During World War II, Milton Friedman, now an alleged free-market economist, came up
with his great proposal of a withholding tax, which of course is now part of the American
heritage, where the tax is painlessly withheld from you on your paycheck every month.
And it's only the use of withholding tax that's permitted this vast, enormous increase
in income tax rates.
It's pretty clear that without that, nobody would be paying up much, if at all.
Withholding taxes was originally supposed to be a temporary wartime measure.
As soon as World War II was over, they said it would be eliminated, purely for the emergency.
Of course, I actually heard of that.
As Madison once said, something like, every emergency is used by the government as a,
becomes part of a permanent, you know, instrument of power by the government.
something you know a phrase for that effect and boy is that is that true so
withholding tax by the way one thing withholding taxes it really violates the
13th amendment an anti-slavery amendment because what it does it it forces them
every employer withhold taxes from their employees without getting paid for it
the employer doesn't even get expenses for this the employer is forced by law spend his time
withholding other people's taxes so the employer is an unpaid coerced laborer for the
government. At any rate, this comes in World War II. The income tax comes in fortuitously
just in time along with the Federal Reserve system to finance the entire World War I war
effort in which these guys are living. We also have statistics comes in, the idea of
government statistics. Edwin Gay comes in as an economic historian at Harvard and dean
and the Harvard School of Business Administration comes in and becomes sort of the statistics
czar in World War I. It was small and general resources, the amount of money going into
it wasn't very much. It's very important. The government can't exist without statistics.
They can't plan anything. They don't know what's going on. So statistics become a key
important nodal point for the government to pour money into, to try to collect, to use
I'm going to give you some key quotes here, notice for example Harry Wheeler, who was
president of the U.S. Chamber of Commerce, came into being because the federal government
wanted a group of businessmen to represent business in some sense.
He said the War Services Committee, remember the War Services Committee, groups of industries
in a different industry, too, which negotiated with commodity section chiefs, there were price-fixing committees for each industry, or the magazine Iron Age, which is the official organ of the American Iron and Steel Institute, said it has apparently taken the most gigantic war in all history, which in those days was World War I, to give the idea of cooperation, any such place in the general economic program as the country
and the steel manufacturers sought to give it in their own industry.
So in other words, here's a marvelous situation, the war is just great because it provides
this instrument of cartelization, of quote cooperation, of course, with government and
among industry as a whole.
Another thing that Hoover did, I should mention, in his voluntary effort, he put out millions
of, literally millions of pamphlets to get the propaganda pamphlets, get the public to
do various things.
I think World War I began a clean plate program. Everybody should clean their plate for the war effort. I don't know what it has to do with the war effort.
It was a method of social control and it was a method of trying to get people to increase their demand for food, I guess, or quote, conserved food.
It seems to have very little to do with it, but a friend of mine who was a sociology professor got his start, his first job, he graduated in World War II, the same thing happened in World War II.
He got his first sociology job in World War II in the Department of Agriculture, I guess it was, and he was engaged in a clean plate program.
and they said the slogan of the program was, clean your plate and kill japs or something like that, starve and jab and clean your plate
and they would go around and find all the garbage cans, whatever the area was, Philadelphia, to make sure there was no food being thrown out
it was part of the war wastage, no waste program, starve and jab today, clean your plate and starve and jab today was the slogan
It was from this experience that you can see the total hatred of the federal government
which it has to this day.
And anybody who disobeyed any government program with Hoover programs was then put a stigma
on of being unpatriotic and pro-German or pro-Japanese later on, whatever.
And every one of these defense contracts, war contracts, in the war production program
was of course cost plus.
This is the beginning of the Cost Plus Doctrine, where you guarantee any cost, recovery of any cost, plus a guarantee rate of profit.
Beloved by these businesses, they could sit back and allow that cost to float upward, and the taxpayer pays for it.
This, of course, is now the whole nub of the current defense program, too.
The whole idea of the government repaying all costs plus a fixed guarantee profit rate begins in World War I, another great contribution in World War I to the economy.
The wheat program goes way up. There's a wheat price fixing program, of course, keeping it high.
The government was allegedly keeping down the wheat price, actually kept it up. It went up from $2 a bushel to $3 a bushel in two months.
was enormous increase, 50% increase in two months, and then after the war is over, they kept the minimum price until the summer of 1919 at $2 a bushel to keep it from falling.
So it's obvious the whole idea was to keep the price up as high as possible.
They also had a gigantic boondog on World War I called the, it dropped out of the history books, called the Hog Island program, Hog Island plant.
They got a plant to build ships for the war effort, and the idea was that they had a mammoth ship building plant on Hog Island, which is a swamp, it wasn't really an island, it was a swamp south of Philadelphia, it was in Philadelphia, in Delaware, and they got the land, I think they bought the land, the land was worthless, it was worthless land, it was a swamp land, they bought the land for $2 an acre or something like that, and they sold it, then they resold it,
The government, $1,000 an acre, enormous profit they got, and the whole thing was a gigantic boondoggle, the first ship that came off the docks at the end of the 1919, after the war was over, and they started pouring ships out, freighters called Liberty ships, and they were competing, they were actually competing, they were actually doing things, peacetime from about 1921, the whole thing died out, but again they were closely connected, the guys running this thing were closely connected with Morgan interests,
The Canadian Corporation or something like that. I have all the stuff home on that one.
This is an enormous multi-million dollar boondoggle. It's been in the Hollywood Island caper.
There's a lot of congressional investigations trying to figure out what's going on.
It's quietly suppressed, the investigation that it is.
Another thing that begins, by the way, comes to a peak around this period, continues for the rest of the 20th century, the Cuban crisis.
Again, this is very similar to the late 19th century. Cuba is producing sugar, its major
product. The United States is imposing sugar import quotas for the benefit of the sugar
growers in Louisiana and the mountain state, beet sugar, and it's constantly adjusting
the quotas. Then, of course, the Cubans worry about increasing their quotas and all the
rest of it. That comes to a head in World War I also.
We want to get sugar at a certain fixed price, in other words, sugar becomes a part of an international power play instead of just an economic venture on the market.
So the idea is to fix the price of sugar low enough the American sugar refiners would like it, but high enough for the American sugar producers would like it.
It's one of these things that keeps changing all the time, what this alleged optimum point is.
Our Cuban tool those days was a guy named General Garcia Menacal, he was the dictator, he founded a sugar mill in Cuba,
along with a Cuban American company, which had the largest sugar estate in the world and a sugar mill, along with a Texas congressman named Hawley,
the borrow of 10 million dollars from J.P. Morgan & Company, of course there's always a Morgan connection in this thing
and the engineer of fraudulent re-election, of course it sounds very familiar,
fraudulent re-election in 1916 at Menekal, then he was kicked out by a liberal revolution in 1917
and remember, there's a liberal revolution, there are no communists in this period yet, can't blame this on communism
Since he was there, since he was in with the Morgans and in with the Congressman Hawley, etc., with Mennekeau,
the United States immediately condemned the liberal revolution and accused the liberals of being German spies.
Couldn't accuse them of being commies, and there were no commies then.
The enemy then was Germany. They were all German agents, German spies, German agents.
And the United States then came to the support of Mennekeau, and Mennekeau had to be reestablished
The United States then shipped guns and ammunition to Menekal, plus 500 Marines, U.S. Marines
who landed in Cuba, several points in Cuba, to support Menekal, brought Menekal back and
crushed the Liberal Revolution.
The United States then put pressure on Cuba to declare war against Germany, too. I'm sure that the Germans were not exactly hurt, not severely injured by a Cuban declaration, and we threatened if Cuba did not declare war on Germany, that they would not buy their sugar. In other words, the sugar quota would be dumped again. We wouldn't buy any more Cuban sugar. Medi-Cal very quickly gave in, of course, and said, okay, yes, master, we will declare war against Germany.
When he declared war, shortly after the United States did, his reason for it, since obviously Cuba had no gripe against Germany, no conceivable gripe, his reason was because of the pacts and obligations which bind us to the United States.
A key advisor to this whole thing, a key guy on the Latin American desk of the State Department during the war was none other than young John Foster Dulles, he was only about 18 or something like that, very young and mysterious.
that pops up now as a key figure
later to become Secretary of State under Eisenhower
and to be an advisor of Versailles
Versailles Treaty
John Foster Dulles was a Foster
nephew of
John Foster who had been Secretary of State in the 1880s
and he got Menneke out of the quote request unquote
The United States stationed Marines in Cuba, which we then happily accepted, so the United States then stationed 2600 Marines in Cuba until 1923, in other words, six years, almost semi-permanent.
This is true of much of Latin America, that the Marines could come in under almost any circumstances.
And the excuse was to aid in the protection of sugar properties
and mining properties.
and I guess it's Menicaus and Morgan Sugar
Menicaus had teamed the government from 1921 with the support of the marines
governing by decree,
suspending elections,
or falsifying votes,
reaping huge private profits, which he put, I guess, in whatever was then the equivalent
numbered Swiss bank accounts
uh...
he also
enforced
export licenses like the United States press censorship like the United States had at the time of the war
postal and telegraph censorship and espionage acts
the United States had espionage acts
locking up people with alleged agents
not much pretext
men account followed suit and all of this was put through by the help of U.S. advisors
Casey didn't know how to set up an espionage act or set up the apparatus
and also incorporated all the rules and edicts of Hoover's Food Administration
now one of the things we have to realize, I haven't had a chance to go into all the
foreign policy actions of the late 19th century and early 20th
but you have to realize all these things would be not, Marines would be shipped in, for example a typical thing would be this, a Latin American country
borrows or sells bonds
or borrow money from Chase National Bank or Sells Bonds
to American bondholders
and then they start being defaulting. So then the question is, do these default on the bonds?
What should be done about it? The United States was pressuring these countries, Haiti,
Dominican Republic, whatever,
Nicaragua, etc., to raise taxes
in these countries so they could pay off the American bondholders.
Because obviously the people of those countries didn't want to have their taxes raised, there was a certain amount of friction there,
They refused to do it and the United States had sent marines down to force them to raise taxes
or tariffs or whatever to pay off American bondholders. So much of the
American intervention in Latin America was that sort of thing. In other words,
the United States intervenes on behalf of the American bondholders, whether bankers or other bondholders,
to force these countries to increase their taxes.
And all of this has been forgotten by America. I don't think it's hardly any American
The United States knows or cares about it. In Latin America, of course, they remember this very well.
So the perception of the United States-Latin American relations is very different in these two regions.
They remember each of these interventions, and they're bitterly opposed to it.
Another thing that happens in World War I is the nationalization of the railroad.
I alluded to this a little bit last time, I think. They were, quote, nationalized.
The U.S. government took them over, and the United States government then ran them.
You might think, well gee, the railroad interests must have opposed this. On the contrary, they're very happy about it for several reasons.
The Interstate Commerce Commission, which had been put in by the railroads, the railroads had lost control of the ICC to the shippers by about 1900 or so.
In other words, the shippers, the people, the industries who were using the railroads began to take over and so they started setting the railroad rates low rather than high.
So the railroads are very bitter at the ICC during this period.
There are actions to find a way to get out from under the ICC.
And then, the way the thing was worked out, the U.S. government nationalized the railroads,
paid all the operating costs, known as ran the railroads, paid the costs, usually deficits, expenses,
and gave the private railroads a guaranteed profit rate all during the war.
So in other words, the private railroads incurred no cost. They just sat back, collected a guaranteed profit.
The US government ran the railroad. It was great for the railroad. They loved it.
And then they could set the rates higher, too. In addition to everything else, they could set the freight rates.
Because they got out from under the ICC, which had now turned against their creator.
So for example, the people who started agitating for this renationalization were the railroads themselves.
Daniel Willard was the head of the Baltimore and Ohio Railroad and becomes head of the
Railroad Czar, the first council of national defense, Daniel Willard, comes sort of the
main railroad guy and he starts pushing for nationalization right away, he's president
of B&O, and the railroads are also agitated for what they call scientific management of
the railroad, which meant higher rates and cartelization, of course.
So, when the Federal Government decided to take it over in 1917, one thing they did is,
in the end of 1917, they guaranteed to the railroads a very high profit rate, essentially
their average 1916-17 profit rate, base profit rate.
They set up a railroad administration to run these nationalized railroads.
The official head of it was Secretary of Treasury McAdoo, of course we know of him as Morgan
Toole, but he of course had other things to do, he was also the secretary of the treasury,
he was like the nominal head of the railroad administration, and the real head, the vice
chairman who really becomes the basic head of it was a guy named Walker Hines, who was
chairman of the board of the Santa Fe Railroad, and the whole railroad administration were
They were railroad executives. They were just borrowed, so to speak, from their respective railroads to become the so-called cabinet of the railroad administration.
And they ran the railroads, and they insured a railroad bonanza.
So now, for example, they set the rates for the railroads, and they raised the freight rates very happily, which the ICC did not allow them to do.
This is something else. They really screwed the shippers. For example, before that, before World War I,
if you were to sample your shipping freight from one place to another,
first of all, the railroads would guarantee the time of departure. You'd have to depart at a certain time.
Second of all, any liability, if your goods got damaged en route, the railroads had to pay for it.
This is the way the market worked.
Well, the Railroad Administration immediately started redesigning the railroads, which continued from then on, by the way, after the war was over, too.
They started, they said, in the name of elimination of waste and efficiency in the war effort and all that jazz,
we're going to, first of all, we're going to allow the railroads to keep freight over here and not ship it out until each car is loaded up, fully loaded up.
You're not going to send out half full cars, because obviously railroads prefer to wait until their shipments, it's like a plane waiting until the plane's filled up. You might wait three days, what the hell?
So, the rules were then changed by the railroad administration so that the shippers had to wait until the car was filled up.
And second of all, the shippers had to take any losses. If there's any damage to the goods, it's tough. The railroads didn't have to pay for it.
This was put in as an alleged wartime measure, which obviously the Railroad Cartel measure
was a measure to screw the shippers for the benefit of the railroads.
And the railroads, of course, loved this.
They thought the railroad administration was great.
See, most people, if you look at it, say, gee, the railroads were being had to sacrifice
during the war because they were nationalized.
They loved it.
Their own people were running it, and they were handing it, and they were consulting
with the railroad people in order to decide what measures to take, what rules to put in,
in the name of efficiency and standardization and all that.
and also they eliminate a lot of competition, a lot of intra-railroad competition.
They say it's inefficient to have wasteful half competition.
So it's eliminating how many railroads are on each different route or how many railroads are on any given territory.
Just like they eliminate different grades or varieties of products in general, but they say it's inefficient to have 150 kinds of clothing, let's have only 30 kinds, things like that.
All this is a method of reducing diversity and thereby lowering the standard of living of consumers in order to benefit selected big businesses or selected big railroads in this case.
In other words, cartelization using the government as the instrument.
This continued on. This, by the way, was originally illegal and then legalized in March 1918 in the Federal Control Act, which legalized the takeover, so to speak,
Again, put through by the railroad lobbyists and the railroad administration people working together
In the spring of 1918, as they got going, they amassed 25% across the board increase in freight rates
which they wanted a little less, which the railroads had tried to put through and couldn't do it
And they did that with no hearings, by the way, usually when the government does something
or any public utility commission does something, they have a lot of hearings, testimonies
It didn't do with no testimony, it just did it
Also, of course, the passenger rate increased. The freight rates, of course, were the bread and butter of the railroad industry.
So after the war was over, the railroads sort of liked the idea to continue on.
They were happy, they would be happy to have this permanent, what the hell, they sit back, they don't have to do anything and they get a high profit rate and the government picks up what's operating.
What finally happened by the early 1920s is that the ICC came under railroad domination again.
The railroad allowed denationalization to go back under the old system, except now the ICC under railroad dominance.
There's another quote from Bernard Baruch as he looks back on his war experiences.
Many businesses have experienced during the war, for the first time in their careers,
Many businessmen, I should say, have the tremendous advantages, both to themselves and to the general public, a combination of cooperation and common action, in other words, a cartel.
He said, we should eliminate waste completely, we should have it permanently, we should have the channels of supply and demand so they would meet, allocate production, avoid extravagant competition, as he called it,
And that all business should be governed by a federal agency, quote, whose duty it should be to economize under strict governmental provision, such, some courage, excuse me, such cooperation and coordination.
And so when the Depression hit, for example, in 1930, Baruch was right there with a plan for what he called Supreme Court of Industry, a new War Industries Board, what he called, I don't know, a Peace Industries Board or something, and do the same thing.
and F.I. McAdoo came out with what he called a peace industry board to coordinate, to raise prices of strict production and all the rest of it
which is what the National Recovery Administration did, what Roosevelt did in the NRA is simply do that, institutionalize it
and have a series of codes, production codes, price codes, etc.
so that, for example, it would work very much like Bismarck's Germany or Fascist Italy
in other words, if you're a member of the steel industry, you have to join the steel association
Association, you have to obey the code set down by the NRA and the steel branch or whatever,
almost a duplicate of the war industry board, frankly cartelizing at it. You have to have
minimum prices and maximum production quotas for each firm as an alleged way of trying
to get out of the depression, any time you pour in consumer purchasing powers or deficits.
But this is the cartilaging branch. The head of the NRA, I think Roosevelt asked Bernard Baruch to be head of it, by the time he was getting old, he said, it's all right, my buddy Hugh Johnson can do it.
Johnson was the head of the NRA, and George Peek was the founder of the Farm Price Support Program,
was the head of the AAA, the Agriculture Adjustment Administration, which was the farm equivalent,
the Roosevelt's farm equivalent of the NRA, in other words, farm price supports restricting production,
production quotas on every product, killing every third hog, for example, the hog production
This is a farm price program. It's very much the way it is now. Acreage control, maximum
acreage control, maximum production hopefully, minimum prices, headed by George Peat. These
These are both declared unconstitutional by the Supreme Court in 1935-1936, which came in 1933.
The last gasp of the Supreme Court as an independent body declared these unconstitutional.
Then they were essentially reconstructed informally, at least the AAA was, as part of agriculture.
The NRA wasn't, but again in World War II the same sort of thing comes in as in World War I. It's almost a duplicate.
Secretary of State Roger Foster Dulles, a top Rockefeller lawyer, J.F. Dulles, the Secretary, the head of the CIA, which is virtually as important in foreign policy as the Secretary of State, especially in those days there was no auditing, nothing, no inspection, they just did it when everybody wanted.
The head of the CIA was his brother Alan W. Dulles,
he was also head of the OSS during World War II, the espionage outfit in World War II, which then became the CIA,
and two Dulles brothers running foreign policy, plus his sister Eleanor Lansing Dulles,
who was head of the Berlin desk of the State Department.
So we had, in other words, talk about a power elite.
This is one family, two brothers and a sister, running a whole American foreign policy, pretty remarkable.
They can't tell me they're the only people qualified in the country to conduct foreign policy.
What happens after World War II, the leap ahead from the current situation, is that the whole Morgan Rockefeller thing,
which we'll go through in the 20s also, the Morgan Rockefeller warfare continues until World War II.
In other words, it's older in the 20s and 30s and Morgan's more or less fairly dominant, but Rockefeller's also important.
With World War II and after World War II, the whole scene shifts.
The oil becomes dominant, so the Rockefellers take over.
There's no longer any warfare because Morgan's now a junior partner for Rockefeller.
Rockefellers are dominant. They run the whole show.
So what we have after World War II is essentially the Rockefellers taking over what's now called the Eastern Establishment.
Everybody else is a subsidiary.
as far as there's one out within that power struggle.
When the war was over, the railroads were happy to return to the private ownership,
except now the ICC, since they were controlling the ICC again, they were willing to do that.
In labor relations, the War Industry Board and other, there was a War Labor Policies Board,
uh... unions were created, in other words the corporatist program creating
unions in order to deal with them, to deal with the working class and sort of
channel them in the desired directions
was set up so that
the war
industries board, the war labor policies board, the war labor board, a whole bunch of them
essentially engaged in compulsory unionization, so the firms that were engaging in defense
war contracts, defense contracts
were forced to unionize, were forced to deal with unions. So what you had then was an
enormous increase in
union membership. Remember I said before, that before World War I,
union membership, a percentage of the labor force
varied from about two percent to about eight percent.
Something like that.
And it concentrated in certain specific areas, construction,
building trades,
anthracite coal, skilled labor, craft unions, but it was down to about 3% or so, let's say, when the war started and because of the World War I, because of the compulsory unionism, which the federal government engaged in, membership went up to 14% in 1918, it was a big increase of union membership, unprecedented increase in union membership, from about 3%, which is sort of the norm around there, to a sudden 14% because of the federal government
government encouragement with the behest of big business. Remember, the big business groups, the Morgans and the Rockefellers and all the rest of them, had come to the conclusion that they wanted a corporatist system, or a cartelized system.
Part of the idea was to have the workers represented in unions, which would then be part of this tripartite process.
The unions being going along with the system.
So at every war, this thing always had one union representative, like Samuel Gompers, people like that.
Also, the unions were used as in socialism, in a sense semi-prominent.
The Socialist Party was fairly important in this period.
The AFL unions were used as pro-war, to induct the laborers and unionists and socialists as a pro-war spirit.
They were used, in other words, to be the pro-war heads of labor, so to speak.
And the Socialist Party, by the way, split as well as the European Socialist Party when the war started.
The Marxist program of forces was against imperialist wars, what they call imperialist wars, and yet in every European country, the Social Socialist Party, the Social Democratic Party, the majority came out in favor of their respective war efforts, except in the United States where the majority of the Socialist Party continued to be against the war, the split-off group of the Social Democratic Federation, if you recall, became one of the pro-war people. Interestingly enough, the head of the Socialist Party in the United States,
Victor Debs was arrested in World War I because he was anti-war, locked up for the duration of the war effort, and later, there was very little civil liberties in World War I, if you continue to oppose the war, once it got started, you were usually locked up, and considered to be a German agent, and so on, so Debs was jailed during the war because of the opposition to the war effort, when the war was over, Woodrow Wilson refused to commute the sentence,
Warren Harding, a so-called conservative, immediately freed Debs when the war was over.
When the National Recovery Administration came in 1933 as part of the New Deal, recartilizing
the economy to fight the Depression, not only was the head of it, Hugh Johnson, a Baruch
War Industries Board person in World War I, all the other officials were too, most of
the other people. John Hancock was a old friend of Baruch, a co-author of Baruch, was a big
shot in the NRA in 1933. He was the Paymaster General of the Navy in World War I and head
of the Naval Industrial Program for the War Industries Board. Dr. Leo Wolman was the
I was the head of the Production and Statistics Division of the War Industries Board and became a member of the NRA and also of the National Labor Board, the NRA also set up the National Labor Board and he was a member of that.
There's a whole bunch of them, it just goes on and on, a whole bunch of these people who had been in the World War I, the War Industries Board, Food Administration, they all rushed back in in the New Deal period.
They really constituted the ranks of the New Deal in 1933. Boy, do they love it. This is it. Boy, we're back in action.
Also, they kept using war terminology during the New Deal period. In other words, when they reconstituted all this stuff, they would hark back consciously to World War I.
For example, Roosevelt said, I don't share any of these doubts on the NRA, the National Recovery Administration.
He said, quote, I took part in the great cooperation in 1917 and 1918 and it is my faith that we can count on our industry once more to join in our general purpose to fight this new threat, new threat being the depression, in other words, Germany is one threat, the pressure is another threat, all considered on the same sort of level.
The blue eagle, the insignia of the NRI, which was put in by Roosevelt, which was taken from the old Herbert Hoover Food Administration, was suggested to Roosevelt by Baruch.
And as Baruch said about using this old method, this logo or symbol, symbolized this cartelist battle, he said, quote, Baruch,
If it is commonly understood that those who are cooperating are soldiers against the enemy within,
and those who are, those who are omit to act on the other side, there will be little hanging back.
In other words, just as the anti-German forces were fighting by war, food administration regulations
had their insignia to show they were part of this fight,
and so the, those who put the blue eagle of the New Deal on their windows were also part of the great fight,
and the enemy within being whatever, being unemployment or whatever you want to call it.
Also, the conscription comes in in World War I, in addition, the income tax, Federal Reserve
system conscription comes in, of course, to draft people for the war effort, and using
a very similar technique, the idea was, again, to have local citizens, unpaid citizens do
the drafting, so instead of thinking it's the central government who are drafting people,
The local boards, local selective service boards who were doing it, who were then become
sort of, again, unpaid agents of government, unpaid enforcement agents, and the same way
the NRA had a local compliance committee to go out and make sure everybody's got the
blue eagle on them and abides by the blue eagle decision and so forth and so on.
They're made up of the, quote, best people, unquote, in the community, whatever that means,
I expect responsible citizens to enforce these things, not hippie types, those who will be trusted to go along with the government at all times.
Mrs. Peek writes about George Peek, her memoir about George Peek, who was head of the AAA, was also originally part of the War Industries Board, one of Baruch's people.
She said to him, that means Peek, with his war experience, war experience meaning the War Industries Board of course.
This whole thing clicks into shape, and some of the fine men of the country are coming to his call, as they did in 1917, with the same high purpose, this time fighting the oppression, quote unquote, with the same kind of cartelist vision.
New Republic, which you remember was set up by the Morgan partner of Willard Strait as their intellectual arm, of course also hoops it up for the war effort.
In fact, most of these guys were calling for war with Germany long before Wilson actually asked for it. Teddy Roosevelt kept accusing Wilson of being a coward for not declaring war by 1914, much less 1917.
And so the intellectuals poured into the government, as I say, as apologists, propagandists, and planners, both in the war and, again, in the New Deal period.
In other words, it was a very similar kind of situation. They learned in World War I and then they continued it on in the New Deal and then again in World War II.
The New Republic also said, for example, Herbert Crowley, the editor of The New Republic, looking back on the wars, what do they love about it, they said, during the war we revolutionized our society, I guess in a sense they did, they made it much more status and collectiveness, played by Permanently, John Dewey, a great philosopher, an aggressive philosopher from the University, founder of pragmatism and semi-socialism,
The War was great because during the war we learned to produce for use instead of producing for profit, ignoring the fact that these guys were making lots of money out of the war effort.
But anyway, John Dewey was meeting the march of the progressive and fragmented intellectuals later in the war.
Oh, Dewey's disciples, Dewey talked about the power of war to force concert of effort and collective planning.
War is a great thing. It means that everybody is forced to join together in collective effort.
This sounds very much like what the communists were saying. I guess it's true. Their purpose is not much different.
Robert Crowley is the editor of the New Republic, progressive intellectual, author of Teddy Roosevelt's major theoretician and guru,
JP Morgan was his major financial backer, and also beautiful circle, you see what happens is the Morgan partner sets up the New Republic,
Publishes that Crowley, the editor, Crowley is a major theoretician for Teddy Roosevelt, himself was a Morgan tool in his life, founder of the idea of what he called the New Nationalism, Hamiltonianism, Jefferson was a bad guy because Jefferson was a favorite of liberty and free market and minimal government, Hamilton was a great guy, Hamilton was a favorite of big government, government industry, partnership, you know, all the rest of the stuff. Crowley's father was a Saint-Simonian Socialist.
Saint-Simoni was a believer in one of the few Saint-Simoni's in the United States
and truly imbibed the father and then continued on, went to Harvard, learned about pragmatism and all the rest of it
and the spinal work stuff and the one mighty rotten synthesis
those guys are being value-free in this thing, they weren't value-free, to say the least
Rex Tugwell, famous collectivist, economist, and one of the big people in the New Deal period,
the leader of the so-called collectivist wing of the New Deal.
When you talk about collectivist in the New Deal, you're dealing with very subtle distinctions here.
At any rate, Rexford Guy Tugwell, I guess in the Department of Agriculture,
but he's one of the so-called brain trusts in the New Deal period.
He wrote about World War I, looking back on it, in 1921-22.
He said, gee, it was a great war. He talked about America's wartime socialism.
He hailed it as being great. It was socialist. The only thing we have to realize, it wasn't proletarian, it wasn't Marxist-Leninist.
It was big business, it was this kind of corporatist socialism, big business, big government collaboration,
and big union, creation of new big unions.
and he said that it was a terrible thing, the war ended when it did
most of these people didn't really come out flatly and say this, they believed this
didn't quite have the goal of saying it, it's too bad the war ended as early as 1918
because if he said, quote, only the armistice in November 18
only the armistice prevented a great experiment of control of production
control of price and control of consumption, in other words, prevented
establishment of permanent collectivism, and he said during the war
The old system of competition had, quote, melted away in the free and new heat of nationalistic vision, unquote.
And if then, of course, when Mussolini's fascism came in in Italy in the early 1920s, all these guys loved it.
Tugwell loved it. Herbert Crowley loved it. If you read The New Republic, it's very instructive to go back and read The New Republic, for example, in the late 1920s.
Crowley was still the editor. They loved Mussolini. They thought that fascism was great because fascism had now achieved in peacetime what the World War I had achieved in wartime and what the United States and Britain and France, except for Germany, had achieved in wartime. Italy had finally established permanently as a triad of corporate state systems and national trade associations, central planning, fixing of production and prices and all the rest of it. In fact, the civil liberties had to go by the board. They didn't really care that much about
Who cares about civil liberties people far away? They didn't even care about civil liberties much in the United States, much less in Europe.
So Italy became a favorite, big businessmen loved fascist Italy, liberals loved fascist Italy until about 1935.
In other words, until the Italian-Ethiopian War, when foreign policy got in the way,
must have been even beloved in the New York Times and all the other organs of established opinion.
or making for right thinking opinion
a writer in Scribner's magazine
hailed the World War I and he said
professors in all countries, the United States and all over the world countries
get this, professors in all countries, quote, fought
they weren't really on the front lines, they fought in the sense of being in Washington or
Berlin or something
they fought and they managed affairs
Thus refuting the ancient, libelous assumption that they constitute an absent-minded, third-sex.
So they're really macho, you see, the professor is fooling me, macho by being out there
and planning and coercing like everybody else.
That's great, for instance, super accomplishment.
The other thing that starts in World War I, several other things start to be mentioned,
the idea of public housing, federal public housing begins in World War I,
with Franklin Roosevelt in the Navy Department, building naval base housing
getting the idea of that
government dams, government electric power, it starts in World War I as part of the
Muscle Shoal Nitrate Plant
in Tennessee
which starts the idea of the TVA, later the TVA
during the 1920s it was pushed by Hoover, the idea of a dam, government
electricity, government dams
Muscle Shoals and also of course in
Colorado River
in Las Vegas, which used to be, I forget now what it's named, it kept being renamed, I've
forgotten now, it's either the Boulder, I think it's the Boulder Dam, when the Democrats
got in, they called it the Boulder Dam, the Republicans got in, they renamed it the Hoover
Dam, the Democrats have then changed, I guess it's Boulder, now here's an example of government
operation and a little bit of socialism, so to speak, you'd think therefore the private
electric companies would be against it, they were not against it, private electric companies
There's always been a favor of government electric power plants. Why? Because what happened was one thing, the government builds the plants at taxpayer's expense, provides cheap electricity, subsidizing electricity users at taxpayer's expense, and usually the private electric companies then buy the electricity from the government vans and sell it to consumers. They love it. But it all depends. The idea that business automatically dislikes government intervention is totally incorrect. It should be one of the key lessons of this course. It's almost the opposite.
Depends again on what they're doing. So here we have a situation where the government is providing cheap power for electric companies. Fantastic.
Roosevelt, when he set up the TVA, the Tennessee Valley Authority in 1933 or so, he harked back to the World War I experience.
He said the World War I, the power development of the war days in TVA, Tennessee, leads logically, as he said, to national planning.
So it all started with this wartime precedent. Also another thing which starts in World War I
was the so-called garden city development. The beginning of the garden city concept where public housing and government build planned cities.
They did it in New Jersey, in Delaware, and Connecticut.
This is based on the crazed housing theory of a British intellectual named Ebenezer Howard, I guess the name was.
The idea was everybody should live in a planned city.
There should be a certain amount of open space.
There should be gardens everywhere, and all the rest of this nonsense, which led to, essentially, World War II public housing developments,
which we're only now getting away from, in other words, the architectural theory
everybody's supposed to live in a way that architects think we should live
it's finally being beaten back by hard experience
turns out people don't want to live in garden cities, they like to live in neighborhoods and things like that
so the whole idea that the few left-wing architects put the plan where everybody's going to live
Well, he begins to take root in World War I. There's not very much, but the seeds of it begin there. As I say, it sprouts until about the 60s and 70s.
In the 1960s, I think it was, Jane Jacobs writes a magnificent book, which I recommend everybody, called The Rise and Fall of the American City, I think the name of it,
in which she attacks this whole idea of the planned city and the planned housing developments as being rotten and causing all sorts of terrible social consequences.
As I say, unions grow enormously as a result of this coerced, Franklin Roosevelt, who was part of the Labor, Assistant Secretary of the Navy, in charge of the Navy Department of Labor policies, one of the leaders in this coerced union thing,
and again he learned from that to put into effect in the NRA in 1933, and then the Wagner Act in 1935, and the idea of coerced unionism.
When the war was over, most of these guys fought like hell to keep the system going even though the war was over.
Baruch wanted to continue it, Hoover wanted to continue it, but to some extent it did continue until the summer of 1919.
The wheat price was kept up by the federal government until June or July 1919.
Finally, it petered out.
For one thing, Wilson was—Secretary Baker, Secretary of War, was sort of in favor of the free market.
market, he really thought this should only be for wartime and so he led the idea of getting
rid of it.
One of the things, this is a remarkable thing that the government did, the government created
a government union, this is a remarkable point which has been overlooked by most historians.
The lumber industries in the west, the forests in the west, most of the unions, to the extent
they were unionized, in the hands of a radical anarchist union called the Industrial Workers
Workers of the World, the IWW, so the Left-Way Anarcho-Syndicalists, I guess would be the
best way to describe them, the industry of workers of the world, were strong in the logging
industries in the Northwest and the mines and the lumber in general, in Idaho and Eastern
Washington and Washington State and things like that.
So since the IWW, the anarchists were against the war, against the entry into the war, they
There were striking and creating problems, so the federal government set up its own loggers union.
It's a pretty remarkable situation, development.
In the summer of 1917, the government set up the loyal legion of loggers and lumbermen,
the so-called 4L movement.
It was a so-called union headed by a general.
It was the first time any general had been head of a union, I'd say.
The general's name was Bryce Diske.
So we had Army Officers, General's Army Officers, running the so-called Union, General Bryce
Disk, B-I-S-Q-U-E. So this is a government, a Union in other words, organized by the U.S.
Army, in which the lumbermen more or less dragooned like a post by force. In other words, first
of all, the IWW was outlawed and the leaders were rounded up in jail for the rest of the
in the war and later, and second of all the lumbermen were sort of the dragoon into this organization, the 4L movement.
So it was organized by the U.S. War Department, that's what it was called then, in November 1917.
So it was headed, excuse me, Colonel Vice-Disc, he wasn't a general yet, he became a general later.
Colonel Disc and a whole bunch of about a hundred army officers organized this union.
and the, they call it 4L-ism, and the Signal Corps division of 10,000 men were assigned to it, sort of run it, sort of head it up and make sure that everybody was looking at.
And they organized lumber camps under the Army and the Signal Corps, and they purchased lumber and also they really became a leading light in the lumber industry.
They imposed an eight-hour day on the lumber industry.
The unions were fighting for an eight-hour day.
I guess it was ten hours, so the army decided to impose it.
And so we had the army union running the lumber industry,
and then ordering the lumber operators to have an eight-hour day
and to bargain with a so-called union.
And they established a minimum wage for the lumber industry,
and they had improved working conditions and whatever.
And then they had a bill empowering the president to seize any mill or lumber camp that refused to abide by these union regulations.
It was really like a government union, or army union, which essentially ran the industry.
By the end of the war, the 4L movement, the royal legion of the longer than one movement, had a membership of 120,000 men,
which really costed the entire lumber industry in the United States.
Every union member had to sign a loyalty oath, and the loyalty oath went as follows.
I, the undersigned, in consideration of my being a member of the loyal legion of loggers and lumbermen,
do hereby solemnly pledge my efforts during the war to the United States of America,
and will support and defend this country against enemies both foreign and domestic.
I like that, domestic. What is a domestic enemy supposed to do?
I further agree by these presence to faithfully perform my duty toward this company by directing
my best efforts in every way possible to the production of logs and lumber for the construction
of Army airplanes and ships to be used against our common enemies.
You notice, this is essentially coerced, essentially forced labor, forced labor situation here.
And then I will stamp out any sedition or acts of hostility against the U.S. government,
which may come into my knowledge, and will do every act and thing which will in general aid in carrying this award of a successful conclusion.
So these were the labor conscripts, so to speak, in the lumber camps.
and Colonel Disca and the whole army began to think of this, well the heck with the war effort, the war effort is only beginning, this is going to be a permanent labor market in this country where we can organize all the working force into a loyal legion of whatever, it doesn't have to be only lumbermen to obey the government, to obey the corporatist dictates, they said this is the end of class war, see this is the end of class war, we're going to have class harmony now, what they call forellism,
They used the term, they thought of it as a philosophy, as a way of life, labor management relations, pronounced for all of them.
And they wanted to continue it when the war was over. Unfortunately for us, or unfortunately for them, the end of the war meant the end of coercion.
They couldn't no longer compel people to join the Union, you know, the Union began to die out.
So, by 1930, they still continued, during the 1920s, by 1930 they only had about a few thousand members.
But they really continued in business for about 12 years after the war was over, more than that.
And when the New Deal came in, in the 1930s, four of them revived in the CCC camp, the Co-op, the Something Conservation Corps.
I think citizens, which was set up by the New Deal to solve the problem of unemployment,
the way you solve the problem of unemployment is you get people into the government service.
The idea was, Civilian Conservation Corps, set up in 1933 to combat the depression.
The idea is you take unemployed youth from the cities and get them out of the healthy climate of the country and get them to chop trees.
The New Dealers loved this. It was a great thing. It's a way of militarizing labor force, bringing in a whiff of the army. It was really run by the army, the U.S. Army.
One of the theories was, for example, to mobilize the unemployed youth into a forestry army.
Then of course, in the meantime, you train them for any future war effort, you get them, sort of, lead them in. If a second World War should break out, there'd be a corps, a cadre.
They were equipped with CCC people, even though they were technically civilians, were put in some army camps, army-type camps in the country. They were equipped with army-type uniforms.
They were gathered in army recruiting stations, they were living in army tents, and they were run essentially by the US Army.
The guy who was the head of it was a guy named Robert Feckner, who was a former war laborer, leader of the former war labor board, again, bringing harking back to the World War I experience.
Richard T. Ely, one of his last books, I think he lived until the late thirties, but he was pretty old by this time, founder of Progressive Economics, by the way, Richard T. Ely was also a post-millennialist, pietist.
Piatists, those who believe that government is God's major instrument of redemption
uh, redeemed citizens in the world for government
anyway, in 1931, to combat the depression, Richard E. Ely writes a book where he proposes a
peacetime army
notice again the military connotations
a peacetime army
recruiting the unemployed to be directed, quote, quote, by an economic general staff
and this army, quote, should go to work to relieve the stress of all the vigor and resources of
Brain and Brawn that we employed in the World War.
Again, you have a mighty alliance of militarism, intellectuals, and corporate state.
Things I mentioned before, automobile industry began, very small, began in bicycle shops.
The bicycles, by the way, are an important harbinger of, if you're interested in the
theory, there's a very good book by Hanschel, David Hanschel called from American Systems
of the Mass Production.
And it talks about the great importance in the 1890s of the bicycle industry.
Before that, the bicycle was, if you remember from old movies, it was shaped like this.
And you'd stand on top of this very big wheel, so it was unsafe, first of all, you couldn't
go very fast, second of all, it kept falling over.
So it was only used by people, a small number of people, sort of aficionados.
And then some guy in England invented the safety bicycle, it was then known as the safety
bicycle, which we know and love today, and it had equal wheels and a chain axle system
linking them up.
So, as a result of this invention of the so-called safety bicycle, which was imported, the first
big bicycle manufacturer in the United States, which made safety bicycles, was done in Pope,
Pope Bicycle Company.
And the bicycle was a big boom, I had the figures at home, a big boom in the 1890s,
I think a huge number of, like, millions of bicycles per year was sold for that 10-year period.
And the thing about bicycles is that technologically it got people used to, got technicians and craftsmen and mechanics used to the idea of the rubber tire and the axle.
I mean, the axle wheel, rubber tire complex, which hadn't been really, you know, done before.
Before the wheels were railroad wheels and they didn't have rubber tires, they didn't have this whole system.
Secondly, you've got the public use of the idea of mobility, in other words, of starting at one point that you prefer and going to another point you prefer,
without schlepping out of the railroad terminal and waiting for the schedule.
In other words, a railroad transportation means you go down in the terminal, it's fixed terminals and fixed tracks and fixed time,
and you go there and you walk or take a horse and carriage or something, horse and buggy the rest of the way.
So people's transportation before the 1890s over land was fixed time schedules and fixed terminals.
All of a sudden with a bicycle people got used to the idea of individually controlled transportation,
going anywhere you want, not to fixed terminals, going whatever time you want, to boot, stopping along the way and all that.
In other words, total individual control and mobility of transportation.
So the automobile came in and it was paved away for the automobile in two ways. One technologically, the axle-wheel-tire techniques and two philosophically, so to speak.
In other words, people got used to it and wanted to have more of this, wanted to be able to drive faster and all that. So the same idea of individual mobility then gets picked up, of course, with the automobile.
People, and sort of a plaything for the rich. If you were Esther or Vanderbilt, you got
an automobile for whatever, $20,000 or whatever it was. And they were very fancy, they were
beautiful, they were hand tool, whatever it is, you know, and all the rest of it, as antique
automobile lovers can attest. But they weren't an economic factor. And the thing which gave
rise to the dominance of Henry Ford, one of the geniuses of this thing, was that he was
And the first guy to say, look, the hell with this place and the rich stuff, I want to make
it all beautiful for the general public, I want to make it all beautiful for the masses.
To do that, it's got to be cheap, no frills, it's got to be cheap, it's got to be therefore
very low cost and lots of them.
And so the whole idea was afford them with the gear, they want to be able to mass product.
And this is why the Ford Motor Company grew from a small blacksmith shop to a mighty four
million car a year outfit.
So going along that line, it was Ford who then said, well, if it's going to be a given
product, first of all it's going to be a uniform product, it's not going to be hand-tooled
or hand-crafted, and it was really for the board of the American industry to the fullest
extent the modern concept of mass production and interchangeable parts.
That's interchangeable parts, each of which is manufactured or fit together not by the
by the craftsman, not by hand-fitting, but by machine, machine-produced interchangeable
ports. Because of that, Ford was able to turn out mass production in cheap products, those
uniform products, and his whole organization was geared toward this end, and to, as I said,
A cheap car and therefore a cheap low-cost car. It used to be thought back in the 1920s
that Ford really invented mass production and it was called Fordism. So during the 1920s
we had an early 30s there were arguments about is Fordism good or bad? And then the revisionist
came along and said that Ford didn't really begin mass production, it was really begun
in the 19th century. Way before that was the McCormick Reaper and the Singer sewing machine
and the arms production. Now, however, with the Hounshell book, the re-revisionism, he goes through a very detailed analysis of Ludwig Mises and he comes to the conclusion that Ford really didn't invent mass production in the modern sense.
It's back to Ford, in other words. Because he said McCormick and all these guys, it's true there was a large production and there's interchangeable parts in one sense, but the interchangeable parts were not machine produced, they were all fitted together by hand craftsmen.
So it wasn't really what we consider modern mass production, it really begins with Ford.
So then we have, with Ford, of course, then invent the assembly line as part of this process.
In other words, the assembly line then makes it much quicker because you have the thing
rolling.
It takes the factory and builds it up to its highest point, so to speak, because not
only do you have all the people and raw materials and whatever concentrated in one spot, is
what happens to the factory.
You also have the moving assembly line which rolls on and then uniform things are done to it and the car comes out at the end.
And so Ford begins mass production and he has enormous, I think it was 1913 or a little later,
he builds the River Rouge plant, which is the mightiest mass production factory ever built up to that point, I think maybe even since.
I think it was 1913, the River Rouge.
What he kept doing was keep reducing the amount of time it takes to produce one car.
In other words, I think when he started this mass production, it took 13 hours to produce
one car.
One car was coming off the assembly line every 13 hours.
And then it was, and he kept improving and getting bigger and more mechanized, it got
down to an hour and a half, three hours, hour and a half, hour and a quarter, and finally
by the 1920s, it was down to a minute, a car per minute.
In other words, at the maximum point of the River Rouge plant, one car is coming off assembly lines per minute, a magnificent achievement.
Okay, so Ford then takes over the automobile industry, becomes a dominant force by this kind of innovation.
From 2% of the automobile industry came and he went up to about 50-60% of the industry.
By 1914 or so, he was about as over two large companies at that point as the Ford and other people kept growing and the others kept dropping out.
The other innovation of Ford, the Ford had two great innovations. One was the whole concept
of mass production, interchangeable ports, all that, moving assembly line. The other
one was marketing, just as important as production. In order to sell this stuff, I mean in order
So it was Ford that really developed the idea of branch supply plants, of branch distribution
plants, of nice franchise dealers who sell the car on the retailers and then can turn
back the amount to the home sales of the manufacturer, and so it was creating the whole worldwide
marketing system to sell the cars, because if you distribute, if you produce a couple
The whole mass marketing process was developed by Ford, too.
It was an enormous achievement, and again, he started poor.
I think it was a Horatio Alger concept. I forget where he grew up.
Of course, he wound up in Michigan very early, apprentice and all that.
I think he was an apprentice bicycle machine shop person.
The young gets plows back profits, borrows money from his relatives and plows back some profits, had nothing to do with the banks as a matter of fact until he died, nothing to do with the Wall Street bankers.
As a result his political views were not part of the establishment, he was a maverick type in general.
Until his grandson took over and his grandson was in with the Wall Street banks and immediately
changed his viewpoint to sort of liberal Republican or moderate Republican, which I guess is his
official establishment view.
At any rate, the other company that was growing up fast, by 1913, 1918, was General Motors,
which grew up by merger.
In other words, it really, instead of developing by innovation and by productive work, so to
It merged a whole bunch of other companies, Buick, all these things which we now think of as divisions of General Motors, originally independent companies,
Olds and, but different manufacturers, Olds and Buick, Mr. Buick and Mrs. Packard and all that sort of stuff.
And they merged into DuPont and the merger, excuse me, merged into General Motors, the merger being promoted by Morgan,
One of these mergees, merger persons, was named Charles Stuart Mott.
I forget, I think he originally had a, I forget what he had, he had an axle company or something, a Mott company.
They merged into General Motors around this period, I think 15 or so.
And Mr. Champion had the Champion spark plug company that I think became part of General Motors.
Well, Mott, in a sense, owned Flint, Michigan. He only died a few years ago, the age of 90 or something, and he had, you know, like a, I know, 100,000 chairs which owned motors and, of course, that developed over the years.
See, he virtually owned Flint, Michigan, the whole town of Flint, the city of Flint, which is essentially Mottsville.
He's got a statue of Mott and whatever.
His son, Stuart Mott, is a big left-winger, I guess he's an heir, and contributes a lot of money to left-wing causes.
So Durant, by 1919-1920, was getting the General Motors in the point of collapse,
where they had merged, they hadn't really achieved their big size through any kind of productive effort.
And they were just collapsing. They were literally going bankrupt. They couldn't hack it, compared to Ford.
And so, at the point of collapse, Morgan and DuPont, the DuPont family, which essentially owned General Motors, took over General Motors, owned it, owned a huge percentage of General Motors stock.
So DuPont didn't know what to do with this company, it was falling apart, and by happenstance
they got a management genius to run, take it over, be the head of it, named Alfred P.
Sloan.
And Sloan reconstructed General Motors to make it not only a viable corporation but
even outgoing Ford.
Sloan did several things. First of all, he reorganized his own motors into the modern
committee system. In other words, Ford literally ran the company all by himself.
He had a few yes-men.
And that was it. And he ran the whole thing, and he was against the idea of structure.
And essentially, Sloan put in the whole
quasi-decentralized committee structure that most corporations have now adopted in the United States. In other words,
executive committee and then different lines, independent branches, each with their own
policy and then they're coordinated by the center, so sort of a semi-decentralized system
with flow charts and specific lines of responsibility and all that, and hierarchical structure,
and Ford is very much opposed to this, and I think there's a speech, I have it at home,
I should have brought it, a speech of his in the early 1920s, around 1923, and he's
I'm against all this junk. We have no lines of command. We have no structure. Nobody knows what he's going to do.
There's what's now called job description. Everybody does everything.
And, of course, he, Ford, is running everything with the help of a few yes-men.
And the problem with running everything turned out, as the Ford Motor Company grew,
it was just too much for the guy to do. One person can't really handle all this stuff.
And it got to be a point of inefficiency of management. It got to be top heavy.
So, in addition to this, we had this regularized accounting auditing flow. Each department was
audited and had yearly goals and all this stuff we're all very familiar with and management
courses and all that. It's really the slowest start of this whole business. They sort of
regularized or formalized structure, job descriptions, auditing of each division, making sure each
division is making a profit and at least not making losses. All that sort of stuff begins
with General Motors. It was a tremendous improvement in managerial technique. They of course also
built up a marketing system imitating Ford. They did one better. They started financing
their own dealers. In other words, here we have an average dealer wants to sell cars
that don't have much money. General Motors acceptance corporation is set up to finance
and lend money to the dealers. So this is an important innovation in marketing, financing
also built up dealer loyalty and all that, and the third thing they did, again as a marketing
innovation, Ford believed, if you have this huge, he believed in a huge plant, if you
have a huge plant, you can make it very cheap, you can have a cheap car, but that's the good
thing, the bad thing is you have to have a uniform product, so he was stuck with a River
4 million Model T Fords every year. Model T was a basic design and it was lovable. It was a great car. Unfortunately, it was boring.
In other words, first of all, it was an old black color. He was against color. He said cars have always been black, sort of an old curmudgeon type and lovable, but on the other hand, cars have always been black, so therefore it's got to be black all the time.
and what cost money is the change colors and the change models. He didn't believe in annual
model changes. The Model T is it, the Model T is there forever and it's it. General Motors
slowly realized that the public wants, that the public is getting more affluent, they're
getting more used to cars, they like to have changes, innovations, fashion changes, more
different colors, different styles. So as General Motors innovated in the mid-1920s,
the idea of annual model changes and different colors, as a matter of fact the idea was more
More than that, different colors. General Motors coined the slogan, a car for every purse.
In other words, they started the idea of different lines where they have expensive cars, medium-sized
cars, and cheap cars. So you have a catallact for wealthier people, and a shovel life, a
cheap for less lower income people, etc., etc. They have a whole structure, a whole line
Design Structure, a car for every pocket, for every purse. The Ford only believed in
one cheap car, the Model T, and that's it. So as a result of that, as a result of Ford
sticking to his tried and true methods, and General Motors being more flexible because
having a smaller, not believing in a bigger plant, having several plants, each of which
will do different things and then changing every year, being more flexible, General Motors
A lot of these model changes are attacked by leftists as being frippery. We only have people like it, even if it is frippery. People like to have cars that are a little bit different, instead of having the same boring car year after year. And why not? What's wrong with that?
So at any rate, Ford began to lose a lot of money, Ford Motor Company,
sticking all during the 1920s to the old Model T,
cheaper, only in the sense, cheaper except that you're stuck with this product, you can't change models.
In other words, in business you have to make choices, and one of the choices is
being inflexible, having a huge plant which is very low cost, but you're stuck with it,
it causes the enormous amount to change the model, change the product,
having a slightly higher cost but more flexible product where you can keep making changes so this is an important choice to be made if that's something and you can't sort of do it a priori you have to look at your feel for the market
anyway Ford gained a lose a lot of money for about 10 years and General Motors again again it was that period from 1925 to 1933 or something which entrenched General Motors as the dominant automobile firm and Ford then became second rank
Ford only would only be able to save what finally Ford threw in the towel, shut down
for a year or two, I think it was about two years, in order to make these changes, to reduce
the size and have different models and try to catch up with General Motors, which in
almost impossible, at least they started adopting the same techniques of, you know, annual,
now there's no real difference between Ford and General Motors in that sense, they all
have a whole structure of cars and they change kind of different colors and they change models,
The General Motors set the pace for this, and everybody was able to attain dominance in the industry.
And it wasn't a dominance because a lot of money was poured into it, the money was almost going down the tube
until Sloan started this whole new process, whole new thinking about automobiles.
Chrysler came, even though Chrysler began to go bankrupt recently,
Chrysler really only begins around 1925 and comes up very rapidly, so it becomes a major company by about the mid-30s,
In 1920, as the country was revolting against the war, against the outcome of the war, against
Woodrow Wilson, Republican nomination becomes important, there's a big fight for Republican
nomination, the guy who was supported by the Morgans and the Rockefellers, mostly the Morgans,
with General Leonard Wood who was an old friend of Teddy Roosevelt who has just died recently
and with General Wood it begins the fight for the draft of the Universal Military Training
around 1913 or 1914 or 1914 really, just as the war starts.
He had the Morgan cache, so to speak.
One of his backers, for example, was Morgan's son-in-law and Stimson and Lodge and Root
and all these people were, Morgan himself were backing Wood.
The other big candidate was Governor Loudon of Illinois, who was married to a Pullman
heiress and therefore had the Pullman fortune, sort of a personal fortune, he didn't have
much big business backing but he had his own money, his wife's money that he could pour
into the married Pullman.
So there's a big fight between Loudon and Wood and it looked as if neither of them could
to really get the nomination, at which point a compromise candidate was worked out, namely
Senator Harding from Ohio.
Now it's true that Harding was a, being from Ohio, was automatically a Rockefeller person.
Although the equation wasn't as, you know, absolutely as it used to be, Rockefeller had
moved to New York, but still in all, Ohio Republicism still meant stolen Rockefeller
influence.
Harding was a very small town, newspaper publisher, really small town, a town of a couple thousand people.
But he was back, of course, by the higher Republican Party, and by Boyce Penrose, who was a boss of Pennsylvania.
And the Morgans finally decided it was okay. In other words, George Harvey, who was the guy who got Woodrow Wilson on the road to politics,
The head of Hawburn Brothers and a close friend of J.P. Morgan was on the scene there. He was in constant touch with four Morgan partners.
And they told him, okay, Harding is okay. We prefer Wood, but we'll settle for Harding.
And so, Loudon was kind of erratic and, you know, who knows?
Anyway, the Morgans then backed Harding as their second choice.
By the way, Harding was also a friend of Judge Gary, the head of U.S. Steel, for instance, as Morgan.
So that was another recommendation. He was so close to Gary that Gary gave a job to Harding's top mistress.
Harding is kind of a major mistress of this man, Britton, and he's looking for employment, so Gary gives her a no-show job.
So at any rate, so the Morgan's father, Harding, was fairly safe, and Harding then sweeps into
the presidency because of the vote against the Democrats.
Harding's cabinet was sort of like a Morgan Rockefeller coalition, basically a lot of Morgan
people in the cabinet.
The basic deal was made, I think, between Morgan and Rockefeller.
I can't substantiate it, I think it's pretty true.
But this time oil was now very big, there was a big oil war continuing between the Standard
Standard Oil on the one hand, all over the world, and the Rothschild-Royal-Duck-Shell
combination.
Essentially, the mortgage said, okay, we'll allow a pro-oil foreign policy.
In other words, the United States will back Standard Oil all over the world.
In the Middle East, for example, which was just then becoming a big oil, a growing oil
center, Iran and Iraq, and it was then Persia and Iraq, discovered oil as a big fight between
the British and the Russians and so forth and so on, and who should get the oil concession.
and the British and United States, the British backing Royal Dutch Shell and the Americans
backing Standard Oil.
So the Secretary of State, the Secretary of State was a key foreign policy position, went
to a Rockefeller person, namely Charles Evans Hughes who had run for president in 1916 and
just lost it, so-called progressive lawyer in New York, former governor of New York and
lawyer for Standard Oil Company, top lawyer for Standard Oil and also a personal lawyer
for John D. Rockefeller and dealing with his estate, very close to the Rockefeller Empire.
Trustee of the Rockefeller Foundation. You have to realize these foundations are not neutrals.
If you see that somebody is a trustee of the Rockefeller Foundation, it means he's a Rockefeller
person, he's in the Rockefeller ambit. I mean, I will not suddenly get selected as a trustee
of the Rockefeller Foundation, and you will not either. So these jobs are carefully selected
as plums for their top people. He was also a law partner, Hughes, of a guy named George
Sherman, whose older brother, Jacob Sherman, was a very close friend of John D. Rockefeller
as well. So there was a very close Rockefeller connection there. Hughes then left after he
was in the Secondary of State in the 1920s. He then was appointed as Chief Justice of
and the Supreme Court, which continued to be older in the 1930s.
So Hughes was running a foreign policy, obviously a pro-standard oil foreign policy.
By the way, it got to the point, in the late 1920s, around 1928-29, several books were
written forecasting an actual war between the United States and Britain.
Ludwell Denny, who was a big shot journalist then, wrote a book called America's Oil War,
which is a war between the US and Britain.
We're expecting war to break out because of this big oil conflict between Standard Oil
on the one hand, and Standard Oil is trying to get concessions in the Middle East.
Britain already had concessions from first Anglo-Persian oil company and whatever and
all the other Royal Dutch Shell affiliates, and the United States is trying to get a part
of it.
Finally, of course, the deal was worked out.
The United States and Britain did not go to war, but for as many years as 1920s, there
was actually serious concern that a war might break out.
Secretary of the Treasury was a figure who was, it came to be Secretary of the Treasury all during the 20s, Andrew Mellon.
This is the first time I can think of where a top tycoon actually takes over an important political post.
Mellon, of course, as a parenthesis, Mellon, and Mellon is a multimillionaire, almost billionaire, I would say billionaire family, still is,
which virtually owns Pittsburgh and everything in it.
Mellons essentially own Alcoa and Gophol and Mellon Bank and God knows what else.
Various other business firms.
Copper's Company, Pittsburgh, Consolidated, Coal, a whole bunch of other things.
Anyway, the Mellons, the Mellons really preface as Mellon.
We have to realize Mellons and Morgans have been allies for quite a while.
When Pittsburgh went Mellon, I mean Morgan, when Carnegie and Frick were merged to become U.S. Steel, Mellons were involved in that.
So we have a Mellon-Morgan alliance. There still is a Mellon, of course, a big Mellon family and a Mellon foundation and everything else.
Under the Secretary of Treasury, appointed by Mellon, was S. Parker Gilbert, who later became a Morgan partner.
Always look, of course, for Morgan partners.
So this symbolizes the Mellon-Morgan alliance because the Rockefellers were sort of parceling
out of the situation.
Rockefellers were willing to...
The Morgans were actually, after all, dominant in the finance and were willing to have the
Morgans take first place in the treasury as long as they get the first shot, important
shot in foreign policy.
Attorney General was an Ohio crony with various connections of harding. The Secretary of War
was a Morgan person from Massachusetts, was a partner of Vice President of the First National
Bank of Boston, which of course was Boston Bomb and Morgan. The Secretary of the Navy
was again a guy from Michigan who was close to the Packard Motor Company, a Detroit lawyer.
His Assistant Secretary of the Navy was Theodore Roosevelt Jr., son of Theodore Roosevelt
Senior and Morgan Person of course. Secretary of Labor, this is kind of cute, Secretary
of Labor is running James J. Davis. It's cute because Davis, even though he had once been
a union member, a long time before, in the amalgamated field union or something, was
now a business man and banker in Pittsburgh and therefore of course a Mellon person. So
It's sort of like giving Mellon two cabinet posts, and the labor unions are pretty well
P.O.ed at this if they do not regard Davis as a union labor person.
Secretary of the Interior was another buddy of Harding from New Mexico, the ambassador
of Great Britain was George Harvey, that's the guy, the Morgan representative who was
finally pushing for Harding, came to pay off as ambassador of Great Britain, etc.
One of the interesting things that happened in the Harding administration, the so-called
Teapot Dome scandal, which I'm not going to go into, got a lot of publicity. It wasn't
really that vital, but anyway, it was a situation where government oil lamps leased out to Harry
Sinclair, who bribed the Secretary of the Interior, etc. But the interesting thing
about it is essentially that was a Morgan ploy. Behind Sinclair were the Morgans. There
and of course Sinclair was a competitor to Standard Oil and this is sort of a Morgan
Ploy and I think the exposure and the hysteria about the Evident was essentially a Rockefeller
product.
I can't prove that because there hasn't been studies for that reason.
When after the Soviet Union took over, after Lenin took over, they were willing to make
deals with American and foreign capitalists. The question is who should get the Baku oil
concessions, a lot of oil, land, and Russia caucuses. And both Rockefeller and Sinclair
was an independent oil person who were competing for a concession. Sinclair finally got it.
And Rockefeller was extremely bitter at this. And they, I think part of, I think the T-5
dome exposure, the whole hysteria about T-5 dome, congressional investigation of the press,
was essentially a Rockefeller ploy to smash the Morgans and Sinclair in that particular
Harding dies suddenly in office, 1923. My contention is whenever a president dies suddenly, he should at least be investigated.
That's my contention. People do die suddenly for natural causes. When a president dies suddenly, he should be investigated with a little more depth than usual.
There are some contention that he was bumped off, Harding. One contention is that he was poisoned by his wife. His wife had several grievances. First of all, he was sleeping around a lot, as it was already indicated. Second of all, the Teapot Bones scandal was just coming out. He himself was not a crook. He was a poker playing friend of crooks. And a little bit like Koch, I guess. He was not directly a crook. But anyway, the scandal was coming out, and she didn't want his name blackened, plus the fact that
She was sort of resentful anyway. Anyway, there are architectures that she poisoned. I'm not saying she did, but what I'm saying is it should at least have been investigated.
Obviously it wasn't. The guy who was a Secret Service agent wrote a book a few years later claiming that she poisoned them, but anyway, that's as may be.
At any rate, once again, a Rockefeller person dies suddenly in office and a Morgan person succeeds him.
Just as Teddy Roosevelt suddenly succeeded McKinley, Harding was now succeeded by Calvin Coolidge, who was the Vice President.
What Coolidge brought with him was a totally Morgan administration. In other words, Rockefeller's administration was a combination.
I mean, Harding's was a coalition between Rockefeller and Morgan. Coolidge brings with him a pure Morgan administration.
by Coolidge himself, he's usually considered to be a silent cow and was quiet, he was the
governor of Massachusetts and he cracked down on a police strike. He arrested the cops and
wanted to strike. The important thing about Coolidge, however, he was an attorney in Western
Massachusetts, truly the head of a small savings bank and attorney, but the key thing is he
had many top backers. His cousin, for example, were Coolidge's, T. Jefferson Coolidge, one
One of his cousin and top backer was a big shot in United Fruit Company in Boston and
in with the Morgan Boston Financial Group.
In other words, he was head of United Fruit, Old Colony Bank and all that.
So T. Jefferson Coolidge, well-known top financier, was a cousin of Calvin.
So the fact that Calvin himself came from a small town in Western Massachusetts doesn't
mean much.
The point is, what are his family connections?
His major mentor, he also had two other mentors, this one was Cousin, his major mentor was
a guy named W. Murray Crane, who was the governor of Massachusetts, I think he was a congressman,
excuse me, congressman of Massachusetts, and chairman of the Republican Party of Massachusetts,
a paper manufacturer, and also a leading Morgan person of Massachusetts, he was the director
The founder of AT&T, which is a Morgan company, a telephone telegraph, and basically a Boston
Morgan person.
In fact, when Coolidge's first act as president was to appoint Crane's top assistant, William
Butler, to be head of the Republican National Committee, that was his direct immediate payoff
for Crane's support.
His other top backer was none other than Dwight Morrow, close friend of Coolidge and Morgan
and Partner. So we have all this, with all this backing of Simon Cowell Coolidge, we can
be assured of the fact that Coolidge's administration will be Morganite. And indeed his whole administration
was Tom Morgan, his Secretary of State, when Hughes resigned as Secretary of State in 1925,
year after, actually just about when Coolidge was elected, in 1924, and he comes in as Vice
President, and then he gets elected in 1924 in his own right.