J P Morgan: Emperor of Wall Street

J P Morgan: Emperor of Wall Street

A&E (2005)

Film Review

This insipidly uncritical biography of the 19th century bankster, J P Morgan, relies mainly on reminiscences of his family and business associates.

Born in Connecticut in 1837, Morgan moved to Britain at 18, where his father worked in the merchant banking firm Peabody, Morgan & Co. A year later he returned to New York to join the US branch of Peabody, Morgan & Co.

The film conveniently neglects to mention he made his fortune during the Civil War, purchasing 5,000 rifles from an army arsenal at $3.50 apiece and reselling them to a field general for $22 each. Morgan evaded the Civil War draft by paying a substitute $300 to take his place (also not mentioned in the film).

In addition to his banking interests, between 1869 and 1883, Morgan systematically gained control of one-third of all US railroads. After his father’s death in 1890, he used his father’s fortune to acquire more corporations.

Following the 1893 depression, the US experienced a massive drain on its gold reserves and Morgan used an old Civil War statute to allow his and the Rothschilds’ banks to sell gold to the US government (at a tidy profit).

In 1901, he purchased Carnegie Steel to form US Steel Corporation (the world’s first billion dollar corporation). Following the purchase, he controlled roughly 70% of the country’s steel production.

After notorious “trust-buster” Teddy Roosevelt assumed the presidency in the same year, his attorney general prosecuted Morgan’s Northern Security Corporation (which ran his railroads) for violating the Sherman Anti-Trust Act. Morgan appealed, but the Supreme Court upheld the government order to break up the company.

During the 1907 panic, many US banks were again on the verge of collapse, when Roosevelt appropriated $35 million from the US Treasury to invest in New York banks to keep them afloat.

It would be the last time the federal government allowed a single banker (the filmmakers refer to Morgan as a “one-man central bank”) to singlehandedly control the US monetary system. In 1913 banking and political leaders secretly conspired with President Woodrow Wilson to create the Federal Reserve.*

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*Contrary to popular belief, the Federal Reserve is not owned and controlled by the government but by a consortium of private banks.

The film can be viewed free on Kanopy

https://pukeariki.kanopy.com/video/j-pierpont-morgan-emperor-wall-street

 

 

 

 

 

 

 

 

https://pukeariki.kanopy.com/video/j-pierpont-morgan-emperor-wall-street

The Mythology of Neoclassical Economics

Classical Economics as a Stratagem Against Henry George (free link)

By Mason Gaffney (2007)

Book Review-Part I

Why do American school children study the beliefs of a German radical named Karl Marx, the villain Americans love to hate? Yet Henry George, whose views on land and tax reform gave rise to the Progressive and Populist movements of the 1900s, is totally absent from US history books. During the 1890s George, author of the 1879 bestseller Progress and Poverty, was the third most famous American, after Mark Twain and Thomas Edison. In 1896 he outpolled Teddy Roosevelt and was nearly elected mayor of New York.

In Neo-classical Economics as a Stratagem Against Henry George (2007), University of California economist Mason Gaffney argues that George and his Land Value Tax pose a far greater threat than Marx to America’s corporate elite. America’s enormous concentration of wealth has always depended on the inherent right of the wealthy elite to seize and monopolize vast quantities of land and natural resources (oil, gas, forests, water, minerals, etc) for personal profit. Adopting an LVT would essentially negate that right. What’s more, every jurisdiction that has ever implemented an LVT finds it works exactly the way George predicted it would. Productivity, prosperity, and social well being flourish, while inflation, wealth inequality, and boom and bust recessions and depressions virtually vanish. (See prior post Facebook’s Billionaire Tax Refugee).

When Progress and Poverty first came out in 1879, it started a worldwide reform movement that in the US manifested in the fiercely anti-corporate Populist Movement in the 1880s and later the Progressive Movement (1900-1920). Many important anti-corporate reforms came out of this period, including the Sherman Antitrust Act (1890), a constitutional amendment allowing Americans to elect the Senate by popular vote (prior to 1913 the Senate was appointed by state legislators), and the country’s first state-owned bank, The Bank of North Dakota (1919).

The Corporate Elite Strikes Back

As with any major reform movement, the corporate backlash was predictable. In Neo-classical Economics, Gaffney reveals that this backlash took two main forms. The first was the Red Scare (1919-1989), overseen by J Edgar Hoover as Assistant Attorney General and later as FBI director. The second was more insidious and involved the deliberate reframing of the classical economic theory developed by Adam Smith, Locke, Hume, and Ricardo as so-called neoclassical economics. The latter totally negates Adam Smith’s basic differentiation between “land”, a limited, non-producible resource. and “capital”, a reproducible result of past human production. Smith, Locke, Hume, and Ricardo all held that individuals have no right to seize and monopolize scarce natural resources, such as land, minerals, water, and forests. They believed that because these resources are both limited and essential for human survival, they should belong to the public.

Neoclassical economics, which first developed in the 1890s, was based on the premise that growth and development can only occur if a handful of rent-seekers are allowed to monopolize scarce land and natural resources for their personal profit. Henry George, who publicly debated the early pioneers of neoclassical economics, claimed the science of economics was being deliberately distorted to discredit him. Gaffney agrees. Because George’s proposal to replace income and sales tax with single land value taxed is based on logical concepts of land, capital, labor, and rent advanced by Adam Smith, Locke, Hume, and Ricardo, they all had to be discredited.

Gaffney believes neoclassical economic theory undermines George’s arguments for a single Land Value Tax in two basic ways: 1) by claiming that land is no different from other capital (ironically Marx made the identical argument) and 2) by portraying the science of economics as a series of hard choices and sacrifices that low and middle income people must make. Some examples:

• If we want efficiency, we must sacrifice equity.
• To attract business, we must lower taxes and shut libraries and defund schools.
• To prevent inflation, we must keep a large number of Americans unemployed.
• To create jobs, we must destroy the environment and pollute the air, water, and food chain.
• To raise productivity, we must fire people.

Below, brief video of Gaffney discussing LVT:

To be continued.