MONEY, POWER, and MODERN ART

MONEY, POWER, and MODERN ART

PART I: Ruthless empire builders

By
Henry C K Liu

This series appeared in Asia Times Online in December 2004

A major event of high culture unfolded in a series of elegant receptions during the third week of November in New York, a city of seriously moneyed art collectors, scathing critics and a discriminating public. Three years in design and construction, the Museum of Modern Art reopened on its 75th anniversary with a new US$850 million building on the same site as the old museum in midtown Manhattan. Loved by all who have been fortunate enough to have their lives enriched by it, this cultural flower in one of the world's greatest cities, affectionately referred to as The Modern, has been cultivated in the supercharged greenhouse of modernist milieu, aiming to define fundamental issues of meaning and truth through the vehicle of esthetic preference at the forefront of modern civilization.

The Museum of Modern Art is the beloved legacy of an extraordinary woman of impeccable pedigree, Abby Aldrich Rockefeller, born in Providence, Rhode Island, on October 26, 1874, to elitist senator Nelson Wilmarth Aldrich (1841-1915), the most powerful politician in a nation rising fast as a world power at the turn of the 20th century. Miss Aldrich was educated at home by a Quaker governess whose pacifist philosophy placed value on inner spirituality, attentive listening, compassion, non-violence, equality (particularly for women), non-evangelistic worship, silent devotion, inner-directedness and respect for consensus.

Such values, central to the ideal American character, had been coming into increasing conflict with evolving socio-economic reality and a new political climate as the young girl blossomed into womanhood. At 17, as proper for young women of her privileged class, she went to Miss Abbott's School to study English, French, German, art history, the classics, gymnastics and dancing. After graduating, she traveled to Europe in 1894 to view first-hand the art she had studied at school. At age 26, she became the wife of John D Rockefeller Jr, son of the founder of Standard Oil, the nation's wealthiest man. After a courtship that lasted more than five years, the couple, who first met in 1894 when the groom-to-be was a student at Brown University, were finally married at a super-lavish wedding on Warwick Neck, Rhode Island, on October 9, 1901. The vibrant bride was given away by her powerful father, Senator Aldrich, to the reserved heir of the nation's greatest fortune. It was a union of wealth and power. But while John D Rockefeller (1839-1937) created and accumulated wealth through the brutal imposition of efficiency on a chaotic oil-refining industry, it was Nelson Aldrich who brought about the private control of currency that made such wealth accumulation structurally systemic.

Elected to the Senate as a Republican from Rhode Island in 1881, Aldrich joined and eventually chaired the Senate Finance Committee, which set tariff rates, the principal means of raising federal revenue in the era before income tax. He was a strong proponent of protective tariffs for the benefit of young industries in the northeast, and helped force the populist Silver Republicans out of the party, and was the power behind the passage of the Gold Standard Act of 1900.

In the era of state-chartered banking, banks were free-standing individual entities that practiced predatory competition on each other in an unregulated free market, with no sense of solidarity or common interest as an industry nor shared responsibility to the community at large. Faced with recurring systemic credit crunches associated with the gold standard in an expanding economy, banks routinely engaged in internecine competition to corner cash, deny new credit to financially weak customers to expose them to predatory takeover raids by preferred customers, suspend cash payments abruptly with no warning, and hoard money regularly for profit. The sound-money regime and its associated credit crunches periodically failed the expanding economy, resulting in sudden layoffs of hundreds of thousands as credit-starved firms fell into insolvency, bringing trade a standstill.

In the summer of 1907, the US economy crashed, with a large number of big businesses and major Wall Street brokerages going bankrupt. By October, the venerated Knickerbocker Trust in New York City and the blue-chip Westinghouse Electric Co had both failed, touching off what came to be known as the Banking Panic of 1907, the latest and most severe of four nationwide banking panics that had occurred in three decades. The stock market plummeted and panic-stricken depositors made massive runs on the nation's banks.

Once more J P Morgan (1837-1913) acted to restore financial order. This was not his first exercise to save finance capitalism from free market forces, each time making his control of the financial markets more complete. He summoned leading bankers and financial titans to his palatial home on 36th Street and Madison Avenue in New York, where they set up a rescue operation in his ornate library. Over the course of the next three weeks, Morgan and his team bypassed legal constraints to channel money from the stronger institutions they owned to the weaker ones they had just acquired through predatory fire sales to keep the system afloat, halting the panic with the cooperation and gratitude of the government. Morgan strong-armed banks to agree to settle accounts among themselves with clearinghouse certificates rather than cash and thus increased the money supply without involving the government, and ended up owning a much larger share of the financial sector paid for with paper. In the finger-pointing following the crisis, reformers in both political parties agreed that the US banking system was fundamentally flawed and needed structural reform.

Conservative business leaders, however, held that it was president Theodore Roosevelt's progressive agenda that had upset the natural order of an otherwise self-balancing market and that if government would only stop meddling in commerce, all would return to normal. Typical of US politics, reform in form gained acceptance only by yielding to conservatism in essence. An emerging consensus affirmed that bank reform was indeed necessary to provide badly needed currency elasticity, which had been a major issue in the panic. But reform was not directed toward providing credit constructively to where the economy needed it most, but toward achieving general soundness in the banking system at the expense of fair competition to develop the full potential of the economy. Under the leadership of Aldrich, Congress responded by passing a hastily prepared stopgap legislation, the Aldrich-Veerland Currency Act of 1908, to provide short-term aid to distressed banks to ease the ongoing credit crunch to save big business. The legislation allowed national banks to issue notes on a wider range of securities than previously, with the effect of putting more money into circulation to prevent further corporate bankruptcies.

To seek a long-range solution to the complex issue of recurring financial crises, Congress created a National Monetary Commission (1808-12) under the Aldrich-Veerland Currency Act, with Aldrich as chairman, to study the matter in depth. A report recommending the Aldrich Plan was issued by the commission four years later in 1912 and not acted upon until 1913 at the beginning of the Democratic administration of president Woodrow Wilson (1913-21). In 1913, Congress passed the landmark Owen-Glass Act, which created the Federal Reserve System to act as lender of last resort to distressed private banks. Aldrich's work on the Aldrich-Vreeland Currency Act of 1908 and his chairmanship of the National Monetary Commission paved the way for the Federal Reserve Act of 1913.

Wilson, being nearly illiterate on the technicalities of banking reform, was strongly influenced by William Jennings Bryan's populist outlook. Bryan, a chronically unsuccessful Democratic contender for presidency, became Wilson's secretary of state. Wilson said a year before he was elected, "The greatest monopoly in this country is the money supply," adding a couple of months later that he would not accept "any plan which concentrates control in the hands of the banks". Under Wilson, Representative Arsene P Pujo of Louisiana, chairman of the House Banking Committee, led the Pujo Commission in 1912 in a wide-ranging congressional hearing on the nation's financial problems. Pujo brought in J P Morgan to testify and eventually came to the conclusion that a "money trust" existed in the nation's financial sector, just as "corporate trusts" existed in oil, mining and the industrial sectors. In the view of the Pujo Commission, the central-banking solution outlined in the Aldrich Plan as recommended by the Monetary Commission did not solve the "money trust" problem.

The Fed is born

In 1913, the Democrat-controlled Congress adopted a regional, rather than fully centralized, approach to banking reform. Carter Glass of Virginia headed matters in the House and Robert L Owen of Oklahoma did so in the Senate. The final legislation created 12 Federal Reserve Banks that would act as central banks for all nationally chartered banks and other state-chartered institutions that voluntarily elected to be members. The idea of regionalism was to have a banking system responsive to the different monetary needs of various regions in the vast nation. The 12 Reserve Banks would not be federal bodies but private institutions owned by the member banks of the system. The compromise was a response to rising regional conflict rather than conflict between private or public control of the nation's money. A Federal Reserve Board was formed to oversee the system and establish policy. Members of the board would be appointed by the US president, providing a considerable measure of federal direction over the private system. Thus, like the Supreme Court, the "politically independent" Federal Reserve Board membership is politically appointed, albeit for fixed terms rather than life.

A new form of currency was created: the Federal Reserve Note, which has remained legal tender to this day, as a way to solve the problem of monetary inelasticity, to provide a national currency that would expand and contract as needed by the economy. The notes were to be backed by reserves of gold of at least 40% of the face amount of the notes issued. Government funds were to be deposited in the Reserve Banks, which ended the old sub-treasury system. The dollar did not become a fiat currency until 1971.

On December 23, 1913, Wilson laid to rest decades of monetary debate when he signed the Federal Reserve Act into law. Wilson's signature catapulted the Federal Reserve System into an monetary adventure that would evolve from a passive institution designed to prevent banking panics into what came to be known as a central bank, with an independent mandate from the body politic as an active promoter of monetary stability, a multi-faceted player and rescuer in the ever-more-reckless financial-services industry and supremely powerful financial arbitrager over the economy of the nation and the world, an institution owned not by the people and controlled not by democratically elected officials, but by political appointees acceptable to private bankers.

The National Monetary Commission had identified two related flaws in the nation's banking system: 1) Venerability to recurring bank panics and 2) An inelastic currency that was unresponsive to changes in demand in a dynamic economy. To combat these two problems, the commission made an urgent plea for timely sovereign lending to distressed banks (referred to as "rediscounting" in the Federal Reserve Act). The greatest power bestowed on the new Federal Reserve system was the setting of the discount rate - the rate of interest charged by the Reserve Banks when lending to member institutions collateralized by government securities. Raising the discount rate generally increases the cost of borrowing and slows the economy, while dropping it stimulates economic activity, since banks set their loan rates above the discount rate, and not by market forces.

Federal Funds include funds deposited by commercial banks at the Federal Reserve Banks, including funds in excess of bank reserve requirements. But Fed Funds can be created at will by the Federal Reserve now that the dollar is a fiat currency not backed by gold. Commercial banks may lend federal funds to one another on an overnight basis at the Fed Funds rate, which is the most sensitive indicator of the direction of interest rates since it is set daily by the market in response to the Fed's open-market operation: the buying or selling of government securities to meet Fed Funds rate targets. Thus the real function of sovereign debt is to provide an instrument through the buying and selling of which the Fed can inject or withdraw money from the money supply without appearing to create or destroy money while actually doing so.

The Federal Reserve Act of 1913 was an important reform measure related to the operation of the banking system, but it failed to address the "money trust" problem of private control of money, a public monetary instrument. The control of the nation's money and credit that had gradually been taken away from the people over decades since the founding of the United States became institutionalized through the creation of the Federal Reserve System and stayed firmly and legally in the hands of a small circle of supremely powerful elite, depriving the nation of the financial democracy on which political democracy ultimately depends. Democracy requires the fair sharing of political power, which cannot be accomplished without fair sharing of financial power.

During the presidency of Theodore Roosevelt (1901-09), Aldrich opposed many of Roosevelt's progressive antitrust reforms against what Roosevelt called the "malefactor of great wealth", particularly against government regulation over private railroads built with massive government subsidy. Although the Aldrich-Rockefeller union combined power and wealth, the reputations of Nelson Aldrich and John D Rockefeller Sr were less than stellar. In a series of articles for Cosmopolitan magazine in 1906, muckraking journalist David Graham Phillips portrayed Aldrich as a corrupt political boss who contributed to the "Treason of the Senate". Similarly, writer Ida Tarbell (History of the Standard Oil) exposed the senior Rockefeller as a ruthless robber baron. President Roosevelt included Rockefeller among the "malefactors of great wealth".

Remembering Rockefeller

When Ida Tarbell traveled to Cleveland to observe John D Rockefeller Sr, the man she had been writing about for two years, she chose not to confront him face to face. She studied Rockefeller's every move at a distance, gathering ammunition for a scathing character piece. For his part, Rockefeller never got back at the feisty reporter. "Let the world wag" was his favorite motto, and long silence his response to Tarbell's attacks.

Tarbell wrote that Rockefeller had the powerful imagination to see what might be done with the oil business if it could be centered in his hands, the intelligence to analyze the problem into its elements, and to find the key to control. He had the essential element to all great achievement, a steadfastness to a purpose once conceived that nothing can crush. The reporter characterized Rockefeller as "good". There was no more faithful Baptist in Cleveland than he. Every enterprise of that church he had supported liberally from his youth. He gave to its poor. He visited its sick. He wept for its suffering. Moreover, he gave unostentatiously to many outside charities he deemed worthy. He was simple and frugal in his habits. He never went to the theater, never drank wine. He was a devoted husband, and he gave much time to the training of his children, seeking to develop in them his own habits of economy and clarity. Yet he was willing to strain every nerve to obtain for himself special and unethical, if not outright illegal, privileges from the railroads that were bound to ruin every man in the oil business not sharing his vision of order. Religious emotion and sentiments of charity, propriety and self-denial seem to have taken the place in him of notions of justice and regard for the rights of others.

"It may be that Mr Rockefeller is one of those double natures that puzzle the psychologist. A man whose soul is built like a ship in air-tight compartments to use the familiar figure - one devoted to business, one to religion and charity, one to simple living and one to nobody knows what. But between these compartments there are no doors," wrote Tarbell.

Rockefeller finally responded late in life

This sweetness that she tries to bring in, referring to these good qualities, and this praise that she brings in as to ability and perseverance and whatever traits which she concedes bring success, is simply covering up her wrath and her jealousy which were all the time present, but which she did not show all the time and which she thought she could bring out all the better by weaving this in as silken thread. She makes a pretense of fairness, of the judicial attitude, and beneath that pretense she slips into her 'history' all sorts of evil and prejudicial stuff, calling it 'the record of the court', where it is only a statement by a party at interest, and she hides the other side. She is very adroit and cunning; but even she has defeated herself. She has over-reached herself, and anyone who reads her book with care can see that she is dishonest, prejudiced and untruthful. Poor woman! How she has degraded herself and failed of accomplishing her object to injure, to smirch, to overthrow the Standard Oil Company, to satisfy the petty spite against it because forsooth her father and brother could not compete in the oil business.

I do not remember just how many [refineries] there were [in Cleveland] - say 25 or 30, more or less. Some of them were very little ... More than 75, and probably more than 80% - certainly a great number - of the refiners at Cleveland were already crushed by the competition which had been steadily increasing up to this time ... They didn't collapse. They had collapsed before. That's the reason they were so glad to combine their interest if they so wished it ... [They were] mighty glad to get somebody to come and find a way out. We were taking all the risks, putting up our good money. They were putting in their old junk ... When it was found how much of stock or money would be given in exchange for their plants we found no difficulty in proceeding rapidly with the negotiations, and nearly all came in ... though it is true that a few of the refiners decided to remain out, and these were among the smallest and least able to compete with us. With these our relations continued, entirely pleasantly, until at length, one by one, of their own volition, they were pleased to embrace the opportunity to join their interests with ours, the result of which in every case was most satisfactory to them.

From Rockefeller's perspective, what he said to them was: "We here [in Cleveland] are at a disadvantage. Something should be done for our mutual protection. We think this is a good scheme. Think it over. We would be glad to consider it with you if you are so inclined." Rockefeller acknowledged no compulsion, no pressure, no "crushing". "How could our company succeed if its members had been forced to join it and were working under the dash?" he asked rhetorically.

Tarbell reported a different observation.

There were at the time some 26 refineries in [Cleveland], some of them very large plants. All of them were feeling more or less the discouraging effects of the last three or four years of railroad discriminations in favor of the Standard Oil Company. To the owners [of the 26 refineries] Mr Rockefeller went one by one, and explained the South Improvement Company. 'You see,' he told them, 'this scheme is bound to work. It means absolute control by us of the oil business. There is no chance for any one outside. But we are going to give everybody a chance to come in. You are to turn over your refinery to my appraisers, and I will give you Standard Oil Company stock or cash, as you prefer, for the value we put upon it. I advise you to take the stock. It will be for your good.' ... It was useless to resist, he told the hesitating: they would certainly be crushed if they did not accept his offer, and he pointed out in detail, and with gentleness, how beneficent the scheme really was - preventing the Creek refiners from destroying Cleveland, keeping up the price of refined oil, destroying competition, and eliminating speculation.

All over the country the refineries in the same condition as Tack's firm sold or leased. Those who felt the hard times and had any hope of weathering them resisted at first. With many of them the resistance was due simply to their love for their business and their unwillingness to share its control with outsiders. The thing which a man has begun, cared for, led to a healthy life, from which he has begun to gather fruit, which he knows he can make greater and richer, he loves as he does his life. It is one of the fruits of his life. He is jealous of it - wishes the honor of it, will not divide it with another. He can suffer heavily by his own mistakes, learn from them, correct them. He can fight opposition, bear all - so long as the work is his. There were refiners in 1875 who loved their business in this way. Why one should love an oil refinery the outsider may not see; but to the man who had begun with one still and had seen it grow by his own energy and intelligence to 10, who now sold 500 barrels a day where he once sold five, the refinery was the dearest spot on earth save his home. He walked with pride among its evil-smelling places, watched the processes with eagerness, experimented with joy and recounted triumphantly every improvement. To ask such a man to give up his refinery was to ask him to give up the thing which, after his family, meant most in life to him.

As Tarbell saw it.

All over the country the refineries [in distressed conditions] were sold or leased. Those who felt the hard times and had any hope of weathering them resisted at first. With many of them the resistance was due simply to their love for their business and their unwillingness to share its control with outsiders. The thing which a man has begun, cared for, led to a healthy life, from which he has begun to gather fruit, which he knows he can make greater and richer, he loves as he does his life. It is one of the fruits of his life. He is jealous of it - wishes the honor of it, will not divide it with another. He can suffer heavily by his own mistakes, learn from them, correct them. He can fight opposition, bear all - so long as the work is his.

That was the American spirit, what the constitution refers to a the right to the pursuit of happiness. There were refiners in 1875 who loved their business in this way. Why one should love an oil refinery the outsider may not see; but to the man who had begun with one still and had seen it grow by his own energy and intelligence to ten, who now sold 500 barrels a day where he once sold five, the refinery was the dearest spot on Earth save his home. He walked with pride among its evil-smelling places, watched the processes with eagerness, experimented with joy and recounted triumphantly every improvement. To ask such a man to give up his refinery was to ask him to give up the thing which, after his family, meant most in life to him ... this feeling was a weak sentiment. To place love of independent work above love of profits was as incomprehensible to him as a refusal to accept a rebate because it was wrong!

Rockefeller agreed.

What a Godsend it was to the many little inefficient and unsuccessful refiners of Oil Creek that a buyer was found for them when for years they had been losing money! How wrong for the "historian" to call it a crime that these men were delivered from their sinking ships. It was a great mercy and without precedent, as has been hitherto stated. Almost any other historian, it would seem, would blush today to read injustice as it is written in these very pages, where [Tarbell] is made to speak of the crime, which should have been characterized only as an unprecedented magnanimous deliverance such as had not hitherto been known in the annals of business! In all times past the weak man in the competition dropped out and was lost sight of.

These men for years were importuned to join hands with those who were stronger and ready to pull them out from their embarrassments and fit them in to be useful in the administration of the Standard Oil Company so far as they had integrity, intelligence, enterprise and industry to warrant the expectation that they could be stones in the foundation of the great structure, the likes of which the world had never seen. [As for the producers], they were like a lot of foolish children, and would not be controlled, and would not observe the law referring to supply and demand. And this was all there was in the problem. How many times we told them - over and over again! - that if they would restrict production they would be the gainers. But how impossible it was for them to grasp that fact, and how impossible it was for them to summon sufficient integrity to carry out the agreements they made, in order to keep it. They knew it, but they wanted what certain of the refiners wanted; that is, to keep their bread and butter and eat it, too. This was found impossible. These people didn't believe in themselves; they didn't believe in the Standard Oil Company, they didn't believe in anybody, away down, and there was a screw loose in a great many of them, and so the sane ones had a hard problem.

A century later, the Organization of Petroleum Exporting Countries (OPEC) adopts Rockefeller's advice and resorts to production cuts to keep oil prices up.

It is therefore truly amazing that Abby Aldrich, born to a super-powerful father and married to a super-rich husband, both of whom personified the rise of a moneyed aristocracy in the new democratic nation, brought up in a family culture that firmly believed in the right of the strong to eliminate the weak, should turn out to be the liberal, progressive woman that she was.

According to biographer Bernice Kert, Abby Aldrich Rockefeller was "a buoyant, impulsive, warm-hearted, lovable woman with [a] relaxed, worldly attitude [that] differed markedly from the rigid Baptist views of the Rockefellers". Yet she handled her in-laws with aplomb, and her reserved husband, John D Jr, adored her. It was Abby who humanized shy, religious John Jr, persuading him to renounce ruthless business in favor of benevolent philanthropy. While keeping her conservative husband happy, she pursued her own interests as a pioneering champion of modern art and folk art. With friends Lillie Bliss and Mary Sullivan, she helped found the Museum of Modern Art in 1929. She encouraged a new appreciation of American folk art through her gifts to Colonial Williamsburg, the 18th-century Virginia town restored with exacting authenticity. She also played a key role in the creation of Rockefeller Center in New York City, a superb urban design project built to create jobs during the Great Depression.

Abby Aldrich Rockefeller used her empathy, willingness to experiment, and defiant optimism to leaven her husband's conservative thinking. She expanded his vision of what the Rockefeller fortune could do, shaping the family into a progressive force in philanthropy, the arts, education, the social and physical sciences and politics. She supported such progressive social reforms as the Young Women's Christian Association (YWCA), National Women's Trade Union League, and American Birth Control League and was at the center of a remarkable network of women including the Mexican communist artist Frida Kahlo, wife of communist painter Diego Rivera and lover of Leon Trotsky; birth-control activist Margaret Sanger; and landscape architect Beatrix Farrand, niece of Edith Wharton and wife of Yale historian Max Farrand (The Fathers of the Constitution). She raised her six children - Babs, John III, Nelson, Laurence, Winthrop and David - with a commitment to social justice and public service to a variety of socially beneficial ends normally alien to super-rich heirs. She exerted strong positive influence on her five sons. A playful and attentive parent, she encouraged them to have an interest in the larger world and instilled in them her open-mindedness. "I want to make an appeal to your sense of fair play ... to begin your lives by giving the other fellow a fair chance and a square deal," she wrote in a 1923 letter to John III, Nelson and Laurence about persistent racism, an issue most white Americans chose to deny or ignore at the time. "It is to the everlasting disgrace of the United States that horrible lynchings and brutal race riots frequently occur in our midst. The social ostracism of the Jews ... causes cruel injustice ... I long to have our family stand firmly for what is best and highest in life ... If you older boys will do it the younger will follow."

A New York Times editorial published on the occasion of her death on April 5, 1948, at age 73 described her as "the spirit that held [the Rockefellers] together" but whose role in the handling of the family wealth was "a fortunate thing for society, for this country, and for the world". The influence of her liberal viewpoints on her husband and children is well documented.

Such personalities as Nelson Aldrich, John D Rockefeller and J P Morgan, all born within a span four years between 1837 and 1841, were products of a capitalistic age they helped to create. They were radicals who altered the nature of US society, overthrowing the agrarian democracy that underpinned the political mandate of the new nation founded three-quarters of a century earlier. With a view of themselves as moral, disciplined visionaries of strong Protestant ethics, they were meticulously upright in their personal affairs while engaging in wholesale duplicity in large-scale business and financial manipulation. They were ruthless empire builders in that they did not merely play the game to win, but they bent the rules of the game to ensure their less-than-fair winnings. And they were not apologetic about it.

Rockefeller wrote:

The Standard Oil Co has been one of the greatest, if not the greatest, of upbuilders we ever had in this country - or in any country. All of which has inured to the benefit of the towns and cities the country over; not only in our country but the world over. And that is a very pleasant reflection now as I look back. I knew it at the time, though I realize it more keenly now. We had vision, saw the vast possibilities of the oil industry, stood at the center of it, and brought our knowledge and imagination and business experience to bear in a dozen, 20, 30 directions. There was no branch of the business in which we did not make money ... Here was a force that reorganized business, and everything else followed it-all business, even the government itself, which legislated against it.

Tarbell rejected that view.

[John Rockefeller's] importance lies not so much in the fact that he is the richest individual in the world, with the control of the property that it entails; it lies in the fact that his wealth, and the power springing from it, appeal to the most universal and powerful passion in this country - the passion for money. John D Rockefeller, measured by our national ambition, is the most successful man in the world - the man who has got the most of what men most want ... Mr Rockefeller is a hypocrite. This man has for 40 years lent all the power of his great ability to perpetuating and elaborating a system of illegal and unjust discrimination by common carriers. He has done more than any other person to fasten on this country the most serious interference with free individual development which it suffers, an interference which, today, the whole country is struggling vainly to strike off, which it is doubtful will be cured, so deep-seated and so subtle is it, except by revolutionary methods. It does not pay. Our national life is on every side distinctly poorer, uglier, meaner, for the kind of influence he exercises.

Tarbell, missing the point that it was the system that made the man, went on to attack the wrong target: "I never had an animus against Standard Oil's size and wealth, never objected to their corporate form. I was willing that they should combine and grow as big and rich as they could, but only by legitimate means. But they had never played fair, and that ruined their greatness for me."

Tarbell was excusing the system and blamed it on the man, a common error made by American liberals. The same attitude perseveres on their reaction to the Enron, WorldCom, Citibank, AIG scandals in recent years, that it was the few apples rather than the barrel that were rotten.

Rockefeller, of course, disagreed: "It was the law of nature, the survival of the fittest, that [the small refiners] could not last against such a competitor. Undoubtedly ... some of them were very bitter. But there was no band of greedy men plundering them. An able, intelligent, far-seeing organization simply outstripped men in the casual, haphazard way of doing business. That was inevitable."

Yet the purpose of civilization is to improve on the laws of nature. The fault was in the system, not the persons who excelled in the barbaric game. These robber barons had a common vision of the need to create a centrally controlled order out of decentralized democratic chaos. Above all, they recognized clearly that in a society where wealth was denominated in money, the way to achieve great wealth was to control the nature of money. What they did was to stage what amounted to an autocratic coup d'etat on the United States' monetary regime. On this most antisocial coup d'etat Tarbell said nothing.

NEXT: A Coup d'etat on the Monetary Regime