Matt Stoller on the 100 Year War Between Monopoly Power and Democracy

Matt Stoller did not grow up in a political family. He studied history at Harvard University. He was for the Iraq war. 

“I trusted the New York Times, Harvard, a whole bunch of elite institutions, John Kerry and Thomas Friedman,” Stoller told Corporate Crime Reporter in an interview last week.

“I was radicalized by the experience of being so horribly wrong and then seeing the people that I trusted either not being held accountable or they were promoted. That was jarring.”

Stoller had to teach himself some American history.

The result is his book – Goliath: The 100 Year War Between Monopoly Power and Democracy.

One of the key figures in the book is Wright Patman.

When did you first hear the name Wright Patman?

“A woman named Jane D’Arista. During the 2008 crisis, very few people understood what was happening. Nobody really knew because everything was blowing up and there was all of this hidden risk they hadn’t tracked. Jane did know what was happening. I met her through William Greider. Bill said – you should meet Jane D’Arista, she was helpful to me when I wrote my book – Secrets of the Temple.”

“Jane would say – that market is going to blow up now, this market is going to blow up now. I asked her – how do you know this when no one else does? And she said – well, I worked with Congressman Wright Patman (D-Texas) in the 1960s and 1970s. And I learned how the New Deal system was set up to prevent all of these problems. And as they took off the guardrails in the 1970s, 1980s and 1990s, I realized that this is blowing up because that guardrail was taken off. She had written bankers about the shadow banking system. Years before she had called it the parallel banking system.”

Who was Wright Patman?

“He was born in 1893 in Texarkana, Texas. He was a tenant cotton farmer. Never went to college. Did one year of law school at Cumberland Law School. He was known as the last populist. For 46 years, from 1929 to 1976, he battled against high interest rates, big banks and monopolies. Those were his foes. He impeached Andrew Mellon, the Secretary of the Treasury in 1932. And he was the first Democrat to investigate Watergate in 1972.”

“In 1975, the Watergate generation of Bill Clinton overthrew him. They were being manipulated by bankers. They did not see the problem of monopoly and concentrated financial power that Patman saw. He represented in his life and his work and his approach to policy an old school, anti-banker, anti-monopoly, Brandeisian, Jeffersonian vision of American politics. He in many ways held the middle class together. He was an important part of that populist residue that built what we consider a more socially equitable world in the 20th century.”

The Watergate baby class of George Miller, Toby Moffett – liberal reformers – came in. And you say they were being manipulated by the bankers.

“One of the Congressman involved was Richard Ottinger. He was very involved in the overthrow of Patman. He had been fighting with Patman for ten years. Even though Patman was chair of the Banking Committee, he was always a minority because Democrats would often vote with the Republicans. In the mid 1960s, they even stripped Patman of his subpoena authority.” 

If you were to boil down your book, it would come down to this question of concentrated monopolies versus decentralized markets, Hamilton versus Jefferson. 

For younger generations who hear the name Alexander Hamilton, you make the point that perhaps we shouldn’t be so enthralled.

“This isn’t the only axis of American politics, but it’s an important axis. America was founded out of a feudal era when we were breaking from aristocracy. There are a lot of elements of aristocracy. One of them was slavery. Another one was a kind of western imperial frame. Another was a separation of classes of people into those who are fit to rule and those who are not. Hamilton was generally more of an aristocrat. But there was a more democratic culture in America, in the colonies than there was in England. He wasn’t as overt about it. But he was far more of an aristocrat than he was a democrat. He did not like democracy. He wanted a President for life. He later on tried to organize an Army that he would control as a quasi military dictator.” 

“Wall Street, which was his great legacy, was designed to exclude the people from any control over the political economy or resource allocation. There were a whole series of bitter fights, including the Whiskey Rebellion, over the economic outcomes of the revolutionary war. Hamilton became this great symbol of autocracy. The Federalists did not want democracy. That’s why when they lost in 1800, they didn’t come back. The party was wiped out. They lost the debate so thoroughly.” 

“It’s inconceivable today to imagine that people were saying – democracy is bad. But yes they were saying that.”

“Jefferson by contrast did believe in more egalitarian ideas. One of the focal points between these two was their approach to banks and monopolies. It was a key difference. Hamilton wanted to amass men and capital in institutions that the better sort would govern. The Bank of the United States was a private bank. It was government chartered, but it was owned by private actors who would profit from it and allocate resources.” 

“Jefferson saw this as dangerous. Similarly, Hamilton wanted a series of industrial monopolies. And Jefferson saw these as dangerous. Jefferson’s view was that we should have a broad distribution of property. This was the yeoman farmer approach.” 

“If you pull this through, we have had this debate for more than 200 years. In the 1900s to the 1930s, the idea was that bankers had ethics and bankers were special and should make decisions about political economy that the people shouldn’t be allowed to interfere with.” 

“And then you move forward today, and you see economists saying – we know the math. That’s another variant of aristocracy – hiding their political assumptions in the math. Call it technocracy, call it aristocracy, these are all ways of preventing ordinary people from having influence over how resources are distributed and how property is organized in America. That tension you saw all the way through the crisis and you see it today.”

“When Lin Manuel Miranda wrote that play on Hamilton, he based it off of research by Ron Chernow. And it paints a falsified picture of the founding. And it excluded the very autocratic beliefs of Alexander Hamilton. They did that because they wanted to celebrate Wall Street. And they wanted to celebrate the bailout. It was in some sense a history of Hamilton. But in another sense it was a celebration of the Bush Obama bailouts.”

Let’s do a lightning round with some of the characters in your book. 

Andrew Mellon.

“Andrew Mellon was the most powerful man in the 1920s. The joke was — three Presidents served under him. He was the Secretary of the Treasury and almost a billionaire. He had massive amounts of power from 1921 to 1932.”

Ferdinand Pecora.

“He was a gutsy street fighter, prosecutor, Republican who exposed the massive network of bribery that JP Morgan had engineered. He exposed Supreme Court justices, CEOs, top Republicans and Democrats, military generals, who were getting money from what was called the preferred list. Ferdinand Pecora exposed that. He also exposed other scandals. He laid the foundation for financial controls in the New Deal.”

Adolph Berle. 

“He was a statist planner from the left. He helped organize the post World War II elite liberal world through the Americans for Democratic Action and then through some foundations. He started to turn the Democratic Party away from its populist and Democratic roots.”

Robert Jackson.

“Robert Jackson was the Supreme Court Justice during Brown v. Board of Education. He was also a Nuremberg prosecutor. But he got his start in politics as a prosecutor for what is today the IRS. He put Andrew Mellon on trial for tax fraud. It was a difficult case, but he effectively won it.”

Richard Hofstadter.

“Richard Hofstadter was the creator of a school of history called consensus history. He is responsible for the lack of awareness writ large in the battles over corporate power that took place in American political economy. He made the argument that populist farmers and merchants in the 1890s – they weren’t upset about banking powers, they were just frustrated with immigration. They were Anglo-Saxons. He told a cultural story instead of an ideological story about finance. He also said that Hoover and FDR had no real ideological disagreements. It was just that FDR was a better politician and warmer than Hoover.” 

“Hofstadter was extraordinarily influential. And the history that Barack Obama learned and that Bill Clinton learned and that George Bush learned is a variant of the history that Richard Hofstadter taught.” 

“When you hear anyone today talk about populism and say – that’s like fascism, that’s not true, but that comes from Richard Hofstadter.”

Robert Bork.

“Robert Bork was probably the most important antitrust lawyer — aside from Louis Brandeis. Bork was the conservative thinker who changed how we think about competition and antitrust. He made the argument that antitrust had nothing to do with political or market power, that it was entirely about outputs and making sure that consumer prices were low. He made this argument from the 1950s until they won the debate in the early 1980s.”

Philip Hart.

“Philip Hart was a great anti-monopoly Senator from Michigan. He and Patman were the rear guard, the last of the Congress to fight for strong anti-monopoly principles. In the 1970s, he put up the Industrial Reorganization Act, which is a no fault monopolization statute that would have broken up big companies throughout the economy. It didn’t pass obviously. But it was very important. And in the hearings for that bill, he ended up getting information about how AT&T operated. And he turned that over to the Department of Justice, which resulted in the antitrust case against AT&T.”

[For the complete q/a format Interview with Matt Stoller, see 34 Corporate Crime Reporter 5(11), February 3, 2020, print edition only.]

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