The Crash of 2016

by Thom Hartmann

  It worked. From 1933 to 1937, in just four short years, FDR pulled the national unemployment rate down from over 24 percent to below 15 percent.

  In 1921, more than a decade before she won her Pulitzer Prize for reporting, journalist Anne O’Hare McCormick convinced her editor at the New York Times to send her to Italy, where she chronicled the rise of the world’s first official Fascist, Benito Mussolini. She knew well what it looked like when executive power was used, and when it was abused.

  In FDR, Anne McCormick saw the former but not the latter, and she largely echoed the American zeitgeist of the day.

  On March 19, 1933, she wrote a full-page article for the New York Times titled “The Nation Renews Its Faith: Out of the Swift Succession of Events That Has Marked Two Weeks of the New Deal, This Fact Stands Out: That the Confidence of the People in Government Has Been Re-established.”

  “Most of all,” she wrote in that article about FDR, “he is an instrument of history.” She noted that FDR’s first two weeks were “more than a transfer of authority from one party to another.” It was, she wrote, “a change of government instead of a change in administration.”

  People who’d lost hope that the federal government could ever be their advocate, that the first three words of the Constitution, “We the People,” had been hijacked by banksters and profiteers, that the government could never work for them, had their faith renewed in American institutions.

  “One suspects that he expresses the kind of revolution that fires the American mind,” McCormick wrote, “a 100 percent American Revolution, whose manifesto is the Constitution.”

  And by Roosevelt’s force of personality, Congress went along.

  As McCormick noted, “One reason for the present meekness of both Houses is that every member is practically buried under avalanches of telegrams and letters from constituents. These messages come to Democrats and Republicans alike. Sometimes profane, always imperative, they are mostly variations of a single order: Support the President: give him anything he wants.”

  Toward the end of the new president’s first month, McCormick again published a full-page New York Times article about FDR. On March 26, 1933, she wrote, “Mr. Roosevelt thinks and talks a great deal about government… He believes that at every turning point of history some one rises up who can enunciate and in a sense personify the new direction of the public mind and will. In his view America has reached such a crossroads.”

  By 1936, the Great Depression–induced “fear” that FDR had warned the nation of in his First Inaugural had largely subsided in America because of the revolutionary economic policies he enacted in his first few years in the White House.

  However, solving the Great Crash’s economic crisis was just the first task. FDR knew the next task was to remain vigilant against the Royalist counterrevolution enabled by the Great Forgetting.

  And so, as he was accepting his party’s nomination for a second term as president of the United States, Roosevelt said, “Today, my friends, we have won against the most dangerous of our foes. We have conquered fear.”

  But, he cautioned, “I cannot, with candor, tell you that all is well with the world.” He added, “Clouds of suspicion, tides of ill-will and intolerance gather darkly in many places.”

  In fact, he’d confronted an attempted coup by the Economic Royalists just two years into his first term.

  A front man for a group of American banksters and industrialists, Gerald MacGuire, approached the popular General Smedley Butler about leading an army of 500,000 men, assembling in Elkridge, Maryland, to march into DC and onto the White House lawn to oust FDR.

  Butler said that some of the wealthiest bankers and industrialists in the nation were putting up $3 million—over $3 billion in today’s dollars. DuPont and Remington were supplying the arms and ammunition for the assault scheduled to begin the following year in 1935.

  But General Butler blew the whistle, and the “Business Plot,” as it came to be known, was thwarted.

  In sworn testimony before the House Un-American Activities Committee, Butler said about MacGuire, “He did not give me the name of it, but he said it would all be made public; a society to maintain the Constitution, and so forth. They had a lot of talk this time about maintaining the Constitution. I said, ‘I do not see that the Constitution is in any danger,’ and I asked him again, ‘Why are you doing this thing?’ ”

  Coconspirators were named in the hearings, including the Rockefellers, the Mellons, the Morgans, the Du Ponts, and the Remingtons. Butler told the Committee that MacGuire had told him, “You know, the president is weak. He will come right along with us. He was born in this class. He was raised in this class, and he will come back. He will run true to form. In the end he will come around.”

  And it was true that Roosevelt did come from a wealthy family of considerable economic and political influence in New York. He had also practiced corporate law for a Wall Street firm. But despite his outward appearances of wealth and allegiance to the financial elite, Franklin Roosevelt was, at his core, a progressive.

  He came of age during the Progressive Era in the early 1900s when his distant cousin (they didn’t know each other personally), Teddy Roosevelt, beat back the Robber Baron Economic Royalists. As he summed up while running for governor of New York for the second time in 1930, “Progressive government by its very terms… must be a living and growing thing, that the battle for it is never ending and that if we let up for one single moment or one single year, not merely do we stand still but we fall back in the march of civilization.”

  So, when the Economic Royalists declared war on FDR, he declared war right back on them. “Here in America we are waging a great and successful war. It is a war for the survival of democracy. We are fighting to save a… precious form of government for ourselves and for the world,” he said in that same 1936 speech.27

  Summarizing America’s multigenerational war against the Economic Royalists, Roosevelt went on, “It was to win freedom from the tyranny of political autocracy that the American Revolution was fought. That victory gave the business of governing into the hands of the average man, who won the right with his neighbors to make and order his own destiny through his own government.”

  However, Roosevelt added, since our War of Independence, “[M]an’s inventive genius released new forces in our land which reordered the lives of our people. The age of machinery, of railroads; of steam and electricity; the telegraph and the radio; mass production, mass distribution—all of these combined to bring forward a new civilization and with it a new problem for those who sought to remain free.

  “For out of this modern civilization economic royalists carved new dynasties. New kingdoms were built upon concentration of control over material things.”

  Roosevelt added, “Through new uses of corporations, banks and securities, new machinery of industry and agriculture, of labor and capital—all undreamed of by the Fathers—the whole structure of modern life was impressed into this royal service.”

  And then the crash happened.

  “The collapse of 1929 showed up the despotism for what it was,” Roosevelt said. “The election of 1932 was the people’s mandate to end it. Under that mandate it is being ended.”

  Echoing warnings Jefferson made a century and a half earlier, Roosevelt argued that America’s survival depended on constant vigilance against the Economic Royalists.

  “These economic royalists complain that we seek to overthrow the institutions of America,” he said. “What they really complain of is that we seek to take away their power.

  “Our allegiance to American institutions requires the overthrow of this kind of power.”

  He told his fellow Democrats at that 1936 Democratic Convention that he was totally committed to the fight.

  Just looking at what was happening in Europe, where the Great Crash was fueling political extremism and unholy alliances between corporate power and autocratic government, FDR knew the stakes couldn’t be higher.

 
“I accept the commission you have tendered me. I join with you. I am enlisted for the duration of the war,” Roosevelt exclaimed.

  It would prove to be a war unlike any other the planet had ever seen.

  The Road to War: Yesterday and Today

  The economic crisis afflicting the world in the 1930s was just the first stage of a cycle that was once again descending on humanity. The next stage is always war.

  History tells us that in these times of crisis, the Economic Royalists—the bankers, industrialists, billionaires, kleptocrats, fascists—who know exactly what’s going on and whose ill-gotten gains had caused the Great Crash to begin with, immediately try to exploit the crisis to further enrich themselves.

  They demand compensation for their losses, extracting bailouts and enacting austerity measures on working people, squeezing what little wealth there is left in the common economy, thus deepening the economic crisis.

  Under calls for privatization, they assault democratic institutions, cutting off vital lifelines and services for working people.

  Aware that just as nature abhors a vacuum, power does also, they use words such as “freedom” and “free market” to push for weaker government, or weaker institutions of organized people, thus clearing room for organized money to take power.

  FDR summed up their strategy in 1936, saying, “In vain they seek to hide behind the flag and the Constitution. In their blindness they forget what the flag and the Constitution stand for.

  “Now, as always, they stand for democracy, not tyranny; for freedom, not subjection; and against a dictatorship by mob rule and the over-privileged alike.”

  As the situation for working people deteriorates further, extremist political parties rise up. Desperate populations flock to racist and nationalistic organizations to place blame on someone or something for their economic plight.

  America was not spared this extremism, and there were very real moments in the 1930s when it looked like the nation might go too far. But FDR successfully navigated that fine line between far-left and far-right extremist politics that were on the rise across Europe and Asia. Today, it’s often said that in those days of Depression, FDR saved capitalism.

  But other nations did succumb.

  Like the United States, the German economy had collapsed. After defeat in World War I, a brutal austerity regime under the Treaty of Versailles was imposed on Germany to make the country pay for the damage it had caused all around the continent.

  The economist John Maynard Keynes warned of the dangers of austerity at the time, writing, “The treaty includes no provisions for the economic rehabilitation of Europe.” He added, “The danger confronting us… is the rapid depression of the standard of life of the European populations to a point that will mean actual starvation for some.

  “Men will not always die quietly. For starvation, which brings to some lethargy and a helpless despair, drives other temperaments to the nervous instability of hysteria and to a mad despair. And these in their distress may overturn the remnants of organisation.”

  Speaking directly about Germany, Keynes warned, “Those who sign this treaty will sign the death sentence of many millions of German men, women and children.”

  War

  Thus arrived the next stage of the crash: war.

  A few months before FDR was sworn in during March 1933, Hitler had been appointed chancellor of Germany. In February of that year, his own forces burned down the Reichstag (the German Parliament building, an act that is comparable to burning the US Capitol), and by blaming it on “communists,” Hitler got the political capital he needed to consolidate power for the Nazis.

  During the next few years, concentration camps were built. Japan invaded China. Italy, which had gone fascist, invaded Ethiopia. Later, a civil war in Spain would give rise to fascism there, too—a comingling of state and corporation laced with hyper-militarism and nationalism. And in March 1936, Hitler invaded the Rhineland, breaking the Treaty of Versailles that had ended World War I.

  By 1936, as he was running for a second term, FDR knew of the peril on the horizon. He was also aware of the cycles of history. And he made an impassioned appeal to this new generation of Americans coming to power during another time of crisis.

  “There is a mysterious cycle in human events,” he said. “To some generations much is given. Of other generations much is expected.

  “This generation of Americans has a rendezvous with destiny.”

  Today, most of FDR’s generation has died out, and a new generation has a rendezvous with destiny that is just as perilous as the previous one. The 2008 stock market crash that triggered this next Great Crash is in our rearview mirror. But the Royalists are on the march in the United States and abroad.

  Royalist technocrats have seen to it that any Royalist losses from the financial crisis are recovered. They’re quietly toppling democratic governments across Europe in Greece, Italy, and Spain, installing Royalist technocrats to oversee harsh austerity measures that cripple working people in order to pay off bankers who made bad investments.

  The cycles of history that led to Europe and the rest of the planet breaking into world war eighty years ago are rolling back around today.

  In Greece, a modern-day version of the Nazi Party, Golden Dawn, is gaining more popularity among the austerity-ravaged people. In 2009, that party, which embraces Nazi symbolism, racism, and xenophobia, had zero seats in the national parliament. But after three years of austerity, in the 2012 election, Golden Dawn picked up eighteen seats in parliament.

  And Golden Dawn is looking to expand its influence, not just in Greece but all around the continent. As the Guardian reported in early 2013, “Greek rightwing extremists have been forging close contacts in Germany in an attempt to strengthen their power base in Europe, according to German officials.”

  In 2012, the European Union was awarded the Nobel Peace Prize for its efforts over the last half century in preventing another Continental war. But four generations later, with fascism once again on the march in Europe, it’s becoming increasingly evident that the Nobel Prize committee spoke too soon.

  It’s looking more and more like 1936 all over again.

  Only this time, in America, we don’t have an FDR with a solid majority in Congress. And just like after the crash of 1857 and subsequent Civil War, the Economic Royalists find themselves in power once again.

  The Economic Royalists have gained majorities in Congress and state legislatures all around the nation, crippling millions of people with brutal austerity cuts to social services, with union busting, and with privatization of the commons.

  As the cycle predicts, extremism is on the rise in America. In 2008, there were just 149 militia groups nationwide. By the end of 2012, there were more than 1,200.

  And thanks to the Supreme Court’s Citizens United decision, there’s more money in our political system than ever before, and crony capitalism rivals that of the 1920s.

  And unique to this cycle are the even more daunting challenges we confront in a rapidly warming planet.

  The legendary Bill Moyers bluntly told me back in 2011, “Our democracy is dysfunctional.”

  He was right then, and it’s only gotten worse.

  “We no longer have a government of, by, and for the people—representative democracy. We have government by plutocracy—the rule of the rich for the rich by the rich,” Moyers said on my television program. “Plutocracy has one purpose, which is to protect wealth.”

  The hallmark of plutocracy is monopoly. Fewer and fewer companies owning more and more wealth. Competition is destroyed by unrestrained growth of corporate interests. Big companies buy small companies over and over again, until there are no small businesses left. Private-equity firms take care of the rest, even harvesting small- and medium-sized businesses for a profit.

  You could parachute from some great altitude over any part of America, into any American city, and you’d have no idea where you are. The great homogenization has happened; all the
cities look the same. There are virtually no unique, regional, family-owned small businesses left; just transnational behemoths whose brands populate every mall, downtown, and suburb of this country.

  New Royalists such as the Kochs, the Waltons, and the Adelsons have replaced the Rockefellers, Carnegies, Du Ponts, and Morgans of the past.

  Bill Moyers, sounding like President Grover Cleveland, noted, “Democracy is in trouble. Democracy in America has been a series of narrow escapes. We may be running out of luck—representative government is threatened at this moment by wealth, power, and corporate conglomerate interests.”

  A year later, Nobel Prize–winning economist Paul Krugman explained to me, “We are living through a time where we face an enormous economic challenge.”

  He warned, “There are a lot of ugly forces being unleashed in our societies on both sides of the Atlantic… We may look back at this, thirty years from now, and say, ‘That is when it all fell apart.’ And by ‘all,’ I don’t just mean the economy.”

  Morris Berman, in his Twilight of American Culture,28 suggests we must create a new monastic class to preserve classical wisdom and teachings as we enter a repeat of the feudal Dark Ages. This coming period of chaos and darkness, Berman suggests, could easily last a century or more before the next Renaissance lifts again the wisdom of Plato and Shakespeare into the light.

  It’s remotely possible that things won’t get that bad. But that will depend on “We the People” overcoming the new Economic Royalists, who’ve taken advantage of this next Great Forgetting and are dragging the nation toward the Crash of 2016.