When Fascism Comes to America…

If you noticed today’s title, “When Fascism Comes to America,” you might think I’m about to talk about current politics.

After all, state governors are ordering people to stay locked up due to COVID-19 and wear masks everywhere, while doing everything.

Meanwhile, there’s a certain contingent loudly describing President Trump in terms reflective of the leadership of Germany and/or Italy in the 1930s and ’40s.

But we run a high-class Whiskey bar here… so we won’t discuss current events in such rhetorical framework.

Instead, we’re delving into history — World War I, the Roaring ’20s, the Great Depression, President Franklin Roosevelt (FDR), World War II… and the aftermath.

Of course, our aim is not to merely reminisce. As we dig into the past, we’ll see the roots and origins of quite a bit of what we see and hear these days.

The inspiration comes courtesy of my long-time friend and publisher of Agora Financial, Addison Wiggin.

He contacted me recently to discuss mid-20th century American thinkers who represented a school of political opposition that grew up against FDR in the 1930s and ’40s.

One name in particular stood out… a financial journalist that more people should know about.

Let’s dig in…

The name is John T. Flynn (1882–1964) a 1920/30s-era writer who stayed active in American political commentary until he died.

From business writing, he transformed into a major critic of FDR, the New Deal and much else about the politics and policies of America’s 32nd president.

Flynn was well-known in his day. He wrote for major newspapers and his columns were republished across the country.

After the Crash of 1929 and the subsequent depression, Flynn began researching what brought down the mighty American economy.

Just the names of Flynn’s books offer a clue to his thinking…

Investment Trusts Gone Wrong: Wall Street and the Security Markets (1930)

Graft in Business (1931)

God’s Gold: the Story of Rockefeller and His Times (1932).

As the titles indicate, Flynn mistrusted many of the people who worked on Wall Street, as well as the very nature of American finance that grew from World War I and the 1920s.

One key element of Flynn’s monetary insight came from the fact that his life spanned two eras of American “money.”

That is, Flynn was born in 1882, in a gold standard era. He grew up and came of age in an economic milieu of hard money and tight credit, based on scarce metal.

But in 1913, when Flynn was 31 years old, the U.S. set up its central bank, the Federal Reserve.

At the time, no one really knew what would happen with this new bank. But the general idea was for the institution to support a so-called “elastic currency.”

That meant that when the U.S. economy needed liquidity — for example, if the business cycle was humming strong — then the Fed could issue funds.

Conversely, the Fed could withdraw funds if the economy became overheated.

But just a year later, in 1914, war broke out in Europe.

America’s new Fed was called upon to supply liquidity and credit into both the U.S. and global economy.

So beginning in the fall of 1914, the Fed supported U.S. business expansion to supply war materials to European belligerents, and even backed extensions of credit to banks and industries in Great Britain and France.

Flynn knew — as did many others of the era — that the “Great War” in Europe (meaning World War I) would not have lasted more than six months or so without ample credit to fund the fighting and carnage.

All sides simply would have run out of the money they needed to buy weapons and pay the troops.

But along came the Fed, with its vast infusions of U.S. credit from outside.

The European/Allied cause was aided by President Wilson and his willingness to permit America’s Fed to supply this credit to belligerent parties.

Eventually in 1917 — after Wilson was safely re-elected — the nature of the war pulled the U.S. into the fighting.

And thus American blood followed its treasure.

While U.S. troops died in the field, the Fed supplied even more credit to pay for the macabre effort.

Eventually, in 1918, Allied victory followed American credit… But the cost was high levels of indebtedness on the backs of European parties, as well as in the name of the U.S. government.

As time passed, Flynn began to understand that wartime inflation coupled with ongoing debt repayment supercharged the 1920s — eventually leading to the market crash of 1929 followed by the Great Depression.

That knowledge landed him a role as an advisor to the “Nye Committee” — a group of Senators who investigated the role of U.S. bankers and munitions makers in dragging out World War I.

Among other things, the Nye Committee is famous for using the phrase “merchants of death” in reference to the companies and banks that profited from U.S. participation in the war.

And this committee gave a platform to retired Marine Corps General Smedley Butler, who testified about the use of U.S. troops to enforce U.S. business interests overseas.

But Flynn’s real concerns were the actions of FDR…

In 1933, not long after taking office, FDR seized the nation’s gold supply, literally taking money from the pockets and hands of the citizens.

Flynn was stunned. He then watched FDR seize more and more power for the federal government via “New Deal” programs.

Not surprisingly, Flynn perceived further dangers to personal liberties, as well as Constitutional order, in the growth of federal power.

For example, he warned that FDR’s National Industrial Recovery Act all but led to government-business micro-management of the U.S. economy.

By 1937 Flynn was shocked at FDR’s proposal to “pack” the Supreme Court with more justices after losing several major cases.

Indeed, Flynn didn’t hesitate to share where he thoughtFDR’s New Deal was leading:

We seem to be not a long way off from the kind of Fascism which Mussolini preached in Italy before he assumed power; and we are steadily approaching the conditions which made Fascism possible.

By 1940, Flynn published a widely read book that was openly disdainful of FDR, entitled A Country Squire in the White House. The title says it all…

Along the way, war had erupted in Asia and in Europe. So in 1940 Flynn helped found the “America First Committee” to keep the country out of the fighting.

Flynn and his group lobbied against FDR’s “Lend-Lease” program to supply Britain with war materiel, and even lobbied against the U.S. “Selective Service Act” (i.e., the draft).

Of course, World War II came to America in 1941 with the Japanese attack on Pearl Harbor.

Dutifully, Flynn helped disband the America First group. He supported the country and its war effort, writing business-oriented articles that explained how the nation was mobilizing and producing equipment with which to supply the Army and Navy.

During this time, Flynn learned about U.S. code-breaking capabilities. The existence of such capabilities was highly classified, and Flynn could not come right out and discuss it.

But he wrote other articles accusing FDR of holding sufficient knowledge to have alerted the forces at Pearl Harbor to expect an attack.

At root, Flynn saw FDR as an underhanded politician who pushed the U.S. into war, with all manner of ulterior purposes.

In 1944, he let the world know it.

Flynn’s 1944 book, entitled As We Go Marching, is presented in three parts. Part 1 examines the history and foundations of fascism in Italy. Part 2 offers a similar look at Germany. Then Part 3 ties things together with an examination of FDR’s New Deal.

Flynn explains that neither Mussolini nor Hitler invented the social-government systems that supported their regimes. No, those seeds were planted long before — starting with the unification of Italy and Germany in the 1800s.

Indeed, both systems — Italian and German fascism — had deep roots in the early days of industrialization, with strong association with the idea of “syndicalism.”

Briefly, syndicalism is a form of socialism. According to Marxian theory, it is the logical follow-on to late-stage capitalism.

Under syndicalism, the government organizes industries and owners into confederations, or “syndicates.” Ideally, industries would be owned and managed by the workers.

It’s worth noting that Vladimir Lenin held “syndicalist” beliefs. One wonders what might have evolved in the Soviet Union had Lenin not died in 1924 (of arsenic poisoning, per authoritative accounts).

But Flynn opines that, absent certain events related to World War I, neither Mussolini nor Hitler would ever have amounted to much more than minor political nuisances.

In other words — and this is key — under different circumstances, “someone else” could very well have seized power in Italy and/or Germany, and governed via “fascism,” or some system bearing a close resemblance to fascism/syndicalism.

In both Italy and Germany, the pre-existing government institutions were already set up, awaiting just the appropriate kind of politician to come along and hijack things.

Here’s the point, distilled to its essence….

No country really needs a mustachioed, evil “dictator” straight from central casting to transform into a full-fledged dictatorship! Not if the groundwork is already there…

For example, imagine a German Chancellor/Fuehrer without the antisemitism of Hitler, but still with the sense of Prussian militarism and desire to expand national territory.

Or to use Flynn’s term about FDR, imagine a “country squire” with polished mannerisms, degrees from Harvard and Columbia, and a beautiful home in Hyde Park, New York…

Imagine that person becoming a “dictator,” ruling the nation through a solid lock on the House, Senate and Supreme Court.

Yes, imagine… which brings us to Part 3 of As We Go Marching

Flynn describes and dissects what FDR did with his power of governance over the U.S. in the 1930s, via the New Deal, then compares actions side-by-side to what was happening in Italy and Germany.

Among other famous passages from the book is this:

When fascism comes it will not be in the form of an anti-American movement or pro-Hitler bund, practicing disloyalty. Nor will it come in the form of a crusade against war. It will appear rather in the luminous robes of flaming patriotism; it will take some genuinely indigenous shape and color, and it will spread only because its leaders, who are not yet visible, will know how to locate the great springs of public opinion and desire and the streams of thought that flow from them and will know how to attract to their banners leaders who can command the support of the controlling minorities in American public life. The danger lies not so much in the would-be Fuhrers who may arise, but in the presence in our midst of certainly deeply running currents of hope and appetite and opinion.”

Flynn’s book hit some parts of the public consciousness like a bomb down the smokestack. To many readers, it was an “uh-oh” moment of realization…

Of course, critics called Flynn a traitor. After all, he was impugning the nation’s wartime leader.

Then again, Flynn already had a reputation as a “Roosevelt-hater” and was mostly dismissed, if not disdained, in polite company of the time.

Still, Flynn was there. He lived through the Depression and New Deal. It’s difficult to dismiss his mastery of facts as he traces out what happened and points to much the same political DNA as underlaid more than a few developments across the Atlantic Ocean, in Europe.

Several years later, Flynn published another famous book, entitled The Roosevelt Myth (1948/rev 1956). Tracking the history of FDR’s tenure and applying benchmarks of philosophy from As We Go Marching, it lambastes and demolishes FDR and his four terms of office, like a fast freight train hitting a stalled pickup truck.

In many respects, though, FDR’s legend remains intact as the Great President and Wartime Leader. Wartime success tends to file the burrs off the edges of heavy-handed governance.

Or look at it this way… From the comfort of many decades of historical perspective, we can today see what FDR did and discern why he felt he had to do it.

Yet it’s also the case that FDR’s strong reputation cannot happily co-exist in any universe in which even a single copy of The Roosevelt Myth remains unburned.

And with the foregoing in mind, we can return to the present and perhaps better draw judgments about the nature of the American political system.

On that note, I rest my case.

That’s all for now… Thank you for subscribing and reading.

Best wishes,

Byron King

Byron King
Managing Editor, Whiskey & Gunpowder

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A Harvard-trained geologist and former aide to the United States Chief of Naval Operations, Byron King is our resident gold and mining expert, and we are proud to have him on board as the managing editor of Whiskey & Gunpowder.

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