The History Behind the Rise of the 1%

Recently, the inequality of wealth in America has been on my mind. Ever since the Occupy movement established the notion that 1% of the people control more wealth than the other 99%, it has become clear that there is a huge disparity between the rich and everybody else. The question for me becomes, “How did we get here? How did this happen?”

Clearly, it happened over a long period of time. Some people date it from the advent of Friedrich Von Hayek’s “trickle down” theory—adopted by Ronald Reagan and Margaret Thatcher—and the very nature of Capitalism itself, but I find the story more complex than that. In this theory, now referred to as neo-liberalism, corporations are set free from governmental regulations. Wealth is supposed to return to the private sector, an attempt to return the country to the Gilded Age before the New Deal. How did the corporations get free of the government to assert their power over regulations?

I recently heard an interview in which the definition of Nazism was made clear: it is when corporations are merged with the government, so that the government protects the interests of the corporations and not the common good. With that thought in mind, it makes the recent Supreme Court ruling, Citizens United, quite interesting—corporations have the rights of people and corporations, therefore, can contribute unlimited sums of money to get the kinds of elected government officials who will vote their interests. So now we are in an interesting situation where corporations, as one politician recently put it, regulate Congress rather than Congress regulating corporations. The whole thing has stood out in my mind as a mystery until I recently read two books: The Brothers by Stephen Kinzler and The Devil’s Chessboard by David Talbot. So let’s go back in time, starting with my own personal experience.

In the fall of 1960, I was sent to Fort Jackson, South Carolina, to serve six months’ active duty for the Alabama National Guard. I was 17. I was under the impression that I was going to have six weeks of basic training and then go to clerk/typist school, but the Army had other plans. They put me in advanced infantry training for the duration of my stay. Toward the end of that training, my company was put on high alert and I was told to pack my bags and get ready to ship out on a wartime mission. We were told that we could not tell anybody that we were on high alert. The whole operation was top secret and I was terrified.  I had not intended to go to war. I was very upset and confused about my future. But a few days later (at least that’s how I remember it—as days—it may have been longer) the order was cancelled and we were released from the “high alert” status. So I was not going to war, my future was restored, and I was discharged six months later, as I had intended. Unbeknownst to me at the time, our operation was to invade Cuba. But that didn’t happen. I never knew why. Rumor had it that new President John F. Kennedy had refused to authorize the invasion. Part of the explanation of that invasion of Cuba goes a long way to explaining how America got to where we are today. So let’s return to those two books. In these two books, I have come to understand not only what happened to me in 1960-61, but also what was happening to the country with respect to the rise of the corporations.

In a review of one of them in The New York Times, Adam LeBor writes, “Anyone wanting to know why the United States is hated across much of the world need look no farther than this book. The Brothers is a riveting chronicle of government-sanctioned murder, casual elimination of ‘inconvenient’ regimes, relentless prioritization of American corporate interests and cynical arrogance on the part of two men who were once among the most powerful in the world.”

The more one looks into the history of the United States under the powerful guidance of John Foster Dulles and Allen Dulles, the more one begins to realize that we, as a country, thought we were living through a peaceful epoch of wealth. What we didn’t realize is that “we the people” were asleep and that there were secret wars being conducted in our name that would have long-lasting blowback implications for the rest of the millennium and even into the twenty-first century.

“With John Foster as Secretary of State, this ‘fraternity of the successful’ enforced a Pax Americana by terror and intimidation, always invoking national security and often blatantly disobeying policy guidelines,” says Kirkus Reviews, referencing Talbot’s The Devil’s Chessboard.

This change in American policy began at the end of World War II. In 1942, though, Allen Dulles worked under Franklin Delano Roosevelt in the Office of Strategic Services (OSS). During his tenure, the Dulles brothers had a very tight relationship with many Nazi businesses.

“…when Allen Dulles was in Switzerland, supposedly working for our side, the OSS, during the war, he was actually using that to meet with a lot of Nazis and to cut separate deals with them,” says David Talbot in a Democracy Now interview with Amy Goodman. “He did indeed finally cut a separate peace deal with the Nazi forces in Italy against FDR’s wishes. FDR had a policy of unconditional surrender. This was Operation Sunrise [1945]… And then he set up these rat-lines, so-called, where Nazis, leading Nazi war criminals, escaped after the war through the Alps in Switzerland, down into Italy and then overseas to Latin America and even in the United States. One of the key Nazis he saved was Reinhard Gehlen, Hitler’s former chief of intelligence, who he installed… as head of West German intelligence after the war, a man who should have stood trial at Nuremberg.”

The question in my mind was why was Allen Dulles making deals with the Nazis? Why did he appoint a high-level Nazi to be one of his station agents? The question keeps coming back because the Dulles brothers did not believe the Nazis to be the real problem. They were in business with the Nazis, as were many American corporations. Fred C. Koch, father to the Koch brothers, built the third largest refinery in the Third Reich and had it personally approved by Adolf Hitler (see Jane Mayer’s Dark Money). The Nazi’s used census records tallied with IBM punch cards. General Motors- and Ford-built tanks. Allen Dulles and John Foster Dulles were avid supporters of their clients’ business interests. Both brothers were lawyers for Sullivan and Cromwell, whose major clients were elite American corporations.

In his blog post, “Harnessing the Growth of Corporate Capitalism: Sullivan & Cromwell and its Influence on Late Nineteenth-Century American Business,” Jason Weixelbaum writes, “Cromwell eventually hired John Foster Dulles in 1911. Fifteen years later, Dulles would become Cromwell’s successor. Just like Cromwell before him, Dulles showed tremendous ambition and drive for both business and diplomacy. John Foster Dulles’ younger brother Allen would become a partner as well. In the proceeding three decades, the Dulles brothers would make clients of the world’s most powerful corporations and financial institutions, including Ford Motor Company, General Motors, International Business Machines, Chase Bank, International Telephone and Telegraph, Brown Brothers Harriman, IG Farben, Standard Oil, and the Bank for International Settlements. The reach of these businesses into the realm of U.S. foreign policy would have a significant global impact during World War II and beyond under Sullivan & Cromwell’s stewardship.  After World War II, John Foster Dulles would hold a forceful position in the Eisenhower administration as the Secretary of State, while his brother Allen would become the longest serving director of the Central Intelligence Agency, respectively. The Dulles brothers’ tremendous influence on twentieth-century U.S. diplomacy and geopolitical strategy further blurred the line between the corporate policy of Sullivan & Cromwell, its clients, and U.S. foreign policy itself. In a sense, William Nelson Cromwell’s dream of working to serve the interests of the most dominant corporations while expanding Sullivan & Cromwell’s influence to the highest offices in America was fulfilled.”

In college, I had often heard people say that Nazism was not the problem but communism was. A lot of people theorized that America should align with the Nazis against communist ideologies. The Dulles brothers thought the real problem was the communist Revolution in Russia, because the peasants wanted to return the power from the Tsars to the Bolsheviks.  The brothers felt the very concept of socialist ideas were a threat. But I didn’t realize, at the time I was hearing this, how fervent and hysterical anti-communist rhetoric had gotten. It became the mantra of U.S. foreign policy.  As far back as the late 1940s, we were beginning to be influenced by the C.I.A.’s anti-communist propaganda in the American press machine.

“CBS, NewsweekThe New York TimesThe Washington Post, they were all in the palm of the C.I.A.’s hands. They all lived together in Georgetown. They had cocktail parties together. It was a very cozy set,” says Talbot.

So it would appear all the major press were in the pockets of the Dulles brothers, who fed them stories and courted the media relentlessly.

The C.I.A. got its start under Truman, who signed the National Security Act of 1947. Its original mission was to gather military intelligence. But under Eisenhower (President from 1953-61), the role of the C.I.A. was expanded to conduct covert actions. War weary, General Eisenhower apparently decided that covert action was superior to overt military actions and he supported a plan whereby the C.I.A. could act independently of Congress and engage in regime changes. Eisenhower was looking for a way to exert influence without going to war. He appointed Allen Dulles to run the C.I.A. and —ignoring the warnings about placing two brothers in such influential positions —appointed brother John Foster Dulles as Secretary of State. These two brothers could now represent Sullivan and Cromwell’s clients’ interests while serving as government agents and executing plans “to protect American business interests abroad.”

“That was the key period when the national security state was constructed in this country, and where it begins to overshadow American democracy,” says Mother Jones.

Neo-liberalism—again, the theory that corporations have less regulation and thus theoretically more wealth to put back into the economy—was beginning to be supported by the press and propaganda from the C.I.A. America began conducting wars on behalf of American business interests and not the American people.

It was John Foster Dulles’ opinion that the, “United States of America does not have friends; it has interests.”

And those interests were business interests.

According to the New York Times, in his book, “Kinzer lists what he calls the ‘six monsters’ that the Dulles brothers believed had to be brought down: Mohammed Mossadegh in Iran, Jacobo Árbenz in Guatemala, Ho Chi Minh in Vietnam, Sukarno in Indonesia, Patrice Lumumba in the Congo and Fidel Castro in Cuba. Only two of these, Ho Chi Minh and Castro, were hard-core communists. The rest were nationalist leaders seeking independence for their countries and a measure of control over their natural resources.”

The C.I.A. had constructed an enemies list: the people the Dulles brothers had decided were ideologically opposed to their clients’ business interests. Never mind that these were fledgling, newly-elected democracies. It mattered not. Árbenz had begun land reforms, giving farmland to peasants against the wishes of United Fruit Company. Mossadegh was nationalizing oil resources. United Fruit wanted their control back. Oil companies wanted their profits. So the C.I.A. engaged in regime change with terrible consequences for everyone but the United States corporations’ bottom line.

“Allen Dulles, working for Eisenhower as C.I.A. director, portrays Jacobo Árbenz as a dangerous communist—he wasn’t—and prepares to overthrow him in a military coup, which does occur,” says Talbot. “[T]he C.I.A. and Allen Dulles told Eisenhower after the Guatemala coup, ‘Oh, it was a clean coup. You know, hardly anyone died.’ But the fact is, tens of thousands of people died in the killing fields of Guatemala as a result of that coup, and that violence continues today.”

The people of Guatemala continue to flee to America to escape the violence resulting from the regimes that were left behind after the overthrow of Árbenz.

“[E]mboldened by how easy it was to do a regime change in Guatemala,” continues Talbot, “when Fidel Castro comes to power in Cuba, he again antagonizes the same corporate interests that the Dulles brothers represent—oil companies, like the Rockefeller-owned Standard Oil, and others, agribusiness firms. So they believe that Fidel has to be eliminated, and they begin plotting, under the Eisenhower administration, with Eisenhower’s approval, to assassinate Fidel Castro.”

Fidel Castro was beloved in Cuba because he had overthrown Mafia-supported, ruthless dictator Fulgencio Batista. People in the United States thought he was glamorous and exciting, like Che Guevera, but the Eisenhower-Dulles-C.I.A. connection was already demonizing him. Fidel couldn’t get a hotel in New York for his delegation to attend a United Nations meeting and ended up at the Hotel Theresa in Harlem.  He managed to embarrass Eisenhower-Dulles contingent by meeting with influential politicos Nikita Khrushchev, President Gamal Nassar from Egypt and Malcolm X in Harlem while the C.I.A. was at the nearby Plaza Hotel plotting his assassination.

So for the first time, one can see the beginning of what was going to happen with the Cuban invasion that I was called up for in 1960-61. It had larger implications than I could have imagined. Why I got to return to my life as a student is something else. The Dulles brothers and Eisenhower tried to make the C.I.A. above the law, but President Kennedy pushed back.

According to Talbot,“Kennedy stood his ground, and he didn’t [go along with Allen Dulles’ plan]. And that was the beginning of his break, at the Bay of Pigs, between the C.I.A. and Cuba—and President Kennedy. And then, yes, that became even more severe with the Cuban missile crisis the following year. President Kennedy basically, I think, saved my life—I was 12 years old at the time—saved a lot of our lives, because he did stand his ground. He took a hard line against the national security people and said, ‘No, we’re going to peacefully resolve the Cuban missile crisis.’”

Kennedy probably saved my life, too.

Kennedy was a real game-changer. When he was campaigning for President, Kennedy visited the Hotel Theresa for a campaign speech because it was revolutionary ground and he thought that America should welcome the winds of change and embrace the future. Talbot says that his speech contained references about race and equality that are still relevant in today’s commentary.

So these two books outline a picture of a C.I.A. operating as a secret organization that was promoting business over the welfare of the people and they were engaged in propaganda to support their efforts.

“President Johnson privately complained that the C.I.A. had been running ‘a goddamn Murder Inc. in the Caribbean,’ an entirely accurate assessment — except the beneficiaries were American corporations rather than organized crime,” says Adam LeBor. “The 1953 C.I.A.-sponsored coup that brought Shah Mohammed Reza Pahlavi to power was seared into Iran’s national consciousness, fueling a reservoir of fury that was released with the Islamic revolution of 1979.”

The area has been enflamed ever since.

The relationship between government entities like the C.I.A., corporations, and privately-owned press continues. The news has become no longer “fair and balanced,” but is controlled by business and corporations whose interests are not necessarily aligned with the common good. So the answer, for me, about “How did we get where we are?” with this dangerous inequality situation resolves down to a history of C.I.A. manipulation and corporate entanglements to the deficit of the 99%. And the argument against communism was a beautiful scheme to conceal an evolution from democracy to fascism. Today, with Citizens United and the corporate media “news-as-entertainment” business keeping us ill-informed, we are still in the grip of the influence of the Dulles brothers.

“I think Dulles would have been delighted by how technology and other developments have allowed the American security state to go much further than he went,” Talbot believes. The surveillance state that Snowden and others have exposed is very much a legacy of the Dulles past.”

I would like to conclude this on an upbeat note. It seems like some Americans are awakening to the spell cast by the political machine left behind by the Dulles brothers.

“Particularly in the reaction to the Syria bombing, I’m beginning to wonder if something profound isn’t changing in the minds of at least some Americans,” says Stephen Kinzer in 2013. “People are looking at each other and saying, ‘I can’t get a job and my leaders are telling me I should be focusing on fixing Syria.’ I think the disconnect that that represents is slowly dawning on some Americans. Maybe we finally are burying John Foster Dulles and Allen Dulles.”

A footnote: I did want to end this post in an uplifting manner, but a recent article and interview with Jeffrey Sachs is testament to the C.I.A.’s involvement in propaganda and regime change. He discusses–among other topics–the disastrous cost that the C.I.A.’s tactics have caused the for current Syrian crisis. You can find the link here:






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