Hidden History: The Great Depression, Henry Ford and Detroit’s Unemployed Workers Councils

1929 The Great Depression Part 1 – A Job At Ford’s

PBS (1993)

Film Review

This is Part 1 of a fascinating 7-part PBS series on the Great Depression, one of the many topics Americans never study in school. The series reveals much hidden history unfavorable to the ruling elite – I doubt that PBS would air documentaries this honest in the current political landscape.

This first episode examines the rapid US industrialization of the 1920s, exemplified by the stellar growth of Ford Motor Company.

Henry Ford’s goal in perfecting assembly line manufacturing was to produce Model T’s so cheaply they would cost less than a team of horses. Ford’s River Rouge complex in Detroit was the largest industrial plant in history, employing 50,000 workers and producing 6,000 cars per day. The availability of credit, another new phenomenon, to purchase cars and other durable goods also played a major role in post-World War I expansion.

Squeezing Workers to Cut Costs

By paying the unprecedented wage of $5/hour, Ford attracted workers from all over the US and Mexico. Over time, however, he cut the hourly wage and sped up the assembly line to further reduce costs. He also created an extremely repressive private security force that relied on 9,000 worker/informants to weed out employees who couldn’t keep up or expressed anger and/or frustration with the speed-ups.

Detroit’s Unemployed Workers Councils

Following the Wall Street crash in October, 1929, the US was the only industrialized country without a government safety net (eg unemployment insurances, old age pensions, welfare benefits, etc) for the millions of Americans who lost their jobs. President Hoover believed the solution to the Great Depression was to increase business investment (and production)* and called on charities and local government to provide relief for homeless and starving families.

The city of Detroit provided relief to destitute families for over a year but ran out of money as unemployment climbed from 20 to 50% in 1930. It climbed to 80% in August 1931, when Ford closed his factory and laid off 60,000 workers.

Assisted by Communist Party organizers, Detroit’s unemployed workers formed a dozen unemployed workers councils, which organized marches and rallies demanding jobs, unemployment compensation and protection against evictions.** The councils also organized direct actions to block sheriff’s officers from removing families’ furniture from their home.

In March 1932, 3,000 unemployed workers organized a hunger march on the Ford factory. In addition to using fire hoses to spray them with freezing water, local police and Ford’s private security force shot 25 of them (many in the back). Four, including a New York Times photographer died instantly.

Ford’s Anti-Semitism

This episode also explores Ford’s anti-Semitic writings in the Dearborn Independent and his book The International Jew, as well as the mutual admiration he and Adolph Hitler shared. It fails to mention the considerable direct and indirect assistance Ford provided the Third Reich in rebuilding the German military machine. See Ford and the Fuhrer


*Hoover’s views flew in the face of most economists, who viewed the Great Depression as a crisis in overproduction and under-consumption.

**At the height of the depression, 150 Detroit families were evicted everyday and someone died of starvation every seven hours.

The Lost Science of Money – Wars Are Won By Bankers, Not Armies

The Lost Science of Money: The Mythology of Money – The Story of Power

by Stephen Zarlinga

American Monetary Institute (2002)

Book Review

This book, by co-author of Congressman Dennis Kucinich’s HR 2990 to abolish the Federal Reserve (see HR2990: Historic Bill to Abolish the Federal Reserve), is one of the most amazing books I’ve ever read. At 775 pages, the lowest price I could find for a used copy was $225 from Alibris. Fortunately it’s also available in PDF format at Lost Science of Money

It’s clear from Zarlenga’s extensive documentation and footnotes that the research for this book took decades. He essentially rewrites western history dating back to the ancient Sumerians. His goal is to expose and correct all the distortions and myths introduced into official history historians in the pay of merchants and bankers. Both are fiercely committed to perpetuating our current global monetary system in which private central banks create and control the money supply.

Among many others, two of the myths Zarlenga explodes are that the Roman Empire collapsed due to barbarian invasion (he demonstrates very convincingly that Rome collapsed due to a debasement of their currency) and the often repeated claim that excessive government printing of money was responsible for the deadly inflation in the early years of the Third Reich – as Zarlenga points out, it was actually the privately owned central Reichsbank that issued the money and created the inflation.

The Concept of “True Money,”

Zarlenga begins by establishing a clear difference between “true money,” which he defines as money with a fixed value set by law and “commodity money,” in which private merchants and banks issue and control the value of money. In the rare historical periods where governments have issued and controlled money by law, the result has been long periods of political stability and flourishing industry and culture.

The Romans enjoyed the longest continuous period (200 years) of monetary stability. Roman leaders maintained control of their money by prohibiting silver and gold coinage for domestic use – issuing fixed value copper and bronze coinage instead. In this way they prevented foreign merchants from capturing control of their money supply and manipulating the value of their currency.

He Who Controls the Money Controls the World

Zarlenga carefully traces how after the fall of the Roman Empire, control of western money shifted from Constantinople (after the 4th Crusade which sacked Constantinople – see link), to Venice, to Portuguese traders in Antwerp (after they opened the trade route around the southern tip of Africa), to Amsterdam (following the civil war splitting the Netherlands into Holland and Belgium), to London (after the Dutch prince William of Orange seized the English throne). In each case, control of the money supply was far more important than military strength in consolidating political control.

Zarlinga also clarifies, though careful research, the historical role played by the Knights Templar and Jewish merchants and money lenders in the development of global monetary centers.

The Dutch Usurper Who Chartered the Bank of England

One of the sections that interested me most concerned the founding of the Bank off England – which set the global standard for all private central banks – in 1694. Previously I hadn’t realized that the Bank of England was started by a Dutch king (William of Orange), who usurped the English throne from James II. Nor that his purpose for chartering the Bank of England was to advance the interest of the Dutch merchants and bankers who initially controlled it.

“True Money” in the Americas

I also enjoyed the detailed section outlining the history of government issued money in the US. Again Zarlenga presents extensive and convincing evidence that it was the ability of colonial governors to issue their own money that enabled commerce and industry in the 13 original colonies, as well as enabling them to organize a successful war of independence against England.

Zarlenga also describes in detail the battle Jefferson, Andrew Jackson and their allies fought against the creation of a privately controlled central bank, as well as the immense popularity of the Greenback Congress issued during the Civil War – and the immense national uprising (the populist movement) launched at the end of the 19th century to save them.

The Federal Reserve Engineers the Great Depression

Obviously the book wouldn’t be complete without a chapter on the criminal conspiracy that lead to the formation of the Federal Reserve in 1913, the Federal Reserve’s role in engineering the Great Depression 26 years later, and Roosevelt’s prolonged battle with Wall Street to implement the New Deal recovery.

Understanding the Current Economic Crisis

The ABC’s of the Economic Crisis: What Working People Need to Know
Fred Magdoff and Michael Yates

Monthly Review Press (2009)

Book Review

In the ABC’s of the Economic Crisis, Magdoff and Yates use stagnation theory to explain the origins of the current global economic crisis. Karl Marx predicted that overproduction and stagnation would be inevitable under monopoly capitalism once market demand has been saturated. Magdoff and Yates use the auto industry as an example. Immediately after World War II, consumers bought a lot of cars and trucks which were unavailable between 1941 and 1945. By 1970 there was a surplus of cars – all the Americans who wanted cars and trucks had already bought them. Meanwhile the world’s poorer nations didn’t have a mass market large enough to reduce this surplus.

The same was true of other durable goods (refrigerators, washing machines, dishwashers, vaccuum cleaners, etc). And as consumer buying slowed, so did profits and GDP growth.

Why Capitalism Didn’t End With the Great Depression

Many Marxists (including John Strachey in The Coming Struggle for Power) believed the Great Depression signaled end stage stagnation and the imminent death of capitalism. According to Magdoff and Yates, it was only the massive economic boost of World War II military spending that saved capitalism in the thirties and forties.

There was also a brief post war boom in the fifties and sixties, as consumers rushed to buy goods that were unavailable during the war. When the sixties ended, stagnation set in again, accompanied by a marked slowing of profits and growth. However neither declined to 1930s levels, thanks to the “financialization” of the US economy.

The Financialization of the US Economy

The term “financialization” describes the process of creating profits without producing products or services. In the US, finanancialization injected money into the economy in three ways: via massive government spending and indebtedness (to private banks), via massive consumer indebtedness and via an explosion in the trade of derivatives and similar financial products.

Between 1980 and the 2008 crash, the banking, insurance and investment sector became the largest growth sector of the US economy. Beyond financing unprecedented levels of consumer, business and government debt, this sector also engaged massively in speculation (ie gambling).

Financialization: A Giant Ponzi Scheme

As Magdoff and Yates describe, the enormous “wealth” created by the financial sector helps to drive the “real” productive economy. The main problem with financialization is that it’s basically a Ponzi scheme – it can continue only so long as economic growth continues. If it goes on too long, the speculative bubble will burst, resulting in financial collapse, as it did in 1929 and 2008.

The Link Between Declining Profits and Low Wages

Despite the life support provided by “financialization,” economic stagnation continued between 1970 and 2008. As Magdoff and Yates point out, GDP growth dropped from 4.4 to 3.3 percent in the 1970s, to 3.1 percent in the eighties and nineties, and 2.2 percent between 2000 and 2008.

A significant decline in wages and purchasing power accompanied this decline in profits and growth. In order to keep workers consuming, the corporate sector compensated by giving them credit cards – lending them money at 18-20% interest they were no longer paying in wages.

The Importance of Fascism in End Stage Capitalism

coming-struggle-for-power

The Coming Struggle for Power

by John Strachey

Victor Golancz Limited (1932)

Free download link: The Coming Struggle for Power

Book Review

In The Coming Struggle for Power, British historian makes the prediction (writing in 1932) that capitalism is in its death throes and will end by 1950. He was wrong, obviously. Strachey had no way of predicting the tremendous boost monopoly capitalism would receive from Cold War military spending, nor the “financialization” (the shift from selling products to selling financial instruments) that would happen in the 1970s.

The book is largely historical, tracing the transition all global economies underwent from feudalism to mercantilism (large scale international trade) and from mercantilism to capitalism. In Europe both transformations were violent. Strachey points to the Rebellion of 1640 (during which Charles I was beheaded) and the Revolution of 1688 (in which James II was overthrown) during the feudal-mercantilist transition. The Enclosure Acts of the 18th century marked the mercantilist-capitalist transition. During this period British troops drove tens of thousands of families off lands they had farmed communally for more than 1,000 years – with most ending up in prisons and work houses.

Strachey also stresses that neither the French Revolution nor the American Revolution was really about political freedom or equality. The real purpose of both wars was to end old feudal relationships that interfered with the right of the new capitalist class to freely produce, buy and sell goods at a profit

The Inevitable Decay of Monopoly Capitalism

Strachey takes the Great Depression of the 1930s as evidence that capitalism has reached its final stage of monopoly capitalism. Quoting Lenin, he lists the three telltale signs that monopolistic capitalism has begun to decay:

1. The monopolistic corporations that control finance capital (ie banks) essentially merge with the monopolistic corporations that control production.
2. There’s growing focus on exporting capital (ie moving factories overseas).
3. National governments, which are essentially controlled by their monopolies, are in constant conflict with one another over who will control the resources, markets and cheap labor of the Third World.

Gee, this sounds familiar. The parallels with 2017 are uncanny.

The Inevitable Rise of Fascism

Strachey also writes about the important role of fascism in end stage capitalism. The declining profits and growth (ie stagnation) associated with end stage capitalism inevitably lead to reduced wages, poorer working conditions and a claw back of social welfare benefits enacted during more productive periods. This, in turn, leads to more conflict between workers and capitalists. Ensuring that production continues during a period of heavy stagnation necessitates the rise of fascism, in which the capitalists themselves organize workers into right wing populist movements which enact laws unfavorable to working people.

How Capitalism Stifles Intellectual Life

For me, the most interesting section of The Coming Struggle for Power concerns the stifling effect of corporate capitalism on intellectual life. Emphasizing the narrow ideological framework capitalism imposes on intellectuals, he devotes one chapter each to religion, philosophy and science and two to literature.

Because “capitalist” theologians and philosophers are limited to value systems that support profit taking and wealth accumulation, humankind has made absolutely no progress in 200 years in leading more moral and ethical lives. This stifling effect is also obvious in the areas of renewable energy technology (people forget Carter had a solar panel on the White House in 1979) and health science. At present, the profit motive has distorted health care to the point that many medical interventions actually make people sicker.

The US Taboo Against Socialism

America’s Unofficial Religion: the War on an Idea

Abby Martin (Empire Files) 2015

Film Review

America’s Unofficial Religion is a documentary about the origin of the American taboo against socialism.

At present, the US is the only western democracy without a prominent socialist party. This hasn’t always been the case. A powerful socialist movement arose alongside the progressive, populist and union movements of the late 19th century. All were a reaction to the brutal industrial oppression that characterized this period.

In 1912, the US had 13 socialist newspapers, 12 socialist monthlies and 57 socialist mayors 23 cities. Socialist Eugene Debs campaigned for president that year and won 6% of the popular vote (at a time when women and blacks were barred from voting).

Concerned about the detrimental effect of strong mass organizing on profits, the corporate elite leaned on president Woodrow Wilson to pass two laws – the Espionage Act, which criminalized dissent, and the Sedition Act, which made it a crime to oppose US involvement in World War I. Following passage of the Sedition Act, Eugene Debs was arrested for making an anti-war speech and sentenced to ten years in prison. The Wilson administration also imprisoned more than 90 International Workers of the World (IWW)* leaders, in addition to sanctioning the murder of IWW members by Pinkerton’s guards and organized lynch mobs.

US Organizing and Strikes in Response to Bolshevik Revolution

The 1917 Bolshevik Revolution would inspire a wave of organizing and strike activity in the US, leading one in five American workers to go out on strike in 1919.

Wilson responded by authorizing Attorney General Mitchell Palmer and his assistant J Edgar Hoover to launch the Palmer Raids, arresting more than 10,000 suspected socialist and communists and deporting thousands more.

In the 1930s, the cruel economic conditions of the Great Depression led to an enormous upsurge in mass organizing. Many historians argue that Roosevelt had no choice but to bring in sweeping New Deal legislation to prevent a socialist revolution.

Taft Hartley, HUAC and Cointelpro

Following World War II, during which US unions won major concessions, a Republican Congress passed the Taft Hartley Act, which made it illegal for union members to be socialists or communists (in 1945, roughly half the union leadership was socialist) and the Smith Act, which made Communist Party membership Illegal.

The enactment of these laws was accompanied by aggressive activity in the House on UnAmerican Activities Committee (HUAC). During the fifties many HUAC subpoenaed Hollywood actors, directors and producers – as well as teachers and college professors. Many were permanently blacklisted from working on the mere suspicion of socialist/communist sympathies.

In 1956 Hoover, a rabid anti-communist, would launch Cointelpro, a program conducting massive illegal surveillance, infiltration and sabotage of civil rights groups and other social change organization. Cointelpro also carried out clandestine assassinations and false imprisonment of numerous black liberation leaders, many of whom are still in prison.


*The International Workers of the World (IWW) is international labor union started in 1905 that has strong ties both to socialism and to anarchism.

The Tea Party: Brought to You by Wall Street

pity the billionaire

Pity the Billionaire: the Hard Times Swindle and the Unlikely Comeback of the Right

By Thomas Frank

Havill Secker (2012)

Book Review

Pity the Poor Billionaire describes how the right wing corporate elite used the 2008 economic crash to build a pseudo-populist movement (aka the Tea Party) to build blue collar support for harsh free market austerity policies that benefited Wall Street at the expense of working people.

According to Frank,  the Tea Party was the fourth conservative uprising in the last half century. The first was the backlash against the anti-Vietnam war movement that resulted in Nixon’s election in 1968 and 1972. The second was the Reagan revolution in 1980; the third the Contract with America revolution that won Republican control of Congress (in 1994) during Clinton’s first term.

The Demise of Unions and the Left

With each of these movements, US political and economic life became increasingly conservative, with all public institutions – churches, hospitals, universities, museums, the US Post Office and even the Army and CIA – succumbing to pressure to operate according to free market principles.

The same period saw the virtual demise of both labor unions and any organized US left. Nevertheless, according to Frank, right wing strategists managed to flood the media with rhetoric ramping up popular fear the left was “on the march.” It mainly  focused on a fictitious behind-the-scenes conspiracy to provoke a crisis – through overspending that would collapse the US economy.

Swaying Popular Anger from Wall Street to the Government

This messaging, crafted by right wing think tanks funded by right wing billionaires like the Koch brothers and delivered by Glenn Beck, Russ Limbaugh and similar right wing celebrities, was spectacularly effective in convincing a majority of Americans that the neoliberal corporatist Obama is really a socialist.

Oil billionaire Charles Koch warned back in 2008 that the global economic downturn could lead to the same “loss of liberty and prosperity” (for billionaires) as the Great Depression did. He and his brother David went on to deliberately manufacture an “astroturf”* movement (ie the Tea Party) to thwart Obama from enacting the same type of public spending projects Roosevelt used to reverse the 1929 depression.**

They did this by using Tea Party protests and right wing media to sway public anger away from Wall Street and onto the government. Via sophisticated psychological propaganda, working people were systematically conned into believing their interests coincide with those of Wall Street corporations.


*Astroturfing is the practice of masking the sponsors of a message or organization to make it appear as though it originates from grassroots participants.

**Frank challenges (with data) the common Tea Party assertion that Roosevelt’s New Deal reforms failed to halt the 1929 depression (ie that it took the World War II mobilization to lift the US out of depression). Between 1929 and 1933 (when Roosevelt took office), the US GDP dropped by more than 50 percent. Following the enactment of the New Deal, it increased by 11% in 1934, 9% in 1935, 14% in 1936 and 13% in 1937. Overall GDP growth 1933-37 was the highest the US has seen outside of war time.

How Banks Invent Money Out of Thin Air

Money as Debt

Directed by Paul Grignon (2006)

Film Review

Money as Debt is the classic primer for understanding where money comes from in contemporary society.

Most people erroneously believe that government issues all the money in circulation by printing bills and minting coins.

In reality, less that 5% of all the money circulating in the global economy is issued by government. More than 95% is issued by private banks as loans to businesses, families and governments.

Most people also mistakenly assume that banks lend money their customers have deposited in savings accounts. The truth is that banks lend out vastly more money than they have on deposit. In fact, every time they issue a loan, they simply create the money out of thin error as a bookkeeping entry.

There is a deliberate effort (by banks and government) to conceal these facts. Even front line bank employees don’t understand this is how money is issued.

The belief that the economy would improve if all government and private debt were repaid is also erroneous. Because nearly all the money in circulation is debt-based money issued by banks, if we paid off all the debt, there would be no money left to run the economy.

A severe shortage of debt triggered both the Great Depression of 1929 and the 2008 economic crisis. Both occurred when banks drastically reduced the supply of new bank loans.

Money as Debt also makes an important link between this debt-based monetary system and the drive for perpetual economic growth. Banks only create (out of thin air) the principal for new loans. Money to pay the interest can only be found by creating more debt through new loans. This pressure to create more and more debt requires a continual increase in production and simultaneous depletion of resources.

The film traces how our current debt based money system first started in England in 1694 and how US founding fathers fought to resist private bank control of the US monetary system until 1913. That was the year Woodrow Wilson signed the Federal Reserve Act, handing control of the US monetary system over to a consortium of private banks called the Federal Reserve.

Filmmaker Paul Grignon is particularly concerned about a system in which governments are forced to borrow from private banks to run military and public services. Because it gives banks far more control than voters over government decisions, he calls it an invisible economic dictatorship.

Check out Positive Money to examine some of the alternatives.