Archive for the ‘History’ Category

Loser Talk

November 5, 2008

Barack Obama is president.

I listened to John McCain’s concession speech with disgust. It succinctly summed up McCain: a pragmatist and compromiser to the end. A principled opponent would have conceded the battle but laid the groundwork for the larger war. He would have pledged to relight the flame of liberty during the dark times ahead.

In today’s climate, such a speech is unthinkable. Unity is the buzzword of the day. Like many times during his flawed, unprincipled run at the presidency, I sought comfort in the 1964 campaign. After listening to McCain’s terrible convention acceptance speech, Goldwater’s was a palliative. I figured that his concession in that same year might provide the inspiring call to action that McCain’s wasn’t. There’s some of that but I think there must be a pattern of graciousness in these matters that I was unaware of. Or maybe the losing candidates are just as sick of campaigning as we are.

I’ve waited ’til now to make any statement about this election because I wanted to find out more of the details of the vote—not just the total but the spread of it, what it might portend at this very early date.

I know many of you expected me to make some statement last night but I held that off. I sent the President the following wire, which I think will be available for you if you don’t have it now:

“To President Lyndon Johnson in Johnson City, Texas.

Congratulations on your victory. I will help you in any way that I can toward achieving a growing and better America and a secure and dignified peace. The role of the Republican party will remain in that temper but it also remains the party of opposition when opposition is called for. There is much to be done with Vietnam, Cuba, the problem of law and order in this country, and a productive economy. Communism remains our No. 1 obstacle to peace and I know that all Americans will join with you in honest solutions to these problems.”

I have no bitterness, no rancor at all. I say to the President as a fellow politician that he did a wonderful job. He put together a vote total that’s larger than has ever been gained in this country.

However, it’s interesting to me and very surprising to me that the latest figures that I can get do not reach the totals of the 1960 election. I am disappointed in this because I thought that the American people would have turned out in greater numbers than they seem to have done.

But he did a good job and I have to congratulate him on it.

Also I want to express my gratitude to the more than 25 million people in this country who not necessarily voted for me but they voted for a philosophy I represent, a Republican philosophy that I believe the Republican party must cling to and strengthen in the years ahead.

I want to thank all of you across this nation who turned out in those numbers to support my candidacy and that of Bill Miller and the Republican party.

I don’t think that I’ve ever seen more dedicated people in my life, people who worked as hard or who worked as long and produced the results that they did. These people are dedicated to, as I say, the Republican philosophy.

There is a two-party system in this country and we’re going to keep it. We’re going to devote our days and the years ahead to strengthening the Republican party, to getting more people into it and I feel that the young people coming along will provide the army that we need.

This effort that we engaged in last January 3 turns out to be a much longer effort than we thought. It’s not an effort that we can drop now nor do we have any intentions of dropping it now.

I will devote—being unemployed as of January 3 or thereabouts—I’ll have a lot of time to devote to this party, to its leadership and to the strengthening of the party, and that I have every intention of doing. I want to just ask the people in this country who worked so hard in this election not to be despondent, that we have a job to do and let’s get along with it, because there are many questions that have to be answered.

I’m very hopeful that the President will, now that the election is over, get along with the answers that we’ve sought during the campaign—the answers about Vietnam, about Cuba, about Communism—Communism’s continuing growth all around the world—about the growing tendency to the control of our economy and our daily lives in this country.

As I said in my wire, anything that I can do—and I’m sure that I speak for all Americans—anything that we can do to help the President get along with the solutions to these problems, we’re ready, willing and able to do.

Now with that I have nothing further to say. I will entertain a few questions—not any prolonged period at it. Mr. Wagner will recognize.

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The Empire Builder

October 16, 2008

If you’re more interested in the subject of James J. Hill after reading my mention of him, I would encourage you to read this series of blog entries that does a capable job of an overview:

  1. James J. Hill, Entrepreneur
  2. James J. Hill, Empire Builder
  3. James J. Hill, Conservationist
  4. James J. Hill’s Legacy

In the “Conservationist” entry, I cannot believe that the author left out the Great Northern Railway’s pivotal role in the development and promotion of what would later become the Glacier National Park. It could have served as an excellent, private model in lieu of the National Park Service.

[UPDATE (10/17/2008): Added “Legacy” link.]

The Panic of 1873 and the Current Crisis

October 15, 2008

I read an article on the parallels between today’s financial crisis and the Panic of 1873 with considerable interest. I got my bachelor’s in history and am halfway through a master’s degree with an emphasis on business history and the post-Civil War American Industrial Revolution. And two of my personal side interests are in banking and railroad history. But I’m pretty out of practice, having set aside plans for my master’s and doctorate to raise my children and work in software, so I read that article uncritically.

I reconsidered the subject when I read this New York Times blog entry following up on the earlier article. Suddenly memories of my research on the Great Depression flooded back into my consciousness and I realized, as usual, that only half the story was being told—perhaps completing the parallels to today’s situation.

Scott Reynolds Nelson (tellingly) never mentions the Northern Pacific by name and only casually refers to Jay Cooke, instead laying the blame for the panic on rampant European mortgages, a bubble that depended on ever-increasing land valuations. Bank failures there spread across the Atlantic where investors lost confidence (inexplicably) in complex railroad bonds and the stock market crashed, he alleges. It’s all very tidy and one is left in awe at Santayana’s maxim, tut-tutting how we never learn.

Jennifer 8. Lee (aside, what’s the story with the number for a middle initial) doesn’t have the luxury of omitting the Northern Pacific since she’s looking through contemporaneous newspaper accounts—where the railroad and Jay Cooke were demonized. She breezed over the issues in Europe, again because the Times wouldn’t have particularly covered them at the time.

But both omit the underlying accelerant in the panic: government subsidy of the railroads on a scale unprecedented in American history. I don’t know anything about European economic history of the nineteenth century except to note that there’s a reason everyone over there was migrating over here—it was pretty dismal except for the landed. Moreover, I know that no- to low-down payment mortgages are a very recent phenomenon: any mortgage of that day would have a substantial equity component that would make it difficult to lose money on a foreclosure.

The transcontinental railroad race was wholly the creation of the federal government, which wanted at least three lines built to link the east to the west as quickly as possible. It meted out cash payments, enormous land grants, and generous loans over the course of nearly 20 years. Despite its best efforts and oversight, each of the transcontinental lines was rocked by financial scandal, bankruptcy, and bribery. But the federal government had a mission and was prepared to spend handily to achieve it.

Each of the railroads, and especially the Northern Pacific, were paid based on how much track was laid. So the main line took precedence and quality of track was of minor importance; this meant that the railroad couldn’t be viable unless goods were transported to stations built on that main line. After the quick buck, which was right in line with the government’s desires, railroad builders of the time spurned branch lines to mines, farming centers, and manufacturers and sited their lines along the easiest grades as straight as possible.

But even doing business that way proved too capital-intensive for the companies so they issued copious quantities of bonds to get the money for building. These bonds, far from the unfathomable financial instruments Nelson would have you believe, were straightforward and relatively short-term. The railroads hoped to complete sections of track in time to pay the interest portions of the bonds and thus stay one step ahead of receivership. Sometimes they made it; sometimes they didn’t.

The country had invested a lot of its hope in the railroads, for they were truly the most modern and mammoth institution America had ever seen. The race across the frontier was followed by everyone in every town across the east. They eagerly bought railroad bonds because they seemed like a prudent investment—the railroads weren’t going anywhere and the government was backing the whole enterprise.

The whole thing was a house of cards. Once the main line track was completed, there were operating expenses of an unprecedented scale and very little freight to generate revenue. With the 1872 Crédit Mobilier scandal fresh in the public’s memory, the bankruptcy of the Northern Pacific in 1873 brought everything crashing down.

Jay Cooke prophetically said in 1869: “Why should this Grand and Glorious country be stunted and dwarfed—its activities chilled and its very life blood curdled by these miserable ‘hard coin’ theories—the musty theories of a bygone age. These men who are urging on premature resumption know nothing of the great and growing west which would grow twice as fast if it was not cramped for the means.” (Murray Rothbard, The Mystery of Banking, p. 231-2) Four years later, his bond bubble would result in chilled activities and a stunted country.

The problem at its root was the distortion and perverse incentives of government subsidy. As Ayn Rand put it:

It is not a matter of accidental personalities, of “dishonest businessmen” or “dishonest legislators.” The dishonesty is inherent in and created by the system. So long as a government holds the power of economic control, it will necessarily create a special “elite,” an “aristocracy of pull,” it will attract the corrupt type of politician to the legislature, it will work to the advantage of the dishonest businessman, and will penalize and, eventually, destroy the honest and the able. “Notes on the History of American Free Enterprise” from Capitalism: The Unknown Ideal

It is convenient to blame the Jay Cookes and mortgage brokers of then and now, but getting rid of them while leaving the underlying system untouched will not address the problem. The well-run and well-planned railroads of the day, like James J. Hill’s Great Northern Railway, did not need government assistance and financed their trek across the United States slowly but safely. The well-run banks of today, like BB&T or Wells Fargo, did not drink from the subprime trough and they’re still around, as viable as ever.

The government needed to get out of the railroad financing business then and it needs to get out of the mortgage finance business now. For starters.

Latest Project

April 27, 2004

If it seems like I’ve been remiss in my blogging, it’s probably because I’ve been hard at work on Vanishing Phoenix, my new site devoted to Phoenix history. I’ve been working on amassing content on my lunch hours, so it’s been pretty slow progress and I don’t officially have anything done except the forums. My goal with the site is to become a focus point for those interested in Phoenix history—a distant and perhaps lifelong quest.

Eventually, I’ll get around to developing its sister, PhoenixHistory.com, into everything that Vanishing Phoenix is not. Where VP covers the past as viewed through artifacts and remnants available in the present, PhoenixHistory.com will take a more general and academic look at Phoenix’s heritage.

It’s not really ready for prime time at this point, but I want to sic Google’s spiders on it early on so it’ll have some status when it is ready. I’ve used the Wiki format because my reach is limited—you may notice that most of the Phoenix landmarks are within an hour of my work and my home. My hope is to eventually attract a community of amateur and professional historians who will write about the periods and subjects they care about.

I’ve got a slew of other plans for future directions as well, but they’re fairly ambitious and long-term. Visit the site now, if you’d like, but stay tuned for when I’ll announce its general opening. If you’d like to join the community, drop me a line and I’ll get you set up.

[UPDATE: Oh and the site design is still in flux. I’m trying to focus on the content and will worry about the presentation as soon as I’ve got a comfortable amount of the former.]