The Founding Fathers of Insider Trading (The GOP, Lincoln & Co.)

LewRockwell.com ^ | 30.08.03 | Thomas J. DiLorenzo

[u-89]

The Founding Fathers of Insider Trading

by Thomas J. DiLorenzo
by Thomas J. DiLorenzo

To this day, the U.S. government has not provided a clear legal definition of insider trading. This allows the feds to engage in periodic witch hunts against unpopular business people such as Martha Stewart, the purpose of which is to divert the public’s attention away from the government’s own failed policies and blame it all on "capitalism."

But there is a particular type of insider trading – political insider trading – that has been clearly understood for generations. Because this kind of insider trading involves politicians themselves, however, there are no laws against it. A good example of political insider trading appeared recently on an episode of "The Sopranos," the HBO television series about a New Jersey Mafia family. The "don," Tony Soprano, is friends with a sleazy and corrupt state legislator, who gives Tony an inside tip that the legislature is about to give the go ahead to commercial development along the riverfront. Tony quickly purchases some land in the area, and his insider information allows him to buy low and sell high, after the development is announced, and make a killing. The state legislator does the same.

The great historian of the American west, Dee Brown, describes the historical origins of political insider trading in her book, Hear that Lonesome Whistle Blow: The Epic Story of the Transcontinental Railroads, which was recently brought to my attention by John Denson. The book tells the story of a group of men who might be called the founding fathers of political insider trading, the most prominent of which was Abraham Lincoln. The rest were some of the founding fathers of the Lincoln’s Republican Party; many of them served as generals in the union army.

In the mid to late 1850s Lincoln was a prominent railroad lawyer. His clients included the Illinois Central, which at the time was the largest corporation in the world. In 1857 he represented the Chicago, Rock Island and Pacific Railroad, which was owned by four men who would later become infamous as "robber barons" for receiving – and squandering – millions of dollars in federal subsidies for their transcontinental railroad. Granting these men their subsidies would become one of the first orders of business in the Lincoln administration.

These men – Thomas Clark Durant, Peter Dey, Grenville Dodge, and Benedict Reed – were easterners from New England and New York State who had "a store of hard experience at canal and railroad building and financing," writes Dee Brown. And they must also have been quite expert at stealing taxpayers’ money for useless government-funded boondoggles. Prior to the War between the States, government subsidies for railroad and canal building were a financial disaster. So disastrous were these government pork barrel projects that by 1860, according to economic historian Carter Goodrich, Massachusetts was the only state in the union to have not amended its constitution to prohibit taxpayer subsidies to private corporations (Carter Goodrich, Government Promotion of American Canals and Railroads, 1800–1890, p. 231).

In a dispute with a steamship company the above-mentioned men "sought out a first-rate lawyer, one who had a reputation for winning most of his cases," writes Dee Brown. "They found him in Springfield, Illinois and his name was Abraham Lincoln." The jurors in the case failed to reach a decision, but Lincoln’s performance "won him a considerable amount of attention in the Chicago press and among men of power, who two years later would push him into the race for President of the United States." One of those "men of power" was Chicago newspaper editor Joseph Medill, whose newspaper trumpeted the Lincoln candidacy on behalf of the railroad interests of Illinois.

This powerful clique of New England/New York/Chicago business interests "aroused the suspicions of the South," says Brown, since they were so vigorously lobbying Congress to allocate huge sums of money for a transcontinental railroad across the Northern states. Southern politicians wanted the route to pass through their states, naturally, but they knew they were outgunned politically by the political clique from "the Yankee belt" (New England, Pennsylvania, Ohio, the upper Midwest).

These Northern political insiders, who would form the core of leadership of the Republican Party and later, in some cases, of Lincoln’s army, positioned themselves to earn great riches from the proposed railroad subsidies. John C. Fremont, who would be a general in Lincoln’s army, was a wealthy California engineer who conducted an extensive engineering survey "to make certain that the most favorable route would end up not in San Diego but in northern California, where Fremont himself claimed sizable land holdings." Another wealthy Yankee, Pierre Chouteau, "put his money into a St. Louis factory to make iron rails and went to Washington to lobby for the 38^th parallel route."

Illinois Senator Stephen Douglas "owned enough strategically located land in Chicago to be a millionaire if his favored route westward through Council Bluffs and Omaha was chosen . . ."

And "Abraham Lincoln, the future President evidently agreed with his debating partner that the route through Council Bluffs-Omaha and the South Pass was the most practical. Lincoln acquired land interests at Council Bluffs" (emphasis added). A short time later, after the Chicago/New England/New York "men of power" propelled him into the White House, Lincoln began signing legislation giving these men millions of acres of public lands and other subsidies for their railroads.

Virtually all of the "leading lights" of the Republican Party got in on the political insider trading game by demanding bribes for their votes in favor of the subsidies. Pennsylvania congressman Thaddeus Stevens "received a block of . . . stock in exchange for his vote," but he also demanded "insertion of a clause [in the subsidy legislation] requiring that all iron used in the construction and equipment of said road to be American manufacture." In addition to being a congressman, Stevens was a Pennsylvania iron manufacturer. At the time, British iron was far cheaper than Pennsylvania iron, so that Stevens’s "restrictive clause" placed a bigger burden on the taxpayers of the North who, at the time, were already being taxed to death to finance the war.

Congressman Oakes Ames, "who with his brother Oliver manufactured shovels in Massachusetts, became a loyal ally [of the subsidy-seeking railroad companies] and helped to pressure the 1864 Pacific Railway Act through the war-corrupted Congress." (It took a lot of shovels to dig railroad beds from Iowa to California).

During the post-war Grant administration the Republican Speaker of the House of Representatives, Schuyler Colfax (later Grant’s vice president) visited the western railroad routes to attend a ceremony in his honor but, writes Dee Brown, "he preferred cash above honors, and back in Washington he eagerly accepted a bundle of Credit Mobilier stock from his follow congressman Oakes Ames, and thus became a loyal friend of the Union Pacific."

Another of Lincoln’s generals, General John Dix, was the Washington lobbyist for the railroads who "spent most of his time strutting about Washington in a general’s uniform." (Dix was the same general who Lincoln ordered in 1862 to shut down all the opposition newspapers in New York City and arrest and imprison the editors and owners).

General William Tecumseh Sherman was also sold land at below-market prices and, after the war, he would be in charge of a twenty-five year campaign of ethnic genocide against the Plains Indians, which was yet another form of veiled subsidy to the railroad corporations. After the war Grenville Dodge, who was also a Union Army general despite his lack of military training, proposed making slaves of the captured Indians and forcing them "to do the grading, with the Army furnishing a guard to make the Indians work, and keep them from running away."

These men – the founding fathers of insider trading – were responsible for the massive corruption of the grant administrations which was only the beginning of what historians call "the era of good stealings."

August 30, 2003

Thomas J. DiLorenzo [send him mail] is the author of the LRC #1 bestseller, The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War (Forum/Random House, 2002) and professor of economics at Loyola College in Maryland.

Copyright © 2003 LewRockwell.com

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http://www.fvp.info/reallincolnlr/

[GOPcapitalist]

Wrong again. Man, you have a real knack for being totally mistaken.

Not at all. You, however, do have a strong, albeit poorly exercised and transparent, inclination towards ex post facto equivocation as a means of escaping the implications of your hastily asserted and fallacious claims from previous posts.

I didn't premise my conclusion on anything. I just laid it down.

In that case, your conclusion would be entirely gratuitous and therefore dismissable as an unsubstantiated case of vocal flatulence on your part. So either way - be it by faulty premise or lack of any premise to begin with - your argument is without merit. If you prefer the second route to the first as your official interpretation it is fine with me as result is still the same.

You are a perfect example of that.

So once again you indulge in attacks upon me over substance. I guess you can't teach a dumb dog new tricks after all.

All I have done is post ridiculously argumentative posts worded in such a way as to get a rise out of you

Now that's odd. I have yet to experience any anger or frustration towards you - the typical characteristics of what one would define as a "rise" of the nature you describe. I have found great amusement, by contrast, in observing you dance in circles to explain away what was in reality an unsophisticated shooting off of your mouth from the very beginning. It's been a great logical exercise and to that end I thank you.

I am going to stop there. But there are at least another DOZEN articles listed that have Lincoln in the title. We can safely assume that he worked old Abe into the others as well. The first 17 all dealt directly or indirectly with Lincoln. OK? So, once again, you are totally wrong.

So 17 short editorials on Lincoln surpasses the contents of 10 full length published books on entirely different subjects? Curious.

[billbears]

DiLorenzo is a nut, but as long as he is able to spread his racist and treasonous BS with a trowel on Rockwell's site

Could you point out some 'racist and treasonous BS' that DiLorenzo 'spreads'. Because all I see is a critique of a man who shouldn't have been President

[Ronly Bonly Jones]

If you think Lincoln shouldn't have been President, you couldn't tell a racist if it bit you in the butt. My pointing out the details would go over your head.

[billbears]

If you think Lincoln shouldn't have been President, you couldn't tell a racist if it bit you in the butt. My pointing out the details would go over your head.

Please do point them out. I've read most of DiLorenzo's work and have yet to see a racist statement from him. Please point out the 'racist' tone in this article or any of his others.

Mind you there are more than a few articles he quotes lincoln and Grant, so please don't attribute statements from those racists to the author

[risk]

So one could argue over the definition of totalitarianism but one can not honestly say that Lew Rockwell supports descrimination or Jim Crow laws. There is no room for that interpretation of his statement. Therefore it is not a racist remark.

I think this is open for debate. If one were black, one would not see the Jim Crow years as relatively decent and humane; before the Civil Rights movement and LBJ's Great Society, there was nothing benign about legal racism in this country. To argue that our dabbling with socialism and the problems that has brought with it are far worse is to ignore a good deal of human suffering before the 1960s.

As Aunt Enna and my dear old father have both said, it is our tolerance for inequality before the law that is the source of most injustice in this country then and today. Americans will forever regret the 3/5ths compromise and the legalization of slavery at our nation's birth. The Affirmative Action legislation and socialism in the name of fighting poverty has has been a clumsy and arguably failed way to surmount what is altogether a much greater problem. But we must not rest until we've solved it. The Great Society that Lew decries is imperfect, but compared to poll taxes and literacy tests, separate drinking fountains, and codified stratification of the races, it's a step forward. Now we just need to remove the positive racism and bone-headed socialism from it.

I am not singling out the south here, either. This was a country-wide problem before the 1960s. Now we have new problems, but I have confidence in Americans of all races to figure out how to move ahead.

I'm also going to say that we don't know what has caused all of the problems that have continued to plague our poor. We have to keep thinking about this together.

I'm going to stand with RDB3 saying Lew made a racist gaffe. I don't know if Lew meant to be racist, but that's how I see it.

[Huck]

I So 17 short editorials on Lincoln ...

That's 17 out of 17, plus at least another dozen.Out of 30 or so articles, maybe 2 or 3 don't deal with Lincoln. That ratio of Lincoln to non-Lincoln articles is irrefutable evidence that my original post, which you hilariously mislabeled as ad hominem, was dead on accurate. That's not even debatable. 17 out of 17. What's that? Coincidence? By the way, did you know Lincoln invented ad hominem? Yeah, well, he didn't actually invent it. He discovered it while secretly studying Karl Marx, then he introduced it to America. I read that on lewrockwell.com. Guess who wrote the piece?

LOL! LOL!!!! I am just thinking about you trying to argue that DiLorenzo isn't Lincoln-obsessed. Man, that's funny. Thanks for the laugh. I stand by my original post, which is irrefutably true.

[GOPcapitalist]

That's 17 out of 17, plus at least another dozen.Out of 30 or so articles, maybe 2 or 3 don't deal with Lincoln. That ratio of Lincoln to non-Lincoln articles is irrefutable evidence that my original post

Too bad for your case that your realm of "evidence" willfully excludes counterevidence that contradicts your original claim. By that I am refering to the 10 full length books he has written, of which only one pertains to Lincoln.

which you hilariously mislabeled as ad hominem

There is no vice in calling something what it is, and as I have proven beyond a reasonable doubt by way of definition, your original post was a poorly constructed ad hominem. I'm truly sorry if you don't like being called on your fallacies but in that you have only yourself to blame. If you desire to avoid it in the future, don't shoot your mouth off.

[GOPcapitalist]

If you think Lincoln shouldn't have been President, you couldn't tell a racist if it bit you in the butt.

"Hon. William H. Seward, Sir, Your note of the 11th was not recd until the 21st. It was read with some surprise, and with more regret, to say nothing of other sentiments. The note is marked “private.” I decline the confidence. Both your notes came into my hands fairly without my having authorized any implication of privacy. And although I may not think it proper or any longer feel disposed, to use the one to Mr South in the particular manner I had desired to do, I shall nevertheless, since you are a public man, feel at perfect liberty to use both of them in any other manner, however public, as evidence of your unfaithfulness to freedom, and your own convictions of the true character of the constitution, which you have sworn to support. And if in so doing, I shall chance to “embarrass” the plans of the Chases, and Summers, and Wilsons, and Hales, and the other jesuitical leaders of the Republican party, who profess that they can aid liberty, without injuring slavery; who imagine that they can even be champions of freedom at the north, and at the same time avowedly protect slavery in the south, “where it is”; and that they can thus ride into power on the two horses of Liberty and Slavery – if I should happen to “embarrass” these plans, I shall not feel that that consequence is one which I need to care to “avoid.” I had had some hope that you would put you foot on these double-faced demagogues, and either extinguish them, or compel them to conduct, for the time being, as if they were honest men. But it seems that you have decided rather to throw yourself into their arms, commit your fortunes to the keeping and do nothing on behalf of liberty, that may “embarrass” their operations...I shall very likely make the whole of this correspondence public; and if it shall serve any purpose towards defeating yourself and the Republicans, I shall be gratified; for I would much rather the government be in the hands of declared enemies of liberty, than in those of treacherous friends."

That statement is by Lysander Spooner on January 22, 1860, who was probably the FURTHEST away from a racist of any man in America at that time. Seward had written him seeking his support for the Republican Party in the 1860 election.

[Ronly Bonly Jones]

There is a difference. Spooner wrote in 1860, BEFORE the Emacipation Proclamation. You write considerably afterwards, and thus do not have the excuse that the reverend does. Ask your African American friends if THEY think Lincoln should never have been President. If you have any.

[Huck]

17 out of 17. Totally irrefutable. DiLorenzo has a lincoln fetish. Now run along.

[Huck]

A quick search on Amazon.com reveals that Thomas DiLorenzo is the author of some 10 or so books

Actually there is only one book listed on Amazon with DiLorenzo as the author, and it is about.................you guessed it! Lincoln!

He is listed as a coauthor with some other guy on a couple of books. One of them claims smoking is good for society. LOL! And I'll bet good Union money he works Lincoln into the sections of the book he worked on! Until you look at it, you can't say they don't deal with Lincoln. With our obsessed DiLorenzo, safe bet to say they do! So where's your so called counter evidence? Nowhere! Now scram.

[GOPcapitalist]

There is a difference. Spooner wrote in 1860, BEFORE the Emacipation Proclamation.

And interestingly enough he also wrote after it, holding the same views.

"Had all those men at the North, who believed these ideas to be true, promulgated them, as is was their plain and obvious duty to do, it is reasonable to suppose that we should long since have had freedom, without shedding one drop of blood; certainly without one tithe of the blood that has now been shed; for the slaveholders would never have dared, in the face of the world, to attempt to overthrow a government that gave freedom to all, for the sake of establishing In its place one that should make slaves of those who, by the existing constitution, were free. But so long as the North, and especially so long as the professed (though hypocritical) advocates of liberty, like those named, conceded the con­stitutional right of property in slaves, they gave the slaveholders the full benefit of the argument that they were insulted, disturbed, and endangered in the enjoy­ment of their acknowledged constitutional rights ; and that it was therefore neces­sary to their honor, security, and happiness that they should have a separate government. And this argument, conceded to them by the North, has not only given them strength and union among themselves, but has given them friends, both in the North and among foreign nations; and has cost the nation hundreds of thousands of lives, and thousands of millions of treasure. Upon yourself, and others like you, professed friends of freedom, who, instead of promulgating what you believed to be the truth, have, for selfish purposes, denied it, and thus conceded to the slaveholders the benefit of an argument to which they had no claim, - upon your heads, more even, if possible, than upon the slaveholders themselves, (who have acted only in accordance with their asso­ciations, interests, and avowed principles as slaveholders.) rests the blood of this horrible, unnecessary, and therefore guilty, war. Your concessions, as to the pro-slavery character of the constitution, have been such as, if true, would prove the constitution unworthy of having one drop of blood shed in its support. They have been such as to withhold from the North all the benefit of the argument, that a war for the constitution was’ a war for liberty. You have thus, to the extent of your ability, placed the North wholly in the wrong, and the South wholly in the right. And the effect of these false positions in which the North and the South have respectively been placed, not only with your consent, but, in part, by your exertions, has been to fill the land with blood."

That is from Lysander Spooner's 1864 letter to Sen. Charles Sumner, a leader of the radical Republicans.

You write considerably afterwards, and thus do not have the excuse that the reverend does.

Reverend? Spooner was an abolitionist philosopher, not a preacher. And he also wrote on the war after slavery had been abolished. From his 1870 book "No Treason" -

"The pretense that the "abolition of slavery" was either a motive or justification for the war, is a fraud of the same character with that of "maintaining the national honor." Who, but such usurpers, robbers, and murderers as they, ever established slavery? Or what government, except one resting upon he sword, like the one we now have, was ever capable of maintaining slavery? And why did these men abolish slavery? Not from any love of liberty in general --- not as an act of justice to the black man himself, but only "as a war measure," and because they wanted his assistance, and that of his friends, in carrying on the war they had undertaken for maintaining and intensifying that political, commercial, and industrial slavery, to which they have subjected the great body of the people, both black and white. And yet these imposters now cry out that they have abolished the chattel slavery of the black man --- although that was not the motive of the war --- as if they thought they could thereby conceal, atone for, or justify that other slavery which they were fighting to perpetuate, and to render more rigorous and inexorable than it ever was before. There was no difference of principle --- but only of degree --- between the slavery they boast they have abolished, and the slavery they were fighting to preserve; for all restraints upon men's natural liberty, not necessary for the simple maintenance of justice, are of the nature of slavery, and differ from each other only in degree."

Considering that Spooner had been a prominent member of the abolitionist movement since the 1830's, had been one of its national spokesmen since 1845, and had been employing his skill as a lawyer to provide defense arguments for fugitive slaves thus securing their freedom individually decades before anything Lincoln ever did, I think it is safe to say that he knew what he was talking about on the slavery issue in 1860 as well as 1864 and 1870.

Ask your African American friends if THEY think Lincoln should never have been President. If you have any.

Well, one of em is a card carrying southern heritage activist with pictures of Robert E. Lee printed in his checkbook so I think it is safe to say that he isn't too fond of the great centralizer. But that is beside the point. Since when does one have to be black to determine whether or not Abe Lincoln was a good president?

[GOPcapitalist]

Actually there is only one book listed on Amazon with DiLorenzo as the author, and it is about.................you guessed it! Lincoln!

Let's see...

The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War by Thomas J. Dilorenzo

Cancer Scam: Diversion of Federal Cancer Funds to Politics by James T. Bennett, Thomas J. Dilorenzo

From Pathology to Politics: Public Health in America by James T. Bennett, Thomas J. Dilorenzo

Unhealthy Charities: Hazardous to Your Health and Wealth by James T. Bennett, Thomas J. Dilorenzo

The Food & Drink Police: America's Nannies, Busybodies & Petty Tyrants by James T. Bennett, Thomas J. Dilorenzo

Unfair Competition by James T. Bennett, Thomas J. Dilorenzo

Official Lies: How Washington Misleads Us by James T. Bennett, Thomas J. Dilorenzo

Underground Government: The Off-Budget Public Sector by James T. Bennett, Thomas J. Dilorenzo

Public Health Profiteering by James T. Bennett, Thomas J. DiLorenzo

Destroying Democracy: How Government Funds Partisan Politics by James T. Bennett, Thomas J. Dilorenzo

Hidden politics : "progressive" nonprofits target the states by Thomas J. DiLorenzo, Daniel T. Oliver

Let's see. That makes, what, eleven books? I only see one that is on Lincoln though.

He is listed as a coauthor with some other guy on a couple of books.

I count about 10 other books - significantly more than "a couple."

One of them claims smoking is good for society. LOL!

Do you support a government ban on smoking then? And I'll bet good Union money he works Lincoln into the sections of the book he worked on! Until you look at it, you can't say they don't deal with Lincoln. With our obsessed DiLorenzo, safe bet to say they do!

Making an assumption of Lincoln content upon the grounds that the negative of its absence has not been shown is, once again, faulty logic on your part. You sure have enjoyed taking indulgences into fallacies of late! Must be something in the water up there in yankeeland.

[Ronly Bonly Jones]

Well, one of em is a card carrying southern heritage activist with pictures of Robert E. Lee printed in his checkbook so I think it is safe to say that he isn't too fond of the great centralizer.>>

Then he is a moral idiot. That's like a Jew being a card carrying German heritage activist with pictures of Adolph Hitler in his checkbook.

[GOPcapitalist]

17 out of 17. Totally irrefutable.

17 editorials and one book on Lincoln. 10 books on other stuff. So it remains - the majority of stuff DiLorenzo has published is on material other than Lincoln and THAT is irrefutable.

[GOPcapitalist]

Then he is a moral idiot.

Actually, I believe he is the descendant of a black confederate. Or would you deny him his right to celebrate his ancestors.

BTW, no comment on Spooner yet? His anti-slavery and pro-equality credentials surpass those of Lincoln by a hundred miles. They also surpass those of the entire Republican Party in his era and probably 99% of his fellow abolitionists. There are few if any other people in the whole American history who devoted so much time and effort as did Spooner to achieving freedom for blacks. He knew what he was talking about better than any other man in his day, and he denounced Lincoln as a fraud.

[Ronly Bonly Jones]

Actually, I believe he is the descendant of a black confederate. Or would you deny him his right to celebrate his ancestors.>>

He's free to celebrate his ancestors all he wants. But if his ancestor fought to keep his fellow blacks in chains, both the ancestor--and he--is a moral idiot.

[Calpernia]

bump for later

[Ronly Bonly Jones]

Spooner's opinions are historically interesting, but nobody who lives in the 21st century has any right to think that Lincoln "should never have been President" without revealing themselves to be bloodyminded fools.... or Neo-Confederates unworthy of being taken seriously by grownups.

[Non-Sequitur]

Only Tommy DiLusional could connect the prosecution of Martha Stewart with Abraham Lincoln, and use a ficitonal TV series to make his case.