Bankers to be Crucified upon a Cross of Gold

The "Cross of Gold" Speech, William J. Bryan (1896)

For those at all familiar with the populist movements of the late 1800′s and the calls for “free silver,” you may find this metaphor most interesting. Of course, I am referring most specifically to that famous “cross of gold” speech delivered by William Jennings Bryan at the 1896 Democratic National Convention in Chicago, in which the Nebraska congressman and future secretary of state declared:

“Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.” – William J. Bryan

Now, it is somewhat ironic that the populist position during the Gilded age when Bryan rose to prominence was one of easy money, while the arguably populist “Ron Paul Revolution,” erects as one of its major platforms, the return to a gold standard. Bryan was a progressive, while Paul is a libertarian. Byran was a defender of labor through credit, while Paul is a defender of labor through capital. If Ron Paul were on the floor of congress during William J Bryan’s time, I suspect the later would accuse the former of being an agent of the industrialist monopoly men. And he may have been correct, but why?

I certainly won’t claim any expertise on the political and social history of post-civil war American. My only encounter with it has been peripheral, having studied it inadvertently through the works of people like Milton Friedman and Howard Zinn in “Monetary History of the United States” and “People’s History of the United States” (ironically, two books whose almost identical titles are the only thing that the two works, as well as their authors, have in common), as well as through the biographies of people like William Jennings Bryan and JP Morgan. That said, it cannot be argued that the industrial revolution was, just what that often abused word implies, anything short of a revolution. It was a fundamental change in the organization of American life, and it took place in an extraordinarily short period of time – in less than a single man’s lifetime (literally, as John D. Rockefeller lived from 1839-1937).

Anytime you have that sort of rapid change, you are bound to see fractures and schisms, as that part of society which failed to catch up looks to “right the wrongs” as it were of the new state of social and economic affairs. During the time of Bryan, that wrong was the wealth disparity that opened like a giant chasm between the owners and employers of capital, and the laborers who needed that capital in order to work and survive. Clashes between capital and labor became quite common during the period, and resulted not just in firings, as was the case during the famous air traffic controller’s strike of the Reagan administration many years into the future, but actual fatalities. The famous “Pullman Strike” that followed the panic of 1893, was not resolved until the US Army was brought in at the behest of the railroad and under the direct orders of Grover Cleveland, a Democrat no less.

Illustration from Harper's Weekly Courtesy of Chicago Historical Society

And even the latest “battle” that was so heavily covered by mainstream outlets like Fox News and MSNBC, fought by the public workers in Wisconsin, was not a war against capital. These workers were waging a war against their own state government. In fact, labor disputes, with the exception of professional sports, don’t carry the weight they once did. When a company can just move jobs overseas, what pull do labor unions really have in America anymore? When a company as innovative and profitable as Apple (for a brief time the largest company by market capitalization in the entire world) manufactures its products outside of this country, I think it’s safe to say that labor, as it has traditionally been thought of in America, has lost the fight. It simply doesn’t have the ammunition to hold capital at bay anymore. The imagery of “labor vs. capital” that is pushed by people like Ed Schultz is a relic of the past. It is a fantasy. It doesn’t exist. Labor is dead in America, and it’s because they have been fighting the wrong fight – they are fixated on the wrong enemy.

Truth be told, the enemy of the American worker is no longer capital. The great industrialists are no longer, now having been replaced in full force by bankers – droves of them – who now populate Wall Street and the City of London like a swarm of termites, eating at the very core of the world’s capital infrastructure. This is not to say that bankers did not represent a hideous breed of insect during the Baronial age, they most certainly did. JP Morgan famously worked alongside the industrialists of the time to help erect and later maintain the sort of monopolies that are anathema to real capitalism. But bankers had gone from being lords of the manor, as they were prior to the industrial revolution, to having their position of power threatened by the very wealth that, through their syndications and stock offerings, they helped create. The industrialists and robber barons of the Gilded age had generated so much wealth that by the start of the 20th century, they were in a position to finance, through free cash-flow and large balances, the entirety of their own operations and investments:

“My own financial operations have been very simple. I started with the policy of buying and selling for Cash, keeping a large fund of cash always on hand, taking full advantage of all discounts, and collecting interest on bank balances. I regard a bank principally as a place in which it is safe and convenient to keep money…The place to finance a manufacturing business is the shop, and not the bank. I would say that a man in business needs to know nothing at all about finance, but he is better off knowing too little than too much, for if he becomes too expert he will get into the way of thinking that he can borrow money instead of earning it and then he will borrow more money to pay back what he has borrowed, and instead of being a business man, he will be a note juggler, trying to keep in the air a regular flock of bonds and notes…We are not against borrowing money and we are not against bankers. We are against trying to make borrowed money take the place of work. We are against the kind of banker who regards a business as a melon to be cut…The time for a business man to borrow money, if ever, is when he does not need it.”

- Henry Ford, My Life and Work (Chapter 11: Money and Goods)

Contrary to popular belief, bankers don’t actually want the borrower to pay back the loan. They want to find that perfect interest rate which will create a steady yet large return on capital in perpetuity, with the balance of the loan remaining psychologically manageable in the mind of the borrower, but by any objective calculation, incapable of being repaid. A company like Apple, with a levered free cash flow most recently of 20 billion dollars, and that had more cash on hand at one point than the US treasury (at $76 billion in the month of August) is JP Morgan’s worst nightmare.

But Apple is the exception (and who knows, maybe even Apple isn’t all that tough in today’s Bankocracy) in a world where the owners of capital bow before the issuers of credit as though they were modern day serfs – a slight exaggeration, though not an unwarranted one. And that’s the dirty little secret that shows like “Ed” on MSNBC and “Bill O’Reilly” on Fox News don’t want you to know. If you are part of the “99%”, it isn’t the “1%” you should be mad at, and likewise, if you are part of the “1%” it isn’t the “99%” that you should be afraid of. It isn’t the owners of capital that are your enemy if you are unemployed, and it isn’t the unemployed that are out to get you if you have capital. The unemployed by and large aren’t lazy, and the rich by and large aren’t greedy. It is those privileged few in society who need neither capital nor labor in order to live high on the hog that we should all pay close attention to. In a really perverse way, the enemy of both capital, as well as labor today is credit. Credit, backed by fiat, convention and the force of law. The enemy is a cartel of highly interconnected and criminal banking oligarchs who function in a vacuum of capital, but by the grace of modern central banking, have the godly power to emit bills of credit to whomever they choose, consolidating the country’s wealth in exponential fashion. If they have their way for much longer, there won’t be a penny of capital left in this economy for the capitalists, and at that point the emitters of credit will be free to “press down upon the bleeding brow of labor and capital this crown of thorns.”

The Cross of Currency Debasement (Source: McClatchy News Service)

If this seems confusing to you, it really ought not to be. After all, it isn’t just the poor or middle class that has been affected by the latest economic crisis. It is the upper and upper-middle classes as well, who had their life savings locked up in 401k’s and who had paid-in benefits that are either already being cut, or will undoubtedly be hacked into in the near future. These people, hard workers, were unable to save their money over the years because of punishingly low interest rates created by a cartel of bankers – insolvent, incompetent and paradoxically indebted issuers of credit – and therefore were forced into the stock market, advised on what to buy and how to “invest” (another word for speculate) by professional “money mangers” who don’t know their ass from a hole in the wall, and who base their advise to unsuspecting clients on the directives of executive memos from people higher up than they and who have anything but the client’s interests at heart. Of course, what Wall Street and the Money Trust could not extract from your 401K, they got from your mortgage refinancing plan, and on it went.

I could go on and on, but those who have read my writings in the past know all to well how I feel about Wall Street, and the role it has played in this latest economic crisis. The war is no longer a war between capital and labor. Capital already won that battle a long time ago, but while it was busy devouring what remained of the American worker, credit and its Wall Street standard bearer moved in quickly to push capital aside as it made room for itself in the hierarchy of American economic life. The new battle lines are now draw. The war is now one of Capital vs Credit, or as some have come to call it, a battle of Savers vs Speculators. And for the moment, it is the speculators who have had their way with the rest of us. Perhaps it is time that we realized this, and turned the great populist and progressive William Jennings Bryan on his head, worrying not about preventing the crucifixion of labor on a cross of gold, but rather beginning what will be a long and arduous battle of crucifying a generation of greedy, insolvent and infestious bankers upon that very same cross, for only if you take away the banker’s access to unlimited credit will capital ever be capable of regaining its rightful place in American capitalism today. Because capitalism without capital is like christianity without christ.