Patneral Capitalism - The Glided Secret

The real secret of American manufacturing success in the Glided Age maybe paternal capitalism. Liberals will scream but paternal capitalism with government regulation is the best fit for democracies. Socialism over promises, delivers little, and a the cost of personal and religious liberty. it takes a strong moral and religious society to grow paternal capitalists. It maybe that the failures of capitalism are the result over declining moral education.
McGuffey Readers in one room schools is the most common factor of our great industrialists.

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The Space Program and Economic Nationalism

The American space program is one of the best models of business, industry, and government cooperation. It was typical of past economic projects of the old Whigs, which us the Erie Canal, our railroads, and the Panama Canal. The program impacted all phases of American business. On October 4, 1957, the Russian satellite Sputnik rocked the United States. Sputnik galvanized and strengthened America’s resolve to compete with the Soviet Union in a space race. The nation’s fears and security became channeled in the Cold War space race, which united the nation’s resources. In 1958, the government created the National Aeronautics and Space Administration (NASA), and launched its first satellite. The real race began in 1961. With America continuing to fall more behind, President John F. Kennedy announced America’s goal to reach the moon. Outside of war, rarely has a nation been so set on a national goal as America in the space race. The space race would increase business and commerce for every tax dollar spent. The manned space program was the largest government investment, surpassing the Panama Canal; but unlike the canal, commercial value was measured in spin-offs versus the end goal. The commercial spin-offs included solar batteries, new materials, computer advances, improved communications, new robotics, and weapons systems. The program made major advances in manufacturing design and management approaches to product improvements. NASA’s organizational infrastructure of process and project management proved highly successful to coordinate private (schools and industry) and military enterprises. Millions of Americans at factories across the USA were proud of their role in making the thousands of parts. Never since have we had the leadership of Kennedy in a version of the old Whig idea of economic nationalism.


NASA estimates that for every dollar spent in the space program, the country receives $7 in increased jobs and income. There is no question that the space program has proven to be the best economic stimulus of American business. Spin-offs became a new business-government model. Its impact went far beyond directly measured benefits. There was an inspirational factor not seen in projects like the Panama Canal and the Hoover Dam. Today a simple 2 million dollar robot race challenge created priceless technology for the Defense Department. The point is that well planned and focused government investment can strengthen our nation. Unfortunately, today we waste billions with negative returns. Americans need leadership and real goals not endless spending.

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Economic Nationalisn

One belief of all the great American industrial barons had in common was economic nationalism. What is it? A belief that America was exceptional and its success would be a beacon of light to change the world. Not by supplying the world fish but teaching them to fish. It was a combination of scientific tariffs, realizing that trade is never free. Currency differences was one reason but more important was the fact that American products carry the internal costs of liberty and freedom as well as worker social costs- pension and health. We have been taken in by the idea that "free" is necessary for capitalism. It is our "free" trade that promotes slavery and socialism around the world. My brother conservatives once carried the flag of economic nationalism, but now the flag has fallen. Some one needs to pick it up and pronounce the the "free trade" economists are not wearing clothes. Capitalism is national - ONLY  the states demonstrate truly equal and free trade.

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my new book on the Carnegie Boys is out - that shows how American capitalists once beleived in economic nationalism of Alexander Hamilton, Henry Clay, Abraham Lincoln, and William McKinley -- and taught in our schools by William McGuffey

The One Common Factor of the Industrial Barons

I have written 15 biographies of America's great industrialists- the amazing common denominator is they came from families with Whig Party backgrounds, believing in the economic manifest destiny of the United States.
The American System of the Whigs and of the writings of Henry Clay and later Abraham Lincoln was summarized best by Historian Edgar Jones and is far different than the platform of either of today’s parties. That summary is:


1. A high protective tariff  [Federalist Paper No. 11 justification]

2. Internal Improvements [ Eire Canal, National Road, Railroads, Hoover Dam, Interstate highways]

3. A loyal adherence to the constitution of the United States


4. Ardent support of the union

5. Passionate patriotism and a belief in the lofty destiny of America  [underlying principle]


Where are the Whigs today?

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Lessons of the Robber Barons

Life as a Challenge and Roadblocks as Motivation


[Successful Characteristics of the Robber Barons---A SERIES]



The term "Robber Barons "is hardly a fair characterization of many of these greats like George Westinghouse, H. J. Heinz, Andrew Carnegie, Henry Ford, and Harvey Firestone. It was never about the money for them; mansions, cars, and trips were merely ancillary rewards of a deep seeded quest. It was achievement that drove them and the more difficult the track the better. Winning a fortune in the lottery as a road to riches would have been shameful. It would be an empty road to success. Money was only a mile marker of achievement for them. They loved their poor beginnings, and almost relished the opportunity to start again in their many bankruptcies. The bigger the challenge the better- old age, lost of face, personal bankruptcies, lost of family, war, etc. Henry Ford bankrupted two companies prior but started over enthusiastically to form Ford Motor Company. George Westinghouse lost his Westinghouse Electric in his fifties and loved the new challenge to start again. Frank Seiberling, founder of Goodyear, lost the company at age 63, and built a new one that became the world’s seventh largest rubber company. Those that didn’t lose their companies or fortunes, like Andrew Carnegie, lamented the fact that they wanted to go back and start over. They missed the challenges of rising and succeeding. The “40” millionaires of the early Carnegie Company (see my book “The Carnegie Boys,”} meet every year after and these reunions lamented the old days have having nothing but a burning desire to succeed.

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A New Look at Great Depression

Stock Market Crash/Great Depression 1929 While the stock market crash of 1929 did not cause the Great Depression, it is the most remembered harbinger of America’s worst financial crisis. The depression that followed would be a decade of unemployment and hard times. Unemployment became a way of life for as many as 25 percent of the American workforce. National gross product 30 percent and industrial production dropped by 40 percent. The nation’s steel mills worked a 2-3 day weeks for years. Corporate investment went negative with capital investment being below depreciation. The depression also exhibited a “double dip” returning in 1937 after some improvement. Unemployment from 1929 to 1941 was above 10 percent and underemployment was as high as 50 percent. The homeless estimated in New York city alone was 15,000. The stock market dropped over 50 percent. The depression changed American psyche and economic thinking to this day. The Keynesian economic approach, named after John Maynard Keynes, which emphasized government spending and consumers, became the dominant approach. Tariff policy would be changed after centuries of tariff protection because of fear of trade wars. The Depression would also initiate a decade of social and economic legislation to build a safety net. Banking laws were strengthened to protect consumers, and the union movement was strengthened to help workers. The depression also changed the political landscape of the nation into this century. An endless array of laws was implemented to address the causes and effects of the depression, including stock market controls. The stock market crash did contribute to it. Stock market losses did cause a pull back in consumer spending and the Federal Reserve to increase interest rates. The roots of the Great Depression go back to a few years earlier and resulted from what many consider the perfect economic storm. Factors included the business cycle, over-speculation, a stock bubble, massive crop failures; trade wars, and government intervention. Still most would agree that the taproot and beginning of the Great Depression was the stock market crash of 1929. The beginning of 1929 saw a nation in a boom economy with a record GNP. Car production had doubled in 1929 from its 1923 level. Real income per capita had reached new highs and the newspapers were filled with stories of excessive spending. Speculation was also at an all time high. Margin leveraged accounts were at record highs as well. To facilitate investment, the Federal Reserve for years had been following a strategy of easy money. Consumer credit was rising dramatically. Interest rates for margin accounts were moving higher reaching over 20 percent. Many small investors were speculating as many stock were selling over 30 times earnings. People were talking of a new economic model were all would become rich in the endless growth of the American economy. Clearly there was a stock market bubble. On September 3, 1929 the Dow Jones industrial average hit a record high of 381. The Federal Reserve had issued warnings of over speculation and had started to tighten money, unfortunately, the New York Federal Reserve broke ranks injecting massive amounts of cash for margin stock accounts (this type of rogue behavior would be addressed after the depression). The availability of call money made big investors over confident about the stock markets setbacks in September of 1929. Market started to show true signs of instability in October of 1929. On Black Thursday, October 24, the market moved lower on record thirteen million shares traded. The big and mostly widely traded companies lost an average of over 10 percent, triggering the first wave of calls on margin loans. The President and major industrialists jumped in with positive statements. Then on Black Tuesday, October 29, 1929, the market crashed to 40 percent of its high a month earlier. As banks recalled loans panic set in and the great crash entered into American legend. The Federal Reserve, business leaders, and politicians made the right moves to stop the economy from going over the cliff. Things did stabilize as the economy moved into 1930. The quick easing of money put off the banks till later 1930. There was even a brief recovery in the first six months of 1930. However, the indicators were showing a decline in economic activity. By the end of 1930 and into 1931, bank failures and panics started with the now famous lines of panicked depositors. Bank failures were 659 in 1929, 1,350 in 1930, and 2,293 in 1931. The banking problems spread in 1931 with a doubling of bank failures and mortgage bankruptcies. The New York money crisis had once again spread across the country and Europe as seen in previous panics. Deflation rapidly lowered house prices and reduced grain prices, which hurt farmers. Farm prices had dropped 40 percent from their 1926 high. The government tried to pour money into creating demand. Social problems started to mount as unemployment hit 17 percent in 1931. Congress passed the Smoot-Hawley Tariff Act creating historic tariff rates. Still, it was not the American tariff rates so much as a rush by all countries to protect their home markets. The combination of deflation, low farm prices, and tariffs cut imports 40 percent. In 1932 as the Dow hit 95, America looked for a political solution with the election of Franklin Roosevelt and the New Deal Democrats. Roosevelt in 1933 imposed a bank holiday to stop panics and build new confidence in the banking system. More dramatic was the creation of the National Recovery Administration, which had sweeping powers to control wages and prices. The NRA created a national industry, similar to that of Stalin in Russia. The NRA would be found unconstitutional in 1935. In hindsight, most economics today see it as ineffective and a mistake. Still it at least stabilized unemployment and confidence. The Dow moved up from a low of 58. The Civilian Conservation Corps hired over 250,000 young men and at least prevented social unrest in the worst of the depression. From 1933 to 1934, Roosevelt used the time to implement sweeping social legislation such as National Labor Relations Board, which enforced the use of collective bargaining. Roosevelt tried a long array of approaches moving off and on the gold standard, credit regulation, mortgage aid, work projects, trade laws, reduced tariffs, increasing taxes, new banking regulations, and expand credit programs. In 1935, the New Deal Democrats looked for long-term social safety net, enacting the Social Security. The National Labor Relations Act of 1935 created unionization of the steel, rubber, and automotive industries, and wide spread collective bargaining. The government had successfully moved into energy production with the Hoover Dam and the Tennessee Valley Authority. Things never really improved and in 1937, the economy slipped into a “depression within a depression.” This set back came as the multitude of social programs took large amounts of money out of circulation. Taxes slowed capital investment. And union-creating laws had caused wages to jump 11 to 33 percent, making things costly and bringing down demand. Another complication was the devastation of American agriculture by the Dust Bowl. The climb out of this second dip was slow. Unemployment went from 18 percent in 1938 to 14 percent in 1940, as war production would finally bring American industry back to life. Arguments and analysis of the causes and solutions for the Great Depression continue to this day. Its impact on the nature of American business was however deep and lasting. see NEW BOOK!! http://www.amazon.com/Most-Significant-Events-American-Business/dp/0313398623/ref=sr_1_10?ie=UTF8&qid=1339505966&sr=8-10&keywords=skrabec

Lessons from America's Golden Years

My twenty years of research and literary pantheon of books on American industry begs the question – can we return to the glory days of the industrial barons? Are there any young barons out there? The following characterization is based on the historical facts. It will not please Democrats or Republicans nor liberals or conservatives. The answer is yes there are young Firestones and Carnegies, but that’s not the real question. The question is America capable of bringing out these young barons, and the answer is no. So what changes would be needed to return and why aren’t we trying. The solution is not as many suggest political, in fact, neither party has the whole answer and that is what limits us. Each party has part of the components of the age of barons but is so polarized that no one can bring the necessary segments together. First we would need to create the early educational environment of the barons. Surprisingly, the educational system of the barons lacked hard science and advanced math, but was rich in the basics and American and heroic history. Education was a local community responsibility and tended to be one-room, poorly lighted, and cold, lacking many physical amenities of today. The only wall decorations were pictures of Washington and Lincoln. Homework seemed endless. Men like Firestone while not great students found inspiration their in McGuffey Readers. It was a highly competitive classroom and playground. Much of the discipline and playground behavior would be banded today! The other characteristic of the educational system was endless stories of the greatness of America. Self-reliance and the need to help the less fortunate, which seemed to build a foundation for paternal capitalists was the basic lesson plan. What of the government and society? Society was self-reliant and competitive reflecting the training of the educational system. The political system was low taxation and highly protective. While they detested government involvement in unionization, they relied on tariffs and government efforts in a national road or transportation systems. The government favored a nationalistic, paternal, and regulated approach to capitalism. Tariffs were as high as 40 percent but that came with heavy, daily regulation by a standing committee of congress. The industries of the barons were protected as long as profits were put back in the expansion of factories, job creation, and to some degree community improvements. The barons themselves were highly patriotic and while expanding internationally, no effort was made to be transnational; in fact, they were more typical of the “ugly” American bringing American methodology to other countries. They believed fully in American exceptionalism. It would be difficult to close an American factory and move off shore for two reasons: (1) they were nationalists above all and (2) Congress would strip them of protective tariff status. Politically, they were Whigs, believing all political platforms should be based solely on the growth of America economically. There was also a belief that America was too unique to be considered as a mere member of an international community, and we didn’t play well with other countries. The barons while expanding internationally for more profits tended to be isolationists. They tended to be pacifists such as Harvey Firestone, Henry Ford, and Andrew Carnegie. Another somewhat surprising characteristic was their hatred of bankers and in particular, the international bankers of New York. They preferred to finance through stock and bond issues. Of course, at least the first part of their careers was in a world of no personal or corporate taxes. They were religious and charitable. Many espoused Christian principles in their management styles. In the workplace, they believed in loyalty and results over higher education. They even forced their sons to at least work through the various levels and departments. While they reflected society’s biases of the time, they generally put results of the person above all else. Youths were given as much responsibility that they demonstrated they could handle. They preferred paternalism to unionism, although, they came to at least tolerate unions while reluctantly giving up authority. Finally, they were flawed humans, requiring government regulations and over site (often demanding it). See the pantheon of books on amazon search SKRABEC http://www.amazon.com/s/ref=nb_sb_noss_1?url=search-alias%3Dstripbooks&field-keywords=skrabec