Excerpts of the book Critical Path by R. Buckminster Fuller
St. Martin's Press, 1981 - hard cover, 1st edition
Front cover (photo)
Back cover (photo)
Dust cover flap (photo)
I'M GOING TO REVIEW my prehistory's speculative assumptions regarding the origins of human power structures.
In a herd of wild horses there's a king stallion. Once in a while a young stallion is born bigger than the others. Immediately upon his attaining full growth, the king stallion gives him battle. Whichever one wins inseminates the herd. Darwin saw this as the way in which nature contrives to keep the strongest strains going. This battling for herd kingship is operative amongst almost all species of animal herds as well as in the "pecking order" of flocking bird types.
I'm sure that amongst the earliest of human beings, every once in a while a man was born much bigger than the others. He didn't ask to bebut there he was. And because he was bigger, people would sayeach in their own esoteric language"Mister, will you please reach one of those bananas for me, because I can't reach them." The big one obliges. Later the little people would say, "Mister, people over there have lost all of their bananas and they are dying of starvation, and they say they are going to come over here and kill us to get our bananas. You're bigyou get out in front and protect us." And he would say, "OK," and successfully protect them.
The big one found his bigness continually being exploited. He would say to the littles, "Between these battles protecting you, I would like to get ready for the next battle. We could make up some weapons and things." The people said, "All right. We'll make you king. Now you tell us what to do." So the big man becomes king quite logically. He could have become so in either a bullying or good-natured way, but the fact is that he was king simply because he was not only the biggest and the most physically powerful but also the most skillful and clever big one.
Every once in a while along would come another big man. "Mr. King, you've got things too easy around here. I'm going to take it away from you." A big battle ensues between the two, and after the king has his challenger pinned down on his back, he says, "Mister, you were trying to kill me to take away my kingdom. But I'm not going to kill you because you'd make a good fighter, and I need fighters around here to cope with the enemies who keep coming. So I'm going to let you up now if you promise to fight for me. But don't you ever forgetI can kill you. OK?" The man assents, so the king lets him up.
But instinctively the king says secretly to himself, "I mustn't ever allow two of those big guys to come at me together. I can lick any one of them, but only one by one." The most important initial instinct of the most powerful individual or of his organized power structure is, "Divide to conquer, and to keep conquered, keep divided."
So our special-case king has now successfully defended his position against two or more big guys who are all good fighters. He makes one the "Duke of Hill A," the second "Duke of Hill B," and the third "Duke of Hill C," and tells each one to "mind your own business" because "only the king minds everybody's business," and he has his spies watch them so that they can't gang up on him. Thus, our considered king is doing very well in his tribe-defending battles.
However, there are a lot of little nonfighting people who are not obeying the king regarding preparations for the next fighting period. The king says to his henchmen, "Seize that mischievous little character over there who is really being a nuisance around here." To the prisoner the king says, "I'm going to have to cut your head off." The man says, "Mr. King, you'd make a big mistake to cut my head off." The king asks, "Why?" "Well, I'll tell you, Mr. King, I understand the language of your enemy over the hill, and you don't. And I heard him say what he is going to do to you and when he's going to do it." "Young man, you've got a good idea at last. You let me know every day what my enemy over the hill says he is going to do and so forth, and your head is going to stay on. In addition, you're going to do something else you've never done before. You're going to eat regularly right up here in the castle near me. And I'm going to have you wear a royal purple jacket (so that I can keep track of you)." The king now has that little man under control and useful. Then another little man makes trouble for the king. As he is about to be beheaded, he shows the king that he understands metallurgy and can make better swords than anybody else. The king says, "You better make a good sword in a hurry." The man makes a beautiful, superstrong, and sharp swordthere's no question about that. So the king says, "OK, your head stays on. You, too, are to live here at the castle."
Next, under the threat of beheadment, another man making trouble for the king says, "The reason I am able to steal from you is because I understand arithmetic, which you don't. If I do the arithmetic around here, people won't be able to steal from you." The king makes him court mathematician.
As each of these men are given those special tasks to do for life, the king says to all of them, "Each of you mind only your own business. You, Mr. Languageman, mind only your own business; and you, Mr. Swordmaker, mind only your own business; and you, Mr. Arithmetic, mind only your own business. Each one minds only his own business. I'm the only one that minds everyone's business. Is that perfectly clear?" "Yes sir." "Yes sir." "Yes sir."
The king now has his kingdom operating very well. He has great fighters, superior metallurgy, better arithmetic and logistics, better spying and intelligence. His kingdom is growing ever bigger. Years go by, and these experts are getting old. The king says, "I want to leave this kingdom to my grandson. Mr. Languageman, I want you to pick out and teach some younger person about language. You, Mr. Swordmaker, I want you to pick out and teach somebody about metallurgy. You, Mr. Arithmetic, I want you to pick out and teach someone about arithmetic." And his total strategy became the pattern for the ultimate founding of Oxford University.
The way the power structure keeps the wit and cunning of the intelligentsiawho are not musclemen, who cannot do the physical fightingfrom making trouble for the power structure (if the intelligentsia are too broadly informed, unwatched, and with time of their own in which to think) is to make each one a specialist with tools and an office or lab. That is exactly why bright people today have become streamlined into specialists.
Nobody is born a specialist. Every child is born with comprehensive interests, asking the most comprehensively logical and relevant questions. Pointing to the logs burning in the fireplace, one child asked me, "What is fire?" I answered, "Fire is the Sun unwinding from the tree's log. The Earth revolves and the trees revolve as the radiation from the Sun's flame reaches the revolving planet Earth. By photosynthesis the green buds and leaves of the tree convert that Sun radiation into hydrocarbon molecules, which form into the bio-cells of the green, outer, cambium layer of the tree. The tree is a tetrahedron that makes a cone as it revolves. The tree's three tetrahedral roots spread out into the ground to anchor the tree and get water. Each year the new, outer-layer, green-tree cone revolves 365 turns, and every year the tree grows its new tender-green, bio-cell cone layer just under the bark and over the accumulating cones of previous years. Each ring of the many rings of the saw-cut log is one year's Sun-energy impoundment. So the fire is the many-years-of-Sun-flame-winding now unwinding from the tree. When the log fire pop-sparks, it is letting go a very sunny day long ago, and doing so in a hurry." Conventionally educated grown-ups rarely know how to answer such questions. They're all too specialized.
If nature wanted humans to be specialists, she would, for instance, have given them a microscope on one eye, which is what nature has done with all other living organismsother than humans. Each has special, organically integral equipment with which to cope successfully with special conditions in special environments. The low-slung hound to follow the Earth-top scent of another creature through the thickets and woods . . . the little vine that can grow only along certain stretches of the Amazon River . . . the bird with beautiful wings with which to fly, which bird however, when landed and in need of walking, is greatly hampered by its integral but now useless wings.
Humans are not unique in possessing brains that always and only are coordinating and storing for later retrieval the integrated information coming in from each and all the creature's sensesvisual, aural, tactile, and olfactory. Humans are unique in respect to all other creatures in that they also have minds that can discover constantly varying interrelationships existing only between a number of special case experiences as individually apprehended by their brains, which covarying interrelationship rates can only be expressed mathematically. For example, human minds discovered the law of relative interattractiveness of celestial bodies, whose initial intensity is the product of the masses of any two such celestial bodies, while the force of whose interattractiveness varies inversely as the second power of the arithmetical interdistancing increases.
The human mind of Bernoulli discovered the mathematical expression of the laws of intercovarying pressure differentials in gases under varying conditions of shape and velocity of gas flow around and by interfering bodies. The Wright brothers' wing foils provided human flight, but not the information controlling the mathematics of varying wing foil conformations. Bernoulli's work made possible the mathematical improvement in speed and energy efficiency of various wing designs. Human mind's access to the mathematics of generalized scientific laws governing physical phenomena in general made possible humanity's production of its own detached-from-self wings to outfly all birds in speed and altitude, while being able to loan one another those wings and modify them to produce even better wings.
* * *
I'm sure our human forebears went through quite a period of giants and giant-affairs evolution. These probably led to all sorts of truth-founded legends from which fairy stories were developed, many of which are probably quite close to the facts of unwritten history. Then humans developed to the point at which a small man made a weapon, a stone-slinger, such as in the story of David and Goliath, with which the little man slays the big man by virtue of a muscle-impelled missile. At the U.S. Naval Academy "ballistics" is defined as: the art and science of controlling the trajectory of an explosively buried missile. After the sling and spear we got the bow and arrow with which a small man could kill a big man at much greater distance than with spear or sling. So skill and human-muscle-impelled weapons ended the era of giants.
Discovery of energetic principles, and human inventiveness in using those principles, such as the invention of catapults and mechanically contracted, steel-spring-coil arrow impelment, advanced the art of weapons. The human power structures that could best organize and marshal the complex of interessential "best" weapons and support an army of best-trained people with each of the special types of weapons were the ones who now won the battles and ran the big human "show." The discovery of gunpowder by the Chinese and the invention of guns introduced the era of ballistics, or as the Navy terms it, "explosively hurled missiles."
Going back to the stone-sling, bow-and-arrow, spear, club, and knife era of weapons, we find that territorial battles between American Indian nations were fought over the local hunting and fishing rights, but the land itself always belonged to the Great Spirit. To the Indians it was obvious that humans could not own the land. There was never any idea that the people could own landowning was an eternal, omniscient omnipotence unique to the greatness, universality, and integrity of the forever-to-humans-mysterious Great Spirit. Until a special human-produced change in the evolution of power structures occurred, the ownership of anything being unique to the Great Spiritin whatever way that might be designated by local humanswas held by all people around our planet.
In 1851 Seattle, chief of the Suquamish and other Indian tribes around Washington's Puget Sound, delivered what is considered to be one of the most beautiful and profound environmental statements ever made. The city of Seattle is named for the chief, whose speech was in response to a proposed treaty under which the Indians were persuaded to sell two million acres of land for $150,000.
How can you buy or sell the sky, the warmth of the land? The idea is strange to us.
If we do not own the freshness of the air and the sparkle of the water, how can you buy them?
Every part of this earth is sacred to my people. Every shining pine needle, every sandy shore, every mist in the dark woods, every clearing and humming insect is holy in the memory and experience of my people. The sap which courses through the trees carries the memories of the red man.
The white man's dead forget the country of their birth when they go to walk among the stars. Our dead never forget this beautiful earth, for it is the mother of the red man. We are part of the earth and it is part of us. The perfumed flowers are our sisters; the deer, the horse, the great eagle, these are our brothers. The rocky crests, the juices in the meadows, the body heat of the pony, and manall belong to the same family.
So, when the Great Chief in Washington sends word that he wishes to buy our land, he asks much of us. The Great Chief sends word he will reserve us a place so that we can live comfortably to ourselves. He will be our father and we will be his children.
So we will consider your offer to buy our land. But it will not be easy. For this land is sacred to us. This shining water that moves in the streams and rivers is not just water but the blood of our ancestors. If we sell you land, you must remember that it is sacred, and you must teach your children that it is sacred and that each ghostly reflection in the clear water of the lakes tells of events and memories in the life of my people. The water's murmur is the voice of my father's father.
The rivers are our brothers, they quench our thirst. The rivers carry our canoes, and feed our children. If we sell you our land, you must remember, and teach your children, that the rivers are our brothers and yours, and you must henceforth give the rivers the kindness you would give any brother.
We know that the white man does not understand our ways. One portion of land is the same to him as the next, for he is a stranger who comes in the night and takes from the land whatever he needs. The earth is not his brother, but his enemy, and when he has conquered it, he moves on. He leaves his father's grave behind, and he does not care. He kidnaps the earth from his children, and he does not care. His father's grave, and his children's birthright are forgotten. He treats his mother, the earth, and his brother, the sky, as things to be bought, plundered, sold like sheep or bright beads. His appetite will devour the earth and leave behind only a desert.
I do not know. Our ways are different from your ways. The sight of your cities pains the eyes of the red man. There is no quiet place in the white man's cities. No place to hear the unfurling of leaves in spring or the rustle of the insect's wings. The clatter only seems to insult the ears. And what is there to life if a man cannot hear the lonely cry of the whippoorwill or the arguments of the frogs around the pond at night? I am a red man and do not understand. The Indian prefers the soft sound of the wind darting over the face of a pond and the smell of the wind itself, cleansed by a midday rain, or scented with piñon pine.
The air is precious to the red man for all things share the same breath, the beast, the tree, the man, they all share the same breath. The white man does not seem to notice the air he breathes. Like a man dying for many days he is numb to the stench. But if we sell you our land, you must remember that the air is precious to us, that the air shares its spirit with all the life it supports.
The wind that gave our grandfather his first breath also receives his last sigh. And if we sell you our land, you must keep it apart and sacred as a place where even the white man can go to taste the wind that is sweetened by the meadow's flowers.
You must teach your children that the ground beneath their feet is the ashes of our grandfathers. So that they will respect the land, tell your children that the earth is rich with the lives of our kin. Teach your children that we have taught our children that the earth is our mother. Whatever befalls the earth befalls the sons of the earth. If men spit upon the ground, they spit upon themselves.
This we know: the earth does not belong to man; man belongs to the earth. All things are connected. We may be brothers after all. We shall see. One thing we know which the white man may one day discover: our God is the same God.
You may think now that you own Him as you wish to own our land; but you cannot. He is the God of man, and His compassion is equal for the red man and the white. This earth is precious to Him, and to harm the earth is to heap contempt on its creator. The whites too shall pass; perhaps sooner than all other tribes. Contaminate your bed and you will one night suffocate in your own waste.
But in your perishing you will shine brightly fired by the strength of the God who brought you to this land and for some special purpose gave you dominion over this land and over the red man.
That destiny is a mystery to us, for we do not understand when the buffalo are all slaughtered, the wild horses are tame, the secret corners of the forest heavy with scent of many men and the view of the ripe hills blotted by talking wires.
Where is the thicket? Gone. Where is the eagle? Gone.
The end of living and the beginning of survival."*
*Chief Seattle's speech was submitted by Dr. Glenn T. Olds at Alaska's Future Frontiers conference in 1979. * * *
In my prehistory accounting I talk about the time when each ice age is engaging an enormous amount of the oceans' water, lowering the waterfront and bringing together the islands of Borneo, the Philippines, and others, all to become part of the Malay Peninsula. I also spoke of the ice cap pushing the furry animals southward until they were suddenly pushed into the land of the previous islands now formed into the new peninsulainto land they could never before reach. This is how animals like tigers got out to now-reislanded places like Bali. Human beings suddenly confronted with these wild animals learned how to cope, hunting some and taming others. In following the evolution of human power structures we are now particularly interested in the humans who found themselves confronted with a tidal wave of wild animals. Those who were overwhelmed became aggressive hunters, and those who were not overwhelmed became peaceful domesticators of the animals. Some of the most aggressive men mounted horses, moved faster than all others, and went out to seek the beasts.
We have learned in the last decade from our behavioral science studies that aggression is a secondary behavior of humansthat when they get what they need, when they need it, Old are not overwhelmed, they are spontaneously benevolent; it is only when they become desperate that they become aggressive because what they have relied on is no longer working. There are two kinds of social behavior manifest today around the worldthe benign and the aggressive. It is probable that this dichotomy occurred in the human-versus-animal confrontation in the ice age time.
When an ice age starts to recede, the horsemen start northhunting with clubs and spears. At the same time, moving much more slowly, we have the beginnings of great tribes of humans following their flocks of goats and sheep as the latter lead them to the best pasturessometimes high on mountainsides, sometimes on great plains. With the big man as kingthe head shepherdwe have humanity migrating off into a wilderness that seemed to have no limits. The land belonged to the Great Spirit. The people lived on the flesh of their animals and the encountered fruits, berries, nuts, and herbs. They kept themselves warm with clothing made of the skins of the animals and also with environment-controlling tents made of local saplings and the animal skins.
We have a king shepherd, from the day of the giants, tending his people and his flock, when along comes a little man on a horse, with a club hanging by his side. He rides up to the king shepherd and, towering above him, says, "Well, Mr. Shepherd, those are very beautiful sheep you have there. You know, it's very dangerous to have such beautiful sheep out here in the wilderness. The wilderness is very dangerous." The shepherd responds, "We've been out in the wilderness for generations and we've had no trouble at all."
Night after night thereafter sheep begin to disappear. Each day along comes the man on the horse. He says, "Isn't that too bad. I told you it was very dangerous out here. Sheep disappear out in the wilderness, you know." Finally, there is so much trouble that the shepherd agrees to accept and pay in sheep for the horseman's "protection" and to operate exclusively within the horseman's self-claimed land.
No one dared question the horseman's claim that he owned the land on which the horseman said the shepherd was trespassing. The horseman had his club with which to prove that he was the power structure of that locale; he stood high above the shepherd and could ride in at speed to strike the shepherd's head with his club. This was how, multimillennia ago, twentieth-century racketeers' "protection" and territorial "ownership" began. For the first time little people learned how to become the power structure and how thereby to live on the productivity of others.
Then there came great battles between other individuals on horses to determine who could realistically say, "I own this land." Ownership changed frequently. The ownership-claiming strategy soon evolved into horse-mounted warfare as each gang sought to overwhelm the other. Then the horse-mounted gangs, led by a most wily leader, used easily captured human prisoners to build them stone citadels at strategic points. Surrounded by prisoner-built moats rigged with drawbridges and drawgates, they would come pouring out to overwhelm caravans and others crossing their domains. "Deeds" to land evolved from deeds of arms. Then came enormous battles of gangs of gangs, and the beginning of the great land barons. Finally we get to power-structure mergers and acquisitions, topped by the most wily and powerful of allthe great emperor.
This is how humans came to own land. The sovereign paid off his promises to powerful supporters by signing deeds to land earned by the physical deeds of fighting in shrewd support of the right leader. Thereafter emperors psychologically fortified the cosmic aspect of their awesome power by having priests of the prevailing religions sanctify their land-claiming as accounted simply either by discovery or by arms.
In another set of events that opportuned the power structure the land barons discovered the most geographically logical trading points for caravaning: a place where one caravan trail would cross another caravan trail; where, for instance, the caravaners came to an oasis or maybe to a seaport harbor and transfer some of their goods from the camel caravans to the boats. The caravaners would say, "Let's exchange goods right here. Fine. You need something; I have it."
One day they're exchanging goods when along comes a troop of armed brigands on horseback. The head horseman says, "It's pretty dangerous exchanging valuable things out here in the wilderness." The caravaners' leader says, "No, we never have any trouble out here. We have been doing this for many generations." Then their goods begin to be stolen nightly, and finally the merchants agree to accept and pay for "protection." That was the beginning of the walled city. The horse-mounted gangsters brought prisoners along to build the city's walls and saw to it that all trading was carried on inside the walls. The lead baron then gave each of his supporters control of different parts of that city so that each could collect his share of the "taxes."
This is how we came to what is called, archeologically, the city-state, which was to become a very powerful affair. There were two kinds: the agrarian-productivity-exploiting type and the trade-route-confluence-exploiting type. These produced all the great walled cities such as Jericho and Babylon.
The agrarian-supported city-state works in the following manner: For example, we have Mycenae in Greece, a beautiful and fertile valley. It is ringed around with mountains. You can see the mountain passes from the high hill in the center of the valley. At the foot of the high central hill there is a very good well. So they build a wall around the citadel on the top of that mid-valley hill and walls leading down to and around the well so that they can get their water. When they see the enemy coming through the passes, the Mycenaeans bring all the food inside their walls and into their already-built masonry grain bins. What they can't bring inside the walls, they burnwhich act was called "scorching the fields." The enemy enters the fertile valley, but there's nothing left for them to eat. The enemy army has to "live on its belly"which means on the foods found along their route of traveland is hungry on arrival in the valley. The people inside have all the food. The people outside try to break into the walled city, but they are overwhelmed by its height and its successfully defended walls. Finally the people outsideonly able to go for about thirty days without foodget weaker and weaker, then the people inside come out and decimate them.
This was the city-state. It was a successful invention for a very long period in history. At the trade-route convergences city-states operated in much the same way but on a much larger scale with the siege-resisting supplies brought in by caravans or ships. The city-states were approximately invincible until the siege of Troy. Troy was the city-state controlling the integrated water-and-caravaning traffic between Asia and Europe near the Bosporus. It had marvelous walls. Everything seemed to be favorable for its people.
Meanwhile in history, we have millennia of people venturing forth on the world's watersdeveloping the first rafts, which had to go where the ocean currents took them; then the dugouts, with which they paddled or catamaraned and sailed in preferred directions; and finally the ribbed-and-planked ship, suggested to them by the stout spine and rib cage of the whales, seals and humansstoutly keeled and ribbed, deep-bellied ships. With their large ships made possible by this type of construction, sailors came to cross the great seas carrying enormous cargoesvastly greater cargoes than could be carried on the backs of humans or animals. Ships could take the short across-the-bay route instead of the around-the-bay mountain route.
The Phoenicians, Cretans, and the Mycenaeans, together, in fleets of these big-ribbed and heavily planked ships, went to Troy and besieged it. Up to this time the besiegers of Troy had come overland, and they soon ran out of food. But the Troy-besieging Greeks and Cretans came to Troy in ships, which they could send back for more supplies. This terminally-turned-around voyaging back to the supply sources and return to the line of battle was called their "line of supply." The new line-of-supply mastersthe Greeksstarved out the Trojans. The Trojans thought they had enough food but had not reckoned on the people besieging them having these large ships. The Trojan horse was the large wooden shipthat did the task of horsesout of whose belly poured armed troops.
At this time the power structure of world affairs shifts from control by the city-state to the masters of the lines of supply. At this point in the history of swiftly evolving, multibanked, oar- and sail-driven fighting ships, the world power-structure control shifts westward to Italy. While historians place prime emphasis on the Roman legions as establishing the power of the Roman Empire, it was in fact the development of ships and the overseas line of supply upon which its power was builtby transporting those legions and keeping them supplied. Go to Italy, and you will see all the incredibly lovely valleys and great castellos commanding each of those valleys such as you saw in the typical city-states, and you can see that none of those walls has ever been breached. Also in Italyin the northeastern corneris Venice, the headquarters of the water-people. The Phoeniciansphonetically the Venetianshad their south Mediterranean headquarters in Carthage in northern Africa. In their western Mediterranean and Atlantic venturings the Phoenicians became the Veekings. The PhoeniciansVenetiansin their ships voyaged around the whole coast of Italy and sent in their people to each castello, one by one. The Venetians had an unlimited line of supply, and the people inside each castello did not. The people inside were starved out. Thus, all of the regional masters of the people in Italy hated the Venetians-Phoenicians-Veekings who were able to do this.
There being as yet no Suez Canal, the new world power structure centered in the ship mastery of the line of supply finally forcing the Roman Empire to shift its headquarters to Constantinople some ten centuries after the fall of Troy. The Roman emperor-pope's bodyguards were the Veekings-Vikings, the water-peoples' most powerful frontier fighters. The line of supply from Asia to Constantinople was partially caravan-borne and partially water-borne via Sinkiang-Khyber Pass-Afghanistan or via the Sea of Azov, the Caspian and the Black seas. From Constantinople, the western Europe-bound traffic was rerouted from overland to waterway routes. Because the Asia-to-Constantinople half of the trading was more land-borne-via-caravans, whose routes were dominated by the city-state-mastering Turks, Constantinople in due course was taken over by the Turks who established the Byzantine Empire in the Aegean Sea and Asia Minor.
Before leaving the subject of the great power-structure struggle for control of the most important, greatest cargo-tonnage-transporting, most profitable, Asia-to-Europe trade routes, we must note that the strength of the Egyptian Empire was predicated upon its pre-Suez function as a trade route link between Asia and Europe via the Indian Ocean, the Red Sea, overland caravan to the Nile, and then water-borne to Alexandria, or via Somaliland, overland to the headwaters of the Nile, and thence to Alexandria. The latter route was not economically competitive but was the route of travel of the ship-designing and -building arts that in due course brought the stoutly keeled, heavily ribbed, big-bellied ships into the Mediterranean.
We have seen the Greek Alexander the Great crossing Persia and reaching the Indian Ocean, thus connecting with the Phoenician trading to Asia. A thousand years later the Crusadersostensibly fighting for holy reasonswere the Indian Ocean-Phoenician-Venetian-Veeking water-borne power structure fighting the older overland-Khyber Pass power structure over mastery of the trade route between Asia and Europe.
In our "Humans in Universe" chapter we spoke about the 600-200 B.C. Greeks' discovery that our Earth is a sphere and a planet of the solar system. This was the typical scientific product of a water-navigation people. We witnessed also the originally horse-mounted Roman Empire's destruction of such knowledge, as their earlier grand strategy sought to reestablish the Asia-to-Europe trade pattern via Constantinople and the inland, overland, Khyber Pass route. This explains why the power structure saw fit to Dark-Age-out the mariners' spherical concept. It explains Ptolemy's 200 A.D. conic map's cutting off the around-Africa route mapped by Eratosthenes 400 years earlier.
With the world three-quarters water the bigger ship-producing capability was the beginning of a complete change in the control of human affairs. Bigger and better engineering was developed. The rival power structures were focused on the water supply lines. The Romans' overland road to England became obsolete. The Phoenician ships sailing out through Gibraltar into the Atlantic outperformed them. This shifted the battles among the world trade-route power structures from on-the-land popular visibility to popularly unwitnessed seascape. Long years of great battles of the corsairs, the pirates of the Barbary Coast, and so forth were unwitnessed and unknown to the land people. Who the power structures might be became popularly invisible.
Finally, bigger ships got out of the Mediterranean and into the Atlantic, around Africa to the Orient, and then around the World. Thus, "those in the know" rediscovered that the world is a sphere and not an infinitely extended lateral plane. Great battles ensuedwaged under the flags of England, France, and Spainto determine who would become supreme master of the world's high-seas line of supply. These great nations were simply the operating fronts of behind-the-scenes, vastly ambitious individuals who had become so effectively powerful because of their ability to remain invisible while operating behind the national scenery. Always their victories were in the name of some powerful sovereign-ruled country. The real power structures were always the invisible ones behind the visible sovereign powers.
Because the building of superior fleets of ships involved a complex of materials to produce not only the wooden hulls but the metal fastenings and the iron anchors and chains and the fiber ropes and cloth sails, and because woods from many parts of the world excelled in various functions of hull, masts, spars, oars, etc., large money credits for foreign purchase of these and other critical supplies brought control of the sea enterprising into the hands of international bankers.
The building of invisible world-power-structure controls operates in the following manner. Suppose you know how and have the ambition, vision, and daring to build one of these great ships. You have the mathematics. You have the positioning of numbers that enables youor your servantsto calculate the engineering data governing the design of hulls, spars, rigging, etc., and all the other necessary calculations for the building of a ship capable of sailing all the way to the Orient and returning with the incredible treasures that you have learned from travelers are to be found there. One trip to the Orientand a safe return to Europecould make you a fortune. "There are fabulous stores of treasures in the Orient to be cashed inif my ship comes in!"
The building of a ship required that you be so physically powerful a fighting mancommanding so many other fighting men as to have a large regiment of people under your controlthat you must have the acknowledged power to command all the people in your nation who are carpenters to work on your ship; all your nation's metalworkers to work on the fastenings, chain plates, chains, and anchors of your ship; all those who can make rope and all the people who grow fibers for your rope; all the people who grow, spin, and weave together the fabrics for your sails. Thus, all the skilled people of the nation had to be employed in the building and outfitting of your ship. In addition you had to command all the farmers who produced the food to feed not only themselves but also to feed all those skilled people while they built the shipand to feed all your army and all your court. So there was no way you could possibly produce one of these great ships unless you were very, very powerful.
Even then, in building ships, there were many essential materials that you didn't have in your own nation and so had to purchase from others. You also needed working cashmoney to cope with any and all unforeseen events that could not be coped with by use of muscle or the swordmoney to trade with. It was at this stage of your enterprise that the banker entered into the equation of power.
Up until 1500 B.C. all money was cattle, lambs, goats, or pigslive money that was real life-support wealth, wealth you could actually eat. Steers were by far the biggest food animal, and so they were the highest denomination of money. The Phoenicians carried their cattle with them for trading, but these big creatures proved to be very cumbersome on long voyages. This was the time when Crete was the headquarters of the big-boat people and their new supreme weaponthe lines-of-supply-control ship. Crete was called the Minoan civilization, the bull civilization, worshippers of the male fertility god.
The pair of joined bull's horns symbolized that the particular ship carried real-wealth tradersthat there were cattle on board to be exchanged for local-wealth items. The Norsemen with their paired-horn headdress were the Phoenician, Veenetian, Veeking (spelled Viking but pronounced "Veeking" by the Vikings). Veenetians, Phoenicians. (Punitians, Puntits, Pundits. Punic Wars. Punt = boat = the boat people. Pun in some African Colored languages means "red," as in Red Sea.). The Veekings were simply the northernmost European traders. The Veekings, Veenitians, Feenicians, Friesiansi.e., Phoenicians, Portuguesewere cross-breeding water-world people.
Graduating from carrying cattle along for trading in 1500 B.C. the Phoenicians invented metal money, which they first formed into iron half-rings that looked like a pair of bull's horns. (Many today mistake them for bracelets.) Soon the traders found that those in previously unvisited foreign countries had no memory of the cattle-on-board trading days and didn't recognize the miniature iron bull horn. If metal was being used for trading, then there were other kinds of metal they preferred trading with peoplesilver, copper, and gold were easy to judge by hefting and were more aesthetically pleasing than the forged iron bull horn symbols.
This soon brought metal coinage into the game of world trading, with the first coin bearing the image of the sovereign of the homeland of the Phoenicians.
This switch to coinage occurred coincidentally at just about the same time as the great changeover from city-state dominance to line-of-supply dominance of the power-structure group controlling most of world affairs. This was the time when the Phoenicians began trading with people of so many different languages that, in need of a means of recording the different word sounds made by people around the world, the Phoenicians invented phonetic spellingPhoenician spjellingwhich pronounced each successive sound separately and invented letter symbols for each sound. With phonetic spelling human written communication changed very muchfrom the visual-metaphor-concept writing of the Orient, accomplished with complex idea-graphics (ideographs), several of which frequently experienced, generalized cartoons told the whole story visually. It was a big change from ideographs to the Phoenicians' phonetic spelling, wherein each letter is a single soundhaving no meaning in itselfand whereby it took several sounds to make a whole word and many such words to make any sensei.e., a sentence. This is the historical event that Ezra Pound says coincides with the story of the Tower of Babel. Pound says that humanity was split into a babble of individually meaningless sounds while losing the conceptual symbols of whole ideaspowerful generalizations. You had to become an expert to understand the phonetic letter code. The spelling of words excluded a great many people from communicating, people who had been doing so successfully with ideographs.
This gradual alteration of world trading devices from cattle to gold brought about the world-around development of pirates who, building small but swift craft, could on a dark night board one of the great merchant ships just before it reached home, richly laden after a two-year trip to the Orient, and take over the ship and, above all, its gold. With the gold captured, the pirates often burned the vanquished ship.
As already mentioned in our Introduction, it was in 1805, 200 years after the founding of the East India Company, that the British won the Battle of Trafalgar, giving them dominance of all the world's lines of supply. They now controlled the seas of the world. It was said by world people that the British Empire became the first empire in history upon which "the sun never set." In order to get their gold off the sea and out of reach of the pirates, the British made deals with the sovereigns of all the countries around the world with whom they traded, by which it was agreed from then on to keep annual accounts of their intertrading and at the end of the year to move the gold from the debtor's bank in London to the creditor's bank in London to balance the accounts. In this way they kept the gold off the ocean and immune to sea pirate raiding. This brought about what is now called the "balance of trade" accounting.
The international trading became the most profitable of all enterprises, and great land-''owners" with clear-cut king's "deeds" to their land went often to international gold moneylenders. The great land barons underwrote the building of enterprisers' ships with their cattle or other real wealth, the regenerative products of their lands, turned over to the lender as collateral.
If the ship did come back, both the enterpriser and the bankers realized a great gain. The successful ship venturer paid the banker back, and the banker who had been holding the cattle as collateral returned them to their original proprietor. But during the voyage (usually two years to the Orient and back to Europe) the pledged cattle had calves, "kind" (German for "child"), and this is where the concept of interest originated, which was payable "in kind"the cattle that were born while the collateral was held by the banker were to belong to the banker.
When the Phoenicians shifted their trading strategy from carrying cattle to carrying metal money, the metal money didn't have little money"kind"but the idea of earned interest persisted. This meant that the interest was deducted from the original money value, and this of course depreciated the capital equity of the borrower. Thus, metallic equity banking became a different kind of game from the original concept.
In twentieth-century banking the depositors assume that their money is safely guarded in the vaulted bank, especially so in a savings bank, whereas their money is loaned out, within seconds after its depositing, at interest payable to the banker which is greater than the interest paid to the savings account depositor and, since the metal or paper money does not produce children"kind"the banker's so-called earned share must, in reality, be deducted from the depositor's true-wealth deposit.
The merchant bankers of Venice came to underwrite the Venetians' (the Phoenicians') voyaging ventures. Such international trade financing swiftly became the big thing in the banking game. The "Merchant of Venice"Shylock and his "pound of flesh forfeit" of the debtorwas Shakespeare's way of calling attention to the fact that the bankers' "interest" was in reality depleting the life-support equity of both the depositors and the borrowers.
It was the financing of such international voyaging, trading, and individual travel as well as of vaster games of governmental takeovers that built the enormous wealth-controlling fortunes of early European private banking families. It was under analogous circumstances of financing inter-American-European trade that, in the late nineteenth century, J. P. Morgan became a man of great power. By having his banking houses in Paris and London, Philadelphia and New York, he was able not only to finance people's foreign travel, all their intershipment of goods, and to give letters of credit, but also to finance and control major "new era" railroading, shipbuilding, mining, manufacturing, and energy-generating enterprises in general.
Such powerful banking gave insights regarding the degrees of risks that could be taken. The people doing the risking came to the banker for advice. In such a manner J. P. Morgan developed the most powerful financing position in America, as society went from wooden ships to steel ships and the concomitant iron mining, blast furnace building, and steel rolling mill development, as well as the making of boilers and engines, electric generators, and air conditioning systems.
To better understand the coming of world power structure into North American affairs, we will switch back from the nineteenth to the seventeenth and eighteenth centuries, to the opening up of North America and the American socioeconomic scene. The European colonization occurred in several major ways.
The Spanish way was accomplished with vast haciendasgrants from the king to powerful supporters. The hacienda development began in Central America and Mexico and expanded northward into California.
The British king also gave vast plantation grants to royal favorites on the North American southeastern coast, below the freezing line.
The French came to two parts of North America: (1) to the Gulf of Mexico-Mississippi delta, where exiled prisoners were dumped, and (2) to the St. Lawrence area of Canada, whence they moved westward via the Great Lakes, then southward on the Mississippi to join with these lower Mississippi colonists exploring northward and westward on the Mississippi.
British sovereign grants were also being given on the northeastern coast, where it was much colder and where existence was much more difficult. Because it was much more difficult to colonize, the royal favorites who received large land grants from the British king in the north did everything they could to encourage colonization of any kind by others, who bought their land from their landlords. The Pilgrims and other people of religious conviction found the freedom of thought-and-act to warrant hazarding their lives in that cold-winter wilderness. On the northeast coast of North America the individuals who did the colonizing were not the landowners, who remained safely in Europe. In the south the royal-favorite landowners themselves occupied and personally operated many of the great plantations.
Though motivated by distinctly different northern and southern reasons for doing so, we have the east-coast North American British-blood people breaking away from the Old World through the American Revolution.
In our tracing of the now completely invisible world power structures it is important to note that, while the British Empire as a world government lost the American Revolution, the power structure behind it did not lose the war. The most visible of the power-structure identities was the East India Company, an entirely private enterprise whose flag as adopted by Queen Elizabeth in 1600 happened to have thirteen red and white horizontal stripes with a blue rectangle in its upper lefthand corner. The blue rectangle bore in red and white the superimposed crosses of St. Andrew and St. George. When the Boston Tea Party occurred, the colonists dressed as Indians boarded the East India Company's three ships and threw overboard their entire cargoes of high-tax tea. They also took the flag from the masthead of the largest of the "East Indiamen"the Dartmouth.
George Washington took command of the U.S. Continental Army under an elm tree in Cambridge, Massachusetts. The flag used for that occasion was the East India Company's flag, which by pure coincidence had the thirteen red and white stripes. Though it was only coincidence, most of those present thought the thirteen red and white stripes did represent the thirteen American coloniesergo, was very appropriatebut they complained about the included British flag's superimposed crosses in the blue rectangle in the top corner. George Washington conferred with Betsy Ross, after which came the thirteen white, five-pointed stars in the blue field with the thirteen red and white horizontal stripes. While the British government lost the 1776 war, the East India Company's owners who constituted the invisible power structure behind the British government not only did not lose but moved right into the new U.S.A. economy along with the latter's most powerful landowners.
By pure chance I happened to uncover this popularly unknown episode of American history. Commissioned in 1970 by the Indian government to design new airports in Bombay, New Delhi, and Madras, I was visiting the grand palace of the British fortress in Madras, where the English first established themselves in India in 1600. There I saw a picture of Queen Elizabeth I and the flag of the East India Company of 1600 A.D., with its thirteen red and white horizontal stripes and its superimposed crosses in the upper corner. What astonished me was that this flag (which seemed to be the American flag) was apparently being used in 1600 A.D., 175 years before the American Revolution. Displayed on the stairway landing wall together with the portrait of Queen Elizabeth I painted on canvas, the flag was painted on the wall itself, as was the seal of the East India Company.
The supreme leaders of the American Revolution were of the southern typeGeorge Washington and Thomas Jefferson. Both were great land-owners with direct royal grants for their lands, in contradistinction to the relatively meager individual landholdings of the individual northern Puritan colonists.
With the Revolution over we have Alexander Hamilton arguing before the Congress that it was not the intention of the signers of the Declaration of Independence that the nation so formed should have any wealth. Wealth, Hamilton arguedas supported by Adam Smithis the land, which is something that belonged entirely to private individuals, preponderantly the great landowners with king-granted deeds to hundreds and sometimes thousands of square miles, as contrasted to the ordinary colonists' few hundreds of acres of homestead farms.
Hamilton went on to argue that the United States government so formed would, of course, need money from time to time and must borrow that money from the rich landowners' banks and must pay the banks back with interest. Assuming that the people would be benefited by what their representative government did with the money it borrowed, the people gladly would be taxed in order to pay the money back to the landowners with interest. This is where a century-and-a-half-long game of "wealth''-poker beganwith the cards dealt only to the great landowners by the world power structure.
Obviously, very powerful people had their land given to them by the king and not by God, but the king, with the church's approbation, asserted it was with God's blessing. This deed-processing produced a vast number of court decisions and legal precedent based on centuries and centuries of deed inheritances. Thus, landlord's deeds evolved from deeds originally dispensed from deeds of war. Then the great landlords loaned parcels of their lands to sharecropping farmers, who had to pay the landlord a tithe, or rent, and "interest" out of the wealth produced by nature within the confines of the deeded land. The landlord had his "tithing" barn within which to store the grains collected in the baskets (fiscus is Latin for "basket"; thus the fiscal year is that which winds up within the basketed measuring of the net grains harvested). The real payoff, of course, was in regenerative metabolic increments of the botanical photosynthetic impoundment of Sun radiation and hydrocarbon molecules' structuring and proliferation through other hydrogenic and biological interaccommodations. Obviously none of this natural wealth-regenerating and -multiplying process was accreditable to the landlords.
When I was young, there were people whom everybody knew to be very "wealthy." Nobody had the slightest idea of what that "wealth" consisted, other than the visible land and the complex of buildings in which the wealthy lived, plus their horses, carriages and yachts. The only thing that counted was that they were "known to be" enormously wealthy. The wealthy could do approximately anything they wanted to do. Many owned cargo ships. However, the richest were often prone to live in very unostentatious ways.
Of course, money was coined and the paper equivalents of metallic coinage were issued by the officers of banks of variously ventured private-capital-banking-type land systems. Enterprises were underwritten by wealthy landowners, to whom shares in the enterprises were issued and, when fortunate, dividends were paid. "Rich" people sometimes had their own private banksas, for instance, J. P. Morgan and Company. Ordinary people rushed to deposit their earnings in the wealthy people's banks.
For all the foregoing reasons nobody knew of what the wealth of the wealthy really consisted, nor how much there was of it. There were no income taxes until after World War I. But the income tax did not disclose capital wealth. It disclosed only the declared income of the wealthy. The banks were capitalized in various substantial amounts considered obviously adequate to cover any and all deposits by other than the bankers involved in proclaiming the capital values. These capital values were agreed upon privately between great landowners based on equities well within the marketable values of small fractions of their vast king-deeded landholdings.
"The rich get richer and the poor get children" was a popular song of the early 1920s. Wages were incredibly low, and the rich could get their buildings built for a song and people them with many servants for another song. But, as with uncalled poker hands, nobody ever knew what the "wealthy" really had. I was a boy in a "comfortably off" family, not a "wealthy" familynot wealthy enough to buy and own horses and carriages. To me the wealthy seemed to be just "fantastically so."
This brings us to World War I. Why was it called the First World War? All wars until this time had been fought in the era when land was the primary wealth. The land was the wealth because it produced the food essential to life. In the land-wealth era of warring the opposing forces took the farmers from the farms and made soldiers of them. They exhausted the farm-produced food supplies and trampled down the farms. War was local.
In 1810, only five years after Malthus's pronouncement of the fundamental inadequacy of life support on planet Earth, the telegraph was invented. It used copper wires to carry its messages. This was the beginning of a new age of advancing technology. The applied findings of science brought about an era in which there was a great increase of metals being interalloyed or interemployed mechanically, chemically, and electrolytically. Metals greatly increased the effectiveness of the land-produced foods. The development of nonrusting, hermetically sealed tin cans made possible preservation and distribution of foods to all inhabited portions of our planet Earth. All the new technology of all the advancing industry, which was inaugurated by the production of steel in the mid-nineteenth century, required the use of all the known primary metallic elements in various intercomplementary alloyings. For instance tin cans involved tin from the Malay straits, iron from West Virginia mines, and manganese from southern Russia.
The metals were rarely found under the farmlands or in the lands that belonged to the old lords of the food-productive lands. Metals were foundoften, but not always, in mountainsall around the world, in lands of countries remote from one another. Mine ownerships were granted by governments to the first to file claims.
It was the high-seas, intercontinental, international trafficking in these metals that made possible the life-support effectiveness of both farming and fishing. The high-seas trafficking was mastered by the world-around line-of-supply controllersthe venturers and pirates known collectively as the British Empire. This world-around traffic was in turn financed, accounted, and maximally profited in by the international bankers and their letters of credit, bills of exchange, and similar pieces of paper. International banking greatly reduced the necessity for businessmen to travel with their exported goods to collect at the importer's end. Because the world-around-occurring metals were at the heart of this advance in standards of living for increasing numbers of humans all around the world, the struggle for mastery of this trade by the invisible, behind-the-scenes-contending world power structures ultimately brought about the breakout of the visible, international World War I.
The war was the consequence of the world-power-structure "outs" becoming realistically ambitious to take away from the British "ins" the control of the world's high-seas lines of supply. The "outs" saw that the British Navy was guarding only the surface of the sea and that there were proven new inventionsthe submarine, which could go under the water, and the airplane, which could fly above the waterso the behind-the-scenes world-power-structure "outs" adopted their multidimensional offensive strategy against the two-dimensional world-power-structure "ins." The invisible-power-structure "outs" puppeted the Germans and their allies. The invisible-power-structure "ins" puppeted Great Britain and her allies. With their underwater strategies the "outs" did severely break down the "ins' " line of supply.
J. P. Morgan was the visible fiscal agent for the "in" power structure, operating through Great Britain and her allies. The 1914 industrial productivity in America was enormous, with an even more enormous amount of untapped U.S. metallic resources, particularly of iron and copper, as backup.
Throughout the nineteenth century all the contending invisible world power structures invested heavily in U.S.A.-enterprise equities. Throughout that nineteenth century, the vast resources of the U.S.A. plus the new array of imported European industrial tooling, the North American economy established productivity. The U.S.A. economy took all the industrial machinery that had been invented in England, Germany, France, and Europe in general and reproduced it in America with obvious experience-suggested improvements.
In 1914 World War I started in the Balkans and was "joined" in Belgium and France on the European continent. The British Isles represented the "unsinkable flagship" of the high-seas navy of the masters of the world oceans' lines of supply. The "unsinkable flagship" commanded the harbors of the European customers of the high-seas-line-of-supply control. If the line of supply that kept the war joined on the European continent broke down completely, then the "outs" would be able to take the British Isles themselves, which, as the "flagship" of the "ins," would mean the latter's defeat.
In 1914, three years before the U.S.A. entered the war, J. P. Morgan, as the "Allies' " fiscal agent, began to buy in the U.S.A. to offset the line-of-supply losses accomplished by the enemy submarines. Morgan kept buying and buying, but finally, on the basis of sound world-banking finance, which was predicated on the available gold reserve, came the point at which Morgan had bought for the British and their allies an amount of goods from the U.S.A. equaling all the monetary bullion gold in the world available to the "ins' " power structure. Despite this historically unprecedented magnitude of the Allied purchasing it had only fractionally tapped the productivity of the U.S.A. So Morgan, buying on behalf of England and her allies, exercised their borrowing "credit" to an extent that bought a total of goods worth twice the amount of gold and silver in the world available to the "ins." As yet the potential productivity of the U.S.A. was but fractionally articulated. Because the "ability to pay later" credit of the Allied nations could not be stretched any further, the only way to keep the U.S.A. productivity flowing and increasing was to get the U.S.A. itself into the war on the "ins' " side, so that it would buy its own productivity in support of its own war effort as well as that of its allies.
By skillful psychology and propaganda the "ins" persuaded America that they were fighting "to save democracy." I recall, as one of the youth of those times, how enthusiastic everyone became about "saving democracy." Immediately the U.S.A. government asked the British and their allies, "What do you need over there?" The "ins" replied, "A million trained and armed men, and the ships to carry them to France, and many, many new ships to replace the ships that have been sunk by submarines. We need them desperately to keep carrying the tanks and airplanes, weapons, and munitions to France." The "ins" also urgently requested that the U.S. Navy be increased in strength to equal the strength of the British Navy and therewith to cope with the German submarines, "while our British Navy keeps the German high-seas fleet bottled up. We want all of this from America."
America went to work, took over and newly implemented many of the U.S. industries, such as the telephone, telegraph, and power companies, and produced all that was wanted. For the first time in history, from 1914 to 1918, humanity entered upon a comprehensive program of industrial transformation and went from wire to wireless communications; from tracked to trackless transportation; from two-dimensional transport to four-dimensional; from visible structuring and mechanical techniques to invisibleatomic and molecularstructuring and mechanics.
Within one year the million armed and trained U.S.A. soldiers were safely transported to France without the loss of one soldier to the submarines. Arrived in France, they entered the line of battle. With the line of supply once more powerfully re-established by the U.S. Navy and its merchant fleet, it became clear that the "ins" were soon going to win.
J. P. Morgan, now representing the "allied" power structures' capitalist system's banks as well as serving as the Allies' purchasing agent, said to the American Congress, "How are you going to pay for it all?" The American Congress said, "What do you mean, pay for it? This is our own wealth. This is our war to save democracy. We will win the war and then stop the armaments production." Morgan said, "You have forgotten Alexander Hamilton. The U.S. government doesn't have any money. You're going to pay for it all right, but since you don't have any money, you're going to have to borrow it all from the banks. You're going to borrow from me, Mr. Morgan, in order to pay these vast war bills. Then you must raise the money by taxes to pay me back."
To finance these enormous payments Mr. Morgan and his army of lawyers inventedfor the U.S. governmentthe Liberty Loans and Victory Loans. Then the U.S. Congress invented the income tax.
With the U.S. Congress's formulating of the legislation that set up the scheme of the annual income tax, "we the people" had, for the first time, a little peek into the poker hands of the wealthy. But only into the amount of their taxable income, not into the principal wealth cards of their poker game.
During World War I, U.S. industrial production had gone to $178 billion. With only $30 billion of monetary gold in the world, this monetary magnitude greatly exceeded any previously experienced controllability of the behind-the-scenes finance power structure of the European "Allies."
World War I over, won by the Allies, all the countries on both sides of the warring countries are deeply in debt to America. Because the debt to the U.S.A. was twice that of all the gold in the "ins' " world, all the countries involved in World War I paid all their gold to the U.S.A. Despite those enormous payments in gold all the countries were as yet deeply in debt to the U.S.A. Thereafter all those countries went off the gold standard.
All the monetary gold bullion paid to the U.S.A. was stored in the mountain vaults of Fort Knox, Kentucky. International trade became completely immobilized, and the U.S.A. found itself having unwittingly become the world's new financial master. Swiftly it arranged vast trading account loans to the foreign countries. This financing of foreign countries' purchasing by the U.S.A. credit loans started an import-export boom in the U.S.A., followed by an early 1920s recession and another boom; then, the Great Crash of 1929.
The reasons for the Great Crash go back to the swift technological evolution occurring in the U.S.A. between 1900 and the 1914 beginning of World War I and the U.S.A.'s entry into it in 1917. Most important amongst those techno-economic evolution events are those relating to electrical power. Gold is the most efficient conductor of electricity, silver is the next, and copper is a close third. Of these three gold is the scarcest, silver the next, then copper. Though relatively scarce, copper is the most plentiful of the good electrical conductors. Copper is also nonsparking and therefore makes a safe casing for gunpowder-packed bullets and big gun shells. As a consequence of these conditions, in the one year, 1917, more copper was mined, refined, and manufactured into wire, tubing, sheet, and other end products than in the total cumulative production of all the years of all human history before 1917.
With the war over all the copper that had been mined and put into generators and conductors did not go back into the mines nor did it rot.
World War I was not an agrarian, but an inanimate-energy and power-driven, industrial-production warwith the generating power coming from Niagara and other waterfalls as well as from coal and petroleum. For the first time the U.S.A. was generating power with oil-burning steam turbines.
When the war was over, all this power-production equipment was still in prime operating condition. There was enormous potential productivitya wealth of wealth-producing capability that had never before existed, let alone as a consequence of war. The production capacity that had been established was so great as to have been able to produce, within a two-year span, all those ships, trucks, and armaments. What was the U.S.A. economy going to do with its new industrial gianthood? It was the vastness of this unexpected, government-funded production wealth and its ownership by corporate stockholders that generated many negative thoughts about the moral validity of war profiteering.
There were many desirable and useful items that could be mass-produced and successfully marketed. Young people wanted automobiles, but automobiles were capital equipment. In 1920 capital equipment was sold only for cash. There were enough affluent people in post-World-War-I U.S.A. to provide an easy market for a limited production of automobiles. In 1920 there were no bank-supported time payment sales in the retail trade. The banks would accept chattel mortgages and time payments on large mobile capital goods, such as trucking equipment, for large, rich corporations. Banks would not consider risking their money on such perishable, runaway-with-able capital equipment as the privately owned automobile.
Because the banks would not finance the buying of automobiles and so many money-earning but capital-less young people wanted them, shyster loaners appeared who were tough followers of their borrowers when they were in arrears. Between the ever-increasing time-payment patronage and the affluent, a market for automobiles was opening that could support mass production.
In 1922 there were about 125 independent automobile companies. They were mostly headed by colorful automobile-designing and -racing individuals for whom most of the companies were named. They survived by individually striving each year to produce an entirely new and better automobile, most of which were costly. Many accepted orders for more than they had the mechanical capability to produce. Their hometown financiers would back these auto-designing geniuses so that they could buy better production tooling and build larger factories. Wall Street sold swiftly increasing numbers of shares in auto companies. More and more of them went broke for lack of production, distribution, and maintenance experience on the part of the auto-designer managements.
In 1926 the Wall Street brokerage house of Dillon, Read and Co. made a comprehensive cost study of the auto-production field. They found that 130,000 cars a year was, in 1926, the minimum that could be accounted as mass production and sold at production prices. Any less production had to carry a much higher price tag. To warrant the latter, the cars had to be superlatively excellent. The English-built Rolls-Royce brought the highest price on the American market. There was fierce competition among Packard, Peerless, Cadillac, Pierce-Arrow, Locomobile, Lozier, Leiand, and others for the top American car. All of those premium cars' frames, bodies, engines, and parts were manufactured within their own factories. There were several in-between classes, such as that of the Buick. Most of the 100 or so cars in this intermediate range were assembled from special engines, frames, and other parts made by independent manufacturers.
The mortality in auto companies was great. Dillon, Read led Wall Street out of its dilemma by buying several almost bankrupt companies, closely located to one another, such as those of the Dodge family, whose joint production capacity topped the 130,000 units per year mass-production figure. They named their new venture the Chrysler Company. Dillon, Read fired the auto company presidents, who were primarily interested in new-car-designing, and replaced them with production engineers. Wall Street followed suit and put in production engineers as presidents of all the auto companiesexcept Ford, who owned his company outright and had no obligation to Wall Street and its legion of stock buyers. Old Henry himself was already the conceiver, initiator, and artist-master of mass production.
Because the American public was in love with the annual automobile shows, the Wall Street financiers who had thrown out all the colorful auto-designer presidents started a new game by setting up the Madison Avenue advertising industry, which hired artists who knew how to use the new (1920) airbrush to make beautiful drawings of only superficiallynot mechanicallynew dream cars. They made drawings of the new models, which required only superficial mudguard and radiator changes with no design changes in the hidden parts. Parts were purchased by the big companies from smaller, highly competitive parts manufacturers operating in the vicinity of Detroit.
This was the beginning of the downfall of the world-esteemed integrity of Yankee ingenuity, which was frequently, forthrightly, and often naively manifest in American business. Big business in the U.S.A. set out to make money deceitfullyby fake "new models"and engineering design advance was replaced by "style" design change.
In the late twenties first Ford and then General Motors instituted their own time-financing corporations. The bankers of America said, "Let them have it, they'll be sorryautos, phew! We don't want to go around trying to recover these banged-up autos when the borrower is in default." The bankers said, "It is very immoral to buy automobiles 'on time.' They are just a luxury."
What the bankers did like to support in the new mass productivity was tractor-driven farm machinery. Farm machinery was easy to sell. As the farmer sat atop the demonstration plowing or harvesting equipment, with its power to go through the fields doing an amount of work in a day equal to what had previously taken him weeks, he said to himself, "I can make more money and also take it a little easier." So the bankers approved the financing of the production and marketing of the farm machinery. They held a chattel mortgage on the machinery and a mortgage on the farmland itself and all its buildings. The bankers loved that. There was enthusiastic bank acceptance of the selling of such equipment "on time" to the farmers. The bankers did not consider this "immoral." The farmer was "producing food wealth." The automobilist was "just joy riding."
Then there came a very bad hog market in 1926. Many farmers were unable to make the payments on their power-driven equipment. The local country banks foreclosed on the delinquent farmers' mortgages and took away their farms and machinery. The bankers had assumed that the farms were going to be readily saleable. It turned out, however, that there were not so many nonfarmers waiting to become farmers, and most of the real farmers had been put out of business by the bank foreclosures so they couldn't buy back their own farms. There were no city people eager to go out and buy one of those farms. "How you gonna keep them down on the farm, after they've seen Paree?" were the words of a popular World War I song.
So the dust bowls developed as the upturned, unsown soil began to blow off the farms. It is relevant to note that, in 1900, 90 percent of U.S.A. citizens were living and working on the farms; in 1979 only 7 percent were on the farms, mostly as local supervisors for big, absent-ownership corporations. The owners of the farmlands today are no longer "farmers" or even individual humansthey are the great business conglomerates. What began in 1934 as government subsidies and loans to farmers for farm machinery, later to keep acreage out of production, would by 1978 result in President Carter making enormous payments to appease big corporations for cutting off vital grain and other strategic shipments to Russia. Next, the U.S. government would make enormous subsidies to bail out large corporations such as Lockheed and Chrysler, which as basic military suppliers the U.S. government could not allow to go bankrupt. Eventually the U.S. taxpayers will be asked to make "free-of-risk" bail-outs of "private" enterprises, corporations with initial physical assets worth over a billion dollars classifed as risk enterprises.
We now return to the 1926-'27-'28-'29 sequence of events developing from selling the farmers' machinery on the bankers' drop-dead terms (mortgage means "on death terms"). In 1927 and 1928 the bigger Western city banks began to foreclose on their local country banks that had financed the farm machinery sales and had been borrowing from the bigger city banks to cover their unprecedentedly expanded loaning. First the little and then the successively bigger banks found that they had foreclosed on farmhouses that had no indoor toilets, many with roofs falling in, barns in poor condition, with the replevined farm machinery rusting out in the openand no customers.
Word of the bad news gradually went around; small bank "runs" began; and in 1929 came the Great Crash in the stock market. All business went from worse to worser. Unemployment multiplied. Prices steadily dropped. Nobody had money with which to buy. Bigger and bigger banks had to foreclose on smaller banks, until finally in early 1933 there came one day in which 5000 banks closed their doors to stop "the run" on their funds.
People were dismayed and both individually and collectively helpless to do anything to combat the economic collapse. The economy had gone to pieces. People did not parade and protest. They became so low in spirit and listless that they just sat around silently in their homes or in public places. The New York subway stations were filled with people sleeping on the concrete platforms and stairways. No religious organizations were willing to let people sleep in their churches.
There came a "pecking-order" point when the central Chicago banks foreclosed on all the other big Western city banksfollowed by the big New York City central banks foreclosing on Chicago's central banks. Finally came the denouement, when the big New York banks found themselves about to close because they were already behind-the-scenes insolvent. This occasioned the U.S. Congress voting to accelerate by four months the presidential inauguration of Franklin Delano Roosevelt who, minutes after taking his oath of office, signed the Bank Moratorium, which momentarily suspended the acknowledgment of the death of the wealthy landowners' banking system that had lost all or much of its depositors' money. About a month later Congress voted to the President of the U.S.A. the ability to control all money. Months later again the U.S. Supreme Court upheld that legislation. The U.S.A. citizens themselves and their government had become the wealth resource "of last recourse." The underwriting wealth belongs to all the people and not to the few. That happened also to be the description of socialism.
The 150-year-long "infinite wealth" poker hand and its uncalled blufimg was over. The called hands were suddenly down. It turned out that the "wealthys' " wealth was nonexistent. Their marble-walled, steel-barred, visibly vaulted banks had been psychologically attractive to the depositors, who preferred to have their earnings and savings deposited along with the wealth of the powerfully rich. What the banks had been doing was to loan the people's deposits to other people. The banks had no money themselves. What they had done was to capitalize their land at their self-asserted value and had been credited with that value of stock in the bank's ownership.
In 1933, for the first time ever, the hands of the U.S. American wealthy were exposed (and by inference, all land-based capitalism everywhere around the world)most were money empty. Their land and multiservanted mansion values dropped to almost nothing. Nobody had the almost-nothing amount of money to buy those richly housed estates. There was one exception to the last statementthe Vatican-administered Roman Catholic Church's world organization, which for a pittance acquired many extraordinary properties at that time, which it converted into monasteries and convents, colleges and schools.
The game of "deedable land wealth" had been a bluff from its very beginningmultimillennia ago, when that little man on a horse, armed with a club, first rode up to the giant shepherd leader of a tribe and said, bluffingly, "It's very dangerous out here in the wilderness for beautiful sheep such as yours," and the shepherd leader's ultimate coercion into accepting "protection" from the claiming and proclaiming "owner" of the land.
Landownership did not go back to an act of God. All the kings always had their priests present when the land claimage was made by their explorers. The priests planted their crosses to confirm that the king's ownership was blessed by God. The Roman Catholic Church, starting in its emperorpope days, has been in the deeded-land business for "going on" 2000 years. It is as yet the world's largest real estate owner. Real, a Spanish word, means "royal"the succession of king-deeded estate lands.
With the bluff of wealth over in March 1933, almost all business in America stopped. On the inauguration of Franklin Delano Roosevelt the emergency was so absolute that Congress voted unanimously for whatever corrective measures the New Deal administration prescribed.
Roosevelt and his advisors said, "One thing is clear. Despite the emergency America abhors socialism. Americans don't like the assumption that everybody is equal. Americans are so independent, they don't feel at all equal. They don't like socialism, but," said the New Deal leaders, "the fact is that we, the American people, are going to have to guarantee our own bank accounts. People don't like to keep their money under their mattresses and prefer to put it into a bank, so we will have to do what we can to rehabilitate the banks. We the people acting unanimously through our government are going to have to guarantee the safety of each deposit in the banks to a convincingly substantial amount$5000. We will leave the bank in ownership of the management of the stockholders of those banks that, by virtue of the presidential moratorium, are as yet theoretically alive, and hope that, with our guaranteeing, regulation, and supervising, many of them will reopen and will be able to progressively accredit their depositors with some percentage of their original deposits.
"But let us not deceive ourselves. With the government of the people guaranteeing the bank accounts, it becomes, in operating fact, socialism. On the other hand people themselves know so little about banking, credit concepts, and the history of power structures that they will not know that they have adopted socialism, since the government has not taken 'possession' of the banks. Society will think well of 'we the people' as the government, guaranteeing the new deposits in the banks up to $5000."
Society likes the idea of a bank as a safekeeping device. People have always believed that when they put their money in the bank, it stayed there. They had no idea it went out on loan within minutes after it came in. They were completely hoodwinked by the appearance of the banks as safe, fireproof, and robberproof depositories of their earnings. Even today, in the last twenty years of the twentieth century, people know little more about banks than they did during the 1929 Crash or at the depth of the Depression in 1932, when all they knew was that they had lost their deposits in most of them.
In 1933, '34, '35, and '36 the New Deal and the U.S. Congress diligently investigated the banking system and the practices of its most powerful leaders. They found many malpractices, which we will discuss later. Most prominently they found the banks loaded with worthless mortgages on properties that were unsaleable because uninhabitablemortgages on buildings without roofs, bathrooms, etc.
The government said, "The first thing we must do is make those mortgages we've inherited worth something." At this point the American government dictated the banking strategy and started refinancing of the building industry. The so-called building "industry" was already 2000 years behind the arts of building ships of the sea and sky, which ships of the sea and sky are, in fact, environment-controlling structures in exactly the same sense that land buildings are environment-controlling structures.
While the design of the seagoing and airgoing environment controls are floatably and flyably weight-considerate and semiautonomous because they generate their own power, desalinate their own water, etc., there is no weight consideration in the designing of the land-anchored environment controls. They don't have to float or fly. They are utterly dependent on sewers, waterlines, electric lines, highway maintenance. They are utterly controlled by the prime landowners, their building codes and readily imposable legal restrictionsall based on the real estates' ownership and control of the highways-sewers-waterlinesthe metabolic "guts" of all U.S.A. towns and cities.
When the government owns the wealth and controls the issuance of its money, it is socialism. The New Deal was not trying to deceive the people but was engaged in a rescue operation of the first order and was hopeful of not irritating the people psychologically by what it seemed was critically mandatory to accomplish.
Paradoxically, the first people they irritatedgreatlywere yesterday's rich, in particular those who were as yet living on the dividends and interest of as yet solvent industrial corporations' stocks and bonds. In fear of the New Deal they sought to discredit Roosevelt by a word-of-mouth campaign. From 1933 to 1940 individual members of rich gentlemen's clubs of New York were ostracized from membership in the rudest manner by "the members" if they were not heard to speak frequently of "that son-of-a-bitch in the White House."
Franklin Roosevelt and his advisors said, in effect, "We've got to do what we feel is best for the people by whatever name the 'best' may bear. We've got them depositing again in the banks and are rehabilitating all those mortgaged properties which we have inherited by loaning the new owners of the properties funds at negative interest provided they will rehabilitate the propertyreroof or put in a bathroom, etc."
To those who understood some of its intricacies, everything was now out in the open about the world of banking. The New Deal said it was going to prohibit usurious rates of interest"the banks must earn enough to keep themselves going, but only can charge 1 1/2 percent for interest." Banks were regulated just like the Post Office. No banker had authority beyond that of a postmaster. The New Deal completely separated from banking what Morgan and many of the private banks had been doingtaking deposit money and putting it into common stocks and even into the bankers' own highly speculative private ventures. Thus came the New Deal's Securities and Exchange Commission and the complete separation of banking and initial risk financingor, at least, supposedly so. Banks' trust departments could as yet buy and sell corporate venture stocks for clients' accounts however.
There were a number of individual bankers who went far beyond unwise banking practices and who, as individuals, took personal advantage of the information they had of individual depositors' affairs and of their privilege as top bank officers to do truly inimical things to enrich their own positions. Few today remember that a half-century ago a number of New York and Chicago's top bankers were sentenced into penitentiariesthe New Yorkers into Sing Singthe senior partner of J. P. Morgan and Company, the president of the National City Bank, the president of Chase Bank. Every one of them had been found to be doing reprehensible financial tricks. They were selling their own friends short. They were opening their friends' mail and manipulating the stock market. They were manipulating everybody. They were way overstepping the moral limits of the privileges ethically existent for officers in the banking game, so a great housecleaning was done by the New Deal.
The banking story is best told by a poem that was, at that time, allegedly composed by Ogden Nash but was never to my knowledge formally published and copyrighted. It was, however, memorized and widely recited from copies often typewritten by those who remembered it:
"BUTCHER, BAKER, CANDLESTICK MAKER"
I'm an autocratic figure in these democratic states,
A dandy demonstration of hereditary traits.
As the children of the baker bake the most delicious breads,
As the sons of Casanova fill the most exclusive beds,
As the Barrymores and Roosevelts and others I could name
Inherited the talents that perpetuate their fame,
My position in the structure of society I owe
To the qualities my parents bequeathed me long ago.
My father was a gentleman and musical to boot.
He used to play piano in a house of ill repute.
The Madam was a lady and a credit to her cult,
She enjoyed my father's playing and I was the result.
So my Daddy and my Mummy are the ones I have to thank
That I'm Chairman of the Board of the National Silly Bank.
CHORUS: Oh, our parents forgot to get married. Our parents forgot to get wed. Did a wedding bell chime, it was always a time When our parents were somewhere in bed. Then all thanks to our kind loving parents. We are kings in the land of the free. Your banker, your broker, your Washington joker, Three prominent bastards are we, tra la, Three prominent bastards are we!
In a cozy little farmhouse in a cozy little dell
A dear old-fashioned farmer and his daughter used to dwell.
She was pretty, she was charming, she was tender, she was mild,
And her sympathy was such that she was frequently with child.
The year her hospitality attained a record high
She became a happy mother of an infant which was I.
Whenever she was gloomy, I could always make her grin,
By childishly inquiring who my daddy could have been.
The hired man was favored by the girls in Mummy's set,
And a traveling man from Scranton was an even money bet.
But such were Mother's motives and such was her allure,
That even Roger Babson wasn 't absolutely sure.
Well, I took my mother's morals and I took my daddy's crust,
And I grew to be the founder of the New York Blankers Trust.
CHORUS: Oh, our parents forgot, etc.
In a torrid penal chain gang on a dusty southern road
My late lamented daddy had his permanent abode.
Now some were therefor stealing, but my daddy's only fault
Was an overwhelming tendency for criminal assault.
His philosophy was simple and quite free from moral taint;
Seduction is for sissies, but a he-man wants his rape.
Daddy's total list of victims was embarrassingly rich,
And one of them was Mother, but he couldn't tell me which.
Well, I didn "t go to college but I got me a degree.
I reckon I'm the model of a perfect S.O.B.,
I'm a debit to my country but a credit to my Dad,
The most expensive senator the country ever had.
I remember Daddy's warningthat raping is a crime,
Unless you rape the voters, a million at a time.
CHORUS: Oh, our parents forgot, etc.
I'm an ordinary figure in these democratic states,
A pathetic demonstration of hereditary traits.
As the children of the cop possess the flattest kind offset,
As the daughter of the floozie has a waggle to her seat,
My position at the bottom of society I owe
To the qualities my parents bequeathed me long ago.
My father was a married man and, what is even more,
He was married to my mothera fact which I deplore.
I was born in holy wedlock, consequently by and by,
I was rooked by every bastard who had plunder in his eye.
I invested, I deposited, I voted every fall,
And I saved up every penny and the bastards took it all.
At last I've learned my lesson, and I'm on the proper track,
I'm a self-appointed bastard and I'M GOING TO GET IT
CHORUS: Oh, our parents forgot to get married. Our parents forgot to get wed. Did a wedding bell chime, it was always a time When our parents were somewhere in bed. Then all thanks to our kind loving parents. We are kings in the land of the free. Your banker, your broker, your Washington joker, Three prominent bastards are we, tra la, Three prominent bastards are we! * * *
To accomplish their restartings in all areas of the U.S.A. economic system the New Deal also set up the Works Progress Administration (to get people jobs) and the Reconstruction Finance Corporation (to get the big industries going).
Amongst the first of the New Deal's emergency acts of 1933 was the establishment of the Works Progress Administration, which provided jobs for approximately anyone who wanted themartists, mathematicians, etc., as well as all white- and blue-collar workers and, of course, all day laborers and such.
Then, pressed by the labor unions and the political urge to avoid the characteristics of socialism and get the heretofore unemployed millions off WPAthe New Deal's Works Progress Administrationthe government financed new buildings and granted mortgages for longer and longer periods to encourage people to undertake the production of much-needed homes and other buildings. It must be noted that the rejuvenated building industry was reset in motion as a concession to the building trades and a move to increase employment, not as a much-needed evolutionary advance in the art of human environment controlling. The unions were so strong as to be able to push the New Deal very hard in the direction of resuming only yesterday's multifoldedly inefficient "one-off" building design techniques and materials as the activity in which they could establish maximum employment. Technically ignorant bank officers became the authorities who alone judged the design validity of the structures and architectural acceptability of the building projects, funds for the building of which they authorized as mortgage-secured loans of their bank depositors' money.
The New Deal went on to rationalize its strategic acts by arguing to itself, "In order to continue as a nation we must have our national defense. Since it is established that there is nowhere nearly enough life support to go around in this world, if we don't have a formidable national defense, we're going to be successfully attacked by hungry enemies. Our national defense can't carry on without steel and the generation of electricity, the production of chemicals, and other imperative industrial items."
The FDR team soon concluded that the industries producing those absolute "defense" necessities were to be called our "prime contractors." The prime contractors must be kept going at any cost. "So we'll give war-production orders to the prime contractors to produce such-and-such goods. The contractors with signed government contracts can then go to the banks and borrow the money to pay their overhead and to buy the materials and power and to pay the wages to produce the goods. Then we the government will pay the producers for those finished goods and services, and they can pay off their loans from the bank. The money paid by the prime contractors as wages will give people buying power, which will allow them to start other economic production systems going." This became a monetary irrigation system (still in use today in 1980 U.S.A. affairs), which works at a rate providing about ten recirculations in a year following upon each major war order initiated by and paid for by the government.
In the depths of the Depression in 1932, when you could buy a meal for five cents and the finest of shirts for one dollar, the Reconstruction Finance Corporation went much further. It gave U.S. Steel $85 million worth of new rolling equipment (in 1980 U.S. currency that would be close to a billion dollars), etc., etc.
The U.S.A.'s Reconstruction Finance Corporation had a secondary government machinery-owning outfit that loaned all these prime contracting companies new equipment with which to fill their government orders. What the New Deal did in fact was to socialize the prime contractor corporations instead of the people. This hid the fact of socialism from the world in general. Socializing the prime contractor corporations indirectly benefited the people themselves. In this way the New Deal seemingly didn't give money to the corporationsjust orders. The U.S.A.-established and -financed RFC loaned the prime contractors all the money they needed to buy all the equipment. But in the end the government rarely collected on the loans and finally just forgave the machinery borrowers altogether, selling them the equipment for very low "nominal" sums.
The New Deal had also pledged itself at outset to take care of the "forgotten man." The government voted minimum-wage limits of a substantial magnitude. The economy was going again. People were getting more and more jobshow many depended upon how many prime contracts the government gave out. World War II was clearly looming ahead. The New Deal said, "We have to be prepared" . . . and their "preparedness" ordering increased. Jobs increased rapidly. Empty buildings filled.
There were a number of great corporations whose businesses had practically stopped by 1933, but those businesses had now been set in healthy motion once more under the New Deal's socializing of the prime contractors. Franklin Roosevelt said to the heads of the great corporations that had not gone "bust," "Every one of you has a large surplus that you held on to, in fear, through the Depression. We want you to spend your surpluses in research and development of new equipment. Since the early clipper ship days, it has always been a function of a 'fundamental risk enterprise' that the enterprise use some of its profits to buy itself new and better equipmenta new and better shipwith the enterprise that is doing the prime risk-taking by investing in the new equipment, thereby requalifying for the privileges and rewards granted by governments for wise risking, daring execution, and good management."
FDR said, "We want you enterprisers to 'modernize.' " But U.S.A. big corporate management said, in unison, "We won't do that. It is much too risky a time to use any of our surplus." They knew the oncoming World War II was forcing the government to see that their plants were modernized, so by holding out they forced the government to take over both the risk and cost of modernizing. Heretofore in the history of private enterprise research and developmentof more efficient new plants and equipmenthad been funded from the enterprise's "surplus" earningsi.e., from earnings prudently withheld from distribution to stockholders to ensure the continuing strength of the enterprise.
Then FDR's U.S.A. Treasury, with all FDR's lawyers' advice, ruled that the large private-enterprise corporations could make their new plant expansion and equipment improvements and charge the costs to operating expenses, which expenses were then to be deducted from new earnings before calculating income taxes. This amounted, in fact, to an indirect subsidy to cover all new-equipment acquisition. The U.S.A. Treasury next ruled that all research and development"R and D"was thereafter also to be considered by the U.S.A. Treasury Department as "an operating expense" and also to be deducted from income before calculating income taxes. The U.S.A. thereby eliminated almost all the "risks" of private enterprise.
Next Henry Luce, representing news publishers in Americathe newspapers and magazineswent to Roosevelt and said, "Your democracy needs its news. You have to have some way for the people to know what's going on." "Yes," said FDR. Luce went on, "We publishers can't afford to publish the news. The prices people are willing to pay for the news won't pay for the publications. The newspapers and magazines are only paid for by advertising, and the New Deal has no allowance for advertising in its operating procedures." The New Deal then ruled that advertising was henceforth to be classified as research and development, therefore deductible from gross income as an operating expense before calculating taxes. Thus advertising became a hidden subsidy of very great sizeabout $7 billion a year at that timehidden in tax-calculation procedures. The subsidy was so great as to cover the founding of what has come to be known as "Madison Avenue."
While the government was doing all this, the Congress passed strict and comprehensive rent controls, bank-loan-interest controls, and price controls of every kind. It was pure socialism. It had to be done that way. There was no question.