SPREADING THE WEALTH

"God... a being whose only definition is that he is beyond man's power to conceive." Ayn Rand. 

I think Sir Francis Bacon (above) is usually credited with the saying, “money is a good servant but a bad master”.  Actually, it was an old French proverb, far older even than the Elizabethan politician and writer, and Sir Francis merely translated it. His own original observation about money said the same thing, but was as prosaic as fertilizer. “Money is like muck,” Sir Francis said, “not good except it be spread.” 

"The alleged short-cut to knowledge, which is faith, is only a short-circuit destroying the mind." Ayn Rand 

You see, Sir Francis believed the biblical warning that “The love of money is the root of all evil” (Timothy 6:10), because capitalism is without morality. It is not amoral. That is an excuse. It is immoral, because money has no memory and no soul.  You buy a loaf of bread and you employ the baker and the driver who delivers it, and the check-out clerk, the farmer who grows the grain...etc. Morality has nothing to do with any of that,

Economists, by the way,  call this the “velocity of money multiplier effect”, or the VMME, and most economists multiply each dollar spent on bread by six. This is the material logic which – in addition to Judeo-Christian and Islamic and Hindu and Confuscusian morality - justifies food stamps and unemployment insurance.  Government is supposed to provide context via morality.

And yet, today's devotees of Ayn Rand (above), meaning most Republican politicians,  ignore VMME,  preaching that wealthy Americans should act only out of self interest while the working poor, once known as the middle class, are sacrificed on the alter of more wealth for the wealthy. Heads the bankers win, tails, anybody who borrows from a banker, looses.  No wonder that these days, every corporation wants to be a bank,  

"We will rebuild America’s system on the moral premise...that man is an end in himself."

Ayan Rand Atlas Shrugged 

According to Wikipedia, “A bank connects customers that have capital deficits to customers with capital surpluses.” But in the post “Citizens Untied” world, where a Supreme Court majority can chose to believe that corporations have the same rights of free speech as individuals – and enough money to reduce “Free Speech” to an oxymoron - money has become the master. Five American banks now hold – hold - more than $8.5 trillion in assets – 56% of America's $15 trillion economy.  

As the stock market becomes increasingly detached from the middle class values these mega-bankers practice zombie capitalism, trading their cash surpluses back and forth between themselves, hedging their equity by shifting the money from this pocket to that, paying themselves a bonus every time their computers shift the funds. At some point reality must intervene in this monetary computer game world, as J.P. Morgan discovered back in 2007 and as Silicon Valley Bank learned in 2023. And when it does, the destructive effect is suffered by the nation as a whole. Sacrifice might be required, but only for those who cannot afford to live in the fantasy world of 21^st century hedge and byte fund managers.  

"I will never live for the sake of another man."  Ayan Rand Atlas Shrugged 

It brings to mind an observation once made by a very angry young man. He wrote, “There have been gambling manias before... (but) the ruling principle of the...the present mania, is... to speculate in speculation...” The angry young man was Karl Marx (above), and he was writing about the swindle of the moment in September of 1856, the collapse of the Royal British Bank. 

It was a fabulous enterprise which seemed solid as granite at one moment and in the next a cruel fraud and a fantasy. And the most interesting thing about the case, besides the moral lessons the fathers. of Communism saw in it, is that the bankers who perpetrated it actually went to jail, however briefly, without bringing down capitalism. 

"Until and unless you discover that money is the root of all good, you ask for your own destruction."

Ayn Rand Atlas Shrugged. 

The Royal British Bank, created in 1849, was innovative. Previously, banking had been a rich man's game. Those with money had banded together to lend to those who could afford to borrow it - i.e. Royalty.  In return the boworers were they granted titles and land rights. But the fortunes created by the industrial revolution were not exclusively blue blooded, and both blue blood and non-blue blooded advanced thinkers in Scotland invented the publicly owned bank. 

They then convinced Parliament and the House of Lords to charter an institution which would allow small investors with a little extra cash to combine their money  And according to the new rules, once they had sold L50,000 worth of stock in the bank, they could open their doors and begin accepting accounts and lending money to make a profit. 

In this case the idea belonged to Londoner John Menzies (above), who suggested the idea to his lawyer, Edward Mullins. Together they printed up a prospectus (or Deed Of Constitution), and went looking for investors. But as England was in the middle of a recession (its fourth “Panic” since 1817) they found little money available for investment.

Until they approached shipbuilder John McGregor (above), who was also a Liberal Party politician representing Glasgow, Scotland. For the price of ten shares – at L10 per share –McGregor bought himself a seat on the board of the new bank. Cheap enough. 

He immediately suggested the board hire an old friend of his who had knowledge of the “Scottish style” of banking, fellow Minister to Parliament,  Hugh Innes Cameron (above).  A bank started by politicians, for the politicians. What could go wrong?  

"If any civilization is to survive, it is the morality of altruism that men have to reject."

Ayn Rand Atlas Shrugged 

Cameron was offered the position of Managing Director of the Royal British Bank. And with McGregor's help, Mr. Cameron obtained a seven year contract which would impress any modern equity or hedge fund manager. The first year Cameron would be paid L1250 (equivalent to $2 million today) , rising to L2,000 a year ($4.5 million today), with an annual housing allowance of L200 (about a hundred thousand modern day dollars). 

Within a few months Cameron had squeezed out the man who first conceived of the idea for the bank, Mr. Menzies, buying him out  with L400 of investors' money. Now there was nobody looking over the shoulder of any of the bank's officers or investors. The fraud was afoot.

"If you ask me to name the proudest distinction of Americans...they were the people who created the phrase "to make money”.

Ayan Rand Atlas Shrugged

From that moment, the bank never stood a chance of surviving. Instead of the L50,000 the law required and which appeared on it's books, at its opening the Royal British Bank actually had no more than L18,000 in its vaults.

Over the next six years, while the 6,000 depositors supplied the salaries, advances and loans never repaid to the officers of the bank, each of those men became involved in enumerable kickbacks, scams and frauds which removed even more of the  investor's  funds -  about L130,000, (or the equivalent of $247 million today). The whole thing collapsed in the summer of 1856, producing, yet another nation wide “Panic”, this one which taught so much to the Father of Communism.  

"The question isn't who is going to let me; it's who is going to stop me."

Ayn Rand Atlas Shrugged. 

John McGregor escaped arrest by sailing to Boulogne, France. He died there, deeply in debt in April of 1857.  In February of 1859 the seven surviving board members were finally tried on seven counts of fraud. The jury convicted them of six. 

At sentencing the judge, Lord Cameron (above), could have been speaking directly modern Wall Street Crypto geniuses, and their patron saint, Ayn Rand. “It would be a disgrace to the laws of any country” said the judge 150 years ago, “if this were not a crime to be punished. It is not a mere breach of contract with the shareholders and the customers of the bank., but it is a criminal conspiracy to do what must inevitably lead to a great public mischief, in the ruin of families and the reduction of widows and orphans from affluence to destitution; I regret to say that in mitigation of your offense it was said to be common practice. Unfortunately a laxity has been introduced into certain commercial dealings...and practices have been adopted without bringing in a consciousness of shame...”  In other words - morality.

"When I die, I hope to go to Heaven, whatever the Hell that is. And I want to be able to afford the price of admission." Ayn Rand 

Because it was his first conviction, Hugh Innes Cameron could only be sentenced to a year in jail. All the other board members received even lesser sentences, and one was only fined a single shilling. 

The scandal sold a few newspapers, and produced a marvelous pamphlet, “The Curious and Remarkable History of the Royal British Bank showing how We Got it Up and How it went down.” But judging by recent history, nobody learned anything from the affair, or any of the other enumerable “Panics”, recessions and depressions which have stricken capitalist economies once or twice a decade ever since. 

I think we learn nothing because greed makes you stupid, and the mega-bankers and their paid political apologists are purveyors of greed and thus are selling and buying stupidity . 

Which is why conservative politicians increasingly say really, really stupid things. We have seen this progression since biblical days. To acknowledge this reality and yet not deal with it is to acknowledge you are a zombie, addicted to greed, and without hope of ever seeing a better future. A devotee of Ayn Rand. 

"You can avoid reality, but you cannot avoid the consequences of avoiding reality."  Ayn Rand.

- 30 -  

SOME God Damn Things Called L.S.T.s.

 

I don't think they even saw each other. The German sailors were shooting at blips on a primitive radar screen, and at shadows in the dark. The British and Americans were just panicking, like chickens with a fox in their hen house. But in that confused melee on a moonless April night ten miles out in Lyme Bay off the southern English coast, Nazi Germany might have come within one torpedo of winning the Second World War. 

All they had to do was sink just one more of those lethargic targets waddling across their sights at ten knots, and the Allied invasion of France would have been delayed for months, perhaps forever. But how could they know that, when the vital importance of these fat clumsy ships came as a surprise even to the man who inspired their creation? A year earlier Winston Churchill had complained that “ the destinies of two great empires . . . seemed to be tied up in some god-dammed things called LST's”

The need for such a ship occurred to the British Prime Minister  in June of 1940 when 300, 000 British and French soldiers were rescued off the beaches of Dunkurque, France. The men were saved, but all their trucks and tanks and cannon had to be left behind. So, the need was simple - a vessel which could run up on a beach to directly load or disgorge heavy tanks and trucks. Of course in practice the thing was complicated. 

The ship would require a shallow draft to “beach” itself, but a deep draft to remain stable while crossing the open sea. While loading and unloading it had to remain level with its stern afloat and its bow on dry land and pointing “up” the beach. Naval Architect Rowland Baker was ordered to design this floating contradiction. Luckily, he knew enough about ships to be a genius.

Like all engineering problems, the most elegant solution was the source of the problem, in this case sea water – too little or too much. Impact with the land would require the strength of a double hull, while pumping sea water between the hulls would lower the draft, making the ship more stable in the open sea. Selectively pumping that water out of compartments between the hulls would allow the ship to come inshore, while balancing level. 

All it required was a bit of plumbing, which Baker ingeniously provided. Britain managed to convert three small oil tankers to the new design (above), but their ship yards were already stretched thin. So, in October of 1941 Baker was sent to Washington on a Lend -Lease shopping spree.

The U.S. Bureau of Ships did not like the design submitted by Baker, and they assigned John Niedermair to fix it. He made the ship bigger (330 feet long), which allowed it to carry 2,100 tons of equipment, and he added a winch system to the anchor chain to help drag the ship off the beach. He even made the bow doors wider. 

In early November of 1941, Britain immediately ordered 200 of the new Landing Ship Tanks. And then in December Japan bombed Pearl Harbor, and then Hitler, for some insane reason, declared war on America, as well. And suddenly the US Army and Marine Corps were  also demanding as many of these ships as possible. Two short months earlier no one had even  heard of an LST.. And that created a new problem.

The U.S. Navy went from 790 active ships in December of 1941, to  6,700 by August of 1945. There was no room in U.S. shipyards for the last minute orders for LST's for our own military, let alone the British. So the decision was to open “cornfield shipyards”, with companies like Chicago Bridge and Iron on the Sennica River in Illinois, Dravo in Pittsburgh and American Bridge in Ambridge, Pennsylvania, and the Missouri Valley Bridge and Iron works in Evansville, Indiana. - all on the Ohio River, and all now building LSTs.  The contracts for all this work, as on all war work, was done on a  "Cost Plus" basis. The Government would pay whatever it cost, plus a  profit margin. It took them six months to build the first ones, from keel to christening. That was incredibly fast for ship building, but not fast enough.

The original plan to invade France called for just three divisions in the first wave, and the only American division was to land on the beach code named Omaha. It was clear, that would not be a strong enough force to guarantee success, but with only 300 LST's  anticipated as arriving in Europe in time, they could not land more. In September of 1943 the head of the U.S. War Production Board, Donald Nelson, visited London and experienced Churchill's panic first hand.. Nelson cabled his staff that LST's were “most important single instrument of war”, and he added “the need for these ships has been grossly understated”

On 8 September, 1943 work began on LST number 507 at the Jefferson Boat and Machine Corporation in Jeffersonville, Indiana, on a bend in the Ohio River, just upstream from Evensville. Like all 117 of her sister ships built here – like the 1,000 of her sisters built in America -  the Jefferson Boat LST's were  assembled from 30,000 separate parts, and built in 3 sections, which were then welded together, mostly by women earning $1.20 and hour and working 9 hour shifts and a 54 hour work week. (Building an LST ) 

Ten weeks after beginning, LST number 507 was launched sideways into the Wabash River, and after fitting out with her deck guns, she sailed down the Ohio and Mississippi rivers to New Orleans, where she officially joined the U.S. Navy on 10 January, 1944 - 124 days from laying keel to joining a convoy. She was just one of 62 brand new LST's that reached England that winter.

This amazing influx of LST's allowed allied planners to add two divisions to the first wave, and a second American beach on Omaha's right, this one to be code named Utah.  But just inland from Utah beach, the Germans had flooded the land, leaving only two roads off the beach. 

That tactical problem could be solved, but the Americans needed someplace to practice, someplace with a tidal marsh just inland of a beach. 

And in December of 1943, three thousand British citizens were evacuated from the south coast of Devon in southwest England, around an area called Slapton Sands.

It was almost a duplicate of the topography of Utah Beach in Normandy. It was here,  in April of 1944, the allies staged Operation Tiger, a full scale live-fire practice of the landing  for Utah Beach.

At 7:30 in the morning of Thursday, 27 April, 1944, 30,000 men of the U.S. 4^th division were to rush ashore on Slapton Sands from, among other ships, 300 LST's.  But a glitch had thrown off the time table for the first wave. 

The gunnery ships were half an hour late, while most of the landing craft stayed on the original schedule. The gunnery officer on the cruiser HMS Hawkins, noted, “they had a white tape line beyond which the Americans should not cross until the live firing had finished. But...they were going straight through the white tape line and getting blown up.” 

About 300 men were killed or wounded. However, after that “glitch”, the rest of the first day's operations went smoothly, at least until after midnight, when the follow up units were preparing to practice their part of the invasion.

It was after one in the morning of Friday 28 April, 1944^, that eight LST's were plowing broad circles at ten knots in the calm, cold waters of Lyme bay, off Slapton Sands. These eight ships carried quartermasters, engineers, and even a graves registration unit, the house-keeping support without which an army cannot fight for very long. Their crews joked that the ship's initials actually stood for “Large Slow Target” or “Large Stationary Target”. This morning they were about to be proven correct. 

Bearing down on them were nine German Schnellbootes, (fast boats), each 120 feet long, each armed with four torpedoes and cannon and machine guns and capable of 42 knots – or four times the top speed of the LST's. All of the German boats carried radar. Only one of the LST's did.

According to the official U.S. naval history, issued in 1946, “LST 507, the first attacked, was hit by several torpedoes which failed to explode, then was set afire by a direct torpedo hit which did. Another struck five minutes later and also exploded. 

The enemy craft strafed the decks with machine guns, and fired on men who had jumped into the water. LST 507 began to settle into the waves.

About the same time, LST 531 was hit and set afire.

About 0210(am), LST 289 was hit by a torpedo which destroyed the crew's quarters, the rudder and the rear guns...” Amazingly, with its stern almost blown off, LST 289 was able to make it safely back to port. But after burning for two hours, LST 531 sank. Eventually a British destroyer arrived to pick up survivors, and was ordered to sink the wreckage of the pride of Jeffersonville, Indiana, LST 507. She had been in existence for six months, from birth to death. Her remains now lay 200 feet beneath Lyme bay, at 50°29′N, 2°52′W. 

The cost of that April night was 198 dead American sailors, and 551 dead American soldiers – 749 total, plus wounded. So tight was security surrounding the invasion that all survivors, the wounded and their doctors and nurses were sworn to secrecy, and many of the dead were buried in unmarked graves.

For the planners, the loss of three LST's meant that on D-Day, 6 June, 1944, there were no LST's in reserve. One more sinking would have meant a weakening of the invasion, and maybe the loss of Utah Beach. 

That was how close the German sailors came to stopping D-Day. They never knew it, of course. They never saw what kind of ships they were shooting at. On 6 June, 1944, the landings on Omaha Beach came perilously close to a disaster themselves. After losing 3,000 casualties, American troops were able to push barely 1 ½ miles inland. 

Meanwhile, on Utah, the beach added because of the rush the previous summer to produced LST's, 23,000 troops and 1,700 vehicles pushed almost 5 miles inland on the first day, at the cost of only 200 casualties.

As of 1 May,  1944, the full production of LSTs was assigned to the Pacific.  Looking back after the war, it was clear the invasion of Normandy was the product of total war -  in this case, the genius of a British design, improved by an American, implemented by the thousands of  American women who had never before had a job outside the home, and never dreamed they would build a sea going ship, who strained to build enough, to build that one ship more than was needed to give the allies a chance at victory. 

When you speak of war, any war, it is best to remember not only how many lives it costs, but also the unimagined demands it makes upon a nation. Because you can never know in advance, what God-damned thing will be vital the next time.

- 30 -