WEBVTT

NOTE The Civil War and Its Legacy

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You can see the embryo of the current institutions. You can see how the things originated and what the causes were and what the consequences were.

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So it's kind of like dealing with the microcosm of the current setup, of the current institutions and laws and agencies and all the rest of it.

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We will focus on, not exclusively, we will focus on the relationship of government and the economy. That's what my major interest in this is.

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We'll deal with other aspects too, but basically we'll deal with, the main thing we'll focus on is how does government intervene and what were the consequences and the causes of the intervention also.

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Most historians, when they deal with government intervention in the economy, sort of deal with the record of it.

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I mean, who did what? 1886, the Interstate Commerce Commission was passed, so forth and so on, but not dealing with the consequences, sort of like the Almanac, you know, sort of like looking at the Almanac saying, well, 1860, 1886, such-and-such law was passed.

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Economic historians, if they know any economics, which is not always the case, the problem with economic historians is half of them are historians who don't know any economics, the other half are economists who don't know any history.

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is one of the big problems in the discipline.

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At any rate, if they know any economics, which some of them do, then they talk about the consequences.

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What were the consequences of these government interventions, these actions, ICC or whatever?

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What happened after that? What was the result? What were the consequences, the economic consequences?

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We'll go into that. We'll also go into a third area, which even fewer people deal with.

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Namely, why do these interventions, why were they passed?

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Why do they come about? What were the motivations involved?

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One of the problems that still goes on, by the way, is when they deal with government,

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they deal with the president, historians, presidents, secretaries of state, secretaries of the treasury, whatever.

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They talk about these guys as if they came up from outer space.

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In other words, so-and-so became president in 1900, or so-and-so became head of the Interstate Commerce Commission,

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as if this person had no past, no associations, no nothing.

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and he just becomes there, Joe Zilch becomes president or becomes secretary of commerce or whatever

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he does some things for six or eight years and he leaves, he drops out of existence

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and that's the implicit assumption, most historical record of this stuff

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they don't say who these people were, who were they before, what were they doing before they became president

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before they became secretary of commerce, what did they do afterward? They had a life before and after

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If you examine the lives of these people before and after, you find some interesting things which hook up, explain the motivations of many of these interventions, many of the actions they took in office.

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The problem of motivation, for example, to give a very non-economic and a very simple reason here is this.

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Most people do not, they have economic motivations. I'm not saying economic motivation is the only motivation in political action.

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What I'm saying is, they tend to be hidden, they tend to be covered up. Historians have to work at finding out what they are.

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For example, to give a very simple example from the news last week, before the Manus case happened, which of course is a big case in New York City politics,

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just three days before that, the city council met and was supposed to have, the guy who was supposed to be the chairman of the city council,

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Council, which is an open spot, was Peter Vallone of Queens. That was sort of the

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traditional thing. Manhattan and Brooklyn got together, an unholy alliance,

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whatever you want to call it, Brooklyn democracy, the Brooklyn Democratic

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Party has been split wide open for many years. They got together for patronage

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reasons on the side of the former alliance of Manhattan to depose

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Vallone, not elect them, and elect Sam Horowitz of Brooklyn. It was a big

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The big struggle was Manhattan and Brooklyn versus Queens and the Bronx, it was the titanic struggle for power.

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Now if everybody stuck with their boroughs, the Manhattan-Brooklyn alliance would have won by one vote.

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A half hour before the vote took place, they took a straw poll in the Manhattan delegation,

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and the vote was unanimous in favor of the Manhattan-Brooklyn guy, Horowitz.

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A half hour later they take the real vote and one guy, Robert Dreyfus in Manhattan shifts his position, votes for Belloni, and Belloni wins by one vote.

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So then the press asked him, well, why did you change your vote?

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What did he say? He didn't say he did it for patronage or committee chairmanship, which he was going to get and stuff like that.

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He said, well, first of all, Stanley Friedman, the absolute boss of the Bronx Democratic Party, was asked,

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how will you reward Dreyfus? And he said, with my love.

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Dreyfus himself was asked, why did you change your vote? And he said, he's sweating, of course,

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because nobody in the Manhattan delegation has still talked to him to this day.

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He said, I did it because of my conscience and my duty to my God, God of my country.

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Anybody who believes that, you know, has extraordinarily naive.

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In other words, his official motive, what is he going to say?

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He did it because he sold out his borough for committee chairmanship or other patronage.

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He's not going to say that. He's going to say he did it for my conscience, for the public interest, the general wheel, the common good, all that crap.

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which is what he said. This is an obvious example. It's not always that blatant, but an historian, if I were an historian, if somebody else is a historian writing history in New York City politics and came to this Dreyfus question, he would not simply take Dreyfus' word for it.

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So Dreyfus said he did it for his God and country. Obviously he can investigate a little bit deeper. So this is something historians have to do in general when it comes to economic motivation. We will be doing that.

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There's one basic text in this course and two paperbacks, supplementary paperbacks.

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We had a problem with the text, this is typical by the way, the text I've been using for many

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years has been, it was the best economic history book even though it was quite old, was being

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kept in print because it was such a good book and all of a sudden as I was told it was in

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I ordered it. In mid-January they called me up and said, gee, it's out of stock. Gone.

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I had to fish around very quickly for a new textbook. I got one, but outside on things, I know the author is a friend of mine, never seen the book.

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I think it's going to be very good. We lucked out. Also, it's there, I think it's there in the bookstore, I think.

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This is Jonathan Hughes, it's called American Economic History

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I forget the publisher, but it's a red cover, sort of a reddish-brownish red cover

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That's the basic text

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Start with, well, I'll explain in a minute

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then there's two paperbacks

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Weinstein

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paperbacks

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a corporate ideal and a liberal state

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and Koko triumph of conservatism.

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Koko and Weinstein both deal with a very important era, which I'll talk a lot about later on,

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Einstein called it the Progressive Era, which essentially, there's some dispute about what the years were, but essentially 1900 and 1917, 1918, that period where most of the current government regulation was launched in almost every field you can think of.

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and so this is the Progressive Era, Weinstein and Kogler both deal with that

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Hughes deals with all of American history. We're going to start in the middle of the Civil War

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and it doesn't

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deals only a little bit with the Progressive Eras and it fits in nicely here

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Civil War to World War I and then after that we'll get to

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World War I and both Hughes and Weinstein and we'll see after that

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You know, after that. Start with Hughes. So, don't read Winston and Coco until later in the course.

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Until, I don't know, about half the course or something, maybe earlier than that.

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Because that deals with the recipe. We're going to begin with the Civil War, which is 1861-65.

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And start with Hughes, chapters 13 and 14.

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13 I think is the Civil War, 14 is Railroads, which is the next thing after the war is the Civil War.

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Basically what we're going to do is we're going to read Hughes chapters 13 and 22.

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That's the couple hundred pages which deal, start with the Civil War and end with World War,

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just before World War I or just before World War I.

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That's the first block of the course, Hughes chapters 13 and 22.

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Start with 13 and 14 and just keep going.

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There's no specific assignment for a specific day.

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Lectures are very important, a textbook is good for background and structure, lectures

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are important, I don't require attendance but attendance is suggested because I talk

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about one I think is important, obviously history is a huge area which you can deal

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with almost anything.

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The first thing to deal with here on the whole 19th century, the first thing I want to talk

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about, the political party system, is something called the New Political History, which has

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been going on now for about 20 years.

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It's very interesting, it's not all in itself, but it's very interesting stuff, what it deals

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with is something which other historians never dealt with, namely, how do people vote, why

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Why do people vote the way they do? Analyzing voting is known as voting behavior. I don't

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like the term, I just get stuck with it. Why do people vote? They try to correlate voting

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with other factors, religious factors, economic factors, geographic. They try to figure out

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why they vote for different parties. In the course of doing that, they found out different

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interesting things. First of all, there are party systems. In other words, we think of

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political parties, Republican, Democratic, that's about it. It's not just that. There

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There are systems which last for about 30 years or 50 years, and then it changes, even if the labels of the party are the same, the nature of the party changes fairly suddenly and sharply into a new system.

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So, for example, of course the problem is you don't know what system you're in when the system changes for quite a while afterward, because you don't know whether this is a temporary glitch in the system or whether it's an important one, so you have to use hindsight.

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But the first, there are, I think, maybe five party systems in the period we're dealing

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with here.

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The first party system, usually the United States, two parties, probably because of the

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way it's structured, the electoral laws, the fact we have a big country, we have to

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have coalitions, whatever, mostly a two-party system, although there have been third parties

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from time to time some importance. The first party system lasted from around 1796 to around

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actually 1815. It was the Federalists, we'll see what they represented, and the Democrat-Republicans.

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Then what happened was a very strange situation happened, not talked about much, from 1815

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to about 1825 there was only one party in the United States, it's a pretty dangerous

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situation to have only one party, it was the Democrat-Republican party, the Federalists

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died out because they were against the war of 1812, they were considered traitors, etc.,

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and they died out.

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Then a new party develops, a Democratic party, and we have from about 1828 a second party

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system, this is like one and a half in between I guess, second party system from about 1828

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to about 1854, there's precise dating is a little difficult but it's not, it's around

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that period, namely the Whigs, W-H-I-G-S, who essentially were successors of the Federalists

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and the Democrats, essentially successors of the Democrat-Republicans with certain exceptions,

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We'll get into what they meant, what the label meant 1854, the Whig Party dies out, the Republican Party comes in and we have a third party system which lasts from 1854 to 1896

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and that was the Republicans and Democrats and even though the Republicans and Democrats are still around, the party system changed drastically around 1896-1900

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1900 is something very different. I think we have about, let's see, the fourth party system, say from 1900 to 1932, some people say a little earlier, some people say later, around that, the fifth party system, 1932 to something, blank, 68, 80, most people think we're now in a sixth party system, a very confused situation, so this is

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32 to 50, let's say 60 something, 54 or whatever. So, we're now something in the six party system.

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One way of looking at the differences here, the third party system was very closely fought.

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Most people had thought the Republicans were dominant. They weren't really dominant very much.

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Only for the presidency, and even they were very close races.

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There was almost no period where the Republicans won both houses of Congress and the presidency.

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The fourth party system was a period of Republican dominance, except for Woodrow Wilson. The fifth party system was Democratic dominance, and right now it's sort of confused with a very high floating independent vote and Republicans winning most of the presidency and Democrats winning the House.

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so that's something like that

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one of the things that distinguishes all of this from the 20th century

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all of the 19th century, the parties were fiercely ideological

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in contrast to now, it's very difficult to figure out any ideology

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the political parties were not just

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ways of getting into office and getting patronage, of course they were that too, but they were also something else

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they were organized around ideology and principle, and they were very fierce about it

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Nowadays, of course, they claim to have principles. When you get to the campaign, they're trying to attract a big floating, independent vote. Everybody fuzzes up.

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So by November 1st or something, you can't tell the difference between when they're all moving toward the center to find the floating vote.

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In those days, there was no floating vote. There was no independent vote. Almost none.

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Everybody was either a Democrat or a Republican. Everybody hated each other. The other party had guts.

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A Democrat or a Republican was staunch. And you expected your nominees to be just as staunch.

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This is a staunch. If they started waffling, you just didn't go out and vote. No Democrat would vote Republican or vice versa.

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I mean, like voting for the enemy. What they do is they just wouldn't show up if this guy's waffling the hell with them.

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And so, in other words, the political candidates had to be even more militant during a campaign than they were the other times.

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They had to bring out the vote, because most votes for most races were close in most states, and Democrats had to be fiercely Democratic

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and attack the Republicans bitterly and vice versa to get their people out.

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There was always a lot more excitement, a lot more ideological differences, and a lot more excitement in 19th century campaigns that were worn out.

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It's very difficult to figure out any differences.

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So, the ideological differences were severe and tremendous.

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And also, the parties are extremely important because they're a way for the average person to have an influence on public affairs.

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In other words, in most cases, special interest groups take over.

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Legislatures and Congress and Cabinet, whatever, special interest groups looking for their own boodle will tend to take over. The average person hasn't got the time

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to get involved in this stuff. If you want to get, let's say you're in the sugar refining industry,

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you have your lobbyist down there working 24 hours a day trying to get a subsidy or a tariff for sugar,

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trying to subsidize sugar refining. The average consumer, you know the consumer will be screwed by this, the average consumer doesn't know anything about it,

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hasn't got the time to invest in it, and so goes by the fall.

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So in those days, what political parties were, they essentially mobilized the average person for an ideology, either to stop the special interests or to confirm them, either one way or the other, depending on what the ideology was.

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So an ideological party meant there was some way to get around the special interests. It was a way for the average person to get involved in politics and realize, to know if you're voting for Joe Turkey, he's not just Turkey, he's advancing your ideological interests, whatever they are.

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So it was an exciting time to be around, I think, in politics.

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Okay, basically, this group here, and this had a similar ideology, economic ideologies especially,

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all the way down to the 19th century, the Federalists, the Whigs and the Republicans had basically a similar ideological structure.

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The Democrats had a similar ideological structure throughout with certain differences obviously,

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but basically very hardcore considering their large parties trying to get an appeal to all sections and stuff like that.

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and stuff like that. The Federalist Whig Republican Group, their vision of the world, well, let's start with something else before we get to the economic part.

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One of the things that I was puzzled at for a long time before I could figure, find out the new political history told me the answer to this,

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I couldn't figure out this. The 19th century had a huge amount of interest on economic questions.

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banking, central banking, tariffs, everybody and his brother are out there writing illiterate pamphlets

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foreign against the tariff, foreign against gold and silver, foreign against the central bank

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I can't get my own students interested in it, and you're a captive audience

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why was everybody interested in economics? nobody's interested in economics now, almost none

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unless they're unemployed or something, or big inflation, it's very difficult to get people interested

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how come people are fascinated, but

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tremendously interested in the economic question

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and recondite obscure economic questions

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and the answer I think was

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given to us by the new political history, the so-called ethno-religious history

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what they found was that the voting, the mass of the population

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they didn't start off being interested in banking and the tarot, things like that, they started off being interested in

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religious questions, local religious political issues

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and they escalated from that to the economic

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The economic question, the consciousness was broadened, so to speak, the economic. Here's the way it worked.

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And here we have to get into religious history. All these things integrate.

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Fascinating thing about history, everything meshes together.

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What happens is that around 1830,

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around that, 1820s, 1830s,

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something crucial happened to American Protestantism.

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The American Protestant religion was transformed

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even though they kept the same word, Baptist, Methodist, etc., it totally transformed to something different

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before that

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it was essentially Calvinist

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you obey, you join the church, you obey the Calvinist creed, the law

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you obey God's law and presumably hopefully you'll be saved, or probably not

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that was basically

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a very simplified version of Calvinist credo. Something happens

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Protestantism in the 1820s and 30s with a revival movement

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with a revival movement, which we're now pretty familiar with, in those days

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Nobody is familiar with something big, brand new. It was originally in Europe

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and it comes to the United States

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and people are rolling on the ground and getting born again and things like that,

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getting converted

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and they get a new religion, really basically a new religion. The new religion

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basically is

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Crees don't matter. It doesn't matter what church you belong to. That's the beginning of the

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breaking up of American Protestant. Nobody cared. Nowadays most Protestants don't care if they join

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Baptist, Methodist, Presbyterian. It doesn't make any difference. In the old days, it made a big difference.

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Presbyterian, meant in your favor, you believe in the elect, general damnation, stuff like that

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Now, from the 1830s on, it didn't make any difference what church you joined, creeds were unimportant

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Everybody was a Protestant together

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That's why the YMCA and the YWCA were founded about that period

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Because we're all Christians, what difference does it make what creed you're in?

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We're all Protestant Christians, I should say

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And the basic view is this, everybody, in order to be saved

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Joining a church or being baptized isn't enough. You have to do a new thing called the baptism of the Holy Spirit. You have to be born again.

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You have to be born again through an emotional, mystical conversion experience. That's why you're rolling on the ground. It's often part of the conversion experience.

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So each person goes through these revival conversion experiences, and then each person has a free will to be saved.

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So this is a free will, each person has a theological free will, can either be saved or not

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and you have to try to achieve this mystical state or emotional state of being born again, baptism of the Holy Spirit

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and each individual is alone with God, there's no church, the church doesn't matter much here

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so the next step was that each individual can easily not be saved because his free will is weak

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So you have to have, if the church doesn't count much anymore, it doesn't matter about

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creed or anything, it's all you and God, therefore the state has to step in, this happened very

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early, the state, the government has to step in and stamp out temptation, try to get you

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to be saved by eliminating, stamping out temptation, there are lots of temptations, stamp out sin

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basically or occasions for sin.

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These new Protestants, sin was everywhere, almost everything was sinful, any kind of enjoyment

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with Sinful, Dancing with Sinful, Gambling with Sinful, all should be supposed to be outlawed

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because each individual is weak to temptation and particularly and especially demon-run

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liquor.

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The hysteria about liquor among so-called fundamentalist new products is enormous, still

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is.

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It's kind of odd because Jesus himself drank wine.

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It's kind of odd for protestants to drink grape juice, a communion.

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The only way I can grasp this is because these people believe that in order to be saved you have to have free will

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and in order to have free will your mind can't be clouded.

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See, if you drink liquor your mind is clouded and your theological free will is taken away from you.

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That's why these guys tended to be anti-slavery, not because they cared about slavery in the sense that most of us care about, liberty versus slavery.

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of Slavery. They cared about the slave's theological free will to be saved and be interfered with.

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So what clouds men's minds? Demon rum, liquor, preventing and therefore has to be outlawed,

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and especially and particularly the Antichrist, literally considered the Antichrist, the Catholic

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Church or the Pope in Rome. So the Catholic Church, the Pope was considered the Antichrist

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and Catholicism is supposed to be stamped out as much as possible.

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So we have then the local and state level.

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These things have not hit the federal level, but on local and state politics, all of the

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new Protestants, there are two divisions now of these new Protestants, the South, Southern

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Protestants who tended to be salvationists, those who believed that everybody should try

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to be saved and that's it.

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They didn't have this fanatical zeal to stamp out sin.

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the Yankee Protestants or the Northern Protestants did

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called Evangelical Pietism

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because part of the new creed in the North is

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that you can't be saved unless you try your best to maximize everybody else's salvation

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this goes beyond missionary work

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the usual idea of missionary work is to go and present

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the truth to everybody and hope they agree to it, this is very different

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this idea is if you don't try your damnedest to stamp out sin and save everybody else, you yourself won't be saved

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You have a tremendous zeal to stamp out sin.

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So you have this, that's how we put it, crusading spirit.

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The way they put it is, we have to achieve the kingdom of God on earth through these methods.

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We have to stamp out sin, we have to make the world, make America holy and make the world holy.

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This is the Messianic creed, the New Protestantism.

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So, this was the new product. It focused on several things.

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If they couldn't kick out the Catholics, if we had a free country, we try to keep out immigrants.

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If you can't keep out Catholic immigrants, they tried to do that. If they can't keep out Catholic immigrants, then

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Christianize, what they call it, Christianize the Catholics. We have to get the kids.

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They consider Catholics as being heathen and followers of the antichrist.

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Therefore, if there are any Catholics, unfortunately, we have to stamp them out by getting the kids and putting them into a Protestantized public school system.

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The public school system in the 19th century was not secular, it was Protestant. They read the Protestant Bible.

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In most jurisdictions, you had to be a member of a Protestant church in order to be a public school teacher.

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The whole idea is to get the Catholic kids and convert them, save them, because otherwise you yourself won't be saved.

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Stamp out liquor, outlaw liquor, this is going on since 1830

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And stamp out Sunday enjoyment, Sabbath laws

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Even in my day, when my wife was growing up in the South, you couldn't play baseball on Sunday, it was illegal

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So up until World War II, this is still going on in the United States, Sabbath laws

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Sabbath should be kept holy, should be able to do nothing on Sunday except go to church, period.

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Anything else is sinful and monstrous.

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Drinking on Sunday is the worst possible sin. It combines two of the great sins.

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Drinking itself is sinful.

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Doing anything, going to church on Sunday is sinful.

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Drinking on Sunday is like the double sin.

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I drove the pietas wild. These we can call the pietas.

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Now most of the people who took to this sort of fanatical deal were the so-called Yankees

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who already, even before this happened, what some call cultural imperialists, they try to shape everybody up

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this sort of people want to shape everybody up by force

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so the Yankees took to this like a duck takes the water

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hey, this is great, now what are Yankees? Yankees don't mean just northerners

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and the southerners used to say damn Yankees, they're much more specific than that

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They meant Yankee ethnic group or cultural group, essentially who started out, they were of course English descent,

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they started out in rural New England, not so much Boston, but rural Massachusetts, rural Connecticut,

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and then emigrated, they were big migrants, they emigrated, they populated most of the northeast.

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In other words, everybody in upstate New York, almost without exception, especially western New York, Buffalo,

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That whole area, the whole area, Genesee Valley, all that sort of deserted area, that whole area there.

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Plus northern Ohio, northern Indiana, northern Illinois, southern Wisconsin.

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That whole area was Yankee. In other words, when you say Yankee, it means everything from rural outside of Boston,

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not so much the city, but outside of Boston, west to around Chicago and so forth.

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Okay, that's Yankee. And so Yankees took to this, I'd say, like a buck takes a mortar.

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New England's stuck. The same thing is going on as fights are going on in California.

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It turns out that all the pro-public school people are Yankees. They were born in New England and immigrated.

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So, the idea of the public school is to shape up the Catholics, get the kids and convert them.

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So this is one group. The group, the party, there's almost a one-to-one correlation here

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The political party these people supported, almost to a man, were first the Federal, after 1830, the Whigs and then the Republicans.

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In other words, the Whig party and then the Republican party were essentially the WASP pietist party.

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Well, certainly, obviously a few exceptions here and there, but basically with mass voting behavior, if you were a pietist, a Yankee pietist, you were a Republican.

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Conversely, what happens then is, originally the Democrat Republicans were not the Yankees,

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the Yankees were the Federalists, the Democrat Republicans were the Dutch types, the Scotch-Irish,

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whatever.

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Later on, what happens is, the other big religious group now, coming into the United States,

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were Roman Catholics and high Lutherans, the Lutherans were split, there were low Lutherans,

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Piatists Lutherans, Scandinavian Lutherans, very much like Yankee Piatists, and German Lutherans and mostly High Church.

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The High Church Lutherans and Roman Catholics come to the United States with a very different creed.

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There are no holy rollers there, except for nowadays this little shot.

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Catholic Church is not what it used to be. I'm talking about, of course, before the 1930s or 1950s.

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At any rate, Catholic Church and High Lutheran Church, basically the idea is you achieve salvation through entering the church, through baptism and keeping the sacraments.

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The church takes care of salvation. You don't need the state to stamp out sin.

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So in other words, you have a much more libertarian basis right away.

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Second of all, sin is not everything enjoyable. The Catholic position and the High Lutheran position always has been.

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Obviously, if you're drunk a lot, this is sinful. On the other hand, if you're drinking in moderation, there's nothing wrong with it.

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So what? Much more rational view.

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Okay, so the Catholics and the High Church of Ludwig come to the United States

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and they don't worry about sin because they think a little church takes care of that.

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All of a sudden they'd be set by craze that they consider crazies.

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Rushing in to destroy bars, destroy liquor,

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trying to force their kids into a public school system.

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parochial schools, they can transmit their religious values to their kids

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who are these fanatics, who are these crazy, wasp crazies coming in and chopping up the bar

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are these for example, particularly the Germans, a very lovable group

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both German Catholics and German Lutherans

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in German culture

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you go to, the whole family goes to church and then they prepare to a beer garden

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charming beer garden, they play a brass band plays

333
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having a lot of quiet fun, all of a sudden the wasp crazy, the cary nation types come in with hatchets and chop up

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destroy the beer

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Sin! Sin! You have a total religious culture clash.

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So what we had for a hundred years, for ninety years,

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in the local and state level, constantly, because they were pests, the wasps were pests,

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because they believed that in order for them to be saved, they had to try to save everybody else.

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So they were constantly trying to outlaw liquor, constantly trying to outlaw parochial schools,

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and constantly trying to outlaw Sunday activity.

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Also, outlaw teaching in the German language, a special dig, say.

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Outlaw German schools altogether.

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So, the Roman Catholics and the High Lutherans,

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one-to-one, almost man-for-man, voted Democratic.

345
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So, what you had then,

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is that the Whigs and the Republicans were the pietist parties,

347
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the Democratic party, the Catholics,

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We call them liturgical groups. These are the pietists.

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And the other groups are called liturgicals. We emphasize liturgy.

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Liturgicals are almost all voted democratic. Some very interesting studies have been made in the different Lutheran synods.

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Lutherans are split into different, very high church Lutherans and moderately and then very low church, very pietist.

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And the voting record is such that the stuff is done on Midwestern voting.

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It turns out the highest church, the highest synod, which is the Wisconsin synod,

354
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Missouri Senate, almost all voted like 90% Democratic, 95% Democratic

355
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The Scandinavian Senate, which is all very low-church, voted like 10% Democratic, 90% Republican

356
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So you have, in other words, the pietist groups voting almost completely Republican

357
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The Catholics and Lutherans voting almost completely Democratic

358
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The Democrats were known, except for the slavery question, it's obviously a separate situation

359
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The Democrats were known as the party of personal liberty

360
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And the Republicans were known as the party of great moral ideas.

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Great moral ideas like stamping out liquor, stamping out sin, outlawing sin, things like

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that.

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The party of great moral ideas versus the party of personal liberty.

364
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So this is going on on the state and local level.

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This is what people are interested in in their gut.

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They're more interested in this than in economic questions.

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They were interested in having the church, or having their school, or outlawing somebody else's school, and having their liquor, having their liquor outlawed.

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This is gut stuff. Fierce fighting going on for a hundred years.

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So how did the economic picture come in? The economic picture came in this way.

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The, sorry, personal liberty, economically, I started to say this, I'll get back to this now, economically, the Federalists, the Whigs of the Republicans were statists, in other words they believed in big government,

371
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I'm going to go into different aspects of this in the next hour, and the Democrats were libertarian.

372
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They believed in minimal government, minimal free trade, laissez-faire, hard money, no

373
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government intervention, etc.

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So the interesting thing is how did the Democratic leadership, who were interested in the economic

375
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question, when they went to their local people, how did they convert local people to interest

376
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in economics and similar Republicans or Whigs?

377
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They did it by taking the religious issues and widening the consciousness of their constituents

378
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to the economic. In other words, Republicans or the Whigs would go to their people and say look,

379
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just as we need big government, local level, stamp out the sin, right?

380
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Right. We need paternalism at the local level, okay?

381
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Just as we need big government, local level, stamp out the sin, so we need big government on the federal level

382
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to increase everybody's purchasing power to keep out cheap foreign goods,

383
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effective tariff, increase purchasing power through inflation, through paper money,

384
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cheap credit for big public works, we need a whole big government structure

385
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so in other words, the Republicans say, yes, yes, of course

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so in other words, they show the application of the religious values of the public

387
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to economic questions. The democratic leadership did the same thing for their part

388
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they said, look, you see these WASP SOBs are trying to eliminate our liquor

389
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and eliminate our churches, our schools, etc., yes?

390
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These same guys want to have big government on the federal level to keep out cheap goods, to try to have monopoly privileges to their people, to different corporations or whatever, and they're trying to keep out, they're trying to have inflation which will rob the value of your purchasing power, they're trying to have government intervention, trying to have big taxes and so forth, the same way they're trying to have big government on the local level. So they widen the consciousness of their people, it will integrate it. So libertarianism on the local level meant libertarianism

391
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Stateism and economics, laissez-faire and economics, the same way, stateism on local

392
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level was translated into, Republicans into, stateism on the economic federal level.

393
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So that's what you had in the 19th century, you had a consistent, two consistent parties,

394
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consistent ideologies, both on local religious, social issues, such as liquor and school systems

395
00:37:07.340 --> 00:37:37.340
and things like that, versus a consistent libertarian position, and so minimal government on local social and religious questions was translated to minimal government on economic questions and vice versa for minimal government, maximal government, so to speak, on social and religious questions to the economic question, so that's why the people got interested and that solved my long-term question on this thing, how they got interested in money and banking and all that,

396
00:37:37.340 --> 00:37:50.340
Okay, so that was the two parties, that was the two ideologies, that was the two ethno-religious bases.

397
00:37:50.340 --> 00:37:58.340
In the Civil War, we had almost a one-party Congress. In other words, the South was almost all Democratic,

398
00:37:58.340 --> 00:38:05.340
or getting almost all Democratic, and the South, they were not Catholic, with the exception of the Southerners, they were not fanatics.

399
00:38:05.340 --> 00:38:10.980
Okay, so they were part of the Democratic coalition. When they left, when they seceded from the Union,

400
00:38:10.980 --> 00:38:14.880
it meant we had almost a one-party Congress, I mean, a total Republican Congress.

401
00:38:14.880 --> 00:38:19.580
At that point, the Republican Party used the opportunity, heaven-sent opportunity, so to speak,

402
00:38:19.580 --> 00:38:23.680
to put through their entire economic program, which they couldn't put through before.

403
00:38:23.680 --> 00:38:27.880
One of the things, the interesting thing that happened here is, that twice in the 19th century,

404
00:38:27.880 --> 00:38:34.080
once in around the 1830s, 1840s, and next time around the 1890s,

405
00:38:34.080 --> 00:38:39.080
The Democratic Party was becoming slowly but surely the majority party.

406
00:38:39.080 --> 00:38:41.480
We'll see in the 1890s.

407
00:38:41.480 --> 00:38:43.720
One reason is because

408
00:38:43.720 --> 00:38:48.480
maybe libertarianism was more attractive to the public. The second reason is that

409
00:38:48.480 --> 00:38:53.360
the demographics were such that Catholics were getting stronger relative to Protestants.

410
00:38:53.360 --> 00:38:57.040
There were more Catholic immigrants than there were Protestant immigrants, and the Catholics had a

411
00:38:57.040 --> 00:38:59.400
higher birth rate, as you probably all know.

412
00:38:59.400 --> 00:39:01.400
So the result of all this,

413
00:39:01.400 --> 00:39:05.840
of Higher Immigration and Higher Birth Rate is the Catholic Lutheran, High Church Lutheran

414
00:39:05.840 --> 00:39:07.840
were gradually becoming a majority.

415
00:39:07.840 --> 00:39:13.580
The first time this happened in the 1840s, we almost had, we're getting to have a solid

416
00:39:13.580 --> 00:39:16.920
democratic majority and then what happened is, of course, the split over slavery and

417
00:39:16.920 --> 00:39:19.760
the whole thing goes up the chute.

418
00:39:19.760 --> 00:39:23.480
Democratic parties split wide open on the slavery question and then we have the civil

419
00:39:23.480 --> 00:39:24.480
wars.

420
00:39:24.480 --> 00:39:25.480
That killed that.

421
00:39:25.480 --> 00:39:30.720
The next time, we'll see later on, it happened in the early and middle 1890s, the Democratic

422
00:39:30.720 --> 00:39:46.240
Okay, let's take a 10-minute break or so and come back to the second hour.

423
00:39:46.240 --> 00:39:51.400
The Republicans did, when the Civil War started, was to put through, since the Democrats had

424
00:39:51.400 --> 00:39:56.880
been more or less the majority, and as a matter of fact, the Democrats had won every presidential

425
00:39:56.880 --> 00:40:08.240
election signed from 1840 for about 20 or 30 years. With the Civil War, with a one-party

426
00:40:08.240 --> 00:40:13.560
Congress, the Republicans used the opportunity to push through their entire national status

427
00:40:13.560 --> 00:40:20.920
economic program. And first of all, of course, big government, very high spending and all

428
00:40:20.920 --> 00:40:37.920
and all that, an income tax for the first time in American history, a high protective tariff, which is one of the big Republican planks,

429
00:40:37.920 --> 00:40:41.820
Wigan, Republican, yeah

430
00:40:41.820 --> 00:40:44.580
Civil War

431
00:40:44.580 --> 00:40:45.840
precisely it

432
00:40:45.840 --> 00:40:47.440
income tax

433
00:40:47.440 --> 00:40:54.440
and protective tariffs

434
00:40:55.520 --> 00:40:58.920
to

435
00:40:58.920 --> 00:41:02.680
pay for the war effort and to build up a big machine

436
00:41:02.680 --> 00:41:04.580
also to pay for the war effort

437
00:41:04.580 --> 00:41:10.580
and also as part of the economic program, irredeemable paper money, in other words, before that we had a gold standard,

438
00:41:10.580 --> 00:41:22.580
gold and silver, really gold standard, hard money policy, to allow inflationary cheap money, paper money, the greenbacks were issued, also by the South,

439
00:41:22.580 --> 00:41:32.580
the South also did the same thing, but the North did it with ideological fervor, so-called greenbacks, meaning the green paper money we've got right now, right?

440
00:41:32.580 --> 00:41:38.580
The gold coins, of course, were gold color. Greenbacks are green.

441
00:41:43.580 --> 00:41:53.580
Also, in addition for allegedly financing the war effort, and also for its own sake, a high public debt, heavy deficit finance.

442
00:41:55.580 --> 00:41:58.580
The first part of the war was financed by greenbacks, but then the greenbacks began to depreciate.

443
00:41:58.580 --> 00:42:08.580
In other words, we got to the point after about two, three years of the war that one paper dollar is worth about 50 cents in gold coins.

444
00:42:08.580 --> 00:42:11.580
The dollar began to depreciate because it was inflationary.

445
00:42:11.580 --> 00:42:17.580
So in other words, if you went to buy a loaf of bread, if it was a dollar, in terms of gold coins, it was two bucks in terms of paper.

446
00:42:17.580 --> 00:42:24.580
So since the green banks were getting to the point of getting worthless, they had to shift to a public debt.

447
00:42:24.580 --> 00:42:32.940
Also, a national banking system, which we'll go into more detail a little bit later, which

448
00:42:32.940 --> 00:42:37.020
essentially outlawed state banknotes.

449
00:42:37.020 --> 00:42:40.940
Part of the Republican creed was a centralization, put everything in the hands of a central government

450
00:42:40.940 --> 00:42:41.940
as much as possible.

451
00:42:41.940 --> 00:42:46.060
With the Democrats, the idea is to have as little as possible in the hands of the federal

452
00:42:46.060 --> 00:42:49.380
government and then devolve on the states and have pretty limited state government also.

453
00:42:49.380 --> 00:42:52.260
And most of the stuff done by the public, by the people themselves.

454
00:42:52.260 --> 00:42:55.740
If you have anything done by government, it should be a state and local level, with almost

455
00:42:55.740 --> 00:42:56.740
nothing in the federal government.

456
00:42:56.740 --> 00:42:58.220
The republic is just the opposite.

457
00:42:58.220 --> 00:43:03.820
So we have national banks, national banking system, which means outlawing state banks

458
00:43:03.820 --> 00:43:06.700
and pyramid on top of a few Wall Street banks.

459
00:43:06.700 --> 00:43:07.700
We'll see that.

460
00:43:07.700 --> 00:43:08.700
We'll get to that later.

461
00:43:08.700 --> 00:43:15.540
I'm not going to spend too much time on banking, it's pretty technical, but it's important.

462
00:43:15.540 --> 00:43:21.420
And huge subsidies to railroads, which we'll get into next after we talk about the Civil

463
00:43:21.420 --> 00:43:29.980
Civil War, huge land-grant subsidies to railroads, giving away the public domain of railroads,

464
00:43:29.980 --> 00:43:37.380
huge privileged railroads.

465
00:43:37.380 --> 00:43:43.780
High excise taxes for the first time, there was some in the war of 1812, but mostly high

466
00:43:43.780 --> 00:43:50.580
excise taxes on two things in particular which continued on forever since then, namely, notice

467
00:43:50.580 --> 00:44:00.580
So what does the pietist note now? Liquor and tobacco. Two enjoyable occupations. Don't forget, nobody knew about lung cancer in those days.

468
00:44:00.580 --> 00:44:08.580
They were against tobacco because it was enjoyable, therefore sinful. As H. L. Mencken, my favorite writer, once wrote, defining Puritanism, he said,

469
00:44:08.580 --> 00:44:16.580
Puritanism is a person with a haunting fear that somebody somewhere might be happy.

470
00:44:16.580 --> 00:44:23.580
Okay, so, these high excise taxes still exist. You can't imagine how cheap liquor was before the Civil War. It was incredible.

471
00:44:23.580 --> 00:44:27.580
A gallon of top scotch was like, you know, 80 cents or something like that.

472
00:44:27.580 --> 00:44:33.580
And it wasn't just the prices. Of course, the price of the dollar is worth more than it is now, but most of it is due to the goddamn taxes.

473
00:44:33.580 --> 00:44:39.580
Huge excise taxes on liquor, which continue on. This contains permanent part of the American heritage.

474
00:44:39.580 --> 00:44:47.580
So if they couldn't outlaw liquor, they could at least slap a high tax on it. That's the point.

475
00:44:47.580 --> 00:45:03.580
And for the first time really in American history, certainly in the national level, conscription, the draft.

476
00:45:03.580 --> 00:45:18.580
And cracking down on dissenters, the suspension of habeas corpus, one of the basic parts of Anglo-Saxon law and also libertarian law, nobody can be jailed without being charged with something, with some crime, and then be tried for it.

477
00:45:18.580 --> 00:45:27.580
Lincoln suspended habeas corpus for the entire war, just locked people up if they were against the war effort, if they were in favor of peace with the South, negotiated peace with the South, he locked them up.

478
00:45:27.580 --> 00:45:32.580
There was an outlawing of dissent, which the Supreme Court said later on was unconstitutional.

479
00:45:32.580 --> 00:45:34.580
Not that it did any good. It was after the war was over.

480
00:45:34.580 --> 00:45:39.580
They said, metrospect, you had no right to do it.

481
00:45:40.580 --> 00:45:45.580
Cracking down on old newspaper editors or writers or against a favorite piece of the South.

482
00:45:45.580 --> 00:45:59.300
Okay, I think that's more or less it, that's more or less the entire bowl of wax.

483
00:45:59.300 --> 00:46:03.340
There was a, they put in, not because they were favorable, but because it appeased the

484
00:46:03.340 --> 00:46:11.980
western former types, the homestead law, and we'll get to that a little bit later.

485
00:46:11.980 --> 00:46:15.980
This is the basic state of the economic program, it's all put through, the high tariff, the

486
00:46:15.980 --> 00:46:20.780
high exercise taxes, inflationary and cheap money, public debt, nationalizing the banking

487
00:46:20.780 --> 00:46:28.820
system, big, huge subsidies to railroads, all these things, the Democrats, the laissez-faire

488
00:46:28.820 --> 00:46:32.980
party are against subsidies, they're against, in favor of minimal, no government intervention,

489
00:46:32.980 --> 00:46:41.180
in favor of free market, free trade, the very low budget, very low taxes, no subsidies,

490
00:46:41.180 --> 00:46:46.580
No Special Privileges etc. etc. So this is more or less a situation for the Civil War,

491
00:46:46.580 --> 00:46:51.860
with some exceptions obviously, just looking at it broadly.

492
00:46:51.860 --> 00:46:52.860
This is the Republican program.

493
00:46:52.860 --> 00:46:57.700
Now most of it continued on, since the Republicans were fairly dominant until about the 1870s

494
00:46:57.700 --> 00:46:58.700
because of the Civil War.

495
00:46:58.700 --> 00:47:02.700
For about 10 or 15, 20 years after the Civil War, Republicans maintained their dominance

496
00:47:02.700 --> 00:47:05.580
by what was called waving in the bloody shirt.

497
00:47:05.580 --> 00:47:09.260
This was done by some guy, some Republican campaigner.

498
00:47:09.260 --> 00:47:13.180
He waved a bloody shirt and as he said, beside the Democrats of the party of treason, the

499
00:47:13.180 --> 00:47:18.060
party of the rebellion and treason, they waved the shirt of some soldier who died in the

500
00:47:18.060 --> 00:47:19.060
northern cause.

501
00:47:19.060 --> 00:47:23.020
Here's the, this is the shirt of Hiram Jones who died from, you know, local Illinois or

502
00:47:23.020 --> 00:47:24.020
somewhere.

503
00:47:24.020 --> 00:47:27.220
If you vote Democrat, you betray the Civil War and stuff like that.

504
00:47:27.220 --> 00:47:30.060
This, you know, this worked for about 20 years.

505
00:47:30.060 --> 00:47:36.460
By the 1870s it didn't work much anymore, but that was the, there was a famous phrase,

506
00:47:36.460 --> 00:47:43.380
This, by the way, in 1884 campaign, when Cleveland won, Cleveland was the first Democrat to win

507
00:47:43.380 --> 00:47:45.740
after the Civil War as president.

508
00:47:45.740 --> 00:47:50.220
And when he won, a very close campaign, and the thing that probably switched it was about

509
00:47:50.220 --> 00:47:55.460
a week before the election, a Republican law minister, actually being Republican, in New

510
00:47:55.460 --> 00:47:59.820
York, Reverend Burchard, attacked a Democratic party and said the Democratic party is the

511
00:47:59.820 --> 00:48:02.620
party of Rum, Romanism and Rebellion.

512
00:48:02.620 --> 00:48:05.180
Now notice these three things.

513
00:48:05.180 --> 00:48:09.980
This was essentially the pietist program, the republican program, summed up in one phrase.

514
00:48:09.980 --> 00:48:16.060
A democratic party is a party of rum, in other words, evil demon rum, liquor clouds men's

515
00:48:16.060 --> 00:48:21.540
minds so they can't get salvation, romanism, in other words, the roman catholic church,

516
00:48:21.540 --> 00:48:25.820
and rebellion with the southern side of the civil war.

517
00:48:25.820 --> 00:48:32.100
This is so angered, anybody who was sort of marginal type that had swung the election

518
00:48:32.100 --> 00:48:39.100
election of Cleveland, so angrily any neutrals or any moderates, this is monstrous, it was

519
00:48:39.620 --> 00:48:45.940
enough to turn enough votes against them to shift the election of Cleveland.

520
00:48:45.940 --> 00:48:49.700
And how much this lasted, the national banking, we never got out of the national banking system,

521
00:48:49.700 --> 00:48:55.820
we never achieved free banking as we had before the Civil War, Democrats were never able to

522
00:48:55.820 --> 00:49:01.260
get rid of this, so this was a permanent heritage until we got the Federal Reserve system in

523
00:49:01.260 --> 00:49:06.860
13. I'll get into that later. Essentially, as I say, outlawed state banknotes and left

524
00:49:06.860 --> 00:49:14.140
centralized the banking system on a few Wall Street banks, basing their issues on reserves

525
00:49:14.140 --> 00:49:20.340
on government bonds. We'll get into that later. We never got Jefferson and Jackson. Jackson

526
00:49:20.340 --> 00:49:23.460
was the only president, I think, but Jefferson did, too, to pay off the federal debt. Paid

527
00:49:23.460 --> 00:49:36.460
Jackson paid off the public debt. Jackson paid it off in his 1830s. The Republicans went under so much debt by the Civil War that it became impossible, of course, you know, it's happening now.

528
00:49:36.460 --> 00:49:44.460
The protective tariff we ever got really rid of, the Republicans remained in power until the Wilson administration, Cleveland and Wilson, we never really got back down.

529
00:49:44.460 --> 00:49:52.460
We reduced it to some extent. It took many decades to get rid of that. The income tax we only got rid of because it was unconstitutional, declared unconstitutional.

530
00:49:52.460 --> 00:49:57.900
Greenbacks, they only got rid of by 1879, we finally got back to the gold standard

531
00:49:57.900 --> 00:50:00.940
tough titanic struggle to do that

532
00:50:00.940 --> 00:50:04.540
we never got rid of the high excise taxes on liquor and tobacco

533
00:50:04.540 --> 00:50:10.540
so these were permanent legacies of the Civil War, huge land grants stopped in 1873

534
00:50:10.540 --> 00:50:13.460
it started in 1862

535
00:50:13.460 --> 00:50:18.660
lasted to 1873, by that time most of the land was given away, well most of the Transcontinental Railways were built

536
00:50:18.660 --> 00:50:21.820
also they began to go bankrupt

537
00:50:21.820 --> 00:50:25.980
So it was an orgy of ten years of huge subsidies for the railroads.

538
00:50:25.980 --> 00:50:32.780
Conscription, of course, was over after the war, but it set a precedent for World War I and II.

539
00:50:32.780 --> 00:50:39.980
And outlawing dissent, they never survived during World War I and II. Of course, it stops after the Civil War is over.

540
00:50:39.980 --> 00:50:51.340
So much of this continues on as part of legacy to try to battle back from the tremendous increase of state power and status and the government intervention that took place during the Civil War period.

541
00:50:51.340 --> 00:50:54.980
What's happening, as a matter of fact, in American history, what we usually have,

542
00:50:54.980 --> 00:50:59.180
of course you can't really do this precisely, but if you could chart government intervention,

543
00:50:59.180 --> 00:51:02.540
the degree of government intervention in the economy and the society,

544
00:51:02.540 --> 00:51:04.900
starting with the 1780s,

545
00:51:04.900 --> 00:51:06.460
it starts very low,

546
00:51:06.460 --> 00:51:12.340
it pegs along more or less very low, then we get a war, we get the war of 1812, we get an increase.

547
00:51:12.340 --> 00:51:16.540
It took about twenty years to wash out the intervention of the war of 1812, excise taxes,

548
00:51:16.540 --> 00:51:23.540
inscription, banking mess-up, anyway, public debt, by the 1840s we get rid of that

549
00:51:24.840 --> 00:51:29.680
and we get to the Civil War, we got a huge increase, we never really get rid of it, so it sloughs off a bit

550
00:51:29.680 --> 00:51:35.160
and the 1900s increase, World War I, you have another big increase, World War II, another big one, that's about it

551
00:51:35.160 --> 00:51:39.580
most of the increase, except for the 1900 period, which is the progressive era

552
00:51:39.580 --> 00:51:42.340
most of the big increases in government eventually come in wartime

553
00:51:42.340 --> 00:51:49.340
usually a big legacy continues after the war is over

554
00:51:50.820 --> 00:51:52.540
okay the uh...

555
00:51:52.540 --> 00:51:56.700
one of the big

556
00:51:56.700 --> 00:51:58.160
one of the big uh...

557
00:51:58.160 --> 00:51:59.060
as I said

558
00:51:59.060 --> 00:52:02.100
we'll get into that in more detail later, one of the big interventions

559
00:52:02.100 --> 00:52:04.500
chapter thirteen by the way

560
00:52:04.500 --> 00:52:05.540
huge deals with

561
00:52:05.540 --> 00:52:11.860
was the civil war, did the civil war promote industrialization? I'll get to that next Thursday

562
00:52:11.860 --> 00:52:18.860
So one of the big programs of the government and Lincoln and Grant administration was huge subsidies to railroads

563
00:52:18.860 --> 00:52:22.860
The subsidies began really a little bit, to some extent, in the 1850s

564
00:52:22.860 --> 00:52:29.860
Railroads began in the 1850s. I want to take a... this gives you an idea of transfer

565
00:52:29.860 --> 00:52:33.860
First of all, I have to realize the significance of railroads in general. I have to realize something, a key thing

566
00:52:33.860 --> 00:52:39.860
Before, say, the 1830s or 1840s when railroads were first invented, before that, from the beginning of time until 1840

567
00:52:39.860 --> 00:52:45.860
1940, means from the year 5000 B.C. or whatever, there was no land transportation, ever, ever.

568
00:52:45.860 --> 00:52:50.860
You have to realize that, nobody moved on land, okay, you couldn't move on land, the

569
00:52:50.860 --> 00:52:57.380
movement was all on water, ocean and rivers, and that's it, okay, and only, you'd only

570
00:52:57.380 --> 00:53:02.860
live near an ocean or near a river, and so all the trade was going on, on ocean and river,

571
00:53:02.860 --> 00:53:05.860
there's no such thing as overland transportation, no roads, yeah.

572
00:53:05.860 --> 00:53:12.860
The point is, in any kind of a large scale, dirt roads, of course there's no automobiles, no trucks, and no railroads, so you've got dirt roads with carts and wagons and so forth, you can make it to the nearest river in good shape.

573
00:53:35.860 --> 00:53:41.860
So, the advent of the railroad was a fantastic thing. It was a tremendous thing for the world.

574
00:53:41.860 --> 00:53:46.860
It meant cheap land transportation for the first time. Cheap, efficient land transportation.

575
00:53:46.860 --> 00:53:49.860
Of course, so everybody wanted to get a hold. Before that, there were canals.

576
00:53:49.860 --> 00:53:53.860
I mean, if you couldn't have a river, you'd dig a canal from one river to the other.

577
00:53:53.860 --> 00:53:57.860
And so, in England in the 18th century, for example, you had a big network of canals.

578
00:53:57.860 --> 00:54:01.860
You could move from one place to the other inside the country.

579
00:54:01.860 --> 00:54:13.860
I'll give you an idea of the railroad. Therefore, the first big business, the first large-scale capital, was railroads.

580
00:54:13.860 --> 00:54:19.860
Manufacturing was never much of anything, it was not a big business until the 1890s.

581
00:54:19.860 --> 00:54:23.860
The first corporations, the first corporations were banks, it doesn't really count, something different.

582
00:54:23.860 --> 00:54:26.860
Governments were supposed to be a corporation, it doesn't count.

583
00:54:26.860 --> 00:54:32.220
The first real corporations were railroad corporations, the first amassing of large-scale capital

584
00:54:32.220 --> 00:54:37.100
so this is where you start with the railroads as the first big business

585
00:54:37.100 --> 00:54:39.240
and

586
00:54:39.240 --> 00:54:41.500
just to give you a little sketch statistic here

587
00:54:41.500 --> 00:54:45.300
mileage, total mileage in the United States

588
00:54:45.300 --> 00:54:47.520
canals

589
00:54:47.520 --> 00:54:50.020
and railroads

590
00:54:50.020 --> 00:54:52.700
total mileage all summed up

591
00:54:52.700 --> 00:54:54.640
in 1840

592
00:54:54.640 --> 00:54:57.600
There were 3.3 thousand miles of canals

593
00:54:57.600 --> 00:55:00.480
and there were 3.3 thousand miles of railroads. In other words,

594
00:55:00.480 --> 00:55:03.940
canals were just as important as railroads in 1840.

595
00:55:03.940 --> 00:55:07.640
Then it changes. In 1840 there was a big change.

596
00:55:07.640 --> 00:55:09.320
By 1850,

597
00:55:09.320 --> 00:55:13.720
there were 3.7 thousand miles of canals, 8.9 thousand miles of railroads.

598
00:55:13.720 --> 00:55:16.160
By 1860,

599
00:55:16.160 --> 00:55:20.320
there were 30.6 thousand miles of railroads. There was a big railroad boom in the fifties.

600
00:55:20.320 --> 00:55:24.260
We'll see later on why the industry in general took off in the fifties.

601
00:55:24.260 --> 00:55:26.660
Railroads began to take off in the 1850s.

602
00:55:26.660 --> 00:55:32.740
Canals began to die out, and if they stopped, if anything, it declined after that.

603
00:55:32.740 --> 00:55:38.120
Railroads are basically cheaper, except of course, you know, when they're right there

604
00:55:38.120 --> 00:55:44.120
in the Erie Canal or something. But basically, the railroad is a fantastic

605
00:55:44.120 --> 00:55:46.940
reducer, tremendous reducer of transportation cost.

606
00:55:46.940 --> 00:55:51.140
So at the beginning you have railroads from one teeny railroad to another, like Perth,

607
00:55:51.140 --> 00:55:59.140
The railroad network started with Amboy to New York, a big railroad, 30 miles or something, and as time goes on, they learn more, there's more capital investment, they learn more technology, etc.

608
00:55:59.140 --> 00:56:17.140
The railroads began to merge into a long line, so by the 1850s, certainly about the Civil War, the railroad network east of Mississippi was more or less built, and there was lots of mileage, and mostly merged into one long line.

609
00:56:17.140 --> 00:56:30.140
So you start off with, say New York, Philadelphia would have originally eight railroads, one New York to Perth Amboy, and then of course they'd integrate and they'd merge into one much more efficient to have one line from New York to Philadelphia, things like that.

610
00:56:30.140 --> 00:56:46.140
By the way, I forget now when this happened, I'll get to it a little later, but one interesting thing is, I bet you all of you think, it happened around 1879, 1880s or something, I bet you most of you think, where do these eastern standards, daylight savings, where do these eastern standards come from?

611
00:56:46.140 --> 00:56:50.140
Standard Time come from. You probably think it was imposed by the government at one point.

612
00:56:50.140 --> 00:56:54.140
The government, its wisdom, said, okay, we have Eastern Standard Time, we have

613
00:56:54.140 --> 00:56:58.140
Midwestern, Central, Mountain and Pacific. It was not done by the government.

614
00:56:58.140 --> 00:57:02.140
Originally there were about 80 different time zones.

615
00:57:02.140 --> 00:57:06.140
Every 10 miles you had a different time zone.

616
00:57:06.140 --> 00:57:10.140
Because nobody travels, nobody really gave a damn. If you couldn't travel,

617
00:57:10.140 --> 00:57:14.140
it took you two weeks to get from here to Boston. It doesn't matter, you can adjust

618
00:57:14.140 --> 00:57:21.140
So there are lots of times, every five miles, every ten miles you have a different time zone, like another ten minutes.

619
00:57:21.140 --> 00:57:28.140
You see, if you want to do it, I guess, technically, there's no such thing as a time zone. You don't have one hour when you get to Chicago.

620
00:57:28.140 --> 00:57:31.140
You know, when you get to Perth Amboy, you're adjusted by five minutes.

621
00:57:31.140 --> 00:57:35.140
I mean, nobody ever knows what the hell time it is. Nobody cares if you never travel.

622
00:57:35.140 --> 00:57:42.140
Everybody in Perth Amboy, here it's 4.30 and Perth Amboy might be 4.25. Nobody really cares.

623
00:57:42.140 --> 00:57:55.140
But the railroads, when they started, the Transcontinental Railroad, they started going from one, they couldn't mess around with it, they had to have a timetable, they had to have a schedule, they couldn't have 80 time zones.

624
00:57:55.140 --> 00:58:06.140
So the railroads got together in a convention, and they agreed on time zones, just arbitrarily, they said, okay, we'll have an eastern standard time, we'll have a western, central, and a mountain Pacific.

625
00:58:06.140 --> 00:58:10.140
it was the railroads that did it, the government had nothing to do with it, the government didn't care

626
00:58:10.140 --> 00:58:14.140
the railroads had an economic incentive to do something about it, they were losing money all the time

627
00:58:14.140 --> 00:58:18.140
by worrying about when the thing came, what time table it was, impossible, total chaos

628
00:58:18.140 --> 00:58:22.140
it was the railroads that brought order out of chaos on that

629
00:58:22.140 --> 00:58:28.140
by the way, the daylight saving time, which I presume the railroads are not responsible for

630
00:58:28.140 --> 00:58:30.140
it was a later invention of government

631
00:58:30.140 --> 00:58:34.140
it's still a little peculiar because some of the

632
00:58:34.140 --> 00:58:42.140
For example, Arizona is never going on daylight saving time, so that Arizona can never, you have to remember that they're still on standard time, things like that.

633
00:58:42.140 --> 00:58:49.140
At any rate, it was much more chaotic in the old days, before the, whenever it was, the 1880s, when the railroads had the agreement.

634
00:58:49.140 --> 00:58:53.140
Similarly, the railroads began to get together and say, look, we have to have a standard gauge.

635
00:58:53.140 --> 00:58:59.140
We're going to go from, the car is going to go from one track to the other, and every gauge is different size, you ain't going to make it.

636
00:58:59.140 --> 00:59:09.140
The railroad is on the other side of what the gauge should be, or again, in the interest of having an efficient, profitable and efficient railroad system.

637
00:59:09.140 --> 00:59:26.140
One of the railroad subsidies began really in the mid-fifties or so with, first of all, every one-horse town wants to have its railroad.

638
00:59:26.140 --> 00:59:30.940
Railroad, remember there's no roads, so every one horse town, gee we can't really prosper

639
00:59:30.940 --> 00:59:33.900
unless we have a railroad, so they begin to have subsidies to get the railroad to come

640
00:59:33.900 --> 00:59:38.900
through your town, beginning of over-building, it's one thing to have, don't forget in those

641
00:59:38.900 --> 00:59:41.700
days there were lots of railroads, every one horse town had about five railroads going

642
00:59:41.700 --> 00:59:47.100
through it, and so as a result of over-building of railroads there's a lot of subsidies on

643
00:59:47.100 --> 00:59:54.100
local level, on the state level, and finally on the federal level, so if you have by about

644
00:59:54.100 --> 01:00:00.100
In the late 1870s or so, you begin to have bankruptcies and collapses in the railroads, at any rate.

645
01:00:00.100 --> 01:00:10.100
The biggest railroad before the Civil War, the Illinois Central, which I think went from Chicago to New Orleans, I believe,

646
01:00:10.100 --> 01:00:17.100
was heavily subsidized and therefore politicized. In other words, the railroad was sort of a political railroad because they wanted subsidies.

647
01:00:17.100 --> 01:00:22.100
Most of the eastern railroads didn't have subsidies. They made it without a free market.

648
01:00:22.100 --> 01:00:25.980
And one of the subsidies began to buy politicians, so you begin to have a situation where

649
01:00:26.780 --> 01:00:29.120
Senator so-and-so was an Illinois Central man

650
01:00:29.780 --> 01:00:34.860
Was known as an Illinois Central person. This is what I meant before at the beginning of the two hours here

651
01:00:34.860 --> 01:00:38.860
I was talking about you have to know who these guys are before they become senators or whatever

652
01:00:39.940 --> 01:00:43.860
Stephen Douglas, for example, of the Democratic Party was an Illinois Central person. He was

653
01:00:45.780 --> 01:00:50.540
Hipped deep in Illinois Central, he was a heavy stockholder. He also owned a lot of

654
01:00:50.540 --> 01:01:01.540
There was a lot of real estate at the terminal in Chicago where the, he was a senator from Illinois, a democratic senator, where the Illinois Central was having its terminals.

655
01:01:01.540 --> 01:01:07.540
He was selling, he would sell the real estate to the Illinois Central, very heavily personally involved, then he'd go out in the Senate and lobby.

656
01:01:07.540 --> 01:01:17.540
So that was the, that was Douglas, I'm not going to go too much into him since he lost, he lost out for the presidency.

657
01:01:17.540 --> 01:01:24.900
At any rate, another person who did not lose out, who was also an Illinois Central person basically, was Abraham Lincoln

658
01:01:24.900 --> 01:01:28.660
Abraham Lincoln is known in the history books as a rail splitter

659
01:01:28.660 --> 01:01:33.540
The image of him in addition to being like Raymond Massey and speaking like Raymond Massey

660
01:01:33.540 --> 01:01:37.340
I don't know if he spoke like, not really spoke like Raymond Massey, he certainly looked like him

661
01:01:37.340 --> 01:01:42.060
Anyway, you see a picture of him splitting, he never split rails, a lot of nonsense, it's like

662
01:01:42.060 --> 01:01:46.300
it's like Reagan riding a horse on a ranch, that sort of thing, he never split rails

663
01:01:46.300 --> 01:01:50.140
He was a railroad attorney, a pretty wealthy railroad attorney, matter of fact.

664
01:01:50.140 --> 01:01:56.480
He was hired as a lobbyist by Illinois Central, for example, to get them their charter in

665
01:01:56.480 --> 01:01:57.480
1850.

666
01:01:57.480 --> 01:02:07.080
So he was a top railroad lawyer and was also mostly an Illinois Central lawyer.

667
01:02:07.080 --> 01:02:11.160
His wife's sister's father-in-law was a big shot president of the Louisville and

668
01:02:11.160 --> 01:02:13.060
Nashville Railroad, which is another big railroad.

669
01:02:13.060 --> 01:02:15.100
He was definitely a railroad person.

670
01:02:15.100 --> 01:02:21.660
He was a dark horse candidate for the Republican nomination in the 1860s, Seward was supposed

671
01:02:21.660 --> 01:02:22.660
to get it.

672
01:02:22.660 --> 01:02:29.660
Seward was a connector of Wall Street law practice and New York State.

673
01:02:29.660 --> 01:02:31.580
So nobody heard much about Lincoln.

674
01:02:31.580 --> 01:02:35.380
His campaign manager, brilliant campaign manager, essentially won him a nomination with Norman

675
01:02:35.380 --> 01:02:40.940
Judd, who was a Chicago lawyer, chairman of the Illinois Republican Party and a railroad

676
01:02:40.940 --> 01:03:02.940
The famous Rock Island Line, which went from Chicago to Omaha at the top of the very important terminus because it's from Omaha to the famous Union Pacific, which would start moving pretty soon to the transcontinental, to the west.

677
01:03:02.940 --> 01:03:08.940
The other guy who helped get on the nomination was Judge David Davis, an old friend of Lincoln,

678
01:03:08.940 --> 01:03:16.940
who before he became a judge, or was he before he became a judge? Judges are not always just sitting on the bench, they're often pretty active politically.

679
01:03:16.940 --> 01:03:24.940
He was a big shot at Illinois Central. He was a top person at Illinois Central.

680
01:03:24.940 --> 01:03:30.940
He also sold a lot of acreage at Illinois Central, something like Stephen Douglas did.

681
01:03:30.940 --> 01:03:43.940
So, what we have then is Lincoln himself, heavily involved in Illinois Central and also his two big campaign managers at the Republican Convention.

682
01:03:43.940 --> 01:03:48.940
He was definitely a Western Railroad person.

683
01:03:48.940 --> 01:03:54.940
The other interesting figure on the cabinet, I'm not going to go through the whole cabinet, the other interesting figure is the Secretary of Treasury.

684
01:03:54.940 --> 01:03:59.940
This involves with banking and deficits and so forth.

685
01:03:59.940 --> 01:04:15.940
The guy who was made Secretary of the Treasury, from Lincoln administration, Salmon P. Chase, a former Democrat, from Cincinnati.

686
01:04:15.940 --> 01:04:21.940
For some reason, Chase was always heavily in debt. He always needed money. I guess lots of it needed money.

687
01:04:21.940 --> 01:04:26.940
He needed a lot of money, even though his wife's father was one of the wealthiest landowners in Cincinnati.

688
01:04:26.940 --> 01:04:56.940
He owned half of Cincinnati, but he always needed money, so Chase was, the two guys who got him into office, lobbied to get him to be Secretary of Treasury, because he was an ex-democrat, so he wasn't really in big favor, were the Cooke brothers, Jay Cooke, the first famous banker, his brother Henry Cooke was a big-shot newspaper editor at Cincinnati, whatever, so Henry Cooke

689
01:04:56.940 --> 01:05:03.940
Jay Cooke was a banker in Philadelphia, went to Philadelphia, became a banker, sort of

690
01:05:04.580 --> 01:05:08.940
a moderate-sized banker, not too great-shaped. As soon as Lincoln, well they poured a lot

691
01:05:08.940 --> 01:05:15.940
of money into Chase's campaign, is estimated over the years, by 1864, in other words by

692
01:05:18.220 --> 01:05:23.820
the end of the Lincoln administration, Jay Cooke personally invested $100,000 in Chase's

693
01:05:23.820 --> 01:05:30.620
Chase's Campaign, Chase's political life, boodles, either subsidies, bribery, or campaign.

694
01:05:30.620 --> 01:05:36.460
$100,000 in the 1860s is enormous, it's over a million now, more than a million now I think,

695
01:05:36.460 --> 01:05:38.420
maybe more than five million or something like that.

696
01:05:38.420 --> 01:05:42.420
Enormous amount of money poured in to Chase's campaign by Cooks, they have a very close

697
01:05:42.420 --> 01:05:45.340
connection between Chase and Cook.

698
01:05:45.340 --> 01:05:50.540
So Cook gets, Cook pours a lot of money into Chase's political stuff, he lobbies to get

699
01:05:50.540 --> 01:05:56.940
Chase Dana, the Secretary of Treasury, and then what happens, the quid pro quo, after

700
01:05:56.940 --> 01:06:03.020
the greenbacks begin to fade out because they're appreciating or inflated, Cook, they put out

701
01:06:03.020 --> 01:06:07.740
a gimmick here, the National Banking Act, the gimmick is this, first of all, Cook gets

702
01:06:07.740 --> 01:06:11.420
from the Treasury Department the monopoly on the underwriting of all government bonds,

703
01:06:11.420 --> 01:06:15.060
huge amount of government bonds now pouring out to pay for the war effort. Cook gets the

704
01:06:15.060 --> 01:06:20.100
monopoly on, in other words, Cook was the first investment banker. He sets up the House

705
01:06:20.100 --> 01:06:27.060
The boss of Jay Cooke and Company in Philadelphia, Jay Cooke and Company, and he gets a contract

706
01:06:27.060 --> 01:06:30.620
from the treasury that Cooke has a monopoly on all floating and government bonds for the

707
01:06:30.620 --> 01:06:31.620
entire war.

708
01:06:31.620 --> 01:06:36.100
And that's how it happened, continued on from then on until the 1870s, except for one

709
01:06:36.100 --> 01:06:41.700
or two years, Cooke had a monopoly on all government bond issues, which is incredible.

710
01:06:41.700 --> 01:06:45.740
So this means that Cooke gets a rake-off on every government bond that's sold.

711
01:06:45.740 --> 01:06:47.740
That's the Chase-Cooke connection.

712
01:06:47.740 --> 01:06:56.740
The way politics works. Cook pours $100,000 into Chase's political career. Chase becomes Secretary of Treasury and grants Cook a monopoly on all government bonds.

713
01:06:56.740 --> 01:07:07.740
Cook is the first con man in finance. By con man, I mean this. You realize this is the days before the science of public relations had been invented.

714
01:07:07.740 --> 01:07:15.740
No PR man, no professional PR man, no Madison Avenue. Cook was the first guy to say, I got all these bonds, how am I going to sell them? Who's going to buy this stuff?

715
01:07:15.740 --> 01:07:22.140
He hires propagandists, he hires agents that comb the country, saying buy America and that

716
01:07:22.140 --> 01:07:23.140
sort of stuff.

717
01:07:23.140 --> 01:07:27.580
All this stuff, all these phony campaigns of government bond salesmen begin with Cook

718
01:07:27.580 --> 01:07:31.300
hiring pamphleteers to talk about the glories of government bonds, how government bonds

719
01:07:31.300 --> 01:07:35.620
are wonderful, how telling you can be wiped out by inflation, things like that.

720
01:07:35.620 --> 01:07:39.260
It all starts with Cook.

721
01:07:39.260 --> 01:07:45.420
So this is number one, and then Cook gets, Cook decides the way to fix up the banking

722
01:07:45.420 --> 01:07:51.420
So the banking system is we outlaw state banknotes and we place, and that would create a national

723
01:07:51.420 --> 01:07:59.460
banking system, which was done in 1863, I think, and say that only national banks can

724
01:07:59.460 --> 01:08:00.460
issue banknotes.

725
01:08:00.460 --> 01:08:04.260
In other words, other banks can now, can still have deposits.

726
01:08:04.260 --> 01:08:08.340
You go to a checking account, you have a checking account, you still do that, but actual notes

727
01:08:08.340 --> 01:08:09.340
like paper money.

728
01:08:09.340 --> 01:08:13.300
In the old days, every bank used to issue paper money, say, they were payable in gold.

729
01:08:13.300 --> 01:08:17.800
You go to the bank of Great Neck, you get $10 bank of Great Neck, which they would

730
01:08:17.800 --> 01:08:22.180
have to pay gold on if you demanded it, and gold coins, or treasury notes, usually gold

731
01:08:22.180 --> 01:08:23.820
coins, and that's it.

732
01:08:23.820 --> 01:08:27.060
This is a free banking system, a free competitive banking system, which is pretty hard moneyish

733
01:08:27.060 --> 01:08:30.560
because no bank could expand very much, couldn't inflate very much, because then they'd be

734
01:08:30.560 --> 01:08:32.780
called upon then for redemption.

735
01:08:32.780 --> 01:08:35.700
People from outside of Great Neck would start calling upon redemption, they wouldn't have

736
01:08:35.700 --> 01:08:36.700
the money, they'd go bankrupt.

737
01:08:36.700 --> 01:08:41.240
So it was a very tightly uninflated system, it was a very hard money system, which is

738
01:08:41.240 --> 01:08:43.880
which is of course what the Democrats were in favor of.

739
01:08:43.880 --> 01:08:47.360
Well now we have the Republicans come in, they've mainly created a system where state

740
01:08:47.360 --> 01:08:51.120
banknotes are outlawed, only a new thing called national banks, which didn't exist before,

741
01:08:51.120 --> 01:08:55.200
there were no national banks, every bank was chartered by the state government, some state

742
01:08:55.200 --> 01:08:56.200
government.

743
01:08:56.200 --> 01:09:00.440
Now we have new things called national banks chartered by the federal government, which

744
01:09:00.440 --> 01:09:05.920
had to be very large, in other words, a few large banks, mostly on Wall Street, a few

745
01:09:05.920 --> 01:09:10.000
New York, Philadelphia banks, half a dozen banks, they become the basis of the whole

746
01:09:10.000 --> 01:09:14.720
The National Banking System, the banks now pyramid on top, before that we had individual

747
01:09:14.720 --> 01:09:22.720
banks, you have gold, issue maybe three times as many bank notes, now they can't do that

748
01:09:22.720 --> 01:09:27.440
because only a national bank can issue bank notes, the national banks, the state banks

749
01:09:27.440 --> 01:09:33.280
have to have accounts of the national bank to try to get bank notes, so you have to pyramid

750
01:09:33.280 --> 01:09:38.440
on top of the national bank, a few Wall Street banks, a few Philadelphia banks, these national

751
01:09:38.440 --> 01:09:43.000
National banks pyramid on top of what? They pyramid on top of government bonds. In other

752
01:09:43.000 --> 01:09:49.640
words, they can create credit, they can expand credit and money. Of course, how many government

753
01:09:49.640 --> 01:09:53.680
bonds they buy? They buy a thousand dollars in government bonds, they have five thousand

754
01:09:53.680 --> 01:09:58.580
dollars in bank credit, which the state banks then pyramid on top of. So in other words,

755
01:09:58.580 --> 01:10:03.060
the more government bonds they buy, the more they can pyramid inflationary credit on top

756
01:10:03.060 --> 01:10:07.400
of it. Okay, so the national banks, like, who do they get the bonds from? They get it

757
01:10:07.400 --> 01:10:12.720
only one person, Jay Cooke, he's got a monopoly, the Cooke lobbies for it and then they have

758
01:10:12.720 --> 01:10:17.120
to go to Cooke to get their money so they can inflate on top of it, expand credit on

759
01:10:17.120 --> 01:10:20.600
top of it, that was a racket, a magnificent racket, Cooke himself created a couple of

760
01:10:20.600 --> 01:10:22.960
national banks which he owned too.

761
01:10:22.960 --> 01:10:30.920
So we then have Cooke emerging from the war as a multi-millionaire, the top investment

762
01:10:30.920 --> 01:10:36.680
banker and mostly, he didn't have much money before the war started, he was a sort of moderate

763
01:10:36.680 --> 01:10:43.560
Banker, begins to get a lot from the Civil War. He was also a Republican, he was a Republican

764
01:10:43.560 --> 01:10:52.060
banker and tied in with the Republican Party and the Republican administration. So we have

765
01:10:52.060 --> 01:10:59.760
then Henry Cook as the editor of the top Ohio Republican paper, we have Jay Cook as an underwriter,

766
01:10:59.760 --> 01:11:05.560
monopoly underwriter and the only guy in the national banks can go to to get their government

767
01:11:05.560 --> 01:11:18.760
So, anyway, that was the chase, that was the chase connection, that was the way the Treasury

768
01:11:18.760 --> 01:11:25.680
worked during the Civil War.

769
01:11:25.680 --> 01:11:33.280
Okay, just to begin the Civil War question.

770
01:11:33.280 --> 01:11:38.280
It used to be thought until about 20 years ago, until about 20 or 30 years ago.

771
01:11:38.280 --> 01:11:43.640
The textbooks have a view, which of course, Hughes is not half, he's up to date, they

772
01:11:43.640 --> 01:11:47.040
had a view that the Civil War launched industrialization in the United States.

773
01:11:47.040 --> 01:11:50.760
The railroads, the manufacturing, all these things start with the Civil War, because the

774
01:11:50.760 --> 01:11:54.760
war gave a stimulus to industry.

775
01:11:54.760 --> 01:11:58.320
And this was in all of it, and therefore, there's a lot of textbooks.

776
01:11:58.320 --> 01:12:03.880
This was, finally I began to do some research and I found out, it's just the opposite.

777
01:12:03.880 --> 01:12:07.720
War retarded industrialization, which makes more sense, after all, the war is siphoning

778
01:12:07.720 --> 01:12:13.720
off a lot of effort, the war effort into armaments and stuff like that, which we didn't have

779
01:12:13.720 --> 01:12:18.240
time for any kind of fundamental improvement.

780
01:12:18.240 --> 01:12:23.320
So as a matter of fact, the take-off stage, as you could call it, industrialization really

781
01:12:23.320 --> 01:12:25.200
begins in the United States with the 1850s.

782
01:12:25.200 --> 01:12:30.600
This is, railroads began in the 1850s, so did industrialization, not as big as railroads,

783
01:12:30.600 --> 01:12:34.200
but everything really begins in the 1850s.

784
01:12:34.200 --> 01:12:37.840
Iron manufacturing increases by two-thirds in that decade, textile manufacturing goes

785
01:12:37.840 --> 01:12:43.680
up by two-thirds, interchangeable parts begin to come in, the whole concept of interchangeable

786
01:12:43.680 --> 01:12:46.600
parts really starts later, it begins to come in then.

787
01:12:46.600 --> 01:12:49.800
See, before that, and this by the way goes on from then, there's some new work being

788
01:12:49.800 --> 01:12:54.400
done claiming it's handicraft lasts for a long time, in the old days what you do is

789
01:12:54.400 --> 01:13:01.400
even when you have machines, craftsmen or mechanics, they go out there and they fit the machine

790
01:13:01.560 --> 01:13:07.560
and so there's a lot of hand work going on in each machine, a lot of expensive, obviously,

791
01:13:07.560 --> 01:13:12.560
hand work, with interchangeable parts, machine-made interchangeable parts means they can all be

792
01:13:12.560 --> 01:13:17.560
replaced easily, they fit together, you don't need hand fitting, it begins to come in in

793
01:13:17.560 --> 01:13:23.560
the 1850s, it really only reaches a peak with Henry Ford in the 1920s, mass production really

794
01:13:23.560 --> 01:13:39.560
1910s, really only begins with Henry Ford, but it begins to come in armories and stuff like that and also in some manufacturing in the 1850s.

795
01:13:39.560 --> 01:13:52.560
Arms factories, clocks, begins with things like that. But one of the reasons why armament comes in is because you want to be able to replace the arm with some piece of the rifle that's broken, you want to be able to replace it, obviously, and fit it in.

796
01:13:52.560 --> 01:13:58.860
So, it's a big advantage to do that. No new contribution begins, no new big

797
01:13:58.860 --> 01:14:04.960
contribution is in the Civil War, starts with the Civil War. As a matter of fact, the war

798
01:14:04.960 --> 01:14:08.400
delayed technological development. For example, the Bessemer steel process, which

799
01:14:08.400 --> 01:14:16.320
is a big thing in England right by the 1850s, a big advance, only really is

800
01:14:16.320 --> 01:14:19.920
adopted here after the Civil War because you haven't got time, you know, you have to

801
01:14:19.920 --> 01:14:26.920
and turn out, grind out arms, there's no time to retool and invest in the Bessemer of Steel process

802
01:14:26.920 --> 01:14:29.920
so that only after 1865 would that come in

803
01:14:29.920 --> 01:14:37.920
the, as a matter of fact, steel in general really just comes in

804
01:14:37.920 --> 01:14:45.920
and before that it was mostly just plain iron and the whole Bessemer of Steel you have the shift to a steel process

805
01:14:45.920 --> 01:14:59.920
and all the things like mechanization, beginnings of corporation, all these things, cotton textile manufacturing began to take off in the 1850s

806
01:14:59.920 --> 01:15:03.920
so all these things, you'll see more of that in Hughes

807
01:15:03.920 --> 01:15:11.920
and as a matter of fact, there tends to be a sort of breakdown in production

808
01:15:11.920 --> 01:15:16.920
because they're working the equipment too hard during the Civil War and it begins to break down.

809
01:15:16.920 --> 01:15:20.920
Productivity begins to fall and they can only replace it after the war is over.

810
01:15:20.920 --> 01:15:27.920
Okay, that's it. Time is up. So, the Hughes book.

811
01:15:27.920 --> 01:15:29.920
Okay, so I'm going to give you some statistics to show.

812
01:15:29.920 --> 01:15:31.920
I'm not going to give you too much statistics, I hope, of course,

813
01:15:31.920 --> 01:15:39.920
but to show that the Civil War had a retarding effect on industrialization instead of a stimulating effect.

814
01:15:39.920 --> 01:15:48.920
There are various ways to do this. There's a statistic or value added by manufacturing.

815
01:15:49.920 --> 01:15:55.920
It's a way of trying to find out in dollar form how much national income is added by manufacturing.

816
01:15:56.920 --> 01:15:58.920
What the hell is going on?

817
01:16:03.920 --> 01:16:07.920
Try to keep them quiet out there, otherwise they won't be able to have any air.

818
01:16:07.920 --> 01:16:36.920
A large class with no teacher is always an explosive combination.

819
01:16:36.920 --> 01:16:46.420
From 1849 to 59, in other words, the decade of the 50s, this went up by 76%.

820
01:16:46.420 --> 01:16:51.520
Now, you can't, there's no precise percentages here, and of course you have to realize also

821
01:16:51.520 --> 01:16:56.520
that as you get, as the economy grows, the percentages will probably decline, but at any

822
01:16:56.520 --> 01:17:05.840
rate, that's, but this is enough of a factor to begin, for 1859 to 69, plus 25%, a big

823
01:17:05.840 --> 01:17:12.840
slowing down, and then 1869 to 79, plus 82%. So again, you can see right away, you have

824
01:17:13.400 --> 01:17:19.600
a big jump, a big increase in manufacturing in the 50s, a slowing down of the 60s. A lot

825
01:17:19.600 --> 01:17:25.480
of this, if you could have figures from 60 to 65, probably you might be much lower.

826
01:17:25.480 --> 01:17:30.920
And the 70s, bouncing up again to a big increase. So this is just one indication of a lot of

827
01:17:30.920 --> 01:17:42.200
Pig Iron Production, very important, by the way, about half of Pig Iron went into railroad,

828
01:17:42.200 --> 01:17:54.800
building of railroads in this period, railroad lines and cars or whatever, railroad track.

829
01:17:54.800 --> 01:18:21.800
1850 to 60 increased about 20% from 1860 to 65 increased by 1% and virtually stayed the

830
01:18:21.800 --> 01:18:34.800
the same, and from 1865 to 70, pig-armor production went up by 100 percent, and from 1870 to 80, went up by 130 percent.

831
01:18:34.800 --> 01:18:48.800
The big industrial boom, as we'll see later, took place after the Civil War, but also, even in the 50s, it was quite substantial, and the Civil War, everything got retarded, all real capital investment gets slowed down.

832
01:18:48.800 --> 01:19:03.800
Cotton textiles, another important manufacturing in that period.

833
01:19:03.800 --> 01:19:09.860
This is a cotton consumed in manufacturing, which really means raw cotton consumed in

834
01:19:09.860 --> 01:19:10.860
textile manufacturing.

835
01:19:10.860 --> 01:19:24.860
Okay, that's the figures we've got, 1850 to 60 was up by 47%, 1860 to 70 down by 6%,

836
01:19:24.860 --> 01:19:31.860
obviously almost all during the Civil War period, and 1870 to 80 up by about 48%.

837
01:19:31.860 --> 01:19:37.860
So once again we have a consistent pattern, we have a big increase to 50,

838
01:19:37.860 --> 01:19:42.860
It's slowing down, even getting declining in the 60s and going up again in the 70s.

839
01:19:42.860 --> 01:19:46.860
And it's almost all the statistics we have have the same kind of pattern.

840
01:19:46.860 --> 01:19:54.860
And when all the statistics sort of confirm each other, it gets a pretty firm conclusion.

841
01:19:54.860 --> 01:20:02.860
Same thing happened with farm machinery, manufacturing, and construction,

842
01:20:02.860 --> 01:20:12.340
And various indexes of business activity, all these things work in about the same way.

843
01:20:12.340 --> 01:20:18.060
The other interesting thing by the way, this is something completely different about prices

844
01:20:18.060 --> 01:20:19.780
which we'll get back to.

845
01:20:19.780 --> 01:20:25.060
Prices, this is something which is almost impossible for us to comprehend because nowadays

846
01:20:25.060 --> 01:20:27.180
we think of prices going up every year.

847
01:20:27.180 --> 01:20:32.840
We think inflation is liquid, it only goes up by 3% nonsense because what we used to

848
01:20:32.840 --> 01:20:40.200
In the 70s, prices were going up by about 14-15%, 10-20% every year, so when it goes

849
01:20:40.200 --> 01:20:43.480
down and only increases by 3-4%, we think inflation is like, not true.

850
01:20:43.480 --> 01:20:45.960
In the old days, prices used to go down every year.

851
01:20:45.960 --> 01:20:50.560
Prices used to fall by about 3% a year, it was magnificent.

852
01:20:50.560 --> 01:20:54.400
The reason is because supply of goods and services went up.

853
01:20:54.400 --> 01:20:57.960
As you have an industrial revolution, supply of goods increases, production increases,

854
01:20:57.960 --> 01:20:58.960
prices fall.

855
01:20:58.960 --> 01:21:06.960
Here we bring in some fundamental economics, if you're taking a little micro, you should grasp it.

856
01:21:06.960 --> 01:21:13.960
You have your good old supply and demand curve, which is the most important single thing to take out of micro.

857
01:21:13.960 --> 01:21:24.960
You have price on the y-axis, and you have quantity on the x-axis, and you have the demand curve, something like that.

858
01:21:24.960 --> 01:21:30.640
supply line which is vertical at any given point, as the supply of goods and services

859
01:21:30.640 --> 01:21:37.560
increases every year, prices are supposed to fall and since overall, as a progressing

860
01:21:37.560 --> 01:21:43.560
economy, a prosperous economy, especially in the 19th century, prices, supply, even

861
01:21:43.560 --> 01:21:47.000
now supply of goods and services keep going up, why aren't prices falling? Prices are

862
01:21:47.000 --> 01:21:51.040
supposed to fall and in the old days they used to fall all the time, every year they

863
01:21:51.040 --> 01:21:56.720
It was magnificent for the average person. It meant that usually wages remain about the

864
01:21:56.720 --> 01:22:01.200
same, the average wage, and of course the living kept going down every year, about 3%

865
01:22:01.200 --> 01:22:05.880
a year or something, so everybody knew in their heart and soul and gut that if they

866
01:22:05.880 --> 01:22:09.960
save money, the value of the savings will go up. It won't be wiped out by inflation.

867
01:22:09.960 --> 01:22:16.540
It will go up because of deflation. And so it did not have a depressing effect on business.

868
01:22:16.540 --> 01:22:18.960
Many historians think it must have been a depression. It wasn't a depression because

869
01:22:18.960 --> 01:22:24.700
because costs also fell, in other words, productivity went up, as capital equipment and technology

870
01:22:24.700 --> 01:22:28.880
improved and capital equipment was invested, supply of goods and services went up, costs

871
01:22:28.880 --> 01:22:33.560
went down and so prices fell, costs fell and profits remained, you know, remained, okay,

872
01:22:33.560 --> 01:22:35.400
profits were not wiped out.

873
01:22:35.400 --> 01:22:40.960
Everybody was happy, the average consumer improved, etc., etc.

874
01:22:40.960 --> 01:22:47.280
So this is the normal condition of the American economy from about 1800 to about 19, actually

875
01:22:47.280 --> 01:22:56.280
from 1800 to 1940, prices fell every year with one exception, and the exception was wartime.

876
01:22:56.280 --> 01:23:07.280
In other words, by the way, in England, in the great period of the Industrial Revolution in England, from about 1750 to about 1900, prices fell every year too, except during wartime.

877
01:23:07.280 --> 01:23:12.280
Get wartime means the government needs money fast.

878
01:23:12.280 --> 01:23:19.280
How are they going to get money? They create money by inflation. They print money one way or the other, print bank credit, various technical ways.

879
01:23:19.280 --> 01:23:27.280
The basic thing is they print money. As they print money to finance the war effort, the supply of money goes up, and the man curves go up.

880
01:23:27.280 --> 01:23:31.280
In other words, everybody's got more money in their pocket, and they bid up prices.

881
01:23:31.280 --> 01:23:38.280
And so, as the man curve goes up, if you have a lot of money, you can offset the increase in productivity.

882
01:23:38.280 --> 01:23:43.600
That's what happened, precisely what happened when the War of 1812, the Mexican War was

883
01:23:43.600 --> 01:23:51.400
too short just to happen, too limited, the Civil War, the enormous increase in money

884
01:23:51.400 --> 01:24:01.500
supply both north and south, World War I and World War II, and this whole period, and every

885
01:24:01.500 --> 01:24:08.000
all other time, except for 1896 to 1914, which for special reasons we'll get to later, when

886
01:24:08.000 --> 01:24:11.000
The prices went up slowly, about 2% a year.

887
01:24:11.000 --> 01:24:16.000
Aside from that, prices fell all the time during all this period except during wartime.

888
01:24:16.000 --> 01:24:18.000
The war, of course, was fairly short.

889
01:24:18.000 --> 01:24:24.000
Like, for example, a lot of jerks now who are Reagan administration apologists.

890
01:24:24.000 --> 01:24:30.000
The economists for the Reagan administration are apologists who face an interesting problem.

891
01:24:30.000 --> 01:24:34.000
Namely, Reagan promised to balance the budget by 1984.

892
01:24:34.000 --> 01:24:40.040
The deficit is about $200 billion a year and going up, I mean they keep saying, well it's

893
01:24:40.040 --> 01:24:42.320
going to go down $150 billion, don't you believe it?

894
01:24:42.320 --> 01:24:46.400
Okay, so the deficit is enormous every year, so how do you justify that?

895
01:24:46.400 --> 01:24:50.080
Somebody's got to, you know, you've got to come up with some kind of justification if

896
01:24:50.080 --> 01:24:54.880
you're a Reagan administration apologist, either actually working for it or spiritually

897
01:24:54.880 --> 01:24:55.880
working for it.

898
01:24:55.880 --> 01:25:01.280
So they say, well, after all it's not so bad if you take the proportion of the GNP, deficits

899
01:25:01.280 --> 01:25:07.580
deficits aren't that bad, only 5%. It was higher in World War II. In other words, deficits

900
01:25:07.580 --> 01:25:12.720
in World War II, since the GNP was lower, national income was lower, the proportion

901
01:25:12.720 --> 01:25:19.320
of the deficit to GNP was high, at 7% or whatever. Well, that's true. However, it's not much

902
01:25:19.320 --> 01:25:26.240
of an argument because the World War II that was only lasted for about two years, you know,

903
01:25:26.240 --> 01:25:34.480
I mean, it was a big burst of tremendous war financing in 1943 and 44, 45, that was it.

904
01:25:34.480 --> 01:25:36.800
And it was known by everybody, it was only a couple of years.

905
01:25:36.800 --> 01:25:37.800
This damn thing is permanent.

906
01:25:37.800 --> 01:25:42.120
It's a very different situation to have a burst of a deficit, it used to happen every

907
01:25:42.120 --> 01:25:45.540
war and then you'd try to wash it out afterwards.

908
01:25:45.540 --> 01:25:48.640
Very different from that to having a permanent deficit and leaning back and saying, ah, there's

909
01:25:48.640 --> 01:25:51.160
nothing wrong with it, it was worse than World War II.

910
01:25:51.160 --> 01:25:54.800
That's the problem with that argument.

911
01:25:54.800 --> 01:26:00.000
At any rate, the, so prices used to fall all the time.

912
01:26:00.000 --> 01:26:05.920
As a result, prices around 1940 were about the same, and this is very rough, about the

913
01:26:05.920 --> 01:26:06.920
same as they were in 1814.

914
01:26:06.920 --> 01:26:08.640
It wasn't really that much difference.

915
01:26:08.640 --> 01:26:12.600
There was fluctuations in war and after the, you know, after war was over it would fall

916
01:26:12.600 --> 01:26:13.600
again.

917
01:26:13.600 --> 01:26:14.720
It would more or less pick up.

918
01:26:14.720 --> 01:26:20.080
So prices were fairly constant over a long period because you have, you have war prices

919
01:26:20.080 --> 01:26:23.960
falling in peacetime, punctuated by increases in war.

920
01:26:23.960 --> 01:26:29.000
So, you wind up something like that.

921
01:26:29.000 --> 01:26:31.960
And fully prices are good from any point of view, from the point of view of the consumer,

922
01:26:31.960 --> 01:26:37.080
from the point of view of the economic health and whatever.

923
01:26:37.080 --> 01:26:46.080
Any rate, to pick up on this, prices were about constant, I'm giving you wholesale prices

924
01:26:46.080 --> 01:26:51.520
now, to give you an idea.

925
01:26:51.520 --> 01:26:58.520
They fell in the 1840s, they went up a bit in the 1850s, so between 1840 and 1860 they were flat, constant.

926
01:27:01.440 --> 01:27:06.720
So 1840 to 60 constant prices.

927
01:27:06.720 --> 01:27:10.560
Again, this is a rough thing, but you don't need precision for this.

928
01:27:10.560 --> 01:27:16.040
1860 to 65, because of the tremendous inflationary policy, so-called greenbacks I mentioned last time,

929
01:27:16.040 --> 01:27:19.840
prices went up double, went up by 99%.

930
01:27:19.840 --> 01:27:23.520
In greenbacks, see, one interesting thing about that period was

931
01:27:23.520 --> 01:27:27.120
you could use gold, they didn't outlaw the use of gold, and in California and Oregon,

932
01:27:27.120 --> 01:27:29.800
where they discovered gold fairly recently,

933
01:27:29.800 --> 01:27:31.840
they were using gold coin

934
01:27:31.840 --> 01:27:34.000
in trade, so

935
01:27:34.000 --> 01:27:39.500
if the average person wanted to know the cause of inflation, you can obviously see the prices are doubling,

936
01:27:39.500 --> 01:27:43.000
they could see what it was because they took a paper dollar,

937
01:27:43.000 --> 01:27:48.080
they went to buy a loaf of bread or something, it cost two bucks in greenbacks, it cost only one buck in gold,

938
01:27:48.080 --> 01:27:55.080
It was obvious what the reason was. They couldn't blame it on speculators or capitalists or unions or anything like that, or aliens or speculators.

939
01:27:55.080 --> 01:27:58.080
It's obvious what the cause was. The cause was the goddamn paper.

940
01:27:58.080 --> 01:28:02.080
There was something wrong with the paper money, and what was wrong was it kept increasing all the time.

941
01:28:02.080 --> 01:28:08.080
At any rate, from 1860 to 1770, the increase was 46%.

942
01:28:08.080 --> 01:28:12.080
In other words, prices began to fall as soon as the Civil War was over.

943
01:28:12.080 --> 01:28:18.140
Just this half decade, if a doubling of prices, if you take the whole decade you have only

944
01:28:18.140 --> 01:28:23.640
going up by 50%, so it goes down, starts going down since the war is over.

945
01:28:23.640 --> 01:28:32.640
In the 1870s, 1870 to 80, prices fell by 26%, what a magnificent thing, 2.5% fall per year.

946
01:28:32.640 --> 01:28:36.920
Money supply kept going up for various machinations, but the increase in productivity, production

947
01:28:36.920 --> 01:28:42.040
was so great that it offset all the manipulations of the banks and so forth, and you have a

948
01:28:42.040 --> 01:28:52.200
of Fallen Prices. In the 1880s, 1880s, 1890, it had a drop of 18 percent, and many historians

949
01:28:52.200 --> 01:28:55.560
looking at this say, gee, it was a big depression in the 18th century, it wasn't a depression,

950
01:28:55.560 --> 01:29:02.400
everybody loved it. There was a fall in prices, there was a fall in costs, everybody was happy,

951
01:29:02.400 --> 01:29:06.840
yet the myth of the secular depression, the reasons historians are now thinking of prices

952
01:29:06.840 --> 01:29:10.160
going up all the time, I think something wrong with prices fall, these are the pressures,

953
01:29:10.160 --> 01:29:13.800
doesn't mean that at all and a little bit of stuff has been done on this in England

954
01:29:13.800 --> 01:29:18.440
but so far in the United States there hasn't been much re-casting of this in the light

955
01:29:18.440 --> 01:29:19.440
of the facts.

956
01:29:19.440 --> 01:29:22.640
At any rate, it wasn't just great stuff, it was magnificent.

957
01:29:22.640 --> 01:29:26.080
Someday it might come again.

958
01:29:26.080 --> 01:29:27.080
Falling prices.

959
01:29:27.080 --> 01:29:32.800
Okay, I'm going to get now to the land question, the key question for that.

960
01:29:32.800 --> 01:29:37.200
It's a key question by the way for all of the so-called third world which we have fortunately

961
01:29:37.200 --> 01:29:42.400
The Theory of Money escaped for various almost accidental reasons.

962
01:29:42.400 --> 01:29:50.600
First you start with the third world model, and this is obviously not true of every country,

963
01:29:50.600 --> 01:29:55.680
but basically it's true of most countries in South America, most countries in Asia.

964
01:29:55.680 --> 01:30:01.040
The model is this, you have peasants, and the peasants are working the land.

965
01:30:01.040 --> 01:30:06.240
Happy peasants with their native costumes, and they're making a living and all that in

966
01:30:06.240 --> 01:30:12.080
in fairly good shape, and all of a sudden, a foreign government comes in and conquers

967
01:30:12.080 --> 01:30:13.080
this land.

968
01:30:13.080 --> 01:30:14.880
Why does a foreign government conquer anything?

969
01:30:14.880 --> 01:30:15.880
What's the point?

970
01:30:15.880 --> 01:30:19.840
Well, as the usual historian, the usual historical view is that they do it for glory, for national

971
01:30:19.840 --> 01:30:21.240
sovereignty.

972
01:30:21.240 --> 01:30:23.600
I wouldn't say it's totally unimportant, but mostly nonsense.

973
01:30:23.600 --> 01:30:24.600
They do it for loot.

974
01:30:24.600 --> 01:30:32.160
In other words, in the case of South America, you have Indians who are peasants who are

975
01:30:32.160 --> 01:30:33.160
tilling the land.

976
01:30:33.160 --> 01:30:37.960
The Spanish come in, conquistadores, they take over, they not only establish a government

977
01:30:37.960 --> 01:30:42.760
there, they also parcel out the land, the key thing which is the story mostly overlooked.

978
01:30:42.760 --> 01:30:47.960
They take, you know, 40 warlords or something, 40 big shots in the Spanish army, in the Spanish

979
01:30:47.960 --> 01:30:51.840
period regime, and they parcel out the land between 40 people, right?

980
01:30:51.840 --> 01:30:53.960
So they have huge land of the states.

981
01:30:53.960 --> 01:30:57.040
The problem is not the size of the land of the state, the problem is you got the peasants

982
01:30:57.040 --> 01:30:58.440
there who thought they owned the property.

983
01:30:58.440 --> 01:31:03.140
All of a sudden they find, bingo, they don't own it anymore, in fact they have to pay rent

984
01:31:03.140 --> 01:31:09.860
rent, people call themselves landlords, and it's as if, I'll give you an example, my

985
01:31:09.860 --> 01:31:13.780
favorite analogy is, as if the Rockefeller family suddenly announced, we own all of New

986
01:31:13.780 --> 01:31:17.980
York State, and the land in New York, and the government passes a law, in the old days

987
01:31:17.980 --> 01:31:22.800
Nelson was the governor, they pass a law saying from now on the Rockefeller family owns the

988
01:31:22.800 --> 01:31:27.460
entire territory in New York State, so from now on we have to pay not only the crummy

989
01:31:27.460 --> 01:31:31.380
taxes we pay, which are enormous for New York, we also have to pay rent, huge amount of rent

990
01:31:31.380 --> 01:31:38.580
This is basically what happens in most countries, except it's mostly foreigners who come in.

991
01:31:38.580 --> 01:31:43.940
So in the United States this would be probably, even now it would be considered unconstitutional

992
01:31:43.940 --> 01:31:44.940
in the past such a world.

993
01:31:44.940 --> 01:31:49.300
In most countries they haven't got a constitution and you don't worry about that.

994
01:31:49.300 --> 01:31:56.400
So what you have is all of a sudden you turn around and by God you've got to pay land rent.

995
01:31:56.400 --> 01:32:00.960
Also in Latin this is the origin of the so-called peasant problem.

996
01:32:00.960 --> 01:32:05.640
The peasants thought they were landowners, all of a sudden they finally have to pay.

997
01:32:05.640 --> 01:32:10.040
And if you're an intelligent landowner, what you do is you squeeze the peasants to the limit.

998
01:32:10.040 --> 01:32:11.040
You're sort of like a slave owner.

999
01:32:11.040 --> 01:32:16.120
You take the peasants, you figure you can't tax all of his income and rent because he

1000
01:32:16.120 --> 01:32:17.120
wouldn't even starve.

1001
01:32:17.120 --> 01:32:22.360
You charge him enough rent to permit him to continue living and continue to raise a family.

1002
01:32:22.360 --> 01:32:29.320
That's basically, in other words, you tax, it's a rent tax over and above subsistence.

1003
01:32:29.320 --> 01:32:34.320
So you siphon off the landlords and build big palaces, and also they have to have a little army there to enforce this.

1004
01:32:34.320 --> 01:32:42.320
So what you've got, this is not, I'm not talking about landlords in the United States, but fortunately we've escaped this problem as we'll see in the next time, I guess.

1005
01:32:42.320 --> 01:32:58.320
Maybe this time. What you've got is an enforced theft of property on a massive scale, stolen by the foreign government, which then parcels out the property to Lopez, Gonzalez, or whatever.

1006
01:32:58.320 --> 01:33:02.720
and they suddenly find you have to pay rent to these people, plus the fact you have to

1007
01:33:02.720 --> 01:33:09.360
pay taxes to the same set of governors, the government is usually an executive committee

1008
01:33:09.360 --> 01:33:10.360
of these landlords.

1009
01:33:10.360 --> 01:33:15.360
So what you have, you pay the same group of people high taxes to support this whole thing

1010
01:33:15.360 --> 01:33:16.360
plus high rent.

1011
01:33:16.360 --> 01:33:22.920
That's the present problem and it's interesting when Marxist-Leninist movements, Marx's theory

1012
01:33:22.920 --> 01:33:26.180
is that the revolution would take place in the most advanced capitalist country, the

1013
01:33:26.180 --> 01:33:32.180
and the proletariat would rise up and take over. There hasn't been no communist revolution in any capitalist country.

1014
01:33:32.180 --> 01:33:40.180
All the communist revolutions have taken place in peasant countries, third world peasant countries, including Russia in 1917, which was essentially a peasant country then,

1015
01:33:40.180 --> 01:33:45.180
and of course China and Cuba and whatever, Vietnam, all these countries were peasant countries.

1016
01:33:45.180 --> 01:33:48.180
The problem was a peasant problem, nothing to do with the proletariat.

1017
01:33:48.180 --> 01:33:54.180
The peasants were being shafted, in the case of Vietnam, by the French who came in about 1890s, 1880s,

1018
01:33:54.180 --> 01:33:58.340
seized the land and parceled it out to various French landlords and also Vietnamese allies,

1019
01:33:58.340 --> 01:34:05.780
the so-called compradores and Marxist terminology.

1020
01:34:05.780 --> 01:34:09.900
And when the peasants were rebelling in Vietnam and China and Cuba, they were rebelling basically

1021
01:34:09.900 --> 01:34:11.500
against these landlords.

1022
01:34:11.500 --> 01:34:13.700
They figured they really owned the land.

1023
01:34:13.700 --> 01:34:14.700
They were private property people.

1024
01:34:14.700 --> 01:34:15.700
They hadn't read Das Kapital.

1025
01:34:15.700 --> 01:34:17.260
They didn't know from communism or anything.

1026
01:34:17.260 --> 01:34:18.260
They wanted their property back.

1027
01:34:18.260 --> 01:34:21.940
That was the whole key to these communist revolutions.

1028
01:34:21.940 --> 01:34:22.940
They were not interested in communism.

1029
01:34:22.940 --> 01:34:26.940
They just want to get their properties. That's the peasant problem.

1030
01:34:26.940 --> 01:34:35.940
Interestingly enough, in Vietnam, after the North Vietnamese made the Treaty of Geneva in 1954,

1031
01:34:35.940 --> 01:34:39.940
they were willing to abandon the South. They thought, all right, we have our Northern,

1032
01:34:39.940 --> 01:34:43.940
this is the theory of peaceful coexistence, we'll hold up on the North and hold up on the South.

1033
01:34:43.940 --> 01:34:46.940
The peasants in the South, as soon as the Americans came back there,

1034
01:34:46.940 --> 01:34:49.940
they started reinstalling the French and other Vietnamese landlords.

1035
01:34:49.940 --> 01:34:56.940
So they send around to each village tax collectors and rent collectors, both of whom were hated on site because they figured they owned their own.

1036
01:34:56.940 --> 01:35:03.940
Nobody likes tax collectors. In addition to that, you get the rent collectors for property which they felt they owned, and rightly so.

1037
01:35:03.940 --> 01:35:11.940
So what happened was, and nothing to do with communism at first, what happened was the South Vietnamese villagers started forming little guerrilla bands and popping off the rent collectors and tax collectors.

1038
01:35:11.940 --> 01:35:18.940
They come around, you shoot them. That was the first response. And they started shooting more. The government would send more.

1039
01:35:18.940 --> 01:35:24.940
and finally they told the communists, look if you don't join our, the communists were trying to shush them up at the beginning

1040
01:35:24.940 --> 01:35:31.940
this violates the peaceful coexistence policy, they said look fellas, you claim you're on our side, you're in favor of the peasants, either sign up or ship out

1041
01:35:31.940 --> 01:35:36.940
and so the communists then of course signed up and being better organized and being aided by the north they finally took over

1042
01:35:36.940 --> 01:35:44.940
but the initial impetus of the Vietnamese revolution was a pure peasant question, nothing to do with communism or Marxism or anything like that

1043
01:35:44.940 --> 01:35:52.740
All right, so we have the poor peasants being shafted by the feudal land system, that's

1044
01:35:52.740 --> 01:35:57.620
probably a bad term, I don't know what better term to use for it.

1045
01:35:57.620 --> 01:35:59.940
State-imposed land ownership.

1046
01:35:59.940 --> 01:36:06.660
In the United States, we escaped feudal land for this reason, we had a lot of land.

1047
01:36:06.660 --> 01:36:11.260
First of all, in the United States, America's discovery of a huge amount of empty land,

1048
01:36:11.260 --> 01:36:14.860
enormous, hundreds of millions of acres of not very productive land with nobody on it.

1049
01:36:14.860 --> 01:36:19.860
Nobody except Indians, of course, there's a controversy about how many Indians there were at that.

1050
01:36:19.860 --> 01:36:28.860
Many of them got wiped out by disease, because when they met the whites they interchanged diseases, and most of them got wiped out.

1051
01:36:28.860 --> 01:36:34.860
But at any rate, the Indians were unfortunately not considered human,

1052
01:36:34.860 --> 01:36:40.860
because of the general policy of the white colonialists, and so they were basically exterminated.

1053
01:36:40.860 --> 01:36:47.900
And aside from that, it was an empty land situation.

1054
01:36:47.900 --> 01:36:51.020
They did not have, it wasn't very densely populated, even with the Indians.

1055
01:36:51.020 --> 01:36:56.420
At any rate, so you have unowned land, unused land, land which is not owned at the UCF.

1056
01:36:56.420 --> 01:36:57.420
Who owns it?

1057
01:36:57.420 --> 01:36:58.420
First question is, who owns this land?

1058
01:36:58.420 --> 01:37:02.340
Well, the peasants, we know who owns it, the peasants owned it, then the feudalists came

1059
01:37:02.340 --> 01:37:09.740
over and took it over, but with unowned land, with this vast country, who owns it?

1060
01:37:09.740 --> 01:37:14.380
So, you have two theories of this, the libertarian theory, which essentially was adopted by Jefferson

1061
01:37:14.380 --> 01:37:15.380
and Jackson.

1062
01:37:15.380 --> 01:37:21.380
I mentioned the democratic party position.

1063
01:37:21.380 --> 01:37:27.220
The libertarian theory is nobody owns it, it's unowned, and this is essentially the

1064
01:37:27.220 --> 01:37:33.420
Jefferson position, essentially the Jackson position.

1065
01:37:33.420 --> 01:37:34.420
So who should own it?

1066
01:37:34.420 --> 01:37:38.500
The libertarian theory is nobody owns it until somebody settles it.

1067
01:37:38.500 --> 01:37:41.540
really settles it and does something with it, bringing it into production.

1068
01:37:41.540 --> 01:37:45.260
Now what it is could be fuzzy but it really isn't in practice.

1069
01:37:45.260 --> 01:37:49.740
You clear the land, you grow something on it, whatever it is, chop a tree down, you

1070
01:37:49.740 --> 01:37:52.780
build a road, whatever the heck it is, you then own it.

1071
01:37:52.780 --> 01:37:54.140
You become a homestead owner.

1072
01:37:54.140 --> 01:37:56.980
This is called homesteading theory.

1073
01:37:56.980 --> 01:38:02.380
John Locke was the first theoretician of this and it's the sort of theory which is sort

1074
01:38:02.380 --> 01:38:05.580
of common sense which most people in practice will adopt.

1075
01:38:05.580 --> 01:38:11.940
Simply enough, for example, in the California gold rush in 1848, there was no government

1076
01:38:11.940 --> 01:38:12.940
in California.

1077
01:38:12.940 --> 01:38:15.140
The United States government technically owned it but wasn't interested.

1078
01:38:15.140 --> 01:38:16.140
It was way the hell out there.

1079
01:38:16.140 --> 01:38:18.180
There was a lot of Indians in between.

1080
01:38:18.180 --> 01:38:19.180
Nobody wanted to schlep the California.

1081
01:38:19.180 --> 01:38:24.100
Don't forget, there was no interstate highway program, no airplanes, there was no interstate

1082
01:38:24.100 --> 01:38:29.300
highway program, no railroads, there was no nuts.

1083
01:38:29.300 --> 01:38:31.980
And I mentioned something, somebody mentioned the covered wagon last hour.

1084
01:38:31.980 --> 01:38:34.860
I have great reverence for the covered wagon people.

1085
01:38:34.860 --> 01:38:40.860
If anybody's ever driven the California, if any of you ever drive the California and driven to it, it is a mess. It is a boring mess.

1086
01:38:40.860 --> 01:38:46.860
From about the edge of Iowa, from the Iowa-Nebraska border until the California border, even beyond that,

1087
01:38:46.860 --> 01:38:52.860
2,000 miles, there's nothing there. There's no houses, there's no people, there's no trees. There's no nothing.

1088
01:38:52.860 --> 01:39:00.860
This is a slight exaggeration, but not much. These people were doing that with no roads, no motels.

1089
01:39:00.860 --> 01:39:04.620
and how they did it, Lord knows, recovered wagon types.

1090
01:39:04.620 --> 01:39:08.060
At any rate, it was a tremendous, I take my hat off, they're a real pioneer spirit.

1091
01:39:08.060 --> 01:39:11.020
What you see in the movies is nothing compared to what actually they went through.

1092
01:39:11.020 --> 01:39:15.100
At any rate, so California had no government, it was anarchy.

1093
01:39:15.100 --> 01:39:18.540
So miners got out there, a whole bunch of gold miners prospecting.

1094
01:39:18.540 --> 01:39:22.140
They had to make decisions on the spot, who owns what, and they made it very interesting.

1095
01:39:22.140 --> 01:39:25.900
They created their own property law. There was no mining property law.

1096
01:39:25.900 --> 01:39:29.100
They created it, they were mostly illiterate, they did it because they knew what was going on.

1097
01:39:29.100 --> 01:39:34.600
Well, let's see, Jake has this vein and therefore Jake owns whatever the technological unit is.

1098
01:39:34.600 --> 01:39:38.600
Say, in other words, he owns this vein plus X number of feet around it or whatever.

1099
01:39:38.600 --> 01:39:40.600
I don't know anything about gold mines, but they did.

1100
01:39:40.600 --> 01:39:46.600
And so they were able to assign, without too much trouble, create a property law for gold mining.

1101
01:39:46.600 --> 01:39:51.600
And they had courts, they had their own private courts, the miners set up, arbitrate all of this and enforce it.

1102
01:39:51.600 --> 01:39:58.600
Claim jumpers, the so-called claim jumpers, a terrible crime, somebody jumped a claim, he was ridden out of town or shot or something.

1103
01:39:58.600 --> 01:40:04.600
So, it worked pretty well, and it took about ten years for the US government to get interested in this.

1104
01:40:04.600 --> 01:40:15.600
So, these things can be worked out in practice. The people who are doing it, they allocate property on a homesteading basis.

1105
01:40:15.600 --> 01:40:19.600
Whoever uses it, finds it, claims it, does something with it, becomes the owner.

1106
01:40:19.600 --> 01:40:24.600
That's the libertarian theory. The libertarian theory is nobody owns it until it's homesteaded.

1107
01:40:24.600 --> 01:40:31.600
The other theory, which is essentially the Federal Government owns it.

1108
01:40:33.600 --> 01:40:38.280
Since the Federal Government was around then, they of course took over immediately when America was discovered.

1109
01:40:38.280 --> 01:40:41.840
The Spanish government owns half of the globe, the Portuguese government.

1110
01:40:41.840 --> 01:40:46.160
They were all porcelain out of land without having been there even.

1111
01:40:46.160 --> 01:40:51.400
And so this is the basic distinction here. The Federal Government puts claims to it.

1112
01:40:51.400 --> 01:40:54.080
Now, once the government claimed they owned it, there's nothing much libertarians could

1113
01:40:54.080 --> 01:40:55.080
do about it.

1114
01:40:55.080 --> 01:40:57.640
It stuck with this government owning it.

1115
01:40:57.640 --> 01:41:01.240
For example, how did this state get to be called New York?

1116
01:41:01.240 --> 01:41:08.720
It's called New York because Charles II, I believe, King of England, we were owned by

1117
01:41:08.720 --> 01:41:13.760
England, parcel out the territory, not called New York, but his brother, the Duke of York,

1118
01:41:13.760 --> 01:41:17.960
okay, who became the private owner of this whole kind of, I mentioned Rockefeller, he

1119
01:41:17.960 --> 01:41:18.960
probably thought it was an exaggeration.

1120
01:41:18.960 --> 01:41:24.160
is exactly what happened. The Duke of York privately owned this whole state, and the

1121
01:41:24.160 --> 01:41:28.160
thing which saved us from feudal land rent, the reason why we don't have to pay half of

1122
01:41:28.160 --> 01:41:33.640
our income to the Duke of York's descendants, was he wanted money. I mean, this is a godforsaken

1123
01:41:33.640 --> 01:41:37.960
area here with no people and lots of trees. He wanted to get money out of it. So in order

1124
01:41:37.960 --> 01:41:42.040
to get money out of it, the feudal landlords of New York and North Carolina, etc., parcel

1125
01:41:42.040 --> 01:41:45.960
it out into small plots and sold it to settlers.

1126
01:41:45.960 --> 01:41:52.140
So that way homesteading came about in the long run, in other words the settlers finally

1127
01:41:52.140 --> 01:41:56.260
wound up, even though they had to pay a high price for it, they finally got out from under

1128
01:41:56.260 --> 01:41:59.960
the feudal land system, a land monopoly system, whichever you want to call it.

1129
01:41:59.960 --> 01:42:07.360
So we had a way out, which unfortunately other countries don't have, because there was such

1130
01:42:07.360 --> 01:42:13.640
and so land became a drug on the market so to speak and they were willing to sell it

1131
01:42:13.640 --> 01:42:16.840
off in small parcels and get any money out of it they couldn't, I mean the Duke of York

1132
01:42:16.840 --> 01:42:20.600
was not really interested in the fact, he wasn't thinking about the fact that in 1980

1133
01:42:20.600 --> 01:42:24.400
his descendants could make a lot of money out of New York, I mean 1680, just a bunch of

1134
01:42:24.400 --> 01:42:28.080
trees and no people, he wanted some people here, in order to get people he had to subdivide

1135
01:42:28.080 --> 01:42:31.800
the land into small plots and sell it to settlers.

1136
01:42:31.800 --> 01:42:37.320
Okay, so we have then, as the United States acquired the West, and the original thirteen

1137
01:42:37.320 --> 01:42:45.320
states in pretty good shape, except for slavery of course, where plantations became large,

1138
01:42:45.320 --> 01:42:50.240
unnaturally large because of cheap labor, except for that, it was a fairly good land

1139
01:42:50.240 --> 01:42:54.880
system because it was essentially acquired by settlers as the government, government

1140
01:42:54.880 --> 01:42:55.880
then owns it.

1141
01:42:55.880 --> 01:43:00.000
In other words, as the United States became a republic, U.S. government owned all unused

1142
01:43:00.000 --> 01:43:05.560
Land, the so-called public domain, just by virtue of the fact that they were government.

1143
01:43:05.560 --> 01:43:09.600
But in the East, the land had already been fairly well parceled out.

1144
01:43:09.600 --> 01:43:13.880
The problem came west of the Appalachians when, first of all, after the revolution,

1145
01:43:13.880 --> 01:43:17.840
we got all this unused land, and then after the Civil War, of course, we got more and

1146
01:43:17.840 --> 01:43:18.840
more of this.

1147
01:43:18.840 --> 01:43:21.720
You have all this land on the west owned by the federal government.

1148
01:43:21.720 --> 01:43:29.200
Aside from the fact that the federal government is not a very shrewd or efficient landowner,

1149
01:43:29.200 --> 01:43:35.880
to say the least, as with everything else, then it becomes a governmental question, how

1150
01:43:35.880 --> 01:43:36.880
do we parcel out the land?

1151
01:43:36.880 --> 01:43:39.560
How much land should go to private ownership and how should it be done?

1152
01:43:39.560 --> 01:43:42.640
Well, what happens is the temptation that either this government will hold on to it

1153
01:43:42.640 --> 01:43:47.880
forever, which happens since about 1900, the so-called conservation movement.

1154
01:43:47.880 --> 01:43:50.200
Most of the land in the western states is still owned by the federal government, held

1155
01:43:50.200 --> 01:43:58.240
out of use, just sitting there locking up all these resources, minerals, trees, ranches.

1156
01:43:58.240 --> 01:44:02.240
And there's a lease of that, well, this is a bad effect, I'll get to that a little bit later on.

1157
01:44:02.240 --> 01:44:15.240
At any rate, the Civil Government owns it. You can either sit on it, lock it up, or you can sell it at auction or whatever, or grant it to various favored people.

1158
01:44:15.240 --> 01:44:23.240
Call it political favorites, or sell it at auction, political favorites. In other words, sell it or keep it. Sell it or grant it.

1159
01:44:23.240 --> 01:44:34.240
So, that was, partially that was done. Before the Civil War, there was a lot of that, selling at an auction to speculators, not the settlers, the speculators, and the speculators would charge the settlers for it.

1160
01:44:34.240 --> 01:44:42.240
The homesteading principle, Jackson and Jefferson, since the government already owned the land, they said, well, at least allow the homesteaders to own it.

1161
01:44:42.240 --> 01:44:49.240
In other words, granted to the homesteaders. The homesteaders is a clear piece of land, the government should grant it to them, and that's it, without charging them for it.

1162
01:44:49.240 --> 01:44:56.240
That's the homesteading doctrine. It's sort of the later version of the libertarian doctrine.

1163
01:45:06.080 --> 01:45:10.080
The South was against homesteading, and the East was against homesteading, and the Westerners

1164
01:45:10.080 --> 01:45:14.080
tended to be in favor of it, but of course the Westerners had voted. So the Republicans

1165
01:45:14.080 --> 01:45:18.400
in 1863, I think, passed the homesteading law, not because they were in favor of it,

1166
01:45:18.400 --> 01:45:21.760
They wanted to make a deal with the West, they wanted to get support on the West, and

1167
01:45:21.760 --> 01:45:28.080
that was their concession.

1168
01:45:28.080 --> 01:45:33.320
And unfortunately, I was fine, Iowa was settled in a homesteading manner, everything was done

1169
01:45:33.320 --> 01:45:37.640
pretty well there, except the problem was, as soon as you get west of Iowa, and this

1170
01:45:37.640 --> 01:45:42.760
happened around 1870, as you ever drive there you'll see, as soon as you, something happened,

1171
01:45:42.760 --> 01:45:46.040
something drastic happened to America, and you get to west of that Iowa, namely there's

1172
01:45:46.040 --> 01:45:52.600
There's no water. Water on line, what do they call it? Ain't no water. So this means that

1173
01:45:52.600 --> 01:46:00.320
it's very dry. It means that you can't, you can have a farm in the east, east of the Mississippi,

1174
01:46:00.320 --> 01:46:04.880
east of Iowa, if it's a little bit west of Mississippi. An average farm could be, a family

1175
01:46:04.880 --> 01:46:10.200
farm is about 160 acres. And so the homesteading law said anybody who clears and produces 160

1176
01:46:10.200 --> 01:46:14.040
acres gets it. And you have to stay there for two years, whatever the provision was.

1177
01:46:14.040 --> 01:46:18.640
160 acres is fine, it's fine for cattle, you can see cattle farms up in Virginia or

1178
01:46:18.640 --> 01:46:23.160
down here, Connecticut or something, a bunch of cattle, 20 cows and it's sitting there

1179
01:46:23.160 --> 01:46:27.380
in a water hole or whatever, it's great, they've got a lot of grass, there ain't no grass out

1180
01:46:27.380 --> 01:46:32.560
there, it's all scrub, you know, they have one cactus and a little bit of grass under

1181
01:46:32.560 --> 01:46:38.360
it, five miles away there's more cactus, 160 acre farm or ranch is nothing, you can't

1182
01:46:38.360 --> 01:46:42.680
do anything, you need a couple of thousand acres to do anything, but for cattle, if

1183
01:46:42.680 --> 01:46:46.240
If you drive in the west, instead of having a bunch of cattle that you do here sitting

1184
01:46:46.240 --> 01:46:50.360
under the shade or in the shade, there ain't no shade out there, so there's no possibility

1185
01:46:50.360 --> 01:46:51.360
of that.

1186
01:46:51.360 --> 01:46:56.480
What they do is, they have one cow over here, another five miles another cow, because there's

1187
01:46:56.480 --> 01:46:59.680
no food, so they have to spread out a lot.

1188
01:46:59.680 --> 01:47:06.320
Unfortunately, after the Civil War, the jerks who were federal land bureau and farm material

1189
01:47:06.320 --> 01:47:07.320
didn't understand that.

1190
01:47:07.320 --> 01:47:08.320
They probably never went out there.

1191
01:47:08.320 --> 01:47:09.720
Who wants to schlep out there?

1192
01:47:09.720 --> 01:47:21.720
They're sitting in Washington where they didn't have air conditioning then but they were sitting there in comfort and so 160 acres and that's it, they refused to expand the size of the homesteading claim.

1193
01:47:21.720 --> 01:47:25.720
They refused to allow farms of more than 160 acres or ranches.

1194
01:47:25.720 --> 01:47:33.720
As a result, there was what we call land communism for about 30 years, making 60, 80, 90 all over the West.

1195
01:47:33.720 --> 01:47:40.880
In other words, from Iowa West to the Sierras or whatever, this whole area and no private

1196
01:47:40.880 --> 01:47:45.680
ranches and there's no private property there at all in land.

1197
01:47:45.680 --> 01:47:49.160
So what they did is the sort of stuff you see in western movies in the old days, you've

1198
01:47:49.160 --> 01:47:52.760
ever seen an old western movie on television, they're always shooting each other.

1199
01:47:52.760 --> 01:47:53.760
Why are they shooting each other?

1200
01:47:53.760 --> 01:47:56.560
Not shooting each other for the fun of it, not because they enjoyed it, it's because

1201
01:47:56.560 --> 01:48:01.040
there was no private property, everybody was scrambling over the water hole.

1202
01:48:01.040 --> 01:48:02.040
Who gets this land?

1203
01:48:02.040 --> 01:48:09.320
There's the nesters, right? There's the nesters who want to farm. There's the ranchers, who

1204
01:48:09.320 --> 01:48:14.080
we usually picture as evil in the movies for some reason. There's the ranchers and the sheep

1205
01:48:14.080 --> 01:48:18.600
men, okay? There's whole groups of them. Each one want to get the same land. They want to

1206
01:48:18.600 --> 01:48:23.000
get their cows to pasture on this thing or whatever. They're each fighting over the same

1207
01:48:23.000 --> 01:48:25.560
property and shooting each other because they claim that... Why are they shooting each other?

1208
01:48:25.560 --> 01:48:28.800
We don't have to shoot each other in the east. Why is that? It's not because they're evil

1209
01:48:28.800 --> 01:48:33.800
Westerners, because there's no private property. They didn't allow property in the public domain.

1210
01:48:33.800 --> 01:48:38.800
They didn't allow large acreage. As a result, you have people using the property but not

1211
01:48:38.800 --> 01:48:43.360
owning it. They're leasing it, in a sense. They're using the fruits of it. They can't

1212
01:48:43.360 --> 01:48:53.560
own the actual land. So, yeah, constant conflicts as a result, constant war over the resources.

1213
01:48:53.560 --> 01:48:58.760
Sheep men come. The sheep men, for example, one thing is, if you have grass, I mean the

1214
01:48:58.760 --> 01:49:01.760
The reason for the dust bowl and so forth, it's quite simple.

1215
01:49:01.760 --> 01:49:05.820
If you have a bunch of grass, it's nice to, it's better to be able to renew it from year

1216
01:49:05.820 --> 01:49:06.820
to year.

1217
01:49:06.820 --> 01:49:10.360
Seed it again and so forth, don't want to eat up the whole thing.

1218
01:49:10.360 --> 01:49:14.520
If you own the grassland, you'll have a capital investment in it.

1219
01:49:14.520 --> 01:49:18.640
To your interest is keep the thing going, to keep the thing productive, not to destroy

1220
01:49:18.640 --> 01:49:19.640
the grassland.

1221
01:49:19.640 --> 01:49:23.800
It's to your own economic interest to keep up the capital value of the ranch.

1222
01:49:23.800 --> 01:49:28.580
So private ranchers or private foresters, they don't chop down all the trees, they might

1223
01:49:28.580 --> 01:49:33.580
They might benefit in the short run, but they've got a lot of trees to sell, but they haven't got any forest left.

1224
01:49:33.580 --> 01:49:37.580
The capital value of their forest, the stock value, disappears.

1225
01:49:37.580 --> 01:49:42.580
So they're interested in renewing it. Private foresters renew the trees. They chop down only a certain amount.

1226
01:49:42.580 --> 01:49:46.580
They renew it. They plant more. Same way with grass. They don't destroy the grassland.

1227
01:49:46.580 --> 01:49:52.580
But if you can use any trees you want or grassland you want, but you can't own it, there's no incentive for you to renew it.

1228
01:49:52.580 --> 01:49:53.580
Renew it.

1229
01:49:53.580 --> 01:49:57.620
Because if you try to renew it, if you plant more grass, some other guy's cattle will eat

1230
01:49:57.620 --> 01:49:58.620
it in two weeks.

1231
01:49:58.620 --> 01:49:59.620
What's the point?

1232
01:49:59.620 --> 01:50:03.500
You're just creating more grass for the other schmo to come in and eat your grass.

1233
01:50:03.500 --> 01:50:07.420
There's a negative incentive to keep up the value of the property, just the opposite.

1234
01:50:07.420 --> 01:50:10.100
If you don't chop down the tree, some other guy will chop down the tree.

1235
01:50:10.100 --> 01:50:12.420
So the incentive is to chop down the tree as fast as possible.

1236
01:50:12.420 --> 01:50:16.020
Because you don't have a private property in the actual resource.

1237
01:50:16.020 --> 01:50:20.120
You only have a private property in what you can chop down today.

1238
01:50:20.120 --> 01:50:24.840
So what you have is, you have one set of cattle, you eat as much grass as possible down to

1239
01:50:24.840 --> 01:50:29.400
the nubbin, because if you don't do it, somebody else's cattle will do it.

1240
01:50:29.400 --> 01:50:33.720
Same way with the sheepmen, the sheep or cattlemen always complain that sheep eat the grass down

1241
01:50:33.720 --> 01:50:34.720
to the root or something.

1242
01:50:34.720 --> 01:50:40.680
Well, I mean, if you have your own sheep ranch, you find a way to solve that problem.

1243
01:50:40.680 --> 01:50:44.080
You wouldn't let them eat everything, you know, whatever.

1244
01:50:44.080 --> 01:50:45.080
That's what happened.

1245
01:50:45.080 --> 01:50:47.960
You have a war of all against all, created by the fact of land communism, it was a fact

1246
01:50:47.960 --> 01:50:53.640
There was no private property. There was communal property in the grassland and in the ranches.

1247
01:50:53.640 --> 01:50:59.160
No private property in actual resource. Actually, left-wing historians blame it on capitalism.

1248
01:50:59.160 --> 01:51:04.040
Just the opposite. Blame for the situation is due to the fact that the entire grass cover

1249
01:51:04.040 --> 01:51:07.320
was destroyed, the forest was destroyed. The problem was not capitalism. The problem was

1250
01:51:07.320 --> 01:51:12.520
the failure to have private property, for the government to allow private property in natural

1251
01:51:12.520 --> 01:51:19.240
resources and grass and forests etc. etc. You've probably seen some movies about the

1252
01:51:19.240 --> 01:51:26.680
barbed wire. They started fencing off them, they started seizing private property and

1253
01:51:26.680 --> 01:51:30.720
cattle ranches by putting a barbed wire around. And then there's a whole bunch of Mystique

1254
01:51:30.720 --> 01:51:34.160
of the Open Range. I remember Kirk Douglas about 30 years ago had a movie which he had

1255
01:51:34.160 --> 01:51:38.800
a phobia about barbed wire. I guess his chest was cut up on him one time. He kept looking

1256
01:51:38.800 --> 01:51:45.800
He's speaking for the open range, he says, this place is no good, they've closed off, they've fenced off everything, I'm leaving for Montana or something.

1257
01:51:45.800 --> 01:51:51.800
Well, it's shawmy and romantic, but the point is, by fencing it off, they were able to have private property and ranches,

1258
01:51:51.800 --> 01:51:57.800
and to solve this problem of constant war over between the nesters, the sheepers and the cattlemen,

1259
01:51:57.800 --> 01:52:01.800
and they were able to keep, start renewing the property, keeping up the capital value and maintaining it.

1260
01:52:01.800 --> 01:52:07.800
It was illegal until about the 1890s. They just illegally fenced it off.

1261
01:52:07.800 --> 01:52:10.800
This is my property, I'm fencing it and that's it.

1262
01:52:10.800 --> 01:52:15.800
And with the invention of barbed wire, which was around the 1870s, it was much cheaper than wood.

1263
01:52:15.800 --> 01:52:17.800
Also, there were no trees there, you understand.

1264
01:52:17.800 --> 01:52:20.800
You can't have wooden fences in the West, there ain't no trees.

1265
01:52:20.800 --> 01:52:26.800
So with the invention of barbed wire, they were able to go in there and just fence off and the heck with it.

1266
01:52:26.800 --> 01:52:34.800
At any rate, this is the reason for the war of the West, the fact that there were constantly wars between the nesters and the ranchers and the cheap men and all that.

1267
01:52:34.800 --> 01:52:45.800
It was brought about by government intervention, by the fact that government refused to have to allow homesteading at larger than 160 acres in dry climates where the 160 acres was pointless.

1268
01:52:45.800 --> 01:53:01.800
Okay, that's really the land question.

1269
01:53:01.800 --> 01:53:12.720
I think there are, this has an application right now, there are lots of things with water.

1270
01:53:12.720 --> 01:53:16.560
One of the problems for the great water problems in the West, it's not just as dry there, that's

1271
01:53:16.560 --> 01:53:17.560
not the real point.

1272
01:53:17.560 --> 01:53:23.600
The point is they steal water from one area to the other.

1273
01:53:23.600 --> 01:53:26.040
Nobody is allowed to sell water.

1274
01:53:26.040 --> 01:53:28.760
Nobody has private property, but they do in the western states.

1275
01:53:28.760 --> 01:53:32.480
You have private property in certain rivers and percentage of flow, like the first deep

1276
01:53:32.480 --> 01:53:36.680
percent or the next second 8% or whatever it is, but you can't sell your right to anybody

1277
01:53:36.680 --> 01:53:37.680
else.

1278
01:53:37.680 --> 01:53:40.960
In other words, the people in Los Angeles want water, the guys up here have it.

1279
01:53:40.960 --> 01:53:43.120
They should be able to sell the right to somebody in Los Angeles.

1280
01:53:43.120 --> 01:53:44.120
They can't do that by law.

1281
01:53:44.120 --> 01:53:46.480
By law, the government has to do it.

1282
01:53:46.480 --> 01:53:47.920
And so it's not done.

1283
01:53:47.920 --> 01:53:51.160
They have a big political conflict in Sacramento between the Southerners and the Northerners.

1284
01:53:51.160 --> 01:53:52.160
They hate each other's guts.

1285
01:53:52.160 --> 01:53:54.160
They threaten to see seeds and so on and so on.

1286
01:53:54.160 --> 01:53:57.360
And finally what happens is they have huge federal projects where they waste billions

1287
01:53:57.360 --> 01:53:58.360
of dollars.

1288
01:53:58.360 --> 01:54:00.600
There's a central Arizona project right now.

1289
01:54:00.600 --> 01:54:04.440
They wasted billions of dollars, huge amount of money to bring water from the Colorado

1290
01:54:04.440 --> 01:54:07.120
River here to Arizona.

1291
01:54:07.120 --> 01:54:08.920
They take this water.

1292
01:54:08.920 --> 01:54:09.920
They sell it.

1293
01:54:09.920 --> 01:54:10.920
The government, of course, owns it.

1294
01:54:10.920 --> 01:54:40.920
Salerno sold it very cheaply to farmers. In other words, the cost of the taxpayer, I don't know, X amount of dollars per gallon, it sold the farmers about one-tenth of that, thereby inducing, and the farmers, by the way, have to buy it, they don't use it, they don't get it, they have to use all this water, induces them to use a lot of water, and then they take the water and they irrigate, uneconomically, growing crops which the government then pays them not to produce. In other words, they then pay them to plow under the crops,

1295
01:54:40.920 --> 01:54:44.920
government buys it and stores it somewhere and finally dumps it

1296
01:54:44.920 --> 01:54:50.920
so it's a totally insane policy, the farmers get subsidized, the water construction people get subsidized, the taxpayers pay through the nose

1297
01:54:50.920 --> 01:54:54.920
and water gets wasted, in other words, here you have a very scarce water supply in the West

1298
01:54:54.920 --> 01:54:58.920
they deliberately induce people, they sell farmers water at a very low rate

1299
01:54:58.920 --> 01:55:02.920
inducing them to go waste it and then they buy the crops and burn it somewhere

1300
01:55:02.920 --> 01:55:07.920
so it's a totally insane policy which benefits only politicians and their constituents

1301
01:55:07.920 --> 01:55:14.920
Anyway, that's enough for today. Next time we'll go on to the railroad question.