#80 Expansion of Statism & the Civil War (The End of Laissez-Faire part 3)

Read Part 2 of this series

Author’s note:

This series of blogposts will be my paraphrased notes on a lecture given by Murray Rothbard called “The American Economy and the End of Laissez Faire“. This means the post will contain some word for word transcriptions of Rothbard’s words and some editorializing and rephrasing of my own. I will not distinguish between the two.

Cultural Genocide
As a result of these cultural differences, Catholic and High Lutheran immigrants to the United States found themselves at odds with WASPs on the issues of alcohol. Where German Catholics & Lutherans would often retire to a Biergarten after church on the sabbath and believed the church would deal with matters of salvation and sinfulness, WASPs took it upon themselves to use coercion and government to reign in anything they viewed as an indulgence.

Thus the Germans found themselves beset by fanatical zealots rushing in to smash bars & liquor, and forcing their children into protestant public schools. In addition to this, many pietists were so radically against the German culture that they sought to even outlaw the teaching of the German language (it’s worth noting here some of the strong WASP general anti German sentiment well before either of the world wars, perhaps worthy of more exploration in regards to West’s involvement).

In light of these cultural differences, Roman Catholics and High Lutherans (the Liturgicals) almost exclusively voted democratic (formerly democrat-republican), and as a reminder from our previous article, Pietists almost exclusively voted Republican (formerly federalist & Whig).

Studies of historical records on Midwestern voting show that High Lutherans voted almost 90-95% democratic. The Scandanavian Lutheran church voted 10% democratic and 90% Rebpulican. So even within the Lutheran denominations of the day there were still cultural and ethno religious divides which expressed themselves politically.

However, generally speaking, the more pietist groups (whether they be more pietist lutheran or protestants) almost overwhelmingly voted Republican and the more liturgical groups (whether they be catholic or high lutheran or calvanist) almost overwhelmingly voted Democrat. Where this trend tended to get more complex was on the issues of slavery, which was obviously a different situation politically.

The Democrats were known as the party of “personal liberty”, while the Republicans were known as the party of “great moral ideas” (outlawing sin). Recall that these political battles are almost exclusively taking place at the state and local level and have no yet made their way to the federal branch of government.

Recall from our previous article how we discussed the importance of economics in the ethno religious political battle. Economically, the Federalist, Whigs, and Republicans were statist, in other words they believed in big government and using government coercion to enforce certain ideals. Democrats, on the other hand, were libertarian, in other words they believed in small, limited government and minimal or no coercion of government in economic action (free trade, laissez-faire, hard money, free banking etc.).

Emergence of Statism
The Republican justification for statism was that it was required to stamp out sin and usher in the salvation of man’s soul. The republican believed that paternalism was required at the local level to police man’s conduct, and this reasoning eventually made it’s way to a striving for ideals of paternalistic statism at the Federal level. Economically, these interventions included manipulating purchasing power of currency through protective tariffs & inflation in order to keep out cheap foreign goods (which encouraged materialism), paper money & cheap credit (to finance the expanse of government), large public works programs, and monopoly business privileges to WASPs.

On the other side of the coin, the evolution of the Federal Democrat platform emerged in response to the Republican WASP push for cultural eradication through statism. It was directly opposed to the Republican economic interventions designed to target non pietist Americans with high taxes, over regulation, and manipulation of purchasing power.

This political battle, making it’s way from the state and local levels all the way up to the Federal level was a result of the widening of the consciousnesses of the voter bases of the respective parties. Because the most effective means of statist subjugation were achieved through economic means, the primary issues political dogma were economic in nature. Thus questions of minimal government in matters of local ethno religious issues, translated into questions of minimal government in matters of Federal economic issues, and vice versa for the statist Rebpulicans.

The Civil War
By this point in time, the South was almost exclusively Democratic. Southerns were not typically Catholic, however, they were not Pietist fanatics like their Yankee protestant counterparts. When the South seceeded from the Union at the beginning of the civil war, it meant that the Federal government ceded power almost exclusively to the Republican party. Throughout the civil war congress was essentially a 1 party (Republican) system.

It was at this point that the Republican party seized on the opportunity to push through it’s Federal economic program, which could not be managed while there was Democratic opposition in congress.

Twice in the 19th century, once in the 1840s and again in the 1890s, the Democratic party was slowly and surely becoming the majority party. Likely this was because Libertarianism was more attractive to the public at large, however, the Catholic demographics were also growing stronger and faster than the protestant demographics. Catholics were immigrating to the West in larger numbers and in addition tended to have higher birth rates. Thus the Catholic & High Luterhan denominations were gradually becoming a dominant majority ethno religious group.

Obviously, the major disruption in this trend occurred during the civil war and large political upheavals over the issues of slavery left the Democratic party fractured for several decades.

From their founding under Andrew Jackson (1828), Democrats had won the majority of presidential elections up until the civil war (1861) with the exception of a couple of Whig victories in the 1840s.

Thus, when Republicans found themselves with unilateral control of the Federal government in 1861, they used the opportunity to push through their economic reforms. This included a federal income tax (for the first time in history), high protective tariffs, deficit spending and public financing of debt, and irredeemable paper money (greenbacks). Interestingly, the south also issued irredeemable paper currencies around this time (both parties likely did so ultimately to finance the war), however, the North did so with ideological fervor as it had long been apart of the Republican desires for economic reform.

Because the civil war was financed so heavily by paper monies, this paper obviously began to depreciate. After just a couple of years in the American Civil War, one paper greenback dollar was worth only about 50 cents in gold coins. Interestingly, Americans were easily able to discern the value differences between the two monetary systems at this time because a loaf of bread would, for example, sell for 50 cents in gold coins or two dollars in paper money. As the paper monies continued to lose value, the Federal government found itself shifting increasingly to financing a public debt to fund the war effort.

In addition to the issuance of the greenbacks, the Republican economic reforms also included capturing control of the issuance of currencies at the Federal level through the creation of a new National Banking system called The National Bank Act. This outlawed state banks and pyramided the Federal banking system on top of a select few Wall Street banks.

A reoccurring aspect of Republican policy-making of the day was the place as much control into the hands of the Federal government as possible, which stood in stark contrast to the Democrats who preferred a small and limited central government and preferred political issues to be handled at the state and local level.

In addition to banking reforms, the Republicans also pushed through massive and unprecedented subsidies in the form of land grants to a select few privileged rail road companies. We will cover the post civil war rail industry in great detail later.

In order to better ally themselves with western expansion states, Republicans also used this opportunity to enact Homesteading legislation, another topic we will expand on later.

Republican pietists achieved a long awaited goal of high excise taxes on two things in particular…liquor & tobacco…taxes which remain in place to this day. A gallon of top scotch prior to the American Civil War was something along the lines of 80 cents. While this is in part due to the depreciation in the value of money, it is also caused by large excise taxes on liquor.

Finally, and probably most importantly, for the first time ever at the national level, Republicans instituted state conscription, in other words, drafting individuals into mandatory military service. As well as a suspension of Habeas Corpus (the right to not be unlawfully imprisoned without trial). Lincoln used this as a political weapon to lock up any dissenting voices against war & conscription as well as for those who called for a peaceful resolution with the southern confederacy. Coincidentally, the supreme court found this unconstitutional, but not until after the Civil War had concluded.

For approximately 20 years after the civil war, republican dominance was maintained at the Federal level. This was done by “waving the bloody shirt”, or in other words, accusing the Democrat party of treason and blaming them for all of the deaths of the Civil War. A Democrat did not win the office of the President again until 1884 (Cleveland).

One week prior to the election of 1884 a republican WASP minister Reverend Burchard made the statement that the Democratic party was “the party of rum, Romanism, and rebellion.” This speech so greatly angered any marginal or independent voters that it swung the election to Grover Cleveland (a Democrat).

Read Part 4 of this Series