In reading Hannah Arendt, she traces the linkage of the Panama Canal
Scandal in France to the Dreyfus affair. She also mentions the Credit
Mobilier Scandal, and other scandals of the 19th century, but since
her emphasis was elsewhere I had to do some digging. The Credit Mobilier company was named after a respected bank of France, but was a construction company in the US contracted out with the task of building part of the Central Pacific Railroad.
It turns out that scams and Snafus have been a regular way that business insiders bilk and con the rest of society on a periodical basis; have done so
throughout our history, and continue to do so. Those of us who buy the
dream that America is a land of opportunity like Beverly Hillbillies
regularly make the mistake of thinking that we are welcome in a new
land for ourselves and abilities and not solely for our money until it
is parted.
I'll start out with a classic scam. Everyone remembers that famous
scene of the Union Pacific and Central Pacific being joined in 1867? Well the
process of building the railroad bankrupted the Union Pacific, but not
the top officials of the Union Pacific. As the author of this website
says....
http://www.pbs.org/wgbh/amex/tcrr/sfeature/sf_scandals.html
http://en.wikipedia.org/wiki/Cr%C3%A9dit_Mobilier_of_America_scandal
"The Crédit Mobilier scam was born out of a simple reality: in the
1860s, the U.S. government wanted a transcontinental railroad more
than investors did. While a railroad across the Rockies had a glorious
air to it, the project also carried an enormous amount of risk, and
risk is generally something investors prefer to avoid. As a result,
when Congress chartered the two companies -- the Union Pacific and the
Central Pacific -- that would build the transcontinental railroad
toward each other, it had to make the deal as attractive as possible.
(Hundreds of thousands of dollars in bribes, by all indications, also
had something to do with the legislators' largesse.) By the time
construction on the Union Pacific really got going (after an initial
attempt quickly ground to a halt), the Union Pacific had been given
huge land grants for each mile it completed, mineral rights on the
land, and hefty subsidies for construction. The result was that what
had previously looked a fool's errand suddenly became a seemingly sure
thing."
They saw that the railroads, while looking like a sure thing, were
really a risky investment, and saw this as an opportunity to make
money and bilk more gullible investors.
"Paying Themselves to Build It"
"Not sure enough for the men who controlled the Union Pacific, though.
There was still the chance, after all, that, even with the subsidies
and land grants, running the railroad might not be a profitable
endeavor. In fact, Thomas Durant, who was vice-president of the U.P.
in its early days, was convinced that all the real money to be made
was in constructing the road, not operating it. So Durant and his
fellow promoters they came up with a seemingly foolproof plan: instead
of paying outside contractors to build the railroad, the U.P.'s
biggest stockholders would just pay themselves. They took over an
ephemeral construction company, the Crédit Mobilier of America, which
just happened to win the contract to build 667 miles of Union Pacific
railroad. The Crédit Mobilier charged the railroad tens of millions of
dollars more than the actual cost of construction, all of which went
right into the pockets of the men who were supposedly running the
Union Pacific. By the time they were done, they'd cleared at least $23
million (and perhaps considerably more), and the U.P. was on the verge
of bankruptcy. Everyone who had invested in the railroad but not the
construction company found themselves with nearly worthless securities
on their hands."
http://www.columbia.edu/~rr91/1052_2002/lectures_2002/new_south2.htm
This same scenario has played out time and time again. Wall Street
Insiders have learned how to bundle worthless loans (recent real
estate fraud) and sell them as "sure" securities. How to scam public
utilities (Enron), "privatize" government owned utilities and business
out of existence, and convert publicly traded or owned value to
private property -- over and over again -- usually with the help of
people nominally in charge of protecting those assets.
"In 1867, Dr. Thomas C. Durant was replaced as head of the firm by
Congressman Oakes Ames. In that year Ames allowed members of Congress
to purchase shares at face rather than market value, the same people
who voted the government funds to cover the inflated charges of Crédit
Mobilier. Ames' actions became one of the best-known examples of graft
in American history."
Thomas C. Durant was the smart one here. He saw his mark, made his
scam, and got out, leaving others holding the bills.
http://www.pbs.org/wgbh/amex/tcrr/peopleevents/p_durant.html
"The Doctor remained ever slippery. After the lines joined at
Promontory Summit, Utah, Oliver and Oakes Ames prepared to oust Durant
once and for all. Durant beat them to the punch, however, resigning
his position, moving onto new railroad projects and new fields of
plunder."
"The story was introduced to the public arena during the Presidential
election campaign of 1872 by the newspaper New York Sun, which was
against the re-election of Ulysses S. Grant. Henry Simpson McComb, (a
future executive of the Illinois Central Railroad) an associate of
Ames, had leaked compromising letters to the newspaper following a
disagreement with Ames. It was claimed that the $47 million contracts
had given Crédit Mobilier a profit of $21 million and left Union
Pacific and other investors near bankruptcy."
http://elections.harpweek.com/1876/Events-1876.htm
The Credit Mobilier scandal burst an investment bubble (like the Enron
Scandal, the Internet Bubble, and the Housing Market bubble) and
presaged the depression of 1873, which started:
"The depression of 1873 resulted in about 15 percent unemployment
among workers; and thousands of farmers were forced to foreclose when
the Northern Pacific Railroad financier Jay Cooke filed bankruptcy.
This economic downturn would persist through the next four years."
Jay Cooke's failure was an example of SNAFU. His banking house was
built on loans to Railroads. There was overbuilding of railroads. The
Credit Mobilier Case was investors parasiting on SNAFU. His case is
more like what happened to the Panama Canal. Credit Mobilier is part
of how SNAFUS occur.
Further reading:
http://www.amazon.com/Jay-Cookes-Gamble-Northern-Railroad/dp/0806137401
http://www.uprr.com/aboutup/history/sig-indv.shtml
Hannah Arendt slices and dices the French Third Republic as part of her explanation of the genesis of anti-semitism. As with everything in her book, what is most chilling are the parallels. She talks about the Dreyfus affair, but she places it squarely in the context of the situation of Jews, the contributions that leading Jews made towards dealing with that situation, and the Panama Scandal. In the interest of brevity I'll talk about the existential issue.
She talks about the existential quandary that Jews were put into by emancipation and then goes on to talk about how Jews reacted to social anti-semitism. What is more important here than the history itself are the processes. Some Jews chose to stick together and to not assimilate. Some chose to rebel against being labeled as Jews and to try to break the stereotypes labeled against them and did their best to be "exception jews". Some chose to go along with those stereotypes and were quite willing to be "pariahs". All three courses only served to reinforce the stereotypes and give credence to the false and abusive narratives that the Anti-Semites were developing.
She talks about the contributions made by Disraeli and the Rothschilds to the anti-jew narrative. Disraeli, apparently, partly because he was a convert to Christianity, and partly because he knew how to use people's prejudices to help himself advance. According to her, some people of the time became "parvenues" "one that has recently or suddenly risen to an unaccustomed position of wealth or power and has not yet gained the prestige, dignity, or manner associated with it", and some became rebels or "pariahs." And they were invited to salons and enjoyed because they were different from other members of society. Most emancipated Jews dealt with their emancipation by trying to make their religion a private thing.
But along with this difference, there was a slide in meaning. "Crime" had once been a definition of behavior. A person might be a bad person for what they did and go to jail, but in the 19th century crime became "vice" and "bad" went from sinning to being "vice" -- under the general decline in morals of the third republic
and vice became a condition that labeled human beings. In this context anti-"Jew" beliefs transformed from social anti-semitism based on purported religious crimes to But this acceptance transformed the "crime" of being of the Jewish Religion to the "vice" of being a Jew.
In our own time we are seeing this slide again. Homosexuals are seen as people who are bad, not because of what they do in public, but because of what they are. Increasingly our laws try to arrest people for what they are thinking and feeling, and "who they are" rather than what they are doing or planning to do. The result is that we are sliding down a road that parallels Weimar Germany or Third Republic France.... And venal politicians are quite willing to look for scape goats for their own treachery, and greed....
It is frightful.
In her opening chapter on "The Origins of Totalitarianism" Hannah Arendt talks about the sophists of ancient times and compares them to those of these modern
times and she concludes:
"The most striking difference between ancient and modern sophists is that the ancients were satisfied with a passing victory of the arguments at the expense of truth, whereas the moderns want a more lasting victory at the expense of reality. In other words, one destroyed the dignity of human thought whereas the others destroy the dignity of human action. The old manipulators of logic were the concern of the philosopher, whereas the modern manipulators of facts stand in the way of the historian. For history itself is destroyed, and its comprehensibility -- based upon the fact that it is enacted by men and therefore can be understood by men -- is in danger, whenever facts are no longer held to be part and parcel of the past and present world, and are misused to prove this or that opinion.1"
Obviously this bears on arguments in the present time as well. This passage struck me deeply, and came to mind during an argument I was having over Jimmy Carter's recent criticism of the president. In both cases, people were torturing language and reality to make violent claims justifying violent actions. In our times Carter is denouncing Torture in no uncertain terms....
CNN reported:
http://transcripts.cnn.com/TRANSCRIPTS/0710/10/sitroom.03.html 2
"In one interview yesterday, Carter accused President Bush of
abandoning the basic principles of human rights, engaging in torture,
and lying about it. In another, he called Vice President Cheney a
disaster for our country and a militant who is "trying again to
promote once again what might well be a counterproductive and
catastrophic military venture."
BLITZER: "President Bush said as recently as this week the United
States does not torture detainees."
CARTER: "That's not an accurate statement. If you use the
international norms of torture as has always been honored, certainly
in the last 60 years, since the Universal Declaration of Human Rights
was promulgated."
"But you can make your own definition of human rights and say, we
don't violate them. And we can -- you can make your own definition of
torture and say we don't violate it."
BLITZER: "But by your definition, you believe the United States, under
this administration, has used torture."
CARTER: "I don't think it, I know it, certainly."
BLITZER: "So is the president lying?"
CARTER: "The president is self-defining what we have done and
authorized in the torture of prisoners, yes.3"
Someone responded to my quote of this with the following complaint:
"He also says that Israel is the aggressor and the Palestinians are the
victims. Go figure."
But of course, the fact that we disagree about evaluations, opinions, doesn't change the facts. Carter has facts that prove his case. I may disagree strongly with Carters opinions about those facts -- but that doesn't change them or diminish the need to take heed of them.4
Footnotes and further readings.
I'm currently reading Hannah Arendt. She is difficult reading, and I've read parts of her book "The Origins of Totalitarianism" before, so this time it is a matter of really studying her ideas and absorbing them. And since I've read parts of her before I started with the middle, the chapter "The Political Emancipation of the Bourgeoisie" because that chapter resonates with the present times....http://en.wikipedia.org/wiki/The_Origins_of_Totalitarianism
Gandhi would say:
“Be the change you want to see in the world.”
Hannah Arendt was a great philosopher. But right now I'm seeing her as prophet and journalist. She saw the big picture of how societies are influenced by their ambitions, their greed, and convenient ideas. And yet she saw past this enough to still have some optimism that things can change. Wikipedia says of her:
'Her posthumous book, The Life of the Mind (1978/edited by Mary McCarthy), was incomplete when she died, but is still widely read in its current form. Stemming from her Gifford Lectures in University of Aberdeen, this book focuses on the mental faculties of thinking and willing (in a sense moving beyond her previous work concerning the vita activa). In her discussion of thinking, she focuses mainly on Socrates and his notion of thinking as a solitary dialogue between me and myself."
Like a good architect, She chose Socrates as her allegory to illustrate a vision of conscience and morality that reflected her life-experience:
"This appropriation of Socrates leads her to introduce novel concepts of conscience (which gives no positive prescriptions, but instead tells me what I cannot do if I would remain friends with myself when I re-enter the two-in-one of thought where I must render an account of my actions to myself) and morality (an entirely negative enterprise concerned with non-participation in certain actions for the sake of remaining friends with one's self)."
However, after talking about thinking, she talks about "willing:"
"In her volume on Willing, Arendt, relying heavily on Augustine's notion of the will, discusses the will as an absolutely free mental faculty that makes new beginnings possible."
St. Augustine reinvented Christianity by turning the literal concept of a "city on the hill" and the Messiah as a figurative one. Like the Free-Masons, the true concept of will is about envisioning a new beginning; a "shining city on the hill" and most importantly engineering that future. Contrary to the "triumph of the will" the vision of a peaceful world requires rebuilding, reconstructing and preserving what is important.
"In the third volume, Arendt was planning to engage the faculty of judgment by appropriating Kant's Critique of Judgment, however she never lived to write it. Nevertheless, although we will never fully understand her notion of judging, Arendt did leave us with manuscripts ("Thinking and Moral Considerations," "Some Questions on Moral Philosophy," and lectures (Lectures on Kant's Political Philosophy ) concerning her thoughts on this mental faculty. First two articles were edited and published by Jerome Kohn, who was an assistant of Arendt and is a director of Hannah Arendt Library, and last one was edited and published by Ronald Beiner, who was taught by Arendt and is a professor of University of Toronto."
She did exert an influence on history. I hope to engage her advanced works, but first I have to absorb this book I'm reading now.
Chris