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MONEY, POWER, and
MODERN ART
PART 1: Ruthless empire
builders
By Henry C K Liu
A
major event of high culture unfolded in a series of
elegant receptions during the third week of November in
New York, a city of seriously moneyed art collectors,
scathing critics and a discriminating public. Three
years in design and construction, the Museum of Modern
Art reopened on its 75th anniversary with a new US$850
million building on the same site as the old museum in
midtown Manhattan. Loved by all who have been fortunate
enough to have their lives enriched by it, this cultural
flower in one of the  world's greatest cities,
affectionately referred to as The Modern, has been
cultivated in the supercharged greenhouse of modernist
milieu, aiming to define fundamental issues of meaning
and truth through the vehicle of esthetic preference at
the forefront of modern civilization.
The Museum
of Modern Art is the beloved legacy of an extraordinary
woman of impeccable pedigree, Abby Aldrich Rockefeller,
born in Providence, Rhode Island, on October 26, 1874,
to elitist senator Nelson Wilmarth Aldrich (1841-1915),
the most powerful politician in a nation rising fast as
a world power at the turn of the 20th century. Miss
Aldrich was educated at home by a Quaker governess whose
pacifist philosophy placed value on inner spirituality,
attentive listening, compassion, non-violence, equality
(particularly for women), non-evangelistic worship,
silent devotion, inner-directedness and respect for
consensus.
Such values, central to the ideal
American character, had been coming into increasing
conflict with evolving socio-economic reality and a new
political climate as the young girl blossomed into
womanhood. At 17, as proper for young women of her
privileged class, she went to Miss Abbott's School to
study English, French, German, art history, the
classics, gymnastics and dancing. After graduating, she
traveled to Europe in 1894 to view first-hand the art
she had studied at school. At age 26, she became the
wife of John D Rockefeller Jr, son of the founder of
Standard Oil, the nation's wealthiest man. After a
courtship that lasted more than five years, the couple,
who first met in 1894 when the groom-to-be was a student
at Brown University, were finally married at a
super-lavish wedding on Warwick Neck, Rhode Island, on
October 9, 1901. The vibrant bride was given away by her
powerful father, Senator Aldrich, to the reserved heir
of the nation's greatest fortune. It was a union of
wealth and power. But while John D Rockefeller
(1839-1937) created and accumulated wealth through the
brutal imposition of efficiency on a chaotic
oil-refining industry, it was Nelson Aldrich who brought
about the private control of currency that made such
wealth accumulation structurally systemic.
Elected to the Senate as a Republican from Rhode
Island in 1881, Aldrich joined and eventually chaired
the Senate Finance Committee, which set tariff rates,
the principal means of raising federal revenue in the
era before income tax. He was a strong proponent of
protective tariffs for the benefit of young industries
in the northeast, and helped force the populist Silver
Republicans out of the party, and was the power behind
the passage of the Gold Standard Act of 1900.
In
the era of state-chartered banking, banks were
free-standing individual entities that practiced
predatory competition on each other in an unregulated
free market, with no sense of solidarity or common
interest as an industry nor shared responsibility to the
community at large. Faced with recurring systemic credit
crunches associated with the gold standard in an
expanding economy, banks routinely engaged in
internecine competition to corner cash, deny new credit
to financially weak customers to expose them to
predatory takeover raids by preferred customers, suspend
cash payments abruptly with no warning, and hoard money
regularly for profit. The sound-money regime and its
associated credit crunches periodically failed the
expanding economy, resulting in sudden layoffs of
hundreds of thousands as credit-starved firms fell into
insolvency, bringing trade a standstill.
In the
summer of 1907, the US economy crashed, with a large
number of big businesses and major Wall Street
brokerages going bankrupt. By October, the venerated
Knickerbocker Trust in New York City and the blue-chip
Westinghouse Electric Co had both failed, touching off
what came to be known as the Banking Panic of 1907, the
latest and most severe of four nationwide banking panics
that had occurred in three decades. The stock market
plummeted and panic-stricken depositors made massive
runs on the nation's banks.
Once more J P Morgan
(1837-1913) acted to restore financial order. This was
not his first exercise to save finance capitalism from
free market forces, each time making his control of the
financial markets more complete. He summoned leading
bankers and financial titans to his palatial home on
36th Street and Madison Avenue in New York, where they
set up a rescue operation in his ornate library. Over
the course of the next three weeks, Morgan and his team
bypassed legal constraints to channel money from the
stronger institutions they owned to the weaker ones they
had just acquired through predatory fire sales to keep
the system afloat, halting the panic with the
cooperation and gratitude of the government. Morgan
strong-armed banks to agree to settle accounts among
themselves with clearinghouse certificates rather than
cash and thus increased the money supply without
involving the government, and ended up owning a much
larger share of the financial sector paid for with
paper. In the finger-pointing following the crisis,
reformers in both political parties agreed that the US
banking system was fundamentally flawed and needed
structural reform.
Conservative business
leaders, however, held that it was president Theodore
Roosevelt's progressive agenda that had upset the
natural order of an otherwise self-balancing market and
that if government would only stop meddling in commerce,
all would return to normal. Typical of US politics,
reform in form gained acceptance only by yielding to
conservatism in essence. An emerging consensus affirmed
that bank reform was indeed necessary to provide badly
needed currency elasticity, which had been a major issue
in the panic. But reform was not directed toward
providing credit constructively to where the economy
needed it most, but toward achieving general soundness
in the banking system at the expense of fair competition
to develop the full potential of the economy. Under the
leadership of Aldrich, Congress responded by passing a
hastily prepared stopgap legislation, the
Aldrich-Veerland Currency Act of 1908, to provide
short-term aid to distressed banks to ease the ongoing
credit crunch to save big business. The legislation
allowed national banks to issue notes on a wider range
of securities than previously, with the effect of
putting more money into circulation to prevent further
corporate bankruptcies.
To seek a long-range
solution to the complex issue of recurring financial
crises, Congress created a National Monetary Commission
(1808-12) under the Aldrich-Veerland Currency Act, with
Aldrich as chairman, to study the matter in depth. A
report recommending the Aldrich Plan was issued by the
commission four years later in 1912 and not acted upon
until 1913 at the beginning of the Democratic
administration of president Woodrow Wilson (1913-21). In
1913, Congress passed the landmark Owen-Glass Act, which
created the Federal Reserve System to act as lender of
last resort to distressed private banks. Aldrich's work
on the Aldrich-Vreeland Currency Act of 1908 and his
chairmanship of the National Monetary Commission paved
the way for the Federal Reserve Act of 1913.
Wilson, being nearly illiterate on the
technicalities of banking reform, was strongly
influenced by William Jennings Bryan's populist outlook.
Bryan, a chronically unsuccessful Democratic contender
for presidency, became Wilson's secretary of state.
Wilson said a year before he was elected, "The greatest
monopoly in this country is the money supply," adding a
couple of months later that he would not accept "any
plan which concentrates control in the hands of the
banks". Under Wilson, Representative Arsene P Pujo of
Louisiana, chairman of the House Banking Committee, led
the Pujo Commission in 1912 in a wide-ranging
congressional hearing on the nation's financial
problems. Pujo brought in J P Morgan to testify and
eventually came to the conclusion that a "money trust"
existed in the nation's financial sector, just as
"corporate trusts" existed in oil, mining and the
industrial sectors. In the view of the Pujo Commission,
the central-banking solution outlined in the Aldrich
Plan as recommended by the Monetary Commission did not
solve the "money trust" problem.
The Fed is
born
In 1913, the Democrat-controlled Congress
adopted a regional, rather than fully centralized,
approach to banking reform. Carter Glass of Virginia
headed matters in the House and Robert L Owen of
Oklahoma did so in the Senate. The final legislation
created 12 Federal Reserve Banks that would act as
central banks for all nationally chartered banks and
other state-chartered institutions that voluntarily
elected to be members. The idea of regionalism was to
have a banking system responsive to the different
monetary needs of various regions in the vast nation.
The 12 Reserve Banks would not be federal bodies but
private institutions owned by the member banks of the
system. The compromise was a response to rising regional
conflict rather than conflict between private or public
control of the nation's money. A Federal Reserve Board
was formed to oversee the system and establish policy.
Members of the board would be appointed by the US
president, providing a considerable measure of federal
direction over the private system. Thus, like the
Supreme Court, the "politically independent" Federal
Reserve Board membership is politically appointed,
albeit for fixed terms rather than life.
A new
form of currency was created: the Federal Reserve Note,
which has remained legal tender to this day, as a way to
solve the problem of monetary inelasticity, to provide a
national currency that would expand and contract as
needed by the economy. The notes were to be backed by
reserves of gold of at least 40% of the face amount of
the notes issued. Government funds were to be deposited
in the Reserve Banks, which ended the old sub-treasury
system. The dollar did not become a fiat currency until
1971.
On December 23, 1913, Wilson laid to rest
decades of monetary debate when he signed the Federal
Reserve Act into law. Wilson's signature catapulted the
Federal Reserve System into an monetary adventure that
would evolve from a passive institution designed to
prevent banking panics into what came to be known as a
central bank, with an independent mandate from the body
politic as an active promoter of monetary stability, a
multi-faceted player and rescuer in the
ever-more-reckless financial-services industry and
supremely powerful financial arbitrager over the economy
of the nation and the world, an institution owned not by
the people and controlled not by democratically elected
officials, but by political appointees acceptable to
private bankers.
The National Monetary
Commission had identified two related flaws in the
nation's banking system: 1) Venerability to recurring
bank panics and 2) An inelastic currency that was
unresponsive to changes in demand in a dynamic economy.
To combat these two problems, the commission made an
urgent plea for timely sovereign lending to distressed
banks (referred to as "rediscounting" in the Federal
Reserve Act). The greatest power bestowed on the new
Federal Reserve system was the setting of the discount
rate - the rate of interest charged by the Reserve Banks
when lending to member institutions collateralized by
government securities. Raising the discount rate
generally increases the cost of borrowing and slows the
economy, while dropping it stimulates economic activity,
since banks set their loan rates above the discount
rate, and not by market forces.
Federal Funds
include funds deposited by commercial banks at the
Federal Reserve Banks, including funds in excess of bank
reserve requirements. But Fed Funds can be created at
will by the Federal Reserve now that the dollar is a
fiat currency not backed by gold. Commercial banks may
lend federal funds to one another on an overnight basis
at the Fed Funds rate, which is the most sensitive
indicator of the direction of interest rates since it is
set daily by the market in response to the Fed's
open-market operation: the buying or selling of
government securities to meet Fed Funds rate targets.
Thus the real function of sovereign debt is to provide
an instrument through the buying and selling of which
the Fed can inject or withdraw money from the money
supply without appearing to create or destroy money
while actually doing so.
The Federal Reserve Act
of 1913 was an important reform measure related to the
operation of the banking system, but it failed to
address the "money trust" problem of private control of
money, a public monetary instrument. The control of the
nation's money and credit that had gradually been taken
away from the people over decades since the founding of
the United States became institutionalized through the
creation of the Federal Reserve System and stayed firmly
and legally in the hands of a small circle of supremely
powerful elite, depriving the nation of the financial
democracy on which political democracy ultimately
depends. Democracy requires the fair sharing of
political power, which cannot be accomplished without
fair sharing of financial power.
During the
presidency of Theodore Roosevelt (1901-09), Aldrich
opposed many of Roosevelt's progressive antitrust
reforms against what Roosevelt called the "malefactor of
great wealth", particularly against government
regulation over private railroads built with massive
government subsidy. Although the Aldrich-Rockefeller
union combined power and wealth, the reputations of
Nelson Aldrich and John D Rockefeller Sr were less than
stellar. In a series of articles for Cosmopolitan
magazine in 1906, muckraking journalist David Graham
Phillips portrayed Aldrich as a corrupt political boss
who contributed to the "Treason of the Senate".
Similarly, writer Ida Tarbell (History of the
Standard Oil) exposed the senior Rockefeller as a
ruthless robber baron. President Roosevelt included
Rockefeller among the "malefactors of great wealth".
Remembering Rockefeller
When Ida
Tarbell traveled to Cleveland to observe John D
Rockefeller Sr, the man she had been writing about for
two years, she chose not to confront him face to face.
She studied Rockefeller's every move at a distance,
gathering ammunition for a scathing character piece. For
his part, Rockefeller never got back at the feisty
reporter. "Let the world wag" was his favorite motto,
and long silence his response to Tarbell's attacks.
Tarbell wrote that Rockefeller had the powerful
imagination to see what might be done with the oil
business if it could be centered in his hands, the
intelligence to analyze the problem into its elements,
and to find the key to control. He had the essential
element to all great achievement, a steadfastness to a
purpose once conceived that nothing can crush. The
reporter characterized Rockefeller as "good". There was
no more faithful Baptist in Cleveland than he. Every
enterprise of that church he had supported liberally
from his youth. He gave to its poor. He visited its
sick. He wept for its suffering. Moreover, he gave
unostentatiously to many outside charities he deemed
worthy. He was simple and frugal in his habits. He never
went to the theater, never drank wine. He was a devoted
husband, and he gave much time to the training of his
children, seeking to develop in them his own habits of
economy and clarity. Yet he was willing to strain every
nerve to obtain for himself special and unethical, if
not outright illegal, privileges from the railroads that
were bound to ruin every man in the oil business not
sharing his vision of order. Religious emotion and
sentiments of charity, propriety and self-denial seem to
have taken the place in him of notions of justice and
regard for the rights of others.
"It may be that
Mr Rockefeller is one of those double natures that
puzzle the psychologist. A man whose soul is built like
a ship in air-tight compartments to use the familiar
figure - one devoted to business, one to religion and
charity, one to simple living and one to nobody knows
what. But between these compartments there are no
doors," wrote Tarbell.
Rockefeller finally
responded late in life
This sweetness that she tries to bring in,
referring to these good qualities, and this praise
that she brings in as to ability and perseverance and
whatever traits which she concedes bring success, is
simply covering up her wrath and her jealousy which
were all the time present, but which she did not show
all the time and which she thought she could bring out
all the better by weaving this in as silken thread.
She makes a pretense of fairness, of the judicial
attitude, and beneath that pretense she slips into her
'history' all sorts of evil and prejudicial stuff,
calling it 'the record of the court', where it is only
a statement by a party at interest, and she hides the
other side. She is very adroit and cunning; but even
she has defeated herself. She has over-reached
herself, and anyone who reads her book with care can
see that she is dishonest, prejudiced and untruthful.
Poor woman! How she has degraded herself and failed of
accomplishing her object to injure, to smirch, to
overthrow the Standard Oil Company, to satisfy the
petty spite against it because forsooth her father and
brother could not compete in the oil business.
I do not remember just how many [refineries]
there were [in Cleveland] - say 25 or 30, more or
less. Some of them were very little ... More than 75,
and probably more than 80% - certainly a great number
- of the refiners at Cleveland were already crushed by
the competition which had been steadily increasing up
to this time ... They didn't collapse. They had
collapsed before. That's the reason they were so glad
to combine their interest if they so wished it ...
[They were] mighty glad to get somebody to come and
find a way out. We were taking all the risks, putting
up our good money. They were putting in their old junk
... When it was found how much of stock or money would
be given in exchange for their plants we found no
difficulty in proceeding rapidly with the
negotiations, and nearly all came in ... though it is
true that a few of the refiners decided to remain out,
and these were among the smallest and least able to
compete with us. With these our relations continued,
entirely pleasantly, until at length, one by one, of
their own volition, they were pleased to embrace the
opportunity to join their interests with ours, the
result of which in every case was most satisfactory to
them. From Rockefeller's perspective, what
he said to them was: "We here [in Cleveland] are at a
disadvantage. Something should be done for our mutual
protection. We think this is a good scheme. Think it
over. We would be glad to consider it with you if you
are so inclined." Rockefeller acknowledged no
compulsion, no pressure, no "crushing". "How could our
company succeed if its members had been forced to join
it and were working under the dash?" he asked
rhetorically.
Tarbell reported a different
observation.
There were at the time some 26 refineries
in [Cleveland], some of them very large plants. All of
them were feeling more or less the discouraging
effects of the last three or four years of railroad
discriminations in favor of the Standard Oil Company.
To the owners [of the 26 refineries] Mr Rockefeller
went one by one, and explained the South Improvement
Company. 'You see,' he told them, 'this scheme is
bound to work. It means absolute control by us of the
oil business. There is no chance for any one outside.
But we are going to give everybody a chance to come
in. You are to turn over your refinery to my
appraisers, and I will give you Standard Oil Company
stock or cash, as you prefer, for the value we put
upon it. I advise you to take the stock. It will be
for your good.' ... It was useless to resist, he told
the hesitating: they would certainly be crushed if
they did not accept his offer, and he pointed out in
detail, and with gentleness, how beneficent the scheme
really was - preventing the Creek refiners from
destroying Cleveland, keeping up the price of refined
oil, destroying competition, and eliminating
speculation. All over the country the
refineries in the same condition as Tack's firm sold or
leased. Those who felt the hard times and had any hope
of weathering them resisted at first. With many of them
the resistance was due simply to their love for their
business and their unwillingness to share its control
with outsiders. The thing which a man has begun, cared
for, led to a healthy life, from which he has begun to
gather fruit, which he knows he can make greater and
richer, he loves as he does his life. It is one of the
fruits of his life. He is jealous of it - wishes the
honor of it, will not divide it with another. He can
suffer heavily by his own mistakes, learn from them,
correct them. He can fight opposition, bear all - so
long as the work is his. There were refiners in 1875 who
loved their business in this way. Why one should love an
oil refinery the outsider may not see; but to the man
who had begun with one still and had seen it grow by his
own energy and intelligence to 10, who now sold 500
barrels a day where he once sold five, the refinery was
the dearest spot on earth save his home. He walked with
pride among its evil-smelling places, watched the
processes with eagerness, experimented with joy and
recounted triumphantly every improvement. To ask such a
man to give up his refinery was to ask him to give up
the thing which, after his family, meant most in life to
him.
As Tarbell saw it.
All over the country the refineries [in
distressed conditions] were sold or leased. Those who
felt the hard times and had any hope of weathering
them resisted at first. With many of them the
resistance was due simply to their love for their
business and their unwillingness to share its control
with outsiders. The thing which a man has begun, cared
for, led to a healthy life, from which he has begun to
gather fruit, which he knows he can make greater and
richer, he loves as he does his life. It is one of the
fruits of his life. He is jealous of it - wishes the
honor of it, will not divide it with another. He can
suffer heavily by his own mistakes, learn from them,
correct them. He can fight opposition, bear all - so
long as the work is his.
That was the American
spirit, what the constitution refers to a the right to
the pursuit of happiness. There were refiners in 1875
who loved their business in this way. Why one should
love an oil refinery the outsider may not see; but to
the man who had begun with one still and had seen it
grow by his own energy and intelligence to ten, who
now sold 500 barrels a day where he once sold five,
the refinery was the dearest spot on Earth save his
home. He walked with pride among its evil-smelling
places, watched the processes with eagerness,
experimented with joy and recounted triumphantly every
improvement. To ask such a man to give up his refinery
was to ask him to give up the thing which, after his
family, meant most in life to him ... this feeling was
a weak sentiment. To place love of independent work
above love of profits was as incomprehensible to him
as a refusal to accept a rebate because it was
wrong! Rockefeller agreed.
What a Godsend it was to the many little
inefficient and unsuccessful refiners of Oil Creek
that a buyer was found for them when for years they
had been losing money! How wrong for the "historian"
to call it a crime that these men were delivered from
their sinking ships. It was a great mercy and without
precedent, as has been hitherto stated. Almost any
other historian, it would seem, would blush today to
read injustice as it is written in these very pages,
where [Tarbell] is made to speak of the crime, which
should have been characterized only as an
unprecedented magnanimous deliverance such as had not
hitherto been known in the annals of business! In all
times past the weak man in the competition dropped out
and was lost sight of.
These men for years
were importuned to join hands with those who were
stronger and ready to pull them out from their
embarrassments and fit them in to be useful in the
administration of the Standard Oil Company so far as
they had integrity, intelligence, enterprise and
industry to warrant the expectation that they could be
stones in the foundation of the great structure, the
likes of which the world had never seen. [As for the
producers], they were like a lot of foolish children,
and would not be controlled, and would not observe the
law referring to supply and demand. And this was all
there was in the problem. How many times we told them
- over and over again! - that if they would restrict
production they would be the gainers. But how
impossible it was for them to grasp that fact, and how
impossible it was for them to summon sufficient
integrity to carry out the agreements they made, in
order to keep it. They knew it, but they wanted what
certain of the refiners wanted; that is, to keep their
bread and butter and eat it, too. This was found
impossible. These people didn't believe in themselves;
they didn't believe in the Standard Oil Company, they
didn't believe in anybody, away down, and there was a
screw loose in a great many of them, and so the sane
ones had a hard problem. A century later,
the Organization of Petroleum Exporting Countries (OPEC)
adopts Rockefeller's advice and resorts to production
cuts to keep oil prices up.
It is therefore
truly amazing that Abby Aldrich, born to a
super-powerful father and married to a super-rich
husband, both of whom personified the rise of a moneyed
aristocracy in the new democratic nation, brought up in
a family culture that firmly believed in the right of
the strong to eliminate the weak, should turn out to be
the liberal, progressive woman that she was.
According to biographer Bernice Kert, Abby
Aldrich Rockefeller was "a buoyant, impulsive,
warm-hearted, lovable woman with [a] relaxed, worldly
attitude [that] differed markedly from the rigid Baptist
views of the Rockefellers". Yet she handled her in-laws
with aplomb, and her reserved husband, John D Jr, adored
her. It was Abby who humanized shy, religious John Jr,
persuading him to renounce ruthless business in favor of
benevolent philanthropy. While keeping her conservative
husband happy, she pursued her own interests as a
pioneering champion of modern art and folk art. With
friends Lillie Bliss and Mary Sullivan, she helped found
the Museum of Modern Art in 1929. She encouraged a new
appreciation of American folk art through her gifts to
Colonial Williamsburg, the 18th-century Virginia town
restored with exacting authenticity. She also played a
key role in the creation of Rockefeller Center in New
York City, a superb urban design project built to create
jobs during the Great Depression.
Abby Aldrich
Rockefeller used her empathy, willingness to experiment,
and defiant optimism to leaven her husband's
conservative thinking. She expanded his vision of what
the Rockefeller fortune could do, shaping the family
into a progressive force in philanthropy, the arts,
education, the social and physical sciences and
politics. She supported such progressive social reforms
as the Young Women's Christian Association (YWCA),
National Women's Trade Union League, and American Birth
Control League and was at the center of a remarkable
network of women including the Mexican communist artist
Frida Kahlo, wife of communist painter Diego Rivera and
lover of Leon Trotsky; birth-control activist Margaret
Sanger; and landscape architect Beatrix Farrand, niece
of Edith Wharton and wife of Yale historian Max Farrand
(The Fathers of the Constitution). She raised her
six children - Babs, John III, Nelson, Laurence,
Winthrop and David - with a commitment to social justice
and public service to a variety of socially beneficial
ends normally alien to super-rich heirs. She exerted
strong positive influence on her five sons. A playful
and attentive parent, she encouraged them to have an
interest in the larger world and instilled in them her
open-mindedness. "I want to make an appeal to your sense
of fair play ... to begin your lives by giving the other
fellow a fair chance and a square deal," she wrote in a
1923 letter to John III, Nelson and Laurence about
persistent racism, an issue most white Americans chose
to deny or ignore at the time. "It is to the everlasting
disgrace of the United States that horrible lynchings
and brutal race riots frequently occur in our midst. The
social ostracism of the Jews ... causes cruel injustice
... I long to have our family stand firmly for what is
best and highest in life ... If you older boys will do
it the younger will follow."
A New York Times
editorial published on the occasion of her death on
April 5, 1948, at age 73 described her as "the spirit
that held [the Rockefellers] together" but whose role in
the handling of the family wealth was "a fortunate thing
for society, for this country, and for the world". The
influence of her liberal viewpoints on her husband and
children is well documented.
Such personalities
as Nelson Aldrich, John D Rockefeller and J P Morgan,
all born within a span four years between 1837 and 1841,
were products of a capitalistic age they helped to
create. They were radicals who altered the nature of US
society, overthrowing the agrarian democracy that
underpinned the political mandate of the new nation
founded three-quarters of a century earlier. With a view
of themselves as moral, disciplined visionaries of
strong Protestant ethics, they were meticulously upright
in their personal affairs while engaging in wholesale
duplicity in large-scale business and financial
manipulation. They were ruthless empire builders in that
they did not merely play the game to win, but they bent
the rules of the game to ensure their less-than-fair
winnings. And they were not apologetic about it.
Rockefeller wrote:
The Standard Oil Co has been one of the
greatest, if not the greatest, of upbuilders we ever
had in this country - or in any country. All of which
has inured to the benefit of the towns and cities the
country over; not only in our country but the world
over. And that is a very pleasant reflection now as I
look back. I knew it at the time, though I realize it
more keenly now. We had vision, saw the vast
possibilities of the oil industry, stood at the center
of it, and brought our knowledge and imagination and
business experience to bear in a dozen, 20, 30
directions. There was no branch of the business in
which we did not make money ... Here was a force that
reorganized business, and everything else followed
it-all business, even the government itself, which
legislated against it. Tarbell rejected that
view.
[John Rockefeller's] importance lies not
so much in the fact that he is the richest individual
in the world, with the control of the property that it
entails; it lies in the fact that his wealth, and the
power springing from it, appeal to the most universal
and powerful passion in this country - the passion for
money. John D Rockefeller, measured by our national
ambition, is the most successful man in the world -
the man who has got the most of what men most want ...
Mr Rockefeller is a hypocrite. This man has for 40
years lent all the power of his great ability to
perpetuating and elaborating a system of illegal and
unjust discrimination by common carriers. He has done
more than any other person to fasten on this country
the most serious interference with free individual
development which it suffers, an interference which,
today, the whole country is struggling vainly to
strike off, which it is doubtful will be cured, so
deep-seated and so subtle is it, except by
revolutionary methods. It does not pay. Our national
life is on every side distinctly poorer, uglier,
meaner, for the kind of influence he
exercises. Tarbell, missing the point that
it was the system that made the man, went on to attack
the wrong target: "I never had an animus against
Standard Oil's size and wealth, never objected to their
corporate form. I was willing that they should combine
and grow as big and rich as they could, but only by
legitimate means. But they had never played fair, and
that ruined their greatness for me."
Tarbell was
excusing the system and blamed it on the man, a common
error made by American liberals. The same attitude
perseveres on their reaction to the Enron, WorldCom,
Citibank, AIG scandals in recent years, that it was the
few apples rather than the barrel that were rotten.
Rockefeller, of course, disagreed: "It was the
law of nature, the survival of the fittest, that [the
small refiners] could not last against such a
competitor. Undoubtedly ... some of them were very
bitter. But there was no band of greedy men plundering
them. An able, intelligent, far-seeing organization
simply outstripped men in the casual, haphazard way of
doing business. That was inevitable."
Yet the
purpose of civilization is to improve on the laws of
nature. The fault was in the system, not the persons who
excelled in the barbaric game. These robber barons had a
common vision of the need to create a centrally
controlled order out of decentralized democratic chaos.
Above all, they recognized clearly that in a society
where wealth was denominated in money, the way to
achieve great wealth was to control the nature of money.
What they did was to stage what amounted to an
autocratic coup d'etat on the United States' monetary
regime. On this most antisocial coup d'etat Tarbell said
nothing.
NEXT: A coup d'etat on
the monetary regime
Henry C K Liu is
chairman of the New York-based Liu Investment Group.
(Copyright 2004 Asia Times Online Ltd. All
rights reserved. Please contact us for information on sales, syndication and republishing.)
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