This is about the absolute dishonest way that libertarians operate, spreading their slime, not able to tell the truth. If they were to do so, they could no longer make their case. Part I discusses Stossel’s adoration of James J. Hill. Part II will discuss the historical perspective of the American West and the Railroads.
John Stossel’s most recent syndicated column is an example of how libertarians mislead, prevaricate, and manipulate to get their way. He also displays the abject ignorance that the current crop of libertarian pandering is so proud to display. His intellectual dishonesty is epic! If you read far enough along, into yet another Pink Flamingo rant about people today not knowing their history, you may discover Stossel is so pathetically disingenuous in his support for the Great Northern Railroad, that it is abjectly disgusting. There is a reason he must use it as a shining example for all that is good about American industry, ignoring history, reason, and honesty along with it. It’s an Ayn Rand thing, as usual.
It is rather difficult to find anything that might make Stossel’s iconic hero and Rand’s prototype into anything less than the libertarian hero he was. One must Google through the usual libertarian traps in order to find out what is really going on here. Stossel is amazing in his dishonesty, that’s for sure. There are libertarians now who are trying to state that the Robber Barons of the Gilded Age were perfection and that they were the be all and end all of American industry. There’s a good reason for this. Stossel is a shill for the modern day robber barons, who are basically destroying American capitalism. Stossel also fails to mention the following:
“...Money personified, the magnificent J. P. Morgan dominated finance, the Northern Pacific and other railroads, and the billion-dollar U.S. Steel Corporation; his ally James J. Hill had the Great Northern line. E. H. Harriman, with his Southern Pacific and Union Pacific routes and his friends in Standard Oil, had challenged Morgan and Hill for control of a railroad into Chicago.
After a fight that wrecked the stock market, the three agreed to combine forces. They organized a holding company, a New Jersey corporation called Northern Securities, and leaned back to enjoy their monopoly on transportation in the Northwest.
Roosevelt ordered the Attorney General to enforce the Sherman Act against them. In the Supreme Court their lawyers argued that only New Jersey could regulate a New Jersey corporation, that stock transactions were not within interstate commerce, that having power did not amount to abusing it.
Justice Harlan read the Court’s opinion in March 1904, to a crowded courtroom and an anxious country. New Jersey did not have Congress at its mercy, he ruled; he called the point about stocks a mere straw man; and Congress, he said bluntly, meant to prevent the “mere existence” of such trusts. If the company was secure the Northwest was not: “the entire commerce of the immense . . . part of the United States between the Great Lakes and the Pacific at Puget Sound will be at the mercy of a single holding corporation. . . .” As the court below had ordered, the Northern Securities Company must be dissolved….”
Someone needs to explain to libertarians like John Stossel that money isn’t everything. There are things more important than money in the great scheme of things. He is complaining because the US Government, in 1863, put up $100,000,000 to build the intercontinental railroad. Stossel thinks that was wrong. That it should have been financed, privately.
Then again, he is making the mistake of comparing the amazing history of the transcontinental railroad with all things evil by the government. Stossel is at best intellectually dishonest and at most, intellectually dishonest. He is also misleading all the wretched little tea party types who lack the capacity to think for themselves, to reason critically. For some strange reason, Stossel goes off on his rant and rave against the “government subsidy” of the building of the transcontinental railroad as proof everything the government touches, fails. His “expert” in how evil the government, and regulations are is Peter Schiff, yet another of those Austrian economists. (They are the ones the libertarians worship).
In a recent study of small businesses, the over all reason they are NOT hiring is NOT because of regulations but the fact that there is NOT money. Banks are not lending. Stossel’s interview with libertarian Peter Schiff is a case in point why business are not hiring. THERE IS NO MONEY.
“…Ah, business lending, then, is back! Well, not so fast. Yes, top-line commercial lending is up, but a closer look shows one segment of loans that did not increase: those to small businesses. According to the F.D.I.C., while the nation’s total commercial and industrial loan portfolio grew by $34 billion, or almost 3 percent, total outstanding loans to small businesses actually fell by $2.5 billion, or 0.4 percent….”
It is amazing how libertarians lie to get their own nasty little way. Case in point is John Stossel’s fascinating “lie” about the history of the transcontinental railroad in this country.
“...I guess Obama doesn’t know that the transcontinental railroad was a Solyndra-like Big Government scandal. The railroad didn’t make economic sense at the time, so the government subsidized construction and gave the companies huge quantities of the best land on the continent. As we should expect, without market discipline — profit and loss — contractors ripped off the taxpayers. After all, if you get paid by the amount of track you lay, you’ll lay more track than necessary.
Credit Mobilier, the first rail construction company, made enormous profits by overcharging for its work. To keep the subsidies flowing, it made big contributions to congressmen….
The transcontinental railroad lost tons of money. The government never covered its costs, and most rail lines that used the tracks went bankrupt or continued to be subsidized by taxpayers. The Union Pacific and Northern Pacific — all those rail lines we learned about in history class — milked the taxpayer and then went broke.
One line worked. The Great Northern never went bankrupt. It was the railroad that got no subsidies.
We need infrastructure, but the beauty of leaving most of these things to the private sector — without subsidies, bailouts and other privileges — is that they would have to be justified by the profit-and-loss test. In a truly free market, when private companies make bad choices, investors lose their own money. This tends to make them careful…”
Stossel ignores a few things. By 1902, Hill was doing his darndest to manipulate government funding to serve is own purpose.
To say that Hill did not benefit from federal hand-outs is not true. He did not directly seek them, but he managed to make deals around them to get what he wanted. He also made it a practice of seriously undercutting rates from any competition, driving them out of business. Now we know why libertarians adore him.
“...A century ago, the enormous success of entrepreneurs such as John D. Rockefeller assembling Standard Oil and Henry Ford turning out the black Model T might well have fit this caricature. Even caricatures, after all, come from somewhere. Their prowess as businessmen and inventors was offset by the optics of labor conflicts such as the Ludlow Mine massacre and the violent strikebreaking at Ford’s Dearborn factories. Railroad kingpin James J. Hill equally complicated the reputation of entrepreneurs for political chastity. When the Dakota territorial legislature refused to approve his right of way, he led a secessionist movement to create North Dakota and thereby gained a more congenial set of assemblymen….”
Hill was the personification of the Robber Baron. His manipulation of railroad stock not only lead to a market crash, but one of the greatest anti-trust cases this nation has ever known. He lost. He was a ruthless, dirty operator – just the kind of person the libertarians and Rand worship. Today, what they did is illegal.
“…The Northern Securities Company was an important United States railroad trust formed in 1902 by E. H. Harriman, James J. Hill, J.P. Morgan, J. D. Rockefeller, and their associates. The company controlled the Northern Pacific Railway, Great Northern Railway, Chicago, Burlington and Quincy Railroad, and other associated lines. The company was sued in 1902 under the Sherman Antitrust Act of 1890 by President Theodore Roosevelt, one of the first anti-trust cases filed against corporate interests instead of labor.
Hill was the president of the Great Northern Railway and Harriman controlled the Union Pacific Railroad, two of the largest railroads in the U.S. Both sought control of the Burlington to connect their roads to the vital railroad hub of Chicago, Illinois. Hill, who also had a minority interest the Northern Pacific Railway, outbid Harriman for the Burlington, by agreeing to Burlington President Charles Elliott Perkins’s $200-a-share price.
Together, the Great Northern and the Northern Pacific assumed control of nearly 100 percent of the Burlington’s outstanding stock. Knowing that the Northern Pacific controlled almost 49.3 percent of the Burlington’s stock, Harriman launched a stock raid against the Northern Pacific. Control of the Northern Pacific would allow him to appoint directors to the Burlington, which could then be forced to treat Harriman’s Union Pacific favorably in business matters. Harriman’s stock raid in May 1901 led to the “Northern Pacific Corner”, driving shares of Northern Pacific to $2,000 per share in some trades. Hill, working with J.P. Morgan, took majority control of the Northern Pacific despite Harriman’s best efforts.
This speculation resonated throughout the stock market and the country as a whole. The two men, their backers, and associates agreed to settle their differences and eliminate ruinous competition through a monopoly combination. The Northern Securities Company was formed by Hill to control the stock of his major railroad properties. Some of Harriman’s directors were appointed as representatives for his holdings of Northern Pacific shares.
A public outcry over the new company made its way throughout the country, and both state and federal officials prepared to file litigation. On February 19, 1902, the United States Department of Justice announced plans to file a suit against the company on the behalf of President Roosevelt. When approached by J. P. Morgan to settle the issue in private, Roosevelt later remarked, “Mr. Morgan could not help regarding me as a big rival operator who either intended to ruin all his interests or could be induced to come to an agreement to ruin none.” Although Roosevelt still believed that trusts were not always bad for society, he could not bear to feel treated as just another rival operator. The suit continued….”
From reading the chapter on the depression of the 1890s, it is obvious Hill was the usual business tycoon. He was neither all evil, nor all good. He does, possess, some common characteristics will all good libertarians. One also gets the impression that he did not want the feds to bail out failing railroads because he was waiting to swoop in and scoop them up for himself. In fact, if you read about Hill, the reason he did not go under was NOT because of government participation but the fact that he was a very smart business person.
The Randian worship of Hill is rather strange, then again, maybe it isn’t. He was a master political manipulator. The reason his railroad survived was because of the fact that he was smarter and more cunning than everyone else.
Stossel’s problem – he’s comparing apples to oranges. Tomorrow The Pink Flamingo will show you why.