Economic Matters

The fundamental transactions that make up the economic activity of American society have not changed materially since 1860: people buy and sell products and services, they rely upon financing as the universal lubricant to facilitate transactions, and the prices of publicly traded securities (stock and bonds) fluctuate in reaction to various events in anticipation of their expected effects upon profits and interests rates. By today’s standard the involvement of the government in ordering and regulating transactions and markets in 1860 was slight. Moreover, subsequent experience has shown that such ordering and regulation can be both beneficial and pernicious – beneficial when it penalizes fraud and corruption and fosters fairness and equality of access to economic resources and pernicious when marginal benefits are achieved at substantial cost or when artificial scarcities restrict access to economic resources. The various markets in 1860 operated well enough but were capable of substantial improvement, and the same judgment is valid today.