Fuller’s story of how humanity arrived at our modern condition continues. Yesterday, Fuller explained the origin of property and government. This series began earlier this week with a discussion of the American Revolution and with an examination of the Russian experience. Now let’s get back to Fuller. My annotations will be italicized and demarcated with an asterisk. This is the fourth post of the Human History Series.
Meanwhile in history, we have millennia of people venturing forth on the world’s waters–developing the first rafts, which had to go where the ocean currents took them; then the dugouts, with which they paddled or catamaran 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 humans–stoutly 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 cargoes–vastly 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 masters–the Greeks–starved 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 ship–that did the task of horses–out of whose belly poured armed troops.
Controlling the Lines of Supply
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 built–by transporting those legions and keeping them supplied. Go to Italy, and you will see all the incredible 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 Italy–in the northeastern corner–is Venice, the headquarters of the water-people. The Phoenicians–phonetically the Venetians–had their south Mediterranean headquarters in Carthage in northern Africa. In their western Mediterranean and Atlantic venturings the Phoenicians became the Veekings. The Phoenicians–Venetians–in their ships voyaged around the whole coast of Italy and sent in their people to each castello, one by one. The Venitians 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 functions 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 Crusaders–ostensibly fighting for holy reasons–were 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.
About 600-200 B.C. Greek’s discovered that our Earth is a sphere and a planet of the solar system. This was the typical scientific product of a water-navigation people. This knowledge so threatened the originally horse-mounted Roman Empire that they moved to destroy all 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 ensued–waged under the flags of England, France, and Spain–to 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 Costs of Building Ships
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 you–or your servants–to 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 Orient–and a safe return to Europe–could make you a fortune. There are fabulous stores of treasures in the Orient to be cashed in–if my ship comes in!
The building of a ship required that you be so physically powerful a fighting man–commanding so many other fighting men as to have a large regiment of people under your control–that 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 ship–and 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 cash–money to cope with any and all unforeseen events that could not be coped with by use of muscle or the sword–money to trade with. It was at this stage of your enterprise that the banker entered into the equation of power.
Enter the Bankers
Up until 1500 B.C. all money was cattle, lambs, goats, or pigs–live 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 weapon–the 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 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, Veeitians, Feenicians, Friesians–i.e., Phoenicians, Portuguese–were 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 recognized the miniature iron bull horn. If metal was being used for trading, then there were other kinds of metal they preferred trading with people–silver, copper, and gold were easy to judge by hefting and were more aesthetically pleasing than the forged iron bull horn symbols.
*Money is a major mechanism of Neutrality. It greatly facilitates trading. However, money is not real wealth. Money is a mechanism of protecting real wealth by using paper or metal to symbolically represent that real wealth. If a ship sunk, the paper or metal was lost, but not the real wealth that paper or money represented. This distinction has been lost in our present world.
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 spelling–Phoenician spelling–which pronounced each successive sound separately and invented letter symbols for each sound. With phonetic spelling human written communication changed very much–from 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 it took several sounds to make a whole word and many such words to make any sense–i.e., a sentence. This is the historical event that Ezra Pound says coincides with the story of the Tower of Bable. Pound says that humanity was split into a babble of individually meaningless sounds while losing the conceptual symbols of whole ideas–powerful 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.
Protecting Gold from Pirates
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 the world’s 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 venture paid the banker back, and the banker who has 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.
Payable in Kind
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 that 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 deposited money is not loaned out just once, but in fact many times. Let’s use the example of a single bank in a small town. Everyone in town uses the same bank. When a borrower takes out his loan for which he is paying interest. He immediately deposits back it into his own account which is at the same bank. The banker has simply moved the money from account A to account B, and can immediately loan it out to someone else. The banker soon figures out the average deposit, and is able to loan the same money out many times over returning much greater interest then that paid by the original borrower.
The merchant bankers of Venice came to underwrite the Venietians’ (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 debtor–was 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.
Shylock and His Pound of Flesh
It was the financing of such international voyaging, trading, and individual travel as well as of vaster games of governmental takeovers that build the enormous wealth-controlling fortunes of early European private banking families. It was under analagous 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.
Land Grants for Service to Power
The Spanish way was accomplished with vast haciendas–grants 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.
*Again, if Land is a gift from God and Nature what is the basis for the King’s claim to ownership? If royal control of land is only by force or coercion then the royal-favorite landowners control of land is also by definition plunder.
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.
East India Company
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 colonies–ergo, was very appropriate–but 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 type–George 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 argued–as supported by Adam Smith–is 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 began–with 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.
The Very Wealthy
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 banks–as, 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 family–not wealthy enough to buy and own horses and carriages. To me the wealthy seemed to be just fantastically so.
World War I
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 found–often, but not always, in mountains–all 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 controllers–the 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 inventions–the submarine, which could go under the water, and the airplane, which could fly above the water–so 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 invisible–atomic and molecular-structuring and mechanics.
America Enters the War
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 invented–for the U.S. government–the Liberty Loans and Victory Loans. Then the U.S. Congress invented the income tax.
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 among 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 war–with 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.