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The "What is Money?" Show
WiM030 - The Frisby Series | Episode 8 | The American Civil War
00:55:00
Dominic Frisby joins me for a multi-episode conversation covering the concepts laid out in his book "Daylight Robbery: How Tax Shaped Our Past and Will Change Our Future"
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- [00:00]
Dominic Frisby
Foreign.
- [00:06]
Robert Reidlove
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- [02:30]
Dominic Frisby
Yeah, it was almost all in the South.
- [02:33]
Robert Reidlove
Yes.
- [02:34]
Dominic Frisby
And the south wasn't trying to invade the north or conquer the North.
- [02:38]
Robert Reidlove
That's right. So we were trying to peacefully succeed, essentially. And your book makes the great point that the south was basically benefiting from a lot of economic prosperity. We're producing a lot of things, but cotton, I guess was the main export, and tobacco. And so we were serving essentially as the tax Base upholding the rest of the country. I think. I think you said 75% of maybe the total tax revenues in the entire country were coming from the south, despite the population in the north being more than twice as much as the South. So we were one third the population, were paying 3/4 of the taxes, something to that effect at one point.
- [03:25]
Dominic Frisby
It was something like that, yeah.
- [03:28]
Robert Reidlove
And we really just wanted to succeed because of that reason, to protect our own economic interests. And we didn't want to go to war with the north because we were outnumbered and they had all the industrial advantages.
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Dominic Frisby
You couldn't beat the north in a war. All you could do was hold them off for long enough until they gave up.
- [03:47]
Robert Reidlove
Yeah. So this whole narrative, which is pumped into us in government school systems, that the north and Lincoln was this noble guy that came down here to end slavery and free all the slaves and the evil slave masters in the south wanted to go and, you know, fight to keep their slaves. A bogus narrative, frankly.
- [04:09]
Dominic Frisby
I think so. And, you know, I'm not sure most Americans want to be challenged and told their history by a bloke with an accent like mine, but nevertheless, you know, this was a book about taxation, and I was looking at the history of the world through this new prism of taxation. That's the central theory of the book. You could take any great event and if you'll find an untold tax story, without which that event would have unfolded in a very different way. And I started the chapter on the US Civil War, ended up becoming the longest chapter in the book, and it's half of what it was in the original draft. The more I started digging into it, I was like, how does nobody know this stuff? And so I'm sure I could sit down on a TV program with a Civil War historian and he'd destroy me in an argument because he'd just have much more recall and knowledge of the documents at the time. But I stand by my original theories. When you start to look at. Through things, through this prism of taxation, events suddenly make sense in a way that they never did before.
- [05:17]
Robert Reidlove
Right.
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Dominic Frisby
And the U.S. civil War is no different. And as a starting point, I want you to tell me what. What is the prevailing narrative? What were you taught about the Civil War when you were at school?
- [05:31]
Robert Reidlove
I would say roughly, that there was slavery in the south, not in the North. There was some type of moral divide roughly between the two, and that Abraham Lincoln was the hero that, you know, the Emancipation Proclamation, I think that was like. And again, I'm not recalling these Facts chronologically as they're maybe taught in school. But just the general thesis of the narrative was that the Emancipation Proclamation was held or he gave the speech and that set the battleground. And the south just was the obstinate resistant of the two. They wanted to keep the slavery. Slavery was so important to their economy. And the north had this moral high ground that they wanted to liberate the slaves, so they went to war. That's the rough narrative that I got going to public school in Tennessee.
- [06:32]
Dominic Frisby
So going. So the. The majority of Americans are taught that the north went to war to liberate the slat. The slaves of the south to end slavery. That was the reason that the north went to war.
- [06:47]
Robert Reidlove
Yes.
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Dominic Frisby
I just find that extraordinary.
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Robert Reidlove
Yeah.
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Dominic Frisby
Because that narrative doesn't even tie to. With the events as they took place at the time.
- [06:58]
Robert Reidlove
Right.
- [07:00]
Dominic Frisby
Because, you know, you can start with Lincoln, when he was elected, said, I'm just turning to the right page. So Lincoln, when he was elected, said in his inaugural address, I have no purpose, directly or indirectly, to interfere with the institution of slavery in the states where it exists. I believe I have no lawful right to do so, and I have no inclination to do so. So he said that quite clearly.
- [07:38]
Robert Reidlove
Yeah.
- [07:39]
Dominic Frisby
And America went to war in what, 1861, was it 1862. And the emancipation of Slavery act didn't come until, I think, 1863.
- [07:49]
Robert Reidlove
Right.
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Dominic Frisby
When at that stage, the war wasn't going that well for the northern states.
- [07:55]
Robert Reidlove
Right.
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Dominic Frisby
And the purpose of the Emancipation act was that was to create civil discord within the southern states.
- [08:08]
Robert Reidlove
Right.
- [08:09]
Dominic Frisby
To drain the resources of the southern armies so that they had to deal with internal civil strife and they would have less resources to allocate to their borders and to fighting the wars. That was the practice from a military strategic point of view. And so that's the first two things. And the Southern states, the moment they knew in November 18th, I get my years muddled up. Was it 1860 or 1859 that Lincoln actually won the election?
- [08:47]
Robert Reidlove
He said November 1860, Abraham Lincoln was elected president.
- [08:51]
Dominic Frisby
Okay. So 1861, he actually became president.
- [08:55]
Robert Reidlove
Yeah.
- [08:56]
Dominic Frisby
So in November, in November 1860, as soon as they knew Lincoln was becoming president, South Carolina and a couple of other states seceded, and they did not have the support of all the other states. And it was only after Lincoln, the shots were fired at Sumter and Lincoln actually went to war that I think Virginia and maybe even Tennessee decided they were on the side of the southern states.
- [09:27]
Robert Reidlove
Right.
- [09:28]
Dominic Frisby
There was only when bullets were fired, and up until that Point. You know, there'd been a Congress in Virginia and they'd all voted in favor of staying in the Union. But when it was clear that Lincoln was going to use force against the Confederacy, new votes were held. And then they voted in favor of secession.
- [09:47]
Robert Reidlove
Yep.
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Dominic Frisby
And they were violent.
- [09:50]
Robert Reidlove
They were. They were. The tariff that the south was opposed to was being reduced. And so they were basically cooperating on that premise.
- [10:00]
Dominic Frisby
Well, we'll come to the tariff in a moment, Robert. The, The. The only thing I was just outlining to you, there was the sequence of events around the actual slavery thing like that, that the timing of that is inaccurate. And, you know, if they were so intent on getting rid of slavery, why did they just replace it with segregation?
- [10:23]
Robert Reidlove
Right.
- [10:25]
Dominic Frisby
Do you know what I mean? Like, it's. It's a classic case of history being written by the victors.
- [10:32]
Robert Reidlove
Yes.
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Dominic Frisby
The victors want to claim the moral high ground.
- [10:35]
Robert Reidlove
Right.
- [10:35]
Dominic Frisby
And so then this narrative being put on after the event, and then the argument gets, ah, well, the Southern states fired the first shot at Sumter. The first shot was fired by the Southern states. But, you know, Lincoln, they. For, For. For considerable time, Lincoln knew that shots fired at Sumter could trigger a war. And, and the Southern states had been. Been trying to get the, The. The Northerners out of Sumter for some considerable time, but Lincoln wouldn't remove him because he was worried. His words was, what about the revenue?
- [11:16]
Robert Reidlove
That's right. That's where they were collecting the revenue. Yeah.
- [11:19]
Dominic Frisby
And they did that. And then. And then it was the supply ships coming in, but they already were being supplied. There's a quite famous interview that Lincoln held with a chap called Major Baldwin. And he. And. And the people of Charleston had been feeding the people at Sumter. They didn't know that need the supply ships, so the supply ships was just a provocation. And when the first bullet was eventually fired, Lincoln said the plan succeeded, they attacked Sumter, it fell, and thus did more service than it otherwise could. Lincoln needed the Confederates to fire the first shot because then he had the justification. You know, he thought like a solicitor, he thought like a lawyer. And then once the first shot was fired, he had the justification to act like he. Right, but. But he was provoking them now. So that's. That's just attacking that narrative about the slavery. But I just want to come to the tax thing now. And there had already been an attempt to secede in the 1830s. There had already been one attempt, and it had nothing to do with slavery. It had everything to do with Taxes. And eventually it was resolved. Henry Clay who was very pro tariff and what was his name, the southern states guy who was this was in another John C. Calhoun and Henry Clay. And they averted secession. And this was in the 1830s or was it early 1840. And then in if again just on the issue of secession again there was an election in 1851 in South Carolina which was to do with the protecting the prosperity of the cotton producers. And it was essentially a referendum on secession. And at this stage the southern states were paying a very respectable rate of taxation. And the secessionists got absolutely walloped. The cooperationists won almost 60% of the vote. So the slavery issue alone wasn't enough to drive even South Carolina which was the most separatist of the states, let alone the other states as a secession, especially when business good. And this was in the early 1850s when the economy was booming. The south had few complaints. But that all changed after the financial crisis of 1857 and it was known as the panic of 1857. So let's just go back a bit. We'll backtrack a bit and we'll go all the way back to. There was a war between England and the United States in 1812 and it went on all the way to 1816 and the Americans won. The English got to had to go and fight Napoleon. Basically I think it was known as the War of 1812. And it went on for three or four years. But it showed to the American authorities that they were very badly prepared because they were totally dependent on English imported goods. And so it was decided that more investment was needed in industrial goods in the northern states so that the America wouldn't be caught short again. And it was self sufficient. And so they introduced this Dallas tariff named after the treasury secretary of the time in 1816. And the Northern state, the southern states were on board with it. And it basically played a large puts, a large tariff on imported goods. Now it was the, it was South Carolina and the Southern states that imported most of the goods from Europe, especially from England. And they sold cotton in exchange and they would import, you know, farming goods, nails, hammers, plows, all this kind of thing. And it was an effective trade. And, and they agreed to this tariff because the southern states agreed that northern industry needed some protection, it needed some investment and the investment for Kamsha come from them. The northern states did so well out of it that in 1820 the Southern states no, we're not playing the tariff anymore. And the Northern states said no, no, we're going to Carry on paying it. And this. The Northern states won. They had sway in Congress and they won the votes they needed to sway. And so suddenly for the next 30 or 40 years, the Southern states suddenly found themselves paying a hugely disproportionate amount of federal taxes at the tax level. And as you said at the beginning, at one point, I think it was actually over 75% of federal taxes were coming from the Southern states at one point, I think it was even in the 90s. And you know, there were times when it came back and there were times when it went up. And eventually by the 1830s, the southern states said, and this sort of loyalty to the United States that exists now, wasn't there then? You know, it was much more about individual states. The United States as a country was a relatively new thing. And the Southern states in the 1830s said, no, we're not having this anymore. We want to secede. And then Clay and Calhoun agreed that tariffs would come down over the next 20 or 30 years. And they did. But Lincoln was elected very much on a protectionist tariff. He was, you know, he won key swing states, Pennsylvania especially, promising to protect their industry. So, and he, I don't think Lincoln got a single seat in the South. I don't think he got one because all the Southern states knew that the election of Lincoln meant higher taxes for them. And so when he was elected, they grant began to succeed secede. And Lincoln's first thing he would always say is, I am going to war to protect the Union. That was his thing. I'm protecting the Union. That was the message that he gave out. But you know, as we know from this, from the book, tax is power, tax is control. Without the Union, without the Southern states, he loses his tax revenue. The last thing the Union wanted was a low tax, nimble free trading. You know, does New York really want all the Southern states suddenly occupying all the free trade with Europe and cutting them out? Nobody wanted it. And so Lincoln went to war to protect the Union, to save the Union. But by that you can infer that as to save Union tax revenue. So I make the argument and that, that, that the Americans, you know, I'm not pretending slavery wasn't an issue because it was a huge issue and it was. The Southern states depended on it and the Northern states, it was, it had already been made illegal in practice, although not in theory in 1804. But when I'll carry on talking just a tiny bit more and then I'll give you, I'll hand it back to you, Robert. When Lincoln was elected, he had said that he had no purpose to impose slavery bans in the South. The Supreme Court had also given its endorsement three years earlier when in 1857, it ruled against Dred Scott, who was a former slave who tried to sue for his and his family's freedom. And the Supreme Court ruled against him. And Congress had offered the south constitutional amendments that protected it from federal government's interference in slavery. So the three main arms of US Power had all said, you will keep your slavery. And still the south wanted secession. Why? So maybe they didn't believe them. And they. There was all sorts. In their various proclamations, there was all sorts of, we want to protect slavery. And you know, slavery was essential to the business model of the south. But as it turned out, you know, with the, with the agriculture and so on. But as it turned out, with improved machinery, slavery would have, you know, we talked about, you know, the, the guy doing the fans being replaced by, you know, machines would have put an end to slavery within probably two or three decades anyway. Right. And the war accelerated the process. But the idea that the north, which had, you know, the south wanted independence. It wanted to protect its own slavery, but it also wanted to protect its economic interests. It wanted protection from these. These onerous taxes, which it hadn't voted for, that were taking its wealth and it hadn't voted for. And they were being spent. The taxes were taken from the south and spent in the North. You know, it wanted its own sovereignty. So all these reasons and then we. If you read the. The address of the people of South Carolina, it read, the people of the Southern states are not only taxed for the benefit of the Northern states, but after the taxes are collected, 3/4 of them are expended in the North. This has made the cities of the south provincial. Their growth is paralyzed. They are more. They are mere suburbs of Northern cities. There, you know, is a key reason why the south wanted secession. And then you learn that. I think in 1864 it sent a delegation to the United Kingdom and it said, if you recognize the Confederate states as an independent nation, we will make slavery illegal. So it's. It shows that independence was more important to them than slavery. Now, I'm not defending the institution of slavery for a second or any such. I'm merely challenging the narrative that Northern states, and especially Lincoln were these especially holy guys. You know, I don't believe how many people were killed in the US Civil Wars. Several million it must have been. Have they really prepared to die for something like slavery at the time, which at the time, in the context of the morals of the time, was not perceived in the same way it is today. I just don't believe they were. And so, you know, the real reason was Lincoln went to war to protect Union tax revenue. And you know, taxation is control. He went to protect Union power. Union control.
- [22:02]
Robert Reidlove
Brilliant analysis and a refreshingly realistic perspective that again is reinforcing this point that it's economic reality or technological reality that underpins morality, like morality emerges from economic realities. But to your point, it's the north being the victor in this battle, just tries to rewrite it the other way, saying that no, we had this superior moral high ground and so we imposed our benefit. They're. They were trying to position themselves as a benefactor, I guess to humanity in some way as this liberating force.
- [22:45]
Dominic Frisby
But it's all just to justify as moral something that actually really wasn't that moral is immoral.
- [22:52]
Robert Reidlove
That's right, that's right. It's like a moralistic camouflage almost, which is very common with government. Right. This is, this is Marxism. Right. From each according to their ability, to each according to their need. It's this beautiful moral container for the most immoral system that ever existed. And this idea, in my mind, it's not even arguable because for war as such an economically expensive enterprise, there has to be the prospect of gain that is motivating it. It can never be just some pure moralistic or ideological contention. It has to be rooted in economic reality. Otherwise you can't wage the war, you can't afford it. Right. There's no benefit for the cost, potential benefit for the cost you are incurring. So it just doesn't make any sense in my mind that couldn't see it any other way, frankly.
- [23:50]
Dominic Frisby
The purpose of every conquest in history is to take control of the tax base, the land, the labor, the produce, the profits. And the American Civil War wasn't a conquest, but in a way it was. Yes, preventing secession. Now, you know, it must be the most. It is the most discussed and disputed and argued and written about event in American history. The American Civil War.
- [24:12]
Robert Reidlove
Yeah.
- [24:13]
Dominic Frisby
And I'm sure most Americans, you know, despite their taught this whole narrative, I bet there's a part of them that just goes, is that really right? Yeah, that doesn't quite. There's always this lingering thing. It doesn't quite ring right to me.
- [24:25]
Robert Reidlove
Yeah.
- [24:25]
Dominic Frisby
And I'm sure this exists and that's why the thing keeps. One of the. Well, one of the reasons why it keeps being discussed and Disputed, because people are going, doesn't. And then once you look at it through this perspective about, it was about maintaining control, it was about maintaining tax. People were fighting basically for their economic interests.
- [24:43]
Robert Reidlove
Right.
- [24:44]
Dominic Frisby
Suddenly you go, oh yeah, suddenly it makes a lot more sense.
- [24:47]
Robert Reidlove
Yes, yes, Southern states did want to.
- [24:49]
Dominic Frisby
Keep the, the institution of slavery and the Northern states were less bothered about it because the Southern states were dependent on, for their economy in the way that the north, because they weren't dependent on slaves working in the fields in the way that the Northern states weren't. And they had all the, the factory workers, you know, could be done by, you know, white slaves effectively, or indentured servants or whatever who were like half a notch up from the black slaves.
- [25:13]
Robert Reidlove
Right.
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Dominic Frisby
So, you know, it was, it was, once you start looking at you, you look at the incentives, you always use that word, and the economic interests of the relative parties, then suddenly the thing makes a lot more sense. And, and I feel quite sorry for people from the Southern states because for 150 years they've been, you know, educated to believe that they're somehow evil and immoral. And I think you, you notice when you go to a lot of those states in America, there's a lack of confidence that you don't find in other American states. And I'm sure it all boils down to this misinformation.
- [25:46]
Robert Reidlove
Yeah, it's interesting, man. I, yeah, I wonder what the cultural echoes have been from that. But this, to me, this is one of my paradigm. This is a paradigm that I have is that I say that money is the means and ends of all warfare. What you're describing is you would say taxation perhaps, where taxation is power. And I agree completely. It was just like to tax is to extract the money, essentially. So you need money to go to war. You have to finance the most expensive enterprise in the sphere of human action. And you also go to war with the aim of profit, basically obtaining more money than you spent going into it. It's almost always that, I don't know of a historical example where it's not that you go to war to get stuff from people, whether you're trying to get food, territory, whatever it may be, it comes down to the money.
- [26:49]
Dominic Frisby
The one example that I can think of that maybe that doesn't apply is World War II. I mean, you know, Hitler went to war to conquer Europe for sure, and.
- [27:02]
Robert Reidlove
He'S raiding gold hoards, right? As he conquers.
- [27:05]
Dominic Frisby
Yeah, oh yeah. Oh yeah, yeah, yeah. Hitler went to war for gold and power and all the things that come with it. And I suppose Russia and England initially went to war with Hitler to stop him doing that. Now, Russia was in the front line a lot more than England was, than Britain was. So Britain, I suppose, didn't really need to get involved unless it really needed to. But then again, I guess it was in Britain's strategic interests to maintain the power structure in a particular way in. In Europe. And that justified, you know, I mean, it. Britain had been getting involved in wars in. In Europe ever since, forever, you know, so it was nothing new. But that's the one war, the British involvement in World War II, where you could say actually maybe personal gain wasn't the reason they did it.
- [27:58]
Robert Reidlove
Tell me if.
- [27:59]
Dominic Frisby
If the irony is World War II, British one, that's like the first major war in history where the British didn't get massive spoils from the conquered country in a way that previous wars resulted in. And that's why Germany was able to come back post war much quicker than Britain did.
- [28:17]
Robert Reidlove
Yeah. Here was my. Another read I had on that was when Germany invaded Poland and they raided the central bank, they looted their gold. I thought at that time Britain took that as a pretty distinct signal that they needed to defend themselves, so they were defending their interest. And that's around the time that a lot of gold in Europe started to head to North America. A lot of it was being shipped to North America as a geographic safe haven. And then I think that ultimately incentivized the United States entry into World War II. We had all the gold here. We could now go in, end the war, rewrite the banking rules to our favorite, and say, all right, we're now the reserve currency pegged to gold. You all are pegged to us. So even at that highest geopolitical level, we're sort of fighting over the money.
- [29:09]
Dominic Frisby
Yeah. The other thing was obviously Pearl harbor, ten years of depression. We need something to get things going here. Maybe it was. I mean, Roosevelt tried to stay out of it, but he couldn't after Pearl Harbor, I suppose. But, yeah, know, there was. There was. By the time Pearl harbor happened, I guess it was a war that they weren't. That they could see, could fix a lot of domestic problems.
- [29:47]
Robert Reidlove
Right. Yeah. It's a very, very interesting lens. I. So bringing it back to the Civil War, this war in Europe that you mentioned actually had a lot of impact because there was a lot of demand. I think Europe was at. I forget who Europe was at war with, but there's a big demand for American exports. So we were sending a lot Of, I guess, cotton food, I guess cotton and tobacco, maybe to Europe. But then when that war ceased, it decreased demand for American exports. So that further put the hurt on the South. So they were getting these tariffs and their exports had collapsed. And so that was contributing to this desire to secede.
- [30:35]
Dominic Frisby
On a relative basis, the Southern states never really recovered, did they? The wealth of the south, the great agricultural wealth of the south, on a relative, it was the North. Northern industry became the big growth area in the, in the second half of the 19th century. And it probably would have done anyway without the war.
- [30:55]
Robert Reidlove
Yeah.
- [30:56]
Dominic Frisby
And the subsidies and the tariffs and everything else. And, you know, maybe it would have been better for American industry not to be protected, and that would have forced it to up its game, you know.
- [31:06]
Robert Reidlove
Right. Yeah. Well, that's what I would believe. You said that the iron, the taxes were outrageous. Nail iron was very heavily taxed. Nails were taxed at over 100%. I thought that was interesting. And then looking at the.
- [31:24]
Dominic Frisby
The English hated it as well.
- [31:26]
Robert Reidlove
Yeah.
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Dominic Frisby
Because their exports became less competitive than, you know, competing with Northern, you know, because if you think, you know, South Carolina's a Britain, it's a pretty straight route. It's a pretty obvious trade route.
- [31:38]
Robert Reidlove
Yeah.
- [31:39]
Dominic Frisby
And, you know, what's it got to do with the North? South Carolina's want something to the British and the British wants something to South Carolina. What's the problem?
- [31:47]
Robert Reidlove
Yeah.
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Dominic Frisby
And. But the north wasn't having it.
- [31:49]
Robert Reidlove
And this was, this was a resurgence of the idea of taxation without representation. Right. Southerners started looking at the north as indistinguishable from the tyranny of Great Britain. You know, not so many years before.
- [32:03]
Dominic Frisby
They viewed themselves in the same way that the, that they. Exactly. That they viewed themselves in the same way that the American revolutionaries had, you know, 1880 years earlier.
- [32:16]
Robert Reidlove
And this really blew my mind because I didn't know this, but looking at the Confederate States Constitution, it was modeled after the US Constitution, except that it actually had even more decentralized sovereignty, even more constraints and restrictions on the federal. The ability of the federal government to collect taxes. So it was a more decentralized governance model. You could say it's more U.S. constitution than the original U.S. constitution.
- [32:47]
Dominic Frisby
I I 100. In fact, it's. It's probably a better. It's a, it's a. It's a wonderful Constitution. It's probably a better constitution to have. Now, you know, this. So this pattern about slavery in it, but basically it made rule local rather than central.
- [33:08]
Robert Reidlove
There just seems to be this recurrent pattern where each time a society attempts.
- [33:12]
Dominic Frisby
To force it banned the slave trade with Africa as well.
- [33:15]
Robert Reidlove
Yeah, and they banned the slave trade.
- [33:17]
Dominic Frisby
They didn't. They didn't. Oh, but there was. There was some hypocritical. Because the one thing they didn't do is they. They prevented states from abolishing slavery within their own borders. That was the one area where individual states rights weren't sovereign.
- [33:35]
Robert Reidlove
Right.
- [33:36]
Dominic Frisby
So that was a. Maybe not quite so good on that one. But. But.
- [33:41]
Robert Reidlove
Yeah, but so this. This recurrent pattern of every time a society forks these ideas that are getting refined over time, like about individual liberty or property rights, they sort of get refined a little bit further in the next formative document in a way where we keep. The tendency of sovereignty has been to decentralize over time. So I just thought that was interesting that even this document that never succeeded was still like that. It was still an iteration. It was like a V2 on the American Constitution.
- [34:17]
Dominic Frisby
Yeah, that's exactly what it was.
- [34:21]
Robert Reidlove
Yeah. And then I guess you could talk about. Yeah. You said Lincoln coaxed us into firing the first shots. He was an attorney, right? Lincoln, yeah. Yeah. So of course he was playing to your point. He was a wily politician. Right. He's playing the game correctly. And then he established the IRS and the US Global tax system.
- [34:46]
Dominic Frisby
And he gave America its first income tax.
- [34:49]
Robert Reidlove
Right. A temporary measure, I'm sure.
- [34:53]
Dominic Frisby
Well, it was. I think he introduced it either 61 or 62, and I think it was abolished again in 75, something like that. And then of course, they bought it back in 1913.
- [35:06]
Robert Reidlove
Right in line with the Fed.
- [35:08]
Dominic Frisby
Yeah. Oh, yeah, yeah. And by the way, it was income tax that gave America prohibition. If you hadn't introduced income tax in 1913, you would never have had Prohibition because the guy who was the main campaigner, Wayne Wheeler was his name, it was a formidable campaigner. And, you know, he coined the term pressure groups. And he would turn on any politician that didn't support him. It didn't matter. And he formed these weird alliances, like, you know, the Ku Klux Klan supported him and all these Catholic and Jewish and Italian, you know, who were the opposite to what the Klu Klux Khan wanted, all supported him as well. He just formed these amazingly weird alliances, all under this one issue of we must make alcohol illegal. And. But the one barrier was, is that the American federal. At the federal level, America was too dependent on alcohol taxes. And so there was no way, if America made alcohol illegal, there was no way that. That the federal government could support Itself.
- [36:15]
Robert Reidlove
Yeah.
- [36:16]
Dominic Frisby
And then. So Wheeler realized this, and so he campaigned like mad for income tax. You got to have income tax. You got to have income tax. You've got to have income tax. And eventually got his way, and income tax was introduced. And then he turned around and said, yeah, you got income tax now. You can make alcohol illegal.
- [36:33]
Robert Reidlove
Wow. Interesting. And so why would. Why did he want to make alcohol illegal, though? What was his.
- [36:42]
Dominic Frisby
Well, his was a. It was a personal mission.
- [36:44]
Robert Reidlove
Oh, it was a personal mission.
- [36:46]
Dominic Frisby
He. He. He'd. I think he'd got stabbed in the leg by a. He grew up on a farm, and there'd been a farmhand who was drunk who'd stabbed him accidentally in the leg with a pitchfork. So he just grew up with a lifelong loathing of alcohol, and he was just. It was just his life's mission to force temperance on everyone else.
- [37:05]
Robert Reidlove
Wow, interesting.
- [37:06]
Dominic Frisby
And then When World War I came, you know, income tax came, then World War I came, and he really attacked all the German brewers, of which there were loads in America. And, like, you know, oh, look, they're German. German. German. German alcohol. German German alcohol. And that was another big thing in his. In his campaigning.
- [37:28]
Robert Reidlove
Interesting. Well, so that was. Yeah, to quote. Oh, and the South, I mean, we offered to peacefully secede even after the Civil War had started. Right. We said we'd abolish slavery and just secede, but the north refused.
- [37:45]
Dominic Frisby
Well, they sent a delegation to the uk.
- [37:48]
Robert Reidlove
To the uk. Gotcha.
- [37:49]
Dominic Frisby
If you recognize us.
- [37:51]
Robert Reidlove
And then, just to quote your book and put a button on it, you said that in a popular understanding of history, the Confederate cause has since been smeared, while the Union effort has been framed as some great and noble cause. In reality, both sides were fighting over their economic interests.
- [38:14]
Dominic Frisby
That's it.
- [38:15]
Robert Reidlove
And it's so. I mean, obvious in a way. It's like, of course they're fighting over their economic interests. That's what. That's what humans fight over. But, man, it is not. I don't think this narrative is well understood at all in the United States today.
- [38:31]
Dominic Frisby
It was no different to any other Civil War or any other great revolt. Somewhere near its heart, there is always a tax story.
- [38:40]
Robert Reidlove
Beautiful, man.
- [38:43]
Dominic Frisby
I talked about tax and money, you know, in the Venn diagram. There's a big crossover in the Venn diagram between the two.
- [38:51]
Robert Reidlove
Yeah. I mean, you need money to efficiently collect taxes, basically. And as we touched on way earlier, and probably our first recording, the first written records were tax records. Right. So it was people. Whether it was in kind or in money, it didn't matter. We were using language to collect taxes.
- [39:15]
Dominic Frisby
How much of altcoin speculation, like, you know, manias and bubbles and popular delusions on all those things, you know, a lot of the time they're a consequence of fiat money. They tend to occur at times when. When greed is at its most and it's almost like the honesty of. Of an honest pound has gone from society. So people try and make easy money. Yeah, because money's too easy. How much of altcoin speculation do you think is a consequence of fiat debasement?
- [39:50]
Robert Reidlove
A significant portion. I think that there's this positive correlation between fiat currency inflation and the propensity to gamble. And you see that historically, that book I mentioned earlier, fiat currency inflation in France, the more rapidly they increase the money supply, the more crazy gambling became. And there was a whole class of people that emerged around that. They were just gambling on anything and everything. So, yeah, I think altcoins are just modern gambling devices. And for that reason, we're probably likely to have a lot more waves of this mania in the coming decade because we're going to have so much inflation.
- [40:36]
Dominic Frisby
And how many. What percentage of people who invest in bitcoin invest in it because they think they're going to get rich quick and what percentage are in it for some other reason?
- [40:55]
Robert Reidlove
I think initially probably almost everyone is drawn in for number go up. Right. That's the marketing technology built into it, which is, hey, I'm going to put dollars in and take more dollars out. The percentage of people that convert, say people come for the profits, but the percentage of people that convert and stay for the principles like of sound money, I would assume is much, much smaller, maybe 5%. But I think initially everyone's drawn in by the economic incentive.
- [41:28]
Dominic Frisby
There's nothing like price confirms narrative.
- [41:32]
Robert Reidlove
That's right. Yeah. It's where the two touch. In a free market, Right, where you have objective reality, supply meeting narrative demand. Wherever they match, wherever they touch is the price.
- [41:47]
Dominic Frisby
But if the price was falling every week, nobody would believe that bitcoin is the money of the future.
- [41:52]
Robert Reidlove
And they didn't. I was here, I was doing all the same things during the bear market and people just thought I was some crazy guy with a bitcoin tattoo. And now people pay attention. So it's. Yeah, that's how it goes, man.
- [42:06]
Dominic Frisby
What does one get as a tattoo? I can't get an IRS tattoo. I want the opposite of the IRS tattoo. I guess I have to get an anarchist tattoo or something like that.
- [42:15]
Robert Reidlove
That was my other thought, is I've got the B on my right arm. I could get the A with a circle on the left arm. Have the above anarchy, bitcoin thing. But I don't know. I don't know if that's that symbol. And that term is pretty ill understood. People think anarchy is lawlessness, but it really means no rulers. Anarchy, no archon, no ruler.
- [42:41]
Dominic Frisby
Yeah. Wonder how we change that narrative. Maybe if we just went back to no rulers.
- [42:49]
Robert Reidlove
You just got to let technological reality do its thing, Right?
- [42:54]
Dominic Frisby
Yeah. Natural law.
- [42:56]
Robert Reidlove
Yeah. Which is so interesting that looking at history in that way, it makes you curious about what morality will look like on a bitcoin standard. If bitcoin succeeds, it changes our morality in the long run.
- [43:11]
Dominic Frisby
What percentage of bitcoin do you think have been lost?
- [43:16]
Robert Reidlove
I've read estimates of 3 to 4 million on 20 million coin. So that's what, 15, 20%?
- [43:23]
Dominic Frisby
Yeah, that's what I've read. I reckon it might be higher.
- [43:26]
Robert Reidlove
Yeah. I think Satoshi Stash is gone. Either the keys are lost, or maybe Satoshi as an individual, if he's an individual, passed away.
- [43:37]
Dominic Frisby
Well, if he's Dan Kleiman, he did pass away.
- [43:39]
Robert Reidlove
Yeah. Yeah. So that. Yeah, there's a million right there. And I'm sure there's at least another 2 to 3 million lost.
- [43:52]
Dominic Frisby
I've got old wallets that if I went in them, I could get my bitcoin gold and my bitcoin cash and my bitcoin. I just got no idea how to do it. I don't even know where the old wallets are.
- [44:05]
Robert Reidlove
Are those. I mean, bitcoin gold? Oh, I guess bitcoin cash still has a market value.
- [44:09]
Dominic Frisby
Bitcoin gold had a run, man.
- [44:12]
Robert Reidlove
Ah.
- [44:13]
Dominic Frisby
Couple like John Matonis was texting me going, get. Find your old wallets, get your bitcoin gold out. It's gone up.
- [44:20]
Robert Reidlove
Interesting. I pay so little attention to the altcoin market.
- [44:25]
Dominic Frisby
Oh, me too. Oh, no, I think I pay more attention than you. I got. I've got a fondness for the privacy coins.
- [44:33]
Robert Reidlove
Yeah. I do get some pushback on that as on the bitcoin narrative. People tell me that Monero is equally decentralized and I know it's way more private, so I don't know. I don't know enough about it. But my general understanding is that everything else is vulnerable to some type of unilateral attack, whereas bitcoin is just the most resistant asset to anything like that.
- [44:59]
Dominic Frisby
Well, that's certainly true. I like Monero because it is actually used to transact stuff I like Ethereum because it is actually used for stuff beyond speculating. People do use it to build apps on and for NFTs and whatever, so they are actually used. I like it no matter what their valuations are. If a coin has demonstrable use.
- [45:26]
Robert Reidlove
Then.
- [45:26]
Dominic Frisby
It has a reason to exist beyond just being a speculative asset in itself.
- [45:30]
Robert Reidlove
Well, I actually consider the HODL a use. I love holding an asset that I have a guaranteed fraction of a supply that nobody can violate. For me, that is Bitcoin's utility for now as it monetizes. Clearly, if it accrues enough purchasing power at some point in your life, you're going to have enough unrealized gain built into your position. You'll have an incentive to go out and spend. But for me now, it's just. Like I said, it's a land grab. I just want as much as possible.
- [46:00]
Dominic Frisby
What do you think about the fact that the early adopters are so dramatically favored? I suppose a lot of that is being compensated with, you know, loss, you know, by hacking or lose lost keys or whatever.
- [46:16]
Robert Reidlove
Yeah, I mean, that's how it works. That's how money works, frankly. If you figure out there's a great. There's a great quote, I think by Minger and he says, throughout history, people are trying to discover how saleable an item is. So everyone's trading with the idea of getting from A to B, essentially. And if you can trade your good for something that's slightly more tradable, it might not be what you're going for, then you're one step closer to getting the thing you ultimately desire. And through that process, something emerges as the most salable good, which is money by definition. But he said historically, as different monies come in contact with one another, certain groups of people figure out first that this thing, this good, is more salable than all other competing goods. So they always benefit disproportionately. It's the same thing like when gold encounters silver in a trade network like China and India that tried to stay on a silver standard longer, they lost out in that trade, whereas people that figured out gold was a better store of value won out. I don't have any qualms about it. I think it's still a better system than central banking, where there is no early adopter. In central banking, it's just whoever owns the printing press or has access to the newly produced dollars can just rob everyone else. Whereas in Bitcoin, at least, the rules are fixed. Like you may have got there first and have way more Bitcoin than I'll ever have. Good for you. Hats off to you. You figured it out first. Or maybe you got lucky, whatever. But at least I know the rules can't be violated to fuck me over later.
- [48:03]
Dominic Frisby
See, I don't mind it as much as some people do because again, you know, some people think the early adoption thing is what makes it a Ponzi scheme or a pyramid, but I think. Because it rewards bravery.
- [48:14]
Robert Reidlove
Yes. Yeah, of course.
- [48:16]
Dominic Frisby
Rewards those who dive in. And, you know, what about the guys looking for El Dorado or whatever it is, you know, or the guys looking for the gold in the Gold Rush in Nevada, you know, it's the guys who move earliest and biggest and bravest were often the ones who rewarded the most.
- [48:36]
Robert Reidlove
Absolutely, yeah. It's no different than going into a venture capital round right at the seed versus the A versus the B versus the C round you're taking the risk is being reduced at each successive funding round because the company's bigger, more successful, more established, whatever, but the payoff is less asymmetric. So the guys that got in early, they were just in this quote unquote seed stage of bitcoin and good for them. I kicked myself still that I was arguing on behalf of Bitcoin in 2014. But I wasn't buying more. I hadn't seen the light, so to speak.
- [49:11]
Dominic Frisby
I'm writing the bloody book about it and I have my coins stolen. But, you know, don't talk to me about it anyway.
- [49:20]
Robert Reidlove
We'Ve all got our painful stories.
- [49:23]
Dominic Frisby
It means I keep working and humankind benefits from my endeavor and my hard work.
- [49:28]
Robert Reidlove
There's the silver lining right there. Well, Dominic, this, your book is incredible, man. I hope everyone will go out and get it again. It's called Daylight Robbery. I. It's just this whole, you know, as you know, this show, it's called the what is Money Show. I think this is just another branch to that rabbit hole for me. It's like, okay, yeah, it's a lot about the money, but the thing that money exists for, the reason money exists, frankly, is for taxation. Almost like they sort of co evolve together and taxation has just shaped the entire world. So your book, I think, just brilliantly laid that out for me and it's given me new insights into history. And for that I thank you.
- [50:15]
Dominic Frisby
Well, thank you very much, Robert. And I will say this. I discovered the evils of fiat money, if you like, in 2005. And I've been reading about it, I've been writing about it, I've been Investing based on it. I've been thinking about it. I've been doing podcasts, I've been making films. It's been like, the subject that's most important to me for a long, long time. And, you know, my first book, Life after the State, I was like, if we're going to save society, we need to fix money. And then while I was writing Life after the State, Bitcoin came along. So I wrote Bitcoin the Future of Money. And, you know, there's a whole chapter in there called why Bitcoin is Enemy of the State. This is the power of independent money. And the next stage, and I'm sure many of your readers will go through, and maybe you will as well, on the journey, is taxation. And as we said, you know, there's a crossover in the Venn diagram, but it's the next. It's money and tax.
- [51:13]
Robert Reidlove
Yeah. What. What was your discovery of the evils of fiat? Because, you know, it's funny, I discovered it in the same year. 2000, you said 2005. That's right. When I. I fell down the central banking rabbit hole, thanks to the creature from Jekyll Island.
- [51:26]
Dominic Frisby
Oh, yeah, yeah, I met him. What's his name again?
- [51:30]
Robert Reidlove
G. Edward Griffin.
- [51:32]
Dominic Frisby
Yeah, Edward. Yeah, Edward G. Griffin. I met him in Mexico in an Acapulco, if you've ever been to that conference. I met him one time.
- [51:39]
Robert Reidlove
Oh, nice.
- [51:45]
Dominic Frisby
I'd made some money. I was looking around at what to invest in. People were talking about gold. I started reading about gold. I read a book called by James Turk, who is a hero, called the Coming Collapse of the Dollar. And it immediately. It was like the American Civil War thing. It was one of those. Once you. You see it, you're like, oh, and suddenly so many things to do with the economy. First and foremost, why house prices cost such a ridiculous amount of money relative to what people earn. Suddenly I understood it. And then it's. It's. It's your blue pill or your red pill or your orange pill or your gold pill moment. I don't even know what color the pill is. I've lost track. But anyway, it's the pill moment and. And I had one of those pill moments with. With money, and I had. I had it with tax, and I hope I have it with something else, or maybe I don't, but, you know. Yeah, that was, that was that book, Gold and House Prices.
- [52:51]
Robert Reidlove
Yeah.
- [52:52]
Dominic Frisby
I just think what high house prices have done to the young. I just think it's like bitcoin's their revenge. Because old people understand it. But what high house prices have done to the young is terrible.
- [53:03]
Robert Reidlove
No. And it's caught, you know, contributing to homelessness, frankly. Like, there's one of my good friends, actually, he's a super wealthy guy, went to Harvard, Whatever, whatever. But he has this quote that he shared with me. He said that some of the best views in the world are wasted on the rich. And what he meant by that is that there are these homes, giant palatial mansion like homes all over the California coast and New York, and they sit empty nine, ten months out of the year. Rich people are the upper, upper, upper echelon of wealth to protect themselves from inflation. They're just buying these houses that sit empty and they're so rich they don't want to rent them out half the time. They just want their stuff in there. And so, I mean, that's not causing homeless.
- [54:01]
Dominic Frisby
I said they talk about bitcoin energy waste. We need to tot up all the empty homes around the world and all the energy that went into building them and then ban empty homes. I'm not calling for that, by the way.
- [54:12]
Robert Reidlove
But like, so that's like the way up restaurant. And then you could imagine how it's just increasing home prices at a lower level and just contributing to homelessness, frankly. So it's really awful.
- [54:25]
Dominic Frisby
Yeah. And they cost, so it costs so little money to build a house. Yeah, you can build a house for like 50 grand.
- [54:31]
Robert Reidlove
Yeah.
- [54:31]
Dominic Frisby
Get an IKEA house, you know.
- [54:34]
Robert Reidlove
Anyway, 50 grand on a Fiat standard. I wonder what it will be on a bitcoin standard. We're just going to 3D print our houses.
- [54:42]
Dominic Frisby
They're 3D printing houses in China for ten grand a pop. It's probably cheaper now. Like five years ago it was ten grand a pop, so I dread to think what they are now.
- [54:51]
Robert Reidlove
Yeah, it's incredible.