Is America Necessary? Conservative, Liberal, & Socialist Perspectives of United States Political Institutions

By Henry Etzkowitz; Peter Schwab | Go to book overview

The middle-grade blues

In terms of the longer-run health of the U.S. economy, though, the most important question is who will have access to bank money, and the outlook is not good. The top tier of U.S. business will be financed without question. Banks will stick with consumer installment lending because the return is so good. But the middle-grade corporation plainly faces trouble. It simply will not be able to count on a guaranteed claim on bank money, and when it does get money, the quid pro quo may be giving the bank more of a say in company management than banks have traditionally had. Chairman John Bunting of First Pennsylvania Corp. in Philadelphia is one banker who thinks bankers will have a louder voice in corporate management in coming years.

For anyone--corporation, individual, city or state--that falls below middle grade, the outlook is bleak. In the days of the new banking, they were all staked by the banks. But the days of new banking are past, and unless monetary policy turns so aggressively easy that banks have enough to supply everyone again, the plight of those frustrated borrowers may be the most significant economic story of the next decade.


Liberal

Martin Mayer. How banks destroy the economy.

That strange and disturbing things have been happening to big banks both here and abroad will scarcely be news to anyone who has read so much as the front pages of the past year's newspapers. What is not so well known is that these shocks are merely the surface expression of an earthquake, a revolution in the technology and function of banking that has shaken up the entire mechanism of the American economy. The revolution took place in the 1960s; looking back on that decade of talky turbulence-- Richard Hofstadter called it "the age of rubbish"--it seems somehow appropriate that the one revolution that actually came off occurred without publicity in the apparently solid structure of what was considered our most thoroughly conservative institution.

Banks have been around so long that we forget they were started with a purpose in mind. That purpose was to gather up what would otherwise be idle monetary assets and use them as grease for the wheels of commerce and industry. The forgetting process itself now has a hundred-year history: Walter Bagehot noted in 1873 that "we have entirely lost the idea that any undertaking likely to pay, and seen to be likely, can perish for want of money; yet no idea was more familiar to our ancestors." The malaise that tainted most people's contemplation of the American banking system in 1974 derived less from the handful of rather dramatic bank failures than from a sense that the system had lost its raison d'âtre. Downtown in the big cities one could scarcely wash down the sidewalk without splashing the plate-glass window of a bank, yet all over the country undertakings likely to pay could see themselves perishing for want of money.

The interest rates, of course, were high enough to inspire fear--effectively, counting the cost of "compensating balances" (money businessmen had to pay for but couldn't use), more than 15 percent per annum. "The Bank of England used to say that 6 percent would draw money from the moon," muttered Ralph Leach, chairman of the executive committee of Morgan Guaranty, studying an analysis some months ago, of what his bank would have to pay for money it was committed to lend. "They seem to have smarter people on the moon these days."

Whatever the definition of money--and however elegant the theoretical formulations, there is no really good, or even acceptable, practical definition--in modern societies the stuff is generated primarily by and through banks. The money shortages of 1974 argued a malfunction of the banking system. Nothing worked right; nothing felt right. We even sensed, briefly, that our monetary troubles did not result from an act

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Is America Necessary? Conservative, Liberal, & Socialist Perspectives of United States Political Institutions
Table of contents

Table of contents

  • Title Page i
  • Preface ix
  • Contents xi
  • Introduction 1
  • Part One 15
  • 1 - Where Do I Stand? 17
  • Conservative 21
  • Conclusion 28
  • Socialist 44
  • Notes 46
  • Part Two 57
  • 2 - The Presidency 61
  • Conservative 67
  • Socialist 79
  • Notes 85
  • 3 - The Pentagon 101
  • Conservative 107
  • Socialist 117
  • 4 - The Secret Police 133
  • Conservative 139
  • Socialist 152
  • Notes 160
  • Part Three 167
  • 5 - Elite Clubs and Associations 169
  • Conservative 173
  • Notes 184
  • Notes 192
  • 6 - Multinational Corporations 209
  • Conservative 213
  • Socialist 221
  • Notes 244
  • 7 - Organized Crime 257
  • Conservative 259
  • Socialist 264
  • Part Four 283
  • 8 - Congress 285
  • Conservative 289
  • Socialist 296
  • Notes 303
  • 9 - The Courts 315
  • Conservative 319
  • Socialist 330
  • Notes 337
  • 10 - Regulatory Agencies 347
  • Conservative 349
  • Socialist 361
  • Notes 369
  • Political Parties 385
  • Conservative 387
  • Liberal 396
  • Conclusion 410
  • 12 - Academia 413
  • Conservative 416
  • References 427
  • Notes 434
  • Part Five 449
  • 13 - The Media 451
  • Conservative 453
  • Liberal 467
  • Notes 474
  • 14 - Banks 483
  • Conservative The Great Banking Retreat. 485
  • Socialist 489
  • Notes 497
  • 15 - Unions 511
  • Conservative 513
  • Notes 519
  • A Critical Issue 537
  • 16 - The Economic Crisis 539
  • Conservative 542
  • Socialist 544
  • Notes 550
  • Part Seven 557
  • 17 - Political Programs 567
  • Louis Banks. the Mission Of Our Business Society. 568
  • Ralph Nader and Donald Ross. Toward an Initiatory Democracy. 576
  • Stanley Aronowitz. On Organization: A Good Party Is Hard to Find. 581
  • Mass Parties and Reformism 587
  • Notes 596
  • Fred R. Harris. Up With Those Who'Re Down. 602
  • Part Eight 613
  • Appendix 621
  • Note 644
  • Index 649
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