Appalachian Mountains, Great Lakes, Northwest Territory, Louisiana Territory and the Erie Canal

Posted by PITHOCRATES - April 29th, 2014

History 101

(Originally published July 30th, 2013)

Everything grown on the West Side of the Appalachian Mountains eventually ended up on the Mississippi River

At the time of the Founding the American population was clustered around the East Coast.  And on major rivers that flowed into the Atlantic Ocean.  On land east of the Appalachian Mountains.  Not by choice.  But because of geography.  The Founding Fathers knew what great land lay west.  But getting there was another story.

The Great Lakes are huge.  The largest group of freshwater lakes in the world.  If you walked all the coastlines you’d walk so long and so far that you could have walked halfway around the world.  Getting on the lakes opened up the Northwest Territory.  Western New York.  Western Pennsylvania.  Ohio.  Michigan.  Indiana.  Illinois.  Wisconsin.  Minnesota.  And with some portaging, the great interior rivers.  Including the Mississippi River.  Opening up the Great Plains to the West.  And the rich fertile farmland of the interior.  But there was one great obstacle between all of this and the east coast.  Niagara Falls.  Which portaging around was a bitch.

The United States would become an agricultural superpower.  But until they had a way to transport food grown on the land west of the Appalachians that land was not as valuable as it could be.  There were some land routes.  George Washington crossed many times into the Ohio Country from Virginia.  And Daniel Boone blazed the Wilderness Road through the Cumberland Gap into Kentucky and Tennessee.  Opening the Northwest Territory to settlement.  All the way up to the Mississippi River.  And its tributaries.  Including the Ohio River.  But none of these water routes offered a way back east.  Which is why everything grown on the west side of the Appalachian Mountains eventually ended up on the Mississippi River.  And traveled south.  To the Port of New Orleans.  But there was one major problem with that.  The Port of New Orleans belonged to the Spanish.

Thomas Jefferson fought Tirelessly against the Constitution to Restrict the Powers of the Executive Branch

At the time of the Founding there were four European nations jockeying for a piece of the New World.  Who all wanted to keep the Americans east of the Appalachians.  The French had lost New France to the British.  Which they hoped to get back.  And the farther the Americans moved west the harder that would be.  The British were in Canada.  With outposts still in the Northwest Territory.  Despite ceding that land to the Americans.  While the British were pressing in from the north the Spanish were pressing in from the south and the west.  Coming up from Mexico they were in New Orleans.  Texas.  The trans-Mississippi region (the land west of the Mississippi River.  And California and the West Coast.  Making navigation rights on the Mississippi River and the Port of New Orleans a hotly contested issue.

Time would solve that problem in America’s favor.  Napoleon would get the Louisiana Territory for France from the Spanish.  And was intent on rebuilding New France in the New World.  But with the slave rebellion in Saint-Domingue—present day Haiti—Napoleon’s plans changed.  Instead of building New France he was focusing on saving Old France.  As the world war he launched wasn’t going all that well.  So he sold the Louisiana Territory to Thomas Jefferson, then president of the United States.  Making the navigation rights of the Mississippi River a moot point.  For it now belonged to the United States.  Which was great for Thomas Jefferson.  For, he, too, looked west.  And believed the young nation’s future was on the west side of the Appalachian Mountains.  Where yeoman farmers would work their land.  Forming the backbone of the new republic.  Honest men doing honest labor.  Not merchants, bankers and stockjobbers that were trying to destroy the new nation in the east.  The detestable moneyed men that Jefferson hated so.  No.  The winds of the Revolutionary spirit blew west.

This is why Jefferson jumped on the Louisiana Purchase.  In direct violation of the Constitution.  A document he hated because it gave way too much power to the president.  Making the president little different from a king.  Which was the whole point of the American Revolution.  To do away with king-like power.  Throughout his active political life he fought tirelessly against the Constitution.  Fighting to restrict the powers of the executive branch wherever he could.  But the Louisiana Territory?  President Jefferson suddenly had an epiphany.  It was good to be king.

The Erie Canal connected the Eastern Seaboard with the Great Lakes without any Portages

Jefferson would resort to his anti-government positions following the Louisiana Purchase.  He may have violated everything he stood for but even the most stalwart limited government proponent no doubt approves of Jefferson’s actions.  Jefferson was happy.  As was everyone west of the Appalachians.  But it didn’t solve one problem.  The Great Lakes region upstream of Niagara Falls was still cutoff from the East Coast.  And the Port of New Orleans.  There were some routes to these destinations.  But they included some portaging between navigable waterways.  Which made it difficult to transport bulk goods into the region.  And out of the region.

As Jefferson’s vision of limited government faded government grew.  As did government spending.  Especially on internal improvements.  For they had great political dividends.  They created a lot of jobs.  And brought a lot of federal money to communities with those internal improvements.  Which helped politicians win elections.  And back around the 1800s the big internal improvements were canals.  Such as the Erie Canal.  Connecting the Eastern Seaboard with the Great Lakes.  Providing a waterway without any portages from the Hudson River that flows into the Atlantic Ocean at New York City.  All the way to the Great Lakes.  Near Buffalo.  Just above Niagara Falls.  Opening the Great Lakes regions to settlement.  And the Northwest Territory.  (Something George Washington wanted to do.  Who wanted to extend a canal into the West from the Potomac River.)  Creating a trade super highway between the Great Lakes region and the East Coast.  Through the Port of New York.  And on to the rest of the world.

The U.S. population moved west.  But still clung to rivers and coastlines.  Until another internal improvement came along.  The railroad.  Which did for the country’s interior what the Erie Canal did for the Great Lakes region.  With cities growing up along these rail lines.  Away from rivers and coastlines.  Then came the interstate highway system.  Which allowed cities to grow away from the rail lines.  There is now a road, rail or waterway that will take you pretty much anywhere in the United States.  And now we have the airplane.  Which can fly over the Appalachians.  Or the Niagara escarpment.  Allowing us today to move anyone or anything anywhere today.  Something George Washington and Thomas Jefferson desperately wanted.  But could only dream of.

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From Commodity Money to Representative Money to Fiat Money

Posted by PITHOCRATES - April 8th, 2014

History 101

(Originally published November 8th, 2011)

The Drawbacks to Using Pigs as Money Include they’re not Portable, Divisible, Durable or Uniform

They say we use every part of the pig but the oink.  So pigs are pretty valuable animals.  And we have used them as money.  Because they’re valuable.  People were willing to accept a pig in trade for something of value of theirs.  Because they knew they could always trade that pig to someone else later.  Because we use every part of the pig but the oink.  Which makes them pretty valuable.

Of course, there are drawbacks to using pigs as money.  For one they’re not that portable.  They’re not that easy to take to the market.  And they’re big.  Hold a lot of value.  So what do you do when something is worth more than one pig but not quite worth two?  Well, pigs aren’t readily divisible.  Unless you slaughter them.  But then you’d have to hurry up and trade the parts before they spoil because they’re not going to stay fresh long.  For pig parts aren’t very durable.

Suppose you have two pigs.  And someone has something you want and they will trade two pigs for it.  But there’s only one problem.  One pig is big and healthy.  The other is old and sickly.  And half the weight of the healthy one.  This trader was willing to take two pigs in trade.  But clearly the two pigs you have are unequal in value.  They’re not uniform.  And not quite what this trader had in mind when he said he’d take two pigs in trade.

Our Paper Currency Evolved from the Certificates we Carried for our Gold and Silver we Kept Locked Up

Rats are more uniform.  They’re more portable.  And they’re smaller.  It would be easier to price things in units of rats rather than pigs.  They would solve all the problems of using pigs as money.  Except one.  Rats are germ-infested parasites that no one wants.  And they breed like rabbits.  You never have only one rat.  Man has spent most of history trying to get rid of these vile disease carriers.  So no one would trade anything of value for rats.  Because these little plague generators were overrunning cities everywhere.  So rats were many things.  But one thing they weren’t was scarce.

Eventually we settled on a commodity that addresses all the shortcomings of pigs and rats.  As well as other commodities.  Gold and silver.  These precious metals were portable.  Durable.  They didn’t spoil and held their value for a long time.  You could make coins in different denominations.  So they were easily divisible.  Unlike a pig.  They were uniform.  Unlike pigs.  Finally, you had to dig gold and silver out of the ground.  After digging a lot of holes trying to find gold and silver deposits.  Which made it costly to bring new gold and silver to market.  Keeping gold and silver scarce.  And valuable.  Unlike rats.

But gold and silver were heavy metals.  Carrying large amounts was exhausting.  And dangerous.  A chest of gold and silver was tempting to thieves.  As you couldn’t hide it easily.  Soon we left our gold and silver locked up somewhere.  And carried certificates instead that were exchangeable for that gold and silver.  And these became our paper currency.

Governments Everywhere left the Gold Standard in the 20th Century so they could Print Fiat Money

The use of certificates like this is typically what people mean by gold standard.  Money in circulation represents the value of the underlying gold or silver.  And can be exchanged for that gold or silver.  Which meant that governments couldn’t just print money.  Like they do today.  Because the value was in the gold and silver.  Not the paper that represented the gold and silver.  And the only way to create money was to dig it out of the ground, process it and bring it to market.  Which is a lot harder to do than printing paper money.  So governments everywhere left the gold standard in the 20th century in favor of fiat money.  So they could print money.  Create it out of nothing.  And spend it.  With no restraints of responsible governing whatsoever.

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The First, Second and Third Reich

Posted by PITHOCRATES - April 1st, 2014

History 101

The Holy Roman Empire was the First German Reich

At the height of the Roman Empire the Mediterranean Sea was a Roman Lake.  For the Romans controlled all the land around the Mediterranean Sea.  As the Roman Empire controlled most of the civilized world.  From Africa to Britain.  From Spain to the Middle East.  And its presence in Europe would shape Europe and the world we know today.  But before the Romans could shape our world the barbarians had to destroy theirs.

The northern frontier of the Roman Empire ran along the Rhine and Danube rivers.  West of the Rhine and south of the Danube was the civilized Roman Empire.  On the other side of those rivers were the Ostrogoths, the Visogoths and the Vandals.  Barbarians.  Germanic people.  Who would sweep down (along with the Huns from Central Asia) and conquer the Western Roman Empire.  With a Germanic chieftain, Odoacer, deposing the last Roman emperor in the West.  Romulus Augustus.

After about 3 centuries Charlemagne, King of the Franks (Germanic tribes in and around modern day France), would unify Western Europe.  In a Christian kingdom.  Pleasing Pope Leo III.  Who went on to crown Charlemagne emperor of the Roman Empire.  But after he died his empire broke apart.  Meanwhile to the east Otto I was unifying the Germanic tribes into a single kingdom.  A German empire that stretched from northern Italy to the North and Baltic seas.  Encompassing a huge swathe of Central Europe (including but not limited to modern day Germany, Austria, Belgium, Czech Republic, The Netherlands, Switzerland, France (eastern lands), Italy and Poland).  A Christian empire.  Pleasing Pope John XII.  Who crowned Otto emperor.  And the First Reich (the first German empire) became the Holy Roman Empire.

Winning the Franco-Prussian War ushered in the Second German Reich

The First Reich would last for about 850 years.  Coming to an end in 1806 when the last Holy Roman Emperor, Francis II, abdicated after fighting and losing to Napoleon.  Who reorganize it into the German Confederation.  And reduced the First Reich to a French satellite.  Up until this time there were two large powers in the Reich vying for power.  Austria in the south.  And Prussia in the north.  Otto von Bismarck was a Prussian.  And Prussia was a militaristic nation.  That believed less in diplomacy and more in power.  And Bismarck would use force to unite the German states into a Prussian-dominated Germany.  While getting rid of its rival.  Austria.

War followed.  The Austro-Prussian War (1866) ended the German Confederation.  Prussia replaced the German Confederation with North German Confederation that excluded Austria.  This confederation included much of the northern lands of the First Reich.  To sooth the feelings between the north (led by Prussia) and the south (led by Austria) Bismarck made the French declare war on Prussia.  And when they did the southern German states sided with Prussia.  The Prussians and Germans moved quickly into northern France.  And after a long siege of Paris the Germans won the Franco-Prussian War (1870-1871).  They took back a lot of lands lost to France.  Including Alsace-Lorraine.  Much to the chagrin of the French.  And unified the German states into a German Empire.  The Second Reich.

The German Empire industrialized.  Greatly increasing its economic and military might.  Shifting the balance of power in Europe.  Germany was now the most powerful nation in Europe.  Which concerned the other powers of Europe.  So they began to enter treaties with each other.  Such that if Germany attacked one nation another nation (or nations) would declare war on Germany.  To provide a deterrent against German aggression.  And rebalance the balance of power in Europe.  But then Archduke Franz Ferdinand of Austria, heir to the Austro-Hungarian throne, traveled to Sarajevo.  Where Gavrilo Princip assassinated him.  Pushing the first domino in a sting of dominos to fall as all of Europe honored their treaties.

The Third Reich was the Largest and Shortest-Lived German Reich

Austria-Hungary invaded Serbia.  In support of Austria-Hungary Germany invaded Belgium and Luxembourg on their way to France.  Causing the United Kingdom to declare war on Germany.  In support of Serbia Russia declared war on Austria-Hungary.  Allying with France and the United Kingdom.  The Ottoman Empire declared war on Russia.  Then nation after nation joined a side and entered the war.  Even the United States.  By the time it was all over some 16 million people were dead.  As were the Russian, Austro-Hungarian, Ottoman and German empires.  The map of Europe changed.  And the Second Reich was over.  Having lasted 47 years.  Large chunks of the Second Reich were taken away.  Including Alsace-Lorraine.  And much of Prussia.  Which was restored to Poland.  Which infuriated a lot of Germans.  Especially one German war veteran in particular.  A corporal.  Adolf Hitler.

World War I ended in an armistice.  Meaning that no one surrendered.  But the American entry into the war pretty much meant that the Germans were going to lose.  All the nations had long grown weary of the war.  But here was a fresh nation that could field fresh troops against Germany.  Which was exhausted.  It had nothing left.  Which gave the Allies the upper hand in the peace that followed.  And it was a bitter peace for the Germans.  Who were singled out as the sole responsible party for the war.  Well, one thing led to another and Adolf Hitler inaugurated the Third Reich.  And he set about retrieving all that lost German territory.  He annexed Austria.  The Sudetenland in Czechoslovakia.  Then he took the rest of Czechoslovakia.  A country that conveniently ran along the southern border of Poland.  And then he kicked off World War II.

The Third Reich invaded Poland.  Norway.  The Low Countries.  France.  And the Soviet Union (the former Russian Empire).  Reclaiming all lost German lands.  Including Alsace-Lorraine.  And unifying them once again.  Even adding on to them.  Through the use of force.  The Prussian way.  The Third Reich was the largest German Reich yet.  But it was the shortest lived Reich.  Lasting only 12 years.  By the time World War II was over some 70 million people were dead.  Making the Third Reich the bloodiest Reich.  The Allies helped to rebuild West Germany (East Germany was behind the Iron Curtain) to keep her out of the Soviet Sphere.  To give it a thriving free market economy.  And prosperity.  By providing full employment.  Which also helped to prevent gangs of unemployed young men from getting nationalistic fervor.  Again.  West Germany integrated into the west.  Away from the Soviets.  And away from her Prussian past.

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After the Civil War Men became less Manly and the Federal Government became more Progressive

Posted by PITHOCRATES - March 25th, 2014

History 101

(Originally published February 12th, 2013)

Prior to 1900 the Role of the Federal Government was primarily to Provide for the Common Defense

In 1800 the new federal government didn’t do a lot.  It spent only about $11 million (in nominal dollars).  With 55% going to defense.  About 31% went to pay interest on the war debt.  About 2% went to the postal service.  And about 12% went to other stuff.  Defense spending and interest on the war debt added up to about 86% of all federal outlays (see Government Spending Details).

In 1860, just before the Civil War, spending increased to $78 million (in nominal dollars).  Defense spending fell to 37%.  Interest spending fell to 4%.  And postal service spending rose to 19%.  While spending on other stuff rose to 40%.  Just over 60 years from the founding the federal government had changed.  It was less limited than the Founding Fathers designed it to be.

In 1900 spending increased to $628.6 million (in nominal dollars).  With defense spending coming in at 53%.  The postal service at 17%.  Interest went up to 6.4%.  And other spending fell to 24%.  Again, defense spending consumed over half of all federal spending.  For the role of the federal government was still primarily providing for the common defense.  Running the postal service.  Treating with other nations.  And trading with them.  As well as collecting duties and tariffs at our ports which paid for the federal government.  There was a lot of graft and patronage.  And long lines for government jobs.  Primarily because government was still somewhat limited.  With a limited number of government jobs to reward campaign contributors.  But that was about to change.

The Progressives expanded the Role of the Federal Government in our Lives and made it more Motherly

The American Civil War killed about 625,000 men.  With an 1860 population of 31,443,321 those deaths amounted to about 2% of the prewar population.  To put that into perspective if 2% of the U.S. population died in a war today that would be approximately 6.2 million people.  And to put that into perspective the total population of the state of Missouri is about 6 million people.  So the American Civil War claimed a very large percentage of the population.  Leaving a lot of children to grow up without a father.  Which had a profound impact on the size of the federal government.

Prior to this generation American men were some of the manliest men in the world.  Tough and rugged.  Who could live off of the land.  Completely self-sufficient.  These are the men that made America.  Men who fought and won our independence.  Who explored and settled the frontier.  Farmers who worked all day in the field.  Men who dug canals by hand.  And built our railroads.  Men who endured hardships and never complained.  Then came the Civil War generation.  Sons who lost their fathers.  And wives who lost their husbands, brothers, fathers and uncles.  Who lost all the men in their lives in that horrible war.  These women hated that war.  And manly displays of aggression.  For it was manly displays of aggression that led to fighting.  And war.  Having lost so much already they didn’t want to lose the only men they had left.  Their sons.  So they protected and nurtured them.  Taught them to shun violence.  To be kinder and softer.  To be not so tough or rugged.  To be less manly.  And when these men grew up they went into politics and started the progressive movement.

The federal government was no longer just to provide for the common defense.  To run the postal service.  To treat with other nations.  To trade with other nations.  Run our custom houses.  No.  Now the federal government grew to be kinder, softer and more motherly.  The progressives expanded the role of the federal government in our lives.  Woodrow Wilson wanted to turn the country into a quasi monarchy.  With a very strong executive branch that could rule against the wishes of Congress.  The Federal Reserve (America’s central bank) came into existence during Wilson’s presidency.  Which was going to end recessions forever.  Then came the Great Depression.  A crisis so good that FDR did not let it go to waste.  FDR expanded the size of the federal government.  Putting it on a path of permanent growth.  And it’s been growing ever since.

They decreased Defense Spending and increased Borrowings to increase Non-Defense Spending

The federal government grew beyond its Constitutional limits.  And the intent of the Founding Fathers.  Just as Thomas Jefferson feared.  It consolidated power just as all monarchies did.  And that was Jefferson’s fear.  Consolidation.  Seeing the states absorbed by a leviathan federal government.  Becoming the very thing the American colonists fought for independence from.  So that’s where the federal government changed.  In the early 20th Century.  Before that it spent money mostly for defense and a postal service.  Now it spends money for every social program under the sun.  There is great debate now in Washington about reducing the deficit.  With the Democrats blaming the deficit problems on too much defense spending.  And too little taxation on the rich.  But if you look at the history of federal spending since 1940 the numbers say otherwise (see Table 3.1—OUTLAYS BY SUPERFUNCTION AND FUNCTION: 1940–2017 and A History of Debt In The United States).

Federal Spending and Debt

As defense spending (including Veterans Benefits and Services) rose during World War II non-defense spending (Education, Training, Employment, Social Services, Health, Income Security, Social Security, Energy, Natural Resources, Environment, Commerce, Housing Credit, Transportation, Community and Regional Development, International Affairs, General Science, Space, Technology, Agriculture, Administration of Justice and General Government) fell as a percentage of total federal outlays.  And the federal debt rose (federal debt is in constant 2012 dollars).  After the war defense spending fell to 50% while the percentage of non-defense spending rose.  And the federal debt dropped slightly and remained relatively constant for about 30 years.

This tug of war between defense spending and non-defense spending is also called the guns vs. butter debate.  Where those in favor of spending money on guns at the federal level are more constructionists.  They want to follow the Constitution as the Founding Fathers wrote it.  While those who favor spending money on butter at the federal level want to want to buy more votes by giving away free stuff.

Defense spending ramped back up for the Korean War and the Cold War during the Fifties.  After the armistice ended hostilities in Korea defense spending began a long decline back to about 50% of all federal outlays.  Where it flattened out and rose slightly for the Vietnam War.  After America exited the Vietnam War defense spending entered a long decline where it dropped below 30% of all federal outlays.  Reagan’s defense spending raised defense spending back up to 30%.  After Reagan won the Cold War Clinton enjoyed the peace dividend and cut defense spending down to just below 20%.  After 9/11 Bush increased defense spending just above 20% of all federal outlays where it remains today.

During this time non-defense spending was basically the mirror of defense spending.  Showing that they decreased defense spending over time to increase non-defense spending.  But there wasn’t enough defense spending to cut so borrowing took off during the Reagan administration.  It leveled off during the Clinton administration as he enjoyed the peace dividend after the defeat of the Soviet Union in the Cold War.  Non-defense spending soared over 70% of all federal outlays during the Bush administration.  Requiring additional borrowings.  Then President Obama increased non-defense spending so great it resulted in record deficits.  Taking the federal debt to record highs.

So is defense spending the cause of our deficits?  No.  Defense spending as a percentage of all federal outlays is near a historical low.  While non-defense spending has soared to a record high.  As did our federal debt.  Clearly showing that the driving force behind our deficits and debt is non-defense spending.  Not defense spending.  Nor is it because we’re not taxing people enough.  We’re just spending too much.  In about 50 years non-defense spending rose from around 22% of all federal outlays to 74%.  An increase of 223%.  While defense spending fell from 76% to 22%.  A decline of 245%.  While the federal debt rose 619%.  And interest on the debt soared 24,904%.  The cost of favoring butter in the guns vs. butter debate.  The federal government has been gutting the main responsibility of the federal government, defense, to pay for something that didn’t enter the federal government until the 20th Century.  All that non-defense spending.  Which doesn’t even include the postal service today.

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The Shifting Borders of Eastern Europe

Posted by PITHOCRATES - March 18th, 2014

History 101

By 1300 the Mongol Golden Horde took all of Kievan Rus

Vladimir Putin took Crimea from Ukraine.  Because he said the people there are more Russian than Ukrainian.  The people there wanted to be a part of Russia instead of Ukraine.  And that the land historically has belonged to Russia.  But that’s not true.  Yes, if you go back in time the land was Russian.  But if you go further back it wasn’t.  In fact the borders of Eastern Europe have changed so much that today’s borders bear little resemblance to what they have been over time.  You can watch 1,000 years of this change play out in a video on Loiter.co (see Watch as 1000 years of European borders change).  We’ll recap some of the changes in century intervals.

In the early 1100s the Western Roman Empire was gone.  In its place was the Holy Roman Empire stretching from central Italy to the North Sea.  Spain was mostly Muslim.  France was taking shape.  The Eastern Roman Empire (the Byzantine Empire) was still in modern day Turkey, Greece and the Balkans.  Going north there was Hungary.  Then Poland.  And Lithuania.  To the east of these countries was the large expanse of Kievan Rus.  Modern day Ukraine, Belarus and western Russia.  And the Crimea was held by the Turkic Cumans.  But this land would change hands many times in the centuries to come.

By 1200 the Byzantine Empire moved further north into the Balkans.  While the Muslims moved into Byzantine territory from the south.  Hungary, Poland and Lithuania adjusted their borders slightly.  The Holy Roman Empire pushed further west in Europe.  The Cumans pushed into southern Kievan Rus.  While Kievan Rus moved south between the Black and Caspian seas.  By 1300 the Mongol Golden Horde (northwest part of the Mongol Empire) took all of Kievan Rus.  Hungary pushed out her borders while Poland shrank hers.  With East Prussia taking her northern lands.  Lithuania reshaped her borders in part to East Prussia.  The Byzantine Empire was reduced to a small area of the southern Balkans.  The Mongols were in Crimea.

Russia, Prussia and Hungary reduced Poland to the Grand Duchy of Warsaw by 1800

By 1400 the Ottoman Empire had replaced the Byzantines in the Balkans.  Hungary adjusted her borders a little.  East Prussia remained the same.  Poland and Lithuania had joined in a commonwealth and pushed their border south and east.  Into the lands that were once Kievan Rus.  Except for Crimea and the area just north of Crimea.  Pushing the Mongols east.  As the Republic of Novgorod and Muscovy pushed down on the Mongols from the north.  By 1500 the Ottoman Empire pushed further into southern Europe.  Into Hungary.  Crimea.  And Poland-Lithuania.  Which pushed north into East Prussia.  While Russia replaced the Republic of Novgorod and Muscovy and pushed south into Poland-Lithuania.

By 1600 the Ottoman Empire adjusted her northern borders a little.  Poland replaced the Poland-Lithuania Commonwealth.  And pushed her border slightly east into Russia.  Russia pushed her southern border to the Caspian Sea.  Sweden was across the Baltic Sea into modern day Finland and Estonia.  On Russia’s most western border.  By 1700 Hungary had pushed the Ottoman Empire back into the Balkans.  Prussia formed on the Baltic Sea west of Poland.  With East Prussia to the east of Poland on the Baltic Sea.  The Russian Empire pushed west to the Baltic Sea.  Pushing the Swedes out of Estonia and part of Finland.  Russia had also pushed south through Lithuania and pushed deep into Poland.  The Ottoman Empire was still on the northern side of the Black Sea at Russia’s southern border.

By 1800 the Russian Empire had pushed their southern border all the way to the Black Sea.  Pushing the Ottoman Empire back.  The Russians also pushed their southern border further south between the Black and Caspian seas.  They pushed west through modern day Finland to the sea.  They pushed their western border through half of what was Poland.  Hungary pushed north into what was Poland.  Prussia and East Prussia joined together, taking land from Poland on the Baltic Sea.  Russia, Prussia and Hungary left little of Poland.   What was left of her lands became the Grand Duchy of Warsaw.

Vladimir Putin has said one of the Greatest Catastrophes of the 20th Century was the Collapse of the Soviet Union

By 1900 the Ottoman Empire was pushed almost completely out of the Balkans.  Greece and Bulgaria were now on the lands the Ottomans once held.  Russia pushed their southern border between the Black and Caspian seas further into the Ottoman Empire.  Hungary pushed her southern border to Greece and Bulgaria.  And west into Austria (which would later form the Austria-Hungary Empire).  The Germanic states had formed into a greater Germany that stretched from France to Russia.  Absorbing the Grand Duchy of Warsaw.  And even pushing into Russia’s western border.

Then came World War I.  And afterwards the borders of Europe were greatly changed.  The Austria-Hungary Empire was broken into Romania, Yugoslavia, Austria, Hungary and Czechoslovakia.  The eastern half (approximately) of the greater Germany was given to a reconstituted Poland.  With East Prussia bordering Poland on the north and separated from Germany (Hitler’s opening shots in World War II was to recover this lost territory).   To the north of Poland and East Prussia were Lithuania, Latvia and Estonia.  Russia was now the Soviet Union with her western border pushed slightly back from where it was before World War I.  Bordering Estonia, Latvia, Poland and Romania in the west.  And pushed back out of Finland.  The Soviet southern border between the Black and Caspian seas was pushed back a little.  And Turkey replaced what was left of the Ottoman Empire.

After World War II the Soviet Union pushed her border through Lithuania, Latvia and Estonia to the Baltic Sea.  After the Soviet Union fell Lithuania, Latvia and Estonia restored their borders.  And the former lands of the Kievan Rus are now divided between Russia in the north and east.  Belarus between Poland and Russia.  And Ukraine bordering Poland, Slovakia, Hungary, Romania and Moldova to the west.  The Black Sea to the south.  And Russia to the east.  With Crimea a part of Ukraine.  Well, until recently, that is.  As Russia has recently annexed Crimea.  And may be looking further west.  For this former KGB officer—Vladimir Putin—has said one of the greatest catastrophes of the 20th century was the collapse of the Soviet Union.  Which he began to put back together with his annexation of Crimea.

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Byzantine Empire, Bosporus, Silk Road, Dutch East India Company, English East India Company, Tea Act and Opium Wars

Posted by PITHOCRATES - March 11th, 2014

History 101

(Originally published May 15th, 2012)

To encourage Risk Takers to Travel Halfway around the World Mercantile States granted Monopoly Charters

The modern world began because Europeans had a penchant for silk and spices.  Something they enjoyed during Roman times.  When the Romans ruled the world.  And the Mediterranean Sea was nothing more than a Roman lake.  But when the empire stopped conquering new lands and sending the spoils of war home they had to turn to other means to pay for the cost of empire.  Taxes.  To pay for the Roman government and their public spending.  And the Roman legions.  This excessive government spending led to the fall of the western half of the empire.  But the eastern half lived on for another 1,000 years or so.  Why?  Because the capital of the Byzantine Empire was Constantinople.  On the Bosporus.  Trade crossroads of the world.

This city was so rich everybody wanted to conquer it.  So they could have all those riches.  For everything that came along the Silk Road from China crossed into Europe at the Bosporus.  Soon Muslims fought Christians in the Holy lands.  Then more Christians came.  The Crusaders.  Those who didn’t die went back to Europe with some of those Chinese luxuries.  Spices.  Silk.  Porcelain.  Etc.  Sparking a renewed interest in these finer things in Europe.  Especially the spices.  For European cooking was horribly bland at the time.  The Ottoman Turks eventually took Constantinople.  Renamed it Istanbul.  And controlled that lucrative trade.  Making those much sought after Asian goods rather expensive in Europe.  Which they had no choice but to pay.  Because if you wanted those luxuries you had to go through Istanbul.  Until the Portuguese sailed around Africa and found a direct route to those cherished goods, that is.

It was the Commercial Revolution.  A new age of international trade.  A trade even more profitable than what the Ottoman Turks controlled.  Because big ocean-going vessels can carry more cargo than anything coming over land on the Silk Road.  And these new European maritime powers wanted that wealth.  And the power it would provide.  To encourage risk takers to get into those wooden ships and travel halfway around the world they granted monopoly charters.  The Dutch East India Company (VOC) was one of the largest.  And one of the wealthiest.  But this was not your typical company.  The VOC established overseas colonies.  It waged war.  Established treaties.  Even coined its own money.  Because of this thousands of VOC ships stuffed full of valuable cargoes sailed to Antwerp and Amsterdam, making the Dutch very wealthy.  And powerful.

The Tea Act allowed the Company to Ship their Tea Directly to America and exempted them from any Duties

Of course the Dutch weren’t the only ones doing this.  They had competition.  Portugal.  Spain.  France.  And England.  Who would bump into each other numerous times fighting for control of this trade.  And those colonies.  The English and the Dutch would fight 4 wars.  Which is how Dutch-founded Manhattan became part of the British Empire and, subsequently, one of America’s greatest cities.  The English East India Company gave the VOC a run for its money.  Parliament even passed legislation to give the English a monopoly on all trade with their American colonies.  The Navigation Acts.  Which stated that all trade to and from America had to be on English ships.  And all trade had to go through an English port.  Where the ships were unloaded and the cargoes inspected.  And taxed.  Then they could reload their cargoes and continue on their journey.  All tenets of mercantilism.  This kept the lower-priced Dutch goods out of America.  And prevented the Americans from selling to the Dutch directly for higher prices.  So it shut down the Dutch from all American trade (except for a prosperous black market). And brought in some lucrative tax revenue for England.  While extending shipping times and increasing prices for the Americans.  Which they were not happy about in the least.

The English East India Company (the Company) was similar in structure to the VOC.  And soon made the Indian subcontinent a wholly owned subsidiary of the Company.  But it wasn’t cheap.  Waging war was costly.  As was managing those conquered territories (something the Romans had also learned).  Then a famine in Bengal in 1770 claimed about one-third of the local population.  Making laborers more scarce.  And more expensive.  All at a time when the sales of their imported goods were falling in Europe.  There were warehouses full of unsold Chinese tea that they couldn’t sell.  Making for a bad time for the Company.

Higher costs and lower sales spelled trouble.  And that’s what the Company had a lot of.  Trouble.  So the Company turned to Parliament for help.  And Parliament helped.  By allowing the Company to ship their tea directly to America without having to unload it in a British port.  Or pay a duty on that tea.  Which would greatly reduce their costs.  And allow them to sell it in America cheaper than they did before.  So Parliament passed the Tea Act in 1773.  Making life better for all involved.  But the Tea Act left in place another tax in the previous Townshend Acts.  Which was a bigger problem than getting cheaper tea (which they could get on the black market from the Dutch).  These taxes on the British subjects in America were unconstitutional.  Because there were no Americans sitting in Parliament.  This was taxation without representation.  A much bigger issue than cheap tea.  So they threw that first ‘cheap’ tea into Boston Harbor.  The Boston Tea Party being a major step towards war with the mother country.  And American independence.

Britain became the Lone Superpower after Abandoning their Protectionist Mercantile Policies and Adopting Free Trade

The American Revolutionary War was not the only headache the British got from their mercantile policies.  Part of those policies required maintaining a positive balance of trade.  So there was always a net inflow of bullion into the mother country.  That’s why raw materials shipped into Britain from America.  And finished goods shipped out to America.  Finished goods are more valuable than raw materials.  So the Americans had to make up for this balance of trade in bullion.  Resulting in a net inflow of bullion into the mother country.  Very simple.  As long as you can manufacture higher valued goods that other people want to buy.

And this is the problem they ran into with the Chinese.  For though the British wanted those Chinese spices, silk and porcelain the Chinese didn’t want anything the British manufactured.  Which meant Britain had to pay for those luxuries with bullion.  Including all that Chinese tea they craved.  Which resulted in a net outflow of bullion to the Chinese.  The British fixed this problem by finding the one thing that the Chinese people wanted.  Indian opium.  Grown in Bengal.  Of course, this turned a lot of Chinese into opium addicts.  The addiction problem was so bad that the Chinese banned opium.  But the British were able to smuggle it in.  They sold so much of it that they used the proceeds to buy their tea.  Thus reversing the bullion flow.

Not the finest hour in the British Empire.  The Chinese and the British would go on to fight a couple of wars over this opium trade.  The Opium Wars.  Which the British did all right in.  Even gaining Hong Kong in the bargain.  They didn’t build any long-lasting love with the Chinese people.  But Hong Kong turned out pretty nice under the British.  Especially after they abandoned their protectionist mercantile policies and adopted free trade.  Which made the British the lone superpower for about a century as they modernized the world by leading the way in the Industrial Revolution.  And the Chinese in Hong Kong were very happy indeed to be there when the communists took over the mainland.  And caused a famine or two.  For they lived comfortably.  In a state founded on mercantilism.  That achieved its greatest prosperity during the free trade of capitalism that followed Britain’s mercantile ways.

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Ukraine

Posted by PITHOCRATES - March 4th, 2014

History 101

Ukraine is a Nation with Farmland so Fertile it earned the Moniker the ‘Breadbasket of Europe’

All roads may have led to Rome.  But all rivers led to Byzantium.  The city Constantine the Great of the Roman Empire turned into Constantinople.  Modern day Istanbul.  The great city on the Bosporus.  One-time trade crossroads of the world.  Where East met West.  And Europe met Asia.  Where goods from the Far East traveling on the Silk Road passed through on their way to Europe.  And where grain grown in the fertile river valleys of Eastern Europe passed through to feed the great empires.

Rivers created civilizations.  For they provided fertile farmland in their valleys.  And the rivers provided avenues for trade.  Which is why our great cities first appeared on rivers.  Like Kiev.  The Ukrainian capital.  On the Dnieper River.  Which flows from Smolensk through Russia, Belarus and Ukraine.  Emptying into the Black Sea.  Along with the Danube.  The Don.  And via a short portage from the Don, trade flowed to the Black Sea on the Volga, too.  (But the waters flowed into the Caspian Sea.)  And across the Black Sea lay Constantinople.  One-time trade crossroads of the world.

Ukraine is a nation with a lot of fertile farmland.  It is so fertile that it earned the moniker the ‘breadbasket of Europe’.  Making Ukraine some very valuable real estate.  Because of their grain production.  And the access the Dnieper River provided.  Opening trade between Scandinavia and the Byzantine Empire in Constantinople.  Providing Ukraine with a lot of north-south movement via the Dnieper.  As well as a lot of east-west movement via land between the Germanic tribes to the west.  And the Turkic people to the east.

To improve Relations with the Rus’ the Byzantine Patriarch converted the Rus’ and the Slavs to Christianity

Kiev was a crossroads.  Varangians (i.e., Vikings) moved south from Scandinavia.  The Greeks from Byzantine moved north.  As they did they bumped into the indigenous Slavs.  And the Khazars (one of those Turkic people).  Kiev was geographically in the Khazar Empire.  But the Varangians ruled Kiev.  As it was on their trade route with the Greeks in Constantinople.  It was the Varangians who ruled Kiev during the Golden Age (11th to early 12th centuries).  Which saw the rise of Kievan Rus’.  Which in time and much change gave us modern day Russia.

As the Rus’ expanded south they encroached on Khazar territory.  The Khazars allied with the Byzantine Empire and fought against the Persians and Arabs.  Who wanted that rich crossroads.  Constantinople.  As did the Rus’.  So there were all kinds of war with all kinds of people.  Which wasn’t good for trade.  So the Byzantines established a division of their empire on the Crimean peninsula on the northern shore of the Black Sea.  Near the mouth of the Dnieper.  The Theme of Cherson.  To ward off those raids by the Rus’.  And to protect the grain coming to Constantinople from the breadbasket of Europe.  The Theme of Cherson became the center of Black Sea commerce.

But to improve relations with the Rus’ the Byzantine Patriarch Photius sent emissaries to convert the Rus’ and the Slavs to Christianity.  In 863 brothers Cyril and Methodius headed north.  They could speak the Slavonic language.  Which was then only a spoken language.  They created an alphabet for them.  The Glagolitic alphabet.  Which became the Cyrillic alphabet.  And gave them a written language.  Translated scripture so they could read it.  And extended the Greek culture of the Byzantine Empire to these lands.  As well as Orthodox Christianity.  Which is why today many of the lands radiating out from the rivers flowing to the Black Sea are Orthodox Christian (Russian Orthodox, Ukrainian Orthodox, Serbian Orthodox, etc.).

Russian Migration into Ukraine helped make her less Ukrainian and more Russian

Kiev was one of the largest cities in the world.  Then came the invasions.  First from the Asian steppes to the east.  The Pechenegs in 968.  And then the Mongols in 1240.  Who completely destroyed Kiev.  Then the Lithuanians from the north (1320s).  Then the Crimean Tatars sacked and burned Kiev (1482).  Then Kiev passed to Poland (1569).  Then the Russians took it over.  In the 18th and 19th centuries the city was full of Russian soldiers.  And ecclesiastical authorities.  From the Russian Orthodox Church.  Making the Ukrainian people more Russian.  Some Ukrainians tried to change that in the 1840s but Russia put a stop to that.

The Russian Empire kept pushing south.  For they wanted a warm-water port.  Which they could have on the Black Sea.  All they had to do was fight through the Ukrainians.  Which they did.  By this time the Muslim Ottoman Turks had long conquered the Christian Byzantine Empire.  Which left the Ottomans open to Russian aggression once the Russians took Ukraine.  Of course, if the Russians conquered the Ottoman Empire that would give Russia open access to the Mediterranean Sea.  Where they could threaten the British Empire holdings.  Also, the Russians could free their fellow Orthodox Christians from Muslim rule.

This aggression exploded into one of the bloodiest wars in history.  The Crimean War (October 1853 – February 1856).  Much like the American Civil War the technology was well ahead of the tactics.  The Russian Empire took on the French Empire, the British Empire, the Ottoman Empire and the Kingdom of Sardinia.  Russia lost.  And she lost what she most coveted.  That warm-water port.  But that didn’t last for long.  Changes elsewhere allowed Russia to reject portions of the peace treaty that ended that war.  And built a navy she operated out of the Black Sea port of Sevastopol (first founded in 1783 by Rear Admiral Thomas Mackenzie then fortified by Catherine the Great in 1784).  On the Crimea peninsula.  And the Russians have been there ever since.

But the beating the Russians took led Tsar Alexander II to free the serfs.  And try to advance the backward Russia to be more like the advanced nations that had beaten her.  But it was too late.  For this marked the beginning of the end for Tsarist Russia.  The war left her in great debt.  So much debt that Russia sold Alaska to the United States.  While creating social unrest that would eventually lead to the October Revolution.  And the Soviet Union.  All the while Russian migration into Ukraine continued.  Making Ukraine less Ukrainian and more Russian.  With the Russian language taking over in Kiev and other large Ukrainian cities.  Pushing the Ukrainian language and culture to the country.  Leading to a divided Ukraine.  Under the boot of the Soviet regime.  Until the collapse of the Soviet Union.  When Ukraine finally got her independence.  Which Russian president and former KGB officer of the Soviet Union, Vladimir Putin, is now currently taking away.

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Henry Ford, Bill Hewlett & Dave Packard, Steve Jobs & Steve Wozniak, Howard Schultz, Ray Kroc and Richard Branson

Posted by PITHOCRATES - February 25th, 2014

 History 101

(Originally published May 8th, 2012)

Capitalism allows Entrepreneurs to bring their Great Ideas to Life

Entrepreneurs start with an idea.  Of how to do something better.  Or to create something we must have that we don’t yet know about.  They think.  They create.  They have boundless creative energies.  And the economic system that best taps that energy is capitalism.  The efficient use of capital.  Using capital to make profits.  And then using those profits to make capital.  So these ideas of genius that flicker in someone’s head can take root.  And grow.  Creating jobs.  And taxable economic activity.  Creating wealth for investors and workers.  Improving the general economy.  Pulling us out of recessions.  Improving our standard of living.  And making the world a better place.  Because of an idea.  That capitalism brought to life.

Entrepreneurs Risked Capital to bring Great Things to Market and to Create Jobs

Henry Ford established the Detroit Automobile Company in 1899.  Which failed.  He reorganized it into the Henry Ford Company in 1901.  Ford had a fight with his financial backers.  And quit.  Taking the Ford name with him.  And $900.  The Henry Ford Company was renamed Cadillac and went on to great success.  Ford tried again and partnered with Alexander Malcomson.  After running short of funds they reorganized and incorporated Ford Motor Company in 1903 with 12 investors.  The company was successful.  Some internal friction and an unexpected death of the president put Ford in charge.  Ford Motor built the Model A, the Model K and the Model S.  Then came the Model T.  And the moving assembly line.  Mass production greatly increased the number of cars he could build.  But it was monotonous work for the assembly line worker.  Turnover was high.  So to keep good workers he doubled pay in 1914 and reduced the 9-hour shift to 8 hours.  This increased productivity and lowered the cost per Model T.  Allowing those who built the cars to buy what they built.  In 2011 the Ford Motor Company employed approximately 164,000 people worldwide.

Bill Hewlett and Dave Packard established Hewlett-Packard (HP) in 1939.  In a garage.  They raised $538 in start-up capital.  In that garage they created their first successful commercial product.  A precision audio oscillator.  Used in electronic testing.  It was better and cheaper than the competition.  Walt Disney Productions bought this oscillator to certify Fantasound surround sound systems in theaters playing the Disney movie Fantasia.  From this garage HP grew and gave us calculators, desktop and laptop computers, inkjet and laser printers, all-in-one multifunction printer/scanner/faxes, digital cameras, etc.  In 2010 HP employed approximately 324,600 employees worldwide.  (Steve Wozniak was working for HP when he designed the Apple I.  Which he helped fund by selling his HP calculator.  Wozniak offered his design to HP.  They passed.)

Steve Jobs had an idea to sell a computer.  He convinced his friend since high school, Steve Wozniak, to join him.  They sold some of their things to raise some capital.  Jobs sold his Volkswagen van.  Wozniak sold his HP scientific calculator.  They raised about $1,300.  And formed Apple.  They created the Apple I home computer in 1976 in Steve Jobs’ garage.  From these humble beginnings Apple gave us the iPad, iPhone, iPod, iMac, MacBook, Mac Pro and iTunes.  In 2011 Apple had approximately 60,400 full time employees.

Jerry Baldwin, Zev Siegl, and Gordon Bowker opened the first Starbucks in 1971 in Seattle, Washington.  About 10 years later Howard Schultz drank his first cup of Starbucks coffee.  And he liked it.  Within a year he joined Starbucks.  Within another year while traveling in Italy he experienced the Italian coffeehouse.  He loved it.  And had an idea.  Bring the Italian coffeehouse to America.  A place to meet people in the community and converse.  Sort of like a bar.  Only where the people stayed sober.  Soon millions of people were enjoying these tasty and expensive coffee beverages at Starbucks throughout the world.  In 2011 Starbucks employed approximately 149,000 people.

Ray Kroc sold Prince Castle Multi-Mixer milk shakes mixers to a couple of brothers who owned a restaurant.  Who made hamburgers fast.  Richard and Maurice McDonald had implemented the Speedee Service System.  It was the dawn of fast food.  Kroc was impressed.  Facing tough competition in the mixer business he opened a McDonald’s franchise in 1955.  Bringing the grand total of McDonald’s restaurants to 9.  He would go on to buy out the McDonald brothers (some would say unscrupulously).  Today there are over 30,000 stores worldwide.  In 2010 McDonald’s employed approximately 400,000 people.

Richard Branson started a magazine at 16.  He then sold records out of a church crypt at discount prices.  The beginning of Virgin Records.  In 1971 he opened a record store.  He launched a record label in 1972.  And a recording studio.  Signing the Sex Pistols.  And Culture Club.  In 1984 he formed an airline.  Virgin Atlantic Airways.  In 1999 he went into the cellular phone business.  Virgin Mobile.  In 2004 he founded Virgin Galactic.  To enter the space tourism business.  His Virgin Group now totals some 400 companies.  And employs about 50,000 people.

The Decline of Capitalism and the Rise of the Welfare State caused the European Sovereign Debt Crisis

And we could go on.  For every big corporation out there will have a similar beginning.  Corporations that use capital efficiently.  Bringing great things to market.  Introducing us to new things.  Always making our lives better.  And more comfortable.  One thing you will not find is a great success story like this starting in the Soviet Union.  The People’s Republic of China (back in the days of Mao Zedong).  East Germany (before the Berlin Wall fell).  North Korea.  Or Cuba.  No.  The command economies of communist countries basically froze in time.  Where there was no innovation.  No ideas brought to life.  Because the government kind of frowned on that sort of thing.

There is a reason why the West won the Cold War.  And why we won that war without the Warsaw Pack and NATO forces fighting World War III.  And why was this?  Because we didn’t need to.  For the communist world simply could not withstand the forces of living well in the West.  Whenever they could their people escaped to the West.  To escape their nasty, short and brutish lives.  In the command economies of their communist states.  Where the state planners failed to provide for their people.  Even failing to feed their people.  The Soviet Union, the People’s Republic of China and North Korea all suffered population reducing famines.  But not in the West.  Where we are not only well fed.  But our poor suffer from obesity.  Which is not a good thing.  But it sure beats dying in a famine.

Sadly, though, the West is moving towards the state planning of their one time communist foes.  Social democracies are pushing nations in the European Union to bankruptcy.  Japan’s generous welfare state is about to implode as an aging population begins to retire.  Even in the United States there has been a growth of government into the private sector economy like never before.  Which is causing the Great Recession to linger on.  As it caused Japan’s lost decade to become two decades.  And counting.  As it is prolonging the European sovereign debt crisis.  With no end in sight.  The cause of all their problems?  The decline of capitalism.  And the rise of the welfare state.  Which just kills the entrepreneurial spirit.  And the creation of jobs.  Which is one cure for all that ails these countries.  And the only one.  For only robust economic activity can pull a country out of recession.  And for that you need new jobs.  And the entrepreneurial spirit.  In short, you need capitalism.

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Marx, Lenin, Trotsky, Stalin and the Soviet Union

Posted by PITHOCRATES - February 18th, 2014

History 101

Marx called for a Dictatorship of the Proletariat where the Workers controlled the Means of Production

Karl Marx did not like capitalism.  Or middle class people that used money to make money.  The bourgeoisie.  Who exploit the working man.  The proletariat.  The bourgeoisie used their capital to exploit the labor of the working man (i.e., taking a risk and investing in land, factories, machinery, labor, etc.) to make money.  While the working man slaved away at slave wages creating all the great things we have in the world.  Of course, the proletariat could not do any of this unless others took risks and invested in land, factories, machinery, labor, etc.

This was just not fair to Karl Marx.  Because the industrial bourgeoisie had all the power.  And their exploitation of the proletariat was nothing more than a dictatorship of the bourgeoisie.  So Marx created a socio-economic philosophy to address this dictatorship.  Marxism.  And called for a social transformation.  For working men everywhere to unite.  And break the chains that bound them in the dictatorship of the bourgeoisie.  Calling for a dictatorship of the proletariat.  For the workers to control the means of production.  In a new system that replaced capitalism.  Socialism.  Until they could usher in the true ideal.  Communism.

In capitalism the bourgeoisie get rich creating neat things people discover and want to buy.  In communism there would be no bourgeoisie using the means of production to make a buck.  Instead, wise and selfless people would determine what was best for the people.  Instead of free markets allocating scarce resources economic planners would.  And they’d do it better.  Because they are selfless.  Creating large surpluses that would go not into some rich capitalist’s bank account.  But they would fairly distribute this surplus among the working class.  So society as a whole would be better off.  Sounds great.  But if the market didn’t make the decisions of what to produce who did?  As it turned out for Marxism that was a very difficult question to answer.

Leon Trotsky was a Like-Minded Marxist and the number two Communist behind Lenin

The Russian people were growing tired of World War I.  And Tsar Nicholas.  In fact they had it with the Russian Empire.  Even before World War I.  Although serfdom was abolished in 1861 the lives of peasants didn’t improve much.  There was still famine.  And the serfs had to pay a lot to their former landlords for their freedom.  So there was revolutionary fervor in the air.  And a few peasant uprisings.  As well as a few revolutionaries.  Such as Vladimir Ilyich Lenin.  Who was a Marxist.  His anti-Tsarist political activity got him arrested and exiled a few times.  In fact, during World War I he was living in exile in Switzerland.  Hoping that the Germans would weaken Tsarist Russia enough to kick off a socialist revolution in Russia.

When revolution did break out Lenin was anxious to return to Russia.  But being in Switzerland posed a problem.  It was surrounded by warring countries.  Lucky for him, though, the Germans were anxious to close the eastern front of the war.  And a little revolution in Russia could do just that.  So they transported Lenin through Germany and helped him return to Russia.  They travelled north.  Took a ferry to Sweden.  Then by train to Petrograd.  Formally Saint Petersburg (Peter the Great’s new capital on the Baltic Sea).  Which was later renamed Leningrad.  And then later renamed Saint Petersburg.  Where he would lead the Bolshevik Party.  And the world-wide socialist revolution against capitalism.

Leon Trotsky was a like-minded Marxist.  And an anti-militarist.  He had a falling out with Lenin but eventually reunited.  With Trotsky becoming the number two communist behind Lenin.  Trotsky addressed a problem with Marxism for Russia.  Socialism was to be the final step AFTER capitalism.  Once there was a strong industrial proletariat.  Russia didn’t have that.  For it was one of the least advanced countries in the world.  An agrarian nation barely out of the Middle Ages.  So Russia had to industrialize WHILE the proletariat took over the means of production.  Which brought up a big problem.  How could a backward nation industrialize while having a revolution?  How could they do this without other advanced capitalistic countries coming to the aid of the bourgeoisie?  Which Trotsky answered with his Permanent Revolution.  For the Russian socialist revolution to be successful there had to be socialist revolutions in other countries, too.  Thinking more in terms of a worldwide revolution of industrialized states.  And not just in Russia.  Something another Marxist disagreed with.  Joseph Stalin

Communist States have Guards on their Borders to prevent People from Escaping their Socialist Utopia

During these revolutionary times workers’ councils were appearing throughout the country.  Soviets.  Which helped stir up the revolutionary fervor.  In 1917 the imperial government fell.  The Bolsheviks killed the Tsar and his family.  And Russia fell into civil war.  Which the Bolsheviks won in 1922.  And formed the Soviet Union.  Or the Union of Soviet Socialist Republics (USSR).  That stretched from Eastern Europe to the Pacific Ocean.  Under the rule of Vladimir Ilyich Lenin.  Until he died in 1924.  Then Joseph Stalin took over after a brutal power struggle.  Even exiled Leon Trotsky.  And established totalitarian rule.  Stalin created a planned economy.  Rapid industrialization.  And collectivization.  As well as famines, forced labor, deportation and great purges of his political enemies.  To strengthen his one-party rule.  To protect the socialist revolution from a return of capitalism.

The Russian Revolution was the only successful socialist revolution in Europe.  The dictatorship of the proletariat did not happen as Lenin and Trotsky had envisioned.  So Stalin abandoned the idea of Permanent Revolution.  And adopted Socialism in One Country instead.  To strengthen the Soviet Union.  And not support a world-wide socialist revolution against capitalism.  In direct opposition of Trotsky.  To aid in the USSR’s industrialization Stalin made a pact with the devil.  Adolf Hitler.  And entered an economic agreement that would allow Hitler to build and test his war machine on Soviet soil that he would use in World War II.  Then came the Treaty of Non-aggression between Germany and the Union of Soviet Socialist Republics.  And the secret protocol.  Where Nazi Germany and the Soviet Union agreed to conquer and divvy up the countries located between them.

Trotsky did not like what the Soviet Union became under Stalin.  An oppressive dictatorship of Joseph Stalin.  Not the dictatorship of the proletariat envisioned by Karl Marx.  And he didn’t like that pact with a militarist Nazi Germany.  He predicted that Stalin’s USSR would not last.  Either suffering a political revolution like Tsar Nicholas suffered.  Or it would collapse into a capitalist state.  Stalin disagreed.  And killed him and his family.  Getting rid of the last of the old Bolsheviks.  Leaving him to rule uncontested until his death in 1953.  Exporting communism wherever he could.  Where it killed more people than any other ideology.  Until the great and brutal socialism experiment collapsed in 1991.  For Trotsky was right.  It could not survive when a better life was just across a border.  Which is why all of the communist states have guards on their borders.  To keep their people from escaping their socialist utopia.

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The Russian Empire

Posted by PITHOCRATES - February 11th, 2014

History 101

The Europeans built Larger Ships and used Advanced Navigational Skills to sail from Europe to the Far East

The Anatolian peninsula (roughly the area of modern day Turkey) has long been a trade crossroads.  It’s where the Black Sea (and the rivers into Europe and Russia) met the Mediterranean Sea.  It’s where Europe met Asia.  Where East met West.  All important long-distant trade traveled through the Anatolian peninsula.  Right through the Bosporus.  The straits between East and West.

The Greeks, the Persians, the Romans and the Ottoman Turks all coveted this region.  When the Western Roman Empire fell the great Italian city-states rose.  They dominated the Mediterranean.  And the trade through the Bosporus.  Where the Silk Road for centuries brought riches from the Far East into Europe.  The Italian merchant banks controlled that trade.  Until the Eastern Roman Empire (the Byzantine Empire) fell to the Ottoman Turks.  Which, lucky for the Europeans, happened at the time of the Renaissance.  Bringing an end to the Middle Ages.  And ushering in the modern era.

It started in Italy.  And then spread into Europe.  A rebirth (hence Renaissance) of all that Greek learning.  Which shifted the trading center from the eastern Mediterranean to Europe.  Where the Europeans built larger ships and used advanced navigational skills to sail from Europe to the Far East.  Bypassing the Silk Road.  And the Ottoman Turks in the Anatolian peninsula.  Making the Europeans the new rich traders.  Knowledge and wealth created more ships for trade.  And advanced armies and navies.  Making the Europeans the masters of the world.

Peter the Great pulled Russia out of the Middle Ages by making it more European

While the Mediterranean and European nations were ushering in the modern world not all of Asia followed them.  Russia in particular remained in the Middle Ages.  A vast land full of disparate peoples.  Not a unique and singular Russian people.  Until Ivan the Terrible came along.  The Grand Prince of Moscow from 1533 to 1547.  Then Tsar of All the Russians.  Ivan the Terrible united Russia by conquering it.  But at a cost.  Continuous wars killed a lot of Russian people.  Which left a lot of farmland fallow.  Giving Russia a chronic problem they would have for centuries.  The struggle to feed themselves.

Tsar Peter the Great (1682 – 1725) modernized Russia.  To be a more modern country like those in Europe.  He even went to Europe incognito to learn as much as he could about advanced European ways.  And had Europeans help him pull Russia out of the Middle Ages.  He made his army to be like European armies.  Learned about shipbuilding.  And built a Russian navy.  Which was a problem as the only access to the sea Russia had was the Arctic Ocean via the White Sea.  Which meant, of course, war and conquest.  He fought the Swedes for access to the Baltic Sea.  And he fought the Ottoman Turks for access to the Black Sea.

The disparate people of Russia were not all that happy with his ideas or the money he spent.  So he brutally suppressed any discontent.  Peter built his navy.  And a new capital on the Baltic Sea.  Saint Petersburg.  A European cultural center.  And the Imperial capital of Russia.  He also attacked the Ottoman Empire.  And lost.  Losing his Black Sea ports.  But Russia would return to fight the Ottoman Turks.  Under Catherine the Great.

The Bolsheviks killed Tsar Nicholas and his Family and ushered in the Oppressive Soviet Union

Catherine the Great ruled during Russia’s Golden Age.  Continuing the work started by Peter the Great to modernize Russia.  Making Russia a great European power.  Through military conquest.  And diplomacy.  She was even an international mediator.  And established the League of Armed Neutrality to protect neutral shipping from British attacks during the American Revolutionary War.

Catherine pushed Russia’s borders out largely at the expense of the Ottoman Empire.  And the Polish–Lithuanian Commonwealth.  These conquests cost, though.  And she turned to the nobility to pay for them.  In return she supported the nobility.  But the wealth she got form the nobility came from the serfs (basically slave laborers) working their land.  Which took a lot of work to pay for her conquests.  Leading to a peasant uprising or two.  But serfdom would continue in Russia.  Tsar Alexander I advanced the status of Russia with his defeat of Napoleon.  They even called him the Savior of Europe.  But serfdom remained as the Industrial Revolution took off in Europe.  Halting the modernization of Russia.

Tsar Alexander II emancipated the serfs in 1861.  Ending the landed aristocracy’s monopoly of power.  Serfs left their lands.  And moved into the cities.  Selling their labor.  Industrializing Russia.  Still, their freedom favored the landed aristocracy.  Who were compensated for their serfs’ freedom with a tax paid by the freed serfs.  Which little improved the life of the freed serfs.  And did little to ease the revolutionary fervor long simmering in the Russian people.  Especially those outside the nobility.

When Tsar Nicholas II entered Russia into World War I things did not go well for Russia.  Military losses, food shortages, fuel shortages, inflation and striking factory workers made the nation ripe for revolution.  Tsar Nicholas went off to command the Russian Army personally.  Leaving his wife Alexandra to run the country in his absence.  Who turned to Grigori Rasputin for help.  Which didn’t help quell the revolutionary fervor simmering in the Russian people.  They didn’t like Rasputin.  Or the Tsar.  And made Tsar Nicholas the last emperor of the Russian Empire.  Which the Bolsheviks made permanent.  By killing Nicholas and his entire family.  Which ultimately ushered in the Soviet Union.  One of the most oppressive regimes of all time.

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