Book Excerpt: 3.2 The Rise of Corporate Executives and Bankers in America

3.2 The Rise of Corporate Executives and Bankers in America

American corporations derive much of their power from their recognition as legal entities separate from those who own it. By law corporations are seen as people, and this means the owners of corporations often aren’t held accountable for what their corporations do, which is absurd. The legal responsibility of individuals who own corporations are often merged into one almost criminally immune, corporate “person.” This allows corporate executives to steal, pollute, exploit their workers, and even kill people (this is called “corporate manslaughter,” not corporate murder[1]) without ever serving jail time. The same applies to owners of private banks since they are corporations as well.

A corporation cannot be put in jail. It can only be fined, and corporate executives take advantage of this. Most often, it is more lucrative for them to break the law and pay the fines than it is to obey the law. Corporations all over the world also enjoy the same rights as people. IGOs like the UN, sovereign states, and even some temples are also considered legal “persons.”

When the American government was formed, corporations and banks did not initially have much power as they were smaller and still developing. The founding fathers recognized the dangers of giving either institution too much power because corporations in Britain like the East India Company where they had come from had a stranglehold over the economy and government there. When the British Empire increased taxes for on imports (like tea) to America to increase their hegemony, America predictably retaliated.

The foundation of the American government in reality had little to do with the values expressed in the Declaration of Independence or the Constitution. These documents contain notions of freedom for some, but they also allowed for slavery to continue. The founding fathers wanted America to be free for them and their families, but also at the cost of the freedom of others. Many of the founding fathers like James Madison and Thomas Jefferson who wrote these documents were slave-owners. Some also had children with their slaves. These documents were not designed to uphold moral order. They ensured America would be an evolving, exploitative, and ultimately the most powerful empire.

Initially, there was a good deal of citizen control over corporations and banks. But eventually companies began to abuse their charters and become more powerful, and smaller businesses lost money as a result. Company towns were born, and corporations hired private armies to keep their workers in line. Corporations also began to buy newspapers, so that they could control what was said about them.

Corporate executives and bankers became much richer and more powerful during the Civil War, because they helped finance and provide supplies for the  war. Corporations took advantage of government’s “need” for corporations. In the 1886 Supreme Court case of Santa Clara County v. Southern Pacific Railroad, a court stenographer wrote that corporations are “natural persons.” This statement was cited by many corporate lawyers who argued corporations deserved the same rights as people, despite the fact that the written statement was not a legal decision or even an instruction. Corporations and their lawyers argued specifically that they deserved the rights given to people guaranteed by the 14th amendment, which states: “No state can deprive any person of life, liberty or property without due process of law.” This amendment was written mainly to give these rights to newly free slaves, but corporations wanted these rights too and they were granted them mostly because of corrupt judges who were paid off.

Corporations have also argued that they have the right to give unlimited capital to politicians corporate lawyers because they define donations as a form of “speech” for corporations who are also legally people. (If this does not make sense, this is because your sanity is intact.) Corporations already utilize just about every media outlet that exists to express their opinions. They clearly have far more voice than most individuals do, so to allow them to make unlimited donations to politicians is nothing short of criminal.[2]

Corporations were able to give unlimited capital until 2002 when the Bipartisan Campaign Reform Act was passed, which made unlimited corporate donations to politicians illegal. However, this bill was overturned by the Supreme Court in January 2010 probably due to corporate pressure and bribing.

Around the time that corporations were securing their “personhood,” American banks were also centralizing their power. In 1913, JP Morgan, John D. Rockefeller, and Paul Warburg bribed senators to pass the Federal Reserve Act, which gave private banks control over the currency. To make the Federal Reserve seem necessary, rich bankers also artificially triggered The Panic of 1907. (This came after several others panics in the 1800s.) After signing the Federal Reserve Act, President Woodrow Wilson published a book called The New Freedom: A Call for the Emancipation of the Generous Energies of a People. In it he wrote:

“It is mere truth to say that the financial institutions of the country are not at the command of those who do not submit to the direction and domination of small groups of capitalists who wish to keep the economic development of the country under their own eye and guidance. The great monopoly in this country is the monopoly of big credits. So long as that exists, our old variety and freedom and individual energy of development are out of the question. A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men, who even if their action be honest and intended for the public interest, are necessarily concentrated upon the great undertakings in which their own money is involved and who necessarily, by reason of their very own limitations, chill and check and destroy genuine economic freedom.” – President Woodrow Wilson[i]

The Federal Reserve is problematic because of its dubious role as an institution that is supposed to serve public and private interests. Regional bank boards consist of nine members and three “classes” of members: A, B and C. Class A members represent the banks’ interests. Class B members are supposed to represent the interests of the public, but they are nominated by member banks, which run for-profit. Class C members are also intended to represent the public, but they are nominated by the board of Governors. They are encouraged to generate as much revenue as possible in any way possible. Much of it goes to the Treasury ($77 billion in 2012), which is responsible for US bills, and everyday people see the least of it. As of mid-2013, America has more than 16 trillion in debt. 

By the Great Depression, private banks and corporations had almost complete control over the economy and they were making risky and unpopular investments. They were also engaging in predatory lending. Banks had a margin requirement of 10%, which meant they would lend their individual customers $9 for every dollar they had. There was also a rise in interest rates before the Depression and central banks were making more money as a result of all of this.

Former President Franklin Delano Roosevelt created his “New Deal” Acts in response to the Great Depression, which put restrictions on what corporations and banks could do. One of the most progressive of the acts, the Federal Emergency Relief Act (FERA) gave $500 million for soup kitchens and direct cash payments to people in need. It also put more than 20 million unemployed people to work, building sewer systems, schools and repairing bridges. Many of these jobs were created by the Civil Works Administration. In 1935 this administration was replaced by the Works Progress Administration (WPA) and the Social Security Administration. The WPA also employed millions and its Federal Art Project in 1936 employed 2200 fine arts professions. In 1933 20.6% of the population was unemployed, but by 1945 only 1.9% of the population was unemployed largely due to FDR’s economic measures. Large corporations were predictably opposed to this kind of legislation (even though the New Deal was moderate considering the circumstances), and so they conspired against the president.

In 1934 a number of representatives from JP Morgan, Good Year Tire, Remington Steel, Dupont and others actually devised a plan to overthrow FDR and they approached Smedley Darlington Butler to execute it. Butler was a decorated marine general who followed orders and invaded countries in order to serve the interests of American corporations like the United Fruit Company, so he looked like a good candidate. Hugh Samuel Johnson, a US army officer and a close advisor and speech writer for FDR, told Butler they had an army of 500,000 men and three million dollars to facilitate the coup. They wanted Butler to overtake the White House with them and force FDR to announce that he was ill so that Johnson could run the country as a de facto leader.[ii] If FDR refused, they wanted Butler to kill him. However, Butler was fed up with working for the corporations and he refused. He also made their plans known to Americans in a public broadcast, and he later wrote a book about the profitability of warfare called War is a Racket. If Butler had accepted their plans, one can only imagine what America and rest of the world would look like today.


[1] Manslaughter is accidental murder.

[2] If we let them, it shouldn’t be long before corporations redefine the right to free speech as the right to “Have it your way” at Burger King.


[ii] New York Times: “General Butler Bares a Fascist Plot.” Newspaper. November 21 1934.

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