The Planned Gutting of Industrial America: Who Did It and
By John Hoefle
January 1, 2001
Original title: Southern Strategy: Assault
on the American Republic published in EIR January 2001
The political success of Richard Nixon and Jimmy Carter's
"Southern Strategy,'' transforming the White House and Congress into
bastions of white Southern power, would have been impossible, without the
economic transformation of the United States from the greatest industrial
and scientific nation-state in history, to a post-industrial nation of white-collar
accountants, real estate brokers, computer programmers, retail clerks, and
This transformation of America, over the past 30-plus years,
has been characterized by the collapse of the urban industrial and cultural
centers of the North--New York, Detroit, Chicago, Boston, Philadelphia,
Cleveland, etc.--and the gradual emergence of the "New South'' as the
heartland of America's post-industrial economy.
Today, Southern cities like Houston, Dallas, Atlanta, and
even Charlotte, North Carolina dominate the new economy'' and house the
multinational corporate and banking headquarters that preside over the deregulated
looting of every last remaining income stream.
This Houston-Atlanta-Charlotte nexus can be dubbed "Southern
Strategy, Inc.'' Of course, it was Wall Street--most prominently the financial
interests associated with Harriman, Morgan, and Rockefeller--which set this
shift in motion. But the deregulated monster represented by such corporate
creatures as Enron Corp. in the energy field, the Rainwater interests buying
up hospitals, or Corrections Corporation of America in private prison operations,
signals as process of financial speculation and physical-economic chaos,
which Wall Street can no longer control. With President George W. Bush and
Vice President Richard Cheney moving from Texas to Washington, the power
of this Southern-based corporate looting apparatus is almost certain to
grow at an even more accelerated rate.
We take up one significant slice of that corporate octopus,
the Texas-centered network of oil industry giants that have been tied to
the political fortunes of the Bush clan for much of the last century.
Behind the Bushes
The role of the Bushes in pushing deregulation, like their role in grabbing
control of physical assets, is in the service of something much older and
Sitting at the center of this web, and typifying the level
of corruption, are two Texas-based energy industry giants, each with ties
into the nastiest of the Wall Street and European financial oligarchies:
Schlumberger and Enron.
By far the older and filthier of the two is Schlumberger,
the intelligence apparatus masquerading as an oil services company. Schlumberger
is one of the two biggest oilfield services companies in the world, Halliburton
being the other. While Schlumberger, the company, was formed in Paris in
the early 1900s, the intelligence network which operates through it is much
older, a part of the banking empire of the interlocked de Neuflize, Schlumberger,
and Mallet-Prevost families, which have been running operations against
the United States since the American Revolution. In Houston, the Schlumberger/Lazard
nexus is closely allied with a nest of British assets centered around the
Harriman interests and operating through a group of powerful law firms.
E.H. Harriman was a 19th-Century railroad robber baron whose companies were
fronts for the British royal family and their fellow aristocrats. Harriman's
agents in Houston included Baker & Botts, the law firm of former Bush
Secretary of State James A. Baker III, which has also represented Schlumberger
since the 1950s. The Bush family is also a creature of the Harriman networks
and their British controllers, through both the Bush and the Walker sides
of the family. Both George H.W. Bush's father, Prescott Bush, and his uncle
Herbert Walker were top officials of the Harriman investment bank, and the
Harrimans, Lazard, and Scottish banker James Gammell funded the business
and political career of Sir George (Prescott, Herbert, and Sir George were
also members of Skull & Bones, the powerful Yale-based secret society).
Also coming together in Houston were the British intelligence networks of
Col. Edward Mandell House, the global oil cartel, and the ``legendary''
Enron, which has an energy trading room in its Houston headquarters
which rivals the trading rooms of the big Wall Street investment banks,
is perhaps the single company most responsible for the chaos in today's
domestic energy markets. Its ``success'' in energy speculation has raised
virtually every electricity bill, natural gas bill, and heating oil bill
in the country, some of them by orders of magnitude,
Enron is a relative newcomer, but plays an important role
in allowing the financial sharks, under the guise of deregulation, to get
their hands on the income streams generated from the production and consumption
of electricity, natural gas, and related energy products. Enron's fortunes
are directly tied to the Bush League: Enron is the single largest contributor
to the political campaigns of President George W. Bush, and the firm hired
as ``consultants'' a number of top officials of his father's administration--including
James Baker III, and Commerce Secretary Robert Mosbacher--after they left
Washington. In return, these officials used their political pull to get
Enron a series of lucrative contracts around the world. Enron chairman Kenneth
Lay has been touted as a potential member of the Bush Cabinet, and Southern
Strategy zealot Rep. Tom DeLay (R-Tex.) is widely known as ``the Congressman
Enron is ``Dubya'' Bush's biggest career patron, having given
him more than $500,000, according to the Center for Public Integrity.
A Bit of Texas History
When Texas became a Republic in 1836, the political battle revolved around
the forces of patriot Sam Houston on the one side, and Mirabeau Buonaparte
Lamar on the other. Lamar was a member of the aristocratic, plantation-owning
Lamar family of Georgia and New York. Houston was inaugurated as the first
President of Texas in October 1836, with his bitter enemy Lamar as his Vice
President. Under the Texas Constitution, Houston could not succeed himself
in office, and not one, but two of his hand-picked successors died while
campaigning for the Presidency, a fortuitous set of circumstances which
helped Lamar become the second President of the Republic of Texas, in 1838.
This Texas-Georgia-New York connection is one of the recurring
themes in this report, exemplified by the Carter-Menil Foundation of former
President Jimmy Carter and Dominique Schlumberger de Menil, and the Houston
connections of Atlanta-based Coca Cola. Coke chairman J.P. Austin was the
Trilateral Commission member who helped Zbigniew Brzezinski recruit and
train Jimmy Carter, to be the President of the Democratic Party's version
of the Southern Strategy. The Lamar tradition also remains strong in Texas:
It was in the Lamar Hotel that the Houston elite gathered to play cards
and run much of the state, and when Texas Commerce Bancshares celebrated
the 150th anniversary of the Republic of Texas with an ad paying homage
to the heroes of the Texas Revolution, leading the list was oligarch Mirabeau
Buonaparte Lamar, with no mention of the patriot Sam Houston.
In the late 1800s-early 1900s, the government of the State
of Texas was dominated by an alliance between the King Ranch and Col. Edward
House. House, who later gained fame as Woodrow Wilson's controller, was
the son of a wealthy British plantation owner in Houston. Back in Houston,
the House family groomed young Jesse Jones to take over as Houston's leading
light. In the 1920s, Jones became a real estate developer in New York, and
among his partners was Robert Lovett, who succeeded E.H. Harriman as the
head of the Union Pacific Railroad. Jones's personal attorney was Capt.
James Addison Baker of Baker & Botts, a firm which represented Harriman
interests in Texas. Jones, in turn, passed the torch to what became known
as the ``8F Crowd,'' so named because they gathered to play poker and run
the state in Room 8F of Jones's Lamar Hotel. The 8F crowd ran Houston and
exerted considerable control over state affairs from the 1940s to the 1960s,
and created institutions that continue to exert significant power today,
notably three of the most powerful law firms in the country, Baker &
Botts, Vinson & Elkins, and Fulbright & Jaworski. Until the late-1980s
demise of the Texas banking system, these law firms were all closely associated
with a major bank: Baker & Botts with Texas Commerce; Vinson & Elkins
with First City; and Fulbright & Jaworski with Bank of the Southwest.
Meanwhile, Back at the Ranch
In 1983, Debrett's Peerage Ltd., publisher of Debrett's Peerage and Baronetage,
issued a book entitled Debrett's Texas Peerage, on ``the aristocrats of
Texas.'' Featured quite prominently in the book was ``The Royal Family of
Ranching,'' the Klebergs of the King Ranch.
``Robert Justus Kleberg, Jr., was a god among Texas ranchers,''
the chapter on the King Ranch began. ``They still talk about him today in
reverent tones, not only on ranches around the world, but at `21,' The Pierre,
Saratoga, The Jockey Club and other exclusive enclaves which he used to
frequent during racing season in the East.''
The New York Times has repeatedly referred to the spread as
``the legendary King Ranch,'' and Debrett's said that before the ranch opened
itself to oil production, it was known as ``the Walled Kingdom.'' The Klebergs,
Debrett's gushed, had ``lifelong friendships with the Whitneys, Vanderbilts
and other horsey families of the East.'' The ranch has also been host to
some of the most powerful oligarchs in the world, including Prince Johannes
von Thurn und Taxis, hereditary head of the Venetian intelligence service,
and Prince Charles of Britain. Anne Armstrong of the King Ranch was U.S.
Ambassador to Britain in the 1970s, as well as being chairman of the President's
Foreign Intelligence Advisory Board (PFIAB) from 1982 to 1990, under Reagan
and Bush. 
The King Ranch was formed in 1857 by Captain Richard King,
who had made his living as a steamboat captain running cargo and passengers
along the Rio Grande River; he had arrived on the Rio Grande just after
Gen. Zachary Taylor arrived with his army to defend the State of Texas against
Mexico. King and his partner, Mifflin Kenedy, ran supplies for Taylor, in
an operation which was actually an intelligence network operating under
the cover of commerce. Just prior to the Civil War, King and Kenedy bought
huge tracts of land just south of Corpus Christi; another member of the
network was Charles Stillman, a border merchant who later moved to New York
to found the National City Bank (a.k.a. Citibank). King's principal lawyer
in the early days was Stephen Powers of Brownsville, who had previously
been a U.S. consul to Switzerland.
During the Civil War, the King Ranch was an important transshipment
point for Confederate supplies, particularly when the Mexican port of Matamoros
took on crucial importance after the Union blockade closed the ports in
the South. The ranch also functioned as an intelligence center for the Confederacy.
The Klebergs entered the picture when Robert Justus Kleberg
(``Kleberg the First,'' according to Debrett's) married Captain King's daughter,
Alice. When Captain King died in 1885, Kleberg took command of the ranch.
Kleberg the First and Alice had two sons and three daughters. The elder
son, Richard Mifflin Kleberg, went to Washington as a Congressmen, and hired
a young man named Lyndon Johnson as an aide. The younger son, Robert, Jr.,
eventually took over the ranch from his father.
The business operations of the ranch in the mid-1980s were
run by Jim Clement, the Princeton-trained son of Martin Clement, a former
honcho of the Pennsylvania Railroad. One of Clement's friends and regular
guests was the late Prince Johannes von Thurn und Taxis, the aforementioned
Venetian spook and oligarch.
The King Ranch got a financial boost when oil was discovered
on the property, and royalties from Humble Oil & Refining (later bought
by Exxon) started rolling in. With their social and political connections,
and the oil money, the King-Kleberg heirs moved into the corporate world.
In 1977, Prince Charles visited the Armstrong Ranch to play
polo with Anne's husband, Tobin Armstrong of the Armstrong Ranch; his brother
John Armstrong of the neighboring King Ranch; John's son Charles Armstrong,
and oil heir Will Farish of Houston, among others.
Enter the Schlumbergers
On Jan. 10, 1901, Captain Anthony Lucas and Patillo Higgins discovered oil
at Spindletop, Texas. The Spindletop salt dome contained enough oil to double
the production of the Pennsylvania fields where John D. Rockefeller's Standard
Oil ruled, and allowed the United States to surpass Russia as the world's
leading oil producer. Oil had been drilled in Texas since 1866, but Texas
had never come close to matching the output of Pennsylvania--until Spindletop.
With the Spindletop gusher, a black-gold rush began, and fortune-seekers
from all over the world poured into Texas. Among them were oligarchs and
their agents, seeking to gain control over this new source of wealth. Over
time, Houston became a center of the oil industry, and a captive of the
British-dominated global oil cartel.
With Schlumberger came two important figures: Jean de Menil
and his wife, Dominique Schlumberger de Menil. Jean, whose background had
been deliberately muddied, was a Tsarist White Russian of some stature,
who had fled Russia to avoid Communist reprisals, while Dominique was the
daughter of company co-founder Conrad Schlumberger. As a top official of
Schlumberger, Jean de Menil's responsibilities included the company's Ibero-American
operations, while Dominique was a cultural and political warfare operative
who founded the Rothko Chapel as a coordinating point for all sorts of unsavory
operations, including terrorist networks involved in the assassination of
Egyptian President Anwar Sadat.
While the full story of Schlumberger's intelligence remains
the subject for further investigation, some aspects are already known. Jean
de Menil, as documented in EIR's book Dope, Inc., was a member of the Solidarists,
a group comprised of Eastern European and White Russian fascists and feudalists.
Many of the Solidarists had been officials of ``quisling'' pro-Hitler governments
during World War II. A leading component of the Solidarist movement was
a highly professional espionage, sabotage, and assassination network called
the Narodnyi Trudovoy Soyuz (NTS). The NTS had been founded by Menshevik
circles in Russia in the 1920s, and functioned as one of British Intelligence's
premier spy rings inside Russia. The principal Western financing conduit
for the NTS and the Solidarist movement was the Tolstoy Foundation of New
York, of which Jean de Menil was a director.
De Menil and Schlumberger were involved in helping to put
Castro in power in Cuba, and later in attempts to overthrow him, in operations
involving both the CIA and George Bush's Zapata Offshore oil company. More
importantly, Jean de Menil was a key figure in Permindex, the corporate
front for the assassins of John F. Kennedy and the numerous attempts on
the life of French President Charles de Gaulle. Permindex was closely linked
with British Intelligence's Special Operations Executive of Sir William
Stephenson and Col. Louis Mortimer Bloomfield, and with the FBI's secret
Division Five, headed by Bloomfield. Schlumberger's links with the intelligence
community are also indicated by its close relationship to former CIA director
George Bush, and the presence on its board today of former CIA director
John Deutch. This is not to suggest that Schlumberger is a CIA ``front,''
however, but rather that Schlumberger is part of a much older oligarchic
intelligence network, with tentacles into national intelligence agencies
such as the CIA.
The Schlumberger/de Menil apparatus had strong ties to the
Houston corporate world and ruling elite. Jean de Menil was, for a time,
on the board of Bank of the Southwest, the bank closely interlinked with
Fulbright & Jaworski, the firm which produced Nuremberg and Watergate
prosecutor Leon Jaworski. Baker & Botts partner Dillon Anderson, an
official in the Eisenhower administration, was on the board of the Schlumberger
Foundation in the 1950s, and senior partner George Jewell was on the board
of Schlumberger in the 1980s. Schlumberger is also closely linked with Lazard,
which played a big role in financing Texas companies like George Bush's
Zapata and Pennzoil. Later, Dominique de Menil would co-found the Carter-Menil
Center in Atlanta, with former President Jimmy Carter. A key liaison between
Carter and de Menil was Charles W. Duncan of Houston, who is both a former
president of Coca-Cola and Carter's Secretary of Energy. Both Charles and
his brother John House Duncan sat on numerous corporate boards of relevance
to this network, including John Duncan's seat on the King Ranch board.
Schlumberger family and board member Didier Primat has rather
secretive operations in the Carolinas and Virginia, overlapping the intelligence
and eugenics operations of the Smith-Richard Foundation and the family of
Bush legal counsel C. Boyden Gray. Primat also held the property title to
Mary Sue Terry, who, as Virginia Attorney General, led a witch-hunt against
the Lyndon LaRouche movement, throwing a number of innocent individuals
into state prison on trumped-up charges.
These Texas-Virginia-Carolina connections also played a role
in the rise of Charlotte, N.C. as a national banking center. Charlotte's
North Carolina National Bank (NCNB) has, through an ever-larger series of
acquisitions, transformed itself into Bank of America, one of the largest
banks in the world, while crosstown rival First Union has grown into a top-ten
bank in the United States. NCNB significantly extended its reach in 1989,
when it bought the bankrupt First RepublicBank of Dallas for virtually nothing,
in a move that helped conceal the maneuvering that was used to keep First
RepublicBank's doors open until after Presidential candidate (and former
director) George Bush had won the Texas primary. NCNB transformed itself
into NationsBank in 1991, with the acquisition of C&S/Sovran, itself
the union of Georgia and Virginia banks. After a number of smaller acquisitions,
NationsBank bought the San Francisco-based Bank of America in 1998; with
the takeover, NationsBank renamed itself Bank of America, with the headquarters,
and the control, remaining in Charlotte. Bank of America is number 12 on
the list of top contributors to the political campaigns of Gov. George W.
Bush, and in its NCNB days, the bank was caught running dirty tricks against
the LaRouche movement.
The Bush League
After graduating from Yale, young Skull & Bones member George Herbert
Walker Bush got his start in the business world at Cleveland-based Dresser
Industries, where his Bonesman father, Prescott Bush, was a director from
1930 until he entered the U.S. Senate in 1952. Dresser was controlled by
the W.A. Harriman & Co. bank,  where Prescott
Bush worked and where George H.W. Bush's uncle and namesake, George Herbert
``Bert'' Walker, was president. After stints in Cleveland and California,
young Bush moved to the Permian basin oilpatch town of Odessa, Texas, circa
1949, to work for Dresser's IDECO subsidiary. While Bush would cultivate
an image as a Texan, the money which would finance his career came from
Wall Street and the City of London; under the cowboy hat was a preppie Connecticut
Not long after arriving in Texas, Bush decided to strike out
on his own, forming the Bush-Overbey Company with landman John Overbey,
funded with $300,000 raised through Uncle Bert Walker. A significant portion
of that money came from the City of London and from Scottish investor James
(later Sir James) G.S. Gammell of Edinburgh's Ivory & Sime. Other investors
included the Lazard-linked publisher of The Washington Post, Eugene Meyer,
and daddy Prescott Bush. Gammell, by the way, would later partner with Schlumberger's
Didier Primat in Adams Bank.
In 1953, Bush decided to link up with Midland oilmen the Leidtke
brothers, the sons of a Tulsa judge who became a top lawyer for the Mellons'
Gulf Oil. They formed a new company, Zapata Petroleum, financed through
Uncle Herbert; Herbert kept a chunk of the company for himself, and sold
some to James Gammell, who got a seat on the board. Basically, Herbert Walker
raised $500,000, and the Leidtkes' Tulsa crowd raised a like amount. In
1954, the company formed Zapata Offshore, a for-hire drilling subsidiary.
Officially, the offshore company was formed to take advantage of the new
leases being offered in the Gulf of Mexico, but there were other reasons
as well. Zapata's first rig, the Scorpion, was leased by Gulf Oil in 1958
(three years before the Bay of Pigs fiasco) and started drilling just 54
miles north of Isabela, Cuba, a perfect base for covert intelligence operations
In 1959, Bush and the Leidtkes decided to split their company
into two parts, with Bush taking the CIA-connected Zapata Offshore, and
the Leidtkes taking the rest. Bush became CEO of Zapata Offshore and moved
it to Houston, while the Leidtkes expanded Zapata Petroleum through mergers,
eventually transforming it into the Houston-based Pennzoil. But it wasn't
long before Bush cast his eye on politics.
In those days, the Democratic Party, dominant in Texas, was
divided into two camps: a liberal/FDR-influenced wing led by Ralph Yarborough,
Sam Rayburn, and Wright Patman, and a Dixiecrat wing, grouped around former
Democratic Texas Governor Alan Shivers and John Connally, who ultimately
ran for President as a Republican. These Dixiecrats would become the basis
for a Republican takeover of the South, determined to undo the industrial
and racial progress which had occurred in the South under FDR and the war
When Bush moved to Houston in 1959, he began socializing with
the likes of James A. Baker III, and the Houston oily-garchs,
and became active with the Harris County Republican Party, of which he became
chairman in 1963, helped both by Harriman money and the sudden dropping
out of the race by his opponent. In September 1963, he announced another
Senatorial bid. Bush won the Republican nomination, but lost the election
to Yarborough. But Bush had an ace up his sleeve, with a lawsuit to force
a redrawing of Congressional districts in Texas. The result was the creation
of an entirely new district on the west side of Houston, an area which Bush
had carried in the 1964 election. Faced with this gift of a friendly district
with no incumbent, Bush left Zapata Offshore in 1966 to run for Congress.
Not surprisingly, he won, and in January 1967, George Bush became a member
of the House of Representatives. In Congress, Bush heavily pushed birth
control and malthusian policies, while defending the oil depletion allowance.
Dissatisfied with a seat in the House, however, Representative Bush decided
to run for the Senate in 1970. In that race, he expected to face Yarborough,
but Yarborough lost the Democratic nomination to Lloyd Bentsen, who beat
Bush 53% to 47%.
After the defeat, Bush took a series of non-elective offices.
In December 1970, Nixon appointed Bush to the post of U.S. Ambassador to
the United Nations. Bush moved to New York City, and the Waldorf-Astoria.
He was nominally working for Secretary of State William Rogers, but his
real boss was National Security Adviser Henry Kissinger. In 1973, Nixon
appointed Bush to head the Republican National Committee. When Nixon resigned
in 1974, Bush angled for President Gerald Ford to appoint him Vice President,
but the job went to Nelson Rockefeller, and Bush got the job as U.S. Liaison
to the People's Republic of China; since the United States did not have
formal diplomatic relations with China at the time, Bush was not officially
an ambassador, and thus did not require what would likely have been a difficult
confirmation by the Senate. In late 1975, Ford shifted personnel around,
in preparation for his own Presidential bid, and George Bush was appointed
director of the CIA. After a contentious confirmation battle, Bush was confirmed
by the Senate and sworn in as CIA Director on Jan. 30, 1976. It was a short-lived
post, as Ford lost to Carter, and Bush returned to Texas when Carter took
over in 1977.
Back in Houston, Bush was appointed to the board of First
International Bank of Houston, its parent First International Bankshares
(a.k.a., InterFirst) of Dallas, and InterFirst's London-based First International
Bankshares merchant bank.  Bush also joined a
few corporate and educational boards, and became an adjunct professor at
Bush's main preoccupation was building a political machine
that would carry him to the White House, and one of his key allies was James
A. Baker III. Baker was the chairman of the Reagan-Bush campaign in 1980,
while fellow Texan Robert Strauss headed the Carter-Mondale effort. Baker
had headed the Ford campaign in 1976, and had been Ford's Deputy Secretary
of Commerce. Oilman Robert Mosbacher headed up Bush's national finance operation.
Bush formally announced his Presidential candidacy on May
1, 1979, and one of his campaign themes was the Union of English-Speaking
Peoples. ``The British are the best friend America has in the world today....
Sure, I'm an Anglophile,'' Bush said at the time. ``We should all be. Britain
has never done anything bad to the United States.''
`Post-Industrial' Southern Strategy
The heart of the Southern Strategy was the oligarchy's plan to shift the
United States from the world's most powerful industrial economy, into a
post-industrial rentier-financier empire. The industrialized cities of
the North would be allowed to decay, while the relatively small cities
of the South would be built up as cheap-labor service centers. As the Industrial
Belt turned into the Rust Belt, the New South ascended. Houston, spurred
by the oil boom, became the fourth-largest city in the country, old Atlanta
became the ``New Atlanta,'' and sleepy Charlotte became a major international
financial center. Existing cities were transformed--Dallas, San Antonio,
Jacksonville, Orlando, Tampa-St. Petersburg, Miami, to name a few--while
Northern cities such as Baltimore, Cleveland, and Philadelphia went into
Coincident with this Southern shift, was the ascension of
finance over industry. U.S. industry had largely been in the hands of the
financiers since the days of J.P. Morgan's creation of the industrial trusts,
and that control was rapidly consolidated during the 1980s. Orchestrated
by Bush's masters, the speculators took over. The corporate raiders, financed
by the dirty-money junk bond networks, bought up significant chunks of corporate
America, and terrified the rest. The raiders' targets, and those who feared
they might become targets, turned to Wall Street's investment banks and
law firms for ``protection.'' As such, the leveraged buy-out/junk bond operation
functioned as a giant protection racket, destroying some as a way of collecting
tribute from the rest. At the same time, dirty money poured into the real
estate market, notably through the giant Canadian developers Olympia &
York and Cadillac Fairview. These firms built the skyscrapers which were
then filled up with service workers--bankers, lawyers, accountants, clerks,
and other white-collar types. Having the tallest office building became
something of a fetish for the business leaders, spurring ever larger towers,
which in turn were filled with ever larger numbers of white-collar workers.
The pouring of hot money into the real estate markets caused
real estate prices to rise. The ``wealth'' created by these rising values
provided more money to pump into the bubble. The rising stock market served
a similar function. The cities were transformed into service centers ringed
by suburbia, leaving the inner cities full of the poor and minorities, ripe
for Strategic Bombing Survey decimation through drug distribution and ``Negro
In the office buildings and the suburbs, the ordinary citizen
was also being hooked on speculation. One of the effects of Fed Chairman
Paul Volcker's deadly interest-rate hikes in 1979-80, was that ordinary
savings accounts suddenly started paying high rates of interest, giving
the ordinary citizen a taste of the action. As more and more of the ``little
people'' discovered the joys of usury, the modern ``my money'' era was born.
That process escalated with the rise in residential real estate prices--homes
were transformed from residences to ``investments,'' with rising equity
values adding significantly to the pools of ``my money.'' The ordinary citizen
also began making money from the rising stock market. Over time, a significant
portion of the population became addicted to usury and speculation, considering
it their right to make money from the manipulation of money. The speculator
went from being the enemy to being the role model; the suckers now identified
with the casino. The old-style productive industry became the realm of ``losers,''
replaced by the hot new ``industries'' of finance and information. Make
derivatives, not steel!
While this transformation was made possible by the policy
changes in Washington and in the states, the mechanism for the change was
specific networks within the corporate world.
The junk-bond market of the 1980s, for example, was a joint
operation of the Morgan/Rothschild Drexel Burnham Lambert investment bank,
and the money laundries of Dope, Inc. Today, the junk bond market is bigger
than ever, with more junk bonds issued in 1998 alone, than in all of the
1980s combined. The leveraged buy-out (LBO) wave was led by Kohlberg Kravis
& Roberts, which was closely linked to the Harriman/Bush machine, and
continues with such new Bush-connected players as Hicks Muse Tate &
Furst, the Carlyle Group, the Bass Brothers, Richard Rainwater, and Sam
Wylie's Maverick Capital hedge fund. The LBO market declined significantly
during the 1990s, as highly inflated stock prices became the currency of
choice for takeovers, but is now making a comeback as a vehicle for taking
key assets private in preparation for a crash.
The Texas networks have spawned wave after wave of deregulation.
The deregulation of the airline industry began in Texas with Frank Lorenzo
and Texas Air, which became Texas International, and ultimately took over
Continental and Eastern, while the Bush League's Albert Checchi took over
Northwest Airlines. Texas is also the center of energy deregulation, home
to Enron and a host of smaller competitors, such as James A. Baker III's
Reliant Energy (the parent of Houston Lighting & Power) and Dynegy;
while many other players have Houston links, notably North Carolina's Duke
Energy and the Schlumberger-linked CMS and American Electric Power. Enron
has also moved into the private water market in England and the United States,
hoping to get a piece of the income streams from water and sewage.
The effect of all this deregulation and speculation has
been the decimation of the physical economy of the United States. Over
the last three decades, the productive capacity of the U.S. economy has
been cut in half, measured in terms of market baskets of goods on a per-capita,
per-household, and per-square-kilometer basis. At the same time, the monetary
claims on that declining production have risen hyperbolically. The process
defined by rapidly rising claims on a steadily declining production is clearly
unsustainable--at some point, it must break down; the question is not if,
but when, that will occur.
It is widely understood among the governments, political elites, and by
the financial oligarchy, that the present financial system is doomed. While
there is a desperate attempt to postpone the inevitable as long as possible,
the serious thought is being put into preparing a new system to be implemented
when this one goes. From the oligarchic perspective, the key to retaining
control in a post-crash environment is twofold:
1) smash the power of sovereign nations through balkanization
and globalization, so that they cannot protect their citizens from looting;
2) grab control of as much of the world's supplies of essential
raw materials, strategic minerals, food supplies, energy supplies, and
similar assets as possible. If they can do those two things, the oligarchs
believe, they can run the post-crash world.
This process is far advanced, both within the United States
and internationally. Take electricity, for example: U.S. firms such as Enron
have been buying up power plants all over the world. One little-known firm,
AES Corp., is poised to become the largest generator
of electricity in Ibero-America, once its various acquisitions are completed.
If you and a cartel of ``competitors'' can control the electricity supply
of a continent, you have tremendous power to decide who survives and who
dies, while grabbing as much of the electricity income stream as the market
Apply the same process to agriculture, where consolidation
among the major food companies is proceeding at a breathtaking pace. Apply
it to the telecommunications companies, which provide essential communications
services; apply it to the production of strategic minerals and metals that
are essential to modern industrial production. What you are left with, in
effect, is a return to the days of the empires, when imperial trading companies
controlled entire continents, and those who were not involved in making
the companies rich, were considered expendable.
1. Halliburton, which acquired the Harrimans' Dresser Industries, has surpassed
Schlumberger as the largest oilfield services company. Among Halliburton's
subsidiaries is Brown & Root, the Houston construction firm which does
sensitive work worldwide for the Pentagon and the State Department. Halliburton
was also the first U.S. oil company to work the Chinese mainland and, beginning
in 1986, was selected by the People's Republic of China to perform offshore
field work. In the 1980s, the Halliburton board included James Glanville
of Lazard, Lord Polwarth of the Royal Bank of Scotland, William Simon of
Wesray and Kissinger Associates, and the King Ranch's Anne Armstrong. The
``Torbitt'' report identified Halliburton and Brown & Root as being
among the principal financiers of Permindex, the financial front suspected
of involvement in the assassination of John F. Kennedy. Halliburton head
Richard Cheney, a former Secretary of Defense, left the firm to become George
W. Bush's Vice President.
2. The Schlumberger family was part of a Swiss-based intelligence
network operating in partnership with the British Secret Intelligence Service,
to defeat the American Revolution. Among the agents run by this network
were Aaron Burr, the man who killed Alexander Hamilton and who was tried
for treason, Jefferson's Treasury Secretary Albert Gallatin, and the most
notorious of all American traitors, Benedict Arnold. A key role was played
by members of the Prevost family, British military commanders from a Swiss
oligarchic family which was intermarried with the Mallet family of the de
Neuflize, Schlumberger Mallet Bank, known today as the Schlumberger interests.
For further details, see Anton Chaitkin, Treason in America (Washington,
D.C.: Executive Intelligence Review, 1998).
3. Lazard Freres is an international investment bank, operating
out of Paris.
4. The firm today known as Baker & Botts was formed in
1866 by Judge Peter Gray and Walter Browne Botts, and became Baker &
Botts when Captain James A. Baker joined in the 1870s. It had a distinct
Confederate and Masonic heritage. Judge Gray had been the Assistant Treasurer
of the Confederate States of America, where, under the command of Confederate
Secretary of State Robert Toombs, he had financed the operations of Gen.
Albert Pike among the Indian tribes in the Southwest. After the war, Pike
and Toombs reestablished the Southern Jurisdiction of the Scottish Rite,
and Pike deputy Philip C. Tucker set up a Scottish Rite lodge in Houston
in 1867, with Walter Browne Botts and Benjamin Botts as leaders. Captain
Baker would later play a key role in pushing eugenics--the precursor of
Nazi race science--for the Harrimans, through Rice University, which he
helped found and chaired for 40 years. In 1912, Baker brought in the head
of the British Eugenics Society, Julian Huxley, to help the school set up
its biology department.
5. Anne Legendre Armstrong, the daughter of aristocratic
New Orleans coffee merchant Armant Legendre, became friends with Helenita
Kleberg at the exclusive Foxcroft School and Vassar College. She married
Tobin Armstrong, whose brother John was married to Helenita's sister Henrietta
Kleberg, and was second in command at the King Ranch. The Armstrongs trace
their heritage to Texas Ranger John Armstrong, an enforcer for the King
Ranch in its early days. Their much smaller Armstrong Ranch is, politically,
an adjunct to the King Ranch. At PFIAB, Armstrong was involved in operations
against Lyndon LaRouche and his associates, and helped bring Henry Kissinger
into the Reagan administration in 1983. She chaired the advisory committee
of the influential Georgetown Center for Strategic and International Studies,
and was co-chair of the Republican National Committee in 1971-73.
6. Belton Kleberg ``B.K.'' Johnson started his own ranch,
and joined the boards of AT&T, Campbell Soup, Tenneco, U.S. Trust and
First City Bancorp., among others. His half-brother Robert Richard ``Bobby''
Shelton bought a ranch in Kerrville, Texas; Bobby Shelton also served a
stint as head of the Texas Department of Public Safety, the state police
agency which included the famous Texas Rangers, which at times seemed to
have functioned as the private police of the King Ranch and its cohorts.
These offspring, along with Anne Armstrong, were heavily interlocked with
the 8F Crowd institutions in Houston. BK and Anne both sat on the board
of First City Bancorp. of Houston, and Anne was also a director of American
Express, General Motors, Boise Cascade, Braniff, Union Carbide, and Halliburton.
7. W.A. Harriman & Co., organized in 1919, was the private
bank of the Harriman family. The chairman was W. Averell Harriman, who with
his brother Roland ``Bunny'' Harriman controlled the bank, while founding
members included George Herbert Walker, Sr. and Percy Rockefeller. Prescott
Bush joined the firm in 1926. All but one were members of Skull & Bones;
Walker was not, but his son, G.H. Walker, Jr., would be.
In 1931, W.A. Harriman & Co. merged with the Brown Brothers
investment bank to form Brown Brothers Harriman. The Harriman brothers and
Prescott Bush were senior partners at BBH, while Walker retired to his own
G.H. Walker & Co. Brown Brothers was a spin-off of the British bank
Brown, Shipley, whose best-known partner was Bank of England head Montagu
In October 1942, the U.S. government seized the Union Banking
Corp. under the Trading With the Enemy Act for acting as an agent of Nazi
Germany. UBC had been co-founded by Bert Walker, Sr., and its board included
Roland Harriman and Prescott Bush. Several other Harriman-Bush-related companies
were also seized, for the same reason.
8. In 1987, the ailing InterFirst merged with its Dallas
crosstown rival RepublicBank to form First RepublicBank, which became the
biggest bank in Texas and ultimately its biggest banking disaster. Within
months, First RepublicBank was insolvent, but Federal regulators kept the
bank open until after the Texas primary in Spring 1988, to avoid embarrassing
Bush in his Presidential bid. A few weeks after Bush won the primary, the
remnants of the bank were sold to Charlotte's NCNB in a sweetheart deal.
A Federal study later revealed that the government had pumped $3 billion
into the bank to keep it afloat.
9. AES may be not be widely known, but it has very high-level
sponsors. Co-founder Roger Sant is a director of Prince Philip's World Wildlife
Fund/World Wide Fund for Nature, and AES director Russell Train is the former
chairman and president of the WWF. AES specializes in expanding into areas
controlled by narco-terrorists.
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