Legally Piggily 4 – The New Deal and the Rise of the Industrial-Military Complex

We continue the story of modern humanity by Buckminster Fuller. My annotations will be italicized and demarcated with an asterisk. This is the sixth post of the Human History Series.

 R. Buckminster Fuller

To accomplish their restartings in all areas of the U.S.A. economic system the New Deal also set up the Works Progress Administration (to get people jobs) and the Reconstruction Finance Corporation (to get the big industries going).

Amongst the first of the New Deal’s emergency acts of 1933 was the establishment of the Works Progress Administration, which provided jobs for approximately anyone who wanted them–artists, mathematicians, etc., as well as all white- and blue-collar workers and, of course, all day laborers and such.

Then, pressed by the labor unions and the political urge to avoid the characteristics of socialism and get the heretofore unemployed millions off WPA–the New Deal’s Works Progress Administration–the government financed new buildings and granted mortgages for longer and longer periods to encourage people to undertake the production of much-needed homes and other buildings. It must be noted that the rejuvenated building industry was reset in motion as a concession to the building trades and a move to increase employment, not as a much-needed evolutionary advance in the art of human environment controlling. The unions were so strong as to be able to push the New Deal very hard in the direction of resuming only yesterday’s multifoldedly inefficient one-off building design techniques and materials as the activity in which they could establish maximum employment. Technically ignorant bank officers became the authorities who alone judged the design validity of the structures and architectural acceptability of the building projects, funds for the building of which they authorized as mortgage-secured loans of their bank depositors’ money.

The New Deal went on to rationalize its strategic acts by arguing to itself, In order to continue as a nation we must have our national defense. Since it is established that there is nowhere nearly enough life support to go around in this world, if we don’t have a formidable national defense, we’re going to be successfully attacked by hungry enemies. Our national defense can’t carry on without steel and the generation of electricity, the production of chemicals, and other imperative industrial items.

Prime Contractors

The FDR team soon concluded that the industries producing those absolute defense necessities were to be called our prime contractors. The prime contractors must be kept going at any cost. So we’ll give war-production orders to the prime contractors to produce such-and-such goods. The contractors with signed government contracts can then go to the banks and borrow the money to pay their overhead and to buy the materials and power and to pay the wages to produce the goods. Then we the government will pay the producers for those finished goods and services and they can pay off their loans from the bank. The money paid by the prime contractors as wages will give people buying power, which will allow them to start other economic production systems going. This became a monetary irrigation system (still in use today 1980 U.S.A. affairs), which works at a rate providing about ten recirculations in a year following upon each major war order initiated by and paid for by the government.

In the depths of the Depression in 1932, when you could buy a meal for five cents and the finest of shirts for one dollar, the Reconstruction Finance Corporation went much further. It gave U.S. Steel $85 million worth of new rolling equipment (in 1980 U.S. currency that would be close to a billion dollars), etc., etc.

Welfare for the Prime Contractors

The U.S.A.’s Reconstruction Finance Corporation had a secondary government machinery-owning outfit that loaned all these prime contracting companies new equipment with which to fill their government orders. What the New Deal did in fact was to socialize the prime contractor corporations instead of the people. This hid the fact of socialism from the world in general. Socializing the prime contractor corporations indirectly benefited the people themselves. In this way the New Deal seemingly didn’t give money to the corporations–just orders. The U.S.A.-established and -financed RFC loaned the prime contractors all the money they needed to buy all the equipment. But in the end the government rarely collected on the loans and finally just forgave the machinery borrowers altogether, selling them the equipment for very low nominal sums.

The New Deal had also pledged itself at outset to take care of the forgotten man. The government voted minimum-wage limits of a substantial magnitude. The economy was going again. People were getting more and more jobs–how many depended upon how many prime contracts the government gave out. World War II was clearly looming ahead. The New Deal said, We have to be prepared . . . and their preparedness ordering increased. Jobs increased rapidly. Empty buildings filled.

Jobs for American Workers

There were a number of great corporations whose businesses had practically stopped by 1933, but those businesses had now been set in healthy motion once more under the New Deal’s socializing of the prime contractors. Franklin Roosevelt said to the heads of the great corporations that had not gone bust, Every one of you has a large surplus that you held on to, in fear, through the Depression. We want you to spend your surpluses in research and development of new equipment. Since the early clipper ship days, it has always been a function of a ‘fundamental risk enterprise’ that the enterprise use some of its profits to buy itself new and better equipment–a new and better ship–with the enterprise that is doing the prime risk-taking by investing in the new equipment, thereby requalifying for the privileges and rewards granted by governments for wise risking, daring execution, and good management.

FDR said, We want you enterprisers to ‘modernize’  But U.S.A. big corporate management said, in unison,We won’t do that. It is much too risky a time to use any of our surplus. They knew the oncoming World War II was forcing the government to see that their plants were modernized, so by holding out they forced the government to take over both the risk and cost of modernizing. Heretofore in the history of private enterprise research and development–of more efficient new plants and equipment–had been funded from the enterprise’s surplus earnings–i.e., from earnings prudently withheld from distribution to stockholders to ensure the continuing strength of the enterprise.

Corporations Protected from Taxes

Then FDR’s U.S.A. Treasury, with all FDR’s lawyers’ advice, ruled that the large private-enterprise corporations could make their new plant expansion and equipment improvements and charge the costs to operating expenses, which expenses were then to be deducted from new earnings before calculating income taxes. This amounted, in fact, to an indirect subsidy to cover all new-equipment acquisition. The U.S.A. Treasury next ruled that all research and development–R and D-was thereafter also to be considered by the U.S.A. Treasury Department as an operating expense and also to be deducted from income before calculating income taxes. The U.S.A. thereby eliminated almost all the risks of private enterprise.

Wall Street Creates Madison Avenue

Next Henry Luce, representing news publishers in America–the newspapers and magazines–went to Roosevelt and said, Your democracy needs its news. you have to have some way for the people to know what’s going on. Yes, said FDR. Luce went on, We publishers can’t afford to publish the news. The prices people are willing to pay for the news won’t pay for the publications. The newspapers and magazines are only paid for by advertising, and the New Deal has no allowance for advertising in its operating procedures. The New Deal then ruled that advertising was henceforth to be classified as research and development, therefore deductible from gross income as an operating expense before calculating taxes. Thus advertising became a hidden subsidy of very great size–about $7 billion a year at that time hidden in tax-calculation procedures. The subsidy was so great as to cover the founding of what has come to be known as Madison Avenue.

Socialism– American Style

While the government was doing all this, the Congress passed strict and comprehensive rent controls, bank-loan-interest controls, and price controls of every kind. It was pure socialism. It had to be done that way. There was no question.

The Securities and Exchange Commission reforms removed J. P. Morgan’s two directors from the boards of almost every one of the U.S.A’s great corporations–except Henry Ford’s–whose interlocking directorships had formerly given Morgan prime control over U.S.A. industry. With the termination of Morgan’s control of all the major corporation boards such as those of U.S. Steel and General Motors, these great corporations’ managements found that they were no longer beholden to J. P. Morgan, and only to their stockholders. All we have to do now to hold our jobs is to make money for the stockholders.

A New Form of Capitalism

At this moment the U.S.A. had evolved into a managerial capitalism, in contradistinction to the now-defunct, invisible finance capitalism of
which J. P. Morgan had been the master.

What became noticeable at this time was the uniformity of position taken by all the great corporation managements in respect to actions taken by the New Deal–for instance, the great corporations’ across-the-board refusal to expend surplus on research and development.

To discover how that came about it first must be realized that the industrial-enterprise underwriting and expansion-financing of the private banking houses of Wall Street could not have been carried on without the advice, contract-writing services, and legal planning of the world’s most powerful and most widely informed legal brains. As a consequence the corporation law firms of Wall Street, New York, were peopled with the most astute thinkers and tacticians of America if not of the whole world. When the Great Crash of 1929 came and events of the Depression occurred, as already related (and the great poker hands were called, and the New Deal had prosecuted the guilty and housecleaned the system and socialized the prime contractors, etc.), it was the counsel of Wall Street lawyers that governed the positions taken by the new, self-perpetuating, industrial-giants’ managements. It was the former J. P. Morgan’s and other financiers’ lawyers who now counseled all the as-yet-solvent big-industry managements to guard their surplus and refuse to cooperate with the New Deal.

Ascendancy of the Wall Street Lawyers

Furthermore the Wall Street lawyers could see clearly what the public couldn’t see–i.e., that while the New Deal was unilaterally socializing the system, it was doing so without exacting any contractual obligation on the corporations to acknowledge the government’s economic recovery strategies. The corporations gave no legal acknowledgment of their socialized status. It was clear to the Wall Street lawyers that without such contractual acknowledgment the government socializing was a one-sided, voluntary commitment on the part of the political party in power. Therefore, in fact, none of the big corporations had lost their free-enterprise independence by accepting the enormous government rehabilitation expenditures.

Since the Wall Street lawyers and brethren in other parts of the country were called upon to fill the Supreme Court bench from which body they could determine the province of free enterprise, the lawyers reasoned somewhat as follows: A socialized system–as clearly manifest by the U.S.S.R.–cannot tolerate free enterprise’s freedom of initiative. There is no lucrative law practice in socialized states–ergo, if we are to survive, we lawyers on Wall Street had best figure out how to go about keeping the fundamentals of capitalism alive amongst the few great industrial corporations that as yet remain solvent despite the 1929 and 1933 Depression events.

The Wall Street lawyers saw clearly that it was those surviving corporations’ undistributed surplus which certified that capitalism had not gone entirely bankrupt despite its banking system’s failure.

Operating invisibly behind the skirts of the as-yet-live corporations, the Wall Street lawyers very informally, but very seriously, organized far-ahead-in-time research-and-study teams consisting of the most astute corporation lawyers to be found in America. From these teams’ realistic conceptioning they formulated a grand strategy that would keep capitalism’s private enterprise alive and prospering indefinitely as run invisibly but absolutely legally by the lawyers.

The latter’s research discovered that they would not soon be able to popularly and legally overthrow the New Deal. It was clear that not until World War II was over might they find conditions suitable for untying all the economic controls established by the New Deal.

The Evolution of Capitalism

It is appropriate at this point to do some reviewing of evolutionary changes that had been transpiring in the nature of capitalism.

It all starts with the land-based capitalism, a capitalism maintained by whoever seized, successfully defended, and controlled the land–ergo, owned the land. Those producing food and life support on the lands were all subservient to, and paid tribute to, the great landowners. In land capitalism whoever owned the fertile fields controlled all the wealth to be made from that land. Land capitalism dealt with nature’s own metabolic productivity.

Then private enterprise and finance capitalism came to discover what could be done with mass-produced metals to multiply the value of the land-produced, life-support metabolics.

In the mid-nineteenth century mass production of steel, for the first in history, suddenly gave humans the capability of producing long-span beams, whereby they were able to produce large-enough, semifireproof, and powerful structures to move more and more wealth-production work under cover. Western-world capitalism began to produce wealth under cover in addition to that produced out in the field. To make the tin cans in the factory to can the food produced in the fields, or to take the cotton produced in the fields and mass-produce cotton cloth, became known as value-added-by-manufacture. Value-added-by-manufacturing was accomplished primarily with metals–metal buildings, metal machinery, metal tools, metal sea and land transportation systems, and, ofttimes, metal end products.

As already mentioned, it was the new, world-around, metals sources that brought about the name World War I.

Controlling  Natural Resources

Suddenly we had a completely new form of capitalism, which required both the large-scale financing and integration of metals, mines and mine-owners, metals refining and shaping into wholesaleable forms, all to be established around the world by the world masters of the great line of supply. The world line of metals-and-alloy supply was essential in producing all the extraordinarily productive new machinery and that machinery’s delivery system, as was the generation and delivery of the unprecedentedly vast amounts of inanimate energy as electricity.

This new form of the world power structure’s capitalism–by ownership of the mines and metals working all around the world–we call the metals and mining capitalism. Whoever owned the mines had incredible power, but never as great as those who controlled the line of their supply. Combining the two, (1) the mines and metals-producing industry and (2) the line of supply, we have the world power structure that operated as the first supranational, world-around-integrated, metals cartels. They were out of reach of the laws of any one country, in a metals cartels capitalism. Combining these two with (3) the absolute need of the large financing and credit at magnitudes rarely affordable by any one individual, we find finance capitalism integrating the world operation.

At any rate we now understand why the 1914-18 war was called World War I. It was inherently a war for mastery of the world’s metallic resources and their world-around physical integration, controlling, and exploitation.

*Land capitalism was founded on control of Land. Finance capitalism which includes metals cartels capitalism and metals and mining capitalism is founded on control of Natural Resources. Again, what is the moral basis for ownership of Natural Resources? Here again we see the adversary mechanism firmly entrenched.

The amount of metal productivity of World War I was so great that, after the war, as the arms products became obsolete and were displaced by new design products, the metal contained in the ever vaster amounts of obsolete products began to come back into circulation as scrap. The scrap resources swiftly increased. The Morgan-escaped managerial capitalists said, I’m going to keep my job if we pay our stockholders dividends–the rate at which we can pay dividends is directly dependent upon the rate at which our production wheels go around. To keep our wheels going around, we don’t care whether we are using scrap metals or mined metals. As a matter of fact, the metals-as-scrap are usually more refined than the metals coming out of the mines. They cost less, so we’re better off using the scrap whether from obsolete buildings, machinery, armaments, railways, or ships. Formerly Morgan had insisted on all his controlled manufacturing corporations acquiring all their metal stocks only from newly mined, refined, and wholesale shaped stocks.

The mining companies found that industry would not buy ingots of their metals. They found that they had to turn their metals into tubes, bars, sheet, plate, wire, and a great variety of sizes and shapes. Wall Street’s finance capitalism, therefore, underwrote the development of a host of metals-shaping industries who were the automatic customers of the only-ingot-producing, metals-mining corporations.

The post-World War I mine-owner capitalists began gradually to be washed out of the game by virtue of the Morgan-emancipated managerial capitalists saying, Our job is to keep the wheels going around. Wheels-going-around producing saleable goods from scrap metals became strategic.

Up to the time of World War I the owners of the factories (Mr. Morgan et al.) said, We put you in as management to make a profit out of this factory. If the management said, Give us a new piece of machinery, the owners said, New piece of machinery! What are you talking about? We put you in to make money out of our machinery. You are fired. Change was anathema to the J. P. Morgan-type of financier. Scientists would come to Mr. Morgan and say, Mr. Morgan, I can show you how to make steel so that it won’t rust. Young man! The more it rusts, the more I sell. How crazy you must be! Get the doctor to look this man over, he’s obviously a lunatic–take those mad papers out or his pocket and put them in my desk drawer.

More for Less

But change was welcomed by the late-1930s’ managerial capitalism. New designs called for more whirling of their production wheels. The change came in the form of many new armament designs for the clearly approaching World War II. The new designs released as scrap the metals from obsolete designs.

Concurrently, with the New Deal’s reforms and controls, the wage-earners were now getting a fairer share of the national income, and the economy was prospering-particularly so as the New Deal began officially to remember the forgotten man. Congress put a dollar cellar under the wages and elevated worker earnings enough to produce minor affluence and security.

Just before the U.S.A. entered World War II, the Wall Street lawyers instructed the heads of great corporations to say to Roosevelt, We heads of the corporations of America were not elected by the American people. We were chosen by our stockholders. Our job is to make profits for our stock-holders. At the time of World War I a lot of business people were called ‘profiteers.’ As we enter into World War II war production, we don’t want to be called ‘immoral profiteers.’ If you want cooperation from us, Mr. Roosevelt, you as government are going to have to be the one to initiate our corporations’ being properly rewarded for our cooperation.

Guaranteed Profits for the Capitalists and their Lawyers 

Mr. Roosevelt said, I agree. You are beholden to your stockholders, so you are going to have to pay them dividends. Coping with this dilemma, the United States Treasury Department agreed that it was legitimate for the industrial corporations to make up to 12-percent profit per each product turnover. The New Deal said, We the people, as government, are, however, going to renegotiate with you all the time, continually inspect you, to be sure you are really earning your profits. As a consequence of all the continuous renegotiation by the government, those U.S.A. corporations earned an average of 10 percent on every turnover. This meant that in World War II for every annual war budget–running at first at $70 billion per year–10 percent, or $7 billion, was earmarked for distribution to the stockholders of the corporations. Complete socialization of the stockholders of the prime U.S.A. corporations was accomplished.

*Based on data up to 1992, our federal government has spent over ten trillion dollars on the military since W.W.II. When the government desires new military armament, it must tax its citizens or borrow the money to underwrite the cost of producing those new weapons. Weapon manufacturer’s who create military products can only sell these products once to the federal government. Once purchased by the federal government with tax dollars or borrowed dollars, these products are stored, maintained, and used in the event of future wars, but they are not for resale. This means there can be no return of capital.

*Since human knowledge and technology continue to grow through the power of Time-binding soon even today’s best weapons are obsolete. The only source of funding for new military weapons is additional taxes or additional government borrowing. This is why our federal deficits grow and grow and grow. All of this money is paid to the prime contractors–those corporations making war munitions. These are the same corporations protected from taxes by being allowed to deduct their Research and Development costs, as well as Advertising costs from their earnings. The same corporations that now are guaranteed 10 percent profit on every turnover by the government to pay their shareholders. Then who pays the these taxes? It is the working people of America who are allowed no tax deductions.

Amongst the prime contractors identified by the New Deal were all the leading automobile companies. For example, Chrysler was picked out to produce the war tanks. With their powerful position established with the government, the U.S.A. automobile manufacturers, on being asked to convert all of their productivity to war armaments, agreed amongst themselves to put into storage all of their production tooling and to resume their post-war auto production with the models they were last producing at outset of war. New production tooling would cost them several billions of dollars. They had their Madison Avenue companies grind out advertisements showing the G.I. soldiers saying, Please keep everything the same at home until I return.

America Becomes the World’s Technological Leader

Because Germany’s, Italy’s, and Japan’s production equipment was destroyed during World War II, they were free after the war to start using the newest war-advanced technology in both the designing and the production of their automobiles. That was the beginning of the end for the U.S.A.’s prestige as the world’s technological leader. The U.S.A. post-World War II cars were inherently seven years passÈ in contrast to the smaller, faster foreign cars. The Big Three American auto producers undertook to manufacture while keeping the foreign cars off the market and while they themselves exploited America’s market need for a geographically expanding economy’s transportation.

In the late 1960s the Big Three automobile companies of America found that their distributors were disenchanted with decreasing financial returns and with frequent bankruptcy. To hold their distributors G.M., Ford and Chrysler deliberately manufactured a few of their mechanically well-designed parts with inferior materials that were guaranteed to deteriorate electrolytically or otherwise. The replacement of these parts guaranteed that all the distributors’ car buyers would have to return to them for service on a high-frequency basis, at which time the distributor would replace the parts catalogue-priced so high that the distributor was guaranteed a profitable business. This continuing deceit of the customers–we the people–was the beginning of the end of the American automobile business and the once-great world esteem for Uncle Sam. U.S.A. discreditation has been brought about without the U.S.A. people’s knowledge of the money-maker-world’s invisible cheating.

Throughout all pre-World War II years employers had maintained that unemployed people were unemployed because they were unqualified for survival, socially expendable. Then World War II saw young people deployed on war tasks all around the world. In view of this loss of labor vast amounts of automation were incorporated in the U.S.A’s home-front war production. With the war over, the government found the cream of its youth all unemployed, and because of the automation there were no jobs in sight. Because they were the proven cream of the youth, no one could say they were unemployed because they were unqualified, so the as-yet-operative New Deal created the G.I. Bill, which sent all those young people to prepaid college and university educations.

By World War II’s end labor was earning so much that it was feeling truly secure, affluent, and successful. Emulating the pattern of the rich, individuals of labor were becoming little capitalists, with many enjoying the realization of their own home and land, with two shiny new post-World War II cars in the garage, their kids going to college, and some savings in the bank. The workers began buying shares in IBM and other superpromising private enterprise companies. The Wall Street lawyers, being astute observers of such matters realized that this labor affluence had brought about a psychological reorientation of the body politic. People no longer remembered or felt the depression of spirit that was experienced in the Great Depression of social economics following the Great Crash. The Wall Street lawyers’ grand strategists saw this as the time for breaking through the New Deal’s hold on government, an event which, up to that time, seemed impossible. The lawyers said, Whoever can get the victorious, supreme-command American general of World War II as their candidate for President will be able to get the presidency. They captured Eisenhower. Eisenhower had no political conviction, one way or the other. His vanity was excited at the idea of becoming president of his country.

The Wall Street Lawyers Elect their First President

The Wall Street lawyers explained to Eisenhower the prevailing new psychology of affluence and convinced him that the new affluent majority would elect a Republican. Thus they successfully persuaded him to be a Republican. With the healthy economy the new wage-earner capitalists, with a vested interest in maintaining the status quo, readily voted for Eisenhower on the Republican ticket. Eisenhower’s Wall Street lawyer-managers explained to him that he had been able to win the war because of the vision, courage, and ingenuity and the productive power of American free enterprise. They convinced Eisenhower that the U.S.A. is, in fact, free enterprise. They also convinced him that the Democrats’ New Deal was socialism and therefore the inherent enemy of free enterprise.

As soon as the Wall Street lawyers had Eisenhower in office in 1952, they instructed him to break loose all the economic controls of the New Deal. They had him cut all price controls, all rent controls, all interest-rate controls; they had him terminate anything that was stymieing the making of big money by big business. For instance, they persuaded Eisenhower to allow the insurance companies to invest their vast funds in common stocks. Before Ike’s liberation of the insurance companies they were allowed to put their funds only in Class A bonds and similar investments. Cheered by the capitalist-owned sector of the press, his Wall Street lawyer-advisors for a long time had Ike feeling like a great liberator.

The Wall Street lawyers’ grand strategists put the Wall Street lawyer John Foster Dulles in as Ike’s Secretary of State to dictate the American foreign policy of Soviet containment, and Foster Dulles’s Wall Street lawyer brother Allen Dulles was put in as head of a new brand of absolutely invisible, U.S.A.-financed, capitalistic welfare department, the CIA, established ostensibly to cold-war-cope with the secret-agent operations of our enemies. So secret was their operation that the people of the United States and its Congressional lawmakers had no idea of the size of the unlimited funds given to the CIA, nor for what those unknown funds were expended. The CIA and Alien Dulles had a U.S.A.-signed blank check for X amount of money to do X tasks. I call the CIA, Capitalism’s Invisible Army.

The great U.S.A. corporations, having been saved in 1933 by being only unilaterally socialized, and having in the subsequent fifteen years become powerfully healthy from enormous war orders, immediately after Eisenhower’s election started escalating prices. Their logic was that the first corporation head to increase prices in a given field of production would be the first to be able to distribute that upping as profits to his stockholders and thereby to gain for himself greater economic management status and personal wealth.

More For Less–A Pattern Continues

As a long-time student of foreign investment I saw a pattern developing. Between 1938 and 1940 I was on the editorial staff of Fortune magazine as its science and technology consultant, and my researchers harvested all the statistics for Fortune’s tenth-anniversary issue, U.S.A. and the World. In that issue I uncovered and was able to prove several new socioeconomic facts-for the first time in the history of industrial economics: (1) the economic health of the American–or any industrial–economy was no longer disclosed (as in the past) by the total tonnage of its product output, but by the amount of electrical energy generated by that activity; tonnage had ceased to be the criterion because (2) we were doing so much more given work with so much less pounds of materials, ergs of energy, and seconds of time per given function as to occasion ever newer, lighter, and stronger metallic alloys, chemicals, and electronics. Though at that time universally used as the number-one guide to the state of economic health of any world nation, tonnage no longer represented prosperity. The amount of energy being electrically generated and consumed became the most sensitive telltale of economic health. Furthermore, I was able in that issue to study carefully all the foreign investments made in America all the way back to its colonization in the early seventeenth century.

The ramifications of my studies in foreign investments in America and elsewhere are wide. An example of my findings included discovery of the swift, post-American Revolution investment in U.S.A. ventures by the British (East India Company-advised) financial world as already mentioned.

I found a similar situation to be existent in World War II. As head mechanical engineer of the U.S.A. Board of Economic Warfare I had available to me copies of any so-called intercepts I wanted. Those were transcriptions of censor-listened-to intercontinental telephone conversations, along with letters and cables that were opened by the censor and often deciphered, and so forth. As a student of patents I asked for and received all the intercept information relating to strategic patents held by both our enemies and our own big corporations, and I found the same money was often operative on both sides in World War II.

The East India Company, whose flag I have shown to be the origin of ours, was a private enterprise chartered by the British. Quite clearly the East India Company didn’t lose the American Revolution. The British government lost the Revolution, and the East India Company swiftly moved large amounts of its capital into U.S. America.

With World War II over I began to watch very closely the foreign investments patterning and the strategic metals movements, especially of copper, but those of silver and gold as well. In 1942 America had all the monetary bullion gold in the world in the Kentucky hills. During World War II what was called the China Bloc–which was the Sung family and others backing Chiang Kai-shek–were able to persuade the American Congress that; China had always been corrupt and was eternally corruptible; to completely avoid communism in China Congress should let them have $100 million worth of gold bullion (2 billion at January 1980 gold pricing) to be taken out of the Kentucky hills. Personally I don’t think that gold ever went anywhere near China. I think it went right into the Swiss bank accounts of some clever thieves. But with that much gold out of the Pandora’s box of the U.S.A. Kentucky hills vaults, it provided a gold lever with which to progressively pry loose more and more gold to be reintroduced into the lifeblood of world economic accounting.

After World War II, with only the one exception of the $100 million worth of monetary gold bullion of the China Bloc, all the rest of the world’s international monetary gold bullion was residing in the Kentucky hills, U.S.A., vaults. All countries outside America had gone off the gold standard. In the course of international monetary negotiating that accompanied the U.S.A.’s post-World War I inadvertent ascendency into being the master economic state, and the U.S.A.’s post-World War II attempts to rehabilitate the leading economies around the world by rehabilitating the economies of its vanquished nations and thereby increasing international trading, the U.S.A. was persuaded to re-establish the gold standard for accounting the international balances of trade.

Gold is the super-helicopter of the open world-market-trading stratagems of the makers-of-money-for-self by the legalized manipulation of the money equity of others, all unbeknownst to the initial wealth equity-owning others. In 1934 Roosevelt’s New Deal prohibited the further use of gold by U.S.A. citizens or U.S.A. businesses.

Moving American Corporations Out of America 

By 1953 it became apparent that the Wall Street lawyers were moving the major American corporations out of America. Of the 100 largest corporations in America four out of five of their annual investment dollars in new machinery and buildings for 1953 went exclusively into their foreign operations. This four-fifths rate persisted for a score of years.

The Wall Street lawyers told Mr. Eisenhower that they didn’t like the overaltruistic social viewpoint of the Marshall Plan for helping underdeveloped countries. They liked foreign aid, but not exclusively for the development of underdeveloped countries. The Wall Street lawyers approved of the foreign aid wherefore the U.S.A. continued with annual foreign-aid commitments by Congress. The average annual foreign-aid appropriation has been $4 billion (1950 value) per year over the twenty-seven-year period from 1952 to 1979, which amounted to a $100 billion total. Each new year’s foreign-aid bill had a rider that said that if American companies were present in the country being aided, the money had to be spent through those American companies. In the foreign countries the corporations and individuals could again deal in gold.

Foreign aid paid for all the new factories and machinery of all the American corporations moving out of America. This became a fundamental pattern: first the 100 largest corporations, then the 200 largest corporations followed, then what Fortune calls the 500 largest corporations. Moving out of America could be done readily because a corporation is only a legal entity–it is not a human being. It had no physical body to pass through immigration or emigration. You and I cannot move out of America because we are physical–we need a passport. A corporation does not.