American Economy and the End of Laissez-Faire – 2 of 13 – The Railroading of the American People

The American Economy and the End of Laissez-Faire: 1870 to World War II

2. The Railroading of the American People
Lecture by Murray N. Rothbard

The railroads experienced both enormous growth and enormous government intervention. Land was closed off from settlement, causing farmers to oppose the privileged railroads. Markets were skewed. Waste and inefficiencies were high. Graft and corruption were rampant. Only the Great Northern by James Hill was built with private monies. It became the of the few transcontinental railroads not to go bankrupt.

Lecture 2 of 13 presented in Fall of 1986 at the New York Polytechnic University.

This lecture as a Podcast: http://enemyofthestate.podomatic.com/

Sourced from: https://mises.org/library/american-economy-and-end-laissez-faire-1870-world-war-ii

Source: American Economy and the End of Laissez-Faire – 2 of 13 – The Railroading of the American People – YouTube

http://www.readrothbard.com/american-economy-and-the-end-of-laissez-faire-2-of-13-the-railroading-of-the-american-people

TRANSCRIPT

00:00
okay railroads were the first big
00:01
business we’re gonna concentrate on
00:03
railroads for a while
00:05
[Music]
00:07
with railroads you have a a double
00:09
situation for the speed have a double
00:13
situation it’s true in general but it’s
00:16
and particularly true in railroads which
00:17
is the first live scare on the street
00:19
mainly you have a fantastic progressive
00:22
increase in standard living a full and
00:24
transportation course and all that and
00:27
along with it you have the government
00:29
stepping in very heavily to
00:31
subsidization later regulation and
00:34
messing things up so you have a double
00:37
effect here not only that two things
00:39
happening a railroad situation one of
00:41
the tremendous competitive cheapening of
00:44
course it can become competitive
00:46
improvements Dan a living increase in
00:48
competition the other hand tremendous
00:50
subsidies and part of the government
00:53
plus later on attempts a merger and
00:56
finally railroad regulation and we’ll
01:00
see why were a regular guy she came in
01:02
later the as I mentioned before the
01:08
Lincoln administration heavily railroad
01:11
oriented administration and one of the
01:13
first things they were committed to was
01:19
a huge subsidization program to the new
01:23
Transcontinental Railroad he proposed to
01:25
the bill across the across the west the
01:33
subsidization of first of all na and a
01:35
homesteading system so very mention with
01:39
a little bit harrion proposal what you
01:43
have is the right-of-way is granted in
01:47
other words if somebody wants to build a
01:49
railroad across a thousand miles of
01:51
nothing the property would get at home
01:54
studying those their homesteading law
01:57
kind of setup will be whatever you know
01:59
whatever it uses nowhere that’s right of
02:01
way it was then only in the right-of-way
02:05
but these the tracks a little bit at
02:09
which the track the track is embedded in
02:10
the stuff and the station terminals and
02:13
you know whatever so it’s actually
02:15
shoulder okay it’s actually a few feet
02:18
in each side of the track that’s that
02:20
would basically be what the railroad
02:21
would own and a libertarian free market
02:23
set up home studying set up and some
02:27
railroads are indeed both my wife
02:28
mattifies will see one great
02:30
transcontinental railroad was built in a
02:31
purely free-market signing it didn’t did
02:33
not go bankrupt like almost all the
02:35
others did and it competed very well at
02:38
rest of it it’s called the Great
02:39
Northern that comes a little bit later
02:40
at any rate the this is not the way it
02:45
was done it was like Republicans wanted
02:47
with a very heavy heavy subsidization
02:49
and privilege into the railroad and so
02:53
instead of just giving in the
02:54
right-of-way they gave the railroads
02:57
first of all first of all they give
02:59
Milan has will see the more detail later
03:01
as we go along
03:02
you gave them huge amount of loans
03:06
interest basically interest-free loans
03:09
heavy heavy subsidies per mile of track
03:13
and in cash plus huge amount of land and
03:18
20 miles for every mile over the 20 mile
03:21
sections 20 square mile section this
03:23
would mean something like for a half
03:27
month whatever about four and a half
03:29
miles at each but in alternate section
03:32
so I mean you can’t do very much in here
03:35
in addition to that the government this
03:39
is this is bad enough that’s this huge
03:41
subsidy here also of course this becomes
03:42
the most personal like beginner arrow is
03:45
the best land in the West
03:48
second of all infini addition and giving
03:51
it more less land they close the
03:53
government US government closed for
03:54
settlement all land and each side up to
03:57
about 16 sometimes 100 miles close the
04:00
wall nobody allowed us all
04:07
200 miles on either side of a track so
04:10
in other words obviously everybody wants
04:12
to get to the railroad station because
04:13
that’s look you know not much going on
04:15
on the West here except the railroad and
04:17
the rest of Indian country or whatever
04:20
balance so this becomes the choices land
04:23
the government closed the oil for
04:24
settlement didn’t allow anybody to
04:26
settle any place any place except buying
04:30
land for the railroads in other words
04:32
railroad get this free land government
04:34
and we sell it to the settlers a high
04:36
price
04:37
essentially monopoly price of this beef
04:39
especially because the government kept
04:41
out of circulation out of settlement for
04:44
many years everything on each side for
04:47
what for many miles to 80 miles or so
04:48
each other the railroad fantastic
04:51
subsidization and this because of
04:56
there’s a limit on a cookery also take
04:58
place it took like in addition of this
04:59
the boodle was welcome to call the
05:03
robber barons came and the robber barons
05:05
were really the robbery was came about
05:08
because it was an open channel by the
05:10
federal government and we’ll see how
05:11
we’ll see how that was done the amount
05:17
of the those differences of you know
05:18
where whichever way should go to get the
05:20
data how many millions of miles of acre
05:22
it Grieder hand that out the federal
05:24
government to the railroads I guess it
05:26
depends on which some of them was given
05:27
back and some others abound there’s
05:29
around 220 million acres enormous amount
05:33
especially considering and it’s a no the
05:36
other land wasn’t worth much in the
05:37
under huge amount much more than that
05:39
was kept out of out of circulation for
05:41
many years forcing people they want to
05:44
get on this in this Bank you settle the
05:47
boy ran at a high price in the railroad
05:49
as a result of this and other things and
05:51
we’ll see if we going along the farmers
05:53
begin to set up but it Venus are griping
05:54
about the railroad and the thing is the
05:57
later rights are more momen very much
05:58
more irrational later guys to the
06:00
freight rates are too high which they
06:01
obviously weren’t and they were falling
06:02
all the time but the the basic gripes
06:04
came about in the and by the 1870s by
06:06
the like late 1860’s early 1870s
06:09
so coal anti-monopoly movement among the
06:12
Western performers we had a very good
06:14
green
06:14
so they have all this land with me kept
06:16
out of circulation we wrote have a free
06:19
gift of land and the whole plan was held
06:22
a destroyed collection and this land was
06:25
untaxed by the local governments know
06:26
that he had set up a local government
06:28
the railroad land was tax exempt even
06:31
while being held out of circulation so
06:32
I’m actually the I don’t blame the
06:34
former for gripe a big wiping – there
06:36
wasn’t a socialistic or state as time a
06:38
kind of a gripe anti-monopoly movement
06:40
it was really essentially an attack on
06:42
the railroad privileges basically there
06:48
were four big transcontinental railroads
06:50
which got the big bulk of the subsidies
06:52
and of LeGrand summer loans we get up
06:57
it’s really three if you get they look
07:00
at it it’s one of them was in two halves
07:05
[Music]
07:07
I’m not exactly distinguished
07:09
cartographer I’ll do my best here like
07:15
that anyway the to leave the two big
07:20
grants the beginning the first big grant
07:22
with the Union Pacific fish started I
07:24
believe in Omaha Nebraska and went west
07:30
and then the Central Pacific started
07:33
from San Francisco and went east to join
07:37
it yeah this is the youth PCP this is
07:42
the famous Golden Spike I think was 1869
07:44
where they met in Utah and and they they
07:49
grow the Golden Spike symbolize whatever
07:52
so this is very heavily subsidized you
07:54
need the specific Central Pacific
07:59
the north end of the Northern Pacific
08:01
which begins around mm-hmm
08:04
west of Chicago I think while I am there
08:08
and it goes to Portland
08:13
another very humbly stuff so it’s got
08:15
this got about forty four million acres
08:18
plus a lot of something a lot of money
08:20
sub something twenty four million acres
08:24
all of these I think went bankrupt not
08:26
too long this you know whether the big
08:28
land grant boom with making Guinea
08:30
Pacific got a big first big round 1862
08:33
the others a few years later and the
08:35
whole thing collapse 1872 so this
08:37
actually in the panic of 1873 Muslim I
08:40
bankrupt it was about ten years of
08:42
fantastic boom and so they said well see
08:48
this
08:52
[Music]
08:59
yeah I’m I didn’t show vocal man but
09:05
somewhere near Chicago somebody west of
09:07
Chicago
09:08
yeah well the uses the give the raros a
09:15
fantastic increase in price in other
09:17
words if you’d like to settle somewhere
09:19
here you can’t do it because it’s kept
09:21
out of used by the government my
09:22
government
09:23
remember only go away now a lot of Matic
09:25
like okay means you have to go to the
09:26
railroad land buy it for a very high
09:28
price this benefits the railroads an
09:30
extra privilege the railroads the
09:32
railroads are getting subsidies about
09:34
three ways they’re getting in the big
09:35
land grant they’re getting then getting
09:37
taken out of circulation so they have to
09:39
go the suburbs have to settle on a roll
09:41
and bile a high price and railroads so
09:44
I’m going here for nothing really and so
09:48
part of the monopoly situation plus they
09:50
got a huge amount of loans per per one
09:52
line up MIT mile of track you know
09:54
financial me out like cash loans or
09:57
grants or had to so these are the two
09:59
big fella wasn’t it was Southern Pacific
10:03
which starts in Los Angeles and in
10:10
continuing something somewhere in Texas
10:11
that wasn’t sort of transcontinental I
10:13
guess ok so this is more than Pacific
10:20
got the most amount of land I got 44
10:23
million acres and I think the other
10:30
three got 44 million of course this is
10:32
about happy so that’s so the all these
10:35
three together got about 44 minutes
10:36
about 88 million just so those big for
10:39
to this feat I shouldn’t call me look
10:41
for the big four also named the Central
10:44
Pacific leadership any write those big
10:47
for transfer Mountain Railroad that’s
10:49
the central is originally Central
10:51
Pacific very soon specific merges with
10:54
Southern Pacific and takes it and
10:56
basically takes it over under the name
10:57
Southern Pacific means seem guys these
10:59
guys are running it this becomes
11:01
Southern Pacific whole California thing
11:03
oh but later
11:06
[Music]
11:07
the Union Pacific and wanted an
11:11
interesting phenomenon here you only
11:14
found out about a couple years ago I was
11:15
reading more about this get this money
11:27
why general general my Grenville dodge
11:31
was the main entrance the Union Pacific
11:33
and sooner than civil war starts he gets
11:44
himself appointed a general and the
11:46
American army northern army of course he
11:49
takes a whole bunch of troops federal
11:51
troops takes it out of the war and uses
11:53
the troops to do why use it they knew
11:55
what the route was gonna be of course
11:56
all the insiders knew one another by the
11:59
way as another thing they did is the
12:00
insiders the top entrepreneurs and
12:02
president vice president ever knew what
12:04
the rule means they often bought land
12:05
along the way and then sold over the
12:07
rail robbery high price alright the yeah
12:10
anyway the general general dodge takes a
12:16
whole bunch of soldier than you huge
12:18
your army and use it as a cook destroy
12:20
only Indians on roof I’m just genocide
12:22
old massacre the Indians in order to
12:25
clear the roofers own goddamn railroad
12:27
which would be which should be granted
12:29
to him in 1862
12:31
that was his his army function I think
12:34
it’s an interesting example of usually
12:36
or me at they what is what does it man
12:38
means you see one of the things you have
12:39
to realize about business and government
12:41
the use of is the use of businessmen use
12:43
of government by businessmen to
12:45
socialize costs in other words take
12:51
their costs and impose them because
12:54
nobody wants to spend pay out court take
12:56
the course and pose another tax payer or
12:58
anything that’s – so you use the army
13:01
what the hell you they take the arm
13:02
there are conscripts anyway using this
13:03
to kill only Indians enroute so it’s the
13:05
clear the path the Union Pacific
13:08
then if then as soon as he he clears the
13:11
path he gets out of the or I mean
13:13
becomes the head of General of Union or
13:15
the purpose of Union Pacific
13:16
[Music]
13:19
another thing these guys that I’ll give
13:21
you some examples as we go along all
13:24
account everybody was on the take you
13:26
know all a congressman wanna take me the
13:29
the Union Pacific group in Congress
13:33
headed I think me Pacific make sure it
13:36
northern yeah any Pacific group was
13:40
headed by congressman Oakes Ames of
13:44
Massachusetts and he was the leader of
13:49
what was known as the Union Pacific
13:51
faction what they didn’t leave everybody
13:55
was on the take
13:57
when grant comes in at 60 1864 1869
14:05
I guess 68 when Grand coming 68 his
14:09
whole in the prior administration was on
14:11
a page might surprise might his personal
14:13
secretary vice president his head of a
14:16
Senate the head of a house the whole
14:18
gang was gonna take me literally on
14:19
taken both me the sitting in their
14:21
Northern Pacific random saw was not on
14:23
the take ran himself was drunk most of
14:25
the time and you know what’s going on
14:26
you can say he was odd I suppose I’m not
14:28
confuse you cared one way we go
14:30
everybody else was gonna take and the
14:32
whole the whole gang wasn’t involved
14:35
with this thing they would get what they
14:36
were getting this not only do they get
14:37
actual money and cash from the railroads
14:40
both in both three cases in several
14:44
percent units of a Northern Pacific the
14:46
top managers with for construction
14:48
companies their own construction in
14:51
other words the rails are a big business
14:53
they had a huge amount of stock whole of
14:55
the huge amount of bond holders was a
14:56
big corporate the only really big
14:58
corporation most of the banks invested
15:02
about 10 percent of the stock other is
15:04
worth the rest of it was with private
15:06
investors many of them were English most
15:08
of you know a lot of small investors is
15:09
on the stock market it was no stocks no
15:12
manufacturing companies alone spot more
15:14
here they’re all private partnerships it
15:16
weren’t big enough to have corporations
15:18
but melrose are big enough now to be
15:19
incorporated so you had a huge number of
15:22
stockholders the inside managers not
15:24
only had a lot of stock but they also
15:25
had they have a form their own
15:26
construction companies
15:29
one of them I think the Central Pacific
15:31
it’s called a credit Moby da I’ll get to
15:36
that specific for a minute
15:39
so each way for these construction
15:41
companies which are formed by the only
15:42
stockholders of these construction
15:44
companies live atop the top spot hole is
15:46
a look of the Marilyn’s they then they
15:49
went at the construction business they
15:51
built the railroad and solar railroad
15:53
mentally for the railroad was the
15:55
Central Pacific and Union Pacific
15:57
construction company constructed a
16:00
railroad a huge by the way huge ransom
16:02
money subsidizing the government being
16:06
per mile
16:07
many cases of track and then they sell
16:11
Italy to the railroad they saw at a very
16:13
high price the estimate thought about
16:16
the the pricing about double what they
16:17
would have been charged with free market
16:19
and worth double the cost the basic
16:21
price in the free market so essentially
16:23
these guys fleece their own stockholders
16:25
and bondholders essentially robbed angry
16:28
yeah the government based on government
16:31
subsidies yeah
16:37
nothing not all the owners and pop
16:39
owners a few insiders right now yes
16:47
exactly leave me what situation is but I
16:51
think you want for a big corporation
16:53
okay you’re you’re a two percent
16:56
shareholder you and two other buddies
16:58
then you form another corporation you’re
17:00
the president you then hire another
17:02
corporation headed by yourself and buddy
17:04
your buddies which are have a hundred
17:06
percent of the share to sell all the
17:08
equipment you saw at a very high price
17:10
and essentially you’re fleecing your
17:12
other shareholders what’s gonna master
17:14
with robbery of the other shareholders
17:15
by the interesting few insiders
17:18
of course illegal them but nobody
17:19
there’s no prosecution with the
17:21
government of anonymous stop so as a
17:25
result you have very low profit rate to
17:27
the railroad and eventual bankruptcy is
17:29
of as much of this huge amount of
17:31
profits by the construction company
17:33
whoever they were coining it their
17:34
capital was given to them by the by the
17:36
taxpayer in those cases and then they
17:37
were getting and they
17:39
sell out a double of the value to their
17:41
to their own railroad well that was part
17:45
of it sure me the fact was overbuilt
17:46
heavy subsidies yeah that was part of
17:49
the cause was this hard to say
17:52
mismanagement they didn’t care about
17:53
management is one of the look of the
17:55
whole situation I’ll give you some
17:57
examples of all that’s not just given
17:59
given overall picture
18:00
yeah Union Pacific the credit memo video
18:02
scandle the let’s say I’ve got the two
18:12
recent examples here the for example
18:16
both for Union Pacific and Central
18:20
Pacific they got special federal
18:24
government loans 30-year bonds they were
18:27
paid my pacification of several Credit
18:31
Mobilier
18:32
several Pacific it was the credit and
18:34
Finance Corporation was called credit
18:37
more ba and the credit finance
18:39
corporation and the
18:52
so they say that this financed the
18:54
construction struction and what happened
18:57
by the way the congressman what they got
18:59
was not just cash the congressman the
19:00
senator is the vice president all that
19:02
they got shares reshares not on the
19:04
railroad but on the construction company
19:07
that wasn’t he in other words they got
19:10
the Senators and the Congress from the
19:12
vice president they got free you know
19:14
thousand free shares of Credit Mobilier
19:15
how will the railroad they carrera know
19:17
he’s not gonna take it the Chinon or
19:19
less so notice it was a robber baron era
19:25
but of the robbery only really
19:27
facilitated and permitted by the faculty
19:30
level he’s huge huge government
19:31
subsidies and the whole thing was tied
19:33
in together for example a credit and
19:37
Finance Corporation which was the
19:38
central Pacific’s construction company
19:42
got they sold the they sold it into the
19:50
reconstructed rare are the price for
19:51
seventy nine million dollars for the
19:53
Central Pacific it was really only worth
19:56
the free market of worth a thirty six
19:58
minutes there’s more than bubble
20:00
seventy-nine many one with although it’s
20:02
tough for people ran the the main owners
20:04
in several Pacific they were the sole
20:06
owners of the construction companies the
20:08
actual center Pacific had a lot of
20:10
course shareholders and want hole so
20:12
that was the that was the way it was
20:14
done in the case of Union Pacific of the
20:18
credit mobile a course were are they the
20:22
normal course of the normal value was
20:24
144 million and they sold it
20:27
the Union Pacific for ninety ninety four
20:31
million again more than a double
20:32
slightly more than double again it was
20:36
the top people owned that to us of
20:38
course the congressmen and Senators get
20:41
them all so
20:45
[Music]
20:47
well my Oakes Ames I should mention
20:49
about Oakes Ames the Union Pacific
20:51
cheerleader and Lee
20:53
what was his shtick in addition to being
20:54
on the take he had a special interest
20:56
Union Pacific
20:58
he was a shovel manufacturer in real
21:00
life is what I meant for Sam I thought
21:02
less important know what these guys do
21:03
in the real world edition of being
21:04
congressman he manufactured shovels who
21:07
gets to do you think up a shovel
21:08
contract for the construction company he
21:10
needs a billion Pacific one yet okay
21:13
though claims he’s getting he’s selling
21:15
shovels and again alive
21:16
handsome price to uni Pacific for which
21:20
he got the contract so he so the Union
21:27
Pacific had on a take all right
21:29
distributing stock of the credit mobili
21:32
I have a construction company the Vice
21:34
President the Vice president-elect
21:36
the Democratic House leader Speaker of
21:39
the House James Blaine was cool one of
21:41
the ran for president one year is called
21:42
a Continental liar in the state of Maine
21:44
James Garfield senator from Ohio later
21:48
be President another very interesting
21:51
character will be a little bit later
21:52
called pig-iron Kelly
21:54
he was the congressman from Pittsburg
21:58
area and then the Kelly he was known as
22:02
pig iron because he was blatantly and
22:06
obviously the representative in Congress
22:07
of a pig our interests first line of
22:09
steel were the big companies were in the
22:13
Pittsburgh area I’m always calling for
22:14
tariffs and also some other subsidies
22:16
for pig iron the well the way Ames put
22:26
it I like the way he put it by the way
22:28
okay he’s and he’s explaining why he
22:29
gave a lot of even lot of free shares of
22:32
credit mobius stocker congressman he
22:34
said quote we want more friends in this
22:36
congress there’s no difficulty in
22:38
getting in getting them to look after
22:40
their own property I like that that’s
22:42
kind of a just think way of putting it
22:44
of course taxpayer I first suffering
22:49
from this and they put the other
22:50
railroad men the
22:53
and then in Pacific well I should split
22:57
with nice you talk about the Central
22:58
Pacific several Pacific an interesting
23:00
another interesting group it was run
23:02
Union Pacific that’s a was was ox Oakes
23:05
Ames and the Greenville dodge the
23:09
Central Pacific which hooked up with it
23:10
from San Francisco was run by the so
23:13
called big for which Hadley with a sole
23:17
owners a construction corporation okay
23:21
interesting characters the the families
23:24
of the big fool are the four people are
23:28
so dominant in California even to this
23:30
day which is pretty is pretty amazing
23:32
the big Ford tent was Charles Crocker
23:37
who was the he was the contractor all
23:41
over California still the Crocker bank
23:43
everywhere the same family Collis
23:48
Huntington it was sort of a dominant guy
23:52
[Music]
23:55
the sort of the main Tamiya deal he also
24:03
dealt with Washington a lot okay mark
24:05
Hopkins is again another big figure in
24:07
California’s famous Mark Hopkins hotel
24:10
in San Francisco which this is a pop of
24:13
a mark of Himalayan workin and let’s go
24:16
looking over the bay and all that he was
24:19
them here the real he was real
24:20
managerial type it he took care of the
24:22
actual running of labor but for food and
24:24
Leland Stanford another question he
24:29
figured founder of Stanford University
24:30
and he was he one of the state politics
24:33
he was the governor we became governor
24:35
of California makes sure that the
24:38
Central Pacific you know taken care of
24:42
for the put a mild like the what’s the
24:47
if I ran for governor the story is
24:49
nothing there’s no no reason to doubt it
24:50
so Stanford his brother stood outside a
24:52
polling place in tariffs Cisco
24:54
scattering gold coins from the masses
24:57
they went up to vote right now probably
25:00
the vote somebody tell me what the
25:02
voting with Philippines is current
25:04
elections of
25:05
the running figures 50 bucks of votes is
25:08
enormous for seasons that’s a monthly
25:10
wage weekly wage your monthly wage good
25:13
thing anyway okay yeah baby
25:15
so several hundred there’s an acquittal
25:18
about one of the 500 bucks here coming
25:20
more than that anyway so scattering gold
25:24
coin which meant a lot then and push
25:26
against a says there was a secret ballot
25:28
those you know no way checking on the
25:31
other hand yeah I got a lot of coin of
25:32
some gold coins here pocket you feel
25:34
your you know mr. Stanford of the work
25:36
it’s worth your vote any rate the sort
25:40
of stuff they did was that the for
25:45
example the idea they were going along
25:47
Ciara’s and what happens the California
25:49
zipping along pretty nice things on
25:51
something he reached the High Sierra big
25:53
mountains that he get around them well I
25:55
had a 40 miles north of this road there
26:01
was a 1% grade and then word first
26:03
amount right here is a 2 percent gray
26:06
which was as much cost layer of court
26:07
was more difficult and they figured in
26:12
any other in a free market railroad it
26:15
would they would have gone three miles
26:16
we’ve saved a lot of money by taking the
26:18
one percent right here they saw the
26:19
whole well that we’re getting paid per
26:20
mile by the government and we wanted
26:22
money fast keep laying track a certain
26:25
number miles you get the money and one
26:27
of the money and so they they went they
26:29
didn’t care to that course where we
26:30
cooped by the government there was like
26:32
a cost plus such operation who cares
26:34
about my court they want something what
26:35
the money fat Uncle Sam is gonna pay for
26:38
the for the course let’s do it
26:39
so yeah well you have situations like
26:41
that another thing they did is they at
26:48
one point they got the sacrifice I got
26:49
to this they came to the rule of
26:52
Sacramento of Valley Railroad turnaround
26:54
here and would have been simple of just
26:56
by the route of the road the short
26:59
railroad instead of that they build
27:01
another Rhode Island’s won’t side out
27:03
what’s the point
27:03
it was costlier it in can time again
27:06
they wouldn’t get subsidized you see but
27:07
they’ve bought the other arrow know
27:08
something’s per mile of track
27:09
construction company isn’t something I
27:11
don’t get subsidized government for
27:14
buying something so they they say what
27:15
the house what
27:17
market the market efficiencies are being
27:19
skewed by governmental by governmental
27:21
incentives where they instead of not to
27:23
be efficient not to make profits or a
27:24
boy boss instead of to get the money
27:26
from the government and whatever
27:27
conditions are laid down that’s what you
27:30
do is the one guy put it quote it was
27:33
cheaper to build up the government
27:34
expense and the bio rail or already
27:36
existing and in other words that your
27:38
own expense so let’s let that be a
27:40
lesson and analysis of contemporary path
27:44
or whatever you know make history the
27:46
estimated waste of this thing was about
27:48
seventy five percent so what the
27:49
estimates are the course of the track
27:52
and laying it and so forth about 70% of
27:54
high 75 percent higher than it should
27:55
have been a favor they’ve really done
27:57
this on three Morgan incentives the
27:59
government weren’t paying for it as far
28:03
as the Central Pacific goes also the
28:05
great story here in order to get his
28:08
this country and all to get this money
28:10
from the government Carlos P Huntington
28:12
goes to Washington takes a train or
28:15
whatever I guess those guys I know which
28:17
I get there anyway I guess I’m watching
28:19
then he takes a bang with him of two
28:22
hundred thousand dollars in cash
28:23
you have to realize two hundred thousand
28:25
those days with enormous I mean I know
28:27
what equivalent I didn’t have it maybe
28:28
twenty million or so okay and well
28:32
nobody knows how he spent it all they
28:34
know where that for lobbying and seeing
28:36
big shopper watching he left for the bag
28:38
empty any people there’s my gambling
28:42
pipe and so that’s it another 22 suppose
28:44
the two hundred thousand dollars of hard
28:46
cash to the politicians to get this get
28:50
this deal anyway later on they say they
28:55
bought Southern Pacific they changed the
28:56
name of Southern Pacific and Southern
28:58
Pacific which was then the combined
29:02
I guess they connected up really ran got
29:05
California politics for a long long time
29:07
decades virtually the California is
29:10
essentially a southern anyway the
29:11
Southern Pacific state
29:21
okay northern that’s more Northern
29:23
Pacific go that would that have several
29:25
entrepreneurs and finally gets another
29:27
hands right 1869 the fabulous Jay Cooke
29:31
reward he talked about Jay Cooke and say
29:35
making millions under the Civil War
29:37
through the bonds bond deals to being a
29:39
monopoly underwriter a government bonds
29:41
which he still was now after the war was
29:43
over and also by setting up a bank and
29:46
no national banking system which
29:48
requires pyramiding credit on top of
29:51
government bonds event banks have to buy
29:52
bonds from cook you know he’s he’s in
29:54
great shape anyway he gets control of
29:55
Northern Pacific by 1969 and he starts
29:58
running that Jay Cooke who by the way
30:01
was known as a tycoon those days I think
30:03
the first guy that was the wooden tycoon
30:05
employed who everybody had an epithet
30:08
some of the way that people worked in
30:10
those in a period that was his epithet
30:13
he was the tycoon what he did was he
30:17
started selling because he had his own
30:19
construction company and stuff he sided
30:21
sold bonds to his and pushed Northern
30:26
Pacific also to get people of subtle
30:28
isn’t you know this I mean this play
30:30
this area is bad enough and slip up here
30:32
then there’s this whole northern area :
30:34
a month miserable all that he’s trying
30:36
to get people with several it’s rotten
30:38
area he hires all but to propagandas use
30:41
the same techniques that he wrote they
30:42
did he used when he was selling
30:44
government bonds high a whole bunch of
30:46
pamphlet here so write about how
30:47
wonderful it is and send its distributed
30:50
in Europe but and whatever he he had for
30:54
example a guy named Sam Wilkerson who
30:57
wrote a a bunch of pamphlets hop hopped
30:59
up pamphlets about the glories of this
31:02
area and he said I think one of this one
31:06
of the phrases was of the climate the
31:10
climate is like Paris in April this is
31:12
the climate of Wyoming nothing yeah what
31:15
Lakota
31:16
anything tell us sucker than anything
31:18
get him up you see my the former little
31:20
irritated than they yeah they finally
31:22
schlep up there I find it a little bit
31:24
different different situation so no but
31:28
something Hanna take they have bigshot
31:30
stockholders or granted stock freely
31:33
construction company vice president
31:36
Schuyler Colfax the other for hazel
31:38
later president Secretary of Treasury
31:40
and of course they had chief justice
31:44
salmon chase oh by the way if I get to
31:46
him they also had Webber and Henry Ward
31:49
Beecher probably the most distinguished
31:50
minister in the United States at
31:51
probably New York Protestant minister
31:53
for actually came from Brooklyn and he
31:55
was on the take he was not paid by
31:57
Northern Pacific to the club all the
31:59
glory for the northwest and all that be
32:01
sure to schlep up the northwest and
32:03
settle there and things like that right
32:05
pamphlets they had pop again the
32:09
meetings for the area and things like
32:10
that
32:12
chief justice was now chief justice in
32:15
our state salmon P chase and not only is
32:18
he still on the tank from whirling
32:20
Pacific but he you once see once Jake
32:24
Lee comes to cook and he urges cook
32:26
remembered cook as finance takes his
32:29
whole career by commercially he becomes
32:31
the club privately says make me a secret
32:33
partner cook thank company which is a
32:36
big investment bank it’s not supposed to
32:38
be done if you’re Supreme Court justice
32:40
hooked me a little bit above the back
32:41
hit me it would be a secret partner of
32:43
some of them investment bank which is
32:44
running half the country anyway so cook
32:47
cooks us so chase I mean cooks as not as
32:49
it’s too risky but he’s very greedy guy
32:52
chase let’s face it his appetite was
32:56
enormous but he was also a secret
33:01
stockholders of Northern Pacific and in
33:06
addition of that she’s just a state
33:08
chases private secretary President Grant
33:10
was on a team also a secret stockholder
33:12
Northern Pacific
33:13
general general reporter and Horace
33:15
Porter the
33:19
a speaker blame of giving some problem I
33:24
told you about blame that’s kind of a
33:25
lie on this thing I mean he was even on
33:27
the payroll of Southern Pacific he’s
33:28
gonna take he was giving the Northern
33:30
Pacific some trouble and getting their
33:32
stuff so so finally cooks brother Jake
33:35
cooks brother Henry was a journalist in
33:37
a big time full-time aide a longtime
33:40
aide of secretary chef chief justice
33:42
chase this point like an ax friend of
33:47
President Grant goes to grant any rent
33:52
and the convinces grant granted very
33:53
favorite very much your favorite
33:54
Northern Pacific and so he gets grantee
33:57
herring or something and then like what
33:59
the Jake cook does he he gives in order
34:02
to buy the favor of Speaker Blaine he
34:04
gives him a long term a very big long
34:05
term longer long-term low-interest now I
34:10
quote alone on quote that takes care of
34:11
Blaine’s stubborn opposition Southern
34:14
Pacific board opposition they say in
34:16
college by my friend of mine is well I
34:18
mean one of the big things by the way in
34:19
politics now and then crooked politics
34:21
now and local politics is the cable the
34:24
cable stuff you know of course the
34:27
Brooklyn I know I’m thinking I’m still
34:28
having that cable is outrageous what
34:31
happens is the reason why most couple
34:33
many cities too long have cable is that
34:35
they’re fighting over who gets one local
34:37
monopoly monopoly franchise set up a
34:39
mini free competition each one is
34:41
fighting for the monopoly my friend who
34:43
lives in Tucson Arizona is a big
34:45
observer of local politics so they
34:48
finally cable are going to come to
34:49
Tucson go to cable companies were
34:51
fighting for leg for the : habla
34:52
franchise okay right very lucrative an
34:56
odd place so a couple of city councilmen
34:58
city can’t think of a couple city
34:59
councilor asked them pleaded for a
35:01
secret person secret ballot which which
35:04
company should get it this is our ragin
35:07
of secret file the reason why they want
35:08
a secret valid they were on the take
35:09
from both companies they didn’t want to
35:11
be found out by either one and so they
35:13
were very embarrassed when the book was
35:16
public and they had a vote one way or
35:18
the other so which is which is
35:22
definitely the definition of honest a
35:24
monolith politician I think this is the
35:25
George Washington Plunkett the famous
35:27
old Haman a leader definition of an
35:29
honest politicians want to stays bought
35:31
so you make your punch front isn’t the
35:35
briber it stick to it if you don’t stay
35:38
boiling you’re a big man cause that’s
35:39
usually in big trouble okay so the now
35:48
get cooking company the here’s Jacob
35:50
owning a little Pacific and all that as
35:53
a major leader J cookin company gets of
35:55
course from a little Pacific the Fiscal
35:58
agency no it gets the power the soul
36:00
part on the right bonds and stocks
36:02
issued by Northern Pacific it charges a
36:06
totally they charge of twelve percent
36:07
Commission’s about double the usual
36:10
Commission here’s the money example we
36:12
cook fleeces the follow spot holders you
36:14
get your investment banker for your own
36:18
railroad except you own most of your
36:19
bank you only own a small portion of the
36:21
railroad if you can fleece the bank
36:22
you’re shifting funds quietly but
36:26
illegally from from the your fellow
36:28
stockholder your come rent
36:30
Stockholm of the Banco look to yourself
36:33
and a couple of other guys in the bank
36:35
so so anyway so cook cause that’s a big
36:39
propaganda campaign first of all the
36:40
blind all of the Pacific bond second
36:42
roll up to the subtle in the north
36:44
northwest the United States and he had
36:47
traveling agents and so for and so on
36:51
one of the traveling ages and he brought
36:53
over for this thing later becomes
36:54
president of the Pacific the German
36:58
fairly wealthy German I mean Henry the
37:01
law depends over-under neither becomes a
37:05
president
37:14
anyway about okay Lee jung-jae cookin
37:21
company and it doesn’t always happen
37:22
like the very rarely happens in history
37:24
where justice triumphs it’s pretty rare
37:28
a case of Jay Cooke however justice
37:30
triumphs and I’m happy to record that
37:32
sure life can be beautiful life can’t be
37:35
beautiful
37:35
and sometimes here’s Jay Cooke levy a
37:40
monopoly underwriter multimillionaires
37:42
look tycoon owner of Northern Pacific
37:46
creator of the national banking system
37:48
the top investment banker except for and
37:50
so on
37:51
he’s of course it’s cut Forbes in
37:52
Philadelphia
37:54
Jay Cooke goes blue e and he doesn’t
37:58
look at Northern Pacific is now
37:59
beginning the collapse and he’s getting
38:02
loans out its overextended all these
38:05
railroads were bringing a fishing after
38:07
realize they were running badly but
38:08
nobody care about how they were run I
38:09
just want to fleece it as much as
38:11
possible and that from an engineering
38:13
point of view they’re all in terrible
38:14
shape intrapreneurial point of the other
38:15
in terrible shape
38:16
so here’s cook trying to get loans of
38:18
bingo comes with a panic of 1873 and
38:24
which was much of which was brought
38:27
about by cooks own inflationary
38:28
manipulations through the banks and Lee
38:31
government bonds etcetera cook goes
38:33
bankrupt one of the great pieces for
38:35
what exists as ever
38:37
that going bankrupt that your own
38:40
creation more or less than worth here he
38:41
is he’s responsible the northern
38:43
Pacific’s overextension is possible for
38:44
the inflationary boom the late sixties
38:46
and early seventies you sponsor with a
38:49
big public debt which comes out of the
38:51
whole bank credit expansion and when the
38:52
collapse comes as always does come he
38:55
gets it in the neck in the end of Jay
38:57
Cooke full of the house of cook that was
39:00
cool the and he sets up these lying
39:06
pamphlets about our great ever the
39:08
greater the climate is in the northwest
39:10
all the rest of us he finally gets it
39:13
what happens is one of the he gets it
39:16
cuz and who he places one what happens
39:18
is he’s of course no Republican brie
39:22
wrapped up with Republican Party very
39:23
wrapped up with chase salmon P chase all
39:27
the grant link administration on the
39:28
grant administration and when he’s
39:32
fooled these poeple is his place is now
39:36
taking an investment banking bite firm
39:39
another Philadelphia for Nicole Drexel
39:40
Morgan and company and this is the
39:44
beginning of the famous rise of JP
39:46
Morgan fame and fortune Anthony Drexel
39:50
was a famous Philadelphia banking
39:52
financial and banking industry and
39:55
family as vessel diddled family which is
39:57
still around the rules are still
39:59
functioning yeah the same stuff right
40:04
Morgan was the son of a British banker
40:06
and Julius Morgan Morgan was younger
40:10
than I think they’re excellent very soon
40:11
took over there’s obviously a dominant
40:13
force and I’m what finally winds up with
40:16
JP Morgan and company and they write
40:17
this is that this is the result of this
40:19
is a rising VP Morgan it becomes the
40:22
dominant figure in American politics
40:24
Wolf’s out and we’ll see later and from
40:27
1873 on I was losing the panic of 1873
40:31
in the collapse of cook but allows room
40:34
for a new some new faces so to speak in
40:36
the situation Morgan is essentially a
40:37
Democrat was involved with Democratic
40:39
Party although he became once a trauma
40:42
and the wing one wing and Republican
40:44
particles will see you later on
40:49
[Music]
40:56
okay so all these the Lord after Khafre
41:00
cook goes bankrupt the Lord becomes head
41:05
of Northern Pacific tries to tries to
41:08
run it and doesn’t do very well it’s
41:13
finally again the costs are excessive
41:16
and so forth by this time by 1873 with
41:19
80 70 to 80 73 at the end of the
41:21
railroad land grants I mean that’s it
41:23
well the end of the grant administration
41:25
of a panic the massive land grants are
41:28
over so now a lot of Pacific has to sort
41:30
of make it on his own I couldn’t do it
41:31
and it goes bankrupt around late
41:34
seventies and you know goes into
41:40
bankruptcy bankruptcy estates railroad
41:42
doesn’t mean the whole track of destroy
41:43
I mean the whole reorganization and
41:45
whatever coming in the last
41:49
Transcontinental Railroad them make it
41:51
doing it purely well almost without any
41:54
government subsidy will certainly with
41:55
no grant no longer all rest of it really
41:58
heroic action this was so-called Great
42:03
North Run which was started up in Duluth
42:08
Minnesota way up northern Minnesota and
42:12
scre to the Canadian border sometimes in
42:16
the American sizes on Canadian side
42:18
something like that comes in the Seattle
42:20
notice all these even though they’re
42:22
only a few common railroads they all
42:24
compete with each other if you’re gonna
42:25
send shipment south account for the west
42:28
coast or what are the East you can take
42:31
any one of these routes and so they’re
42:32
all really in competition so if course
42:35
this is called the great northern Great
42:37
Northern completed around 1670 double
42:41
evening was person mostly in competition
42:44
with Northern Pacific and this was
42:49
organized and my underwear was game J
42:52
help the last look like we’re a little
42:54
nine nights it was a very interesting
42:57
character he’s one of these people who
43:00
fit the complete horatio alger picture
43:02
which is the so called stereotype Rachel
43:05
the stereotype
43:06
he he was born in Canada poor he’s born
43:11
in a log cabin is actually born in Long
43:13
camera which is not something you know
43:14
it sounds great
43:15
it’s not something that can really hope
43:17
that you’re born in he kind of came from
43:19
scotch-irish
43:21
farm and Terry oh he was became a clerk
43:25
he got educated comes like mostly people
43:27
are energy edited it becomes a clerk he
43:31
comes to the age of eighteen emigrates
43:33
the st. paul minnesota and becomes he
43:38
starts getting interested in he starts
43:40
buying out small bankrupt railroads and
43:43
starts integrating them and making it
43:45
more efficient an extremely efficient
43:48
construction person and he was also he’s
43:56
the son of the first railroad called st.
43:57
Paul Minnesota Manitoba rarest war-era
44:00
he’d be any what he when he went for I
44:03
think he’s also short and thin how these
44:05
guys are quite short oh I think I’ve
44:07
ever nerves then Rockefeller was quite
44:10
was very short the I mention that and
44:17
they’re not too many short entrepreneurs
44:18
these days they were short any rate the
44:23
he and he specializes in low-volume low
44:25
and low rates cheap freight rates but
44:28
rate is a big thing of passengers are
44:30
from an economic point we didn’t mean
44:31
much for these company and a large
44:34
volume and being competitive and so we
44:36
very efficient rate fish and we’re up as
44:38
always actively no I competed Northern
44:40
Pacific and made good profits is
44:43
extremely there was no there’s no phony
44:44
construction company the whole thing is
44:46
on the up-and-up
44:47
it’s kind of a heroic thing the James J
44:49
Hill and so I it’s a good counter image
44:53
any and by the way when he he encouraged
45:01
immigration but he was very new well he
45:02
knew the area he raised we did in this
45:03
area amount of Toby knew exactly know
45:05
what the climate was like she didn’t
45:07
have the light of a public cuz he’s
45:08
actually there none of these guys
45:09
he’s tamp up here that someone is
45:10
sitting in Philadelphia and then what’s
45:12
going on couldn’t Northwest okay let’s
45:15
take a 10-minute break and we’ll be back
45:16
with
45:17
[Music]
45:23
okay the anti-monopoly movement at least
45:26
the late sixties and early seventies
45:28
focused on the emmys problems with land
45:30
grants and a land and cool for the late
45:36
nineteen eighties were talking about
45:37
belly aching about railroad rates which
45:39
we’re not really a problem but the this
45:41
one zero nothing’s like demanding no
45:43
future land grants with the railroads
45:45
which they accomplished 1873 the man a
45:50
forfeiture of the un– the unused land
45:52
grant a lot of these land grants is
45:54
simply their unused yet waiting for a
45:57
place to get higher demanding they be
45:59
forfeited and demanding also a taxation
46:03
of the railroad lands and and a forced
46:06
sale of them
46:08
those weren’t really accomplished so
46:10
much for the least they ended the you
46:13
know new land grants the another another
46:17
coverage and other larger rackets the
46:21
curtains compared with what my have an
46:23
Indian land scene
46:24
Miami is supposed to be homestead it
46:26
accepted the maximum size I said was out
46:29
of the 60 acre but any lands that the
46:31
Indians got kicked out of what sort of
46:33
up for grabs
46:34
there’s no homesteading applied to it
46:35
there’s a lot of finagling going on with
46:37
taking them and selling them to
46:39
speculate huge blocks the speculators
46:41
order railroads so railroads not a lot
46:43
of extra land that way one of the famous
46:49
examples of that was the Cherokee tract
46:54
in southeastern Kansas like a whole
46:57
quarter here or something almost copy
47:01
from Kansas turkeys were kicked out the
47:05
land that gets open up what’s gonna
47:06
happen to it
47:07
and it was sold by the federal
47:11
government in 1868 to Ford for to a guy
47:20
named James F joy we’ve also known as
47:23
the railroad King weakened in Iowa
47:25
Illinois Iowa
47:27
now Kansas James joy was the head of a
47:33
Kansas City Fort Scott on Gulf Railroad
47:36
it was sold to him for by the way there
47:39
was settlers there
47:40
she mentioned that the whole bunch of
47:42
suppers on the plan they were
47:44
disregarded the whole thing was sold a
47:46
joy and it’s a little bit like the South
47:48
American or Asian case where people
47:50
living there and there’s that forming
47:51
the land most of those guys now they
47:53
owner and it sold more great cheaply and
48:00
he he takes I think we spoke over dollar
48:04
an acre and then he sells it for about
48:05
two dollars an acre the settlers and
48:07
he’s getting a big profit on no
48:09
investment or almost no investment the
48:13
reason why I got this big deal son of
48:15
James Joyce it was the land was sold to
48:18
another secretary of the interior
48:19
secretary interior forces in charge of
48:21
the public domain still is so it’s a
48:24
powerful position and those days of
48:26
course and then running the whole West
48:28
and secondary Turia then allows this
48:32
deal that take place with Jim joy who
48:33
was the Secretary of Interior and we
48:35
know the name of the secretary interior
48:36
Orville browning of Illinois right but
48:40
most historians stop there
48:42
means don’t even say well writes ever
48:43
browning and I mean secondarily browning
48:45
him but also so happens that browning
48:48
was a brother-in-law of Jim joy right
48:50
now begins the light becomes even
48:52
clearer if the why this occurred he also
48:59
brownie lip has had represented a for he
49:01
became secretary and after he left the
49:03
Secretary of the Interior ship he
49:05
represented joy as his lawyer we have a
49:08
very close relationship between Jim joy
49:11
and and the types of the railroad can
49:13
you do this coal and browning
49:21
[Music]
49:24
the another similar situation happened
49:30
to another part of Kansas the Osage
49:33
tribe land there’s a lot of 8 million
49:36
acres for continuing of railroads one
49:41
mentioned so a little bit about the land
49:43
situation when questioned the Frederick
49:49
Jackson Turner of a famous pieces around
49:52
1900 or so called
49:55
turner thesis by the importance of the
49:58
frontier american history of a land
50:00
question of the frontier the fact that
50:02
there’s always a frontier out there and
50:04
there’s been a lot of arguments back and
50:06
forth about it basically has a great
50:09
deal sense to it
50:11
the one-month factors of the frontier of
50:14
Iowa call a safety valve in other words
50:16
people in like it in the yeast nipping
50:19
out west find fame and fortune and work
50:22
site and so to have an enormous expanse
50:25
of free land and more or less free land
50:27
what you get there so for women is
50:28
there’s differences on that a lots of
50:32
land available and this is extremely
50:34
important in American history that
50:35
distinguishes America from say Europe
50:37
and many other most other areas namely
50:39
the enormous amount of land and enormous
50:42
ratio of land to labor so the so if you
50:53
have a huge amount of land per labor for
50:56
labor then you have difference also the
50:58
different economic sociological or
51:00
whatever in production for example a
51:01
kind of Agriculture we have the Unites
51:03
States is very different from the same
51:04
Europe because you don’t try to I mean
51:07
at least until recently certainly during
51:08
the 19th century the idea you don’t try
51:10
to economize on land as lots of land
51:12
land going out coming out the yangyang
51:13
it my mother would let the land not
51:17
people the Tillett in other words people
51:19
become very expensive labor is scarce
51:21
dear sir and land is a very abundant the
51:26
kind of farming methods are those which
51:28
are what you’re determined by that kind
51:30
of situation in the word you have
51:32
you can kind of Mize on went on labor
51:34
and not on land you lost the land
51:36
because land is not very scarce so the
51:40
land labour ratio is very high nothing I
51:43
mean on the hand of Europe you ever been
51:45
the Western Europe for example
51:46
everything is tale of intensive
51:48
agriculture there’s very little land per
51:50
person lots of people in very little
51:52
land so the land labour ratio is very
51:55
low in Europe as a result so your
52:06
European agriculture is not as intensive
52:08
in other words the very careful
52:11
cultivation every every square foot
52:13
practically is cultivated my face is
52:15
very charming if you go to the Alps
52:17
you’re up on the highest region in the
52:18
Alps almost as up there and there’s lots
52:20
of cows and the cows with bells on them
52:23
learn and that kind of like that cabins
52:25
things going on is lots of people and
52:27
lots of telling I think I finally read
52:29
charming you gotta lock easy whatever
52:30
words nope nobody there no people no not
52:33
no cultivation so if you have an
52:36
extensive cultivation in the United
52:38
States in other words lots of land and
52:41
therefore there’s no intensive methods
52:43
so European agricultural us becoming
52:46
isolated to say the parable of
52:48
Technology here the agriculture is very
52:50
backward but wasn’t there was backwards
52:52
mothers if in Markinson know about
52:54
intensive agriculture this note was not
52:56
economically unnecessary to have
52:57
intensive agriculture you know if
52:59
they’re worried about land which you
53:01
worry about labor so that this
53:03
determines very different kinds of
53:04
methods technological methods in
53:06
agriculture and this is ridiculous to
53:09
have intensive agriculture United States
53:11
there’s plenty on land around there’s no
53:13
very few people and plenty of land
53:14
there’s a very different kind of
53:15
Agriculture ok their extensive
53:17
agriculture you know try to form every
53:19
square foot things like that so it all
53:22
depends what you’ve got like your
53:24
resources you’ve got and they’re
53:25
responsive accordingly the
53:33
I don’t know by the way in in there’s a
53:35
whole there’s still a lot of argument I
53:37
know very little about Indian
53:38
agriculture so a lot of argument Indian
53:40
agriculture there’s one set of economics
53:43
will claim Indian agriculture is on
53:45
economic because of like its cow is
53:46
sacred and therefore thousand ever kill
53:48
the other hand another contending group
53:50
which claims with cows have an important
53:53
agricultural function it’s not
53:54
economically weak whatever so that I
53:57
don’t wanna get into this argument over
53:59
at all about it I just is a contender
54:01
though it’s not obvious that way the so
54:10
another thing is that the person becomes
54:16
a little more intensive Navis even even
54:18
even in this situation even later on
54:20
Skol have a much more extensive
54:21
agriculture in United States also the
54:23
kinds of sociologically different in
54:25
other words usually European farming
54:28
farmers are farmers on villages they’re
54:30
all located in village judgment some
54:32
other model they won’t lift together in
54:35
other words you have a village with lots
54:36
of people in it it’s a farming village
54:38
and the forms are out here somewhere
54:39
either right behind your house or a
54:42
couple of miles out everybody’s got
54:44
their pot I think so and therefore there
54:47
are common was in everything I talk
54:48
about even with individual plots there
54:50
so everybody’s sort of together here in
54:52
the village they go out in the daytime
54:53
and then fall and come back in the
54:57
United States we have lots of land and
54:58
very few people the settlement patters
55:00
are very different everybody’s you know
55:02
they have an isolated farm the family
55:03
farms out here you gotta let the land
55:06
out there there’s another farm way than
55:07
hell out here such much more lonely
55:10
exist in dividual istic existence so
55:11
geologically then in Europe villages are
55:15
just trading villages you have a few
55:17
people and you know supermarkets or
55:19
whatever general stores but every
55:21
individual is physically spatially
55:25
widely wide apart whereas in Europe that
55:29
cluster together and the village farming
55:31
villages I suppose you can say much more
55:35
more individualistic
55:37
American farmers be more individual if
55:39
afros that’s true
55:42
so Turner talk about the individualism
55:44
of the farmer of the frontier talk about
55:47
being more democratic I’m not sure about
55:49
that one aspect of it another aspect he
55:53
did not talk it back it was so ingrained
55:55
in him and he didn’t think about it much
55:57
although it’s in there if you look at it
55:58
mainly the most of these people were
56:00
Yankees as I pointed out and they will
56:02
apply attest
56:03
this shouldn’t be individualistic and
56:07
there will most of them come from the
56:09
wing liberal New England they won’t want
56:11
an outlaw a liqueur and crush Catholics
56:13
they like that he including Turner of
56:16
late Sam it’s so ingrained of themself a
56:18
lot quieter but didn’t he didn’t think
56:21
twice about it so I think this is
56:23
important also it was a safety valve
56:25
people could get out of the depression
56:27
or recession in New York or Philadelphia
56:28
all right like what are you you can find
56:31
a farm somewhere and a lot of that was
56:33
being done in contrast is that a lot of
56:36
people didn’t like the fact of people
56:37
couldn’t have a safety valve a lot of
56:39
Eastern landowners let’s say you’re a
56:41
fairly large landowner in Massachusetts
56:43
or in the south
56:44
you don’t want workers farm workers
56:46
playing leaving and schlepping them
56:48
Wisconsin and set up a phone you want
56:50
them working here so you can have a
56:51
cheap labor supply so there’s always
56:53
happens it happens in the industrial
56:55
revolution in England for example the
56:57
main opponents of the Industrial
56:58
Revolution when the landlord’s they
56:59
didn’t want their farm workers leaving
57:01
the farm and going off to a factory
57:03
somewhere
57:03
means they haven’t got the farm organs
57:05
even have to pay more for higher wages
57:07
and so they’re constantly trying to
57:09
cripple a development of every industry
57:11
and anyone leave the first stage of
57:13
legislation so socialistic legislation
57:16
12o put in essentially by Tory landlords
57:18
we wanted to keep up farm workers on a
57:20
farm but they didn’t want heavy
57:21
available have factories available to
57:23
them if they can move it’s a similar
57:25
sort of process here or my Easterners
57:27
and southerners particularly one of the
57:29
limit land development on the West keep
57:32
out homesteader keep out settlements
57:33
they have to stay here and work
57:35
again remember laborers particularly
57:37
stierson in
57:39
in the United States I might have
57:43
mentioned this before but and the South
57:44
slavery in the South flavor er which was
57:48
probably a such a large-scale plantation
57:52
ownership development and they followed
57:56
that they weren’t here on the plantation
57:58
they leave somewhere which later on
57:59
definitely would have the at any rate
58:03
this this but in the other side was 1862
58:07
the homesteading act in 1860 to have a
58:09
breakthrough on that you have a move
58:12
toward Western development and even
58:13
though in some cases there wasn’t home
58:15
studying installed was enough of the
58:16
land distribution the United States the
58:18
void of the whole feudal land set up as
58:20
mattified really hearts the thing I’m
58:23
starring at Harvard wrote a famous book
58:25
in a 1940 a a thankful in the liberal
58:27
tradition and basically what he said was
58:29
a different thing I say the reason why
58:31
United States never had a Marxist party
58:32
you never had a always set of
58:34
essentially liberal capitalist because
58:36
we avoided the whole feudal land set up
58:38
and I think that’s totally true and the
58:40
board statement in cases where we had a
58:47
sort of a fuel and stuff interesting
58:48
enough for example in the United States
58:50
conquered Mexico and grab the whole
58:51
southwest the Mexico a lot of Spanish
58:55
land grants and some cases the Spanish
58:58
language even seized by the US
59:00
government or California government
59:01
whoever doesn’t that’s an you got huge
59:03
land mass of the using land of acreage
59:07
but they usually get washed out they
59:09
didn’t stay there because they wanted
59:11
them there’s nobody there they want it
59:12
suddenly one of the subdivide it and
59:13
sell it so eventually they’re gonna
59:15
washed out fortunately you know have
59:17
this problem there was one one
59:19
interesting thing is there’s a lot of
59:20
Spanish land grants which we decided the
59:23
honor in Mexico Texas
59:26
Mexico I think Texas New Mexico and the
59:30
United States grabbed it anyway and they
59:33
still have the deeds there the whole New
59:35
Mexican rebellion movement where the
59:38
people have their they have the be given
59:39
their ancestors with your it I own 100
59:42
acres most of it is owned owned by the
59:44
American Park Service
59:46
so forest service so that there’s an
59:49
obvious clash within the leader there
59:51
they they’re not being honored about
59:53
here and I say it’s government they
59:56
right but basically we have a LAN system
59:59
with you more like free and open that’s
60:02
the result is only from this lack of a
60:05
fix of a tight feudal land system and
60:09
Utah also particularly the Mormons
60:12
subtle Utah on a very home studying
60:15
fashion thing where you having each
60:17
other developing things a small farms
60:19
the home studying instead of kind of
60:22
that situation I will get into the water
60:34
thing I think at some point the whole
60:37
interesting area the youngest touch on
60:39
here in Europe of course water generally
60:43
considered super abundant those such
60:46
things a water shortage in halong
60:47
there’s something like that all a big I
60:48
think plenty of water side use it to
60:51
have more landfill so the European the
60:55
crutches who owns water balloons wat
60:57
water the way the common law developed
60:59
in Europe in the so-called riparian
61:02
system all right PR I am where you have
61:07
a river say you own let’s say you have a
61:10
house or a land right on this river you
61:12
only look for a river Norma this chunk
61:15
of a rubric stunning into it
61:16
this budget having to live next to it
61:18
this is so cool riparian skiing
61:20
obviously it’s not a very good way of
61:22
allocating river resources minutes and
61:24
you can lock up for the whole this whole
61:25
river thing nobody worried about they
61:27
didn’t think about rivers being a scarce
61:29
resource except when it comes to
61:33
polluting you know upstream polluting
61:34
down string whatever aside from that
61:36
looking too much problem there when you
61:38
got in the same the same law than apply
61:40
to the eastern United States you still
61:42
have a riparian water system but of
61:44
water ownership I mean essentially you
61:46
can’t do much of anything at that some
61:48
way of getting around this and the West
61:49
we always have a big water shortage
61:51
order scarcity and the West for example
61:53
that says River you look at a map it
61:55
says River there was nothing there just
61:56
a dry dry depression
61:59
only a couple of months a year to
62:01
actually have water running through it
62:02
so as a result of this very different
62:06
kind of water system they they hid out
62:08
there they have they mentally political
62:10
appropriations yeah more or less a
62:12
homesteading system in and rivers I
62:15
worked it worked pretty well
62:17
unfortunately what happened was it’s not
62:20
pure private ownership what happens is
62:21
if you don’t use your 3% they have the
62:23
first three percent the second three
62:25
percent or whatever you don’t use it to
62:27
revert the ownership revert back of the
62:29
state government if you can then hand it
62:31
out in some other way so as a result you
62:33
can’t really sell your rights to it it’s
62:34
not a full private property situation
62:38
it’s an approach toward it but it really
62:40
doesn’t it doesn’t it doesn’t meet the
62:42
whole thing is there’s all doesn’t work
62:43
too well especially when you try to
62:45
change uses so for example and counsel
62:48
at country Wars of course who gets as
62:51
water of the Colorado River which goes
62:53
through Nevada and down Arizona or
62:56
something who gets it so Los Angeles of
62:58
course is I build out of a desert I need
63:00
lots of water all classes shouldn’t they
63:02
get water who spends was getting water
63:04
from Northern California from the
63:05
Colorado River and they’re accused by
63:06
the other guys of stealing their water
63:08
or cut some custom political fights they
63:11
wouldn’t have to do that I think if you
63:12
could use let’s say the only you only
63:14
you know three percent down here say the
63:17
flow you should be able to sell it but
63:19
it’s a Los Angeles why not
63:21
you saw the rights to it there’d be no
63:22
problem we can’t do it but you have
63:24
reverted back to the Arizona government
63:26
of a lonely California government so it
63:29
becomes a political football instead of
63:31
simply a market phenomenon there were of
63:33
course attempts now to try to make it a
63:34
full appropriation system with full
63:36
lights to buy and sell I would eliminate
63:37
the whole water most of the water crisis
63:40
between different governments different
63:41
regions that are etcetera mattify right
63:43
now in a series of fantastic
63:46
multi-million dollar boondoggle they’ve
63:48
just completed the several Arizona
63:49
project in Arizona which takes water
63:52
from the Colorado River brings of the
63:53
southern Arizona of course that I don’t
63:57
know I’m team billion dollars of
63:59
taxpayer in many years they do is they
64:01
send the water in here then they even
64:03
order for the extremely scarce right
64:04
instead of charging a high price them
64:06
the market price of the former they
64:08
charge a very low price they subsidize
64:10
great cheap water way below of
64:13
of course the taxpayer and they make the
64:16
farmers use a little bit you don’t lose
64:18
it use it or lose it so you know you get
64:20
this cheap cheap water except you have
64:22
to use all of it and when they courage
64:24
them to grow these crops which nobody
64:26
can’t sell it except for the very low
64:28
prices as well the government then
64:29
wisely pays the farmers not to produce
64:31
it unbelievable situation they take weed
64:35
or something a little cotton wherever I
64:36
go in there they pay the farmers they
64:39
subsidize the farmers of I love water at
64:40
a cheap rate so the courage is fantastic
64:43
waste of the water and the cheaper then
64:46
they grow the crops that they can’t sell
64:48
it on a high enough price to the
64:50
government buys a bag of pays them more
64:52
money not to grow the crops so they pay
64:53
them twice once then irrigate the crops
64:56
and to not the grow them but the farmers
64:59
loveth are getting paid three ways or
65:02
two at least two ways paid to producing
65:05
stuff and then pay nothing for this
65:07
bubble and of course the government
65:09
agriculture department loves their
65:10
getting old exam and carrier partly
65:12
getting lots of people lots of employees
65:14
they’re gonna filling their and prior
65:15
and again lots of monies in tax payer
65:17
the only people don’t love it other poor
65:18
consumer the tax payer things within
65:19
those but paying for for scarce water
65:24
than we see earth water than pain and
65:26
not to grow the crops would be
65:29
subsidized to grow totally nuts out of
65:31
system but not so not too often pointing
65:33
to the government government and the
65:34
point of the state governments are in or
65:35
like take or the and the farmer those
65:37
three groups love it
65:40
the the people are get to the farm we
65:43
can’t work tax they don’t know much they
65:44
can’t free market economist against them
65:46
the environmentalists again so you have
65:49
a coalition you’re owning coalition the
65:52
West the free market Commons and
65:53
environmentalists course these are the
65:55
everything what are you telling wildlife
65:56
whatever they so you have an interesting
65:59
new coalition of these groups here ok we
66:03
go well I’ll get back to water a little
66:05
bit later on land but the continuing on
66:07
with the railroads the
66:15
by the mid-1880s we had every every
66:18
large town the United States had at
66:19
least two railroads sometimes more than
66:21
that there are for example between st.
66:24
Louis and Atlanta the twenty competing
66:26
railroad routes lots of competition
66:28
don’t forget there were no roads
66:31
so after after always understand that
66:35
and the railroad rates kept going down
66:37
as I sell my ass on all the time
66:39
constantly especially in spurts there’d
66:41
be a big price war to go down and and
66:44
the state fixing to go down again there
66:49
were there was a five so-called trunk
66:52
lines trunk lines are the the big five
66:56
railroads which went from the eastern
66:57
seaboard of Chicago basically and you
67:02
have the several of these
67:04
transcontinental roads only from Chicago
67:06
Omaha something to point to the West
67:07
they have the basic lines going from the
67:10
eastern seaboard Chicago you had B&O;
67:15
Baltimore on a high out which went to
67:17
Baltimore to Chicago and Pennsylvania
67:22
Railroad which went to Philadelphia New
67:24
York Central which went from New York up
67:26
the Hudson and there’s also Erie
67:32
Railroad and there’s also Grand Trunk
67:36
which went all the way up Canadian
67:38
border I think to Boston so and they
67:43
were very fiercely competitive realize
67:45
they competed for it even though they go
67:47
to the same places they compete
67:48
Philadelphia riches of defeating in New
67:50
York merchants and so forth of Chicago
67:52
market so they were in there as we’ll
67:57
see they were country trying to have
67:59
cartels if I oh stop with one
68:02
interesting thing is when they had a
68:03
cartel they’re trying to figure out how
68:04
to price this thing each railroad was
68:07
arguing from his own self-interest of
68:08
course what what should pricing be based
68:11
on example
68:13
baldemar Ohio and Pennsylvania have the
68:16
shortest routes the shortest mileage so
68:18
they claim should you should base rates
68:20
on distance those of us have shorter
68:23
road to have a charge of lower price
68:26
vulnera which are the higher price I was
68:28
doing one screw than competitors here
68:30
New York Central were kind of longer
68:33
route so no no he should base pricing on
68:35
the course of operation turnout of New
68:38
York that will have easier grades so
68:40
that the let’s costly to building the
68:42
actual track so then they had denser
68:45
traffic’s and a lower operating cost
68:47
so they were arguing for that of course
68:48
there’s no way to resolve this arguments
68:50
up on the screen market we just charge
68:52
whatever you get away with on the
68:53
competitors and let you get away with
68:54
you’re trying to have a cartel these
68:56
which I’m very important kind of figure
68:58
out what do you what which we base the
68:59
pricing on well there’s no way there’s
69:02
no rational way quote-unquote of the
69:03
side between this and Grand Trunk but
69:06
you always on the edge of bankruptcy
69:07
anyway with them move the shakiest shape
69:09
and eventually to go bankrupt they say
69:12
should only charge the cover operating
69:14
costs should have to cover construction
69:16
cost and they’re obviously or they
69:18
hardly cover anything anyway it was a
69:20
series of rate wars between the branch
69:22
front line 1976 which so the whole rates
69:26
fell which touched off by the completion
69:30
of Baltimore Ohio Railroad 1874 which
69:33
starts with a big theory of the rate
69:35
Wars and so for example anything between
69:43
1876 and 77 just not one year give you
69:51
no idea first-class freight rates from
70:03
from the east of Chicago and with
70:10
several classes a bunch of like four or
70:11
five classes so first class Chardin I
70:14
are breaking them for choir outside that
70:17
should mean lower rates and fourth class
70:19
the the first time straight race was
70:23
safe fell from 75 cents to the Senate
70:25
for 700 100 weight CWC hundred weight
70:31
I guess a mile 75 cents to a quarter and
70:36
then wasn’t felt like 2/3 and stayed
70:37
there as if it was short run pepper a
70:39
big big smash the the eastbound rate of
70:46
going from Chicago eastward fell from a
70:52
dollar hundreds late to 15 cents so I
70:58
when a passenger rate for cut in half
70:59
mine didn’t worry that much about
71:01
passages or the fact is a very small
71:03
amount of fortunately income but that
71:05
was kind of man 2 all the way one way
71:10
that the railroad curry favor of the
71:12
government was all throw at railroads
71:15
course a way to travel and Big Shot the
71:17
government got free passes we were
71:18
passing your senator or governor
71:20
whatever you mean you’re gonna automatic
71:23
pass which would you find you to be more
71:26
friendly benevolent so the rail gives it
71:28
pass so you had this bruit syslog y’all
71:38
not give you a you know our TV first
71:41
quite first class for the highest rate
71:42
and then the guys we got lower from then
71:44
on I’ll give you to give you more
71:46
broader review here great rates take
71:53
Maine May 1865 and was taking this whole
71:56
period and the end of 1888
72:06
we have a freight rates from New York of
72:08
Chicago what’s been free like North
72:10
Otago
72:11
and this is a standard great way for
72:15
different freight rate for different
72:16
classes first class second class third
72:22
fourth class and this is just two
72:29
dollars and 15 cents
72:31
okay I guess 400 hundred wait again went
72:35
down at 75 cents dollar eighty down to
72:41
1555 spent all our six 50 cent ladies
72:50
think that’s down to 35 something that’s
72:54
a little bit over going because prices
72:56
went down during this period so the the
72:58
deflation but even with that even
73:01
correcting for that it still was a big
73:02
drop and it was it store huger dropping
73:05
even a real freight rates much less much
73:07
less money favorite the another thing
73:12
they did is part of a competitive
73:14
process not only do they cut the freight
73:17
rate there was a cup of classification
73:18
one way of competing you keep the
73:20
freight rates the same but you you
73:23
declassify products in other words when
73:25
we have competing was it shift that you
73:27
keep the race and Sam I might write to
73:29
the same but something you move stuff
73:31
for a first class a second classes in
73:32
second and third you lower the
73:34
classification you really forth making
73:35
it cheaper while the rates remain the
73:37
same applying nowadays we have don’t
73:41
increase the income tax but you have
73:42
inflation everybody’s walking into a
73:44
higher tax bracket and you pay a bigger
73:45
proportion so you you increased the
73:48
income tax without saying you have a
73:50
taxing free by the way the latest
73:51
nonsense is just yesterday totally awful
73:55
irrelevant what course here but it is no
73:58
it isn’t because it is modern he gonna
74:00
make American economy history Reagan
74:02
always was thing he’s not gonna have any
74:04
tax increase so he’s had over the years
74:06
he’s had a revenue enhancement the
74:08
revenue enhancements on a tax increase
74:10
I’ve had closing of loopholes doesn’t
74:14
call it tax increase and now he has
74:16
something said well he’s not gonna
74:17
you’re gonna find new revenue sources
74:21
you you tell me what the difference
74:23
between a tax increase is finding a new
74:24
revenue source we’re just having new
74:26
revenue source I’m not something crazy
74:28
anything you keep your pledge nothing
74:30
for you factors like calling it but
74:32
saying it’s not a sanctuary there’s been
74:33
rhetoric you do what in reality no doing
74:36
a rudder you think you’ve accomplished
74:37
something all right
74:39
that’s so but in those they think we’re
74:41
going getting cheaper all the time and
74:43
they’re getting cheaper officially and
74:46
also unofficially like having lower
74:48
classifications rate
74:51
in addition of that boroughs are so
74:54
competitive they would have special
74:56
rates another word here you have a
74:58
railroad you have shippers everybody
75:00
else in the shipper you are a railroad
75:02
you were shipping think you’re a
75:03
shipping Freight and the railroads would
75:11
sell anxious for shippers business that
75:13
they would have special rates or rebates
75:15
from the official rank readme rebate men
75:21
at discount you get my business I’ll
75:23
give you a 10% cut off the list in
75:26
business you don’t want to cut the list
75:27
and if you cut the price of the list
75:28
it’s a real commitment it’s a big open
75:31
commitment means you have a list pricing
75:32
and cutting whatever it is coca-cola
75:34
whatever isn’t you don’t like that you
75:36
hate I hate to cut the fight here hope
75:38
that maybe you’ll go up again soon
75:39
you’ll be so easily to cut especially
75:42
this campus for customers different
75:44
times become new customers old customers
75:46
whatever the one that when the big as
75:50
we’ll see later on the big chart came of
75:52
Standard Oil was having special rebates
75:53
one of the big quote monopoly things
75:56
backs down an oil especially rebates
75:58
from railroads for shipping and stuff
76:00
it’s true that ferry but everybody else
76:02
has such a river all the other world
76:03
companies are rebate everybody had
76:05
rebate the whole world had rebates the
76:07
whole world lived off in other words not
76:09
only do the official rates go down not
76:11
only were with classifications going
76:13
down but every stripper was getting a
76:15
rebate some are getting more than others
76:16
some lesson of every every shipper was
76:18
getting discounts there’s a famous story
76:22
of Stuart Fletcher Stiegler or later got
76:24
a Nobel Prize in Economics the famous
76:27
study of the
76:29
let’s feel real caper for many years you
76:32
cannot economist claim something very
76:34
peculiar about steel rail prices say
76:36
from 1900 of 1940 or whatever it is 40
76:39
years steel rail remain fixed and the
76:43
price of steel rails make opinion they
76:47
were always respected whether they have
76:48
a boom or a depression or whatever the
76:50
price of steel rail were fixed many
76:52
theories were invented to try to explain
76:54
it why should price of me of it would
76:55
make any sense and no the prices go up
76:57
and demand increases we held those they
76:59
go down with supply increases what if I
77:02
sell a fake well this is a crazy theory
77:03
or concoct a to figure this out well if
77:06
speaker pointed out and there’s been
77:08
point out for other things before you’re
77:10
trying to explain it phenomena if
77:11
ability to make sure the phenomenon
77:12
exists right where you met the theory to
77:15
explain something doesn’t be sure the
77:17
thing that actually exists how do they
77:19
know the steel rails are fixing prices
77:21
well let’s price remain the same girl if
77:22
you’re an economist we cannot make
77:24
storing unite you’re lazy you look at
77:26
the list right to say well that’s it if
77:29
you go in on the real world however very
77:30
almost none of these things with so
77:32
littlest prices the interest the
77:34
important thing is what were the price
77:35
was a real place for real transaction so
77:37
somebody went I think it was Spiegel and
77:39
when I made a study or on what actually
77:41
the prices were over the years the
77:43
turnout nobody solo list if you had a
77:45
boom period so like five percent down
77:47
from less than the depression it’s so
77:49
pretty good night man so feel real
77:51
fights were fluctuating all the time it
77:52
just as they didn’t recorder than they
77:54
in the books you know the official price
77:56
books priceless books so what you’re
78:00
trying to find out is what the actual
78:01
prices and and say this counter was a
78:04
time time-honored method of salem
78:07
business especially in the business
78:10
uncertain what’s gonna happen anything
78:12
about you give it this camp so and
78:19
remember that in a cartel the thing
78:21
which breaks the cartel dimension lands
78:23
on a secret price cutting
78:24
secret rebates you’re giving theory we
78:28
basically you don’t want your car tell
78:29
us your fellow cartel have to find out
78:31
you’re you’re screwing them here giving
78:33
a secret breaking your agreement by
78:36
giving a special rebate off us buddy but
78:37
these things are not evenly it’s secret
78:39
there was ever done all the time
78:41
[Music]
78:42
in addition to competing by cutting
78:45
rates you have to realize the whole the
78:47
whole emphasis and these days work on
78:48
who how do you have a hidden price
78:50
increase and those days emphases have a
78:52
hidden price for prices were falling all
78:54
the time it was tremendous competition
78:56
tremendous increase in production a
78:58
wonderful time for the consumer to be
79:00
alive and and so in addition to prices
79:05
being cut quality of service kept going
79:07
up it kept giving him extra deals one
79:10
thing which the railroads began to do is
79:11
for example give you special discount if
79:13
you fill up the railroad car does that
79:15
mean obviously why and the railroad car
79:20
Zombies reason for that they try not to
79:24
send the car around until it’s fully
79:25
loaded and so if you can have a shipment
79:28
which fills up the whole car you’re in
79:29
great shape if on the other hand you
79:31
only do have a third of the car you have
79:32
to wait so if somebody else has stuff
79:35
for the other 2/3 and so they started
79:37
charging lower rates if you can fill the
79:39
car up raisins nothing sinister about
79:40
that and that’s one reason why you have
79:43
a high quantity shipper you can get a
79:45
lower rate because you can fill a car
79:47
but get it out get out there you know
79:49
nowhere once I have a car sitting around
79:51
a lot that’s another thing discounts are
79:56
given for that so obviously with fan of
79:59
the world I will get the Standard Oil
80:00
later on but withstanding a lot of
80:02
thoughts filling out what’s lots of cars
80:04
with oil or obviously gonna get a lower
80:05
rate because there can guarantee a fully
80:08
loaded car mihrab car
80:16
so for example New York Central at one
80:19
point had 6,000 rebates 6,000 rebate the
80:22
shippers and we call special contractor
80:24
special rates sometimes available to
80:29
start paying for storage so not only who
80:31
pays for storage the shipper page the
80:32
railroad pay well it’s up to you know
80:33
the contractual situation the railroads
80:35
were battling for business they started
80:37
taking over the storage fees so one way
80:44
of course having hidden increases if you
80:46
have government’s a regulation of rates
80:47
and you want to have a hank equation in
80:50
Ohio and increases the reclassifying
80:52
class phrase upward you keep us saying
80:55
rate up later on I got plenty of century
80:57
then you hey well we have this thing we
80:59
have raised our affairs in 30 years
81:01
except for what used to be third-class
81:03
on our first-class buddy okay that’s one
81:05
way of doing it without doing an
81:06
official like that raising officially
81:08
over 19th century is the other way
81:10
around cutting rates okay so what you
81:18
had then is the first thing business was
81:20
a highly competitive industry and all
81:24
another thing I should say that the I
81:26
won’t go into this in detail but the
81:29
South was always belly aching about this
81:31
why were freight rates in Southern
81:33
Railroad higher than Northern America
81:34
always complaining about this father was
81:37
something sinister some plot against the
81:39
south wasn’t any plug or economically
81:41
raise you understand first flight the
81:43
head no no thrill lines in the South no
81:46
with the railroad where outline in the
81:49
north with long through lines either
81:53
from the east of Chicago or on West you
81:55
know transcontinental line line the
81:57
South have short railroad they didn’t
81:58
have any trunk the old front lines
81:59
actually was short rail they couldn’t
82:01
they couldn’t have big discounts they
82:03
had short routes they had a high fixed
82:06
cost in terminal cost and therefore they
82:08
can have higher core have higher
82:09
I’m Dahle gonna have higher rates and
82:13
the other thing about the south where
82:15
they had a triangular pattern they
82:17
developed trade they would get they
82:20
would buy food let’s there grain for the
82:23
Midwest they felt cotton of the eat
82:28
right as a result the cars would be
82:30
empty in both going going both ways here
82:32
reading the Salim
82:33
nothing much of so Allah West where our
82:36
cars would be empty and they wouldn’t
82:37
have much this way so in other words
82:39
there’s a half full and so they couldn’t
82:41
get the quantity discounts to beat the
82:43
people paying higher rates because they
82:44
because the cars were half empty empty
82:47
on the other route nothing on the way
82:49
back and unfortunately the way it was
82:51
there’s not a plot it’s good economic
82:53
reasons for this wasn’t a quote
82:55
discrimination unquote and then you’re
83:00
right in response so we have been a very
83:02
competitive railroad system very
83:03
productive very competitive even over
83:05
build in some cases have a tremendous
83:07
drop in freight rates throughout as a
83:10
result of this from the very beginning
83:11
starting the late 1860’s railroads was
83:16
desperately something have a cartel
83:17
trying to get a cartel trying to raise
83:19
their rates and since they were the
83:23
first big business they were the first
83:24
cartel us and there’s a great book on
83:27
this by cocoa both our our book on
83:29
private server you’re just in this area
83:31
it’s called railroads and regulations I
83:33
don’t think it’s it might be in
83:34
paperback either any right I recommend
83:36
this for those of you interested going
83:37
into this and
83:44
he talks about this and meets nail the
83:47
barrel desperately trying to form a
83:49
cartel headed by JP Morgan who now
83:51
becomes after the early seven these the
83:52
top and toward you before that was
83:54
important the top railroad investment
83:56
banker and trying to form a cartel
84:00
cutting shipments getting quotas and
84:02
raising the rainy trying to do it
84:03
everyone was a flopper oh every one of
84:05
them fought through very quickly John
84:07
mentioned a couple of them of the
84:08
leading la Peru’s here they couldn’t do
84:10
it the internal price cutting and
84:13
external new new sources of Lu railroad
84:17
coming in very simple a big try to have
84:19
you know you said a freight right
84:21
between here and here you two or three
84:23
rail and they fix the pricing cut the
84:24
shipment a new rail will come in and
84:26
undercut them at the end of it they have
84:27
better equipment to be newer so these
84:31
two things would broke every every
84:32
railroad carts are by the way a railroad
84:34
cartels are called pools we were cool
84:38
summary pooling their resources in one
84:44
case kind of charming in some cases one
84:48
guy would own what they have two
84:49
railroads here I’m having weekend on
84:51
case we’ll get to what happened one guy
84:53
we own both railroads people managers
84:56
are different the sales vice president
84:58
each railroad they didn’t want people
85:00
they get for pure sales manager their
85:02
whole life is based on how much you can
85:04
sell it just they disobey the orders of
85:06
the owner they started undercutting the
85:09
cartel in order to pick up more more for
85:11
their railroad more than for they’re
85:12
aware road charming
85:13
yeah they are you know one guy owns the
85:16
v2 railroad you know one of them that
85:17
cut them keep the price of a cup the cup
85:20
of the shipment and they look violated
85:22
anyway books go ahead it’s not giving
85:24
discounts and pick up shipping these
85:25
shoe sales manager has his own thing you
85:27
know that’s his ego his life is wrapped
85:30
up on that he violated anyway say a
85:33
competition even one guy on both
85:34
railroads okay one one charming case of
85:40
this is in one case one of the most
85:44
important cartels was called the Iowa
85:45
pool a very good book on this bike
85:49
Julius grows density call the Iowa
85:52
one of the are tough yes is dead now and
85:55
one of the top railroad historians and
85:57
the conditions for a cartel we’re great
86:03
if you’re interested if you’re
86:04
interested in having cartel couldn’t
86:06
have been better than these conditions
86:09
because what your hand was really three
86:11
railroads competing for the top Illinois
86:14
Iowa business here so if you have two of
86:20
them I think we’re owned by the one guy
86:38
the important thing is to try to get to
86:40
the eastern cover of the Union Pacific
86:41
in the Omaha Omaha is up here the Omaha
86:48
the twin city of a Council Bluffs and he
86:50
was on the Iowa side of the I think the
86:52
terminus in the Council Bluffs the thing
86:57
is but the Iowa cool dealt with was the
87:00
Chicago Omaha market becomes extremely
87:02
important I mean he has a cramp Scott
87:03
know we’re all going what you want a
87:05
hook-up on the eastern all these and
87:07
stuff coming in Chicago the key in
87:10
Chicago around here so the point of how
87:15
do you get from Chicago to the Council
87:17
Bluffs one way is one of the three
87:20
basically three railroad routes and one
87:23
was this one short us coming like that
87:27
this is a Chicago and northwestern
87:29
railroad the other one sort of like this
87:38
coming up like that this is a Chicago
87:40
Rock Island then Pacific this is the
87:47
famous Rock Island line the great folk
87:50
song and The Rock Island line you have
87:55
the title Northwestern and another one
87:57
called a Burlington another one went
87:59
like this down like that firmly to the
88:06
Missouri which and Chicago Burlington in
88:13
Quincy a nice cool roads like this not
88:15
like this you had three alternative
88:19
routes and this one which hooks up here
88:21
and these two so they figured if you
88:26
have a cartel of these three routes you
88:28
can be in great shape and then not only
88:32
not only raise the rates you also raise
88:35
the rates of these through the Union
88:37
Pacific you can screw you need the
88:38
sipping that I’m hearing the SIP like a
88:40
la Transcontinental Railroad to make
88:43
them pay to transfer those of the
88:44
Chicago route you reason right rating
88:48
cup of shipment that was the idea
88:51
Poole Chicago Burlington and Quincy in
88:55
the Brahma Gong Missouri these two lines
88:57
here this thing here was owned by our
89:01
pal James joy the the railroad King look
89:06
I got the Cherokee lands of the favorite
89:08
big brother in law secretary the
89:10
interior he was the owner of this Talese
89:13
torero here the joint known as the
89:15
Burlington system
89:25
[Music]
89:26
and this was he was such that he’s
89:28
invested in by the boston capitalists
89:30
boston group of four of the group and he
89:36
also controlled a cup of other railroads
89:38
in this area and this is the burlington
89:40
system the the Rock Island line was
89:50
owned by John Tracy
89:57
so also on the Chicago northwestern
90:03
there was one guy John crazy sexually
90:06
control their own these top two new here
90:10
Chicago Western rock garland and John
90:12
and Jim joy on the Burlington system
90:14
there’s two people I could just work out
90:16
a car tight good thing be easy and fun
90:17
and that’s what they did they owned they
90:21
form the pool and say pick an eight
90:27
[Music]
90:29
eighteen seven they believe and it
90:34
lasted officially for about fifteen
90:36
years actually a collapse in them and
90:37
they’re not too many years in a few
90:39
years late seventies and they say you
90:44
think it’d be Duck Soup to do this and
90:49
if there was cheating between these two
90:52
guys and say one of these is the sales
90:54
of vice president sales managers would
90:56
cut it anyway
90:57
even though John Tracy owned both of
90:59
these roads did they have there there
91:01
were also some problems in that they
91:03
could never get there was there was
91:04
cheating between of two there was they
91:05
were a secret price cutting and all the
91:07
rest of it and you know of course they
91:14
kept asking for higher rates in Union
91:16
Pacific to admit the the stuff that go
91:19
on in Chicago are coming from Chicago so
91:22
finally what happened the couple of
91:23
things short could not believe in that
91:26
is that it’s kind of interesting when I
91:30
essentially having whether the Union
91:32
Pacific got to be cut together the side
91:34
of the crush the cartel us here by
91:36
creating their own new railroad system
91:37
we are getting together how much your
91:39
little railroad and a whole Altoona
91:41
system hold in the system you may be
91:44
coming from st. Louis they’re like here
91:47
coming from bad here before you get the
91:50
Omaha and down around here and up in st.
91:54
Louis and after Chicago and by forming
91:59
this they needed by creating new
92:00
railroad of buying old ones and merging
92:02
it you even something it under it cut
92:04
the whole cartel but they didn’t get the
92:07
whole thing and was applicable to sever
92:09
about seven
92:10
years to do it so in addition the
92:12
internal cheating will be fees to
92:14
company to free company to which are
92:15
almost things on eventually what you
92:17
need to simply simply created cut
92:18
together a fourth system created a
92:20
fourth new system was going to buck the
92:22
other three that was the end of the
92:23
Lizzie the end of the Chicago pool time
92:26
heroic that’s the market in actions on
92:29
the free market in actually if you have
92:30
a couple of roads which seems to be in
92:32
great shape to have a car car you can’t
92:34
really you can’t really continue it for
92:36
every wall okay
92:46
you

Leave a Reply

Your email address will not be published. Required fields are marked *