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Saturday, June 09, 2007

Capitalism and Atomic Bombs (In space)

by Dr. Carroll Quigley
ISBN 0913022-14-4

Page 873
The period 1945 to early 1963 forms a unity during which a number
of factors interacted upon one another to present a very complicated
and extraordinarily dangerous series of events. That mankind and
civilized life got through the period may be attributed to a number of
lucky chances rather than to any particular skill among the two
opposing political blocs.
The Cold War is almost always described in terms which put minor
emphasis or even neglect the role of technological rivalry because
most historians do not feel competent to discuss it but chiefly
because much of the evidence is secret. Because of such secrecy, the
story of this rivalry falls into two quite distinct and even
contradictory parts:
1) what the real situation was; and
2) what prevalent public opinion believed the situation to be.
For example, the Soviet Union had an H-bomb many months before we
did when public opinion believed the opposite; the 1960 believe
throughout the world of a so-called "missile gap" or American
inferiority in nuclear missiles when no such inferiority existed.
Page 875
The balance of nuclear weapons was the central factor in the Cold
War. Cessation on nuclear testing came close to achievement in 1950
when both sides had atomic weapons but was destroyed at that time by
President Truman's order to proceed with the development of the
hydrogen bomb. By 1963, both sides had these weapons and the balance
of terror had been achieved.
Page 879
The party struggle in the U.S. found the intellectuals (including
scientists), the internationalists, the minorities and the
cosmopolitans in the Democratic Party with the businessmen, bankers
and clerks in the Republican Party. The Republicans had fallen into
the control (represented by Senators Taft, Wherry, Bridges and Jenner)
of those who were most ignorant of the real issues and were most
remote from any conceptions of national political responsibility.
Page 880
This group, to whom we often give the name "neo-isolationist,"
knew nothing of the world outside the U.S., and generally despised it.
Thus, they gave no consideration to our allies or neutrals, and saw no
reason to know or to study Russia, since it could be hated completely
without need for accurate knowledge. All foreigners were regarded as
unprincipled, weak, poor, ignorant and evil, with only one aim in
life, namely, to prey on the United States. These neo-isolationists
and unilateralists were equally filled with suspicion or hatred of any
American intellectuals, including scientists, because they had no
conception of any man who placed objective truth higher than
subjective interests since such an attitude was a complete challenge
to the American businessman's assumption that all men are and should
be concerned with the pursuit of self-interest and profit.
Neo-isolationism had a series of assumptions which could not be
held by anyone who had any knowledge of the world outside U.S. middle-
class business circles. These beliefs were seven in number:
1) Unilateralism: that the U.S. should and could act by itself without
need to consider allies, neutrals or the Soviet Union;
2) National omnipotence: that the U.S. is so rich and powerful that no
one else counts and that there is no need to study foreign areas,
customs, policies;
Page 881
3) Unlimited goals (or utopianism): the belief that there are final
solutions to the world's problems. Upholders of this view refused to
accept that constant danger and constant problems were a perpetual
condition of human life except in brief and unusual circumstances.
Dulles insisted that the Truman policy of containment must be replaced
by a policy of "liberation." These policies were not designed to win
conclusively and did not seek to solve the problem of the Soviet Union
but to live with it, "presumably forever." He did accept preventive
war in the form of massive retaliation if the Communists made any
further advances.
4) The neo-isolationist belief that continuance of the Soviet threat
arose from internal treason within America.
Page 882
5) Since the chief "high moral principle" which motivated the neo-
isolationists insisted that Soviet Russia and Democrats were engaged
in a joint tacit conspiracy to destroy America by high taxes by using
the Cold War to tax America into bankruptcy
6) Since neo-isolationists rejected all partial solutions, there was
little they could do but talk loudly and sign anti-communist pacts.
7) The unrealistic and unhistoric nature of neo-isolationism meant
that it could not actually be pursued as a policy. It was pursued by
John Foster Dulles with permanent injury to our allies. When Senator
McCarthy turned his extravagant charges of subversion and treason from
the State Department to the army, his downfall began. The neo-
isolationist forces still continue in an increasingly irresponsible
form under a variety of names including John Birch Society members or
more generally as the "Radical Right."
Page 885
Robert Oppenheimer was on a total of thirty five government
committees. There was a shadow on Oppenheimer's past. In his younger
and more naive days, he had been closely associated with Communists.
Certainly never a Communist himself, and never, at any time, disloyal
to the U.S., he had nonetheless associated with Communists. His
brother Frank and his wife were Communist Party workers while
Oppenheimer's own wife was an ex-Communist, widow of a Communist who
had been killed fighting Fascism in Spain in 1937. The Oppenheimers
continued to have friends who were Communists and contributed money
until the end of 1941.
Page 886
All this derogatory information was known to General Groves and
to Army Intelligence and used in 1953-1954 to destroy his reputation.
It was an essential element in the neo-isolationist McCarthyite,
Dulles interregnum of 1953-1957.
Page 891
IN the Soviet system, while most Russians lived in poverty, a
privileged minority, buying in special stores with special funds and
special ration cards, had access to luxuries undreamed of by the
ordinary person.
Page 900
In 1944, Secretary of the Treasury Morgenthau took advantage of
his close personal friendship with Roosevelt to push forward his own
pet scheme to reduce Germany to a purely agricultural state by almost
total destruction of her industry, the millions of surplus population
to be, if necessary, deported to Africa. The secretary, supported by
his assistant secretary, Harry Dexter White, was deeply disturbed by
Germany's history of aggression. The only way to prevent it was to
reduce Germany's industry and thus her warmaking capacity as close to
nothing as possible. The resulting chaos, inflation, and misery would
be but slight repayment for the horrors Germany had inflicted on
others over many years.
By personal influence, Morgenthau obtained acceptance of a
somewhat modified version of this plan by both Roosevelt and Churchill
at the Quebec conference of September 1944. The error at Quebec was
quickly repudiated but no real planning was done and the Morgenthau
Plan played a considerable role in the JCS 1067, the directive set up
to guide the American military occupation of Germany. It proposed
reparations be obtained by dismantling Germany industry. The JCS 1067
directive ordered that Germany be treated as a defeated enemy and not
as a liberated country. No steps were taken to secure its economic
Page 901
At the Potsdam conference, it was agreed that the German economy
should not be permitted should not be permitted to recover higher than
the standard of living of 1932, at the bottom of the depression, the
level, in fact, which had brought Hitler to power in 1933.
It took more than two years of misery for Germany to secure any
changes in these American objectives. Hunger and cold took a
considerable toll, and the Germans, for two years, experienced some of
the misery they had inflicted on others in the preceding dozen years.
The Germany currency reform of 1948 is the fiscal miracle of the
post-war world. From it came
(1) an explosion of industrial expansion and economic prosperity for
West Germany;
(2) they tying of the West Germany economy to the West;
(3) an example for other western European in economic expansion; and
(4) a wave of prosperity for western Europe as a whole.
Page 909
The American response to the Soviet refusal of postwar
cooperation was confused and tentative.
Winston Churchill in June 1946 spoke of the "Iron Curtain" which
Staling was lowering between the Soviet bloc and the West.
Lasting from 1947-1953, the chief characteristics of
"containment" were economic and financial aid to other nations to
eliminate the misery and ignorance which fosters communism.
Page 910
Americans, when goals are established as they are in war, work
together very effectively, but political work in peacetime, with its
ambiguous goals, is relegated to rivalry, bickering, and total
inability to relate means to goals. As a result, the means themselves
tend to become goals.
Page 911
Each service has alliances with the industrial complexes which
supply their equipment. These complexes not only supply funds for each
service to carry its message to the Congress but also exert every
influence to retain equipment by dangling before the high officers who
can influence contracts, offers of future well-paying consultant
positions with the industrial firms concerned. Most high officers
retired and then took consultant jobs with those firms.
Page 912
Four-star general Somervell retired on a disability salary of
$16,000 to join a number of firms which paid him R$125,000 a year;
three-star general Campbell retired on a disability salary of $9,000
and became an executive at $50,000 a year of firms from whom he had
previously purchased $3 billion in armaments; four-star general Clay
retired on $16,000 a year but signed up at over $100,000 a year.
These are but a few of more than a hundred general officers whose
post retirement alliances with industrial firms encouraged their
successors, still on active service, to remain on friendly terms with
such appreciative business corporations.
Page 919
Pearl Harbor was a total surprise. This last point was so hard to
believe, once the evidence was available, that the same groups who
were howling about Soviet espionage in 1948-1955 were also claiming
that Roosevelt expected and wanted Pearl Harbor. Both these beliefs,
if they were believed, were based on gigantic ignorance and
misconceptions about the nature of intelligence.
Page 921
A great deal of nuclear information (whether secret or not is
unknown) as well as uranium metal, went to the Soviet Union as part of
Lend-Lease in 1943. Major George Racey Jordan, USAAF, tried in vain to
disrupt these shipments at the time. While most of Jordan's evidence
is unreliable, the shipment of uranium to Russia is corroborated from
other sources. The export licenses for such shipments were granted at
the request of General Groves. Jordan's other evidence, most of which
was very discreditable to the New Deal (since he testified that he,
Groves, and others were under direct pressure from Harry Hopkins to
allow export of nuclear materials) was subsequently shown to be false.
Page 923
Much of the evidence on the Communist movement came from ex-
Communists such as Elizabeth Bentley, Louis Budenz, Whittaker
Chambers, John Lautner and others. The first three names mentioned are
known because they dramatized, distorted and manipulated evidence for
their own private purposes. This is particularly true of Elizabeth
Bentley who exaggerated her role.
Page 925
The House Un-American Committee was aimed more at partisan
advantage than ascertaining the nature of the Communist conspiracy.
the truth cannot now be ascertained. Numerous other accused
Communists, both in government and out, whose names were given to the
committee in the same breath as Hiss or Lattimore were almost totally
Page 927
Others called before the committee who refused to give evidence
under the Fifth Amendment which protects against self-incrimination
were in fact Communists and Bentley and Chambers knew them as such.
Page 938
The revelation of Communist influence in the U.S. was undoubtedly
valuable but the cost in damage to reputations of innocent persons was
very high. Much of this damage came from the efforts of Senator Joseph
McCarthy, Republican, of Wisconsin to prove that the State Department
and the army were widely infiltrated with Communists.
Page 939
McCarthy was not a conservative, still less a reactionary. He was
a fragment of elemental force, a throwback to primeval chaos. He was
the enemy of all order and all authority, with no respect, or even
understanding, for principles, laws, regulations, or rules. As such,
he had nothing to do with rationality or generality. Concepts, logic,
distinctions of categories were completely outside his world. It is
clear he did not have any idea what a Communist was, still less
Communism itself, and he did not care. This was simply a term he used
in his game of personal power. Most of the terms which have been
applied to him, such as "truculent," "brutal," "ignorant," "sadistic,"
"foul-mouthed," "brash," are quite correct but not quite in the sense
that his enemies applied them, because they assumed that these
qualities and distinctions had meaning in his world as they did in
their own. They did not, because his behavior was all an act, the
things he did to gain the experience he wanted, that is, the feeling
of power, of creating fear, of destroying the rules, and of winning
attention and admiration for doing so. His act was that of Peck's Bad
Boy but on a colossal scale. He sought fame and acclaim by showing an
admiring world of schoolmates what a tough guy he was, defying all the
rules, even the rules of decency and ordinary civilized behavior. But
like the bad boy of the schoolyard, he had no conception of time or
anything established, and once he had found his act, it was necessary
to demonstrate it every day. His thirst for power, the power of mass
acclaim and publicity, reached the public scene at the same moment as
television, and he was the first to realize what could be done by
using the new instrument for reaching millions.
His thirst for power was insatiable because like hunger, it was a
daily need. It had nothing to do with the power of authority or
regulated discipline, but the personal power of a sadist. All his
destructive instincts were against anything established, the wealthy,
the educated, the well-mannered, the rules of the Senate, the American
party system, the rules of fair play. As such, he had no conception of
truth or the distinction between it and falsehood, just as he had no
conception of yesterday, today, tomorrow as distinct entities. He
simply said whatever would satisfy, momentarily, his yearning to be
the center of the stage surrounded by admiring, fearful, shocked,
amazed people. He did not even care if their reaction was admiration,
fear, shock, or amazement and he did not care if they, as persons, had
the same reaction or a different one the next day or even a moment
later. He was exactly like an actor in a drama, one in which he had
made the script as he went along, full of falsehoods and
inconsistencies, and he was genuinely surprised and hurt if a person
whom he had abused and insulted for hours at a hearing did not walk
out with him to a bar or even to dinner the moment the hearing session
was over. He knew it was an act; he expected you to know it was an
act. There was really no hypocrisy in it, no cynicism, no falsehood,
as far as he was concerned, because he was convinced that this was the
way the world was. Everyone he was convinced, had a racket; this just
happened to be his, and he expected people to realize this and to
understand it.
Page 930
Of course, to the observant outsider who did not share his total
amorality, it was all false, invented as he went along, and constantly
changed, everything substantiated by documents pulled from his
briefcase and waved about too rapidly to be read. Mostly these
documents had nothing to do with what he was saying; mostly he had
never looked at them himself; they were merely props for the
performance, and to him, it was as silly for his audience to expect
such documents to be relevant as it would be for the audience in a
theater to expect the food that is being eaten, the whiskey that is
being drunk, or the documents which are read in that play to be
relevant to what the actor is saying.
Every time he spoke, with each version he became a larger more
nonchalant hero. In 1952, he intimidated the Air Force into awarding
him the Distinguished Flying (given for twenty five combat missions)
although he had been a grounded intelligence officer who took
occasional rides in planes.
Since laws and regulations were, for McCarthy, nonexistent, his
business and financial affairs are, like his life, a chaos of
Page 931
He seized upon Communism. "That's it," he said. "The government
is full of communists. We can hammer away at them." Without any real
conception of what he was doing, and without any research or knowledge
of the subject, on February 9, McCarthy waved a piece of paper and
said "I have here in my hand a list of 205 members of the Communist
Party still working and shaping the policy of the State Department.
Page 932
On Feb 20th, in an incoherent speech in the Senate was six hours
of bedlam, as case after case was presented filled with contradictions
and irrelevancies. According to Senate Republican Leader Taft, "It was
a perfectly reckless performance." Nevertheless, Taft and his
colleagues determined to accept and support these charges since they
would injure the Administration. Few people realize that in five years
of accusations, McCarthy never turned up a Communist in the State
Department although undoubtedly there must have been some.
Page 933
He claimed that "the top Russian espionage agent" in the U.S.,
Alger Hiss's boss in the State Department, "the chief architect of our
Far Eastern policy" was Professor Owen Lattimore. The trouble was
Lattimore was not a Communist, not a spy, and not employed by the
State department.
In July, the Tydings subcommittee condemned McCarthy for a "fraud
and a hoax." McCarthy had the power of an inflamed and misled public
opinion. Tydings was beaten in Maryland in 1950. Benton from
Connecticut who introduced the resolution to expel McCarthy from the
Senate in 1951 and whose charges were fully supported by the Senate's
investigation of McCarthy's private finances, was defeated in 1952.
During this period, McCarthy violated more laws and regulations than
any previous senator in history. When a reporter once said "Isn't that
a classified document?" McCarthy said, "It was. I just declassified
Page 934
Eisenhower was soon boasting that 1,456 Federal workers had been
"separated" in the first four months of the Eisenhower security
program. 2,200 at the end of the first year. Nixon said "We're kicking
the Communists and fellow travellers and security risks out of the
Government by the thousands." It was soon clear that no Communists
were kicked out and that security risks included all kinds of persons.
For a while, the Administration tried to outdo McCarthy by
demonstrating in hearings that China had been "lost" to the Communists
because of the careful planning and intrigue of Communists in the
State Department. But they failed to prove their contention.
Page 935
There is considerable truth in the China Lobby's contention that
the American experts on China were organized into a single
interlocking group which had a general consensus of a Leftish
character. It is also true that this group, from its control of funds,
academic recommendations, and research of publication opportunities,
could favor persons who accepted the established consensus and could
injure, financial or in professional advancement, persons who did not
accept it. It is also true that the established group, by its
influence on book reviewing in the New York Times, the Herald Tribune
and the Saturday Review, a few magazines including the "liberal
weeklies" and in the professional journals, could advance or hamper
any specialist's career. It is also true that these things were done
in the United States by the Institute of Pacific Relations, that this
organization had been infiltrated by Communists, and by Communist
sympathizers, and that much of this group's influence arose from its
access to and control over the flow of funds from financial
foundations to scholarly activities. All these things were true, but
they would have been true of many other areas of American scholarly
research and academic administration.
On the other hand, the charges of the China Lobby that China was
"lost" because of this group is not true. Yet the whole subject is of
major importance in understanding the twentieth century.
Page 936
Lattimore, because he knew Mongolian, tended to become
everybody's expert. Many of these experts which were favored by the
Far East "establishment" in the Institute of Pacific RElations were
captured by Communist ideology. Under its influence, they
propagandized, as experts, erroneous ideas and sought to influence
policy in mistaken directions.
Behind this unfortunate situation lies another, more profound,
relationship, which influences matters much broader than Far Eastern
policy. It involves the organization of tax-exempt fortunes of
international financiers into foundations to be used for educational,
scientific, and "other public purposes." Sixty or more years ago,
public life in the East was dominated by the influence of "Wall
Street" referring to international financial capitalism deeply
involved in the gold standard, foreign exchange fluctuations,floating
of fixed-interest securities and shares for stock-exchange markets.
Page 937
This group, which in the United States, was completely dominated
by J.P. Morgan and Company from the 1880s to the 1930s was
cosmopolitan, Anglophile, internationalist, Ivy League, eastern
seaboard, high Episcopalian and European-culture conscious. Their
connection with the Ivy League colleges rested on the fact that large
endowments of these institutions required constant consultation with
the financiers of Wall Street and was reflected in the fact that these
endowments were largely in bonds rather than in real estate or common
stocks. As a consequence of these influences, J.P. Morgan and his
associates were the most significant figures in policy making at
Harvard, Columbia and Yale while the Whitneys and Prudential Insurance
Company dominated Princeton. The chief officials of these universities
were beholden to these financial powers and usually owed their jobs to
The significant influence of "Wall Street" (meaning Morgan) both
in the Ivy League and in Washington explains the constant interchange
between the Ivy League and the Federal Government, and interchange
which undoubtedly aroused a good deal of resentment in less-favored
circles who were more than satiated with the accents, tweeds, and High
Episcopal Anglophilia of these peoples. Poor Dean Acheson, in spite of
(or perhaps because of) his remarkable qualities of intellect and
character, took the full brunt of this resentment from McCarthy and
his allies. The same feeling did no good to pseudo-Ivy League figures
like Alger Hiss.
Page 938
In spite of the great influence of this "Wall Street" alignment,
an influence great enough to merit the name of the "American
Establishment," this group could not control the Federal Government
and, in consequence, had to adjust to a good many government actions
thoroughly distasteful to the group. The chief of these were in
taxation law, beginning with the graduated income tax in 1913, but
culminating above all else with the inheritance tax. These tax laws
drove the great private fortunes dominated by Wall Street into tax-
exempt foundations which became the major link in the Establishment
network between Wall Street, the Ivy League and the Federal
government. Dean Rusk, Secretary of State after 1961, formerly
president of the Rockefeller Foundations, is as much a member of this
nexus as Alger Hiss, the Dulles brothers, Jerome Green, etc.
More than fifty years ago, the Morgan firm decided to infiltrate
the Left-wing political movements of the United States. This was
relatively easy to do since these groups were starved for funds and
eager for a voice to reach the people. Wall Street supplied both. The
purpose was not to destroy, dominate, or take over but was really
1) to keep informed about the Left-wing or liberal groups;
2) to provide them with a mouthpiece so they could blow off steam;
3) to have a final "veto" on their actions if they ever went radical.
There was nothing really new about this decision, since other
financiers had talked about it and even attempted it earlier.
The best example of the alliance of Wall Street and Left-wing
publication was "The New Republic" a magazine founded in 1914 by
Willard Straight using Payne Whitney money. The original purpose for
establishing the paper was to provide an outlet for the progressive
Left and to guide it in an Anglophile direction. This latter task was
entrusted to Walter Lippmann.
Willard Straight, like many Morgan agents, was present at the
Paris Peace Conference in 1919.
Page 940
The first New Republic editor,Herbert Croly wrote, "Of course,
the Straights could always withdraw their financial support if they
ceased to approve of the policy of the paper;and in that event, it
would go out of existence as a consequence of their disapproval." The
chief achievement of The New Republic in 1914-1918 and again in 1938-
1948 was for interventionism in Europe.
Page 942
Straight allowed the Communists to come into the New Republic.
The first to arrive was Lew Frank.
Page 944
Frank joined a "Communist Research Group" which met in the
Manhattan home of the wealthy "Wall Street Red," Frederick Vanderbilt
Page 945
To Morgan, all political parties were simply organizations to be
used, and the firm always was careful to keep a foot in all camps.
Like the Morgan interest libraries, museums and art, its
recognition of the need for social work among the poor went back to
the original founder of the firm, George Peabody. To this same figure
may be attributed the use of tax-exempt foundations for controlling
these activities as in the use of Peabody foundations to support
Peabody libraries and museums. Unfortunately, we do not have space
here for this great and untold story, but it must be remembered that
what we do say is part of a much larger picture.
Our concern at the moment is with the links between Wall Street
and the Left, especially the Communists. Here the chief link was the
Thomas W. Lamont family. Tom Lamont was brought into the Morgan firm,
as Straight several years later, by Henry P. Davison, a Morgan
partner. Each had a wife who became a patroness of Leftish causes and
two sons, of which the elder was a conventional banker, and the
youngest was a Left-wing sympathizer and sponsor.
HUAC files show Tom Lamont, his wife Flora, and his son Corliss
as sponsors and financial angels to almost twenty extreme Left
organizations, including the Communist Party itself.
Page 946
In 1951, the McCarran Committee sought to show that China had not
been lost to the Communists by the deliberate actions of a group of
academic experts on the Far East and Communist fellow travellers whose
work in that direction was controlled and coordinated by the Institute
of Pacific Relations (IPR). The influence of the Communists in the IPR
is well established but the patronage of Wall Street is less well
The IPR was a private association of ten independent national
councils in ten countries concerned with affairs in the Pacific. Money
for the American Council of the IPR came from the Carnegie Foundation
and the Rockefeller Foundation. The financial deficits which occurred
each year were picked up by financial angels, almost all with close
Wall Street connections. There can be little doubt that the IPR line
had many points in common both with the Kremlin's party line on the
Far East and with the State Department's police line in the same area.
Clearly there were some Communists, even party members, involved but
it is much less clear that there was any disloyalty to the U.S. There
was a great deal of intrigue both to help those who agreed with the
IPR line and to influence U.S. government policy in this direction,
but there is no evidence of which I am aware of any explicit plot or
conspiracy to direct American policy in a direction favorable either
to the Soviet Union or to international Communism.
Page 948
It must be confessed that the IPR had many of the marks of a
fellow traveller or Communist "captive" organization. But this does
not mean that the Radical Right version of these events is accurate.
For example, Elizabeth Bentley testified on the IPR and identified
almost every person associated with the organization as a Communist.
Page 949
This Radical Right fairy tale, which is not an accepted folk myth
in many groups in America, pictured the recent history of the United
States as a well-organized plot of extreme Left-wing elements,
operating from the White House itself and controlling all the chief
avenues of publicity in the United States. This plot, if we are to
believe the myth, worked through such avenues as the New York Times,
Herald Tribute, Christian Science Monitor, Washington Post, Atlantic
Monthly, and Harper's Magazine and had at its core the wild-eyed and
bushy-haired theoreticians of Socialist Harvard and the London School
of Economics. It was determined to bring the U.S. into World War II on
the side of England (Roosevelt's first love) and Soviet Russia (his
second love) and, as part of this consciously planned scheme, invited
Japan to attack Pearl Harbor all the while undermining America's real
strength by excessive spending and unbalanced budgets.
Page 950
This myth, like all fables, does in fact have a modicum of truth.
There does exist and has existed for a generation, an international
Anglophile network which operates to some extent in the way the
Radical Right believes the Communists act. In fact, this network,
which we may identify as the Round Table Groups, has no aversion to
cooperating with the Communists, or any other groups, and frequently
does so. I know of the operations of this network because I have
studied it for twenty years and was permitted for two years, in the
early 1960s, to examine its papers and secret records. I have no
aversion to it or to most of its aims and have, for much of my life,
been close to it and to many of its instruments. I have objected, both
in the past and recently, to a few of its policies but in general my
chief difference of opinion is that it wishes to remain unknown, and I
believe its role in history is significant enough to be known.
The Round Table Groups have already been mentioned several times.
At the risk of some repetition, the story will be summarized here
because the American branch of this organization (sometimes called the
"Eastern Establishment) has played a very significant role in the
history of the United States in the last generation.
The Round Table Groups were semi-secret discussion and lobbying
groups whose original purpose was to federate the English-speaking
world along lines laid down by Cecil Rhodes. By 1915, Round Table
groups existed in seven countries including England, South Africa,
Canada, Australia, New Zealand, India and the United States.
Page 951
Money for their activities originally came from Cecil Rhodes,
J.P. Morgan, the Rockefeller and Whitney families and associates of
bankers Lazard Brothers and Morgan, Grenfell and Company.
The chief backbone of this organization grew up along the already
existing financial cooperation running from the Morgan Bank in New
York to a group of international financiers in London led by Lazard
Lionel Curtis established in England and each dominion a front
organization to the existing local Round Table Group. This front
organization called the Royal Institute of Public Affairs, had as its
nucleus in each area the existing submerged Round Table Group.
Page 952
In New York, it was known as the Council on Foreign Relations and
was a front for J.P. Morgan and Company in association with the very
small American Round Table Group. The American organizers were
dominated by the large number of Morgan "experts" including Lamont and
Beer, who had gone to the Paris Peace Conference and there became
close friends with the similar group of English "experts" which had
been recruited by the Milner group. In fact, the original plans for
the Royal Institute and the Council on Foreign Relations.
In 1928, the Council on Foreign Relations was dominated by the
associates of the Morgan bank. Closely allied with this Morgan
influence were a small group of Wall Street lawyers whose chief
figures were Elihu Root, John W. Davis, the Dulles Brothers, John J.
Page 953
On this basis, there grew up in the 20th century a power
structure between London and New York which penetrated deeply into
university life, the press, and the practice of foreign policy.
The American branch of this "English Establishment" exerted much
of its influence through five American newspapers (New York Times and
Herald Tribune, Christian Science Monitor, Washington Post, Boston
Evening Transcript). It might be pointed out that the existence of
this Wall Street Anglo-American axis is quite obvious once it is
pointed out. It is reflected by the fact that such Wall Street
luminaries such as John W. Davis, Lewis Douglas, Jock Whitney and
Douglas Dillon were appointed to be American ambassadors in London.
This double international network in which the Round Table groups
formed the semi-secret or secret nuclei of the Institutes of
International Affairs was extended into a third network for Pacific
Affairs in 1925 by the same people for the same motives.
Page 954
The chief aims of this elaborate, semi-secret organization were
largely commendable: to coordinate the international activities and
outlooks of all the English-speaking world into one; to work to
maintain peace; to help backward, colonial, and underdeveloped areas
toward prosperity along the lines somewhat similar to those taught at
Oxford and the University of London.
These organizations and their financial backers were in no sense
reactionary or Fascistic persons, as Communist propaganda would like
to depict them. Quite the contrary, they were gracious and cultured
gentlemen who were much concerned with the freedom of expression of
minorities and the rule of law for all and who were convinced that
they could forcefully civilize the Boers, the Irish, the Arabs, and
the Hindus, and who are largely responsible for the partitions of
Ireland, Palestine, and India. If their failures now loom larger than
their successes, this should not be allowed to conceal the high
motives with which they attempted both.
It was this group of people, whose wealth and influence so
exceeded their experience and understanding, who provided much of the
framework of influence which the Communist sympathizers and fellow
travellers took over in the United States in the 1930s. It must be
recognized that the power of these energetic Left-wingers exercised
was never their own power or Communist power but was ultimately the
power of the international financial coterie, and, once the anger and
suspicions of the American people were aroused as they were in the
1950s, it was a fairly simple matter to get rid of the Red
sympathizers. Before this could be done, however, a congressional
committee, following backward to their source the threads which led
from the admitted Communists like Whittaker Chambers, through Alger
Hiss, and the Carnegie Endowment to Thomas Lamont and the Morgan Bank,
fell into the whole complicated network of the interlocking tax-exempt
foundations. The Eighty-third Congress set up in 1953 a Special Reece
Committee to investigate Tax-Exempt Foundations. It soon became clear
that people of immense wealth would be unhappy if the investigation
went too far and that the "most respected" newspapers in the country,
closely allied with these men of wealth, would not get excited enough
about any revelations to make the publicity worthwhile. An interesting
report showing the Left-wing associations of interlocking nexus of
tax-exempt foundations was issued in 1954 rather quietly.. Four years
later, the Reece Committee's general counsel, Rene A Wormser, wrote a
shocked, but not shocking, book on the subject called "Foundations:
Their Power and Influence."
Page 956
Jerome Green is a symbol of much more than the Wall Street
influence in the IPR. He is also a symbol of the relationship between
the financial circles of London and those of the eastern U.S. which
reflects one of the most powerful influences in 20th century American
and world history. The two ends of this English-speaking axis have
sometimes been called, perhaps facetiously, the English and American
Establishments. There is, however, a considerable degree of truth
behind the joke, a truth which reflects a very real power structure.
It is this power structure which the Radical Right in the U.S. has
been attacking for years in the belief they are attacking the
Communists. These misdirected attacks did much to confuse the American
people in 1948-1955. By 1953 most of these attacks had run their
course. The American people, thoroughly bewildered at the widespread
charges of twenty years of treason and subversion, had rejected the
Democrats and put into the White House a war hero, Eisenhower. At the
time,two events, one public and one secret, were still in process. The
public one was the Korean War; the secret one was the race for the
thermonuclear bomb.
Page 965
On March 1, 1954, we exploded our first real thermonuclear bomb
at Bikini atoll. It was a horrifying device which spread death-dealing
radioactive contamination over more than 8,000 square miles and
injurious radiation over much of the world.
Page 968
To prepare public opinion to accept use of the H-bomb, if it
became necessary, Strauss sponsored a study of radioactive fallout
whose conclusion was prejudged by calling it "Project Sunshine." By
selective release of some evidence and strict secrecy of other
information, they tried to establish in public opinion that there was
no real danger to anyone from nuclear fallout even in all-out nuclear
war. This gave rise to controversy between the scientists and the
Administration on the danger of fallout.
The Eisenhower through the Dulles doctrine of "massive
retaliation" was so deeply committed to nuclear war that it could not
permit the growth of public opinion which would refuse to accept the
use of nuclear weapons because of objections to the danger of fallout
to neutrals and non-combatants. By 1953, this struggle became so
intense that supporters of massive retaliation decided they must
destroy the public image and public career of Oppenheimer.
Page 970
The emphasis on nuclear retaliation to Communist aggression
anywhere in the world made it necessary to draw a defence perimeter
over which such aggression would trigger retaliation. At the
insistence of MacArthur, that perimeter was drawn to exclude Korea,
Formosa and Mainland China; accordingly, all American forces had been
evacuated from South Korea in June 1949.
Page 971
The Soviet Union interpreted this to mean that the U.S. would
allow South Korea to be conquered by the North. Instead, when Russia,
through its satellite North Korea, sought to take Korea, this game
rise to an American counteraction.
Page 972
For forty-eight hours after the Korean attack, the world
hesitated, awaiting America's reaction. Truman immediately committed
American air and sea forces in the area south of 38 degrees and
demanded a UN condemnation of the aggression. Thus, for the first time
in history, a world organization voted to use collective force to stop
armed aggression. This was possible because the North Korean attack
occurred at a time when the Soviet delegation was absent from the UN
Security Council, boycotting it as a protest at the presence of the
delegation from Nationalist China. Accordingly, the much-used Soviet
veto was unavailable.
Page 974
The frontier was reached by UN forces as the month ended. The Red
Chinese decision to intervene was made nine days after American troops
crossed the 38th parallel into North Korea. It was inevitable as Red
China could hardly be expected to allow the buffer North Korean state
to be destroyed and American troops to occupy the line of the Yalu. As
soon as it became clear that American forces would continue past the
38th parallel to the Yalu, the Chinese intervened, not to restore the
38th parallel frontier but to clear the U.N. forces from Asia
Page 975
The Truman Administration, after the victory at Inchon, did not
intend to stop at the 38th parallel and hoped to reunite the country
under the Seoul government. It is probable that this alone triggered
the Chinese intervention.
On October 9, 1950, two of MacArthur's planes attacked a Russian
air base sixty-two miles inside Russian territory.
Page 977
After Truman removed MacArthur, Republican leaders spoke publicly
of impeaching the President. Senator William Jenner said: This country
today is in the hands of a secret inner coterie which is directed by
agents of the Soviet Union. We must cut this whole cancerous
conspiracy out at once. Our only choice is to impeach the president
and find out who is the secret invisible government which has so
cleverly led our country down the road to destruction."
Page 979
On the whole, neo-isolationist discontent was a revolt of the
ignorant against the informed or educated, of the nineteenth century
against the insoluble problems of the twentieth, of the Midwest of Tom
Sawyer against the cosmopolitan East of J.P. Morgan and Company, of
old Siwash against Harvard, of the Chicago Tribune against the
Washington Post or New York Times, of simple absolutes against complex
relativisms, of immediate final solutions against long-range partial
alleviations, of frontier activism against European though, a
rejection, out of hand, of all the complexities of life which had
arisen since 1915 in favor of a nostalgic return to the simplicities
of 1905, and above all a desire to get back to the inexpensive,
thoughtless, and irresponsible international security of 1880.
Page 980
This neurotic impulse swept over the U.S. in a great wave in the
years 1948-1955, supported by hundreds of thousands of self-seeking
individuals, especially peddlers of publicity and propaganda, and
financed no longer by the relatively tied-up funds of declining Wall
Street international finance, but by its successors, the freely
available winnings of self-financing industrial profits from such new
industrial activities as air power, electronics, chemicals, which
pretended to themselves that their affluence was entirely due to their
own cleverness. At the head of this list were the new millionaires led
by the Texas oil pluggers whose fortunes were based on tricky tax
provisions and government-subsidized transportation systems.
Page 982
The Kremlin was quite wiling to keep America's men, money, and
attention tied down in Korea.
Page 985
During Truman's last four budgets, expenditures on national
security increased from $13 billion in 1950 to $50 billion in 1953.
Page 986
The Korean War disrupted the pleasures of the postwar economic
boom with military service, shortages, restrictions and cost-of-living
inflation which could not help but breed discontent. And through it,
all the mobilized wealth of the country, in alliance with most of the
press, kept up a constant barrage of "Communists in Washington,"
"twenty years of treason." In creating this picture, the leaders of
the Republican Party totally committed themselves to the myths of the
neo-isolationists and of the Radical Right.
In June 1951, Senator McCarthy delivered a speech in the Senate
of 60,000 words attacking General Marshall as a man "steeped in
falsehood" who has "recourse to the lie whenever it suits his
convenience," one of the architects of America's foreign policy made
by "men high in Government who are concerting to deliver us to
disaster, a conspiracy so black that when it is finally exposed, its
principals shall be forever deserving of the maledictions of all
honest men."
Page 987
Eisenhower had no particular assets except a bland and amiable
disposition combined with his reputation as a victorious general. He
also had a weakness, one which is frequently found in his profession,
the conviction that anyone who has become a millionaire, even by
inheritance, is an authoritative person on almost any subject.
Page 988
If elected, he would go to Korea to make peace. Although himself
not a neo-isolationist or a reactionary, Eisenhower had few deep
personal convictions and was eager to be president. When his advisers
told him that he must collaborate with the Radical Right, he went all
the way, even to the extent of condoning McCarthy's attack on General
Marshall when he, under McCarthy's pressure, removed a favorable
reference to Marshall from a Wisconsin speech.
Eisenhower allotted the functions of government to his Cabinet
members ("eight millionaires and a plumber").
Page 991
Attorney General Herbert Brownell confided to a businessmen's
luncheon in Chicago that President Truman, knowing that Harry Dexter
White was a Russian spy, had promoted him from assistant secretary of
the treasury to executive director of the U.S. Mission to the
International Monetary Fund in 1946. The House Committee on Un-
American activities at once issued a subpoena to the ex-President to
testify which was ignored.
McCarthy's attacks on the U.S. Information Agency overseas
libraries led to burning of books like Tom Sawyer and Robin Hood as
subversive (Robin Hood stole from the rich and gave to the poor,
clearly a Communist tactic).
Page 992
Dulles publicly announced the conception of "massive retaliation"
before the Council on Foreign Relations on January 12, 1954.
Page 995
W.L. Borden wrote a letter to J. Edgar Hoover stating that "J.
Robert Oppenheimer is an agent of the Soviet Union." This charge was
supported by a biased rehash of all the derogatory stories about
Oppenheimer and was made up of wild charges which no responsible
person has ever been willing to defend." On the basis of this letter
and at the direct order of President Eisenhower, Chairman Strauss
suspended Oppenheimer's security clearance.
Page 998
Broadest of the three narrowing circles of outlook was a violent
neurotic rebellion of harassed middle-class persons against a long-
time challenge to middle-class values arising from depression, war,
insecurity, science, foreigners, and minority groups of all kinds.
Public opinion always supported large defence forces.
Public opinion gave much less support to foreign aid.
These statements based on public opinion polls.
Page 1009
Immediately after Stalin's death, the "collective leadership" was
headed by Malenkov, Beria and Molotov. Malenkov supported a policy of
relaxation with increased emphasis on production of consumers goods
and rising standards of living, as well as increased efforts to avoid
any international crises which might lead to war; Beria supported a
"thaw" in internal matters, with large-scale amnesties for political
prisoners as well as rehabilitation of those already liquidated;
Molotov continued to insist on the "hard" policies of Stalin with no
relaxation of domestic tyranny.
Page 1010
Wild rumors and and some relaxation, at Beria's behest, in East
Germany, gave rise to false hopes and on June 16, 1953, these workers
rose up against the Communist government. These uprising were crushed
with the full power of the Soviet occupation armored divisions. Using
this as an excuse, the Kremlin leaders suddenly arrested Beria and
shot him.
The overthrow of the master of terror was followed by an
extensive curtailment of the secret police and its powers. Secret
courts were abolished.
Page 1011
The gradual elimination of Molotov found Khrushchev as the
champion of "thaw" in the Cold War.
Page 1012
Khrushchev's six-day visit to Tito is of great importance because
it showed Russia in an apologetic role for a major past error and
because it reversed Stalin's rule that all Communist parties
everywhere must follow the Kremlin's leadership such that "differences
in the concrete application of Socialism are the exclusive concern of
individual countries." En route home, he stopped in Sofia and place
the fuse in another, even larger, stick of dynamite, by a secret
denunciation of Stalin personally as a bloodthirsty tyrant. Back in
Moscow, Khrushchev won over the majority by arguing that the loyalty
of the satellites, and especially their vital economic cooperation,
could be ensured better by a loose leash than by a club.
Page 1013
The Russians spoke favorably about disarmament which, to them,
meant total renunciation of nuclear weapons and drastic cuts in ground
forces, a combination which would make the United States very weak
against Russia while leaving Russia still dominant in Europe.
Page 1012
The Geneva Conference discussions were conducted in an
unprecedented atmosphere of friendly cooperation which came to be
known as the "Geneva spirit" and continued for several years and was
never completely overcome even when matters were at their worst
following the U-2 incident of 1960 and the Cuban crisis of 1962.
Page 1016
At the Twentieth Party Congress in February 1956, the first
speech of 50,000 words delivered by Khrushchev over seven hours urged
the need for coexistence with the West and references to the
possibility of peaceful rather than revolutionary change from
capitalism to Socialism.
The real explosion came at a secret all-night session on July 24
in a 30,000 word speech where Khrushchev made a horrifying attack on
Stalin as a bloodthirsty and demented tyrant who had destroyed tens of
thousands of loyal party members on falsified evidence. The full
nightmare of the Soviet system was revealed.
Page 1017
A few passages from this speech:
"This concept "enemy of the people" eliminated any possibility of
rebuttal. Usually, the only evidence used, against all the rules of
modern legal science, was the confession of the accused, and as
subsequent investigation showed, such "confessions" were obtained by
physical pressure on the accused. The formula "enemy of the people"
was specifically introduced for the purpose of physically annihilating
these persons.
How is it that a person confesses to crimes that he has not
committed? Only in one way - by application of physical pressure,
tortures, taking away of his human dignity.
Page 1019
The "secret speech" also destroyed Stalin's reputation as a
military genius:
"Stalin said that the tragedy of the war resulted from the
unexpected attack by the Germans. This is completely untrue. Churchill
warned Stalin that the Germans were going to attack. Stalin took no
had and warned that no credence be given to information of this sort
not to provoke a German invasion. Had our industry been mobilized
properly and in time to supply the army, our wartime losses would have
been decidedly smaller.
Very grievous consequences followed Stalin's destruction of many
military commanders during 1937-1941 because of his suspiciousness and
false accusations. During that time, leaders who had gained military
experience in Spain and the Far East were almost completely
Page 1021
Stalin's 1948 "Short Biography" is an expression of most
dissolute flattery, making a man into a god, transforming him into an
infallible sage, "the greatest leader and most sublime strategist of
all times and nations." We need not give examples of the loathsome
adulation filling this book. They were all approved and edited by
Stalin personally. He added "Although he performed his task of leader
of the people with consummate skill and enjoyed the unreserved support
of the whole Soviet people, Stalin never allowed his work to be marred
by the slightest hint of vanity, conceit, or self-adulation." I'll
cite one more insertion by Stalin: "Comrade Stalin's genius enabled
him to divine the enemy's plans and defeat them. The battles in which
Comrade Stalin directed the Soviet armies are brilliant examples of
operational military skill." "
Page 1022
By directing all the criticism of Stalin personally, he
exculpated himself and the other Bolshevik survivors who were fully as
guilty as Stalin was - guilty not merely because they acquiesced in
Stalin's atrocities from fear, as admitted in Khrushchev's speech, but
because they fully cooperated with him.
A study of Khrushchev's life shows that he defended Stalin's acts
which caused the deaths of millions. The fault was not merely with
Stalin; it was with the system, it was with Russia.
The more completely total and irresponsible power is concentrated
in one man's hands, the more frequently will a monster of sadism be
The very structure of Russian life drove Khrushchev, as it had
driven Stalin, to concentrate all power in his own hands. Neither man
could relax halfway to power for fear that someone else would continue
on, seeking the peak of power. The basis of the whole system was fear
and like all neurotic drives in a neurotic system, such fear could not
be overcome even by achievement of total power. That is why it grows
into paranoia as it did with Ivan the Terrible, Peter the Great, Paul
I, Stalin and others.
Page 1031
Having failed to block Khrushchev's economic plans, his rivals in
the Presidium were reduced to a last resort, they had to get rid of
the man himself. At a Presidium meeting on June 18, 1957, the motion
was made to remove Khrushchev as the first party secretary. The
discussion grew violent with Malenkov and Molotov attaching and
Khrushchev defending himself. He was accused of practicing a "cult of
personality" and of economic mismanagement. The vote was 7-4 against
him with Mikoyan, Kirichenko and Suslov his only supporters. He was
offered the reduced position of minister of agriculture.
Page 1032
Khrushchev refused to accept the result, denying that the
Presidium had the authority to remove a first secretary, and appealing
to the Central Committee. The members of this larger group joined in
the discussions as they arrived while Khrushchev's supporters sought
to delay the vote until his men could come in from the provinces.
Marshall Zhukov provided planes to bring in the more distant ones. The
discussion became bitter when Zhukov threatened to produce evidence
that Malenkov and Molotov had been deeply involved in the bloody
purges of 1937. Madame Furtseva, an alternate member of the Presidium,
filibustered with a speech for six hours. Eventually, there were 309
members present. When the vote was finally taken, Khrushchev's
supporters voted for him solidly and his removal, already voted by the
Presidium, was reversed. Khrushchev at once counterattacked. He moved
and carried the expulsion from the Presidium of Malenkov, Molotov,
Kaganovich and Shepilov for "anti-party" activities. Then came the
election of a new Presidium with fifteen full members instead than the
previous eleven, and nine alternates instead of the previous six.
This change was Khrushchev's most smashing personal victory and
the most significant event in Russia's internal history. It led
Khrushchev to a position of political power more complete than
Stalin's had been although it was clear that Khrushchev would never be
allowed to abuse his power the way Stalin had done.
Page 1033
Khrushchev did not rest on his oars. During the summer of 1957,
he made notable concessions to the peasants (ending compulsory
deliveries from products of their personal plots), slammed down the
lid on freedom of writers and artists, pushed vigorously both the
"virgin lands" scheme and the decentralization of industry, and worked
to curtail the growing autonomy of the armed forces and revived trade
unions into the new regional economic councils.
Page 1034
Russian objection to city-bombing or to strategic terror of the
V-2 kind as ineffective and a waste of resources was undoubtedly
The Soviet Union has no idea of being able to achieve military
victory over the United States simply because they have no method of
occupying the territory of the United States at any stage in a war.
Page 1035
They are unlikely to use nuclear weapons first although fully
prepared to resort to them once they are used by an enemy.
Page 1036
However such a war is regarded by the Soviet leaders as highly
undesirable while they, in a period of almost endless cold war, can
seek to destroy capitalist society by nonviolent means. This theory of
"nibbling" the capitalist world to death is combined with a tactic
which would resist "capitalist imperialism" by encouraging "anti-
Stalin and Dulles saw the world largely in black-and-white terms:
who was not with them was obviously against them.
Page 1037
Stalin did not see the possibility of colonial areas becoming
non-Communist and non-colonial independent states and rebuffed the
local native groups. Khrushchev did the opposite.
Page 1038
This shift in the Soviet attitude toward neutralism was helped by
Dulles' refusal to accept the existence of neutralism. His rebuffs
tended to drive those areas which wanted to be neutral into the arms
of Russian because the new nations of the developing Buffer Fringe
valued their independence above all else. The Russian acceptance of
neutralism may be dated about 1954 while Dulles still felt strongly
adverse to neutralism four or five years later. This gave the Soviet
Union a chronological advantage to compensate for its many
disadvantages in the basic struggle to win the favor of the neutrals.
Page 1039
By 1939, there was only one independent state in southeast Asia:
Siam. Thus all southeast Asia, except Thailand, was under the colonial
domination of five Western states in 1939.
French Indochina emerged from Japanese occupation as the three
states of Vietnam, Laos, and Cambodia, each claiming independence.
Efforts by the European Powers to restore their prewar rule led to
violent clashes with the supporters of independence. These struggles
were brief and successful in Burma and Indonesia but were very
protracted in Indochina.
Page 1042
In all these areas, native nationalists were inclined to the
political Left, if for no other reason than the fact that the
difficulties of capital accumulation and investment to finance
economic improvements could be achieved only under state control. In
some cases, such Communism may have been ideological but inmost cases,
it involved little more than the desire to play off the Soviet Union
and China against the Western imperialist Powers.
Page 1042
A communist revolt in the Philippines had already begun and was
joined by similar uprisings in Burma, Indonesia, and Malaya. Most of
these revolts took the form of agrarian agitations and armed raids by
Communist guerrilla jungle fighters. Since the operated on a hit-and-
run basis and had to live off the local peasantry, their exploitation
of peasant life eventually made them decreasingly welcome to this very
group for whom they pretended to be fighting.
In the Philippines, the rebels were smashed in 1953. In
Indonesia, Sukarno repressed the insurrection and executed its
leaders. In Malaya, the Communists were systematically hunted down and
destroyed by British troops. In Burma, they weren't eliminated until
The real problem was Indochina. There, the French Army was
uncompromising and Communist leadership was skillful. As a result, the
struggle became part of the Cold War. The Malay peninsula is dominated
by a series of mountain ranges with their intervening rivers running
southward from Chinese Yunnan. These rivers fan out into fertile
alluvial deltas which produce surplus foods for undemanding peoples.
Page 1043
Indochina brought considerable wealth to France. After the
Japanese withdrawal, the Paris government was reluctant to see this
wealth, chiefly from the tin mines, fall into native groups and by
1949, decided to use force to recover the area.
Opposed to the French effort was Ho Chi Minh, a member of the
French Communist Party. Ho had set up a coalition government under his
Viet Minh Party and proclaimed independence for Vietnam (chiefly
Tonkin and Annam) in 1945, while French troops, in a surprise coup,
seized Saigon in the south. Ho received no support from the Kremlin.
At first, Ho sought support from the United States but after the
establishment of Red China in 1949, he turned to that new Communist
state for help. Mao's government was the first state to give Vietnam
diplomatic recognition (January 1950) and at once began to send
military supplies and guidance. Since the U.S. was granting extensive
aid to France, the struggle in Vietnam became, through surrogates, a
struggle between the United States and China. In world opinion, this
made the U.S. the defender of European imperialism against anti-
colonial native nationalism.
During this turmoil, independent neutralist governments came into
existence in Laos and Cambodia. Both states accepted aid from whoever
would give it and both were ruled by an unstable balance of pro-
Communists, neutralists, and pro-Westerners, all with armed
supporters. On the whole, the neutralist group was largest and the
pro-Western was the smallest but could obtain support from America's
wealth. The decisive influence was that the Communists were prepared
to accept and support neutralism years before Dulles would condone it.
Page 1044
The readiness of Dulles and the French Army to force a showdown
in Vietnam was unacceptable to the British and many in France. Out of
this came a Soviet suggestion for a conference on Indochina in Geneva.
By early 1954, the Communist guerrillas were in control of most
of northern Indochina, were threatening Laos, and were plaguing
villages as far south as Saigon. About 200,000 French troops and
300,000 Vietnamese militia were tied in knots by about 335,000 Viet
Minh guerrillas. France was being bled to death with nothing to show
for it.
By the end of March 1953, the outer defences of the French strong
point at Dien Bien Phu were crumbling. The French chief of staff found
Dulles ready to risk all-out war with Red China by authorizing direct
American intervention in Indochina. As usual, Dulles thought that
wonders could be achieved by air strikes alone against the besiegers
of Dien Bien Phu and for a few day, at Dulles' prodding, the United
States tottered "on the brink of war." Dulles proposed "a united
action policy:" "If Britain would join the United States and France
would agree to stand firm, the three Western states could combine with
friendly asian nations to oppose communist forces.
Page 1045
President Eisenhower agreed but his calls to Churchill and Eden
found the British government opposed to the adventure because the
Sino-Soviet Treaty of 1950 bound Russia to come to the assistance of
China if it were attacked by the United States as Dulles contemplated.
During the 1954 Far Eastern Geneva Conference, two American
aircraft carriers, loaded with atomic weapons, were cruising the South
China Sea, awaiting orders from Washington to hurl their deadly bombs
at the Communist forces besieging the 15,000 exhausted troops trapped
at Dien Bien Phu. In Washington, Admiral Radford was vigorously
advocating such aggressive action on a generally reluctant government.
In Paris, public outrage was rising over Indochina where the French
had expended 19,000 lives and $8 billion without improving matters a
particle. The fall of Dien Bien Phy on May 7th led to the fall of the
French government. The new prime minister promised a cease-fire or his
own retirement within 30 days. He barely met the deadline.
The Indochinese settlement of July 20, 1954 was basically a
compromise, some of whose elements did not appear in the agreement
itself. A Communist North Vietnam state was recognized north of the
17th parallel and the rest was left in three states: Laos, Cambodia
and South Vietnam.
The new state system was brought within the Dulles network of
trip-wire pacts on September 8, 1954 when Britain, France, Australia,
New Zealand, Pakistan, Thailand, Philippines and the U.S. formed the
South-East Asia Treaty Organization (SEATO) and extended their
protection to Laos, Cambodia and South Vietnam.
The Geneva agreement was to neutralize the Indochina states but
was apparently not acceptable to the Dulles brothers and any possible
stability in the area was soon destroyed by their activities,
especially through the Central Intelligence Agency (CIA) seeking to
subvert the neutrality of Laos and South Vietnam by channeling
millions in American funds to Right-wing army officers, building up
large military forces, rigging elections, and backing reactionary
coups d'etat.
Page 1046
These techniques might have been justified in the eyes of the CIA
if they had been successful but, on the contrary, they alienated the
mass of the natives in the area, brought numerous recruits to the
Left, gave justification for Communist intervention from North
Vietnam, disgusted our allies in Britain, France, Burma, India and
elsewhere, and by 1962 had almost destroyed the American image and
position in the area.
In Laos, the chief political figure was Prince Phouma, leader of
the neutralist group, who tried to keep a balance between the
Communist Pathet Lao on his Left and the American-subsidized
politicians and militarists led by General Nosavan on his Right.
American aid was about $40 million a year of which about $36 million
went to the army. This was used, under American influence, as an anti-
neutralist rather than an anti-Leftist influence culminating in a
bungled army attack on two Pathet Lao battalions in 1959 and openly
rigged elections in which all the Assembly seats were won by Right-
wing candidates in 1960. In August 1960, an open revolt in behalf of
the neutralist Phouma game rise to a Right-wing revolution led by
General Nosavan. This drove the neutralists in the arms of the Pathet
The SEATO Council refused to support the American position, the
Laotian army was reluctant to fight, and the American military mission
was soon involved in the confused fighting directly.
The American bungle in Laos was repeated, with variations,
elsewhere in southern and southeastern Asia. In South Vietnam,
American aid, largely military, amounted to about two thirds of the
country's budget, and by 1962, it had reached $2 billion. Such aid,
which provided little benefit for the people, corrupted the
government, weakened the swollen defense forces, and set up a chasm
between the rulers and people which drove the best of the latter
Leftward, in spite of the exploitative violence of the Communist
guerrillas. A plebiscite in 1955 was so rigged that the American-
supported candidate won over 98% of the vote. The election of 1960 was
similarly managed, except in Saigon, the capital, where many people
refused to vote. As might have been expected, denial of a fair ballot
led to efforts to assassinate the American-sponsored President, Diem,
and gave rise to widespread discontent which made it possible for the
Communist guerrillas to operate throughout the country. The American-
sponsored military response drove casualties to a high sustained
figure by 1962 and was uprooting peasantry throughout the country in
an effort to establish fortified villages which the British had
introduced with success in Malaya.
Page 1047
These errors of American policy, which were repeated in other
places, arose very largely from two factors:
1) American ignorance of local conditions which were passed over in
animosity against Russia and China;
2) American insistence on using military force to overcome local
neutralism which the mass of Asiatic people wanted.
The American militarization of both Thailand and South Vietnam
was used to increase pressure on Cambodia which was driven to seek
support for its independence from China and Russia.
North Vietnam had a deficiency of food while South Vietnam, like
all delta areas, is a zone of rice surplus and thus a shining target
for North Vietnamese aggression.
The collapse of the world price of rice at the end of the Korean
War left Burma with an unsellable surplus of almost two million tons.
Within the next three years, Burma signed barter agreements with Red
China and Soviet Europe by which Burma got rid of a third of its
surplus each year in return for Communist goods and technical
assistance. These returns were so poor in quality, high in price and
poorly shipped that Burma refused to renew the agreements in 1958.
Farther west, in southern Asia (correctly called the Middle East
from the Persian Gulf to Burma) American bungling also opened may
opportunities for Soviet penetration which the Soviets failed to
Page 1048
India was determined to be neutral; Pakistan was willing to be an
ally of the United States.
Page 1049
The partition of India before independence in 1947, as in
Palestine and earlier in Ireland, received strong impetus from the
Round Table Group, and in all three cases, it led to horrors of
violence. In India's case, the partition was a butchery rather than a
surgical process. Imposed by the British, it cut off two areas in
northwestern and northeastern India to form a new Muslim state of
Pakistan (cutting right through the Sikhs in the process). The two new
nations began under two new leaders. In the post-partition confusion,
minorities on the wrong sides of the lines sought to flee, as
refugees, to India or Pakistan, while the Sikhs sought to establish a
new homeland by exterminating Muslims in East Punjab. In a few weeks,
almost 200,000 were killed and twelve million were forced to flee as
The two sections of Pakistan were separated from each other by
1,100 miles of India territory, its boundaries irrational, its
economic foundations torn to shreds by the partition.
Page 1050
In 1958, martial law was established and General Khan became
president. Under military rule, a sweeping land-reform program
restricted owners to 500 irrigated or 1000 non-irrigated acres with
the surplus distributed to existing tenants or other peasants. Former
landlords received compensation in long-term bonds.
Page 1052
The American insistence on the non-committed nations adopting
anti-Soviet lines opened the way for the Soviet to pose as the friend
of such nations by supporting their neutralism.
Page 1053
At the end of World War II, about 80 percent of Iran's population
were peasants. Four fifths of the land was almost entirely useless,
being either mountainous or arid. Moreover, the peasants who tilled
the land were much oppressed by heavy rents to absentee landlords who
also controlled, as separate rights, essential access to water. Only
about a seventh of the land was owned by peasants who worked it.
Peasants retained little more than a fifth of what they produced.
The shah has shifted the basis of his support from the elite
landed group to this growing middle class.
Before 1914, the shah sought to raise funds for his personal use
by selling concessions and monopolies to foreign groups. Most of these
were exploitive of the Iranian peoples. Of these, the most important
was the concession for petroleum which came into possession of the new
Anglo-Persian Oil Company which came to be controlled, through secret
stock ownership, by the British government.
Page 1054
At the end of World War I, Iran was a battleground between
Russian and British armed forces. By 1920, the withdrawal of British
forces left the anti-Bolshevik Russian Cossack Brigade as the only
significant military force in the country. The chief Iranian officer
in that force, Reza Pahlavi, in the course of 1921-1925 gradually took
over control of the government and eventually deposed the incompetent
28-year-old Shah Ahmad.
Pahlavi's chief aim was to break down tribalism and localism. To
this end, he defeated the autonomous tribes, settled nomadic groups in
villages, shifted provincial boundaries to break up local loyalties,
created a national civil service and police force, established
national registration with identity cards for all, and used universal
conscription to mingle various groups in a national army.
All these projects needed money and the chief resource, oil, was
tied up completely in the concession held by the AIOC with the
inevitable result that it became the target of the Iranian nationalist
desire for traditional development funds. The older Iranian elite
would have been satisfied with a renegotiated deal but the newer urban
groups demanded the complete removal of foreign economic influence by
nationalization of the petroleum industry.
Page 1056
By 1950, the Shah put his prime minister in to force through the
supplemental agreement. Opposing groups introduced nationalization
bills. Gradually, the nationalization forces began to coalesce about a
strange figure, Mr. Muhammad Mossadegh, with a doctorate in Economics.
Politically, he was a moderate but his strong emotional appeal to
Iranian nationalism encouraged extreme reactions among his followers.
The company insisted that its status was based on a contractual
agreement which could not be modified without its consent. The British
government maintained the agreement was a matter of international
public law which it had a right to enforce. The Iranian government
declared it had the right to nationalize an Iranian corporation
operating under its law on its territory, subject only to adequate
The nationalist arguments against the company were numerous:
1) It had promised to train Iranians for all positions possible but
had only used them in menial tasks, trained few natives and employed
many foreigners.
2) The company had reduced its payments to Iran, which were based on
profits, by reducing the amount of its profits by bookkeeping tricks.
It sold oil at very low prices to wholly-owned subsidiaries outside
Iran or to the British Navy, allowing the former to resell at world
prices so that AIOC made small profits, while the subsidiaries made
large profits not subject to the Iranian royalty obligations. Iran
believe that all profits should fall under the obligations. but as
late as 1950, AIOC admitted that the accounts of 59 such dummy
corporations were not included in AIOC accounts.
3) AIOC generally refused to pay Iranian taxes, especially income tax
but paid such taxes to Britain; at the same time, it calculated the
Iranian profit royalties after such taxes so that the higher British
taxes went, the less the Iranian payment became. Thus, Iran paid
income tax to Britain. In 1933, AIOC paid #305,000 in British taxation
and #274,000 in Iranian taxes. In 1948, the two figures were #28.3
million to Britain and #1.4 million to Iran.
Page 1057
4) The payment to Iran was also reduced by putting profits into
reserves or into company investments outside Iran, often in
subsidiaries, and calculating the Iranian share only on the profits
distributed as dividends. Thus in 1947, when profits were really #40.5
million, almost #15 million went to British income taxes, over #7
million to stockholders, and only #7 million to Iran. If the payment
to Iran had been calculated before taxes and reserves, it would have
received at least #6 million more that year.
5) AIOC's exemption from Iranian customs deprived Iran of about #6
million a year.
6) The company drew many persons to arid and uninhabited areas and
then provided very little of the costs of housing, education, or
7) AIOC as a member of the international oil cartel reduced its oil
production and thus reduced Iran's royalties.
8) AIOC continued to calculate its payments to Iran in gold at #8.1
per ounce for years after the world gold price had risen to #13 an
ounce while the American Aramco in Saudi Arabia raised its gold price
on demand.
9) AIOC's monopoly prevented Iran developing other Iranian oil fields.
As a consequence of all these activities, the Iranian
nationalists of 1952 felt angered to think that Iran had given up 300
million tons of oil over fifty years and obtained about #800 million
in profits.
The Iranian opposition to nationalization was broken in 1951 when
the prime minister was assassinated. The nationalization bill was
passed and at the request of the Majlis, the shah appointed Mossadegh
prime minister to carry it out. This was done with considerable
turmoil which included strikes by AIOC workers against mistimed
British wage cuts, anti-British street riots and the arrival of
British gun-boats at the head of the Persian Gulf. Rather than give up
the enterprise or operate it for the Iranian government, AIOC began to
curtail operations and ship home its engineers. In May 1951, it
appealed to the International Court of Justice in spite of Iranian
protests that the case was a domestic one, not international. Only in
July, 1952, did the court's decision uphold Iran's contention by
refusing jurisdiction.
Page 1058
At first, the U.S. supported Iran's position fearing British
recalcitrance would push Iran toward Russia. However it soon became
apparent that the Soviet Union, while supporting Iran's position, was
not going to interfere. The American position then became increasingly
pro-British and anti-Mossadegh. This was intensified by pressure from
the international petroleum cartel comprising the seven greatest oil
companies in the world.
As soon as Britain lost its case in the International Court of
Justice, it put into effect a series of reprisals against Iran which
rapidly crippled the country. Iranian funds were blocked; its
purchases in British controlled markets were interrupted; its efforts
to sell oil abroad were frustrated by a combination of the British
Navy and the world oil cartel (which closed sales and distribution
facilities to Iranian oil). These cut off a substantial portion of the
Iranian government's revenues and forced a drastic curtailment of
government expenditures.
Page 1059
Mossadegh broke off diplomatic relations with the British,
deported various economic and cultural groups, and dismissed both the
Senate and the Iranian Supreme Court which were beginning to question
his actions.
By that time, almost irresistible forces were building up against
Mossadegh, since lack of Soviet interference gave the West full
freedom of action. The British, the AIOC, the world petroleum cartel,
the American government and the older Iranian elite led by the shah
combined to crush Mossadegh. The chief effort came from the CIA under
the personal direction of Allen Dulles, brother of the Secretary of
State. Dulles, a former director of the Schroeder Bank in New York. It
will be remembered that the Schroeder Bank in Cologne helped to
arrange Hitler's accession to power as chancellor in January 1933.
In the Near East, the mobs are easily roused and directed by
those who are willing to pay and Dulles had the unlimited secret funds
of the CIA. From these he gave $10 million to Colonel H. Norman
Schwartzkopf who was in charge of training the Imperial Iranian
Gendarmerie and this was judiciously applied in ways which changed the
mobs tune. The whole operation was directed personally by Dulles from
In August Mossadegh held a plebiscite to approve his policies.
The official vote was about two million approvals against twelve
hundred disapprovals but his days were numbered. On August 13th, the
Shah precipitated the planned anti-Mossadegh coup by naming General
Zahedi as prime minister and sent a messenger dismissing Mossadegh.
The latter refused to yield and called his supporters into the streets
where they rioted against the Shah who fled with his family to Rome.
Two days later, anti-Mossadegh mobs, supported by the army, defeated
Mossadegh supporters. He was forced out of office and replaced by
General Sahedi. The shah returned from Italy on August 22nd.
Page 1060
The fall of Mossadegh ended the period of confusion. From 1953
on, the shah and the army, backed by the conservative elite,
controlled the country and the docile Majlis. Two weeks after the
shah's countercoup, the U.S. gave Iran an emergency grant of $45
million, increased its economic aid payment to $23 million and began
to pay $5 million a month in Mutual Security funds. In return, Iran
became a firm member of the Western bloc. The Communist Tudeh Party
was relentlessly pursued after 1953.
By 1960, the shah tried a program of agrarian reform which sought
to restrict each landlord's holdings to a single village, taking all
excess lands for payments spread over 10 years and granting the lands
to the peasants who worked them for payments over 15 years. The shah's
own estates were among the first to be distributed but by the end of
1962 over 5000 villages had been granted to their peasants.
In the meantime, the oil dispute was settled and the incomes to
Iran were considerably increased averaging about $250 million or more
a year.



Page 1088
Dulles refused to recognize the right of anyone to be neutral and
tried to force all states to join the American side of the Cold War or
be condemned to exterior darkness.

Page 1090
The so-called "missile gap" was a mistaken idea for the U.S. was
in a condition of "nuclear plenty" and of "overkill capacity" that
posed a serious problem for the Soviet Union. It was, strangely
enough, just at that time (end of 1957) that two American studies (the
Gaither Report and the Special Studies Project of the Rockefeller
Brothers Fund) suggested the existence of a missile gap or inferiority
in missile capacity of the United States compared to the Soviet Union
based on the overemphasis on the "size" of Soviet rocket boosters. In
this pleasant period of self-deception, the Soviet Union entered upon
an unofficial international suspension of nuclear bomb testing from
1958 until 1961.

Page 1097
As a result of NASA's $5 billion budget, the educational system
was brought into the tempestuous atmosphere of the frantic American
marketplace and was being ransacked from the highest levels down to
high school and even below for talented, trained, or merely eager
people. As the demands for such people grew and their remunerations
and opportunities increased, the substantial minority who were not
talented, trained or eager found fewer and fewer opportunities to make
a living and began to sink downward toward a steadily growing lower
class of social outcasts and underprivileged, the socially self-
perpetuating group of the impoverished.

Page 1098
In 1959, Red China began making increasingly unfavorable comments
about Khrushchev's doctrines of "peaceful coexistence with capitalism"
and the "inevitable victory of Socialism without war." He ruled out
the need for war and the Soviet Union was willing to reach complete
disarmament supervised by mutual controls including aerial

Page 1101
As late as 1960, only 38,000 man-days of labor were lost by
strikes and lockouts in West Germany compared to almost half a million
in the Netherlands, 3 million in the U.K. and 19 million in the U.S.
In Germany in 1958, eight great trusts still controlled 75
percent of crude steel production, 80 percent of raw iron, 60 percent
of rolled steel, and 36 percent of coal output.
The ten percent increase each year in the West German gross
national product was something that could not be denied or

Page 1102
In East Germany in 1960, almost a million farmers were forced
into less than 20,000 collective farms by methods of violence and
social pressure similar to those Stalin had used. And the consequences
were similar: agricultural production collapsed. Shortages of food
were soon followed by other shortages.

Page 1103
Khrushchev's talk about "peaceful co-existence" was sincere and
he sincerely wished to divert the Communist-Capitalist struggle into
non-violent areas. Thus he was sincere in his disarmament suggestions.

Page 1105
Metternich said, "A diplomat is a man who never allows himself
the pleasure of a triumph," and does so simply because it is to the
interest of the stronger that an opponent who recognizes the victor's
strength and is reasonable in yielding to it not be overthrown or
replaced by another ruler who is too ignorant or too unreasonable to
do so.

Page 1108
After Russia backed down on the Cuban missile crisis, the White
House received a long and confused letter from Khrushchev whose tone
clearly showed his personal panic and, to save his reputation, it was
not released to the public. The next morning, the Soviet Foreign
Office published a quite different text, suggesting that a deal be
made dismantling both the American missile sites in Turkey and the
Soviet missile sites in Cuba. To those inside both governments, this
was recognized as a Soviet surrender since they knew that the Turkish
sites were obsolete and were already scheduled to be dismantled. It
was rejected by the White House because it would have represented to
the world a surrender of Turkey. Instead, the White House replied to
an offer to remove the Russian missiles if we would lift the blockade
and promise not to invade Cuba.



Page 1109
The Brazilian cost of living rose 40% in 1961, 50% in 1962, and
70% in 1963.

Page 1110
Latin America is not only poverty-ridden but the distribution of
wealth and income is so unequal that the most ostentatious luxury
exists for a small group side by side with the most degrading poverty
for the overwhelming majority. Four fifths of the population of Latin
America get about $53 a year, while a mere 100 families own 90% of the
native-owned wealth of the whole area and only 30 families own 72% of
that wealth. In Brazil, half of all and is owned by 2.6% of the
landowners while 22.5% is owned by only 1/2% of the owners. In Latin
America, at least two thirds of the land is owned by 10% of the

Page 1111
As things stood in 1960, infant mortality varied between 20% and
35% in different countries.

Page 1112
While such conditions may rouse North American to outrage or
humanitarian sympathy, no solution can be found by emotion or
sentimentality. The problems are not based on lack of anything but on
structural weaknesses. Solutions will not rest on anything that can be
done to or for individual people but on the arrangements of peoples.
Latin American lacks the outlook that will mobilize its resources in
constructive rather than destructive directions.
Obviously, the birthrate must decrease or the food supply must be
increased faster than the population. And some provision must be made
to provide peasants with capital and know-how before the great landed
estates are divided up among them. A more productive organization of
resources should have priority over any effort to raise standards of

Page 1113
We hear a great deal about Latin America's need for American
capital and American know-how, when in fact the need for these is much
less than the need for utilization of Latin America's own capital and
know-how. The wealth and income of Latin America, in absolute
quantities, is so great and it is so inequitably controlled and
distributed that there is an enormous accumulation of incomes, far
beyond their consumption needs, in the hands of a small percentage of
Latin Americans. Much of these excess incomes are wasted, hoarded, or
merely used for wasteful competition in ostentatious social display
largely due to the deficiencies of Latin American personalities and
The solution is not to redistribute incomes but to change the
patterns of character and of personality formation so that excess
incomes will be used constructively and not wasted.

Page 1114
At least half the value of American aid has been wiped away by
the worsening of Latin America's terms of trade which made it
necessary for it to pay more and more for its imports at the same time
that it got less and less for its exports made worse by much of the
available supply of foreign exchange spent for self-indulgent and non
constructive spending abroad or simply to hoard their money in New
York, London or Switzerland. The solution must be found in more
responsible, more public-spirited, and more constructive patterns of
outlook, of money flows, and of political and social security. A
similar solution must be found for social deficiencies like inadequate
housing, education, and social stability.

Page 1115
An Asian despotism is a two-class society in which a lower class
consisting of nine tenths of the population supports an upper ruling
class consisting of a governing bureaucracy of scribes and priests
associated with army leaders, landlords, and moneylenders. The
essential character of an Asian despotism rests on the fact that the
ruling class has legal claim on the working masses and possesses the
power to enforce these claims.

Page 1119
Arabic boys grow up egocentric, self-indulgent, undisciplined,
immature, spoiled, subject to waves of emotionalism, whims, passion,
and pettiness. Another aspect of Arabic society is its scorn of
honest, steady manual work, especially agricultural work. There is a
lack of respect for manual work that is so characteristic of the
Pakistani-Peruvian axis. The Bedouin outlook include lack of respect
for the soil, for vegetation, for most animals, and for outsiders.
These attitudes are to be seen constantly as erosion, destruction of
vegetation and wild life, personal cruelty and callousness to most
living things, including one's fellow man, and a general harshness and
indifference to God's creation.

Page 1120
The ethical sides of Judaism, Christianity and Islam sought to
counteract harshness, egocentricity, tribalism, cruelty, scorn of work
and one's fellow creatures but these efforts have met with little

Page 1122
The method for the reform of Latin America rest in the upper
class of that society. Such reform can come about only when the
surpluses that accumulate in the hands of the Latin American oligarchy
are used to establish more progressive utilization of Latin American

Page 1123
The whole system is full of paradox and contradiction. The
obstacle to progress and hope rests in the oligarchy because it
controls wealth and power, and also because there is no hope at all
unless it changes its ideology.

Page 1124
World War II, by increasing demand for Latin America's mineral
and agricultural products, pushed starvation and controversy away from
the immediate present. Latin American boomed: the rich got richer; the
poor had more children. A few poor became rich, or at least richer.
But nothing was done to modify the basic pattern of Latin American
power, wealth, and outlook.

Page 1127
Until the 1952 revolution, the Bolivians, mostly of Indian
descent, who were treated as second-class persons working as
semislaves in the mines or as serfs on the large estates, had a per
capita annual outcome of about $100. As might be expected, the
majority were illiterate, sullen and discouraged.

Page 1128
The Junta was overthrown in 1952. Paz Estenssoro returned from
exile to become president. Pressure from the tin miners and from the
peasants forced the new regime to nationalize the mines and to break
up many of the large estates. Production costs of tin rose above
market price thus wiping out their foreign exchange earnings. Worse,
the world price of tin collapsed in 1957.
The problems could hardly be handled because of popular pressures
in a democratic country to live beyond the country's income. The final
collapse did not occur because of the efforts of President Siles and
assistance from the United States.

Page 1129
If any proof were needed that radical reform for sharing the
wealth of the few among the many poor is not an easy, or feasible
method, Bolivia's hard-working Indians, once hopelessly dull, morose,
and sullen, are not bright, hopeful, and self-reliant. Even their
clothing is gradually shifting from the older funereal black to
brighter colors and variety.
Few contrasts could be more dramatic than that between the
Bolivian revolutionary government (in which a moderate regime was
pushed toward radicalism by popular pressures and survived, year after
year, with American assistance) and the Guatemala revolution where a
Communist-inspired regime tried to lead a rather inert population in
the direction of increasing radicalism but was overthrown by direct
American action within three years (1951-1954).
Guatemala is one of the "banana republics." The retail value of
Latin America's part of the world's trade in bananas is several
billion dollars a year but Latin America's gets less than 7% of that
value. One reason for this is the existence of the United Fruit
Company which owns two million acres of plantations in six countries
and handles about a third of the world's banana sales. It pays about
$145 million a year into the six countries and claims to earn about
$26 million profits on its $159 million investment but this profit
figure of about 16.6% is undoubtedly far below the true figure. In
1970, 95% of the land held by United Fruit was uncultivated.

Page 1130
Guatemala, like Bolivia, has a population that consists largely
of impoverished Indians and mixed bloods (mestizos). From 1931 to 1944
it was ruled by the dictator Jorge Ubico, the last of a long line of
corrupt and ruthless tyrants. When he retired to New Orleans in 1944,
free elections chose Juan Jose Arevalo (1945-1950) and Jacobo Arbenz
Guzman (1950-1954) as presidents. Reform was long overdue and these
two administrations tried to provide it, becoming increasingly anti-
American and pro-Communist over their nine-year rule. When they began,
civil or political rights were almost totally unknown and 142 persons
(including corporations) owned 98% of the arable land. Free speech and
press, legalized unions, and free elections preceded the work of
reform but opposition from the United States began as soon as it
became clear that the Land Reform Act of June 1952 would be applied to
the United Fruit Company. This act called for redistribution of
uncultivated holdings above a fixed acreage or lands of absentee
owners, with compensation from the twenty year 3 percent bonds equal
to the tax value of the lands. About 400,000 acres of United Fruit
lands fell under this law and were distributed by the Arbenz Guzman
government to 180,000 peasants. This was declared to be a Communist
penetration by Allen Dulles, Director of the CIA, which soon found an
American-trained and American-financed Guatemalan Colonel, Carlos
Castillo Armas, who was prepared to lead a revolt against Arbenz. With
American money and equipment, and even some American "volunteers" to
fly "surplus" American planes, Armas mounted an attack of Guatemalan
exiles from bases in two adjacent dictatorships, Honduras and
Nicaragua." Both these countries are horrible examples of everything a
Latin American government should not be, corrupt, tyrannical, cruel,
and reactionary, but they won the favor of the United States State
Department by echoing American foreign policy at every turn.
Nicaragua, often a target of American intervention in the past, was
decayed, dirty, and diseased under the twenty-year tyranny of
Anastasio Somoza (1936-1956). His assassination handed the country
over to be looted by his two sons, one of whom became president while
the other served as commander of the National Guard.

Page 1131
From these despotic bases, the CIA-directed assault of Colonel
Armas overthrew Arbenz Guzman in 1954 and established in Guatemala a
regime similar to that of the Somozas. All civil and political
freedoms were overthrown, the land reforms were undone, and corruption
reigned. When Armas was assassinated in 1957 and a moderate elected as
his successor, the army annulled those elections and held new ones in
which one of their own, General Fuentes, was "elected." He liquidated
what remained of Guatemala's Socialist experiments by granting these
enterprises, at very reasonable prices, to his friends while
collecting his own pay of a $1 million a year. Discontent from his
associates led to a conservative army revolt but American pressure
secured his position. The U.S. could not afford a change of regime
since that country was the chief aggressive base for the Cuban exiles'
attack on Cuba at the Bay of Pigs in April 1962.
The CIA success in attacking "Communist" Guatemala from
dictatorial Nicaragua in 1954 was not repeated in its more elaborate
attack on "Communist" Cuba from dictatorial Guatemala in 1962. In
fact, the Bay of Pigs must stand as the most shameful event in U.S.
history since the end of World War II.
The causes of the Cuban disaster, if we oversimplify, may be
organized in terms of two intersecting factors:
1) the personality deficiencies of the Cubans themselves such as their
lack of rationality and self-discipline, their emotionalism and
2) the ignorance and ineptitude of the American State Department which
seems incapable of dealing with Latin America in terms of the real
problems of the area but instead insists on treating it in terms of
America's vision of the world, which is to day, America's political
preconceptions and economic interests.
Cuba is more Spanish than much of Latin America and only obtained
its independence in 1898, two generations later than the rest of Latin
America. Then, for over thirty years, until the abrogation of the
Platt Amendment in 1934, Cuba was under American occupation or the
threat of direct American intervention. It fell under American
economic domination by American investments on the island and by
becoming deeply involved in the american market, especially for sugar.
A local oligarchy of Cubas was built up including an exploitative
landlord group that had not existed previously.
With the establishment of the Good Neighbor Policy in 1933 and
ending the threat of American direct intervention, it became possible
for the Cubans to overthrow the tyrannical and bloody rule of General
Machado which had lasted for eight years (1925-1933).

Page 1132
The opportunity to begin a series of urgently needed and widely
demanded social reforms under Machado's successor, San Martin, was
lost when the United States refused to recognize or to assist the new
regime. As a result, a ruthless Cuban army sergeant, Fuegencio
Batista, was able to overthrow San Martin and begin a ten-year rule
through civilian puppets chosen in fraudulent elections, and then
directly as president himself. When San Martin was elected president
in 1944, he abandoned his earlier reformist ideas and became the first
of a series of increasingly corrupt elected regimes over the next
eight years. The fourth such election for 1953 was prevented when
Batista seized power once again in 1952.
The next seven years were filled with Batista's efforts to hold
his position by violence and corruption against the rising tide of
discontent against his rule.
One of the earliest episodes in that tide was an attempted revolt
by a handful of youths, led by 26-year-old Fidel Castro in eastern
Cuba on July 26, 1953. The failure of the rising gave Castro two years
of imprisonment and more than a year of exile but at the end of 1956,
he landed with a handful of men to begin guerrilla operations.
Batista's regime was so corrupt that many segments of the army and
middle class were neutral or favorable to Castro's operations. The
necessary arms and financial support came from these groups although
the core of the movement was made up of peasants and workers led by
young middle-class university students.
This Castro uprising was not typical because of Castro's
fanatical thirst for power, his ruthless willingness to destroy
property or lives in order to weaken the Batista regime, and his
double method of operation, from within Cuba rather than from abroad
and from a rural base, the peasants, rather than the usual urban base,
the army, used by most Latin American rebels.
On New Year's day of 1959, Castro marched into Havana. Within two
weeks, the supporters of the Batista regime and dissident elements in
Castro's movement began to be executed by firing squad.
For a year, Castro's government carried on reforms aimed at
satisfying the more obvious demands of the dispossessed groups.
Military barracks were converted into schools; the militia was
permanently established to replace the regular army; rural health
centers were set up; a full-scale attack was made on illiteracy; new
schools were constructed; urban rents were cut in half; utility rates
were slashed; taxes were imposed on the upper classes; the beaches,
once reserved for the rich, were opened to all; and a drastic land
reform was launched.

Page 1133
These actions were not integrated into any viable economic
program but they did spread a sense of well-being in the countryside
although they curtailed the building boom in the cities, largely
rooted in American investment, and they instigated a flight of the
rich from the island to refuge in the U.S.
Castro sought to export revolution to the rest of Latin America.
Arms and guerrilla fighters were sent, and lost, in unsuccessful
efforts to invade Panama, Nicaragua, Haiti, and the Dominican
Republic. Failure of these turned him to methods of more subtle
penetration, largely worked by propaganda and the arming and training
of small subversive groups, especially where democratic or progressive
regimes seemed to be developing as in Venezuela or Colombia. At the
same time, an unsuccessful effort was made to persuade all Latin
America to form an anti-Yankee front.
Although the U.S. had promised in 1959 to follow a policy of non-
intervention toward Cuba, these changes within the island and a visit
of Soviet Deputy Premier Mikoyan in February 1960 forced a
reconsideration of this policy. The Mikoyan agreement promised Cuba
petroleum, arms and other needs for its sugar followed by
establishment of diplomatic relations with the Soviet Union in May and
with Red China later in the year. The Soviet embassy in Havana became
a source of Communist subversion for all Latin America almost at once,
while in September Khrushchev and Castro jointly dominated the annual
session of the General Assembly of the U.N. in New York.
Castro obtained petroleum for Cuban sugar. When he insisted that
American-owned refineries in Cuba process this oil, they refused and
were at once seized by Castro.

Page 1134
The U.S. struck back by reducing the Cuban sugar quota in the
American market which led, step by step, to Castro's sweeping
nationalization of foreign-owned factories on the island. The United
States retaliated by establishing a series of embargoes on Cuban
exports to the U.S. These controversies led Castro into an economic
trap similar to that into which Nasser had fallen with Egypt's cotton.
Each nationalist leader committed his chief foreign-exchange-earning
product (sugar and cotton) to the Soviet Union as payment for
Communist (often Czech) arms. This tied these countries to the Soviet
Union and deprived them of the chance to use their own source of
foreign money for equipment so urgently needed for economic
improvement. By December when American diplomatic relations with Cuba
were broken off, the Cuban economic decline had begun and soon reached
a point where standards of living were at least a third below the
Batista level except for some previously submerged groups.
At the end of 1960, the Eisenhower Administration decided to use
force to remove Castro. This decision was a major error and led to a
totally shameful fiasco. The error apparently arose in the CIA and was
based on a complete misjudgment of the apparent east with which that
agency had overthrown the Arbenz regime in Guatemala in 1954 by
organizing a raid of exiles, armed and financed by the CIA, into
Guatemala from Nicaragua. The CIA analyzed this apparently successful
coup quite incorrectly,since it assumed that Arbenz had been
overthrown by the raiding exiles when he had really been destroyed by
his own army which used the raid as an excuse and occasion to get rid
of him. But on this mistaken basis, the CIA decided to get rid of
Castro by a similar raid of Cuban exiles from Guatemala.
This decision was worse than a crime; it was stupid. A
unilateral, violent attack on a neighboring state with which we were
not at war, in an area where we were committed to multilateral and
peaceful procedures for settling disputes, was a repudiation of all
our idealistic talk about the rights of small nations and our devotion
to peaceful procedures that we had been pontificating around the world
since 1914. It was a violation of our commitment to non-intervention
in the Americas and specifically in Cuba. In sequence to our CIA
intervention in Guatemala, it strengthened Latin American picture of
the U.S. as indifferent to Latin America's growing demand for social
The whole operation, patterned on Hitler's operations to subvert
Austria and Czechoslovakia in 1938 was bungled as Hitler could never
have bungled anything. The project was very much a Dulles brothers'
job and its execution was largely in the hands of the CIA.

Page 1135
The plan of invasion of Cuba seems to have been drawn on typical
Hitler lines: the expeditionary force was to establish a beachhead in
Cuba, set up a government on the island, be recognized by the U.S. as
the actual government of Cuba, and ask Washington for aid to restore
order in the rest of the island which it did not yet control. The CIA
assured President Kennedy that if matters were allowed to go on as
they were, Castro would be strengthened in power (which was untrue)
and that the invasion would be success because of the Cuban people,
led by the anti-Castro underground, would rise against him as soon as
they heard of the landing.
The executive committee of Cuban refugees in the U.S., mostly
representatives of the older ruling groups in Cuba, were eager to
restore the inequitable economic and social system that had existed
before Castro. They were alienated from the most vigorous anti-Castro
groups in the Cuban underground who had no desire to turn back the
clock to the Batista era. The CIA would not cooperate with the anti-
Castro underground because it was opposed to their wish for social and
economic reform. Accordingly, the CIA launched the invasion without
notifying the Cuban underground. Then the attack was bungled.

Page 1136
This greatly strengthened Castro's prestige in Latin American
more than in Cuba itself. This in turn permitted him to survive a
deepening wave of passive resistance and sabotage within Cuba itself,
chiefly from the peasants to recapture control of the Cuban
revolutionary movement.

Page 1138
In May 1961, Castro proclaimed that Cuba would be a socialist
state but despite his statements, he was not in any way a convinced
Communist or a convinced anything else, but was a power-hungry and
emotionally unstable individual, filled with hatred of authority
himself, and restless unless he had constant change and megalomaniac
satisfactions. His tactical skill, especially in foreign affairs, is
remarkable, and shows similarity to Hitler's.

Page 1139
On the whole, the role of the U.S. in Latin America has not been
such as to help either patterns or priorities, largely because our
concern has been with what seems to be useful or better for us rather
than with what would be most helpful to them.

Page 1140
Despite the enthusiasm and energy that make it possible for them
to overthrow corrupt and tyrannical regimes,it soon becomes clear that
they have little idea what to do once they get into power. As a
result, they fall under the personal influence of unstable and
ignorant men, the Nassers, the Perons, and the Castros who fall back
on emotionally charged programs of hatreds and spectacular displays of
unconstructive nationalism that waste time and use up resources while
the real problems go unsolved.
A heavy responsibility rests with the United States for this
widespread failure to find solutions to problems all the way from
Pakistan to Peru. The basic reason for this is that our policies in
this great area have been based on efforts to find solutions to our
own problems rather than theirs; to make profits, to increase supplies
of necessary raw materials, to fight Hitler, to keep out Communism and
prevent the spread of neutralism. The net result is that we are now
more hated than the Soviet Union and neutralism reveals itself as
clearly as it dares through the whole area.

Page 1141
The sole consequence of the Dulles efforts to do the wrong thing
along the Pakistani-Peruvian axis has been to increase what he was
seeking to reduce: local political instability, increased Communist
and Soviet influence, neutralism, and hatred of the U.S.
Although the Dulles period shows most clearly the failures of
American foreign policy in Latin America, the situation was the same,
both before and since Dulles. American policy has been determined by
American needs and desires and not by the problems of Latin Americans.
There are four chief periods in U.S. policy in Latin America in the
20th century:
1) a period of investment and interventionism (until 1933) and was
basically a period of American imperialism. American money came as
investments seeking profits out of the exploitation of the areas
resources. There was little respect for the people themselves and
intervention by American military and diplomatic forces was always
close at hand as a protection for American profits and investments.
2) the Good Neighbor Policy in 1933 reduced intervention while
retaining investment.
3) from 1940 until 1947, our efforts to involved the are in our
foreign policy against Hitler and Japan;
4) since 1947, against the Soviet Union.
Both these efforts have been mistakes.

Page 1142
That this failure continued into the 1960s was clear in
Washington's joy at the military coup that ejected the left-of-center
Goulart government from Brazil in 1964 for that government, however
misdirected and incompetent, at least recognized that there were
urgent social and economic problems in Brazil demanding treatment. No
real recognition that such problems existed was achieved in Washington
until Castro's revolution forced the realization.
The formal agreement for the Alliance for Progress aims and
attitudes were admirable but required implementation features that
were not covered in the Charter itself.
"We, the American Republics, hereby proclaim our decision to
unite in a common effort to bring our people accelerated economic
progress and broader social justice within the framework of personal
dignity and personal liberty. Almost two hundred years ago we began in
this hemisphere the long struggle for freedom which now inspires
people in all parts of the world. Now we must give a new meaning to
that revolutionary heritage. For America stands at a turning point in
history. The men and women of this hemisphere are reaching for the
better life which today's skills have placed within their grasp. They
are determined for themselves and their children to have decent and
ever more abundant lives, to gain access to knowledge and equal
opportunity for all, to end those conditions which benefit the few at
the expense of the needs and dignity of the many."

Page 1144
These were fine words but the methods for achieving these
desirable goals were only incidentally established in the Charter. On
the whole, it cannot be said that it has been a success. It's
achievement has been ameliorative rather than structural, and this
alone indicates that it has not been a success. For unless there are
structural reforms, its economic development will not become self-
sustaining or even manage to keep up with the growth of population on
the basis of income per capita.

Page 1145
The failure of the Alliance for Progress to achieve what it was
touted to achieve was a result that it was not intended primarily to
be a method for achieving a better life for Latin Americans but was
intended to be a means of implementing American policy in the Cold
War. This became clearly evident at the second Punta del Este
Conference in 1962 where Washington's exclusive control over the
granting of funds was used as a club to force the Latin American
states to exclude Cuba from the Organization of American States. The
original plan was to cut off Cuba's trade with all Western Hemisphere
countries. A two-thirds vote was obtained only after the most intense
American "diplomatic" pressure and bribery involving the granting and
withholding of American aid to the Alliance. Even at that, six
countries, Brazil, Mexico, Argentina, Chile, Bolivia, and Ecuador,
representing 70% of Latin America's population refused to vote for the
American motions.
The aid takes the form not of money which can be used to buy the
best goods in the cheapest market but as credits which can be used
only in the U.S. Much of these credits goes either to fill the gaps in
the budgets or the foreign-exchange balances which provides the
maximum of leverage in getting these governments to follow America's
lead but provides little or no benefit to the impoverished peoples of
the hemisphere.


Page 1148
The post-war agrarian reform redistributed the ownership of land
by the government taking all individual land holdings beyond 7.5
acres, all rented land over 2.5 acres, and the land of absentee
landlords. The former owners were paid with long-term bonds. In turn,
peasants without land or with less than the maximum permitted amount
were allowed to buy land from the state on a long-term low-interest-
rate basis. Cash rents for land were also lowered. As a result, Japan
became a land of peasant owners with about 90% of the cultivated land
worked by its owners.

Page 1151
Agrarian reform has driven Communism out of the rural areas and
restricted it to the cities, chiefly to student groups.

Page 1153
Under the Czar, Russia produced great surpluses, especially of


Page 1159
Previous to the Land Reform Law of 1950, 10% of families owned
53% farm land while 32% owned 78% of the land. This left over two
thirds of such families with only 22% of the land. The first stage in
agrarian reform had been the "elimination of landlordism." The
landlords were eliminated with great brutality in a series of
spectacular public trials in which landlords were accused of every
crime in the book. At least 3 million were executed and several times
that number were imprisoned but the totals may have been much higher.
The land thus obtained was distributed to poor peasant families with
each obtaining about one-third of an acre.
The second stage sought to establish cooperative farming. In
effect, it took away from the peasants the lands they had just
obtained. The third stage constituting the basic feature of the "Great
Leap Forward" merged the 750,000 collective farms into about 26,000
agrarian communes of about 5,000 families each. This was a social
rather than simply an agrarian revolution since its aims included the
destruction of the family household and the peasant village. All
activities of the members, including child rearing, came under the
control of the commune.

Page 1160
The Communist government was not involved in corruption, self-
enrichment, and calculated inefficiency as earlier Chinese governments
were and had both greater power and greater desire to operate a fair
rationing system but the fact remains that the inability of communized
agricultural system to produce sufficient food surpluses to support a
communized industrial system at a high rate of expansion is now
confirmed and the need for all Communist regimes to purchase grain
from the Western countries confirms that there is something in the
Western pattern of living which does provide a bountiful agricultural

Page 1164
A source of alienation between Moscow and Peking is concerned
with the growing recognition that the Kremlin was being driven toward
a policy of peaceful coexistence with the U.S. not as a temporary
tactical maneuver (which would have been acceptable to China) but as a
semipermanent policy since Marxist-Leninist theory envisioned the
advanced capitalist states as approaching a condition of economic
collapse from "the internal contradictions of capitalism itself." This
crisis would be reflected in two aspects: the continued impoverishment
of the working class with the consequent growth of the violence of the
class struggle in such countries and increasing violence of the
imperialist aggressions of such countries toward each other in
struggles to control more backward areas as markets for the industrial
products that the continued impoverishment of their own workers made
impossible to sell in domestic market. The falseness of these theories
was fully evident in the rising standards of living of the advanced
industrial countries. This evidence of the errors of Marxist-Leninist
theories was increasingly clear to the Kremlin, although it could not
be admitted, but it was quite unclear to Peking.

Page 1165
Mao Tse-tung, son of a peasant who became wealthy on speculation
and moneylending was born in 1893 in Hunan province.

Page 1168
There are at least half a dozen legal, minor political parties in
Red China today (1966). These not only exist and are permitted to
participate in the governing process in a very minor way, but they are
subject to no real efforts at forcible suppression, although they are
subject to persistent, rather gentle, efforts at conversion.

Page 1170
French expenditure of $7 billion and about 100,000 lives during
the eight-year struggle ended at Geneva in 1954. The Geneva agreements
provided that all foreign military forces, except a French training
group, be withdrawn from Laos. When the Pathet Lao showed increased
strength in the elections of May 1958, the anti-Communist group
combined to oust Premier Phouma and put in the pro-Western Sananikone.
This government was then ejected and replaced by a Right-wing military
junta led by General Nosavan in 1960; but within seven months a new
coup led by Kong Le brought Phouma back to office. Four months later,
Nosavan once again replaced Phouma by military force. The Communist
countries refused to recognize this change and increased their
supplies to the Pathet Lao by Soviet airlift.

Page 1172
The Geneva agreement of 1954 had recognized the Communist
government of North Vietnam dividing the country at the 17th parallel
but this imaginary line could not keep discontent or Communist
guerrillas out of South Vietnam so long as the American-sponsored
southern government carried on its tasks with corruption, favoritism
and arbitrary despotism. These growing characteristics of the South
Vietnam government centered around the antics of the Diem family.
President Diem's brother Nhu was the actual power in the government
heading up a semi-secret political organization that controlled all
military and civil appointments. On the Diem family team were three
other brothers, including the Catholic Archbishop of Vietnam, the
country's ambassador to London, and the political boss of central
Vietnam who had his own police force.
While the country was in its relentless struggle with the
Vietcong Communist guerrillas who lurked in jungle areas, striking
without warning at peasant villages that submitted to the established
government or did not cooperate with the rebels, the Diem family
tyranny was engaged in such pointless tasks as crushing Saigon high
school agitations by secret police raids or efforts to persecute the
overwhelming Buddhist majority and to extend favors to the Roman
Catholics who were less than 10% of the population.
When Diem became president in 1955, after the deposition of the
pro-French Emperor Bao Dai, the country had just received 800,000
refugees from North Vietnam which the Geneva conference had yielded to
Ho Chi Minh's communists, the overwhelming majority of which were
Roman Catholics, raising their number to over a million in a
population of 14 million. Nevertheless, Diem made these Catholics the
chief basis of his power, chiefly recruiting the refugees into various
police forces dominated by the Diem family.

Page 1173
By 1955, these were already beginning to persecute the Buddhist
majority, at first by harassing their religious festivals and parades
but later with brutal assaults on their meetings. An attempted coup by
army units was crushed and the Diem rule became increasingly
American military assistance tried to curtail the depredations of
the Communist guerrillas. The intensity of the guerrilla attacks
steadily increased following Diem's re-election with 88% of the vote.
American intervention was also stepped up and gradually began to shift
from a purely advisory and training role to increasingly direct
participation in the conflict. From 1961 onward, American casualties
averaged about one dead a week, year after year. The Communist
guerrilla casualties were reported to be about 500 per week but this
did not seem to diminish their total number or relax their attacks.
These guerrilla attacks consisted of rather purposeless
destruction of peasant homes and villages, apparently designed to
convince the natives of the impotence of the government and the
advisability of cooperating with the rebels. To stop these
depredations, the government undertook the gigantic task of organizing
the peasants into "agrovilles" or "strategic hamlets" which were to be
strongly defended residential centers entirely enclosed behind
barricades. The process, it was said, would also improve the economic
and social welfare of the people to give them a greater incentive to
resist the rebels. There was considerable doubt about the
effectiveness of the reform aspect of this process and some doubt
about the defence possibilities of the scheme as a whole. Most
observers felt that very little American economic aid ever reached the
village level but instead was lost on much higher levels. By the
summer of 1963, guerrillas were staging successful attacks on the
strategic hamlets and the need for a more active policy became acute.

Page 1175
This final crisis in the story of the Diem family and its
henchmen arose from religious persecution of the Buddhists under the
guise of maintaining political order. On November 1, 1963, an
American-encouraged military coup led by General Minh overthrew the
Diem family. A new government with a Buddhist premier calmed down the
domestic crisis but was no more able to suppress guerrilla activities.


Page 1178
The massive economic mobilization for World War II showed clearly
that there could be an equally massive post-war mobilization of
resources for prosperity.

Page 1184
It is usually not recognized that the whole economic expansion of
Western society rests upon a number of psychological attitudes that
are prerequisites to the system as we have it but are not often stated
explicitly. Two of these may be identified as:
1) future preference and
2) infinitely expandable material demand.
In a sense, these are contradictory since the former implies that
Western economic man will make almost any sacrifice in the present for
the same of some hypothetical benefit in the future while the latter
implies almost insatiable demand in the present. Nonetheless, both are
essential features of the overwhelming Western economic system.
Future preference came out of the Christian outlook and
especially the Puritan tradition which was prepared to accept almost
any kind of sacrifice in the temporal world for the sake of future
eternal salvation, willing to restrict their enjoyment of income for
the sake of capital accumulation.
The mass production of this new industrial system was able to
continue and to accelerate to the fantastic rate of the 20th century
so that today, the average middle-class family of suburbia has a
schedule of future material demands which is limitless.
Without these two psychological assumptions, the Western economy
would break down or would never have started. At present, future
preference may be breaking down and infinitely expanding material
demand may soon follow it in the weakening process. If so, the
American economy will collapse unless it finds new psychological

Page 1187
In Asia, as is traditional along the Pakistani-Peruvian axis, the
structure of societies had been one in which a coalition of army,
bureaucracy, landlords, and moneylenders have exploited a great mass
of peasants by extortion of taxes, rents, low wages, and high interest
rates in a system of such persistence that its basic structure goes
back to the Bronze Age empires before 1000 B.C.



Page 1200
Weapons will continue to be expensive and complex. This means
that they will increasingly be the tools of professionalized, if not
mercenary, forces. All of past history shows that the shift from a
mass army of citizen-soldiers to a smaller army of professional
fighters leads, in the long run, to a decline of democracy.

Page 1204
When Khrushchev renounced the use of both nuclear war and
conventional violence, and promised to defeat the West by peaceful
competition, he was convinced that the Soviet Union could out-perform
the U.S. because it could, in his opinion, overcome the American lead
in the race for economic development that the Socialist way of life
would become the model for emulation by the uncommitted nations.

Page 1213
In other economies, when additional demands are presented to the
economy, less resources are available for alternative uses. But in the
American system, as it now stands, additional new demands usually lead
to increased resources becoming available for alternative purposes,
notably consumption. Thus if the Soviet Union embraced a substantial
increase in space activity, the resources available for raising
Russian levels of consumption would be reduced while in America, any
increases in the space budget makes levels of consumption also rise.

Page 1214
It does this because increased space expenditures provide
purchasing power for consumption that makes available previously
unused resources out of the unused American productive capacity.
This unused capacity exists in the American economy because the
structure of our economic system is such that it channels flows of
funds into the production of additional capacity (investment) without
any conscious planning process or any real desire by anyone to
increase our productive capacity. It does this because certain
institutions in our system (such as insurance, retirement funds,social
security payments, undistributed corporate profits and such) and
certain individuals who personally profit by the flow of funds not
theirs into investment continue to operate to increase investment even
when they have no real desire to increase productive capacity (and
indeed many decry it). In the Soviet Union, on the contrary, resources
are allotted to the increase of productive capacity by a conscious
planning process and at the cost of reducing the resources available
in their system for consumption or for the government (largely
Thus the meaning of "costs" and the limitations on ability to
mobilize economic resources are entirely different in our system from
the Soviet system and most others. In the Soviet economy, "costs" are
real costs, measurable in terms of the allotment of scarce resources
that could have been used otherwise. In the American system, "costs"
are fiscal or financial limitations that have little connection with
the use of scarce resources or even with the use of available (and
therefore not scarce) resources. The reason for this is that in the
American economy, the fiscal or financial limit is lower than the
limit established by real resources and therefore, since the financial
limits act as the restraint on our economic activities, we do not get
to the point where our activities encounter the restraints imposed by
the limits of real resources (except rarely and briefly in terms of
technically trained manpower, which is our most limited resource).
These differences between the Soviet and American economies are:
1) the latter has built-in, involuntary, institutionalized investment
which the former lacks;
2) the latter has fiscal restraints at a much lower level of economic
activity which the Soviet system also lacks.
Thus greater activity in defence in the USSR entails real costs
since it puts pressure on the ceiling established by limited real
resources while greater activity in the American defence or space
effort releases money into the system which presses upward on the
artificial financial ceiling, pressing it upward closer to the higher,
and remote, ceiling established by the real resources limit of the
American economy. This makes available the unused productive capacity
that exists in our system between the financial ceiling and the real
resources ceiling; it not only makes these unused resources available
for the government sector of the economy from which the expenditure
was directly made but also makes available portions of these released
resources for consumption and additional capital investment.

Page 1215
For this reason, government expenditures in the U.S. for things
like defence or space may entail no real costs at all in terms of the
economy as a whole. In fact, if the volume of unused capacity brought
into use by expenditures for these things (that is, defence and so on)
is greater than the resources necessary to satisfy the need for which
the expenditure was made, the volume of unused resources made
available for consumption or investment will be greater than the
volume of resources used in the governmental expenditure and this
additional government effort will cost nothing at all in real terms,
but will entail "negative" real costs. (Our wealth will be increased
by making the effort).
The basis for this strange, and virtually unique, situation is to
be found in the large amount of unused productive capacity in the U.S.
even in our most productive years. In the second quarter of 1962, our
productive system was running at a very high level of prosperity, yet
it was functioning about 12% below capacity, which represented a loss
of $73 billion annually. In this way, in the whole period from the
beginning of 1953 to the middle of 1962, our productive system
operated at $387 billion below capacity. Thus if the system had
operated near capacity, our defence effort over the nine years would
have cost us nothing, in terms of loss of goods or capacity.
This unique character in the American economy rests on the fact
that the utilization of resources follows flow lines in the economy
that are not everywhere reflected by corresponding flow lines of
claims on wealth (that is, money). In general, in our economy the
lines of flow of claims on wealth are such that they provide a very
large volume of savings and a rather large volume of investment, even
when no one really wants new productive capacity; they also provide an
inadequate flow of consumer purchasing power, in terms of flows, or
potential flows, of consumer goods; but they provide very limited,
sharply scrutinized and often misdirected flows of funds for the use
of resources to fulfill the needs of the government sector of our
trisectored economy. As a result, we have our economy distorted
resource-utilization patterns, with overinvestment in many areas,
overstuffed consumers in one place and impoverished consumers in
another place, a drastic undersupply of social services, and
widespread social needs for which public funds are lacking.
In the Soviet Union, money flows follow fairly well the flows of
real goods and resources, but, as as result, pressures are directly on
resources. These pressures mean that saving and investment conflict
directly with consumption and government services (including defence),
putting the government under severe direct strains, as the demands for
higher standards of living cannot be satisfied except by curtailing
investment, defence, space, or other government expenditures.

Page 1216
Many countries of the world are worse off the Soviet Union
because their efforts to increase consumers' goods may well require
investment based on savings that must be accumulated at the expense of
As a chief consequence of these conditions, the contrast between
the "have" nations and the "have-not" nations will become even wider.
This would be of little great importance to the rest of the world were
it not that the peoples of the backward areas, riding the "crisis of
rising expectations" are increasingly unwilling to be ground down in
poverty as their predecessors were. At the same time, the Superpower
stalemate increases the abilities of these nations to be neutral, to
exercise influence out of all relationship to their actual powers, and
to act, sometimes, in an irresponsible fashion.
These neutrals and other peoples of backward areas have acute
problems. Solutions do exist but the underdeveloped nations are
unlikely to find them.

Page 1221
A growing lowest social class of the social outcasts (the
Lumpenproletariat) has reappeared. This group of rejects from the
bourgeois industrial society provide one of our most intractable
future problems because they are gathered in urban slums, have
political influence, and are socially dangerous.
In the U.S. where these people congregate in the largest cities
and are often Negroes or Latin Americans, they are regarded as a
racial or economic problem, but they are really an educational and
social problem for which economic or racial solutions would help
little. This group is most numerous in the more advanced industrial
areas and now forms more than 20% of the American population. Since
they are a self-perpetuating group and have many children, they are
increasing in numbers faster than the rest of the population.

Page 1229
The pattern of outlook on which the tradition of the West is
based has six parts:
1) There is truth, a reality (thus the West rejects skepticism,
solipsism and nihilism)
2) No person, group, or organization has the whole picture of the
truth (thus there is no absolute or final authority.)
3) Every person of goodwill has some aspect of the truth, some vision
of it from the angle of his own experience.
4) Through discussion, the aspects of the truth held by many can be
pooled and arranged to form a consensus closer to the truth than any
of the sources that contributed to it.
5) This consensus is a temporary approximation of the truth which new
experiences make it necessary to reformulate.
6) Thus Western man's picture of the truth advances closer and closer
to the whole truth without ever reaching it.
This methodology of the West is basic to the success, power and
wealth of Western Civilization.

Page 1231
To the West, in spite of all its aberrations, the greatest sin
from Lucifer to Hitler, has been pride, especially in the form of
intellectual arrogance, and the greatest virtue has been humility,
especially in the intellectual form which concedes that opinions are
always subject to modification by new experiences, new evidence, and
the opinions of our fellow men.
The most triumphant of these aspects is science, whose method is
a perfect example of the Western tradition. The scientist goes eagerly
to work each day because he has the humility to know that he does not
have any final answers and must work to modify and improve the answers
he has. He publishes his opinions and research reports or exposes
these in scientific gatherings so that they may be subjected to the
criticism of his colleagues and thus gradually play a role in
formulating the constantly unfolding consensus that is science. That
is what science is, "a consensus unfolding in time by a cooperative
effort in which each works diligently seeking the truth and submits
his work to the discussion and critique of his fellows to make a new,
slightly improved, temporary consensus."


Page 1234
American society in the 1920s was largely middle-class. Its
values and aspirations were middle-class and power or influence within
it was in the hands of middle-class people.
Most defenders of bourgeois America saw the country in middle-
class terms and looked forward to a not remote future in which
everyone would be middle-class except for a small shiftless minority
of no importance. America was regarded as a ladder of opportunity.
Wealth, power, prestige and respect were all obtained by the same
standard, based on money. This in turn was based on a pervasive
emotional insecurity that sought relief in the ownership and control
of material possessions.

Page 1235
Years ago in Europe, the risks (and rewards) of commercial
enterprise, well reflected in the fluctuating fortunes of figures such
as Antonio in The Merchant of Venice were extreme. A single venture
could ruin a merchant or make him rich. This insecurity was increased
by the fact that the prevalent religion of the day disapproved of what
he was doing, seeking profits or taking interest, and he could see no
way of providing religious services to the town dwellers because of
the intimate association of the ecclesiastical system with the
existing arrangement of rural landholding.

Page 1236
Credit became more important than intrinsic personal qualities,
and credit was based on the appearance of things, especially the
appearances of the external material accessories of life. Old values
such as future preference or self-discipline, remained, but were
redirected. Future preference ceased to be transcendental in its aim
and became secularized.

Page 1237
Middle-class self-discipline and future preference provided the
savings and investment without which any innovation - no matter how
appealing in theory - would be set aside and neglected.
The middle-class character is psychic insecurity founded on lack
of secure social status. The cure for such insecurity became
insatiable material acquisition. From this flowed attributes of future
preference, self-discipline, social conformity, infinitely expandable
material demand, and a general emphasis on externalized impersonal
values. The urge to seek truth or to help others are not really
compatible with the middle-class values.

Page 1238
One of the chief changes, fundamental to the survival of the
middle-class outlook, was a change in society's basic conception of
human nature. This had two parts to it. The traditional Christian
attitude was that human nature was essentially good and that it was
formed and modified by social pressures and training. The "goodness"
of human nature was based on the belief that it was a kind of weaker
copy of God's nature. In this Western point of view, evil and sin were
negative qualities; they arose from an absence of good, not from the
presence of evil. Thus sin was the failure to do the right thing, not
doing the wrong thing.
Opposed to this view was another which received its most explicit
formulation by the Persian Zoroaster in the seventh century B.C. It
came in through the Persian influence on the Hebrews, especially
during the Babylonian Captivity of the Jews, in the sixth century and
more fully through the Greek rationalist tradition from Pythagoras to
Plato. The general distinction of this point of view from Zoroaster to
William Golding (in Lord of the Flies) is that the world and the flesh
are positive evils and that man, in at least this physical part of his
nature, is essentially evil. As a consequence, he must be disciplined
totally to prevent him from destroying himself and the world. In this
view, the devil is a force, or being, of positive malevolence and man,
by himself, is incapable of good and is, accordingly, not free. He can
be saved in eternity by God's grace alone and he can get through this
temporal world only by being subjected to a regime of total despotism.

The contrasts can be summed up thus:
Evil is an absence of Good;
Evil is a positive entity.
Man is basically good;
Man is basically evil.
Man is free;
Man is a slave of his nature.
Man can contribute to his salvation by good works;
Man can be saved only by God.
Self-discipline is necessary to guide or direct;
Discipline must be external and total.
Truth found from experience and revelation interpreted by tradition;
Truth is found by rational deduction from revelation.
Luther, Calvin, Thomas Hobbes, Blaise Pascal and others believed
that truth was to be found in rational deduction from a few basic
revealed truths in sharp contrast with the orthodox point of view
still represented by the Anglican and Roman churches which saw men as
largely free in a universe whose rules were to be found by tradition
and consensus.

Page 1240
The Puritan point of view led directly to mercantilism which
regarded political-economic life as a struggle to the death in a world
where there not sufficient wealth or space for different groups. To
them, wealth was limited to a fixed amount and one man's gain was
someone else's loss. That meant that the basic struggles of this world
were irreconcilable and must be fought to a finish. This as part of
the Puritan belief that nature was evil and that a state of nature was
a jungle of violent conflicts.
One large change was the Community of Interests which rejected
mercantilism's insistence on limited wealth and the basic
incompatibility of interests for the more optimistic belief that all
parties could somehow adjust their interests within a community in
which all would benefit mutually.
Above all, the middle-class which dominated the country in the
first half of the 20th century were a small group of aristocrats.
Below were the petty bourgeoisie who had middle-class aspirations.
Below these two were two lower classes: the workers and the

Page 1242
In America, as elsewhere, aristocracy represents money and
position grown old, and is organized in terms of families rather than
of individuals. Traditionally it was made up of those families who had
money, position,and social prestige for so long that they never had to
think about these and,above all, never had to impress any other person
with the fact that they had them. They accepted these attributes of
family membership as a right and an obligation. Since they had no idea
that these could be lost, they were self-assured, natural but distant.
Their manners were gracious but impersonal. Their chief characteristic
was the assumption that their family position had obligations. This
"noblesse oblige" led them to participate in school sports (even if
they lacked obvious talent) to serve their university (usually a
family tradition) in any helpful way, and to offer their services to
their local community, their state, and their country as an

Page 1243
Another good evidence of class may be seen in the treatment given
to servants who work in one's home: the lower classes treat these as
equals, the middle-classes treat them as inferiors, while the
aristocrats treat them as equals or even superiors. On the whole, the
number of aristocratic families in the U.S. is very few, with a couple
in each of the older states. A somewhat larger group of semi-
aristocrats consists of those like the Lodges, Rockefellers, or
Kennedys,who are not yet completely aristocratic either because they
are not, in generations, far enough removed from money-making, or
because of the persistence of a commercial or business tradition in
the family.
The second most numerous group in the U.S. is the petty
bourgeoisie, including millions of persons who regard themselves as
middle-class and are under all the middle-class anxieties and
pressures but often earn less money than unionized laborers. As a
result of these things, they are often very insecure, envious, filled
with hatreds, and are generally the chief recruits for any Radical
Right, Fascist, or hate campaigns against any group that is different
or which refuses to conform to middle-class values. Made up of clerks,
shopkeepers, and vast numbers of office workers in business,
government, finance and education, these tend to regard their white
collar status as the chief value in life, and live in an atmosphere of
envy, pettiness, insecurity, and frustration. They form the major
portion of the Republican Party's supporters in the towns of America,
as they did for the Nazis in Germany thirty years ago.

Page 1244
Eisenhower himself was repelled by the Radical Right whose
impetus had been a chief element in his election although the lower-
middle-class had preferred Senator Taft as their leader. Eisenhower
however had been preferred by the Eastern Establishment of old Wall
Street, Ivy League, semi-aristocratic Anglophiles whose real strength
rested in their control of eastern financial endowments operating from
foundations, academic halls, and other tax-exempt refuges.
As we have said, this Eastern Establishment was really above
parties. They had been the dominant element in both parties since 1900
and practiced the political techniques of J.P. Morgan.

Page 1245
They were, as we have said, Anglophile, cosmopolitan, Ivy League,
internationalist, astonishingly liberal, patrons of the arts, and
relatively humanitarian. All these things made them anathema to the
lower-middle-class and petty-bourgeois groups who supplied the votes
in Republican electoral victories but found it so difficult to control
nominations (especially in presidential elections) because the big
money necessary for nominating in a Republican convention was allied
to Wall Street and to the Eastern Establishment. The ability of the
latter to nominate Eisenhower over Taft in 1952 was a bitter pill to
the radical bourgeoisie.
Kennedy was an Establishment figure. His introduction to the
Establishment arose from his support in Britain. His acceptance into
the English Establishment opened its American branch as well. Another
indication of this connection was the large number of Oxford-trained
men appointed to office by President Kennedy.

Page 1246
In the minds of the ill-informed, the political struggle in the
U.S. has always been viewed as a struggle between Republicans and
Democrats at the ballot box in November. Wall Street long ago had seen
that the real struggle was in the nominating conventions. This
realization was forced upon the petty-bourgeois supporters of
Republican candidates by their inability to nominate their
congressional favorites. Just as they reached this conclusion, the new
wealth appeared in the political picture, sharing petty-bourgeois
suspicions of the East, big cities, Ivy League universities,
foreigners, intellectuals, workers and aristocrats. By the 1964
election, the major political issue in the country was the financial
struggle behind the scenes between the old wealth, civilized and
cultured in foundations, and the new wealth, virile and uninformed,
arising from the flowing profits of government-dependent corporations
in the West and Southwest.
At issue here was the whole future face of America, for the older
wealth stood for values and aims close to the Western traditions of
diversity, tolerance, human rights and values, freedom, and the rest
of it, while the newer wealth stood for the narrow and fear-racked
aims of petty-bourgeois insecurity and egocentricity. The nominal
issues between them, such as that between internationalism and
unilateral isolationism (which its supporters preferred to rename
"nationalism") were less fundamental than they seemed, for the real
issue was the control of the Federal government's tremendous power to
influence the future of America by spending of government funds. The
petty bourgeois and new wealth groups wanted to continue that spending
into the industrial-military complex, such as defence and space, while
the older wealth and non-bourgeois groups wanted to direct it toward
social diversity and social amelioration for the aged and the young,
for education, for social outcasts, and for protecting national
resources for future use.

Page 1247
The outcome of this struggle, which still goes on, is one in
which civilized people can afford to be optimistic. For the newer
wealth is unbelievably ignorant and misinformed.
The National parties and their presidential candidates, with the
Eastern Establishment assiduously fostering the process behind the
scenes, moved closer together and nearly met in the center with almost
identical candidates and platforms although the process was concealed,
as much as possible, by the revival of obsolescent or meaningless war
cries and slogans.

Page 1248
The two parties should be almost identical so that the American
people can "throw the rascals out" at any election without leading to
any profound or extensive shifts in policy. The policies that are
vital and necessary for America are no longer subjects of significant
disagreement, but are disputable only in details of procedure,
priority, or method: we must remain strong, continue to function as a
great World power in cooperation with other Powers, avoid high-level
war, keep the economy moving, help other countries do the same,
provide the basic social necessities for all our citizens, open up
opportunities for social shifts for those willing to work to achieve
them, and defend the basic Western outlook of diversity, pluralism,
cooperation,and the rest of it, as already described.
Either party in office becomes in time corrupt, tired,
unenterprising and vigorless. Then it should be possible to replace it
every four years by the other party which will be none of these things
but will still pursue, with new vigor, approximately the same basic
The capture of the Republican National Party by the extremist
elements of the Republican National Party in 1964 and their effort to
elect Barry Goldwater with the petty-bourgeois extremists alone, was
only a temporary aberration on the American political scene and arose
from the fact that President Johnson had pre-empted all the issues so
that it was hardly worthwhile for the Republicans to run a real
contestant against him. Thus Goldwater was able to take control of the
party by default.
The virulence behind the Goldwater campaign, however, had nothing
to do with default or lack of intensity. Quite the contrary. His most
ardent supporters were of the extremist petty-bourgeois mentality
driven to near hysteria by the disintegration of the middle-class and
the steady rise to prominence of everything they considered anathema:
Catholics, Negroes, immigrants, intellectuals, aristocrats,
scientists, and educated men generally, cosmopolitans and
internationalists and, above all, liberals who accept diversity ad a
This disintegration of the middle classes had a variety of
causes, some of them intrinsic, many of them accidental, a few of them
obvious, but many of them going deeply into the very depths of social
existence. All these causes acted to destroy the middle-class by
acting to destroy the middle-class outlook.

Page 1250
In the earlier period, even down to 1940, literature's attack on
the middle-class outlook was direct and brutal, from such works as
Upton Sinclair's "The Jungle" or Frank Norris's "The Pit," both
dealing with the total corruption of of personal integrity in the
meatpacking and wheat markets. These early assaults were aimed at the
commercialization of life under bourgeois influence and were
fundamentally reformist in outlook because they assumed that the evils
of the system could somehow be removed. By the 1920s, the attack was
much more total and saw the problem in moral terms so fundamental that
no remedial action was possible. Only complete rejection of middle-
class values could remove the corruption of human life seen by
Sinclair Lewis in Babbitt or Main Street.

Page 1252
The Puritan point of view of man as a creature of total depravity
without hope of redemption which in the period 1550-1650 justified
despotism in a Puritan context, now may be used, with petty-bourgeois
support, to justify a new despotism to preserve, by force instead of
conviction, petty-bourgeois values in a system of compulsory
conformity. George Orwell's 1984 has given us the picture of this
system as Hitler's Germany showed us its practical operation. Barry
Goldwater's defeat moved the possibility so far into the future that
the steady change in social conditions makes it remote indeed.

Page 1253
For generations, even in fairly rich families, the indoctrination
continued because of emphasis on thrift and restraints on consumption.
By 1937, the world depression showed that the basic economic problems
were not saving and investment but distribution and consumption. Thus
there appeared a growing readiness to consume, spurred on my new sales
techniques, installment selling and the extension of credit from the
productive side to the consumption side of the economic process. As a
result, an entirely new phenomenon appeared in middle-class families,
the practice of living up to, or even beyond, their incomes - an
unthinkable scandal in any 19th century bourgeois family.

Page 1255
Middle-class marriages were usually based on middle-class values
of economic security and material status rather than on love. More
accurately, middle-class marriages were based on these material
considerations in fact, while everyone concerned pretended that they
were based on Romantic love. Even when the marriage becomes a success,
in the sense that it persists, it is never total and merely means that
the marriage becomes an enslaving relationship to the husbands and a
source of disappointment and frustration to the wives.


Page 1300
In the old days, the merchant bankers of London controlled fairly
well the funds that were needed for almost any enterprise to become a
substantial success. Today, much larger funds are available from many
diverse sources, from abroad, from government sources, from insurance
and pension funds, from profits from other enterprises. These are no
longer held under closely associated controls and are much more
impersonal and professional in their disposal so that on the whole, an
energetic man (or a group with a good idea) can get access to larger
funds today, and can do so without anyone much caring if he accepts
the established social precedents.

Page 1303
Lycurgus renounced social change in prehistoric Sparta only by
militarizing the society.


Page 1310
Tragedy and Hope? The tragedy of the period covered by this book
is obvious but the hope may seem dubious to many. Only the passage of
time will show if the hope I seem to see in the future is actually
there or is the result of mis-observation and self-deception.
The historian has difficulty distinguishing the features of the
present and generally prefers to restrict his studies to the
past,where the evidence is more freely available and where perspective
helps him to interpret the evidence. Thus the historian speaks with
decreasing assurance about the nature and significance of events as
they approach his own day. The time covered by this book seems to this
historian to fall into three periods: the 19th century from 1814 to
1895; the 20th century after World War II, and a long period of
transition from 1895 to 1950.
The 20th century is utterly different from the 19th century and
the age of transition between the two was one of the most awful
periods in all human history. Two terrible wars sandwiching a world
economic depression revealed man's real inability to control his life
by nineteenth century techniques of laissez-faire, materialism,
competition, selfishness, nationalism, violence, and imperialism.
These characteristics of late nineteenth-century life culminated in
World War II in which more than 50 million persons were killed, most
of them by horrible deaths.
The hope of the twentieth century rests on the recognition that
war and depression are man-made, and needless. They can be avoided in
the future by turning from the 19th century characteristics just
mentioned and going back to other characteristics that our Western
society has always regarded as virtues: generosity, compassion,
cooperation, rationality, and foresight, and finding an increased role
in human life for love, spirituality, charity, and self-discipline.
On the whole, we do know now that we can avoid continuing the
horrors of 1914-1945 and on that basis alone we maybe optimistic over
our ability to go back to the tradition of our Western society and to
resume its development along its old patterns of Inclusive Diversity.

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