Wednesday, June 29, 2016

Wilson and the Fed, XI: Wilson’s Arrogance

Unfortunately for the leader of a country that was not only confronted with a turning point in its own history, but was poised to become a major player on the world scene, Woodrow Wilson combined elitist arrogance with an essentially weak and vacillating character. He seemed to feel that he was a natural leader because of his scholarly attainments[1] and his position, regardless what he might do (or not do) with either.
Wilson at Versailles: a sheep among the wolves.
The problem was, in common with many politicians today, Wilson tried to command and order, rather than to persuade and lead, when he lacked the ability or the will to do either. This would cause Wilson to fail spectacularly at the Versailles peace talks at the end of the First World War, when more able and, yes, tougher leaders simply ignored him and his “Fourteen Points.” It also seriously hampered the reform effort that he had promised to undertake as soon as he took office.
More immediately, Wilson’s fixed belief in the superiority of the “better” sort of people, meaning the economic and academic élite whom he considered the real rulers of the country, led him to try and delay and change the reform program that had gotten him elected. Nowhere was this more evident than with his interference in and foot-dragging with respect to the reform of the financial system.
Wilson virtually personified the dangers the progressives had seen threatening the country: disappearance of opportunity, rule by an economic élite, the great mass of people left powerless at the mercy of an all-powerful State on which they depended for everything — the list is long, much too long to give here.
Scott v Sandford: a watershed in U.S. political philosophy.
Matters had been building up to this for some time, since at least before the Civil War, in fact. We saw this in the new view of sovereignty and the role of the State implicit in Scott v. Sandford in 1857. Wilson’s election, however, institutionalized social, economic, and what might be called “political” positivism in the U.S. government.
There was, however, one chance that the trend could be reversed. A reform of the financial system that broke the virtual monopoly the economic élite enjoyed over money and credit would at least keep open the door to opportunity by emancipating economic growth from the slavery of past savings — and thus dethrone the fixed belief that “the rich” are essential to a free market and democracy.
In and of itself, of course, such a reform would not restore democratic access to the means of acquiring and possessing private property in capital. It would, however, ensure that the mechanism existed, much as the landed frontier existed before the Homestead Act. A “Capital Homestead Act” duplicating the success of the land-based Homestead Act is, in fact, not possible without a reform of the financial system — and the powers-that-be exerted all their efforts to ensure that the reform either would not take place, or would take place only on their terms.

[1] Link characterized Wilson as a scholar rather than an intellectual. This suggests someone who accumulates facts without really understanding them. Ibid., 33.

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