The United States has been a rogue empire masquerading as a legitimate nation ever since 1861. The U.S. Constitution was an interstate compact among nine or more separate nations, establishing the electorate of each ratifying state as the ultimate authority of that respective nation—that is, the electorate of the nation-state of New York was the supreme authority in New York, and so on. By 1861, however, charlatans had established the myth that the United States was a single nation founded in 1776 and that the federal government possessed ultimate authority over it. According to this view, it has been a rogue empire ever since, regardless of what it claims to be. As Gary Porter, who teaches Saturday seminars on the Constitutions of the United States and Virginia, writes:
”The Constitution of 1789 described a national government of limited and enumerated powers; today’s Constitution no longer does, and the change has nothing to do with the 27 amendments.
To calm the Anti-Federalists’ fears that an all-powerful government had been created, Madison stated at the Virginia Ratifying Convention: ’The powers of the federal government are enumerated; it can operate only in certain cases; it has legislative powers over defined and limited objects, beyond which it cannot extend its jurisdiction.’ This was little more than a restatement of a passage from Federalist No. 45: ’The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite.’
Even before the Tenth Amendment captured this philosophy in slightly different language, the framers of the Constitution understood that they had created a government primarily concerned with ’external objects.’
Joseph Story summarized this well: ’…the powers of the general government will be, and indeed must be, principally employed upon external objects, such as war, peace, negotiations with foreign powers, and foreign commerce. In its internal operations it can touch but few objects, except those which are necessary to regulate commerce, intercourse, and other relations between the States, and to lay taxes for the common welfare. The powers of the States, on the other hand, extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State.'”
We no longer enjoy the balance of power that the Framers intended. Today, as former Congressman Peter Stark once boasted, ”…the federal government can do most anything in this country.” This complete reversal in the relative distribution of power from that envisioned in 1789 occurred gradually over many years as the result of countless judicial decisions, nearly all of which served to erode the limits on federal authority established by the Framers.
The clearest illustration of this transformation is to compare the Constitution of 1789—as approximated by a typical pocket edition of the Constitution (even though such editions include all 27 amendments and often the Declaration of Independence as well)—with today’s Constitution of the United States: Analysis and Interpretation, a massive volume reflecting the accumulated body of constitutional case law.
Many, including Madison, argued that the Tenth Amendment is redundant because the Constitution already clearly enumerated the powers of the federal government. Nevertheless, the Tenth Amendment serves as a thumb on the scale in favor of the states whenever the federal government claims powers that have not been delegated to it, as it frequently does. Cases involving the Commerce Clause illustrate the importance of the Tenth Amendment. Without it, the Commerce Clause could be stretched to even greater lengths to justify federal authority over the states.
It was through the erosion of the Constitution, the growing power of the federal government, and the concentration of the profits of empire in the hands of a privileged business elite—as the Founding Fathers had warned—that, according to the American economist and sociologist Thorstein Veblen in The Theory of Business Enterprise (1904), the conditions emerged that made possible the rise of the eugenic and fascist deep (or shadow) state in the United States.
Gustavus Myers was an American journalist and historian who published a number of highly critical and influential studies on the social costs of wealth accumulation. History of the Great American Fortunes was Myers’s most important and influential work, documenting in detail the corruption and criminality that, according to his research, underlay the formation of the great American fortunes during the nineteenth century. From the Astors and Vanderbilts, Jay Gould and Marshall Field, Stanford and Harriman, to Elkins, Morgan and Hill, Whitney, Rockefeller, Dodge, Havemeyer, and many others, Myers detailed the enduring and devastating effects that the accumulation of wealth had on the structure of the American economy, society, and the quality of life of the vast majority of Americans.
Myers’s well-documented account argues that the great fortunes throughout American history—including those of the Astors, Vanderbilts, and Rockefellers—were created through fraud, contrary to the claims of free-market fundamentalists. According to Myers, the founders of this ”government of wealth” depended on government support and the exploitation of workers, rather than on hard work and intelligence alone. He further argues that state and federal governments had, since colonial times, oppressed the poor while supporting the wealthy. Myers cites laws that, for much of the nineteenth century, imprisoned people for debt, prohibited workers from striking through conspiracy laws, and records instances in which police and military forces killed workers who attempted to organize in defense of their rights.
Ida Tarbell was an American author, investigative journalist, biographer, lecturer, and a pioneer of investigative journalism. She is best known for her 1904 book The History of the Standard Oil Company. Historian J. North Conway called it ”a masterpiece of investigative journalism,” while historian Daniel Yergin described it as ”the single most influential book on business ever published in the United States.” The documentary evidence and oral interviews that Tarbell assembled, according to her account, demonstrated that the Standard Oil monopoly had employed coercive tactics and manipulated competitors, railroad companies, and others in order to achieve its business objectives. Tarbell organized this material into a compelling narrative that became both ”a damning portrayal of big business” and a personal account of Rockefeller’s persecution of smaller competitors.
Tarbell succeeded in locating a crucial source that had largely disappeared: Rise and Fall of the South Improvement Company, published in 1873. According to her account, Standard Oil and Rockefeller had their origins in the illegal arrangements of the South Improvement Company. Standard Oil had allegedly attempted to destroy all available copies of the book, but Tarbell eventually succeeded in locating one at the New York Public Library.
Another break in the story came from Standard Oil itself and served as evidence that the company was still employing illegal and questionable methods. An office boy working at Standard Oil’s headquarters was instructed to destroy records containing evidence that railroad companies had provided the company with advance information about refinery shipments. This allowed Standard Oil to undercut competing refineries on price.
The young man happened to notice the name of his Sunday school teacher on several of the documents. His teacher worked in the oil refining business, and the young man took the papers to him. The teacher, in turn, delivered them to Tarbell in 1904.
Historian Charles R. Geisst suggested that there has long been a ”tug-of-war” between business interests on Wall Street and the authorities in Washington, D.C., the nation’s capital. Throughout the nineteenth century, Wall Street generally developed its own ”distinctive character and institutions” with very little outside interference.
Between 1860 and 1920, the American economy evolved from being ”agricultural to industrial to financial,” and, according to historian Thomas Kessner, New York retained its dominant position despite these transformations. It ranked second only to London as the world’s leading financial center. Ron Chernow’s The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance traces the history of Anglo-American banking, with roughly two-thirds of the book describing how financial power gradually—but inexorably—shifted from London to New York. J. P. Morgan was an American financier and banker who dominated corporate finance on Wall Street during the Gilded Age (from the 1870s to around 1900). He headed the banking firm that eventually became known as J. P. Morgan & Co. and enjoyed immense prestige, international influence, and extensive political and financial connections. His influence reached its peak between 1880 and 1930, and his firm remains one of Wall Street’s leading financial institutions today.
The American journalist and author Matthew Josephson wrote The Robber Barons: The Great American Capitalists (1934), a well-written history of the steel, railroad, shipping, oil, and coal magnates of the post-Civil War era through the time of Theodore Roosevelt. According to this interpretation, this was the first period in American history in which a government ”of the people, by the people, and for the people” became thoroughly corrupted by men of immense wealth who considered themselves to be above the law. Their wealth made it possible, quite literally, to buy influence in Congress. The Founding Fathers had never intended for the nation to be governed by hereditary elites; that was precisely the kind of system they had sought to escape in Europe.
For further study of this subject, one can read The Ending of Hereditary American Fortunes by Gustavus Myers, published in 1939. The extent of market manipulation that took place on Wall Street is truly astonishing.
One scholar who has written extensively about both the earlier history of corruption and the modern corruption of Wall Street and the major banks is Charles R. Geisst, an academic, author, and former investment banker. Since 1985, he has taught economics at Manhattan College, where he currently serves as the Ambassador Charles A. Gargano Professor of Global Business and Finance. He is the author of Wall Street: A History.
Other People’s Money and How the Bankers Use It is a collection of essays by Louis Brandeis, first published in book form in 1914. The book criticized the use of investment capital to promote the consolidation of various industries under the control of a small number of corporations, which Brandeis argued was a means of suppressing competition.
Brandeis was highly critical of investment banks that controlled vast sums of money deposited by middle-class customers. He pointed out that the executives of these banks routinely sat on the boards of railroad companies and major manufacturing firms, and regularly directed their banks’ financial resources to benefit the companies in which they held positions. Those companies, in turn, sought to maintain control over their industries by crushing smaller businesses and penalizing innovators who developed superior products capable of competing with them.
Brandeis supported his arguments by discussing the actual amounts of money—millions of dollars—controlled by specific banks, industries, and industrial corporations such as J. P. Morgan. He observed that these interests had recently come to control a far greater share of American assets than any previous business enterprises. He frequently cited testimony presented during the congressional investigation conducted by the Pujo Committee, named after Louisiana Representative Arsène Pujo, which was established to investigate self-serving and monopolistic business practices.
The book received widespread publicity and was highly praised by legal scholars. Interest in the work increased further following Brandeis’s nomination to the Supreme Court of the United States in 1916.
In Other People’s Money and How the Bankers Use It, Brandeis warned as early as 1914 about interlocking directorates among banking institutions. He wrote, in part:
”The dominant element in our financial oligarchy is the investment banker. Associated banks, trust companies, and life insurance companies are his tools. Controlled railroads, public utility corporations, and industrial enterprises are his subjects. Although they are properly middlemen, these bankers seek to bestride American business as its masters, so that practically no major enterprise can be carried out successfully without their participation or approval.
These bankers are, of course, capable men and possess great wealth. But the most powerful factors in their control over business are not extraordinary ability or great fortunes. The key to their power lies in combination—concentration, both intensive and extensive—advancing along three distinct lines.
First: There is the obvious consolidation of banks and trust companies, and the less obvious affiliations—through stock ownership, voting trusts, and interlocking directorates—among banking institutions that are not legally connected. There are also joint transactions, gentlemen’s agreements, and the so-called ’ethics of banking,’ all of which eliminate competition among bankers.
Second: There is the consolidation of railroads into vast systems, the formation of large public utility combinations, and the creation of industrial trusts. By making enterprises so large that local, independent banking houses can no longer provide the necessary capital on their own, these developments have created a relationship of dependence upon the New York bankers. Yet, however extensive, combination along these lines alone could not produce a financial oligarchy. Another, and even more powerful, element of combination was added.
Third: Investment banking houses, such as J. P. Morgan & Co.—dealers in bonds, stocks, and securities—gradually assumed control over the functions of the other three classes of corporations with which their business brought them into contact. They became the controlling force in the railroad, public utility, and industrial corporations through which our great business enterprises are conducted—the creators of bonds and stocks. They became the controlling force in the life insurance companies and the other great corporate reservoirs of the people’s savings—the purchasers of bonds and stocks. They became the controlling force as well in the banks and trust companies—the custodians of the nation’s liquid capital, the lifeblood of business, through which they and others carried on their operations.
Thus, four distinct functions, each essential to business and each originally exercised by a separate group of men, became united in the role of the investment banker. It is chiefly to this union of business functions that the financial oligarchy owes its existence.
The development of our financial oligarchy has, in this respect, followed the pattern with which the history of political despotism has made us familiar: usurpation proceeding through gradual encroachment rather than through violent acts; subtle and often long-concealed concentrations of different functions which are beneficial when exercised separately but become dangerous when united in the hands of the same individuals. It was through processes such as these that Caesar Augustus became the ruler of Rome. The framers of the American Constitution had similar dangers in mind with regard to American political liberty when they took such great care to separate the powers of government.”
One of the earliest critics of America’s elite families, such as the Rockefellers, was Ferdinand Lundberg, who published America’s 60 Families in 1937. Lundberg was an American journalist known for his frequent and forceful criticism of American financial and political institutions. He was outspoken in his dissenting views, describing the United States as an oligarchy composed of prominent American families, including the Rockefeller family. In his book The Rockefeller Syndrome (1968), Lundberg traced what he argued were the illicit origins of the Rockefeller family’s fortune. Based on his research, he contended that a small group of sixty interconnected American families controlled the mainstream media, dominated the U.S. economy, and exercised unchecked influence over American political institutions.
An even earlier critic of the Rockefeller family than Ferdinand Lundberg was New York City Mayor John Francis Hylan. Although he did not write an academic study on the subject, he spoke publicly and forcefully about his concerns.
In an article entitled ”HYLAN TAKES STAND ON NATIONAL ISSUES,” The New York Times, in its March 27, 1922 edition (p. 3), quoted Mayor John Francis Hylan as saying:
”Theodore Roosevelt’s warning is especially pertinent today: the real menace to our Republic is the invisible government which, like a giant octopus, sprawls its slimy length over city, state, and nation. Like the real octopus, it operates under cover of a self-created screen. At the ends of its long and powerful tentacles are our executive officers, our legislative bodies, our schools, our courts, our newspapers, and every agency created for the public protection. It seizes the reins of government from the shadows, secures the enactment of laws favorable to corrupt business interests, violates the law with impunity, muzzles the press, and reaches into the courts.
To pass from mere generalities, let me say that at the head of this octopus are the Rockefeller–Standard Oil interests and a small group of powerful banking houses generally referred to as the international bankers.
This small coterie of powerful international bankers virtually runs the United States Government for its own selfish purposes. They practically control both political parties, write political platforms, use the leading men of private organizations, and employ every device to nominate only candidates for high public office who are amenable to the dictates of corrupt big business. They favor the centralization of governmental power on the theory that a small group of carefully selected and secretly controlled individuals in positions of authority can be more easily managed than a larger body in which there will almost certainly be men genuinely devoted to the public welfare.
These international bankers and the Rockefeller–Standard Oil interests control a majority of the nation’s newspapers and magazines. They use the columns of these publications to coerce into submission—or drive from public office—those who refuse to obey the dictates of the powerful and corrupt cliques that constitute the invisible government.”
During the early 1960s, the noted American historian, Council on Foreign Relations (CFR) member, and insider Carroll Quigley conducted extensive research for his encyclopedic work Tragedy and Hope: A History of the World in Our Time. Spanning more than 1,300 densely printed pages, Tragedy and Hope recounts how a cadre of extremely wealthy and powerful individuals gradually rose to positions of influence. Some were bankers, while others began in different industries before moving into banking because they regarded it as the true center of power. They generally operated behind the scenes, not as the political elite of individual nations but as an international elite—or super-elite. To them, national borders and traditional loyalties became increasingly irrelevant.
The rise of the invisible government and the evolution of the empire – Part 3
