Free Market

Birth of an Empire

The Free Market

The Free Market 15, no. 7 (July 1997)


Jack Kemp, former HUD secretary and failed vice presidential candidate, recently proved that academic leftists aren’t 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 “Oh Gawd!”

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 comment on an interesting paper on the optimal size of government by Professor Richard Vedder of Ohio University. Vedder’s 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 criteria, 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 state.

If Kemp had stayed around to the end of my talk, he would have heard me say that a more ideal 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 of 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, only Union veterans qualified for the pensions.

Immediately after the war the public-school monopoly, which had been started in the North, was 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 armies 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 January 2, 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 framers.

*In a civil war, two or more sides battle over control of the central government, as in the English 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


DiLorenzo, Thomas. “Birth of an Empire.” The Free Market 15, no. 7 (July 1997).

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