WEBVTT

NOTE Woodrow Wilson and World War I

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The guy who was appointed on the Federal Reserve Board, the original Federal Reserve Board, the most appointed, had all sorts of big shots.

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Paul Warburg was too low, and all sorts of other people.

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But the guy who really ran the system from 1914 until he died in 1928 was a guy named Benjamin Strong.

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And everybody admits that when he ran the system, he seized power.

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As head of the Federal Reserve Board in New York, he was in control of all the bond operations in Wall Street, which was the key to this whole thing.

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He ran it with an iron hand for about, let's say, till he died. So who was Benjamin Strong?

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Most historians don't look into it. They say what he did. He was very inflationary. He

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doubled the money supply during the war, thereby financing the war, basically, the American

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participation in the war. He kept inflating during the 1920s to support England's crazy

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bond system, which I hope to get to before it turns over, crazy monetary system. And

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thereby was responsible for the Great Depression, because he kept inflating during the 20s and

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and the reaction came in 2009.

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So there's a lot to answer for Strong.

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And the question is, who was he?

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The question, which somebody like myself would ask,

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OK, Strong was very powerful. He ran the whole system.

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Who the hell was he? Where did he come from?

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What was he before he was the head of the Fed?

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When he was running the Fed?

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Well, he was the vice president and then president

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of Banker's Trust Company.

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Banker's Trust Company, as we've seen,

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was a Morgan, JP Morgan Institution,

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which was created around 1901 or so,

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in order to buy trust instruments,

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buy trust instruments, which is a new instrument then, trade and trust instruments.

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Trusts are very important there. They set up a trust. A trust is a high-powered, protected instrument.

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In other words, the government can't invade trust very well. They set up a trust that's protected from a lot of government intrusion.

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At any rate, the Bankers Trust Company was a Morgan institution.

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Benjamin Strong was a disciple of Henry P. Davison, he was a best friend of Henry P. Davison's Morgan partner.

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He lived in Englewood, New Jersey, which in those days was a very wealthy suburb.

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Lived right next door to Davis and I think.

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His other close friends were Thomas W. Lamont, Morgan partner, and Dwight Morrow, Morgan partner.

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His three best friends in the world and mentors, I guess, I think Davis was his mentor anyway, three best friends and mentors in the world, partners with JP Morgan and Company.

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He joined the country club, a very swanky country club that he would join, etc, etc.

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When he gets the nod, Colonel House, of course, being a Morgan person,

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was running, manipulating all of Wolfson's appointments.

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He gets the nod, the offer of being head of the Federal Reserve Bank in New York,

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he doesn't want to take it, he feels unworthy, you know that sort of stuff,

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I'm not really, I'm only a president of Bankers Trust.

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He was persuaded to take it by Davison, Lamont and Morrow,

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No, no, you gotta take it, we need you, blah, blah, blah, and he takes it.

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In other words, Benjamin Strong lived his entire life in the Morgan and J.P. Morgan ambit,

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very close as a top Morgan person. His policies after he got out of the office

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were totally consonant with Morganism. In other words, he followed J.P. Morgan's

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basic policies, which I will now get to, now brings us

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to World War I. J.P. Morgan Empire was getting into economic trouble.

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Remember, Morgan was heavily involved in railroads, and always had been.

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and Railroads are beginning to collapse. 1900 and on begins the long secular decline of

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railroad industry. J.P. Morgan, even though they're into industry too, was lagging behind

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Kuhn-Loha when it got to underwriting and being investment bankers for industry. Kuhn-Loha

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was a jump, it's like with all monopolies or plays on monopolies, they can't, they don't

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spot the new trends coming in very well. And so Morgan didn't spot the industry trend,

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he lagged behind Kuhn-Loha, Kuhn-Loha was doing better. In 1914, Morgan's very important

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and the New Haven Railroad, a $400 million railroad went bankrupt, and we began to see

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then the handwriting on the wall, the Morgan Empire might totally collapse, might be a total

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destruction for the vast Morgan Empire.

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When World War I comes, happily for Morgan, we have World War I. J.P. Morgan always had

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tremendous, very close ties with the Bank of England and the English finance, English

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international bankers, and as soon as the war was declared in August 1914, Henry P.

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J.P. Davis and Morgan partner gets on the boat, gets on the ship, I guess they call it.

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There's no plane aboard, there's no Concorde, no jet.

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He gets on the ship, rushes to London, and makes a deal with the Bank of England,

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the English government. J.P. Morgan and company got the

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total monopoly of all underwriting of British and French government bonds

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in the United States. Unbelievable situation. In other words,

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the British and French are going heavily into debt in order to finance the war effort. The United States is expected

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J.P. Morgan & Company gets the total monopoly of underwriting

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and all the big commissions which is involved

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monopoly of underwriting, British and French government bonds

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which they then happily began to float

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in addition to that, it still happened in most of the war equipment, most of the war industry

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which America now began to ship to Britain and France, especially Britain

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Steel and all sorts of stuff were essentially Morgan companies, US Steel, Bethlehem, various

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arms equipment firms were Morgan companies.

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So here we have JP Morgan Company very heavily invested now in the victory of the French

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and British in World War I and both because of the government bond underwriting and because

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of the war equipment underwriting of the war exports.

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Very heavily involved.

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It's essentially pulled the Morgans out of a financial depression, but now the Morgan

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The Morgan Empire was now totally committed to the importance of British and French victory.

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If the Germans had won the war, the entire Morgan Empire would have collapsed.

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The bonds would have been worthless, and all the rest of it, the war equipment industry, et cetera, et cetera.

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So, the Morgan begins, the mass height, J.P. Morgan, at the very beginning, as soon as the war started,

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J.P. says, he said it later, I think in a congressional investigation, he said,

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From the very big start, we did, and we mean his Morgan Empire, we did everything we could

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to contribute to the cause of the Allies, in other words, everything we could to drag

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the United States into war on the side of Britain and France. It becomes a Morgan project,

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and the entire Morgan statesman, so to speak, gets involved in this thing, using all our

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influence on Woodrow Wilson to get him into the war, including Colonel House, was lying

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to Wilson constantly in order to try to get him into the war, Ambassador Page, Ambassador

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in London, conniving with the British Secret Service and with the British Foreign Office

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and with House drag Wilson into the war, Wilson's sort of a dum-dum

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it's not that he's unwilling, but he's sort of a little bit reluctant

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and the Morgans used all their powerful influence to try to do this

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as Secretary of Treasury McAdoo said, it was of course again a Morgan person

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Our prosperity is dependent upon our continued and enlarged foreign trade.

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To preserve that, we must do everything we can to assist our customers to buy, to maintain our prosperity, and we must finance it.

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What the hell does that mean? It means that we, what do you mean we have to finance it?

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What he's saying is the basis of foreign aid programs still exists in our huge quantities.

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that for our export industry to be phosphorus, quote-unquote, the American taxpayer, in other

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words, look at the situation here. Here's export industries. In those days, Morgan controlled.

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Since they're not getting too much business, we, the American taxpayer, have to be taxed.

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The money has to be shipped abroad to Britain, France, Angola, whatever happens to be, whatever

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for Dictatorship or whatever it was, and then these dictators then buy American exports.

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They use the dollars to buy American exports. So our prosperity is financed by our foreign

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aid. What is this? Who's the we and who's the our? It's very much like the Keynesian

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nonsense about we. The public debt is good, the national debt is good, we only owe it

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to ourselves. The question is, who's the we and who's the ourselves? The we, the ourselves

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here is the Morgan interest. In other words, the taxpayers are being financed at each step

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Let's start with the way. Taxpayers have stopped. The American taxpayer pays through the nose for whose benefit.

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First of all, the American government takes its handling charge. In other words, bureaucrats get some money out of this. They get their salaries.

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Some of the foreign aid gets siphoned off the U.S. government. The rest of it gets sent to Britain, France, Zaire, you name it.

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You underline Pakistan, whoever that happens to be. They get their cut. They build up their bureaucracy, dictatorship, whatever it is.

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and they take the rest of the dollars and buy American exports, U.S. Steel, General Electric, whatever happens to be.

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In other words, the whole foreign aid process is a process by which the American taxpayer is suckered into subsidizing American export companies

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and plus other bureaucrats, American bureaucrats and foreign bureaucrats.

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And so Morgan and Morgan Partners are leading the way in war propaganda.

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They set up an aerial patrol. There was an aerial patrol, aerial coast patrol in 1915.

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The war starts in 1914. In 1915, Henry P. Davison, Morgan's partner,

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a guy who made a deal with the Bank of England, probably one of the most important people in the 20th century in America.

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Almost unknown now, Henry P. Davison, a key figure.

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So he sets up the aerial coast patrol to get, and Baruch is in this and so forth,

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to get Americans to look for German planes.

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They stand there on the rooftop in New York or somewhere,

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they get the design of what a German plane looks like, and looking to spot German planes,

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German planes, it induces war hysteria on the part of the public.

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They're out there on the roof looking for German planes.

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So, creating a sort of war climate.

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Charles Schwab, the head of Bethlehem Steel, producing Armored Plate.

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Hey, we've got a great Armored Plate thing.

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He sets up a propaganda to have a big Navy.

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You need a big Navy.

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Naval ships, US Navy ships, then of course using Armored Plate.

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Who are they going to buy the Armored Plate from?

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Bethlehem Steel, of course.

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So you have these guys, these munitions manufacturers, and Morgan setting up war propaganda agencies.

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So Plattsburgh, New York, way upstate New York uses a closer universal military training zone.

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These guys set up a camp to have the draft, prepare the way for conscription, which is really probably unconstitutional.

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So Morgan's led this thing. For example, in the aerial coast patrol, in the Plattsburgh, it's called the businessman's training camp.

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All these Morgan types are up there training and getting everybody else to come in and military training

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Who is running it? Willard Strait, Morgan partner, also the publisher of the New Republic

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Robert Bacon, Morgan partner

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Teddy Roosevelt, Morgan tool, Henry Cavalade, Morgan person

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Ella Hewroot, Morgan lawyer, these guys, by 1915 they're pushing for a declaration of war against Germany

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Maybe in a very short period of time

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Original pro-war types

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DuPont, a big arms manufacturer, of course, all in favor of heavy ammunition spending, and all the rest of it.

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As Morgan again said, we agree that we should do all that was lawfully in our power to help the allies win the war as soon as possible.

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This is 1915, 1914.

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Why does war break out?

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I want to talk about this because it's really the beginning of all, as I said last time,

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the beginning of all foreign policy. All foreign policy to this day rests on the whole World War I experience, so to speak.

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What you really have, the real problem was that Germany and Russia had a sort of a cozy alliance for a long time.

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Neither would attack the other. They're both the Tsar and the Kaiser, or cousins, part of the same German family.

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And so the peace of Europe continued for quite a while.

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The thing that then happens is, the Russian gets taken over by hopped up czarist fanatics, who are essentially generals and pan-Slavic types.

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They believe it was a holy Russian mission in life to run into all the Slavic peoples.

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Anybody who was a Slav was destined by God to be run by the Russian czar.

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This inspired a perpetual drive by Russia to take over the Balkans, any place which has Slavs in it, the German part of Poland, the Balkans, the Austro-Hungarian Empire was in bad shape, they had a multi-ethnic kind of situation.

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The Russians began to rely on the Kingdom of Serbia, which was a group of hopped up Serbs and wanted to take over all the Serbs in the Austro-Hungarian Empire, living in Croatia, Bosnia and other places in Eastern Europe.

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We had in other words a Russian, first of all Russia was the most imperialist power on the continent for most of the 19th century.

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I think taking over northern, central Asia and so forth, Hashkent, Ghana as well, a whole bunch of areas in central Asia.

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You had an imperialist Russian drive now to move into the Balkans, to take over Turkey, to take over Bulgaria, whatever.

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So this is and runs this whole Balkan area, thereby coming an immediate conflict with

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Austria-Hungary.

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In the meantime, the French, in their own right, they want to re-seize Alsace-Lorraine,

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which had been taken over by the Germans in 1871 on the French-German border.

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This is a complex situation and basically what happened was that Louis Napoleon, who

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had been the Emperor of France, went to war against Germany and after being kicked back,

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The Germans took over Alsace and Lorraine. The case for Alsace is pretty strong. Alsace is basically German, ethnically German. Lorraine's case is probably weaker.

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The result of all of this was set up in France, a desire among all parties for what was known as revanche, or revenge in English, but these were the revanchistes.

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So we have that, especially among the French right wing, for thirty years or forty years agitation to go to war against Germany to re-seize Alsace-Lorraine.

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France was not very much like it. France was a republican and all the other countries were monarchies at that time.

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France was considered a commie because they were republicans.

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But France and Russia finally form a fateful alliance around the 1890s

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on the basis of this common ground, because Germany was allied with Austria-Hungary

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it begins to develop this mighty block situation

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with Russia and France allied, not because they liked each other, but because they had a common enemy, namely Germany, Austria, and Hungary.

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And so, a war situation begins to develop between these two blocks.

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Great Britain, in the meantime,

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becoming very, very anti-German because Germany is rising up industrially

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and Britain also had the idea that only Britain could have a large Navy

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somehow God had decreed that only Britain could have a Navy. Germany even gets to build a Navy

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and Britain gets hysterical. And that's like Admiral Fisher, the head of the

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British fleet, wanted to bomb the German fleet in 1907 or 1906

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the German fleet was located off Copenhagen in Denmark

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and he had a serious plan to bomb it, just like that, to destroy it

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and it finally overruled, it was called Copenhagen in the German fleet

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at any rate, so Britain becomes an ally of France and Russia

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and the situation then develops where after a member of the Serbian secret police

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assassinate the Austrian Archduke in what's now known as Yugoslavia

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The Austrians, actually what happened was the Austrians were one of the serfs to punish this assassin, the serfs refused to do it

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and a war develops between Austria and Serbia, the Russians come in on the part of Serbia and the French come in on the part of signing with the Russians

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the Germans come in on the part of Austria and the British come in and all of a sudden, bingo, there's a world war in August 1914

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It's a war which is useless from any rational point of view and no rational objective

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In other words, there's no moral justification for it on any ground, there's nobody trying to conquer the world, there's none of this stuff.

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These are imperial disputes for ignoble ends, territorial gain, whatever, for defeating competition by military fight.

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And in this fight, there's no question about it, in my mind, that the major culprits are Russia and France and then Britain,

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Germany and Austria-Hungary, Germany is the least guilty of all of these states.

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The one is dragged in because they had a peaceful alliance with Austria-Hungary.

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At any rate, both sides think the war will be over in six weeks or so.

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Quick war of a win and by Christmas.

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The famous phrase was, out of the trenches by Christmas.

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Of course, it wasn't over until it was dragged on for four and a half years,

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four and a quarter years, and as it drags on, the war gets tougher and tougher,

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and more and more chaos. I mean, the war is unbelievably destructive. I mean, by the end of the war, the political systems, the social systems, the economic systems, the loss of life was enormous.

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I mean, fantastic loss of life and total disruption of everything. And neither side would have a compromised peace, because they all say, we have to win, we have to have a holy honor.

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Once one soldier of one country gets killed, they say, we have to avenge this guy's death, and it goes, all right, it's an escalating situation.

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and it was almost a compromised piece in 1916 and Woodrow Wilson prevented it, one of the most ignoble actions

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so, no, no, we have to win, we don't have to crush them, so

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in this situation, as I say, Morgan was heavily wrapped up in French and English victory

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in addition to that, Kuhn-Loha was pro-German, since Kuhn-Loha Company was German investment bankers

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of Bankers, they sided emotionally in favor of Germany so that the World War I fight them

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becomes a situation.

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Warburg, for example, squeezed out a Federal Reserve worker who is pro-German.

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We have a situation now where Morgan can use the World War I not just to get a lot of profits

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but also to crush Kuhn-Loh to make it much less effective, like defeating their German

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investment banking competitors.

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So at any rate, so there's the reason for the war, there's no good reason for any, anybody's

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far from the war in any sense.

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The United States had the least reason possible to enter the war at all because they were

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trading with both sides, no territorial ambition, no nothing.

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So the, of course Morgan is trying to get Wilson into the war on the side of the British

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and the French and the big propaganda was the submarine warfare, a terrible thing in Germans

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using submarines.

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Well, the situation was this, the British were opposing a blockade. In other words, don't let any goods through.

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The British were seizing American ships. If there was any American ship that went to Germany, it was being seized.

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The British kept violating American international law and American shipping rights all the time.

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In other words, if we were sending a ship straight to Germany, the British would confiscate it.

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And the Germans, however, since the British command of the sea had all the surface ships, the Germans had submarines.

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The thing is, the submarines can't surface. The thing about submarines, if it surfaces, in other words, if you have a surface ship,

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let's say you have a destroyer or whatever, and you're a battleship, you can command the ship, you know, heave two and whatever,

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and you can capture the ship, you can say, okay, we'll take a men on board, et cetera, but you can do that.

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A submarine can't do it. The submarine surfaces and it gives orders that it can be destroyed.

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A submarine on the surface is totally vulnerable. There's no weapons.

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So the submarine, and what the British would do then, if the submarine tried to get a British merchant ship,

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merchant ships were armed by the way, of course,

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the British, if the submarine surfaced and said go to the merchant ship, it would immediately destroy the submarine, it would immediately shoot it.

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So the submarine had to torpedo the ships.

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They couldn't surface and give a warning because then they'd be smashed

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So submarine warfare, since the Germans were forced into submarine warfare because they didn't have any surface ships worth much

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And they were forced into a situation where they had to shoot torpedoes, use the torpedoes first, without surfacing and giving warning

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So it was easy to whip up propaganda, emotional propaganda against the Germans in the United States by saying

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Look, the Germans are not fighting fair because they're submarining, they're using torpedoes and not surfacing to give warning

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The whole point of a submarine is it's impossible for them to do it, but actually the British

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were interfering much more with American shipping than the Germans were, and if we were out

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to defend the rights of international law and neutrals, etc., we should have won a war

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against the British, not against the Germans.

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This is, I think, a pretty clear cut.

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Nobody was advocating, however, going to war on the side of the Germans, World War I.

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So, what then also happened was the Lusitania, the famous incident occurred in 1912, excuse

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me, 1916.

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I'm not saying 1916 was the Lusitania, which is an armed, British-armed merchantman, goes

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from New York to London, it was armed, in other words, it was perfectly legitimate for

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a submarine to destroy, to shoot it, to torpedo it, in international law, because it was an

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armed merchantman, it was not a peaceful merchantman.

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Americans went aboard it, American passengers went in it, even though they knew it was an armed merchant man, they knew it was a very peculiar situation, the British sucked them into it, they said, yes, yes, it was perfectly safe, and so on, they got a lot of big shots, a lot of American big shots on it, the ship was then sunk by the Germans, torpedoed by German submarine, it had to drive immense hysteria in the United States, we should go to war with Germany, American lives were lost, well the fourth they were lost, you get on an armed English merchant man, which was a war with Germany, obviously, they were at risk.

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Now, why these jerks didn't realize, I haven't studied the specific question why they didn't realize

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I think they were sucked into it by the government, perfectly safe, blah, blah, blah

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Now, there was some evidence, this has been disputed, it's not been accepted yet

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There's some evidence of the fact that Winston Churchill was then

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secretary of the Navy in England, he was the first Lord of the Admiralty

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deliberately created a situation where misleading the British happened in Lusitania

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and not telling them that there were German submarines in the area so that it would be sunk.

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In other words, the British wanted to create an incident

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which would, where they could use the sinking of a British ship

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with Americans on it to attack Germany and war propaganda.

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This has not been fully established. I wouldn't put it past Churchill.

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At any rate, it's possible that he deliberately did this, not warning, not sending a warning

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the warning of the German submarine era, allowing it, so to speak, to be sunk

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and creating a tremendous war story in the United States. The British, by the way,

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denied there was an armed merchant, although, of course, there was, but another thing is

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a little rubbery. So,

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and it was the submarine warfare question again, which

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induced, which got the climate of opinion such that

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Wilson declared war against Germany and entered the war to the tune of

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A huge amount of American lives lost, plus property, plus total destruction of 19th century civilization

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The creation of conditions, we'll see next time, allowing the rise, bringing about the rise of Nazism and Communism

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There would not be any Bolshevism in Russia, there would not be any Nazism in Germany, if not for World War I

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World War I created the conditions for the whole 20th century stuff

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War crusade, perpetual war, all the rest of it

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Okay, we'll take that up Tuesday. Tuesday I'll start talking about the exam. I think we're going to have essay questions.

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That's pretty clear, but anyway, we'll get to talk more about it next week.

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Read, I guess this will be the final reading. Read on the war.

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It's the final chapter of Einstein, a magnificent final chapter on the war's fulfillment.

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Last chapter, chapter of great beauty, and also one of the best chapters in Hughes, chapter 23, on the command economy of World War I.

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This is the so-called revisionist view of World War I on the economic front.

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Till Weinstein wrote, and Coco has a similar one, but Coco doesn't really talk about the war. He stops more or less with the war.

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Before this, it was considered the progressive era, progressive reform was ended by World War I.

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In other words, he had this great progressive movement and helping the mankind and welfare of the state and all that.

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And then, all of a sudden, war comes along and kills progressivism.

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And what Weinstein points out as, on the contrary, progressive war was the culmination of the progressive movement.

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It was it. That was the key thing, to provide all the things they wanted in spades.

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and they realized that they were all in favor of it, except for one or two people, except for a couple of mavericks who didn't like the idea.

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Most of the progressives loved the war, and they thought it was the greatest thing that ever happened to them, and it happened in the United States.

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We'll get into that in a minute. And Hughes also talks about the war as a command economy.

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So, it's a very different view of the progressive movement, namely the status movement,

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Movement, which is in favor of any kind of state action, especially including war.

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A similar thing happened with the New Deal period, World War II. It was generally considered

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that, as Roosevelt said when we entered World War II, the Dr. New Deal is now gone, it's

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been replaced by Dr. Win the War. We assume that the war put an end to New Dealism. Quite

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the contrary, the war was a fulfillment of the New Deal. It maximized state power, which

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and it became sort of a permanent heritage of a massive state after that.

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What's happened in American history is basically that if you want to have sort of a

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diagram of government power, which is very difficult, I can't really precisely

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obviously measure it, if you want to have a government power over society and the economy,

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it's usually pegged along, first at a low level, pegged along until a war pops up.

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In other words, first the war of 1812, big increase in taxes and government control and all the rest of it, government budgets.

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We spent about 30 years rolling them back, the Jacksonian Democrats, etc.

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Spent about 30 years getting rid of the effects of the war of 1812.

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Excise taxes, federal bank, inflationary banking, especially money supply, big increase in the army and navy and so forth and so on.

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and so on. By the 1840s these aspects were wiped out and we became almost sort of on a low level.

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So Civil War, you have a massive increase in government power, the income tax comes in, the draft comes in,

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huge excise taxes on liquor and tobacco, big increases in the budget, high tariffs, government subsidies and all the rest of it.

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Then we take another 30 years trying to wash that out. It never really totally went back, but

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We never got rid of the protective tariffs, there were certain cuts.

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By the way, by the 1840s, get this, by the 1840s there was no national debt.

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Jefferson had paid off the national debt before that.

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Almost no tariffs, very, very low.

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No tariffs, very low government.

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No income tax either, there was almost no taxes.

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So then we have a big increase and also a free banking system, more or less.

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Then we have a massive government money and so forth, we only partially washed that out by the 1890s.

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Then comes World War I, you have another tremendous increase in government power,

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it's only reduced a little bit, and World War II, another huge increase, it's only reduced a little bit.

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So in other words, you have like a ratchet effect.

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The reason for growth of government power in the United States is against the society and the economy, is war, wartime is basically it, except for a few, like the progressive period, where there wasn't a war, but a preparation for war, so to speak, is not the only exception to that, the war, as Randolph Bourne, the great libertarian writer, said around, during World War I, war is the health of the state, in other words, it's war that provides the state the excuse for massive expansion,

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There's a great new book coming out, which I recommend everybody. It hasn't been published yet, so I can't require you to read it.

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It will come out this summer by Robert Higgs, called Crisis and Leviathan, which deals with how the economy and society have a tremendous increase in government power because of wartime.

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It should be a blockbuster. He's one of the very few social scientists in economic history.

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I'm going to finish up on the war. As I mentioned last time, the war broke out largely because of Russian imperialism in the 19th century.

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It was a very small number of people who took that position.

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Although in the 19th century, all the free market people were anti-war, down to about 1900, 1905.

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Anyway, before I get into the political economy of World War I, I'm going to finish up on the war.

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And last time, the war broke out largely because of Russian imperialism in the Balkans, its

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potential to kind of run all the Slavs in the Balkans, any Slav is considered a Russian,

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naturally born Russian to the legend.

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France was desire to grab Al-Gazalain back, and England was desire to crush German, nascent

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German competition, industrial might and navy.

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As a result, World War I breaks out, each side, you know, can win very quickly.

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Wilson apparently stepped in and prevented a negotiated peace in 1916, which would have at least prevented most of the devastation

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Wilson, by the way, at this time, itching to get into the war on the side of the allies because of the Morgan, largely because of the Morgan connection

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also because of Wilson's desire for world global salvation, through pious desire to remake the world to American might

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typical pious, even versus the pious, dedicated pious type

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So, we have a fusion of pietism, progressivism, pietism, and this time applying on a world level, not just on an American level, not just stamp out sin on an American level, but also on a world level.

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Sin was defined by the Wilkinson as being anything bureaucratic. In other words, what he wanted every country to be democratic in some way, centrist.

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Neither Marxist nor monarchistic. Both monarchies, or absolute monarchies, and Marxian governments violated his creed on what Wilkins thought the world should become.

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Basically, Wilkins, by the way, stepped forth all of American foreign policy since then. He's actually been a Wolfsonian.

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He was almost in the party. Even in the 1920s, even the Republicans in the 1920s were basically Wolfsonians.

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and Wolfsonian. Certainly, Secretary of State Hughes, a Rockefeller person, was Wolfsonian, and so was everybody else.

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When Richard Nixon became president, the first thing he did was to put the picture of Wolfson up right over his desk as his inspiration.

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So they've all been Wolfsonian ever since then. And Wolfsonian doesn't mean the United States has some kind of God-given mandate.

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To see through it, everybody in the world is democratic. There are democracies everywhere, and all the world shapes up according to the United States' desires.

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And so he stepped in and prevented the negotiated peace in World War I, but at that time his idea was every ethnic group should have national self-determination.

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This of course, this was a 19th century liberal view of national self-determination and opposition to imperialism.

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So each nation, each nationality should have its own school and languages, own government and so on.

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The problem is, this was done through coercion, in other words, through America's imposition from above.

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And at Versailles, after the war was over, a tremendous devastation of the war.

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A victor's peace, of course, written by the victors.

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The map of Europe was redrawn, allegedly in accordance with the Wilsonian principle of national self-determination.

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However, they had these experts, these historians, who were appointed by Colonel House about a year or two before the end of the war,

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in the name of the war, called The Inquiry, who much of political scientists and historians

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finding how to carve up the map of Europe, and this is a beautiful opportunity for intellectuals

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to take over here, intellectuals were given for the first and last time, perhaps, the

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power to redraw the map of Europe, almost at will, and you can't imagine how they botched

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it up, in other words, if they had been blind, if they had been, what do they call it, tinder

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donkey, tinder donkey gang, if they had taken the map of Europe and arbitrarily blindfolded

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and so on, and arbitrarily picked out, carving up the map of Europe by purely blindly, they

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couldn't have done a worse job than they did. It's unbelievable. They screwed things up to

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such an extent that it created a perpetual war from then on, for the rest of the 20th

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century. But it was done, it wasn't really random, it was done with a certain amount

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of malice at forethought. It was done, of course, in the Colonel House and all the stories,

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essentially, in the Morgan Ambit. And it was carved up in such a, Europe was carved up

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in a way, it's the maximum benefit to British and French imperialism.

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The curious thing is what happened in Europe at that time, in Eastern Europe, which again

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has set the stage for the rest of the 20th century.

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I think for the first and last time in world history, at least modern history, a very peculiar

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situation developed in Eastern Europe, namely, usually when a war is launched, either one

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side wins and the other side loses, or both sides win, both sides are in a stalemate situation.

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There's either one side wins, or both sides are stalemate.

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Because of the peculiar situation in Eastern Europe and World War I, both sides lost.

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I can't think of another situation where both sides are crushed.

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What happened was that, this is Europe, here's Germany, here's Russia,

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And there were the two big combatants, and also Austria-Hungary, of course. Austria-Hungary was totally demolished, totally wiped up by the Allies, just carved up.

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Germany first crushed Russia. Russia had a massive army, huge army, and they were simply lost, they were smashed.

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They were smashed. And as they were smashed, what happened by the end of the war was that simply in 1917, the soldiers just walked off. They shot their officers and left. They walked home, basically.

388
00:35:01.680 --> 00:35:11.680
Mass mutinies on the Russian front. And even though, of course, Russia was probably behind the war, they were all in favor of it until they won. This, by the way, is typical of states in general.

389
00:35:11.680 --> 00:35:16.680
As long as the country is winning, everybody loves it. As long as we crush Grenada, everybody knows it's a great thing.

390
00:35:16.680 --> 00:35:22.680
If, on the other hand, the coffins start coming back, the body count goes up, support for the war begins to dwindle

391
00:35:22.680 --> 00:35:29.680
and as Russia started losing the war, they all left, so you have a massive mutiny in the Russian front, eastern front

392
00:35:29.680 --> 00:35:36.680
So, here's Russia losing the war in a massive disaster, every party refuses to leave, refuses to get out

393
00:35:36.680 --> 00:35:43.680
they all say, no, we're committing ourselves to a war effort, including the Bolshevik party, which was set from the very beginning

394
00:35:43.680 --> 00:35:46.680
German imperialist war, Russia shouldn't engage in it.

395
00:35:46.680 --> 00:35:50.680
Bolsheviks are saying the same damn thing. They're saying, no, no, German imperialism, blah, blah, blah.

396
00:35:50.680 --> 00:35:55.680
By this time, by the way, the United States' propaganda machine claimed, I think they really believed it by this time,

397
00:35:55.680 --> 00:35:58.680
the Kaiser was out for world domination. They're out to conquer the world.

398
00:35:58.680 --> 00:36:01.680
Therefore, any moment is going to invade the United States.

399
00:36:01.680 --> 00:36:04.680
It's physically impossible as long as it's absurd to begin with.

400
00:36:04.680 --> 00:36:07.680
And therefore, the Kaiser is the center of all evil.

401
00:36:07.680 --> 00:36:10.680
You have to crush the Kaiser at all costs.

402
00:36:10.680 --> 00:36:15.680
The majority of the Bolshevik party were backing a disastrous policy, including the Bolshevik party.

403
00:36:15.680 --> 00:36:24.680
When Lenin returns from exile, arises the famous Finland station in Leningrad in the spring of 1917, I think April 17,

404
00:36:24.680 --> 00:36:30.680
he says, what is this nonsense? We should get the hell out of the war. The public wants to get out of the war, and it's the only rational thing.

405
00:36:30.680 --> 00:36:34.680
The majority of the Bolshevik party were against him, much less everybody else.

406
00:36:34.680 --> 00:36:42.680
had to, by sheer mental force, he had to persuade the, yell at the Bolshevik party to convince them to change their position.

407
00:36:42.680 --> 00:36:46.680
So finally after about two or three months, he was able to do it.

408
00:36:46.680 --> 00:36:50.680
The Bolshevik party then became the only party in Russia to say, we've got to leave the war.

409
00:36:50.680 --> 00:36:57.680
And the basic reason for the Bolshevik takeover, November 1917, is that their only party said, we've got to leave the war, we've got to quit.

410
00:36:57.680 --> 00:37:03.680
Everybody else, the social democrats, the social revolutionaries, the Mensheviks, the pre-Zarists, the cadets,

411
00:37:03.680 --> 00:37:07.680
The whole spectrum of Michael Letts that were committed to the end of the war effort,

412
00:37:07.680 --> 00:37:11.680
throwing more resources into battling the evil Germans.

413
00:37:11.680 --> 00:37:15.680
The only Lenin's that we got to get at, that's the basic reason for Lenin's victory,

414
00:37:15.680 --> 00:37:19.680
even though the Bolshevik party was small, but they were the only ones that said,

415
00:37:19.680 --> 00:37:22.680
now we got to get out of the war, and it drew a lot of people to the Bolshevik ranks,

416
00:37:22.680 --> 00:37:26.680
and they were finally able to take over.

417
00:37:26.680 --> 00:37:30.680
The other slogan on the part of Lenin, they were the only ones in favor of the peasants

418
00:37:30.680 --> 00:37:38.980
The peasant party, the peasant had a big party, a social revolutionary party, supposedly

419
00:37:38.980 --> 00:37:39.980
out of peasant interest.

420
00:37:39.980 --> 00:37:45.160
They got rid of the feudal land and surfed them and all the rest of the stress, the effect

421
00:37:45.160 --> 00:37:49.000
of surf, and then the big landlord seizure of peasant land.

422
00:37:49.000 --> 00:37:52.960
They were a favorite peasant land, but what happened in the summer of 1917 was growing

423
00:37:52.960 --> 00:37:57.000
chaos and the war, losing the war, the peasants started taking over their own land, they were

424
00:37:57.000 --> 00:38:08.000
shooting the landlords and taking their land back, and the social revolution said, well, we are favoring this in principle, we can't, this is too anarchic, we gotta wait for a parliament to be established.

425
00:38:08.000 --> 00:38:15.000
But there wasn't a mini parliament for several years, because the peasant parties turned against the peasants themselves. Once again, only Lenin.

426
00:38:15.000 --> 00:38:23.000
The Bolsheviks were against everybody except Lenin, and Lenin said, no, no, we should ratify them, the peasants are in great shape, they're the revolutionary group at this point.

427
00:38:23.000 --> 00:38:53.000
Violating the principles of Marxism, which is really anti-peasant. Marx himself, of course, thought that the peasants were just rabble and a really progressive class of industrial libertarians, industrial workers, the peasants were reactionaries, which should be exposed of anyway, but Lenin being a keen political entrepreneur, so to speak, letting it override as Marxism, said, no, no, this produces a change, we've got to unite with the peasants. So Lenin was the only person in all of Russia to say the peasants are right,

428
00:38:53.000 --> 00:39:00.000
The President was right and we've got to get out of the war, but in those two bases, land and peace, Lenin was able to take over.

429
00:39:00.000 --> 00:39:07.000
It's not that everybody in Russia read us, copied Paul, communists, etc. He was the only one to raise the correct position here.

430
00:39:07.000 --> 00:39:12.000
At any rate, when he finally took over, it was a big struggle to get out of the war.

431
00:39:12.000 --> 00:39:18.000
Even within the Bolshevik Central Committee, Lenin said we've got to ratify current borders.

432
00:39:18.000 --> 00:39:24.000
get out of the war, get out of the border, get out of the war, just to say, okay, we conclude peace with the current border

433
00:39:24.000 --> 00:39:28.000
at that time, the Germans had taken over the Ukraine and White Russia

434
00:39:28.000 --> 00:39:35.000
and set up, by the way, an autonomous, for the first and only time that Ukraine and White Russia had been independent

435
00:39:35.000 --> 00:39:42.000
in many centuries, during this brief period of six months, Germany had occupied it

436
00:39:42.000 --> 00:39:48.000
to set up or allow Ukrainian and White Russian nationalism to take over.

437
00:39:48.000 --> 00:39:54.000
So Lenin said, no, we've got to conclude in peace. The entire Bolshevik committee almost went to stir up on this one.

438
00:39:54.000 --> 00:39:58.000
No, no, we can't do it. We have to crush German imperialism, roll back only Russian soil.

439
00:39:58.000 --> 00:40:02.000
All this stuff is supposed to be bourgeois and nationalistic views.

440
00:40:02.000 --> 00:40:07.000
Trotsky and Manoli's got Wuhan. They all said, no, no, we've got to continue the war.

441
00:40:07.000 --> 00:40:14.000
and so that Lenin just overrode them and concluded with a famous appeasement piece of Ruslan Tusk

442
00:40:14.000 --> 00:40:21.000
in March 1918, which Russia successfully got out of the war, and just quit.

443
00:40:21.000 --> 00:40:28.000
So, yeah, that's a situation where Germany had occupied Ukraine and white Russia.

444
00:40:28.000 --> 00:40:32.000
So Russia was out of it, in other words, Russia was defeated.

445
00:40:32.000 --> 00:40:39.000
When the Allies of the United States, Britain and France conducted a massive offensive and defeated Germany in November 1918,

446
00:40:39.000 --> 00:40:48.000
Germany was defeated, and this meant that both Germany and Russia, the two great powers in Eastern Europe, were both defeated, both prostrate.

447
00:40:48.000 --> 00:40:53.000
It was a very unusual situation, the two mighty superpowers were both beaten.

448
00:40:53.000 --> 00:40:59.000
This left a power vacuum in Eastern Europe, a power vacuum which the Allies, Britain, France and the United States then took advantage of,

449
00:40:59.000 --> 00:41:10.000
The idea was to have these states be the buffer zone to keep down Germany and Russia.

450
00:41:10.000 --> 00:41:14.000
Germany was hated because they were the enemy, they were defeated.

451
00:41:14.000 --> 00:41:17.000
Russia was hated because the communists got them out of the war.

452
00:41:17.000 --> 00:41:21.000
They had two enemy countries, so to speak, Bolshevik Russia and Germany.

453
00:41:21.000 --> 00:41:26.000
The idea was to set up these states in Eastern Europe which would perform the function

454
00:41:26.000 --> 00:41:32.000
of keeping down permanently Germany and Russia, keeping them as subjugated countries.

455
00:41:32.000 --> 00:41:40.000
The idea was crazy in the long run. Obviously these countries didn't have the resources to do it.

456
00:41:40.000 --> 00:41:44.000
They were just totally idiotic. It was a long run proposition.

457
00:41:44.000 --> 00:41:49.000
But that was the idea, keep down. So they set up in Eastern Europe,

458
00:41:49.000 --> 00:41:54.000
one of the independent states of Latvia, Estonia and Lithuania,

459
00:41:54.000 --> 00:42:08.000
They basically set up Poland as a client state in Eastern Europe, making Poland as strong as possible by including within Poland, not just ethnic Poland, which would have been perfectly legitimate, a principle of national self-determination,

460
00:42:08.000 --> 00:42:17.000
allow independence, grant independence, ethnic Poland, which is more or less like this, Warsaw Lodz area, Polish heartland.

461
00:42:17.000 --> 00:42:22.240
Instead of just giving independence to that, they gave Poland a huge amount of territory,

462
00:42:22.240 --> 00:42:31.240
one white Russian and Ukrainian, huge chunks of Lithuania and huge chunks of Germany, which

463
00:42:31.240 --> 00:42:42.480
were sliced off from the German part land, namely the East Prussia, huge parts of Prussia

464
00:42:42.480 --> 00:42:55.480
in Russia, and huge chunks of Prussia, Silesia, a big colonized area, a Sudetenland, a Sudeten area, so all this was put in place under Poland.

465
00:42:55.480 --> 00:43:05.480
When I was growing up on the European map in the 1930s, Poland, which we considered as kids, well, it's Poland, it's natural Poland, and really only about half of it was Poland,

466
00:43:05.480 --> 00:43:10.200
Poland, the rest of it was huge chunks of Germany, White Russia and Ukraine, all of

467
00:43:10.200 --> 00:43:13.980
whom hated the Poles, of course, for good reason at this point.

468
00:43:13.980 --> 00:43:19.360
So we had then, Poland was supposed to be the power center, keeping down the Russians

469
00:43:19.360 --> 00:43:20.880
and Germans in Eastern Europe.

470
00:43:20.880 --> 00:43:23.320
Czechoslovakia was also carved out.

471
00:43:23.320 --> 00:43:25.840
Here we had Czechoslovakia.

472
00:43:25.840 --> 00:43:27.440
The Czechs were our client states.

473
00:43:27.440 --> 00:43:29.440
The Czechs, we loved the Czechs.

474
00:43:29.440 --> 00:43:33.600
Masaryk was here in the United States, and then different things, Wilson, etc., etc.

475
00:43:33.600 --> 00:44:03.600
We had the Czechs and Slovaks, the Czechs and Slovaks had hated each other's guts for centuries, they had hated each other's guts, eventually they were placed in one country, the Czechs dominated the Slovaks, and also the Carpatho-Ukrainians, really just the Ukrainians, there was a whole chunk, the Czechs were given power over this people, about half of the Czechs were occupied by the Czechs, the Slovaks dominated, Carpatho-Ukrainians dominated the Czechs, then Yugoslavia was set up,

476
00:44:03.600 --> 00:44:22.600
I was carved out of Austria-Hungary with the Serbs who were our clients, so to speak, the Serbs were dominating the other half of the country, which were Croats, Slovene, Montenegrin, Macedonians, all of whom hate the Serbs, again for good reason.

477
00:44:22.600 --> 00:44:28.600
So you have the Serbs, about half the population, tyrannizing over the rest of the country.

478
00:44:28.600 --> 00:44:34.600
You have the Czechs, the Czechs, the Czechs, the Serbs, and the Poles were our favorite states.

479
00:44:34.600 --> 00:44:38.600
They were the client states. And they're supposed to keep down Russia and Germany.

480
00:44:38.600 --> 00:44:44.600
First of all, they were small anyway. Second of all, they had a huge amount of friction within their own country.

481
00:44:44.600 --> 00:44:52.600
It's set up, in other words, it's set up a permanent problem, a permanent friction, a permanent problem of domination and resentment among the people who are being dominated.

482
00:44:52.600 --> 00:45:00.600
So instead of granting national self-determination to every group, they were only granted to three ethnic groups and the rest of them were put under the domination of the people they hated.

483
00:45:00.600 --> 00:45:04.600
It's not exactly a long-run set-up.

484
00:45:04.600 --> 00:45:09.600
So there's no such thing as Yugoslavs, there's no such thing as Czechoslavs.

485
00:45:09.600 --> 00:45:12.600
All this is American and English and French propaganda.

486
00:45:12.600 --> 00:45:15.600
There are Czechs, there are Slovaks, there are Croats and Serbs,

487
00:45:15.600 --> 00:45:18.600
you know, who hate each other's guts, so forth and so on.

488
00:45:18.600 --> 00:45:20.600
For a while, Russia was being crushed.

489
00:45:20.600 --> 00:45:32.600
In other words, for a while, the United States, France, and I think Japan all invaded Russia to try to overthrow Bolshevism.

490
00:45:32.600 --> 00:45:34.600
This really cemented Bolshevism.

491
00:45:34.600 --> 00:45:37.600
The Russians didn't like being invaded for obvious reasons.

492
00:45:37.600 --> 00:45:42.600
and it's really bolstered Bolshevism more than overthrowing it

493
00:45:42.600 --> 00:45:47.600
and the Poles invaded Russia and seized a whole bunch of Eastern Ukrainian Russia's zone here

494
00:45:47.600 --> 00:45:54.600
so when Russia finally got out of it, when Trotsky built up the Red Army and finally beat back the allied forces

495
00:45:54.600 --> 00:45:59.600
obviously there was a lot of hatred between East and West already

496
00:45:59.600 --> 00:46:04.600
so we have in other words conditions that were beautifully set up for another war, for the Second World War

497
00:46:04.600 --> 00:46:13.600
The German foreign policy then came for the rest of the 20 years, to get back the territory they were carved up out of, in other words, the territory was carved up.

498
00:46:13.600 --> 00:46:24.600
The Allies forced the Germans, the Allies imposed a food blockade, the armistice was to play on November 11, 1918.

499
00:46:24.600 --> 00:46:30.600
Until the peace treaty was signed the following year, I think September or August or something, the Allies imposed a food blockade.

500
00:46:30.600 --> 00:46:37.600
The British and French blockaded Germany through the mass starvation in Germany and Central Europe after the war, for about nine months after the war was over.

501
00:46:37.600 --> 00:46:42.600
So that Germany could sign the famous war guilt clause confessing to total war guilt.

502
00:46:42.600 --> 00:46:46.600
They were the only guilty parties in World War I, which of course, I'll be baloney.

503
00:46:46.600 --> 00:46:52.600
Probably they were the least guilty of any of the states. They had to sign a sole war guilt clause which sort of rubbed the salt on the wounds.

504
00:46:52.600 --> 00:46:55.600
So in other words, Alsace-Lorraine was taken away from Germany.

505
00:46:55.600 --> 00:47:02.600
German areas and Sudetenland were taken away, the Polish corridor was taken away, and also the colonies in Africa.

506
00:47:02.600 --> 00:47:11.600
And the German foreign policy, regardless of what party, right, left or center, the next 20 years the voters are getting back to the territories.

507
00:47:11.600 --> 00:47:21.600
The re-arming, because you can allow all this armament, as opposed to Germany also, of the Versailles Treaty, and the idea to get the territory back.

508
00:47:21.600 --> 00:47:28.600
The English for a long time were saying, yes, they're really right, we have to adjust this, we have to do this all and give them territory, but no one ever did it.

509
00:47:28.600 --> 00:47:39.600
So Russia was trying to get their territory back, and it was the goal of Russian foreign policy. Both countries, both Russia and Germany became revisionist countries in the Versailles Treaty.

510
00:47:39.600 --> 00:47:46.600
And the idea then was that Russia wanted to get its territory back, and Germany wanted to get its territory back, regardless of what the ideology was, they wanted to get their territory back.

511
00:47:46.600 --> 00:47:51.600
And so the famous Hitler Stalin pact of 1939 should not have been a surprise to anybody.

512
00:47:51.600 --> 00:47:54.600
It was a big shock to those leftists in the United States.

513
00:47:54.600 --> 00:48:01.600
It was very easy to understand, because they got their territory back, eastern Poland, which is really part of Russia.

514
00:48:01.600 --> 00:48:05.600
They got Estonia, Latvia, and Lithuania back, and the Germans got their territory back.

515
00:48:05.600 --> 00:48:08.600
Of course, they also added some more, obviously.

516
00:48:08.600 --> 00:48:15.600
But the point is, they had reached their objectives, and there was a common ground there, regardless of the ideological differences.

517
00:48:15.600 --> 00:48:26.600
So it's set up for the rest of the 20th century, the total wars were set up because of the Versailles Treaty, total flagrant disaster.

518
00:48:26.600 --> 00:48:36.600
At any rate, in addition to that, to get back to the economic aspects, all the warring countries, I mean Germany, France, the United States and England,

519
00:48:36.600 --> 00:48:41.600
conducted the war in a very different way from which they conducted the war before.

520
00:48:41.600 --> 00:48:52.320
Before that, first place war was not really total, it was really more gentlemanly, it sort of fought, the armies fought and you didn't kill civilians, there was a so-called international law that was developed

521
00:48:52.320 --> 00:48:58.480
17th, 18th century, if you have to fight, don't kill civilians, don't interfere with neutral trade and all the rest of it

522
00:48:58.480 --> 00:49:10.520
The way the war was fought was very different, total war, civilians were considered fair game, and also, each war was run on a collectivist basis, the entire economy was collectivized by each side

523
00:49:10.520 --> 00:49:12.880
by the United States, by England, by France, by Germany

524
00:49:12.880 --> 00:49:16.320
and they all loved it, they came out of the war saying, this is great

525
00:49:16.320 --> 00:49:19.840
they have a collective system, we have cartelized the system now, we have

526
00:49:19.840 --> 00:49:24.120
we impose, we have control over all of industry, we impose

527
00:49:24.120 --> 00:49:30.320
price control, production control, we enforce trade association, we have the whole fascist or corporatist system

528
00:49:30.320 --> 00:49:35.560
and now impose them in the name of the war effort, you have to have a war effort, therefore you have to run

529
00:49:35.560 --> 00:49:38.640
no other war was fought that way, all other wars were fought by

530
00:49:38.640 --> 00:49:42.960
The tax story was to fight the resources away from the private sector and just fight the war.

531
00:49:42.960 --> 00:49:47.160
Now the ideology was, no, no, you have to total control of the economy in order to fight the wars.

532
00:49:47.160 --> 00:49:49.160
Of course, Bologna, you didn't have to have it.

533
00:49:49.160 --> 00:49:53.560
It just has fit in with, of course, the whole ideology of the progressive era, namely

534
00:49:53.560 --> 00:49:56.040
the Morgan, in the United States, the Morgan Rockefellers,

535
00:49:56.040 --> 00:50:00.480
whom Loeb drive for state domination, for government cartelization.

536
00:50:00.480 --> 00:50:04.400
And they imposed total cartelization in World War I, war collectivism.

537
00:50:04.400 --> 00:50:06.520
And they loved it. Why do they love it?

538
00:50:06.520 --> 00:50:15.520
He finally had government planning, he had intellectuals running the system, historians, economists, technologists, engineers, they were all running everything, boy do they love it!

539
00:50:15.520 --> 00:50:24.520
Several hundred thousand people were killed, Americans were killed in the war, many millions of Europeans, that was an unfortunate by-product, they loved the war system.

540
00:50:24.520 --> 00:50:35.520
And so, from then on, after the war was over, they tried to come back to it, all the guys who were running the war, they were all pretty young for some reason, they were in their thirties, sometimes in their twenties,

541
00:50:35.520 --> 00:51:05.520
So the rest of their lives, which went into the current period, they try to restore the war system and war collectivism. If you can't have a war, have it to fight depression, have it to fight inflation, have a government planning system, a government business partnership, big government setting, fixing prices, production and so forth, having trade associations, businessmen, and then unions running labor force, sort of corralling a labor force as a partner in this tripartite kind of agreement.

542
00:51:05.520 --> 00:51:12.520
but basically the new deal was very similar, the new deal was to restore the old World War II system and make it permanent

543
00:51:12.520 --> 00:51:22.520
okay, before we get to the actual setup, I mentioned that there was a little export prosperity before we entered the war

544
00:51:22.520 --> 00:51:25.520
from 1914 to 1917, just to give you a few figures on that

545
00:51:25.520 --> 00:51:34.520
for example, from August 1914, when the war started, until March 17 when we entered the war

546
00:51:34.520 --> 00:51:46.520
Total war munitions exported from the U.S. to Britain and France were $2.2 billion, which is an enormous amount, close to about $16 billion now.

547
00:51:46.520 --> 00:51:59.520
$700 million worth of explosives, $420 million worth of iron and steel, $485 million of copper manufacturing, meaning Guggenheims, etc. etc.

548
00:51:59.520 --> 00:52:10.520
40% of the ammunition was DuPont, and here DuPont calls for a war build up for defense contracts and all that, and makes 40% of the ammunition.

549
00:52:10.520 --> 00:52:19.520
Also in addition to that, in 1913 and 14 there was a big recession due to the previous bank credit expansion.

550
00:52:19.520 --> 00:52:28.520
Unemployment was fairly high, there was many factories and only a 60% capacity, and so the war orders that came in from 1914 were very welcome to all these people.

551
00:52:28.520 --> 00:52:58.520
Andrew Carnegie writes a letter to Wilson in November 1914, saying, this is great stuff, we have a very distressing financial and economic condition, and here these export orders are really helping us out, and of course, Benjamin Strong, the newly developed Federal Reserve system begins to inflate a lot, in order to permit all those things to happen, to permit big foreign loans, loans to Britain and France, expansion of war industries and so forth and so on,

552
00:52:58.520 --> 00:53:05.080
This is rendered permissible by the big expansion of inflationary money supply, money and banking,

553
00:53:05.080 --> 00:53:12.960
which of course then doubled the price level by the end of World War I.

554
00:53:12.960 --> 00:53:21.600
And profits go up in the war industry, for example, iron and steel exports, for example.

555
00:53:21.600 --> 00:53:39.600
The US iron and steel exports were $250 million in 1914, and by 1917, when we entered the war, it was $1.1 billion, so it was a four or five-fold expansion in iron and steel exports.

556
00:53:39.600 --> 00:53:49.600
The iron and steel profits went way up as a result. The average profit rate in 1915 we have for iron and steel was 7.5%.

557
00:53:49.600 --> 00:53:59.600
By 1917 it was 29 percent. A big expansion of profits, even more than the, almost about the same as the exports.

558
00:53:59.600 --> 00:54:08.600
So we had, in other words, enormous increase in profits as a result of the war production and war exports.

559
00:54:08.600 --> 00:54:13.600
In addition to the Morgan underwriting, monopoly underwriting of British and French bonds,

560
00:54:13.600 --> 00:54:24.600
The French bonds, they were also, Morgan loaned $823 million, a stupendous figure in those days, a single loan in late 16, early 17 to Great Britain.

561
00:54:24.600 --> 00:54:30.600
So when the war came about, there was a massive collectivization of the industry, usually illegally.

562
00:54:30.600 --> 00:54:34.600
In most cases, Wilson simply appointed somebody to be the czar of some industry and it was illegal.

563
00:54:34.600 --> 00:54:41.600
Then they got the Congress a few months later to ratify it by passing a law saying this is okay.

564
00:54:41.600 --> 00:54:50.600
There was a certain jockeying for power, and eventually by March 1918, Bernhard Baruch, as I mentioned, became the sole head of the War on the Industries Board,

565
00:54:50.600 --> 00:54:52.600
collectivizing all of industry.

566
00:54:52.600 --> 00:54:54.600
And they would set up commodity sections.

567
00:54:54.600 --> 00:55:01.600
In other words, each commodity had commodity sections. There were about, I think, 90 of them, I would say.

568
00:55:01.600 --> 00:55:08.600
There were over 60, over 60 commodity sections, or different commodities, iron, steel, copper, whatever, had sections.

569
00:55:08.600 --> 00:55:14.600
These were called commodity sections, which were headed by a certain number of people,

570
00:55:14.600 --> 00:55:19.600
three or four or five or whatever, government appointees running each section.

571
00:55:19.600 --> 00:55:25.600
Let's say iron and steel. And the iron and steel people would negotiate with trade associations.

572
00:55:25.600 --> 00:55:29.600
If they didn't have a trade association, they'd encourage them, they'd sort of force them to have one.

573
00:55:29.600 --> 00:55:32.600
Well, you guys better form a representative so they can negotiate.

574
00:55:32.600 --> 00:55:38.600
So the iron and steel industry was encouraged then to have, to elect representatives so to speak

575
00:55:38.600 --> 00:55:42.600
and they would negotiate over prices and production with the iron and steel committees

576
00:55:42.600 --> 00:55:47.600
government committees, section chiefs

577
00:55:47.600 --> 00:55:53.600
and this would happen in copper and everything, machine tools, all these industries, a whole bunch of different industries

578
00:55:53.600 --> 00:55:57.600
each of which would have government appointees, section chiefs and committees

579
00:55:57.600 --> 00:56:01.600
negotiating prices and production with these committees, trade association

580
00:56:01.600 --> 00:56:06.600
The question is, who are these guys from the government? They were big shots from the same industry.

581
00:56:06.600 --> 00:56:11.600
In other words, they appoint these guys, let's say the head of U.S. Steel would be appointed head of the Steel Commit section.

582
00:56:11.600 --> 00:56:16.600
He would then negotiate with the vice president of U.S. Steel or two or three other types.

583
00:56:16.600 --> 00:56:22.600
In other words, the very cozy cartel arrangement, when the government officials are simply the same, the old heads of various firms,

584
00:56:22.600 --> 00:56:28.600
and then they get a dollar a year. They say, boy, we're really sacrificing the law after only getting a dollar a year from the government.

585
00:56:28.600 --> 00:56:36.000
But they have the power, also they keep getting salaries from an escrow or whatever from the industry, from the firm anyway.

586
00:56:36.000 --> 00:56:47.120
So, they are negotiating with the people from their own buddies, from the big shots in steel and construction, copper and lumber and whatever.

587
00:56:47.120 --> 00:56:54.720
In this way, the whole government, the whole industry is planned by these government association, collaboration of government and industry,

588
00:56:54.720 --> 00:57:02.520
designed for us to restrict production and keep prices up. It means to expand more production, but to restrict it in the sense of keeping, making sure the prices go way up

589
00:57:02.520 --> 00:57:05.280
and profits are guaranteed, and so on.

590
00:57:05.280 --> 00:57:10.320
So, they all love that, except for individual firms that try to break the cartel.

591
00:57:10.320 --> 00:57:15.360
If an individual firm tries to bust the agreement on lower prices or expand production,

592
00:57:15.360 --> 00:57:21.960
in other words, they have minimum quotas and maximum

593
00:57:21.960 --> 00:57:27.760
minimum prices and maximum production in most cases

594
00:57:27.760 --> 00:57:33.440
if some firm were trying to out-compete, they'd be smashed, they'd be cracked down on by the government

595
00:57:33.440 --> 00:57:37.520
the mavericks who refused to run with the herd, as they call it

596
00:57:37.520 --> 00:57:39.560
these were called, by the way, these

597
00:57:39.560 --> 00:57:42.880
these representatives were called war service committees

598
00:57:42.880 --> 00:57:46.080
the industry groups were called war service committees

599
00:57:46.080 --> 00:57:52.040
The government were called commodity sections. There were about 300 war service committees

600
00:57:52.040 --> 00:57:54.960
negotiated with about 60 or so commodity sections.

601
00:57:54.960 --> 00:57:58.600
And the Chamber of Commerce, which was set up by the government, in essence, remember,

602
00:57:58.600 --> 00:58:02.680
Cass had the idea toward the end of his regime to set up

603
00:58:02.680 --> 00:58:06.120
an industrial group which would then sort of negotiate with government.

604
00:58:06.120 --> 00:58:10.760
And they just about came into being by the time Wilson came in.

605
00:58:10.760 --> 00:58:14.200
So the Chamber of Commerce sort of oversees this whole thing, in other words, sort of

606
00:58:14.200 --> 00:58:18.680
a point of the war service committee, or got the copper industry to get together

607
00:58:18.680 --> 00:58:21.600
and elect the war service committee people, or appoint them

608
00:58:21.600 --> 00:58:26.320
the chamber of commerce is sort of acting as a government business liaison for this whole situation

609
00:58:26.320 --> 00:58:30.040
in U.S. chamber of commerce

610
00:58:30.040 --> 00:58:32.120
a very cozy situation, for example

611
00:58:32.120 --> 00:58:35.620
Robin Clarkson, who was, I think, the secretary of the war industry board

612
00:58:35.620 --> 00:58:36.880
wrote a book

613
00:58:36.880 --> 00:58:41.740
about the experience after the war is over, they all loved this experience, it was just great, and Clarkson

614
00:58:41.740 --> 00:58:43.200
participated in it

615
00:58:43.200 --> 00:58:48.160
It's a very interesting book. I mean, of course, I love the whole system. He sees nothing wrong with it. He's lauding the whole thing.

616
00:58:48.160 --> 00:58:49.400
It's called, I think,

617
00:58:49.400 --> 00:58:52.880
Industrial Production in America, something like that, and the war.

618
00:58:52.880 --> 00:58:56.600
There's a great quote from Clarkson, a revealing quote.

619
00:58:56.600 --> 00:58:58.580
He's talking about the war collectivism.

620
00:58:58.580 --> 00:59:01.960
Businessmen wholly consecrated the government's service.

621
00:59:01.960 --> 00:59:04.600
There's a lot of baloney, they're consecrated their own profits,

622
00:59:04.600 --> 00:59:08.800
in addition to the government's service. Businessmen wholly consecrated the government's service,

623
00:59:08.800 --> 00:59:13.200
but full of understanding of the problems of industry

624
00:59:13.200 --> 00:59:16.400
now face, that's the guys on the Commodity Section

625
00:59:16.400 --> 00:59:21.460
he's a businessman, consecrated to government service, wholly consecrated to government service

626
00:59:21.460 --> 00:59:23.780
but full of understanding of the problems of industry

627
00:59:23.780 --> 00:59:29.220
now face businessman, wholly representative of industry, that's these guys on the war service committees

628
00:59:29.220 --> 00:59:30.460
they're buddies

629
00:59:30.460 --> 00:59:34.860
but sympathetic with the purpose of government, of course they're sympathetic, they're very cozy

630
00:59:34.860 --> 00:59:37.480
partnership here, cartelizing partnership

631
00:59:37.480 --> 00:59:41.280
and he goes on, the commodity sections were businessmen operating government

632
00:59:41.280 --> 00:59:43.600
business for the common good

633
00:59:43.600 --> 00:59:45.880
if you scratch the common good you get the

634
00:59:45.880 --> 00:59:47.040
much better view of it

635
00:59:47.040 --> 00:59:49.260
the war committees of industry

636
00:59:49.260 --> 00:59:53.980
knew, understood, and believed in the commodity chiefs, they were of the same

637
00:59:53.980 --> 00:59:54.960
piece

638
00:59:54.960 --> 00:59:59.660
they were the same people, they were buddies, they were close friends and whatever

639
00:59:59.660 --> 01:00:03.060
coming from the same firms and then cozy getting together with the

640
01:00:03.060 --> 01:00:06.240
power of government to run the system

641
01:00:06.240 --> 01:00:11.120
again he says the commodity sections were industry, mobilized and drill

642
01:00:11.120 --> 01:00:15.080
mobilized and drill responsive, keen and fully staffed, they were militant

643
01:00:15.080 --> 01:00:18.080
they were militant and in serrated ranks

644
01:00:18.080 --> 01:00:23.640
notice the military analogy here, they were militant, they were all organized

645
01:00:23.640 --> 01:00:27.080
he says at one other point, if any maverick

646
01:00:27.080 --> 01:00:29.640
undercut the system trying to compete in other words

647
01:00:29.640 --> 01:00:35.200
he was roped and branded and forced to run with a herd and was treated as if they were cattle

648
01:00:35.200 --> 01:00:42.200
the maverick leaves the herd, he's forced by the benevolent shepherd or whatever it is, you know, the cowboy to come in and force him to join with the rest of the group

649
01:00:45.680 --> 01:00:52.120
the commodities section, he says, were industry, yeah, they were a system of concentration of commerce, industry, and all the powers of government

650
01:00:52.120 --> 01:00:55.960
it was without compare among all the other nations, well the other nations were pretty

651
01:00:55.960 --> 01:00:58.400
pretty well acted that way too

652
01:00:58.400 --> 01:01:00.520
at any rate

653
01:01:00.520 --> 01:01:04.680
Who was in the war industry's board? Well, Baruch, as I say, was the chairman.

654
01:01:04.680 --> 01:01:09.560
A Guggenheim tool, as we now know, after many years of

655
01:01:09.560 --> 01:01:11.000
the mystery.

656
01:01:11.000 --> 01:01:15.600
The vice-chairman was Alexander Legge, another very interesting person, who pops up later.

657
01:01:15.600 --> 01:01:18.840
Very important figure of Baruch. All these guys, by the way,

658
01:01:18.840 --> 01:01:22.360
had a lot of solidarity coming out of the war. They all liked each other.

659
01:01:22.360 --> 01:01:26.560
They all got along very well. And after the war, the next twenty years of trying to recapture,

660
01:01:26.560 --> 01:01:29.320
we established these institutions in peacetime.

661
01:01:29.320 --> 01:01:33.200
Alexander Legge, Vice Chairman of the War Industries Board

662
01:01:33.200 --> 01:01:37.360
had been Chairman of the Board of President of the International Harvester

663
01:01:37.360 --> 01:01:41.840
one of the top Morgan trusts

664
01:01:41.840 --> 01:01:45.640
in other words, or emphasis, Morgan

665
01:01:45.640 --> 01:01:49.160
he was Vice Chairman of the War Industries Board

666
01:01:49.160 --> 01:01:53.160
Robert Brookings was in charge of price fixing the wealthy St. Louis

667
01:01:53.160 --> 01:01:57.440
lumber magnate and founder of the Brookings Institution around that time

668
01:01:57.440 --> 01:02:04.440
Another guy, who became a Baruch tool for the next 20 years and also founder of a form block, was George Peake.

669
01:02:05.980 --> 01:02:09.260
He was vice president of the Beer & Company,

670
01:02:09.260 --> 01:02:12.640
later the Moline Plough Company.

671
01:02:12.640 --> 01:02:14.340
Moline was the

672
01:02:14.340 --> 01:02:21.340
second largest farm equipment manufacturer. International harvester was the Molineing farm equipment manufacturer.

673
01:02:21.340 --> 01:02:28.340
So, Peek and General Johnson, who was also in the Vier and Company, became the founders

674
01:02:31.140 --> 01:02:38.140
of the farm block after the war was over, about 1920, 1919. Peek and Johnson came out

675
01:02:38.900 --> 01:02:43.020
with a book called Equality for Agriculture, which they called for the use of government

676
01:02:43.020 --> 01:02:48.180
to raise, especially the farm price support firms, to buy crops, cotton, wheat, etc.,

677
01:02:48.180 --> 01:02:50.380
The Raise of Farm Prices

678
01:02:50.380 --> 01:02:55.460
Now these guys were not dirt farmers, they were farm equipment manufacturers, and they realized, of course, we want to

679
01:02:55.460 --> 01:03:00.820
subsidize farm equipment manufacturing, and the best thing to do is for the government to subsidize the farmers, and in turn, we'll then buy

680
01:03:00.820 --> 01:03:02.260
farm equipment.

681
01:03:02.260 --> 01:03:06.100
So, and Baruch, by the way, was also the

682
01:03:06.100 --> 01:03:10.940
grand old man, so to speak, of the farm policy, farm price support program.

683
01:03:10.940 --> 01:03:16.900
He was a big land speculator, he bought a lot of rural farmland, and of course, if you have farm price support, so the government

684
01:03:16.900 --> 01:03:20.900
which tremendously raises the price of farmland.

685
01:03:20.900 --> 01:03:24.900
So there's a personal economic interest involved here

686
01:03:24.900 --> 01:03:28.900
as well as an ideological drive towards statism.

687
01:03:28.900 --> 01:03:32.900
Then there's the Railroad Administration in charge of the railroads.

688
01:03:32.900 --> 01:03:36.900
As we'll see next time, the railroads are nationalized by the federal government

689
01:03:36.900 --> 01:03:39.900
at the behest of the railroads. They love nationalization.

690
01:03:39.900 --> 01:03:42.900
You'd think the railroads wouldn't like to be nationalized. They loved it.

691
01:03:42.900 --> 01:03:49.900
In the beginning of World War I, the thing I mentioned last time or the time before that, the railroads had lost control of the ICC.

692
01:03:49.900 --> 01:03:52.900
They had set up the ICC and they were running it for many years.

693
01:03:52.900 --> 01:03:57.900
By 1900, 1905 or so, the shippers began to control it, the organized shippers.

694
01:03:57.900 --> 01:03:59.900
Of course, they wanted to keep railroad rates low.

695
01:03:59.900 --> 01:04:03.900
All of a sudden, the railroads found the railroad rates were low. They didn't like the ICC anymore.

696
01:04:03.900 --> 01:04:08.900
And so in order to get out from under the ICC, the railroads promoted the idea that the government should nationalize them.

697
01:04:08.900 --> 01:04:14.900
The government nationalized the railroads, put them over, I think it was head up by the Railroad Administration,

698
01:04:14.900 --> 01:04:21.900
ran the trains and all that, incurred all the operating costs, and the railroads got a guaranteed profit.

699
01:04:21.900 --> 01:04:25.900
In other words, railroads got their, whatever, six percent, eight percent profit or something, for doing nothing.

700
01:04:25.900 --> 01:04:30.900
All the costs were incurred by the government, deficits, and then the taxpayer picked up the difference and paid off the railroads.

701
01:04:30.900 --> 01:04:35.900
They loved it. Great way to be nationalized. You get guaranteed profits and no costs.

702
01:04:35.900 --> 01:04:41.900
and also Herbert Hoover was in charge of the food administration as the czar of the entire food industry

703
01:04:41.900 --> 01:04:51.900
Hoover had been a British connected miner, geologist and general copper and oil miner and so forth

704
01:04:51.900 --> 01:04:56.900
I guess copper largely and other mines

705
01:04:56.900 --> 01:05:04.900
I was an England and I took charge of Belgian War Relief

706
01:05:04.900 --> 01:05:07.900
for which I became known as a food maven

707
01:05:07.900 --> 01:05:10.900
and then he was appointed by Wilson, he was a big Wilsonian

708
01:05:10.900 --> 01:05:14.900
became a food czar, demanding absolute power of all food

709
01:05:14.900 --> 01:05:17.900
he didn't even have a commission over him, he just ran all the food

710
01:05:17.900 --> 01:05:20.900
farms, wholesale retail, everything else

711
01:05:20.900 --> 01:05:29.900
and what he did is he imposed a whole licensing requirement. In order to exist in the food industry, you have to have a license, a federal license which was issued by the food administration.

712
01:05:29.900 --> 01:05:36.900
If they didn't like what you were doing, if you didn't abide by the price and production agreements, you were deprived of your license. You were put out of business, in other words.

713
01:05:36.900 --> 01:05:44.900
A very powerful weapon by Hoover. Hoover was much more of a dictator over food than the other guys were over industry. He had a huge federal licensing network.

714
01:05:44.900 --> 01:05:50.900
Also, Hoover invented the system of fake voluntarism.

715
01:05:50.900 --> 01:05:58.900
In other words, what he did was, he had all these price restrictions, price controls put on by Hoover.

716
01:05:58.900 --> 01:06:02.900
Food prices had to be a certain amount, so forth and so on. It had a certain minimum.

717
01:06:02.900 --> 01:06:07.900
He got the public to volunteer to be the unpaid enforcer.

718
01:06:07.900 --> 01:06:14.900
He was a paid enforcer. He mobilized the public to be like friends of the Food Administration.

719
01:06:14.900 --> 01:06:18.900
I think he had some kind of stamp, a kind of logo of the food.

720
01:06:18.900 --> 01:06:23.900
He had them abide by each restaurant, each food and grocery store had this logo of the Food Administration.

721
01:06:23.900 --> 01:06:28.900
And he mobilized everybody to report, spy on their neighbors, spy on every restaurant, every grocery store,

722
01:06:28.900 --> 01:06:33.900
make sure they didn't cut prices or whatever. If they did cut prices, report them to the Food Administration.

723
01:06:33.900 --> 01:06:40.900
It's really like a vast espionage network of unpaid patriots who were spying on, who were opposed to administration regulations.

724
01:06:40.900 --> 01:06:43.900
That's what Hoover called volunteerism.

725
01:06:43.900 --> 01:06:51.900
The peculiar kind of volunteerism was like having voluntary Gestapo, spying on your neighbors.

726
01:06:51.900 --> 01:06:54.900
And the regulations that he put in were cartilaginic regulations.

727
01:06:54.900 --> 01:06:57.900
In other words, for example, he had a big bread campaign.

728
01:06:57.900 --> 01:07:01.900
Before that, if your wholesalers or bakers sold bread to the retailers

729
01:07:01.900 --> 01:07:16.900
And the retailers didn't sell all the bread, they returned them to the free of charge, like newspapers, newsstands now return unsold papers to the newspaper, news dealers, newspaper people, so they could return the breading and pay for it.

730
01:07:16.900 --> 01:07:26.900
So Hoover insisted, put the government regulation, no, no, from now on, the retail is responsible for unsold bread, in other words, trying to get them to sell its stale bread to the public, in the name of the war effort.

731
01:07:26.900 --> 01:07:31.160
first what it does is it means it's restricting the supply, decreasing the quality

732
01:07:31.160 --> 01:07:36.600
typical of cartilages is to cut the quality and raise the price

733
01:07:36.600 --> 01:07:40.600
so these were some of the measures

734
01:07:40.600 --> 01:07:45.560
again Clarkson talking about this whole system says, another great quote from Clarkson

735
01:07:45.560 --> 01:07:51.760
business willed its own domination, forged its bonds, and policed its own subjects

736
01:07:51.760 --> 01:07:55.660
there were bitter and stormy protests here and there

737
01:07:55.660 --> 01:08:02.660
The occasional obstructor fled from the mandate of the board, only to find himself ostracized by his fellows in industry.

738
01:08:02.660 --> 01:08:13.660
In other words, anybody who broke, decided to sell fresh bread instead of stale butter, cut the price or whatever, was then ostracized by the other people in the industry, violating the cartel agreement,

739
01:08:13.660 --> 01:08:23.660
and also, of course, in the case of Hoover, mobilizing the deluded public to spy on and try to put these guys out of business.

740
01:08:23.660 --> 01:08:28.060
Another thing that the Food Administration did, and also was done in industry,

741
01:08:28.060 --> 01:08:33.960
in the name of the war effort, it's to eliminate a variety of products. This was done all through industry, by the way.

742
01:08:33.960 --> 01:08:36.760
Compulsory is called elimination of waste.

743
01:08:36.760 --> 01:08:39.660
Therefore, you're against waste. Waste is bad for the war effort.

744
01:08:39.660 --> 01:08:45.260
So, in the name of eliminating waste, they had compulsory standardization of all sorts of stuff, gear shifts,

745
01:08:45.260 --> 01:08:48.560
bread, I mean, whatever, what do you think of? In other words, if there were fifty different

746
01:08:48.560 --> 01:08:53.460
varieties of certain products, they'd fortunately have only ten, things like that.

747
01:08:53.460 --> 01:09:23.460
By doing that means you're eliminating small businesses, you're hurting, you're changing the shape of industries and have to reduce the number of opportunities available to the consumer, you're having a smaller number of products and then a larger size of each product. In other words, you're benefiting large businesses, expensive smaller businesses which meet different parts of the market. And this was carried on, this was continued during the 1920s by Hoover when he was Secretary of Commerce continuing this compulsory standardization of industry.

748
01:09:23.460 --> 01:09:39.460
Reduce the number of styles, the number of fashions, the number of different grades of things, and thereby cut competition, cut the supply curve to the left, push the supply to the left, push out of business a whole bunch of competing firms, especially small business.

749
01:09:39.460 --> 01:09:46.460
This was done mostly by the conservation division of the Warren District Board, the name of conservation.

750
01:09:46.460 --> 01:09:53.460
As Clarkson says about the Conservation Division, he says there's a drastic reduction in the number of styles and sizes of products.

751
01:09:53.460 --> 01:09:57.460
You can only have eight kinds of gear shifts or years instead of 20 or whatever.

752
01:09:57.460 --> 01:10:02.460
He said, quote, the World War was a wonderful school.

753
01:10:02.460 --> 01:10:10.460
The Conservation Division alone showed that merely to strip from trade and industry the lumber of futile custom and the incrustation of useless variety

754
01:10:10.460 --> 01:10:12.460
could then bring about what was a great thing.

755
01:10:12.460 --> 01:10:15.460
In other words, to eliminate what the consumers wanted, which is a lot of variety.

756
01:10:15.460 --> 01:10:22.460
For example, there were Conservation Division outlawed 250 kinds of plows and 750 kinds

757
01:10:24.460 --> 01:10:27.620
of drills. Well, there were lots of different drills with different, meeting different tastes.

758
01:10:27.620 --> 01:10:34.620
Now I can only have a few kinds of plows, a few kinds of drills. And the Clarkson goes

759
01:10:34.660 --> 01:10:38.860
on, this then would be the goal of the next quarter of the 20th century, to standardize

760
01:10:38.860 --> 01:10:44.100
American industry, to make a wartime necessity a matter of peacetime advantage.

761
01:10:44.100 --> 01:10:49.100
He wants to perpetuate this stuff during peace.

762
01:10:49.100 --> 01:10:55.100
And then Clarkson talks about how the people of the war industry, the war is one that wants to perpetuate this whole thing forever.

763
01:10:55.100 --> 01:11:02.100
He says, from their meditations arose dreams of an ordered economic world.

764
01:11:02.100 --> 01:11:09.100
They conceive of America as commodity sectioned, permanently commodity sectioned, for the control of world trade.

765
01:11:09.100 --> 01:11:13.100
They beheld the whole trade of the world, carefully computed and registered in Washington.

766
01:11:13.100 --> 01:11:21.100
In a word, a national mind and will confronting international trade and keeping its own house in business-like order.

767
01:11:23.100 --> 01:11:31.100
As Harry Wheeler, who was head of the Chamber of Commerce, talked about the future based on this war industry board thing, he said,

768
01:11:31.100 --> 01:11:38.100
the war services committee system, quote, promises to form the basis for a truly national organization of industry.

769
01:11:38.100 --> 01:11:42.100
The integration of business, the expressed aim of the national chamber, is in sight.

770
01:11:42.100 --> 01:11:49.600
War is a stern teacher that is driving home the lesson of cooperative effort.

771
01:11:49.600 --> 01:11:56.100
War breaks out, there's tremendous... European countries are blockading each other,

772
01:11:56.100 --> 01:11:58.600
so they're not buying each other's food as they used to,

773
01:11:58.600 --> 01:12:03.600
and so they're buying American food when America was neutral in the war until 1918, 1917.

774
01:12:03.600 --> 01:12:07.100
So you have a tremendous increase in price, this is quantity,

775
01:12:07.100 --> 01:12:10.600
a tremendous increase in demand for American agricultural products.

776
01:12:10.600 --> 01:12:17.600
And so, as a result, you have a huge increase in supply, big increase in price.

777
01:12:17.600 --> 01:12:25.600
So the price goes up, and then when the war starts, there's a big American demand for food, et cetera, et cetera, and foreign aid, and all the rest of it.

778
01:12:25.600 --> 01:12:29.600
You have a tremendous increase in agriculture, both in production and in price.

779
01:12:29.600 --> 01:12:35.600
So you have a huge increase in demand, huge increase in price, and it stimulates a big increase in American cotton and wheat and all that.

780
01:12:35.600 --> 01:12:41.600
Now, when the war is over, the blockade is gone finally and Europeans are growing their own food and trading it.

781
01:12:41.600 --> 01:12:44.600
They don't need American agriculture that much.

782
01:12:44.600 --> 01:12:48.600
The demand curve for agriculture falls back again and prices fall.

783
01:12:48.600 --> 01:12:52.600
And after every big war, you always have a fall in farm prices.

784
01:12:52.600 --> 01:12:54.600
First, the prices go up during the war.

785
01:12:54.600 --> 01:12:57.600
Same thing happened after the Napoleonic Wars in 1815.

786
01:12:57.600 --> 01:13:00.600
Big drop in demand for agriculture, a big fall in prices.

787
01:13:00.600 --> 01:13:05.600
Well, at full agricultural prices, the farmers start griping, of course.

788
01:13:05.600 --> 01:13:07.200
Farmers want to be

789
01:13:07.200 --> 01:13:11.200
kept in a style in which they become accustomed during wartime.

790
01:13:11.200 --> 01:13:15.480
But the farmers themselves were not that organized yet. The farmers didn't have

791
01:13:15.480 --> 01:13:19.200
that powerful farm block that they have today. The first guys calling for

792
01:13:19.200 --> 01:13:21.320
government subsidies to agriculture,

793
01:13:21.320 --> 01:13:26.200
farm price support, in other words, the taxpayer buying farm products that can rise in price,

794
01:13:26.200 --> 01:13:34.200
So Johnson and Peake and Baruch are their godfathers, so to speak. Baruch, I guess, was the Jewish godfather of this whole movement, so to speak.

795
01:13:34.200 --> 01:13:38.200
So Johnson and Peake write this thing.

796
01:13:38.200 --> 01:13:44.200
He, in other words, farm equipment manufacturers saw from the very beginning the advantages of farm price support. In other words, they're that.

797
01:13:44.200 --> 01:13:48.200
In other words, if you give the farmers more money, they will buy more farm equipment.

798
01:13:48.200 --> 01:13:53.200
And so the farm equipment manufacturers are the first ones to fall for farm price supports.

799
01:13:53.200 --> 01:14:16.200
So we have a combination of farm speculators and farm equipment manufacturers, being the first ones to engage in this farm block process.

800
01:14:16.200 --> 01:14:27.200
So, they started this agitation for farm price support, and all the way in the 1920s, this picks up support among the farmers, and they get into it.

801
01:14:27.200 --> 01:14:33.200
And Herbert Hoover was also a Baruch, I mean also part of the Wilsonian war effort.

802
01:14:33.200 --> 01:14:40.200
In other words, he was nominally a Republican, but nobody even knew it. He was the food czar in World War I, as I already mentioned.

803
01:14:40.200 --> 01:15:10.200
and also a big pro-farmer person, he told the farmers that if he ever got to be president, he would immediately institute this new system of farm price supports, which he did, the first thing he did as president, he gets in in March 1929, immediately pushes through this farm price program, which of course is still with us, it's still a big disaster, it's gotten worse, but basically he started it, Hoover basically was a major person responsible, so again, bipartisan, Hoover, when Hoover

804
01:15:10.200 --> 01:15:22.200
Hoover entered politics. Hoover had been in Belgium, a big mining geologist is what he was, basically, and an entrepreneur and promoter of copper mines and other mines throughout the world.

805
01:15:22.200 --> 01:15:36.200
He lived in London for many years and during World War I he was head of Belgian War Relief, which was using food as a political weapon to feed only Belgians and not Germans, that sort of stuff.

806
01:15:36.200 --> 01:15:42.000
The pretense of being a Christian, pro-food person who doesn't care who's being relieved.

807
01:15:42.000 --> 01:15:48.200
At any rate, when America entered the war, Hoover was made food czar, he was brought back by Wilson.

808
01:15:48.200 --> 01:15:53.800
Wilson loved Hoover, Hoover loved Wilson, and Hoover was a Wilsonian to the hilt.

809
01:15:53.800 --> 01:15:59.800
And his political career begins, he's already a multi-millionaire, he wants to devote himself to politics.

810
01:15:59.800 --> 01:16:04.200
He's only about 40, something like that, and he becomes the food czar.

811
01:16:04.200 --> 01:16:09.200
He insisted, by the way, Baruch at least had the head of the war industry's board.

812
01:16:09.200 --> 01:16:13.200
Hoover insisted, I want no boards, I've got to be the sole power.

813
01:16:13.200 --> 01:16:19.200
And Wilkson of course gave it to him, like Wilkson made Colonel House his foreign policy czar, for the speak.

814
01:16:19.200 --> 01:16:23.200
Colonel House a Morgan associate.

815
01:16:23.200 --> 01:16:25.200
Hoover said, I have to be the food czar.

816
01:16:25.200 --> 01:16:29.200
So Hoover heads up the food administrator, he's the food administrator.

817
01:16:29.200 --> 01:16:34.200
Sam mentioned this, the licensing power, to license everything connected with food.

818
01:16:34.200 --> 01:16:40.200
The Federal Government licensed every restaurant, every food, wholesale or manufacture, everything.

819
01:16:40.200 --> 01:16:51.200
Any processor was licensed, and if the restaurant or the bread manufacturer didn't obey the food administration regulations,

820
01:16:51.200 --> 01:16:55.200
the cartel regulations that you have to, price has to be a certain amount, production has to be a certain amount,

821
01:16:55.200 --> 01:16:58.200
The license was taken away, they couldn't, they were put out of business.

822
01:16:58.200 --> 01:17:01.200
Licensing is a very powerful weapon.

823
01:17:01.200 --> 01:17:08.200
It's like the FCC can decide if a radio station or a TV station is biased or something, they can remove the license.

824
01:17:08.200 --> 01:17:16.200
So Hoover also pioneered in the use of phony voluntarism.

825
01:17:16.200 --> 01:17:23.200
In other words, to use the masses, use the public, unpaid supporters of the unpaid enforcers of government regulations.

826
01:17:23.200 --> 01:17:53.200
So, he'd say, well, every restaurant had to obey certain price regulations, maximum prices, minimum prices, whatever, and they had to put up a sign saying, we obey the regulations, a kind of symbol, which Franklin Roosevelt later used for the National Recovery Administration, called the Blue Eagle, the NRA had a Blue Eagle sign, put the Blue Eagle up on the window, to show you were true America. So, anyway, then they used the masses,

827
01:17:53.200 --> 01:18:05.200
In other words, Hoover encouraged volunteer organizations or citizens to go out there and police the food stores and the restaurants to make sure that prices were no higher or no lower than the regulation.

828
01:18:05.200 --> 01:18:13.200
And then to report back to the local government food administrators. In other words, they used the public as a group of unpaid spies, so to speak.

829
01:18:13.200 --> 01:18:20.200
This was done also on the civil liberties front. The public was encouraged to turn in quote, German agents or German spies, unquote.

830
01:18:20.200 --> 01:18:50.200
This is the beginning of the whole spy hysteria, which of course is still with us. World War I, I mean, it starts everything. World War I begins the whole espionage hysteria, it starts then, and everybody, not only is this the beginning of the FBI, and it really starts slightly after the war, but basically begins then, but the whole idea that we're encountering menace from foreign agents begins in this period, and people are encouraged to turn everybody in. Everybody, anybody speaking German was in those days.

831
01:18:50.200 --> 01:18:57.200
Fair game. As a matter of fact, the use of the German language was, the use of the German language, the teaching of German was outlawed in Seattle.

832
01:18:57.200 --> 01:19:04.200
High points, low points, World War I. The German was considered enemy language, therefore nobody was allowed to teach it.

833
01:19:04.200 --> 01:19:07.200
It was a great big step forward in human knowledge.

834
01:19:07.200 --> 01:19:15.200
Bunch of monsters. Anyway, this is the, and so the German copy taught in the public school system because it was a so-called enemy language.

835
01:19:15.200 --> 01:19:25.040
And Sauerkraut was renamed Liberty Cabbage, I think, or Victory Cabbage, which was Sauerkraut's red German name.

836
01:19:25.040 --> 01:19:29.840
Beethoven was barred from being on the radio because he was a German composer, right?

837
01:19:29.840 --> 01:19:35.040
And so, I mean, it's just an unbelievably monstrous, the whole set, the whole World War I,

838
01:19:35.040 --> 01:19:44.400
it begins with all the evils of the 20th century, the whole man business, economically, foreign policy and civil liberties and all the rest of it.

839
01:19:44.400 --> 01:19:48.400
and those historians, it also begins the idea of intellectuals

840
01:19:48.400 --> 01:19:52.400
working for the war effort, working for the government

841
01:19:52.400 --> 01:19:56.400
to run the system, economists to run the economy

842
01:19:56.400 --> 01:20:01.400
historians are propagandized by the Germans as an evil since the 16th century or whatever

843
01:20:01.400 --> 01:20:09.400
and social workers and all the rest of it, the whole group

844
01:20:09.400 --> 01:20:15.800
political scientists, all of them become part of the government machine, in this case the war machine

845
01:20:15.800 --> 01:20:19.800
particularly those intellectuals who have gotten PhDs in Germany

846
01:20:19.800 --> 01:20:22.000
historians, economists, political scientists

847
01:20:22.000 --> 01:20:26.600
are leading the parade and saying all German culture has been evil for hundreds of years

848
01:20:26.600 --> 01:20:30.400
just writing crazed pamphlets

849
01:20:30.400 --> 01:20:35.200
that it all started with Luther and everybody's been evil ever since and all Germans have been rotten and so on

850
01:20:35.200 --> 01:20:38.600
of course they sang a very different tune five years before that

851
01:20:38.600 --> 01:20:44.600
but this is the... each one was trying to prove their 100% Americanism or 200% Americanism or whatever

852
01:20:44.600 --> 01:20:48.600
any professors who didn't go along with this were driven out of the university system

853
01:20:48.600 --> 01:20:54.600
and Richard T. Ely, one of my least favorite people in American history, symbolizes much of this

854
01:20:54.600 --> 01:21:02.600
he was the top progressive economist, founder of the major founder of the American Economic Association

855
01:21:02.600 --> 01:21:07.600
to lead the economic profession away from laissez-faire and toward the statism

856
01:21:07.600 --> 01:21:26.600
The founder of the Wisconsin Idea and institutionalist and whatever, got a PhD in Berlin, was one of the leading war propagandists and cracking down on the idea of academic freedom for professors and the rest of it.

857
01:21:26.600 --> 01:21:34.600
He also considered any pro-peace agitation or any anti-war agitation as German espionage, agents of the Kaiser.

858
01:21:34.600 --> 01:21:43.600
By the way, when Lenin popped up, and as a matter of fact, there are still nutty historians right now who think that Lenin was essentially a German agent.

859
01:21:43.600 --> 01:21:50.600
In other words, all of Bolshevism was a plot by the Kaiser to break the Russian war effort.

860
01:21:50.600 --> 01:22:01.600
Still, there was a biography of Lenin a few years ago that said the same thing. It was all essentially a plot, a Kaiser plot.

861
01:22:01.600 --> 01:22:31.600
So, all these guys were, as I say, they all started with Wilsonian, Wilson provided the sort of the intellectual, Wilson himself as the only PhD who's ever been president, I hope it will not be any other one, he's representative of what happens when a PhD becomes president, a professor, PhD, distinguished historian and political scientist, and

862
01:22:31.600 --> 01:22:38.600
In many sense, of course, the idea that it's America's role in the world to remake the entire world in an American image

863
01:22:38.600 --> 01:22:45.600
that everybody's democratic and everybody listens to the other thing, centrist, not too left-wing, not too right-wing, everything's got to be fixed

864
01:22:45.600 --> 01:22:50.600
and re-drawing the map of Europe in that image

865
01:22:50.600 --> 01:22:57.600
So Hoover, nobody knew which party Hoover belonged to

866
01:22:57.600 --> 01:23:03.600
In 1920, when Hoover, when Wilson's family's second term was up, he was already pretty ill

867
01:23:03.600 --> 01:23:09.600
A lot of people, a lot of Democrats were booming Hoover for the Democratic nomination for president

868
01:23:09.600 --> 01:23:13.600
They didn't know what his party was, they assumed he must be a great guy, must be a Democrat

869
01:23:13.600 --> 01:23:19.600
He later said he was a Republican, but the point is, it would have surprised nobody which party he belonged to

870
01:23:19.600 --> 01:23:24.600
The same thing happened to Eisenhower after World War II, he was being boomed for both party nominations

871
01:23:24.600 --> 01:23:54.600
And so, it really didn't make that much difference. This is a little 20th century bipartisan man, so to speak, who can swing either way because they're really technocrats, since both parties are, quote, progressive, unquote, and both parties are committed to the same kind of Wilsonian foreign policy and progressive domestic policy, it doesn't really make much difference what party you're dealing with. Oh, another person, another politician who gets his start under Wilson as Assistant Secretary of the Navy. Remember, Assistant Secretary in those days was a pretty powerful post, he was like number two man.

872
01:23:54.600 --> 01:24:06.600
Franklin D. Roosevelt, then runs for vice president I think in 1920 and is defeated and then becomes president.

873
01:24:06.600 --> 01:24:13.600
He also has Wilsonians, and I think Franklin Roosevelt and Hoover, even though most historians consider them as mortal enemies, they were pretty friendly.

874
01:24:13.600 --> 01:24:16.600
They were close friends. They were both Wilsonians and both knew each other.

875
01:24:16.600 --> 01:24:23.600
And after the war was over, in a little known event, Hoover and Franklin Roosevelt collaborated in a group,

876
01:24:23.600 --> 01:24:28.120
formed a group called the American Construction Council

877
01:24:28.120 --> 01:24:32.160
and the object of which was to cartelize the construction industry. In other words,

878
01:24:32.160 --> 01:24:36.920
the construction industry has always been highly competitive. There's always been a lot of real contractors and developers.

879
01:24:36.920 --> 01:24:40.080
The idea was to bring them all together in one council so they can

880
01:24:40.080 --> 01:24:43.480
restrict production, raise prices, and all the rest of it.

881
01:24:43.480 --> 01:24:47.000
The usual cartelist thing. It didn't work in construction.

882
01:24:47.000 --> 01:24:49.400
Since they did not have government backing,

883
01:24:49.400 --> 01:24:53.720
it didn't work. Voluntary cartels never worked, especially didn't work in this case.

884
01:24:53.720 --> 01:25:00.280
It died out after about two or three years, but these two died, one was president and one was vice president, I forget which is which.

885
01:25:00.280 --> 01:25:03.520
So Roosevelt and Hoover are both Wilsonians, both

886
01:25:03.520 --> 01:25:06.720
progressives, both what would later be known as New Dealers.

887
01:25:06.720 --> 01:25:12.840
As a matter of fact, the entire New Deal policy started with Hoover, the entire New Deal program

888
01:25:12.840 --> 01:25:15.480
of keeping up wage rates

889
01:25:15.480 --> 01:25:17.600
by government coercion,

890
01:25:17.600 --> 01:25:21.480
expanding, cheapening credit, expanding the money supply,

891
01:25:21.480 --> 01:25:26.160
expanding public works to fight against the recession. It all begins with Hoover.

892
01:25:26.160 --> 01:25:31.320
Roosevelt did a foreign price support program. It all begins with Hoover. Roosevelt just did more of it.

893
01:25:31.320 --> 01:25:33.640
Quantitatively did more of it.

894
01:25:33.640 --> 01:25:37.320
Qualitatively, in other words, looking at each program, Hoover really started the whole thing.

895
01:25:37.320 --> 01:25:40.920
There's no program that Roosevelt started. Hoover didn't start before that.

896
01:25:40.920 --> 01:25:45.320
Deficit spending, it all really begins with Hoover.

897
01:25:45.320 --> 01:25:53.000
Another thing which I almost forgot to mention here, another key thing which happened in 1913, in addition to the Federal Reserve Act,

898
01:25:53.000 --> 01:25:57.800
which paved the way for financing the war, was of course the income tax, our beloved income tax.

899
01:25:57.800 --> 01:26:06.360
It begins in 1913 with the Wilkins administration, but it was made constitutional under the Taft administration in 1908,

900
01:26:06.360 --> 01:26:11.360
so that basically both parties began to be responsible for this income tax.

901
01:26:11.360 --> 01:26:14.600
Before that, of course, there was no income tax.

902
01:26:14.600 --> 01:26:19.960
We didn't have to fill out any 1040 forms in April 15th or anything like that. There were tariffs.

903
01:26:19.960 --> 01:26:23.120
When the Democrats came in, the tariffs were pretty low.

904
01:26:23.120 --> 01:26:26.040
And that was about it.

905
01:26:26.040 --> 01:26:31.080
In other words, government was very small, because they didn't have an income tax to siphon things off.

906
01:26:31.080 --> 01:26:34.500
When the income tax first came in,

907
01:26:34.500 --> 01:26:37.320
the critics of the income tax claimed that

908
01:26:37.320 --> 01:26:41.640
if you start with an income tax, you might eventually get a tax rate as high as ten percent.

909
01:26:41.640 --> 01:26:50.640
1%, 2%, maximum 5%, the highest millionaire level. The rest, of course, is history.

910
01:26:50.640 --> 01:26:59.640
So, again, with any government power, especially revenue source, you start small and you keep expanding.

911
01:26:59.640 --> 01:27:02.640
This is what always happens with government. You start small, you get your foot in the door,

912
01:27:02.640 --> 01:27:07.640
you get people desensitized to it and you widen it and you grab more loot.

913
01:27:07.640 --> 01:27:14.640
You don't start with a 90% income tax right away, obviously. It would be a revolution. You start with five and work your way up.

914
01:27:14.640 --> 01:27:17.640
So anyway, of course, now it's part of the American heritage.

915
01:27:17.640 --> 01:27:27.640
Actually, the income tax wasn't used that much until World War II. What happened in World War II was, to finance World War II,

916
01:27:27.640 --> 01:27:32.640
see, the old days you had to cough up your entire lump sum on March the 15th.

917
01:27:32.640 --> 01:27:38.640
You have to save up, you have to pay $5,000 in income tax. You have to save the whole thing up and pay it in one sum.

918
01:27:38.640 --> 01:27:43.640
And obviously nobody could, you know, very few people would do that. So the tax rates had to be kept fairly low.