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A Revisiting of Upton Sinclair's The Money Changers A Revisiting of Upton Sinclair's The Money Changers
by Dr. Emanuel Paparella
2013-02-23 12:12:00
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“The panic may have stopped, but the business of the country lay in ruins. For a week its financial heart had ceased to beat, and through all the arteries of commerce, and every smallest capillary, there was stagnation. Hundreds of firms had failed, and the mills and factories by the thousands were closing down. There were millions of men out of work. Throughout the summer the railroads had been congested with traffic, and now there were a quarter of a million freight cars laid by. Everywhere were poverty and suffering, it was as if a gigantic tidal wave of distress had started from the Metropolis and rolled over the continent. Even the oceans had not stopped it; it had gone on to England and Germany — it had been felt even in South America and Japan.”

                                                                                                             --Upton Sinclair

This review essay of one of Upton Sinclair’s most neglected books can be construed as a sort of follow up to my article on power and multiple modernities in the 21st century within the Ovi theme of “Who Rules?” Rather than concentrating on governments or nations or bureaucrats, this time we will focus on investors, investment bankers, the stock market and the corrupt manipulative capitalism as aptly described by Sinclair in his novel The Money Changers.

The passage above sounds eerily familiar and if one knew nothing about its author it could easily be mistaken for a recent newspaper description of the great recession which began in 2007 on the Bush administration’s watch; a recession from which the US, the EU and most of the global economy is still trying to come out from. In reality it is a passage from section 23, page 201 of Upton Sinclair’s prescient book The Money Changers, a fictionalized account of the Wall Street financial panic of 1907 published in 1908 and narrating how a small group of Wall Street powerful capitalists, investment bankers and financial players plot to outmaneuver their rivals via various financial schemes thus prompting a stock market crash, a bank run, and a dramatic rise in unemployment. This is one of the more overlooked books of Sinclair’s repertoire but it remains the most relevant to the present economic situation and  shares many similarities and parallels to the series of events that fully unfolded on Wall Street and across global financial markets exactly one hundred years later in 2008.

The story is told through the eyes of Allan Montague -- a successful lawyer living in New York. Through the course of the story he becomes introduced to several power players who have millions riding in the stock market and use fronts and fake companies whose only purpose is to sell things -- they make nothing. This gets the public and the government to invest in their companies which ultimately go bankrupt. Sinclair reveals the back room shenanigans of the stock market and the manipulations they pulled on it. In addition, he points out that the press too is being manipulated since many of the corporations own the newspapers.

Indeed, the book while based on the real events of 1907 prophesizes those of a century later in 2007. There may not be any Show more Show less Trusts presently, but very powerful concentrations of business, particularly in banking and non-financial bank entities are still around. It would be enough to search terms one finds in the novel, such as “capital adequacy” and “bank leverage,” to realize that even today financial institutions remain over-leveraged, similar to 1907. There is in the novel the description of a frantic scene similar to the worst days of the 2008 crash, when the credit marks froze abruptly, the government began to intervene more and more, and a Warren Buffett-investment type figure steps in to loan banks a then considerable sum of $25 million at 10%, the same kind of rate (via preferred stock dividends) that Mr. Buffett attained from his emergency investments in General Electric and Goldman Sachs.

There is also the uncanny description of how the banks profited off of government (and thus the people’s) money; a carbon copy of what banks have been doing the last few years, deceitfully reporting strong, and in some cases, record earnings. These smooth gentlemen got the people’s money to build their institutions. They got the Government to deposit money with them, and they paid the Government nothing, and charged the people interest for it. They had the privilege of issuing a few hundred millions of bank-notes, and they charged interest for these and paid the Government nothing. And then, to cap the climax, they used their profits to buy up the Government! They filled the Treasury Department with their people. This is still true today.

It should be kept well in mind that the reason Sinclair presents fictitiously to the American public the shenanigans and backroom manipulation of the stock market and capitalism in general was to impress upon them that if the situation actually occurred, the turmoil would be palpable, painful and real for millions of people. Such a prophecy has in fact come to pass a century later. Moreover, Marx’s insight also remains valid: those who do not know their own history are condemned to repeat it.


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Leah Sellers2013-02-26 05:36:40
Dear Brother Emanuel,
Thanks for Re-Minding me of Upton Sinclair's Works. I shall Re-fresh my Reading Lists.
His Works (and Mnay Others) will always have a Powerful Resonance throughout the Ages.
Time to Root Out some of the cyclical, reocurring Root Causes of Our National and Global Dis-eases.

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