The Progressive Era: Chapter 4

This chapter focuses on the the political system that prevailed in throughout most of the Gilded Age in the United States. During this time period, there existed extremely tight races, high voter turnout, and a profound loyalness to the party. In particular, it pays close attention to extremely opposing forces that preoccupied the two major parties.

The Democrats were historically the party of individual liberty and laissez-faire. From Jefferson to Van Buren & Benton to Cleveland, there emerged a mostly consistent platform that advocated for personal and economic freedom (the issues of slavery and the indigenous tribes of America being the sole exceptions). The Whigs, and later the Republicans, by contrast were statists who believed firmly in a nation bound by the morals of the Puritans and the economic nationalism of Hamilton. They were also opposed to Masonry, Catholicism, and immigration due to the fact that they wanted to preserve their aristocratic WASP status. The only issue that gave the Republicans a foot in the pro-liberty camp was their anti-slavery position that attracted many abolitionists and Free Soil Democrats. However, after the passage of the Reconstruction amendments and the attempt at establishing civil rights for African-Americans, the Republican Party had a massive decline throughout the nation. This was primarily due to strong support for decentralization as well as the disgust at the widespread corruption present with Big Businesses.

The rest of the chapter takes a look at the ethnic makeup of the two major parties, and answers the question of why certain groups tended towards one party over the other. Throughout the Third Party System, there existed a sharp religious divide between the Pietists and the Liturgicals. The Piestists, who were primarily made up of Yankee Postmillenial Christians and Scandinavian Immigrants, believed that it was the state who was responsible for lifting up the “weaker” brethren from vice and sin. Their primary complaint was against alcohol, which many believed was the root of all the evil in the world, and so many latched onto the Temperance Movement which wanted the state to step in and forcibly prevent people from drinking or going to taverns. By contrast, the Liturgicals, Dutch/Irish Catholics and conservative Lutherans, believed that each church rather than the state was responsible for salvation, thereby leading to a support for decentralization. Economic issues were often framed in both parties as a religious and cultural issue rather than a purely intellectual one, leading many voters to remain engaged and informed. The chart below shows the complete visual breakdown of the Democratic voting base and support by ethnic group (no similar chart exists for the Republicans, but it’s not too hard to tell which groups tended towards them).

The one area that Rothbard touches on but doesn’t go into much detail about is the massive support for the Democrats in the South. This is a hugely important deviation from his theme of religion as the primary motivation of party loyalty. While there were Bourbon Democrats and Mugwump Republicans who supported civil rights, both parties, but especially the Dixiecrat faction of the Democrats, were the architects of Jim Crow and supported white terrorist groups like the KKK and the Knights of the White Camille. The racist South allowed for the marginalization of these communities, and prevented the Democrats from becoming a truly libertarian party in this era. This is not to say that the Republicans were better. Quite the contrary, they were extremely nativist and racist and had tried in the past to prevent blacks from migrating to Northern States like Illinois. It’s no surprise that this period is also known as the Nadir of American Race Relations. While there will probably be more to say about race in subsequent chapters, I suspect that it is not focused on as much.

Review of Christopher Columbus: A Greek Nobleman

Today’s review will be a brief detour from Rothbard’s massive work. This is a work by Seraphim G. Canoutas which is out of print and was extremely hard to find. Baruch Hashem for interlibrary loan for getting me this work, which would have otherwise been a couple hundred bucks to obtain.

There are many theories of where Christopher Columbus was born and raised. The common view is that he was from the Republic of Genoa (modern-day Italy) and went on to become acquainted with the Spanish monarchs. However, given that we do not have Columbus’ words, there has been much speculation since the 19th century about whether this hypothesis is true. They range from the absurd (Scotland/Norway) to the somewhat plausible (Catalan-Jewish Hypothesis). However, this work provides the most detailed academic account of a possible Greek origin story that is as convincing as it is captivating.

Canoutas starts out by providing an analytical overview the chief sources that historians had used to show that Columbus was of Genoese birth. The earliest sources come both from the account of Bartolome de las Casas in his History of the Indies and Ferdinand Columbus, his youngest son. The problem with these two accounts is that Ferdinand did not actually visit any relatives to find out whether the pitiful stories his father told him could be verified. He only visited the locations 15 years after his father’s death and there was no one still alive for him to interview. Las Casas simply just adopted Ferdinand’s account of the events. So instead, it is up to the Spanish and Italian court historians to provide a much more detailed account of Columbus’ origins. The problem, however, lies in the fact they do not agree with each other and provide many different cities and childhood backgrounds.

Once Canoutas detail the contradictions found in the early source documents he turns his attention to refuting the mainstream historian’s arguments for the Genoese hypothesis. While he gives 10 examples to support his claim, I’ll only comment on two. The fact that neither Columbus nor his brothers knew any dialect of Italian is a huge issue given that they were supposed to have reached full adulthood by the time that they left. The author also thinks it’s odd that there is an account of Domenico Columbus (Columbus’ father) dying in abject poverty in 1498. Given that Columbus was affectionate to his brothers and sons, Canoutas thinks it’s odd that he would allow his father to suffer in misery. It is this, plus the consideration of high Italian nationalism in the late 19th Century (especially in Genoa) that the author gives as the reasons for the popularity of the poor wool-worker origin.

It is now that the author goes into his thesis that, Columbus was actually a Greek nobleman from the Byzantine House of Palaiologos, the last ruling dynasty of the empire. Columbus often claimed to his son that he was “honorably descended” and was shown to have a wide knowledge of religious mysticism, math, history, cartography, and cosmology that would have been befitting for a nobleman. Canoutas goes into considerable detail about the familial connections between the dynasty and the royalty of Genoa, and how close in intellectual and economic ties they were. He proposes using the events like the Fall of Constantinopole in 1453 and Columbus’ claims that he traveled with a Colon the Younger (identified by historians as an exiled Byzantine Greek who was really named Dishypatos) to redate his birth to around 1438 and put a more realistic stamp upon the kinship between the two explorers. Finally, in taking a look at Columbus’ family seal, there are references to Orthodox Christianity (an obvious Greek metaphor) but also a Star of David (which some have taken as evidence of being a converso but Canoutas believes is a reference to the might of King David) and a Muslim crescent which references the Byzantine’s Islamic neighbors. All these symbols are taken as evidence that he was proud to be a somewhat cosmopolitan nobleman.

While the information this book has provided is interesting, it is not without it’s faults. For one thing Canoutas is Greek himself, and his wife happens to be from the very same family that the author attributes Columbus to being a part of. This obvious bias notwithstanding, there are also some academic problems with this work. The biggest issue is whether or not Columbus was telling the truth to his son. The theory rests primarily on the single thread that he had a kinship bond with Colon the Younger. If this isn’t true, it falls apart. The author, while acknowledging he couldn’t cover everything in a concise treatise, still doesn’t tell us the origins of the parents of Columbus, an important fact that is unknown. It also doesn’t explain why Columbus was so silent on his origins, nor does it account for the fludity of national identity in the pre-modern era. All in all, this work is a fascinating revisionist account that forces us to question the foundations of the Genoese origin story that has been attributed to him. However, this book’s arguments, while interesting, are not fully convincing in arguing the Greek Hypothesis.

Image result for columbus a greek nobleman

I give this work a 3/5.

Review: The Progressive Era, Chapter 3

In this chapter of our massive multi-post review of The Progressive Era, Rothbard does some myth-busting about the free market creating monopolies. He does this through a series of case studies analyzing the various ways in which all attempts to establish a monopoly through voluntary means. Before this however, he discusses the massive increase in the standard of living of the average American. The Gilded Age introduced a massive transition away from the era of small merchants and craftsmen towards large corporate factories. Thanks to economies of scale, between 1870-90, prices fell 2 1/2% per year, costs of living fell 31%, real wages rose by 13%, and GNP rose 20% overall. Thanks to the massive diversification created by the increase in the division of labor, the New York Stock Exchange, which had previously dealt with government bonds and railroad/banking stocks, now engaged in a wide variety of stock exchanges.

Now, we turn to the case studies, the first being our ol’ pal J.P. Morgan and his interactions with General Electric. Morgan made his initial fortune owning security investments and kept buying competing life insurance companies. This wasn’t terribly profitable, however it allowed him to hold assets and be in good standing with the Wall Street cronies. One person stood in his way, however, and that was George Westinghouse. He spurned reliance on Wall Street investment in favor of competition and doing his own thing. A costly series of patent wars and failed takeover attempts by Morgan led eventually to a sharing of electrical technologies, thus defeating the ultimate attempts to underwrite all corporate industry.

The next industry we turn to is petroleum, and its most infamous leader, John D. Rockefeller. His company Standard Oil grew in size by expensive buyouts rather than, as is commonly taught, predatory price-cutting. Often many of the oil refiners whom Standard would buy from often forced Rockefeller to a buyout and would profit handsomely from it. Some like George Rice even formed multiple oil companies in a row so that he would keep buying from them. Eventually, Rockefeller would come to encompass 90% of refineries by 1879, but at great cost. Standard Oil was so efficient that the price of oil dropped all the way down to 6 cents/gallon. This meant that if they wanted to raise prices to make a profit, they would decrease their market share. Their numbers would decline to 80% by 1911, and (collectively from the breakup) 50% by 1921. Standard Oil was extremely conservative in their business practices and didn’t respond to dynamic changes in the marketplace. Specifically, the switch from refining to crude oil pursued by Texas & Gulf, and the switch from kerosene to gasoline were all major shifts that Rockefeller didn’t jump on until it was too late and other companies began to assert their dominance.

Rothbard goes into more case studies analyzing the steel, agricultural, and sugar industries. All these attempts at mergers and “gentlemen’s agreements” pursued in large part thanks to Morgan as well as the extremely high Republican tariffs. By the early 20th Century, most businesses were disillusioned with trust combinations, and found that just by being large it did not equal more efficiency. In fact, market shares declined for these conservative practices thanks to new entrepreneurs who would undermine the cartels and gain more profits and market shares. While we can’t know for certain that Rothbard would have written more on this had he lived longer, one can imagine that there would probably be more details on the myths associated with predatory pricing and the story of how Herbert Dow defied the German bromine cartel and undermined this very tactic. Luckily, Dr. Thomas E. Woods talks about this in his Politically Incorrect Guide to American History. All, in all this chapter provides a useful economics lesson in monopoly theory that demolishes the conventional wisdom.

Review: The Progressive Era: Chapter 2

In this chapter, Rothbard begins his discussion of how the federal government came to intervene in the economy. Much like the state regulation of the 1870’s, railroads sought to have the federal government step in to thwart the “cutthroat competition” that existed. The first major act was the Interstate Commerce Act of 1887, which created one of the first federal agencies, the Interstate Commerce Commission, whose job it was to enforce fixed rates. The ICC was a radical departure for the Bourbon Democrat President Grover Cleveland. Cleveland was normally a classical liberal in all governmental affairs, vetoing federal Civil War pensions and relief aid, and advocated for tariff reductions, the gold standard, and merit-based positions. However, when it came to railroads, he was completely in their pocket, and was referred to as a “railroad attorney.” J.P. Morgan, the successor to the Jay Cooke & Co. monopoly, and Belmont, a Rothschild associate, exercised tremendous influence over the Democratic Party, turning it away from its laissez-faire roots and increasingly gaining crony corporate control. The most notable aspect was the fact that Thomas Cooley, the chair of the ICC, stated that railroads were exempt from the strict construction of the Constitution that normally characterized his thinking.

However, despite all the pressure by J.P. Morgan to form a government cartel, the ICC had no enforcement mechanism to carry out the requests by Big Railroads. Eventually, competition returned to the scene, and the pool agreements collapsed. However, a new wave of federal intervention in the railroads was about to erupt with the Presidency of Theodore Roosevelt. The Elkins Act of 1903 would strengthen the ICC and would abolish so-called “secret rates.” In the wake of the ICA, in order to keep doing business, many smaller railroads would continue giving rebates to valued customers (often those who frequently paid). With this new act, many such as James J. Hill were forced to end this practice of rebates. As a result, international trade actually declined and many businesses who specialized in freight shipments were forced to cut back. Another, the Hepburn Act of 1906, would extend this prohibition to all types of commercial railway such as express, sleeping cars, private cars, and pipelines. In addition, it added steep fines that were three times the amount of the rebate plus two years imprisonment. This had the effect of virtually outlawing competitive price cutting and contributed to the further cartelization of the railroad lines.

However, not all railroad regulation was universally supported by Big Railroad. In particular, the Esch-Townsend Bill was defeated due to the fact that there was a split in agreeing over how this would benefit them. The final piece of legislation that is worth mentioning is the Mann-Elkins Act of 1910, which was signed by William Howard Taft into law and created the Commerce Court that would review and punish violators of of the rebate laws. The railroads couldn’t have been more overjoyed since the pro-railroad court would drive out smaller competitors and further monopolize the major industries. Fortunately for the smaller shippers, they were able to get the Supreme Court to emasculate the Court in 1912, and the following year the law was repealed. This was a major setback for the “old guard” of railroad interests, and eventually the ICC would be under the control of rival companies, who would favor far larger increases of federal control over railroads. By the 1916 election, both the Democrats and Republicans favored total nationalization.

This chapter, while it focuses exclusively on railroads, provides a window into how many of the legislative acts that the history textbooks consider wonderful reform, were in reality a tool by large corporations to monopolize themselves at the expense of their smaller competitors. It is ironic then, that it took a Marxist historian Gabriel Kolko in two books (Railroads and Regulation and The Triumph of Conservatism) to deflate the Progressive mythology that continues to be the standard line. Rothbard was highly influenced by Kolko’s work and utilized him in his analysis. If one reads the expansive footnotes, Rothbard (and the editor as well) even responds to Kolko’s critics, who claim that he was exaggerating the extent to which the cronies influenced the pieces of Progressive legislation. This may not seem remarkable at first, but when one considers most scholarly monographs in the 21st Century, one does not usually see historians defending other historians within their works. Rothbard takes great pains to point out where Kolko’s critics go wrong and anticipates the great economists James M. Buchanan and Robert Higgs in pointing out how the government has self-interested incentives that factor into what gets passed. However, unlike the private sector, the government does not obtain wealth through appeal to customers, but rather through a monopoly on force. It is this institutional framework that, in Rothbard’s view, ultimately lead to the railroads obtaining a cartelized monopoly.

Review: The Progressive Era, Chapter 1

Ever since I became a libertarian, I’ve always been enamored by the writings of Murray51m3nbxysol-_sx331_bo1252c204252c203252c200_ Rothbard. For those who are unfamiliar with him, he is often referred to as “Mr. Libertarian.” This is no surprise as he did more than any other person in the liberty movement to bring about a revival in radical liberal ideas. He was the ultimate polymath, writing over 20 books on economics, political theory, history, and philosophy. Jeff Deist, the current President of the Mises Institute, states that his bibliography is currently 63 pages long! He made major contributions in Austrian Economics, anarchism, and historical revisionism. He was the originator of the term anarcho-capitalism, and was a co-founder of both the Cato Institute and the Ludwig von Mises Institute. While there are areas of his thought I personally disagree with him on (which will probably end up being a post in it of itself), there is no denying that he is one of my intellectual heroes and is always a resource in my education.

The current work I will be reviewing is the brand new book The Progressive Era, which was edited by Mises Institute fellow and Professor of economics at George Mason University Patrick Newman. Despite passing away in 1995, Rothbard was so prolific that he had an unfinished manuscript lying around in his papers. This book takes that manuscript, along with his previously scattered articles on World War One, the FED, and Herbert Hoover, and combines it into a single 500 page volume with a lovely forward by Judge Andrew Napolitano. I personally acquired this when I went to the Mises NYC Gala event on the weekend of October 6-7th. Because this work is so massive and packed with juicy history, I’m going to take it chapter by chapter, and take it from there.

The first chapter talks about the economic situation facing the country following the Civil War. Specifically, he goes into a discussion about the railroads in this country. As per all of his historical works, he likes to introduce a bunch of characters as integral to the story. He especially emphasizes the people whom most historians would gloss over, like Schuyler Colfax and Collis P. Huntington. He also states at the outset of this chapter that from the beginning the building of the transcontinental railroads was illegitimate due to the theft of Native American land, something that would probably not even get a mention from most economic historians, who would instead emphasize efficiency and growth. Instead this is a people-centered approach that we would expect from all historians after the rise of the revisionists in the 1960s and 70s.

Throughout this chapter, Rothbard discusses the large amount of cronyism that existed among the Republican Party members who towed the Hamilton-Clay line. But if you think this work is just about the rise of neo-mercantilism after the Civil War, think again! Because after the Panic of 1873, which destroyed the Jay Cooke & Co. monopoly, there was a strong anti-monopoly movement that led to the states slowly ending their monopolistic practices (it also leads to the rise of J.P. Morgan, but he isn’t a major player as of right now). Rothbard also briefly alludes to the origins of the Populist movement among the farmers, emphasizing that the Granger Movement was wrong in its assertions that they were getting the raw end of the deal, however he’ll return to this subject once he talks about the 1892/6 Elections.

Finally, he goes into lengthy detail about the economics of the merger movement of the 1870s. The railroads, wanting to monopolize the market, sought to form a cartel that would engage in predatory pricing, rate wars, and end the unfettered competition that was preventing them from making the large profits they had enjoyed under government subsidy. However, each time they tried to form a voluntary cartel, someone would leak the information out and the cartel would collapse as the businesses returned to free market competition.

This chapter is quite reminiscent of a series of lectures that Hans Hermann-Hoppe recorded in 1986 while Rothbard was teaching at Brooklyn Polytechnic. However, while in the lectures he goes more into the mindset of the American people with regards to both the railroads and politicians who subsidized them, here it is a much more serious economic take on the attempted mergers and cartels. Through the historical example of the railroads, Rothbard demolishes the standard Progressive argument that monopolies naturally form on the free market. Ultimately, this chapter serves as the opening shot for the beginning of the end of a mostly laissez-faire economy in the United States, and the rise of the modern corporate system, supported, in large part, by the rising Progressive Movement. But that will all be fleshed out in future chapters, as I continue to plow through this massive and dense volume.

3, 2, 1…LIFTOFF!

After much consideration, I decided I would start this blog as a way of expositing my ideas and as the home for a potential future PODCAST.

As of right now, it’s all in the brain, but it’s something I’ve been considering for a while now, and have only recently decided to act on it as a way of making some income on the side while I accumulate student loan debt. *fun*

Just as a disclaimer for any of you who are reading this in the future, my opinions will probably have changed over the course of writing, and while I will try to not make this about ranting at things I’m mad at, there are probably going to be times when I do that. There are probably times where I will absolutely contradict myself between two posts, because I am open to changing my mind when someone has the better argument. There are only two things I am absolutely stubborn about and won’t change my mind on: individuals have natural rights that can’t be infringed, and someone’s private property rights (in the loose sense of the term, there are legitimate debates among advocates of private property over the line to be drawn) cannot be violated.

That being said, what should you know about me? Well I am a history and education student at The College of New Jersey. My academic passions are for the above majors plus economics, philosophy, politics, religion, and more recently linguistics, anthropology and sociology. I also have side hobbies like playing guitar and trumpet, collecting maps, and listening to an insane amount of podcasts and YouTube videos.

All in all, I hope that this is a successful blog, and that it is as about an interesting read as a college student can make.