WEBVTT NOTE The Hard Money Issue in American Political History 1 00:00:00.000 --> 00:00:08.300 In listening to Elizabeth Currier's proposal about a musical about John Law, 2 00:00:08.300 --> 00:00:16.040 I was a bit put off simply because if it were made by Broadway or Hollywood, 3 00:00:16.040 --> 00:00:21.000 I fear it would be in the same vein as there are many movies, 4 00:00:21.000 --> 00:00:24.160 including those to which we were subjected during World War II, 5 00:00:24.160 --> 00:00:26.860 about the glories of the Soviet system. 6 00:00:26.860 --> 00:00:37.340 I fear that the picture would come out something like an intrepid, heroic, business-exposing 7 00:00:37.340 --> 00:00:43.660 reporter, preferably a woman for the Mercury de France, would be following John Law around 8 00:00:43.660 --> 00:00:50.600 and showing how this new banking system was all part of the capitalist plot against the 9 00:00:50.600 --> 00:00:51.600 working class. 10 00:00:51.600 --> 00:00:53.600 I suppose Jane Fonda could play that role. 11 00:00:53.600 --> 00:01:00.600 That is, if she were willing to wear a long dress rather than slack, 12 00:01:00.600 --> 00:01:08.600 so that may be the one thing that would prevent it. 13 00:01:08.600 --> 00:01:13.600 In discussing the constituencies for hard money, 14 00:01:13.600 --> 00:01:26.600 I think I can do no better than begin at the point at which Elizabeth Currier ended her presentation. 15 00:01:26.600 --> 00:01:37.600 Because it's important for us to realize that for the American Founding Fathers in the 18th century 16 00:01:37.600 --> 00:01:44.960 And for our forefathers in the 19th century, the story of John Law and the story of the 17 00:01:44.960 --> 00:01:49.120 Mississippi bubble were in their direct consciousness. 18 00:01:49.120 --> 00:01:53.660 This was something they were very, very familiar with. 19 00:01:53.660 --> 00:01:59.760 In other words, it's impossible to really have a picture like 1776 without having a 20 00:01:59.760 --> 00:02:04.540 picture about John Law, because one can't understand what the founding fathers were 21 00:02:04.540 --> 00:02:11.900 were doing in Philadelphia in 1776 or in 1787 when they framed the Constitution, unless 22 00:02:11.900 --> 00:02:18.720 one understands that they and the people who elected them were very, very aware of the 23 00:02:18.720 --> 00:02:26.140 Mississippi bubble and of John Law's theory and totally repudiated them. 24 00:02:26.140 --> 00:02:33.600 Just as those same people in the 18th and 19th century were totally aware of Roman 25 00:02:33.600 --> 00:02:43.100 in History and the Role of Inflation, the Role of Taxation in Destroying the Great Cultural 26 00:02:43.100 --> 00:02:46.560 Achievements of the Ancient World. 27 00:02:46.560 --> 00:02:53.680 So that what we have heard today is exactly what the Founding Fathers were aware of, but 28 00:02:53.680 --> 00:03:01.660 which few people outside this room have any awareness of. 29 00:03:01.660 --> 00:03:13.020 Now when John Moore finally was pulled down partly by the heroic speculations of Richard 30 00:03:13.020 --> 00:03:25.100 Cantillon, he was replaced, he and the government of the regent were replaced by a new government, 31 00:03:25.100 --> 00:03:36.100 The young king, Louis XV, the great-grandson of Louis XIV, turned to his tutor, the Abbé 32 00:03:36.100 --> 00:03:43.500 Fleury, to replace law and the regent in control of the government. 33 00:03:43.500 --> 00:03:53.820 And the Abbé Fleury, who was not a young man, took control and, being Prime Minister 34 00:03:53.820 --> 00:03:58.140 Professor of France was raised from being an abbey to being a cardinal, so he was like 35 00:03:58.140 --> 00:04:02.540 so many of the cardinals who come to high office in the Catholic Church only when they're 36 00:04:02.540 --> 00:04:08.260 in their 70s and seem to live on to their 90s, and perhaps that explains why the institution 37 00:04:08.260 --> 00:04:10.100 has lasted 2,000 years. 38 00:04:10.100 --> 00:04:15.940 There's nothing impetuous, only caution and good sense. 39 00:04:15.940 --> 00:04:25.260 Now the Cardinal Fleury saw the causes of the inflation that John Law instituted. 40 00:04:25.260 --> 00:04:30.600 That is, the previous high degree of government indebtedness which drove the government to 41 00:04:30.600 --> 00:04:38.820 try and find some way to get out of the government debt, and the solution to them was the inflation 42 00:04:38.820 --> 00:04:44.140 that he proposed. 43 00:04:44.140 --> 00:04:50.500 It's important for us to realize that at the very same time John Law was carrying out the 44 00:04:50.500 --> 00:04:53.020 Mississippi Bubble. 45 00:04:53.020 --> 00:05:03.100 In England, similar financiers were carrying out the so-called South Sea Bubble. 46 00:05:03.100 --> 00:05:07.880 And the American Founding Fathers and our forefathers in the 19th century were very 47 00:05:07.880 --> 00:05:12.580 familiar with the Mississippi Bubble and the South Sea Bubble. 48 00:05:12.580 --> 00:05:22.980 The South Sea Bubble had the same causes as the Mississippi Bubble, that is, large indebtedness. 49 00:05:22.980 --> 00:05:26.900 How did that indebtedness occur? 50 00:05:26.900 --> 00:05:32.780 In other words, we're dealing with something unique in modern history, the beginning of 51 00:05:32.780 --> 00:05:34.160 our own experience. 52 00:05:34.160 --> 00:05:38.220 This is the first of many occasions, and what was the cause of it? 53 00:05:38.220 --> 00:05:47.340 The cause was the first world war with a small f, the first time there was a world war. 54 00:05:47.340 --> 00:05:56.040 It lasted roughly from 1689 to 1713, almost 25 years, and to fight that war, both England 55 00:05:56.040 --> 00:06:00.840 and France went into immense indebtedness. 56 00:06:00.840 --> 00:06:04.380 But to be able to do that required something new. 57 00:06:04.380 --> 00:06:09.080 In England, lenders were familiar with the government. 58 00:06:09.080 --> 00:06:14.400 A few people lent money to the government, and whenever the king was short of money, 59 00:06:14.400 --> 00:06:18.720 he just repudiated the previous loans. 60 00:06:18.720 --> 00:06:23.240 So people were not anxious to lend money to the king or to the government. 61 00:06:23.240 --> 00:06:26.080 And so something new had to be invented. 62 00:06:26.080 --> 00:06:27.920 Why? 63 00:06:27.920 --> 00:06:30.880 Because the public didn't want to pay for the war. 64 00:06:30.880 --> 00:06:32.080 The war was being carried on. 65 00:06:32.080 --> 00:06:33.800 It was protracted. 66 00:06:33.800 --> 00:06:38.340 People did not want to pay taxes, and yet the government wanted to continue the war. 67 00:06:38.340 --> 00:06:39.540 It wanted to borrow. 68 00:06:39.540 --> 00:06:42.980 The only way it could do that was to develop something entirely new. 69 00:06:42.980 --> 00:06:45.280 That is, the central bank. 70 00:06:45.280 --> 00:06:51.400 And so in order to fight the war, the Bank of England was created in order to begin to 71 00:06:51.400 --> 00:06:57.520 finance the war through public borrowing, to create something else that was new, the 72 00:06:57.520 --> 00:07:00.440 national debt. 73 00:07:00.440 --> 00:07:02.880 No one trusted the government. 74 00:07:02.880 --> 00:07:08.800 But if key financiers would guarantee the debt, people would lend to them, and then they would 75 00:07:08.800 --> 00:07:13.940 in turn, through the Bank of England, lend to the government. 76 00:07:13.940 --> 00:07:19.940 And in return, they got monopoly concessions from the government. 77 00:07:19.940 --> 00:07:22.760 And this persisted. 78 00:07:22.760 --> 00:07:28.760 And finally, after more than 15 years of war, even the Bank of England said, well, we're 79 00:07:28.760 --> 00:07:29.760 not going to lend more money. 80 00:07:29.760 --> 00:07:34.360 The government created a new company called the South Sea Company. 81 00:07:34.360 --> 00:07:39.060 Now, if you think the Mississippi area was obscure to people at that time, 82 00:07:39.060 --> 00:07:43.460 the South Seas, that is, the Pacific, was unknown. 83 00:07:43.460 --> 00:07:49.360 Therefore, people were willing to risk even more money into the South Sea Company than in the Mississippi Company. 84 00:07:49.360 --> 00:07:54.960 Who knew what cities of gold existed in the islands of the South Seas? 85 00:07:54.960 --> 00:08:00.480 Somewhere near Antarctica, there might be just wealth to be made hand over fist. 86 00:08:00.480 --> 00:08:03.160 So investments were put into this. 87 00:08:03.160 --> 00:08:08.160 The government then started borrowing from the South Sea Company. 88 00:08:08.160 --> 00:08:15.320 And the same speculation that went on in France went on in England. 89 00:08:15.320 --> 00:08:21.000 And at the same time, the floor fell out of the South Sea Company, 90 00:08:21.000 --> 00:08:22.440 as it did the Mississippi Company. 91 00:08:22.440 --> 00:08:24.120 Both bubbles broke. 92 00:08:24.120 --> 00:08:34.440 And just as in France, in England, a new administration came in under Sir Robert Walpole and his associates, 93 00:08:34.440 --> 00:08:38.760 Henry Pelham, his chief aide at the Treasury, Pelham's brother, the Duke of Newcastle, 94 00:08:38.760 --> 00:08:45.800 who became Secretary of State for 40 years, and the Lord Chancellor Philip York. 95 00:08:45.800 --> 00:08:55.000 And they recognized that the cause of this inflation had been the prolonged war. 96 00:08:55.000 --> 00:09:02.320 And so they came to an agreement with Cardinal Fleury that they would not pursue a strong military policy. 97 00:09:02.320 --> 00:09:08.860 Each country would reduce their military strength because that was the only way of cutting taxes. 98 00:09:08.860 --> 00:09:13.660 And so the English administration drastically cut taxes, 99 00:09:13.660 --> 00:09:21.380 French administration did also, and the result was a miracle. 100 00:09:21.380 --> 00:09:30.620 Because with those cuts in taxes, with a hard money policy, 101 00:09:30.620 --> 00:09:33.400 Englishmen accumulated the capital that 102 00:09:33.400 --> 00:09:37.060 was available for the Industrial Revolution. 103 00:09:37.060 --> 00:09:44.700 Without this policy of low taxation, without this policy of reducing the national debt, 104 00:09:44.700 --> 00:09:49.140 without a hard money policy, there wouldn't have been the savings available to invest 105 00:09:49.140 --> 00:09:51.180 in the Industrial Revolution. 106 00:09:51.180 --> 00:09:58.240 And so our whole history was changed by the recognition of these men, of the fundamentals 107 00:09:58.240 --> 00:10:03.840 of economic ideas. 108 00:10:03.840 --> 00:10:08.920 And they stayed in power, as I indicated, Walpole for almost 25 years and Newcastle 109 00:10:08.920 --> 00:10:10.020 for even longer. 110 00:10:10.020 --> 00:10:12.760 They pursued a policy of deregulation. 111 00:10:12.760 --> 00:10:17.400 That is, they didn't repeal any laws, they just didn't enforce them. 112 00:10:17.400 --> 00:10:23.800 They appointed lots of friends to offices as tax collectors and other positions, and 113 00:10:23.800 --> 00:10:25.920 none of them did their jobs. 114 00:10:25.920 --> 00:10:26.920 And they didn't get fired. 115 00:10:26.920 --> 00:10:29.360 They were kept on for life. 116 00:10:29.360 --> 00:10:43.360 They all sat in coffee houses, drinking coffee, while all the goods of Europe came flooding in through the channel ports, along the channel coast. 117 00:10:43.360 --> 00:10:57.360 A policy which the French superintendent of commerce coined the phrase laissez-faire to describe. 118 00:10:57.360 --> 00:11:03.840 American historians describe this period because Americans were affected as part of the British 119 00:11:03.840 --> 00:11:10.240 Empire by this as the period of salutary neglect. 120 00:11:10.240 --> 00:11:16.120 For the first time, government was neglecting the people. 121 00:11:16.120 --> 00:11:25.120 No government official did any of their jobs, and it was in this period that America flourished. 122 00:11:25.120 --> 00:11:31.720 Before this period, America and colonies were few huddled people along the coast. 123 00:11:31.720 --> 00:11:36.160 It was during this period that America filled up with population. 124 00:11:36.160 --> 00:11:41.240 Immigrants came from England, from Scotland, from Ireland, from Germany. 125 00:11:41.240 --> 00:11:47.820 They filled America and pushed over across the Appalachians. 126 00:11:47.820 --> 00:11:58.820 The population increased by something of perhaps 10 times during this period. 127 00:11:58.820 --> 00:12:07.820 Without that huge population increase, it would have been impossible to even think of being independent of England. 128 00:12:07.820 --> 00:12:16.820 Unfortunately, the successors of Walpole and the successors of Fleury started fighting again. 129 00:12:16.820 --> 00:12:24.260 And in that war, England was completely successful. England defeated France and Spain. 130 00:12:24.260 --> 00:12:32.220 It conquered Havana and Manila, the West Indies, the East Indies, West Africa, Quebec and the Mississippi Valley. 131 00:12:32.220 --> 00:12:41.780 England achieved total domination, including in India, but at the price of the biggest national debt in the history of the world. 132 00:12:41.780 --> 00:12:46.940 And as soon as the war was over, they said, well, we're not going to pay this ourselves. 133 00:12:46.940 --> 00:12:51.700 You Americans are going to have to pay for this national debt. 134 00:12:51.700 --> 00:13:01.020 And if you don't, then we're going to quarter troops in your cities and collect the taxes. 135 00:13:01.020 --> 00:13:12.380 And that led to the Declaration of Independence, and to the War of Independence. 136 00:13:12.380 --> 00:13:22.740 Now when the war started, the great disciple of Cantillon and Gournay, the man who developed 137 00:13:22.740 --> 00:13:32.700 The idea of laissez-faire happened to be the Finance Minister of France, Turgot, the greatest 138 00:13:32.700 --> 00:13:39.460 French economist in the 18th century, and he told the king that the Americans would 139 00:13:39.460 --> 00:13:45.900 probably win the revolution on their own, but it would take a long time, and the longer 140 00:13:45.900 --> 00:13:50.680 it took, the more it would exhaust England, and the more England was exhausted, the better 141 00:13:50.680 --> 00:13:56.120 and the way they're all France would be, and therefore the king shouldn't interfere. 142 00:13:56.120 --> 00:14:01.720 But unfortunately, the foreign ministry and the defense ministry said, we can't let England 143 00:14:01.720 --> 00:14:06.960 be defeated without France looking like it did it. 144 00:14:06.960 --> 00:14:12.480 Otherwise, it's sort of second rate gain and balance of power. 145 00:14:12.480 --> 00:14:13.480 We have to jump in. 146 00:14:13.480 --> 00:14:18.520 So, Turgot was thrown out, a new finance minister brought in, who said, oh, I know how to do 147 00:14:18.520 --> 00:14:19.520 it. 148 00:14:19.520 --> 00:14:26.240 will increase the government debt and so France shared in the victory of the American Revolution 149 00:14:27.760 --> 00:14:34.160 and was rewarded with the French Revolution because the French Revolution was the attempt 150 00:14:34.160 --> 00:14:41.520 of the French government to solve the immense debt caused by joining in the American Revolution. 151 00:14:41.520 --> 00:14:55.720 And the French did that, 1789, very years that the new American government was being established. 152 00:14:55.720 --> 00:15:02.120 It was right after Washington was inaugurated as president, it was right after the new Congress 153 00:15:02.120 --> 00:15:08.000 was called that the French Revolution was beginning. Thomas Jefferson was ambassador 154 00:15:08.000 --> 00:15:13.340 of France during this period. He came back to Washington but kept constant touch with 155 00:15:13.340 --> 00:15:19.020 France. He knew day to day what was happening in France, and this very much affected his 156 00:15:19.020 --> 00:15:25.320 thinking and therefore the thinking of 19th century American politics. 157 00:15:25.320 --> 00:15:36.320 The French sought to solve the financial problem of the national debt by seizing all the church 158 00:15:36.320 --> 00:15:43.320 They were in search of properties and issuing bonds called Asenyats against them, 5% bonds. 159 00:15:43.320 --> 00:15:48.320 But month after month they issued more and more and more bonds, 160 00:15:48.320 --> 00:15:55.320 so that there were eventually 45 million Leroy of these bonds out. 161 00:15:55.320 --> 00:15:58.320 The inflation rate was incredible. 162 00:15:58.320 --> 00:16:05.320 In order to deal with that the French government instituted the so-called terror, 163 00:16:05.320 --> 00:16:10.220 Institute at Price and Wage Controls, anyone who would not accept the Asen Yachts, which 164 00:16:10.220 --> 00:16:13.680 was everybody, was subject to death penalties. 165 00:16:13.680 --> 00:16:19.780 It became so bad that finally Robespierre had to be overthrown and an attempt made to 166 00:16:19.780 --> 00:16:21.080 stabilize to some degree. 167 00:16:21.080 --> 00:16:22.080 They didn't succeed. 168 00:16:22.080 --> 00:16:23.600 They issued more and more. 169 00:16:23.600 --> 00:16:30.560 And the final result of that was a totally new government came in, that is Napoleon Bonaparte. 170 00:16:30.560 --> 00:16:42.840 He knew why the previous governments had failed due to inflation and so he put in a gold standard 171 00:16:42.840 --> 00:16:49.200 and France from that time until after World War. 172 00:16:49.200 --> 00:17:00.440 Everyone had a relatively stable monetary and political system. 173 00:17:00.440 --> 00:17:09.120 In fact, during the 20th century, some of the brighter economic political commentators 174 00:17:09.120 --> 00:17:15.240 have said, well, oh, poor France, it's so backward, because the majority of the population 175 00:17:15.240 --> 00:17:23.400 is still enthralled with gold. It's such a sad situation. 176 00:17:23.400 --> 00:17:32.300 But because of that, because of the peasants and the ordinary people being more conscious 177 00:17:32.300 --> 00:17:39.440 of gold than any other of the major Western democracies, America or England, this has 178 00:17:39.440 --> 00:17:46.000 has meant much more stability in France than would have been expected. 179 00:17:46.000 --> 00:17:58.160 And the French continued to look to gold as an important solution to the craziness of political spending. 180 00:17:58.160 --> 00:18:05.360 Jacques Rouef, Ludwig von Mises' renowned colleague, 181 00:18:05.360 --> 00:18:13.800 was an advisor to the French government when Juan Carrey, the former president, returned 182 00:18:13.800 --> 00:18:20.680 in 1925 as prime minister, as the head of the Blanc National, to throw out the left 183 00:18:20.680 --> 00:18:25.540 cartel de gauche and to install the gold standard. 184 00:18:25.540 --> 00:18:31.460 And France survived the Great Depression much better than any other country because it did 185 00:18:31.460 --> 00:18:35.000 not go off the gold standard. 186 00:18:35.000 --> 00:18:45.060 And when World War II ended, and temporarily due to the advice of the Americans, France 187 00:18:45.060 --> 00:18:52.440 had the benefit of a tripartite government that is the moderates, the socialists and 188 00:18:52.440 --> 00:18:58.040 the communists, and ran up huge debts as you can imagine. 189 00:18:58.040 --> 00:19:04.340 Finally, the people throughout, the ones that the Americans preferred and put in the ones 190 00:19:04.340 --> 00:19:12.100 As the Americans didn't prefer the extreme right, that is hard money people, in 1951, 191 00:19:12.100 --> 00:19:21.260 Antoine Pinet, the famous mayor of a city near Lyon, which is the center of the tanning 192 00:19:21.260 --> 00:19:29.900 industry, he himself, a man operating a tannery, became prime minister, and immediately put 193 00:19:29.900 --> 00:19:39.340 in gold-backed bonds and immediately the financial stability of France returned and the government 194 00:19:39.340 --> 00:19:50.560 was able to shift to a growth situation from the previous no-growth post-war situation. 195 00:19:50.560 --> 00:19:59.100 And when General de Gaulle came to power in 1958, he appointed Antoine Pinet as his finance 196 00:19:59.100 --> 00:20:04.500 The United States Minister with Jacques Rouef as his advisor, as Rouef had been in 1951, 197 00:20:04.500 --> 00:20:12.020 and they pushed the gold standard, just as de Gaulle continued to do as the American inflation 198 00:20:12.020 --> 00:20:23.820 began to burn and destroy the currencies of other parts of the world during the 60s. 199 00:20:23.820 --> 00:20:36.180 This week, President Mitterrand, who as you know came to Silicon Valley in March to find 200 00:20:36.180 --> 00:20:43.700 out how to have a growth economy, for some reason he stayed the entire time on the campus 201 00:20:43.700 --> 00:20:48.660 of Stanford University and never once went to one of the businesses in the area. 202 00:20:48.660 --> 00:20:56.980 He was surrounded by the National Bureau of Economic Research, econometricians, and I'm 203 00:20:56.980 --> 00:21:03.620 sure France will not challenge the United States if he's using those people as his advisors. 204 00:21:03.620 --> 00:21:12.060 This week, Mitterrand has declared that he will not abide by the bonds issued in 1974 205 00:21:12.060 --> 00:21:15.820 which were gold-backed. 206 00:21:15.820 --> 00:21:21.780 In 1974, the French government, after de Gaulle left power, in order to try and stabilize 207 00:21:21.780 --> 00:21:25.320 the finances, issued gold backbonds. 208 00:21:25.320 --> 00:21:33.680 Mitterand is saying they're too much of a channeling effect, they're too constraining 209 00:21:33.680 --> 00:21:40.780 for the government, which wants to do so much for the people by increasing the circulation 210 00:21:40.780 --> 00:21:47.620 through the bloodstream, as John Law indicated, by pumping as much new money into circulation. 211 00:21:47.620 --> 00:21:52.140 And this is going to create a new constitutional crisis in France, very similar to the one 212 00:21:52.140 --> 00:21:57.060 that went on in the spring and that he pulled back from, which was his attempt to destroy 213 00:21:57.060 --> 00:22:02.900 the private schools. 214 00:22:02.900 --> 00:22:10.580 Now this history, as I indicated, was very familiar to the American Founding Fathers. 215 00:22:10.580 --> 00:22:18.580 It was equally familiar to the writers on whom the Founding Fathers and their successors 216 00:22:18.580 --> 00:22:20.480 depended for economic ideas. 217 00:22:20.480 --> 00:22:29.340 That is, due to Thomas Jefferson, the two leading French economists of the beginning 218 00:22:29.340 --> 00:22:41.340 In the beginning of the 19th century, Bastute de Tracy and Jean-Baptiste Say were translated into English and published in Georgetown on the Potomac, 219 00:22:41.340 --> 00:22:49.340 and were used as the major textbooks in American colleges for economics until the end of the 19th century. 220 00:22:49.340 --> 00:22:55.340 And these were much more hard money than the English economists. 221 00:22:55.340 --> 00:23:01.300 and therefore American economic thinking was better even than the English 222 00:23:01.300 --> 00:23:07.100 economics thinking of the 19th century due to the two treatises by one by 223 00:23:07.100 --> 00:23:13.820 Destut de Tracy and one by Jean-Baptiste Say, both of which were translated 224 00:23:13.820 --> 00:23:20.860 through the efforts and probably by Jefferson himself. Probably that was the 225 00:23:20.860 --> 00:23:24.820 greatest legacy among many great legacies that Jefferson left to the 226 00:23:24.820 --> 00:23:42.620 American People. It was with these ideas in mind that Jefferson's successors, his disciples, 227 00:23:42.620 --> 00:23:50.260 especially those associated with Andrew Jackson and Martin Van Buren, that is the Democratic 228 00:23:50.260 --> 00:23:58.740 Party, so-called Second Democratic Party that came into existence in the 1820s, who centered 229 00:23:58.740 --> 00:24:04.060 their attention on destroying the monopoly of the Second Bank of the United States, the 230 00:24:04.060 --> 00:24:13.440 great monster as they called it, the great monopoly, in order to permit freedom of banking. 231 00:24:13.440 --> 00:24:20.720 It was the work of Say and destitute Tracy, it was the experience of the French Revolution, 232 00:24:20.720 --> 00:24:28.640 it was the experience of John Law, the Mississippi bubble on the one hand, and the experience 233 00:24:28.640 --> 00:24:35.140 of the great growth coming out of Walpole's salutary neglect, the Industrial Revolution 234 00:24:35.140 --> 00:24:44.060 in England and the huge agricultural growth in the American colonies. 235 00:24:44.060 --> 00:24:51.180 It was that background that made them recognize the dangers of a central bank and the great 236 00:24:51.180 --> 00:25:07.500 Contest that occurred about the bank, a contest that had huge popular support. 237 00:25:07.500 --> 00:25:20.740 Jackson and his policies were strongly supported by his followers, and the supporters of the bank were strongly supported. 238 00:25:20.740 --> 00:25:31.460 because these economic ideas were very closely connected to the more basic religious ideas 239 00:25:31.460 --> 00:25:36.060 of the period. 240 00:25:36.060 --> 00:25:44.300 Murray Rothbard has asked, how was it that while he can't get his students in class 241 00:25:44.300 --> 00:25:51.500 who have to pass exams to understand the importance of the debates on the tariff or the debates 242 00:25:51.500 --> 00:25:54.180 on money and banking. 243 00:25:54.180 --> 00:26:00.300 And yet, ordinary people in the 19th century would come out and march around the city for 244 00:26:00.300 --> 00:26:09.540 a whole afternoon or attend meetings all day to attack central banking, to attack the tariff, 245 00:26:09.540 --> 00:26:11.660 to support free trade. 246 00:26:11.660 --> 00:26:18.700 And he explains that the reason was that these people knew the connection between these more 247 00:26:18.700 --> 00:26:26.700 elevated issues and those more basic to themselves, namely sets of political issues coming out 248 00:26:26.700 --> 00:26:35.780 of their own cultural, moral and religious situations. 249 00:26:35.780 --> 00:26:44.300 Because the Jacksonian Democrats were opposing the Whigs and later the early Republicans, 250 00:26:44.300 --> 00:26:51.620 the Abraham Lincoln Republicans, who stood for a different set of values than did the 251 00:26:51.620 --> 00:26:55.180 Jacksonians and their supporters. 252 00:26:55.180 --> 00:27:06.940 What you had was a conflict between the Puritan ethic on the one hand, and those who were 253 00:27:06.940 --> 00:27:10.740 not of the Puritan ethic. 254 00:27:10.740 --> 00:27:15.460 Now this is a different Puritan ethic than we associate with John Calvin. 255 00:27:15.460 --> 00:27:26.740 In fact, the strict Calvinists in this period sided with the anti-Puritans. 256 00:27:26.740 --> 00:27:33.740 The reason was that this was a period when Puritanism had experienced a radical change 257 00:27:33.740 --> 00:27:38.140 from 16th, 17th and 18th century Calvinism. 258 00:27:38.140 --> 00:27:51.140 It was replaced by a more, a less traditional form of religious expression, 259 00:27:51.140 --> 00:28:07.140 emphasizing the idea of rebirth of some of the similar ideas that we've associated in the past with President Carter's religious ideas. 260 00:28:08.140 --> 00:28:10.900 Fine for those who held them. 261 00:28:10.900 --> 00:28:16.420 The problem was they quickly shifted from these as personal religious ideas and turned them 262 00:28:16.420 --> 00:28:18.380 into political ideas. 263 00:28:18.380 --> 00:28:24.420 They were not satisfied with their own salvation, but they were going to impose salvation on 264 00:28:24.420 --> 00:28:27.460 the rest of the population. 265 00:28:27.460 --> 00:28:35.100 And so whatever the value of their particular individual religious ideas when they became 266 00:28:35.100 --> 00:28:42.820 Part of a political framework were very much transformed, because just as they felt that 267 00:28:42.820 --> 00:28:53.980 a individual rebirth in Christianity would bring out a new man in a purely religious 268 00:28:53.980 --> 00:29:01.700 and moral sense, when they shifted from this as individual religion to political religion, 269 00:29:01.700 --> 00:29:09.240 They then said that in the same way you could create the new man who wasn't bound by traditional 270 00:29:09.240 --> 00:29:12.180 natural law, traditional human nature. 271 00:29:12.180 --> 00:29:16.380 You can see how different that is than traditional Calvinism. 272 00:29:16.380 --> 00:29:24.980 And so they felt just as the new man was not bound by previous restraints, the new man 273 00:29:24.980 --> 00:29:28.380 wouldn't be bound by things like the law of supply and demand. 274 00:29:28.380 --> 00:29:36.940 The new man, in a social-political context, would not be bound by this petty interest in hard money. 275 00:29:36.940 --> 00:29:43.980 Therefore, why not do, as John Law said, pump in something new into the economy? 276 00:29:43.980 --> 00:29:53.820 Let's have fiat money, because we're not bound by the old restraints that the rest of mankind had been bound by. 277 00:29:53.820 --> 00:29:58.060 Let's pump in government intervention in the form of tariffs, 278 00:29:58.060 --> 00:30:04.520 because we will protect the American economy and America will thrive because we're not 279 00:30:04.520 --> 00:30:10.220 bound by the laws of supply and demand. We are a new civilization. We've gone beyond 280 00:30:10.220 --> 00:30:17.120 that. You can see how much it's similar to, say, the French Revolution and Jacobin ideas. 281 00:30:17.120 --> 00:30:21.820 It's no longer anything we would recognize as a religious point of view. It's been totally 282 00:30:21.820 --> 00:30:25.860 secularized and became a secular religion. 283 00:30:25.860 --> 00:30:32.700 And one of the main vehicles for achieving this goal was to be the public school system. 284 00:30:32.700 --> 00:30:38.340 The public school system was invented in order since the existing adults who didn't agree 285 00:30:38.340 --> 00:30:39.340 were hopeless. 286 00:30:39.340 --> 00:30:40.940 They were benighted and couldn't be changed. 287 00:30:40.940 --> 00:30:47.220 But if we could get a hold of their children and mold them into seeing the value of central 288 00:30:47.220 --> 00:30:53.100 Financial Banking, seeing the value of government intervention, tariffs, government subsidies, 289 00:30:53.100 --> 00:31:00.400 how a whole new economy could be created, a vast flowering of the economy. 290 00:31:00.400 --> 00:31:08.220 And so the great issue for the individual people was the public school system, for example. 291 00:31:08.220 --> 00:31:14.020 Those who did not want to have their children forced into government schools also were against 292 00:31:14.020 --> 00:31:20.580 government tariffs, government banks, government money 293 00:31:20.580 --> 00:31:26.060 while those who wanted the public school system wanted other forms of control over the population 294 00:31:26.060 --> 00:31:35.260 the government control over money, fiat money, central banking, tariffs, subsidies 295 00:31:35.260 --> 00:31:39.940 and so you had a great civil war in the 19th century 296 00:31:39.940 --> 00:31:52.180 Unlike today, 85% to 95% of eligible voters voted because they were great issues at stake, 297 00:31:52.180 --> 00:31:56.660 whether or not the government was going to get control of your children, 298 00:31:56.660 --> 00:32:03.620 whether it was going to teach them a religion different than the one you wanted them to learn. 299 00:32:03.620 --> 00:32:11.460 And so, throughout the 19th century, there is an endless battle in this regard. 300 00:32:11.460 --> 00:32:18.900 Now, during the 19th century, insofar within the states, most of these battles occurred in the North, 301 00:32:18.900 --> 00:32:26.580 because southern states, the southern constituencies, totally rejected the puritan, secular puritan view. 302 00:32:26.580 --> 00:32:36.580 They were totally laissez-faire, totally Jeffersonian, totally influenced by the history of England and France and America in the 18th century. 303 00:32:39.580 --> 00:32:51.580 Unfortunately, the American South was defeated and occupied by the Puritan forces, and immediately the great benefits of government intervention were introduced. 304 00:32:51.580 --> 00:33:02.060 The public school was fastened on the southern states. Railroad subsidies, banking privileges, 305 00:33:02.060 --> 00:33:11.020 and in these reconstruction governments the end result was a astronomical debt for each southern 306 00:33:11.020 --> 00:33:19.740 state which held the south down until the 20th century. So the south during this period was a 307 00:33:19.740 --> 00:33:30.740 is a great center of support for laissez-faire, for liberty against government intervention. 308 00:33:30.740 --> 00:33:42.740 Unfortunately, bearing the burden of this immense debt, 309 00:33:42.740 --> 00:33:44.740 southern politics polarized. 310 00:33:44.740 --> 00:33:50.100 were some of the best, most hard-money people in the country were the so-called Southern 311 00:33:50.100 --> 00:33:56.580 Bourbon politicians, the great laissez-faire leaders of the post-Reconstruction period. 312 00:33:56.580 --> 00:34:01.220 But the debt was monstrous and heavy on the South, and so the South became one of the 313 00:34:01.220 --> 00:34:08.860 great centers of support for inflation. 314 00:34:08.860 --> 00:34:14.940 Having unfairly been, had this debt imposed on them, they were seeking another form of 315 00:34:14.940 --> 00:34:20.140 government intervention, inflation, to escape the burden of this immense debt which was 316 00:34:20.140 --> 00:34:23.540 breaking the back of the southern economy. 317 00:34:23.540 --> 00:34:34.120 And so, the end of the 19th century, the great debates about government intervention became 318 00:34:34.120 --> 00:34:49.520 More intense, in 1890, the Congress passed three major bills. 319 00:34:49.520 --> 00:34:58.680 One was the McKinley Tariff, which created extremely high tariffs obstructing free trade 320 00:34:58.680 --> 00:35:08.360 and Goods, and that created such a massive dislocation in the American economy that America 321 00:35:08.360 --> 00:35:13.400 suffered very much from a major depression. 322 00:35:13.400 --> 00:35:18.180 This was further intensified by the other acts that were passed. 323 00:35:18.180 --> 00:35:23.720 One was, since the main argument against the tariffs was that the tariffs would create 324 00:35:23.720 --> 00:35:29.960 Monopoly Companies Behind the Tariff Walls, which everyone recognized was true, Congress 325 00:35:29.960 --> 00:35:37.560 passed the Sherman Antitrust Act in order to try to keep down the growth of monopolies 326 00:35:37.560 --> 00:35:42.120 that would obviously grow behind the tariff walls. 327 00:35:42.120 --> 00:35:51.220 In addition, Sherman brought in the Silver Purchase Act, which mandated that the government 328 00:35:51.220 --> 00:36:01.720 issue four and a half million ounces of silver coin a month, which was a major inflationary 329 00:36:01.720 --> 00:36:08.840 measure and which contributed to the intensification of the depression that occurred. 330 00:36:08.840 --> 00:36:10.700 And so what was the answer? 331 00:36:10.700 --> 00:36:16.380 The answer was because the President of Cleveland, who was one of the most laissez-faire presidents 332 00:36:16.380 --> 00:36:20.820 and the most hard-money presidents, kept warning, this is a great danger, this is a great danger. 333 00:36:20.820 --> 00:36:27.560 He was repudiated and they said, the problem is we didn't inflate high enough, four and 334 00:36:27.560 --> 00:36:31.860 a half million ounces of silver a month wasn't enough. 335 00:36:31.860 --> 00:36:32.860 That was the problem. 336 00:36:32.860 --> 00:36:38.900 We have to have complete coinage of silver and repudiation of gold. 337 00:36:38.900 --> 00:36:46.940 And so the Democratic Party repudiated its hard money position, its anti-government intervention 338 00:36:46.940 --> 00:36:52.740 in position and put in William Jennings Bryan as the presidential candidate. 339 00:36:52.740 --> 00:36:57.940 He had swept the convention with his speech declaring that mankind would no longer be 340 00:36:57.940 --> 00:37:08.600 crucified on the cross of gold, forgetting the whole experience that Americans had known 341 00:37:08.600 --> 00:37:16.200 that mankind is crucified on the cross of paper money and saved through gold. 342 00:37:16.200 --> 00:37:26.560 And so his nomination totally reconstituted politics in America from then on. 343 00:37:26.560 --> 00:37:34.360 McKinley himself was nominated through the efforts of Mark Hanna to be presidential candidate, 344 00:37:34.360 --> 00:37:44.560 and Hanna arranged for the elimination from the Republican Party of all of the Puritanist 345 00:37:44.560 --> 00:37:50.320 leaders who were not able to get popular support, those who wanted to fasten the public school 346 00:37:50.320 --> 00:37:54.400 system on the population. 347 00:37:54.400 --> 00:38:00.240 He got them out of the party, the extreme Puritanists, and said, we have to have a Republican 348 00:38:00.240 --> 00:38:03.800 party in which those issues are not involved. 349 00:38:03.800 --> 00:38:07.700 We can't be involved in that because that will make us a minority party. 350 00:38:07.700 --> 00:38:12.920 What we want to do is to be open to all the people who are against Brian. 351 00:38:12.920 --> 00:38:17.280 We shouldn't stand for positive things, we shouldn't try to propose new things. 352 00:38:17.280 --> 00:38:24.720 We will defend the gold standard and otherwise let the Democrats propose new taxes, inflation, 353 00:38:24.720 --> 00:38:29.280 public schools, whatever, and all the rest of the population will find a haven in the 354 00:38:29.280 --> 00:38:31.720 Republican Party and form a majority. 355 00:38:31.720 --> 00:38:33.560 And that's exactly what happened. 356 00:38:33.560 --> 00:38:41.300 Now contemporary American historians, like most contemporary American scholars, are very 357 00:38:41.300 --> 00:38:53.300 and they look at the Brian election and say here is Brian who had the most left-wing program in American campaigns, at least in the 19th century. 358 00:38:53.300 --> 00:39:05.300 How is it he didn't get any working-class vote? Here he is calling for inflation, calling for government subsidies, all of the things that supposedly the working class wants. 359 00:39:05.300 --> 00:39:09.300 And yet, there's a mystery that he didn't get any of these votes. 360 00:39:09.300 --> 00:39:16.300 It must have been the capitalists secretly threatened the workers that they'd be fired if they were caught voting for Brian. 361 00:39:16.300 --> 00:39:18.300 That must be the reason, because we don't have any... 362 00:39:18.300 --> 00:39:23.300 There's no rational explanation, since workers must hate hard money. 363 00:39:23.300 --> 00:39:26.300 And of course, the explanation is workers love hard money. 364 00:39:26.300 --> 00:39:32.300 The working class flocked to the Republican Party, totally abandoned the Democratic Party, 365 00:39:32.300 --> 00:39:44.300 The Democratic Party swept the Republican Party into power, which it held really until 1932. 366 00:39:44.300 --> 00:39:47.300 And it was because the Republican Party stood for hard money, 367 00:39:47.300 --> 00:39:54.300 it was because the workers, more than anyone else, have to have a sound monetary system. 368 00:39:54.300 --> 00:40:00.300 They have to have their standard of living based on hard money. 369 00:40:00.300 --> 00:40:09.060 They became the base constituency as they had been really throughout the 19th century. 370 00:40:09.060 --> 00:40:16.220 But then as supporters of the laissez-faire democratic party, they shifted en masse in 1896 371 00:40:16.220 --> 00:40:24.700 in reaction to William Jennings Bryan and the inflation campaign. 372 00:40:24.700 --> 00:40:35.100 The Republicans continued to be helped by being open to all those frightened by the Democratic Party 373 00:40:35.100 --> 00:40:39.500 and not proposing anything themselves to frighten these voters from themselves 374 00:40:39.500 --> 00:40:45.340 by the fact that the Democrats nominated William Jennings Bryan three times for president. 375 00:40:45.340 --> 00:40:50.940 So these voters got so used to voting Republican to keep Bryan out of power 376 00:40:50.940 --> 00:40:58.780 that it fastened the Republican control on the Congress and on the country until 1932. 377 00:40:58.780 --> 00:41:05.340 Wilson was only able to be elected in 1912 because there were two Republican presidential candidates, 378 00:41:05.340 --> 00:41:09.580 President William Howard Taft and former president Theodore Roosevelt. 379 00:41:09.580 --> 00:41:13.580 They split the Republican vote and Wilson came in. 380 00:41:13.580 --> 00:41:21.980 In 1916, Wilson was re-elected only because the former Republican vice presidential candidate, 381 00:41:21.980 --> 00:41:27.180 the candidate on Theodore Roosevelt's ticket, Senator Hiram Johnson of California, 382 00:41:27.180 --> 00:41:33.900 told all of his supporters, don't vote for Charles Evans Hughes, cut the national ticket, 383 00:41:33.900 --> 00:41:40.140 and California, which hadn't gone Democrat, I think since it had been admitted in 1850, 384 00:41:40.140 --> 00:41:45.820 in 1916 went for Wilson and that's what elected him but so the Republicans in 385 00:41:45.820 --> 00:41:52.340 essence kept control until 1932 because of this hard-money constituency among 386 00:41:52.340 --> 00:42:06.180 the working class and I might as an aside mention that this hard-money 387 00:42:06.180 --> 00:42:14.980 Any working class constituency is, to some degree, paralleled by what is called the Tory 388 00:42:14.980 --> 00:42:18.420 working class in England. 389 00:42:18.420 --> 00:42:24.620 About 25% of the working class in England votes conservative, ordinarily. 390 00:42:24.620 --> 00:42:33.420 But if the working class, 30%, votes conservative, it means the conservatives will win. 391 00:42:33.420 --> 00:42:39.220 If less than 30, then it's a very close call. Margaret Thatcher has been getting 40 percent 392 00:42:39.220 --> 00:42:46.760 of working class vote, because the working class is the one most hurt by inflation. They 393 00:42:46.760 --> 00:42:53.020 don't have all of the gimmicks to escape that other people have, and so they are very, 394 00:42:53.020 --> 00:42:58.940 very sensitive to the inflation issue and very much supporters of hard money. 395 00:42:58.940 --> 00:43:12.420 Now, that support of the Republicans was destroyed in the 1920s when the Republicans became the 396 00:43:12.420 --> 00:43:19.780 main supporters of Prohibition, because Prohibition was a government intrusion that the working 397 00:43:19.780 --> 00:43:21.680 class did not like. 398 00:43:21.680 --> 00:43:27.900 And so they increasingly abandoned the Republican Party and created the base for the New Deal 399 00:43:27.900 --> 00:43:31.900 and the Federal Coalition of the 1930s and 40s. 400 00:43:31.900 --> 00:43:37.900 But if we look at the period since World War II, 401 00:43:37.900 --> 00:43:43.900 if we look at the nine elections for president that occurred 402 00:43:43.900 --> 00:43:49.900 from World War II until 1980, or the tenth one coming up, 403 00:43:49.900 --> 00:43:54.900 of those nine, the Republicans have won five and the Democrats four. 404 00:43:54.900 --> 00:44:01.860 In other words, the Republicans have controlled the White House more often than the Democrats. 405 00:44:01.860 --> 00:44:10.300 They haven't controlled Congress, but they've controlled the White House. 406 00:44:10.300 --> 00:44:14.180 And up until now, if you add those total votes from those nine elections, the Republicans 407 00:44:14.180 --> 00:44:20.460 have about a 25 million vote majority over the Democrats, because the Republicans have 408 00:44:20.460 --> 00:44:27.020 have tended to win big, and the Democrats have won narrow victories. 409 00:44:27.020 --> 00:44:34.020 Now the reason for that difference between the White House and Congress is that Democrats 410 00:44:34.020 --> 00:44:41.180 tend to choose presidential candidates against whom the massive people want to vote. 411 00:44:41.180 --> 00:44:46.880 And they tend to choose Republican presidential candidates who are not offensive to them, 412 00:44:46.880 --> 00:44:55.880 So they're willing to vote for the Republicans in order to keep out the Stevensons, the Humphreys, 413 00:44:55.880 --> 00:45:06.000 the McGoverns, Carter and Mondale, whereas quite often the Republican and Democratic Congressional 414 00:45:06.000 --> 00:45:08.600 candidates are not in the same situation. 415 00:45:08.600 --> 00:45:15.240 Local Democrats tend to choose people not much at odds with the local population and 416 00:45:15.240 --> 00:45:18.600 Republicans locally don't seem to know what they're doing. 417 00:45:18.600 --> 00:45:24.160 And so the result is that the presidential elections 418 00:45:24.160 --> 00:45:27.040 reflect something very different than the congressional elections. 419 00:45:27.040 --> 00:45:30.040 Also, many more people vote for president than for Congress 420 00:45:30.040 --> 00:45:34.200 because they feel they can understand that debate 421 00:45:34.200 --> 00:45:35.880 and choose between the candidates, 422 00:45:35.880 --> 00:45:38.240 and they don't know what the congressional candidates are saying, 423 00:45:38.240 --> 00:45:40.960 and so they keep out if they don't vote. 424 00:45:40.960 --> 00:45:43.880 They skip that line. 425 00:45:43.880 --> 00:45:50.760 But if you look at that election, those elections since World War II, 426 00:45:50.760 --> 00:45:57.800 you find that the first major Republican victory, that is 1952, by Eisenhower, 427 00:45:57.800 --> 00:46:04.760 came in the wake of both World War II and especially Korean War inflation. 428 00:46:04.760 --> 00:46:11.160 And Eisenhower was elected by a very strong support among workers 429 00:46:11.160 --> 00:46:17.000 who had experienced the burdens of inflation during the Korean War. 430 00:46:17.000 --> 00:46:23.720 And Eisenhower's government was a model for future voting in favor of the Republican Party 431 00:46:23.720 --> 00:46:29.400 because Eisenhower had very limited inflation during his presidency. 432 00:46:29.400 --> 00:46:32.520 Taxes were low. 433 00:46:32.520 --> 00:46:38.200 People continue to look back to the Eisenhower years as a golden age of laissez-faire, 434 00:46:38.200 --> 00:46:45.560 low taxes and low inflation and so many of these people voting Republican are continuing to see 435 00:46:45.560 --> 00:46:52.760 well maybe we can get another era like that perhaps we can get because under the Democrats 436 00:46:52.760 --> 00:46:57.320 it's a disaster and then the Republicans come in and they try to solve it and they make a mess of 437 00:46:57.320 --> 00:47:04.360 it trying to solve it there's a constant looking back to that period and to certain a large degree 438 00:47:04.360 --> 00:47:10.360 I think Reagan's image is much that he reflects for them the Eisenhower period 439 00:47:10.360 --> 00:47:16.360 of low taxes, low inflation, and low government intervention. 440 00:47:16.360 --> 00:47:21.360 And the question is whether that will continue into the future. 441 00:47:21.360 --> 00:47:29.360 Republican Party, up until 1980, among the under 40 generation, 442 00:47:29.360 --> 00:47:33.360 had only about 12% party recognition. 443 00:47:33.360 --> 00:47:40.360 Under 40, 50% of the people were independents. They didn't have party affiliation. 444 00:47:40.360 --> 00:47:50.360 Today we're seeing a massive expression of younger voters under 40 supporting Reagan over Mondale. 445 00:47:50.360 --> 00:47:56.360 Can that be translated into strength for the Republican Party for the long run? 446 00:47:56.360 --> 00:48:02.360 We don't know. These are people who are even more sensitive to the issues of inflation, 447 00:48:02.360 --> 00:48:06.360 and maybe even more hard money than previous generations 448 00:48:06.360 --> 00:48:13.360 because they've gone through this recent Carter inflation. 449 00:48:13.360 --> 00:48:18.360 And that's when they began to look around the world and understand politics 450 00:48:18.360 --> 00:48:21.360 and the first thing they encountered was the Carter inflation 451 00:48:21.360 --> 00:48:24.360 and the destruction of the American dollar, 452 00:48:24.360 --> 00:48:29.360 the great national shame of a low-value dollar. 453 00:48:29.360 --> 00:48:36.640 So they admire Reagan because he's made the dollar very strong, he's gotten rid of inflation. 454 00:48:36.640 --> 00:48:42.800 If the Republicans can continue to do that and otherwise not turn off these voters with 455 00:48:42.800 --> 00:48:49.840 extraneous issues, then they will be Republicans for the rest of their lives. 456 00:48:49.840 --> 00:48:56.700 But if the Republicans do not keep to a low inflation and low tax policy, or if they bring 457 00:48:56.700 --> 00:49:21.860 Thank you very much, Leonard. 458 00:49:21.860 --> 00:49:25.900 We just have a few brief minutes for questions and answers. 459 00:49:25.900 --> 00:49:31.300 Lew Rockwell, the executive director of the Mises Institute, would like to make a few closing remarks. 460 00:49:31.300 --> 00:49:33.500 So let's just take a couple of minutes now. 461 00:49:33.500 --> 00:49:42.500 Anyone has a question or comment for Leonard? 462 00:49:42.500 --> 00:49:43.940 Would you please use the microphone? 463 00:49:45.540 --> 00:49:52.140 I think there's a danger in your last comments that as this occurs, there's the potential 464 00:49:52.140 --> 00:49:59.100 Well, for a tremendous polarization in our society, as inflation goes rampant, the danger 465 00:49:59.100 --> 00:50:02.640 is not to the people in this room. 466 00:50:02.640 --> 00:50:06.100 Many of the people in this room are smart enough to use inflation to their advantage 467 00:50:06.100 --> 00:50:09.440 if that's the way the game has to be played. 468 00:50:09.440 --> 00:50:14.940 But as the Democratic Party becomes the party of the poor and the minority and the Republican 469 00:50:14.940 --> 00:50:19.500 Party becomes the party of the rich and the middle class, then I think that could lead 470 00:50:19.500 --> 00:50:30.100 Well, from the description that you've just presented, what you're describing is an overwhelmingly 471 00:50:30.100 --> 00:50:37.700 republican majority, the middle class being an overwhelming majority, and a very small 472 00:50:37.700 --> 00:50:43.100 democratic party, because the middle class is the largest, the working class, which is 473 00:50:43.100 --> 00:50:49.160 the main part of the middle class, is moving very strongly into the republican party. 474 00:50:49.160 --> 00:50:53.720 So what you're describing is something that if the Republicans keep to their principles 475 00:50:53.720 --> 00:50:59.840 could make them the dominant party for years and the Democrats are not going to have any 476 00:50:59.840 --> 00:51:06.000 important impact because they're going to represent such a small chunk of the population. 477 00:51:06.000 --> 00:51:11.800 Don't you think that will lead to a very frustrated 25% of this country? 478 00:51:11.800 --> 00:51:17.120 No I think, no I mean that what you're describing is really what the history of the world has 479 00:51:17.120 --> 00:51:23.860 has been for 10,000 years and I think the answer is that unlike other countries, the 480 00:51:23.860 --> 00:51:30.800 United States in the past and under Reagan currently is solving that by providing opportunity, 481 00:51:30.800 --> 00:51:36.000 by permitting saving, permitting investment, creating new jobs. More jobs have been created 482 00:51:36.000 --> 00:51:42.160 in 18 months, last 18 months in the U.S. than were created in Europe in the last 20 years. 483 00:51:42.160 --> 00:51:49.920 So I think the solution, it's because we don't live in a static society. 484 00:51:49.920 --> 00:51:55.840 The economics is never static, politics, to the extent that politics intrudes, then politics 485 00:51:55.840 --> 00:52:01.620 creates locks in conditions and creates, and it's only like an earthquake, it's only when 486 00:52:01.620 --> 00:52:06.160 the earth doesn't move that you have earthquakes because it builds up and builds up the tensions. 487 00:52:06.160 --> 00:52:16.080 And so, the more freedom, the less tensions, and if the Republicans hold to their current 488 00:52:16.080 --> 00:52:20.840 policies in terms of freeing up the economy in a radical way, then that won't happen. 489 00:52:20.840 --> 00:52:21.840 Did you want to follow up? 490 00:52:21.840 --> 00:52:22.840 Yes. 491 00:52:22.840 --> 00:52:28.840 I want to ask you the same question I asked earlier this morning about policy recommendations, 492 00:52:28.840 --> 00:52:32.720 about what kinds of things would you like to see, or what transition steps need to happen 493 00:52:32.720 --> 00:52:34.280 to get back to hard money? 494 00:52:34.280 --> 00:52:37.280 And I want to ask two related questions to go a little further. 495 00:52:37.280 --> 00:52:40.280 One is, do you see what proposals you're going to make? 496 00:52:40.280 --> 00:52:44.280 Do you see some of those being politically feasible in a kind of a subcategory, 497 00:52:44.280 --> 00:52:47.280 that is, with today's inflation being lower than it is, 498 00:52:47.280 --> 00:52:51.280 is it going to be tougher to get hard money through than it has been in the past? 499 00:52:51.280 --> 00:52:57.280 Well, insofar as you're asking for any technical response, 500 00:52:57.280 --> 00:53:02.280 we have better experts on that like Murray Rothbard to answer that. 501 00:53:02.280 --> 00:53:12.080 But in terms of the political implications, I would say that the problem is the political 502 00:53:12.080 --> 00:53:20.720 system, that there's no way to translate easily the wishes of the majority through our political 503 00:53:20.720 --> 00:53:29.720 system. 504 00:53:29.720 --> 00:53:32.320 The problem is that you have two political systems. 505 00:53:32.320 --> 00:53:37.720 You have the formal constitutional political system of Congress and presidency in the Supreme Court. 506 00:53:37.720 --> 00:53:45.420 But you have what's grown up for almost 200 years next to that and implementing that is the party system. 507 00:53:45.420 --> 00:53:52.720 And the problem is that you have the present two-party system in no way reflects what people's real views are. 508 00:53:52.720 --> 00:53:58.220 In other words, the party system is extra-constitutional. 509 00:53:58.220 --> 00:54:02.380 And most people don't vote in the primaries, for instance. 510 00:54:02.380 --> 00:54:08.140 So come November when they vote, which is what they're supposed to do under the Constitution, 511 00:54:08.140 --> 00:54:13.380 they are given two choices who don't represent them at all. 512 00:54:13.380 --> 00:54:14.540 So then what are they trying to do? 513 00:54:14.540 --> 00:54:17.720 They're trying to keep Mondale from being elected, so they have to vote for Reagan to 514 00:54:17.720 --> 00:54:19.340 keep him out. 515 00:54:19.340 --> 00:54:23.300 And since Reagan doesn't seem very threatening, they're willing to do that. 516 00:54:23.300 --> 00:54:29.740 But the problem is the party system, that there's no way for people to vote for people 517 00:54:29.740 --> 00:54:37.220 who really represent them because they participate in the official constitutional structure which 518 00:54:37.220 --> 00:54:38.420 is the November vote. 519 00:54:38.420 --> 00:54:44.860 They don't participate in the non-official, almost private, the two parties are really 520 00:54:44.860 --> 00:54:50.460 private organizations who happen to have a monopoly of the ballot. 521 00:54:50.460 --> 00:54:55.620 And so people who don't agree with that, who would stand for other issues, don't have any 522 00:54:55.620 --> 00:54:59.020 way of getting presented to the public. 523 00:54:59.020 --> 00:55:06.900 So the crisis is in that room. 524 00:55:06.900 --> 00:55:07.900 Further questions? 525 00:55:07.900 --> 00:55:16.660 Ken Leonard, thank you very much. 526 00:55:16.660 --> 00:55:18.500 Just a couple of brief items. 527 00:55:18.500 --> 00:55:31.500 First I've been asked to announce that Jim Turney has audio and video tapes for sale of the entire day seminar proceedings, either individually or in sets of the entire day. 528 00:55:31.500 --> 00:55:41.500 The audio tapes are already available for take-home. The video ones can be ordered. Jim has a sales table right outside the door. 529 00:55:41.500 --> 00:55:49.500 And finally, on a personal note, let me thank you for your attentiveness and the vigor you have brought to this seminar. 530 00:55:49.500 --> 00:56:01.500 I know a number of people today have raised the question of, well, what can be done, either from a public policy perspective or some other type of framework to institute some changes. 531 00:56:01.500 --> 00:56:06.500 And I don't pretend obviously to have any answers. I don't think any of us do. 532 00:56:06.500 --> 00:56:14.500 But perhaps at least a partial answer is to be found somewhat surprisingly in John Maynard Kane's general theory. 533 00:56:14.500 --> 00:56:20.500 Kane's toward the end of the book stated something that I think is worth thinking about. 534 00:56:20.500 --> 00:56:31.500 He said, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. 535 00:56:31.500 --> 00:56:35.500 Indeed, the world is ruled by little else. 536 00:56:35.500 --> 00:56:45.500 Keynes went on to say that practical men, who believe themselves exempt from any intellectual influences, are usually the slave of some defunct economist. 537 00:56:45.500 --> 00:56:54.500 Mad men in authority, who hear voices in the air, are distilling the frenzy of some academic scribbler of a few years back. 538 00:56:54.500 --> 00:57:01.500 So I think in large part the battle is an intellectual one. That is the first step indeed. 539 00:57:01.500 --> 00:57:07.500 And just like all of us here share a vision of the world, there are those who do not share this vision, 540 00:57:07.500 --> 00:57:13.500 who are just as firmly convinced that their view is the so-called true one. 541 00:57:13.500 --> 00:57:19.500 So an intellectual debate must occur, and the opposing parties must meet head-on 542 00:57:19.500 --> 00:57:27.500 and thrash out the visions not on the basis of polemics, but on the basis of rigorous logic and the weight of empirical evidence. 543 00:57:27.500 --> 00:57:37.000 We must go into that with the confidence that the rigor of our logic in the way of the historical evidence will confirm our views. 544 00:57:37.000 --> 00:57:40.000 Thank you very much for attending today. Let me give you Lew Rockwell. 545 00:57:44.500 --> 00:57:50.000 Thank you, Stephen. I want to thank all our very eloquent speakers and, of course, thank all of you for coming. 546 00:57:50.000 --> 00:57:56.000 I'm glad Steve mentioned Keynes. I finally realized today during Joe Peden's talk what Keynes was talking about 547 00:57:56.000 --> 00:57:58.760 about when he kept calling gold a barbarous relic. 548 00:57:58.760 --> 00:58:01.160 It was because, of course, all those barbarians wanted gold 549 00:58:01.160 --> 00:58:04.820 instead of Roman funny money back in the days, 550 00:58:04.820 --> 00:58:06.360 the last days of the empire. 551 00:58:07.440 --> 00:58:09.320 As you all know, or as I hope you all know, 552 00:58:09.320 --> 00:58:13.160 we're gonna have a dinner tonight honoring Ron Paul. 553 00:58:13.160 --> 00:58:14.320 And as a matter of fact, 554 00:58:14.320 --> 00:58:16.440 to answer one of the questions that someone asked, 555 00:58:16.440 --> 00:58:18.180 he's gonna be talking among other things 556 00:58:18.180 --> 00:58:20.400 about how we do get to a gold standard, 557 00:58:20.400 --> 00:58:24.260 what steps we might take to not to go back 558 00:58:24.260 --> 00:58:25.100 to a gold standard.