Return to the Charles A. Thomas Papers (KSU May 4 Collection)

 

THE SCALES OVERTURNED: KENT STATE AND AMERICAN BUSINESS.

An e-book by Charles A. Thomas

 

CHAPTER ONE: The Money-Changers – In the Belly of the MIC.

 

            Neither honor, nor patriotism, nor generous superstition could animate the       

            lifeless bodies of the slaves and strangers who had succeeded to the honors of the

            legions… their vices were inherent, their victories were accidental, and their

            costly maintenance exhausted the substance of a state which they were unable to

            defend.

                                    Edward Gibbon, describing the Byzantine military ca. 600 A.D[1].

 

                        Lord, we have based the development and prosperity of many of our giant

            industries on the diabolical capacity to produce arms…

                        …there are many young people rebelling that justice may be advanced

            and that concord may be the law of coming generations.

                                    Pope Paul VI, January 1, 1970[2]

 

 

            1969 had not been a good year for America – least of all for its financial markets

(which in some quarters is regarded as saying the same thing).   A leading business magazine summed it up in its waning days with the title of a lead article: “Street hopes worst is over.”[3]   The downturn had lasted since the inauguration of Richard Nixon as President, the first in a series of Republican accessions that would reverse the adage that GOP victories are good for business.   And yet he had campaigned on his promise to end the ruinous war in Vietnam and the equally devastating inflation it had triggered.   Such a promise had always seemed dubious coming from a candidate whose entire public life had been a crusade against communism.   And his entire career had made any promise seem dubious if it came from “Tricky Dick”.   But he had started withdrawing troops from that dark field and after the endless ordeal, Americans may have felt entitled to hope –

            Nixon had been the vice-president of Dwight D. Eisenhower, the former supreme command of the allied forces in World War II – a five-star general, the highest rank to which any American soldier can ever aspire.   At the end of his second term,

Eisenhower had delivered his Farewell Address to the Nation, which contained a warning so dire and appropriate that this speech is associated with this President as if he had never said anything else.   He had warned of a “Frankenstein’s monster” that had been created as a result of the struggle with the Axis monster: the military-industrial complex (MIC).[4]

A number of giant corporations had arisen during the war that understood doing business only on wartime terms: with the War Department (now and with increasing inaccuracy renamed the Defense Department) as their close customer, with no real competition, with open-ended contracts providing for unlimited additional costs, and a complaisant work force expected to sacrifice its own interests to “the effort”.    They were “able to combine all the comforts, including the classic inefficiencies, of socialism with all the rewards and immunities of private enterprises.”[5]

            The armaments industry had become a parasite sucking its host dry at a rate of

$ 80 billion a year, tying up a tenth of its work force, consuming a tenth of its Gross National Product.   “The whole economy is infiltrated,” Senator Gaylord Nelson complained, “We are a warfare state.”   To Senator William Fulbright, the military infra-state had become “a direct threat to American democracy.”[6]

            By 1969 it was impossible to tell whence the unholy fusion had commenced.

Another legendary hero of World War II charged that “[m]ilitary procedures – including the general staff system, briefings, estimates of the situation, and the organizational and operational techniques of the highly schooled, confident military professionals – spread through American culture.”[7]   A disillusioned Army career officer claimed rather that business had infected the military: the officer corps had degenerated into a cadre of executives who each saw their service as “a business conglomerate, to be promoted and expanded in much the same way as General Motors or IBM.”[8]   Critics of this school blamed Secretary of Defense Robert McNamara for the Vietnam debacle, because he had tried to manage the war the way he had his erstwhile fiefdom, the Ford Motor Company.

            Or the fusion that created the mutant could have been simultaneous and bilateral.

It was without doubt irresistibly attractive to the fusibles.  The “defense” executives wanted huge profits without having to face the risks of the marketplace.   The career  officers wanted lucrative industry jobs after they had put in their twenty or thirty years, instead of the traditional penury of military retirement.  The result was “much closer to socialism than to capitalism” and fraught with peril for the future of the economy.   “The danger is that this mode of doing business, however inefficient and wasteful, has become the dominant mode for American business.  If it persists, our historic industrial superiority will be a hollow shell.”[9]

            Under such circumstances the war in Vietnam proved equally irresistible to the MIC.   The US economy, in serious recession in 1957, recovered neatly following the first massive infusion of aid to the besieged Diem regime in 1958.   “[T]he financial leaders and the leaders of overdeveloped industry in the United States realized that, as the intervention of their country in Vietnam increased, their businesses expanded and their profits went up more sharply.”[10]   With return to a global conflict impossible because of the existence of nuclear weapons, Vietnam provided the next best alternative: a war which could drag on indefinitely (because war aims didn’t have to be defined – after all, there had been no declaration of war), consuming vast amounts of munitions and conventional material.   New weapons could be tested and unproductive manpower continuously drained off, diminishing the unemployment rolls.

            No one could predict, at the outset, that the little brown men in black pajamas would fight elite American shock troops to a standstill, or that the country the United States had come to “rescue” would embrace the ethos of capitalism so passionately that it would become dysfunctionally corrupt.   By the time a half million GIs were in the field, more bombs had been dropped on the phantom enemy than on the Axis in World War II, and the only reward had been the shock of the communists’ 1968 Tet offensive, the exuberance of expenditure on the war had unleashed murderous inflation at home.

            By the beginning of 1970, American Big Business wanted out.

 

                 The harmful effects of extreme militarism on the US economy have become so

            widely recognized that there has developed a significant congressional opposition

            to the military-industrial complex and the stock market, contrary to some earlier

            tendencies, is now bullish on peace news and bearish on war news.[11]

 

            Except, of course, for the MIC industries.   For them, the next step after the one out of Vietnam could be into oblivion.   They knew nothing of competing in a true peacetime economy “and hence believe their futures are mortgaged unless the war, or some worthy surrogate*, continues…  the selective profitabilities help to keep the war machine going.”[12]   The inability of many of the war’s critics to perceive this divergence of interest between the war industries and other American business interests severely hampered its efforts during this entire period.

            The MIC could hope by now that it had made itself indispensable to the economic health of the Nation.   If “peace broke out” and it went under, would it drag the rest of the country with it?   Those who explored the alternative, that it could retool to fill the needs of civilian consumption, were forced to abandon it.   The process of corruption had resulted in a “trained incapacity in much of military industry for serving a civilian economy…  Military industry has lost the traditional American industrial capacity for offsetting high wages with high productivity.”[13]   “The economy is addicted to federal subsidy and to military subsidy in particular.   It appears that we have to spend, because what a high-employment economy produces has to be vended.”[14]   This much classical Marxism had anticipated: “monopoly capitalism… has to rely in the main on military spending for the preservation of the prosperity and high employment on which it depends both for profits and for popular support.”[15]

            Nixon had campaigned on ending the war in Vietnam.   Had he not at least once considered that this would also bring recession?   Defense stocks dropped sharply during his first six months in office.[16]   Speaking to the California Chamber of Commerce, Secretary of Defense Melvin Laird raised the specter of mass unemployment as peace clouds gathered on the horizon.[17]   In addition to this, Nixon continued to be bound by the Republican dogma of wage and price controls as heresy, thus placing his administration in a terminal bind.   “The task the Nixon administration set itself – to slow down the very advanced inflation that afflicted the US in 1969 without intervening at all in wage-price bargaining and without precipitating a recession – was an impossible one.”[18]

            For most of his first year in office, Nixon outwardly appeared to adapt the human strategy for coping with an intractable problem: trying to ignore it.   Actually, he had already made his decision.   A month after his inauguration, he told intimates, “I don’t go along with the idea that sees us as heroes on inflation and villains on unemployment.  That will take us to the point where no conservative will ever be elected again… we will never get in again.”   In December, spurred by the specter of the off-year election in nine months, he reminded them, “The ‘need for a Republican Congress’… must be ‘superior’ to the goal of fighting inflation.”[19]   An incumbent didn’t win elections by keeping people out of work.     But how to keep them on the job while winding down the war?   If they stayed on the job,  would they care if he really wound down the war – or even if he wound it up again?   The average American, as he read the animal, was far less concerned about “the amount of violence going on in Vietnam itself” than whether s/he got a paycheck.[20]

            Early in 1970, the Central Intelligence Agency engineered a coup in Cambodia.   It replaced its relentlessly neutral leader Prince Norodom Sihanouk with General Lon Nol.    Those American business leaders outside the MIC, who had grown extremely nervous about the Indochina adventure, immediately suspected that “events in Southeast Asia today strongly tempt some officials here to creep a little deeper into that region’s spreading warfare.”[21]   While Nixon still talked about withdrawing troops, the Pentagon let multi-million-dollar contracts for ammunition, naval aircraft, and tank engines.[22]

            One week into April, the editors of the Wall Street Journal printed an unprecedented caution to a US President, warning Nixon against falling “like his predecessor, into the old delusions” about military victory in Southeast Asia.    It was partially based on recent public opinion polls “which… have shown an ominous shift towards immediate withdrawal” and “the extraordinary move of the Massachusetts legislature to challenge the constitutionality of the war”.   Any order sending US troops into new realms of that fated land would doom all concerned:

 

                 If that should happen again on a wider scale, the personal political price Mr.

            Nixon himself will pay may only be exceeded by the agonies which will befall an

            America already deeply troubled by a widespread sense of lost confidence in

            Government.[23]

 

            That aside, the leading figures on “the Street” – as the New York Stock Exchange was sometimes known, for its proximity to Manhattan’s Wall Street – felt they could break out of the economic swamp in which they were mired with just one “good piece of news”, because the market was “oversold and most of the downside factors have spent themselves”.   Philip Clark, vice-president of Burham & Co., suggested he would welcome as “a sufficiently stimulating piece of news an announcement that the US planned to pull half its troops out of Vietnam by mid-1971.”[24]

            On April 13th, the President held a cabinet meeting at three, one of the few that spring concerned with the economy.   Budget Director Robert Mayo fed Nixon’s chronic impatience with him by asserting that the problem had been neglected far too long for much of anything to be done now.   As chief of staff H.R. “Bob” Haldeman transcribed the proceedings on his ever-present legal pad,

 

            Mayo’s interjections – i.e., balanced budget, monetary policy.

                 Fed did hang on too long

                 Shld have loosened in Sept

                 but now to loosen too much       

                      wouldn’t help Nov. elections

                      but would inflate after elections.

            fiscal side

                 have loosened up on some spending

                 pay raise & social security

                 but big push in defense contracts, etc.

                      wouldn’t help – need in 6 mos.[25]

 

 

            That same day the Apollo XIII astronauts ran into deadly danger on their lunar

voyage.    Whether their plight triggered a spasm of horror deep in his psyche, or whether it proved to be a ploy to divert attention from his current dilemmas, the President paid no attention to anything else for a week.   He even postponed his scheduled address to the nation announcing further troop withdrawals from Vietnam.    But the Cambodian government did not suspend its demands that the United States make good on the promise of the Nixon Doctrine: that if the Southeast Asian anticommunist powers supplied the manpower to defeat the communists, the Americans would be unstinting in their material support.     The Journal’s editors noted these demands with dread.

           

                 Cambodia is trying to collect on the Nixon Doctrine…  And Washington’s first

            Seems to waver between shock and equivocation…

                 There are also fears that supplying arms can lead to sending military

            instructors, maintenance men, advisors, and perhaps someday combat troops,

            much as happened in South Vietnam years ago…

                 The bid for arms, which apparently arrived here Wednesday, may be one

            Reason for Mr. Nixon’s decision to postpone his televised talk on the Vietnam

            War, officially delayed because of Apollo 13 difficulties.[26]

 

In London, Paul McCracken, chairman of the Council of Economic Advisors, piqued rather than allayed these fears when he announced, “I am confident that we will find that the first quarter of this year has been the softest period for the US economy in 1970”[27] –

i.e., the economy would revive as the year passed.    But what would revive it?

            The President flew out to Hawaii to be present when the astronauts “splashed down” after their cosmic brush with death.   During the attendant patriotic celebration, choreographed with all Haldeman’s twenty years of expertise as an advertising executive,  no one noticed Nixon slip away for a daybreak briefing with Admiral John McCain, Sr., commander of all US forces in the half of the planet drained by the Pacific.   McCain, known to a skeptical press as “the Big Red Arrow Man” for his scarifying map briefings depicting imminent communist conquest, told the President that the Cambodian capital of Phnom Pehn was about to fall to the “Reds”.   Thus abruptly did the President’s festive mood end.   He took McCain with him when he flew back to the Western White House so that the admiral could repeat his briefing for national security advisor Henry Kissinger.   That evening Nixon went ahead with his scheduled national television address on troop

withdrawals from Vietnam.    It was by all accounts a flat and perfunctory performance by a man who seemed preoccupied.

            The next day was equally as flat on the stock exchange.   The “bounce” expected from the announced withdrawals simply failed to materialize.   It was almost as if the Street, in its ineffable wisdom, had sensed Nixon’s new obsession and was now waiting in dread to see where it would lead.[28]   It was doubtless just as well for “the numbers” – the averages of stock prices which gauged the daily health of the Exchange – that Nixon would now proceed in deepest secrecy.   He would not inform his own cabinet officers, let alone the Congress or the American people, that he was planning the invasion of Cambodia with American troops.    (The South Vietnamese were also planning to invade Cambodia in support and as soon as they were briefed on the plan, the communist high command knew all about it.)  

            The US economy dragged to the end of another sere month.   As the Times’ business pages summed it up,

 

                 The reasons range from the corrosive quality of inflation to the current bite on

            corporate profits, from over-speculation in the bull market to fear as to the

            economy’s future, from the impact of the war in Vietnam to misgivings about

            Cambodia, and finally, from a cultural fallout, embracing the generation gap, the

            credibility gap, and even integration.[29]

 

By the 28th, even as the plans for the invasion were filtering down to brigade level, Nixon was finally compelled to take notice of the crisis.

 

                 In recent weeks, several brokerage houses have ceased operations and the

            securities industry’s profits have declined… executive salaries have been reduced

            and staff layoffs have been instituted.   Rumors of additional liquidations have

            been rampant.[30]

 

Bernard “Bunny” Lasker – President of the Board of Directors of the New York Stock Exchange – flew into Washington with several colleagues to confer with the administration.   He didn’t get to see the President, but talked to McCracken and Peter Flanigan (who firm had leased oil tankers to the President’s chief corporate sponsor, Union Oil).

            Nixon rather met with Haldeman and his chief domestic advisor John Ehrlichman to discuss what the other parties had discussed.   He dismissed the crisis with a typical response, ordering the firing of several visible scapegoats.   “Said [Treasury Secretary David] Kennedy and Mayo have to go… Wants me to fire Mayo – can’t decide who’s to do Kennedy… Told E[hrlichman] to accelerate tax collections to lessen the ’70 deficit.”[31]

His public relations men released some optimistic rhetoric, and the President retreated to his hideout in the Executive Office Building, to re-immerse himself in writing his speech for television announcing the invasion.

            Eileen Shanahan, ace financial reporter for the Times, related of the meeting that ”each side reassured the other that things were under control.”   Those familiar with her dry wit understood the emphasis she placed on Lasker’s inane announcement: “I’m thrilled that my hero was right in his prediction that the market would turn back up.”[32]

Her verbal scalpel would be wielded at a later crisis point, to much greater effect (see below).    Her colleagues shared her skepticism.   The meeting was too little, too late, to soothe anyone’s fears.   “Under other circumstances,” a leading business periodical noted, “both the threat of an expanding war and the possibility of continuing inflation might be bullish.   Today, they are terrifying.”[33]

            The terror was not long in coming.   The next day, the 29th, the White House finally broke through the wall of silence and secrecy to announce that South Vietnamese troops had crossed the border into Cambodia, assisted by American “advisers, tactical aid, air coordinators, medical evacuation and some logistics assistance”.   However a State Department official “with good political connections” reassured the Journal reporter that it would end there: “Richard Nixon is not – repeat not – going to commit American troops to Cambodia in an election year”.   Even Mississippi’s arch-reactionary Senator John Stennis opposed committing US regular forces in combat there “even if Red battalions storm Phnom Penh”.[34]

            Nonetheless the market staged a feeble rally, since Lasker and his associates had at least gotten in to see Nixon’s advisors.   Surely, once those advisors explained the extremity the markets face, the President would reconsider any contemplated expansion of the war.   The next day, April 30th, prices drifted lower, responding to announcements that the President would address the nation on television again that evening.   On schedule, a visibly stressed Nixon told his people that he had ordered US combat ground forces to invade Cambodia.    Anyone hoping he would add that he had asked for and gotten a declaration of war from the Congress, as required by the Constitution, was to be disappointed.

            The country exploded, even before the television screens had faded to black.

Nixon’s moribund arch-enemy, the antiwar movement – which had closed its national headquarters on the 19th for lack of money and support – staged a fast-forward resurrection.   Demonstrators took to the streets while he was still speaking; they huddled  to plan a giant march on Washington long after he was finished.   By midnight, many of the nation’s colleges and universities had voted to go on strike.   Congressional reaction, even – or with an election coming, perhaps especially – from his own party was appalled.  The opposition was discussing impeachment.   America’s closest allies recoiled in horror.

            Only the fact that the speech would be followed by a weekend lessened its horrific effect.   Yet, with only Friday to make things worse, the President voiced his contempt for the “bums” demonstrating on the campus the first thing that morning.

 

                 Mr. Nixon, by characterizing far-out elements among his campus critics as

            ‘bums’, has already provided for fear that much of his sudden militancy stems

            from a desire to divert attention from inflation, unemployment, and other

            difficulties as the Congressional election moves into high gear.[35]

 

To which the Journal added, foretelling what would had at Monday’s opening bell,

“Government economists couldn’t muster much hope that Mr. Nixon gave even momentary attention to the impact on the U.S. economy” when he had made his decision.[36]   But had he ignored the interests of the economy in favor of geopolitics?  Or had he remained faithful to the sector of it that above all others was rooted in the geopolitical?

 

                

           

 

CHAPTER TWO: The Hidden Card.

 

 

            Why did Richard Nixon order the invasion of Cambodia, a move so fraught with disaster for himself and his country?   In his book on Operation PHOENIX, the campaign of mass kidnapping, torture, and murder conducted by the CIA in South Vietnam, Douglas Valentine observes almost casually,

           

                 The invasion defected attention from the CIA-engineered coup and bloodbath

            in Phnom Penh, it enabled Lon Nol to install a pro-American government in

            Cambodia, and it allowed Union Oil of California to secure concessions for all

            onshore and much offshore Cambodian oil.[37]

 

(Valentine does not deal with the CIA’s interest in gaining control over the length of the Mekong River and the port of Phnom Penh to expedite the bulk transport of its heroin, which has been more than adequately detailed elsewhere.)[38]

            But what did Richard Nixon have to do with Union Oil, or any other oil company?   True, Kenneth Vaughan, Senior Vice President and Director of Union, was his classmate at Fullerton High School in California.[39]   And Nixon appointed Claude Brinegar, another Fullerton alumnus and a vice president of Union, his Secretary of Transportation during a period of national energy crisis.[40]   But these could have been coincidences.   The answer lies in Nixon’s life a quarter of a century before the Cambodian invasion.

 

            In 1944, the California Republican Party nominated oil man Roy McLaughlin to run against Jerald Voorhis for the US House of Representative.   When the votes were counted, McLaughlin had become the fifth GOP knight to fall before Voorhis’ lance.   But the demographics of total war were aligning to make this the populist Democrat’s last victory: his congressional district was being flooded by military careerists and armaments workers.   And thus Big Oil saw its chance to get rid of its most detested foe.

            The prize of battle was the Tidelands, the federally-controlled coastal oil basins which the petrocompanies perennially lobbied to get turned over to the control of the states (in whose legislatures their corrupting dollars went much further).   Voorhis stood like a rock against them, casting his vote against the industry’s revenant Tidelands bill yet again in 1946.   His son would later note “my father might very well have signed his political death warrant” with that vote.[41]   Even as potential Republican candidates refused to run for the seat, convinced the incumbent was invincible, the oil industry made the final decision that any means to defeat Voorhis must be tried, and that any candidate, whatever his qualifications, would be backed with all their vast wealth if only he would come forward.[42]

            Revisionist biography of Richard Nixon, which has been a major industry since 1974, has nurtured the myth that he was selected to run for Congress in 1946 by a group of local small businessmen in his home town of Whittier, California.   But before his strange death in the early 1970s, Murray Chotiner – Nixon’s perennial campaign manager and original dirty tricks specialist – asserted that the Nixon name was not put forward by Whittier bank Herman Perry (as Ambrose and other credulous chroniclers have agreed), but by a “wealthy business friend” whom Chotiner would not name even twenty-five years later.   And William Larsen, who carried the “political proxy” for Standard Oil, was present at the meeting that selected Nixon to run against Voorhis.   The petrodollars that

funded his campaign would be funneled through local conduits Richfield and Signal Oil.  Nixon made it clear he would need plenty of money; he could not live on a congressman’s salary.   “The important thing was not to get caught.”[43]

            Another California representative, Helen Gahagan Douglas, had voted against the industry bill.   In 1950, she ran for the Senate.   The industry picked Richard Nixon to run against her and again, Texas oil money flowed into California like a black river.   But oil was never mentioned as the real issue; like Voorhis, Douglas was accused, by every innuendo that Chotiner could devise, of being a communist.[44]   In the “red scare” climate accompanying the outbreak of the Korean “conflict”, she was defeated.   Big Oil had found its candidate and he had settled on his invariable tactic.   “The oilmen of Texas,

Louisiana, and California could not lose, and the American people could not win.”

Within two years, the petrobarons were already pointing Nixon toward the White House.

            But at this point, and after he had already won his party’s nomination for the Vice Presidency, his road almost deadended.   During the 1952, it came to light that the candidate was relying on a secret slush fund, “drawn heavily from oil men, including Herbert Hoover, Jr.”[45] (one of the directors of Union Oil).   Rather than answer the charges, Nixon staged a brilliant diversion on national television, “laying his soul bare” as an average working American, just another struggling Everyman whose most prized campaign contribution was a Cocker Spaniel adored by his little girls.   “Oil money was never mentioned, and soap opera was established as an integral part of the political scene.”[46]

            The oil industry remained Richard Nixon’s scarcely-hidden partner throughout his political career, until its typically illegal contributions to his 1972 campaign helped end it in disgrace.[47]   He reciprocated by advancing its interests – along with its inseparable companion, the armament industry’s – regardless of the effect on the national welfare, even the welfare of the nation’s other businesses.   But where was the connection to Cambodia?

            Certainly Southeast Asia was not too far afield to look.   America was now faced with the fact that would define the rest of its national life: its addictive need for the black ooze could no longer be satisfied within its own borders.   The Vietnam adventure had thrown the depth of the addiction into sharp relief.   “The oil thirst of the American war had indeed been [as] spectacular… as the sudden appearance of a new medium-sized industrialized nation on the map, like a massive island rising out of the ocean by geological accident.”[48]   Since 1949. the Pentagon’s consumption had tripled, from 330,000 to 1.2 million barrels a day – and yet this was only a small fraction (8.1%) of the amount that had to be poured into the bottomless maw of civilian consumption.[49]

            The offshore shelf of the Southeast Asian peninsula comprised the least explored potential oil basin in the world.   But the petrobarons had known about its promising geological configuration since the early 1960s.   Their cupidity had been forced to wait on technology, particularly the development of undersea drilling hardware and digitial computers that could coordinate sea bottom readings.   In April 1969, an obscure body

called the Economic Committee for Asia and the Far East released a report announcing that the use of “seismic refraction and shallow penetration sparker” exploration off the coast of South Vietnam had disclosed “one of the most spectacular petroleum deposits in the world.    But the announcement was only made within industry circles; its representatives were “extremely reticent” about it beyond them and “questions are not welcomed”.[50]   “None of the oil companies… nor the Ray Geophysical Division of Mandrel Industries, Inc., of Houston, which did the survey, would disclose the results.”[51]

“The results have never been made public.”[52]

            Even with the link between the discovery and US policy in Southeast Asia thus masked from the American public[53], it seemed transparent to the more sophisticated observers in Europe.   “[R]ecent military escalations in Cambodia and Laos coincided with the actual determination of petroleum deposits in Indochina.”  According to the Agence France-Presse,

 

                 One cannot know precisely when the existence of the deposits became

            known to the Americans, but according to the same sources, one cannot

            discard the possibility that decisive information on this subject was obtained

            before the unrolling of the events in Cambodia last spring.[54]

 

            The most condign corporate secrecy could not hide “the richest oil pool between

the Persian Gulf and Alaska’s North Coast” forever.   One “executive burbled, ‘There’s going to be an exploration boom around here like nobody has ever seen before.”[55]   A European periodical described it as a “sea of oil of about 4000 by 800 miles… from the Gulf of Siam across Indonesia to the coast of northern Australia” (and the Swiss author asked the needless question, “Is the ideological conflict the only concern of the United States engagement in Indochina?”)[56]

            Seeing a last chance to give foreigners any interest in saving their regime, the South Vietnamese leaders put the “largest continuous continental shelf in the world” up for auction in 18 blocks, most sold to American companies like Union, as “oil fever” gripped the embattled land.[57]   At the last minute, when everyone outside of the MIC was sick of the Southeast Asian slaughter, the war gained a “politically and economically powerful constituency – the international oil firms”[58].    And so the war would drag on for another four years.  According to one of the now virtually-vanished “oil trades”, “the Defense Department has offered ‘to help foot investment insurance to US companies for any future offshore South Vietnam oil exploration and development’.”[59]   (Speculating on why the US Air Force kept disgorging tons of bombs over Southeast Asia “so long after our troops and POWs have been withdrawn from Indochina”, Senator George Aiken, one of the disappearing breed of Republican moderates, posed the logical answer: that the “investment of the American oil company might be a bit more secure.”[60]  

            But this time, propping up the corrupt Saigon and Phnom Penh governments, placing faith in their demoralized soldiers and venal generals, and creating moonscapes out jungle and paddy with carpet bombing worked no better than they ever had.   The two capitals fell to the communists.   Saigon, renamed Ho Chi Minh City, proved ready to discuss the development of oil resources – with the Soviet Union.   The fanatic teenagers who took over in Cambodia were not prepared to accommodate capitalism in any way.

Nor could the industry get any further help from its President, who by then had other problems.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHAPTER THREE: The Managers on Moriah.

           

            The announcement of the invasion came on Thursday evening, April 30th.   The New York Stock Exchange was quiet on Friday, whether stunned or still waiting and watching.   As always, it was closed over the weekend, while the national student strike spread from coast to coast and police and National Guard battled protestors on a hundred campuses.   It opened Monday under the dark pall of the same suspicion that lowered over the rest of the nation: that the invasion had opened the final rift between America’s generations and thus threatened her very existence.

 

                 Like the ordinary German who a generation ago slowly became aware that

            something terrible was going on at the edge of town, so those in middle age are

            having their conscience aroused by youth and feel that more than a few things

            around them may not be well.[61]

 

 

                 [T]he Vietnam War gas taken a cruel toll in the  destruction of the bonds of

            consensus and authority that allow a society to operate both at home and abroad.

            By now the danger of disintegration here is far more serious than any military

            threat in Indochina.[62]

 

 

                 Now no one can be sure what the chances of further escalation or intervention

            may be.   This looming uncertainty, replete with menaces of inflation and

            controls, is now the dominant influence upon the business prospect.

                 President Nixon has demonstrated that there are worse things than economic

            recessions.[63]

 

 

            As soon as the opening bell rang on the Exchange, prices began to decline.   Traders nervously waited for news of Soviet premier Alexei Kosygin’s press conference, insofar as it conveyed his country’s reaction to the invasion.   When the wire services carried this story late in the morning, the Russian response proved, as one broker put it, “more diplomatic and less threatening than had been expected.”   Prices rallied.   Then, shortly after noon, word of the Chinese Communist reaction came it – the invasion was a “provocation” to the Chinese people – and “prices started diving again”.[64]   (But the reporter’s own editors assessed the Chinese statement as, “while bellicose… about what anyone would have expected”.)[65]   Then the wires added the story that no one had expected (except perhaps in the White House and some corridors of the intelligence community) that the Ohio National Guard had fired on students on the campus of Kent State University, wounding eight and killing four.   The bottom dropped out.   The Dow-Jones Industrial Average, the leading indicator of stock prices, recorded its worst single day since the assassination of President Kennedy in 1963.

            This seems astounding in terms of the clichés that nurtured both sides throughout the Cold War.   The New York Stock Exchange, foundation of the plutocracy, shrine of the vested interest, shaken to the core by the killing of college students at an antiwar demonstration?   The New York Times’ business editors, acknowledging the plunge, refused to believe it had anything to do with the incident – or to even mention Kent State.

But this probably reflected the rabid basis of managing editor A.M. Rosenthal, who conducted page-by-page censorship of each edition, against student demonstrators.[66]   The Times acknowledged only “the uncertainty stemming from the intensified war in Indochina” as well as “lower corporate earnings”[67]   But the Journal ascribed it to “China’s angry reaction to the Allied incursion and the accompanying explosive violence on US campuses.”[68]   For most of the more sensitive and perceptive members of the business community had worried about the alienation of American youth for some time – and now wondered what catastrophe might await once the government had answered the questions and fears of the new generation with lethal gunfire.

 

 

            That concern had alerted Fortune magazine, the most literate and eclectic of the business periodicals, four years earlier.   It was raised during what may have begun as a  human interest piece on “the private world of the class of ’66”; the reporter researching it discovered some unsettling things about the rising generation and its attitude toward the corporate culture.

 

                 [T]his rejection of business is strong now, and many of those with the highest

            scholastic ranks will go on into teaching, passing on their moral and intellectual

            disapproval…  the anti-business sentiment is strongest in the schools that have the

            highest academic standards, where business in the past has carried on its most

            ardent solicitation of recruits.

 

 

Three years later, the month of Richard Nixon’s inauguration, Fortune devoted its entire issue to this theme: “the young are the nation just ahead.”[69]   Citing its own 2/66 article as a point of departure, it added, “That cloud on the horizon spotted by FORTUNE (and others) nearly three years ago has become a hurricane.” (p. 57)   “Educated youth have to  be taken seriously in any society,” editor Hedley Donovan warned, “even when they condemn it bitterly, they are presumed to be its future leaders.” (p. 67)

            In one of the articles, John Bell painted a starkly prophetic vision of the bleak world awaiting that year’s graduates.   The US economy would lose its capacity to manufacture competitive goods, a task which would be taken over by sweatshop labor in the Third World.   It would thereafter provide “services”, chiefly “information”.   This information would not be enlightening, but promotional.   And yet it would be technical,

“requiring that educated people (even those in the humanities) increase their knowledge of quantitative methods.”   Not even those at the apex of this information society would hold secure jobs – not “in a world where status derives from intellectual attainments and where these in turn depend on comprehension of a theory that is always in flux.” (p. 174)[70]   It was an uncannily precise prediction of the horrors of the computer age and its destruction of human values.   (In another eerie prefiguring, the economic slump leading to the crisis of May 1970, like that leading to the recession of 2001, would be led by the collapse of computer companies.)[71]

            Look magazine, in a remarkable series of articles on the MIC and how it was creating the generational fission of America, quoted a young politician named Walter Mondale as predicting, “If these young militants on campuses and in the political parties are going to be our national leaders – and someday they are – they are not going to be interested in keeping this kind of society together.”[72]

            By the beginning of 1970, even the New York Times had been alerted to the crisis, most immediately by a Daniel Yankelovitch campus opinion survey (similar to the one Fortune had used): “94 per cent of all college students (not just the radical left) believe that business is overly occupied with profits and too little concerned with facing its public responsibilities.”[73]   The corporate response to the crisis was “neither fast enough nor thorough enough”, an academic management journal reported, and the government’s response was misdirected “toward the few young men who are radical in violent action rather than the many other young (and not so young) men who have become radical in perception.”[74]   “[T]he creative element is youth… we cannot do without them; and since they will eventually assume control, we had better do with them.”[75]

            The prospect of the coming generation turned against business was bad enough.   But there were also signs that the students were not turning away in a sense of withdrawal, but turning toward capitalism’s traditional enemy.   Like Reverend King, they  were discovering that the Vietnam War was not a temporary aberration by a fundamentally just society, but rather a typical crime by a fundamentally corrupt one.

 

Coming to terms with this was a visceral wrench for antiwar leaders like Sam Brown and came only through bitter experience.

 

                 I remember attending a march in 1965 at which both Norman Thomas and Carl

            Oglesby spoke…  Oglesby talked about US imperialism with language that set my

            teeth on edge.   Within a year, I read Oglesby’s speech in essay form and found

            myself agreeing with it.   Within two years, I found it hard to restrain myself from

            using his language.   I had come to believe it but feared it would be offensive to

            potential supporters.[76]

 

 

            Language begat action.   In 1968, the Students for a Democratic Society targeted Stanford University and its research institute for performing war work.   (They made it clear in the process that the university and the institute had been corrupted to this end by trustees like Arthur Stewart and Fred Hartley of Union Oil, and Richard McCurdy and Gardinier Symonds of Shell and Tenneco respectively.   The latter two companies had been among those which had moved into Indonesia after the CIA-engineered bloodbath of 1965.)   On April 13, 1969 the protestors called for an end to all war-related research at SRI.   The trustees predictably rejected their demands.   The students occupied the Applied Electronics Laboratory between the 9th and 18th, naturally drawing media attention.   “Chemical and biological research was ended, and SRI, sold” as a result.[77]

It was a stunning – and awakening – blow to the previously invincible MIC.

            Next to attack on this axis was the New Mobe [Mobilization Against the War in Vietnam], previously a single-issue movement only.   It moved into the fray on the side of the 100-day-old strike by General Electric workers.

 

                 [T]he New Mobe called upon the Senate to investigate General Electric’s use

            of profits made in the Vietnam War to break the strike.   It pointed out that one-

            fifth of GE’s total business was in war contracts and its profits from these

            contracts and its cheap labor plants in Southeast Asia helped resist the demands

            of the unions.[78]

 

            Whether or not in response to these two sallies, the MIC held a closed meeting at New York City’s Commodore Hotel on June 23, 1969, under the auspices of the state’s Commerce and Industry Association, to “plan strategy against a Students for a Democratic Society project to form a worker-student alliance”.  (It thus appears that the regime had no more realistic idea than the SDS itself how effectively their young radicals would be able to mingle with and influence the aspiring bourgeoisie on the production lines; the “work-in” program proved a grotesque failure.    Three days after the Commerce and Industry war council, SDS met in its own national convention, where it proceeded to commit suicide by schism.)     The meeting at the Commodore was addressed by William C. Sullivan, the FBI’s liaison with the CIA, and three other officials identified only as representatives of Defense, the academic community, and the trade unions.   Its watchword, passed on from the US Chamber of Commerce, was “Look out for the workers.”[79]

            But if the activists had chosen the wrong target in the “work-in” and the moribund SDS as the wrong standard-bearer, the objective was all too correct.   As the new Mobe closed its offices in April 1970, an irreducible cadre of survivors formed the Coalition on National Priorities, making the MIC its single-issue agenda for the 1970 Congressional elections.[80]   They failed because they had forgotten that newspapers and broadcast stations were themselves part of the corporate tribe:

 

                 [T]he media was [sic] critical in keeping antiwar, and anti-Nixon, protest from

            becoming the basis for a more systematic critique of the political, social, and

            economic system…   [T]he media was as important in preventing this chaotic

            situation from evolving into a larger questioning of the system as it was for

            branding Nixon a deviant.[81]

 

            Undirected and unsupported by any national organization or strategy, the anti-corporate revolt – like the unseen enemy in Vietnam – was the more harrowing for these reasons.   Its spontaneous and unstructured eruption, the opposite of a Marxist revolution directed by a tightly-disciplined cadre, was the perfect foil to the anthill society monopoly capital was in the process of constructing.   The inability of his colleagues to perceive, let alone understand it, let Wallace G. Taylor, president of Formica, Inc., to label them

 

                 deaf, dumb, and blind to a hydra-headed new American revolution that is

             tearing this country asunder, value by value… [can] a country whose business

             is business continue to be deaf to its own youth and blind to a war that is rapidly

             turning this country into one of the poor nations?[82]

 

            If the corporate world at large ignored the passion of its new challenger, Nixon and his cadre tried to domestic the new environmental movement, hoping that the first Earth Day (April 1, 1970) would divert the young from anti-war activities.   The ploy backfired.   “[T]he struggle for clean air and water is producing as many radicals as the war”, because the force that had created the war was the same one that was leaching and poisoning the planet: “the needless drive for growth and profit.”[83]   Thus antiwar Resistance leader Staughton Lynd proclaimed the standing order for both movements: “Our inevitable enemy in the coming years is the corporation.”[84]

            The new rebel army sprang into existence with a ready-made tactic, one for which the guardians of the regime had no defense.    While their protestors gathered outside the shareholders’ annual meetings, they infiltrated the gates with demonstrators armed with voting proxies.   Once such gained admittance to the United Aircraft annual meeting and used his proxy to call for the passage of a resolution condemning the board of directors as war criminals.   Meanwhile, demonstrators outside chanted, “Peace now!  Peace now!”, to the martial music of the Third World Inter-Galactic Marching Band and Cloud Society.[85]   Fifteen hundred protestors in war paint, calling themselves Minnesota Proxies for Peace, marched on the headquarters of Honeywell, Inc., demanding that the company cease manufacturing cluster bombs.   Company police with Mace needed a backup of sixty city cops in riot gear to scatter them.   Inside the hall, chairman of the board James Binger ruled the dissidents with proxies out of order, gave the agenda a speed-reading,

and adjourned after ten minutes.   Honeywell offices in Boston, London, and Copenhagen were simultaneously taken under siege.[86]   In Seattle, Boeing Aircraft shareholders huddled in the cafeteria while pickets outside carried signs reading “Boeing Profits From Death and Oppression”, burned a 10-foot yellow papier mache effigy of a B-1 bomber, and danced around it chanting antiwar slogans.[87]

            Slightly flaky around the edges or not, the revolution had arrived in the factory yard.   Olin Matheson, the munitions giant, was spooked into an admitted “over-reaction” that left it apologizing to shareholders.   Its security provisions for the annual meeting included twenty-eight Stamford, Conn. police, fifteen Olin guards, and any number of “undercover” executives, spying on and harassing its guests through a maze of I.D. checks.[88]

            Three days after the Kent State killings, the protests invaded the previously-sacred halls of the Exchange itself, in the persons of demonstrators leafleting and proselytizing office workers.   The violence was limited to the street outside, where construction workers rained soda bottles and beer cans on protestors in the streets “from several stories up”.[89]    The “hard hats” came down into the streets the next day – “Bloody Friday”, May 8, 1970 – and roamed them wielding baseball bats and heavy tools, attacking anyone who looked like their idea of a “hippie” while the police looked on or even shouted encouragement.   Their brutality and brown coveralls reminded many, particularly Jewish businessmen who had fled the Holocaust, of a scene from the rise of the Nazi Party in Germany.[90]   John Winthrop, a prominent Gentile (of Wood, Struthers, & Winthrop) also “noted disconcerting similarities between the fury of the workers and the Nazis during the last days of the Weimar Republic.”[91]

            The trepidation of the Street’s elders became total disorientation as the Exchange was then invested by fifteen hundred student demonstrators from the Columbia, Dartmouth, Harvard, Massachusetts Institute of Technology, New York University, and the University of Pennsylvania graduate schools of business.   “[R]ecent events in Cambodia and at Kent State University stirred them to action almost overnight.”

“Heretofore business students were more concerned with their own futures than with the welfare of the world,” NYU’s Michael Dembo explained, “They’ve now become aware that they have no future if our country has no future.”[92]   The revolt was reaffirmed at the scene of its first great victory, as students of the Stanford Graduate School of Business joined the national strike.   The pickets were led by the dean, James Van Horn.   The president of the MBA student association Roger Salquist sent letters to the presidents of the Fortune 500 companies urging them to “focus the immense power of the business community to achieve vitally needed changes in our national priorities.”[93]

            Before the invasion of Cambodia, Louis B. Lundborg, chief executive officer of the Bank of America, had warned a Senate committee,

 

                 The war has divided, confused, and bewildered Americans…   As a result of

            this confusion and bewilderment, many people are losing trust in the institutions,

            both public and private, through which we govern ourselves and run our

            economy.[94]

 

In the wake of the Kent State murders, Thomas J. Watson, chairman of the board of International Business Machines, restated the same warning to the same committee:

 

                 [T]he longer the war continues, the more it broadens the gap between the elder

            generation and the young men and women who will soon be responsible for the

            leadership and destiny of this country.   Indeed, prolongation of the war may well

            set up a continuing revolution of our youth through which they become

            demoralized so that the progress of our country will be appreciably slowed.[95]

 

Entrepreneur Peter Grace put it more baldly: “If I were Nixon, I would have pulled out on Jan. 15, 1969…   it is unfair for everyone else to enjoy business as usual while 16-year-old kids are bearing the burden of worry about the war.”[96]

            Some managers had already done more than warn, stunning their peers by joining the line of march during the October moratorium against the war.   Fifteen thousand of them had staged a “walk for peace” up Wall Street; a hundred of these spent the day in front of Trinity Church reading the names of GIs killed in action.[97]   “[T]he day after Kent State,” recalled Revlon vice president George Paris “ – the day after that picture ran in the papers – I couldn’t work.   My son happens to be a college student, and I could have  been looking at a picture of him.”   He and another Revlon v.p., Paul Woolard, formed the Corporate Executives Committee for Peace.   “The time has come for businessmen to draw up a profit-and-loss statement on the war,” Woolard declared,

“If we owned that venture, we would liquidate it before it bankrupted the rest of the corporation.”[98]

            Their Committee was one of the ad hoc groups that was born of the shock on May 4th and then sputtered and died for lack of peer support.    Harold Willens, would-be founder of the Businessmen’s Educational Fund, mailed 250,000 copies of Commandant Shoup’s article on article on the MIC to his fellow executives, requesting comment.   Of the 1700 replies he received, 1100 agreed with agreed with Shoup “but desired anonymity”.   They could not identify themselves for fear of ostracism and eventual oblivion within the corporate culture.[99]

            But if most businessmen could not openly come out against the war, they were getting less shy about expressing themselves on the subject of the President.   A Louis Harris poll in early May found that of the population sampled – 537 managers in the Fortune 500 top companies – 78% blamed the President’s policies for the stock market’s decline.[100]   And Fortune itself commissioned another Yankelovitch survey of 250 chief executive officers in the same top echelon of American businesses.   No new categories appeared under the heading of administration successes.   Several new ones appeared as failures.   “Most strikingly, the Administration’s lack of communication with the nation’s youth has come from nowhere to rank right up with Vietnam.   The President’s failure to unite the country also was mentioned for the first time.”[101]

            It was an unprecedented moment in American history.   Big Business was turning against a Republican president.   The question no one thought to raise was whether Richard Nixon even cared.