215. Rothbard's The Progressive Era, with Patrick Newman
Apr 2, 2024
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Professor Patrick Newman discusses Rothbard's insights on American history, critiquing progressivism and government power evolution. They explore monarchy vs. democracy's impact on freedom, monetary policy, and the post-Civil War economy. The discussion also delves into silver vs. gold dynamics, the shift towards progressivism, and the Federal Reserve's impact on America's economic history.
Government interventions in the US banking system during the 19th century had significant impacts, including laws on bank reserves and interest rates.
The free banking era in the mid-19th century demonstrated monetary stability without a central bank, but regional monopolies emerged due to state restrictions.
The issuance of greenbacks during the Civil War led to credit expansion, inflation, and income redistribution to government supporters.
Salmon P. Chase strategically included his face on greenbacks during the Civil War for political visibility, sparking controversy and amending later.
The transition to modern bill dimensions in 1928 and the emergence of a national banking system post-Civil War reflect shifts in monetary policy towards centralization.
Deep dives
Government Interventions in the 19th Century Banking System
During the 19th century, government interventions significantly impacted the US banking system. These interventions included laws requiring banks to use state government bonds as reserves, accepting banknotes for taxes, restricting interest rates, and fixing the exchange rate between gold and silver. The Jacksonians' correction of the gold-silver ratio and the introduction of the Independent Treasury system were notable responses to these issues.
Monetary Stability During Free Banking Era
Contrary to common misconceptions, the free banking era in the mid-19th century, characterized by the absence of a central bank, exhibited a great deal of monetary stability. Competition among banks restrained credit expansion, while state restrictions on interstate branch banking led to regional monopolies. The period highlighted how government interventions, such as prohibitions on branch banking, impacted monetary efficiency and reliability.
Inflationary Greenbacks During the Civil War
The issuance of greenbacks during the Civil War marked a significant shift in US monetary policy. To finance the war, the US government suspended species payments and introduced greenback paper money. The value of greenbacks was based on future redemption promises, leading to credit expansion by banks. This inflationary measure resulted in price inflation and the redistribution of income from the public to government and its supporters.
Salmon P. Chase's Greenback Campaign Strategy
During the Civil War period, Salmon P. Chase, Secretary of the Treasury, strategically included his face on greenbacks as a campaign tactic for the 1864 presidential election. This move, along with featuring Lincoln's image, aimed to increase Chase's public visibility. However, the practice stirred controversy and was later amended due to concerns about leadership egotism.
Evolution of Currency Size: From Large to Modern
Banknotes saw a transition in size around 1928 to the modern bill dimensions. Despite the disappearance of greenbacks, their impact lingered. Notably, Andrew Jackson's placement on the $20 bill drew attention due to his history with central banking opposition.
Transition to Quasi Central Banking System
Around the Civil War era, a national banking system emerged alongside the Greenback Act, forming a quasi-central banking structure. This move aimed to centralize reserves in Wall Street banks, resembling miniature central banks.
Economic Innovation Amidst 'Depression' Myths
The period post-Civil War is often labeled as depressive due to a contracting money supply. However, Rothbard highlights it as a transformative era with widespread economic growth and innovation. Despite falling prices, the era witnessed remarkable technological advancements.
Impact of Monetary Legislation on Economic Growth
Rothbard delves into history to reveal the motivations behind monetary laws and their effects on economic development. The examining of post-Civil War economics challenges traditional narratives of a depressive era, showcasing a period of significant growth and innovation.
The podcast explores the illusion of harmful monopolies preying on consumers and reveals a more complex reality. Cartels, depicted as exploitative, were often created or sustained by government interventions like protective tariffs. The narrative around monopolies is portrayed as a battle for dominance within regulatory environments, shaping perceptions of economic power dynamics.
Rethinking Teddy Roosevelt's Progressivism
Teddy Roosevelt's progressive policies and stances are scrutinized for their impacts on economic efficiency and regulatory interactions. The podcast sheds light on the intertwined relationship between political figures and corporate interests during the Progressive Era, challenging romanticized views of government intervention and corporate regulation.
Professor Patrick Newman has edited and produced several of Rothbard's unfinished books, and he joins us to continue our discussions of Rothbard's work on American history by focusing on Rothbard's The Progressive Era.
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