FOLLOW THE LEADER

 

"A leader in the Democratic Party is a boss, in the Republican Party, he is a leader."
Harry Truman

Ohio born from Irish immigrant parents,  eldest son James Pendergast (above) was a steel worker and laborer in Kansas City, Missouri, who struggled to support his large family until he won big - betting on a race horse named Climax.  Or so goes the legend. 

James invested the winnings in a collection of bars (above), a restaurant and hotel in Kansas City, Missouri's West Bottom neighborhood, on the Kansas River flood plain.

The town was then divided between the uptown establishment Republicans who lived on the high ground, and the working class Democrats who were literally on the flood plain (above).  James' business success allowed him to became one of the town’s most powerful councilmen. 

His competition for Democratic votes was Joe Shannon (above) who controlled the Democratic votes in the Kansas City suburbs. But James Pendergast's  first instinct was always to negotiate. and "Big Jim" cut cut a power sharing deal with Shannon, which ultimately worked to Big Jim's advantage.

“You use a saw to shape wood, not a hammer.”
James Pendergast. 1892

Jn the early 1890's James Pendergast hired his youngest brother, Tom (above), as cashier and bookkeeper. Big Jim also schooled Tom in local politics, lecturing him that, “The important thing is to get the votes.” 

In 1900 James (above) secured Tom the position of Superintendent of Streets. Tom immediately hired two hundred new employees, all loyal goats, as Pendergast supporters and voters were called.  Then, in November of 1911, at just 55 years old, big brother James died of kidney failure. 

Tom Pendergast stepped in to fill his brother’s seat on the council, but resigned after just five years. The position was no longer powerful enough for him. Tom’s first instinct was always to go for the power, not the office. 

“Today, politics may be our friend, and tomorrow we may be its victims.”

Owen D. Young. Chairman of General Electric. 1922-1939

In 1916 Tom Pendergast had himself appointed to the leadership of the Jackson County Democratic Party, headquartered in a two story yellow brick building (above, left)  at 1908 Main Street. With the votes from the Irish and Italian neighborhoods in his pocket, Tom became the invisible hand in writing of the new city charter, adopted in 1925. 

“Boss” Tom, as the Republican newspapers called him, could now manipulate both the city and county governments, both the Democratic and Republican parties, from behind the scenes, following a simple rule; The important thing is to get the votes-no matter what.”

“Those who are too smart to engage in politics are punished by being governed by those who are dumber.”

Plato 400 B.C.E.

Boss Tom’s name never had to appear on another ballot. As one Republican St. Louis writer noted, “Pendergast never did hunt ducks with a brass band. It has always been hard to tell what he is doing, but easy to tell what he has done the day after the election.” 

Tom helpfully described the methods he had learned from his older brother. “Every one of my workers has a fund to buy food, coal, shoes and clothing. When a poor man comes to old Tom's boys for help….we fill his belly and warm his back and vote him our way.”

“Politics have no relation to morals.
Niccolo Machiavelli. 1532

James "Blackie" Audett claimed he knew the methods Boss Tom used to gain power. “My first job in Kansas City was to look up vacant lots…we would give addresses to them vacant lots. Then we would take the address and assign them to people we could depend on – prostitutes, thieves, floaters, anybody we could get on the voting registration books. On election days we just hauled these people to the right places and they went in and voted…”  

It's a standard Republican charge, but a moment's thought will reveal that all vacant lots already have numbers. That is what defines them as vacant. But such Republican smears are still accepted about Kansas City, and all Democratic voting cities, as fact almost a century later. 

“The political machine triumphs because it is a united minority, acting against a divided majority.”
Will Durant.

With the arrival of the Great Depression, Boss Tom did not wait for Hoover to sympathize with Kansas Cities’ 38% unemployment. In November of 1930 the town voted a $40 million bond issue, for a “Ten-Year-Plan”. 

What Kansas got for its investment in the future was the “Power and Light Building”, still a landmark in KC., as well as a new City Hall, the Jackson County Court House, a new Police Headquarters, a new Municipal Auditorium, and several schools. 

When the KC “Star” described all these new buildings as “Pendergast’s concrete pyramids”, Tom merely smiled. And the hundreds of unemployed who found work building Kansas City's future, smiled too. The truth was Pendergast Ready-Mix Cement was a legal business and although fraud was heavily charged it was never proved. But what brought Tom Pendergast down was yet another perfectly legal business; political consultant.

“There are no true friends in politics. We are all sharks circling, and waiting for traces of blood to appear in the water’
Alan Clark. 1974

Since 1922 regulators for the State of Missouri and 137 fire insurance companies had been sparing over rate increases.  As a compromise, for 15 years the companies were allowed to charge higher rates, but the difference between the old and the new rates was impounded, Eventually, the impounded fees reached $10 million. Then, suddenly, the state agreed to a settlement, giving the insurance companies $8 million in higher rates, all their impounded rates, and the right to future increases. 

In May of 1938 Republican Governor Loyd Stark (above, right), a Tom Pendergast pick, ordered an investigation. This investigation uncovered that the insurance companies had delivered a half million dollars in cash to Tom Pendergast as a “political consulting” fee, just before the settlement. Now, since Pendergast had no direct authority over the insurance commissioner, this fee was legal. However it would have been politically embarrassing. And in order to avoid the embarrassment, Boss Tom had not declared the income on his Federal income tax. And that was illegal.

“The hardest thing about any political campaign is how to win without proving that you are unworthy of winning.”

Adlai Stevenson.

The end came quickly. On 7 April, 1939 Boss Tom (above) was arraigned on two counts of tax fraud. On 22 May, 1939 he pled guilty. 

"Boss" Tom Pendergast paid a fine and served 15 months in prison, and was never involved in Missouri politics again.  His photos reveal a man not nearly as fat as the Republican newspapers wanted him to be.

“An election is coming. Universal peace is declared, and the foxes have a sincere interest in prolonging the lives of the poultry.”
George Eliot.

The reformers patted themselves on the back, and the Republicans reveled in their triumph over Democratic sin. Governor Stark (above) hoped to use the toppling of Boss Tom to propel himself into the U.S. Senate. 

But in 1940, Stark lost a nasty election contest to Harry Truman (above), who had been a long time Pendergast man.  After that Stark was through in Missouri politics. 

When Boss Tom died in January of 1945, his funeral was well attended (by President Harry Truman, among others), and the only thing that changed about Missouri politics was the names on the ballots. The working men and women of Kansas City, Missouri, knew he had been their friend, and had thought about them when the Republican bankers and power brokers did not. They erected a statue of him, gazing paternally down upon the bottoms he had risen from.

“If you can’t convince them, confuse them.”

Harry S. Truman.

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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 a 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 bit 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 father 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 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.

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