Thursday, September 8, 2016

History: The Year is 1866

I've uploaded year 1866 to the TSP Wiki...

Here are some one liners...

Black Friday and Our Own Best Interest -- The Overend Bank goes off the deep end and takes a lot of investors with it, but before it does it turns to the Bank of England for help, but despite its name, the BoE remains a PRIVATE bank and looks to its own interests, so to speak.

The Trans-Atlantic Telegraph is in Business -- The project is led by an American but backed to the hilt by the British. It is smiles all around as TWO trans-Atlantic telegraph cables begin to sing.

The Struggle for Civil Rights Begins -- Congress passes civil rights legislation and then begins work on the 14th Amendment to grant themselves the power to do what they already did. I talk about birthright citizenship.

In Other News -- The Shield nickel, Jesse James and dynamite.

Black Friday and Our Own Best Interest

There is a run on the "banker's bank" as stock prices collapse. The London bank "Overend, Gurney and Company" has made its name offering commercial loans to banks. (This is called "discounting".) After the retirement of Mr. Gurney, the bank expanded its investments, apparently oversubscribing in railway stocks. Realizing the bank was overextended they attempted to increase their liquidity by selling stock in the bank during the recent stock market upturn, but when the market takes a quick downturn, especially in railway stocks, the bank's account holders are left holding the bag and it is a BIG BAG: about 1.2 billion dollars in modern money. (Breathe in. Breathe out.) The Overend Bank seeks a bridge loan from the Bank of England to get them over this little patch. DENIED! The Overend Bank takes a flying leap into oblivion taking a lot of big investors with them. Discount rates shoot up to 10% causing commercial loans to dry up and sending 200 companies to the chopping block. Unemployment soars to 8% and while that percentage is fairly high, it is survivable, so exactly how the worker's riots got started is more due to the political situation than the economic one. The workers blame the government for yet another fowl up. The workers are fighting for men's suffrage, and more men will get the vote in England and Wales next year. (Women are still at the back of the line.) [1] [2] [3]
My Take by Alex Shrugged
OK. How did government get blamed? Well... the Bank of England was assumed to be backed by the government even though it was not strictly a government agency. Thus investors were surprised when the Bank of England realized that it was a PRIVATE institution with a responsibility to its own shareholders and refused save anyone else. This reminds me of the roots of the sub-Prime mortgage crisis of 2007 to 2009 when high-risk mortgages were bought up by Fannie-Mae and Freddie-Mac. Easy loans were meant to stimulate home ownership for people who normally would not qualify for a loan. (Why wouldn't they qualify? The reasons given were the unfair economic situation for minorities, and the vile greed of evil bankers, but in fact it was because a lot of these loan-seekers were over-extended and any little breeze might push them over the edge.) So, Fannie-Mae and Freddie-Mac were buying these high-risk loans, and with so many politicians on the Board of these financial institutions, a government guarantee of the loans was implied. Right? WRONG! When housing prices dropped, many homeowners owed more money than their houses were worth. Then adjustable-rate mortgages were adjusted UP! Homeowners who could not afford the larger payments and could not sell their homes then abandoned them to the banks. The government passed legislation to solve this problem, but it mostly solved the banker's problem. Did we learn our lesson? No one looks out for your own best interest better than your self. Believe it. [4] [5] [6] [7]

The Trans-Atlantic Telegraph is in Business

Actually, TWO Trans-Atlantic telegraph cables are now working. Last year one of the cables was lost, but the captain took a reading in order to pin point its position for later recovery. Cyrus Field or "Lord Cable" is the American who has been pushing this project along which as become a British project since the American War between the States broke out. With the sudden loss of the cable last year, Cyrus thought that the project was lost too, but the communication break in the cable caused great concern. It was believed the ship had been lost, so when the ship returned intact, Cyrus was a hero! New financing allowed him to build a second, lighter and better designed cable which they laid across the Atlantic this year. Then they returned to the original location where last-year's cable was lost and hooked it. They spliced into it and carried the line all the way across, establishing two telegraph lines. With the recent troubles in the London stock market, the cables are already making money as buy and sell orders wing their way across the Atlantic. The financial world has become a lot smaller as the telegraph creates a unified system. [8] [9]
My Take by Alex Shrugged
Just to be clear... 90% of the financing of the trans-Atlantic cable came from British sources. British ships laid the cable and a lot of the British movers and shakers received knighthoods and baronets from Queen Victoria, but since Cyrus Field was not a British subject, he could not receive such honors. Nevertheless, the British people called him "Lord Cable" in honor of his efforts to bring the trans-Atlantic cable about. The cable also stopped a serious war and saved the United Kingdom a lot of money when a dust up in Canada seemed to require military action. Before the troops shipped out, the conflict was resolved and the military action was cancelled, saving lives and saving an amazing amount of money. The cable was worth every penny. [10]

The Struggle for Civil Rights Begins

The first Civil Rights Act is passed into law over the veto of President Andrew Johnson. The 13th Amendment to the Constitution has already ended slavery, but Black Codes (or laws) passed by individual states have imposed taxes on ex-slaves who cannot find work. Let's work out the logic of this: An ex-slave or Freedman cannot find work, so he is taxed, but he can't pay the tax because he is out of work, so the Freedman is arrested for tax evasion and forced to work for the state to pay off the debt, after which he is a former-felon who cannot find work. Wash. Rinse. Repeat. To resolve such injustices, the US Congress passes the Civil Rights Act which grants citizenship to any number of people including Freedmen and grants them equal rights to enter into binding contracts, to sue in the courts and to prevent discrimination on the job based on race. There is some doubt as to whether the Congress has the authority to pass such sweeping legislation. Nevertheless, enough Congressmen object to the current injustices to override President Johnson's veto. Then the Congress begins work on the 14 Amendment to grant themselves the authority to do what they already did. [11] [12] [13] [14] [15] [16] [17]
My Take by Alex Shrugged
The 14th Amendment which includes the "Equal Protections" clause, was ratified by the states in 1868. More than any other legislation, it has transformed the United Stated from a confederation of independent states into a unified and federalized whole... like it or not. Oddly enough, California did not ratify until 1959. Oregon followed in 1973. Ohio and New Jersey finally ratified in 2003 making it unanimous amongst the states in existence in 1866. FYI, under the 14th Amendment American Indians under tribal jurisdiction were not granted citizenship. Also, a tribal Indian did NOT become a US Citizen once he left his tribe. Apparently, he was a man without a country until 1924 with the passage of the Indian Citizenship Act. Whether one automatically became a citizen after being born of foreign parents living in the United States was answered by the US Supreme Court in 1898 when a Chinese couple legally immigrated to the USA, established residence and had a child. The court determined that the child was a citizen. Whether that decision includes ILLEGAL immigrants has remained a matter of controversy. Frankly, the issue should be settled in legislation or with a constitutional amendment, but not by court fiat. [18]

In Other News

  • The US Congress approves the 5-cent coin called the "Shield nickel". Apparently nickel miners have been pushing for this more substantial coin. The silver half-dime will be discontinued in 1873. [19] [20]
  • The first daylight bank robbery by Jesse James and company. A bank in Liberty, Missouri is owned by a Republican and Jesse James and his gang are out-of-work, former Confederates. What could be more natural? [21]
  • Alfred Nobel invents dynamite. He uses diatomaceous earth to stabilize nitroglycerin and BAM! He is going to be rich! DuPont is blowing it. [22]

This Year in Wikipedia

Year 1866, Wikipedia.

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