Judge Thomas Penfield Jackson’s ruling that Microsoft is a monopoly
raises the question of how that monopoly is to be remedied or
abolished. The judge wrote, “Microsoft has demonstrated that it will
use its prodigious market power and immense profits to harm any firm
that insists on pursuing initiatives that could intensify competition.”
But the hallmark of a true monopoly is that it has the force of
government behind it, like the public schools, and can charge the
highest price for the shoddiest goods, which is what the government
schools do. Microsoft is certainly not a monopoly in that sense. It
has given consumers an excellent product at a very good price. In fact,
it is the knowledge of potential competitors waiting in the wings that
forces Microsoft to offer its products at a very reasonable price. If
consumers thought that there was a better product at a better price that
would give them what they now get from Microsoft, they’d abandon
Microsoft in a minute.
Apparently, the Justice Department is very selective in how it views
monopolies. For example, there is one government-sanctioned monopoly in
this country that has more power than all past monopolies put together.
It’s called the Federal Reserve System. Here’s what a reporter in Worth
magazine of November 1998 wrote about it:
- The U.S. Federal Reserve is the most powerful central bank in the
world. It can send stock markets around the world soaring or crashing
with merely a word, and wipe out or create billions of dollars with a
Now that’s a monopoly! That’s the kind of colossal power the
opponents of the Federal Reserve Act feared in 1913 when they voted
against the creation of a central bank. Andrew Jackson knew that such a
monopoly was bad when in 1832 he vetoed the extension of the charter of
the Bank of the United States and withdrew federal funds from it. The
bank was hated in its day and considered a “hydra-headed monster, a
grinding monopoly, robbing the people, making money dear, ruining State
banks, and causing hard times.” Jackson wrote in his veto message:
- Many of our rich men have not been content with equal protection
and equal benefits, but have besought us to make them richer by act of
Congress. By attempting to gratify their desires we have in the results
of our legislation arrayed section against section, interest against
interest, and man against man, in a fearful commotion which threatens to
shake the foundations of our Union. It is time to pause in our career
to review our principles, and if possible revive that devoted patriotism
and spirit of compromise which distinguished the sages of the Revolution
and the fathers of our Union.
From that time on, the American people thought that a central
bank was a bad idea and stayed away from it. England, France and
Germany had central banks, but that was Europe where monopolies and
cartels were part of the system. But in the U.S. monopolies and cartels
were finally made illegal with the passage of the Sherman Anti-Trust Act
of 1890, which was used to break up John D. Rockefeller’s Standard Oil
So, how were the bankers able to get Congress to create the biggest
monopoly of them all? The plan was conceived by a cabal of New York
moneyed interests that met in secret on Jekyll Island, Ga., at the
private resort of J.P. Morgan in November of 1910. The participants
were Nelson W. Aldrich, Republican senator, chairman of the National
Monetary Commission, business associate of J.P. Morgan, and
father-in-law to John D. Rockefeller Jr.; Abraham Piatt Andrew,
assistant secretary of the U.S. Treasury; Frank A. Vanderlip, president
of National City Bank of New York, representing William Rockefeller and
Kuhn, Loeb & Company; Henry P. Davison, senior partner of J.P. Morgan;
Charles D. Norton, president of J.P. Morgan’s First National Bank;
Benjamin Strong, head of J.P. Morgan’s Banker’s Trust Company; and Paul
Warburg, partner in Kuhn, Loeb & Company.
All of these gentlemen rode in secret to Jekyll Island aboard
Aldrich’s private railway car. It is obvious from the roster that this
was an inside deal made between corrupt politicians and big money.
Thus, when Aldrich presented his plan for a central bank to the Congress
in 1910, it was rejected. A second version was introduced in 1913, and
this time, there was a president, Woodrow Wilson, who would not veto the
plan as Andrew Jackson had done. Indeed, Wilson had been put in the
White House by the very men masterminding the Fed.
The basic argument for the Federal Reserve System was that it would
provide stability for the economy and end the boom and bust cycles that
plagued the stock market. It is true that the stock market had its ups
and downs, but they were never prolonged, and recovery took place in a
relatively short time. So how come the worst stock market crash and
prolonged depression took place after the Federal Reserve was in power
for more than 15 years?
The answer is quite simple. The Federal Reserve is a monopoly, or
more correctly, a cartel of New York banks. Their aim was to shake out
the economy, get rid of the hundreds of small, local banks that held the
deposits of millions of people, reduce the price of stocks so that they
could be bought up on the cheap by those with cash waiting for the
fall. In fact, many of the top moneymen got out of the stock market
knowing that the Fed would destabilize it and bring about a crash. They
sold their stock when prices were at their height, and bought them back
when they were at their lowest.
And because our economy is now run by bankers, we have become a debt
economy in which all of us are up to our ears in debt. We can’t save
money because taxes are so high, so we must borrow money for homes,
cars, vacations, college tuition and just about everything else. And
that’s how the banks get rich, charging interest on borrowed money. The
banks prefer debtors to savers, because savers collect interest from the
bank, while debtors pay interest to the bank. And since the Federal
Reserve can create money out of nothing, banks don’t even need savers
for money to lend out. They can borrow it from the Federal Reserve.
What a racket! Americans are now so used to buying everything on
credit, that the whole concept of thrift and saving is now considered
old fashioned. Why delay gratification when plastic can get you what
you want now? Yes, you become a debtor, but that’s OK because everyone
is now a debtor, and banks have liens on virtually all of our assets.
And when banks make mistakes, like lending money to Third World nations,
there is always the taxpayer to bail them out.
So when the Justice Department and Janet Reno talk about the evils of
monopolies, one must stop and think and wonder when will the nation wake
up to the biggest monopoly of them all.
Samuel L. Blumenfeld is the author of eight books on education,
including “NEA: Trojan Horse in American Education,” “Is Public
Education Necessary?” and “Homeschooling: A Parents Guide to Teaching
Children.” All of these books are available through Amazon.com.