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The Geniuses Of Society Will Make You A Millionaire

Chapter 3 (Continued)

The Market Businessman

What follows is a recent speech by Eric Savage that puts true facts into context for a stunning yet unknown historical picture. Mr. Savage is an authority on international business and world economies.

James J. Hill
by
Eric Savage

Today, a major issue is America's trade deficit and America's lack of international competitiveness. Particularly troubling is America's trade deficit with Japan and Asia. The President issues grave warnings about America's trade deficit; Congress forms commissions to study it. CEOs of Fortune 500 companies issue grave warnings about America's weakness, our trade deficit with Asia and our lack of international competitiveness. Top economists and management gurus all warn that America's economic problems are because of its growing trade deficit and it's lack of international competitiveness, particularly with Japan and Asia. They tell us America's lack of international competitiveness threatens our economy.

Those people also give reasons for America's weakness in international trade. They all say the problems started after World War II. At the end of World War II, America was the dominant economic power in the world. Thus, they blame our trade deficit and weakness in international competitiveness on factors that occurred after World War II. They list reasons such as management laziness, excessive union demands, excessive government regulation, all of which eroded America's international competitiveness...now causing factories to close down and people to lose their jobs by the thousands. ...All this sinking economic strength happened since the end of World War II, they all say.

But nobody knows that 100 years ago a man called James J. Hill started something really magnificent that would have painted an entirely different picture of America's future than that of gloom today. But the parasitical elite destroyed that great and prosperous future when they destroyed Hill 100 years ago:

This is a story about James J. Hill. I'm going to tell you a story tonight that demonstrates what Mark Hamilton has been talking about these past four weeks...this phenomenon where a few of our working-class brothers start doing integrated thinking; therefore, they start pushing up the lid on this jack-in-the-box. When they do that, they begin threatening the parasitical-elite class and, as a result, they get smashed down.

As Mark has described, a person rises as he learns to integrate. As he rises, he soon buckles the lid on this jack-in-the-box. But then the envy class, those parasitical elite and their bogus jobs become threatened. So they push down the lid where it buckles. And the real damage is far more than what meets the eye immediately. The real damage comes with opportunity and prosperity lost in the future, as America is learning now, 100 years after Hill buckled the lid but was pushed back down.

Now, I will tell you the story of a working-class brother, James J. Hill. He was a railroad pioneer back in the mid-1800s, and his story is brought to light in a book called, "Entrepreneurs Versus The State" by Burton Folsom.

Let's travel back in time to the 1860s. America was experiencing its first railroad boom. Railroads were being built all up and down the East Coast. Well, as Mr. Folsom identifies in his book, two classes of entrepreneurs exist: market entrepreneurs and political entrepreneurs. Political entrepreneurs are what Mark has been calling lazy political businessmen who are part of the parasitical elite. Political entrepreneurs make their money by seeking government subsidies, by getting special government rights of way, and by accessing political clout. Indeed, they seek their success through political clout with government officials.

Market entrepreneurs are what Mark has been calling our hard-working brothers in the working class who are rising up. They are the precious head of the working class, men and women who learn how to integrate, rise up, and create jobs. Market entrepreneurs make their money by providing more and more values and services to society at lower and lower costs. They also create more and more jobs for us.

A Deception Was Woven

During America's railroad building boom in the 1860s, an opportunity arose for the parasitical-elite class. The political entrepreneurs seeking easy money got together with congressmen seeking popularity, and together they wove a deception. The deception was that only the government could finance the building of America's first transcontinental railroad. That deception 100 years ago is still promoted today. I remember reading about it in my history text books in school.

But that was a deception woven by the parasitical-elite class: by political entrepreneurs so they could line their pockets with lavish government subsidies and by congressmen so they could boost their self-worth and soak up self-glory by spending money that they controlled but did not earn. They could parade around and say, "Look how important we are. Look how we benefit the American public. We, the government, are building this transcontinental railroad and opening up the interior and west coast of America." ...A perfect setup for the parasitical-elite class to come together -- political entrepreneurs joining hands with power-seeking politicians.

So a deception was woven: only the federal government could finance the building of the transcontinental railroad. The public bought it, and with great fanfare, Congress went ahead with it.

Construction Begins

There were two companies: Central Pacific started building eastward from the West Coast and the Union Pacific started westward from the East Coast. The government paid those companies by the total miles of track they built. So what did they do? Instead of being bound by the disciplines of a bottom line, they were getting lavish subsidies from the government for the total miles of track they built. So they rushed into the wilderness to collect government subsidies.

But because they were being paid by the mile, these companies purposely built the longest, most circuitous routes they could possibly justify so they could get more government money. And they rushed construction to collect their per-mile subsidies. They rushed ahead with poor construction and poor planning into the wilderness.

Remember, the congressmen were spending money that they did not earn but controlled, and they wanted to reap the self-glory for spending that money. Those politicians, always trying to justify their jobs, always trying to show that they benefit the American public, got into the railroad business where they had no business being in the first place. Controlling tremendous amounts of money they didn't earn, they reaped all this self-glory that comes with spending the money. Now they could say, "Look how valuable we are; we're financing the building of a transcontinental railroad across America!"

But those bogus-job congressmen were part of the parasitical-elite class. They were not interested in getting out and exerting the nitty-gritty effort that business does when it spends money. They were glad to spend the money, large amounts of money, and reap the glory, but they weren't about to get out there and exert the nitty-gritty effort to put the controls on spending to make sure that money was spent right. They were not about to get right down into the details themselves to make sure that they were buying the right quality goods and that the railroad was being built over the right routes...not like a businessman would who is spending that money out of his own pocket.

Construction Corruption

So the whole program was laced with fraud to begin with. The line managers set up their own supplier companies selling their railroads substandard quality rails and ties at exorbitant prices. For, there was no control over the government money.

In addition, because they were getting paid by the amount of rail they built, each company was racing to build as much track as it could before the other one...to get the most money from the government. So instead of taking the proper time to carefully map out the best routes, especially vital for building over hills at the lowest uphill grade, they instead just raced forward and paid no attention to vital planning and surveying. No time to be wasted on planning and surveying, they built track over uphill grades that were far too steep. They didn't take the necessary time to do anything right. When winter came, they just kept on building over the plains, right over the ice! Because they wanted to build as much as possible, they did not wait for the ice to melt -- they just kept on laying track. When summer came, they had to tear up thousands of miles of track and rebuild it, before they could open the line! And to get more money, the two railroad companies built the longest routes with under-quality material. ...You can just imagine what the future operating costs this transcontinental railroad would endure.

Profit-Proof

Indeed, when the Union Pacific was complete, from day one it could not make a profit because it's operating expenses were too high. First of all, thousands of miles of shoddily built, under-quality track had to be constantly replaced. Second of all, because they took the extra long route, and it wasn't built over the lowest grade hills, they had to pay a lot more money in fuel costs, wage costs, and it took a lot more time to haul freight across the country. So the operating expenses were so high, from day one the Union Pacific was never able to make a profit.

Therefore, the government had to continue to subsidize the transcontinental line once it was built. Union Pacific had to continue to receive more and more government money or it would have gone out of business and stopped running. Indeed, Congress had just spent a fortune financing the building of the transcontinental line. Now Congress could not let their prize transcontinental line declare bankruptcy and close down. So, the government continued financing it.

After the Union Pacific was built, other political entrepreneurs got together with glory-seeking politicians in their areas of the country and said, "The federal government financed the Union Pacific, therefore they have to finance a transcontinental railroad in our region."

So Congress went ahead and financed the building of a transcontinental up North called the Northern Pacific, and one down South called the Santa Fe. Of course, both of those had the same results. They built extra long, circuitous routes; they turned into an orgy of fraud, substandard quality material used, no time taken to select the lowest grade hills. So right from day one, the other two transcontinentals lost money, and they had to receive government subsidies just to continue operating.

Enter The Market Entrepreneur

In the meantime, there was this young man, James J. Hill. He was born in a log cabin in Ontario, Canada to a working-class family. His father died when he was a young boy, so he had to get a job to support his mother. At seventeen, he moved to St. Paul and got a job for a shipping company. He started in an entry-level position, but he loved the transportation business. He really applied himself; he began making contacts, and he began moving up. Before long, Hill started integrating. He began making partnerships in local railroads that were being built in his area. Eventually, Hill started major integrating. He decided that he was going to build the first completely privately financed transcontinental railroad way up along the U.S. and Canadian border, which at that time was all wilderness with no settlers.

Well, from day one the idea was labeled Hill's Folly, and you can see why. How could someone build a railroad that could possibly compete when he had to pay all the building costs himself, and there were three others that existed farther South that had all their building costs paid by the government? Moreover, Hill's railroad was going to be way up North where no one lived. Those other three government-financed railroads were located in the main population areas of the U.S. In addition, once Hill did complete his railroad, how could he compete with the other three railroads when they continued to receive government subsidies and Hill had to pay his expenses through his own bottom-line profits -- and the three other lines proved that no profits existed!

Well, Hill went ahead with his plans anyway. Hill had to obey the disciplines of a bottom line. He couldn't go rushing into the wilderness to collect government subsidies. He had to build his line out West one extension at a time. He'd build westward into the wilderness a few hundred miles at a time. Then he would send agents back East to advertise to farmers in the East. Hill offered to move the farmers for free into this western wilderness so they could settle and start their farms. Then Hill would give them free rates to ship their crops back to the markets in the East for a couple of years until they got established.

This worked. For each extension West, he brought in farmers; he'd build up his track, and after awhile his extension West made money. From those profits, he'd finance another extension West...a few hundred miles at a time. He never stopped. He settled the entire northern border of the United States with his railroad. And, lo and behold, in 1890 the first American transcontinental railroad was built without one penny of government money. He reached the Pacific Ocean, and he did it without one penny of government money!

What an accomplishment! But most amazingly, one man did it! Not the entire might of the U.S. Government -- one lone man! One man and his integrated thinking was raising the prosperity of an entire nation! But, now that he accomplished this amazing feat, could he make it work? Here Hill was with his transcontinental, way up North when the population base was farther South; he was competing against three transcontinentals farther South that had all of their expenses paid for by the government. So, what would happen to Hill's transcontinental?

Competence

During the building of Hill's railroad, since it was his personal money that was being spent, he personally dug into the tough nitty-gritty details. With unyielding disciplines and efforts, he put controls on everything: He personally surveyed the routes; he made sure the shortest, most direct routes were built. When the track had to go over hills, he would spend time with the engineers and make sure they picked out the lowest grade hills. He personally supervised the buying of materials to make sure they got the highest quality rails and ties for the lowest cost. ...So what happened to Hill's Folly? Well, from day one, when it was completed, he made a profit! He ran circles around the three government-financed lines because his operating expenses were so much lower. In addition his freight took a lot less time to reach the West Coast. From day one, Hill made a profit. From day one, the government-subsidized transcontinental railroads never, ever turned a profit.

One man was running circles around the almighty U.S. Government! Of course, the incompetence and greed of career politicians could never bring values to the people. But one market businessman can raise the standard of living of a nation. ...Just think of the power behind Mark Hamilton's Great Replacement Program in which market businessmen lead our country and build our economy! Anyway, back to J. J. Hill:

This one integrated thinker's advantages kept building momentum and left Congress's follies in the dust. Hill was one real man from the working class with the competence to build jobs and values for everyone. He kept rising up. Congressmen, by contrast, are fakes with no business competence whatsoever. Thus, Hill left them all in his dust.

Hill built up the whole industry of the Northwest. He built feeder lines. For example, if copper were found a hundred miles north, he'd build a feeder line, move in a copper company so they could start mining and shipping the copper over his line. If lumber were discovered up in the mountain, he'd feeder line up there, move in a lumber company, and they'd start shipping the lumber over his lines. If there was a good clearing for cattle ranching a few miles south, he'd build a feeder line. ...Railroads discovered that feeder lines became a main source of profit.

But consider Congress's lines built for their own glory and self-worth. Because those railroads were receiving their money from the government, they would have to get Congress's permission to build a feeder line. Well, of course, everyone knows what happens when the government has to make a decision. A simple black-and-white decision to build a profitable feeder line that should be made overnight would be tied up for months, even for years. All the incompetent congressmen would get up and debate over it to get in the spotlight and appear needed and important. ...They cared only about themselves, not about what's best for America.

So Hill's railroad ran circles around the three government-financed railroads from day one. In addition, Hill brought civilization and industry to the Northwest: mining, lumber, apple farmers in Washington, wheat farmers on the plains. He built up the whole region along his railroad line.

Pushing Up The Lid

Once Hill completed his line to the West Coast, he did not stop there. He kept integrating out. Hill started integrating out toward the Orient. What about trade with the Orient? Hill did some calculations: if one major province in China substituted an ounce of rice a day for an ounce of American wheat, that would mean 50 million bushels of American wheat would travel over his railroad to China every year! American farmers exporting huge shipments of wheat to China -- what a possibility! So Hill sent agents to Japan and China to begin promoting American trade, the same way he had done during the building up of his transcontinental railroad.

In the meantime, we had these political entrepreneurs in America still running around wondering how to get more government subsidies to line their pockets. Yet one working-class brother was integrating out, pushing up the lid, creating jobs by the thousands. Indeed, Hill sent his agents to Japan and China to start promoting American products, and he went out and bought his own steamship line. He raced his ships back and forth between Japan and China and America. Hill built up American trade with Asia the same way that he built up business along his line. He would send products for free to the Japanese and Chinese if they would just try them out. Then once they tried them out, if they liked them they would come back, and Hill would build up the business.

Every day Hill filled his ships with American grain, and with copper from Montana, lumber from Washington, cotton from the South, textiles from New England, rails from Pittsburgh, apples from Washington. He would send them all free to the Far East. The Asians would try these American goods, and if they liked them, then they would come back for more.

In fact, Hill went to Japan, met with Japanese businessmen, and proposed that he would buy southern cotton, pay for it himself, ship it to the Japanese for free, and give it to them free. Hill would buy the southern cotton out of his own money if the Japanese would just try this cotton in place of the cotton they normally got from India. Well, the Japanese took him up on his offer; they liked it, and soon Hill's box cars were full of cotton, travelling from the South to the North to the Pacific Coast and then on to a steamship to Japan.

Hill used this strategy to build up all kinds of business. In 1900, Japan started a railroad building boom. Hill recognized the potential of railroads throughout Asia. At that time, the world's suppliers of rail were England and Belgium. But there were a few American rail makers in Pittsburgh. So Hill went to Japan; he purposely underbid the English and the Belgian, paid the difference out of his own pocket just to get the Japanese to try rails made in Pittsburgh. His strategy worked: Japan started buying all their rail from Pittsburgh, which built up the fledgling rail industry in America.

Hill's Miracle

What happened in the 1890s was nothing short of a miracle: When Hill started his push into Asia, trade with Japan was seven million dollars a year. Nine years later, with Hill in charge of this American mission into Asia, American trade with Japan alone was 52 million dollars! And he was now pushing into China as well! Hill was causing geometrical increases in American commerce. He was spearheading 100 years ago an American dominance of trade in Asia! In the meantime the political entrepreneurs, Hill's so-called rivals, were still running around Washington trying to figure out how they could get more subsidies. And Hill just kept on integrating and pushing out into Asia, spearheading a geometrical increase of American commerce in Asia. This was 100 years ago.

The Government's Folly

As time went by, the other three government-financed transcontinentals continued to lose money. The government kept pouring taxpayers' dollars into financing them. No, career politicians can never serve the people and provide values to society; career politicians can only drain the people by spending taxpayers' money incompetently. The public started getting fed up with this. In addition, as time went by, the fraud committed by the political entrepreneurs started to surface - things like setting up their own companies to sell substandard material at overcharged prices. The American public had to continue to pay subsidies into this hoax just to keep these other three government railroads running. The public finally had enough. So Congress, nothing but glory-seeking politicians, started self-righteously parading the corrupt political entrepreneurs in front of Congress and the nation, forming special-investigation committees.

Well, once again, Congress wove a deception: They presented themselves as protectors of the American public. They would nobly project, "Look how great we are; look how needed and important we are; we're going to protect the American public from those greedy and corrupt railroad executives." Yet, the root cause of the problem was Congress itself. Congress was the culprit! Congress spent other people's money in a railroad business where they had no business being in the first place. ...Incompetent politicians in the railroad business -- c'mon!

So instead of getting up and confessing, "Look, the problem was us. We now realize the problem was us getting into the railroad business in the first place. We had no business in there, so now we're going to get completely out." They could have been honest, but they were not. No, they didn't want to say that because that would have exposed their bogus jobs. Instead, they saw a chance to increase their bogus jobs and to increase their popularity and political power for re-election. They instead self-righteously projected, "Look how we earn our jobs. We're protecting the American public." Congress self-righteously started parading those corrupt railroad executives in front of the nation. Congress made the railroad executives solely to blame for the transcontinental fiascoes. And then, to "protect the public," they proposed to form the ICC, the Interstate Commerce Commission, and to pass Sherman Antitrust legislation to further get in there and regulate the railroads.

Hero Hill

Well, Hill knew what was going on; he knew what the story was here. So Hill moved to Washington. He set up residence in Washington, D.C. He personally talked to the congressmen. He testified before their special committees. He told them what was going on: the root cause of the problem was the government getting in there where it had no business being in the first place, financing these railroads, spending other people's money on rails. That caused the corruption. Hill gave the example of his railroad. He didn't accept one penny of government money while his railroad built up all the industry in the Northwest. And now his line was promoting an explosion of American trade into Asia while the three government-sponsored lines were sinking in corruption.

Now, the congressmen were intelligent men. They were college educated. They knew what Hill was saying. They knew it all made sense. They knew it was the truth, but they didn't care because they wanted to justify their bogus jobs. So they ignored him. They ignored Hill, and they went on to pass the ICC and the Sherman Antitrust legislation, which enabled them to get in and heavily regulate and punish the railroads.

Hill even wrote a book on this whole ordeal and circulated his book to the congressmen, explaining the situation. He presented all the evidence that showed how Congress was doing the wrong thing. But the bogus-job fakes in Congress ignored Hill because they wanted to advance their own power. This clique of people went ahead and passed the ICC, passed the Sherman Antitrust legislation. And what did that do? Those regulations made it illegal for railroads to make any kinds of deals with customers. They had to charge the same standard rate to all customers. Therefore, the dynamics Hill used to build up his railroad, to move in people for free, to ship their freight for free or for a low cost until they got established...was now illegal! Those same dynamics that he was now using to spearhead an American dominance of trade in Asia were all now illegal! Bam! Hill was a working-class brother who discovered integrated thinking, and he was rising up faster and faster, pushing up the lid to lift all the world into a jack-in-the-box explosion -- and BAM! The parasitical elite smashed him down. Hill's drive into Asia was over.

The year after the ICC's legislation passed, America's trade with Japan alone dropped by 40%. Now remember, Hill was spearheading a geometrical increase in trade. Trade with Japan and China was increasing geometrically. Now Congress passed this legislation and, plop, everything dropped 40%.

Hill's Miracle...Was Over

Hill was forced to sell his steamship lines, he got out of trade completely with Asia, and he was so frustrated, he retired. Suddenly, the miracle was over. Now, this was a hundred years ago! Let's stop and look at the implications of this. Let's stretch this out to see what Congress really cut off a hundred years ago. It was bad enough they cut off Hill's trade with Asia back then, but let's project that into the future to see what they cut off today:

Today, you hear our President and top CEOs and top economists saying that America's greatest danger economically is its trade imbalance with Asia, and our lack of international competitiveness. But who the hell knows that a hundred years ago Hill was spearheading an American dominance of trade throughout all of Asia? That trade dominance was cut off by pip-squeaks and clowns in Congress. Who even knows that? Nobody mentions that today, but everyone is warning about "the greatest economic danger facing America today". Americans are losing their jobs by the thousands, being outcompeted, factories being closed down. Yet who knows that one hundred years ago this one integrated thinker, one man, learned how to start doing integrated thinking, started pushing up the lid on this jack-in-the-box, started spearheading an American dominance of trade with Asia increasing geometrically, then WHAM! It was all smashed back down by a few pip-squeaks and clowns in Congress strutting around with superiority complexes a hundred years ago!

The politicians back then knew what they were doing. They were intelligent men. They were college educated. Hill went and explained the facts to them. But no, they wanted to increase their power. They wanted to justify and advance their bogus jobs. So they ignored Hill, and they cut off something magnificent a hundred years ago.

Let's consider this further. What did they really cut off? What really happened a hundred years ago?

The Unforgivable Tragedy

Hill was not only spearheading an American dominance of trade with Asia a hundred years ago, trade that was increasing geometrically, but Hill was also spearheading an industrialization of Asia, of Japan and China. He was getting the American trade in there; he was bringing in railroads, causing the railroads to be built up, causing factories to be built. He was causing American industry to follow its natural course and start flooding in and dominating Asia, which would have caused Asia to industrialize, Japan to industrialize, China to industrialize.

So what does that mean? Consider the spread of Communism in Asia. Communism cannot take over an affluent, industrialized nation. Communism never has; it can't. Communism only takes over poor, unindustrialized peasant countries.

Well, a hundred years ago Hill was spearheading a geometrical increase of American commerce in China. This was causing China's industrialization. But because he was cut off in the bud a hundred years ago by a handful of self-serving politicians, all that trade and industrialization was cut off. Forty-five years later, China was still a backward, peasant, unindustrialized country waiting for Mao.

So what happened? Communism swept through China; Mao killed 30 million people. Thirty million people! In addition, Communism spread into Korea and Vietnam, costing 110,000 Americans lives. Why? Because a hundred years ago a few self-serving politicians in Congress, trying to fake manhood, cut off something magnificent, smashed down this integrated thinker who was causing the industrialization of China. He would have prevented Communism in Asia and the deaths of 30 million Chinese and 110,000 Americans...history's unforgivable tragedy.

Chapter 3 Continues



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