21-04-2014, 07:26 PM
An excerpt from a new book by Nomi Prins, via Russ Baker's website:
http://whowhatwhy.com/2014/04/20/book-re...s-bankers/
BOOK EXCERPT: All The President's Bankers
By Liu Wei on Apr 20, 2014
QQ截图20140420100323
The following is an excerpt from All The President's Bankers: The Hidden Alliances that Drive American Power by Nomi Prins. Reprinted with permission from Nation Books.
Kennedy vs. The Bankers
On January 14, 1963, during what would be his final State of the Union address, President John F. Kennedy emphasized the need to keep economic recovery going with high growth and full employment. Again, he pushed for a balanced budget and tax reductions for individualswhich he had championed during his inaugural address. Six weeks later, at an American Bankers Association symposium at Washington's Mayflower Hotel cohosted by David Rockefeller, he attempted to rally business support for his proposals.
It was difficult. Neither the business community nor Congress wanted tax cuts without requisite spending cuts. In response to one loaded question, Kennedy said briskly, "The alternative today is between keeping this economy moving ahead and a recession, and in my judgment the best medicine for that recession is a tax reduction."
On April 23, in a speech at the Economic Club of Chicago, Chase chairman David Rockefeller proposed creating a private business advisory committee to work with government organizations implementing the Alliance for Progress. He endorsedKennedy's support for broadening the government's investment-guarantee program, which encouraged a greater flow of private investment. He also indirectly admonished Communist-leaning governments, stating, "Latin-American governments cannot lure foreign capital by harassing companies already there." Three days later, Rockefeller had an off-the-record meeting alone with Kennedy to discuss these private business-government synergies.
On the one hand, Kennedy was learning the bankers' language. "I want to make it clear that, in solving its international payments problem, this nation will continue to adhere to its historic advocacy of freer trade and capital movements, and that it will continue to honor its obligation to carry a fair share of the defense and development of the free world," he said. "At the same time, we shall continue policies designed to reduce unemployment and stimulate growth here at homefor the well-being of all free peoples is inextricably entwined with the progress achieved by our own people." He also made it clear that he would maintain the dollar "as good as gold," freely interchangeable with gold at $35 an ounce, "the foundation-stone of the free world's trade and payments system."
Yet Kennedy stubbornly targeted that balance of payments deficit, to the chagrin of bankers. It was largely because of their opportunistic expansion that the Eurodollar market had roughly tripled during the 1950s, and doubled again in the early 1960s amid the rapid expansion of American multinational corporations and the companion growth of US banking branches abroad.
Kennedy feared that the outflow of funds into Eurodollar accounts was damaging the US balance of payments that tabulated the amount of physical and financial exports and imports. The declining balance meant that more money was flowing out, and that more American companies and individuals were investing their dollars outside the United States.
To combat this inequity, he announced a program on July 18 that included a temporary 15 percent tax on purchases by Americans of foreign securities and a tax on loans made by American banks to foreign borrowers, a quasi-regulation impinging on banks' global expansion activities. His action infuriated the bankers, who had positioned themselves above US balance of payments problems by opening foreign branches that could cater to foreign investors and borrowers, or sell foreign securities to America. The government concerns over where money was spent was less important to US banks.
But privately, Kennedy was worried about the value of the dollar and of gold. Certain US aid to developing countries wasn't pouring back into the US economy but going into gold purchases. During a July 31 phone conversation, Treasury Secretary C. Douglas Dillon told him Peru, for one, was "using our aid money to buy gold."
Kennedy commented, "It's an insane system to have all these dollars floating around [that] people can cash in for a very limited supply of gold."
Dillon agreed, saying they should tell Congress "we have a policy: if countries have so strong a balance of payments, we can't give these soft loans."
But in terms of the gold standard, the banking sector, as Rockefeller had recently implied in a profile in Life magazine, considered it restrictive to their desired open policy of money and investment flow. To them, this transcended any national balance of payment issues. First National City Bank executive vice president Walter Wriston was especially livid. "Who is this upstart President interfering with the free flow of capital?" he demanded. "You can't damn capital."
Born in Middletown, Connecticut, on August 3, 1919, Wriston was "an unbending proponent of laissez-faire capitalism," much like his father, Henry, who considered FDR's New Deal a folly and had served in various advisory capacities for the Eisenhower administration and as president of the Council on Foreign Relations from 1951 to 1964.
In 1942, with a master's degree from Harvard, Walter Wriston began a three-year stint as a junior Foreign Service officer. He intended to remain at the State Department. But his father had a powerful friend at National City Bank, Vice Chairman W. Randolph Burgess, who found a spot for him in the bank's credit department.
By June 1960, at the age of forty, Wriston was running First National City Bank's international division. Under his direction, the firm opened banks in Puerto Rico, Cuba, Brazil, and Argentina. The resource-rich Latin American region soon accounted for the bulk of its overseas bank deposits. There, its presence exceeded Chase's, to Rockefeller's chagrin.
Instead of fighting Wriston, on October 2, 1963, Kennedy appointed him to serve with other financiers on a task force to study ways to increase foreign investment in the securities of US private companies and survey the availability of foreign financing to US private companies operating abroad (the opposite of his proposals), as another possible way to balance payments.
It was a clumsy, desperate notion on Kennedy's part; to ask Wriston to find ways for foreign banks to fund US companies abroad would be to ask him to detract business away from his overseas branches. He had no incentive to put the country's economic issues ahead of his own. Nor did he try to. There was too much money to be made.
The bankers did support Kennedy's foreign aid budgetor at least the part that aligned with their goals. On October 11, Rockefeller and nine other prominent business leaders protested a cut in Latin aid from $600 million to $450 million that the House had just passed and urged the Senate Foreign Relations Committee to restore the $150 million to the Alliance for Progress. In a cover letter to Senator J. William Fulbright, Rockefeller wrote that the actions of the House were "deeply disturbing to many in the businesscommunity."
Rockefeller and Kennedy got their wish. The Senate restored the $600 million in their November 7 budget vote, even as it voted to reduce Kennedy's foreign aid budget in general. As one of his last personal requests to Kennedy, McCloy asked him to give a speech at his alma mater, Amherst College, for the groundbreaking of the Robert Frost Memorial Library. Kennedy flew to Massachusetts to address a crowd of ten thousand people and pay homage to the recently deceased poet.
He also received an honorary law degree. At a time when 50 percent of the students at private universities came from the top 10 percent of the wealthiest Americans, Kennedy said, "Privilege is here, and with privilege goes responsibility." He also said, "When power leads men towards arrogance, poetry reminds him of his limitations." But rather than taking Kennedy's words to heart, bankers were working hard to increase their power around the globe.
***
In the shadow of Kennedy's murder in November 1963, his young adversary Wriston stood poised to grab a larger role influencing international financial policy. Wriston's international division opened its 100th and 101st foreign branches, in Durban, South Africa, and New Delhi, India, respectively. First National City Bank now had more overseas branches than any other American bank, spanning thirty-four countries on five continents.
In a piece it decided to run just two days after Kennedy's death, the New York Times glowed, "Tall, lanky, youthful Walt Wriston looks, talks, and acts like anything but the typical banker' . . . whose fingers rest on the levers that make the big money flow."
The paper was oblivious to tension between Wriston and Kennedy before his death. According to the article, Wriston "knows the bankers who count from London to Tokyo, from Cape Town to Cairo," yet he never "served a pitch on foreign soil." Technological advances in banking and communications, the offering of more flight routes, and an eager set of bankers willing to jet anywhere to push a deal enabled Wriston to do much from his New York office.
Of the recent rush of American banks opening offices in Europe to take advantage of the Eurodollar market, Wriston quipped, "Europe is a pretty girl everyone has just discovered at the dance." In truth, as Wriston knew well, the Eurodollar market was more than a fad. It was a means to circumvent US banking regulations and establish an international command station from which to dominate an increasingly globalized financial arena.
Under Lyndon Johnson, the globe remained David Rockefeller's theater, and his connection to Washington would solidify. He became the banker with whom Johnson had the most frequent communication on policies. (Johnson had the closest personal contact with his banker friend Sidney Weinberg.) Rockefeller was also the first banker to follow his condolences to Johnson with his agenda.
He saw Kennedy's Alliance for Progress program as a support mechanism for his expansionist economic policy, and he had no intention of letting Kennedy's death change the momentum. Less than a week after Kennedy was laid to rest, Rockefeller informed Johnson that Kennedy had sent him a letter two days before his death in which he said he "would welcome having the appropriate agencies of government" meet with Rockefeller's Business Group for Latin America.
Rockefeller needed Johnson's approval for the plan to come to fruition. Johnson responded with unequivocal support for the Alliance for Progress, particularly the private enterprise component that Rockefeller so earnestly advocated. The initiative served both men. For Rockefeller it provided broader entry into a region rich with financial promise, and for Johnson it meant business-sector support for an area rich with political promise. Backing non-Communist countries in Latin America with a combination of private and public capital would provide another signal of Johnson's strength against the Soviets.
"I . . . want . . . to reaffirm the important role that private enterprise has to play in helping to achieve the goals of the Alliance for Progress," Johnson replied. Over the next few years, several critical meetings took place between Johnson, Rockefeller, and the Business Group for Latin America. As a result of the alignment of Johnson and the financial sector, US banks more aggressively set up branches and bought ownership percentages in locally established banks in the region. The financialization of foreign policy would continue to disperse globally with impunity.
Author's Correction: In the above excerpt, the word damn' should read dam' and Mr. Wriston received his Masters from Tufts University.
- See more at: http://whowhatwhy.com/2014/04/20/book-re...llAlt.dpuf
http://whowhatwhy.com/2014/04/20/book-re...s-bankers/
BOOK EXCERPT: All The President's Bankers
By Liu Wei on Apr 20, 2014
QQ截图20140420100323
The following is an excerpt from All The President's Bankers: The Hidden Alliances that Drive American Power by Nomi Prins. Reprinted with permission from Nation Books.
Kennedy vs. The Bankers
On January 14, 1963, during what would be his final State of the Union address, President John F. Kennedy emphasized the need to keep economic recovery going with high growth and full employment. Again, he pushed for a balanced budget and tax reductions for individualswhich he had championed during his inaugural address. Six weeks later, at an American Bankers Association symposium at Washington's Mayflower Hotel cohosted by David Rockefeller, he attempted to rally business support for his proposals.
It was difficult. Neither the business community nor Congress wanted tax cuts without requisite spending cuts. In response to one loaded question, Kennedy said briskly, "The alternative today is between keeping this economy moving ahead and a recession, and in my judgment the best medicine for that recession is a tax reduction."
On April 23, in a speech at the Economic Club of Chicago, Chase chairman David Rockefeller proposed creating a private business advisory committee to work with government organizations implementing the Alliance for Progress. He endorsedKennedy's support for broadening the government's investment-guarantee program, which encouraged a greater flow of private investment. He also indirectly admonished Communist-leaning governments, stating, "Latin-American governments cannot lure foreign capital by harassing companies already there." Three days later, Rockefeller had an off-the-record meeting alone with Kennedy to discuss these private business-government synergies.
On the one hand, Kennedy was learning the bankers' language. "I want to make it clear that, in solving its international payments problem, this nation will continue to adhere to its historic advocacy of freer trade and capital movements, and that it will continue to honor its obligation to carry a fair share of the defense and development of the free world," he said. "At the same time, we shall continue policies designed to reduce unemployment and stimulate growth here at homefor the well-being of all free peoples is inextricably entwined with the progress achieved by our own people." He also made it clear that he would maintain the dollar "as good as gold," freely interchangeable with gold at $35 an ounce, "the foundation-stone of the free world's trade and payments system."
Yet Kennedy stubbornly targeted that balance of payments deficit, to the chagrin of bankers. It was largely because of their opportunistic expansion that the Eurodollar market had roughly tripled during the 1950s, and doubled again in the early 1960s amid the rapid expansion of American multinational corporations and the companion growth of US banking branches abroad.
Kennedy feared that the outflow of funds into Eurodollar accounts was damaging the US balance of payments that tabulated the amount of physical and financial exports and imports. The declining balance meant that more money was flowing out, and that more American companies and individuals were investing their dollars outside the United States.
To combat this inequity, he announced a program on July 18 that included a temporary 15 percent tax on purchases by Americans of foreign securities and a tax on loans made by American banks to foreign borrowers, a quasi-regulation impinging on banks' global expansion activities. His action infuriated the bankers, who had positioned themselves above US balance of payments problems by opening foreign branches that could cater to foreign investors and borrowers, or sell foreign securities to America. The government concerns over where money was spent was less important to US banks.
But privately, Kennedy was worried about the value of the dollar and of gold. Certain US aid to developing countries wasn't pouring back into the US economy but going into gold purchases. During a July 31 phone conversation, Treasury Secretary C. Douglas Dillon told him Peru, for one, was "using our aid money to buy gold."
Kennedy commented, "It's an insane system to have all these dollars floating around [that] people can cash in for a very limited supply of gold."
Dillon agreed, saying they should tell Congress "we have a policy: if countries have so strong a balance of payments, we can't give these soft loans."
But in terms of the gold standard, the banking sector, as Rockefeller had recently implied in a profile in Life magazine, considered it restrictive to their desired open policy of money and investment flow. To them, this transcended any national balance of payment issues. First National City Bank executive vice president Walter Wriston was especially livid. "Who is this upstart President interfering with the free flow of capital?" he demanded. "You can't damn capital."
Born in Middletown, Connecticut, on August 3, 1919, Wriston was "an unbending proponent of laissez-faire capitalism," much like his father, Henry, who considered FDR's New Deal a folly and had served in various advisory capacities for the Eisenhower administration and as president of the Council on Foreign Relations from 1951 to 1964.
In 1942, with a master's degree from Harvard, Walter Wriston began a three-year stint as a junior Foreign Service officer. He intended to remain at the State Department. But his father had a powerful friend at National City Bank, Vice Chairman W. Randolph Burgess, who found a spot for him in the bank's credit department.
By June 1960, at the age of forty, Wriston was running First National City Bank's international division. Under his direction, the firm opened banks in Puerto Rico, Cuba, Brazil, and Argentina. The resource-rich Latin American region soon accounted for the bulk of its overseas bank deposits. There, its presence exceeded Chase's, to Rockefeller's chagrin.
Instead of fighting Wriston, on October 2, 1963, Kennedy appointed him to serve with other financiers on a task force to study ways to increase foreign investment in the securities of US private companies and survey the availability of foreign financing to US private companies operating abroad (the opposite of his proposals), as another possible way to balance payments.
It was a clumsy, desperate notion on Kennedy's part; to ask Wriston to find ways for foreign banks to fund US companies abroad would be to ask him to detract business away from his overseas branches. He had no incentive to put the country's economic issues ahead of his own. Nor did he try to. There was too much money to be made.
The bankers did support Kennedy's foreign aid budgetor at least the part that aligned with their goals. On October 11, Rockefeller and nine other prominent business leaders protested a cut in Latin aid from $600 million to $450 million that the House had just passed and urged the Senate Foreign Relations Committee to restore the $150 million to the Alliance for Progress. In a cover letter to Senator J. William Fulbright, Rockefeller wrote that the actions of the House were "deeply disturbing to many in the businesscommunity."
Rockefeller and Kennedy got their wish. The Senate restored the $600 million in their November 7 budget vote, even as it voted to reduce Kennedy's foreign aid budget in general. As one of his last personal requests to Kennedy, McCloy asked him to give a speech at his alma mater, Amherst College, for the groundbreaking of the Robert Frost Memorial Library. Kennedy flew to Massachusetts to address a crowd of ten thousand people and pay homage to the recently deceased poet.
He also received an honorary law degree. At a time when 50 percent of the students at private universities came from the top 10 percent of the wealthiest Americans, Kennedy said, "Privilege is here, and with privilege goes responsibility." He also said, "When power leads men towards arrogance, poetry reminds him of his limitations." But rather than taking Kennedy's words to heart, bankers were working hard to increase their power around the globe.
***
In the shadow of Kennedy's murder in November 1963, his young adversary Wriston stood poised to grab a larger role influencing international financial policy. Wriston's international division opened its 100th and 101st foreign branches, in Durban, South Africa, and New Delhi, India, respectively. First National City Bank now had more overseas branches than any other American bank, spanning thirty-four countries on five continents.
In a piece it decided to run just two days after Kennedy's death, the New York Times glowed, "Tall, lanky, youthful Walt Wriston looks, talks, and acts like anything but the typical banker' . . . whose fingers rest on the levers that make the big money flow."
The paper was oblivious to tension between Wriston and Kennedy before his death. According to the article, Wriston "knows the bankers who count from London to Tokyo, from Cape Town to Cairo," yet he never "served a pitch on foreign soil." Technological advances in banking and communications, the offering of more flight routes, and an eager set of bankers willing to jet anywhere to push a deal enabled Wriston to do much from his New York office.
Of the recent rush of American banks opening offices in Europe to take advantage of the Eurodollar market, Wriston quipped, "Europe is a pretty girl everyone has just discovered at the dance." In truth, as Wriston knew well, the Eurodollar market was more than a fad. It was a means to circumvent US banking regulations and establish an international command station from which to dominate an increasingly globalized financial arena.
Under Lyndon Johnson, the globe remained David Rockefeller's theater, and his connection to Washington would solidify. He became the banker with whom Johnson had the most frequent communication on policies. (Johnson had the closest personal contact with his banker friend Sidney Weinberg.) Rockefeller was also the first banker to follow his condolences to Johnson with his agenda.
He saw Kennedy's Alliance for Progress program as a support mechanism for his expansionist economic policy, and he had no intention of letting Kennedy's death change the momentum. Less than a week after Kennedy was laid to rest, Rockefeller informed Johnson that Kennedy had sent him a letter two days before his death in which he said he "would welcome having the appropriate agencies of government" meet with Rockefeller's Business Group for Latin America.
Rockefeller needed Johnson's approval for the plan to come to fruition. Johnson responded with unequivocal support for the Alliance for Progress, particularly the private enterprise component that Rockefeller so earnestly advocated. The initiative served both men. For Rockefeller it provided broader entry into a region rich with financial promise, and for Johnson it meant business-sector support for an area rich with political promise. Backing non-Communist countries in Latin America with a combination of private and public capital would provide another signal of Johnson's strength against the Soviets.
"I . . . want . . . to reaffirm the important role that private enterprise has to play in helping to achieve the goals of the Alliance for Progress," Johnson replied. Over the next few years, several critical meetings took place between Johnson, Rockefeller, and the Business Group for Latin America. As a result of the alignment of Johnson and the financial sector, US banks more aggressively set up branches and bought ownership percentages in locally established banks in the region. The financialization of foreign policy would continue to disperse globally with impunity.
Author's Correction: In the above excerpt, the word damn' should read dam' and Mr. Wriston received his Masters from Tufts University.
- See more at: http://whowhatwhy.com/2014/04/20/book-re...llAlt.dpuf
“The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him.â€
― Leo Tolstoy,
― Leo Tolstoy,