Ellen Brown begint haar fantastische boek Web of Debt met een uitleg over het verhaal over The Wizzard of Oz, en de symboliek die staat voor de strijd van de boeren, de arbeiders en sommige politici als William Jennings Bryan tegen de formidabele almacht van de bankiers.
Hier het eerste hoofdstuk:
Chapter 1
LESSONS FROM
THE WIZARD OF OZ
“The great Oz has spoken! Pay no attention to that man
behind the curtain! I am the great and powerful Wizard of Oz!”
In refreshing contrast to the impenetrable writings of economists,
the classic fairytale
The Wizard of Oz has delighted young
and old for over a
century. It was first published by L. Frank Baum as
The Wonderful Wizard
of Oz in 1900. In 1939, it was made into a hit
Hollywood movie
starring Judy Garland, and later it was made into
the popular stage
play The Wiz. Few of the millions who have enjoyed
this charming tale
have suspected that its imagery was drawn
from that most
obscure and tedious of subjects, banking and finance.
Fewer still have
suspected that the real-life folk heroes who inspired
its plot may actually
have had the answer to the financial crisis facing
the country today!
The economic
allusions in Baum’s tale were first observed in 1964
by a schoolteacher
named Henry Littlefield, who called the story “a
parable on Populism,”
referring to the People’s Party movement challenging
the banking monopoly
in the late nineteenth century.1 Other
analysts later picked
up the theme. Economist Hugh Rockoff, writing
in the Journal of
Political Economy in 1990, called the tale a “monetary
allegory.”2 Professor Tim Ziaukas, writing in 1998, stated:
“The Wizard of Oz” .
. . was written at a time when American
society was consumed
by the debate over the “financial
question,” that is,
the creation and circulation of money. . . . The
characters of “The
Wizard of Oz” represented those deeply
involved in the
debate: the Scarecrow as the farmers, the Tin
Woodman as the
industrial workers, the Lion as silver advocate
William Jennings
Bryan and Dorothy as the archetypal American
girl.3
12
Chapter 1 - Lessons
from the Wizard of Oz
The Wizard of Oz has
been called “the first truly American
fairytale.”4 The Germans established the national fairytale tradition
with Grimm’s Fairy
Tales, a collection of popular folklore gathered by
the Brothers Grimm
specifically to reflect German populist traditions
and national values.5 Baum’s book did the same thing for the American
populist (or
people’s) tradition. It was all about people power,
manifesting your
dreams, finding what you wanted in your own
backyard. According
to Littlefield, the march of Dorothy and her
friends to the
Emerald City to petition the Wizard of Oz for help was
patterned after the
1894 march from Ohio to Washington of an
“Industrial Army” led
by Jacob Coxey, urging Congress to return to
the system of
debt-free government-issued Grenbacks initiated by
Abraham Lincoln. The
march of Coxey’s Army on Washington began
a long tradition of
people taking to the streets in peaceful protest when
there seemed no other
way to voice their appeals. As Lawrence
Goodwin, author of
The Populist Moment, described the nineteenth
century movement to
change the money system:
[T]here was once a
time in history when people acted. . . .
[F]armers were
trapped in debt. They were the most oppressed
of Americans, they
experimented with cooperative purchasing
and marketing, they
tried to find their own way out of the strangle
hold of debt to
merchants, but none of this could work if they
couldn’t get capital.
So they had to turn to politics, and they
had to organize
themselves into a party. . . . [T]he populists didn’t
just organize a
political party, they made a movement. They
had picnics and
parties and newsletters and classes and courses,
and they taught
themselves, and they taught each other, and
they became a group
of people with a sense of purpose, a group
of people with
courage, a group of people with dignity.6
Like the Populists,
Dorothy and her troop discovered that they
had the power to
solve their own problems and achieve their own
dreams. The Scarecrow
in search of a brain, the Tin Man in search of
a heart, the Lion in
search of courage actually had what they wanted
all along. When the
Wizard’s false magic proved powerless, the Wicked
Witch was vanquished
by a defenseless young girl and her little dog.
When the Wizard
disappeared in his hot air balloon, the unlettered
Scarecrow took over
as leader of Oz.
The Wizard of Oz came
to embody the American dream and the
American national
spirit. In the United States, the land of abundance,
all you had to do was
to realize your potential and manifest it. That
Web of Debt
13
was one of the tale’s
morals, but it also contained a darker one, a
message for which its
imagery has become a familiar metaphor: that
there are invisible
puppeteers pulling the strings of the puppets we see
on the stage, in a
show that is largely illusion.
The March
on Washington
That
Inspired the March on Oz
The 1890s were
plagued by an economic depression that was nearly
as severe as the
Great Depression of the 1930s. The farmers lived like
serfs to the bankers,
having mortgaged their farms, their equipment,
and sometimes even
the seeds they needed for planting. They were
charged so much by a
railroad cartel for shipping their products to
market that they
could have more costs and debts than profits. The
farmers were as
ignorant as the Scarecrow of banking policies; while
in the cities,
unemployed factory workers were as frozen as the Tin
Woodman, from the
lack of a free-flowing supply of money to “oil”
the wheels of
industry. In the early 1890s, unemployment had reached
20 percent. The crime
rate soared, families were torn apart, racial
tensions boiled. The
nation was in chaos. Radical party politics thrived.
In every presidential
election between 1872 and 1896, there was a
third national party
running on a platform of financial reform. Typically
organized under the
auspices of labor or farmer organizations,
these were parties of
the people rather than the banks. They included
the Populist Party,
the Greenback and Greenback Labor Parties, the
Labor Reform Party,
the Antimonopolist Party, and the Union Labor
Party. They advocated
expanding the national currency to meet the
needs of trade,
reform of the banking system, and democratic control
of the financial
system.7
Money reform
advocates today tend to argue that the solution to
the country’s
financial woes is to return to the “gold standard,” which
required that paper
money be backed by a certain weight of gold bullion.
But to the farmers
and laborers who were suffering under its
yoke in the 1890s,
the gold standard was the problem. They had been
there and knew it
didn’t work. William Jennings Bryan called the
bankers’ private
gold-based money a “cross of gold.” There was simply
not enough gold
available to finance the needs of an expanding
economy. The bankers
made loans in notes backed by gold and required
repayment in notes
backed by gold; but the bankers controlled
the gold, and its
price was subject to manipulation by speculators.
14
Chapter 1 - Lessons
from the Wizard of Oz
Gold’s price had
increased over the course of the century, while the
prices laborers got
for their wares had dropped. People short of gold
had to borrow from
the bankers, who periodically contracted the money
supply by calling in
loans and raising interest rates. The result was
“tight” money –
insufficient money to go around. Like in a game of
musical chairs, the
people who came up short wound up losing their
homes to the banks.
The solution of Jacob
Coxey and his Industrial Army of destitute
unemployed men was to
augment the money supply with governmentissued
United States Notes.
Popularly called “Greenbacks,” these
federal dollars were
first issued by President Lincoln when he was
faced with usurious
interest rates in the 1860s. Lincoln had foiled the
bankers by making up
the budget shortfall with U.S. Notes that did
not accrue interest
and did not have to be paid back to the banks. The
same sort of
debt-free paper money had financed a long period of
colonial abundance in
the eighteenth century, until King George forbade
the colonies from
issuing their own currency. The money supply had
then shrunk,
precipitating a depression that led to the American
Revolution.
To remedy the
tight-money problem that resulted when the
Greenbacks were
halted after Lincoln’s assassination, Coxey proposed
that Congress should
increase the money supply with a further $500
million in
Greenbacks. This new money would be used to redeem the
federal debt and to
stimulate the economy by putting the unemployed
to work on public
projects.8 The bankers countered that allowing the
government to issue
money would be dangerously inflationary. What
they failed to reveal
was that their own paper banknotes were
themselves highly
inflationary, since the same gold was “lent” many
times over,
effectively counterfeiting it; and when the bankers lent
their paper money to
the government, the government wound up
heavily in debt for
something it could have created itself. But those
facts were buried in
confusing rhetoric, and the bankers’ “gold
standard” won the
day.
Web of Debt
15
The Silver
Slippers: The Populist Solution
to the
Money Question
The Greenback Party
was later absorbed into the Populist Party,
which took up the
cause against tight money in the 1890s. Like the
Greenbackers, the
Populists argued that money should be issued by
the government rather
than by private banks. William Jennings Bryan,
the Populists’
loquacious leader, gave such a stirring speech at the
Democratic convention
that he won the Democratic nomination for
President in 1896.
Outgoing President Grover Cleveland was also a
Democrat, but he was
an agent of J. P. Morgan and the Wall Street
banking interests.
Cleveland favored money that was issued by the
banks, and he backed
the bankers’ gold standard. Bryan was opposed
to both. He argued in
his winning nomination speech:
We say in our
platform that we believe that the right
to coin
money and issue money is a function of government. . . . Those who
are opposed to this
proposition tell us that the issue of paper
money is a function
of the bank and that the government ought
to go out of the
banking business. I stand with Jefferson . . . and
tell them, as he did,
that the issue of money is a function of the
government and that the banks should go out of the governing
business.
. . . [W]hen we have
restored the money of the Constitution, all
other necessary
reforms will be possible, and . . . until that is
done there is no
reform that can be accomplished.
He concluded with
these famous lines:
You shall not press
down upon the brow of labor this crown of
thorns, you shall not
crucify mankind upon a cross of gold.9
Since the Greenbackers’
push for government-issued paper money
had failed, Bryan and
the “Silverites” proposed solving the liquidity
problem in another
way. The money supply could be supplemented
with coins made of
silver, a precious metal that was cheaper and more
readily available
than gold. Silver was considered to be “the money of
the Constitution.”
The Constitution referred only to the “dollar,” but
the dollar was
understood to be a reference to the Spanish milled silver
dollar coin then in
common use. The slogan of the Silverites was “16
to 1”: 16 ounces of
silver would be the monetary equivalent of 1 ounce
of gold. Ounces is
abbreviated oz, hence “Oz.” The Wizard of the
Gold Ounce (Oz) in
Washington was identified by later commentators
as Marcus Hanna, the
power behind the Republican Party, who
16
Chapter 1 - Lessons
from the Wizard of Oz
controlled the
mechanisms of finance in the administration of President
William McKinley.10 (Karl Rove, political adviser to President George
Bush Jr., reportedly
took Hanna for a role model.11)
Frank Baum, the
journalist who turned the politics of his day into
The Wonderful Wizard
of Oz, marched with the Populist Party in
support of Bryan in
1896. Baum is said to have had a deep distrust of
big-city financiers;
but when his dry goods business failed, he bought
a Republican
newspaper, which had to have a Republican message to
retain its
readership.12 That may have been why the Populist message
was so deeply buried
in symbolism in his famous fairytale. Like Lewis
Carroll, who began his
career writing uninspiring tracts about
mathematics and
politics and wound up satirizing Victorian society
in Alice’s Adventures
in Wonderland, Baum was able to suggest in a
children’s story what
he could not say in his editorials. His book
contained many subtle
allusions to the political and financial issues of
the day. The story’s
inspirational message was a product of the times
as well. Commentators
trace it to the theosophical movement, another
popular trend of
which Baum was an active member.13 Newlyimported
from India, it held
that reality is a construct of the mind.
What you want is
already yours; you need only to believe it, to “realize”
it or “make it real.”
Looking at the plot
of this familiar fairytale, then, through the lens
of the contemporary
movements that inspired it . . . .
An Allegory
of Money, Politics
and
Believing in Yourself
The story begins on a
barren Kansas farm, where Dorothy lives
with a very sober
aunt and uncle who “never laughed” (the 1890s
depression that hit
the farmers particularly hard). A cyclone comes
up, carrying Dorothy
and the farmhouse into the magical world of
Oz (the American
dream that might have been). The house lands on
the Wicked Witch of
the East (the Wall Street bankers and their man
Grover Cleveland),
who has kept the Munchkins (the farmers and
factory workers) in
bondage for many years.
For killing the
Wicked Witch, Dorothy is awarded magic silver
slippers (the
Populist silver solution to the money crisis) by the Good
Witch of the North
(the North was then a Populist stronghold). In the
1939 film, the silver
slippers would be transformed into ruby slippers
to show off the
cinema’s new technicolor abilities; but the monetary
Web of Debt
17
imagery Baum
suggested was lost. The silver shoes had the magic
power to solve
Dorothy’s dilemma, just as the Silverites thought that
expanding the money
supply with silver coins would solve the problems
facing the farmers.
Dorothy wanted to get
back to Kansas but was unaware of the
power of the slippers
on her feet, so she set out to the Emerald City to
seek help from the
Wizard of Oz (the apparently all-powerful President,
whose strings were
actually pulled by financiers concealed behind a
curtain).
“The road to the City
of Emeralds is paved with yellow brick,” she
was told, “so you
cannot miss it.” Baum’s contemporary audience,
wrote Professor
Ziaukas, could not miss it either, as an allusion to the
gold standard that
was then a hot topic of debate.14 Like the Emerald
City and the Great
and Powerful Oz himself, the yellow brick road
would turn out to be
an illusion. In the end, what would carry Dorothy
home were silver slippers.
On her journey down
the yellow brick road, Dorothy was first
joined by the
Scarecrow in search of a brain (the naive but intelligent
farmer kept in the
dark about the government’s financial policies),
then by the Tin
Woodman in search of a heart (the factory worker
frozen by
unemployment and dehumanized by mechanization).
Littlefield
commented:
The Tin Woodman . . .
had been put under a spell by the Witch
of the East. Once an
independent and hard working human
being, the Woodman
found that each time he swung his axe it
chopped off a
different part of his body. Knowing no other
trade he “worked
harder than ever,” for luckily in Oz tinsmiths
can repair such
things. Soon the Woodman was all tin. In this
way Eastern
witchcraft dehumanized a simple laborer so that
the faster and better
he worked the more quickly he became a
kind of machine. Here
is a Populist view of evil Eastern
influences on honest
labor which could hardly be more pointed.
The Eastern
witchcraft that had caused the Woodman to chop off
parts of his own body
reflected the dark magic of the Wall Street bankers,
whose “gold standard”
allowed less money into the system than
was collectively owed
to the banks, causing the assets of the laboring
classes to be
systematically devoured by debt.
The fourth petitioner
to join the march on Oz was the Lion in
search of courage.
According to Littlefield, he represented the orator
Bryan himself, whose
roar was mighty like the king of the forest but
18
Chapter 1 - Lessons
from the Wizard of Oz
who lacked political
power. Bryan was branded a coward by his
opponents, because he
was a pacifist and anti-imperialist at a time of
American expansion in
Asia. The Lion became entranced and fell
asleep in the Witch’s
poppy field, suggesting Bryan’s tendency to get
side-tracked with
issues of American imperialism stemming from the
Opium Wars. Since
Bryan led the “Populist” or “People’s” Party, the
Lion also represented
the people, collectively powerful but entranced
and unaware of their
strength.
In the Emerald City,
the people were required to wear green-colored
glasses attached by a
gold buckle, suggesting green paper money
shackled to the gold
standard.
To get to her room in
the Emerald Palace, Dorothy had to go
through 7 passages
and up 3 flights of stairs, an allusion to the “Crime
of ’73.” The 1873 Act
that changed the money system from bimetallism
(paper notes backed
by both gold and silver) to an exclusive gold
standard was proof to
all Populists that Congress and the bankers
were in collusion.15
Dorothy and her troop
presented their requests to the Wizard,
who demanded that
they first vanquish the Wicked Witch of the West,
representing the
McKinley/Rockefeller faction in Ohio (then considered
a Western state). The
financial powers of the day were the Morgan/
Wall Street/Cleveland
faction in the East (the Wicked Witch of
the East) and this
Rockefeller-backed contingent from Ohio, the state
of McKinley, Hanna,
and Rockefeller’s Standard Oil cartel. Hanna
was an industrialist
who was a high school friend of John D. Rockefeller
and had the financial
backing of the oil giant.16
Dorothy and her
friends learned that the Witch of the West had
enslaved the Yellow
Winkies and the Winged Monkeys (an allusion to
the Chinese
immigrants working on the Union-Pacific railroad, the
native Americans
banished from the northern woods, and the Filipinos
denied independence
by McKinley). Dorothy destroyed the Witch by
melting her with a
bucket of water, suggesting the rain that would
reverse the drought,
as well as the financial liquidity that the Populist
solution would bring
to the land. As one nineteenth century
commentator put it,
“Money and debt are as opposite in nature as fire
and water; money
extinguishes debt as water extinguishes fire.”17
When Dorothy and her
troop got lost in the forest, she was told to
call the Winged
Monkeys by using a Golden Cap she had found in the
Witch’s cupboard.
When the Winged Monkeys came, their leader
explained that they
were once a free and happy people; but they were
now “three times the
slaves of the owner of the Golden Cap, whosoever
Web of Debt
19
he may be” (the
bankers and their gold standard). When the Golden
Cap fell into the
hands of the Wicked Witch of the West, the Witch
made them enslave the
Winkies and drive Oz himself from the Land
of the West.
Dorothy used the
power of the Cap to have her band of pilgrims
flown to the Emerald
City, where they discovered that the “Wizard”
was only a smoke and mirrors
illusion operated by a little man behind
a curtain. A
dispossessed Nebraska man himself, he admitted to being
a “humbug” without
real power. “One of my greatest fears was
the Witches,” he
said, “for while I had no magical powers at all I soon
found out that the
Witches were really able to do wonderful things.”
If the Wizard and his
puppet were Marcus Hanna and William
McKinley, who were
the Witches they feared? Behind the Wall Street
bankers were powerful
British financiers, who funded the Confederates
in the Civil War and
had been trying to divide and conquer
America economically
for over a century. Patriotic Americans had
regarded the British
as the enemy ever since the American Revolution.
McKinley was a
protectionist who favored high tariffs to keep
these marauding
British free-traders out. When he was assassinated
in 1901, no
conspiracy was proved; but some suspicious commentators
saw the invisible
hand of British high finance at work.18
Although the Wizard
lacked magical powers, he was a very good
psychologist, who
showed the petitioners that they had the power to
solve their own
problems and manifest their own dreams. The
Scarecrow just needed
a paper diploma to realize that he had a brain.
For the Tin Woodman,
it was a silk heart; for the Lion, an elixir for
courage. The Wizard
offered to take Dorothy back to Kansas in the
hot air balloon in
which he had arrived years earlier, but the balloon
took off before she
could get on board.
Dorothy and her
friends then set out to find Glinda the Good Witch
of the South, who
they were told could help Dorothy find her way
home. On the way they
faced various challenges, including a great
spider that ate
everything in its path and kept everyone unsafe as long
as it was alive. The
Lion (the Populist leader Bryan) welcomed this
chance to test his
new-found courage and prove he was indeed the
King of Beasts. He
decapitated the mighty spider with his paw, just
as Bryan would have
toppled the banking cartel if he had won the
Presidency.
The group finally
reached Glinda, who revealed that Dorothy too
had the magic tokens
she needed all along: the Silver Shoes on her feet
would take her home.
But first, said Glinda, Dorothy must give up
20
Chapter 1 - Lessons
from the Wizard of Oz
the Golden Cap (the
bankers’ restrictive gold standard that had
enslaved the people).
The moral also worked
for the nation itself. The economy was
deep in depression,
but the country’s farmlands were still fertile and
its factories were
ready to roll. Its entranced people merely lacked the
paper tokens called
“money” that would facilitate production and
trade. The people had
been deluded into a belief in scarcity by defining
their wealth in terms
of a scarce commodity, gold. The country’s true
wealth consisted of
its goods and services, its resources and the
creativity of its
people. Like the Tin Woodman in need of oil, all it
needed was a monetary
medium that would allow this wealth to flow
freely, circulating
from the government to the people and back again,
without being
perpetually siphoned off into the private coffers of the
bankers.
Sequel to
Oz
The Populists did not
achieve their goals, but they did prove that a
third party could
influence national politics and generate legislation.
Although Bryan the
Lion failed to stop the bankers, Dorothy’s prototype
Jacob Coxey was still
on the march. In a plot twist that would be
considered contrived
if it were fiction, he reappeared on the scene in
the 1930s to run
against Franklin D. Roosevelt for President, at a time
when the “money
question” had again become a burning issue. In
one five-year period,
over 2,000 schemes for monetary reform were
advanced. Needless to
say, Coxey lost the election; but he claimed
that his Greenback
proposal was the model for the “New Deal,”
Roosevelt’s plan for
putting the unemployed to work on government
projects to pull the
country out of the Depression. The difference was
that Coxey’s plan
would have been funded with debt-free currency
issued by the
government, on Lincoln’s Greenback model. Roosevelt
funded the New Deal
with borrowed money, indebting the country
to a banking cartel
that was surreptitiously creating the money out of
thin air, just as the
government itself would have been doing under
Coxey’s plan without
accruing a crippling debt to the banks.
After World War II,
the money question faded into obscurity.
Today, writes British
economist Michael Rowbotham, “The surest way
to ruin a promising
career in economics, whether professional or
academic, is to
venture into the ‘cranks and crackpots’ world of
suggestions for
reform of the financial system.”19 Yet the claims of
Web of Debt
21
these cranks and
crackpots have consistently proven to be correct.
The U.S. debt burden
has mushroomed out of control, until just the
interest on the
federal debt now threatens to be a greater tax burden
than the taxpayers
can afford. The gold standard precipitated the
problem, but
unbuckling the dollar from gold did not solve it. Rather,
it caused worse
financial ills. Expanding the money supply with
increasing amounts of
“easy” bank credit just put increasing amounts
of money in the
bankers’ pockets, while consumers sank further into
debt. The problem has
proven to be something more fundamental: it
is in who extends the nation’s credit. As
long as the money supply is
created as a debt
owed back to private banks with interest, the nation’s
wealth will continue
to be drained off into private vaults, leaving
scarcity in its wake.
Today’s monetary
allegory goes something like this: the dollar is a
national resource
that belongs to the people. It was an original invention
of the early American
colonists, a new form of paper currency
backed by the “full
faith and credit” of the people. But a private banking
cartel has taken over
its issuance, turning debt into money and
demanding that it be
paid back with interest. Taxes and a crushing
federal debt have
been imposed by a financial ruling class that keeps
the people entranced
and enslaved. In the happy storybook ending,
the power to create
money is returned to the people and abundance
returns to the land.
But before we get there, the Yellow Brick Road
takes us through the
twists and turns of history and the writings and
insights of a wealth
of key players. We’re off to see the Wizard . . . .
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