by midtowng | 1/30/2010 11:44:00 PM
On January 29, 1911, a small band of 18 revolutionaries marched into Mexicali and seized the town, practically without firing a shot. Thus began one of the most unusual and controversial episodes in Mexican history.
These revolutionaries were not the typical warlords that Mexico was used to seeing. These revolutionaries had American volunteers, but not the sort of filibusters that Baja California was already very familiar with. In fact, this revolutionary movement had little in common with anything Mexico had experienced before or since.

Image Hosted by ImageShack.us

These revolutionaries weren't interested in just overthrowing the corrupt and repressive government, they wanted to overthrow society as well.



Image Hosted by ImageShack.us

Ricardo Flores Magón was born on Mexican Independence Day in 1874. Ricardo and his brothers, Jesús and Enrique, grew up in extreme poverty.
Early on, Flores embraced the anti-clerical, reform agenda of the liberal society. On August 7, 1900, Flores, his brothers, and Antonio Horcasitas founded the periodical Regeneración. The very next year Flores would help found the Partido Liberal Mexicano (i.e. Mexican Liberal Party). This journalistic/political alliance would become one of the origins upon which the Mexican Revolution was founded.
"The Liberal Party works for the welfare of the poor classes of the Mexican people. It does not impose a candidate (in the presidential election), because it will be up to the will of the people to settle the question. Does the people want a master? Well let them elect one. All the Liberal Party desires is to effect a change in the mind of the toiling people so that every man and woman should know that no one has the right to exploit anybody."
- Flores Magon, November 20th 1910
Ricardo Flores was an anarchist. He was influenced by the early anarchist writings of Mikhail Bakunin and Pierre-Joseph Proudhon, but his primary influence was Peter Kropotkin. It is with this philosophy that the Liberal Party would be built upon.

Image Hosted by ImageShack.us
Partido Liberal Mexicano 1910

The Magonistas were campesinos, industrial workers, miners, and a smattering of middle-class intellectuals. Their original aim was to bring down the dictatorship of Porfirio Diaz. They used strikes, propaganda, and even guerrilla tactics of sabotage to undermine the government. Before long they were wanted men. On January 4, 1904, Flores Magón, his brother Enrique, and a few supporters, fled crossed the border into Texas.
The Magonista leadership remained in exile from 1904 to 1907, where they continued to print the Regeneracion, which eventually reached a circulation of 27,000 despite the targeted readership being largely illiterate.

Image Hosted by ImageShack.us

On July 1, 1906, the Magonistas published a call for revolution. Liberal groups organized overwhelmingly by the PLM began a series of direct attacks on the state-capitalist system in Jimenez, Coahuila, Camargo, Tamaulipas, Acayucan and other cities. The attacks failed miserably due to lack of funds, weapons, and recruits.
What the Magonistas failed to anticipate was that they had other enemies besides just Diaz. The revolts caught the attention of a capitalist land-owner in Los Angeles by the name of Harrison Gray Otis, the owner of the Los Angeles Times. Together with industrialist William Greene, Otis spent thousands of dollars of his own money hiring the Furlong Detective Agency to round up Magonista leadership within America by the hundreds, starting in August 1907. They weren't charged with crimes against any living thing, but instead were tried for spreading revolutionary propaganda.

The Magonistas tried another revolt in 1908, which failed for similar reasons. By 1910 the PLM was nearly bankrupt. This caused the PLM to change its focus to primarily Baja California, and to rely on support from socialist and labor groups in America, with the Industrial Workers of the World (i.e. Wobblies) taking the lead.
It was around this time that Francisco Madero began the much more widely supported and better funded Mexican Revolution. With the Diaz government shaken from a nationwide revolution, the PLM decided to make their move in Mexicali.
"Governments have to protect the right of property above all other rights. Do not expect then, that Madero will attack the right of property in favour of the working class. Open your eyes."
- Flores Magon, November 1910
By January 1911 the PLM was successfully liberating towns and villages in six different Mexican states. In March, a peasant army led by Emilio Zapata, but influenced by Magon, rose in revolt.

Image Hosted by ImageShack.us

Within three days of the Magonistas seizing Mexicali, 120 volunteers flocked to the cause, 40 of them were anglo Wobblies from America. The Wobblies had been instrumental for months now in smuggling arms across the border, and for raising money for the cause. Wobblie members of note were Joe Hill and Frank Little.
"We socialists, anarchists, hoboes, chicken thieves, outlaws and undesirable citizens of the U.S. are with you heart and soul. You will notice that we are not respectable. Neither are you. No revolutionary can possibly be respectable in these days of the reign of property...I for one wish there were more outlaws of the sort that formed the gallant band that took Mexicali."
- Jack London, February 5, 1911
After building up their numbers and resources, the Magonistas then marched on Tecate, capturing small mining towns along the way. On March 12, Tecate fell to the rebels, but the federal soldiers were beginning to organize and offer tougher resistance. Colonel Celso Vega, governor of the region, sent a force of 100 to defeat the revolutionaries. Through a combination of desertions and poor logistics, the federal army was soundly defeated by the Magonistas. The way was now open to the Pacific.

Image Hosted by ImageShack.us
Magonistas es Mexicali 1911

Meanwhile, on February 8, a force of Magonistas seized Guadalupe, Chihuahua, capturing weapons and supplies in the process. Another force of 200 captured the towns of Sasabe, Hermisillo, Arizpe, and Bacoachi. However, this force was defeated in March and its leaders were executed.

In response to the unrest, the American government sent 20,000 troops to the border in order to cut off the source of supplies and weapons. Recruits for the rebellion were sought openly in I.W.W. halls, offering $1 a day and 160 acres of land.
"The Mexican Liberal Party is not fighting to destroy the dictator Porfirio Diaz in order to put in his place a new tyrant. The PLM is taking part in the actual insurrection with the deliberate and firm purpose of expropriating the land and the means of production and handing them over to the people, that is, each and every one of the inhabitants of Mexico without distinction of sex. This act we consider essential to open the gates for the effective emancipation of the Mexican people."
- PLM manifesto, April 1911
By this time the Magonista army in Baja numbered about 300, 100 of which were Wobblies. At dawn on May 10, the long anticipated attack on Tijuana began. By 8 a.m. it was all over. Around 20 of the Federal defenders and a dozen of the rebels had been killed. A large red flag was raised over the tiny town with the slogan "Tierra y Libertad" on it.
It was at this point, when the Magonistas seemed to have everything going for them, that it all began to fall apart.

Image Hosted by ImageShack.us
Magonistas en Tijuana

The biggest problem was that Madero and Diaz had signed a peace agreement on the condition of Diaz stepping down as dictator. With the revolution temporarily suspended, the federal forces were now free to turn on the Magonistas. An army of nearly 600 was being organized at Ensenada.
It's possible that this threat could have been dealt with except for four other crippling issues:
1) supplies were getting exhausted because of the military blockade at the border. This included everything from ammunition to food.
2) a general lack of leadership. Much of the Magonista leadership had been arrested, and those that remained were politicians, not generals. Magon himself never left California to directly participate in the revolt.
3) the revolution had been infiltrated by opportunists. A number of profiteers sold "day-passes" to San Diego tourists who freely looted Tijuana shops.
4) a general lack of support from the local population.

On June 2, 1911, Richard "Dick" Ferris held a meeting and declared himself the new president of the "Republic of Baja California." He advised the rebels to haul down the Red Flag and abandon socialism, anarchism "and every other ism you have got into." He then created his own flag.
Ferris was not a Magonista and had done none of the fighting. He was merely an opportunist, and the Wobblies were not pleased. The ruling Junta of the PLM declared him persona non grata and had his flag burned.

Image Hosted by ImageShack.us

The problem with Ferris is that he exposed to the world what was wrong with this Magonista Revolution - the lack of Mexicans participating. The army that stormed Tijuana was made up largely of anglos and blacks from America, and native indians. The political leadership was totally Mexican, but it was operating mostly out of Southern California. The military leadership and most of the troops were not Mexicans. Much of the Mexican nationals, including Jesus Flores Magón, had abandoned the Magonistas to join Madero back in March when a split developed between the Anglo forces and the Mexicans. The mixed complexion of the rebel forces, combined with weak leadership, led to racial divisions that sometime ended with duels in the middle of the street.
Thus the whole operation, at least on its surface, looked suspiciously like a filibuster. When Ferris declared the "Republic of Baja California" everyone couldn't help but recognize the fact that this had been done once before in the name of imperialism - by William Walker in 1853.
The leadership, politics, and motives of this revolution were totally different from William Walker's, but it was understandable if the local Mexicans couldn't help but be skeptical when they looked around and saw all those white faces. The Diaz government successfully exploited this fact for propaganda value.

Image Hosted by ImageShack.us
Cap Pryce

The mostly anglo forces that took Tijuana was commanded by the Welsh soldier of fortune Cap Pryce. By June the lack of supplies was becoming critical. Pryce and other senior staff slipped over the border to San Diego to see if more supplies could be procured. After a few days they were recognized and arrested while trying to flee. They were sent to Fort Rosecrans.
"They had no money and we didn't have any ammunition and it was useless to move on to Ensenada. So when I found the jig was up, I wrote back to the boys in Tijuana and advised them to disband."
- Cap Pryce
In Pryce's place, Jack Mosby, a deserter of the Marine Corps, was elected to be the new military commander.

On June 17, the "First Division" at Mexicali surrendered to federal forces. Prisoners were murdered, sometimes after being forced to dig their own graves. The Madero forces met with Magon in Los Angeles to give him one last chance to fold his forces into the national army. He refused with the reply of "...until the land was distributed to the peasants and the instruments of production were in the hands of the workers, the liberals would never lay down their arms".

Image Hosted by ImageShack.us
John Mosby

On June 22, just outside of Tijuana, Mosby with an army of 155 men met an advancing federal army of 560. After a 3-hour battle, Mosby and the remnants of his army fled for the California border. They left at least 30 dead on the field of battle.
They were met at the border by the U.S. Army, who temporarily interred them. 12 of them were identified as deserters and sent to prison. Mosby was killed en route to Leavenworth, supposedly while trying to escape custody.

Epilogue

Magon and the PLM settled down in Los Angeles, but arrests and internal conflict doomed the movement. By 1917 it was all but crushed. On March 21, 1918, Ricardo Flores Magon was arrested one last time and charged with "obstructing the war effort" under the Espionage Act. He received a 21-year sentence.
His health in Leavenworth Penitentiary deteriorated, and the prison officials are suspected of purposeful neglect of his condition. On November 21, 1922, he died in his prison cell. Today, his is remembered in Mexico as a national hero, almost as beloved as Emilio Zapata. His funeral in Mexico City was attended by 10,000.

Pryce beat his charges in court and later became a Hollywood movie star playing cowboy roles.

The Wobblies in San Diego were far from defeated. They had been organizing successful strikes and agitating in San Diego since 1910. In response the San Diego Common Council banned all public speaking in a 49-square block area on January 8, 1912. This was the trigger that began a year long Free Speech fight with the Wobblies.
Wobbblies arrived from all over the state to speak on street corners, where they were arrested. Or if there were too many protestors, then firehoses would be turned on the crowds for the crime of speaking in public.
"For a full hour hundreds packed themselves in a solid mass around Mrs. Emerson as she stood upon the speakers stand. Bending themselves to the terrific torrent that poured upon them they held their ground until swept from their feet by the irresistible flood.
An old gray haired woman was knocked down by the direct force of the stream from the hose...A mother was deluged with a babe in her arms.
An awestruck American patriot wrapped himself in the flag to test its efficacy against police outrage, but he was knocked down and jailed and fined $30.00 for insulting the national emblem."
- The Oakland World, 1912
By 1912 the Wobblies were experienced in these free speech fights. The idea was to overwhelm the local court systems so that they were unable to process anything but free speech arrests. It became a war of attrition. The Wobblies suffered the jail time and beatings, while the local government spent money and time in wasteful police enforcement. Eventually the local citizens would yell "Uncle" when they got tired of spending all their tax money on these 1st Amendment arrests. Usually the Wobblies won these fights.
When the police failed to stop the disobedience in San Diego paramilitary groups were formed. Sometimes vigilantes would be waiting for them to leave prison where they were made to run through double rows of men armed with clubs, whips and guns.
Emboldened by the support and approval of some of the leading San Diego daily newspapers and its leading commercial bodies, members of the so-called vigilance committee became so reckless in their contempt of the law and for the provisions of the Constitution that, antagonized by his bold and, to them, distasteful, utterances, A. R. Sauer, editor of the SAN DIEGO HERALD, was kidnapped by the so-called vigilantes. Sauer who was on the way home from his office in the evening, before darkness really had fallen, was accosted by a number of men, placed in an auto and hurried out of town. Arrived at the outskirts, the editor was compelled to descend, followed by his captors, who placed a rope about his neck. The other end of the rope was flung over the limb of a tree, and Sauer was hauled clear of the ground. In view of which treatment he was constrained to promise that he would leave San Diego and never return. The threat was made, according to Sauer's story, that if he divulged the names of his captors he would suffer the penalty of death.
Sauer returned to San Diego, but never revealed the names of the vigilantes.
Despite the excesses of the vigilantes, there was no outcry from the middle class of San Diego.

"in this day and land of initiative, referendum and recall there is no excuse for organized disobedience and defiance of the enforcement of law."
- Superior Judge Sloane, 1912

Eventually the vigilantes won. The Free Speech movement had been crushed and the Wobblies were driven from San Diego.

Labels: , ,

 
by midtowng | 1/17/2010 01:11:00 AM
"You saw those cars coming, and you knew who those men were. They wanted you to see them. They wanted you to be afraid of them."
- Lillie McKoy, former mayor of Maxton talking about the KKK

By the mid-1950's the Civil Rights Movement was gaining momentum and the KKK decided they had to fight back. Their campaign of terrorism swept through many of the southern states, but largely fell flat in North Carolina.
James W. "Catfish" Cole, the Grand Dragon of the Ku Klux Klan in South Carolina, decided he was going to change that. Cole was an ordained minister of the Wayside Baptist Church in Summerfield, North Carolina, who regularly preached the Word of God on the radio. His rallies often drew as many as 15,000 people. As Cole told the newspapers: "There's about 30,000 half-breeds up in Robeson County and we are going to have some cross burnings and scare them up."

Cole made a critical mistake that couldn't be avoided by a racist mind - he was completely ignorant of the people he was about to mess with.



Dr. Perry was a black doctor in Monroe, NC, and helped finance a local chapter of the NAACP. One night at an meeting the word was received that the Klan threatened to blow up Dr. Perry's house. The meeting broke up and everyone went home to get their guns.
Sipping coffee in Perry's garage with shotguns across their laps, the men agreed that defending their families was too important to do in haphazard fashion. "We started to really getting organized and setting up, digging foxholes and started getting up ammunition and training guys," Williams recalled. "In fact, we had started building our own rifle range, and we got our own M-1's and got our own Mausers and German semi-automatic rifles, and steel helmets. We had everything."
Many of these men were veterans of the WWII who didn't scare easily. Men guarded the house in rotating shifts and the women of the NAACP set up a telephone warning system.
On October 5, 1957, Catfish Cole organized a huge Klan rally near Monroe. Afterward the decision was made to move on Dr. Perry's home.
a large, heavily armed Klan motorcade roared out to Dr. Perry's place, firing their guns at the house and howling at the top of their lungs. The hooded terrorists met a hail of disciplined gunfire from Robert Williams and his men, who fired their weapons from behind sandbag fortifications and earthen entrenchments. Shooting low, they quickly turned the Klan raid into a complete rout. "[Police Chief] Mauney wouldn't stop them," B. J. Winfield said later, "and he knew they were coming, because he was in the Klan. When we started firing, they run. We run them out and they started just crying and going on."
Amazingly no one was killed, but a number of cars were disabled. The following day the Monroe city council held an emergency meeting and passed an ordinance against Klan motorcades.

This setback was a huge embarrassment to Cole and his racist movement. He needed a weaker opponent to abuse and he needed it quick. Cole's target was a small indian tribe that was marginalized even in the indian community - the Lumbee.

The Lumbee had been fighting for official recognition since shortly after the Civil War. Through recorded history they were normally classified as "mulatto" and "free persons of color". They had always considered themselves indian, but were classified and treated as descendants of blacks. Their eyes and skin were lighter than most indians.
The State of North Carolina recognized them in 1885, but the federal government refused to recognize them as a distinct indian tribe until 1956. The Lumbee Act, which recognized their existence, specifically prohibited the tribe from receiving federal services normally provided to tribes by the Bureau of Indian Affairs. The Lumbees were living alone in the margins.

On January 13, 1958, the Klan burnt a cross on the lawn of a Lumbee woman because she was living with a white man. The next day it was the lawn of a Lumbee family that had moved into a white community. As the days passed more crosses were burnt while Cole traveled around the area holding rallies and preaching against the evils of "mongrelization" and the loose morals of Lumbee women.
Pleased with the growing hatred he was feeding, he called for a massive Klan rally of 5,000 members on January 18, 1958, at Hayes Pond. The purpose was to remind indians of "their place in the racial order".
"He said that, did he?" asked Simeon Oxendine, who had flown more than thirty missions against the Germans in World War II and now headed the Lumbee chapter of the Veterans of Foreign Wars. "Well, we'll just wait and see."
"They didn't differentiate between the Indian and black population. They figured to have their usual show and go home."
- Stan Knick, director of the UNC-Pembroke Native American Resource Center

In the days leading up to the Hayes Pond rally, Cole had come through town with a loudspeaker on his flat-bed truck, preaching his vile hate for everyone to hear.
Cole wasn't actually from the county and neither were many of his followers. So it was probably a surprise to Cole when Robeson County sheriff Malcolm McLeod visited Cole in his South Carolina home and "told him that his life would be in danger if he came to Maxton and made the same speech he'd been making." Cole's reply: "It sounds like you don't know how to handle your people. We're going to come show you."

The Battle of Hayes Pond

The Fayetteville Observer had gotten word that the Lumbee were planning on attending this rally even if they weren't invited.
Reese reported that Lumbee leaders, including Neill Lowery and Sanford Locklear, had decided to run the Klan out of the county. Willie Lowery's barbershop in Pembroke become the Lumbee planning room for the upcoming battle. From there the call went out for volunteers and according to Reese, more than 1,000 Lumbees answered the call.
Another leader was Simeon Oxendine, who had been a waistgunner on a B-17 during WWII. He wasn't someone you wanted to match up against.

Cole's big rally was a flop before it even started. The local Klan members sensing the mood of the community stayed away. Instead, only 50 of his most hard-core supporters showed up to hear Cole preach against the evils of mixed marriage on the public address system he had set up on his truck. As the sun was setting they rigged up a floodlight and prepared a tall, wooden cross to burn later.
The sound of a reel-to-reel tape of "Kneel at the cross" poured into the meadow. They wore white hooded robes and carried rifles. The Lumbee, they assumed, were cowering in their homes that night.
"They were talking about blacks, using the 'n' word a lot, calling us 'half-n's'," Littleturtle said. "I think their intention was to intimidate us."
Instead of cowering, the Lumbees had assembled about a mile away. Small groups of armed Lumbee indians, about 500 in total, fanned out across the highway and began to encircle the Klansmen.
As the song finished and the rally was to begin, Sanford Locklear walked up to Cole and began arguing with him. Words became shoves and tempers rose. Neill Lowery had seen enough. He leveled his shotgun at his hip and blasted out the floodlight. The field went dark.

The Lumbees began firing into the air and yelling their warhoops as they charged the field. The nerve of the Klansmen broke and they fell into complete panic.
The Klansmen dropped their guns and scrambled for their cars. Some had brought their wives and children with them, who wailed in fear as dark-faced Lumbee milled around their cars and pointed flashlights at them.

Image Hosted by ImageShack.us

James Cole, the Grand Dragon himself, was in such a panic that he ran into a nearby swamp, abandoning his wife and "white womanhood" in the process. Cole's wife, Carolyn, also in a panic, drove her car into a ditch. After a few minutes several Lumbee helped push her car back onto the road.

"The only thing they left behind was their stuff and their families."
- Littleturtle

The state patrol, led by Sheriff McLeod, had set up camp about a mile away. McLeod intentionally waited until the shooting started because he didn't want to be accused of defending the Klan by showing up early. He organized his men to search the bushes for Klansmen who were hiding, and then escorted them out of the county.
Afterward the police tossed a couple tear-gas grenades into the field to disperse the crowd. The battle was over.

Four people suffered minor injuries from falling shotgun pellets. One Klansman was arrested for public drunkenness.
One Klansman cursed a Lumbee who was blocking the road. The Lumbee punched him through the open car window.

To the victors go the spoils

The victorious Lumbee had collected the robes and banners that the Klansmen had left behind. They then held their own "Klan parade" through the town of Maxton. Some rode in cars, other marched. The parade ended with a bonfire of Klan material in Pembroke. Catfish Cole was hung in effigy.
The large, captured Klan banner was taken back to the VFW convention in Charlotte, where Lumbee posed in front of it for pictures.

Newspapers praised the Lumbee and mocked the Klan. James Catfish Cole was prosecuted, convicted, and served a two-year sentence for inciting a riot.
The Klan ceased to exist in Robeson County until 1984.

Labels: , , , ,

 
by midtowng | 11/14/2009 04:13:00 PM
By any standard measure the suicide of Wesley Everest should be considered unusual.
Everest had only recently returned from the front lines of WWI France, so a suicide isn't all that shocking. However, the circumstances of his death on Veterans Day 1919, should have raised questions with the coroner. That is, if the coroner had bothered to examine the body before declaring it a suicide.

Everest's teeth had been knocked out with a rifle butt. He was then tossed over the side of a bridge several times until his neck was broken from the noose tied around it. Afterward his lifeless body had been shot full of bullets, which is very difficult for a dead man to inflict upon himself.

Perhaps the coroner was just stating that Everest's suicidal action happened long before his death. It happened when he decided to become a member of the Industrial Workers of the World.



Image Hosted by ImageShack.us

"Tell the boys I died for my class."
- Wesley Everest's last recorded words

After the failure of the Patterson Silk Strike of 1913, the east coast IWW mostly collapsed. Into this vacuum arose an IWW active in the coal mines, loading docks, farms, and hobo and logging camps of the western states. Nowhere were they stronger and more active than in the Pacific Northwest.
In the summer of 1916 this led to a confrontation.

The Everett Massacre

On May 1, 1916 the Everett Shingle Weavers Union went on strike. The IWW had no direct affiliation with the shingle weavers, but their philosophy was to support the working class in all its struggles.
When I.W.W. organizer and speaker James Rowan arrived in Everett on June 31, 1916, Everett became the home of the I.W.W.'s newest "Free-Speech Fight". This fight started relatively peacefully. Perhaps purposely, the I.W.W. speakers chose to speak at the corner of Hewitt and Wetmore, a corner where public speaking was illegal, although it was legal at other corners. At first, the speakers were merely arrested and released.
The Everett jail was kept full and the sheriff busy. Eventually the speakers were deported to Seattle instead of just released. The weavers strike was eventually settled at every mill but one - the Jamison Mill.
Until August 19, 1916, the strike had been peaceful. It wasn't meant to last. Strikebreakers, hired by one of the mill owners, Neil Jamison, attacked the picketers by beating them with clubs. The police, standing by, refused to intervene. When picketers retaliated on the scabs later that day the police did intervene.
The IWW then rented out a union hall in Everett. On August 22, Sheriff McRae closed their hall and ordered them to go to Seattle. The wobblies refused. So over the coming weeks several wobblies were beaten and arrested by the police.

Sheriff McRae made being a member of the IWW illegal in Everett. Wobblies that had been arrested were beaten, and any entering Everett were beaten by the police. The IWW refused to give up.
The worst of these beatings was on October 30, 1916. Forty-one I.W.W. members had come by ferry to Everett, to speak at Hewitt and Wetmore. The Sheriff and his deputies beat these men, took them to Beverly Park, and forced them to run through a gauntlet of 'law and order' officials, armed with clubs and whips.
Despite the serious injuries they sustained, many were forced to walk the 25 miles back to Seattle.
The IWW decided to come back in larger numbers on November 5, 1916.

Image Hosted by ImageShack.us

260 wobblie members booked a ticket to Everett via the steamer Verona. Forty more came on the steamer Calista. They planned on having a massive free-speech rally about the events that happened in Beverly Park.
In response, Sheriff McRae and around 200 armed deputies went to the dock to meet the ship.
The Verona arrived first, pulling in along side the dock. McRae asked "Who is your leader?" When he was told "We are all leaders!", he informed passengers they could not land. A single shot was fired, followed by minutes of chaotic shooting. Whether the first shot came from boat or dock was never determined. Passengers aboard the Verona rushed to the opposite side of the ship, nearly capsizing the vessel.
When the ship tilted a railing broke and several wobblies fell into the harbor. There were some weapons aboard the Verona, but most people were unarmed.

Image Hosted by ImageShack.us

175 bullets struck the pilot house alone. The captain, Chance Wiman, survived by hiding behind a safe. IWW member James Billings forced the ships engineer at gunpoint to back out of the dock and return to Seattle.
Five I.W.W. members (Abraham Rabinowitz, Hugo Gerlot, Gus Johnson, Felix Baran and John Looney) were killed, as were two of the deputies (C.O. Curtis and Jefferson Beard). Dozens more from each side were wounded. At least 6 additional I.W.W. members disappeared and were either drowned after falling overboard, or shot while in the water.
On the way back to Seattle the Verona passed the Calista and warned them to return to Seattle.
The local Everett wobblies started their rally anyway, and were then arrested and thrown in jail.

Upon reaching Seattle 74 wobblie members were peacefully arrested. Thomas Tracy was to be tried first for conspiracy to commit the murder of Sheriff's Deputy Jefferson Beard. Originally they were all going to be charged with the murder of Deputy C.O. Curtis, but it was discovered that Curtis had been shot in the back by other deputies.

The Tracy trial went on for months. Wobbly trial lawyer Charles Vanderveer demanded a reenactment of the events, which showed how impossible it would have been to identify from the shore who fired a shot. Tracy was acquitted of all charges, and shortly after all charges against the other 73 defendants were dropped.
No charges were ever brought against Sheriff McRae or the deputies. The national guard was moved into Everett and Seattle, and the local authorities tried to pretend it never happened.

"Timber Beasts"

Instead of taking the Everett Massacre as a reason to back down, the IWW organized a massive statewide logger's strike just 8 months later. The strike's objectives were an 8-hour day, improved sanitary conditions, and a union hall.
The strike had mixed results, but it did organize the logging industry and had some improvement in working hours and conditions. One of the workers effected by the labor struggle was a logger named Wesley Everest.

Despite successes like these, the roots of the IWW's demise were already set in stone - their opposition to wars.
The IWW believed that war was a struggle between capitalists where the rich get richer, and the poor die. Just before America's declaration of war, the IWW issued this proclamation: "Capitalists of America, we will fight against you, not for you! There is not a power in the world that can make the working class fight if they refuse."

The public, whipped into a nationalistic frenzy, strongly disagreed with the IWW's stand. IWW organizer Frank Little was strongly opposed to the war, and was lynched just four months after America's entry into the war.
The government used the war as an excuse to crack down on the radical labor union (and any open dissent) using the Espionage Act. 165 IWW leaders were arrested for opposing the draft and given long prison sentences. The union never fully recovered, and the repression didn't end even after the war did.

The Centralia Massacre

Wobblies in Centralia, Washington tried to open a union hall in 1917, but the landlord evicted them when he discovered their identity. However, the following year they succeeded in opening a hall.
During the Red Cross Parade in 1918, a group from the American Legion broke off from the parade and ransacked the union hall. The wobbly members where then removed from their hall by force, beaten and humiliated, and thrown out of town.
The IWW claims this was arranged by business owners who hired thugs. The American Legion and Elks Club said it was just locals who thought the IWW was seditious and un-American. Either way the IWW swore they would never be evicted that way again.
The IWW reopened its union hall in the old Roderick Hotel.

The Armistice Day Parade route that began at 2 p.m. on November 11, 1919, snaked through downtown Centralia and went right in front of the Roderick Hotel. The IWW members, expecting another attack, had armed themselves in advance. Rumors of a repeat of the Red Cross Parade attack were so pervasive that the owner of the Roderick Hotel had asked for assistance from the local sheriff, but was turned down.
What exactly happened when the parade reached the IWW hall is hopelessly disputed, except that it ended in the quick death of three of the Legionnaires — Warren Grimm, Arthur McElfresh and Ben Cassagranda.

Image Hosted by ImageShack.us

Warren Grimm was a leader of the local branch of the American Legion. He was also a veteran of the American Expeditionary Force Siberia where he had fought Bolsheviks firsthand. He was known to be strongly anti-IWW because of their socialist leanings. He led the Centralia American Legion and gave the order to pause in front of the IWW hall.
He was also the first one to die.

According to the Legionnaires, Grimm was shot in middle of the street by a high powered rifle of Wobbly Eugene Barnett, stationed in the Avalon Hotel across the street. Legionnaire McElfresh, standing nearby, was hit next.
In response to this apparent ambush, the Legion members charged the Roderick Hotel.

Image Hosted by ImageShack.us

According to IWW testimony, the Legionnaires charged the union hall before the first shots were fired. One of the marching veterans, Dr. Frank Bickford, backed up the IWW's claim in written testimony. Other testimony show that Legionnaires were carrying coils of rope with them.
Also, since the main aggressors against the union hall were from the back of group, many of the Legionnaires may have honestly believed they were fired on first. Grimm, standing out in front of the group, was the easiest target.

"I fought for democracy in France and I'm going to fight for it here. The first man that comes in this hall, why, he's going to get it."
- Wesley Everest

What happened next is less disputed. As the Legionnaires kicked down the front door of the hall, two Wobblies inside the hotel shot at their attackers. Legionnaires Bernard Eubanks was shot in the leg while charging the hall and Eugene Pfitzer was hit in the arm.
Wobbly Wesley Everest shot and killed legionnaire Ben Cassagranda inside the hall before he ran out the back to escape the mob. Everest made it as far as the Skookumchuck River, when legionnaire Dale Hubbard caught up with him, pointed a gun, and demanded he surrender.
Everest, standing in middle of the river, turned and shot and killed Hubbard and seriously wounded legionnaire John Watt. Unable to ford the river because it was so high, Everest returned to the river bank where the mob descended on him while he tried to reload his weapon.

Image Hosted by ImageShack.us
Centralia Victims

Several wobblies had hid in a storage locker and surrendered without a fight. The contents of the hall were taken out into the street and burned.
Everest was taken to jail. He had still not given them his name.

Image Hosted by ImageShack.us
Centralia police station; Everest's body being moved

That night someone cut the power to downtown. A mob broke into the prison, pulled Everest from his cell, and lynched him. Neither city undertaker would accept Everest's body, so it was taken back to prison where the prisoners made his coffin.
No one was ever prosecuted for the lynching.
In the growing hysteria, anyone with even vague I.W.W. connections or leanings was jailed. In the search for Wobblies, two groups of vigilantes, each unaware of the other group, converged on an empty cabin. Each group believed that the other group were Wobblies, exchanged gunfire, and John Haney was killed.
...
The US Attorney advised holding all suspected I.W.W. members throughout the nation on federal charges. Washington soon passed a law making it illegal to belong to the I.W.W. Many feared that the Centralia Massacre, as it had come to be known, was a planned piece of a larger conspiracy.
The outcome of the trial of 10 Wobbly members that followed was decided even before it started.
All motions to move the trial, to trial the defendants separately, or to discuss events leading up to the massacre were rejected. Ex-servicemen were given the right to wear their uniforms in court.

Image Hosted by ImageShack.us
Centralia Defendants

After six weeks of testimony, the jury acquitted Elmer Smith and Mike Sheehan, found Loren Roberts guilty but insane, and found the others guilty of third degree murder. The judge rejected this verdict, saying there was no such thing as third degree murder.
The jury was sent back and returned two days later with the same verdict, but convicting the remaining seven defendants of second degree murder. All 12 jurors petitioned the judge requesting leniency for the convicted men.
The judge rejected the petition and handed down sentences for the eight guilty men of 25 to 40 years in prison, far longer than the typical 10 year sentences for second degree murder. The Legionnaires thought the sentences were too weak.
All attempts at appeals were rejected. Four of the jurors later recanted their verdicts on the grounds that they feared repercussions on their family if they didn't vote for guilt.

Wobbly James McInerney died while in prison. Two defendants were paroled in 1931. Three more in 1933. By 1939 they were all out of prison.

Labels: , , , , , , ,

 
by midtowng | 10/21/2009 01:11:00 PM
John Montgomery Ward was inducted into the Major League Baseball Hall of Fame in 1964. He debuted with the Providence Grays on July 15, 1878, as a pitcher. He won 164 career games with a 2.15 ERA. He threw the second perfect game in baseball history.
When an injury ended his pitching career in 1884, he learned to throw with his other arm and became a shortstop and second baseman. He went on to collect over 2,100 hits and steal 540 bases, including 111 in just one season.
He played on two pennant winning New York Giants teams, and managed the team for two other seasons. No other player in the history of baseball has won over 100 games as a pitcher and also collected over 2,000 hits.
For all these reasons he deserves to be remembered.

However, these accomplishments were nothing in comparison to the real legacy that defined him as a person and left its mark on baseball.

Image Hosted by ImageShack.us



"No other single accident has ever been so productive of games as that invention. From the day when the Phaeacian maidens started the ball rolling down to the present time, it has been continuously in motion, and as long as children love play and adults feel the need of exercise and recreation, it will continue to roll."
- John Montgomery Ward, from "Base-ball: How to become a player", 1888

At the age of 13 Ward began attending Penn State University, where some attribute him to developing the first curve ball.
The following year his parents died and he was forced to quit school to earn his own living. After failing at being a traveling salesman, he joined a semi-pro baseball team. A few years later the team folded, which gave him an opportunity to sign a contract with the Providence Grays in the newly formed National League.
At the age of 20, Ward became a player-manager for the Grays.

In those days a pitcher almost always threw complete games. Ward consistently pitched over 600 innings a year. In fact, in 1882 he threw an 18-inning complete game. This kind of wear and tear contributed to ending his pitching career at the ripe old age of 23.
The Grays, knowing his career as a pitcher was over, sold his contract to the New York Giants, where Ward began playing shortstop.

While in New York, Ward went back to college and graduated from the Columbia Law School in 1885.
That's where his story gets interesting.

"Is the Base-ball player a Chattel?"

Image Hosted by ImageShack.us"I will confine myself to a consideration of these relations as they have been induced by the action of the reserve-rule. I will first describe briefly the origin, intent, and effect of the rule; I will then trace in detail its subsequent development; I will show that there has been a complete departure from its original intent, and in consequence a total change in its effect; that abuse after abuse has been fastened upon it, until, instead of being used to the ends for which it was formed, it has become a mere pretence for the practice of wrong."
- John Montgomery Ward, August 1887


On this day in 1885, John Montgomery Ward, together with several other players on the New York Giants, met in secret and formed The Brotherhood of Professional Base Ball Players.
It was the first labor union in professional sports history.

The Brotherhoods had a long list of grievances: an end to extra duties, such as collecting tickets and sweeping up after games; an end to player sales in which the player gets nothing; and most of all, an end to the reserve system.

This is how John Ward described the reserve system:
The first reserve agreement was entered into by the club members of the National League September 30, 1879. By that compact each club was conceded the privilege of reserving for the season of 1880 five of its players of the season of 1879, and each of the eight clubs pledged itself not to employ any player so reserved by any of the others. The five men so chosen by each club were thus forced either to sign with the club reserving them at its own terms or withdraw to some club not a member of the League; and, as there were no such clubs then in existence, the reservation was practically without alternative. The club thus appropriated to itself an absolute control over the labor of five of its men, and this number has since been enlarged to eleven, so that now the club controls practically its entire team.
While the reserve system enabled poor teams to more easily stay solvent, it came at a cost born entirely by the players themselves.
You have to remember that in these days, professional baseball was a part-time job, and a poorly paid one at that. The reserve system locked a player into a club for life. If he didn't like it he could sit out a season, but when he came back no club would talk to him expect for team with the reserve claim on him.
While the club could unilaterally release a player and end his contract, it could still retain the reserve claim.

This monopoly system led to extreme abuses. Ward gives a good example of this:
A practical illustration of the working of this construction was given in the case of Charlie Foley. During the season of 1883 he contracted a malady which incapacitated him for play. He was laid off without pay, though still held subject to the direction of his club. In the fall he was placed among the players reserved by the club, though he had not been on the club's pay-roll for months. The following spring he was still unable to play, and the Buffalo Club refused to either sign or release him. He recovered somewhat, and offered his services to the club, but it still refused to sign him. Having been put to great expense in securing treatment, his funds were exhausted, and it became absolutely necessary for him to do something. He had offers from several minor clubs, to whom he would still would have been a valuable player, but on asking for his release from Buffalo it was again refused. He was compelled to remain idle all that summer, without funds to pay for medical treatment; and then, to crown all, the Buffalo Club again reserved him in the fall of 1884.
The following year the Brotherhood, with Ward as it leader, announced itself to the world and began agitating for players rights. They had managed to sign up most of the players of the National league, and some of the American Association players. At first there was some mild success, and they won the right to negotiate with other teams after being forced to take a pay cut by their current team.
However, even that modest victory caused a backlash.

After the Giants won the National League Pennant in 1888, the team set off on a first-ever world tour. Meanwhile, the owners met and designed a "Brush Classification Plan" in which the most a player could get in salary was $2,500. The New York Giants then sold Ward to the Washington Nationals for a record price of $12,000.

Ward was furious. He left the tour and demanded a meeting with the owners, as a representative of the Brotherhood, to discuss the classification system. He also demanded a share of his own sale price from Washington.
The owners refused to discuss the classification system with him, and Washington refused to pay him for his sale, thus nullifying the deal. During this time Ward still managed to bat .299 as the Giants won another NL Pennant.
In 1889 the National League began charging players rent for use of team uniforms, and $0.50 a day for meal money.

The Brotherhood was ready to go on strike, "a strike which will be the biggest thing ever heard of in the baseball world."

A Structure to Last Forever

"We believe it is possible to conduct our national game upon lines which will not infringe upon individual and natural rights. We ask to be judged solely by our business conducted more intelligently under a plan which excludes everything arbitrary and un-American, we look forward with confidence to the support of the public and the future of the national game."
- John Ward, November 8, 1889

Ward realized that the owners didn't take The Brotherhood seriously, so he threatened to form an alternative league.
The owners scoffed at Ward. They considered it an idle threat.

The owners had underestimated Ward. They failed to recognize his connections in the business community, not to mention his influence amongst the players. In 1890 the Players' National League of Professional Base Ball Clubs was formed.

56 National League players defected to the Players' League, including 15 future Hall of Fame players. Also, most of the St. Louis Browns of the American Association became a Players' League franchise. It consisted of eight teams. Ward managed one of them - Brooklyn Ward's Wonders - which finished second behind the Boston Reds.

The new league had a profit sharing system for the players and had no reserve system or classification plan. The league was operated on a cooperative basis, with both owners and players sitting on the board of directors.
Gate receipts were split evenly amongst the clubs. The owners kept the first $10,000 per club, with the rest shared with the players. Many players bought stock in their clubs.

The Players' League wasn't just a competing baseball league. It was a radically different concept.
In brief, the sports leagues are cartels, whose members compete on the field but collude to varying degrees off the field in order to ensure a competitive balance among their teams to guarantee continued attendance. One of the key characteristics of this organizational structure is that players are contracted employees, and have no ownership interest in the corporations (clubs) for whom they work. Also, players have no voice in league operations, and are subject to have the right to their labor traded or sold to other corporations (clubs) without the player's consent.8 The Players' League was the only attempt to create a rival league organized on a different basis. It was a co-operative, where players were investors in their clubs, player trades were by consent, and the "capitalists" (not owners) were to divide the profits equally with all the players.
The National League owners called them "secessionists". They said the Player's league was "an edifice built on falsehood" and its members as "overpaid players". But they reserved their worst criticism for Ward, who they called an employer of the "terrorism peculiar to revolutionary movements". Sympathetic newspapers called him "'Judas' Montgomery Ward".

The National League lifted the salary cap when they began to see most of their star players leaving for the new league. When that didn't help, they began a bidding war to get the players back. The National League intentionally scheduled their games to conflict with with Players' League games, forcing the fans to chose.
Several NL teams went to court to try to enforce the reserve clause, but they were eventually rejected in the courts "upon the grounds that the contract is indefinite and uncertain." Ward's case was the first.

All the baseball leagues lost money in 1890, but the Player's League lost the least. The New York Giants of the National League had to be bailed out by the other owners or it would have folded. Meanwhile, the National League Cincinnati franchise was purchased in mid-season by a group of Players' League owners, including Ward.

The Player's League was well attended, and drew larger crowds than the National League in 1890. They were strongly supported by the labor unions of the time.
However, the profit sharing system cut into the PL owners' profits. The PL owners didn't realize how much money the NL owners were losing, and naively thought the NL was in a stronger position. They began meeting secretly with the National League, which offered hefty bribes to the owners.

After the season ended, the owners folded the league. When meeting with their NL counterparts, the PL owners barred the players from attending, including Ward. The Brooklyn, New York, Chicago and Pittsburgh franchises were merged into the National League.

"The idea was as old as the hills, but its application to Base Ball had not yet been made. It was, in fact, the irrepressible conflict between Labor and Capital asserting itself under a new guise.... Like every other form of business enterprise, Base Ball depends for results on two independent divisions, the one to have absolute control over the system, and the other to engage in... the actual work of production."
- Andrew Spalding
Image Hosted by ImageShack.us


When the Players' League collapsed, so did The Brotherhood.
With no other league to challenge the NL, player's salaries dropped 40% by 1893.

The only lasting monument of the Players' League was the Polo Grounds, which had been constructed for the New York Giants team of the Players' League, not the one in the National League of the same name.

"The Players' League is dead. Goodbye Players' League. Your life has been a stormy one. Because of your existence many a man has lost by thousands of dollars. And before long all that will be left of you is a memory--a sad, discouraging memory."
- The Sporting News

The reserve system would last until 1976.

Finishing a Legacy

Ward came back to the National League as a player-manager of the Brooklyn Grooms. Eventually he was traded back to the New York Giants, where he finished his professional career in 1894.
After retiring Ward became a part owner of the Boston Braves, but his primary career was a lawyer representing baseball players against the National League.

When the Federal League was created in 1914, Ward became a business manager for the Brooklyn Tip-Tops.
Eventually he found a passion for golf and became one of the best in the country at that too, winning several championships in New York.

Ward died of pneumonia in 1925 at the age of 65. His plaque at the Baseball Hall of Fame fails to mention his involvement in the Brotherhood or the Players' League.

Labels: , , ,

 
by midtowng | 9/11/2009 12:11:00 PM
With most of the media focused on Obama's speech about health care on Wednesday, this item got largely overlooked.
Sweeping regulatory reform of the financial sector-thought to be a 2009 legislative given just four months ago-may now come down to a piece-meal approach, with the White House and its allies happy to see a couple prized components signed into law this year.
"I think it's unraveling,' says former FDIC Chairman William Isaac. "It is hard for me to see how this legislation gets done this year."
One year removed from a catastrophic, global, economic meltdown, and 26 months removed from the start of the credit crisis, our political establishment is either unwilling or unable to reform the system and punish the perpetrators of this debacle. The situation is so far beyond the pale that it makes one wonder if another catastrophe is even avoidable.



"And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."
- Sen. Dick Durbin
The proposals also challenged the status quo of the financial services industry, which publicly supported the reforms in general but lobbied against many of the particulars behind closed doors.
"There's a lot of problems with this regulatory reform, so it could easily slip to next year," says one knowledgeable industry representative.
In fact the proposed changes are extremely mild in comparison to the deregulations that preceded them in the previous decades. But Wall Street simply can't wait to return to the speculative frenzy of the recent credit bubble, and now that most of the risk has been offloaded onto the American taxpayer, Good Times Are Here Again.
The all-consuming debate over health care has damped enthusiasm for tackling such complex legislation. Meanwhile, major U.S. banks have regained their footing, and some of their swagger.
Companies are selling exotic financial products similar to those that felled markets and the world economy last fall. And banks' appetite for risk has grown: The nation's top five banks collectively stood to lose more than $1 billion on an average day in the second quarter of 2009 should their trading bets go sour, a record level. Now, the federal government is locked in a kind of regulatory limbo. U.S. officials say they are committed to preventing history from repeating and have pleaded for fresh powers to do so. But today, they have few new options -- excepting another bailout -- should financial markets seize up again or a large institution totter.
"There's no fundamental change in the way the banks are run or regulated,"
said Peter J. Solomon, a former Lehman vice chairman who runs an eponymous investment bank in New York. "There's just fewer of them."
...
Perhaps the best indicator of Wall Street's revived exuberance is its continued pursuit of exotic financial engineering. The market for credit derivatives, widely blamed for helping destabilize markets, remains vast....Total return swaps -- a type of derivative that lost favor during the crisis -- are among the instruments regaining popularity, bankers and investors say....Even collateralized debt obligations, perhaps the biggest money-loser in Wall Street history, are staging a comeback of sorts.
So after trillions of bailouts and guarantees at the taxpayer expense, banks have used that taxpayer money to thwart any reform legislation, while returning to risky investment practices at an even greater level than ever. And when things blow up again, we can expect an even larger bailout than before. Or another Great Depression. Or both.
Nothing has been fixed. Nothing has been changed, because we gave money to the people that caused the problems and demanded nothing in return.

Image Hosted by ImageShack.us

"The abatement of financial tensions has led some financial institutions to imagine they can return to the same modes of action prevalent before the crisis."
- British Prime Minister Gordon Brown, French President Nicolas Sarkozy and German Chancellor Angela Merkel, September 3

So what has Wall Street done with all that TARP bailout money? Well, they bough Ginnie Mae bonds because they are backed by taxpayers.
Wall Street also used the TARP money to give themselves huge bonuses. More than anything else, Wall Street has used the bailouts to speculate on stocks and bonds.

What the Wall Street banks haven't done is lend money to businesses so that they can hire employees.
"The pace of bank credit tightening has become draconian in scope and now stands at the recessionary levels last seen in 1991 and 2002," credit analyst Christopher Garman said in a report. "This promises a rapid increase in default rates over the next few quarters."
What the Wall Street banks haven't done is lend money to consumers so they can pay their bills.
About 65 percent of domestic banks -- up notably from about 30 percent in the April survey -- indicated that they had tightened their lending standards on credit card loans over the past three months, and about the same fraction of respondents -- up from roughly 45 percent in the April survey -- reported having tightened standards on consumer loans other than credit card loans.
Only the healthiest borrowers, the ones who need it the least, have access to credit these days. We could have let the Wall Street banks fail and have gotten into that situation at a much cheaper price.

All things considered, you have to wonder if the Green Shoots and Recovery talk has any validity if the bank's lending patterns don't reflect it. On the other hand, the Green Shoots talk has been very effective in reducing the political pressure for banking reforms.

Which brings us back to the proposed banking system reforms.
The first thing that jumps out at you is all the ways that the Federal Reserve would be entrusted in regulating and reforming the financial system. The Fed would be in charge of detecting and thwarting systemic risk.

The irony could not be greater because the Federal Reserve was the leading advocate of deregulation in the financial system over the last two decades, believing that the financial markets are self-regulating.
Not only that, the Fed was caught flat-footed by the economic meltdown. They completely failed to detect the credit bubble, despite repeated warnings from outside the Federal Reserve, and then failed to understand the magnitude of the situation until the system was on the verge of collapse.
What's more, the Fed has shown no signs of a change in attitude. They continue to view their role as janitor of disasters, not a preventer of them. Their only accomplishment so far has been a massive transfer of bad debt from private hands to public hands.

Image Hosted by ImageShack.us

"We must break the Money Trust or the Money Trust will break us."
- Louis D. Brandeis, 1913

Then there are the things mostly missing from the proposed reforms. For instance, limits on executive compensation, an idea that America is fighting on a global scale.
Then there is the half-hearted attempt are regulating the rating agencies, the people who got paid to say that subprime mortgages were "safe".
Basically, even if all these proposals were implemented, which isn't going to happen, it still wouldn't be nearly enough.
"The American regulatory structure is in total disarray and what has been proposed to fix it is partial, and even then there is heavy resistance," said Hal Scott, Nomura Professor on International Financial Systems at Harvard Law School.
"I don't see us coming out with any significant change to the structure."
What I find to be most interesting from the reform proposals, and from the political debate, is the complete absence of discussion concerning the most obvious of suggestions - rolling back the deregulations.
I think the reason this isn't being discussed is because any debate about past regulations would illuminate just how pathetic the proposed reforms are.

Regulating casino capitalism

Image Hosted by ImageShack.us

“America’s economic system is where it is today because gambling became the financial sector’s principal preoccupation. The pile of chips grew so big that the Money Industry displaced real businesses that provided real goods, services and jobs.”
- Harvey Rosenfield

Did you know that Bank of America, J.P. Morgan Chase, and Wells Fargo are currently in violation of federal banking law, but the government won't enforce that law?
The law in question is the Riegle–Neal Interstate Banking and Branching Efficiency Act of 1994, passed by a Democratic Congress and signed by a Democratic President.

Prior to passage of this act, banks were restricted from operating widespread, multi-state branching networks. Plus, many states had their own restrictions on banks. These restrictions dated all the way back to the National Bank Act of 1864. The result was a nation full of relatively small banks. The idea was that competitive equality was good for the industry. Local banks invested their money locally, while large banks drained funds from rural areas and directed them to large cities.

The Riegle-Neal Act deregulated this limitation on the financial industry. Now banks could go national almost without restriction. The result has been a dramatic decrease in the number of small banks in the country.
However, there was one caveat built into the bill - no single bank could have more than 10% of all the deposits in the country.

The 10% limit remained in effect for a little over a decade. When the crisis struck in 2008, the Treasury and Fed encouraged the consolidation of the banking industry between the weak and the strong. The 10 percent cap became the victim of the crisis in the same way that laws against torture were also ignored.

"The goose that lays golden eggs has been considered a most valuable possession. But even more profitable is the privilege of taking the golden eggs laid by somebody else's goose. The investment bankers and their associates now enjoy that privilege. They control the people through the people's own money."
- Louis D. Brandeis, 1913

One of the primary means for Wall Street banks to bring in revenue these days is charging fees for pretty much everything. They will haul in 38 Billion dollars on overdraft fees this year, with a median APR of 4,547%. That's enough to make a loan shark blush. They will rake in another $48 Billion from credit card swipe fees.
The best example of predation by the banks is in the form of payday loans. The major banks have always been silent owners behind this loan shark filth that suck the life blood out of the poorest, but lately they have come out into the open.
A few of the nation's largest banks -- including Minneapolis-based U.S. Bancorp, Wells Fargo & Co. of San Francisco, and Fifth Third Bancorp of Cincinnati -- are now marketing payday loan-type products, with triple-digit interest rates, to their checking account customers.
Would it surprise you that as recently as 1979 this sort of usury was regulated and illegal? Would it also surprise you that it was a Democratic Congress and a Democratic President that revoked those laws?

Image Hosted by ImageShack.us

The law in question was the Depository Institution Deregulation and Monetary Control Act of 1980. William Greider explained in his book Secrets of the Temple, "Passage of the Monetary Control Act had very little to do with how effectively the Federal Reserve could control the supply of money. It's purpose was to protect the Federal Reserve's political base."
The law did a lot of things such as requiring banks to operate under the Federal Reserve umbrella (commercial banks were leaving the Fed at the time), gave banks more opportunities to merge and consolidate, raised deposit insurance levels, and, oh yeah, allowed S&L's to speculate in commercial real estate. But it also did one other thing that seems very relevant today.
Eliminates State mortgage usury ceilings and restrictions on discount points, finance charges and other charges...
The most important part of the Glass-Steagall regulation of the New Deal was Regulation Q. This law regulated the amount of interest and fees that banks could charge for over 47 years.
The Monetary Control Act gutted Regulation Q, and all state usury laws were unilaterally suspended. The law was a political trade-off. The Federal Reserve became stronger at the banks expense, but the banks endorsed the law because they got the most prized gift of all - a free pass to prey on the most vulnerable in American society, and they got a multi-billion dollar tax cut to boot.
It seems rather ironic that the give-aways to the wealthy that Reagan and the Republicans of the 1980's were famous for started entirely with the Democrats.

"I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010. I wasn't around during the 1930's or the debate over Glass-Steagall. But I was here in the early 1980's when it was decided to allow the expansion of savings and loans. We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness."
- - Senator Byron L. Dorgan, Democrat of North Dakota, 1999

"The concerns that we will have a meltdown like 1929 are dramatically overblown."
- Senator Bob Kerrey, Democrat of Nebraska, 1999

Much ink has been spilled over the demise of Glass-Steagall in 1999. In fact many of the ills that plague the financial world today go back further and are not being discussed today. Reviving Regulation Q would be the most moral and Christian act we could do today, but it is not being discussed. Rolling back the Riegle-Neal Act would permanently fix the problem of banks being "Too Big To Fail", and thus saving the taxpayer of ever having to do another disastrous bailout of these crooks.
In the meantime, even before any reforms are voted on, it would be nice if the government would simply enforce the laws already in place, such as the 10 percent cap rule.

Labels: , , ,

 
by midtowng | 8/21/2009 03:27:00 PM
"We must break the Money Trust or the Money Trust will break us."
- Louis D. Brandeis, 1913

When the economy appeared to be melting down last September, Wall Street bank representatives began showing up in Congress like mobsters walking into a mom-and-pop business looking for protection money.
"Nice economy ya got here.(crash!) It would be a shame if something were to happen to it."

Mobsters and Robber Barons have a lot in common.
Neither has any respect for the law or morals, only for power. Neither can ever be satisfied with any amount of wealth. They will always need to steal more and more and more until they've completely bankrupted their victims.

We are now at the mercy of modern Robber Barons, and if history is any judge, it is either them or us.



Bank Wars

"The great monopoly in this country is the money monopoly. So long as that exists, our old variety and freedom and individual energy of development are out of the question."
- Woodrow Wilson, 1911

On February 28, 1913, the House of Representatives released a report with the most banal name imaginable - Committee Appointed Pursuant to House Resolutions 429 and 504 to Investigate the Concentration of Control of Money and Credit.
In spite of the long-winded and innocuous title, the testimony in the report revealed to the world an unseemly and corrupt conspiracy of Wall Street bankers that threatened the very foundations of our democracy. Despite the dangers, many of the recommendations of the Pujo Committee were ignored until after the 1929 Crash.

Image Hosted by ImageShack.us
Arsene Pujo

As a species and a nation, we seem to be doomed to repeat our mistakes.

Dirty political battles between Washington and eastern bankers are not a new concept in America. The Bank War between President Jackson and the Second Bank of the United States is the most obvious and public of these exchanges. Nicolas Biddle, the Second Bank's President, purposely caused the 1834 Depression, by restricting the money supply, to use as leverage against President Jackson.

Image Hosted by ImageShack.us

Src: The Smoking Argus Daily, Allison Bricker
Unfortunately for Mr. Biddle, his arrogance regarding his ability to cause an economic collapse allowed his ego to get the best of him. He continued boasting, now publicly that relief would only come if Congress renewed the bank’s charter. When Pennsylvania Governor George Wolf, a previous supporter of the central bank was made aware of the bank President’s sentiments, he immediately came out against extension or renewal of the bank’s charter.
When someone mentions trusts and trust-busting, people tend to think of John. D. Rockefeller's Standard Oil, J. P. Morgan's Northern Securities railroad company, and Andrew Carnegie's U.S. Steel.
What frequently gets forgotten is the Money Trust of Wall Street. The reason that it isn't mentioned is because it was never totally broken. Instead the decision was to regulate it via the creation of the Federal Reserve. Nicolas Biddle's dream was finally realized.

Image Hosted by ImageShack.us

Src: The Smoking Argus Daily, Allison Bricker

Our Financial Oligarchy

"Far more dangerous than all that has happened to us in the past in the way of elimination of competition in industry is the control of credit through the domination of these groups over our banks and industries."
- Pujo Committee

"The dominant element in our financial oligarchy is the investment banker. Associated banks, trust companies and life insurance companies are his tools...Though properly but middlemen, these bankers bestride as masters America's business world, so that practically no large enterprise can be undertaken successfully without their participation or approval."
- Louis D. Brandeis, 1913

What frequently gets lost in economic discussions is that the current depression is different from all other post-WWII recessions. All previous recessions were caused intentionally by the Federal Reserve.
The Fed would raise interest rates in order to choke off inflation. Once the inflation was contained they would lower interest rate. Consumer demand, which was artificially suppressed by the Fed's high interest rates, would then be released and the economy would boom.

That didn't happen this time.

The Fed didn't raise interest rates to choke off inflation. There was no consumer demand that was artificially suppressed, thus there was no pent-up demand that was waiting to be released when the Fed cut rates.
What little "less bad" news that we've heard with home and auto sales has been almost exclusively to do with the tax rebates for first-time home buyers and the cash-for-clunkers program. Both of these programs are limited in time and scope, and both bring future demand to the present, which will leave an even bigger gap in demand once they are finished.

What happened this time was an economic collapse that emanated directly from Wall Street. It's source was bad loans that the bankers and rating agencies pushed onto the financial markets of the world, knowing full well that it was only a matter of time before they blew up and took down the world economy.
The economy didn't collapse because of government regulations. It didn't collapse because the government taxed too much or spent too little.
It wasn't because the American consumer stopped spending.

It was because the financial system knowingly overpriced a major financial asset class, and then leveraged itself against that asset class in the vain hope that the Day of Reckoning never came.

The whole financial crisis only came to light because of what amounts to a falling out amongst thieves.

War Between the Ruling Kleptocracy

"Gentlemen: You have undertaken to cheat me. I won't sue you, for the law is too slow. I'll ruin you.
Yours truly, Cornelius Vanderbilt."

- 1853

It is sometimes forgotten that the 19th Century Robber Barons spent much of their time wasting resources trying to crush each other.
For example, the Erie War crippled what should have been the most profitable railroad in the nation, not to mention the cost from the corruption of the entire New York Assembly. An even more colorful battle involved the Albany and Susquehanna Railroad that resulted in hundreds of paid goons crashing trains into each other and engaging in shooting wars.

History has proven that the unrestrained greed of an unregulated economy is neither fair, nor efficient. It also often leads to economic crisis.

Wall Street knows that you can make enormous amounts of money during an economic crisis, and no crisis is more fortunate than the failure of a leading competitor. The perfect example of that is the Panic of 1907.
John Pierpont Morgan again used rumor and innuendo to create a panic that would change the course of history. The panic of 1907 was triggered by rumors that two major banks were about to become insolvent. Later evidence pointed to the House of Morgan as the source of the rumors.
Image Hosted by ImageShack.us
J. P. Morgan

J. P. Morgan's false rumors created a real panic and it threatened to bring down the entire financial center. Morgan then nobly contacted his European sources and managed to borrow $100 million worth gold bullion in order to stem the panic. History remembers Morgan as saving the day, and also helping to convince the public that we needed a central bank in this country.
Morgan didn't save the system from a crisis of his own creation out of the goodness of his heart.
Of course Morgan did not go unrewarded. Recall from our story of two weeks ago that Teddy Roosevelt, despite his antitrust proclivities, allowed Morgan to purchase the Tennessee Coal and Iron Company for about $45 million when the true value was closer to $700 million, thus expanding Morgan's steel empire.
If this sounds somewhat familiar, it should. Recall the failure of Bear Stearns.

Bear Stearns had been unpopular with the rest of the Wall Street oligarchy since it refused to participate in the bailout of Long-Term Capital Management in 1998, despite helping to create the problem.
The most suspicious fact of the Bear Stearns failure was the massive increase in short positions on March 10 and 11, with only five days left before expiration. Some insiders knew something they shouldn't have. John Olagues makes a strong case that it was insiders at JP Morgan Chase that were shorting Bear Stearns and helping to create a "run" on their stock, knowing full well that they would be taking over the bank with the Fed's help.

How would people at JP Morgan Chase know that ahead of time? They were in position to make the deal.
The Fed and U.S. Treasury brokered a deal for J.P. Morgan in haste without question. Usually, such huge deals or mergers would go through committees or FTC oversight, but none of that here –a quick weekend jaunt in the park. It was not surprising that no red flags were raised about J.P. Morgan’s chairman, James Dimon holding a board seat at the Federal Reserve Bank of New York when the deal was made.
Bear Stearns was bought by JP Morgan Chase at a price of $2 a share. A week later it was raised to $10 a share. Was it shame or a guilty conscience to caused JP Morgan Chase to give back a small amount of their quick profits?
JP Morgan Chase was in a position to profit from Bear Stearns demise, and another profit from its taxpayer-funded acquisition, just like in 1907.

Later on that year, JP Morgan Chase managed to purchase Washington Mutual, a bank with $307 Billion in assets, for the price of $1.888 Billion after the FDIC seized the bank.
Back in April JP Morgan Chase offered to purchase WaMu at a far, higher price, but WaMu refused.

"You should have sold to JPMorgan Chase in the spring, and you should do so now. Things could get a lot more difficult for you."
- Treasury Secretary Paulson to WaMu CEO Kerry Killinger, August 2008

A Naked Coup

"We're moving to an oligopolistic situation."
- Kenneth Guenther, Independent Community Bankers of America, 1999

"The goose that lays golden eggs has been considered a most valuable possession. But even more profitable is the privilege of taking the golden eggs laid by somebody else's goose. The investment bankers and their associates now enjoy that privilege. They control the people through the people's own money."
- Louis D. Brandeis, 1913

It's too big of a coincidence that the biggest winners on Wall Street are also the most politically connected, and no one is more connected than Goldman Sachs.
Bush’s Treasury secretary, Hank Paulson, is a former Goldman C.E.O., and his replacement at Treasury, Tim Geithner, was mentored by Goldman alumni. Mario Draghi, who is leading the crisis response for the E.U., is a former Goldman vice chairman.

Merrill Lynch C.E.O. John Thain was once Goldman’s co-president, and Wachovia chief Robert Steel was a vice chairman. Ed Liddy, the new C.E.O. of A.I.G., was Goldman’s vice chairman. World Bank president Robert Zoellick was a managing director. Even Neel Kashkari, the 35-year-old tapped to oversee the $700 billion Troubled Assets Relief Program, served at Goldman as a vice president.
And the list goes on. Robert Rubin, President Clinton's former Treasury Secretary, was once the co-chairman of Goldman Sachs. Jon Corzine, now the governor of New Jersey, is a former Goldman Sachs CEO. A top aide of Tim Geithner is former Goldman lobbyist Mark Patterson.
It's so obvious, so in-your-face, that one must assume that Goldman Sachs feels itself invulnerable.

By now everyone should be aware that Goldman Sachs was the biggest beneficiary of the AIG bailout, to the tune of $12.6 Billion, and will be the winners again if AIG finally goes under.
With Paulson in charge of the Treasury at the time, it appeared that Goldman Sachs was bailing out Goldman Sachs. Rich bankers were bailing out rich bankers, and working-class taxpayers were footing the bill.

America has been purchased in a leveraged buyout. For about $5.2 Billion Wall Street has purchased the complete deregulation of the the financial sector, and unprecedented political influence that even now allows them to defeat any new regulations they choose. It's actually a very good return on investment.

“America’s economic system is where it is today because gambling became the financial sector’s principal preoccupation. The pile of chips grew so big that the Money Industry displaced real businesses that provided real goods, services and jobs.”
- Harvey Rosenfield

This corrupt collusion between financiers and government officials was spelled out in no uncertain terms in Simon Johnson's article, The Quiet Coup. Simply put, America is following the path of petty Banana Republics.
elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.
Johnson goes on to say that chaos and confusion are very much in the interests of the ruling oligarchy, as it lets them take things, both legally and illegally, with impunity.
This message is echoed by Matt Taibbi in his article The Big Takeover.
The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.
It seems hard for you and I to believe that anyone, any group, would purposely engineer an economic crisis for personal benefit. That's because you and I aren't consumed with ego, greed, and lust for power like the bankers on Wall Street are today. History has shown, time and time again, that this is exactly what these people do. Why should now be any different?
Goldman Sachs and JP Morgan Chase have already benefited from the crisis.

The spirits of Nicolas Biddle and John Pierpont Morgan are alive and well today in the plush offices of Wall Street.

Labels: , ,

 
by midtowng | 8/12/2009 12:25:00 AM
In 1997 the Tennessee branch of the AFL-CIO made an agreement with the Corrections Corporation of America (CCA) to support the privatization of Tennessee's state prison system. This opened the door for Tennessee's prison labor being used to compete with private industry.
Currently the highest-paying prisoner in Tennessee earns 50 cents an hour to produce jeans for Kmart and JC Penney, among other things.

Of all the states, Tennessee unions should have been the last ones to support prison labor. The reason lies more than a century in the past, in the days following the end of slavery.



Worse than Slavery

With the end of the Civil War, employers all over the south were confronted by the reality of the end of free labor. They appealed to their state representatives for help and their representatives responded by finding a pool of free labor previously untapped - prisoners.
It was called Convict Leasing. The prisoners would work for companies during the day outside of prison, and then return to their cells at night. Neglect, brutality, and abuse of the prisoners were rampant, as was official corruption. The conditions were so harsh that prisoners rarely survived longer than 10 years, but everyone was making money from it (except for the prisoners, of course) so the system remained.

In fact the system was so successful that there was a need for more labor. In many states simple assault carried sentences of seven and eight years of hard labor. Larceny could get you twenty years in prison. Stealing five dollars worth of goods could net you twelve months. Even the theft of a rail fence could put you in prison stripes.

Of course, this reality wasn't true for everyone (read: white people). If it was then there would be a political backlash. Instead these inhumane laws fell disproportionately on the recently freed black community.
At Tennessee's main prison in Nashville, African-Americans represented 33 percent of the prisoners in October of 1865. In 1866 Tennessee passed it's convict leasing law. By 1869, 64% of the prison was African-American, and it kept climbing in the following years.

The benefits of this new slavery fell on a select few - the rich.
Poor whites workers found themselves at a disadvantage in this system when their interests conflicted with the upper-class.
In January 1871, free white miners in Tracy City struck for higher wages against the Tennessee Coal and Iron Company (TCI). TCI brought in convict labor as strikebreakers. The strike ultimately failed and was broken.



By 1889, TCI was contracting, or sub-contracting out 60 percent of all of Tennessee's prison population for over $100,000 a year.

Strikebreaking of this sort would pop up several more times in the following twenty years. Whenever the miners tried to organize for better wages and working conditions, the companies would use the threat of convict labor. In the words of TCI company vice-president A. S. Colyar, "an effective club to hold over the heads of free laborers."
This stalemate ended in 1891.

The New South Rebellion

"Kill a man, get another; kill a mule, buy another."
- a familiar phrase in the mines the convicts worked

In 1866, right around the end of the War between the States, coal began to be mined in an area of Anderson County known as Coal Creek. By 1870 this sparsely populated area contained 10 businesses, three of them saloons.


Governor John Buchanan

In 1890 John P. Buchanan become governor of Tennessee with the Farmers' Alliance and Laborers' Union party. This labor-friendly political environment emboldened the miners of Coal Creek Valley to make two demands.
One demand was the end of company script. The miners wanted to be paid in cash rather than being forced to pay for overpriced goods at the company store.
The other demand was to be able to elect their own checkweighmen - the specialist who weighed the coal the miner produced, and thus determined the miner's wages - rather than the checkweighmen the company hires.

Since state law already barred scrip payment and company-hired checkweighmen, most of the coal companies agreed to these demands. However, the Tennessee Coal Mining Company (TCMC) rejected these demands, and on April 1, 1891, they shut down their mine near Briceville. Two months later they demanded the miners agree to a yellow-dog contract before working in the mine. The miners refused.



On July 5, TCMC reopened the mine with convict labor. The company had torn down several houses in order to build the stockade for the prisoners.
On Bastille Day, 300 armed miners surrounded the Briceville stockade. After the guard surrendered without a fight, the 40 convicts and the guards were marched to Coal Creek where they were loaded onto a train and sent to Knoxville.

The miners then sent a telegram to Governor Buchanan, stating their actions were taken to defend their property and wages, and asked for his intervention. The Governor responded by accompanying three state militia companies, and the prisoners, back to Briceville.
At Thistle Switch several hundred angry miners confronted the governor. He assured them he was a champion of labor, but as governor he was obligated to enforce state contracts. He didn't mention the state laws concerning cash wages and checkweighmen. The governor left 107 militiamen to guard the stockade and fled the area.

On the morning of July 20, 2,000 armed miners again surrounded the Briceville stockade. Their numbers had been bolstered by union miners from surrounding regions, including Kentucky, which had removed their own convicts from mines several years earlier.
The militia, seeing the futility of resistance, surrendered. Once again the convicts and guards were marched to Coal Creek and put on a train back to Knoxville. The miners then marched to the nearby Knoxville Iron Company mine, which also used convict labor. Just like at Briceville, the guards surrendered and they were all put on a train to Knoxville.

The following day the governor met with a committee of local leaders friendly to the miners, especially United Mine Workers organizer William Webb. He convinced them to agree to a 60-day truce while he called for a special session of the legislature where he recommended the convict leasing law be repealed. The miners agreed.

Much to the chagrin of the miners, the only action the legislature took was to make it a felony to interfere with the leasing system. A court challenge of the system was also defeated in October.
On October 28, 1891, the committee representing the miners resigned and denounced the legislature. The path to violence was now open.

The Coal Creek War



On October 31, a large group of armed miners surrounded, and then burned down the convict stockade at Briceville. The prisoners were supplied with food and civilian clothing and then turned loose into the surrounding woods after being urged not to commit any more crimes.
The Knoxville Iron Company stockade was also seized that day, and several company buildings were destroyed in the process. All told 300 prisoners were released by the miners.
On November 2, another prison stockade at the Cumberland mine in Oliver Springs was burned and another 153 prisoners were released.

Another truce was negotiated which allowed the return of the convicts to Coal Creek and Oliver Springs, but not to Briceville (TCMC president B.A. Jenkins had grown disenchanted with convict labor).
The state dispatched an 84 man militia detatchment under the command of J. Keller Anderson. Anderson constructed Fort Anderson, equip with a gatling gun, atop "Militia Hill" to guard the stockade at Coal Creek. The convicts returned on January 31, 1892.


Looking up at Militia Hill

In the following months miners and soldiers at Coal Creek shot at each other indiscriminately. Both sides blamed the other.

The Revolt Spreads

The use of convict labor, and the violence associated with it, had given the practice a bad name. Most coal companies were moving away from convict labor, with one major exception - TCI.
When Cumberland Coal decided against using convict labor at the Oliver Springs mine, TCI purchased the mine lease. TCI then began minimizing the use of free labor.

On August 13, 1892, free miners tore down the stockade at Tracy City and freed hundreds of convicts. On August 15, convicts from the TCI stockade at Innman were also freed.
On August 17, a group of miners attacked the TCI stockade at Oliver Springs, but were beaten back by the guards. However, the miners regouped and enlarged their numbers. The guards then surrendered. The stockade was burnt down and the convicts and guards were put on a train to Nashville.

The following day in Coal Creek, militia commander Anderson was captured by the striking miners. The miners then sent a demand to Fort Anderson's second-in-command, Lieutenant Perry Fyffe, to surrender.
When Fyffe refused the miners charged the fort and a fierce firefight ensued. The miners failed to capture the fort, but two militia were killed by snipers.

Governor Buchanan declared martial law in the Coal Creek region. He dispatched 583 militiamen under the command of General Samuel T. Carnes. He also ordered sheriffs in effected counties to organize posses.
Most of the sheriffs ignored the command, however volunteers in Knoxville organized themselves and marched on Coal Creek to relieve Fort Anderson. As the volunteers descended Walden Ridge they were ambushed by a group of miners and two of the volunteers were killed. The rest fled back to where they came.

Carnes arrived on August 19 and quickly restored order. He negotiated the release of Anderson, and then conducted a sweep of the entire Coal Creek region.
Carnes arrested hundreds of miners, which in effect ended the Coal Creek War.

Aftermath

Some 300 miners were put on trial, but the jurors only convicted two - D.B. Monroe and S.A. Moore, for conspiracy. Neither of which served more than a year in prison.

Most of the violence associated with convict labor was spent, although there was a failed attack on a stockade in Tracy City in 1893.

Buchanan was attacked by both miners and mine owners for indecisiveness. He failed to win his party's nomination for governor in 1892.

The legislature proved more willing to address the subject of convict leasing in their 1893 session. They agreed to construct a new state penitentiary and abolish convict leasing at the expiration of the lease contract in 1896.

Labels: , , , , , , ,