Financial Reform of 2010 and Glass-Steagall Act of 1933

The article writes about the 2010 financial reform conducted by president Obama and democratic congress by passing the Dodd-Frank act. The reform was a response to the largest economic recession since the Great Depression, which was sparked by troubles in the financial industry. The article summarizes the important provisions of the bill, and starts, not randomly, with the expansion of the focus of federal financial oversight from banks and public markets to a wider range of financial companies and “black markets”. It also created new council of federal regulators to coordinate the detection of risks to the financial system, provided ability for government to dismantle troubled companies, created a financial products consumers protection agency, imposed restrictions on trading derivatives, to make the process more transparent, also restricted the ability of “FDIC insured” banks to trade for their own benefits (Volcker rule).

The regulation is very similar to the Glass-Steagall act of 1933, in that it was enacted in very similar circumstances and had very similar purpose and targets: to limit the risks associated with financial industry. It was also passed during an unprecedented economic recession, to which the financial collapse of 1929 contributed a great deal. While the Glass-Steagall is more radical then the Dodd-Frank, its basic provision to separate commercial banking from Wall Street investing is very similar to the Volcker rule.


The rise of the students in politics

During the 1950 college students and young people were largely not involved in politics, they were called a “silent generation”. Colleges and universities had been very conservative institutions with wealthy people attending them. That changed in 1960. By 1968 students became one huge sector of the population, due to the generation of the baby-boomers, with over 7 million attending colleges. These people, even though raised in affluence, were discontent with existing social mainstream, created by their parents, as it did not provide for authenticity, which they viewed as a crucial element of personal freedom. Thus the children of middle class became part of what came to be called the New Left. They called for democracy and equality for everyone, using rhetoric based on discontent with the “establishment” which generates things like loneliness, isolation, alienation, powerlessness, unification. Their main inspiration was the black freedom movement which intensified in 50s.
The above processes that came about within the growing population of students led to the emergence of organisations like SDS, the phenomena of the counter-culture of the sixties and laid the foundation of the left political ideas for decades to come.

SDSers gather outside the Smithsonian in Washington (Photo: Thomas Good)


the 1960 U-2 incident

The story in the video covers the details and immediate aftermath of the incident quite comprehensively.
This incident have produced a lot of tensions between the US and the SU, at the time when the relationships between the two superpowers had just started to warm up for the 1st time since 1945. The two countries were in the midst of nuclear arm race. Between 1953 and 1958 US UK and SU held 231 atmospheric nuclear tests, some of which were massive. In 1958 an agreement had been reached to temporarily ban testing of nuclear weapons. Negotiations about further restrictions were going along, but very slowly and carefully, as it had potentially very far-reaching strategic consequences for both sides. In 1959 Khrushev came with an unprecedented friendly visit to the USA. But when the U2 incident occurred the trust between the two poles plunged, and the relationships sharply entered another phase of crisis. All negotiations on nuclear test bans were halted, shortly after the moratorium was broken and the biggest explosion ever to ever go off on our planet had been carried out by Soviets.


the “Long telegram” by George Kennan – a single document, that made US policy for decades

Telegram, George Kennan to James Byrnes, February 22, 1946. Harry S. Truman Administration File, Elsey Papers.

This is a front page of one of the most influential pieces of history, the “Long telegram”.

The Telegram was sent In February 1946 in response to a request made by US Department of Treasury to US Embassy in Moscow as to why USSR did not support newly created World Bank and IMF. It was composed by then minister-counselor in the embassy George Kennan, an expert on Soviet Union. In the telegram he gave his conspicuous account on the state of things in SU, including its philosophy behind the foreign policy and, more importantly, its weaknesses. “According to Kennan, the Soviet Union did not see the possibility for long-term peaceful coexistence with the capitalist world. It was its ever-present aim to advance the socialist cause…” (from http://en.wikipedia.org/wiki/Long_Telegram#The_Long_Telegram). Among the reasons, he pointed out, was that Stalin needed the people of SU to view the outside World as hostile to justify his autocratic policies. In Section five Kennan pointed to the weaknesses of the Soviet system, which he suggested to exploit in the U.S. foreign policies. He argued that the Soviet regime was inherently unstable, that Soviet’s aggressive foreign policies were not aligned with their economic situation, and, therefore, the US should not directly confront, but leave the SU alone, until it falls apart on its own. So, instead of confronting it, Kennan suggested to prevent SU’s further expansion of its power around the World, by containing it, and, in the long run, waiting till SU rots from inside.
This telegram had far-reaching consequences for the US foreign policy for decades to come. It defined the policy of Containment, and reoriented the US to try to affect internal processes and people of SU to escalate the collapse of the system. Some people consider this telegram as a mark for the beginning of the Cold War. If it did not happen, the US foreign policy towards SU would have been different, and today’s World might have been very different. At the very worse, we might have fought a WWIII or have been extinct. On the other hand, the SU could have evolved into something else.


Deficit to debt

This political cartoon is the work of Herbert Johnson of the Saturday Evening Post, from the 1930s Continue reading on Examiner.com: Political Cartoon Controversy in New York Post - National progressive politics | Examiner.com http://www.examiner.com/progressive-politics-in-national/political-cartoon-controversy-new-york-post#ixzz1GkWD5F10

This cartoon is a reaction to the controversies around budget deficit, which FDR’s presidency is known for.
FDR during his 1st election campaign while talking about broadening government’s responsibilities advocated balanced federal budget and criticized President Hoover for excessive spending. In 1933 the passing of The Economy Act reduced salaries of government employees and cut pensions to veterans by 15%. This allowed to save 500 millions a year (source: http://en.wikipedia.org/wiki/New_Deal). However during his presidency federal budget deficit had been adding up at an unprecedented pace of $24,746,949,443 on average a year according to http://home.adelphi.edu/sbloch/deficits.html. Hover’s budget was only increased by $6,852,813,799 a year on average. Such a deficit came as a result of all the government programs that FDR created. He argued that there were two parts of federal budget – a “regular” part, which he balanced by cutting salaries etc, and the “emergency” part. The latter he justified by unique crisis the country was going through, Great Depression. The emergency budget did not have to be balanced temporarily to help the country climb out of the crisis.


Christmass in NY during Great Depression

Photographer: Russell Lee. Unemployed workers in front of a shack with Christmas tree, East 12th Street, New York City. December 1937.

Alternative take of Migrant Mother by D. Lange taken in March 1936, Nipomo, California

The pictures were taken in very different parts of the US, one in New York City, another in California, the two business centers of the two coasts. Both photos from the both coasts convey the same great deal of hopelessness and insecurity. The scenery is similar: temporary shelters made of various scrap materials in the middle of a field with debris and garbage spread around, and in the middle people, all look haggard, exhausted and depressed. The Christmas Three by the shelter looks very dramatic, as the picture was taken in December. The similarities in the two photos show that Great Depression did not spare either part of the US, including large cities like NYC.


Charlie Chaplin, Silent revolution and mass production in 1920s

Charlie Chaplin, a silent movies actor, had become an icon in 20s with the emergence of movie theaters as a form of mass entertainment. In 1929 weekly attendance of movie theaters had reached 80 million people according to E. Foner, which was double the amount in 1922. Popularity of movies along with proliferation of radio stations throughout the country fueled by the additional leisure time and income, people gained as a result of industrial progress, had brought about the celebrity culture in the form known to us today. Not accidentally, it was the 1927th when the tradition to install stars with “limbprints” of actors into the sidewalks by theaters in Hollywood took place. Among the very first ten stars were the star of Charlie Chaplin (source: http://www.filmsite.org/20sintro.html). The flourishing movie industry in 20s was a part of a larger trend of quickly developing mass production and mass consumption during the booming economic growth of the decade, a trend so large that it had completely changed the culture of the society.

Video tribute to Charlie Chaplin with lots of scenes from his movies and some techno)


War Industries Board and the intervention of government

The picture of Bernard Baruch, who was assigned to oversee the War Industries Board. From worldlyphilosophers.com

On July 28 1918 the War Industry Board was established by federal government to coordinate production war-related in the country. Very well known in our college Bernard Baruch, a successful financier at the time was set to oversee the Board. This was unprecedented intervention of government into economy dictated by U.S. involvement into WWI.

In Foner the War Industry Board is presented in the context of progressive movement, which aspired to use the momentum produced by the war to reform “the American society along scientific lines”. The 1917 Selective Service Act is mentioned just before the the War Industries Board as another example of war created “national state” with unseen before presence in Americans’ everyday lives. So it seems that the Board was touched upon in the text as an example to expanding government and progressive achievement. However the social premises of the Board were very well elaborated, the economic prerequisites were left untouched completely. From my quick research there were plenty of them, such as instant surge of demand on steel up to and beyond the edge of what economy could produce and many more. The description of the board’s functionality and structure was very brief. There was no coverage of the aftermath of War Industry Board’s activity, or any assessment of the role it had played for the US economy or strategy during the war. And as a Baruch college student I am grateful Foner had Bernard Baruch specifically mentioned in the text, however I’d love to see more information about his personal contributions into the Board’s operations.


Jacob Riis

Jacob Riis was a muckraking journalist. A Danish American immigrant, he went through poverty himself, and as a photo journalist he was primarily interested in bringing up the issues of poverty in his pictures. The main subject of his pictures were the awful conditions in which poor people had to live, he photographed slums, tenement houses, lodging houses in the city. His first major work published in 1889 called “How the other half lives” generated a lot of public attention. It was an illustrated account about life in the city. After the book came out NYC Police Commissioner had to close down the lodging houses that were featured in the book.


1910 Labor agency and American Express

Image Title: Living rooms of a tenement family near Hull House, Chicago, 1910 Creator: Hine, Lewis Wickes, 1874-1940 -- Photographer

1900. Made by Byron Company

The first image shows a scene in front of a labor agency. We can not see any women in the crowd, but there are children. This is representative of the current demographic structure on the labor market overall. In 1900, a census year, only 19% of working age women participated in the workforce, while in the same 1900 1.75 million children of age 10-15 y.o. were “gainful workers”. It was comparable with the amount of “non-white” workers, which totaled to 3.8 mln people (source: http://www.bls.gov/opub/cwc/cm20030124ar02p1.htm). To put the dollar sums visible on the ad board into the context, the average price of bread in 1912 was 5.6 cents/pound (http://www2.census.gov/prod2/statcomp/documents/CT1970p1-06.pdf).
The second photo is showing women on Mulberry str., area heavily populated by Italian immigrants. The picture is very different from the first one, so I will not go into differences of the two photos. What I found interesting, however, was the sign in the background saying “American Express Company”. Turns out currency exchange was a big business because of the constant flow of new coming immigrants. Particularly there were a number of private exchangers on the Ellis Island, who were not always honest with their clients. In an attempt to control the flagrant practices US immigration department in 1905 made AmEx the first company officially authorized to handle currencies exchange for the immigrants on Ellis Island. Apparently they had branches in other areas of the city, as we see on the photo.


Huge Black Friday Sale … of gold on Friday, September 24, 1869

This was the first time the term “Black Friday” was used. It was coined by New York Times in response to the financial panic, caused by manipulation of the price of gold. The scheme was carried out by J Fisk and J Gould. They managed to recruit Abel Corbin, president Grant’s brother-in-law, to persuade president to start selling gold, and to gain access to inside information about when are the sellouts going to be. As a result of their activity on September 24th, 1869 the price of gold fell dramatically within minutes when government started selling. People lost fortunes. It had far reaching disrupting consequences for the economy, as gold was the cornerstone of monetary policy in the US at the time. Foreign trade was halted, export of agricultural products fell by over 50%.
The picture below is the photograph of the transaction board in the New York Gold Room on that day. It shows the prices at which the deals were made. The photograph was used in the subsequent congressional investigation, which was substantially limited because the members of the presidential family were not allowed to testify. Needless to say, presidential reputation was damaged by the crisis.

image from http://en.wikipedia.org/wiki/Black_Friday_(1869)

based on:


Propaganda loves history

The  “Race and Reunion” by D. Blight  does seem quite interesting to me for several reasons. Firstly, it would be very informative, as not much do I know about the Civil War, and, according to Foner, this is “is the most comprehensive and insightful study of the memory of the Civil War”. Secondly, the book is touching upon the subject that is very relevant to me. As a person who grew up in Russia and now lives in the US, the two opposite poles of the Cold War World, I have been exposed to the two interpretations of history, at times completely different. So I am particularly interested in the subject of information wars, as I have witnessed and felt its consequences.  One great example would be the World War II and the controversy over the question “who won the war?”, or who contributed the most to the victory over Hitler. Most Americans think that undoubtedly U.S.A did, and every single Russian believes it was the USSR, including myself. I also think that the memories about the WWII in the US have undergone similar “treatment” to which the reconciliationists subjected the memories about the Civil War. In particular omissions and underplays of important facts and events. And off course informational wars in one way or another are always tied up to the political battle for electorate, and the first and foremost subject of any propaganda is history.


Cave Art, Papyrus, Paper, Books, Photography, Press, Television, Internet, Youtube, Twitter, WikiLeaks – one trend

From the historical point of view all the forms of new technology that help to pass on more information to the following generations are STRICTLY a positive thing. Just like the emergence of paper, then books and literature,  then photography, then press, then cinema, then television – each added a new crucial dimension of historical data  and helped us, posterior generation, to better understand and visualize our history.  Similarly the emergence of electronic databases, internet, twitter, wikileaks, youtube will help following generations to understand and assess their history and bear tremendous anthropological value.

So I think it is a very bright decision on the part of the US government to archive all public tweets. Likewise, the emergence of wikileaks is a good thing for us in the long run. All  the talks about privacy concerns are a natural reaction of humans to resist additional transparency,  which has always been the case.  And as always the pressure for more transparency will overcome the resistance, and will take its own, as it produces more understanding, more accountability, more integrity, more efficiency, more justice, more happiness for the mankind in the long run.