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.The Eternal American Battle - Humans V Money

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Friday, September 14, 2012

DESIGNER OF DISASTER


I would like to introduce you to Mr. Andrew William Mellon, a scarecrow of a man whose life reads like a Balzac novel. He is virtually forgotten today, but he should be remembered. First, he is one of the men who brought you the Great Depression; second, he is the man who invented “trickle down economics”, which is trying very hard to bring you the next depression; third, his name has appeared on more dollar bills than anyone, with the possible exception of Alexander Hamilton; and fourth, his obsession with money was so great that its poison has leached into our own time, for Andrew William Mellon is the 'prater profectio' of the “vast right wing conspiracy.” Suffice it to say that if Freud had ever met Andrew Mellon, psychiatry would be a recognized science today.
Andew was lucky enough to be born in Pittsburg during the latter half of the ninteenth century – “hell with the lid off as the town was described”.  And he was born to  a Scrooge-like father who disapproved of those with..."festive dispositions”. His father was a successful banker, and when Andrew was 17 he loaned the boy enough cash - at reasonable interest rates - so that he could found his own lumber company. He ran the firm following the mantra, “What would father do?” After paying daddy back and making a small fortune of his own, Andrew sold out. He felt the market was about to take a downturn – which it promptly did. Andrew then joined with his father and brother in founding a bank, T. Mellon & Sons. In 1882 Andrew became the President and primary shareholder. Using it as a base, and his connections with the Pittsburg elite of Carnegie and Rockefeller, Andrew helped found ALCOA, B.F. Goodrich, Gulf Oil, Heinz Foods and dozens of other corporate giants of the dawning 20th century. And he took a share in the stocks of every one of them.
Andrew (above) was, by 1899, the fourth richest man in America. But he was still living with his parents and eating porridge for dinner. Did life have anything to offer Andrew other than an “Oedipal competition” which he could never win? It turns out it did. But Andrew screwed it up.
In 1900 the 45 year old Andrew tried to escape his desolate fate by marrying the vivacious 19 year old Nora Mary McMullen (above), "The prettiest woman in London", and heir to part of the Scottish Guinness Brewing fortune. But instead of Nora providing Andrew with a way out, he dragged her into his miserable life. She tried to make dirty, foul Pittsburg a home. The couple had a daughter in 1901 and a son in 1907, but Andrew became convinced that Nora was seeing a certain debonair and dashing cavalry Captain, George Alfred Curphey - who had already been named as co-respondant in the South African Vivian divorce case of 1907. Perhaps Nora was having an affair. But the microphones Andrew had hidden in their home failed to produce any evidence of it. So Andew smashed 12 of them with an axe. For a decade Nora pleaded with Andrew for a divorce, but Andrew wanted custody of the children, and she didn't want them trapped as Andrew was. Finally, in 1912, he actually charged her with adultry in court papers. Nora strongly denied the accusation and a special master who carefully examined Andrew's evidence, rejected his claim. However , Nora had suffered enough. In exchange for a $2 million settlement and her freedom, Nora did not fight Andrew when he demanded primary custody of the children. But that merely meant that now the children would be just as miserable as Andrew was.
By 1920 Andrew had become so brittle that one writer would described him as a “dried-up dollar bill waiting to be blown away”. And this was the man the new President, Warren G. Harding, named as his Secretary of the Treasury. And why not: if you believed in the power of unfettered capitalism, what better man to guard its future than one of the most devoted and disciplined unfettered capitalists in the world? After resigning as director from the sixty corporate boards he sat upon, Andrew accepted the post. Of course he still maintained close contact with the family bank, now under his brother's stewardship.
The entire modern Republican economic game plan was on display while Andrew Mellon (above, center) ran Treasury through the terms of Presidents Harding, Calvin Coolidge (above, left)  and Herbert Hoover (above, right). Through the entire decade of the 1920’s the economy grew at 7% per year, while unemployment remained between just three and four percent.
Mellon moved to quickly retire much of America's World War One debt, cutting it by $10 billion. He also pushed hard to cut the upper income tax rate from 77% to 24%, and cut taxes for middle class Americans at the same time, although by not nearly as much. He reduced the Estate Tax, (known in current Republican circles as the “Death Tax”). But more importantly, he moved to improve the “efficiency” of government. Remember this was when the largest civilian department in the government was the Post Office.
In 1920 the federal government was providing $1,329.77 per person per year in benefits to its citizens. By 1927, after seven years of Andrew Mellon 'efficency' at Treasury, that spending had fallen to $180.57 per citizen per year - for the Post Office, the Navy, the Army, food inspectors, for everything.
So if Mellon was making government so efficent by 1929, what went wrong? As one historian has explained, “Between 1923 and 1929 manufacturing output per person-per hour increased by 32 %, but workers’ wages grew by only 8 %. (Meanwhile) corporate profits shot up by 65 %" (Sound familar?) "… In 1929 60% of families were living on less than $1,500 a year….” (equal to $18,500 in 2012)
And then in the Revenue Act of 1926 , pushed hard by Andrew Mellon, taxes were cut for those making $1 million or more a year by more than 2/3rds. As a result, by 1929, the top 1/10th of 1% of Americans had an income equal to that of the bottom 42% of Americans. Another historian has observed that, "The Mellon tax policy, placing its emphasis on relief for millionaires…made the mal-distribution of income…even worse."
By 1929 the American middle class was being squeezed out of existence. (Sound familar?) And since the economic health of the nation became dependent solely on the swing of business cycles, without consumers, there was not much of a swing left. The M-1, the money supply in circulation, had contracted past the point where the economy could recover from the next stumble.
And when the next "stumble" came, without cash moving through the system; “Industrial production fell by nearly 45% between the years 1929 and 1932. Home-building dropped by 80%...” The stock market simply followed suit. It fell from a high of 294 points in early October 1929, to 230 points at the end of the month. Does any of this sound familiar?
One wag put it to verse; “Mellon pulled the whistle, Hoover rang the bell, Wall Street gave the signal, And the country went to hell.” Mellon saw what was happening, but favored what he called a “liquidationist” approach to the problem. (Sound familar, again?) Mellon believed that weak banks (like weak insurance conglomerates, weak car companies and weak hedge funds today) should always be allowed to fail. Mellon called it “weeding out”. What that strategy produced in 1929, and in 2008, was panic selling, when over-confident investors suddenly realized that actually applying the rules of capitalism to them meant that, actually  the odds were they would be the next loser. Realizing this, they then acted accordingly. They got out of the market. Fast.
In the public’s mind, Mellon, who was by then 70 years old, had become the face of the “old system”. During 1930 and 1931 Herbert Hoover saw to it that Andrew Mellon spent much of his time out of the public purview, in Europe, with the thankless job of trying to get America's ex-allies to repay wartime debts. But since they were also suffering in the Great Depression, they could not.
It was during these years that the Hoover administration, still following Andrew Mellon’s theories, drove the economy from a recession into a depression, eventually dropping the market, on July 8, 1932, to an all time low of just 41 points. And rightly or wrongly, in the public’s mind, Andrew Mellon as well as Hoover bore the responsibility for the disaster.
Capitalism had reached such a point of concentration of capital that while the millionairs still had plenty of money, there was no where for them to invest it. (This is true again today, except today big banks can invest their money in each other, trading vast fortunes and claiming imaginary profits by doing so)  There was no consumer demand in America because the consumers had been "weeded out" of Mellon's system. What was needed was what Roosevelt called "priming the pump", but such ideas were anathama to Mellon's economic thinking, and anatham to Republicans today.
Finally, in February of 1932, with Hoover looking for some way to get the disgraced economic mastermind out of the public eye before the November elections, Andrew agreed to step down from Treasury, and accept the post of Ambassador to England. He served for just one year, and performed such assignments as introducing Emilia Erhart to the King of England (above). And then he resigned.
In 1937 the Roosevelt administration opened “The Mellon Tax Case”, investigating Andrew's  ties with the family bank while he was serving at the Treasury Department. Eventually the Mellon Bank settled for $668,000 (the equivalent to $10 million, today).
But by then Andrew had died, on August 27, 1937. And though his estate had been hurt by the massive tax settlement, and even though Andrew had spent the last years of his life giving away much of the wealth he had accumulated, Andrew still held so much personal wealth, that in 2007 (seventy years later!) the various trusts that Andrew created saw that his grandson,...
 ...75 year old Richard Mellon-Scaife, was still collecting about $45 million a year from them. Scaife used some of his unearned wealth to finance the impeachment campaign against President Bill Clinton in 1998, and the idea that Barak Obama didn't have a valid U.S. birth certificate in 2008. It is as if this part of the family, and the Republican Party, is still trying to prove that old man Andrew Mellon was right back in 1929,  and that the Great Depression did not really happen.
As Honor de Balzac wrote in his novel, “Father Goriot”, “Behind every great fortune…is a crime that has yet to be discovered.”
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Wednesday, September 12, 2012

REPETITION

I've heard a rumor that history repeats itself. So, why don't you see if you find anything familiar in what happened after the James Franklin tied up in her home port of Bridgeport, Connecticut on Thursday, the 12th of July, 1878. The single masted schooner was a half century old already, 51 feet long and 18 feet wide, and built it seems to put the lie to the romance of the age of sail. She was a working ship, a hard lifetime of utilitarian cargo recorded in her thirty tons of chipped paint, rusted cleats, and patched gunwales. Her master (they dare not call him a captain) was the meager 23 year old Frank E. Bassett, a short young man whose alcohol tanned life was stretched taut over the forty miles between the docks of New York's treacherous East River, through the Hellsgate, up Long Island Sound to the mouth of the Pequonnock River, and back again - and again and again. The Franklin and her master and her crew were of value only so long as they were less expensive than a steam ship, and the owners invested in them accordingly.
Once the cargo had been unloaded and the crew paid their meager $40 for the month's work, Bassett invited crewman “Stuttering Jack” Rufus,  “a well-meaning fellow”,  to share a drink with him and his regular passenger, his common law wife, Lorena Alexander- a hard faced woman in her forties. And as the three comrades walked to Lorena's rooms at William and East Washington Avenues, in Bridgeport's East Side neighborhood, Jack was probably expecting little more than enough whiskey to dull his misery. He got that, certainly. But after clambering through the broken fence surrounding the abandoned Brewster carriage factory, he also received something far more mercenary.
Two months later Frank Bassett was arrested for the theft of a wallet containing $65 dollars in cash ($1,400 today). Desperate to make bail, Frank sold all the furniture from the Brewster factory apartment. A week later when Lorena returned from a trip and found her home stripped, she was infuriated. And being a woman driven by her passions, she was determined to get even. She told the police she knew something about Frank Barrett which would “put him where he belonged.” She said Frank had killed a poor simpleton named Stuttering Jack, for the cash to be made selling his corpse.
Lorena said that on the night of the 12th, she was in the bedroom “attending to some sewing” when Frank ordered her to come out. Stuttering Jack was passed out on the sofa and Frank ordered her to fetch a bottle of chloroform from the mantle. She says she cried out, “Oh Frank, what are you going to do with that? What are you about?” He replied, "Shut up, you act cowardly and child-like.” Lorena said she tried to run, but the domineering Frank Bassett ordered her to stay and help clean up the mess.
To validate her story Lorena lead them to the roads north of Shelton, Connecticut, and to a ravine near the new Ousatonic Water Company canal. In its shadowed recesses they found a barrel containing Stuttering Jack's body. They then traveled 8 miles to New Haven and spoke to Dr. Leonard Sanford, Professor of Anatomy and Physiology at the Yale College of Medicine. He confirmed that on Friday the 13th Lorena had offered him a body for sale. Dr. Sanford explained he required a valid death certificate, and Lorena responded by pleading, cursing and even wailing, begging for at least $5 to cover the cost of renting a horse and wagon -  until finally the doctor had her escorted off the premises. But he did not call the police. And then, finally, the police confronted Frank Bassett with Lorena's story. And Frank told his own.
Frank said that on the nigf July 12th, 1878, he was in the other room reading the paper when Lorena entered and announced “she had got him fixed, and I says what. She says I have chloroformed him. She called me out of the room, and I told her she had done wrong. She said, "Never mind, Frank, we can got $25 for the body." Then she got the barrel, and I helped to put him in,.” Frank admitted, “In the morning I hired a team, and we both went to New Haven to see Dr. Sanford. After we got there the Doctor would not receive the body and we started for home.” And, “on the way we dumped the barrel in the woods where it was found.” To validate his version of events Frank lead police to the chicken coop behind the Brewster factory, beneath which he had buried the dead man's coat and shoes.
The newspapers were electrified. The New York World insisted “nothing like it ever happened here before or elsewhere...” The Hartford Courant headlined, “A Horrible Murder Discovered”, and the Boston Globe called it “A Shocking Example of Human Depravity”. The coroners' jury investigation garnered so much press coverage that Bridgeport brought in State's Attorney James Harvey Olmstead. His family name was engraved on the “Founders Monument” in Hartford, and he was a powerful member of the Democratic party. In fact his cousin, George F. Olmstead, was one of the owners of the James Franklin. James Harvey Olmstead proved his worth when he decided to charge both Bassett and Alexander with murder, but to try them separately. It meant their “he said, she said” defenses would work for the prosecution
As usual, as the trial approached the story got more complicated. It was revealed that the victim's name was not actually “Stuttering Jack”, or even John Rufus, although he answered to either. Legally he was Jack Weinbecker, and well known as a “simpleton”, who “belonged to a low, miserable, drunken class”, and he had a police record as a thief. But then, so did Frank Bassett.. Frank's mother explained to one reporter (as she would testify under oath) that little Frank – he weighed only 125 pounds – was also an alcoholic and “slow”. Frank had also been been arrested several times, once for assault on Lorena. But it was upon Lorena that the press focused most of their vitriol..
Lorena had been raised in Manhattan's Bowery, a lower east side neighborhood filled with brothels, opium dens, gay and lesbian bars, “German beer gardens, pawn shops and flophouse”. Still, she claimed she was a pious Christian, until “Men... turned her away from the Lord.” As usual the press was fascinated with her attire, describing her black silk dress accented with a flower pattern and a crown like hat of black velvet, editorializing “The woman’s personal appearance suggests natural shrewdness.” According to the New York Times, “ In 1872 she was living in East Houston-street...as Lena E. Coyne, and was employed at Harry Hill's (as a barmaid)...Among her effects is the outfit of a fortune-teller and astrologer.” Lorena admitted having been married three times, but the press uncovered at least three other co-habitations. She had a daughter who was only a few months younger than her co-defendant Frank Bassett, and during Frank's trial, one reporter noted, she was more engrossed in her two year old daughter playing on her lap, than in the testimony .
Frank's defense was described by the New York Times as, “he was so completely under the influence of Mrs. Alexander that she controlled him about as she pleased.” The jailer, the aptly named Wakeman W. Wells, told the jury, “"I was particular to ask him who chloroformed the man, and he said that Mrs. Alexander did ". Then the paper added, "The father of the prisoner, George Bassett, a man with straight hair, copper-colored complexion, and the features of an Indian, testified that his son...had never been very bright since an attack of scarlet fever when he was 4 years old” This defense was only a partially successful. Frank Bassett was convicted of murder in the second degree, and sentenced to life. At her trial in October, Lorena claimed Frank had conceived the entire plot, and had robbed Jack's body of $5.75. The jury did not believe her, and she received an identical sentence to his.
Both prisoners were sent to separate wings of Wethersfield Prison, just south of Hartford. On entering the prison their heads were shaved before they were confined to individual 3 ½ by seven foot cells, which were unheated, and had no water or toilets. Thankfully the inmates were required to work six days a week, marching in lockstep each way to and from the work yard. But no prisoner was allowed to speak at any time, except if being questioned by a guard. Suicides were common, usually by hanging, but there are records during this time of numerous prisoners cutting their own throats, and at least one man who lay on his bed, emptied his kerosene lamp on himself, and set himself on fire. Lorena endured this hellhole for six years, before being transferred to the State Insane Asylum at Middletown, where she died early November of 1878. No cause of death was given, nor is it explained what happened to her body. But it was also common for the bodies of prisoners to be provided to the Yale School of Medicine for dissection. Surely Lorena's demise was more horrible than Stuttering Jack's.
Frank did not die in prison, physically. According to the Hartford Courant, “At first Bassett was employed in the prison shop. When his mind began to slip from him, he was given employment as a runner and as a sweeper.” But, according to the story published on the fiftieth anniversary of the murder, “Friendless and feeble, the old prisoner spent the day in idleness, an inmate of the insane ward of the institution....playing in far-off lands and imagining strange journeyings which he describes to whoever will listen.”
The Courant also recorded Frank's death in 1937. “-The longest prison confinement in the state's history ended Friday when Frank Bassett, 82, died at Norwich State Hospital.... He is believed not to have any relatives. Years ago a woman in Chicago made arrangements with an undertaker...to care for his body.”
And if you can't find a similar story in today's headlines, I don't think you are paying attention.
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Sunday, September 09, 2012

COXEY'S ARMY Pt Seven BEING HEARD


I imagine that every one of the seven miles from Brightwood Park to the capital were very tense for Coxey’s men. The now 500 man Army was swollen by supporters to 4,000, who were hoping, I suspect, to protect the marchers with their bodies, if necessary. They were further supported by 12,000 witnesses, among whom was Mr. L. Frank Baum, who the next year would pen the children’s book “The Wonderful Wizard of Oz”. The crowds lined the route of the Army down 16th Street to Massachusetts Avenue, then across to Mount Vernon Square (to avoid passing the White House), south on 9th Street to Pennsylvania Avenue, which they followed directly to the capital building. 
"This is a great comfort," he said. "I have been holding that axe in the air ever since I rusted, and I'm glad to be able to put it down at last. Now, if you will oil the joints of my legs, I shall be all right once more." 
So they oiled his legs until he could move them freely; and he thanked them again and again for his release, for he seemed a very polite creature, and very grateful. "I might have stood there always if you had not come along," he said; "so you have certainly saved my life. How did you happen to be here?" 
"We are on our way to the Emerald City to see the Great Oz," she answered, "and we stopped at your cottage to pass the night." 
"Why do you wish to see Oz?" he asked. 
"I want him to send me back to Kansas, and the Scarecrow wants him to put a few brains into his head," she replied. 
The Tin Woodman appeared to think deeply for a moment. Then he said: "Do you suppose Oz could give me a heart?" 
"Why, I guess so," Dorothy answered. "It would be as easy as to give the Scarecrow brains." 
"True," the Tin Woodman returned. "So, if you will allow me to join your party, I will also go to the Emerald City and ask Oz to help me."
1900  L. Frank Baum  "The Wonderful Wizard of Oz" 
By this time the crowd was so large, it was being led by 25 mounted Metropolitan Policemen, just to keep the Army moving. Ray Standard Baker, covering the march for the Chicago Record, noted that “Coxey’s carriage (stopped) near the “B” street entrance to the grounds…Rising from his seat, he stooped over and kissed his wife, as if realizing something of the terrible ordeal to follow”.
Jacob Coxey then “leaped nimbly to the ground, and in a moment he and Browne were swallowed up in a wild surging mob of men which lifted them from their feet and bore them bodily across the street to the Capital grounds. More than four hundred mounted policemen…rode into the crowd with the intention of capturing the two…but they might as well have attempted to arrest a cyclone. The mob forced one of them against a stone wall…and threw his horse violently to the ground. Coxey…lost his footing and in a moment he was at the bottom of a pack of writhing, struggling humanity.” 
“The mounted policemen lost their heads…and began striking everyone within reach. Women and children were ruthlessly ridden down…All this time Coxey had been struggling through the crowd toward the central steps of the capital….Before anyone knew it Coxey was bounding up the East front…He was up to the tenth step before he was recognized. Then the officers closed in on him.”
Holding Coxey’s arm, Captain Garden of the Capital Police demanded, “What do you want here?” Coxey replied, “I want to make an address.” Gardner told him he would not be allowed to do that. “Then can I read a protest?” asked Coxey. The answer was no. It was all over in less than five confused minutes.
Jacob Coxey was not arrested on the capital steps, no matter what the history books say. He was ushered back to his carriage, and the Army, now under the command of his son Jesse Coxey, marched “like a funeral procession” toward their new camp, at the site of an old dump on M street, which they dubbed “Camp Tyranny”. However Carl Browne and another aide had been arrested in the melee. 
On Wednesday, May 2nd. Jacob Coxey was in court to show support and pay the fines for his two friends. And then he was arrested. The charges laid against all three men were carrying banners illegally and walking on the grass. They were immediately thrown in jail. One week later, on Tuesday, May 8th, all three were tried in District Court, where it was revealed that the illegal banners they were charged with displaying were the three by two inch cloth lapel pins worn by every member of the Army. Coxey always maintained that he never stepped on the grass. It did not matter. All three men were found guilty, fined five dollars each and sentenced to an additional 20 days in jail.
Coxey’s Army stayed in Camp Tyranny for two weeks, playing baseball, drilling and attending rallies, until the D.C. Board of Health ordered them to move. They then returned to their camp at Hyattsville for another week. Then a hotel in Bladensburg, Maryland provided free rooms for the newly released Coxey and Browne, while the Army cramped in the back yard. Heavy rains in June drove the marchers to higher ground and this time they moved to Roslyn, Virginia. Finally, on August 11th their numbers had dwindled to the point that the Governor of Maryland dispatched Baltimore Police Officers to sweep in and arrest the remaining 80 men on charges of vagrancy. That whimper was the end of Coxey's Army of 1894.
In the speech Coxey had intended upon reading on the steps of the capital, was a desperate plea. “We choose this place of assemblage because it is the property of the people,” he had wanted to say. “We…say, help, or we and our loved ones must perish… we come to remind the Congress here assembled of the declaration of a United States Senator, “that for a quarter of a century the rich have been growing richer, the poor poorer, and that by the close of the present century the middle class will have disappeared as the struggle for existence becomes fierce and relentless.” That was what all he had wanted to say.
In the wake of Coxey’s Army, ex-President William Howard Taft was asked what a man with a family was to do when there were no jobs. The President replied “Lord knows. I do not.” He didn’t. Neither did he have any idea how to help revive the national economy. Two years later, the Denver News would still note, “There are millions of heads of families partially or wholly out of employment…In the agricultural districts wages have fallen one-half. In manufacturing…the aggregate of all wages paid is at the starvation point.” The depression would continue for yet another two long years, and during this lost decade, those with little imagination fiercely contended that there was nothing that could be done to mitigate the disaster; Nothing.
Then, in 1898 the United States went to war with Spain. We raised an army and invaded Cuba. And at about the same time the six year long depression came to an end. But conservative economists argue that this war could not have revived the economy. The budgets increases were far too small and it was far too short a war. Besides, increasing taxes and government investment in infrastructure could not revive a depressed economy. And that may be so. But if it is so, then the war spending and the end of the depression was one heck of a coincidence in 1898, and again in 1942. 
I think the best memorial for those unnamed heroes of the spring of 1894 was provided by a bar fly in New York City named Feeb, who composed and preformed songs for his supper. “Come, boys, turn around the beer keg. And listen to my song, Great Coxey is among us, to right each grievous wrong. N'o more shall sorrow grip us, We're on the way to wealth…With a glass in every hand; Sing to Coxey and his army, And free lunch all in the land.”
"…and the Witch said to the Scarecrow, "What will you do when Dorothy has left us?"
"I will return to the Emerald City," he replied, "for Oz has made me its ruler and the people like me. The only thing that worries me is how to cross the hill of the Hammer-Heads." 
"By means of the Golden Cap I shall command the Winged Monkeys to carry you to the gates of the Emerald City," said Glinda, "for it would be a shame to deprive the people of so wonderful a ruler." 
"Am I really wonderful?" asked the Scarecrow. 
"You are unusual," replied Glinda." 
1900  L. Frank Baum  "The Wonderful Wizard of Oz"
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