Crisis and Liberty: Lecture 4

0:00Good afternoon, ladies and gentlemen. This morning I touched on a number of developments in the 19th century, with an eye more to disclosing some of the ways in which government was never as limited as many people take it to have been in the 19th Century.

0:59but perhaps not as stark a difference as some people believe and some data suggest. So we need to be aware of those aspects of our history. They help us to understand better some of the things that continue to take place right up to the present day in this country. I want to now move into the 20th century and talk this afternoon about the so-called progressive era. I've already touched upon this to some extent yesterday when I gave a very quick and dirty sketch of some contours of ideological history in the United States, but I want to get into a little more detail about the progressive era and not only deal with some ideological developments, but with some of the economic and political events of that time.

2:15This is a critical period of 15, 18 years. It constitutes, as I've called it, a bridge to modern times. And I've got just a few names thrown up not quite at random here to suggest some of the landmark personalities that are involved in not only making that transition but to suggest that it took place along two tracks both with regard to the government's role in foreign policy, the role of the United States in the world, and in domestic policy.

3:05So, we can think, crudely speaking, of the 19th century as the old regime, in the sense that U.S. foreign policy adhered for the most part, not perfectly, but for the most part, to the direction given by George Washington and Thomas Jefferson, who advised that the country should stay out of foreign quarrels, specifically those of the European nations, with whom we had many ties of commerce and friendship and culture and other things. No one of any importance ever urged isolationism in a literal sense.

3:59No one said we should withdraw from the world and be as Japan was before Commodore Perry forced them to open up their trade. We had lots of connections and the Jeffersonians were always glad to have those connections of culture and commerce. and Commerce, but what they didn't want was for the government of the United States to project this nation into the endless intrigues and bloodshed that had marked the history of Europe. They said we've got plenty to do here, we've got a continent to develop, we've got lives of our own to lead, let's do that, let's let these people stew in their own juices as it were. If they must cut one another's throats, let them attend to it all by themselves.

4:57And so that was, as I say, for the most part, the sort of foreign policy that the United States conducted for more than a century. Now, there were always some people who wanted to get involved in foreign affairs militarily or in some other way that deviated from Jeffersonian and conservatism, and occasionally something would happen, as Jefferson himself authorized naval expeditions to suppress Barbary pirates. So one can certainly, if one tries, go back and create a fairly long list of events and deviations from that general policy stance.

5:47But I would still insist that they are anomalies. They are exceptions to the general rule of foreign policy. But beginning with the Spanish-American War in 1898, we move into a new era of American foreign policy. Policy. And from that time forward, the United States has been actively, repeatedly, and significantly involved in the military and political affairs of many other parts of the world, and eventually to virtually all other parts of the world. No one by the post World World War II period could really be immune from some American interest or involvement or intervention or influence of some kind that was carried out deliberately by the U.S. government.

6:53So we eventually arrived at global interventionism after World War II, which put the country in a completely different position than it had been in with regard to foreign policy in the 19th century. And it only gets worse lately. Domestically, we never had, as I say, laissez-faire, but we had limited government. We know it was limited because we know now that in the 20th century it got much bigger, so it might have been bigger in the 19th century.

7:41As I've stressed, there were lots of people seeking government intervention of all kinds in the 19th century, and many of them simply failed to get what they wanted. They didn't achieve the enactment or implementation of the government policies they wanted to do all sorts of things. Subsidize various industries, make tariffs even higher than they were already, provide emergency employment projects for people during industrial slumps. All sorts of proposals were being made all the time for some kind of additional government action in the 19th century. But in most cases, no response came forth.

8:33And when we look back and say, well, why was that? Why was it that the kinds of proposals that seem to go through much more readily in the 20th century I have concluded that an important part of the answer, probably not the whole of it, but an important part, is that the dominant ideology was one at that time that was much closer to what we would call classical liberalism. Many more people had a view of the proper role of government in economy and society as a closely limited role.

9:19And people talked that way. It was something you could read in newspaper editorials. You could even hear members of Congress saying things you'd never hear them say nowadays, Such as, we can't do such and such because we can't take money that doesn't belong to the Congress and use it to benefit these people. It's not our money. Well, actually that kind of talk was revived by a few people in the last 20 years in Congress, but they don't mean it. The difference was in the 19th century when some guy stood up on the floor of Congress and said that he really meant it. Look, it's not our money. We can't just do anything we think would be nice with that money.

10:06It's not ours to dispose of that way. We're constrained by the Constitution. This Congress only has certain limited, enumerated powers. Well, eventually that kind of belief system dissolved. and we got the kind of dominant ideology that has been friendly to unchecked exercise of government intervention in countless varieties of forms in domestic policy. Policy. Now, I put up some presidents here who were, as it were, at critical junctures of making this transition from the old regime to the modern regime, and Teddy Roosevelt and Woodrow Wilson I would call the mothers of all pernicious 20th century policy, whether or domestic or foreign. These were really bad guys, any way you slice it. Talk about misfortune. Roosevelt was a psychopath for starters. I'm not exaggerating here. The man was a complete nut. He relished killing people. There's an interesting account of the Spanish American War, when he is described by someone who came upon him dancing a little jig around a dead Spaniard.

11:43Well, you'd cogitate on that one for a while, when kind of a person dances a little jig around a slain human being. He loved to kill any kind of living creature, an avid hunter, up to and including human beings. So, that was one element of his personality, unfortunately, he was a complex figure, he wasn't just a psychopath, he was, in many ways, a keenly intelligent man, which made him even more dangerous. He wrote a great deal, he wrote many books, he was a successful author, and they're not bad books, they're not terrible books, you go read some of that now, and you'll find he's quite literate, he had a flair for writing, he obviously had a keen intelligence at work, now you may have problems with the kinds of thoughts he was processing with that intelligence, with some of the values that underlay his views and interpretations, but he certainly was not a dummy.

13:04And he had a virtually unbounded lust for power of the kind that demagogues exhibit. He loved public adulation. He loved to hear the people cheering for him. And that's one of the things that makes all politicians so dangerous, that they're that sort of person. They get their jollies from leading people, because the next thing you know, they're leading them over a cliff. So there was Roosevelt who inadvertently became president in 1901 when one of Ralph Raco's conspirators up in Buffalo polished off President McKinley and he stuck around for the rest of that term and won more.

14:10And then he left office, leaving his hand-picked successor, Taft, who proved to be a great disappointment rather quickly. Taft is also a complex figure, I think, a more admirable man, although not wholly admirable himself. A man of judicial temperament, whether you like his judicial doctrines or not, at least that was his temperament. He didn't really like being a politician, so you have to say, well, so far so good. He didn't like campaigning, he didn't particularly get a lot of joy from having public adulation. He was a thoughtful man, I think, and eventually he was much happier later on being Chief Justice of the U.S. Supreme Court The President of the United States But he did advance in some ways the program that Teddy Roosevelt had set in motion.

15:15For example, antitrust prosecution was carried out much more actively on an annual rate basis under TAF than it had been under Roosevelt. So even though Roosevelt is sometimes described as the trust buster, Taft was a more active prosecutor of antitrust cases than Roosevelt. And that was not good because, as I suggested this morning, antitrust law was a dreadful form of law. It imposed all kinds of uncertainty hanging over the conduct of business, particularly large business in this country. And even though the government in those days had limited enforcement resources, so chances were pretty good if you violated the antitrust laws, you'd get away with it.

16:10Still, you didn't know for sure, and if you were unlucky and were prosecuted and lost a case in court, Court. It could be extremely costly and potentially even devastating to your enterprise. So it was not a good thing that Taft was himself a big trust buster. But Taft looks like something If Teddy Roosevelt was a kind of psychopathic proto-fascist, then Wilson, to my way of thinking, was more akin to Lenin, a zealot, a humorless man, so far as his engagement with Lenin was concerned.

16:57My way of thinking was more akin to Lenin, a zealot, a humorless man so far as his engagement in public affairs went, utterly convinced of his own rectitude. What could be more dangerous than a man in power utterly convinced of his own rectitude? That's what we had to deal with with Wilson. Now Wilson never would have become president in the 12 election, had been elected then, become president the following year, but for Teddy's revived ambition. Teddy, having been out of office and slain enough large mammals in Africa to carry him for a lifetime, just Just couldn't stand being out of the public eye, especially when he was so disappointed in the way Taft was carrying on as president. So he, along with some of his politically influential pals, decided that they needed to put him back in office, but it didn't seem to be workable to do that via the Republican Party. So they said, well, if that won't work, We'll take our political football and go home and create the Progressive Party and Teddy Roosevelt will be our candidate and he'll run and be re-elected and we're off and running again.

18:31So that's what they did in 1912, and as a result of that political shenanigan, they split the non-democratic vote in such a way that Woodrow Wilson got a majority of electoral votes and was elected. I believe his popular vote was 43%, if I recall correctly, in that neighborhood. I think it was, well, at all events, it was in that neighborhood. He did not get a majority of the votes, but he won in the electoral college. So when Woodrow Wilson took office, he seemed, I think, to many people to be A democrat of the sort they had seen before. He had sometimes made noises about believing in competition and believing in the market economy and believing in low tariffs and free trade and those seem like traditional democratic positions.

19:36If you'd actually looked a little more closely into what he had to say, for example, by reading the collection of speeches published in 1912 called The New Freedom, you would have found that actually he was not any kind of Grover Cleveland Democrat. He was already deviating off into much more interventionist directions with regard to domestic policies. Foreign policies, you know, he didn't have any experience with and nobody seemed to be terribly interested in them in 1912 anyhow. So the election was really decided on the basis of the candidates' positions on domestic policies.

20:23And it was expected, I think, that Wilson would revert to some extent to democratic positions. And indeed in a few ways he did, such as lowering tariffs in 1913. But he had more in mind. He was already developing a kind of megalomania and it was going to be expressed in domestic policy by making the government a much more decisive arbiter of economic events than it had been before. He said in that book I mentioned that under modern conditions we can no longer rely on a government that promotes liberty in the old negative sense of just leaving people alone.

21:17We now have to have a government that actively intervenes on behalf of the individual as against powerful entities such as the trusts. So this was more like the kind of demagoguery you were getting from Teddy Roosevelt who by that time had become a full-fledged fascist who was campaigning for complete government control of big business and was making terribly menacing noises about almost acting as a dictator. So, I guess we should be glad in a way that Teddy didn't have another run, though it's hard to conceive of anything that would have turned out worse all in all than events as they turned out under Wilson.

22:09The great disaster of Wilson, of course, was that he ended up plunging the nation into World War I in a way that affected decisively the outcome of the war. But for American entry, it seems quite likely that the warring powers in Europe would have ultimately, in a state of exhaustion, concluded a peace with one another on very different terms than the Treaty of Versailles, which loaded the guilt and heavy reparations liability onto Germany, which busted up four large political empires and created a jerry-built arrangement of new nations and mandates and divvied up loot between the French, the Italians and the English.

23:04and created a situation in which a renewal of the fighting in Europe was well guaranteed, as many people saw quite plainly at the time. Mises wrote about it, John Maynard Keynes wrote about it. Many people who had heads on their shoulders could look at that treaty and say, This is a disaster. This is guaranteed to produce renewed warfare in the future, as it did just 21 years later. That was Wilson. Wilson created the outcome of World War I as it happened, I'd say almost single-handedly.

23:49Wilson personally had not decided to ask for a declaration of war. I don't believe the United States would have entered World War I. So if ever we could blame one man for so much horror, that's the man. Well, he had descendants, and a lot of them. And I've just sketched in one of his apostles, as it were, Herbert Hoover. Hoover himself was something of an author, who wrote a number of books. The last book he wrote was an adulatory book about Woodrow Wilson, because he idolized Wilson as many of the people who worked in Wilson's cabinet did.

24:48and he was a Wilsonian. Later on, of course, the Democrats tried to tar Hoover as some kind of a callous throwback to old-fashioned laissez-faire Republicans, but that was complete hogwash. He wasn't anything of the sort. He didn't believe in laissez-faire. He believed in all kinds of government active involvement in the economy, business government cooperation of various sorts.

25:18government assistance to farmers, to industrialists, transportation, banks, so whoever was anything but a proponent of laissez-faire. In fact, he thought laissez-faire was an outmoded idea and the government had to act differently. He was very much a Wilsonian in regard to domestic policy. He was somewhat less of a Wilsonian, I think, in foreign policy. He's not quite so keen to have the United States try to become the arbiter of the world's affairs. But again, not a perfect figure. But when we get to FDR, now we get someone who's a full-fledged Wilsonian, domestically and internationally.

26:08And we get him at the worst possible time, 1933, when we're at the pit of the great contraction and many people in this country are desperate for some kind of assistance that they see no way to get except from the federal government. So we'll come to that later on and talk about FDR and his leadership of the New Deal and the U.S. during World War II, which was so terribly destructive and prolonged the war, as John Denson will tell us later, by his policy of unconditional surrender, causing millions of unnecessary deaths.

26:53Followed directly by the pygmy Truman who, strange to say, eventually became a popular, almost mythical figure to the American people. There's just no accounting for the tricks that memory can play because when Truman left office in 1953, He was one of the most unpopular people who had ever held the office of the presidency, and for perfectly good reasons. His administration had been domestically corrupt and in foreign affairs disastrous, and so he deserved all the contempt anyone could heap on him.

27:39But eventually people looked back somehow and found his kind of bluntness so appealing The Theory of Money and Credit

28:16of FDR, and then after some kind of quieter times under Eisenhower, we get this succession of figures, which all need to be lumped together. In fact, Nixon was, in many ways, just like these other guys, extreme proponent or at least tolerator of domestic activism of all kinds. The regulatory state probably took a bigger leap under Nixon than any other president in any four-year period. And so we have these guys in the 60s and early 70s who then put in place the modern welfare state and up to and including its embeddedness in the medical care system, which is proving so disastrous by the day.

29:11So this is a kind of overview of figures, there's a lot more in that story of course, but the key here again for present purposes is that we get here via progressivism. Now one of the things that I was not happy about, and some readers of my book Crisis and Leviathan were equally unhappy about I think, was that when I discussed progressivism And I treated this crucial ideological change as exogenous, you know, I say we must recognize these things happened, but I didn't give a compelling explanation, even attempt to give an explanation of why.

29:57Why was it that progressivism occurred, that we moved from the dominant ideology of limited in Government, which had been in place with some resilience for more than a century to this very different kind of dominant ideology of government activism, both domestically and in foreign affairs. I don't know that I have ever arrived at anything I would characterize as a simple I have no confidence myself that I can put down in a few lines why that transition took place, because I think it has various sources.

30:48What I have tried to do to get a better mental grip on it myself is to consider the context in which it took place, Some of the background, some of the main ideas that composed it and try to link all these things together. How do they connect up? Some of them seem, as I said yesterday, to be at odds with one another. Progressivism seems in some respects to be internally contradictory. It's for more politics and for less politics, for example. But ultimately, it's for more statism in every dimension. It's just a question of the progressive's view of the mechanisms by which that statism would be brought into play.

31:38And this belief that they had in expert management, I think, is one of the keys, because that's really different. are different. You don't find in the 19th century anybody to speak of who touts the idea that we'll all be better off if we have a government expert running things. In fact, that would have been, I think, viewed almost universally as a preposterous idea in the 19th century. I mean, people recognize that politics happened, that you couldn't stop it, that sometimes it produced bad outcomes, but they didn't say, this is grand. They didn't say, that's the way to run a railroad, to twist an old expression. They would have said, government commission setting railroad rates? Well, what an idiotic idea. What do they know about that?

32:37They don't know anything about railroad business. Running banks? Well, we've already been there, and that was terrible. They already demonstrated they can't run banks. Running agriculture? Running the manufacturing industry? Stupid. These guys don't know how to run anything. They're just politicians. All they know how to do is tax and make rules and shake people down. That's what politicians do, and some people accepted that. It's like the sun rises in the east, you're going to have politics. Americans are rarely anarchists, you know, very seldom did they say, we've got to eliminate politics. They said, you know, you can't do anything about that except throw the rascals out at the next election or maybe keep a closer eye on them or something of that sort.

33:31But they certainly didn't often believe that they knew what to do to make the world a better place and that if you assigned them that task, they would do it. So in those respects, I think our forebears were a lot more astute than we have been in the 20th century to fall for the kinds of assumptions we've fallen for. But we got there for a reason. The ground was plowed, as it were, prepared in the late 19th century by intellectuals, opinion leaders, people who in some cases, as I mentioned yesterday, had picked up ideas in Europe, especially in Germany, where government control and the early welfare state were much much more in evidence, and they had decided that if these highly educated Germans thought these were good ideas, then they must be. So we had a lot of these young political scientists and historians and economists coming back to the United States in the late 19th and early 20th century with their heads full of status nonsense they acquired in Heidelberg,

34:53and then they had students and their students had students and eventually these things began to have a serious impact on the thinking of lots of Americans. Some of the figures that are pretty much forgotten now, people such as Lester Ward, Charles Cooley, Edward Ross, usually called E.A. Ross, these guys wrote books that were big sellers by by the Standards of Academia at the Turn of the Century, and they trained people at leading universities. Richard Ely, probably the kingpin of them all, taught, for example, John Commons, and in Commons taught a legion of students, including a man named Witte, W-I-T-T-E, who was the principal author of the Social Security Act.

35:55And if you like, you can track any number of threads like that from a veritable handful of these German trained professors in the United States whose students ended up getting involved in policy making, Making, especially in Wisconsin where John Commons was the leader of a whole school of thought about government interventionism. Besides Ely and the ones I mentioned, John Burgess, Albion Small, Simon Patton at Pennsylvania, these guys were very influential. Simon Patton, for example was the professor who taught Rexford Tugwell and Tugwell was one of FDR's brain trust guys in 1932-33 and remained in the government later in the 1930s so it's not difficult at all to find out where bad ideas are born.

37:02Heidelberg but they were carried here and disseminated so that's one thread and I think it's a it's of some importance although it's sometimes hard to tie down its importance because you need more than just an idea a proposal is not enough this has to be sold, it has to be carried through the political process and so forth so there's more to it Then just some pernicious ideas being imported into the United States. But the point of this is that it was changing the climate of intellectual opinion at leading places. And even people who weren't in universities, people like, say, Walter Lippmann, who was very much an intellectual and learned at Harvard these kinds of ideas, became a socialist in his early life and a proto-socialist for the rest of his long life.

37:57Life, very influential, writing columns way up into the 1960s, conspiring with politicians and diplomats all along the way. This guy had tremendous influence and he's simply one more of this group, who are shaping political action and moving it in the direction of collectivism and away from the old regime. So Irving Fisher, John Dewey, everybody's heard of John Dewey because he's the guy who did more to destroy education than anybody else by propounding very bad ideas that were wildly popular among people who went to teacher's college for decades.

38:50These guys besides being collectively inclined along the lines of the German trained professors also had another trait that was coming into play here and that is that they came out of the post-millennial pietist religious channels in which the dogma includes the idea that we have an obligation to God to bring about the heaven on earth that Christ isn't going to come and then produce heaven on earth. We're going to produce it and then Christ will come back. So if that's your religious tenet, you're motivated to get out there and start creating heaven on earth and these people believe that the power of the state would be mighty useful in helping to do that.

39:50So Murray Rothbard has written a great deal about the influence of post-millennial pietism. I commend to you his writings on that topic. He knew more about it than anybody I've run across. So we've got, as it were, intellectuals on one side, but they're not separate from and these religiously inspired currents going on at the same time, tied up with movements that go way back in the 19th century such as prohibition of alcohol, prohibition of Sunday trading, blue laws, various schemes to force people to be more virtuous than they'll and eventually these ideas were also carried into practice in the form of the Prohibition Amendment to the U.S. Constitution, a very curious kind of thing to have a constitutional amendment about, but it was done and of course we all know how that worked, we learned so much from it that we've been duplicating it for the last 40 years with another amendment.

41:07with another substance with, I would say, even more disastrous effect, but we're not giving it up. Once again, there's evidence that people are getting stupider as time passes, not smarter. What happened to the theory of evolution? It took a wrong turn somewhere. Well, this is kind of intellectual and popular religious background that feeds into the progressivism proper that we get between 1900 and 1918. And this is occurring in a socio-economic context that I think is no longer very familiar to people, and even historians, I think, lose track of what it was like in that period.

42:06The economy was growing rapidly, so sometimes people think, well, everything was hunky-dory. We were having rapid economic growth. but if you go back and look at the actual year-to-year records what you find is that the growth of the US economy in that period was extremely erratic we'd have a year when when when GDP real GDP would grow 10% in one year and then we'd have a year when it didn't grow at all or a year or five percent growth followed by Actual Fall in GDP. On the average, the economy was growing 3-4% a year in that period, but the average doesn't mean anything because the variance was so great. And the importance of that was that this created a lot of uncertainty and apprehension. It made people nervous about What the future held, correctly so, even if you can expect, for example, demand for your product to grow and you're in business, well, if it collapses next year, you could be wiped out. One bad year is plenty in a lot of business situations. So businessmen were nervous, a

43:29lot of ordinary people were nervous. They never knew when their employer might lay them When they come off, when they might have trouble finding another job nearby, so this was a time when many people were more apprehensive than you might think from the trends that characterized it. Financial panics happened every few years, banks would close, depositors would be running and so forth, so people were worried about the financial condition of the country, not least of the warriors were the bankers themselves, because they didn't like the setup they had at that time.

44:23Many business people had been badly stung by the depression of the 1890s, and it was foremost in their mind throughout this whole progressive period. A lot of businesses had gone bankrupt in the mid-90s. Even those that hadn't gone bankrupt had lost money for years on end in many cases, and so they knew something was wrong. They said something about this The economic set-up we have here is not giving us good results if we have events like that great depression we just had. Even now when we look back, it's the second worst depression of American history. Unemployment rates for industrial employees probably got as high as 30 or 35 percent at times in the 1890s.

45:12So it was a terrible slump and it put a lot of business people and bankers in a frame of mind to look around for reforms of some kind. And we can in fact draw not a straight line but a fairly direct line from that depression and people's responses to it through a number of meetings of bankers and others interested in financial reform Ultimately leading up to the creation of the Federal Reserve System in 1913. So financial instability, economic instability, labor relations were horrible at this time. Not just that there were strikes, there were strikes fairly frequently in some industries.

46:04not a great many workers were organized into unions then not even 10% of the whole labor force belonged to labor unions but in some industries such as mining and the railroad industry lots of people did belong to unions and in some places such as out in the western part of the country there were radical unions I believe it was more syndicalist than socialist.

46:57and so there were events every once in a while such as the the governor of I guess it was Idaho who walked out of his house one morning was blown to smithereens by dynamite that was not an accident and on more than one occasion police or the militia would be brought out and would gun down some of these people there was There was a massacre in Centralia, Washington, before World War I, or maybe it was just after actually, around the World War I period and right up the road from where I used to live, north of Seattle and Everett, there was another great massacre involving the Wobblies who showed up on a boat from Seattle and were met by the mill owners and their local sheriffs and thugs, heavily armed, and they had a huge gunfight right there on the wharf.

47:54So, this is what we call labor relations in the progressive era, but that is not quite the way we model it in neoclassical economics, and it made a lot of people apprehensive. In 1914, probably the worst episode was out in Ludlow, Colorado, there was a big mining camp and the miners went on strike, Rockefeller owned this operation and so they got the state militia in there and they got them incomplete with machine guns and they set up their weaponry and they set this tent city where the strikers were living on fire and proceeded to burn a bunch of the people to death including women and children and to shoot down some of the others and they inspired more than a week of civil war right there between the state Authorities and the Striking Miners. Well, something else to make people nervous, to make them think, maybe there's a reform that's needed here, maybe capitalism at least in this form isn't working. So what I'm doing here is I'm trying to suggest

49:05the kinds of contexts in which progressivism developed and to suggest to you that this was not a golden age. This was a period in which a lot of Their uncertainties were hanging over people and putting them in a frame of mind to look for some more secure arrangement. If there's one promise that government makes to people it's that they're the ultimate provider of security. So here were a lot of Americans feeling insecure and therefore becoming more amenable to some Some proposal to use government power in a way that would enhance their security. That's the ultimate good deal people want from government. It never gets it, but it's always a deal they're willing to consider. Immigration rates were very high at this time. On average, about a million foreigners entered the country every year. The population of the United States The price in 1900 was 76 million, so to put that in context, that's more than 1% being added to the population by gross immigration flows every year.

50:23Between 1900 and 1914, when the war started, the shipping wasn't available and the immigration flows almost stopped. But, up until the war, there was heavy immigration every year. It fell back a great deal during the depression years, because word passed very quickly between Europe and the United States, and so people knew there's no point moving to Pittsburgh in 1908, because there's no work to be had there. The thing is, from 1900 to 1909, it was the highest ceiling of immigration in the United States in our history. Right. Yes. Yeah. Well, what this did, again, was create situations in many of the big cities of the east and the northeast, where people found life more uncertain. Not just the immigrants, of course, they frequently didn't know what was going on,

51:53Lots of people became essentially middlemen and translators and what have you, so there was a huge number of institutional innovations that came forth to accommodate the assimilation of all these strangers into American society. And I think in retrospect we'd have to say that they worked quite well, but that didn't mean they worked instantaneously or that they always worked. And so there were conflicts, ethnic conflicts that took place throughout the industrial areas of America and in these, even in the West, in places with mining and lumbering camps, employments of that sort. That was another part of the context. And then there was on top of this, as I mentioned earlier this morning, the growth of big business which continued during the progressive era quite rapidly and had a lot of people scared particularly small business people who were apprehensive that they'd be able to meet the competition. By that time we we not only had big manufacturers and big utilities and big railroad companies but we're even beginning to see such things as big retailers. People like the mail

53:07order sellers of Montgomery Ward and Sears that were starting to provide had serious competition to a lot of small storekeepers in rural areas because they offered low prices and they delivered reliably and so they were serious competitors and people didn't want to go down to the local store and pay 50% more. So this kind of development of big business This was occurring as well. So in this context, schemes to have the government do something that looked as if it would provide more security or hold in check some of these emerging threats gained a new credibility and more political support among the public and thence among representatives in legislatures and in Congress.

54:00In 1903, now we've got Teddy Roosevelt as president, his desire to dictate to big business took the form of the creation of something called the Bureau of Corporations. This was the beginning of any kind of general interest at the federal level in overseeing big business. We already had the ICC, which is the so-called Independent Regulatory Commission, but the Bureau of Corporations was part of the executive division of the federal government and didn't have great ambitions, although some people wanted to go so far as even having a federal license for corporations doing interstate business.

54:55That didn't go through, but the Bureau of Corporations was supposedly going to discipline big business by collecting information about business and disseminating it to the public, so that the power of public opinion would be mobilized if businesses were behaving badly. The Bureau of Corporations is the germ from which we then got later on, the Department of Commerce and Labor, which evolved into the Department of Commerce, which is sort of the government's busybody subsidy office that we have to put up with now as well.

55:47This is where it began. The antitrust laws didn't satisfy a lot of people, not just the businessmen who had to endure the uncertainty, but others as well, and eventually they were amended in 1914. The Clayton Act was an amendment to the Sherman Act and tried to clarify a little bit exactly What the reach of the antitrust laws were, what things were criminal and what things were not. I don't know that it provided a great deal of clarification, but it moved in that direction perhaps. At the same time, the Federal Trade Commission Act was passed, and that created another commission, Administration, sort of duplicating what was being done already by the antitrust division of the Justice Department, which was looking into anti-competitive actions by business.

56:46And so we've been stuck with that outfit for the last 89 years as well, again creating more uncertainty for businesses. You never know when FTC might come down on you with In 1906, the two laws were passed having to do with security of food and drug supply, the Meat Inspection Act and the Food and Drug Act, sometimes called the Pure Food and Drug Act of 1906. These are interesting in various regards. In some ways, they're quite typical of progressive lawmaking in the sense that they were preceded by quite a lot of muck-raking journalists exposing supposedly terrible practices, especially in meatpacking plants where unsanitary conditions were being tolerated and contaminated products were being marketed and what have you. Much of this was fiction, literally fiction, such as Upton Sinclair's book, The Jungle, which may have had the biggest impact of any of the muckraking, but some of it purported to be reporting as opposed to fiction, but I think much of it was bad reporting. Later

58:17Later on it became fairly clear that the worst defenders in this regard were not the big meatpacking companies, indeed they were probably the best performers, but the worst defenders were the little fly-by-night outfits who were usually able to escape any kind of supervision whatsoever. But even they were disciplined by market competition, so I don't want to make too much of their are Sins. At all events, the legislation was misdirected. Both of these acts were, however, also typical of progressive legislation in that they are not what they seem. Historians used to write about them in a very naive way. They'd say the capitalists were committing sins. The muckrakers discovered it and told the public. The public demanded that the government Clean Up the Mess, and they did, and they passed these laws into story.

59:17Well, actually, there was a long, long background to the Food and Drug Act, for example, that involved lobbying and politicking and organizing going back at least to the 1880s. And particularly central to this background was one Harvey Wiley, who started out in the 1880s in a position called the chemist of the Department of Agriculture and that's interesting, the chemist, they had only one in those days, that's why they're known as the good old days. But Harvey Wiley was an ambitious bureaucrat, he was kind of a model for bureaucrats everywhere at all times. He wanted to expand his power. He wanted to build the size of his bureau and his budget and the scope of its actions. And so he worked tirelessly, never gave up, and he realized that if he was ever going to get anywhere, he needed powerful allies in the political process. So he went out and allied himself over the years, especially with Sugar Producers who were concerned about competition from the saccharin, which is an

1:00:36artificial sweetener that had come into use in the late 19th century, and whiskey producers who were fighting against rectified whiskey as opposed to whiskey aged in barrels the old-fashioned way, and so Wiley, although he was an ambitious bureaucrat, was also a Dr. Strangelove believed in purity, the code phrase in Dr. Strangelove, purity of essence. Wiley had the notion that only certain foods were pure and ought to be consumed by human beings.

1:01:22They were the natural ones, sugar, say, as opposed to the impure or artificial ones, saccharin. I don't know quite how he got the idea that old-fashioned whiskey was pure and rectified whiskey not, but he did. Same with butter and margarine. He tied himself up with the butter producers who were concerned about competition from the margarine producers. Margarine was impure. In fact, the federal government actually placed a tax on, an excise tax on margarine in the late 19th century, of all things, and the state said laws that wouldn't allow producers to color it yellow. They had that for ages, in fact. In my lifetime, you could still buy white margarine and get a little package of coloring when you bought it, and you could take it home and mix up the coloring with this white stuff and make it look like butter.

1:02:20But that was all because of government regulation and Wiley joined forces with these protection seeking manufacturers and they lobbied Congress year after year after year to get a law enacted that would basically outlaw or somehow penalize these impure foods. And ultimately that law they got in 1906 with the Food and Drug Act which began fairly innocently almost as a labeling law. It required producers of drugs and processed foods to reveal their ingredients and to say exactly what was in the package and not to say something was in there that wasn't in there.

1:03:07So that didn't seem like too burdensome a law at the time, but again it was a foot in the door and from that beginning the power of the federal food and drug regulators grew and grew and grew from episode to episode as some big public health disaster took place involving particularly drugs that might kill a lot of people. So eventually we got a kind of draconian regulation of food and drugs in this country. It goes back to the progressive era. Well, let me say a little about one more kind of progressive attempt to get security.

1:03:53And this is one that has resonance for those of us who still remember well the events of the 1970s. In the 1970s, many people became concerned with running out of raw materials with energy insecurity. Remember how Nixon and Carter and those guys used to try to sell the country on their energy policies as national security issues. and people still talk like this sometimes. We're reliant on the Persian Gulf for oil, people claim, and therefore we're at risk. It's a national security thing. We have to kill all the Arabs, some such non-sequiturs rarely far behind.

1:04:44Well, a lot of people in the late 19th century and even more in the progressive era began to fear. We're always dealing with fear here, I reiterate. Fear is the best thing to use if you want to do something in politics. They began to fear and to try to persuade other people to fear that we were going to run out of various natural resources. And one reason we were going to run out of them is because currently they were being used unwisely. By whom? Oh, by their owners. By, for example, people who owned forest land and had the audacity to go into that land and cut the trees down and turn them into lumber.

1:05:37Now, in the process of doing so, they sometimes use the methods that in a very naive or vulgar sense seem to be wasteful. They might not cut all the trees, for example. They might cut only certain sizes. They might not process the wood very carefully, so they might build up a huge amount of byproduct I remember when I was a kid going up into Northern California and Oregon and Washington, all these lumber mills used to have these funny looking teepees where they would burn sawdust and waste wood from the lumber mills.

1:06:28I never see that anymore, maybe it's because they've moved all the timber making to Canada. at all events that was the sort of thing that some of these early conservationists would see and they'd say well look at that good product going to waste. They were very much attuned to the physical fallacy of waste. When they thought of waste they thought of stuff, of things they could see being not used for any productive purpose. purpose. Ergo, they thought they were seeing waste. What they didn't understand, and indeed what conservationists to this very day have never understood, is that waste has everything to do with value. It's not being appropriated, but value. And that when we talk about something It has value not being used because it would be more costly to use it than to let it go to, quote, waste.

1:07:33That's not really waste at all. That's economic behavior. So if some guy in Wisconsin or Minnesota cut all the trees on his woodlot, It might look as if somehow they were devastating nature's bounty, but what these guys understood perfectly well was that from the Rocky Mountains to the Pacific Coast, there were countless thousands upon thousands of acres of perfectly good trees waiting to be cut at fairly low Low cost in many places. It didn't make a lot of sense to use German conservation methods in Wisconsin. It wasn't worth the cost of the resources required to do it. If you wanted to replace the wood you just cut down in Wisconsin, go to Colorado and cut some trees there. Now, You didn't have to explain this to lumbermen. They knew this already. That was their business.

1:08:44But the conservationists looked at the cutover district of the northern Midwest, upper Michigan, of Wisconsin, Minnesota, and they said, look, they're wrecking this place. They're just destroying it. We've got to stop them somehow. Capitalism is just raping the land. They thought But any number of other resources were going to be overused, misused, used up as well. Let me read you just a brief section from a book written by one of the leading early conservationists, Gifford Pinchot, an important progressive figure.

1:09:30And he wrote in this 1910 book, we have a limited supply of coal and only a limited supply. Whether it is to last for a hundred or a hundred and fifty or a thousand years, the coal is limited in amount. Unless through geological changes, which we shall not live to see, there will never be any more of it than there is now. But coal is in a sense represents the vital essence of our civilization. If it can be preserved, if the life of the minds can be extended, if by preventing waste there can be more coal left in this country after we of this generation have made every needed use of this source of power, then we shall have deserved well of our descendants.

1:10:26and later on in the same book he wrote, the five indispensable essential conditions or materials of our civilization are wood, water, coal, iron and agricultural products. We have timber for less than 30 years at the present rate of cutting, 1910. The figures indicate, expert speaks, the figures indicate that our demands upon the forest have increased twice as fast as our population. We have anthracite coal, but for 50 years, and bituminous coal for less than 200.

1:11:15Our supplies of iron ore, mineral oil and natural gas are being rapidly depleted. And many of the great fields are already exhausted. Mineral resources such as these, when once gone, are gone forever. Well, you can take this passage, unchanged, and insert it 20 years later, 50 years later, or tomorrow, and you'll find somebody willing to sign at the bottom. This is what conservationists slash environmentalists have been saying from the beginning. They've been talking about misuse, waste, all subscribing to physicalist fallacies, and all proposing that the answer to this dire problem is government control of natural resources.

1:12:14Now, this control had already begun to be expressed as early as 1891, when the Federal Government first created forest reserves, which is to say, it took some of the areas that were still in the public domain, and it said, we're never going to sell these, or let somebody come in and use them. These are going to be set aside as protected forest reserves. 1891 was the beginning of the forest reserve system. That would be President Harrison's term, although I don't know that he had much personally to do with this. But this was something that Teddy Roosevelt latched onto and made one of his political claims to fame.

1:13:03and he was the great conservationist, he was going to save our natural resources from rapacious capitalists and again this fits right into the atmosphere of thinking in the progressive era. So Roosevelt greatly expanded the number of forest reserves from 41 that existed in 1899 to 159 when he left office, which increased the area from 46 million to 150 million acres in forest reserves. and later on even more land was added and and you can find people today that want to set aside still more forest land to be overseen controlled by the federal government. Countless forest economists have demonstrated that the government's management of these lands is a disaster, that it gives them negative value. Now I'm not saying it reduces their value, I'm saying it makes them worthless. The The costs being incurred are greater than the benefits being yielded and if you add that up over a stream of future years you get a gigantic negative current present value for what the government is getting out of this property. It's squandering the property. It's

1:14:28been squandering it all along. These were senseless reserves in the beginning. The forests were vast in 1908 in this country. There was no running out of wood. Forestry companies These know perfectly well how to replant forests when it pays to do so, and some of them eventually began to do that when it made economic sense, but meanwhile the government insisted on embedding itself in the whole management of the forest, and not just the forest, but a lot of other natural resources as well. But we have these progressives and the progressive conservationists to thank for this kind of Policy, which has become characteristic of modern environmentalism along the way.

1:15:17Well, let me stop at this point. We've got about 15 minutes left in this session, and we have more time now for questions. Don't confine yourself if you want to ask about some other topic that's come up in the past four sessions. Ask anything you feel like or make comments. Yes sir. You quoted Woodrow Wilson from a book, I think you said you had previously mentioned, but I didn't catch the title. It's called The New Freedom. It was really a collection of speeches that he gave in 1912 when he was angling to become president. So is it edited by him? Do you know? I don't know that it even has an editor. I think it's just back-to-back essays, as I remember.

1:16:04The last lecture you mentioned on the book about the abolition of the luxurious prison, will you give the title of that book?

1:16:34Sklar is one of the members of the Quasi-Marxist Corporate Capitalism School of History Writing. It means that these are not exactly full-fledged Marxists. They don't spout the full panoply of Marxist doctrine. But they use a species of class analysis that clearly springs directly from Marxism. And they don't understand much of anything about how markets work. They have very crude ideas at best. Sklar himself actually ends up going wrong partly because he did look at some neoclassical economics and learned all the wrong lessons.

1:17:27So he comes away arguing that what business was trying to do, big business in the progressive era was to find a way to administer prices. That's an expression that goes back particularly to Burlian means in the early 1930s. Administered prices meant sort of prices fixed by the businesses themselves or by trusts or combinations of businesses. Businesses, at all events, not competitive prices, somehow administered, and he's got the idea that whether businesses set prices, a big business sets the price, or the government sets the price, it's just different ways of administering the price. So he's basically an ignoramus when it comes to understanding the working of markets, but in other ways He's a meticulously careful historian, and as I said, his reading of the jurisprudence of the Sherman Act is superior to anything I know.

1:18:29So I'm quite happy to give him his due. If you happen to be interested in other aspects of his work, it's a huge work, very interesting about the politics of the progressive era. He goes through all of the presidents and tracks the major policy making and gives a lot of detail about who did what, who said what, who conspired with whom. So I actually recommend this book despite what I've said about it. I wrote an essay actually, a kind of review essay about it in a journal called Critical Review in 1992. And my essay is called Origins of the Corporate-Liberal State, and I believe it's online at onpower.org if you'd like to look it up.

1:19:25So basically this squire fellow belongs to a school of thought that uses a semi-socialist framework that doesn't spout any crap about dialectical materialism or anything? He's got a kind of, not exactly dialectical materialism, but he's got, again, something verges on it. He's got ideas about how historical change is brought about by sort of changing forces of production and those giving life to political pressures and therefore bringing into being new property relations. That's all. I mean, it's as if you're having a dream of Marx, but it's a fuzzy dream.

1:20:16Then you know it's really Sklar you're dreaming about because it's not really Marx, The apprehension that you talked about in the early 1900s, like the Wobblers and the Rockefeller, those all seem to be like exogenous and outside of anything fueled directly by the government, whereas today's apprehension of terrorism and anti-democracy is so Marxian in flavor and tone that you can't quite shake the feeling that you're in that other dream.

1:20:52and the drug war and the big scary cigarette companies and what not are all pretty much fueled by the federal government. What do you think about that?

1:21:22The members of the, turned out to be the Reagan administration because I pulled this federal guide book off my shelf and it went back to the 80s when Reagan was president. It's one of these places where you can look up who is who in the government and what positions they occupy formally. And in the Reagan administration, there were a dozen or more of these deputy assistants under somethings for something, all of whom were basically spin doctors. I mean, just hosts of these guys, highly paid on the federal payroll, and they exist in every department.

1:22:07It's not just in the executive office of the president. They're everywhere. The government has equipped itself over time to constantly feed disinformation to the public, to promote, well, itself. That's what it's promoting. It's drumming up business, demand, artificial demand for what it purports to supply, some form of service or security to the public. That didn't exist in Teddy Roosevelt's day. Politicians made speeches, but they didn't have vast staffs of flax running around telling tall tales like that. So you had to do your own dirty work more directly if you were a politician in those days.

1:22:57In fact, they do so much advertising that the media is almost beholden to it, because at all, on Sundays, they say, we're not going to give you our anti-drug laws, or whatever. You'll go broke. I have an exercise I suggest to the reader. Sometimes when you listen to the news, just keep a tally as you go along of the stories and note how many of them go to sources in the government. Is it, you know, the president's press spokesman? Is it Joe Blow at the Department of Defense? Where do these stories come from? And I think you'll find that the majority of what pretends to be news nowadays is nothing but propaganda being propagated through the mouthpieces of people who pretend to be journalists. They're just retelling the tale. Because they're supposed to be independent, we're supposed to believe that's credible once they repeat But they're carrying away press releases and they're carrying away leaks that are given to them and they are indeed beholden because if they cross their masters, they'll get cut off.

1:24:32They won't get any more leaks. They won't even be treated civilly. They won't be called upon at a presidential press conference. Conference. Every once in a while something happens. The mic is on when the president doesn't know it. He makes some crack about a jerk over there. I'm never going to call on him. So it's just a fact of life. That's the way journalism operates in the era of massive government. The news media, not entirely, of course. There are all kinds of fringy news sources in in existence, and thank goodness for the internet because we can all get at them now, but the major media are, I believe, pretty much just unofficial arms of the government.

1:25:24All their stories, or all their main stories seem to either involve one of the government's already ongoing wars against, you know, social crusade wars against one thing or another, I'd also like to keep a tally of the fright du jour. If you check CNN's headline news, for example, just about every half hour you'll see, you know, what is today's announcement It's some horrible thing that may be killing us in the food or the water, the birds flying over, who knows where it could be, but actually the government is looking into it, this will be dealt with.

1:26:15It's not just the news, though. It's crossed over into pure entertainment media, too, because the Drug Enforcement Administration and the Drug Policy Offices were vetting scripts from network entertainment shows and giving money, providing support to TV shows that towed the line on their anti-drug policies. It's probably worse I think because it's more insidious. This kind of the government disinformation has its origins I think in this country in wartime.

1:27:00During World War I the government went to great lengths to feed its line to one and all. The movies, the theater, the school teachers, the preachers, you name it, and then in World War II, they operated a little more subtly, but similarly, and they worked through the movie industry, up to and including, or maybe I should say down to and including, cartoons, in which cartoon figures were talking about the importance of paying their income tax, and obeying prices business regulations and buying bonds, of course. So the wars have been real schools for government manipulation and control of media, including entertainment media. Luke?

1:27:56Thank goodness we've now got a new generation reminding us of the glories of the British Empire and our duty to recreate it. Thank you very much.