Wall Street Was America’s First Foe in World War II

Breaking up monopolies was the first step in fighting Hitler.

By Matt Stoller and cross-posted from Foreign Policy.

As World War II approached, the lesson of World War I, for Americans, was a frightening one. Despite two and a half years of warning, the United States had entered the First World War unprepared. By 1918, the U.S. field army numbered 5 million men but still relied on British and French allies for artillery and other equipment.

The United States had started late, and it tried to “bait” its manufacturers into expanding plants with lucrative contracts. U.S. soldiers had to use British and French weapons. The United States of the late 1930s was now in the same situation. On the eve of Germany’s invasion of Poland in 1939, 85 percent of U.S. factory machinery dated from the 1920s or earlier. Some predated the Civil War.

After the invasion of Poland, Americans didn’t necessarily want to intervene in Europe, but preparedness and support for military spending began to increase. U.S. President Franklin D. Roosevelt asked for larger Army and Navy budgets. But to build that larger Army and Navy, massive supplies of steel, aluminum, copper, and every other material would be necessary. The control of monopolists, who wanted to restrict supplies of these metals, would have to be broken.

What Roosevelt called in 1932 the “unofficial … economic Government of the United States” had to be dismantled, and replaced with democratic means of wielding power. The system that monopolists such as J. Pierpont Morgan and Andrew Mellon had put together did not just wield power over government; it was a government in and of itself. This government of the monopolists had two separate layers of power. There were individual monopolies. Mellon’s aluminum giant Alcoa, for instance, was not only an aluminum producer, but the regulator of the aluminum trade itself. It controlled pricing, output, wages, and the buying of key inputs, such as electric power.

As Morgan, and then Mellon, took a set of businesses and turned them into monopolies, power passed from the engineers, workers, and communities who created, invented, and produced, to financiers, salesmen, and lawyers who controlled, restrained, and manipulated. The second layer was how these monopolies related to one another. An individual monopoly controlled just a single branch of trade. It became a political system when its power, the power of one boss, was combined with other monopolies, the power of many bosses. And this system—of big-business bosses monopolizing the key channels of trade and commerce—still lived on Wall Street

Continue reading the article

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s