JUNE 2020

JUNE   2020
He Has Dragged Us Back Forty Years.


Friday, June 03, 2011


I wish the average libertarian could meet Jay Gould, because he was unfettered capitalism in the flesh, “the human incarnation of avarice,” as one minister described him, the Mephistopheles of Wall Street, the robber baron par excellence, “prince of the railroad schemers”, annd the man within whom all the theories of the libertarians about capitalism and freedom met the reality of human nature, and got the tar beat out of it.
He was a “…short, thin man with cold black eyes, a narrow face and, in his maturity, a “full black beard”. Born into poverty, his mother was active in the Methodist Church until her death, when Jay was 10 years old. When he was seventeen, Jay apprenticed himself to a surveyor, Oliver Diston, at the salary of $10 a month. When Jay started issuing his own maps for sale, Diston sued. Jay’s attorney, T. R. Westbrook, managed to have the lawsuit dismissed, but, as one biographer noted, from that day forward, “…there was scarcely a day during his whole life that he did not have some litigation on his hands.”
His map business made Jay $5, 000, which he invested with Zadock Pratt, a Manhattan leather merchant. Smothering Mr. Pratt in adoration, the 21 year old Jay proposed to write the older man’s biography. That project drew the pair into a partnership in a new leather tannery south of Scranton, Pennsylvania. With Pratt’s money Jay built an entire company town, which he named “Gouldborough”. He wrote Pratt sycophantic letters, in one describing the organizing meeting for the new community. “Three hearty cheers were proposed for the Hon(erable) Zadock Pratt…This is certainly a memorandum worthy of note in your biography, of the gratitude and esteem which Americans hold your enterprising history.” What Jay did not explain is why the new town was named after him, and not Mr. Pratt.  However Mr. Pratt, who knew a lot more about the tanning business than young Jay, had begun to see through the fog of compliments.
Pratt (above) showed up at the plant unannounced in the summer of 1858 to go over the books, and discovered them to be a confusing mess -  showing unauthorized risky investments and a private bank which Jay had established in Stroudsburg, apparently with company funds, but without the company sharing equally in any profits. However, Jay had anticipated this, and had already lined up a richer and more docile partner. When confronted in August by Pratt, Gould stunned the man by offering to buy him out for $60,000. Pratt quickly accepted. The cash for the buyout had come from Jay’s new partner, Charles Lessup.
But it wasn’t long before Lessup began to suspect he was being had, and by the fall of 1859 Lessup was panicked by the commitments Jay (above) was making in his name. On October 6, 1859, facing financial ruin, Charles Lessup shot himself. Lessup’s daughters bitterly demanded Jay repay them for their father’s investment, and Jay countered with an offer of a payment of $10,000 a year for six years. He had, of course, neglected to include any interest during the five year delay. Unfortunately for Jay, the families’ lawyers caught the omission. Still, in the early months of 1860, it became clear that Jay was hiding assets from the family.
Lawyers and 40 deputized men were dispatched to the tannery (above) on Tuesday morning, March 13, 1860. They flashed the legal papers, ushered the workers out and padlocked the doors. They held the place for a little over six hours, until Jay returned from New York. Just past noon some 200 men, covinced by Jay they were defending economic freedom in America, stormed the building with axes, muskets and rifles. Four men were shot, others were badly beaten, and according to the New York Herald, “…those who did not escape were violently flung from the windows and doors…” As Jay would later boast, ““I can hire one-half of the working class to kill the other half.” The courts would eventually throw Jay Gould out of the tannery, but by then he had shifted his operations to a place more suited to his nature; the unregulated economic free-for-all that was Wall Street.
While North and South battled over slavery, Jay Gould formed his own brokerage firm, Smith, Gould and Martin, and made the acquaintance of James “Big Jim” Fisk, who had made his fortune smuggling southern cotton through the Federal armies and selling Confederate War Bonds. And even while brave men died by their tens of thousands, this pair joined Daniel Drew, director of the Erie Railroad, in their own, private war.
Their enemy was Cornelius Vanderbilt (above) who owned every railroad in the east except the Erie. Naturally, “The Commodore”, as Vanderbilt liked to be called, was seeking a monopoly, so he could charge whatever freight rates he wanted, and he began to buy stock in the Erie. Sensing blood in the water, Jay and friends printed up 100,000 common shares of Erie stock, which The Commodore promptly bought, and which the board of the Erie – Drew, Fisk and Jay Gould – immediately declared to be worthless.
Bilked out of $7 million, Vanderbilt filed legal papers to examine the Erie’s books. Jay and friends grabbed the company records and retreated to New Jersey, where they re-incorporated. Vanderbilt then had arrest warrants issued for all three men. And since New York law could not touch them, the Commodore began to assemble ships and men to invade New Jersey, all by himself. While the Erie Board prepared to receive the invaders, Jay managed to slide a bill through the New York State assembly making the issuing of worthless stock retroactively, legal.
This slight of hand was achieved by the simple expedient of giving William “Boss” Tweed, the head of political graft in New York, a seat on the Erie board. That brought the Erie War to a temporary end. And if you are feeling sorry for the Commodore, remember that Cornelius himself once said, “Law, what do I care about the law? Ain't I got the power?" Another libertarian hero.
With the Commodore’s cash, and further fortified by looting the Erie’s assets, Jay, Fisk and Drew began their own complicated scheme to raise freight rates on the Erie Railroad. In 1869 they began to hoard gold, because raising the price of gold would raise the price of wheat, which would allow them to raise the freight rates they charged farmers for shipping the wheat. As insurance the trio took on another partner, Abel R. Corbin, who happened to be President Grant’s brother-in law. That gave the appearance that “the fix” was in, and other investors jumped on the bandwageron. The price of gold skyrocketed.
When Grant learned about the manipulations, he immediately ordered the U.S. Treasury to sell $4 million in gold. The sudden influx hit the market like a bomb, on September 24, 1869, when gold dropped 30%. The date would henceforth be known as “Black Friday” (at least until October of 1929). Thousands of investors were wiped out, including Abel Corbin, and an angry mob swarmed the Gould’s brokerage offices, smashing the furnishings and chanting “Who killed Charles Lessup?” Of course the trio of Gould, Fisk and Drew, walked away from the wreckage with an $11 million profit.
Daniel Drew was to be Jay’s next victim. In 1870 Fisk and Gould secretly sold their shares in the Erie to the Commodore for $5 million. The deal gave Vanderbilt his monopoly, but it also revealed that the Erie was bankrupt. And it left Daniel Drew, abandoned by his partners, out $1.5 million. He would die flat broke nine years later, just one more partner and one more victim of Jay Gould.
Big Jim Fisk was saved from a similar fate when, in 1871, a competitor for a woman shot him to death in a New York Hotel. After that Jay was reduced to stealing from lesser partners, such as Major Abin A. Selover, who actually considered himself a friend of Gould’s. It was Selover who introduced Jay to a California friend of his, James R. Keene. After Keene and Selover had both been battered by Gould in a contest for control of Western Union, Jay and Selover happened to meet on the street one day. Jay tried to walk away, but for once in his life, Jay Gould was caught.
Selover grabbed Jay be the collar and shouted, “I’ll teach you to tell me lies!” The six foot tall Selover then threw Jay to the ground, and then yanked him up again by one hand, dangling him above the stairwell of a below-street level barbershop. With his free arm Selover began slapping the Mephistopheles of Wall Street and shouting, “Gould, you are a damn liar!” When Selover finally let go, Gould dropped 8 feet to the stairs. A stock broker the next day quipped, “It was characteristic of Mr. Gould that he landed on his feet.”
Overnight, Abin Selover became the most popular man in New York City. Jay Gould was wise enough not to press charges, since no jury could be expected to convict anyone of assaulting Jay Gould. Henceforth, Jay never went out without a body guard. He began to describe himself as the “most hated man in New York”, but he never changed his ways. Selover went broke, as did Keene. However, when he died in 1892, Jay Gould was the ninth richest man in America, worth about $77 million. He died a hero only to those who never did business with him. Gould scoffed at the idea that Wall Street should be regulated. “People will deal in chance….Would you not, if you stopped it, promote gambling?”
It was and is a philosophy which fails to see an advantage to drawing a line between gambling and investing. It is the philosophy of libertarianism. It is the philosophy of greed. It was the philosophy of Jay Gould.
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Wednesday, June 01, 2011


I have to say that Mansa Musa made quite an entrance. He materialized out of the Sahara heat shimmers like a mirage in 1324. His unexpected arrival stunned the Islamic potentates of Cairo and Mecca out of their smug self assurance, and shocked the European Christians out of their complacency. Because when Mansa paused in Cairo to stock up on souvenirs, he paid in gold. And he bought a lot of souvenirs. Mansa was leading 80 camels just to carry his gold. He came from a land whose ancient name was Kaya Magha, which meant “King of Gold”. And Mansa was certainly that. Mansa spent so much gold on his Hajji, that for the only time in all of recorded history, the price of gold in all of Europe and Africa and the Middle East was determined by one single man. And no one had ever heard of Mansa before, nor of his kingdom of Mali, nor of the city he claimed to have come from, the mysterious and mythical, Timbuktu. In the Berber language of the desert tribes, the name means “the well at the end of the world”.
The river Niger begins as a tiny spring in the West African highlands of Ghana, just 150 miles from the Atlantic. But the Niger immediately turns its back on the ocean and instead flows eastward. As it does the river collects vast amounts of gold, which could teased from the waters.
Dugout canoes then carried the gold downstream, following the river north, penetrating the desert. At the peak of that arc, in Timbuktu, slabs of salt, mined from the blistering floor of the heart of the Sahara, and carried 500 miles south across the sands on camel back, were exchanged for the gold.
The salt was then transferred to other canoes for distribution a thousand miles further south in the equatorial heart of black Africa. There, the final commodity, slaves, were exchanged for the salt and then marched, locked in shackles, back upstream.
And it was at the point of contact between the two worlds, the Arab north and the African south, that the economic ties were joined. And at about the same time that William the Conquer was winning the battle of Hastings, the village of Timbuktu was founded.
What made this trade possible, what made the city of Timbuktu possible, was the Niger River and an extraordinary pack animal, the Arabian camel (Camelus dromedarius). This ungulate with three stomachs evolved in North America, but went extinct there about 1 million years ago, at the start of the ice ages. By the end of the last ice age, about 10,000 years ago, its new home range was the arid and unforgiving Arabian Peninsula.
This amazing beast can lose up to 40% of its body weight, and can gulp down, up to 21 gallons of salt laden brackish water within 10 minutes; either of which behavior would kill a lesser creature. Its mouth and throat are so soft that it can ingest thorns and bare branches without injury. Its huge soft padded feet allow it to climb sand dunes with ease. Its long eyelashes and double eyelids allow it to survive the most fierce sand storms on earth. Known in Arabic as a Jamal, the camel can easily carry 200 pounds of cargo for twenty miles a day through blistering heat. And it can do it for fifty years.
The camel was first domesticated in Arabia about 3.500 years ago, and by the time they were introduced into the Sahara by Arab traders about the second century A.E, there were few wild dromedaries left. It was these ships of the desert, combined with the great river, which built the greatest of West African kingdoms, Mali.
Mansa was the second Musa (or “King of Kings”) from Mali to go on Hajji. His predecessor, Kankan Musa, had appointed Mansa as his Deputy King when he began his pilgrimage. But the desert had swallowed Kankan and his party without a trace, and after a year of silence, in 1307, Mansa had been crowned Musa of Mali, Emir of Melle, Lord of the Mines of Wangara, conqueror of Ghanata and Futa-Jallon, and quite possibly the richest man in the world. Only Genghis Kahn ruled a larger empire.
Mali was a multiethnic and multi-religious kingdom larger than Western Europe, and containing some 400 cities and uncounted villages. Timbuktu was the gateway for Islam into Mali. There it thrived alongside shrines to Sango (above), the thunder God, and Legba, messenger to all the African gods. A devout Muslim, Mansa felt no need to convert all his subjects. Instead, when he retuned to Mali in about 1325, he was inspired to rebuild Timbuktu, already a mud brick metropolis of 100,000 people.
Mansa brought an architect from Muslim Spain to design his new palace, as well as the mud brick Djinguereber Mosque (above), where 2,000 people took their daily prayers. The cities’ University of Sankoré began attracting world class astronomers and mathematicians and Islamic scholars. A Mali proverb observed, “Salt comes from the north, gold from the south…but the word of God and the treasures of wisdom are only to be found in Timbuktu.”
The city was famous for its libraries. Leo Africanus, an Islamic historian, wrote that in Timbuktu, “There is a great demand for books, and more profit is made from the trade in books than from any other line of business.” The scholar Ahmad Baba claimed that his personal library was one the smaller ones in the city, containing only 1,600 books. The entire city and its environs was said to hold during the golden age of Mali perhaps 10,000 ancient, pre-Islamic manuscripts. Book copying was a big business in Timbuktu.
Musa ruled his kingdom for perhaps 25 years. He died some 13 years after his Hajji, about the year 1337. The city of Timbuktu was ruled by his descendents for another century, until the empire of Mali was replaced by the Sunni empire, which was more African than Muslim. But the stories of so much gold attracted the interest of European monarchs, and in the sixteenth century Portuguese “explorers”, pushing down the coast, reached out and destroyed Timbuktu without ever seeing the city. First contact diseases killed thousands. Armies from Morocco then killed more when they captured the weakened city in 1591.
But although the Moroccan leader Ahmad I al-Mansur hungered for the wealth of Timbuktu, he had no conception of what that wealth was based upon. In 1593 he began to dismantle the economic engine by first exiling the scholars, men like Ahmad Baba, because he considered them “disloyal”. For the first time it its history, ignorance reigned in Timbuktu. The economic engine had lost its spark. It sputtered and slowly died.
When Europeans finally arrived in the nineteenth century they were shocked to discover the mysterious and romantic city of Timbuktu was a dusty backwater, little more than a local market town, slowly being reclaimed by the desert from which it had sprung. The cityand empire of mystery had been killed by ignorance.
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Sunday, May 29, 2011


I believe it was the great Sam Rayburn - Speaker of the House for so long they got to calling him “Mr. Democrat” - who explained, “Every administration should have at least two Tommy Corcorcorans.” Sadly, Franklin Delano Roosevelt had them both. The first Tommy Corcorcoan pushed through the original Social Security legislation and became FDR's special liaison on Capital Hill, while the second Tommy made millions abusing the contacts established by the first. As Sam Rayburn put it once, “A jackass can kick a barn down, but it takes a carpenter to build one.” And again, Tommy was both of those, too.
"I know the corners of this town in the dark”
Thomas G. Corcoran. 1945.
They called him “The Cork” because he was irrepressible - he just kept popping up. He first rose to the surface after the 1934 midterm elections, when, improbably, the party in power added nine more seats in the House and nine more in the Senate. Roosevelt was now ready for Social Security, a program he designed to defeat what he knew would be future attempts to destroy it. It would be funded by payroll deductions because that way, said Roosevelt, “no damn politician can ever scrap my social security program.” And the man he chose to ruthlessly push that program into life was the “boyish, but intellectually quick ”, Tommy Corcorcan.
“If, as our Constitution tells us, our Federal Government was established . . . ‘to promote the general welfare,’ it is our plain duty to provide for that security upon which welfare depends.”
Franklin Roosevelt. June 8, 1934
In January of 1935 the Social Security Act was introduced into both the Senate and the House of Representatives simultaneously. According to Tom Elliot, who had helped Tommy in drafting the law, the strongest opposition came in the Senate. “Tom(my) took four senators, I took four senators, and Charlie West from the White House took four senators. The outcome was, I think, the measure of our skill as lobbyists. Charlie West got nobody...I got two and lost two. Corcoran got all of his four.”. After that victory, FDR brought Tommy into the inner circle and made him his private secretary – “speech writer, strategist, talent scout and back channel lobbyist.”
“Apart from my father, Tom (Corcoran) was the single most influential individual in the country."
Elliott Roosevelt 1939
It was Tommy who guided the next big fight, after the Supreme Court had killed several of the New Deal's most progressive programs. Roosevelt began to push for an amendment to the Constitution adding a new justice to the court every time one of the original nine justices reached 70 years of age. Tommy wrote fiery speeches that Roosevelt delivered with fire. The battle failed, but the court got the message and abruptly reversed itself on several subsequent decisions. Said a Washington sage, “A switch in time saved nine.”
But it was also Tommy who suggested the Anglophobe Joe Kennedy (above) as ambassador to England, and who pushed for American neutrality during the Spanish Civil War, which helped make Franco dictator in Spain for fifty years. By the fall of 1940 Roosevelt saw the problem. As Harry Hopkins, who would replace The Cork, explained, “ "Tom, you're too Catholic to trust the Russians and too Irish to trust the English." But Roosevelt fired Tommy in typical FDR fashion. He asked him to leave government so he could secretly aid China in their war with the Japanese. That removed Tommy as an irritant for FDR but The Cork was far from sunk. Call it a lesson in unintended consequences.
“I want to make a million dollars in one year, that's all.”
Tommy Corcoran 1940
Under Roosevelt's protection, Tommy's created Claire Chennault's Flying Tigers -  U.S. Army pilots in American P-40 fighters, bearing Chinese markings, which were shooting down Japanese aircraft a full year before Pearl Harbor.
But at the same time, now technically a private citizen, Tommy was also paid $25,000 to introduce Henry Kaiser (above) to the chief of the Production and Management Office. Shortly thereafter Kaiser, who had never built a ship before in his life, was granted $645 million in naval construction contracts. Tommy also introduced Kaiser to the head of the Reconstruction Finance Corporation, which loaned Kaiser the money to build a magnesium production plant in San Jose, California. Tommy sent Kaiser a bill for $135,000 and 1/3 of the shares in the plant. Kaiser never paid him. But by now Tommy had a long list of clients, who did pay him
In late 1945 a D.C. ,“financier” named Serge Rubinstein came under investigation for draft evasion. Rubinstein called The Cork. And on January 27, 1946, Tommy called Abe Fortes, and old buddy from his New Deal days. Tommy explained to Abe, “He is a rich man who's scared...I think you can get $100,000 down this morning.” Fortes called Tommy back the next day and revealed that Rubinstein had handed over a check for just $5,000. “That's all yours”, said Tommy. Technically, this was Tommy's first year in private practice, and he earned from this and other such cases, $250,000.
"When you're charging fees . . . charge them high. The world takes you at your own valuation. You decide whether you're Tiffany or Woolworth--not the market.”
Tommy Corcoran.
Immediately after the war, Tommy cut a deal to distribute relief supplies in China by air. The United Nations paid $2 million to buy the war surplus aircraft and a company, Commercial Air Transport (CAT), set up by Tommy and run by Claire Chennault, promised to deliver that medicine and food. But as Chennault explained in a July 18, 1946 phone call to Tommy, “This thing would be a great money-maker if we didn't carry a pound of UNRRA cargo.” So they didn't. But they still kept the airplanes. In 1950 the CIA purchased those same planes for a million dollars, one third of which went into Tommy's pocket.
“Once you get into this business you’ve got to be a draft horse and you’ve got to wear blinders,”
Tommy Corcorcoan
It was the CIA connection that convinced managers of the massive United Fruit Company to hire Tommy as a lobbyists, even giving him shares in the company.  E. Howard Hunt, of Watergate fame, admitted in his biography to cutting his “special ops” teeth on offensives against land reform minded politicians in Guatemala, all inspired by Tommy to protect United Fruit's stranglehold over the local governments.
“(Tommy Cororcoan) ...inhabits that lawyer ruled limbo between government and business, where deals are made and big fish are caught in a seamless net of arguments, favors and threats. In this strange element, you can't keep a live cork down.”
Life Magazine. April 11, 1960
We know so much about Tommy's immediate post war business because in May of 1945 the new President Harry Truman asked FBI director J. Edgar Hoover to tap The Cork's office phones. Over the next three years this produced 5,000 pages of transcripts. Those transcripts, kept in the Truman Library, were released in 1983, two years after Tommy's death, at 80 years of age from a pulmonary blood clot. And by then,   lobbying in Washington had become bigger than any idividual.
 “Every time I wag my ass on the Hill, someone reads cosmic importance into it.”
Tommy Corcorcoan
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