A Short History of the Fed Bank

            Given the enormous losses during the country’s recent fiscal meltdown that cost Americans twenty trillion public dollars, their jobs and their homes, it might seem curious that few elected officials in Washington have spoken critically or demanded an investigation regarding the Federal Reserve Bank’s role in the debacle.   While the silence has been deafening, such a blackout of opinion on the country’s economic fortunes has not always been the case.    

           

            Since Article I, Section 8 of the U.S. Constitution gives Congress the power to “coin and regulate the value of money,” the Congressional decision in 1791  to delegate that responsibility to a central bank has been fraught with controversy, opposition and charges of corruption ever since. 

           

            The First Bank of the United States was chartered for a twenty year period to pay revolutionary war debts and consolidate state currencies and financial policies.  Thomas Jefferson believed that a central bank was not authorized by the Constitution and that such a financial institution would benefit the privileged and wealthy and be adverse to the interests of democracy and the common people. 

           

            By 1811 with fraud and corruption rampant, President James Madison allowed the First Bank charter to expire after Congress, citing a ‘paradise for speculators,” failed to continue the Bank by one vote.   Madison saw the Bank as favoring business institutions while ignoring the country’s agricultural needs.  However, unable to finance the country due to inflation caused by funding the War of 1812, Madison succumbed to renewal in 1816 for another twenty years .  

           

            As the country’s agriculture sector boomed, the Second Bank of the United States encouraged widespread loans to land speculators creating an economic bubble which resulted in the Panic of 1819.  

            Elected as a fierce opponent of a monopolistic central bank, President Andrew Jackson (1829 – 1837) issued an Executive Order transferring the deposit of government funds to state banks.  Unperturbed by a censure from the Senate, Jackson allowed the Bank’s charter to expire in 1836    As astute as Jefferson and Madison, Jackson saw the Bank as concentrating financial strength in one institution while improving the fortunes of an ‘elite circle’ at the expense of farmers and workers.   He feared that the Bank exposed the government to foreign interests, fed the fever of credit and speculation and exercised too much control over Congress.   To his enduring credit, Jackson became the only President to pay off the national debt. 

            Even after the speculative Panic of 1837, President John Tyler Jr., (1841 – 1845), a strict Constitutionalist and opponent of a central bank while in the Senate, vetoed two attempts by Congress to charter a second central bank.  Tyler’s reward for standing firm was censure by the Senate, resignation of all but  one of his Cabinet and expulsion from the Whig party.  Tyler became one of three Presidents to serve in office with no party affiliation as outraged Whig party loyalists protested outside the White House.

After a series of financial crises that culminated with the Panic of 1907, the justification again existed for a centralized bank to bring financial stability and control to the U.S. economy.  The Federal Reserve Act of 1913 was adopted establishing a quasi-governmental Federal Reserve system known today as the Fed Bank.   

Despite a new central bank, sixteen years later, the stock market crashed ushering in the Great Depression which ushered in the Glass-Steagall Act of 1933 which provided relative economic stability until President Clinton signed a Congressional bi-partisan repeal in 1999 which, in part, ushered in the 2008 fiscal meltdown.

While embedded tradition dictates that Fed  Bank ‘independence’ be immune from politics, former Chair Greenspan set a double standard by freely manipulating and ‘coaching’ members of Congress and Administration personnel.   Presumably, Bernanke has continued Greenspan’s time – honored behavior.

Given the prescient predictions of 150 and 200 years ago, words that echo back to us over the centuries, today’s elected representatives are, by comparison, too often like deer caught in the headlights unsure of which way to go, too eager to acquiesce their fiduciary responsibility to an unelected entity, too willing to take a pass on real oversight and accountability and unlike their predecessors, too willing to sit down and shut up.    

The Peekskill Riots of 1949 and the 2010 Election

            Even before the success of right wing candidates in the 2010 elections, the sudden emergence of intimidating tactics at raucous Congressional town meetings and gun-toting tea party rallies was an alarming phenomena.   It is not the first time that bullying and threats of violence have occurred in American politics.

            One Sunday afternoon many years ago, a local radio station reported that a ‘riot’ had occurred  in a quiet Hudson River Valley community.   Only years later, after having read Howard Fast’s first hand description of events in “Peekskill USA,” were  the shameful details apparent.  

            An hour’s drive from downtown Manhattan, Peekskill, New York exploded on the national scene in August, 1949  when a mob of veterans, Ku Klux Klan members and their supporters attacked concertgoers.. The music lovers were to attend a performance by internationally-renown bass-baritone Paul Robeson.   A Phi Beta Kappa and all-American football star from Rutgers University and graduate of Columbia Law School, Robeson was also a socialist known for his outspoken support of civil rights and the trade union movement. 

            In 1949, the country was already on edge since the House Un-American ActivitiesCommittee had been investigating alleged disloyalty and subversive activities on the part of private citizens, public employees, and organizations suspected of having Communist ties  and the “Hollywood Ten” were about to go to jail for failing to ‘co-operate’ with the Committee.   Senator Joe McCarthy would begin his witch hunts the following year.  

            The local newspaper called public attention to Robeson’s politics and encouraged citizens to protest his performance – and protest they did!  An estimated several thousand self-proclaimed  patriots, many fueled by alcohol,  were content to block the concert entrance,  burn a cross on a nearby hill, jeer and scream racial and ethnic slurs and throw rocks until a group of about one hundred feral souls, armed with baseball bats, knives, broken bottles, and brass knuckles charged a group of men, women and children (including Howard Fast) who had already gathered and were trapped within the concert grounds. 

            Fast, who was to emcee the event, organized  42 men and boys to resist three waves of  ‘screaming madmen” in hand to hand combat who were shouting ‘we’ll finish Hitler’s job’ and  threatening to ’string up’ Robeson as state police officers stood by and FBI men took notes.  In an extraordinary display of courage, Fast and those of his group still standing withstood the last assault by locking arms to protect the women and children while singing “We Shall Not be Moved.”   The concert did not occur and Robeson, who never reached the concert location, was safely ensconced elsewhere.

            In response, a second performance was planned for the following week when an estimated 20,000 gathered to hear Robeson, Pete Seeger and others as several thousand unionists formed a ring of protection around the concert.  The performance ended with no disturbance and only as thousands drove away did they realize that hundreds of protesters were waiting along the exit route  to once again attack concertgoers with rocks and broken fence posts. 

            Pete Seeger told how all the windows of his Jeep which contained his wife, two small children, Lee Hays and Woody Guthrie were broken by multiple rocks which he later used to build the chimney in his home.  Despite photographs, the public beating of a black WWI combat veteran by two policemen and a state trooper never led to prosecution.

            Even as a fifty year ‘remembrance and reconciliation’ ceremony was held in 1999, the Peekskill riots remain a long standing wound on the national psyche.  In the aftermath of the angry confrontations of the 2010 election, Howard Fast’s words remind us of “how thin the line is that separates constitutional government from tyranny and dictatorship” remain as valid today they were in 1949.

        

More Nukes and Drill Baby Drill

The following article was written soon after President Obama’s March 31st announcement of his energy policy.   Six weeks later, the BP Deepwater Horizon accident spilled millions of barrels of oil in the Gulf of Mexico continuously for three months until being capped.  The accident killed eleven workers and had devastating effects on Gulf tourism, its fishing industry, marine life and habitat.

                                     MORE NUKES AND DRILL BABY DRILL

           

            During his 2009 State of the Union address, President Barack Obama announced it was time for a ‘new generation of clean energy” initiatives.   The President’s call for construction of ‘safe, clean’ nuclear power plants and opening “new areas” for off shore petroleum drilling were each greeted with standing Congressional ovations amidst loud ‘huzzahs’ and cheers. 

            The lack of new nuclear plant applications and a Congressional off shore drilling moratorium were hard-fought victories that environmentalists won more than twenty years ago - but apparently the President and members of Congress have either short memories or this country is moving backwards on environmental protection.  

            With his usual soaring rhetorical promise, Obama accomplished a long sought goal of the nuclear industry in the early-1980’s by skillfully repackaging nuclear power as ‘clean’ and ‘safe’.   Neither is true as Three Mile Island taught us.

            In the 1970’s, the anti-nuclear (energy) movement began when a handful of ‘intervenors’ across the country challenged the Nuclear Regulatory Commission’s licensing proceedings.  Those interventions grew into citizen protest groups like the Clamshell Alliance in New Hampshire and the Abalone Alliance in southern California which committed acts of civil disobedience.   Both efforts alerted the public to significant health and safety issues like the cumulative impact of routine radioactive emissions and ground water contamination on the surrounding population.  

            In 1982, Congress adopted the Nuclear Waste Policy Act which promised ‘proof’ that a ‘solution’ for high level radioactive waste, which was then being stored at-reactor sites, existed.     Almost thirty years later, that radioactive waste is still being stored at-reactor sites and Yucca Mountain’s designation as a long term repository remains problematic.

            The $8 billion Obama promised in 2009 for sun farms and renewable energy projects is dwarfed when compared to the President’s $54 billion request for nuclear industry loan guarantees together with $18 billion loan money already approved by Congress in 2009.

            On the heels of his commitment to add to the nation’s 104 operating nukes which provide 20% of the nation’s electricity, the President said it is time to make ‘tough decisions’ and open ‘new areas’ for off shore drilling along the country’s seacoasts.   

            The state of Florida with 1200 miles of coastline has perhaps the most to lose as the Gulf of Mexico is being considered as one of those ‘new areas’.  Since Congress allowed the off shore moratorium to lapse, the Florida legislature is expected to disregard its $65 Billion tourist industry when it votes to repeal its state ban which would allow drilling platforms as close as three miles from the state’s ecologically fragile coasts. 

             The South Atlantic Planning Area, which runs 85,000 miles from Florida to South Carolina, would be subject to a series of seismic surveys to determine if sufficient liquid gold oil reserves exist.  One such exploration would include underwater airguns shooting compressed air bubbles up to 260 decibels with blasts of 60 or more impulses per mile powerful enough to penetrate several thousand feet into the Ocean floor.   Mother of all life, such invasive Ocean  testing would be devastating to all marine creatures especially the endangered right whale, prehistoric sea turtles and dolphins.  Recent independent geologists assert that sufficient geologic structures do not exist along Florida’s Atlantic coast to create enough oil to justify such speculative damaging tests.

            Given the 10 – 15 year licensing timeline for both nukes and off shore platforms to be operational and up and running, a determined Obama commitment could bring alternative energy sources on-line sooner rather than later.  If retooling the auto industry and punching out tanks for WW II took six months, a little political will could make all the difference - and make green energy a reality.

            If the President’s support for more nukes and off shore drilling is a ploy to obtain Republican votes in exchange for their support on global warming legislation, who is naïve enough to believe that they won’t take it and run – after meaningful climate change has been successfully emasculated. 

            Since it has been at least three decades since the adoption of any significant environmental legislation, Obama’s endorsement of new nuclear plants and off shore drilling appears to be a tacit admission that the President’s green energy lingo is little more than business as usual and that hefty Democratic majorities in Congress are unable to deliver on an environmental agenda.