The Great Socialist Revival

One of the most startling articles ever printed in an American magazine appeared in the September 21, 1970 issue of New York (not to be confused with The New Yorker) Magazine. It is entitled "Richard Nixon and the Great Socialist Revival." The theme of the article is that Richard Nixon is a secret Marxist, working with the giant foundations and international bankers, mouthing platitudes in praise of free enterprise while quietly socializing the country through deeds.

The art work graphically illustrates the point; it shows the famous (in Communist circles anyway) poster of Mao Tse-tung with his little Mao beanie and collarless Red Chinese uniform triumphantly waving a huge blood-red Communist flag—except that the face in New York Magazine is not Chairman Mao's, but Richard Milhous Nixon's. Subsequent pages show workers giving the Communist clenched-fist revolutionary salute, and the final panel shows a worker giving the salute with the Federal Reserve building in the background. If one read the article without noting the name of the author, one might well conclude that someone had somehow spirited a manuscript out of the editorial offices of American Opinion in the dead of night and New York Magazine had run it just for fun. On closer scrutiny, however, certain features of the article give away the fact that its author is an Insider on the Left. As is indeed the case. The man behind the typewriter for this amazing literary revelation is none other than Harvard Professor John Kenneth Galbraith, the Peck's bad boy of the Insider Establishment.

Before reading the article one is tempted to think that Galbraith may be writing satire. But a closer look discloses that he is writing only half in jest, and wholly in earnest. Such a tactic leaves a convenient back door to slip out of in case the situation gets sticky. This ploy was used some years ago by another ultra-Leftist Insider, Richard Rovere, in an article for Esquire titled "The American Establishment." In detailing the existence and workings of the Establishment, Rovere, with tongue inserted part way in cheek, gave an excellent description of the Council on Foreign Relations, its satellites, and the chief personalities involved. Rovere stated:

"The directors of the Council on Foreign Relations make up a sort of Presidium for that part of the Establishment that guides our destiny as a nation."

Galbraith is a member of the CFR, and the subject of his revealing article, Richard Nixon, has also been a member of the CFR, and during his 1968 Presidential campaign wrote an article for the official CFR organ, Foreign Affairs (which differs from its "underground" counterpart, Political Affairs, only in style and sophistication). At last count more than one hundred members of the CFR had been appointed to key positions in the Nixon administration. Both Nixon and Galbraith, then, are members of the same ruling elite, composed of men from the government, foundations, big business, and international banking—all under the CFR umbrella.

For Galbraith, to pronounce the President a socialist is not an accusation, but a compliment. He wants his own Democratic Party to quit pussy-footing around and proclaim its adherence to socialism. The Cambridge sage writes in his latest book. Who Needs The Democrats?: ". . The Democratic Party must henceforth use the word socialism. It describes what is needed . . ."

At least Galbraith is frank; most of his fellow socialists hide behind the euphemistic term. Liberalism. As U.S. News & World Report recently noted: "The 'liberal' movement in America dates back to the rise of socialism and trade-unionism around the turn of the twentieth century."

Socialists had a difficult time selling their ideology until they stole the honorable word "Liberalism," whose meaning was once the opposite of what it is today. Today's Liberalism is derived from socialism, whose father is Karl Marx; and Marx made no distinction between socialism and Communism in his Communist Manifesto. If Galbraith really wanted to be brutally honest he would use the terms Marxism and Communism as well as socialism. Lenin believed that socialism would come to backward countries like Russia by revolution and to industrial nations like Great Britain or America by the creeping method, via the ballot box. Therefore, all Communists work for socialism. They understand what the naive and well-meaning amateur Liberal (as distinguished from the professional Liberal like Galbraith) does not—that the difference between "democratic" socialism as practiced in England or Sweden, and the openly totalitarian socialism practiced in Russia and China, is one not of degree but of time.

Galbraith was a founder, and has served as chairman, of the 60,000-member Fabian-socialist Americans for Democratic Action (ADA). He has also been affiliated with the avowedly socialist League for Industrial Democracy, which spawned the bomb-throwing Students for a Democratic Society (SDS). Galbraith has never been accused of being anti-Communist. He contends of the Soviets that "they are basically just like us." Whom does he mean by "us"?

Galbraith is probably best known for his book The Affluent Society, which propounded the theory that government and its services are being scandalously starved while the private consumer lives in luxury. His solution: Tax the latter more heavily to support the former more generously.

The exploit for which Galbraith is least known is probably his participation in preparing a sinister Orwellian plan published as the "Report From Iron Mountain on the Possibility and Desirability of Peace." The jacket on the Delta edition of this opus states:

"Report From Iron Mountain [taken from the site of the first meeting] unveils a hitherto top-secret report of a government commission that was requested to explore the consequences of lasting peace on American society. The shocking results of the study, as revealed in this report, led the government to conceal [and subsequently deny] the existence of the commission—they had found that, among other things, peace may never be possible; that even if it were, it would probably be undesirable; that "defending the national interest" is not the real purpose of war; that war is necessary; that war deaths should be planned and budgeted."

[Note: The report was prepared at Herman Kahn's (CFR) Hudson Institute, taxation when they come in the guise of national defense. Galbraith admits in the New York article: 'In the past the war power has been notoriously a cover for socialist experiment and, feeling that the end justifies the means, socialists have not hesitated, on occasion, to stretch the law.']

The report is a blueprint for the "perpetual war for perpetual peace" technique being used by the Insiders in Vietnam, which is doubtless destined to be used soon in other parts of the world. According to the Iron Mountain Boys, "social change" (read socialism) can best be brought about during wartime. People will accept a greater degree of control and this strategy also allows the revolutionaries from below—students, minorities, and "the poor"—to demand "peace" and "social justice."

While visiting in England, Galbraith admitted that he was indeed one of the report's authors. The Associated Press picked up the admission, but few papers printed it—many undoubtedly not understanding how monstrous was the boast, or the confession (whichever it was). In America, however, Galbraith is a leader of the "peace" movement and feigns sympathy with the young men who are sent to their deaths in wars that are not meant to be won. On the cover of the Delta Press edition, Galbraith (with tongue wholly inserted in cheek) denounces the report as something that might have emanated from the twisted mind of Dean Rusk (who like JKG himself is a member of the CFR, the father of no-win wars). Thus, Galbraith denounces Galbraith. War is peace. Slavery is freedom.

The incredibly devious Galbraith is also reported to have written a favorable review of "The Report From Iron Mountain" that appeared under a pseudonym. Such deceitfulness is beyond the comprehension of most people. But in order to be a conspirator, one must be a liar for no conspiracy can succeed unless its existence is concealed by lies.

Galbraith began his New York article by proclaiming:

"Certainly the least predicted development under the Nixon Administration was this great new thrust to socialism. One encounters people who still aren't aware of it. Others must be rubbing their eyes, for certainly the portents seemed all to the contrary. As an opponent of socialism, Mr. Nixon seemed steadfast . . ."

It is true that the reality of Richard Nixon is in sharp conflict with the image he has carefully projected for the past twenty years.

The public's memory is notoriously short, but those who have watched Nixon's deeds (in contrast to his words) over the past two decades know that Galbraith was right. Nixon actually began moving Left well before he became Vice President in 1952, and by the end of Ike's second term, sophisticated Liberals knew he was in their camp. Richard Wilson, Chief of Look's Washington Bureau, acted as a transmission belt for the Insiders when he wrote a feature article in Look of September 3, 1957, titled "The Big Change in Richard Nixon." In this story, which contained virtually unqualified praise for the "new Nixon," Wilson wrote:

"He has made a distinct turn to the left. When the choice has been between the Republican right and the Republican left, Nixon has sided with the Republican left."

The Galbraith article in New York magazine admits that the economic philosophies of the late lavender lecher, John Maynard Keynes, promote socialism. Keynes, who tried to turn the British Fabian Society into a sort of Roaring Twenties Gay Liberation Front, has been the economic patron saint of Franklin D. Roosevelt, Benito Mussolini, Adolf Hitler, John Fitzgerald Kennedy, Lyndon Baines Johnson, and last but not least, Richard Nixon. That Nixon subscribes to Keynesian Economics, we have abundant evidence. The Wall Street Journal noted on December 5, 1968:

"It's clear, too, that the President-elect wants the Government to use fiscal and monetary policy to urge the nation along a safe economic course. To that extent he accepts the "New Economics" pursued by the Kennedy and Johnson Administrations . . ."

The Journal's Richard Janssen had written even before the election, on October 21:

"In fact, the Nixon camp is stressing that it's no less committed to the basic principle of Government-guided economic growth than the Johnson-Kennedy Administrations have been. Mr. Nixon has labeled himself a "new economist," aides note, a tag customarily attached to such Democratic seers as Walter W. Heller, Gardner Ackley and Arthur Okun, the current chairman of President Johnson's Council of Economic Advisers . . ."

Presidential economic adviser Herbert Stein even wrote a book titled Conservatives Are Keynesian, Too, the theme of which was described by Business Week of May 3, 1969 (page 88), as follows:

"The great fiscal revolution in America . . . was not the exclusive product of Keynesian economists and Democratic politicians. Rather it was an event for which Republicans, conservatives, and businessmen are entitled to an almost equal share of the credit. And that alone should lay to rest any worry that the Nixon Administration will revert to antediluvian attitudes if the going gets rough in the war against inflation."

Former Harvard Professor Seymour Harris, a top Keynesian and a member of the Fabian-socialist ADA, wrote:

"Current pronouncements by leaders of the Nixon Administration sound like those of the able economic advisers of 1961-68. This is not surprising since the new economists in the Nixon Administration, for the most part, have learned their economics under the same influences as the Kennedy-Johnson economists . .

"Harvard turned out the largest number of the new economists who in turn moved to Washington to work for the KennedyJohnson administrations. Now Nixon offers us Paul McCracken, Henry Wallich and Hendrik Houthakker, the first two Harvard trained, the last a Harvard teacher. They also mobilized John Dunlop and Gottfried Haberler, both distinguished economists of long standing at Harvard, to chair committees to investigate important problems . . .

"Are there then no differences between President Nixon's economics and those of his predecessors? Indeed, there are; but on the fundamentals the objectives and means of achieving them are strikingly similar. It is fortunate for the country that Mr. Nixon has abandoned his attacks on "growth-manship" and on governmental responsibility for the functioning of a healthy economy. For he will need the help of government to maximize output and minimize instability. That is what the New Economics is all about . . . It is not surprising that he embraces fiscal policy, as the Democrats do."

The GOP has been railing against Keynesian deficit spending for nearly four decades, but nationally syndicated columnist JR Ter Horst observed in the Indianapolis Star of October 30, 1968:

"Even Nixon, interestingly, has discarded the old GOP axiom of balancing every Federal budget every year. His emphasis now is on "the intelligent balancing of the economy over the business cycle"—which is the philosophy of the New Economics which has dominated budgetary policy the last eight years.

"Fabian-socialist Keynes boasted to a friend that his system would be the "euthanasia of capitalism" and would destroy free enterprise under the guise of saving it. Keynesian "New Economics" is but a euphemism for Fabian-socialist economics. The only honest description of the New Economics (socialism) is "Communist economics," since Marx, the father of modern socialism, as we have said, used the words interchangeably. The fifth plank of Marx's Communist Manifesto is "centralization of credit in the hands of the state" . . . As a celebrated Keynesian himself, Galbraith cannot have been very much surprised at what he calls "the new socialism" under Nixon, even though the public is increasingly flabbergasted."

Galbraith does, however, seem to have been somewhat surprised to see Nixon moving towards socialism in ways other than Keynesian monkeying with government spending to "boost" the economy. The Wizard of Harvard (which is the real land of Oz) proclaimed in his article:

"In an intelligently plural economy, a certain number of industries should be publicly owned. Elementary considerations of public convenience require it. For moving and housing people at moderate cost, private enterprise does not serve. But I had come reluctantly to the conclusion that socialism, even in this modest design, was something I would never see. Now I am being rescued by this new socialist upsurge promoted, of all things, by socialists not on the left but on the right. And they have the blessing, and conceivably much more, of a Republican Administration."

Professor Galbraith contends that the "new socialism" is the basis of the "Nixon Game Plan," based on the successful Fabian-socialist conspiracy in England. Galbraith refers to it as "the doctrine of the commanding heights":

"The new socialism also shows an acute sense of strategy. In the years after World War II in Britain, where socialism had a fair run, British socialists developed the doctrine of the commanding heights.

"The state would not take over the entire economy. It would aim for that part which was so strategic that its loss destroyed capitalist power, shattered its morale and so secured social control over the rest. The new conservative socialism in the United States has taken over the strategy of the commanding heights with a vengeance."

And Mr. Nixon appears to be beginning where the British, according to Professor Galbraith, also began:

". . . the first of the heights which the British socialists marked out for capture after World War II was the railroad system. It had great symbolic value. More than textiles, water transport or steel, this was the industry where modern large-scale capitalism began. So, pro tanto, it was where socialism should begin. To be astride the transportation system carried also the impression if not the reality of power.

"The railroads were similarly marked out by the new American socialism for its first offensive. This was concentrated on the biggest of the systems, indeed the biggest transportation company in the United States, the Penn Central. The attack was not led by the passengers and shippers, the two groups which had been most aggressively abused by private capitalism in this industry. Nor did the workers, once the big battalions of socialism, react. The socialist thrust against the Penn Central was led by the executives of the railroad—by the agents and instruments of the capitalists themselves."

This is an admission that socialism is not a movement of down-trodden masses but a tool of the power-hungry intellectual and financial elite. The socialists would have us accept the theory that government ownership and control over the means of production of goods and services is the road to sharing the wealth. Socialism is not a share-the-wealth program, but is in reality a consolidate-and-control-the-wealth program aimed at making serfs out of the upstart middle class. This explains the participation of many of the super-rich in socialist movements. If they were merely suffering from a guilt complex because of inherited wealth (which doubtless is a reason in some cases), the super-rich could assuage their consciences by giving away their mansions, airplanes, and yachts and joining the rest of us peasants with our $20,000 mortgages. Instead these Insiders hide (and compound) their wealth inside tax-free foundations and avoid taxes by purchasing and selling stocks through Swiss banks.

As Dr. Galbraith notes, when the Penn Central Railroad faced bankruptcy, it ran (with the urging of seventy-seven banks) to the government, inviting the U.S. to invest $200 million in Penn Central as a first step. The Nixon administration welcomed it with open arms. This dramatic rush to socialism won the initial approval of the Republican administration. Everything, indeed, seemed greased and ready to go, says Galbraith. By this we assume that Dr. Galbraith refers to the fact that Penn Central had hired the legal services of Randolph Guthrie of Nixon's "former" law firm of Mudge, Rose, Guthrie and Alexander. But the move was blocked by Rep. Wright Patman, Chairman of the House Banking and Currency Committee. Galbraith comments:

"But it seems likely that the setback is only temporary. Other railroads are known to want government participation in their capital structure. There is no chance that the Penn Central will get through receivership, much less escape from it, without public capital. Even if he feels strongly about defending private enterprise, Mr. Patman cannot stand up against this kind of pressure forever.

The handwriting is on the wall. Most railroads are very shaky, caught between a business slow-down, labor demands, inflation, and the Interstate Commerce Commission, which controls rates. The chief causes of the railroads' problems were summarized by Professor Michael Conant, writing in the Wall Street Journal of September 17, 1970:

"The Federal legislation which inhibits successful management is of three main types. The minimum rate regulation keeps railroads from lowering many rates for commodities in which railroads compete with highway and water carriers. The effect is to increase the nation's investment in trucks which pollute the countryside while railroads could do a more efficient job of carrying most commodities for distances over 250 miles.

"The second group of statutes are railway labor laws, which put so much power in the unions that they force the employment of large numbers of unneeded workers. Featherbedding in the railroad industry is real and the political power of railway unions prevents the enactment of laws to foster its termination.

"The third group of statutes prevents the disinvestment in plant that can be operated only at a net loss. These are the laws relating to pooling of operations, trackage rights and abandonments. The many parallel railroads and thousands of branch lines were built before the days of the hard road, the motor truck and the airplane. The present great excess capacity in railroad lines and yards can only become an increasing source of losses as real estate taxes and costs of maintenance of way increase . . .

"Railroad managements would like the public treasury to give them short-run financial aid. In light of the facts outlined above, however, no reasonable taxpayer can support public loans to failing railroads, the proposal now before the Congress. Until the three groups of Federal statutes are amended, such "loans" would merely be subsidies to inefficiency while railroad losses and bankruptcies continued to increase. The American taxpayers must not be so foolish as to throw money down this bottomless pit."

The only real solution to the Railroads' bevy of dilemmas was proposed by Professor Oscar Cooley in the Anaheim Bulletin of July 20, 1970:

"The Interstate Commerce Commission should be abolished. The competition of substitute methods of transportation trucks, waterways, pipelines, airplanes—not to mention the very real competition between the rail companies themselves, is amply protecting the customers.

"The railroad companies should be set free to fix their own rates, provide such services as they choose to provide—after all, they must serve the public if they are to make a profit, and in every respect to run their own business."

But Richard Nixon, for all his campaign talk about how government controls produce stagnation, has not even suggested this possibility. Doubtless nationalization will proceed through a series of steps involving subsidies and loan guarantees. The President did not push plans for infusing money into the Penn Central during the campaign, but the Wall Street Journal reported on September 14, 1970: "Some sources believe that large amounts of funds for the Penn Central will be forthcoming after the November elections . . ." Now the plan can be promoted as giving a badly needed "boost to the economy." In the meantime a bill has passed Congress and been signed by the President to establish a $340 million federally chartered National Railroad Passenger Corporation. This bill, which the October 20, 1970 Wall Street Journal dubbed "semi-nationalization," provides for government takeover of passenger service.

Nixon's Secretary of Transportation John Volpe gave us a clue to the thinking of the New Leadership Team: "The only option for keeping service intact—the only one we could think of—is take-over by the Government."

And the Establishment media have indeed started to beat the bongo drums for a government takeover of railroads, Times magazine editorialized: "Washington seems to be the only power that has the potential, at least, of building a rational, balanced national rail system."

We must not lose sight of the fact that the sixth plank of Marx's Communist Manifesto calls for "centralization of the means of communication and transport in the hands of the state." This is exactly what the Insiders have in mind. They will doubtless be bailed out of their Penn Central investments at a handsome profit. The truth is, we don't know who controls the Penn Central behind the scenes (assuming they do still control the Penn Central as they controlled the Pennsylvania).

But now, Galbraith gets down to the real nitty-gritty in his article:

"Important as they are, however, the railroads . . . are not the ultimate goal of the new socialism. The ultimate target is Wall Street. This is as it should be, and here it is making its greatest move—one that for drama and a kind of sanguinary gall would be appreciated even by such a master of these arts as the young Leon Trotsky himself."

The allusion to Trotsky is interesting, since Trotsky was financed by the Wall Street firm of Kuhn, Loeb and Company, and the largest fund raiser for Nixon's 1968 campaign is reported to have been Kuhn, Loeb partner Lewis Strauss. Galbraith continues:

"The Wall Street objective is nothing less than the New York Stock Exchange itself, the very heart of American, even world capitalism, the Everest of the commanding heights. The opportunity arises, as ever, from economic crisis. A known, appreciable but undisclosed number of members of the Stock Exchange have been hit by falling revenues, high costs and the slump in the stock market and thus in the value of the securities they own. In consequence of this and their own inefficiency, their capital is impaired, the chances for repair are poor and, a miracle apart, they cannot make good to their customers the money and securities left with them for speculative use . . ."

It is significant that in his article Galbraith nowhere advocated the elimination of all Wall Street firms. Obviously the Insider firms will survive the violent drops in the stock market caused by changes in Federal Reserve policies which they control or to which they are privy. [See Gary Allen's articles, "The Bankers" and "The Federal Reserve," in American Opinion, March and April 1970 respectively.]

Los Angeles stock broker John Weber reports that he was told by a very high official in the mutual fund industry that a top Securities and Exchange Commission official admitted to him in 1964 that what SEC wanted to see within a decade was a consolidation and elimination of brokerage firms until only ten Wall Street firms survived. Galbraith, however, believes (or claims to) that the federal government will eventually dominate all of Wall Street. Galbraith writes:

"The Wall Street vehicle of the new socialism is the proposed Securities Investor Protection Corporation [sic], or SIPC, a fund created by the Stock Exchange which is to be guaranteed by the government to the extent of a billion dollars. This will pay off the customers, creditors and victims of the failed houses. Because of some residual opposition to socialism in Wall Street, SIPC is being billed, rather imaginatively, as an insurance fund. Since the firms to be rescued are already in deep trouble, it is the first insurance fund in some time to insure against accidents that have already occurred—to place a policy on barns which have already burned down. But this is a detail. As the new socialists see the prospect (one may assume), several of the larger stock exchange houses will eventually fail. The government will step in to conserve their assets against the claims it has paid. There will be strong pressure to minimize hardship and unemployment by keeping firms going. The government will oblige—the familiar yielding to pressure again. Presently other firms will fail and the government will find itself in a dominant position on the Street and in the Exchange."

The result of this ploy would be that a handful of Insider firms would have a monopoly on Wall Street, with government capital to use to acquire whatever they might want. Galbraith in his article says of this plan:

". . . no old-fashioned socialist ever had a better idea for getting a foothold on Wall Street. Their hats should be off to the new man, Friedrich Engels, a rich and gentlemanly businessman who loved fox-hunting, would; one senses, especially approve."

The Harvard seer concludes his amazingly revealing article with a discussion of "Nixon Game Plan" strategy. He begins by observing that:

"Mr. Nixon is probably not a great reader of Marx, but Drs. Burns, Shultz and McCracken are excellent scholars who know him well and could have brought the President abreast . . . "

Galbraith says of Dr. Burns, a fellow member of the CFR "Presidium" who has moved from a position of adviser to Nixon to head the all-powerful Federal Reserve Board:

"A conspiracy theory of history is always too tempting. Dr. Arthur Burns as the Kerensky of this revolution, the Federal Reserve Building as its Smolny, tight money rather than oratory as its weapon, forces unleashed which, as in the case of Kerensky, no man can control—these thoughts are almost irresistibly attractive."

[Note: It should be noted that Galbraith serves with Arthur Burns as a trustee for the Twentieth Century Fund, founded in 1919 by a wealthy Boston merchant, Edward A. Filene, who was affiliated with pro-Communist organizations. The Twentieth Century Fund has financed Fabian-socialist activities in the U.S. for half a century. Among the officials of the Fund have been such people as Arthur Schlesinger Jr., Julius Robert Oppenheimer (self-confessed to have been at one time a financial contributor to the Communists), and Evans Clark (another friend of the Soviets).]

Mixing fact with what he certainly must know to be fiction Galbraith describes the "Game Plan:"

". . . it is beyond denying that the crisis that aided the rush into socialism was engineered by the Administration. Money was deliberately made tight. The budget was deliberately made restrictive. The effect of these actions in raising interest rates and depressing the economy was firmly acclaimed as the Nixon Game Plan. The difficulties of Penn Central, Lockheed and the member firms of the NYSE were part of the same game—and socialism, as we have seen, is the name of the game. Cause and consequence were never closer; cause could not have been more deliberately contrived.

"And suspicion is deepened by the sensational silence of conservatives."

As Galbraith is fully aware, it was the Federal Reserve Board and not Nixon that moved to tighten money. It is the Federal Reserve Board and not the administration that controls the money faucet. Economist Dr. Milton Friedman wrote before Nixon's inauguration: "Since fiscal policy does not matter, and monetary policy is controlled by the independent Fed, the administration will not really have control over economic policy." Burns himself stated on November 11, 1969:

"The responsibility of the Fed is to supervise monetary policy . . . The FRB's autonomy was conceived for purposes of maintaining the integrity of the currency. I think it's quite proper that money authority be independent of political authority."

Asked, in an interview reported in the May 5, 1969 issue of U.S. News & World Report, "Do you approve of the latest credit-tightening moves?" Nixon's Secretary of the Treasury, David Kennedy, told the interviewer: "It's not my job to approve or disapprove. It is the action of the Federal Reserve."

This does not mean that the FRB is not part of the conspiracy of which Galbraith writes. If the Federal Reserve was created in 1913 for the reasons its defenders claim, i.e., to establish economic stability by putting an end to boom-and-bust cycles, it has been an enormous failure. If, on the other hand, it was created by the Insiders to produce inflationary booms followed by depressions or recessions in which the stock market falls out of bed, allowing Insiders to accumulate enormous profits from both boom and bust, then the "Fed" has been a tremendous success.

Since the creation of the "Fed," which Liberals guaranteed would end depressions forever, we have had the worst depression in the history of the country, and severe recessions in 1920, 1936-37, 1948, 1953, 1956-57, 1960, 1966, and 1970. If you have advance knowledge of Federal Reserve policies you can make a killing whether the stock market is going up or down, and if you control the men who make these policies you can control the timing of the boom and the bust. The FRB inflated wildly (i.e. increased the money supply, thus bidding up prices) during LBJ's second term. During Nixon's first year in office the "Fed" had to stop inflating or face runaway inflation. The time had come to shear the sheep. Between December 1968 and July 1970, the stock market lost 35 percent of its value.

Since the same Insiders who control the Federal Reserve also control Nixon, Galbraith's statement about tight money in his discussion of the Nixon Game Plan is true in essence if not from a technical standpoint. And Nixon's fiscal policies (taxing and spending) worked hand in glove with the "Fed's" temporary halting of money expansion. During the campaign Nixon talked of tax-cutting:

"My administration will be one in which we are going to do what is necessary but with less money. That policy, directed toward achieving a balanced budget, will stop the rise in prices and lead to a reduction in taxes."

He specifically, promised on numerous occasions to end the 10 percent surtax on income. Then, said U.S. News & World Report, "After taking office. President Nixon in March asked Congress to extend the surtax for another year."

The President's excuse was that the surtax was needed to control inflation. This was absurd. Congressman H.R. Gross, on June 11, 1969, stated that the 10 percent surtax on income, which extracts from the taxpayers some $12 billion a year, "hasn't worked because the Government has simply taken the money and spent it." Congressman John Rarick added:

"There is something patently asinine about the theory that it is inflationary for the man who earned the dollar to spend it on his family—but that it is not inflationary for the Government to take the dollar away from him and give it to someone else to spend. "

In fact, it is less inflationary to let the man who has earned the money keep it, because he will save at least a part of it, whereas the government will spend every last penny and more. Taxes further feed the wage-price spiral, because they are a cost of production and must be added on to the price of a product at every level. Therefore, the selling price of the product is increased by all of the additional taxes on its ingredients. The Indianapolis Star editorialized on July 13, 1969:

"Last year the House, approved the tax surcharges by demanding a $6 billion cut in expenditures by the government and a cut of 240,000 employees from the payroll. There was no cut in spending—it increased. There was no cut in the payroll. It increased. The taxpayers were double-crossed."

The President, however, was adamant. He made the surtax vote a loyalty test and threatened conscience-stricken Congressmen with cuts in federal spending in their home districts. Washington correspondent Paul Scott reported in the Yakima Eagle of July 3, 1969:

"An estimated forty Republicans dropped their opposition to the controversial tax proposal after the President laid down his loyalty gauntlet during his weekly White House conference with GOP House Leaders.

"In a half-hour table-pounding session, the President told the GOP leaders that the surtax must be extended or "my whole inflation control program could go down the drain."

""Republican members of Congress," the President told the leaders, "should be made to understand that I regard their vote on the tax bill as a party loyalty test."

"The President stressed that "I will be watching the vote closely and future administration actions to help members will be guided by the way they vote.""

Scott's report was confirmed by the vote, as described in Newsweek of July 14, 1969:

"As the hour of reckoning neared, not all the Administration's minions were being so discreet. Rep. William L. Scott, a Virginia Republican, complained angrily that a GOP colleague had warned him that his district would lose a long-scheduled dam if he didn't vote aye on the surtax; later, he shouted his no "a little louder than normal."

"But the liberals were not to be appeased; they stood their ground in the kind of solid front they have rarely been able to forge. After the second call of the roll, the nays had it, 201-194. Then the Administration began committing its surprise reserves conservative Republicans who had promised their votes only if absolutely necessary. Behind the House rail, a small knot of congressmen huddled together drawing straws. Short straw men trudged disconsolately down to the well to switch sides or withdraw their nays. The final tally: 210 ayes, 205 nays. Only 56 Democrats, most of them tied to the leadership, joined the winning combination."

The President's next gambit in his socialist conspiracy was the repeal of the 7 percent tax credit for capital investment. Economist Henry Hazlitt commented in the February 1970 issue of Battle Line:

"Even more ill-advised [than continuing the surtax] was Mr. Nixon's call for repeal of the 7 percent corporation investment tax credit. This was done for two reasons: to raise more revenue, and to reduce or remove the supposed "inflationary impact" of investment in new plant and equipment. The effect is to increase the tax burden still further on the corporations—precisely on the key productive element on which the whole nation's income and economic growth depend. The anti-inflationary argument is a complete fallacy. It is only government deficits and consequent money creation that cause inflation. The repeal of the tax credit merely means that a larger percentage of private spending will go into current luxury consumption and a smaller percentage into improving the competitiveness, efficiency and productivity of America's industrial plant."

A disillusioned Pierre Rinfret, who had been a Nixon economic advisor during the campaign, contended that "you lick inflation by increasing capacity and not by holding it back." Rinfret claimed the tax credit repeal "has destroyed the only real hope for resolving inflation". But this obviously, was the whole "Game Plan" idea—to restrict money for the private sector, not for the government. Penn Central, Lockheed, and hundreds of other American corporations were put in a financial vise just as Galbraith indicates.

The third trick-or-treat scheme the President pulled from his Machiavellian bag of tricks was the deceitful "tax reform." "Reform" is so much kinder a word than "raise." The National Taxpayers Union pointed out:

"Recently Congress passed new tax legislation. Reform legislation some call it—but it actually raised taxes by 3 billion dollars."

Senator John Williams, one of the most respected members of the Senate, said:

"The 'tax reform' bill is a hodgepodge of what seems on the surface to be politically 'popular' but in reality could be repudiated in the next election if the voters are given the real truth about the causes of higher and higher prices and the curtailment of the purchasing power of the dollar."