- Centralizing Credit in the Hands of the State

Centralizing Credit in the Hands of the State

Written by Art Thompson

Thursday, 09 October 2008 17:18

There are those who think that the money power rules. This is true to some degree, but historical example after example illustrates that this is a temporary arrangement, unless checked by widespread understanding of the proper role of government and limitations upon its power.

Wall Street Cartoon After a certain amount of power is lodged in the hands of government, even when that money power may have brought centralized power to government in the first place, a line is crossed and it is difficult for the citizenry to return to the other side.

One prime example in the 20th Century of government vs. money power was in Germany. A number of American and European industrialists and bankers helped Hitler rise to power.

According to the U.S. Kilgore Committee,

By 1919 Krupp was already giving financial aid to one of the reactionary political groups which sowed the seed of the present Nazi ideology…. By 1924 other prominent industrialists and financiers, among them Fritz Thyssen, Albert Voegler, [Emil] Kirdorf, and Kurt von Schroder, were secretly giving substantial sums to the Nazis....

Kirdorf, incidentally, had acted as a conduit for financially supporting German involvement in pushing Bolshevism into power.

As the power of the Nazis grew, the Thyssen brothers knew that they had to leave town, so they moved to Switzerland for the duration of World War II. If they had not, Hitler would have removed them as potential rivals just as he removed rivals on the Night of the Long Knives, eliminating the Brown Shirt leadership from any idea of supplanting him as leader.

Thyssen went back after World War II, eventually gaining control of Krupp. But while the Nazis had control and power to the level that they did, the Nazis ruled, not the money power.

General Electric, of which Gerard Swope was a prominent member, was another backer of Hitler. But the largest financial contributor to Hitler’s rise to power was I.G. Farben, providing some 500,000 marks. The board of its U.S. subsidiary contained some interesting names:

Edsel B. Ford of the Ford Motor Company
C.E. Mitchell of the New York branch of the Federal Reserve
Walter Teagle, director of the New York branch of the Federal Reserve
Paul M. Warburg, first director of the New York branch of the Federal Reserve

We all know how things turned out after Hitler was turned loose on Europe.

Another form of totalitarianism to be nurtured by the money power was Bolshevism. In the February 2, 1918 issue of the Washington Post, it was reported that William Boyce Thompson,

who was in Petrograd from July until November last, has made a personal contribution of $1,000,000 to the Bolsheviki for the purpose of spreading their doctrine in Germany and Austria….

Mr. Thompson deprecates American criticism of the Bolsheviki. He believes they have been misrepresented and has made the financial contribution to the cause in the belief that it will be money well spent for the future of Russia as well as for the Allied cause.

As in the case of Hitler, numerous wealthy Wall Street bankers and industrialists also lent a helping hand for the rise of totalitarianism in Russia. The results are a matter of historical record, with some 50,000,000 million deaths caused by that regime. (We fail to see how Bolshevism benefited anybody other than those seeking for power and gain.)

So, what do we make of the wealthy and influential using their means to help in the centralization of power in the government?

For starters, we only have to trace these power brokers’ careers to see how their investments rewarded them with positions of power.

Gerard Swope, of General Electric, and an advocate of corporate socialism, became the author of the New Deal under Roosevelt. Teagle (of the Federal Reserve and tied to Hitler’s financial backing and rise) became one of the heads of the socialist/fascist National Recovery Administration. And Paul Warburg and his associates became Roosevelt’s advisors. Small world.

Ultimately, the money power seeks for and lusts after political power. Karl Marx, the godfather of modern statist ideologies, who lived on the generosity of other wealthy individuals so that he could articulate ways for them to destroy the middle class, outlined ten basic steps for wresting property away from the petty bourgeoisie.

Marx knew that people would not surrender all of their property over to the state in one step, or, as he put it, “in the beginning this cannot be effected by means of despotic inroads on the rights of property…” So, he advocated “means of measures … which appear economically insufficient and untenable, but which, in the course of the movement, outstrip themselves, necessitate further inroads upon the old social order, and are unavoidable as a means of entirely revolutionizing the mode of production.”

This process of “further inroads” has been underway for decades in the U.S., but the Power Elite have been unable to consummate their objectives here so far.

But, they have accelerated their efforts. What we are seeing right now in the United States is an astonishingly rapid progress toward this process, of supplanting the money power with government power.

The latest announcement by Treasury Secretary Henry Paulson that the Treasury would purchase stakes in heretofore private banking instutions illustrates clearly where they intend to go.

Paulson’s statement relative to the government possibly assuming partial ownership of the banks is another major “inroad” Marx would recognize as a “means of entirely revolutionizing” our economy.

One can well argue the case that it was government that set the stage for this increase in power due to its role in bringing about the crises in the first place. (See The New York Times, “Fannie Mae Eases Credit To Aid Mortgage Lending,” by Steven A. Holmes, September 30, 1999.)

Paulson, according to well-known investigative journalist and Washington Times reporter Bill Gertz in his latest book, The Failure Factory, is “China’s man in the Bush cabinet.” Gertz also quotes former Pentagon official Frank Gaffney as stating that “Henry Paulson has been Communist China’s Armand Hammer.”

Hammer, who became chairman of Occidental Petroleum Corporation, and was the beneficiary of numerous lucrative contracts with the Soviets, epitomized the corporate socialist ruling class of that era. (For what it’s worth, Armand’s father Julius was a member of the Socialist Party and a prominent financial backer.)

The process in the United States has been gradual when it comes to building total power in the state. With this latest economic crisis, the steps are more bold – the bigger the assumed crises, the bigger the steps they can take to build power.

Business Week's cover depicting Bernanke as some kind of “Reluctant Revolutionary” is deceitful. Bernanke, Paulson, and their corporate socialist allies are pushing forward at a sprinters’ pace.

They must be stopped.