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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The Poor Economic Model of Passenger Rail

Posted by PITHOCRATES - November 25th, 2013

Economics 101

The Amtrak Crescent is about a 1,300 Mile 30 Hour Trip between New Orleans and New York City

An Amtrak train derailed this morning west of Spartanburg, South Carolina.  Thankfully, the cars remained upright.  And no one was seriously injured (see Amtrak Crescent with 218 aboard derails in SC by AP posted 11/25/2013 on Yahoo! News).

There were no serious injuries, Amtrak said of the 207 passengers and 11 crew members aboard when the cars derailed shortly after midnight in the countryside on a frosty night with 20-degree readings from a cold front sweeping the Southeast.

This is the Amtrak Crescent.  About a 30 hour trip one way.  It runs between New Orleans and New York City.  Approximately 1,300 miles of track.  Not Amtrak track.  They just lease track rights from other railroads.  Freight railroads.  Railroads that can make a profit.  Which is hard to do on a train traveling 1,300 miles with only 207 revenue-paying passengers.

People may board and leave the train throughout this route.  But if we assume the average for this whole trip was 207 and they were onboard from New Orleans to New York City we can get some revenue numbers from the Amtrak website.   We’ll assume a roundtrip.  They each have to pay for a seat which runs approximately $294.  Being that this is a long trip we’ll assume 20 of these people also paid an additional $572 for a room with a bed and a private toilet.  Bringing the total revenue for this train to approximately $72,298.  Not too shabby.  Now let’s look at the costs of this train.

Diesel Trains consume about 3-4 Gallons of Fuel per Mile

If you search online for track costs you will find a few figures.  All of them very costly.  We’ll assume new track costs approximately $1.3 million per mile of track.  This includes land.  Rights of way.  Grading.  Bridges.  Ballast.  Ties.  Rail.  Switches.  Signals.  Etc.  So for 1,300 miles that comes to $1.69 billion.  Track and ties take a beating and have to be replaced often.  Let’s say they replace this track every 7 years.  So that’s an annual depreciation cost of $241 million.  Or $663,265 per day.  Assuming 12 trains travel this rail each day that comes to about $55,272 per train.

Once built they have to maintain it.  Which includes replacing worn out rail and ties.  Repairing washouts.  Repairing track, switches and signals vandalized or damaged in train derailments and accidents.  This work is ongoing every day.  For there are always sections of the road under repair.  It’s not as costly as building new track but it is costly.  And comes to approximately $300,000 per mile.  For the 1,300 miles of track between New Orleans and New York City the annual maintenance costs come to $390 million.  Or $1 million per day.  Assuming 12 trains travel this rail each day that comes to about $89,286 per train.

Diesel trains consume about 3-4 gallons of fuel per mile.  Because passenger trains are lighter than freight trains we’ll assume a fuel consumption of 3 gallons per mile.  For a 1,300 mile trip that comes to 3,900 gallons of diesel.  Assuming a diesel price of $3 per gallon the fuel costs for this trip comes to $11,700.  The train had a crew of 11.  Assuming an annual payroll for engineer, conductor, porter, food service, etc., the crew costs are approximately $705,000.  Or approximately $1,937 per day.  Finally, trains don’t have steering wheels.  They are carefully dispatched through blocks from New Orleans all the way to New York.  Safely keeping one train in one block at a time.  Assuming the annual payroll for all the people along the way that safely route traffic comes to about $1 million.  Adding another $2,967 per day.

Politicians love High-Speed Rail because it’s like National Health Care on Wheels

If you add all of this up the cost of the Amtrak Crescent one way is approximately $161,162.  If we subtract this from half of the roundtrip revenue (to match the one-way costs) we get a loss of $88,864.  So the losses are greater than the fare charged the travelling public.  And this with the freight railroads picking up the bulk of the overhead.  Which is why Amtrak cannot survive without government subsidies.  Too few trains are travelling with too few people aboard.  If Amtrak charged enough just to break even on the Crescent they would raise the single seat price from $294 to $723.  An increase of 146%.

Of course Amtrak can’t charge these prices.  Traveling by train is a great and unique experience.  But is it worth paying 80% more for a trip that takes over 7 times as long as flying?  That is a steep premium to pay.  And one only the most avid and rich train enthusiast will likely pay.  Which begs the question why are we subsidizing passenger rail when it’s such a poor economic model that there is no private passenger rail?  Because of all those costs.  Congress loves spending money.  And they love making a lot of costly jobs.  And that’s one thing railroads offer.  Lots of costly jobs.  For it takes a lot of people to build, maintain and operate a railroad.

Which is why all politicians want to build high-speed rail.  For it doesn’t get more costly than that.  These are dedicated roads.  And they’re electric.  Which makes the infrastructure the most costly of all rail.  Because of the high speeds there are no grade crossings.  Crossing traffic goes under.  Or over.  But never across.  And they don’t share the road with anyone.  There are no profitable freight trains running on high-speed lines to share the costs.  No.  Fewer trains must cover greater costs.  Making the losses greater.  And the subsidies higher.  Which is why politicians love high-speed rail.  It’s like national health care on wheels.

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

Posted by PITHOCRATES - July 30th, 2013

History 101

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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Saint-Domingue Slave Rebellion, Great Migration and 1967 Detroit Race Riot

Posted by PITHOCRATES - July 23rd, 2013

History 101

The Brutal Slave Rebellion on Saint-Domingue created Haiti and opened the Door to the American West

Haiti was born from a slave rebellion.  Inspired by the French Revolution, which was inspired by the American Revolution, the slaves on Saint-Domingue could taste the liberty in the air.  The slaves outnumbered the whites on the island.  And when they rose in rebellion in 1791 their white overlords were powerless to stop them.  The slaves massacred the white planters.  Those lucky enough to survive fled the island.  The French tried to reestablish control.  Then they went to war again against the British.  Which complicated matters.  And led to a British invasion of Saint-Domingue.

Toussaint Louverture, a former slave, and educated, eventually led the now former slaves to victory.  And won the peace.  He invited the planters back.  Replaced slave-labor with paid-labor.  Reestablished trade with Great Britain.  And the new United States.  While the French did away with slavery in their colonial possessions.  For a while.  During the convulsions going on in France following the French Revolution there were many changes in government.  And the government in 1802 lent a sympathetic ear to the former white planters who wanted their plantations back.  And their slaves.  Napoléon Bonaparte, interested in reestablishing New France in North America, sent a military force to take back Saint-Domingue.  Who captured and sent Toussaint Louverture back to France.  But things did not go well for the French.

Jean-Jacques Dessalines continued the fight in Louverture’s place.  A determined enemy, and Yellow Fever, were too much for the French.  They pulled out their remaining soldiers.  Gave up on Saint-Domingue.  And on New France in North America.  Causing another exodus from the island.  And if you ever wonder why New Orleans is so French this is why.  A lot of those fleeing Haiti settled in New Orleans.  Doubling the city’s population.  Needing money to continue the war against Great Britain Napoléon offered to sell the Louisiana Territory, the thick center part of the United States between Texas and Canada, to Thomas Jefferson.  And did.  So the brutal slave rebellion on Saint-Domingue not only created Haiti.  It gave the Americans the Mississippi River and its tributaries.  The Mississippi Valley.  The Great Plains.  And opened the door to the West.

The Great Migration brought some 6 Million Blacks from the Rural South to Northern Factories

But that brutal slave rebellion did something else.  It made the southern planters nervous.  Over half of the 40,000 white colonists were killed during that slave rebellion.  A fact that weighed heavily on the minds of the highly outnumbered white planter class in the South.  Who lived in fear of a similar slave rebellion happening in the United States.  Which lead to a more oppressive control over their slaves.  So they could snuff out any rebellion at the first sign of trouble.  And there was a reversal of policy.  The Founding Fathers had shelved the issue of slavery for 20 years to get the South to join the new nation.  Believing that the institution of slavery would die out on its own.  And in the following two decades some slave owners were freeing a slave or two.  But that all stopped following the revolution in Saint-Domingue.  When the life of a slave went from bad to worse.  For the last thing the white planter class needed was a Toussaint Louverture in their midst.

By the time of the American Civil War the slave population had grown much larger.  Which added another element to the Civil War.  Especially for the South.  The North was fighting for a noble purpose.  To free the slaves.  And fulfilling the declaration that all men were created equal in the Declaration of Independence.  But what then?  What happens after the North wins the Civil War?  And they free the slaves?  Where are the slaves going to go?  Back to Africa?  Even the ones who have no idea what or where Africa was?  Having been born and raised in the United States?  No.  They weren’t.  They were going to remain in the South.  Nothing would change in the North.  But life in the South would be changed into something that just didn’t exist.  A biracial society.  Worse, this was going to be a biracial society where the majority was once brutally oppressed by the minority.  Thanks in large part to the slave rebellion on Saint-Domingue.

With this backdrop the odds for a peaceful reconstruction were slim.  The South did not adjust well to the new reality.  There were fears.  Anger.  And the old prejudices.  While in the North life went on as it always did.  Predominantly white.  And industrializing.  Creating more and more factory jobs.  That drew immigrants to the industrial north.  As it drew southern blacks.  Leading up to the Great Migration.  From 1910-1930.  Pausing during the Great Depression and World War II.  And picking up again from 1940-1970.  When some 6 million blacks left the rural south.  And headed to the jobs in the big cities in the Northeast.  The Midwest.  And the West.  Working and living in the big cities.  Like Detroit.

The 1967 Detroit Race Riot accelerated the White Flight from the City which decimated the Tax Base

Detroit dominated following the post-war period.  It was an economic powerhouse.  Thanks to a booming automotive industry.  And a war-torn Europe and Asia.  Whose industrial capacity suffered greatly from Allied bombing.  Leaving the motor city the auto capital of the world.  And making Detroit one of the richest cities in the nation.  With their population peaking in 1950.  As people came to the city for those manufacturing jobs.  But the housing did not keep up with the growth in population.  Blacks and immigrants often faced discrimination.  Getting the worst jobs.  And the worst housing.  Things that changed in the Sixties.  Thanks in large part to a shift of the auto industry out of Detroit.

Following World War II Packard, Hudson, and Studebaker went out of business.  And the Big Three went on a building spree.  In the suburbs.  And a lot of white Detroiters followed them.  Relieving the housing pressure a little.  Allowing a black middle class to grow.  But the suburbs kept growing.  As businesses moved their jobs to the suburbs that were a little more business friendly.  With sprawling spaces for new factories.  And a brand new interstate highway system to easily ship material and parts from one to another.  The same interstate highway system that converged four expressways in the city of Detroit.  Destroying a lot of neighborhoods.  Which were predominantly black.

Many of those displaced people moved to the 12th Street area.  An area that become twice as crowded as the city average.  Unemployment was rising.  As was crime.  Including prostitution.  Where white johns were coming to the neighborhood to solicit black prostitutes.  A big complaint of the black community.  So the police cracked down on prostitution.  And a black prostitute ended up dead.  The people blamed the cops.  The cops blamed a pimp.  Tensions were rising.  Then on July 23, 1967, the police raided a blind pig.  An unlicensed after-hours bar.  On the corner of 12th Street and Clairmount.  Where a party of some 80 people were celebrating the return of two soldiers just back home from the Vietnam War.  The cops arrested them all.  While they were waiting for the paddy wagon to take them away a crowd formed outside.  Someone threw a bottle at a cop.  And thus began the 1967 Detroit race riot.  Which only accelerated the white flight from Detroit.  Caused an exodus of jobs, too.  As businesses fled the city.  Which just decimated the tax base.  Accelerating the urban decay.  Soon the black middle class followed the whites.  In pursuit of those jobs.  And to escape the dying city.  Which it did in 2013.  Die.  Figuratively.  By filing the largest municipal bankruptcy in U.S. history.

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Superstorm Sandy Recovery Slower in Less Affluent Areas where People Feel Abandoned

Posted by PITHOCRATES - November 4th, 2012

Week in Review

After George W. Bush used his special secret powers to steer Hurricane Katrina into New Orleans and then blew up the levees protecting the city because he hated poor minorities (that’s what some on the Left believe), the media attacked him for the federal response.  Nothing was done fast enough.  Or good enough.  And the reason was because George W. Bush hasted poor minorities.  But many have placed a lot of blame on the mayor and governor.  For not following New Orleans’ evacuation plan.  Especially the mayor for waiting so long to give the evacuation order.  Probably few will ever be satisfied with placing the blame for the aftermath of Katrina.  For they could have done a lot of things better.

Katrina is past history.  A tragedy.  But a learning opportunity.  After that experience all levels of government should be able to operate as a finely oiled machine to bring quick relief to anyone suffering a Katrina-like event.  And now we’ve had one.  Hurricane Sandy (or Superstorm Sandy).  So how is the Sandy aftermath going?  Well, if you read some reports, you’d think you were reading about Katrina again (see ‘This is our Katrina’: Misery for 2.5 million STILL without power after six days as lawlessness and fear take over New York’s outer boroughs by Rachel Rickard Straus and Snejana Farberov posted 11/3/2012 on the Daily Mail).

Almost one week after superstorm Sandy struck the East Coast with its ferocious force, power was still out to some 2.5 million customers due to damages, down from 3.5 million on Friday, the U.S. Department of Energy’s Office of Electricity Delivery & Energy Reliability claimed.

The state with the largest number of outages by far is still New Jersey with 32 percent of customers without power, it said it a report.

And as the lights begin to flicker on in Lower Manhattan, nine percent of customers across the state of New York still do not have power, followed by seven percent in Connecticut.

This comes as residents of the Rockaways in Queens continued to struggle without power, heat or food for a sixth day as their neighborhood slowly descended into chaos.

‘It’s chaos; it’s pandemonium out here,’ said Chris Damon, who had been waiting for 3.5 hours at the site and had circled the block five times. “It seems like nobody has any answers.”

Added Damon: ‘I feel like a victim of Hurricane Katrina. I never thought it could happen here in New York, but it’s happened.’

With little police presence on the storm-ravaged streets, many residents of the peninsula have been forced to take their protection into their own hands, arming themselves with guns, baseball bats and even bows and arrows to ward off thugs seeking to loot their homes…

City Councilman James Sanders said he fears that things are going to get even worse.

‘We have an explosive mix here,’ he said. ‘People will take matters into their own hands.’

Sanders has directed much of his anger and frustration at LIPA, calling on the City Council to investigate the utility for ignoring the Rockaways for so long.

‘LIPA has failed the people of the Rockaways,’ he said. ‘It’s a question of class… serving the richer areas of Long Island and ignoring the Rockaways…’

Stranded neighbors largely have been relying on volunteers delivering food, water and other basic necessities while the Red Cross and FEMA were still nowhere in sight…

In a Coney Island apartment block, where tenants huddle together in one room and human waste spills out of the toilet, tenant Jeffery Francis despairs that help is not getting to Brooklyn faster.

We are scavenging for food like animals,’ he told the New York Daily News. ‘We are in a crisis and no one will help us. Look at us. We are misery. Everyone cares about Manhattan. No one is looking out for us. Nothing…’

While power is likely to be returned to Manhattan’s East and West Villages, Financial District, Chelsea, Chinatown and the Lower East Side by the weekend, according to the power company Con Edison outages in Brooklyn, Queens and Staten Island are not expected to be repaired for another week.

Across Staten Island residents are also increasingly frustrated they are being passed over while other parts of New York and New Jersey receive aid and attention…

For power companies, the scale of the destruction was unmatched – more widespread than any blizzard or ice storm and worse than the aftermath of Hurricane Katrina.

‘It’s unprecedented: fallen trees, debris, the roads, water, snow. It’s a little bit of everything,’ said Brian Wolff, senior vice president of the Edison Electric Institute, a group that lobbies for utilities.

Initially, about 60 million people were without power in 8.2 million homes and businesses.

By Wednesday night, that number had fallen to roughly 44 million people in 6 million households and businesses and today around 3.6 million are without power.

Manhattan and Long Island getting power before the less affluent areas hit by the storm?  That sounds like what the Left claimed the Bush administration was doing in New Orleans.  Now either President Obama hates poor minorities, too.  Or neither he nor George W. Bush hate poor minorities.  More likely the Democrat-friendly media reported every New Orleans failing because they hated George W. Bush.  While they will make no such claims in the Sandy aftermath because they love President Obama.

It would probably be better to have a Republican in the White House during the Sandy recovery.  Because the media would be relentless attacking the administration for every misstep.  While a lesser federal effort under a Democrat administration will get a more positive treatment in the media.  So there would be more urgency under a Republican administration to help people than there would be under a Democrat administration.  Especially poor people and minorities.  Who the Left says Republicans hate.  Especially when this is happening a week before an election.

Had Sandy happened with George W. Bush in office running for reelection they would have excoriated him for hitting the campaign trail.  For not expending every last effort in the recovery process.  It would have been just like Katrina.  But President Obama can hit the campaign trail.  For he walked New Jersey with Governor Christie.  And that was enough.  Of course the people in Brooklyn, Queens, Staten Island, New Jersey and in the other areas struggling to recover from Sandy probably want more.  Especially when they see the lights coming on in Manhattan when they have no power, food or heat.  And have to defend themselves from roving mobs of looters.

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Mercantilism, North America, Pontiac’s Rebellion, American Revolution, Northwest Territory, George Rogers Clark, Louisiana Territory

Posted by PITHOCRATES - May 31st, 2012

Politics 101

The French claimed great Territories in the New World but they did not Settle them nor could they Defend Them

In the Age of Discovery the Old World discovered the New World.  The Portuguese bumped into Brazil while sailing around Africa.  And they stayed awhile.  Which explains how the language from tiny Portugal is one of the top ten spoken languages in the world today.  Because of Brazil.  Population 205,716,890 in 2012.  The Spanish pretty much discovered and settled the rest of South and Central America.  Working their way up the Pacific coast of North America.  And into Mexico, Texas and Florida.  Because of this Spanish is now the 4th most spoken language in the world.  The British discovered and settled North America east of the Appalachians between Maine and Georgia.  They also settled parts of Canada south of the Hudson Bay.  And some of the Maritime Provinces.  Today English is the 2nd most spoken language in the world.  The French also came to the New World.  But they weren’t as successful.  Today French is only the 10th most spoken language in the world.

The Age of Discovery was also the age of mercantilism.  Which is why the Old World was racing to settle the New World.  So they could establish colonies.  And ship back raw materials to the mother country.  And in Spain’s case, all the gold and silver they could find.  Which they found a lot of.  Mercantilism is a zero-sum game.  To maximize the export of manufactured goods.  And to maximize the import of raw materials and bullion.  To always maintain a positive balance of trade.  And whoever had the most overseas colonies sending raw material back to the mother country won.  And as they expanded throughout the New World they eventually began to bump into each other.  As well as the Native Americans.  Who weren’t mercantilists.  But hunters and gatherers.  Like all Europeans were some 5,000 years or so earlier.  Before they became farmers.  Moved into cities.  Where they took control of their environment.  And became more efficient.  Growing ever larger populations on smaller tracts of land.  Which proved to be a great threat to the Indians.  For when these Europeans took their land they also increased their numbers.  Greatly.  And this fast growing population had the latest in war-fighting technology.

Soon they were stepping on each others’ toes in the New World.  The British and the Spanish north of Florida.  The British and the French between the Mississippi River and the Appalachians.  In New Brunswick.  And large parts of Ontario and Quebec.  A lot more territory was in dispute between the British and the French.  And that’s because the French claimed so much territory in North America.  Their claims included the lands around the St. Lawrence Seaway.  All the land around the Great Lakes.  And pretty much the total watershed into the Mississippi River.  The French had profitable business in the fur trade.  They used the rivers in North America for that trade.  With a few forts scattered along the way.  Where they traded with the Indians.  But the big difference between the French and everyone else is that the French claimed the land.  But they didn’t settle it.  Which made the Native Americans tolerate them more than the other Europeans in the New World.  But in the days of the mercantilist empires that was a problem.  Because everyone wanted everyone else’s land.  And if it wasn’t settled with large and growing populations, someone else was just going to take it.

The Proclamation of 1763 and the Quebec Act of 1774 tried to make Peace with the Indians but Inflamed the Americans

And that’s what happened in the French and Indian War (1754–1763).  The European powers came into conflict with each other over their North American territories.  The British came out the big winners.  And the French were the big losers.  Losing pretty much everything east of the Mississippi to the British.  And everything west of the Mississippi to Spain.  The various Indian tribes fought alongside the various European powers.  But it is the fighting on the side of the French that we know them for in this war.  Where their fighting against the British Americans was some of the cruelest fighting in the war.  For the Indians liked the non-settling ways of the French.  While they didn’t care for the settling ways of the American colonists at all.  Who kept encroaching on their hunting grounds.  So at the conclusion of the French and Indian War the Native Americans were restless.  Something the British were keenly aware of.  And after the long and expensive war they just fought they didn’t want a return to hostilities.  So King George III issued the Royal Proclamation of 1763.  Setting the border between the British American colonists and the Indian lands along the watershed of Appalachia.  Lands where the rivers flowed to the Atlantic Ocean were the American colonists’ lands.  Lands where the rivers flowed into the Mississippi River and its tributaries (east of the Mississippi) were Indian lands. 

This did not go very well with the American colonists.  For they planned to expand west until they could expand west no further.  At the shore of the Pacific Ocean.  Especially Virginia.  Who wanted to expand into Kentucky.  And into the Ohio Country (across the Ohio River from Kentucky).  Before the Proclamation of 1763 could even go into affect the Indians rose up in the Great Lakes region, the Illinois Country and Ohio Country.  Where the British displaced the French.  Pontiac’s Rebellion (1763–66).  A rather nasty and brutal war where the Indians killed women and children as well as prisoners.  And the British used biological warfare against the Indians.  Giving the Indians smallpox-infested blankets.  In 1774 Parliament passed the Quebec Act.  Which did a lot to further annoy the American colonists.  Especially that part about extending the province of Quebec (the former French territory from Labrador all the way to the Great Lakes region) south into the Ohio and Illinois country.  Many lumped the Quebec act in with the Intolerable Acts of 1774 which were to punish the colonists for the Boston Tea Party.  All these acts of Parliament and proclamations of the Crown failed in one of their main objects.  Maintaining the peace on the frontier.  One year later there was another shooting war in North America.  And this one did not end well for the British.

The American Revolutionary War evolved into a World War.  Once the Americans defeated a British army at Saratoga the French joined the American cause and declared war on Great Britain.  Eager to get back their North American territories.  The Spanish would join the French in alliance and declared war on Great Britain.  Primarily to settle some old scores in the Old World as opposed to helping the American cause.  They had the lands west of the Mississippi and control of that same river.  They had no desire to see the Americans advance any further west.  In fact, they wanted to expand their territory at the expense of both the Americans and the British.  The Indians, meanwhile, saw the Americans as the greatest threat and allied with their two-time past enemy.  The British.

The Indians were Little More than Bystanders while the Europeans Traded their Land with each Other

The war in the frontier lands of the West was as nasty and brutal as ever.  The British coordinated their war effort against the Americans from their frontier outposts.  Where they traded with their Indian allies.  Some even paying the Indians for each scalp they brought back from their raids.  And so the Indians crossed the Ohio River into Kentucky.  Throughout the war.  And attacked these frontier settlements.  While the Americans fought a defensive war.  Until one man arose.  Who believed the strongest defense was a strong offense.  And he took the war to the Indians and the British in the West.  Saving Kentucky.  And conquered the Northwest Territory. 

George Rogers Clark’s plan for conquering the Northwest was bold.  First take Vincennes (in southern Indiana near the Illinois border).  Travel up the Wabash River.  Down the Maumee River.  And then on to Detroit.  After taking Detroit head north to Michilimackinac (on the northern tip of Michigan’s Lower Peninsula).  The Virginian authorities liked the plan.  And commissioned him colonel in the Virginian forces.  And authorized him to conquer the Northwest.  For Virginia.  So Clark led his men down the Ohio River.  And traveled all the way to Kaskaskia near the Mississippi River in southern Illinois.  Not far from St. Louis.  Took it.  And marched to Vincennes.  And took Fort Sackville at Vincennes.  Shortly thereafter Henry Hamilton (who had a reputation for buying scalps from the Indians), governor of Detroit, Left Detroit and headed to Vincennes.  Gathering Indians along the way.  Recaptured Vincennes.  Then Clark returned and in one of the most fabled actions of the entire Revolutionary War took back Vincennes.  Despite the British and Indians greatly outnumbering Clark’s force.  Detroit lay open.  But Clark did not have the men or provisions for that conquest.

Meanwhile the Spanish were looking to cash in on their alliance with France.  And moved against British outposts from New Orleans.  Taking Baton Rouge.  Natchez.  Mobile.  And Pensacola.  To turn back the Spanish Governor Sinclair of Michilimackinac gathered a force and headed to the Spanish outpost St. Louis.  With the ultimate goal of taking New Orleans.  It did not go well.  The following year the Spanish launched an offensive of their own to take Detroit.  They got as far as St. Joseph on the other side of Michigan’s Lower Peninsula.  Around the bottom of Lake Michigan from Chicago.  A lot of land changed hands in the Northwest.  But thanks to Clark much of it remained in American hands at the end of the war.  Who came out the big winners in this war.  The British ceded all their claims east of the Mississippi to the Americans.  Including all of the Illinois and Ohio country.  Including Michigan and the lands surrounding the Great Lakes south of Canada.  The French did not drive the peace as they had hoped.  And recovered none of their North American territories.  The Spanish emerged with pretty much what they had when they entered.  Only with the Americans across the Mississippi instead of the British.  Who were much more interested in westward expansion than the British.  But they didn’t have to worry about the Americans crossing the Mississippi.  For Napoleon strong-armed the Louisiana Territory from the French in exchange for some land in Tuscany.  Who would later sell it to the Americans.  While being rather vague on the exact boundaries.  Which the Spanish would have to worry about in the years to come as the Americans headed west.  Towards Spanish country on the west coast.

Of course the Indians were the greatest losers.  For they were little more than bystanders while the Europeans traded their land with each other.  Making the Native Americans ever more restless.  And unwilling to give up their hunting and gathering ways.  Which sealed their faith.  For while they retreated west the American population exploded.  Due to their efficient use of the land.  It was the New World against the Very Old World.  Modern farming civilizations displaced the hunters and gatherers everywhere in the world.  A trend that started some 5,000 years earlier.  And the history of North America would be no different.  The Indian ways since then have been fast disappearing.  The Indian languages were so rarely spoken in the 20th century that the code based on it was the one code the Japanese couldn’t crack during World War II.

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Benjamin Franklin, John Adams, Silas Deane, Arthur Lee, John Jay, Mississippi River and Dutch Treaty of Commerce and Friendship

Posted by PITHOCRATES - May 17th, 2012

Politics 101

Franklin spent a Great Deal of Time in France during the Revolution enjoying Social Gatherings and Social Drinking

People are disgusted by politics today.  Negative campaigns.  Personal attacks.  Special interests.  People using their public office for personal gain.  Scandals.  Intrigue.  It’s enough to turn anyone off of politics.  Forever.  For it seems like no matter what the politicians say nothing ever changes.  And you know what?  They haven’t changed.  For even before there was a United States of America this stuff was going on.  Even threatening the success of the American Revolutionary War.

George Washington is criticized for many things.  For owning slaves (which he released and trained to enter the workforce as free men in his will).  That he wasn’t a great general.  For he did lose more battles than he won.  But even his critics have to give him this at least.  He was a man of honor.  With impeccable integrity.  His men respected him.  His officers respected him.  His enemies respected him.  One of Britain’s last attempts of treachery was to try and bribe Washington to defect to the British side.  Where he could live out his life very comfortably.  Knowing the Americans would give up without him.  But he did not waiver.  Resolute to the end.  The indispensable one.  The Father of our Country. 

Sadly, though, there weren’t many indispensable ones.  And few that matched Washington’s stature.  Perhaps the one coming closest was Benjamin Franklin.  Our most respected diplomat.  Who played a large part in gaining French support for the American cause.  Franklin spent a great deal of time in France during the Revolution.  The French loved him.  And he loved his time there.  Perhaps a little too much.  Staying up late.  Getting up late.  Enjoying social gatherings.  And social drinking.  Something that John Adams couldn’t stand.  Who was very religious.  And all-business.  About as different from Franklin as you could get.  But the French liked Franklin.  And did not like Adams.  Because he was all-business.  And a bit insufferable.

It didn’t take a Genius to know that the Americans Planned on Moving West to the Mississippi River and Beyond

France was America’s most important ally during the war.  And technically speaking their only ally.  There were many foreigners who sought a commission in the American army.  But that was more for glory and fame than support of the cause.  France, though, entered into treaty with the independent United States.  And supplied a large part of the war effort in both money and arms.  Granted this was more to get back at their archenemy, the British, than it was to help the Americans.  But the love and respect for Franklin was real.

Franklin was a self-made man living his third life.  He was a small business owner and writer.  He was a scientist.  And now he was a diplomat.  He had little to prove.  And needed no money.  All he wanted was to enjoy what life he had left.  And champion the American cause.  Not so with his co-emissary Arthur Lee.  Whose interests centered more on Arthur Lee than the American cause.  He didn’t like Franklin because the French liked and respected him more.  And he didn’t like America’s other emissary, Silas Deane, who was in France before Franklin and Lee joined him.  And who the French liked and respected, too.  Which really annoyed him because the French didn’t like him at all.  In fact they thought Lee liked England just a little too much.  For he had a brother in England.  Which didn’t go over well with the French.  Despite his having two brothers in the Continental Congress you just didn’t know where his allegiance lay.  Lee aggressively tried to disgrace both Deane and Franklin to make his star shine brighter.  Franklin’s character was impeccable, though.  No one believed anything he said about Franklin.  But, alas, they did about poor Deane.  At least enough to recall him to Congress.  The French, though, respected Deane enough to give him safe passage back on a French warship with the new French minister to America.  This whole episode did little to impress upon the French the professional stature of American diplomacy.   Nor did it impress the other European courts.  America just wasn’t being taken seriously in Europe.

Except, perhaps, in Spain.  John Jay went to Madrid to get Spanish recognition.  And Spanish aid.  Getting little of either.  Spain entered the conflict.  As an ally to France, though.  Because they, too, hated the British.  And they used this opportunity to get Gibraltar back from the British.  (They didn’t.)  Other than that they had little interest in helping the Americans.  For they didn’t trust the Americans.  France may have lost all of their North American possessions to the British but they hadn’t.  They still had the Louisiana Territory.  Western Florida.  The land from the Texas Gulf coast to California.  As well as the port of New Orleans.  And control of the lower Mississippi River.  Which the Americans wanted navigation rights on.  And god knows what else.  For it was no secret that the Americans wanted to expand west.  That’s why they wanted the Ohio country.  And the Ohio River flowed into the Mississippi River.  It didn’t take a genius to know what that meant.  The Americans planned on moving west to the Mississippi River.  And beyond.  Using the Mississippi to ship all of their goods from the interior of the country to the Port of New Orleans.  And on to the world.  All they needed to do was to remove one last obstacle.  The Spanish.  And the Spanish grew weary of John Jay.  Who only wanted two things.  To get Spain to recognize their independence.  And for Spain to give them money.  Suffice it to say the Spanish did not enter into an alliance with the United States.  And gave little money.

Catherine the Great’s League of Armed Neutrality isolated Britain and helped Adams in the Netherlands

Meanwhile John Adams, having annoyed the French, headed to the Netherlands.  And was more successful.  Not so much because they supported the American cause but because of their commerce.  The Dutch and the British had been bitter rivals.  The Dutch East (and West) India Company.  The English East India Company.  They both wanted what the other had.  Commerce.  They would actually go to war over this trade.  Some 4 times.  And now the British were interfering with their trade once again.  Interfering with their lucrative black market trade from the Dutch West Indies to the United States.  Through the British blockade.  Which may have broken a treaty they had with the British.  So Adams found commercial incentive for Dutch support.  But what he didn’t find was Dutch respect for the American cause.  And a general ignorance of the American cause.  There was just little information about the United States in the Netherlands.

They did see a rising commercial power in the U.S.  That would have a lot of food and materials to ship.  And being good businessmen they wanted a piece of that action.  And they certainly didn’t want to see the French and Spanish monopolize that trade.  Which could happen based on the treaty between France and America.  And the treaty between France and Spain.  Of course if they backed the wrong horse that could hurt them in post-war relations with Britain.  Should Britain win.  But neither was it in their best interests for Britain to win.  For that would only make their greatest rival stronger.  But what if the Americans won with the help of the Franco-Spanish alliance?  Would the Americans keep their independence?  Or would they get absorbed into France and/or Spain?  That wouldn’t be good.  For it wasn’t that long ago that they won their independence from Spain.  So making Spain stronger and/or richer wasn’t high in their to-do list. 

Catherine the Great of Russia finally helped push the issue.  Indirectly.  To keep the seas free and to protect neutral nations she organized a League of Armed Neutrality of which the Netherlands was signatory.  Neutral nations wanted no part of Britain’s war with America.  And they didn’t want it to interfere with their trade on the high seas.  Even if that trade favored the Americans somehow more than the British.  So if the British fired upon a neutral engaging in trade the British did not approve of these neutrals would fire back.  Thus isolating Britain.  And shortly thereafter Adams negotiated a couple of loans.  Got recognition as the minister representing the United States of America.  And as one of his first duties in that capacity he signed a treaty of commerce and friendship.  He may not have had the stature of a Washington or a Franklin but he had the same dedication to the cause.  And refused to quit.  He was successful.  But few other American diplomatic missions were.  And they probably caused more harm than good.  The antics of a few bringing ridicule to the new nation.  Franklin in fact did not approve of this ‘cold calling’ on countries for recognition and aid.  Perhaps explaining his laid back ways in France that so irritated Adams.  “A virgin state,” Franklin said, “should preserve its virgin character, and not go about suitoring for alliances, but wait with decent virgin dignity for the application of others.”  It seemed to do wonders for him.  And the nation.

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LESSONS LEARNED #11: “Before you condemn capitalism, imagine a world without professional sports, movies, cell phones and tampons.” -Old Pithy

Posted by PITHOCRATES - April 29th, 2010

AT THE END of the American Revolution the world said, “Okay.  Now what?”  We were a joke.  We were broke.  We were weak.  And now that the common enemy was no more, we weren’t very united any more.  Most assumed we would end up back with Great Britain.  And because of that many thought there was no sense rushing in to make treaties that will just have to be unmade.

It was complicated dealing with us.  In a confederacy of strong states, it was not easy making trade or treaties.  Multiple currencies, tariffs, laws, etc.  To enter the world of the European powers, America needed to put on her big boy pants and speak with one voice.  Some Founding Fathers saw this.  That’s why they met in Philadelphia and drafted the Constitution.  And with ratification, we had one voice.

ALEXANDER HAMILTON WAS a capitalist.  Thomas Jefferson was not.  Hamilton understood money and finance.  Jefferson did not.  Hamilton liked manufacturing and commerce.  Jefferson did not.  He thought everyone should be a simple farmer.  Everyone, that is, but him.

When elected president, people hailed Jefferson as the people’s president.  Simple, unassuming, the epitome of egalitarian republicanism.  Only thing was, there wasn’t anything simple, unassuming or egalitarian about him.  He attacked the nobility, the corruption of big cities and the evils of commerce and the ‘money’ men.  Yet he indulged in the good life like no other American.  He always lived beyond his means.  He lavished himself in the finest luxuries of the time.  And he absolutely loved Paris though it was everything he said he hated.

Hamilton put America’s financial house in order.  He helped give the new nation legitimacy.  He opened European credit to us.  Problem was that, in Jefferson’s eyes, America was becoming too much like Great Britain.  And worse, it was becoming less Virginian.  So they squared off and fought each other.  Tooth and nail.  They gave birth to America’s first political parties (Federalists and Republicans).  They viciously attacked each other in the press.  Yes, politics were nasty right from the beginning.

Then something happened that caused Jefferson to embrace much of what Hamilton did.  He fell ass-backwards into the Louisiana Purchase.

THERE WERE DREAMS of a French empire in North America.  But the slave uprising in Saint-Domingue (present day Haiti) put the kibosh on that.  With Saint-Domingue lost, there was no point in France keeping New Orleans or the Louisiana territory beyond.  And Napoleon needed money.  He was at war.  And that war was about to expand to include Great Britain.  So he offered it all to the Americans for about 15 million dollars.  Though a steal, 15 million was still a lot of money.  And then Jefferson embraced what that capitalistic bastard (we can call him that for Hamilton was the fruit of unmarried loins) created. 

(This sale was also strategic.  By expanding America’s western border, it kept that land from falling to the British.  America would grow and, in time, a stronger America would challenge Great Britain for all that sea-going commerce in the Atlantic.  If it couldn’t go to the French, better it go to the Americans.  And, in the process, it would really piss off the British.  Like I said, strategic.)

The deal included gold, bonds and some debt assumption.  Jefferson was adamantly opposed to Hamilton’s assumption of states’ debt back in Washington’s administration for it only aggrandized the central government.  And Jefferson absolutely hated banking (probably because he was forever in debt).  And though he was brilliant, he was not so brilliant when you put dollar signs in front of things.  Jefferson made the purchase, but the bond deal put together was pure Hamiltonian. 

France wanted cash.  We didn’t have it.  But we now had established credit in Europe.  We could issue bonds.  Because of our credit worthiness, the Dutch were willing to buy those bonds from France at a discount and give France the cash Napoleon wanted.  And, voilà, Hamilton’s capitalism allowed Jefferson to double the size of the United States while reducing the threat in North America from the competing European powers (Great Britain, France and Spain).  It also enabled Napoleon to cause further mischief in Europe (an unfortunate side affect).  Sorry about that, Europe.  It was an unintended consequence.

THE FREE FLOW of ideas and capital can define capitalism.  Some people have great ideas.  Others have lots of money and are willing to take a risk.  Separately, these two don’t do much to make life better.  But bring them together, though, and let the good times roll.

Venture capitalists are rich.  And they’re looking to get richer.  It’s what they’re good at.  They look for talent.  New start-up companies with a good idea.  An idea that may change the world.  They may not have that creative spark to create something new, but they can recognize that spark when they see it.  And when they see it, they want to finance it.  If they pick a winner, we may get that something that changes the world.  And they may make a dump truck full of money.  Everyone wins.

Venture capitalists bring in money.  And talent.  The entrepreneur spends his or her time creating.  The venture capitalist helps build the business.  Kind of like a mentor.  They can be demanding, though.  And impatient.  They expect a big profit on their investment.  And they don’t want to wait around forever to get it.  When things work, they can work well.  Very well.  The entrepreneurs create something new and remarkable that everyone must have.  They then take their company public.  Their initial public offering brings in gazillions.  And those initial investors (the entrepreneurs and the venture capitalists) get incredibly rich.

IN 1976, THREE guys had an idea.  They made an electronic device in a garage that they thought people would want to buy.  It was crude and ‘some’ assembly was required.  And by ‘some’ I mean a lot.  Initial financing was limited.  A car and a scientific calculator just didn’t sell for a lot.  Two of them (one had since left the company) approached a couple of venture capitalists who introduced them to a man by the name of Armas Clifford (Mike) Markkula Jr.  He, too, was a venture capitalist.  And an engineer to boot.

Markkula joined the company.  He was one of the driving forces behind a new product introduced in 1984.  Their Super Bowl ad was, is, a classic.  That product was the Macintosh computer.  Those two men introduced to Markkula were Steve Jobs and Stephen Wozniak.  That company is, of course, Apple.  Today, Apple’s iPhone dominates the market.  And they’re still innovating.  Thanks to a venture capitalist willing to take a risk.

CAPITALISM CAN DO remarkable things.  It can build a nation.  Or change a world.

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