I started this blog a couple of years ago, as an outlet to vent my frustration. One of my biggest concerns was the amount of spending (and subsequent corruption) by our so-called representatives in Washington D.C.
One of my first posts was directed at Rep. Larry Kissell of the 8th Congressional District in North Carolina. At the time, he was mailing brochures bragging about the amount of money he was “appropriating” for his constituents. I took issue with it. A commenter responded:
"Anonymous said...
This is HORRIBLE! Do the taxpayers know they are getting their money back in roads, sewers, fire trucks and stuff? Gawd, I HATE him. That was DC money! Why should he bring it back? I mean it's not like he's in Congress or anything."
The debate about the federal government’s role in infrastructure projects is as old as the republic. I responded with the following:
As you can see, there seems to be a disconnect as to who actually owns the money. The commenter believes it is D.C.'s. I contend that it actually belongs to the taxpayer. This person also doesn't comprehend that the federal government doesn't create wealth; rather it confiscates and redistributes it after they get their cut to pay for the various bureaucracies.
It is quite interesting to look back and find out what our founding fathers thought about the federal government’s role in confiscating the citizenry's wealth and using it to promote and pay for infrastructure programs.
Alexander Hamilton published his Report on Manufacturers in 1791 in which he wrote, "The public purse must supply the deficiency of private resource. In what can it be so useful as in prompting and improving the efforts of industry."
But it was Thomas Jefferson's own secretary of the treasury who actually provided a detailed plan for internal improvements. Albert Gallatin promoted a 10 year plan for a government financed and supervised canal and road building system. It was aptly named The Gallatin Plan.
John Quincy Adams made proposals that would "checker" the country with railroads and canals.
So you have to ask yourself why did these programs not come into fruition? Who put a stop to these programs?
It was men like Jefferson, Madison, Monroe, John C. Calhoun, and Andrew Jackson who stood in their way. They decried that such programs were unconstitutional.
When the Erie Canal was brought forth to the federal government for financing; Jefferson turned it down, as did Madison during his presidency.
Henry Clay tried to sneak a 1.5 million dollar internal improvement subsidy through congress. Madison squashed it:
[D]ecided it was time to teach the nation a lesson in constitutionalism. . . . The. . . bill, he said, failed to take into account the fact that Congress had enumerated powers under section eight of the first article of the Constitution, ‘and it does not appear that the power proposed to be exercized in the bill is among the enumerated powers, or that it falls by any just interpretation within the power to make the laws necessary and proper’ for carrying other constitutional powers into execution.
Madison further stated that if they want taxpayer monies to go to such programs, it would require a constitutional amendment.
Henry Clay was also foiled by Andrew Jackson on many such bills.
So, without federal government subsidies, who built the roads and canals?
In Daniel B. Klein's “The Voluntary Provision of Public Goods? The Turnpike Companies of Early America,” he wrote:
As early as 1800, before the internal improvements debate even commenced, there were sixty-nine private road-building companies that were chartered by the states.14 In the next three decades, writes Klein,The [private road-building] movement built new roads at rates previously unheard of in America. Over $11 million was invested in turnpikes in New York, some $6.5 million in New England, and over $4.5 million in Pennsylvania. . . . Between 1794 and 1840, 238 private New England turnpike companies built and operated about 3,750 miles of road. New York led all other states in turnpike mileage with over 4,000 as of 1821. Pennsylvania was second, reaching a peak of about 2,400 miles in 1832. New Jersey companies operated 50 miles by 1821 . . . [B]etween 1810 and 1845 over 400[private turnpikes were chartered and built
Individual states began to finance roads, canals, and railroads; which nearly bankrupted them. Many states amended their constitutions so as to stop subsidization of such projects. New York's Erie Canal is the one project that many point to as a success. But the railroad soon rendered it obsolete after 15 years. It officially shut down in 1913.
It wasn't until Lincoln won the election, and the secession of the southern states that the federal government began to go hog wild on subsidizing infrastructure projects; especially railroads. Lincoln, a former Whig, believed in these projects and in order to finance them would have had to raise tariffs. This would have had a deleterious effect on the south; and they rebelled.
The two railroads that received funding from the federal government were the Union Pacific and Central Pacific Railroads. After much waste, and using shoddy material they went bankrupt shortly after its completion in 1869.
Many say that big projects such as railroads would never have come to fruition without the involvement and financing of a government entity. That is not true. The Great Northern Railroad did not receive any financing or assistance from any government entity; and they were profitable.
The Mormons built four railroads in Utah without one dime from the feds. New Hampshire and Vermont did not subsidize private companies and those companies built railroads throughout those mountainous states. New Hampshire didn't even intervene with eminent domain; forcing the companies to pay market prices for property.
During Reconstruction, programs that were designed to rebuild the South's infrastructure were replete with corruption and waste. It was known as the Era of Good Stealings. Grants administration is probably known as one of the most corrupt in history thanks to the incompetency of federal bureaucrats.
With the implementation of the Federal Reserve in 1913 and repeal of the gold standard in 1971, we have seen outrageous spending by our so-called representatives in congress. It seems that every day is Christmas in Washington D.C.; but their gifts are just going to bankrupt the country.
So I say yes Virginia (anonymous), there is a Santa Claus. He just doesn't work for the government.
Source: The Role of Private Transportation in America's 19th Century "Internal Improvements" Debate. by Thomas J. DiLorenzo, Professor of Economics
