After the War to Prevent Southern Independence and the assassination of Lincoln the federal government was said to possess a "treasury of virtue." The Republican Party, which was the federal government, with a decades-long monopoly of power rivaled only by the Bolsheviks in Russia, made sure that the government-run schools would preach this Virtuous State Philosophy to generations of school children.
And what did the Party of Virtue do with its "treasure"? A first order of business was to commence a campaign of ethnic genocide against the Plains Indians. Initiated just three months after the end of the war, and with Generals Grant, Sherman and Sheridan in charge, all of the Plains Indians — women and children included — would be either murdered or imprisoned on government reservations ("where they can be watched," said Sherman) by 1890. The Party of Virtue even cynically recruited ex-slaves (the "Buffalo Soldiers") to assist in its campaign of genocide against another colored race.
The Party of Virtue also broke up the union, which it had supposedly just "saved," by disenfranchising all the adult white male southerners and denying them congressional representation unless the southern states ratified the 14th Amendment. At the same time, every last adult male ex slave was registered to vote Republican, and assisted in the Republican Party’s twelve-year plundering expedition in the South, also absurdly known as "Reconstruction."
Onerous taxes were imposed on a region that was in dire need of tax amnesty. Property taxes in South Carolina, for example, were thirty times higher in 1870 than they were in 1860. The purpose of such confiscatory taxation was to force southern property owners to either pay bribes to Republican Party hacks employed as tax collectors, or sell them their land at fire sale prices. Nothing much was "reconstructed" but a great many carpetbaggers became very wealthy.
Then there was the massive corruption and criminality associated with building the government-subsidized transcontinental railroads, a project begun when Abraham Lincoln called a special session of congress to get the ball rolling just a few months after taking office. The infamous corruption of the Grant administrations was an inevitable consequence of these policies.
The average U.S. tariff rate was escalated to nearly 50 percent during the Lincoln administration and remained in that range until the income tax was adopted in 1913. Thus, the Party of Virtue engaged in fifty years of legal plunder through protectionist trade policies.
The taxpayers were plundered further by being forced to pay more and more for veterans’ pensions, for the war created a well-oiled lobby of Union Army veterans. Veterans’ pensions comprised 29 percent of all federal expenditures by 1884.
Government bureaucrats proliferated at all levels of government, as did taxes. The regulatory state was also greatly expanded, imposing regulations on freight rates, grain warehouses, trusts, and myriad occupations.
Fortunately for the ex slaves, very little was done for them by the federal government, allowing them the freedom and independence to pursue their own livelihoods, quite often with astonishing success despite all the roadblocks they faced.
The Great Libertarian from Buffalo
In the post-war years the Democratic Party possessed most of what was left of the states’ rights, strict constructionist Jeffersonians in American politics. The party had its share of scoundrels, politics being what it is, but it still generally championed free trade over the legal plunder of protectionism, and laissez faire over Lincolnian mercantilism. Its greatest spokesman in this regard was President Grover Cleveland, who served two terms as president: 1885—1889 and 1893—1897. His political philosophy was perhaps best expressed in his second inaugural address, where he said, "The lessons of paternalism ought to be unlearned and the better lesson taught that while the people should patriotically and cheerfully support their Government its functions do not include the support of the people." He was a nineteenth century James Ostrowski.
Cleveland began his political career as sheriff of Erie County, New York in 1871, where he earned a reputation for fearlessness and incorruptibility. He was then elected mayor of Buffalo in 1882 where he became known as "the veto mayor." He earned this noble designation for repeatedly vetoing inflated government contracts with politically-connected firms doing business with the city. He also insisted on competitive bidding on all city contracts, a practice almost unheard of in New York.
Ascending to the governor’s mansion, Cleveland became known as "the veto governor" for vetoing numerous Tammany Hall patronage bills put before the state legislature. Inevitably, this reputation would follow him into the White House where he would veto hundreds of bills, including forty-nine that he pocket vetoed on his very last day in office, March 4, 1897 (see Alyn Brodsky, Grover Cleveland: A Study in Character New York, St. Martin’s Press, 2000, p. 57).
During his first term as president Cleveland vetoed hundreds of pension expansion bills as unwarranted raids on the U.S. Treasury. He became Public Enemy Number One in the eyes of the "Grand Army of the Republic," the Union army veterans lobbying organization that consistently agitated to plunder the taxpayers. Despite the dwindling number of veterans, expenditures on veterans’ pensions had increased by some 500 percent in the previous twenty years (Brodsky, p. 182), purely because of the political clout of Union army veterans. (Southerners paid taxes to finance the pensions, but did not qualify for them).
Cleveland also campaigned vigorously for a reduction in the tariff rate, calling the current rates, an economic legacy of the Lincoln administration, "indefensible extortion" and "a vicious, inequitable, and illogical source of unnecessary taxation." Republicans fiercely defended tariff extortion, as they always had, and prevailed politically during Cleveland’s first term.
Grover Cleveland was also a crusader for the Gold Standard and sound money. Naturally, the Republican Party opposed him on this issue with all its powers. In a message to Congress he announced, "The people of the United States are entitled to a sound and stable currency and to money recognized as such on every exchange and in every market of the world." And only a gold standard, Cleveland believed, could guarantee such a stable currency.
After 1878 the federal government was not required to maintain a gold standard (See Robert Higgs, Crisis and Leviathan, p. 87). Inflationists thought they had the upper hand as a result of the Sherman Silver Purchase Act of 1890 (sponsored by Senator John Sherman of antitrust law fame, who was also the senate sponsor of the McKinley Tariff Act and the Sherman Antitrust Act in that same year. Some "champion of free enterprise"). Sherman and his Republican Party cohorts wanted to flood the nation with silver (and gold) to expand expenditures on "public works" and other big-government schemes. But they met their match in Grover Cleveland.
In June of 1893 Cleveland called a special session of Congress to repeal the Sherman Silver Purchase Act (Higgs, p. 88). After heated debate, Congress passed a bill doing so, and Cleveland signed it into law on November 1.
The economy at the time was in a severe recession and gold reserves were dwindling despite the repeal of the Sherman Silver Purchase Act. Cleveland decided on a plan to save the gold standard. As explained by Robert Higgs (p. 89):
Cleveland and [Treasury Secretary John] Carlisle entered into secret negotiations with the titans of Wall Street, J.P. Morgan and August Belmont. A way had to be found to restore the gold reserve without draining part of the Treasury’s initial gold stock in the process. The government also needed to diminish public fears and to discourage the gold hoarding and short-term capital exports of speculators against the dollar. The syndicate headed by Morgan and Belmont promised to achieve these goals by, in effect, controlling the foreign exchange market. In February 1895 the Treasury and the syndicate signed a contract that pledged the government to issue $62 million in 30-year bonds priced to yield 3.75 percent in exchange for about $65 million in gold and the bankers’ commitment to protect the Treasury from withdrawals of gold. It worked. For the next five months no gold was withdrawn from the Treasury, and confidence in the government’s ability to maintain the gold standard was restored.
Even Murray Rothbard, who was not in the habit of praising government bureaucrats, referred to this whole episode as the "heroic acts of the Treasury" which "restored confidence in the gold standard." (Murray N. Rothbard, A History of Money and Banking in the United States: The Colonial Era to World War II, p. 169).
Cleveland’s heroic efforts to reduce tariff rates achieved modest success in his second term, as the average tariff rate was reduced from 48 percent to 41 percent. Unfortunately, it came as a result of the Wilson-Gorman Act of 1894, which also instituted an income tax. Cleveland allowed the Act to become law without his signature, and an enlightened Supreme Court subsequently ruled the income tax unconstitutional for the time being.
In 1894 labor unions representing workers of the Pullman Car Company in Chicago — and led by the socialist gadfly Eugene Debs — orchestrated a violent strike that turned into a city-wide riot in which twenty people were killed. Believing that the first responsibility of government is to protect citizens from such violence, and realizing that local authorities were clearly unable to do so, Cleveland restored law and order by sending federal troops to Chicago.
The Republican Party of the post-war era was dominated by "militarists of the period [who] shared with many … industrialists the belief that it was the nation’s inherent right to colonize the continent westward and southward to its geographical limits, and then push ever westward across the waters" (Brodsky, p. 228). These men considered this to be America’s "Manifest Destiny" that was ordained by God. (It is remarkable how today’s neoconservatives, who dominate Bush administration foreign policy, share essentially the exact same philosophy, but applied to the entire planet, not just North America and the Western Hemisphere).
Grover Cleveland considered this imperialistic fantasy to be "every bit as odious as imperialism and misguided nationalism" (p. 228). He was determined that "we never get caught up in conflict with any foreign state unless attacked or otherwise provoked," in the spirit of George Washington and Thomas Jefferson. If he were alive today, Grover Cleveland would be the chief nemesis of the neocons.
Grover Cleveland was a principled classical liberal. But even while serving as president, his own Democratic Party was deserting him as the forces of statism and unlimited democracy, unleashed by the death of states’ rights in 1865, were beginning to dominate American politics. He was the last American president in the Jefferson/Andrew Jackson/John Tyler tradition, and the last good Democrat to serve in that office. For the most part, his successors (in both parties) have ranged from pathetic panderers to dangerous, megalomaniacal warmongers, or both.
Thomas J. DiLorenzo [send him mail] is the author of The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War, (Three Rivers Press/Random House). His latest book is How Capitalism Saved America: The Untold Story of Our Country’s History, from the Pilgrims to the Present (Crown Forum/Random House, August 2004).