|1.||Are banks solely economic institutions? Or are they political structures as well?|
|2.||What political powers do banks have?|
|3.||Is there an alternative to the American banking system?|
Conservatives maintain that banks are purely financial institutions, not political entities. The role of banks is to fund corporate investments. It is the underlying assumption of conservatives, who prefer to limit competition, that there are too many banks in America. Too many banks acting independently make it difficult for the large organizations such as Bank of America, Morgan Guaranty Trust Co., Chase Manhattan, First National City, Chemical-New York, to exert sufficient influence and maintain stable financial conditions. The only thing the government has to do to help the banking industry is to place large amounts of additional capital into circulation under the control and regulation of banks. Since the banking industry is not a political institution, government interference in its workings is not wanted.
Liberals hold that banks are not fundamentally political institutions, yet they can exert political pressure. For example, in 1975 the major New York City banks refused to loan funds to the city to maintain its educational structures and municipal services.1 Liberals maintain that problems such as this can be rectified by government loaning capital when banks refuse it. The threat of government intervention would keep banks in accord with the interests of the people.
To socialists banks are fundamentally political institutions, often the instruments through which capitalists increase their profit. They loan money that enables governments to carry on war. By first advertising and furthering an economy that exists on credit, and then withholding that credit, banks have the ability to create economic chaos for individuals. The dollar, the virtual god of Americans, is manipulated and controlled by the banking industry.
The political clout of banks is enormous. They have the power to decide if cities collapse financially, or prosper. They have the power, through international loans, to decide whether poor countries will survive. They have the power to cause a depression or create prosperity. An institution as powerful as this cannot be considered to be purely financial.
Limiting or eliminating the power of banks is a key issue for socialists. One solution is the creation of alternate banking institutions. The Woman's Bank in New York City, is one example of this strategy, the Freedom National Bank, located in Bedford Stuyvesant and Harlem, in New York City, is another example. Another way of circumventing the major banks is the transferral of funds from major banking institutions to minor ones.2 A third strategy is a refusal to live on credit. Credit cards should not be utilized, and personal loans for luxury goods should not be