 Excuse me, I'd like to get started. I have about at least eight hours to cover and about less than two hours. So I apologize for leaving stuff out, which is almost inevitable. Stop right in with this proposition. Supposing you see in the paper, this is not, of course, unrealistic, that the Congress had just raised the tariff on steel imports or that it's imposed import quotas on steel. What does one conclude from this? What do you think your reaction will be to this? You think anyone would think by looking at this that, well, Congress must have, for some reason, had an intellectual interest in the steel industry and decided to help it out? Or that theoreticians of some sort descended upon Washington to try to get them to do something for steel? I think I'd be pretty idiotic. I think anybody who has any marbles at all will conclude that the steel industry must have lobbied for a higher steel tariff or for steel import quotas. And of course, it would be right. So the interesting thing is, I think everybody would admit this, it has to be extremely naive to think that Congress went ahead on its own without consulting, without being lobbied by the steel industry to do that. So if that's true, why is not, if everybody acknowledges this, why is this not called either conspiracy theory of history or economic determinism? This is what is applied as smear terms to people who use this insight, not just the things like tariffs, but the little wider things with a little wider reach. So if it's almost self-evident that the steel industry lobbies for tariffs, and that's it, and nobody else does, and they're the driving force behind it, why can't they do that for other things, for other political measures that are a little, I'd say a little broader, which could be things like regulatory commission or some kind of public works development or a bond issue or a war. So what this sort of, what I call power elite analysis, you can call a lot of things, really involves a simply common sense. This really, Mises talks about the task of the historian is to try to figure out the motivations of different actions, also the consequences and the motivations. And when you try to figure out the motivations of actions, it's not, of course, apodictic to use the right Misesi in terms. It's not an absolute law. It's using perchean. Yet you can pretty well be sure that if a steel tariff is passed, it's because the steel industry lobbied for it. So you have to use, the historian has to use judgment and for staying and doing that. And I'd say common sense, I think, is a key thing here. I think you can divide this sort of government aid to business in four categories that you'd be dealing with here. One is for subsidy, outright subsidy. Two, contracts, which is equivalent to subsidy. Three, and outright grant, well, really five categories. Subsidy and a contract are slightly different, but really about the same thing. Three, government monopoly privilege. This was done, for example, in Europe, in the mercantilist period, such and such a producer gets a monopoly grant by the government to produce salt, mine salt in the kingdom, or to produce playing cards, or textiles, or whatever. Next and more important in American history, even though it had been monopoly privileges, more important is government-enforced cartilization, restricting supply in the industry in order to raise the price. And finally, socialization costs, which don't get mentioned much, I think very important, where the businesses load their costs onto the taxpayer, Uncle Sap, to pay for it. OK, let's see what the, let's see some examples of this. The, there's, for example, the Illinois Central Railroad, which is the major federally subsidized railroad in the 1850s for the big transcontinental railroads, was the big north-south hub from Chicago, I think the New Orleans or Mobile. At any rate, the Illinois Central Railroad got heavy federal subsidies, also had connected with the two famous American politicians who were at sorts point at everything else, namely Abraham Lincoln, beloved figure, and, and, and what's the first name, Douglas? Steven Douglas, right. Both of them are heavily connected with the Illinois Central Railroad. Abraham Lincoln has been called, had the image of most people of a rail splitter. I guess he, I guess, I guess he split rails in his youth. But that's, that's not what he did in maturity. He was a, connected with a railroad, all right, but he was a, he was a big attorney for an Illinois Central Railroad. It's like calling some, some, some corporate lawyer on Wall Street a rail splitter, whatever. Steven Douglas made a huge amount of money out of the Illinois Central caper, which he, of course, argued for and lobbied for on the Senate. He bought up, he found out where the Illinois Central terminal would be. It's always important where the terminal is gonna be in Chicago, and he bought the land up beforehand and then resold the land to Illinois Central, making, making a huge bundle on it. Okay, that's, these are, these are direct subs, these, well, these are hidden subsidies. The, the important thing here is this, if we have a question of motivation, here is Steven Douglas. He's arguing in the Senate for a big subsidy to the Illinois Central Railroad in landing in Chicago. Is he going to say to the American public, I'm doing this because I have the land underneath the terminal. I'm gonna make, I'm gonna make millions out of it. I don't think so. He's gonna talk about the national interests of public, the common good, national defense, national security, general welfare, and all the other garbage. Okay. Now I'm not saying there's no such thing as general welfare, common good, but the point is, he even might be one of his motivations. I'm not denying that, but the point is that the, that the economic motivation, I mean, personally economic motivation gets hidden. It becomes, it's under, it's undercover, it's under the table. It's the task of the historian, not to say that this is his only motivation, but task of the historian to uncover the hidden motivations, to figure out what is the economic interest here. Unfortunately, there are not too many historians who have been doing this, if you might note. It's not fashionable. I don't know how many thousands of PhD dissertation have been in American history, a huge number of them, almost none of them go into this sort of stuff, this economic interest analysis, whatever you wanna call it. I mean, there must have been 10 dissertation about every battle of the Civil War, for example, but very little of it, this sort of stuff, which I think is even more important. So one of the problems here is that academics won't deal with this, because it's not respectable, because it's smeared as conspiracy theory of history and economic determinism. This sort of analysis is left to, not should we say untrained scholars, journalists, sometimes crackpots, who engage in this sort of truth-seeking, and the trouble is, of course, this discredits the movement, the uncovering the economic interest movement, because the guy's a little kooky, in many cases. For example, I hope to get back to this later tonight, but one of my favorite muckrakers of this sort of thing we wanna call a muckraker is a crazed eye doctor in New York, named Dr. Emmanuel Josephson, who's done some very interesting work on the Rockefeller World Empire on Franklin Roosevelt. Actually, his best book is at least known, I don't know how much this is known at all, but at least known within the framework, within the spectrum, his first book, called Your About Medicine, which you really know something, of course, knows a lot about, called Your Life as Their Toy, which is a wonderful title. Ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha. Subtitle on expose A to the AMA in its rackets. Anyway, one time I visited Dr. Josephson's and I wanted to get by one of his pamphlets, which of course is not widely distributed, as you might imagine. And since I wasn't, I didn't live too far away, I decided to drop in on this official address of Chedney Press, which was the name of his publication, so I thought I'd buy a pamphlet and get out. Now it turns out he was his eye doctor office and he had this field machine, the thing you measure your brain tumor, possibly the brain tumor, and the field machine was filled with cobwebs, obviously. Ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha. Anyway, pamphlets all over the place on the Rockefellers and things like that. I finally extracted my cell, I bought the pamphlet, took me about three hours to get out of there. It's very interesting. Interesting character, obviously, did not have a busy practice. Ha ha ha ha ha ha ha ha ha ha ha. Anyway, so you have to deal with this if you want to find out what's going on in the world, okay, either historically or in the contemporary history. Okay, another, get back to another example. Socialization costs. In the Civil War period, General Grenville Dodge, who was an important entrepreneur, becomes the general in the US in the Northern Army, takes a number of troops of the US Army and uses the troops to clear out the Indians from Iowa and Nebraska or whatever. He did it, and then he resigned after he succeeded in clearing out the Indians, a considerable course in lives of the soldier and taxpayer money, he then resigns from the Army to become what, to become head of, or one of the heads of Union Pacific, which got the land rights, which got the subsidy for the whole land area of the area, which he cleared. Now in other words, and notice this was going on here, in other words, they want the Union Pacific, you know, once a rarer in this area. First, you get the Congress to subsidize, they give you huge land grants plus construction subsidies. Secondly, you want to clear out the Indians, the Indians are a pain in the neck in the area, so you don't do it yourself, you don't organize a private army to do it, you get the taxpayers, the suckers to do it, plus the conscripted soldiers, I think they're fighting the Civil War, actually they're clearing out the Indians for on behalf of Union Pacific. It's called socialization of course. Another example of that, a very different example. In 1900 or so, the public school, there was an agitation for the public school system to expand its education from reading, writing, and arithmetic to teaching foreign languages, particularly Spanish. Who did this agitation? You could say, well, Spanish teacher, but not really, actually the real agitation came from businessmen, business groups who wanted to send salesmen down to Latin America, and they wanted somebody else, in other words, a taxpayer to pick up the tab, instead of them having to train people in Spanish, let the idiot taxpayers do it to the public school system. That's another example of socialization of cost. Of course, businessmen always like to have, they get the profits and the taxpayer picks up the cost, it's very much like saving a loan movement, where the taxpayer guarantees the liabilities and they have freedom to invest in assets. I wish I had gotten a kind of business, it would be great. Okay, so another example of subsidy, I'm just picking them almost at random, but anyway, is, I'll give you maybe two more examples of subsidies, the Transcontinental Railroad Caper, where not only Union Pacific, Central Pacific, Southern Pacific, Northern Pacific, the Big Four got huge land grant subsidies of the best land, by the way, of the only areas around the track, plus construction subsidies from Congress. The famous story of an enrollment that was here because Central Pacific, which Leland Stafford was one of the four big owners of, sent Collis Hunting, so the major guy of the Big Four, Collis Hunting went to Washington with a bag of, I think, $100,000 in gold coins, I remember. When he left Washington, there was no money in the bag, gold coins had suddenly disappeared. They had not been stolen, they were distributed as bull, the various executive, people in the executive branch and in Congress as a result of which they got Central Pacific as the huge subsidies. In addition to that, representative Oakes Ames of Maine, Republican of Maine was one of the key figures in pushing this through, was also a shovel manufacturer and he got the shovel contract for Central Pacific, which is quite lucrative. So all these things, all these things have to be dug up. They are not in the standard histories. Some of them a little bit, a few of them are, but not much. Just another, just to lead to the present, because the problem, this sort of things, I might get stuck in the 19th century and I'll be up to the present. Come to the 20th century, there's, for example, Lyndon Baines Johnson. I'm gonna say that he's one of my least favorite politicians, like I have so many least favorites, it's difficult to look. However, I focus on, I hate. So, the, how does Lyndon Baines Johnson, he gets the impression, we know, but Lyndon Baines Johnson is a poor, poor Southern and he comes into Congress, he gets a fairly low salary, merges for many years of Congress, a multi-millionaire. How did he do this? One of the ways he did it was that he was a, his wife owned this radio station, which he got special privilege from the FCC. I think he was also on the communications, Senate communications committee. At any rate, Lyndon, Lyndon's whole career, was financed by Texas, big Texas construction company called Brown and Root, headed by the beloved figure of George Brown, 80 year old George, I guess he was never, no, not always 80, but I think he was not the generic. And he was George Brown's disciple, he should call it that. And when Johnson got to be president, he handed out all sorts of construction contracts, the federal government, including of course, the military bases, we had the bill in Vietnam, all of which went to Brown and Root. And you notice the connection here, you have a Brown and Root socialism, so to speak. And could you say when you judge motivation was certainly something in here about this, I mean, did Lyndon and Johnson expand the Vietnam War just because of Brown and Root? Who knows, probably not, but you know, certainly it's an element in there which has to be considered and usually is not talked about by historians. Okay, I don't know how early to get to go back, I just wanna say, I'm trying to zip through the early American period, but the bad guys, I'm gonna explain why you use terms like bad and evil a little bit later on. The bad guys from say 1780s until past the Civil War were usually centered in Pennsylvania. Pennsylvania was like the center of evil. And that was where the power elite lived. The first major bad guy in Pennsylvania was the guy who was called in the history books the financier of the American Revolution, Robert Morris. Actually, he was not the financier of the American Revolution, the American Revolution financed him. To millions, millions. Nobody knows how much he stole from the taxpayer because there was no, what are they in that? There was no general accounting office, none of the other alleged checks and balances. He was the economic czar of the Continental Congress. He just, he handed out contracts using taxpayer money and paper money and all that and he handed out contracts for the war effort for supplies and all that to his own partners, his own relatives, his partners, his mercantile partners like William Bingham and people like that. And so the whole thing was an unbelievable racket. He also created the first central bank in the United States, the Bank of North America, which is his own private bank, which was set up by Morris as the economic czar of Congress, which had, by the way, a first little teeny little business cycle. It was only in Philadelphia. Philadelphia was like the major center. So it was a little Philadelphia business cycle, a little boom bus cycle. Fortunately, Morris got kicked out after the war was over and so the Bank of North America collapsed. And one thing, you know, the very few cases in world history and certainly in American history were justice triumphs. I'll talk about why I use the word justice too a little bit later. But justice triumphs, the case of Robert Morris, justice triumph, he ended his days in debtor's prison. He went bankrupt. And those days, if you go bankrupt, you don't just sail past another, fleecing some more creditors. There's no chapter seven or chapter 11. You go to jail until you can pay it. It's difficult to get, make money in jail. They usually stay there. Okay, so I just want to talk a little bit about the Federalist Program, which was the first power elite program, which was, by the way, the Constitution was driven through America against the will of most of the people. It was driven through in a blitzkrieg. You have to realize there's no debt of winter in most of it. First of all, you realize there's no roads then, no TV, no telephone, no, no, no, no, no radio, no, no. And no land transportation, no roads. So since the Federalists controlled the urban areas, plus the power, most of the power elite are able to push this through. And the Federalist Program, which was instituted by Morris by this time, was out of the picture, but has spiritual heirs and successors like Alexander Hamilton. So what do they do? They pay off the government bondholders at par. The public debt had depreciated during the Revolutionary War and after it. The taxpayers are forced to pay it off at par. I want to focus on this a little bit, the whole public debt question. The public debt is a big rip-off. The public debt is a situation where bondholders, public creditors, in other words, the bondholders, went out at the expense of the taxpayers. This is a fantastic loot situation. Nobody, we won't focus on this much. We talk about how terrible the deficit is. We don't talk about how, one of the big consequences of the deficit, those bondholders are ripping us off, ripping off the taxpayers. Of course, in many cases they're the same people, but obviously there's a handling charge. But of course, they're not really the same people as a net shift from taxpayers to bondholders. The federalists established the central bank, the first regular central bank, the Bank of the United States, in order to have cheap credit, inflationary credit, for favor of businessmen, high tariffs to protect inefficient American manufacturers and artisans, a big Navy to compulsorily open up markets of rollout for exports, and higher taxes to pay for all this stuff. And also, of course, centralization of power in the national government. That was mostly in Philadelphia. Morris was in Philadelphia, the Bank of the United States was in Philadelphia, the whole power elite was there. It comes to the war of 1812, and the Philadelphia and Stephen Gerard, it was by that time, one of the richest people in the country, was a merchant, one of the richest people in the country, was also the major public creditor, and also the major stockholder of the Bank of the United States. After the Democrat Republic, the Jeffersonians were able to get rid of the Bank of the United States. The long last, during the war and after the war, Gerard puts in his own guy, Alexander Dallas, his own lawyer, a secretary of treasury, he gets Madison, the evil Madison to get him a secretary of treasury, and Madison then pushes through the second bank of the United States. Nicholas Biddle also from Philadelphia becomes the head of it. He had a whole Philadelphia stains throughout this whole period. Also, after 1815 and 1820, during the Panic of 1819, is the first organized protectionist movement in the United States. There had been tariffs before during the war, for example, during the war of 1812, but it was no mass protectionist movement. Now they needed, they felt they needed a protectionist movement. It was a little generated from Pennsylvania. The guy in Congress introduced the idea of a high tariff as representative, Henry Baldwin of Pittsburgh, himself an iron manufacturer. And the big propaganda was Henry Cary, a alleged economist and printer of Philadelphia and news writer, who also wanted a big high tariffs on printing, on paper printing and all that. So they generated the tariff movement didn't work in 1820, but it was lively from then on. By the way, talking about printing, you have to realize in this whole early period, one of the key ways in which the government managed to manipulate the press was through printing contracts. In those days, the government didn't print anything. There was no government printing office. The government release would let out, it was sort of privatized printing. Government let out contracts to the press and so of course they kept the good guys and they bought off in the press with the guys and they used. So it was a big thing to buy for the printing contract from the local and state government and national government. Benjamin Franklin, one of my least favorite people in American history. A racketeer from the highest order. Very smart racketeer. I'm not denying that. Came out, again of course in Philadelphia. Gave it, was also got the, was a printer of course in Philadelphia as we all know. He got the printing, first of all he agitates for paper money. One of the first paper monies in the country. He wants paper money is great. He writes a pamphlet, a wonderful paper money is and then he gets the paper money printing contract from the Pennsylvania government. That's the way it worked. Okay, one of the things as I go on with this sort of stuff. I mean, one of the important things to talk about strategy for liberty and free market. I think it's very important when we're dealing with the public or with ourselves for that matter or with scholars that the problem is not just economic error. Of course there's lots of economic error. Inflation is an economic error, price is an economic error, subsidies are an economic error. It's more than that, how? People, these guys are ripping us off. It's not just economic error. They've got a vested interest in economic error. Which is one of the reasons it gets perpetuated. And I think, and to ignore that is sort of being extremely naive. And also another thing is the public. We're talking about how to influence the public. Public gets very upset about this sort of stuff and rightly so. The public is not so upset about flaws in economic theory, right? Because they don't know that much about economic theory. If you tell them, this is really an unsound banking. You know, they begin, their eyes begin to glaze over. If you tell them these guys are ripping us off, they're thieves, then they're alert and they listen. So it's important not to have one hand tied behind our back and power elite analysis. Okay, so it comes to the civil war. Of course it's weeping, weeping every fast. But again, Philadelphia and Pennsylvania is a key thing. Civil war period. One of my least favorite people in American history pops up. Jay Cook, C-O-O-K-E was an investment banker in Philadelphia. One of the problems, just to say very simply here, one of the problems of commercial banking is they create money and they ain't got it. They create liabilities to money which they haven't got. So commercial banks are always inherently insolvent and ready for looking for government handouts to bail them out. That's the basic problem of commercial banks. Problem investment bank, investment banking is not inflationary. It's fine, theoretically fine. The problem investment banks, a lot of their investment purchases are in government bonds, which gives them a stake in the government, which gives them a stake also in trying to increase taxes to have a poor taxpayer, the suckers, pay for the government bonds, pay them for the government bonds. A lot of American imperialism, for example, late 19th, early 20th century, when the Marines were sent out of Nicaragua and Cuba and Dominican Republic and lots of countries in Latin America, these are by the way forays which when Americans don't know anything about, they're not taught in history books, but the people in Cuba, Nicaragua, and the Nicaragua, they know very well about it. They say it's still seething with resentment for good reason about this. For example, Chase National Bank, a Morgan tool at that point, Morgan Bank, buys government bonds, let's say, from Nicaragua, or Cuba, or whatever. The government bonds are not being paid off, okay? And so the Marines are sent, the behest of Chase National Bank, the Marines are sent to Nicaragua or Cuba to force the government to increase their taxes against the poor guys in Nicaragua and Cuba, except we'll have to pay off the Chase National Bank. This causes not a lot of resentment on these in Latin American countries for two reasons. One, because one of these Yankee troops go down there telling them what to do, and two, they're increasing their taxes. What kind of free market is that? It's supposed to be the defense of the free market. It's obviously just the opposite. See to me, if you're buying government bonds, should be lucky to get away with your hide, much less forcing taxpayers to pay for it. Government bonds, of course, being a share and future taxes, a share and loot. Okay, the, so Jake Cook, okay, Jake Cook, as a war star, Jake Cook had been a sort of modest Philadelphia banker, but the key thing about Jake Cook was Sam and Pete Chase, a longtime Ohio politician. Cook was originally from Ohio, Cincinnati. Jake Cook, I mean, Samuel Chase was on Jake Cook's payroll. In other words, Samuel Chase was usually in debt. He was a politician. Jake Cook was his padron. He was paying him a huge amount of money, not only for his campaign expenses, but also just an unretainer. So Cook was sort of Chase's, I mean, Chase was sort of Cook's tool, okay? So when Chase, when the war starts, the Civil War starts, Chase is made, since he was a big shot Republican, he's made Secretary of Treasury on the Lincoln administration, immediately upon which Jake, Samuel Chase, replaces, repays the kindness of Jake Cook by making him the monopoly underwriter of all government bonds for the duration. Monopoly underwriter of all government bonds, enormous number of government bonds of course to finance the Civil War, plus he continued to be a monopoly underwriter for government bonds from then on until 1873, the exception about one or two years after the war. Here's this guy, the monopoly of all government bonds. In other words, if you want to buy a government bond, you have to go through with Jake Cook. So Cook is making a fortune out of this and as a result of this, Cook is the first creator and first innovator of modern PR propaganda, because he wants to sell these bonds at a favorable rate and he hires, he hires pamphleteers to tell the public how wonderful government bonds are, how they read investment on America and all the other nonsense you've heard from time to time. Again, he really starts this whole thing, hiring PR men, hiring writers, the lie about government bonds. And all the rest of it. And he manages to sell a lot of them. In addition to that, Jake Cook collaborates with the other Republicans, and I'll get a little later about why the Republicans were interested in all of this as an ideology, to eliminate the semi-free banking system. We had, I'm not a great, I'm not enthusiastic about the banking system we had from 1840s and 50s, but certainly the best we've ever had are likely to have in the foreseeable future. And it was a banking system without a central bank because the Jacksonian, the libertarian Jacksonian movement managed to smash the central bank after a huge fight and managed to separate government from the banking system in general. And so it was more or less semi-free banking system with various flaws I haven't got time to go into, but it was relatively a good system. So Cook, so a lot of the bankers, of course, didn't want to have that. They wanted a semi-central banking. They wanted to have another central bank. They felt like politically couldn't get away with it. So they decided to have a semi-central banking system called the National Banking System, which Cook maneuvered through Congress in particular. And what happens, this is the acts of 1863 and 64, first of all, they essentially outlawed all state bank notes. In other words, state chartered banks who had a prohibitive tax on them, so they couldn't circulate anymore. And they created a whole new group of nationally chartered banks, which are very small group of very wealthy banks in New York and Philadelphia in particular. Which the only banks allowed to print bank notes, which meant that the state banks had only issued deposits, demand deposits, and they had to have accounts in these national banks in order if their customers want to get the cash. So essentially it was like the Federal Reserve system, except instead of having one national bank, there was a series like a dozen or so private Wall Street banks and Philadelphia banks that were the base, the reserve base for the expansion of credit of the state banks. In addition to that, but the interesting kicker for Jay Cook is that the reserve requirements of national banks were gold, of course, plus government bonds. So the more government bonds, say the Chase Bank bought, the more money they could pyramid 10 to one or whatever on top of it. So this is a great market, so Jay Cook creating his own market for his own bonds. This is called supply creating its own demand, not through say's law, but through government action, government privilege. Also Cook had a couple of national banks of his own, which he owned, plus the fact that he had the, I think Union Pacific, which he got also mashed to get through this whole process too. So he was in great shape. He was known as the tycoon, the first real multi-millionaire in the United States, real monster. So with Jay Cook, the same thing happened as with Robert Morris, just as triumphed. Jay Cook went bankrupt in the panic of 1873, which he did so much to bring about, through bank credit expansion. This whole system collapses. Banking system collapses. Railroads collapsed, but most of the transcontinental railroads went bankrupt then too. And Jay Cook was out of it. He had it, it was a blow by his own evil actions. And what happens is that with Jay, so that's sort of Jay Cook, that sort of ends the Philadelphia supremacy. Well, no, it doesn't end, no, one more step on that. After the Civil War was over, we have the, in Pennsylvania, the venerable Henry C. Carey economist, former Bastia fan, now shifting to a status position, as you see for his own benefit. I guess he's about in the 70s now. He's considered the venerable figure in Pennsylvania politics and economics. He's also himself an iron master. In other words, an iron manufacturer. He gathered about him was called the Carey Vespers. Every Tuesday night or something, he had a salon and dinner, for a selected circle of big shots, the head of the Pennsylvania Manufacturers Association, the head of America Iron and Steel Institute, people like that, also the top iron and steel people and Republican officials. And he instructed them why it is, one of course, protect, they all knew the protective tariffs were great. We need more and better protective tariffs, but also why it is that we, the greenbacks and fine money inflation is good. It was an excellent explanation of this thing. He told them, look, we should keep greenbacks as much as possible, not go back to the gold standard for a long time, if ever, because the more we inflate the domestic money supply, the more the exchange rate drops, the dollar will drop. The dollar will drop faster than domestic prices go up. So during this transition period, during this transition period, this is like a double tariff for iron and steel products. This will stimulate steel exports and restrict steel imports. It was a brilliant analysis. I mean, Curia is very bright, it was just evil. It's possible, of course, and it happened a lot, where intelligence is used in the service of evil. I'm going to explain later why I use the term evil. Okay, so we have, so this was, I guess the last, well, I should say also about the radical Republicans. There was a, which Curia is a member of the successful Republican party. Robert Sharkey was an excellent book on called Money, Class, and Party, which came out many years ago, which was an excellent, excellent book of power elite analysis after the Civil War. He pointed out, in contrast to beer, beer, by the way, was the great pioneer of all of us. I think it was a great historian, Charles Beer, and he was, he used to be a revived, the pioneer. So Sharkey pointed out the way it really was, was that the, the Pennsylvania-led party, led by Iron Manufacturer Henry C. Cary, Iron Manufacturer Congressman Thaddeus Stevens, was also a big shot in the House of Representatives and Iron Manufacturer. This whole group, what they wanted was high tariffs and greenbacks, greenback in place, and that went out. Sharkey also said something that was close to my heart, so I remember it ever since in his introduction. He was talking about economic determinants. He said, look, nobody is saying that economic interests determines a person's action, but it's very rare the person votes or acts against his economic interests. I think it's a very cute way to put it. Okay, the, to get to the Civil War ideologists, the Republican Party, so it wasn't just isolated acts of the Court of Intervention, the Republican Party put through, used the Civil War to put through their beloved program, which was a Democratic Party, which was basically a laissez-faire party throughout the 19th century. This is, of course, a culture shock for many of us. I think of the Democratic Party as a libertarian party, a laissez-faire party. The Federalists, the Whigs, their successors, and the Republicans, their successors were the status party. Okay, during the Civil War, the Republicans used the fact that it was almost a one-party Congress, since the South had seceded, to put through their entire economic program. What did they put through? They put through the income tax for the first time, a beloved tax, which they could try to continue after the war, but fortunately, the Supreme Court declared it unconstitutional, and that was finally repaired by the 16th Amendment. Conscription for the first time, national conscription. Locking up all the centers from the war effort without, without charge, without, without guiding them or in charge, in other words, violating the basic Anglo-Saxon rule of habeas corpus. Locking them up, by the way, and press off, anybody who was in favor of a piece of peace with the South was locked up. Any politician or press or reporter or editor, by the way, jails in those days were not like they are now. Not exactly, there was no TV, there was no exercise around the courtyard, or anything like that. It was a very, it was a pretty monstrous, very high death rate. It wasn't just Andersonville, a Confederate jail, which everybody knows is rotten. It was also the Northern Jails, which are equally rotten, which I don't get talked about. Just the Northerners basically write the history. High protective tariffs were put in, massive subsidies to railroads, this is called a partnership of a government and industry. Railroads was the first big business then, they were the first manufacturer, there was nothing in them, the manufacturer was there, but it was essentially small partnerships. Railroads was the first big corporation, the first big amassers of capital. Land grants and construction subsidies through railroads, Fiat money and greenback inflation, which the Republicans stubbornly wanted to continue, as we know what you see would carry, and only came back, because the Democrats finally got, insisted on it and finally got it back in 1879. So we had from 1860, from the Civil War until 1879, it was Fiat money inflation, the National Banking Act, I've already talked about it, and essentially nationalized the banking system, and high excise taxes on liquor and tobacco, so-called sin taxes. Some of these are called sin taxes for good reasons. I'll mention in a minute. Now the thing is, and this is very important, there's a great book by Bob Higgs, who's a faculty member here, called Crisis and Leviathan, which I recommend everybody, which demonstrates that the key aspects, the key reason for the growth of government, has essentially been wars. There's also ideological reason, the wars are a key. Bob starts basically with the World War, when the 1990s and World War I, it's been true ever since World War 1812, World War 1812 was a big increase in statism, it's sort of like a ratchet effect. Big increase in statism in the World War 1812, was high protective tariffs, there was embargoes, there was big Navy, there was the Bank of the United States, excise taxes, all this was, it took the Jacksonian libertarians about 20, 30 years to wash it out of the system, took 30, to the 1840s, before we finally got free trade, hard money, separation of government banking, the end of public works and all the rest of it. So it took about 30 years for the Jacksonians to reverse the statism of World War 1812. The statism of the Civil War, the big leap forward into statism, was never washed out, was slightly moderated by 1914, but never washed out. It was 1914 and other tremendous leap up, and then World War two, and we're off to the races. It's always war is the key ratchet effect. War as Randall of War, of course, is the health of a state. Unless the state is actually beaten by another state, it's actually crushed by another state, which doesn't have a tool offer, especially the United States, then war is obviously a big occasion for expansion of the state. Okay, I said I'm gonna explain why I use the words like evil and swine and stuff like that. I'm doing it deliberately, I'm doing it of course, because I believe it for one thing, I'm like certainly, but also the second reason to emphasize the fact that history, the historians should also engage in moral judgments. This is a very unfashionable position. The Lord Acton is my guide here, Lord Acton, the great libertarian man of letters and a theoretician of the late 19th century, said that an historian, instead of the judge, the historian should be a judge, a moral judge and also a hanging judge when that's necessary. And the way I look at it is if you can't get the guide, the guide doesn't get as just deserts on earth, we should, the historians should at least give it to them. It might be a poor substitute with the only substitute we've got. How do we get a hold of Jake Cook and give him the business or whatever, only by historical truth. This is very different from the Marxist view. You notice that Fidel Castro made a famous speech, which used to be reprinted everywhere on the old guys were called history will absolve me, where essentially his crimes and his murders will be absolved by the march of history. Well, what that meant was that Marxists believe that they know the objective laws of history and history is on their side because the working class is bound to win out, et cetera. Therefore, anything that they do is a means to achieve the victory of working classes is good and history will not absolve them from what seems to be crimes. This is a very different position. I'm not talking about the laws of the historian, believe that, if you read theory and history, it's a wonderful book, you emphasize this, but the economist or what the historian does is to use, apply all the disciplines that he knows, economic theory, medicine, psychology, whatever, whatever the discipline happened to be, technology, to try to explain historical events using forstand and judgment and so forth to do it. But since he did not believe that ethics is a discipline, since he thought ethics were purely emotive, he didn't believe that historians would apply it. But if you believe that either ethics is a discipline, then you have the obligation to apply it, which is what, of course, I try to do. The ethics is not that difficult, but I try to explain it, either at the end of this hour or the next hour, why I think, briefly, why I have these ethical positions. The interesting thing here is that historians, of course, don't really obey this rule. They're phony value-free, it's all on nonsense. They pretend to be value-free, they pretend not to use moral judgment, they do it all the time, except they do it covertly. For example, if you read almost any biography of Franklin D. Roosevelt, it's brimming with love and adoration, right? With hagiography, it's disgusting, but they don't say. And almost any other president, so-called great president, brimming with adoration, Woodrow Wilson, Abraham Lincoln, et cetera, et cetera. The only time they really, frankly, admit they're engaging in value judgment is when they write about somebody like Hitler. Hitler, it's okay when you talk about Hitler to say he's evil, say. So the difference between me and the regular historians, I have a smaller list of good guys, a much bigger list of bad guys. I don't, they do. I don't think that Hitler installed them with the only criminals in the history of the world. Okay, so it's really the same basis, same principle, except they refuse to admit it. It's phony value freedom, just like most economists will claim to be value free and also say the government should expand the money supply by 3.5%, blah, blah, blah, are really, of course, not value free, but they just don't admit it. So they have no ethical system or ethical principles that they can defend. Another thing I must say about history, this sort of history, usually moral judgments, is a lot more fun than orthodox history. And I remember when I took a course in European Economic History at Columbia University, graduate school, the professor of Shepherd-Bankhoff-Cloff, a distinguished historian. I was looking nice and off-gain, everything, all those positions were about the direct opposite of mine, but he was a pro-mercabilist. He thought that fascism was a wonderful system. These were the days when liberals were pro-fascists. This was before the shift. But the things he groaned on, we only have sort of a low monotone, all he talked about was he was listing tables of exports, things like that. And I don't think, it's not exactly a zinger, it doesn't stir the blood. Much less, of course, econometric equations, how they do it either. Okay, I wanna explain my basic framework for economic history and this will, I think also sort of imply moral categorism using. Basic framework is essentially set forth by two great social and political thinkers, Franz Oppenheimer, the late 19th century German sociologist and Albert J. Nock, his disciple. Franz Oppenheimer wrote a great book called The State. I think in German it's much bigger, but since I don't read German, unfortunately, and I've read the smaller English version of it. And Albert J. Nock's book, Our Enemy to State, you can see more or less what the trend here is. It's a wonderful book, applying this to American history, the basic framework of American history. Basically, the thesis is this, the Oppenheimer Nock's thesis. There are two ways to acquire wealth, by which an individual can acquire wealth. One is by producing something and exchanging it for the wealth of somebody else, at some other production. Two producers and you have a voluntary exchange. This is productive. This is mutual benefit of each exchange and it brings about the vision of labor and prosperity and all the rest of it. The second way, the second way to achieve wealth is by robbing it, by hitting somebody over the head and stealing it. This method is parasitic. Benefits, the guy who hits the guy over the head of expensively other guys. You have a set of both parties benefiting, one benefits expensively other. It's parasitic as the more robbers you've got, the less the robber will produce. Until eventually this continues, the parasite will destroy the host and itself in the long run. And so robbery is a dysfunctional method, say the least of production. And I think it's pretty clear now why you can say that the productive and voluntary way is the good way and the way a robbery is the evil way. Not even going to any other aspects of this doctrine. The interesting enough, Oppenheimer defined the route of voluntary exchange to wealth as the economic means for achieving a wealth. He defined the method of robbery to achieve wealth as the political means for achieving a wealth. And then he went on to define the state as the organization, the regularization of the political means for achieving a wealth. I think it's a beautiful way to define it because it really sums it up. Cuts through all the baloney about the state being the father of the country and all the rest of it and a social contract. Of course, there's never been any social contract and all the rest of it. It cuts through the real essence of it which is essentially the regularization of the political means or as Nock said the state, the sort of the orthodox definition of the state as of the government as an organization which has the monopoly of force in a given territorial area. That's the sort of Max Weber standard definition. Nock refined that and proved on it by saying the finding of the state as the organization which attempts to achieve a monopoly of crime in its territorial area. Individual criminals because they're interfering with their particular racket. Notice for example, just look at the degree of punishment which the state levies into a private crime like mugging, raping, murdering, et cetera. And there's sort of fairly lax and blasé about that sort of crime and the severity which the state goes after crimes against the state namely not paying income taxes or counterfeiting which interferes with the state's monopoly on counterfeiting. These the state takes very seriously. And when the state catches a counterfeiter an income tax evader, they don't worry about the fact that he's been deprived of playgrounds as a youth or came from a broken home. They don't care. They just lock them up and throw the key away. Because then that's really serious. That's interfering with the state's revenue. Now, not went on to define, I think it's a wonderful distinction. Henry Haslund in the review of the book didn't like it. I think it's a wonderful distinction. Not summed up the array of voluntary interactions, economic exchanges, prosperity, et cetera, and voluntary interactions like science, art, culture, all that. He defined that as social power, namely this is the product, the fruits of voluntary interaction, creative and voluntary interaction. He defined the state and its organization, its exercise of the state, as state power. So you have state power versus social power. And essentially, he looked at history. I think this is a beautiful insight. Economic history and history in general is a race between state power and social power. In other words, social power creates stuff. It creates product production. It creates art and music and science and all the rest of it. And then the goddamn state comes along taxed, looted, crippled, distorted, and finally kill it if it can. And so you have, you look at the advance of history as a race between these two forces. Obviously in the 19th century, late 18th and 19th century, social power burst ahead of a tremendous increase in creativity, leaving state power behind. So the relative degree of state parasitism was much lower. And then the 20th century, of course, is the century of the state caught up. And this is the problem, of course, with the 20th century. I think it's a beautiful way of looking at it. More or less defines my framework. Fredrik Boss just another thing on this. How long should I go on for the break? Oh, okay, fine. The Fredrik Boss the other, Fredrik Boss the other find the state, what's an excellent definition of this, is that organization in which, or the fiction, excuse me, the fiction in which everyone tries to benefit the expense of everybody else. A better refinement of that was John C. Calhoun, a great thinker, a political thinker who said, who said the state inevitably creates net taxpayers and net tax consumers. In other words, the state doesn't, bureaucrats, for example, don't pay taxes. That's only a fiction, you know, if a guy gets his salary from the government of 100,000 a year and pays 20,000 of taxes, he's not paying any taxes, it's simply a net tax consumer of 80,000. It's only an accounting fiction who lures the public and is thinking they're really paying taxes. The beloved bureaucrats of the United Nations in New York, they don't pay any taxes at all, people are resenting that, but they're really, it's the same thing, I mean, no government officials pay taxes, it's just an accounting fiction. At least they don't have an accounting fiction there. And then you write, so Calhoun says, well, even if the government does nothing else, even if the government is very minimal, doesn't do anything else, they still create, the government, if so fact, though, creates a class conflict or as Mises said, a caste conflict between net tax payers and net tax consumers or immediately a class conflict between them. And most laissez-faire theorists don't even think of that. Of course, in those terms, they think of taxes as being somehow neutral, at least minimal tax. They're not neutral, they're never neutral. They always create a class conflict. Calhoun, of course, concluded the state should be as minimal as possible to reduce the degree of this kind of exploitation. There's a libertarian class analysis, which I think somebody here would be talking about it, something like Hans Hoppe would give a class on it. Basically it is, most people don't realize this, that the Marxian class theory is a bastardized version of libertarian class theory, sort of a distorted version. A libertarian class analysis started with two groups of people. I don't know if they're independent or not. I really haven't done the research on that. One is about the same time. One was the French libertarians, Charles Coulomb and Charles Goumoyer around 1815 after the restoration of a bourbon at the end of Napoleon. They started working on writing on this sort of thing, and they were both, not only libertarians, but they both, Coulomb, by the way, was the son-in-law of J.B. Sey, as a much-nelected libertarian pre-market economist. They worked out the following doctrine, that there's always a ruling class, that the ruling classes are those people who get control of the state, that they get net taxes, they also get other privileges which they give to themselves, and the rule of the guys who are, of course, paying for all of us, the mass of the public. They go through an historical analysis, too. They go through, this is the Marx, those who know about Marx seem familiar, is Oriental Despotism, let's say in ancient China, where the emperor and the bureaucracy exploit, loot the peasants and everybody else through taxes. There's feudalism in which the groups of landlords who land monopoly grab taxes and land rent from the peasants and the rest of the people, and then says Coulomb in a new way, as industrial revolution develops, we need a free market to support, to run an industrial system. As this develops, inevitably yet, they set a classless society because we'll get a society where a government will wither away. They use the term withering away of a state. They said the state will eventually wither away because it's inefficient, it's exploitative, and have a vast network throughout the world of free markets and free exchanges, essentially anarcho-capitalism, as we call it now. And what they meant by classless society is no ruling elite. As a matter of fact, Coulomb actually used the Marxian phrase before Marx, eventually the government of men will be replaced by the administration of things, which is then meant to be no power over people, just be power over property, just be property ownership. Well, what happened that this libertarian class analysis in France is that Saint-Simon, who's an aristocrat, idol aristocrat, I like to never read any things right now, but I like to listen to people, so I'm a conversational type, picked this up, he was engaged in some laws, he picked up this class analysis and distorted it, got it screwed up and had the, and then his disciples were socialists, one of the first socialists, and then systematized this, changing this thing so that keeping, and by the way, Marx and Lenin continue the same practice, keeping the Oriental despotism and feudalism analysis, saying that, yes, yes, on the Oriental despotism and feudalism, the ruling class are those who manage to get control of the state, that makes them the rulers, okay? But suddenly when you get the capitalism, you get the wage contract, suddenly it's different, and suddenly the employer is exploiting the worker, that's never really explained, and it shifts the definition for those who run the state, to those who simply wage contract, and then the Marxian analysis of the state is of the ruling class thing, the employer has then got control of the state and used that as a sort of a super exploitation, exploitation squared, but the original exploitation is the wage contract, which totally is totally contradictory to the other class analysis of Marx. Mises like to point out that Marx and Marx has been writing about class, I mean, millions of words about it, Marx, when I was life writing about it, I never defined it, because if you don't define it, you can be slippery about it, you can talk about it with employers, you can talk about two class, you can talk about the financial capital, the industrial capital, you can be very slippery, and the third volume of Das Kapital, Marx says, I now will proceed to the fine class, it's after talking about it this effort in a long time, and he says a few paragraphs about it, and then that's it, just as he about to define these stops, and Engels, his faithful donor, a patron and stooge, Engels, an editor, Engels writes underneath, at this point the manuscript breaks off, well gee, it looks like, boy, poor Marx, he died in the process, you know, with a pen there, as he's about to define class, but he stopped working for about 15 years, he didn't even work after that, he was fooling Engels, claiming he was working on this great book, instead he was learning Danish, you know, all sorts of other, wasting his time, presumably because he couldn't define class, only he reached the point where he realized the whole thing was futile, I hope so, I don't know what, I don't know what, so we had, so as a result, of course, Marxian theory of the class gets, it's all like the press and the play and the libertarian theory dies out, another independent creator, I think of the libertarian class theory, James Mills, one of my favorite economists, he's, not that I agree with him, I disagree with him at least half the time, but he's a very interesting figure, a charismatic figure, and essentially Ricardo's control, and Ricardo's got more and more commitments, the only thing he knew about was money and banking, where he's very good, and much better, by the way, than mill, but everything else he knew, nothing, no, it was just feeding him stuff, forcing him, quote unquote, to do stuff. Anyway, mill, was, had a class analysis about the same time, but didn't have the historical stuff, it was simply a two class of the rulers and the rulers, and the minority rulers would get control of the state, the few versus the many, what they called the privileged few versus the exploited many, he called them by the way, I like this, I didn't just use the term special interest, these are the sinister interests, I like that, sinister interest versus the mass of the public are being exploited. Okay, how does this exploitation take place, to revert to get out of Marx's class analysis? How does this minority exploiters get away with it? Because as David, as ATN Deloitte pointed out in the 1550s, as David Jung pointed out 200 years later, as Mises pointed out in human action, you can't have a government, a state existing in the long run, without majority consent of some sort. You can't just have 100 people using force against 5,000 or 20,000, because eventually they'll just turn on, they'll just rip you apart. Majority's gonna win out. And we know that even the most dictatorial governments, even, you know, Soviet Russia under Stalinist stuff, they used to have mass propaganda machine to bamboozle the public, they just didn't just use quote, force unquote. So then the question is, what I call the mystery of civil obedience, the real mystery of real problem political science is the mystery of civil obedience, why do people obey the state? Why do they obey these yokels over there? 10 guys sit in a room, they issue orders to 500,000 people and they all obey it. Why do they do, how do they get away with this? And to me, one of the most wonderful things in history is when you see a situation with the state crumbles where nobody obeys the orders anymore, this happened in Pennsylvania during the American Revolution when the old colonial government was sitting there, they thought they were the legislature, they're issuing edicts and orders, nobody paid attention, there were just 10 guys and 20 guys in a room. Everybody ignored them, they set up, people set up alternative governments of their own. That's great, but it doesn't happen very often. So how do they get away with this? How do they get the public to obey? And the answer, of course, is the state rulers form an alliance for the organized intellectuals or the opinion-molding classes, those intellectuals who bamboozle the public of telling them that the state is good, the state is wonderful, the state is even divine, if they can get away with that in the old days. So you have, it's the alliance of throne and altar, the old European conservatives loved so much, throne and altar, you've got the king and the nobility separate, you've got the intellectuals to do it. And until the 18th and 19th century, the 17th century in the history of the world, all intellectuals were churchmen. There was no such thing as lay pamphlet here as writing stuff, they were all churchmen. So basically it's the alliance of church and state. And the reason why, one of the great things about the United States, the separation of church and state, it's not just the separation, not just you don't have prayers in the public school and that and outside. The point, the real point there, real glory of it is, you don't have a fusion of the state and the church. You don't have this unholy alliance. And the unholy alliance works like this. The church tells the public, the believers, the state is wonderful, the state is divine, even the state has divine sanction. If you must obey the state, it's evil and sinful not to do it, God will punish you if you don't. And then in return for that, the state kicks in part of the loop to the church, the state pays the church out of the tax loot and gives them prestige and all that. So you have a very cozy alliance with throne and order of church and state. Nobody suffers except for the mass of the public who is duped by all this and pays the taxes and believes this stuff. So the great thing about the modern world of the 17th, 18th, 19th century, I'll use a very loose term modern, is you have the growth of independent intellectuals. You have a growth of property ownership in the middle class where people are gonna afford, don't have to be a churchman, don't have to be part of the state apparatus to write stuff and publish stuff. And as part of that, you have a falling away, have a growth of course of libertarian thought. I'll get into that in my seminar. But you have a falling away of this alliance. And in my view, in the United States, what you do in America, you don't have this alliance. Basically you have a very free system, a growth of libertarian thought. And what happens around 1900, starting in late 19th century, especially in my 1900, is a real alliance of state and intellectuals. The state forms a new alliance, a new form of state, mostly big business oriented, but also other people, form an alliance of intellectuals, not just churchmen, but lay intellectuals. What's the tremendous growth of lay intellectuals, technocrats, scientists, economists, historians, PhD men's ship, all the rest of it, but flooding late, during the latter part of the 19th century. So now you have a new alliance, a new fascinating of church state or intellectual state making broader on the American people, and the people in Europe too. It's going on throughout the Western world. A new mercantilism with new rhetoric. Now the interesting problem they had for this, for this new alliance, I'll get to this next hour, is how do you get away with this in the United States, particularly in the United States is born an anti-monopoly and a libertarian thought. It's born anti-monopoly opinion, namely by the monopoly meant in those days, the government granting monopoly privilege, like branding Jake Cook, monopoly of underwriting government bonds. It didn't mean charging a high price, having a high concentration of an industry, and that crap, and then the government giving a monopoly privilege, very simple. So the United States was born in hatred of this and reaction against the Boston Tea Party and all the rest of the team monopoly and high taxes. How does the government get away with this when big business begins to move in the late 19th century to reestablish cartilization, as we'll see in the next hour. How do they get away with this? How do they get the American public to be suckers and fall for it? The way they do it is a formal alliance with intellectuals. You know, this I'm sort of summing up the next hour, but the point is the intellectuals, the tremendous growth among intellectuals period during the late 19th century. The old days, you weren't an engineer, you were a mechanic, a sort of tool and dime man. Then you had engineering schools coming up and you had licensed this and licensed that and all that of shrinks, positions, social workers, the economists, all that sort of stuff. What do they want? They want a prestigious jobs and income they'd like to achieve which they probably could not get on the free market. And the state was ready to give it to them. The state was, the unholy alliance was this, the new alliance was this, starting around 1900 or so. New alliance was, intellectuals tell the public they have to have government intervention. They have to, the modern economy requires it and blah, blah, blah. You need to curb big business and all the rest of it. Return for which the big business runs state basically, grants these intellectuals jobs and the government apparatus, planning, et cetera. And also of course, propagandizing, apologizing for the new system. So you have, so again, a very happy alliance, the only people suffer from, of course, the rest of us. Okay, I guess I'll continue next hour. I'll be right back. Thank you.