aefenglommung (aefenglommung) wrote,
aefenglommung
aefenglommung

Democrats, Republicans, and Wall Street -- some history, part II

The Republican Party was not, in its beginnings, much concerned with economics beyond an opposition to chattel slavery, or, at least, opposition to its intrusion into parts of the country from which it had previously been excluded. The first great principles, then, to develop within the party were the preservation of the Union, the elimination of slavery, and the protection of civil rights for African-Americans. These have been prominent parts of the Republican platforms and history ever since. That the party of slavery, of Jim Crow, and of the KKK -- the Democratic Party -- has often been successful in tagging their opponents as racist is one of the ironies of history.

Between the Civil War and the Great Depression, however, economics were front and center of many an election. Some of the issues of that day (e.g., bimetallism and the tariff) are hard to grasp today. Others are more enduring. But the whole question of Big Business emerges at this time in our history.

The first Big Business concern was the Railroads. To unify the country in one great transcontinental grid was the achievement of the age. It took a lot of government support to do. And so, the Railroads -- the first truly national corporations -- were born as conjoined twins with government funding. The Railroad barons bought and sold politicians, even as politicians touted Railroads as a means of developing the wealth of their States and Territories. As the nation boomed economically following the Civil War, large financial institutions -- the "Trusts" -- also developed, as did large conglomerates assembled by financiers such as John D. Rockefeller, J.P. Morgan, and others.

Big Business was largely indifferent to party politics. Except for the Railroads' need for subsidies in the form of land, government had little to offer the financiers. The presidency was comparatively weak, and Congress met only part-time. The Wall Streeters formed an aristocracy of money that governed themselves. Newbies were cautioned, "Buyer, beware," for there was no regulation -- and no mercy for those who weren't "in the know." The two major parties didn't have much to do with Big Business, either.

The Democrats pursued an on-again, off-again love affair with free silver and bimetallism, attempting to update the loose money policies of Andrew Jackson for the conditions of the day. "You shall not crucify mankind upon a cross of gold," declared William Jennings Bryan, although fellow Democrat Grover Cleveland was a supporter of the gold standard. Truth to tell, the Democrats of that day didn't much understand economics (not much has changed there, either). Once, J.P. Morgan had to point out to President Cleveland that he hadn't enough gold reserves left in the Treasury to meet the demands of its largest creditor; he wound up loaning the government enough money to meet its obligations, for which Cleveland was uncomfortably grateful.

Meanwhile, the Republicans were the party of Small Business, which was the engine of progress in those days. The period between 1870 and 1910 was the great age of the family business, based in the small city. It culminated in a couple of bicycle repairmen from Dayton building the first powered flying machine. From Ball Jar in Muncie to the Goodyear and Goodrich rubber companies in Dayton and Akron, to the various early automobile manufacturers all over northern Indiana, the land was dotted with new businesses providing new products for an expanding market.

The Republican Party is still highly supportive of Small Business, including family farming, Chapter S corporations, and so on. Small Business is the primary creator of new jobs. Small Business is the land of risk and reward, whereas Big Business has become bureaucratic and risk-averse. Small Business is interested in maintaining fair competition among all players, which is their only means of competing with the 800 lb. gorillas in the room. Big Business, while mouthing "free market" platitudes, is far more susceptible to the lure of monopolism, of self-regulation, and of massive public-private deals (including bailouts). Big Business likes government rules, because they have the wherewithal to comply with them, while Small Business goes broke keeping up with the paperwork.

Big Business and Big Government go hand-in-hand, and their incestuous union is at the center of our current troubles. The Democrats, being more in favor of Big Government than Republicans are, like to rail against Wall Street even as they and the wizards of finance buy and sell each others' souls in markets to which ordinary people cannot find entrance.
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