THE LIBERTARIAN REALITY

I wish modern libertarianS could meet Jay Gould, because he was unfettered capitalism in the flesh, “the human incarnation of avarice,” as one minister described him, the Mephistopheles of Wall Street, the robber baron par excellence, “prince of the railroad schemers”, and the man within whom all the theories of the libertarians about capitalism and freedom met the reality of human nature, and got the living tar beat out of it.

He (above) was a “…short, thin man with cold black eyes, a narrow face and, in his maturity, a “full black beard”. Born into poverty, his mother was active in the Methodist Church until her death, when Jay was 10 years old. When he was seventeen, Jay apprenticed himself to a surveyor, Mr. Oliver Diston, at the salary of $10 a month. When Jay started issuing his own maps for sale, Diston sued his apprentice. Jay’s attorney, Mr T. R. Westbrook,  managed to have the lawsuit dismissed. But, as one biographer noted, from that day forward, “…there was scarcely a day during his whole life that (Jay Gould) did not have some litigation on his hands.”

His map business made Jay $5, 000, which he invested with Zadock Pratt, a Manhattan leather merchant. Smothering Mr. Pratt in adoration, the 21 year old Jay proposed to write the older man’s biography. That project drew the pair into a partnership in a new leather tannery south of Scranton, Pennsylvania. Using  Pratt’s money, Jay built an entire company town, which he named “Gouldborough”. He wrote Pratt sycophantic letters, in one describing the organizing meeting for the new community. “Three hearty cheers were proposed for the Hon(erable) Zadock Pratt…This is certainly a memorandum worthy of note in your biography, of the gratitude and esteem which Americans hold your enterprising history.” However Mr. Pratt, who knew a lot more about the tanning business than did the young Jay Gould, had begun to see through the fog of compliments.

Pratt (above) showed up at the plant unannounced in the summer of 1858, to go over the books.  He quickly discovered them to be a confusing mess, showing unauthorized risky investments, including in a private bank which Jay had established in Stroudsburg, Pennsylvania. But the company did not share in the bank's profits. Those went only to Jay Gould. Pratt decided to fire his erstwhile friend and sue him to take ownership of the bank.  However, Jay had anticipated this, and had already lined up a richer and more docile partner. In August,  when confronted by Pratt, Gould stunned the man by offering to buy him out for $60,000. Pratt quickly accepted. The cash for the buyout had come from Jay’s new partner, Charles Lessup.

But it wasn’t long before even the somnolent Lessup began to suspect he was being had, too. By the fall of 1859 Lessup was panicked by the commitments Jay had made, using his good name. But it was too late. On 6 October, 1859, facing financial disaster, Charles Lessup shot himself.  Lessup’s daughters bitterly demanded Jay repay them for their father’s lost investment, and Jay countered with an offer of a payment of $10,000 a year for six years. He had, of course, neglected to include any interest during the five year delay. Unfortunately for Jay, the Lessup families’ lawyers caught the omission. Still, in the early months of 1860, it became clear that Jay was hiding huge assets from the family.

Lawyers and 40 deputized men were dispatched to the tannery on Tuesday morning, 13 March, 1860. They flashed the legal papers, ushered the workers out and padlocked the doors. They held the place for a little over six hours, until Jay returned from New York. Just past noon some 200 men stormed the building with axes, muskets and rifles. Four men were shot, others were badly beaten, and according to the New York Herald, “…those who did not escape were violently flung from the windows and doors…” As Jay Gould would later boast, “I can hire one-half of the working class to kill the other half.”  The courts would eventually throw Jay Gould out of the tannery, but by then he had shifted his operations to a place more suited to his nature; the unregulated economic free-for-all that was Wall Street.

While North and South battled over slavery, Jay Gould battled over wealth. He formed his own brokerage firm -  Smith, Gould and Martin. Like all of Gould's  partners, Smith and Martin  were soon left behind. Gould  then made the acquaintance of James “Big Jim” Fisk, who made a fortune smuggling southern cotton through the Federal armies, and selling Confederate War Bonds. And even while brave men died in their tens of thousands,  Gould and Fisk joined with Daniel Drew, director of the Erie Railroad, in their own, private war.

Their enemy was Cornelius Vanderbilt (above), who owned every railroad in the east except the Erie. Naturally, “The Commodore”, as Vanderbilt liked to be called, was seeking a monopoly, so he could charge whatever freight rates he wanted, and he began to buy stock in the Erie. Sensing blood in the water, Jay and friends printed up 100,000 new shares of Erie stock, which The Commodore promptly bought, and which the board of the Erie – Drew, Fisk and Jay Gould – immediately declared to be worthless.

Bilked out of $7 million, Vanderbilt filed legal papers to examine the Erie’s books. Jay and friends grabbed the company records and retreated to New Jersey, where they re-incorporated. Vanderbilt then had arrest warrants issued for all three men, but since New York law could not touch them in New Jersey, the Commodore began to assemble ships and men to invade that state,  all by himself. While the Erie Board prepared to receive the invaders, Jay managed to slide a bill through the New York State assembly making the issuing of worthless stock, perfectly legal, retroactively.

This trick was managed by the simple expedient of giving William “Boss” Tweed (above), the head of political graft in New York, a seat on the Erie board. That brought the Erie War to a temporary pause. And if you are feeling sorry for the Commodore, remember that Cornelius himself once said, “Law, what do I care about the law? Ain't I got the power?" -  another libertarian hero.  The entire bunch were so busy cheating and stealing they barely noticed the end of the Civil War.

With the Commodore’s cash, and further fortified by looting the Erie’s assets, Jay, Fisk and Drew began their own complicated scheme to raise freight rates on the Erie Railroad. Using the profits from that scheme, in 1869 they began to buy and hoard gold, because raising the price of gold would raise the price of wheat, which would allow them to raise the freight rates they charged farmers for shipping the wheat. As insurance the trio took on another partner, Abel R. Corbin, who happened to be President Grant’s brother-in law. The new partner gave the appearance that “the fix” was in, and other investors jumped on the bandwagon. The price of gold skyrocketed.

When President Grant learned about the manipulations, he immediately ordered the U.S. Treasury to sell $4 million in gold. On 24 September 24, 1869, the sudden influx hit the market like a bomb, and gold dropped 30% in a day. The date would henceforth be known as “Black Friday” - at least until October of 1929. Thousands of investors were wiped out, including Abel Corbin. An angry mob swarmed the Gould’s brokerage offices, smashing the furnishings and chanting “Who killed Charles Lessup?” Of course the trio of Gould, Fisk and Drew, walked away from the wreckage with an $11 million profit.

Gould's own partner Daniel Drew was to be his next victim. In 1870 Fisk and Gould sold their shares in the Erie to their one time enemy the Commodore, for $5 million. The deal gave Vanderbilt his monopoly, but it also revealed that the Erie was bankrupt. And it left Daniel Drew, abandoned by his partners, out $1.5 million. He would die flat broke nine years later, just one more partner and one more victim of Jay Gould.

Big Jim Fisk was saved from a similar fate when, in 1871, a competitor for a woman shot him to death in a New York Hotel. After that Jay was reduced to stealing from lesser partners, such as Major Abin A. Selover, who actually considered himself a friend of Gould’s.  It was Selover who introduced Jay to a California friend of his, James R. Keene.  After Keene and Selover had both been battered by Gould in a contest for control of telegraph company, Western Union,  Jay and Selover happened to meet on the street one day. Jay tried to walk past, but for once in his life, Jay Gould had been caught out in the open.

Selover grabbed Jay be the collar and shouted, “I’ll teach you to tell me lies!” The six foot tall Selover then threw Jay to the ground, and then yanked him up again by one hand, dangling him above the stairwell of a below-street level barbershop. With his free arm Selover began slapping the Mephistopheles of Wall Street and shouting, “Gould, you are a damn liar!” Nobody who witnessed the event interrupted to disagree. When Selover finally let go, Gould dropped 8 feet to the stairs. A stock broker the next day quipped, “It was characteristic of Mr. Gould that he landed on his feet.”

Overnight, Abin Selover became the most popular man in New York City. Jay Gould was smart enough not to press charges, since no jury could be expected to convict anyone of assaulting Jay Gould. Henceforth, Jay never went out without a body guard. He began to describe himself as the “most hated man in New York”, but there was a touch of pride in his voice when he said it. Selover eventually went broke, as did Keene. However, when he finally died in 1892, Jay Gould was the ninth richest man in America, worth about $77 million. He died a hero only to those who never did business with him. Gould scoffed at the idea that Wall Street should be regulated. “People will deal in chance….Would you not, if you stopped it, promote gambling?”

It was and is a philosophy which fails to see an advantage to drawing a line between gambling and investing. It is the philosophy of libertarianism. It is the philosophy of unmitigated greed. It was the philosophy of Jay Gould.

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"EQUO NE CREDITE " ( Never Trust the Horse)

I want to retell a story you've heard since childhood, a romance of brave heroes and young love crushed by cruel fate. It is the legend of the shining city of Troy, Helen and Achilles and the wooden horse. But this time I mean to wring as much of the myth out of the tale as I can. My version begins with the capricious, hot, dry Etesian winds, which for five months every summer for the last five thousand years have periodically roared without warning down the winding narrow straights of the Hellespont – the land gates to the Sea of Helen - for days at a time. Faced with such a fickle and relentless foe, crews of the square rigged ships, sailing from the Aegean Sea to the Bosporus and the Pontos Axinos (the Dark or Black Sea) beyond, risked their lives and their cargoes if caught in the straits by an Etesian wind.

A safe harbor close to the southern entrance of the dangerous straits, where a ship could safely wait for favorable winds, would surely prosper. For some 1,500 years there was just such a wealthy port on a broad bay at the mouth of the Scamander River, within ten miles of the Dardinelles, the   Hellespont. And to modern ears the cities' name sounds almost ethereal, as if whispered by the Etesian winds themselves – Wilusa.

Wilusa began as a fishing village, atop a 100 foot high limestone outcrop that jutted into the bay like a ship's prow. Over a thousand years the village became a royal palace and keep, five city blocks wide, with 25 foot high sloping walls. Eventually, as the town prospered, two ditches were dug, eleven feet wide and six feet deep, running out from the land side of the citadel. The earth from the ditches produced a 12 foot high wall,  encircling a city, eventually, of 6,000 people. A tunnel dug through the bed rock fed Wilusa with fresh water. And outside the walls, dotted with farms, was “The Troad”, the sea of grasses that made Wilusa famous for horse breeding.

The great crises for the city that would come to be called Troy began about the year 1275 B.C.E., when the guarantor of Wilusan royalty, The Hittite King Mursili III, was challenged by the resurgent Egyptians along his southern border in Syria.  Seeking to secure his opposite flank, Mursili III picked a dull but stable, younger son,  Piya Walmu, for the kingship of Wilusa. His name meant "gift from Wilusa". And for the Hittites he was a gift, supplying horses and chariots for the Hittite Army under Mursili's uncle, Prince Hattusili. It was the logical decision, but it short changed the older son, Piya Aaradu.  His name meant "gift of the faithful”. And his gift was a dangerous ego maniacal ambition.

The Battle of Kadesh in 1274 B.C.E. began when Hattusli's chariots caught a third of the Egyptian army by surprise, and came very close to sweeping it off the field and killing the Pharaoh. But Ramses kept his nerve and held his force together until reinforcements arrived. Nearly 4,000 chariots on both sides, the battle tanks of the day, swept back and forth across the Syrian plain, until the Hittites were forced to take refuge behind the walls of Kadesh.  Hattusli was saved only because Ramses' army was too weakened to put the city under siege.  Both sides' propaganda claimed a bloody victory, and both Ramses and Hattusli were labeled as heroes. But afterward both Hittite and Egyptian empires retreated to lick their wounds.

At the first word of Hittite troubles, Piya Aaradu murdered his bother and declared himself the new King of Wilusa. But Mursili knew he would not remain King for long if he was thought to be weak. And he felt his uncle Hattusli, the “hero” of Kadesh, looming behind his throne. So Mursili commanded Manapa-Tarhunda, the governor of the Seha River region , just south of Wilusa, to punish the usurper.  In about 1273 B.C.E., the Seha army marched on Wilusa.  But on the plains of The Troad,  Piya Aaradu ambushed the punitive force, and Manapa-Tarhunda was defeated. Now, suddenly, the Hittite western border was looking vulnerable, as well.

Mursili had no choice. In 1272 B.C.E. he dispatched a larger, fully Hittite force under a general known to history only as Gassus. Using a horsehide covered battering ram suspended from a rolling frame (above), the Hittites quickly breached the city walls of Wilusa.  Gassus allowed his warriors to sack the city, but prevented them from burning the entire place to the ground.  Afterward, Wilusa was no longer trusted enough to have its own king, but a local was named the new governor - Alaksandu. The only mistake Gassus  made, and perhaps the reason we do not know his full name, was that he allowed Piya Aaradu to escape.

The pouting prince sailed 300 miles down the coast of Asia Minor to the port of Millawanda, or Miletus in language of its Archean founders, the kings of Mycenea,  100 miles west across the Aegean Sea, in what is today Greece.   Here, Piya Aaradu was sympathetically greeted by Governor Atpa, who was also his son-in-law, and the brother of Akagamunas, the king of Mycenae. 

With this familiar support, Piya Aaradu led a mercenary raid against Hittite merchants on the island of Lesbos. The joint Achean and Wilusian raid captured 700 skilled artisans, who were then sold into slavery.  It seems likely Piya Aaradu split the profits with Atpa, and that Akagamunas also “got a taste”, to borrow a Mafia term from the 20^th century A.D.  The “had been” and “would be” King of Wilusa, Piya Aaradu was now a pirate, with money to finance future raids, and a safe base to operate from.

Unfortunately for Piya Aaradu, his military alliance with the Mycenae was the final straw for the Hittites. About 1269 B.C.E. Mursili III was sent into exile by, his uncle, Hatusili.   The new king gathered an army and about 1267 B.C.E, marched on Miletus. 

Piya Aaradu tried talking his way out of the mess. He offered to swear allegiance to Hatusili if he was returned to power in Wilusa.  Hattusli responded by marching his army right up to the border with Miletus. Teetering on the brink of all out war between Mycenea and the Hittites, Hattusili demanded Akagamunas hand over Piya Aaradu for punishment.

Akagamunas was not eager to start a war. Pulling Hittite beards was fun, and Piya Aaradu's raids had even shown a small profit. But big wars have a tendency to wipe out small profits very quickly. So, as a show of respect, the Governor of Melitus, Atpa, invited Hatusili to visit Melitus , assuring him he would hand Piya Aaradu over to him. But once Hatusili was inside the city walls, Atpa informed the Hittite King that, oops,  Piya Aaradu had skipped town, some how.

Hattusili was not happy.  But he did not want a war, either. So after stomping around Mellitus for a few days, he headed home. And given the time and distance to think during his journey, and perhaps listen to his advisers, Hattusila decided on a new approach. The following year he offered to give Piya Aaradu everything he wanted, including the crown of Wiliusa. Swear fidelity to Hattusili and all would be forgiven.

Now, no one in their right mind would have believed such an offer. But was Piya Aaradu in his right mind? Or - more importantly - was Akagamunas?  And there were logical reasons for the King of Mycenea to be suspicious of the pirate prince.  It was one thing to finance Piya Aaradu when the Achaens had plausible denial  It would another if Piya Aaradu began to trumpet Mycenaean duplicity from the topless towers of Ilium. No matter how unlikely the offer from Hattusili was, the king of Mycenea could not risk the pirate prince taking the offer. It was a death sentence for Piya Aaradu.

It made little difference if the ego maniac was strangled in his bed, or stabbed by a trusted friend while leading another raid. His dead body may have even been handed over to Hattusili as a sign of good will. But as long as there was the possibility of Piya Aaradu switching sides again, he had to die.

In fact Hattusili followed a similar strategy later when his nephew Mursili escaped his exile and arrived in Egypt. First the Hittite King demanded his return. And then offered to welcome him back into the family. Both Mursili and Piya Aaradu simply, suddenly. disappeared from history. And they were far from the only ones who disappeared.

"Within a period of 40 to 50 years",  beginning abound 1206 B.C.E., according to historian Robert Drews, “...almost every significant city in the eastern Mediterranean world was destroyed, many of them never to be occupied again”  One of the first to be burned for the last time around 1200 B.C.E., was Wilusa. Almost the last to go was the Hittite capital of Hattusa, which was burned to the ground one night in 1180 B.C.E.  By then, every major city, from Greece to the Egyptian frontier, was violently destroyed, and often left unoccupied for generations.

Maybe the villeins were  invaders, or diseases, or volcanoes or climate change or perhaps even the replacement with bronze by iron tools and weapons. But whoever or whatever the cause, to a child growing up in Greece 3,000 years ago,  the past was a time of greatness and plenty, unlike the hunger and poverty of their today.  And leaders like Piya Aaradu (aka Priam), Akagamunas (or Agamemnon), Alaksandu (Alexander, aka Paris) were so famous for so long, they became myths. And Helen herself, the most beautiful woman in history, the face that launched a thousand ships and toppled the topless towers of Ilium (Troy) was Greece herself, and the new Hellenistic culture she would export to the entire world.

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DEAL WITH THE DEVIL

I know we like to think our nation was founded by political geniuses armed only with the best of intentions. But the truth is, if the vast majority of the founding fathers were to somehow magically reappear in today's political arena, they would probably be most comfortable as members of the Klu Klux Klan – sexists and white supremacists. Under the first constitution for South Carolina (signed in 1778) Catholics were not allowed to vote. Delaware's first constitution denied the vote to Jews, and Maryland did not permit the sons of Abraham to cast a ballot until 1828. And, of course, women and both sexes of African-Americans either were already or shortly would be arrested if they tried to cast a ballot anywhere in America. But the most fundamental bigotry in America was and is not racial or religious. It is monetary. The most disenfranchised group in America has always been anyone who was “not rich”.

In ten of the 13 original United States you had to own at least 50 acres of land or $250 in property before you were judged qualified to vote. The official price for uncleared land along the frontier was set at just ten cents an acre, but was sold by the government in lots no smaller than a section of 640 acres. So a section of land cost $640. At the same time the average yearly income for a laborer in the north was about $90.  Few working people could ever hope to save enough to afford a section of land. So the land speculators stepped in. They already owned land (usually large plantations) which they could use as collateral. This gave them access to credit, to acquire hundreds of sections of land at a time, survey, subdivide and resell the property in plots down to five or ten acres each. It was a system rife with legal and illegal corruption. The speculators' profit margins tripled or quadrupled the price per acre to the yeoman farmers who usually borrowed to buy the land. One bad crop meant they could not make the payments and had to return the land to the speculators and were forced to move even further west to try again, still without the right to vote on the legality of such monetary rules.  It was why Daniel Boone kept moving his entire life, as did Abraham Lincoln's father.

This explains why, forty years after the revolution, only half a million out of the ten million Americans could qualify to vote, and why, in 1824 less than 360,000 actually cast a ballot. The debacle of the 1824 presidential election being thrown into the House of Representatives, resolved by the so called “corrupt bargain” between Henry Clay and John Quincy Adams, leads to the realization that the first objective of fair elections must be to keep the powerful from limiting the right to vote. That was why, beginning in the new states beyond the Appalachian crest, the wealth restrictions on voting were dropped. And slowly this influenced the politics back in the original 13 states.  Very slowly.

On 7 October, 1825, with John Quincy Adams ensconced in the White House for less than 8 months, Senator Andrew Jackson (above) rose in the Senate chamber. Nominally he was to comment on a proposed constitutional amendment to prevent another “corrupt bargain” from ever happening again. But, “I could not”, Jackson assured his fellow politicians, “consent either to urge or to encourage a change which might wear the appearance of being ...a desire to advance my own views” (He meant unlike Henry Clay, and President Adams, of course.) And "reluctantly" he added, “I hasten therefore to tender this my resignation.”  It wasn't that Jackson was clearing his schedule for the upcoming 1828 rematch. Oh, no. He was resigning so “my friends do not, and my enemies can not, charge me with...degrading the trust reposed in me by intriguing for the Presidential chair.” As he walked out of the Capital that afternoon, it's a wonder his trousers did not burst into flames. The proposed amendment was then quietly allowed to die, in part because Jackson knew he might have to avail himself of the same technique in 3 years.  And he did.

On the same day, on the west fork of the Stones river, meeting in St. Paul's Episcopal Church on East Vine Street in Murfreesboro, Tennessee (where their capital had burned down two years earlier), the state legislature unanimously nominated Andrew Jackson to be the next President of the United States – three years hence. What a happy coincidence of timing, with those two events occurring over a thousand miles apart, and on the same day – proof positive that no one could accuse Andrew “Jackass” of “intriguing” for the Presidency. And if any of you reading this are offended by modern pundits theorizing about the next election almost before the last one is completed, welcome to the brave new world of 1825

Of course, if you were looking for more hard evidence of intrigue you might journey to the 9th Congressional District of Virginia, tucked away in the south-western corner of the Old Dominion. The two term representative for this last gasp of the Shenandoah Valley and its encroaching mountains was a transplanted Pennsylvanian, a graduate of William and Mary named Andrew Stevenson (above).  He had been the Speaker of the House of Burgess, where he was considered a member of the “Richmond Junta” which ran Virginia politics. And now the dapper Congressman had tied his horse to Andrew Jackson's cart. So why would a member of the Richmond Junta decide to join forces with a Yankee from the Albany Regency, to support Andrew Jackson from Nashville, Tennessee, for President?

First, the south had something that New York Democrat Martin Van Buren (above) wanted – electoral votes. The institution of slavery was indeed peculiar because although those humans were treated as property with no rights, each slave did count as 3/5ths of a person for determining congressional districts and votes in the electoral collage. After the census of 1820 this gave the south 22 additional congressional districts – and 22 additional electoral votes – which their white population alone did not entitle them too. This was the deal with Satan the founding fathers from New England had been forced to make in order to form a “more perfect union.” Those 22 electoral votes were more than enough to throw an election in whatever direction Martin Van Buren, and the New York banking inetersts he represented,  wanted .

What Stevenson and other Southerners wanted in exchange was a guarantee that the economy of the south would be protected from the growing power of the North.  Practically this meant low tariffs. The slave states produced few of the machines that were increasingly vital to modern life,  largely because slaves had no incentive to invent or invest of themselves more than was required. Meanwhile, a little over two weeks after Jackson's resignation from the Senate, the Erie Canal officially opened, connecting the produce of  Ohio to the markets of New York City. It was visible evidence of the economic giant the workers and consumers of the "Free States" were becoming.  But in a nation without an income or a sales tax, a tax levied on imported goods, or a tariff, was the only way to support projects like the canal, or a national highway, then approaching the eastern Indiana border.

The Bank of the United States was a vital part of the infrastructure which Federalists were  advocating, financing  the National Road and canals connecting the great lakes with the Ohio and Mississippi rivers. But what Adams saw as government preforming the unprofitable investment in infrastructure so that business could use it as a base for their future profits, Stevenson and Van Buren saw “Big Government”, supported by tariffs, as a multi-head snake (above), big enough to regulate business and tangentially  a threat to slave state economics.  And they were right.

In 1831 (six years hence) a young French official, Alexis de Tocqueville, would journey to America to observe the young nation.  And in perhaps his most famous passage he touched upon the effect of slavery on the south.  “The State of Ohio”, wrote de Tocquville,”is separated from Kentucky just by one river; on either side of it the soil is equally fertile, and the situation equally favorable, and yet everything is different...(In Ohio the population is) devoured by feverish activity, trying every means to make its fortune...There (in Kentucky) are people who make others work for them...a people without energy, mettle or the spirit of enterprise...These differences cannot be attributed to any other cause but slavery. It degrades the black population and... (saps the energy of) the white.”

So, a hundred years before the Republican Party adopted its infamous “Southern strategy” to convert segregationist “boil weevel” "Dixie-crats"  into a southern Republican voting block, the Democrats, at very the moment of their party's birth, made a much more vile  bargain – agreeing to protect real slavery in all its foul existence,  in exchange for gaining national power to protect the money interests of Wall Street.  

Jackson's  only real interest was seeking the Presidency in 1828 was in defeating those who “cheated” him out of his victory in 1824.  Jackson was a slave owner, and his natural inclination was to support slavery. But because of the support offered by Van Buren,  he also opposed the national bank, and Adam's program of “big government” investments.   The hard work of forming the party that carry him to victory he left to men like Van Buren and Stevenson, who were binding Southern ruling elite to Northern ruling elite. That accommodation would be the foundation of the new Democratic Party for the next 100 years.

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