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The Ultimate Leverage for Riches

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Chapter 9

Birth of Parasitical Elites
in
America

James J. Hill was a 19th-Century super value producer who pushed into a worldwide business dynamic. Just as Hill achieved great success in the American railroad industry and began spearheading an international expansion, he was snuffed out by a newly burgeoning parasitical-elite class in America. The story of James J. Hill is documented in the book "Entrepreneurs Versus The State" by Burton W. Folsom, Jr.

Political Entrepreneurs Versus Market Entrepreneurs

In that book, Folsom identifies how throughout history there have been two distinct types of entrepreneurs: political entrepreneurs and market entrepreneurs. Political entrepreneurs seek profits by working with the government to get subsidies, grants, and special privileges. They seek success through political pull. In contrast, market entrepreneurs seek success by producing increasingly improved values, products, and services at increasingly lower costs.

The Transcontinental Railroads

The building of America's transcontinental railroads provided a dramatic example of political entrepreneurs versus market entrepreneurs. In the 1860s, railroads began expanding rapidly throughout America. Thus, political entrepreneurs seeking easy dollars teamed up with Congressmen seeking unearned power and glory. Those political entrepreneurs lobbied Congressmen for the federal government to subsidize the building of America's first transcontinental railroad.

That situation presented a perfect combination for the parasitical-elite class: White-collar-hoax political entrepreneurs could line their pockets with lavish government subsidies, and the Congressmen handing out those subsidies could garner self-glory and justify their jobs by proclaiming how beneficial they were to the American people by financing America's first transcontinental railroad. Thus, a deception was woven by that parasitical-elite class through claiming only the government could finance an undertaking as large and expensive as building a transcontinental railroad. That same deception is still promoted in history books to this day.

With great fanfare, enormous subsidies were granted to the Union Pacific and the California Pacific. The California Pacific started building track from the west coast, the Union Pacific from the east coast. Those companies were paid by the government according to how many miles of track each laid. Consequently, both companies built along the longest, most out-of-the-way routes they could justify. That way, each company collected the maximum dollars from the government.

Spending public money they controlled but did not earn, the Congressmen were quick to claim credit for building America's first transcontinental railroad. But, unlike market-entrepreneur businessmen spending their own money, those Congressmen were not about to exert the nitty-gritty effort required to insure good value was received for each dollar spent. Thus, the building of that government-financed transcontinental railroad turned into an orgy of fraud.

As a result, after that first transcontinental railroad was built, subsequently called the Union Pacific, it had enormously high operating costs. Because extra-long routes had been purposely built, because time and research had not been taken to locate routes across the lowest-grade hills, each train took more time and fuel to complete its journey. More wages had to be paid; more equipment was tied up. In addition, because the railroad track had been laid so hastily, thousands of miles of shoddy track had to be pulled up and laid again before the first train could even travel over it. Thus, from the start, the Union Pacific could not make a profit. As a result, the federal government had to continue doling out taxpayer dollars just to enable the Union Pacific to operate after the line had been completed.

Soon other political entrepreneurs ganged up with local politicians to demand federally subsidized transcontinental railroads be built in their areas of the country. Thus, the federal government financed a transcontinental railroad in the North, the Northern Pacific, and a transcontinental railroad in the South, the Santa Fe. The building of those two additional government-financed railroads followed the same course as the building of the Union Pacific. The lines were poorly constructed. The builders focused on obtaining maximum government subsidies, not on achieving economy and quality. Thus, after the Northern Pacific and Santa Fe transcontinentals were completed, they too had unnecessarily high operating costs. Both lost money from the start, and both had to continue receiving government subsidies just to operate.

A Deception Is Woven

A parasitical-elite class consisting of political entrepreneurs, job-justifying politicians, and government-subsidized university professors propagandize to this very day that only the federal government could have financed the building of America's first transcontinental railroads. The story of James J. Hill is ignored.

James J. Hill was a market entrepreneur, not a political entrepreneur. He was an integrated thinker and a forward-essence mover. Hill was born in a log cabin to a working class family in Ontario, Canada. He got a job with a local railroad when he was a teenager. He loved railroads and integrated his life with them. Hill moved up quickly. Soon he became involved in the building of local railroads. Then, in 1880, Hill decided to build a transcontinental railroad privately, without any government subsidies. He would call his line the Great Northern.

Hill's plan to build a transcontinental railroad at the very northern border of America was labelled "Hill's folly." Why? First of all, Hill was building a railroad way up north in unsettled wilderness. From where would his business come? Secondly, Hill would have to compete with three transcontinental railroads to the south: the Northern Pacific, the Union Pacific, and the Santa Fe. How could a private railroad be built without government help and then compete with three other railroads that had their expenses paid by the government?

James J. Hill was forced to meet the disciplines of a bottom line. He had to stay within profitable red-to-black business dynamics. Thus, instead of "rushing to collect government subsidies", he built his railroad one extension at a time, westward into the northern wilderness. Hill would build an extension westward a few hundred miles, then move in farmers from the East, free of charge, in order to settle the land along his railroad. Those farmers would then start using Hill's railroad to ship their crops back East to market. Because Hill received no government money, each extension constructed westward would have to profit before another westward extension could be built. In ten years, Hill completed his transcontinental railroad, the Great Northern, without receiving one cent of government money.

Hill had to build each extension with detailed planning to achieve maximum efficiency at minimum operating costs. Hill personally mapped out and built along the shortest, most direct routes. He also carefully surveyed land to find routes containing the lowest grades of hills over which to build. And, with Hill spending hard-earned private money, he insisted on the highest quality workmanship and materials.

The three government-financed transcontinental railroads south of Hill's Great Northern were in the heart of the country and none of them could earn a profit. But, what actually happened once Hill's Great Northern reached the Pacific? All three government-financed transcontinentals went bankrupt and required ever more government bail-out money -- taxpayer money -- to continue running. In stark contrast, Hill's railroad flourished from the very start. The Great Northern produced a profit, even during recession years.

A Spiral of Inefficiencies

Because the federal government continued subsidizing the money-losing, government-financed transcontinentals, each of those railroads had to obtain government approval to build any new extension. On the other hand, once the Great Northern was running, Hill built his railroad with extensions called feeder lines. For example, if coal was discovered a hundred miles to the north of Hill's line, he built a feeder line to service that mine. If good trees were available for lumber on a nearby mountain, Hill would build a feeder line to that mountain so that a lumber company could move in and use his railroad to ship its lumber to market. If a suitable valley for cattle ranching existed a few miles to the south, Hill would build a feeder line to service that valley. Railroads discovered that feeder lines were crucial to their profitability. But whenever one of the government-subsidized railroads wanted to build a feeder line, it had to get approval from Congress since it was providing the financing.

Well, everyone knows what happens when politicians become involved. A simple business decision would get hung up for months, even years, before receiving approval. Thus, the government-subsidized railroads could not operate effectively. They could not compete with Hill's Great Northern railroad. What had initially been labelled "Hill's folly" by the establishment ran circles around the government-subsidized, poorly managed railroads.

Fraud Is Inherent in the Parasitical-Elite Class

Over time, the corruption that laced the government-financed transcontinental railroads began unraveling. Unlike James J. Hill's privately-financed transcontinental railroad, the managements of the government-financed transcontinental railroads were not operating by the disciplines of a bottom line. Thus, those white-collar-hoax political entrepreneurs did not exert the discipline required to closely supervise the construction of their railroads for quality and efficiency. The survival of those political entrepreneurs did not depend upon efficient management. Their survival, instead, depended upon exerting political pull. Consequently, the government-financed railroads were left wide open to fraud. Managers often formed their own supply companies selling substandard materials to their own
railroads at inflated prices. Payoffs and sellouts were rampant.

Over time, the fraudulent practices of the government-subsidized transcontinental railroads increasingly surfaced. The public became fed up with that corruption. Thus, glory-seeking politicians in Washington once again rushed in to grab attention and "serve the public". A new deception was woven. Congressmen now claimed they were the defenders of the American people and would expose the corruption in the transcontinental railroads. Glory-seeking Congressmen began conducting investigations into the nation's railroad business. Yet, in reality, those glory-seeking politicians were the root cause of that corruption.

As the fraud continued between political entrepreneurs and job-justifying politicians, consider what James J. Hill, the market entrepreneur, was accomplishing. After completing his profitable transcontinental railroad, Hill promoted the building of entire new industries in the Northwest, such as lumber companies in Oregon, apple farms in Washington, mining industries in Montana, cattle ranches in the plains. Hill helped businesses move to the Northwest and gave them special rates to ship their products back East until those businesses became established. This practice quickly built up business along Hill's railroad line.

Next, Hill began thinking about business beyond America. He began exploring opportunities in the Orient. Hill calculated that if a single major Chinese province substituted just one ounce of American wheat for rice in their daily diets, he could ship 50,000,000 bushels of wheat to China from America. ...Hill, using wide-scope integrated thinking, began moving beyond the boundaries of a restricted, single-nation mode. He began moving into a worldwide mode.

James J. Hill decided that he was going to promote American trade in Asia, just as he had promoted trade in the Northwest. So, he bought cargo ships and formed his own steamship company to ship American goods to China and Japan. He then sent agents abroad to promote American goods to Asians.

While the white-collar-hoax political entrepreneurs were still trying to figure out how to get more subsidies from the federal government, Hill was turning his attention to world business. James J. Hill was figuring out how to deliver increasing values to the world. He realized that the key to tapping the vast markets of Asia was to build trade by offering to ship American products on his railroad and steamships for free until trade could become established. So, Hill began racing his steamships back and forth between Japan, China, and America.

Hill was a heroic forward-essence mover. He exported to Asia wheat from Midwest farmers and cotton from Southern farmers. He offered a group of Japanese industrialists low-cost American cotton if they would test the American cotton in place of the cotton that they traditionally imported from India. If the Japanese did not like the American cotton, Hill offered to let them keep it free of charge. This worked. Soon Hill's boxcars were filled with cotton bales heading to Japan. Utilizing this same technique, Hill got both the Japanese and the Chinese to start buying American textiles from New England.

James J. Hill Was Spearheading
An American Dominance of Asian Trade

In 1896, American exports to Japan totalled 7.7 million dollars a year. Nine years later, James J. Hill had pushed that figure to 51.7 million dollars a year. He was spearheading an American dominance of Asian trade. And this was occurring a hundred years ago! James J. Hill worked diligently to promote American exports to Asia. For example, starting around 1900, Japan began a railroad building boom. England and Belgium were the traditional suppliers of rail. American rail-makers were still fledgling in the Pittsburgh area. But Hill recognized the importance of the Asian market for steel and rails. So, he personally underbid the Europeans to capture Japanese orders for American rail-makers.

Hill diligently promoted American goods in Asia, ranging from lumber from the Northwest to wheat from the Midwest, to copper from Montana, to apples from Washington, to steel from Pittsburgh, to cotton from the South, to textiles from New England. While the white-collar-hoax political entrepreneurs of the government-subsidized railroads were being closed in upon, Hill was booming American business while blossoming his railroad into an international dynamo.

So what happened next? Attention-seeking politicians began parading the corrupt political entrepreneurs infesting government-subsidized railroads before the public through Senate investigation hearings. Yet, it was Congress that created that corruption in the first place by self-righteously giving away public money it controlled but did not earn. Instead of identifying that Congress was the root cause of the problem, Congress began clamoring for strict regulation of the railroad industry. Congress then devised a strong-arm approach, proclaiming it was protecting the American public from greedy, corrupt railroad executives.

Congress proposed creating the Interstate Commerce Commission to regulate and control the railroads and the Sherman Antitrust Act designed to threaten and punish the railroad industry. Well, James J. Hill realized what was occurring. He travelled to Washington to testify before Congress. Hill meticulously explained what had happened with the government-subsidized railroads versus his privately-financed railroad and how the solution was for government to get out of the railroad business altogether.

But Hill was ignored. Those politicians and bureaucrats could not increase their power nor garner self-glory if they admitted that the root of the problem was caused by Congress getting into the railroad business in the first place -- a place in which government never belonged.

Conscious Destruction

Congress ignored James J. Hill and went ahead to create the Interstate Commerce Commission (ICC) and pass the Sherman Antitrust laws that heavily regulated and punished the railroad industry. The ICC and antitrust laws forbid giving any special deals to customers. Thus, the techniques Hill had used to build up trade in the Northwest and was now using to build American trade to Asia became "illegal" -- illegal not through objective law but through force-backed, political-agenda "law". As a direct result of that legislation, James J. Hill ended his expansion into the Asian markets. One year after Congress created the Interstate Commerce Commission and passed the Sherman Antitrust laws, Hill sold his steamship line. His farsighted, wide-scope methods were stopped by corrupt government regulations.

America's trade to Japan and China dropped forty percent within two years. ...Remember, before that point, America's trade with Asia had been increasing geometrically. Two years after that legislation was passed by Congress, America's trade with Asia dropped almost in half.

What happened in Congress was not a case of ignorance. James J. Hill actually set up residence in Washington to intensively lobby Congress and its investigative committees. Hill made sure those Congressmen knew what had really happened in the railroad industry and why. He even wrote a book about the situation and published the book himself. Still, Hill's arguments were ignored. For, Congress's goal was not to serve the best interests of the public.

Instead, Congress could garner public support and praise by attacking and regulating the railroad industry, not by admitting that they had been the root cause of railroad corruption. ...Power-seeking politicians with regulating bureaucrats will always block free enterprise and competitiveness. The intervention of politicians and bureaucrats will always drive prices up, service down, while spreading decay and corruption.

What Are the Implications?

How many people today have the slightest idea what happened a hundred years ago with James J. Hill? How many people today know what was started by a single, integrated thinking, forward-essence mover? How many people today know that James J. Hill was spear-heading an American dominance of trade in Asia one-hundred years ago!

Hill's incredible parade of value production, trade, business, and job creation was cut off in its infancy because of a handful of politicians. Seeking to advance their own harmful careers, with total disregard of honesty and reality, those politicians stopped a tremendous value producer, James J. Hill, and his push into Asia.

Hill's master plan was destroyed by corrupt Congressmen one-hundred years ago. And, one must not forget, those Congressmen knew what they were doing. Hill diligently informed them of the real situation -- what he had done with his privately-financed railroad, whose fault it was for the corruption that occurred within the government-financed railroads, and what his railroad was doing for America's international trade by its freedom to nurture new business. Yet, those elite, college-educated Congressmen proceeded to pass their self-serving laws and regulations in order to protect and enhance their own harmful livelihoods.

What Really Happened a Hundred Years Ago?

Let us examine this situation even closer. ...What really happened a hundred years ago? What really was cut off by the parasitical-elite class in Washington using force-backed political policies? James J. Hill was not only spearheading an American dominance of trade in Asia a hundred years ago, he was also spearheading an industrialization of Asia. Hill was pushing American business into Asia, causing railroads to be built, causing factories to be built, causing new businesses to be created. He nurtured American business in Asia, and that business was beginning to follow its natural course of flooding into markets and dominating trade. That, in turn, would have led to a rapid industrialization of Asia.

Had James J. Hill been left free to continue spearheading the industrialization of China a hundred years ago, the world would be different today. What kind of creative energies would have been released if China, a country of one billion people, had industrialized a hundred years ago? Where would civilization be today? Would we have cures for cancer, heart disease, AIDS? Would we be building cities in the oceans and on the moon? The contributions that the Chinese could have made to science, to technology, to the world economy are mind-boggling. But no. All of that potential was smashed. A billion people were pushed down and stagnated, 30 million Chinese were killed by communist predators. Why? Because Congressmen a hundred years ago wanted to exercise unearned power and feel false importance!

Thus Arose the Newly Born Parasitical Elites

A hundred years ago, one man learned how to honestly integrate business with reality. He started moving up. He learned how business worked; he learned how the American economy worked. Then, he learned how the world economy worked. He began learning how the whole up-rising of civilization worked. One man, a hundred years ago, learned how to do integrated thinking and forward essence movement. He then began pushing the lid up on society. If that man had been left alone, if he had not been stopped by the politicians, he would have swung open that lid, China would have industrialized, all of Asia would have industrialized, the whole world would have risen up, and America would have been sitting on top of it all.

Instead, James J. Hill was smashed down. The newly born parasitical-elite class consisting of politicians, bureaucrats, political entrepreneurs, and other professional value destroyers smashed down whatever threatened to expose their hoaxes, whatever threatened their nonproductive livelihoods.

Thus arose the newly born parasitical-elite class in America. They joined the worldwide parasitical elites that created an anticivilization on planet Earth. But this irrational civilization based on illusions and hoaxes will be replaced by the rational Civilization of the Universe sensed by James J. Hill at the start of the 20th century and implemented by Zon at the end of the 20th century.

E.S., 1989

Anticivilization: The irrational planet Earth riddled with dishonest parasitical elites like Woodrow Wilson, FDR, and the Clintons causing endless cycles of corruption, destruction, and death for everyone.

Civilization of the Universe: The rational universe filled with honest value producers like J.J. Hill, Ray Kroc, and Bill Gates providing endless happiness, wealth, and life for others and society.


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