Friday, April 11, 2014

The Karankawa Indians

The Karankawa Indians lived along the Texas Gulf Coast. The first written account about them was by the explorer Alvar Nunez Cabeza de Vaca in the 16th century who was taken captive by them. The Karankawa helped Jean Laffite recover after the hurricane in 1818. By 1860, just before the America Civil War, they no longer existed at all. Some say they had been completely exterminated. That is not necessarily the case. But any surviving members of their tribe must have been completely assimilated. Their way of life and their language were gone forever.

Karankawa encampment
image from
According to Cabeza de Vaca, the Karankawa were very tall, well over six feet. The men went naked and were covered with tattoos, and their nipples and lower lips were pierced. They covered their bodies with alligator grease to keep themselves from being bitten by mosquitoes.

Without any modern technology or medical care, the Karankawa were an amazingly hardy people. Cabeza de Vaca, who served as their slave for a time, observed that they could go out in the heat of the sun completely unaffected. In the winter, they bathed in frozen water, breaking the ice with their bodies. The elements did not seem to trouble them at all.

The word Karankawa means "dog-lover", and the Karankawa always had dogs with them. The dogs were a fox and coyote hybrid, ad they shared in the food of the Karankawa.

The Karankawa used dugout canoes to fish and hunt for oysters, clams, mollusks,turtles and porpoises, as well as the more common types of fish. When they went inland, they also hunted for deer, bear, and ducks. They were nomadic and changed their location according to the seasons and where food was most plentiful at the time.

Some people accused them of being cannibals, but that is not true. In fact, when Cabeza de Vaca related that his shipwrecked crew resorted to eating dead members, the Karankawa were quite shocked. They would never eat their own people. They did occasionally eat certain organs of beaten enemies, but that was not as a food source. That was to magically gain the power of their enemies.

This is something we should think about for a moment, because it is a problem we are dealing with even now as we speak. People forget the true meaning of cannibalism. It means eating your own kind, feeding on members of your own group. It does not mean eating somebody who is outside your group.

Many people are confused about this, not the least the Buddhists and those "enlightened souls" who recognize that other living beings have feelings. There is the circle of life, where being feeds on being. And then there is the circle of those we offer protection and whom we consider our peers.

It is not cannibalism to eat a cow, even though we understand that cows have intelligence and feeling. It is cannibalism to eat a member of your own family, tribe or larger group with which you are identified, such as all humans. The circle that you extend your protection to and claim as your own may be small, or larger, but it cannot include all living things, because life feeds on life.

Here is an article written by my father, Amnon Katz, that explains this better:

This brings us back to the meaning of piracy. Piracy would mean preying on your own. Privateering means preying on enemy ships. The whole difference between the two is where you draw the circle. If the Spanish are your allies, then preying on them is piracy. If they are your legally acknowledged enemies, it is privateering.

When the government of the United States chased Jean Laffite away from Barataria and later from Galveston, they were choosing piracy over privateering, or cannibalism over eating their enemies' organs. They preferred to fund their military expansionist ambitions by taxing their own people, instead of allowing their friends and allies and their own people to prey on acknowledged enemies. They were siding with Britain and Spain against the American people.

And that in a nutshell is the difference between feeding on the in-group and feeding on those outside the circle.

If we go against cattle ranchers and independent farmers, if we save all the marine life, and give land only to large factories that will exploit it to the max, in the end there will be nothing left to eat but each other.

The Karankawa Indians were not exterminated because they ate too much, used too many resources or destroyed the land. It is because they were too modest in their aspirations that they were not allowed to exist at all. The same is true for Jean Laffite and his establishment, and the privateering way of life.


Monday, April 7, 2014

President Monroe on Withholding from the Wants of Others

When we consider how very badly things turned out for most Americans in terms of economics in 1819, it might be a good idea to go back to President Monroe's first address to Congress and see the rosy forecast he gave and the ways in which he predicted there would be revenue to pay off the national debt.

In calling your attention to the internal concerns of our country the view which they exhibit is peculiarly gratifying. The payments which have been made into the Treasury show the very productive state of the public revenue. After satisfying the appropriations made by law for the support of the civil government and of the military and naval establishments, embracing suitable provision for fortifications and for the gradual increase of the Navy, paying the interest of the public debt, and extinguishing more than $18 million of the principal, within the present year, it is estimated that a balance of more than $6 million will remain in the Treasury on the first day of January applicable to the current service of the ensuing year.
The payments into the Treasury during the year 1818 on account of imposts and tonnage, resulting principally from duties which have accrued in the present year, may be fairly estimated at $20 million; the internal revenues at $2.5 million; the public lands at $1.5 million; bank dividends and incidental receipts at $500,000; making in the whole $24.5 million.
The annual permanent expenditure for the support of the civil government and of the Army and Navy, as now established by law, amounts to $11.8 million, and for the sinking fund to $10 million, making in the whole $21.8 million, leaving an annual excess of revenue beyond the expenditure of $2.7 million, exclusive of the balance estimated to be in the Treasury on the first day of January, 1818.
In the present state of the Treasury the whole of the Louisiana debt may be redeemed in the year 1819, after which, if the public debt continues as it now is, above par, there will be annually about $5 million of the sinking fund unexpended until the year 1825, when the loan of 1812 and the stock created by funding Treasury notes will be redeemable.
It is also estimated that the Mississippi stock will be discharged during the year 1819 from the proceeds of the public lands assigned to that object, after which the receipts from those lands will annually add to the public revenue the sum of $1.5 million, making the permanent annual revenue amount to $26 million, and leaving an annual excess of revenue after the year 1819 beyond the permanent authorized expenditure of more than $4 million.
The Louisiana Purchase and  the debt that came with it were not President Monroe's fault. That he could not predict that cotton prices would go down as soon as Europe recovered from the wars it had been embroiled in, and the bad harvest of the year without a summer (1816), was also not his fault.  Many of the problems he faced as a president were inherited from his predecessors. But to allow the banks to renege and default on their obligations to depositors and to hold the Second Bank of the United States above the laws of the states for purposes of the application of ordinary contract law was in my opinion bad policy as well as unconstitutional.

In President Monroe's Address from December of 1819, he spoke of the drop in the price of both goods and labor:
The great reduction in the price of the principal articles of domestic growth which has occurred during the present year, and the consequent fall in the price of labor, apparently so favorable to the success of domestic manufactures, have not shielded them against other causes adverse to their prosperity. The pecuniary embarrassments which have so deeply affected the commercial interests of the nation have been no less adverse to our manufacturing establishments in several sections of the Union.
So it seems that the price of unskilled labor, of staple goods and of manufactured goods all went down at the same time. If this was the case, you would think that people who had money would in fact be doing very well. Those of us with a positive net worth are supposed to thrive under these conditions of reduced prices. Let's remember who those people are. They are not all rich. Some are widows and orphans and retired people who happen to have a nest egg and who hope to use that money to live on for the rest of their lives. Often they deposit such money in the bank. In a depression, they should do really well, because there is plenty of food and other goods to be had at a highly reduced price. This means retired people ought to be suddenly able to afford a higher standard of living than they otherwise could.

 But guess what? The people who had money in the bank were not able to use the money to buy more things, because the banks would not release the money! This is an aspect of what happened during the Panic of 1819 and of every subsequent panic, including the one in 1929, that people don't tell you about. Depressions are not bad because the price of everything goes down. Lower prices are a good thing for the average person. Depressions are bad because the banks get to keep ordinary people's money, with the government's blessing.

But was President Monroe worried about people not being able to get to their savings? No, he was worried about the effect on businesses when the banks could not loan them money to take advantage in the fall in price of goods.
The great reduction of the currency which the banks have been constrained to make in order to continue specie payments, and the vitiated character of it where such reductions have not been attempted, instead of placing within the reach of these establishments the pecuniary aid necessary to avail themselves of the advantages resulting from the reduction in the prices of the raw materials and of labor, have compelled the banks to withdraw from them a portion of the capital heretofore advanced to them. That aid which has been refused by the banks has not been obtained from other sources, owing to the loss of individual confidence from the frequent failures which have recently occurred in some of our principal commercial cities.
The economy, even in the days of President Monroe, was seen as healthy when it was growing and unhealthy when it was not growing. But a non-interventionist policy ought in fact not to have cared whether there was growth. Debt fosters growth. The fact the Federal government was chronically in debt made it long for constant growth in the economy, and this in turn fostered a policy toward population growth and against hunter-gatherers.

Today, the same policies are still being applied, even while liberal-minded people give lip service to their concern about how the native American populations were expropriated of their lands. But President Monroe, in his first address to Congress, had no compunction about spelling it out. Hunter-gatherers had to stop hunting, because our mission is to expand the population to the max.
In this progress, which the rights of nature demand and nothing can prevent, marking a growth rapid and gigantic, it is our duty to make new efforts for the preservation, improvement, and civilization of the native inhabitants. The hunter state can exist only in the vast uncultivated desert. It yields to the more dense and compact form and greater force of civilized population; and of right it ought to yield, for the earth was given to mankind to support the greatest number of which it is capable, and no tribe or people have a right to withhold from the wants of others more than is necessary for their own support and comfort.
Wow! There in a nutshell is the idea that no one should be allowed to own land if that land could support more people if somebody else owned it! The "wants" of others trump your property rights!

Photo compilation of Smoky Mountains by Reverie Hikes from Wikimedia Commons

"The earth was given to mankind to support the greatest number of which it is capable." James Monroe

The fiscal policy of wanting loans for large businesses but not having specie available to small depositors is the same as the land policy of  enabling the high yield of denser populations and overriding the rights of smaller, less productive landholders to decide what lifestyle they prefer.

Notice that this is not a racist policy. At no time did the race of the native inhabitants come into it. President Monroe applied the same essentially socialist policy to everybody. His goal was constant expansion in order to fuel a growing economy in order to produce ever greater revenues to pay off massive debts. We have been on the same trajectory ever since.

Sunday, April 6, 2014

When the Banks Renege -- The Panic of 1819

Jean Laffite always paid for his purchases in specie. He paid his debts in silver and gold. When he wanted to make change, he could cut up a coin or a bar into smaller pieces, because the value of the coin was in the metal it was made of, not the printing that was on it. Try making change by cutting up a dollar bill today. Not only will the little pieces not be worth a fraction of the whole, but also it's illegal to do so!

During the War of 1812, some merchants in New Orleans tried to blame the Laffites and their establishment at Barataria for a shortage of specie. It is typical of people who themselves deal in bank notes without cover that they try to blame others who are more fiscally responsible for their own problems.

The United States was not on a solid financial footing during the War of 1812, but after the war, things became much worse. In 1816 the Second Bank of the United States was established. And in 1819, we had our first major Panic, aptly named the Panic of 1819.

What were the causes of the Panic of 1819? Those in the know will name a few: a reduction in the price of staple goods like cotton due to a resurgence of production in Europe which hurt growers in  the U.S., the printing of bank notes without cover by various banks, and the eventual  tightening of the money supply when the United States needed to withdraw two million in specie from the Second Bank of the United States to make payments in October of 1818 on its notes for the Louisiana Purchase, promissory notes made out to France but now owned by an English bank.  After this withdrawal, there was not enough specie to cover the bank's obligations.

The problem for ordinary people was that while banks that were in debt were not forced to pay their creditors in specie, and the Bank of the United States, though a supposedly private entity, was exempt from the laws of the states and could not be foreclosed on, ordinary people still had to pay their own debts, or suffer the consequences.

When a tighter fiscal policy was enforced at Second Bank of the United States, the saying went that the bank was saved, but the people were ruined.

Now, many populist agitators see this as an issue between the "wicked rich" and the "victimized poor", but this way of conceptualizing the problem hides the real issue: that not all poor people are treated the same. If we go by net worth alone, the Second Bank of the United States and all the other reneging smaller banks that relied on it, were actually poorer than an ordinary person who had a few coins in his pocket, because they had a negative net worth. The banks, including the very biggest one,  should by rights have been allowed to collapse and their corpses fed to their creditors.

President Monroe is thought to have been a fiscally conservative president, because he did not pass relief for the "poor". But how fiscally conservative is it to allow a bank to reneg on its obligation to depositors? The very poorest of the poor were the banks themselves. They should have been allowed to fail.

Would the United States not have fared better under pirates who dealt exclusively in silver and gold and made change in bits and pieces?

the value of money used to be in the metal and people made change by cutting it

Saturday, April 5, 2014

The Safety Net for "Pirates"

Did you know that Jean Laffite provided an on-the-job insurance policy to all the officers and  crew members employed under him? It makes a certain amount of sense. A privateer setting out to do battle might think to himself: "But what if I lose a limb?"

The very fictional Long John Silver leading captive Jim Hawkins despite his work  injury
from an illustration by N.C. Wyeth for a 1911 edition of Treasure Island

We have all heard of limbless pirates. A wonderful fictional example is Long John Silver in the book Treasure Island by Robert Louis Stevenson. The fact that his left leg was cut off close to hip made him all the more terrifying. It's not politically correct to admit it today, but when we see a fellow human being who has been dismembered, it scares us, because it makes us think that this might also happen to us. We feel this way, despite the fact that many of those who lost their limbs have done so while fighting for our freedom.

Jean Laffite was not a pirate. All his limbs were intact, and if you met him, you would think him a very courteous, soft spoken gentleman. However, he was also a privateer, and he drew up many contracts to equip and man privateering vessels.

According to historian William C. Davis, in his book The Pirates Laffite, Jean Laffite's standard contract for officers and crew members of his privateering vessels included compensation for loss of limbs while on the job (Davis 2005.398).
The overriding concern with profit was evident in another document handed to captains by Laffite and Humbert, a "charter for partition" that detailed the division of spoils taken from prizes, a touchy subject since the dawn of piracy. Half of everything went to the ship owner and outfitter, together with a five percent commission on the balance of the cargo brought into Galveston. The captain was to hold back another five percent of what was due to the crew pending dispensation of everything. If the crew took a vessel better than their own and abandoned their own as a result, then the new prize became entirely the property of the owner of the original privateer in order to cover the loss. All arms also went to the owner. Thereafter, in something resembling an insurance policy, Laffite detailed the special shares of profit to be given to a man should he lose an arm or a leg.  The first man to spot a prize was to get an extra share, as well as the first man to board one. The captains controlled four discretionary shares to hand out to men who performed particularly well, whereas any men who deserted or were caught stealing  from their mates should lose their shares. Then, in descending order, from the captain to the common crewmen, a division of shares by rank was detailed.

What do we learn from this? One, the profit motive is a wonderful thing, and it includes everything that is needed to keep a ship running smoothly. Two, the profit motive actually induces good entrepreneurs, like Jean Laffite, to provide insurance to those working under them under perilous conditions. Three, for all the egalitarianism that Laffite spouted, rank and personal performance played an important role in determining each person's share in the spoils. But because payment was percentage based , even the lowliest crew member was extremely motivated to work hard for his pay.

Do you think a safety net for injury on the job is something offered only under socialism? Do you think egalitarianism a la Jean Laffite requires all to be compensated equally regardless of their contribution? Think again.

Wednesday, April 2, 2014

President Monroe's First Address to Congress

James Monroe by Samuel Morse
from the wikipedia
Even before George Graham arrived in Galveston, President James Monroe had already decided that Jean Laffite should be asked to leave. As early as December of 1817, he said so in his first address to Congress. After describing the Amelia Island Incident, which culminated in the capture of that independent island by an American naval force, President Madison went on to say this:

A similar establishment was made at an earlier period by persons of the same description in the Gulf of Mexico at a place called Galvezton, within the limits of the United States, as we contend, under the cession of Louisiana. This enterprise has been marked in a more signal manner by all the objectionable circumstances which characterized the other, and more particularly by the equipment of privateers which have annoyed our commerce, and by smuggling. These establishments, if ever sanctioned by any authority whatever, which is not believed, have abused their trust and forfeited all claim to consideration. A just regard for the rights and interests of the United States required that they should be suppressed, and orders have been accordingly issued to that effect. The imperious considerations which produced this measure will be explained to the parties whom it may in any degree concern.
  To obtain correct information on every subject in which the United States are interested; to inspire just sentiments in all persons in authority, on either side, of our friendly disposition so far as it may comport with an impartial neutrality, and to secure proper respect to our commerce in every port and from every flag, it has been thought proper to send a ship of war with three distinguished citizens along the southern coast with these purpose. With the existing authorities, with those in the possession of and exercising the sovereignty, must the communication be held; from them alone can redress for past injuries committed by persons acting under them be obtained; by them alone can the commission of the like in future be prevented.
President Monroe's use of the term "impartial neutrality" belies his assertion that he has the right to "suppress" the establishment at Galveston, when Galveston is outside the territorial claims of the United States at that time. His questioning of whether these establishments were ever "sanctioned by any authority whatever" begs the question by what authority the government of any country, and especially an upstart like the United States,  is sanctioned.

To conquer a territory outside your own borders requires a declaration of war against those who hold it. To tell an established government that it must be suppressed is an act of war. You would think that if this is what James Monroe had in mind, he would be asking Congress for a declaration of war against the currently established government at Galveston. Instead, he informs Congress that he has sent a ship of war.

Jean Laffite had a policy engraved in stone not to make war on the United States, whom he regarded as his ally. But the United States more than once made war on him, without a declaration.