On The Guns of August

I recently finished reading The Guns of August, the Pulitzer Prize-Winning Classic about the Outbreak of World War I, by Barbara W. Tuchman.

Below are key excerpts from the book that I found particularly insightful:

Wilson, facing this group of “ignorant men,” as he called them, and accompanied by his fellow officer and future chief, Sir John French, “who knows nothing at all about the subject,” pinned up his great map of Belgium on the wall and lectured for two hours. He swept away many illusions when he explained how Germany, counting on Russia’s slow mobilization, would send the bulk of her forces against the French, achieving superiority of numbers over them. He correctly predicated the German plan of attack upon a right-wing envelopment but, schooled in the French theories, estimated the force that would come down west of the Meuse at no more than four divisions. He stated that, if all six British divisions were sent immediately upon the outbreak of war to the extreme left of the French line, the chances of stopping the Germans would be favorable.

Coming from Haldane this conclusion had a profound effect upon Liberal thinking and planning. The first result was a naval pact with France by which the British undertook at threat of war to safeguard the Channel and French coasts from enemy attack, leaving the French fleet free to concentrate in the Mediterranean. As this disposed the French fleet where it would not otherwise be, except by virtue of the agreement, it left a distinct obligation upon Britain…This curious document managed to satisfy everybody: the French because the whole British Cabinet Government had now officially acknowledged the existence of the joint plans, the antiwar group because it said England was not “committed,” and Grey because he had evolved a England was not “committed,” and Grey because he had evolved a formula that both saved the plans and quieted their opponents. To have substituted a definite alliance with France, as he was urged in some quarters, would “break up the Cabinet,” he said.

War pressed against every frontier. Suddenly dismayed, governments Struggled and twisted to fend it off. It was no use. Agents at frontiers were reporting every cavalry patrol as a deployment to beat the mobilization gun. General staffs, goaded by their relentless timetables, were pounding the table for the signal to move lest their opponents gain an hour’s head start. Appalled upon the brink, the chiefs of state who would be ultimately responsible for their country’s fate attempted to back away but the pull of military schedules dragged them forward.

How far reduced, how distant the end, no one yet knew. No one could realize that for numbers engaged and for rate and number of losses suffered over a comparable period of combat, the greatest battle of the war had already been fought. No one could yet foresee its consequences: how the ultimate occupation of all Belgium and northern France would put the Germans in possession of the industrial power of both countries, of the manufactures of Liege, the coal of the Borinage, the iron ore of Lorraine, the factories of Lille, the rivers and railroads and agriculture, and how this occupation, feeding German ambition and fastening upon France the fixed resolve to fight to the last drop of recovery and reparation, would block all later attempts at compromise peace or “peace without victory” and would prolong the war for four more years.

At the time of the disaster General Marquis de Laguiche, the French military attache came to express his condolences to the Commander • in Chief. ‘We are happy to have made such sacrifices for our Allies,” the Grand Duke replied gallantly. Equanimity in the face of catastrophe was his code, and Russians, in the knowledge of inexhaustible supplies of manpower, are accustomed to accepting gigantic fatalities with comparative calm. The Russian steam roller in which the Western Allies placed such hopes, which after their debacle on the Western Front was awaited even more anxiously, had fallen apart on the road as if it had been put together with pins. In its premature start and early demise it had been. Just as the Grand Duke said, a sacrifice for an ally. Whatever it cost the Russians, the sacrifice accomplished what the French wanted: withdrawal of German strength from the Western Front. The two corps that came too late for Tannenberg were to be absent from the Mame.

But Francois faced battle, whereas Kluck, thinking he faced only pursuit and mopping up, ignored the precaution. He believed the French incapable, after ten days of retreat, of the morale and energy required to turn around at the sound of the bugle and fight again. Nor was he worried about his flank. “The General fears nothing from the direction of Paris,” recorded an officer on September 4. “After we have destroyed the remains of the Franco-British Army he will return to Paris and give the IVth Reserve the honor of leading the entry into the French capital.”

In conclusion:

After the Marne the war grew and spread until it drew in the nations of both hemispheres and entangled them in a pattern of world conflict no peace treaty could dissolve. The Battle of the Mame was one of the decisive battles of the world not because it determined that Germany would ultimately lose or the Allies ultimately win the war but because it determined that the war would go on. There was no looking back, Joffre told the soldiers on the eve. Afterward there was no turning back. The nations were caught in a trap, a trap made during the first thirty days out of battles that failed to be decisive, a trap from which there was, and has been, no exit.

A recommended read in the areas of history and military conflicts.

On The Rise Of Theodore Roosevelt

I recently finished reading The Rise Of Theodore Roosevelt by Edmund Morris. As the title indicates this is a book that chronicles the early stages of Theodore Roosevelt from birth to his ascension to US Presidency.

Below are key excerpts from the book:

Politically, too, it has been a year of superlatives, many of them supplied, with characteristic immodesty, by the President himself. “No Congress in our time has done more good work,” he fondly told the fifty-ninth, having battered it into submission with the sheer volume of his social legislation. He calls its first session “the most substantial” in his experience of public affairs. Joseph G. Cannon, the Speaker of the House, agrees, with one reservation about the President’s methods. “Roosevelt’s all right,” says Cannon, “but he’s got no more use for the Constitution than a tomcat has for a marriage license.”

Roosevelt is used to such criticism. He has been hearing it all his life. “If a man has a very decided character, has a strongly accentuated career, it is normally the case of course that he makes ardent friends and bitter enemies.”‘Yet even impartial observers will admit there is a grain of truth in Twain’s assertions. The President certainly has an irrational love of battle. He ceaselessly praises the joys of righteous killing, most recently in his annual message to Congress: “A just war is in the long run far better for a man’s soul than the most prosperous peace.”

To say that Theodore Roosevelt made a vivid first impression upon his colleagues would hardly be an exaggeration. From the moment that he appeared in their midst, there was a chorus of incredulous and delighted comment. Memories of his entrance that night, transcribed many years later, vary as to time and place, but all share the common image of a young man bursting through a door and pausing for an instant while all eyes were upon him—an actor’s trick that quickly became habitual. This gave his audience time to absorb the full brilliancy of his Savile Row clothes and furnishings.

Like a child, said Isaac Hunt, the young Assemblyman took on new strength and new ideas. “He would leave Albany Friday afternoon, and he would come back Monday night, and you could see changes that had happened to him. Such a superabundance of animal life was hardly ever condensed in a human [being].

Although the World claimed, with possible truth, that New Yorkers were pleased to see Roosevelt go,few could deny that his record as Commissioner was impressive. “The service he has rendered to the city is second to that of none,” commented The New York Times, “and considering the conditions surrounding it, it is in our judgment unequaled.” He had proved that it was possible to enforce an unpopular law, and, by enforcing it, had taught the doctrine of respect for the law. He had given New York City its first honest election in living memory. In less than two years, Roosevelt had depoliticized and deethnicized the force, making it once more a neutral arm of government. He had broken its connections with the underworld, toughened the police-trial system, and largely eliminated corruption in the ranks. The attrition rate of venal officers had tripled during his presidency of the Board, while the hiring of new recruits had quadrupled—in spite of Roosevelt’s decisions to raise physical admission standards above those of the U.S. Army, lower the maximum-age requirement, and apply the rules of Civil Service Reform to written examinations. As a result, the average New York patrolman was now bigger, younger, and smarter. “He was also much more honest, since badges were no longer for sale. and more soldier-like (the military ideal having been a particular feature of the departing commissioner’s philosophy). Between May 1895 and April 1897, Roosevelt had added sixteen hundred such men to the force.

Well might he be happy. Theodore Roosevelt had cone home to find himself the most famous man in America—more famous even than Dewey, whose victory at Manila had been eclipsed (if temporarily) by the successive glories of Las Guasimas, San Juan, Santiago, and the round-robin which “brought our boys back home.” The news that the United States and Spain had just signed a peace initiative came as a crowning satisfaction. Intent as Roosevelt might be to parry questions about his gubernatorial ambitions—thereby strengthening rumors that he had already decided to run—his days as a soldier were numbered. It remained only to spend five days in quarantine, and a few weeks supervising the demobilization of his regiment, before returning to civilian life and claiming the superb inheritance he had earned in Cuba.

One of the first outsiders to congratulate Roosevelt was William McKinley, who sent a handwritten expression of unqualified good wishes…There comes a time in the life of a nation, as in the life of an individual, when it must face great responsibilities, whether it will or no. We have now reached that time. We cannot avoid facing the fact that we occupy a new place among the people of the world, and have entered upon a new career.. . . The guns of our warships in the tropic seas of the West and the remote East have awakened us to the knowledge of new duties. Our flag is a proud flag, and it stands for liberty and civilization. Where it has once floated, there must be no return to tyranny or savagery . . .

If not the first, Theodore Roosevelt was certainly one of the first politicians to act responsibly in view of the changing economics and class structure of late-nineteenth-century America. As such he deserves to be ranked only slightly behind Altgeld and Pingree and Jones. If his governorship, which lasted only two years (and was subject to enormous distractions in the second), was less spectacular than some, it was spectacular enough in terms of his own membership in the social and intellectual elite. One thinks of his early contempt for unions, for Henry George, for the unwashed Populists, for the rural supporters of William Jennings Bryan. Yet as Governor, Roosevelt had shown himself again and again willing to support labor against capital, and the plebeians in their struggle against his own class.

A highly recommended read in the area of politics. I look forward to reading the sequel, Theodore Rex.

The House Of Morgan

I recently finished reading the award-winning book The House of Morgan by Ron Chernow. As best summarized by the author: “This book is about the rise, fall, and resurrection of an American banking empire—the House of Morgan. Perhaps no other institution has been so encrusted with legend, so ripe with mystery, or exposed to such bitter polemics. Until 1989, J. P. Morgan and Company solemnly presided over American finance from the “Corner” of Broad and Wall. Flanked by the New York Stock Exchange and Federal Hall, the short building at 23 Wall Street, with its unmarked, catercorner entrance, exhibited a patrician aloofness. Much of our story revolves around this chiseled marble building and the presidents and prime ministers, moguls and millionaires who marched up its steps. With the records now available, we can follow them inside the world’s most secretive bank.”

Below are key excerpts from the book that I found particularly insightful:

The story of the three Morgan banks is nothing less than the history of Anglo-American finance itself. For 150 years, they have stood at the center of every panic, boom, and crash on Wall Street or in the City. They have weathered wars and depressions, scandals and hearings. bomb blasts and attempted assassinations. No other financial dynasty in modern times has so steadily maintained its preeminence. Its chronicle holds up a mirror in which we can study the changes in the style, ethics. and etiquette of high finance. To order this vast panorama, we will divide our saga into three periods. This framework applies principally to the Morgan houses but also has, I think, more general relevance to other banks.

The House of Morgan’s future approach to business was shaped in the gloomy days of 1873. The panic was a disaster for European investors. who lost $600 million in American railroad stocks. Stung by all the railroad bankruptcies, Pierpont decided to limit his future dealings to elite companies. He became the sort of tycoon who hated risk and wanted only sure things. “I have come to the conclusion that neither my firm nor myself will have anything to do, hereafter, directly or indirectly, with the negotiation of securities of any undertaking not entirely completed; and whose status, by experience, would not prove it entitled to a credit in every respect unassailable.” Another time, he said, “The kind of Bonds which I want to be connected with are those which can be recommended without a shadow of doubt, and without the least subsequent anxiety, as to payment of interest, as it matures. ” This encapsulated future Morgan strategy—dealing only with the strongest companies and shying away from speculative ventures.

Pierpont selected partners not by wealth or to fortify the bank’s capital but based on brains and talent. If the Morgan style was royal. its hiring practices were meritocratic. The bank had many first-rate technicians.

The intellectual and political leap most damaging to the House of Morgan was a spreading notion that a Wall Street trust had created the industrial trusts and governed their subsequent destiny.

After Pierpont Morgan’s death, the House of Morgan would become less autocratic, less identified with a single individual. Power would be diffused among several partners, although Jack Morgan would remain as figurehead. In the new Diplomatic Age, the bank’s influence would not diminish. Rather, it would break from its domestic shackles and become a global power, sharing financial leadership with central banks and government! and profiting in unexpected ways from the partnership. What nobody could have foreseen in 1913 was that lack Morgan—shy, awkward, shambling Jack who had cowered in the corners of Pierpont’s life—would preside over an institution of perhaps even larger power than the one ruled by his willful, rambunctious father.

Through Strong’s influence, the Federal Reserve System would prove far more of a boon than a threat to Morgans. The New York Fed and the bank would share a sense of purpose such that the House of Morgan would be known on Wall Street as the Fed bank. So, contrary to expectations, frustrated reformers only watched Morgan power grow after 1913.

The news of war was greeted with melodramatic foreboding by Jack Morgan, who foresaw “the most appalling destruction of values in securities which has ever been seen in this country.” Later reviled as a “merchant of death” by isolationists, his first reaction, in fact, was spotlessly humane.

So the early New Deal threatened the House of Morgan in two ways: the Pecora hearings were exposing practices that could bring fresh regulation to Wall Street. And the White House attitude toward European finance augured an end to the House of Morgan’s special diplomatic role of the 1920s. After an incestuous relationship with Washington in the twenties, the bank would suffer the curse of eternal banishment.

The Glass-Steagall Act took dead aim at the House of Morgan. After all, it was the bank that had most spectacularly fused the two forms of banking. It had, ironically, proved that the two types of services could be successfully combined; Kuhn, Loeb and Lehman Brothers did less deposit business, while National City and Chase had scandal-ridden securities affiliates. The House of Morgan was the active double threat. with its million-dollar corporate balances and blue-ribbon underwriting business.

As it turned out, the House of Morgan didn’t suffer as much from Willkie’s defeat as might have been expected. Bolstered by his election victory, Roosevelt moved more vigorously to support Britain, and in this effort he needed the Morgan bank. With marvelous suddenness, the chill in Morgan-Roosevelt relations thawed and was replaced by cordiality from the White House of a sort that 23 Wall hadn’t known since the twenties. As America’s attention shifted from blistering debates over domestic policy to ways in which to deal with Europe’s dictators, the power of the House of Morgan surged accordingly.

On a closing note:

The old House of Morgan’s power stemmed from the immature state of government treasuries, companies, and capital markets. It stood sentinel over capital markets that were relatively small and primitive. Today, money has become a commonplace commodity. A company in need of capital can turn to investment banks, commercial banks, or insurance companies; it can raise it through bank loans, bond issues, private placements, or commercial paper; it can draw upon many) currencies, many countries, many markets. Money has lost its mystique, and banking. therefore, has lost a bit of its magic. The Morgan story is the story of modern finance itself. A Pierpont Morgan exercised powers that today are dispersed among vast global banking conglomerates. The activities once performed by a knot of side-whiskered men in mahogany parlors are now spread across trading rooms around the world. We live in a larger, faster, more anonymous age. There will be more deals done and more fortunes made, but there will never be another barony like the House of Morgan.

A recommended read in the areas of Finance, Banking and History.

On Lenin’s Tomb

I recently finished reading the Pulitzer Prize winning book: Lenin’s Tomb – The Last Days of the Soviet Empire – by David Remnick.

Below are key excerpts from this masterpiece:

In the years after Stalin’s death, the state was an old tyrant slouched in the comer with cataracts and gallstones, his muscles gone slack. He The state was nearly senile, but still dangerous enough. He still kept the key to the border gate in his pocket and ruled every function of public life. Now and then he had fits and the world trembled.

When Brezhnev shoved Khrushchev out of power, the state M had the means to squash what little freedom it had allowed. The censors went through the libraries with razor blades and slashed from the bound copies of Novy Mir Solzhenitsyn’s One Day in the Life of Ivan Denisovich…The regime would rather kill its brightest children than give way.

“It is perfectly obvious that the lack of the proper level of democratization of Soviet society was precisely what made possible both the cult of personality and the violations of the law, arbitrariness, and repressions of the thirties—to be blunt, real crimes based on the abuse of power. Many thousands of members of the Party and nonmembers were subjected to mass repressions. That, comrades, is the bitter truth. Serious damage was done to the cause of socialism and the authority of the Party, and we must speak bluntly about this. This is essential for the final and irreversible assertion of Lenin’s ideal of socialism. ‘The guilt of Stalin and those close to him before the Party and the people for the mass repressions and lawlessness that were permitted are immense and unforgivable…even now we still encounter attempts to ignore sensitive questions of our history, to hush them up, to pretend that nothing special questions of our history, to hush them up, to pretend that nothing special happened. We cannot agree with this, it would be a neglect of historical truth, disrespect for the memory of those who found themselves innocent victims of lawlessness and arbitrariness.”

But Gorbachev had not finished. There was a reason for his revelation. It tied out that he had saved his confession for traditional ends. “I’ve been told more than once that it is time to stop swearing allegiance to socialism,” he was saying now. “Why should I? Socialism is my deep conviction, and I will promote it as long as I can talk and work.” By late 1990, political opinion polls showed that only a minority of Soviet people—not more than 20 percent—still shared Gorbachev’s faith in the efficacy of socialism. But attempts to turn away from the “socialist choice” were inconceivable to Gorbachev—a betrayal, a “counterrevolution on the sly.”

But things had changed. The sharp ideological divisions within the Party had now become an open secret, an open struggle, and the trick was to get the support of powerful liberals within the structure. Three old friends—Yuri Afanasyev, Nikolai Shmelyov, and Yuri Karyakin—brought to the Nineteenth Special Party Conference, in June 1988, a petition demanding Karpinsky’s rehabilitation. With the help of his old acquaintances Aleksandr Yakovlev and Boris Pugo, the tactic worked. By the next year, Len Karpinsky was in the regular rotation as a columnist at Moscow News—a golden boy, he says, “of a certain age.”

The Communist Party apparatus was the most gigantic mafia the world has ever known. It guarded its monopoly on power with a sham consensus and constitution and backed it up with the force of the KGB and the Interior Ministry police. There were also handsome profits. The Party had so obviously socked away money abroad and sold off” national resources—including the country’s vast gold reserves—that just after the collapse of the August coup, the Party’s leading financial officer took a look into the future and threw himself off” a high balcony to his death.

But Gorbachev knew that he could not conduct a genuine investigation into the Partv’s corruption. First, the Party, of which he was the head, would sooner kill him than allow it. Second, even if he could carry out such an investigation, Gorbachev would be faced with the obvious embarrassment: the depths of the Party’s rot. Instead, taking a page from Andropov’s style manual, he made a grand symbolic gesture. Yuri Churbanov, Brezhnev’s son-in-law and a deputy chief of the Interior Ministry, was indicted and tried son-in-law and a deputy chief og the Interior Ministry, was indicted and tried for accepting more than $1 million in bribes while working in Uzbekistan…But just as he could never distance himself enough from a discredited ideology, Gorbachev’s inability to jettison the Party nomenklatura and his political debts to the KGB spoiled his reputation over time in the eyes of a people who had grown more and more aware of the corruption and deceit in their midst.

At first, the Kremlin had not seemed so threatened by the Baltic republics. They were, after all, a “special case,” minuscule states absorbed into the Soviet Union more than twenty years after the Bolshevik Revolution…But the Baltic example became the model not for the revitalization of the Union, but rather for its collapse. In the three years it took to win independence, the Baits were never violent, only stubborn. It was that very temperament—Sakharov’s calm confidence on a mass scale—that characterized their revolution. None of the other republics organized quite so well or thought with such precision and cool.

The idea that the individual was of absolute value appeared in Russia only in the nineteenth century via Western influences, but it was stunted because there was no civic society. This is why human rights was never an issue. The principle was set out very clearly by Metropolitan Illarion in the eleventh century in his ‘Sermon on Law and Grace,’ in which he makes clear that grace is higher than law; you see the same thing today in our great nationalists like Prokhanov—their version of grace is higher than the law. The law is somehow inhuman, abstract. The attempts to revise this principle were defeated. The Russian Revolution was a reaction of absolute simplification. Russia found its simplistic and fanatic response and conquered its support. What we are living through now is a breakthrough. We are leaving the Middle Ages.’

“When Mikhail Sergeyevich rejected the 500 Days program he was rejecting the last chance for a civilized transition to a new order,” Aleksandr Yakovlev told me. “It was probably his worst, most dangerous mistake, because what followed was nothing less than a war.”

And just as a change in consciousness in the people had led to this incredible resistance, one could not rule out that even the conspirators had evolved beyond their ancestors. They had the same Stalinist impulses, but not the core of cruelty, the willingness to flood the city in blood, call it a victory for socialism, and then go off” to a midnight screening of Happy Guys. They could pick up the pistol, but not always shoot it. They were bullies, and bullies could be called on their bluff”.

But without Yeltsin, Gorbachev might well have dallied more than he did, the radical democrats Gorbachev might never have found a single, strong leader, the coup might have succeeded. As much as they had come to despise each other, Gorbachev and Yeltsin were linked in history.

What he hopes for now, he said, was not a new empire, not the resuscitation of a great power, but simply the development of “a normal country.” It was time to join in that process. After a life that had reflected the agonies of the old regime—a communist youth, the war, prison, the camps, the battle with the Kremlin. forced exile—now, at the age of seventy-five, he was completing the circle. He had tickets to return home. “Even at the worst tunes. I knew I would be coming home.” he said. “It was crazy. No one believed it. But I knew I would come home to die in Russia.”

A highly recommended read in the areas of history and world politics.

JFK And The Unspeakable

I recently finished reading JFK and the Unspeakable – Why He Died and Why It Matters by James W. Douglass. As James Bradley best said it in his praise of the book: “A remarkable story that changed the way I view the World”.

Below are key excerpts from the book that I found particularly insightful:

“The Unspeakable” is a term Thomas Merton coined at the heart of the sixties after JFK’s assassination—in the midst of the escalating Vietnam War, the nuclear arms race, and the further assassinations of Malcolm X, Martin Luther King, and Robert Kennedy. In each of those soul-shaking events Merton sensed an evil w^hose depth and deceit seemed to go beyond the capacity of words to describe.

Whether or not JFK was a martyr his story could never have been told without the testimony of risk-taking witnesses to the truth. Even if their lives were not taken—and some were—they were all martyrs in the root meaning of the word, witnesses to the truth. The belief behind this book is that truth is the most powerful force on earth, what Gandhi called satyagraha, “truth-force” or “soul-force.” By his experiments in truth Gandhi turned theology on its head, saying “truth is God.” We all see a part of the truth and can seek it more deeply. Its other side is compassion, our response to suffering. The story of JFK and the Unspeakable is drawn from the suffering and compassion of many witnesses who saw the truth and spoke it. In living out the truth, we are liberated from the Unspeakable.

Two critical questions converge at Kennedy’s assassination. The first is: Why did his assassins risk exposure and a shameful downfall by covertly murdering a beloved president? The second is: Why was John Kennedy prepared to give his life for peace, when he saw death coming.? The second question may be key to the first, because there is nothing so threatening to systemic evil as those willing to stand against it regardless of the consequences. So we will try to see this story initially through the life of John Kennedy, to understand why he became so threatening to the most powerful military-economic coalition in history that its wielders of power were willing to risk everything they had in order to kill him.

To match the efficiency of a totalitarian enemy, U.S. military leaders urged legislation that would mobilize the nation to a state of constant readiness for war. Thus the National Security Act of 1947 laid the foundations of a national security state: the National Security Council (NSC), the National Security Resources Board (NSRB), the Munitions Board, the Research and Development Board, the Office of the Secretary of Defense, the Joint Chiefs of Staff, and the Central Intelligence Agency (CIA). Before the act was passed, Secretary of State George Marshall warned President Truman that it granted the new intelligence agency in particular powers that were “almost unlimited,” a criticism of the CIA that Truman would echo much too late—soon after the assassination of John Kennedy.

Castro’s comparison between Cuba and Vietnam provokes further questions about John Kennedy. If JFK had the courage to resist the CIA and the Pentagon on Cuba, as Castro recognized, how could he have allowed himself to be sucked into the war in Vietnam? Or did he finally turn around on Vietnam in a way that paralleled his changes toward the Soviet Union and Cuba? Did John Kennedy ultimately make a decision for peace in Vietnam that would become the final nail in his coffin?

As spring turned into the summer of 1963. President John F. Kennedy had decided to withdraw the U.S. military and neutralize Vietnam, just as he had done in Laos. When he said that one day to his aides Dave Powers and Kenny O’Donnell, they asked him bluntly: How could he do it? How could he carry out a military withdrawal from Vietnam without losing American prestige in Southeast Asia?

In Kennedy’s short presidency, the military-industrial complex actually increased its profits and power. JFK’s initial call to develop a military response to the Soviet Union and its allies that would be “more flexible” than the Eisenhower policy of mutual assured destruction expanded the Pentagon’s contracts with U.S. corporations. Yet in the summer of 1963, the leaders of the military-industrial complex could see storm clouds on their horizon. After JFK’s American University address and his quick signing of the Test Ban Treaty with Khrushchev, corporate power holders saw the distinct prospect in the not distant future of a settlement in the Cold War between the United States and the Soviet Union. Both Kennedy and Khrushchev were prepared to shift their war of conflicting ideologies to more peaceful fronts. Kennedy wanted a complete ban on the testing of nuclear weapons, then mutual steps in nuclear disarmament. He saw a willing partner in Khrushchev, who wanted to ease the huge burden of arms expenditures on the Soviet economy. In that direction of U.S.-Soviet disarmament lay the diminished power of a corporate military system that for years had controlled the United States government. In his turn toward peace, Kennedy was beginning to undermine the dominant power structure that Eisenhower had finally identified and warned against so strongly as he left the White House.

In his deepening alienation from the CIA. the Pentagon, and big business. John Kennedy was moving consciously beyond the point of no return. Kennedy knew well the complicity that existed among the Cold War’s corporate elite. Pentagon planners, and the heads of “intelligence agencies.” He was no stranger to the way systemic power worked in and behind his national security state. But he still kept acting for “the interests of the great mass of Other people”—and as his brother Robert put it, to prevent “the specter of the death of the children of this country and around the world.” That put him more and more deeply in conflict with those who controlled the system.

On September 20, 1963. two months and two days before his death. Kennedy spoke to the United Nations. He took the opportunity to return to a theme of his American University address—pursuing a strategy of peace through a step-by-step process. Peace,” he said, “is a daily, a weekly, a monthly process, gradually changing opinions, slowly eroding old barriers, quietly building new structures. And however undramatic the pursuit of peace, that pursuit must go on.”

Just as Chicago was the model for Dallas, Saigon was the backdrop for Chicago. The virtual simultaneity of the successful Saigon plot to assassinate Ngo Dinh Diem and the unsuccessful Chicago plot to assassinate John F. Kennedy strongly suggests their having been coordinated in a single, comprehensive scenario. If Kennedy had been murdered in Chicago on the day after Diem’s and Nhu’s murders in Saigon, the juxtaposition of the events would have created the perfect formula to be spoon-fed to the public: “Kennedy murdered Diem, and got what he deserved.”

How real was the threat to use President Kennedy’s assassination as the justification for an attack on Cuba and the Soviet Union? When we take off our Warren Commission blinders, we can see that the letter sent to the Soviet Embassy was designed to implicate the Soviets and Cubans in the murder of the president of the United States. That was the apparent tactic of a twofold, winner-take-all plot: a plot to assassinate the president who was prepared to negotiate an end to the Cold War, intertwined with a deeper plot to use fraudulent proof of the U.S.S.R.’s and Cuba’s responsibility for that assassination so as to justify the option of preemptive strikes on those same two Communist nations. President Kennedy encountered that kind of push for a nuclear first strike against the Soviet Union from the beginning of his presidency. While such a “winning strategy” was becoming a top-secret, military priority, the pressures on Kennedy to approve it were so intense that it took a contemplative monk in the silence of his Kentucky monastery to recognize and articulate the truth.

On December 22, 1963, one month to the day after JFK’s assassination. Former President Truman published a very carefully worded article in the Washington Post warning the American people about the danger of the CIA taking over the government. He wrote: “I think it has become necessary to take another look at the purpose and Operations of our Central Intelligence Agency—CIA … “For some time I have been disturbed by the way the CIA has been diverted from its original assignment. It has become an operational and at times a policy-making arm of the Government. This has led to trouble and may have compounded our difficulties in several explosive areas. “We have grown up as a nation, respected for our free institutions and for our ability to maintain a free and open society. There is something about the way the CIA has been functioning that is casting a shadow over our historic position and I feel that we need to correct it.” Truman’s warning, with its ominous post-assassination timing, was greeted by total silence. Had it been noticed and heeded, the controversial ex-president might have been accused more justly this time of trying to abolish the CIA, since he did indeed want to abolish its covert activities. President Harry Truman had himself established the CIA in 1947, but not. he thought, to do what he saw it doing in the fall of 1963.

Then came the heart of the speech, the most eloquent statement of John F. Kennedy’s presidency: “So, let us not be blind to our differences—but let us also direct attention to our common interests and to the means by which those differences can be resolved. And if we cannot end now our differences, at least we can help make the world safe for diversity. For, in the final analysis, our most basic common link is that we all inhabit this small planet. We all breathe the same air. We all cherish our children’s future. And we are all mortal.”

Secretary of State Dean Rusk’s memory of what Jacqueline Kennedy said to Mikoyan was more succinct: “My husband’s dead. Now peace is up to you.” That essence of her message is appropriate to us all. John F. Kennedy is dead. Now peace is up to us.

President Kennedy’s courageous turn from global war to a strategy of peace provides the why of his assassination. Because he turned toward peace with our enemies, the Communists, he found himself at odds with his own national security state. Peacemaking was at the top of his agenda as president. That was not the kind of leadership the CIA, the Joint Chiefs of Staff, and the military-industrial complex wanted in the White House. Given the Cold War dogmas that gripped those dominant powers, and given Kennedy’s turn toward peace, his assassination followed as a matter of course. The story of why John Kennedy died encircles the earth. Because JFK chose peace on earth at the height of the Cold War, he was executed. But because he turned toward peace, in spite of the consequences to himself. humanity is still alive and struggling. That is hopeful, especially if we understand what he went through and what he has given us as his vision.

A must read on leadership, politics and world affairs.


On Thomas Jefferson

I recently finished reading Thomas Jefferson – The Art of Power – by Pulitzer Prize Winner Jon Meacham.

Below are key excerpts from the book that I found particularly insightful:

He had a defining vision, a compelling goal—the survival and success of popular government in America. Jefferson believed the will of m educated, enlightened majority should prevail. His opponents had less faith in the people, worrying that the broad American public might be unequal to self-government. Jefferson thought that same public was the salvation of liberty, the soul of the nation, and the hope of the republic. In pursuit of his ends, Jefferson sought, acquired, and wielded power, which is the bending of the world to one’s will, the remaking of reality in one’s own image. Our greatest leaders are neither dreamers nor dictators: They are, like Jefferson, those who articulate national aspirations yet master the mechanics of influence and know when to depart from dogma. Jefferson had a remarkable capacity to marshal ideas and to move men, to balance the inspirational and the pragmatic. To realize his vision, he compromised and improvised. The willingness to do what he needed to do in a given moment makes him an elusive historical figure. Yet in the real world, in real time, when he was charged with the safety of the country, his creative flexibility made him a transformative leader. America has always been torn between the ideal and the real, between noble goals and inevitable compromises. So was Jefferson. In his head and in his heart, as in the nation itself, the perfect warred with the good, the intellectual with the visceral. In him as in America, that conflict was, and is, a war without end. Jefferson’s story resonates not least because he embodies an eternal drama: the struggle of the leadership of the nation to achieve greatness in a difficult and confounding world. More than any of the other early presidents—more than Washington, more than Adams—Jefferson believed in the possibilities of humanity He dreamed big but understood that dreams become reality only when their champions are strong enough and wily enough to bend history to their purposes. Broadly put, philosophers think; politicians maneuver. Jefferson’s genius was that he was both and could do both, often simultaneously. Such is the art of power.

Like his father, he believed in the virtues of riding and of walking. holding that a vigorous body helped create a vigorous mind. “Not less than two hours a day should be devoted to exercise, and the weather should be little regarded,” Jefferson once said…Jefferson was always asking questions. With “the mechanic as well as the man of science,” a descendant recalled, Jefferson learned all he could, “whether it was the construction of a wheel or the anatomy of an extinct species of animals,” and then went home to transcribe what he had heard. He would soon be known as a “walking encyclopedia.”

Jefferson and his fellow American Revolutionaries took the positions they did—positions that led to war in 1776 and the Declaration of Independence in 1776—partly because they saw themselves as Englishmen who were being denied a full share of the benefits of the lessons of English life.

For the colonists, the decision to revolt was not solely economic, but it was surely informed by concerns over money. In Virginia the impetus to rebel came from the propertied elements of society; the middle and lower classes were slower to follow the lead of men such as Jefferson. It was a rich man’s revolution, and Jefferson was a rich man. It was a philosophical revolution, and Jefferson was a philosophical man.

He had the best of editors in private: “self-evident” was Benjamin Franklin’s, In sum, Jefferson’s draft was a political undertaking with a philosophical frame. It was produced in a particular moment by a politician to satisfy particular concerns for a particular complex of audiences: undecided Americans, soldiers in arms, and potential global allies.

Boldness and decisiveness were sometimes virtues in a leader. Having failed to be either bold or decisive during the invasions of Virginia, he gained valuable experience about the price of waiting. At the time, however, he could not have known that one day he would owe something of his presidential success to his failures of 1781.

Like poetry, politics was partly inspiration, but it was, as Izard said and Jefferson knew, a craft that required relentless practice. It was a lesson Jefferson had learned in Williamsburg, and which now served him well an ocean away.

Liberty, he was saying, requires patience, forbearance, and fortitude. Republics were not for the fainthearted. “I hold it that a little rebellion now and then is a good thing,” he told Madison, “and as necessary in the political world as storms in the physical.”

For Jefferson, the images of monarchy swirled. The rhetoric of the American Revolution—Jefferson’s rhetoric, the product of his own pen—seemed fainter in the clatter of a capital that he believed was beginning to feel more like a king’s court than the seat of a republic.

He understood the country was open to—even eager for—a government that seemed less intrusive and overbearing than the one Washington and Adams had created…Jefferson had long cared about two things: American liberty and American strength. For eight years he summoned all the power he believed he required to make America more like what he thought it should be.

The America of Jefferson was neither wholly Federal nor wholly Republican. It was, rather, a marbled blend of the two, confected by a practical man of affairs. The significance of the case of Louisiana in shaping the destinies of the country and in illuminating Jefferson’s political leadership cannot be overstated. He believed, for instance, in a limited government, except when he thought the nation was best served by a more expansive one. It was a moment to savor success.

Slavery was the rare subject where Jefferson’s sense of realism kept him from marshaling his sense of hope in the service of the cause of reform. “There is nothing I would not sacrifice to a practicable plan of abolishing every vestige of this moral and political depravity,” he wrote in 1814, but that was not true. He was not willing to sacrifice his own way of life, though he characteristically left himself a rhetorical escape by introducing the subjective standard of practicability.

A Decalogue of canons for observation in practical life. Never put off till tomorrow what you can do today. 2. Never trouble another for what you can do yourself 3. Never spend your money before you have it. 4. Never buy what you do not want, because it is cheap; it will be dear to you. Pride costs us more than hunger, thirst, and cold. 6. We never repent of having eaten too little. 7. Nothing is troublesome that we do willingly. 8. How much pain have cost us the evils which have never happened. 9. Take things always by their smooth handle. 10. when angry, count ten, before you speak; if very angry, a hundred.

On a beautiful day in Boston, with President Adams in the hall, Webster painted an indelible portrait of Jefferson’s and Adam’s ascent to the American pantheon: “On our fiftieth anniversary, the great day of national jubilee, in the very hour of public rejoicing, in the midst of echoing and re-echoing voices of thanksgiving, while their own names were on all tongues, they took their flight together to the world of spirits.”

Jefferson speaks to us now because he spoke so powerfully and evocatively to us then. His circumstances were particular, yet the general issues that consumed him are constant: liberty and power, rights and responsibilities, the keeping of peace and the waging of war. He was a politician, a public man, in a nation in which politics and public life became—and remain—central. As Jefferson wrote, “Man … feels that he is a participator in the government of affairs not merely at an election, one day in the year, but every day.”

He endures because we can see in him all the varied and wondrous possibilities of the human experience—the thirst for knowledge, the capacity to create, the love of family and of friends, the hunger for accomplishment, the applause of the world, the marshaling of power, the bending of others to one’s own vision. His genius lay in his versatility; his larger political legacy in his leadership of thought and of men.

We sense his greatness because we know that perfection in politics is not possible but that Jefferson passed the fundamental test of leadership: Despite all his shortcomings and all the inevitable disappointments and mistakes and dreams deferred, he left America, and the world, in a better place than it had been when he first entered the arena of public life. Jefferson is the founding president who charms us most. George Washington inspires awe; John Adams respect. With his grace and hospitality his sense of taste and love of beautiful things—of silver and art and architecture and gardening and food and wine—Jefferson is more alive, more convivial.

A highly recommended read on a defining figure of modern history.



On The Wealth of Nations

I recently finished reading the landmark classic The Wealth of Nations by Adam Smith. This book has been on my reading list for a long time, but I was discouraged by its length (1200+ pages). Having now read it, I am very glad I did. The breadth and depth of this book is – even after 239 years of publication – a monumental achievement.

Below are key excerpts from the book that I found particularly insightful:

As it is by treaty, by barter, and by purchase, that we obtain from one another the greater part of those mutual good offices which we stand in need of, so it is this same trucking disposition which originally gives occasion to the division of labour.

The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities.

The five following are the principal circumstances which, so far as I have been able to observe, make up for a small ~ pecuniary gain in some employments, and counter-balance a great one in others: first. the agreeableness or disagreeableness of the — employments themselves; secondly, the easiness and cheapness, or the difficulty and expence of learning them; thirdly, the constancy or inconstancy of employment in them; fourthly, the small or great trust which must be reposed in those who exercise them; and fifthly, the probability or improbability of success in them.

I shall conclude this very long chapter with observing that every improvement in the circumstances of the society tends either directly or indirectly to raise the real rent of land, to increase the real wealth of the landlord, his power of purchasing the labour, or the produce of the labour of other people.

Political economy considered as a branch of the science of a statesman or legislator, proposes two distinct objects: first, to provide a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public services. It proposes to enrich both the people and the sovereign.

The importation of gold and silver is not the principal. much less the sole benefit which a nation derives from its foreign trade. Between whatever places foreign trade is carried on, they all of them derive two distinct benefits from it. It carries out that surplus part of the produce of their land and labour for which there is no demand among them, and brings back in return for it something else for which there is a demand. It gives a value to their superfluities, by exchanging them for something else, which may satisfy a part of their wants, and increase their enjoyments. By means of it, the narrowness of the home market does not hinder the division of labour in any particular branch of art or manufacture from being carried to the highest perfection.

We must carefully distinguish between the effects of the colony trade and those of the monopoly of that trade. The former are always and necessarily beneficial; the latter always and necessarily hurtful. But the former are so beneficial, that the colony trade, though subject to a monopoly, and notwithstanding the hurtful effects of that monopoly, is still upon the whole beneficial, and greatly beneficial; though a good deal less so than it otherwise would be.

The discovery of America, and that of a passage to the East Indies by the Cape of Good Hope, are the two greatest and most important events recorded in the history of mankind. Their consequences have already been very great: but, in the short period of between two and three centuries which has elapsed since these discoveries were made, it is impossible that the whole extent of their consequences can have been seen.

When a landed nation, on the contrary, oppresses either by high duties or by prohibitions the trade of foreign nations, it necessarily hurts its own interest in two different ways. First, by raising the price of all foreign goods and of all sorts of manufactures, it necessarily sinks the real value of the surplus produce of its own land, with which, or, what comes to the same thing. with the price of which, it purchases those foreign goods and manufactures. Secondly, by giving a sort of monopoly of the home market to its own merchants, artificers and manufacturers, it raises the rate of mercantile !e and manufacturing profit in proportion to that of agricultural profit, and consequently either draws from agriculture a part of the capital which had before been employed in it, or hinders from going to it a part of what would otherwise have gone to it. This policy, therefore, discourages agriculture in two different ways; first, by sinking the real value of its produce, and thereby lowering the rate of its profit; and, secondly, by raising the rate of profit in all other employments. Agriculture is rendered less advantageous, and trade and manufactures more advantageous than they otherwise would be; and every man is tempted by his own interest to turn, as much as he can, both his capital and his industry from the former to the latter employments.

According to the system of natural liberty, the sovereign has only three duties to attend to; three duties of great importance, indeed, but plain and intelligible to common understandings: first, the duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice; and, thirdly, the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit could never repay the expence to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.

Commerce and manufactures, in short, can seldom flourish in any state in which there is not a certain degree of confidence in the justice of government. The same confidence which disposes great merchants and manufacturers, upon ordinary occasions, to trust their property to the protection of a particular government; disposes them, upon extraordinary occasions, to trust that government with the use of their property. By lending money to government, they do not even for a moment diminish their ability to carry on their trade and manufactures. On the contrary, they commonly augment it. The necessities of the state render government upon most occasions willing to borrow upon terms extremely advantageous to the lender. The security which it grants to the original creditor, is made transferable to any other creditor, and, from the universal confidence in the justice of the state, generally sells in the market for more than was originally paid for it.

But if the empire can no longer support the expence of keeping up this equipage, it ought certainly to lay it down; and if it cannot raise its revenue in proportion to its expence, it ought, at least, to accommodate its expence to its revenue. If the colonies, notwithstanding their refusal to submit to British taxes, are still to be considered as provinces of the British empire, their defence in some future war may cost Great Britain as great an expence as it ever has done in any former war. The rulers of Great Britain have, for more than a century past, amused the people with the imagination that they possessed a great empire on the west side of the Atlantic. This empire, however, has hitherto existed in imagination only. It has hitherto been, not an empire, but the project of an empire; not a gold mine, but the project of a gold mine; a project which has cost, which continues to cost, and which, if pursued in the “”same way as it has been hitherto, is likely to cost, immense expence, without being likely to bring any profit; for the effects of the monopoly of the colony trade, it has been shewn, are, to the great body of the people, mere loss instead of profit. It is surely now time that our rulers should either realize this golden dream, in which they have been indulging themselves, perhaps, as well as the people; or, that they should awake from it themselves, and endeavour to awaken the people. If the project cannot be completed, it ought to be given up. If any of the provinces of the British empire cannot be made to contribute towards the support of the whole empire, it is surely time that Great Britain should free herself from the expence of defending those provinces in time of war. and of supporting any part of their civil or military establishments in time of peace, and endeavour to accommodate her future views and designs to the real mediocrity of her circumstances.

A must read for anyone seeking a deeper understanding of economics.


On Guns, Germs, And Steel

I recently finished reading the Pulitzer winner Guns, Germs, And Steel – The Fates of Human Societies – by Jared Diamond. As the author best summarizes:

Thus, we can finally rephrase the question about the modern world’s inequalities as follows: why did human development proceed at such different rates on different continents? Those disparate rates constitute history’s broadest pattern and my book’s subject. While this book is thus ultimately about history and prehistory, its subject is not of just academic interest but also of overwhelming practical and political importance. The history of interactions among disparate peoples is what shaped the modern world through conquest, epidemics, and genocide. Those collisions created reverberations that have still not died down after many centuries, and that are actively continuing in some of the world’s most troubled areas today…It seems logical to suppose that history’s pattern reflects innate differences among people themselves. Of course, we’re taught that it’s not polite to say so in public. We read of technical studies claiming to demonstrate inborn differences, and we also read rebuttals claiming that those studies suffer from technical flaws. We see in our daily lives that some of the conquered peoples continue to form an underclass, centuries after the conquests or slave imports took place. We’re told that this too is to be attributed not to any biological shortcomings but to social disadvantages and limited opportunities…I harbor no illusions that these chapters have succeeded in explaining the histories of all the continents for the past 13,000 years. Obviously, that would be impossible to accomplish in a single book even if we did understand all the answers, which we don’t. At best, this book identifies several constellations of environmental factors that I believe provide a large part of the answer to Yali’s question. Recognition of those factors emphasizes the unexplained residue, whose understanding will be a task for the future.

Below are excerpts from the book that I found particularly insightful:

In short, plant and animal domestication meant much more food and hence much denser human populations. The resulting food surpluses, and (in some areas) the animal-based means of transporting those surpluses. were a prerequisite for the development of settled, politically centralized, socially stratified, economically complex, technologically innovative societies. Hence the availability of domestic plants and animals ultimately explains why empires, literacy, and steel weapons developed earliest in Eurasia and later, or not at all, on other continents. The military uses of horses and camels, and the killing power of animal-derived germs, complete the list of major links between food production and conquest that we shall be exploring.

There is no doubt that Europeans developed a big advantage in weaponry, technology, and political organization over most of the non-European peoples that they conquered. But that advantage alone doesn’t fully explain how initially so few European immigrants came to supplant so much of the native population of the Americas and some other parts of the world. That might not have happened without Europe’s sinister gift to other continents—the germs evolving from Eurasians’ long intimacy with domestic animals.

Knowledge brings power. Hence writing brings power to modern societies, by making it possible to transmit knowledge with far greater accuracy and in far greater quantity and detail, from more distant lands and more remote times. Of course, some peoples (notably the Incas) managed to administer empires without writing, and “civilized” peoples don’t always defeat “barbarians,” as Roman armies facing the Huns learned. But the European conquests of the Americas, Siberia, and Australia illustrate the typical recent outcome. Writing marched together with weapons, microbes, and centralized political organization as a modern agent of conquest. The commands of the monarchs and merchants who organized colonizing fleets were conveyed in writing. The fleets set their courses by maps and written sailing directions prepared by previous expeditions. Written accounts of earlier expeditions motivated later ones, by describing the wealth and fertile lands awaiting the conquerors. The accounts taught subsequent explorers what conditions to expect, and helped them prepare themselves. The resulting empires were administered with the aid of writing. While all those types of information were also transmitted by other means in preliterate societies. writing made the transmission easier, more detailed, more accurate, and more persuasive.

When a widely useful invention does crop up in one society, it then tends to spread in either of two ways. One way is that other societies see or learn of the invention, are receptive to it, and adopt it. The second is that societies lacking the invention find themselves at a disadvantage vis-a-vis the inventing society, and they become overwhelmed and replaced if the disadvantage is sufficiently great.

Considerations of conflict resolution, decision-making, economics, and space thus converge in requiring large societies to be centralized. But centralization of power inevitably opens the door—for those who hold the power, are privy to information, make the decisions, and redistribute the goods—to exploit the resulting opportunities to reward themselves and their relatives. To anyone familiar with any modern grouping of people, that’s obvious. As early societies developed, those acquiring centralized power gradually established themselves as an elite, perhaps originating as one of several formerly equal-ranked village clans that became “more equal” than the others.

Why were the trajectories of all key developments shifted to later dates in the Americas than in Eurasia? Four groups of reasons suggest themselves: the later start, more limited suite of wild animals and plants available for domestication, greater barriers to diffusion, and possibly smaller or more isolated areas of dense human populations in the Americas than in Eurasia.

These comparisons suggest that geographic connectedness has exerted both positive and negative effects on the evolution of technology. As a result, in the very long run, technology may have developed most rapidly in regions with moderate connectedness, neither too high nor too low. Technology’s course over the last 1,000 years in China, Europe, and possibly the Indian subcontinent exemplifies those net effects of high, moderate. and low connectedness, respectively.

There are many obvious reasons for these effects of history, such as that long experience of state societies and agriculture implies experienced administrators, experience with market economies, and so on. Statistically, part of that ultimate effect of history proves to be mediated by the familiar proximate causes of good institutions. But there is still a large effect of history remaining after one controls for the usual measures of good institutions. Hence there must be other mediating proximate mechanisms as well. Thus a key problem will be to understand the detailed chain of causation from a long history of state societies and agriculture to modern economic growth, in order to help developing countries advance up that chain more quickly.

A must read for anyone looking to better understand the past, present and future of human civilization.


On Lords Of Finance

I recently finished reading the Pulitzer Prize winning, Lords of Finance – The Bankers Who Broke The World by Liaquat Ahamed. This book aim, as best described by the author is: “The collapse of the world economy from 1929 to 1933—now justly called the Great Depression—was the seminal economic event of the twentieth century. No country escaped its clutches; for more than ten years the malaise that it brought in its wake hung over the world, poisoning every aspect of social and material life and crippling the future of a whole generation. From it flowed the turmoil of Europe in the “low dishonest decade” of the 1930s, the rise of Hitler and Nazism, and the eventual slide of much of the globe into a Second World War even more terrible than the First. The story of the descent from the roaring boom of the twenties into the Great Depression can be told in many different ways. In this book, I have chosen to tell it by looking over the shoulders of the men in charge of the four principal central banks of the world: the Bank of England, the Federal Reserve System, the Reichsbank, and the Banque de France…Governments then believed matters of finance were best left to bankers; and so the task of restoring the world’s finances fell into the hands of the central banks of the four major surviving powers: Britain, France, Germany, and the United States. ”

Below are key insights from the book that I wish to share:

On Central Banks:

To understand the role of central bankers during the Great Depression, it is first necessary to understand what a central bank is and a little about low it operates. Central banks are mysterious institutions, the full details of their inner workings so arcane that very few outsiders, even economists. fully understand them. Boiled down to its essentials, a central bank is a bank that has been granted a monopoly over the issuance of currency. This power gives it the ability to regulate the price of credit—interest rates—and hence to determine how much money flows through the economy. Despite their role as national institutions determining credit policy for their entire countries, in 1914 most central banks were still privately owned.

On the start of WW1:

As the lights started to go out over Europe that fateful first week of August, every banker and finance minister seemed to be fixated not on military preparations or the movements of armies but on the size and durability of his gold reserves. The obsession was almost medieval. This was, after all, 1914, not 1814. Paper money had been in wide use for more than two centuries, and merchants and traders had developed highly sophisticated systems of credit. The idea that the scope of the war might be limited by the amount of gold on hand seems anachronistic. Nevertheless, here was the London magazine United Empire declaring that it was “the amounts of coin and bullion in the hands of the Continental Great Powders at the outbreak of hostilities” that would largely determine “the intensity and probable duration of the war.”

On the effect of the war on the US:

More important, the war had irrevocably changed the economic and financial position of the United States in relation to the rest of the world. The Fed, which barely existed in 1914, now sat on the largest reservoir of gold bullion in the world, making it potentially the dominant player if and when the international gold standard was restored.

On the impact of reparations on Germany:

Behind all the divisions that were to wreck Germany for the next few years, the one single factor that united every class and every political party—democrats and royalists, liberals and Socialists, Catholics and Protestants, northerners and southerners, Prussians, Bavarians, Saxons, and Hessians—was the injustice of the peace treaty, or as it was called the Diktat. And of all the various penalties heaped on Germany by the treaty – disarmament, dismemberment, occupation, and reparations—it was reparations that would become the single most consuming obsession of German foreign policy.

On the US monetary policy and Keynes:

The hidden irony was that every one of Keynes’s main recommendations—that the link between gold balances and the creation of credit be severed, that the automatic mechanism of the gold standard be replaced with a system of managed money, that credit policy be geared toward domestic price stability—corresponded precisely to the policies Strong had instituted in the United States.

On the expanding role of the Central Banks:

This new set of principles, somewhat cobbled together on the fly, represented a quiet, indeed carefully unheralded, revolution in monetary policy. Until then central bankers had seen their primary task as protecting the currency and confined their responsibilities to ensuring that the gold standard was given free rein, only stepping in at times of crisis or panic. The credit policy of every industrial country had been driven by one factor alone: gold reserves. The United States was, however, now so flush with gold that the solidity of its currency was assured. Led by Strong, the Fed had undertaken a totally new responsibility—that of promoting internal economic stability.

On Churchill and the return to gold standard:

Though Churchill remained chancellor until 1929, by 1927 he had come to realize that the return to gold at the old prewar exchange rate had been a misjudgment. But by then there was little he could do about it except fulminate in private about the evil effects of the gold standard. In later life, he would claim that it was “the biggest blunder in his life.” He blamed it on the bad advice he had received.

On the opposable forces facing Central Banks:

The men in charge of central banks seem to face a similar unfortunate fate—although not for eternity—of watching their successes dissolve in failure. Their goal is a strong economy and stable prices. This is, however, the very environment that breeds the sort of over-optimism and speculation that eventually ends up destabilizing the economy. In the United States during the second half of the 1920s, the destabilizing force was to be the soaring stock market. In Germany it was to be foreign borrowing.

On the blame attributed to the US and France regarding their “hoarding of gold”:

The Sunday Chronicle of September 20 carried a profile of Montagu Norman by Winston Churchill, as part of a commissioned series on contemporary figures. Since leaving office in June 1929, Churchill had quarreled with his Conservative colleagues over Indian self-rule and, now isolated and out of favor, felt free to express his disillusionment with the gold standard orthodoxy openly. The problem was not so much the standard itself, he argued, but the way it had been allowed to operate. It was the hoarding of gold by the United States and France and the resulting shortage in the rest of the world that had brought on the Depression. He had begun to sound almost like Keynes—in a speech to Parliament the week before he had described how gold “is dug up out of a hole in Africa and put down in another hole that is even more inaccessible in Europe and America.”

On the steps taken by the US Government to alleviate the great depression:

In February 1932, he pressed Congress to pass legislation that would make government securities an eligible asset to back currency. At the stroke of a pen the gold shortage was lifted, allowing the Fed to embark on a massive program of open market operations, injecting a total of $1 billion of cash into banks. The two new measures combined—the infusion of additional capital into the banking system and the injection of reserves allowed the Fed finally to pump money into the system on the scale required. But Meyer had left it too late. A similar measure in late 1930 or in 1931 might have changed the course of history. In 1932 it was like pushing n a string. Banks, shaken by the previous two years, instead of lending It the money used the capital so injected to build up their own reserves. Total bank credit kept shrinking at a rate of 20 percent a year…By Thursday, March 9, the Emergency Banking Act was ready to be submitted to Congress. Most of it was based on the original Mills proposal. Banks in the country were to be gradually reopened, starting with those known to be sound, and progressively moving to the shakier institutions, which would need government support. A whole class of insolvent banks would never be permitted to reopen. The bill also granted the Fee the right to issue additional currency backed not by gold but by bank assets. And it gave the federal government the authority to direct the Fed to provide support to banks. The legislation was supplemented by a commitment from the Treasury to the Fed that the government would indemnify it for any losses incurred in bailing out the banking system. This unprecedented package finally forced the Fed to fulfill its role as lender of last resort to the banking system. But to achieve this, the government was in effect providing an implicit blanket guarantee of the deposits of every bank allowed to reopen.

On the US coming off of the Gold standard:

Roosevelt’s decision to take the dollar off gold rocked the financial world. But in the days after the Roosevelt decision, as the dollar fell against gold, the stock market soared by 15 percent. Financial markets gave the move an overwhelming vote of confidence. Even the Morgan bankers. historically among the most staunch defenders of the gold standard, could not resist cheering. “Your action in going off gold saved the country from complete collapse,” wrote Russell Leffingwell to the president.

On the IMF:

Much of the negotiating had been done prior to the conference between the Americans and the British. At Bretton Woods, the biggest controversy was over how much money each country would be eligible to borrow from what was now being called the International Monetary Fund. The Russians, who were there in strength though very few of them spoke English, demanded that the borrowing rights reflect not simply economic power but also military strength, and insisted on equality with the British; India wanted to be on a par with China; the Bolivians wanted parity with the Chileans and the Chileans with the Cubans. The United States, as the find’s prime financier, set these quotas in a series of backroom deals orchestrated by White. On July 22, the conference came to its formal close with a great banquet. Keynes gave a final address. He reminding the participants of the economic chaos that had afflicted the world for almost a generation and paid tribute to the spirit of cooperation that had informed the discussions: “If we can so continue, this nightmare, in which most of us present have spent too much of our lives, will be over. The brotherhood of man will have become more than a phrase.” As he left the room, the delegates sang “For He’s Jolly Good Fellow.”

On a Concluding Note:

For many years people believed—even today many continue to do so—that an economic cataclysm of the magnitude of the Great Depression could only have been the result of mysterious and inexorable tectonic forces that governments were somehow powerless to resist…To the contrary, in this book I maintain that the Great Depression was not some act of God or the result of some deep-rooted contradictions of capitalism but the direct result of a series of misjudgments by economic policy makers, some made back in the 1920s, others after the first crises set in—by any measure the most dramatic sequence of collective blunders ever made by financial officials. Who then was to blame? The first culprits were the politicians who presided over the Paris Peace Conference. They burdened a world economy still trying to recover from the effects of war with a gigantic overhang of international debts…The second group to blame were the leading central bankers of the era in particular the four principal characters of this book, Montagu Norman, Benjamin Strong, Hjalmar Schacht, and Emile Moreau. Even though they, especially Schacht and Norman, spent much of the decade struggling to mitigate some of the worst political blunders behind reparations and war debts, more than anyone else they were responsible for the second fundamental error of economic policy in the 1920s: the decision to take the world back onto the gold standard…More than anything else, therefore, the Great Depression was caused by a failure of intellectual will, a lack of understanding about how the economy operated. No one struggled harder in the lead-up to the Great Depression and during it to make sense of the forces at work than Maynard Keynes. He believed that if only we could eliminate “muddled” thinking—one of his favorite expressions—in economic matters, then society could allow the management of its material welfare to take a backseat to what he thought were the central questions of existence, to the “problems of life and of human relations, of creation, behavior and religion.” That is what he meant when in a speech toward the end of his life he declared that economists are the “trustees, not of civilization, but of the possibility of civilization.” There is no greater testament of his legacy to that trusteeship than that in the sixty-odd years since he spoke those words, armed with his insights, the world has avoided an economic catastrophe such as overtook it in the years from 1929-33.

A must read for anyone seeking to gain a deeper understanding of the global financial system.

Pity the Nation

I recently finished reading Pity the Nation – The Abduction of Lebanon by award-winning journalist Robert Fisk. I had possessed this book for a while, but didn’t have the chance to read it until now. Being Lebanese this book particularly resonated with me as it covered the many dimensions of instability within Lebanon and the Middle East region for the last 50 years.

Below are some key excerpts from this historical masterpiece:

I think I was in Lebanon because I believed, in a somewhat undefined way. that I was witnessing history – that I would see with my own eyes a small part of the epic events that have shaped the Middle East since the Second World War.

At best, journalists sit at the edge of history as vulcanologists might clamber to the lip of a smoking crater, trying to see over the rim, craning their necks to peer over the crumbling edge through the smoke and ash at what happens within. Governments make sure it stays that way. I suspect that is what journalism is about – or at least what it should be about: watching and witnessing history and then, despite the dangers and constraints and our human imperfections, recording it as honestly as we can.

I hate the reporters who moaned about their ‘stress’, their need for ‘counselling, their walks through hell. We journalists are, after all, privileged folk. If we don’t like the heat, we can fly home. Club Class, to the glistening bubble of Europe or America, a glass of champagne in our hand. It was the Lebanese, the Bosnians, the Afghans who needed our pity, citizens of pariah countries for whom there were no planes, no visas, no safety, no life. And it was my doubtful, dangerous privilege – along with my colleagues – to be a witness to their suffering, to record their history, so that no-one could ever complain that no-one told them. So that no-one can ever say: ‘We didn’t know.’

What I did not realise then – but what I would discover the moment I embarked on my journey to those front doors – was that I had touched upon the essence of the Arab-Israeli war; that while the existence of the Palestinians and their demand for a nation lay at the heart of the Middle East crisis, it was the contradiction inherent in the claims to ownership of the land of Palestine – the “homeland” of the Jews in Balfour’s declaration – which generated the anger and fear of both Palestinians and Israelis. The evidence of history, not to mention the physical evidence of those land deeds, suggested a subject of legitimate journalistic inquiry: who legally as well as morally had the right to ownership of the property?

For another generation, this Covenant was to be held up as a model of political excellence within the Middle East, especially by the Western powers which gave it such approval but which did not have to suffer its consequences. It was supposed to be a paragon of democracy in an Arab world more familiar with dictatorship than freedom. But there were two fundamental flaws in the Covenant. The first was that the Maronite community which at best constituted only 30 per cent of the Lebanese – was almost certainly outnumbered by the Sunnis or the Shias. There had been no census since 1932 – nor was there ever to be a census again. The myth of a Maronite majority thus had to be accepted by the Muslims for Lebanon’s ‘democracy’ to work. For their part, the Muslims had already given up their claim to reunion with Syria as their price for participation in government under the Covenant.

To 1982 again, to the high-ceilinged room in east Beirut where Pierre Gemayel sits behind his large oak desk. He does not wish to talk further about his visit to Berlin in 1936. But he does not wait to be asked about the Palestinians. He calls them a ‘fifth column’ and he means it. They were a subversive presence here,’ he says. There was a war, not between us and the Lebanese, but between us and the Palestinians, who tried to conquer Lebanon and take Lebanon and occupy it. They wanted to dissolve Lebanon in the Arab world.’ And one is conscious as Pierre Gemayel speaks – unfairly perhaps but the parallel is there – of Gemayel speaks – unfairly of another, infinitely more vulnerable minority which another government blamed, back in the 1930s, for its own social ills.

In Lebanon, one shot, one bomb, has served to immortalise a cause. to make words unimpeachable, arguments irreproachable. To question the dead is sacrilege of a special kind. Look at the legions of martyrs on the walls of Beirut, all those who followed this wisdom of the dead. Study the confident, smiling eyes of Bilal Fahas, lionised by the Amal militia as arouss al-jnoub the ‘bridegroom of the south’, his last moments captured by Amal’s official war artist, driving his Mercedes car bomb into an Israeli armoured personnel carrier. After a while, a routine started; the martyrs would have their own show on television.

Journalists who report wars have to be as dispassionate as doctors 3bout the physical aspects of mortality. We needed the psychological strength to convince ourselves that gruesome detail was also scientific fact; we had to interpret the smell of human decomposition not as something disgusting but as a process of chemical change that was natural if unpleasant. Yet all this is easier said than done. Death is frightening. If nothing else, the dead of Lebanon – the repeated experience of seeing bodies lying like sacks in roadways, ditches and cellars were a constant reminder to us of how easy it is to be killed. It is a necessary lesson. Just one little step across a very fine line, the slightest misjudgement over when to cross a road, when to smile or look serious in front of a gunman, could mean the difference between life and death.

For Arafat, the issues were simple if not simplistic. Palestinians and Lebanese had died in defence of a land that would ‘remain Arab through and through’. His was the path of the sleepwalker, the believer in the blood sacrifice. Those who had been steadfast in battle against the Israelis would know how to transform their ‘new revolutionary awakening into a beam of light and victory on the long road of pains, the road of Golgotha, towards liberated Palestine and to our noble Jerusalem. But Arafat was not going to Jerusalem. He was leaving Beirut onn a Greek cruise ship for exile in Tunisia.

Everyone is convinced that tithe IDF is more humane than any other army. “Purity of arms” was the slogan of the Haganah army in early ’48. But it never was true at all.’ , Politicians, according to Avneri, used the Holocaust as moral blackmail. But it’s real, it’s not invented – it’s there. It produces an odd kind of schizophrenic attitude. The Israelis will say: “We’ll never allow another Warsaw ghetto or Auschwitz to happen again.” Then they’ll tell you they can conquer the whole Middle East in forty-eight hours. No one feels any contradiction in this.’

But ‘terrorism’ no longer means terrorism. It is not a definition; it is a political contrivance. ‘Terrorists’ are those who use violence against the side that is using the word. The only terrorists whom Israel acknowledges are those who oppose Israel. The only terrorists the United States acknowledges are those who oppose the United States or their allies. The only terrorists Palestinians acknowledge ~ for they too use the The only terrorists Palestinians acknowledge — for they too use the word – are those opposed to the Palestinians.

The Lebanese Christians would have been the first to strip Israel of its illusions about the Shia Muslims of the south. If Sunni orthodoxy condemned the Shia as theological heretics, the Christians saw them ” in the words of one Lebanese academic as ‘the Albigensians of the Middle East’. In Lebanese politics, heresy meant betrayal, and the poverty of the hill villages of southern Lebanon, the historical neglect suspicion deep inside the framework of Lebanese Shia society. We would encounter this ourselves on visits to the south. Shia friends whom we had known for months, family members with whom we had stayed for weeks – men and women who had protected us during periods of would turn to us suddenly, without warning, at breakfast or on a car journey and ask: ‘Are you a spy?’

On a concluding note:

A quarter of a century. When I thought about it, I felt old. Yet working in the same region, watching the same tragedy, involves a kind of eternal youth. I still felt as young and fit as I was when I first came to Lebanon in the hot and terrible summer of 1976.1 was 29 then, with my parents’ energy and wisdom and my own schoolboy enthusiasm. My father had fought in the trenches of France in 1918 and in the year he died, I was in the city that sent him there, watching the continuation of the European civil war in Sarajevo. My mother had died six years later. in 1998.1 had no brothers or sisters. Sometimes I felt very much alone. But I had come through, I told myself. I made it. How very easy it would have been to die in Lebanon.

Yet Still as I write now, I fear the monsters. Perhaps I fear history and the frightening authority it has over our lives, its ability to persuade us to repeat our tragedies, over and over again. Maybe this is what draws me back to the slums of Sabra and Chatila year after year, with its garbage and rats and hopelessness. Balfour and the British mandate of Palestine, Hitler and Zionism – yes, and the Arabs – all conspired to imprison these poor people in the slums. Arafat had abandoned them for his garbage statelet in Gaza. In February 2001 I was back in the camps again, still trying to find one more clue – one more unheard witness – to the massacre of 1982.1 walked again those same roads. Here is where I found the body of the old man with the stick, Mr Nouri. Just beyond is the execution wall and, to the left, the spot where I found the two women and the dead baby. Behind me is the ward where Loren Jenkins and I hid beside the dead body of the newly murdered young woman, the one with the clothes pegs lying round her head like a halo. And right here, on this stretch of muddy road, is where Jenkins, sickened by the smell of death and the personal responsibility of one man, screamed: ‘Sharon!’ A day after that last visit of mine to Sabra and Chatila, on 6 February 2001, Ariel Sharon was elected prime minister of Israel.

A must read for anyone looking to understand the geopolitics of the Middle East in general and Lebanon in particular.