1931 Moratorium on Brains

Herbert Hoover in 1938 meeting with results of 1931 Moratorium

In 1931 Republican President Herbert Hoover and drug czar Harry Anslinger were pressuring Germany into additional curbs on heroin exportation while semisocialist Germany’s victims were demanding reparations payments under the Treaty of Versailles (which the US did not ratify, but which still involved $10 trillion in gold).

Hoover’s error is relevant to ongoing efforts to extricate These States from the Vichy Paris carbon tax extortion the Obama Administration tried to smuggle past the Senate. Already there is a severe shortage of nuclear power plants in These States–which is the whole reason engineers are forced to rely on coal. Coal is less clean, less safe, and less hardened against attack by comparison. The Paris Capitulation can only benefit Communist China and Venezuela at the expense of the relatively free world. 

As 1931 stupefacient drug prohibition negotiations proceeded, banks in Germany and Austria failed. Depositors were removing their money because they knew the influx of dope money would stop, but reparations claims were persistent. Hoover’s brilliant idea was to let France, Britain, Italy, Russia and others “temporarily” default on war loans payable to the USA. In exchange, they would let Christian altruist Germany default on reparations payments owed to the USA. That was the lose-lose theory of coercive prohibitionism. What happened under the Moratorium was that Germany kept exporting addictive poisons and using the money to build up the Steel Helmets, build submarines and battleships and entrench the National Socialist party. Immediately all of Europe began defaulting on war debts, and even commercial loans of private US capital.

Mystical collectivists elect Nazis, thanks to Hoover

Ayn Rand was a Hollywood writer and reader hanging out with pre-code movie stars like Barbara Stanwyck, watching Three on a Match (with husband Frank O’Connor), Scarface, Night Nurse (bootlegger hero), Dinner at Eight, The Secret Six and old Alma Rubens movies. At age 24, newlywed immigrant Ayn Rand was certainly aware of Russian and German anti-jewish fanaticism. All of America was painfully aware of Hoover’s solicitous concern for The Accursed Hun.

The smart Moratorium in Atlas Shrugged is Hank Rearden voluntarily offering rail on credit to Taggart Transcontinental. The dumb Moratorium of 1931 was Hoover helping Hitler’s backers arm and control Germany’s government. To this Ayn Rand drew too vague an analogy with the Moratorium on Brains in Atlas Shrugged. Nor did she clarify the connection–possibly for fear of weakening Barry Goldwater’s GOP while the Soviet still existed.

Dwight Eisenhower was, after all, the conquering Republican president of both These States and the Government of Occupation, and Richard Nixon was his vice-president and anticommunist Wingman when Atlas Shrugged was finally published. But the book was already in its tenth chapter in 1947, when Christian National Socialists were denying ever having so much as suspected that Henry Ford’s Fuehrer’s promise to “extirpate” jewish egoism in Mein Kampf was anything but a joke. That was the year Rand composed the Non-Aggression Pledge. That tersely-worded individual decision established a modern ethical position consistent with the era of mature nuclear physics.

Get the complete story in Prohibition and The Crash on Amazon Kindle in two languages

Prohibition and The Crash, on Amazon Kindle

I also produce books and articles in Portuguese, using Brazilian historical sources at http://www.expatriotas.blogspot.com or amigra.us

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1929 Stock Market Crash One

Chapter 46

The First Stock Market Crash

Chicago Tribune 27MAR1929

On March 26, 1929, Al Capone was still sequestered for the federal grand jury as ordered by Judge Wilkerson, and the U.S. Attorney had sent a federal raiding party to the Lexington and Metropole hotels to seize Capone’s records. Although ostensibly over fallout from the Chicago Heights raids, Assistant United States District Attorney Daniel Anderson nonetheless asked the famous entrepreneur point-blank: “What is your business?”

“I must stand on my constitutional rights and refuse to answer anything particular about that,” was Capone’s answer. Al was charged with contempt and a warrant issued the following day. Health problems as a pretext for avoiding the courtroom had been successfully invoked by Jew-baiting magnate Henry Ford just two years earlier, but the court extended no such privilege to young Al Capone.^[1] The market crashed with a record turnover of over 8 million shares on March 26, 1929.^[2] Wall Street sources reported that Chicago banks withdrew substantial sums from Wall Street to meet credit exigencies in the “Middle West.” This announcement would be repeated in even stranger circumstances by Herbert Hoover before the year was out.^[3]

Wall Street Journal headlines on March 27 glumly described severe declines on the “largest volume of dealings ever known.” Time Magazine chimed right in, announcing “the biggest stock market crash in Coolidge-Hoover history.” Some of the cash movement had to do with income tax payments—which back then were due March 1—and some with quarterly government financing. Indeed, call money bounced back up to 14% at the close of March. News came in of increased opium trade in China precisely coinciding with a new wave of suppression there.^[4]

Judge Winslow’s impeachment was gathering steam, with attorney Isidore Kresel scheduled to conduct an investigation beginning Monday. City Trust, Lancia motors and the late F.M. Ferrari were also back in the news over a disputed note, and George McManus—Rothstein murder “suspect”—was released on bail for want of a speedy trial.^[5]

Again the Journal reported that there had been a “drastic movement of funds to Chicago to replace funds called in that City by local banks.”^[6] This pattern would repeat itself time and time again before 1933, yet remain a mystery to economists and financiers for the next seventy years. Just how much of the March panic was due the various forms of prohibition we may never know. We do know, however, that this record-volume stock market crash occurred well before the tariff debate had even begun and after no interest rate increases by the Fed.

Yet as the crash occurred, vigilantes closed in on Chicago racketeers, Al Capone fidgeted before Judge Wilkerson in a Federal courtroom interested in his income tax records, banks were caught financing bootleggers, League of Nations narcotics statistics reports were falling due, corporate magnates were tried without publicity or fanfare in a Buffalo star chamber and the Chicago-bound trunkful of drugs case slowly expanded into a conspiracy involving failed banks and other corporations. A pattern was taking shape.

The New York World scrupulously ignored the Illinois Alcohol trial, 73 subpoenas and all—yet covered the news of the following day’s “brief but violent tumble in stock prices.”

Same day Chicago Tribune cartoon

Walter Strong, Publisher of the Chicago Daily News had visited President Hoover on March 19. Strong—together with Judge Frank Loesch of the Chicago Crime Commission—had given “chapter and verse for their statement that Chicago was in the hands of gangsters, that the police and magistrates were completely under their control, that the governor of the state was futile, that the Federal government was the only force by which the city’s ability to govern itself could be restored.” Thus spoke President Hoover, who at once gave orders that “all the Federal agencies at once concentrate upon Mr. Capone and his allies.” This was to be accomplished at once, without publicity and regardless of expense. Having thus ordered such Treasury agents as Eliot Ness and Elmer Irey unleashed upon Chicago’s shadow government, the President again turned his attention to the special session he’d been planning for Congress.^[7]

If you had never heard of the March 1929 stock market crash, perhaps you have also never heard of court or financial interpreters for the Portuguese language.

^[1] (Bergreen 1994 326) (Pasley 1930 73) (Lacey 1986 216-217)

^[2] (Time Capsule 4/1/29 212)

^[3] (WSJ 2/26/29; 3/27/29 1; 5/18/29 7)

^[4] (NYT 3/31/29 III-6:2; 7/21/29 III-8:8)

^[5] (NYT 2/26/29 24; 14) (NY World Almanac 1930 103)

^[6] (WSJ 5/18/29 7)

^[7] (Hoover Memoirs Vol. 2 277) (Myers & Newton 1936 376)

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Then and now, asset forfeiture crashes

According to Ronald Reagan, on Thursday, September 11, 1986, lunch with VP George H.W. Bush was followed by a lengthy cabinet meeting over proposed prohibitionist legislation.

Those were the heady days of “Just Say No,” when the Soviet Union was going broke and the Reagan administration was looking for ways to cut off all sources of income for the communist empire. The 9/11 drug bill in question contained items like using the military to invade other countries to enforce prohibition, an extra hundred million dollars to hire a drug army, Federal funds for state prisons, and “introduction of illegally obtained evidence at criminal trials in cases where a police officer acting in good faith makes an error in a warrantless search situation” … “forfeiture of substitute assets“,  “drug tests for all U.S. government employees in “sensitive” positions” and so on.  Reagan signed the resulting bill and called it a “National Crusade.” The way these laws are written, they only take effect a year after they are signed. You wouldn’t want cause and effect close enough together to draw attention to the financial charts.

The same sort of thing had been happening 55 years earlier, Herbert Hoover was president, beer was a major felony, several large banks in New York City had been involved in financing illegal alcohol and drugs, and Ronald Reagan had just turned 20.

President Wilson’s son-in-law, William McAdoo, suggested that Congress pass a law confiscating all money owned by drug and alcohol operators. Pres. Hoover had already more than doubled the number of convicts in prison for victimless crimes. Money the government didn’t have was being appropriated for building new prisons and hiring hordes of agents an prosecutors.

In June 1932 the Senate passed the revenue act containing the asset forfeiture provisions, along with major tax hikes. Hoover lost the election in November, but would still be president until March 4, 1933. In the meantime banks for closing right and left because citizens, fearful of asset forfeiture confiscations, we’re removing all of their deposits, thereby contracting the amount of available credit. Tax revenue fell by nearly half before anyone had ever heard of the Laffer curve. Stockbrokers were only making money by selling short. Huge bootlegging and narcotics trials of wealthy and important defendants from arrests made back in 1928-1932 were running out of delaying tactics.

Finally, on December 13, 1932, President Hoover signed executive order 5970 –Inspection of Income Tax Returns–which allowed States to look at Federal income tax forms filed by corporations within their borders.

This was done quietly, with no fanfare in the newspapers. Few even realized what had happened until Hoover’s press conference of January 20 subtly spilling the beans. This realization dawned ten days before Hitler was named Chancellor of the same German Reich Hoover had nurtured and protected by his moratorium on war debt collections (the Moratorium on Brains). The House promptly cut off all funding for wiretaps and entrapment buying. Corporations began withdrawing money from banks, and over the course of the following month every single bank in the United States shut down even before Franklin D Roosevelt was sworn in to become President for Life and declare a “holiday,” complete with fines, imprisonment and forfeiture language.

Religious conservatives have since that time pronounced the word “liberal” (in favor of repealing prohibition) the way their German counterparts pronounced the words “liberal” and “Jewish” (meaning laissez-faire).  In the rest of the English-speaking world, liberal still means the same thing that it meant–-even to religious conservatives–-in America before 1932.

For a detailed analysis of the Crash and Depression buy Prohibition and The Crash, live on Amazon Kindle in two languages–for the cost of a competent pint.

Prohibition and The Crash, on Amazon Kindle

Stay tuned for how these events relate to the Crash of 2007-8 and the ensuing Depression. Need an interpreter?
My other blog is in Brazilian

 

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