Downfall: the empire’s destiny

I was recently introduced to “The Great Red Dragon,” by L. B. Woolfolk, published in 1890. In broad strokes, the book documents the takeover of the American economy by British banking interests. Their methods entailed periodically flooding the economy with credit and generating a boom. Then, when the bankers' nets were full and everyone was in debt, the bankers would abruptly withdraw credit. The practice was simply predatory.

The triggering event usually involved a high-profile bank failure, which would cause an economy-wide avalanche of bankruptcies. Large, politically connected banks would then take over choice businesses, farmland and real estate for pennies on the dollar. Within our lifetimes, the Lehman Brothers’ failure in 2008 would have been a typical example of this, but Covid pandemic response in 2020 served the same predatory purpose.

Boom, bust, rinse, repeat…

During the 19th century, US economy endured three major financial crashes: in 1837, 1857, and in 1873. Each crash triggered major economic depressions with mass-scale culling of smaller banks and other businesses. The collapse enabled the ruling oligarchy to consolidate monopolies over all the key industries.

The people and the press were suspicious enough to tag the winning tycoons of the era “robber barons,” but their attentions were usually distracted by frequent wars, including the Civil War (1861-1865). The 20th century opened with the crash of 1907 followed by World War I, then the crash of 1929 followed by 1930s depression, then World War II, and so on. During the recent decades, we seem to have sunk into a state of chronic economic crisis and permanent warfare.

This predatory system was engineered a long time ago and it defined Western civilization’s character over the past few centuries. Consider that the Bank of England (BOE) was established in 1694. Over the following century (from 1701 to 1815), England prosecuted 18 officially declared wars against her then rival power, France. In 1833 the Parliament passed the Bank of England Act, granting the BOE monopoly on issuing the legal tender money. Out of the remaining 67 years of the 19th century, Britain spent at least 32 years in recessions, depressions, bankruptcy or financial collapse including the 22-year long depression from 1873 to 1896.

It would appear that the sequence of booms and busts followed by major wars is a feature of Western-style "free market capitalist economy." How and why this happens is never properly explained nor understood, but somehow, it’s become our normal. Where explanations should be sought and offered we get shrugs and blank stares: "It's complicated..."

Sure. It's complicated, so let's not try too hard to understand it. Keep calm and carry on: get into debt, mortgage your property, enjoy some temporary prosperity, then struggle and go bankrupt. Then you may get to send your sons off to war. They’ll tell you which enemy to hate and you may resign yourself to the unfolding dystopia. We’ve always been at war with Eurasia. What could you possibly do?

It doesn’t have to be that way

But what if this hellish doom loop isn't inevitable? What if it was deliberately engineered to be that way by the ruling oligarchies for their own ends? Even if their methods may be hard to identify, we can at least acknowledge that China's 40-year development as a capitalist free market economy didn't include any economy-wide crashes nor wars. China even completely avoided the 1997 East Asian financial crash.

How perfidious of the CCP to insulate China from the crisis that capsized all of the Asian Tiger economies. But if China was able to build prosperity for 40+ years and lift 850 million of her people out of poverty without squandering the economy's precious resources on wars, why can't the West do the same? Why aren't all of western economists studying the Chinese model and learning how we could upgrade and improve our own? Instead of discussing this, we only get China bad, CCP bad, let's go to war!

Downfall: every empire’s ultimate destiny

To think that only some 30 years ago, the West had emerged victorious from the Cold War and its economic, political, military and even cultural power seemed unchallengeable. Some people even convinced themselves that we'd reached "the end of history." Others boldly announced the “New American Century,” proclaiming global "full spectrum dominance." But as history has shown again and again, the inevitable destiny of every empire is its ultimate downfall.

The bankers of the world

Perhaps the most powerful empire there ever was, and certainly the largest one by geographical extent, was the British Empire. From today's perspective it is hard to appreciate quite how dominant Great Britain was at its peak, and how unassailable its position in the world appeared. In "The Great Red Dragon," L. B. Woolfolk reproduced parts of a pamphlet he obtained in London in 1864. A few excerpts from that document follow:

"It is a remarkable position England occupies in the world. ... the British Isles are... the heart of the world - the center to which the thoughts and acts of men most generally tend and to and from which the streams of material life are ever flowing. ... England, commercially, holds in the world the same predominant position which the Eternal City held in the restricted era of the Roman empire. Our country is the chief goal of the highways of commerce. ... England furnishes employment to tens of millions of people in the uttermost parts of the earth. ...

The trade of England is ubiquitous. It penetrates to every part of the earth. Fully three-fourths of the exportable produce of every country is sent direct to England, and of the remaining one-fourth, the greater part is carried by English enterprise, and at English risk to the port of consumption. In like manner, almost every spot on the earth receives its foreign supplies from this country, or by the hands of English traders; and by means of English capital.

We are the manufacturers of the world. Every nation in the world except England may be called an agricultural country; ... few countries export much except raw produce; and the direct trade between the various countries of the world is very small. All trade through England; for what little goes direct from one country to another is generally on English account, carried by English enterprise, and with English capital.

We are the great carriers of the world. Thirty thousand ships sailing under the flag, or bearing the cargoes of England, are ever on the seas going and coming from all parts of the globe. ... We are the shipbuilders of the world; and own or have mortgages on every vessel afloat. The shipping in every foreign port either belongs to England or are employed by England with the exception of a few coasters. ...

We are the railway makers of the world: and the actual owners of the greater proportion of foreign railways. We carry the mails for the whole world. Strange as it may appear, even the letters from South America to North America have always passed through the London post office. ... No one can go from one part of the world to another without passing through England; so completely do we monopolize the whole passenger traffic. ...

We are the bankers of the whole world. If the North sends money to the South, or the East to the West, the money must be sent through London, there is no other way. ... We are the bullion dealers of the world: all gold and silver is brought direct to England in payment of debts due to us and then is redistributed by us in the shape of public and private loans. ... We have the lion's share in every mine. ... We are the great capitalists of the world. It may be truly said that there is not at any time any corner of the world in which Englishmen have not more or less pecuniary interest. ...

English capital performs the internal traffic of every country, and largely supplies the means of interior production. ... We are the annuitants of the world. We have loaned money to every government, and almost to every municipality. Every country has to pay large sums to the English as interest upon loans, amounting to many hundreds of millions [of pounds]. ... Nothing is too large and nothing is too small for English capital. ... The very waterworks of Berlin were constructed by the English, and are owned in England. So endless are the ramifications of British trade and enterprise, that... in fact more than half the world is mortgaged to England."

The conquest of America seemed irresistible…

Moolfolk elaborates the way London bankers came to control the bulk of American industries including oil, steel, shipping, railroads, mining, timber trade, real estate development, farming, as well as wholesale and retail trade. He cited an American banker who told him that,

"the money line... always has three points: the agent in the West, who loans the money; the intermediary in the East from whom he gets it; but the third point in the line is always London. There is where the money is coming from."

At the time the process appeared unstoppable: "If things go on as they are,” lamented Moolfolk, “in a few years more, the Money Power will have monopolized the retail traffic, as it has monopolized and is now monopolizing all the other branches of business in this country."

… but their empire will still collapse

But even by the time “The Great Red Dragon” was published, British bankers’ colossal empire was already well past peak and had begun its irreversible decline. The gushing, self-congratulatory 1864 pamphlet about the unassailable British hegemony was a reflection of that era's groupthink about their own version of "full spectrum dominance" and the "end of history."

But then as now, as impressive as empires appear in their zenith, they are always unsustainable. The whole business model just simply doesn't work and without exception always leads to failure. Undeterred, our imperial oligarchies can’t seem to give up on their delusions of grandeur; they refuse to learn their history and won’t stop their destructive march of folly – probably until enough of us have said, enough already.