You break it, you buy it
We seem to be once again at a point in the history of our great nation when the lust of the few for money and power has brought low the fortunes of mere working men and women. The last time we were treated to this was the Great Depression, but before that was the Panic of 1907 which was caused almost singlehandedly by one of the Butte Copper Barons.
These three events are all similar in nature; there is an aggregation of money in the hands of a few extremely capable and manipulative men (yes, men) because a festering flaw in the financial morals of the time erupts and allows them to turn to unscrupulous methods and fraudulent schemes to accrue money. Capitalism is a system based on trust, and cannot prosper for long when making money is based on chicanery. There have been many innovative schemes in recent years; the Long-Term Capital Management hedge fund debacle in 1998, the totally phony books of Enron in 2001, and the current mortgage bundling scam. If the underlying mortgage contracts had been sound there may have been little problem with this latest scheme; but they weren’t, and purposely so. National firms gave their mortgage brokers bonuses for negotiating terms they knew would cause the buyer to default. At the very foundation of the scheme there was fraud; who could think that it could survive for long?
Well, it survived long enough for a good number of people to make an astronomical sum of money, even as their institutions were collapsing around them, until it reached a crisis point where the taxpayer was enlisted to bail them out.
I have a suggestion; make the jerks that created the crisis pay for the bailout. It’s been done before; in ancient Greece and Rome many functions of government were paid for by "liturgies" donated by the wealthiest citizens. In emergencies they were expected to donate large sums to the public treasury to help defray the cost to the state. In those days the wealthy were expected and obligated to their community to use their wealth for the public good—this in a country the wealthy ran, if you can fathom that.
That kind of civic responsibility has happened in America, too; one hundred and one years ago J. P. Morgan, then one of the wealthiest men in the world, helped avert worldwide economic catastrophe by stepping in and putting things right during the Panic of 1907. The Panic was the baby of F. Augustus Heinze, a brilliant and powerful figure in the Butte mining industry who employed whatever methods it took to best the Amalgamated Copper Company (later the Anaconda Company). After a lengthy legal battle with Amalgamated, Heinze sold his Butte interests to them and founded the United Copper Company. An attempt by Heinze’s brother to corner United’s stock failed, and in its failure exposed an intricate web of interconnected directorships which manipulated the American banking system. This exposure created massive distrust in depositors, who began to withdraw their money from the banks in a mad panic, causing the banks to fail for lack of funds.
Morgan saw his duty as one of protecting the American financial system (and himself) by saving the more liquid banking companies from failure, and asked the Presidents of 50 solvent banking companies to come up with $25 million to shore up the troubled banks. Twenty-five million was Large Cash back then. He summoned them to the opulent library of his New York mansion and told them to work things out themselves. He then left the library, locking the doors behind him, thus locking in the 50 bankers. At three in the morning Morgan entered the library to find that nothing had been achieved so he had a document drawn up that shared the $25 million among the 50 banks and asked the Presidents to sign it. No one moved. Morgan approached Edward King, the President of the Union Trust bank, took him by the arm and led him to the table where the contract lay. Pointing to the contract, Morgan said, "There’s the place, King, and here’s the pen." King signed, and the other 49 followed suit.
As I watch this pathetic drama of a few greedy people bringing our country low I think more and more of the phrase in the Parable of the Faithful Servant; "to whom much is given, much shall be required." There is a responsibility to the common good that has been ignored by these "malefactors of great wealth," as Teddy Roosevelt used to call them.
We expect our elected officials to have the best interests of America and Americans at heart. That’s because they are our government and steer the nation for our benefit. But what happens when a few enormously wealthy unelected corporate managers become powerful enough to become the government, as has now again happened? Where is their allegiance to America? Where is their patriotic duty to do what’s best for the nation? From what I can see, it ain’t there.
Well, it should be, so maybe they should be reminded of their obligation to the American citizenry and handed a contract and a pen... a Red, White and Blue pen, of course.
[The information on J. P. Morgan is from an article by Jean Strouse in the Washington Post Weekly Edition, October 6-12, 2008]