their own words, a separation of bank and government,

172
00:19:40.040 --> 00:19:46.680
A divorce of the treasury from the banks and the way to do that was set up an independent

173
00:19:46.680 --> 00:19:52.680
treasury in which the U.S. government would only receive gold and silver as money and

174
00:19:52.680 --> 00:19:58.840
only hold gold and silver in its own vaults as money and only pay out gold and silver

175
00:19:58.840 --> 00:20:09.200
as money and that became the main legislation that Van Buren pressed for throughout his

176
00:20:09.200 --> 00:20:19.200
Now, there were competing interests supporting the independent treasury because it could accommodate differing views on currency and banknotes.

177
00:20:19.200 --> 00:20:26.200
Both hard money advocates, those who wanted a completely metallic currency, supported the independent treasury,

178
00:20:26.200 --> 00:20:32.200
but also advocates of unregulated free banking also supported the independent treasury.

179
00:20:32.200 --> 00:20:47.200
of the Independent Treasury. And it was a long struggle, and my chapter in the book will detail the politics of the struggle, but the upshot was that the Independent Treasury passed at the end of Van Buren's turn in 1840.

180
00:20:47.200 --> 00:21:01.200
Now some of the benefits of the Independent Treasury. The most important benefit of the, or one of the benefits of the Independent Treasury was it brought about, for the first time, complete deregulation of the financial system at the national level.

181
00:21:01.200 --> 00:21:22.200
Now, it's true that under Tyler, the independent treasury was repealed, but then it was reinstated under Polk and remained in force until the Civil War, which means that essentially, up until the Civil War, the national government has no dealings whatsoever with banks or any other part of the financial system.

182
00:21:22.200 --> 00:21:29.160
Now there's still numerous regulations at the state level, but economists are increasingly

183
00:21:29.160 --> 00:21:35.960
coming to the conclusion that this era of relatively free banking wasn't perfect, but

184
00:21:35.960 --> 00:21:41.720
was the best monetary system the United States has ever had.

185
00:21:41.720 --> 00:21:51.320
The second benefit of Van Buren's push for the independent treasury and his other domestic

186
00:21:51.320 --> 00:21:56.880
Initiative, was it thwarted all attempts to use the Depression as an excuse for expanding

187
00:21:56.880 --> 00:22:01.040
the role of government.

188
00:22:01.040 --> 00:22:09.960
With the panic of 1837 and the resulting Depression, it turned out that many states had squandered

189
00:22:09.960 --> 00:22:15.480
huge sums of money, funding, canals and other internal improvements.

190
00:22:15.480 --> 00:22:19.040
Again, we heard about this yesterday in Tom's talk.

191
00:22:19.040 --> 00:22:23.840
What happened during the Depression is that the states began to face financial stringency.

192
00:22:23.840 --> 00:22:28.520
In fact, about $40 million worth of state bonds went into default when several states

193
00:22:28.520 --> 00:22:31.600
actually repudiated their debts.

194
00:22:31.600 --> 00:22:38.280
Henry Clay saw this as a beautiful pretext for reintroducing the distribution of federal

195
00:22:38.280 --> 00:22:46.560
funds under a new justification, and that justification was assumption of state debts.

196
00:22:46.560 --> 00:22:55.560
Van Buren and the Democrats opposed that and opposed all the other relief measures promoted by the Whigs.

197
00:22:55.560 --> 00:23:01.560
Now, the importance of this cannot be overstated.

198
00:23:01.560 --> 00:23:08.560
And to appreciate it, you need to know a little bit about what's going on with the economy during this period

199
00:23:08.560 --> 00:23:17.560
Because there are actually two bank suspensions, and they both have the same causes, but they have differing consequences.

200
00:23:17.560 --> 00:23:30.560
In both cases, they're caused by the Bank of England raising the discount rate, gold flowing out of the United States and setting off a panic and bank runs in the United States.

201
00:23:30.560 --> 00:23:39.560
But the first panic, the one at the beginning of Van Buren's administration, followed two years of rapid rise in prices.

202
00:23:39.560 --> 00:23:45.560
It was a sharp contraction. It brought about a major recession.

203
00:23:45.560 --> 00:23:52.560
Then the economy seemed to recover, and the second bank panic hit in 1839.

204
00:23:52.560 --> 00:23:56.560
Now the second bank panic was not as severe as the first.

205
00:23:56.560 --> 00:24:01.560
Only about half the banks were forced to suspend BC payment.

206
00:24:01.560 --> 00:24:07.560
But it initiated a long-term monetary contraction in the United States.

207
00:24:07.560 --> 00:24:19.560
From 1839 to 1843, the total money supply in the United States over that four years fell by one-third.

208
00:24:19.560 --> 00:24:27.560
And there's only one other period in all of American history during which the money supply fell that much.

209
00:24:27.560 --> 00:24:34.560
And some of you know what period it was, 1929 to 1933.

210
00:24:34.560 --> 00:24:39.560
And many economists have drawn parallels between the two monetary contractions.

211
00:24:39.560 --> 00:24:42.560
Both of them are of the same magnitude.

212
00:24:42.560 --> 00:24:45.560
Both of them last at the same length of time.

213
00:24:45.560 --> 00:24:50.560
But the economic consequences of the two are dramatically different.

214
00:24:50.560 --> 00:24:57.560
The monetary contraction of the Great Depression, 29 to 33, resulted in 25% unemployment

215
00:24:57.560 --> 00:25:03.560
and a fall in output of 30%. The economy's total production fell by 30%.

216
00:25:03.560 --> 00:25:12.560
During the monetary contraction of 1839 to 1843, output not only did not fall,

217
00:25:12.560 --> 00:25:16.560
It actually went up 16%.

218
00:25:18.560 --> 00:25:22.560
This was a full employment deflation.

219
00:25:24.560 --> 00:25:28.560
And what's the reason it was a full employment deflation?

220
00:25:28.560 --> 00:25:31.560
Well, the answer of economists is prices were flexible.

221
00:25:31.560 --> 00:25:35.560
The Great Depression is the first, the most serious depression,

222
00:25:35.560 --> 00:25:39.560
the longest depression in American history is of course also the first depression

223
00:25:39.560 --> 00:26:09.560
to be met with a massive program of government intervention and those of you who read the works of Murray Rothbard know that that government intervention didn't begin with the policies of Franklin Roosevelt and his New Deal but actually began with the efforts of Herbert Hoover to hold up prices, to move heaven and earth to try to hold up prices under the theory that if you held up prices you could prevent depression. So prices were, in economist jargon, rigid downward. They couldn't fall fast enough to restore equilibrium.

224
00:26:09.560 --> 00:26:18.560
and the equilibrium. Whereas during Van Buren's administration, prices were flexible and they fell much more.

225
00:26:18.560 --> 00:26:26.560
Prices did fall from 29 to 33 during the Great Depression, but during Van Buren's administration, they fell much more.

226
00:26:26.560 --> 00:26:32.560
As a result, the economy was saved from an episode as severe as the Great Depression.

227
00:26:32.560 --> 00:26:45.960
I don't think that Van Buren deserves credit for single-handedly preventing the contraction of 1939 to 1943 from becoming another Great Depression.

228
00:26:45.960 --> 00:26:57.560
But he certainly held the pass against all of the special interests, the mercantile interests, the state governments, who were demanding favors from government at a crucial time,

229
00:26:57.560 --> 00:27:01.280
and at a time when it was politically inexpedient to do so because that's the

230
00:27:01.280 --> 00:27:08.280
main reason he was defeated for re-election in 1840.

231
00:27:13.960 --> 00:27:14.880
Now,

232
00:27:14.880 --> 00:27:17.560
there are a couple...

233
00:27:17.560 --> 00:27:19.680
Van Buren wasn't perfect,

234
00:27:19.680 --> 00:27:22.960
if I had a few more minutes I'd give you a couple of his flaws,

235
00:27:22.960 --> 00:27:25.280
but uh...

236
00:27:25.280 --> 00:27:30.360
I think the most important thing to recognize about Van Buren is that unlike better known

237
00:27:30.360 --> 00:27:36.000
champions of liberty, Thomas Jefferson and Andrew Jackson, Van Buren was more principled

238
00:27:36.000 --> 00:27:43.640
while in office than outside of office. There's nothing like Jefferson's despotic embargo,

239
00:27:43.640 --> 00:27:48.600
his unconstitutional Louisiana Purchase, his vindictive witch hunt against Aaron Burr to

240
00:27:48.600 --> 00:27:52.600
to disfigure Van Buren's administration.

241
00:27:52.600 --> 00:27:58.600
Nothing like Jackson's executive bullying of South Carolina, or of Congress, or of France.

242
00:27:58.600 --> 00:28:02.600
We almost got a war with France during Jackson's administration.

243
00:28:02.600 --> 00:28:08.600
So it's not just that Van Buren was the least bad American president.

244
00:28:08.600 --> 00:28:14.600
While avoiding foreign wars, he did more than maintain the domestic status quo.

245
00:28:14.600 --> 00:28:26.100
He reduced central authority in the face of stiff resistance, thereby helping the American economy to weather one of its most severe deflations.

246
00:28:26.100 --> 00:28:38.100
Now, it's commonly acknowledged that Americans at one time enjoy greater liberty than any other people on the face of the earth,

247
00:28:38.100 --> 00:28:44.100
if you measure liberty in terms of freedom from government coercion.

248
00:28:44.100 --> 00:28:57.100
And for that accomplishment, I believe that Martin Van Buren deserves as much credit as any other single individual and certainly more credit than any other American president.

249
00:28:57.100 --> 00:28:59.100
Thank you very much.