Saturday, February 5, 2011

Grover Cleveland, Obama's Percursor?

I have been thinking about presidential comparisons with Obama. The closest I could imagine was Grover Cleveland's second administration.

Cleveland was the leader of the pro-business Bourbon Democrats who opposed high tariffs, free silver, inflation, imperialism and subsidies to business, farmers or veterans. His battles for political reform and fiscal conservatism made him an icon for American conservatives. Cleveland was tight with the bankers and the railroad. Maybe he was not so much in love with them as Obama, but it is still pretty disgusting.

Here are my notes from Matthew Josephson's The Politicos:


Josephson, Matthew. 1969. The Politicos, 1865-1896 (New York: Harcourt, Brace and company).

518-9: The second Cleveland administration was intent on restoring business confidence, in part, by reestablishing the gold standard by repealing the sermon Silver Purchase Back of 1890, and the elimination of silver as a metallic basis of money.

519: Tariffs were to be reduced in order to encourage imports to raise customs revenue.

519: Gold reserves were depleted under Harrison. The government would issue bonds to purchase more gold. Bankers, such as August Belmont, J.P. Morgan, and James Stillman, together with a group of German bankers represented by Henry Villard, had the president's ear.

527: In early 1893, Austria was accumulating gold for resumption and Russia for suspected war purposes. In Interest rates were rising and bankers were withdrawing gold from the treasury at an alarming rate.

530: A financial panic morphed into a depression.

530-1: Congress did not like Cleveland, who withheld patronage from Congress, in order to wield this scarce resource. Later to get unpopular measures passed.

531: In June of 1893, Cleveland called a special session of Congress to repeal "unwise laws" relative to the currency.

540: By January 1894, and the treasury, moving on its own, announced the issue of $50 million of 5% 10-year bonds to be sold that not less than 117.223 two-year-old 3%.

540-1: The banks did little to increase the treasury's holdings of gold. They presented their legal tender for redemption, using the gold they received, we loaned the gold back to the treasury.

543: The tariff reduction bill was structured so that it presented little threat to the great trusts.

545: The final tariff bill actually produced significant tariff increases in the most significant industries.

559: By the spring of 1894, people were becoming rebellious. They were even said to have commandeered trains from the southern Pacific and the Union Pacific. The credibility of these claims was an indication of how fearful the ruling class had become.

561: Coxey's "army" was forming. Coxey was a successful businessman, whose program was to have the federal government use its credit to give jobs to the unemployed, especially for public works.

563: Attorney general Olney enrolled approximately 1000 deputy marshals to track down disturbers.
566: The police violently dispersed Coxey's demonstration to the great relief of the establishment.

566: Labor injunctions had rarely been used. Olney perfected the legal weapons by which the military and the police would protect capitalist enterprises.

567: In 1894, following the panic of 1893, employers engaged in intensive wage cutting. This time, workers' resistance became stronger, unlike earlier periods. Almost 750,000 workers engaged in strikes -- the great railroad strike being the most dramatic.

588: While Cleveland and Olney were battling the workers to protect the capitalists, the capitalists were withdrawing their gold from the treasury.

589: By the fall of 1894, the depression became more acute.

590: By August of 1894, the government had exhausted the proceeds of his recent loan and the gold reserves sank the $52 million. Secretary of the treasury, Carlyle, begged the bankers, the deposit gold in the subtreasuries in return for legal tender. The bankers grudgingly relented a bit.

592: In November, Carlisle invited public bids for a second loan, but the bankers were dissatisfied with the terms.

593: The bankers relented, but the proceeds of the loan disappeared within 10 weeks, whereas the earlier loan took 10 months. In other words, massive withdrawals of gold occurred.

595: By January 1895, Cleveland agreed to virtually all of the banker's demands. He asked congress to agree that all new bonds would be gold bonds and that greenbacks and treasury silver notes would be converted into a national bank notes secured by government gold bonds.

596: The bankers, led by Morgan, demanded that the government make sure that the 3.75% bonds be issued abroad and that the gold be purchased with these bonds come from abroad.

599: The administration's financial bill was overwhelmingly defeated in the house in February 1895.

600: "At one psychological moment of the contest, by telephone, a call came from a treasury official who reported that there was less than $9 million in gold coin at the New York Sub-Treasury. Whereupon Morgan is said to have remarked: "Mr. President, the Secretary of the Treasury knows of one cheque outstanding for twelve million dollars. If that is presented today; it is all over." The implied threat in Morgan's words was unmistakable." [In other words, Morgan could bankrupt the government if it refused to accept his conditions.]

601: "Morgan also supervised and controlled for several months the gold reserve of the Treasury. Every banking house and exchange dealer in New York having important European connections was bound to the undertaking by being given an allotment of the syndicate's bonds at profitable rates."


11 comments:

Barkley Rosser said...

But Obama does not support the gold standard, nor has he supported strikebreaking, and the recession started well before he became president, as well as the financial crisis, with the economy starting to grow not too long after he came into office, even if unemployment has remained high.

John Emerson said...

Cleveland basically brought the Populist Party into being. And he wasn't the only Bourbon Democrat. Only with Bryan did the Democrats start moving in the direction of egalitarianism. Before then parties were organized around sectionalism, ethnicity, and graft.

Obama supports budget balancing at the cost of high employment. That's a pretty good gold standard equivalent. And Obama's Democrats just decided to have their convention in the most anti-union state in the country.

Brenda Rosser said...

Some economic history notes relating to this period:

1890s – JP Morgan bailed out the Grover Cleveland regime. This marks the beginning of The Eastern Establishment of the United States – an agglomeration of financier factions headquarted in Wall Street.
“..The Eastern Establishment, understood as an agglomeration of financier factions headquartered in Wall Street, had been the dominant force in American politics since J.P. Morgan had bailed out the Grover Cleveland regime in the 1890's. Since the assassination of William McKinley and the advent of Theodore Roosevelt, the power of the Wall Street group had grown continuously. The Eastern Establishment may have had its earliest roots north of Boston and in the Hudson River Valley, but it was determined to be, not a mere regional financier faction, but the undisputed ruling elite of the United States as a whole, from Boston to Bohemian Grove and from Palm Beach to the Pacific Northwest. It was thus imperative that the constant tendency towards the formation of regional factions be pre-empted by the pervasive presence of men bound by blood loyalty to the dominant cliques of Washington, New York, and the "mother country," the City of London…”
George Bush: The Unauthorized Biography --- by Webster G. Tarpley & Anton Chaitkin
Chapter -VIII- The Permian Basin Gang, 1948-59
http://www.tarpley.net/bush8.htm

1895 – Andrew Carnegie speaks of the ‘higher uses’ of surplus wealth.
"... there are higher uses for surplus wealth than adding petty sums to the earnings of the masses. Trifling sums given to each every week or month -- and the sums would be trifling indeed -- would be frittered away, nine times out of 10, in things which pertain to the body and not to the spirit; upon richer food and drink, better clothing, more extravagant living, which are beneficial neither to rich or poor."

Carnegie, Andrew. 1895. "The Best Use of Wealth." in Miscellaneous Writings of Andrew Carnegie, 2 vols. Burton J. Hendrick, ed. (Garden City, NY: Doubleday, Doran & Company, 1933): pp. 203-18.

CMike said...

Webster Tarpley, really Brenda R.?

Wikipedia says:

**************
...Tarpley is a marxist historian, author, journalist, lecturer, and critic of US foreign and domestic policy. Tarpley maintains that the September 11 attacks were engineered by a rogue network of the military industrial complex and intelligence agencies.

His writings and speeches describe a model of false flag terror operations by a rogue network in the military/intelligence sector working with moles in the private sector and in corporate media, and locates such contemporary false flag operations in a historical context stretching back in the English speaking world to at least the "gunpowder plot" in England in 1605.

He also maintains that "The notion of anthropogenic global warming is a fraud."

...He was a frequent host of "The LaRouche Connection" which its producer LaRouche's Executive Intelligence Review News Service describes as "a news and information cable television program."

Tarpley first gained attention for co-authoring, with Anton Chaitkin, ("history editor of Executive Intelligence Review") a 1992 book on George H. W. Bush, George Bush: The Unauthorized Biography, which was published by Executive Intelligence Review, run by Lyndon LaRouche.

He has expounded the "Versailles Thesis" laying the blame for the great wars of the 20th century on intrigues by Britain to retain her dominance. He gained experience as a political operative during his years with the LaRouche movement but broke away sometime after 1995....
****************

And regarding that Carnegie quote, the text from an Alistair Cooke documentary reads:

**********************
[Carnegie] wrote the best selling sermon, The Gospel of Wealth:

>>>>>The kept dollar is a stinking fish. The man who dies rich, dies thus disgraced.<<<<<

Now we're at this organ because this is how he began to dis-embarrass himself of his huge fortune. This was, of course, before the government saved you the embarrassment by taking it anyway. Once a Scottish Presbyterian church had asked him for a pipe organ and he provided it. And the word got around and within the next forty odd years he gave away nearly 7000 pipe organs.

And, because as a boy he'd had the first apprentice's card to a free public library in Pennsylvania, he gratefully presented over 3000 public libraries in America, Britain, Europe, Africa, Fiji.

Of the $400 million he made, 350 went to public benefactions, another 20 to an endowment for peace, the remaining 30 to pension off the widows of former presidents and tenants and crofters and servants and innumerable old friends, including "lifetime pension to my dear friend David Lloyd George."

"The man who dies rich, dies...disgraced." Well, I guess by his lights he did not die disgraced.

He left to his widow and daughter a trust fund which would keep them in considerable comfort but only through their own lifetime because he believed the most evil possible use of money was to leave it to your own family. "I would as soon," he wrote, "I would as soon leave my son a curse as the all mighty dollar."
**********************

At that point in his documentary Cooke looks at another side of Carnegie. The entire Money on the Land episode (continuous play YouTube link here) from Cooke's America series is worth watching for its discussion of the Robber Baron era and the issue of inherited wealth. The episode concludes with an assessment of William Jennings Bryan's place in that history.)

Barkley Rosser said...

John E.,

Obama says he is for reducing the deficit, as was Clinton. However, in December he agreed to a deficit-increasing tax deal with the Repubs so that he could get the START ratified and DADT repealed. Not much evidence of working too hard to reduce the deficit so far in reality rather than rhetoric.

John Emerson said...

Giving a tax cut treat like that to the Republicans is not a way for Obama to make himself look good in my book. There are really a long list of Clevelandesque things that Obama has done.

michael perelman said...

Obama's real crime was that he came into office with considerable good will and power. He failed to address the economy and finance, choosing instead to sell a flawed health care plane, co-written by the lobbyists. Only Lyndon Johnson (after the assassination of Kennedy) came into office with a stronger mandate.

Barkley Rosser said...

If there had not been a general willingness to use the filibuster for any and everything, I think we might have gotten a much better health care reform, maybe even single payer. As it was, to get anything it got so watered down as to barely do anything, despite all the hysterical screaming by the teahadists.

As it was, one of the biggest things LBJ did was get medicare, and there was a strong mandate for Obama to do something about health care. He also did something about fin reform, although in the end it also did not amount to much.

As for the economy in general, well, this recession was going to take a long time to get out of, given the depth and breadth of the financial crash, which did not happen on Obama's watch.

BTW, I would agree that in general Obama is more from the centrist DLC gang than from the more progressive end of the Dems in terms of his policies.

Brenda Rosser said...

CMike: "Webster Tarpley, really Brenda R.? "

Well, yeah. What is it specifically about Webster Tarpley that you don't like CMike? (I don't like LaRouche because of his and his cohort's hidden agenda and the spin thrown into the middle of a few credible paragraphs.)

Thanks for the info, by the way. Interesting background on Carnegie. All that effort to rid himself of hundreds of millions of dollars he could not have possibly earned in the first instance.

Obama's lame duck administration is not all that surprising given his pre-presidency background. The public were warned.

Brenda Rosser said...

"[Webster Tarpley] also maintains that "The notion of anthropogenic global warming is a fraud."

How about the notion of 'anthropogenic climate change' then?

Ken Houghton said...

543: The tariff reduction bill was structured so that it presented little threat to the great trusts.

545: The final tariff bill actually produced significant tariff increases in the most significant industries

Is there something mistranscribed here? Or were the Captains of Industry really Not Paying Attention?