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The Founding Fathers of Insider Trading (The GOP, Lincoln & Co.)
LewRockwell.com ^ | 30.08.03 | Thomas J. DiLorenzo

Posted on 08/30/2003 7:10:08 AM PDT by 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 38th 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

Thomas DiLorenzo Archives at LRC

Thomas DiLorenzo Archives at Mises.org

Really Learn About the Real Lincoln

Now there is a study guide and video to accompany Professor DiLorenzo's great work, for homeschoolers and indeed anyone interested in real American history.
http://www.fvp.info/reallincolnlr/



TOPICS: Constitution/Conservatism; Crime/Corruption; Government
KEYWORDS: civilwar; corporatewelfare; corruption; crockwellsucks; gop; gopcapitalistsucks; gotcrap; graft; graydiaperbabies; graylosers; ihatelincoln; insidertrading; insidetommysdelusion; iwantmycbf; lincoln; lincolnhatersunite; loserslament; lostcauselosers; railroads; republican; robberbarons; southernwhine; subsidy; tommydelusional; waah; whigs
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To: Ronly Bonly Jones
But if his ancestor fought to keep his fellow blacks in chains, both the ancestor--and he--is a moral idiot.

What if his ancestor fought to defend his home, friends, and family from an invading army that also happened to be unusually abusive of civilians? It seems to me that failure to act in that situation would itself be immoral.

81 posted on 09/01/2003 2:39:04 PM PDT by GOPcapitalist
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To: 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

Spooner is generally considered to be one of the greatest minds ever produced by America. Even the slaveowners who despised the abolitionist movement were honest enough to give credit to and respect his intelligence. His beliefs, like them or not, were almost always rigidly thoughtful and philosophically brilliant - far more so than any other abolitionist and in fact more than most historians ever since. Seeing as their originator Spooner was no fool, none of those beliefs could be properly called foolish simply from being adhered to and espoused by others. That holds true for today since much of what he wrote after the war pertained to the directions American government was going, including where it is still going today.

82 posted on 09/01/2003 2:47:47 PM PDT by GOPcapitalist
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To: billbears
that lincoln was a cheap politician,racist, anti-semite, tyrant & war criminal is well-known.

so, why should anyone be surprised that he was also a crooked lawyer?????

free dixie,sw

83 posted on 09/01/2003 2:50:59 PM PDT by stand watie (Resistence to tyrants is obedience to God. -Thomas Jefferson)
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To: GOPcapitalist
Number of books Dilorenzo authored: 1

Number of books Dilorenzo authored that focus on Lincoln: 1

Number of books co-authored by Dilorenzo contributed to: however many it was, 9?

Number of those books where Dilorenzo entertains his Lincoln fetish: ???

We don't know. Could be he writes about Lincoln in all of them. So, we have on the one hand, clear and irrefutable evidence that Dilorenzo is a Lincoln fetishist, and on the other hand, we have....doodly squat. We know that when he finally got to write HIS OWN book--and there is only one of those--it was about his most cherished subject: Ole Ape Lincolm.

But go on arguing Dilorenzo isn't all about Lincoln. Even though 17 of his most recent 17 columns and his only book deal with Lincoln. LOL! I love it. Dilorenzo? He's got a casual interest in Lincoln. Sometimes he goes a whole hour without thinking about him! LOL!

84 posted on 09/01/2003 3:02:49 PM PDT by Huck
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To: GOPcapitalist
Spooner is generally considered to be one of the greatest minds ever produced by America

Wholly cats! "Generally considered"?? Spooner is generally not considered at all.

85 posted on 09/01/2003 3:04:45 PM PDT by Huck
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To: GOPcapitalist
Just a heads up: Post 83 begins with a clear case of ad hominem against old Ape Lincolm. I trust you will admonish the poster responsible.
86 posted on 09/01/2003 3:09:09 PM PDT by Huck
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To: GOPcapitalist
Spooner is generally considered to be one of the greatest minds ever produced by America. >>

That's funny. I've never heard of him. Ever.
87 posted on 09/01/2003 3:14:21 PM PDT by Ronly Bonly Jones
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To: Ronly Bonly Jones
That's funny. I've never heard of him. Ever.

And you're proud to admit that? I guess for some ignorance truly is bliss.

88 posted on 09/01/2003 3:20:51 PM PDT by GOPcapitalist
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To: Huck
We don't know. Could be he writes about Lincoln in all of them.

It could be anything, but based on the subject matter it is perfectly reasonable to conclude that what you suggest is unlikely. Your case that he wrote about Lincoln in those books is wholly speculative and without a shred of evidence, thereby making it insufficient to hold up as a matter of fact or even factual assumption.

So, we have on the one hand, clear and irrefutable evidence that Dilorenzo is a Lincoln fetishist

No we don't. First off, I'm not quite sure what a "Lincoln fetishist" is, nor do you seem to beyond tossing out that term as an intended pejorative. Second, 17 editorials on Lincoln is not at all unreasonable or excessive from an author whose most widely published and recent book is a Lincoln biography. In fact you will probably find that most people who have written a widely circulated book on Lincoln have written AT LEAST 17 short articles on him as well, if not other books. And though that is also certaintly true of such notables as Harry Jaffa, Jim McPherson, and Eric Foner for some reason I doubt you would ever accuse either of them of having a "Lincoln fetish." Third, as has been demonstrated repeatedly, DiLorenzo has written at least 10 other books and who knows how many academic journal articles. All 10 of those other books are on things such as health care policy, the economics of charity and other things with no indication whatsoever beyond your own blind and wholly unsubstantiated speculation that they mention so much as a word about Lincoln. They constitute a greater volume of his work than his one book on Lincoln and those editorials on the same subject.

We know that when he finally got to write HIS OWN book--and there is only one of those--

Since when was there anything wrong with coauthoring a book with another expert in a given field? Surely you are not suggesting that Bennett chose the subject of those other 10 books and forced it upon Dilorenzo as an unwilling coauthor!

Even though 17 of his most recent 17 columns and his only book deal with Lincoln.

Funny. I see at least 10 other books in which his name appears on the cover and title page. But, of course, you are not interested in an honest portrayal of his work so you make up excuses by which you may continue to perpetrate your attacks upon him without having to address the consequences upon your claims that their existence creates.

89 posted on 09/01/2003 3:38:05 PM PDT by GOPcapitalist
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To: GOPcapitalist
It could be anything

That's my point. And since we both admit that fact, we can't really safely assume anything. I hope it's raining where you are.

90 posted on 09/01/2003 4:24:25 PM PDT by Huck
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To: GOPcapitalist
No. Nobody else has heard of him either.

If you have to dredge up some obscure 100-years-dead abolitionist philosophe to cover up your own political boneheadedness ... but never mind.
91 posted on 09/01/2003 4:50:30 PM PDT by Ronly Bonly Jones
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To: GOPcapitalist
Well, we've disposed of those books Dilorenzo coauthored, since we both admit the contents could very well contain references to Lincoln. But, I did forget to answer your question regarding what I call a Lincoln fetish. I mean fetish as in a fixation. Dilorenzo is fixated on Lincoln. Now, that may well be for economic reasons. He is trying to sell books. Wonder how many copies he's sold, by the way. Whatever the case, you are again incorrectly labelling as ad hominem what is merely descriptive language. 17 for 17 is clearly the work of a man fixed on one subject. He is fixated. Hence, a Lincoln fetish. Sorry to confuse you.
92 posted on 09/01/2003 4:53:51 PM PDT by Huck
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To: GOPcapitalist
But if his ancestor fought to keep his fellow blacks in chains, both the ancestor--and he--is a moral idiot.
What if his ancestor fought to defend his home, friends, and family from an invading army that also happened to be unusually abusive of civilians? It seems to me that failure to act in that situation would itself be immoral.>>

All it would indicate is that your friend is unusually receptive to mindless neoconfedereate propaganda and has an uncommon fondness for identifying himself with those who sold his ancestors.
93 posted on 09/01/2003 4:59:19 PM PDT by Ronly Bonly Jones
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To: Ronly Bonly Jones
All it would indicate is that your friend is unusually receptive to mindless neoconfedereate propaganda and has an uncommon fondness for identifying himself with those who sold his ancestors.

Not at all. He simply knows his history better than you do.

94 posted on 09/01/2003 5:38:49 PM PDT by GOPcapitalist
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To: Ronly Bonly Jones
No. Nobody else has heard of him either.

The willingness with which you persist in advertising your own ignorance never ceases to amaze and amuse me. Do a quick search on google or some other search engine for the name "Lysander Spooner." In addition to finding plenty of biographies and the sort on him you will get somewhere around 8 to 10 thousand hits. There aren't very many people named "Lysander Spooner" so you can be assured that practically all of them refer to him.

In the event that you are too lazy to complete even that task here is the pertinent information on him. In 1845 Lysander Spooner published a book entitled "The Unconstitutionality of Slavery." The book almost immediately revolutionized abolitionism in a new direction and between then and 1860 was one of the primary texts of the movement. Within 2 years it had been formally adopted into the platform of the abolitionist Liberty Party. Throughout the 1850's it was hotly debated on the floor of the US Congress. By 1852 Frederick Douglass had adopted its argument as the basis for his anti-slavery message and endorsed it in his famous "Fourth of July" speech.

In modern times Spooner is discussed in practically all the standard histories of abolitionism and appears in academic publications on political theory. You'll also probably see his name at least mentioned in the standard 8th grade US history classroom textbook under abolitionists. As another indicator of his role, a multi-volume set entitled the "Collected Works of Lysander Spooner" was published in the mid 1970's and may be found in practically any good research library (hint: you have to be pretty important or famous to get your collected works published. The only people they do this to are prominent polticians, authors, and philosophers).

That you do not know all of these facts about him is, I suppose, tolerable in the sense that not everybody knows the realm of philosophy inside and out. But that you have never even heard of his name until now is a tragedy of our education system and an indicator of your ignorance on both the civil war era and of American history in general.

Put differently, before you shoot your mouth off with accusations and attacks upon other persons (i.e. calling them fools, among other things) you should first make sure you know what you are talking about. By your own admission and demonstration it is clear that, at least as far as the civil war is concerned, you do not.

95 posted on 09/01/2003 5:57:52 PM PDT by GOPcapitalist
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To: Huck
Well, we've disposed of those books Dilorenzo coauthored, since we both admit the contents could very well contain references to Lincoln.

Yet that they do contain Lincoln references is not only unlikely considering their content (i.e. public health finance). It is also is blind and wholly unsubstantiated speculation on your part, making it inadmissable as evidence to this debate. Now, if you want to make a claim of certainty that they do contain Lincoln references you are free to do so. But that also means you will have the burden of proving that claim. In other words, be prepared to go to the library and check his books for Lincoln references or else your argument will persist in its baseless state.

I mean fetish as in a fixation. Dilorenzo is fixated on Lincoln.

Okay. Fixation is a better explanatory term than fetish, which was indisputably employed in the pejorative via your previous use. Now let's test how consistently you apply that determination. Do you consider Harry Jaffa to be fixated on Lincoln as well? How about James McPherson? Bruce Catton? How about Wlat?

Now, that may well be for economic reasons. He is trying to sell books. Wonder how many copies he's sold, by the way.

Don't know. It's currently ranked 7 thousand-something on Amazon, which is significantly higher than your average book and that's after being in print for a year. You can also probably find it if you go to your local barnes and noble as it was distributed on a national scale.

Whatever the case, you are again incorrectly labelling as ad hominem what is merely descriptive language.

Not at all. You repeatedly accused him of a "Lincoln fetish" in absence of any substantive response to his arguments and as your reason for failing to post a substantive response. Your use of the term was also clearly pejorative, making it an attack rather than an honest description. All of those acts qualify it as a by-the-book ad hominem under the definitions I posted previously.

17 for 17 is clearly the work of a man fixed on one subject.

And 17 editorials on Lincoln by the author of a widely circulated Lincoln biography is not at all unusual by any standard. In fact I would be surprised if a Lincoln biographer did NOT write other articles on Lincoln.

96 posted on 09/01/2003 6:10:36 PM PDT by GOPcapitalist
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To: GOPcapitalist
Not at all. He simply knows his history better than you do.>>

Well if "knowing his history" means identifying more with his ancestors' enslavers and rapists than with his ancestors, then thank God I am "ignorant," by your scale.
97 posted on 09/01/2003 7:05:27 PM PDT by Ronly Bonly Jones
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To: Ronly Bonly Jones
Well if "knowing his history" means identifying more with his ancestors' enslavers and rapists than with his ancestors, then thank God I am "ignorant," by your scale.

Considering that many of those rapists were yankees who invaded and plundered the south circa 1861-65, I find your embrace of ignorance all the more absurd.

98 posted on 09/01/2003 7:12:59 PM PDT by GOPcapitalist
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To: GOPcapitalist
inadmissable as evidence

That's my point. Those books he coauthored are inadmissable. You tried to admit them. I successfully obliterated them. Whereas the many, many articles available online are wholly admissable and remain solid evidence to back MY claim. I see that you also acknowledge my correctness in using the term fetishist now that you understand that fetish and fixation are synonyms. Glad we cleared that up. Because it shows once and for all that my well chosen words aptly describe Thomas J. Dilorenzo. Wait until you discover that I was equally on target when I spoke of Dilorenzo's admirers. I think I said they were dupes.

99 posted on 09/01/2003 7:23:57 PM PDT by Huck
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To: Ronly Bonly Jones
I've heard of Spooner. He is an obscure 19th century American weirdo dredged up usually by hard core libertarians. These hard core libs overlap with revisionist neorebs--they share common hatreds (The USA, The Constitution, the rule of law) and common heroes (Jefferson, Calhoun, Henry). Therefore it is not surprising to find Spooner mentioned on this thread. If I recall correctly, Spooner was a radical Northeastern brahmin, the type of dude who would have made John Muir seem normal. For GOP Capitalist to quote him, it's like a conservative quoting Alan Deschowitz and saying "see, this is one of your guys, he's waaay out there and even he says such and such. Which is all well and good, except that you would have to know more about Spooner, and the historical context, to have any chance of properly interpreting the information. And since neorebs are no less prone than any other fringe group to mislead and publish things out of context, you simply can't know what you are looking at.
100 posted on 09/01/2003 7:31:04 PM PDT by Huck
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