The Mises Institute monthly, free with membership
Volume 15, Number 7
Birth of an Empire
Jack Kemp, former HUD secretary and failed vice presidential candidate, recently proved
academic leftists arent the only ones intolerant of politically incorrect ideas. He interrupted a
luncheon speech I was giving at an academic conference by squirreling around in his seat,
ostentatiously rolling his shoulders and eyes, and loudly and repeatedly moaning, "Jeez!" and
His outburst grew so disruptive that I had to stop speaking to ask whether someone else was
scheduled to speak in this slot. As I began again, he began to hiss and make other shrill and
guttural noises while continuing to contort his body and move about. He then shoved back his
chair and marched out of the room.
What was it I said that caused Kemp to throw a fit?
The event was a conference on "Applications of the Laffer Curve," and I was invited to
on an interesting paper on the optimal size of government by Professor Richard Vedder of Ohio
University. Vedders analysis concluded that since 1965 the growth of government has not been
conducive to economic growth. Before that period, he argued, government was still essentially in
its "protective state" role. The advent of the "Great Society" changed that.
Instead of quibbling over Vedders analysis, I argued that a more important question is what
constitutes the optimal scope of government, regardless of its size, and suggested
that the U.S.
Constitution provided a good model. So far, so good.
But what incited Kemp's public temper tantrum was my statement that, according to my
Vedder had overestimated the period of "optimal" government by about 100 years. Echoing the
theme of Jeffrey Hummel's book, Emancipating Slaves, Enslaving Free Men, I
argued that the
War Between the States was a watershed event whereby massive erosions of constitutionally
protected economic liberties took place, setting the stage for the 20th-century welfare/warfare
If Kemp had stayed around to the end of my talk, he would have heard me say that a more
scope of government would have included the peaceful abolition of slavery, as Great Britain
achieved in just 20 years prior to the War Between the States (as did every other slaveholding
country except the U.S. and Haiti), along with the configuration of government that existed prior
to 1860, not 1965 as Vedder had argued.
The Lincoln administration ushered in myriad economic interventions that only a few years
earlier were considered illegitimate and unconstitutional. Consider just a few of the major ones.
There was central banking with the National Currency Act, a precursor to the Federal Reserve's
monetary monopoly. The first income tax was invoked. Although it was ended after the war, it
established a precedent that eventually led to the permanent establishment of the tax.
Military conscription was mandated for the first time. Massive regulation and regimentation
the wartime economy became a "model" for socialist planners during the post-war years as they
successfully argued for regulating business in peacetime as they had during the war. Tariffs rose
three-fold and remained historically high for decades. Massive, federally funded "internal
improvements" (i.e., pork-barrel spending projects) were initiated, as were the first
government-funded old-age pensions. Although all citizens paid federal taxes in the post-war era,
veterans qualified for the pensions.
Immediately after the war the public-school monopoly, which had been started in the North,
imposed on the South by federal military dictatorship. Compulsory, statist
brainwashing--including false histories of the misnamed Civil War*--became universal. And
government at all levels ballooned as Americans were taught to believe in the oxymoronic
phrase, "government problem solving."
The horrors of waging total war against civilian populations was legitimized as federal
marched through the Shenandoah Valley of Virginia in 1864, burning every house, farm, and
business in sight, and terrorizing helpless women and children. General Grant famously ordered
cavalry officer Philip Sheridan to render the valley so barren that a crow flying over it would
have to pack its own lunch.
Sheridan's terror campaign was so successful that to this day residents still speak of "The
Burning." After the war Sheridan, Sherman, and Custer went on to finish off the Indians,
administer the occupation of the South for a dozen years, and reorganize the voluntary local
militias into a federally funded (and controlled) "national guard."
The great historian of liberty, Lord Acton, understood the implications of this assault on
constitutional liberty. In a November 4, 1866, letter to Robert E. Lee he wrote, "I saw in States
Rights the only availing check upon the absolutism of the sovereign will, and secession filled me
with hope, not as the destruction but as the redemption of Democracy.... I deemed that you were
fighting the battles of our liberty, our progress, and our civilization; and I mourn for the stake
which was lost at Richmond more deeply than I rejoice over that which was saved at Waterloo."
Lord Acton was prescient. As Illinois Gov. Richard Yates told his state legislature on
1865, the war "has tended, more than any other event in the history of our country, to militate
against the Jeffersonian idea that the best government is that which governs least." I suspect that
politicians like Kemp know that Yates was right. They can't stand the truth. Despite all of their
rhetoric, they do not believe in the kind of constitutional republic that was established by the
*In a civil war, two or more sides battle over control of the central government, as in
or Spanish civil wars. Jefferson Davis didn't want to run Washington, D.C., any more than
George Washington wanted to run London. The war for Southern independence, like the war for
American independence, was a struggle for secession.
Thomas DiLorenzo is an adjunct scholar of the Mises Institute and teaches Economics at Loyola College