Wall Street as the co-government of the U.S.

I’ve written many posts about the revolving door between Wall Street and Washington, and how the U.S. government puts the interests of the financial oligarchy above the interests of the American public.

I’ve just finished reading a book that shows how far back in American history this goes.

 ALL THE PRESIDENT’S BANKERS: The Hidden Alliances That Drive American Power by Nomi Prins (2014) is a narrative history showing the interdependence of the Presidents and the Wall Street banking and financial community from the early 20th century to the present day.

Nomi Prins showed how American Presidents from 1910 to 1970 had to take the interests of Wall Street banks into account in implementing their policies, and then how, from 1980 on, the banks freed themselves from governmental restrictions to engage in ever-bigger speculations, from which they had to be bailed out.

Her story begins with the Panic of 1907 with President Theodore Roosevelt standing by helplessly while J. Pierpont Morgan summons bankers to his mansion and arranges a bailout to prevent financial collapse.

The Federal Reserve System was created in 1913 in order to prevent such a situation from recurring.

This was a major turning point in American history.  It gave the United States a financial stability and financial resources without which it could not have been a world power.  It made possible U.S. participation in the world wars, the projection of American global power and the great expansion of federal government activity—none of which could have been paid for on a pay-as-you-go basis or with foreign loans.

At the same time, it formalized the position of the great American banks as a kind of fourth branch of government.

Theodore Roosevelt on patriotism

Martin J. Sklar on corporate liberalism

The giant business corporation is a type of institution which has made possible economic growth and creation of wealth on a scale never before seen in history.  It also is a concentration of economic and political power that is dangerous to a free and democratic nation.

One of the great issues of American public policy, for more than a century, has been how we the people can get the benefit of the corporate form of organization without allowing it to swallow up everything else in American life.

Marty Sklar, a college classmate of mine at the University of Wisconsin in the 1950s, went on to become a historian whose field of study was this issue.  I didn’t keep in touch with him after college, but I recently read magazine articles paying tribute to him as a historian on the occasion of his death.  I was intrigued enough to get a copy of his major book, which is out of print.

The Corporation Reconstruction of American Capitalism, written in 1988, is about the debate over corporate monopoly and anti-trust law in the era when corporations first came to dominate the U.S. economy.

It covers roughly the same period and issues as Altgeld’s America, but in a very different way.  Ray Ginger’s book is about the hurly-burly, corruption and violence of street-level politics and labor struggles in Chicago, while Sklar’s book is about high-level discussion of public policy.

American statesmen saw that corporate trusts and monopoly represented a dangerous concentration of power, which farmers, laborers and independent business owners could not withstand.  But at the same time, these same corporations increased economic efficiency and productivity and raised the American material standard of living to a level never before seen.

I remember Marty in his college student days as a strongly committed left-wing radical.  But in his book, he seems well-content with the workings of American capitalism and American statesmanship.

Theodore Roosevelt on politeness

Theodore Roosevelt on Independence Day

 I like the Fourth of July speech given by Theodore Roosevelt in 1886 when he was a young rancher in the Dakota Badlands.

Much has been given to us. . . and we must take heed to use aright the gifts entrusted to our care.  It is not what we have that will make us a great nation; it is the way in which we use it.  I do not undervalue for a moment our material prosperity.  Like all Americans, I like big things; big prairies, big forests and mountains, big wheat fields, railroads . . . big factories, steamboats, and everything else.  But we must keep steadfastly in mind that no people were ever yet benefited by riches if their prosperity corrupted their virtue. … … 

Each one must do his part if we wish to show the nation is worthy of its future.  Here we are not ruled by others, as in Europe; here we rule ourselves. …… When we thus rule ourselves, we have the responsibility of sovereigns, not of subjects.  We must never exercise our rights wickedly or thoughtlessly; we can continue to preserve them in but one possible way, by making the proper use of them.

Click on Address to the Citizens of Dickinson for Theodore Roosevelt’s full speech.

Click on Reflections on the Revolution in the United States for reflections by Conor P. Williams on The League of Ordinary Gentlemen web site on how to celebrate Independence Day.

Click on The Fourth of July for thoughts on the significance of Independence Day by Maggie McNeill on The Honest Courtesan web log.

Click on Happy Independence Day: a Story About Becoming American by Ken on Popehat.

Theodore Roosevelt on church and state

Theodore Roosevelt. a regular churchgoer and Sunday school teacher, made the statement above in a speech at Carnegie Hall in 1915 on “Americanism” to the Knights of Columbus, a Catholic fraternal organization.  Click on Theodore Roosevelt on Americanism for the text of the entire speech.

When the government issued a new $20 gold coin in 1907, Theodore Roosevelt as President ordered the “In God We Trust” motto omitted on the grounds that putting such a motto on money trivialized religion.  Congress overrode his decision.  Click on When Roosevelt Dropped “In God We Trust” in 1907 for the full story.

I wonder what kind of acceptance TR would get in today’s Republican Party.

Hat tip for the graphic to Bill Elwell.

Looking back on the Progressive Era

I first read RENDEZVOUS WITH DESTINY: A History of Modern American Reform by Eric Goldman when I was in college in the 1950s.  It is a history of American progressivism and liberalism from Grant to Truman.  Its pivot is the Progressive Era, 1890-1920.  I reread it a couple of weeks ago to see if it held any lessons for today.

The issues of the Progressive Era – corporate monopoly, Wall Street’s power, corruption, global trade, immigration, racial and religious prejudice, the gap between the haves and the have-nots – are still with us today, and our thinking on these issues has not gotten far beyond the ideas of the Progressive Era.

Goldman focused on the ideas of middle-class reformers and college-educated intellectuals, rather than insurgent farmers and industrial workers, which I think is justified, because few social reforms have ever been accomplished in the United States without the support of the middle class.

He did not attempt to define progressivism and liberalism, words which represented different things in different eras.  If there are any common threads at all in progressivism, they are sympathy for the underdog, opposition to the power of big business and a desire to improve rather than replace American capitalism and democracy.  Communism, anarchist and other radical ideologies are outside the scope of Goldman’s book.

At the dawn of the Progressive Era, the big banks, railroads and industrial corporations largely controlled government in their own interest.  Corruption was rampant; bribery was common.  What was even more powerful than money was what Goldman called “the steel chain of ideas.”  It was commonly accepted that regulation of economic activity was (1) unconstitutional, (2) contrary to the laws of economics, (3) contrary to Darwin’s principle of survival of the fittest and (4) contrary to God’s law—all arguments that are still made today.

Goldman devoted several chapters to reform interpretations of law, economics, Darwinism and the social gospel.  The common thread was the pragmatic philosophy that there is more than one way of looking at any thing, and you should choose the one that works best for the benefit of all.  John Dewey was the great exponent of this way of thinking.  The problem with this way of thinking, as Goldman pointed out, is that a pragmatist has to make a separate decision in each situation because on the circumstances of the particular case.   Pragmatism is not founded on a rock.  It is hard for pragmatists to stand up to absolutists.

The rise of Theodore Roosevelt

I’m interested in the Progressive Era of a century ago because in many ways its issues were the same as those of today—immigration, globalization, foreign military intervention and corrupt relationships between government and monopolistic business.

Theodore Roosevelt, a many-sided, larger-than-life figure, was the leading personality of that era.  I recently finished reading The Rise of Theodore Roosevelt, by Edmund Morris, which deals with TR’s pre-presidential career.  It is as readable as a good novel, and won the Pulitzer Price for 1979.  Morris later wrote Theodore Rex, about TR’s presidency, and Colonel Roosevelt, about his post-presidential career.

Roosevelt would not be considered a progressive today.  He was an imperialist and a warmonger, although, unlike most of today’s warmongers, he was eager to take part in the fighting himself.  He believed in British and American world supremacy, based on the superior qualities of the Anglo-Saxon “race”.

His pre-presidential progressivism consisted mainly in fighting for honest government, and in being willing to speak frankly of “the criminal rich class.”  In that era, mere honesty was important and rare, just as it is today.  It was necessary to break up the corrupt relationship between corporations and government before anything else constructive could be accomplished.

Most Americans know the story of how TR built himself up a weak, asthmatic young boy into a successful college boxer, cowpuncher, big game hunter and volunteer cavalry officer who led the Rough Riders in their famous charge up San Juan Hill during the Spanish-American War.

The fact that he was a serious intellectual is not so well known.  He held his own with people like Henry Adams.  All his idle moments were devoted to serious reading.  Once he went on vacation for a month and, to pass the time, wrote a biography of Oliver Cromwell.  He wrote 14 books in all.  At least two of his work, The Naval War of 1812 and The Winning of the West, are read by serious historians today.

That’s not all.  He was a rancher who rode with cowboys in roundups.  He was a deputy sheriff who tracked down desperadoes and brought them to justice.  He made contributions to the science of ornithology and the art of taxidermy.  He was one of the founders of the U.S. conservation movement.  He had as wide a range of interests and as powerful an intellect as anyone who ever occupied the White House, with the exception of Thomas Jefferson.

Theodore Roosevelt – he hated to be called “Teddy” – does not fit into today’s liberal vs. conservative, Team Blue vs. Team Red categories.  It is good to be reminded that today’s political divisions are not eternal, and that the political divisions of the past cut across different lines.  It is also good to be reminded of what a real leader is like.