Dear Unknown Friends:

Eli Siegel is the philosopher to show that economics, with all its statistics, products, human suffering and hopes, is fundamentally a matter of ethics and aesthetics. It is, like every aspect of life, described by this Aesthetic Realism principle: “All beauty is a making one of opposites, and the making one of opposites is what we are going after in ourselves.”

For economics to be sane and ethical two constant opposites need to be one: selves and earth. At the age of 20, Mr. Siegel wrote in the Modern Quarterly (March 1923): “Now if nobody made the land, it is evident, to a really normal human, that everybody living has a right to own it and should own it.” And from the fact that the earth has not been owned by everyone but by a few people, have come centuries of pain. Amid all the national and international happenings now, the huge underlying urgency goes on: two opposites are asking to be one—the earth, in all its wealth, and the self of every person. Every person includes a child in the Bronx; a woman in Ramallah; a jobless man in Quito, Ecuador.

We are serializing Mr. Siegel’s important 1970 lecture Selves Are in Economics. And in the present section he speaks about other opposites: concentration and expansion in relation to the Federal Reserve Bank; stability and motion in monetary terms; the US as having unity and divisions. Then, commenting on a 1910 article, he speaks some about oil.

That thing, petroleum, coming from the earth itself, from the land which no person made, is at the center now of so much: lobbying; power struggles, massive and intricate; US decisions to back or overthrow regimes. The world’s oil and who controls it are much concerned with what Mr. Siegel explained in 1970, the year of the lecture we are serializing.

The stock market had been plummeting, and by mid-May of that year it had lost a third of its value. On May 22, 1970 Mr. Siegel explained that the factors were different from those in previous financial crises. This time, though stocks might rise again, economics based on seeing people in terms of profit had failed permanently. It could no longer go on with the ease it had once. And in a series of lectures, he gave reasons for that statement. “There will be no economic recovery in the world,” he said,

until economics itself, the making of money, the having of jobs, becomes ethical; is based on good will rather than on the ill will which has been predominant for centuries …. Man should not make money from man! That was justice five thousand years ago, but it didn’t have a chance to show its power until now …. Ethics is a force like electricity, steam, the atom—and will have its way. [Goodbye Profit System: Update, pp. xxxiii, 82]

International Know-how and Oil

One of the causes Mr. Siegel gave for the difficulty in having profits come in as before, is that “America is not the only country now with industrial know-how …. There is more competition with the American product” (GPS:U, p. 46). In these 32 years, the international competition has become vast. Its existence is part of the force of ethics; because for people in many countries to have know-how—for certain knowledge to be no longer monopolized by the US and, say, England—is an ethical victory. Mr. Siegel gives, as an example, oil:

Once you could start oil drilling in a country, and as long as persons were paid something and things seemed busy, they didn’t ask how much went back to America. (Most of it did.) That would occur in the Middle East. Then many people in Saudi Arabia got interested in how much of the money that the oil fetched remained in Saudi Arabia. What was it used for?

…Most people would grant that Iran sees the oil it has differently from [once]. Most people would grant that the rulers and the population of Saudi Arabia see the oil of that country differently. And the people of Nigeria see the wealth of that country differently. And the people of Venezuela see the wealth of that country differently …. This does not help the stock market. It doesn’t help the profit system. [GPS:U, pp. 47, 142, 48]

That US companies cannot control the oil of the world is a huge thing. And even if oil producers elsewhere—in Saudi Arabia, say—are voracious for profit themselves, they are still serving the failure of the profit system, because they have interfered with the ability of US firms to profit freely. Americans are seeing that so much of our foreign policy is impelled by the desire to have oil money be in the hands of US companies. This desire has made for bombings, coups, invasions, and more.

The Message of Oil

In that dark liquid beneath the ground, spouting from wells, flowing in pipelines—ethics is flowing too. Ethics in oil is saying to those who see people and earth as existing for their personal profit: “You can no longer have that earth-thing, petroleum, on your terms!” This is what the following statements in the Washington Post come to; they are by William R. Freudenburg:

Back in 1859, the United States was the country where the idea of drilling for oil originated, and for nearly a century thereafter, we were a virtual one-nation OPEC….But ever since then, our proportion of world oil production has been dropping….In recent years, we have produced less than a tenth of the world’s oil. [National weekly edition, April 29-May 5, 2002]

The real question is: Should oil, needed by the world’s people, coming from the land itself, be a matter for some individual’s private profit at all? It should not be. There is huge contempt in the idea that people can get what they need for their very lives only if they can supply somebody with a big enough profit. There is huge contempt in seeing another’s deep need as a chance for you to wring as much cash as possible from that person. So the force of ethics has taken, along with other forms, the form of oil, saying: “Economics should be based on usefulness to people—not on squeezing from them all you can get. You will have trouble about oil until you see it as belonging truly to everyone.”

Poetry and Oil

I translate here some lines by one of the most noted writers of the last century, the true poet Pablo Neruda, of Chile. In his poem “La Standard Oil Co.,” we see some of the deep craziness, even humor, in the fact that something belonging to the world itself should be a source of private aggrandizement:

These lines have music and wonder, even as they end with the ridiculous. And there are music and anger as Neruda describes some of the ways of the Standard Oil Company:

Whatever else, that is some of the real poetry of the Western Hemisphere. And oil itself is poetic, in its oneness of humility and pride, nondescriptness and might: this lowly-seeming liquid, unimpressive for millennia, which came to be an enormous power. Oil tells us we shouldn’t sum anything up.

—Here now is part 9 of Selves Are in Economics, by the person grandly fair to reality and the self of everyone.

—Ellen Reiss, Aesthetic Realism
Chairman of Education

Banks, Oil, & the Opposites

By Eli Siegel

Note. Mr. Siegel is discussing passages from articles in the New York Independent of August 1910.

In 1912 Woodrow Wilson became President, and one of the acts passed in his administration was that making for the Federal Reserve Bank. In economics, the idea of concentration and expansion is present. And finance at this time is regional, as courts are. There are the United States courts in various parts of the country, and there also are Federal Reserve Banks. This began in Mr. Wilson’s administration, and one cause of it was the panic of 1907. Every panic is a little different. The panic of 1907 is different from the panic of 1857, 1837, the panic in the 1870s, the panic in the 1890s.

It was felt the reason there was a panic in 1907 was that when New York banks needed money they couldn’t get it because the other banks of the country tightened up, seeing the distress going on in New York. It’s very interesting, all that flurry around Wall Street. It’s different from what happened this year. This year, I have to say, is completely different; and it’s with some awareness of those previous sad occasions and turbulent occasions I say what I do—because what we have now is entirely different from 1907 and 1920 and 1930 or 1929.

There’s an article in this 1910 journal on the need for a Federal Reserve Bank. It is called “A Better System of Banking and Currency.” And like some others, the writer feels that if the monetary situation in America were made sensible, or firmed, there would be no panic. That wasn’t true, because there was the Federal Reserve and there was a panic in 1929 anyway, let alone 1920. But it was different from 1907.

Stability and Motion

In the phrase “Banking and Currency” we have the opposites again. The word bank is a nice word, like pillow, cupboard, put it under your hat—things having to do with stolidity, stability, stodginess, being stuck. Bank may come from the benches that the Lombard merchants used in Italy—banco. But the word has a certain quietness, a little bit like a squirrel who has done his work in getting nuts and has got the right tree. However, the word currency—that is something else.*

Then, you have the word liquid, and that’s in motion; it can scare you. You have opposites: bank and liquid, bank and currency. Assets is pretty sensible. Specie and bullion are the way things should be: you feel confident there. But commercial paper—that sounds kind of gauzy: paper! Promissory notes sound awfully frail.

America: Divisions and Center

Edward B. Vreeland is the author of this article about a central bank. And the editor says he is “vice-chairman of the Monetary Commission and chairman of the House Committee on Banking and Currency.”

America has been divided in various ways: New England, Middle Atlantic, Southern states, Middle Western states, Far Western states, Pacific Coast. And there are other ways, regionally. It has had various capitals. For instance, the capital geographically of America is where I said it was in Hail, American Development: near Liberal, Kansas, near Larned, near Dodge City. That is where the center of America is geographically. But there are other capitals. Chicago has been put forth as a capital for real being busy. Then New York, to be sure, is a capital. Then there’s poor forlorn Washington—all it has is Congress and the White House.

How can the United States be divided? Everyone agrees that Georgia belongs to the South and Wyoming to the Far West. The fact that America does have Georgia and Wyoming shows we should still have hope. Any country that has Georgia and Wyoming at the same time, and choo-choo trains planning to go to both—well!

Why money couldn’t be got to New York at a time it should have been, caused people to think about it and try to avoid it. So there was this talk of a central bank, and out of it came the Federal Reserve system. Vreeland makes it clear that his idea of a Federal Reserve Bank is not Biddle’s Bank of the United States, which was opposed by Jackson and was a scheme of the financial aristocrats. This article helped to bring about the Congressional enactment a few years later.

A Limit to Profit

One interesting question of Vreeland is: If earnings were strictly limited, could there be monopoly? He says:

With earnings limited to four and one-half per cent. there could not be a monopoly. Suppose the earnings of the Standard Oil Company were limited by law. The monopoly of the Standard Oil Company would disappear over night. There would be no necessity or benefit in reaching out for all the oil business of the world.

Is that true? If the government were stern enough and meant what it was doing, would that be? I think it would. I think that, once there is a limit on profit and it’s kept to, the profit system would find it hard to be. Profits cannot be limited and still be considered as profits in the full sense. A hamstrung entrepreneur is not a complete entrepreneur.

Well, the question here is concerned with America now, because, with all the good news we get from Wall Street, there’s still a tendency to think that there should be limits on profit. If there were a limit, it would mean that the cause of people in general was stronger than private causes.

Standard Oil was thought to be having a great deal of influence in the banking of New York. “The monopoly of the Standard Oil Company would disappear over night”: the feeling is still there that no matter what an oil company calls itself, it is owned by Standard Oil. It’s a little weaker than it used to be.

The history of oil is a mighty big thing. In 1910, good old Standard Oil was a real American company. It hadn’t got yet to the Holy Land, and to Libya and South America here and there. It felt that getting oil from Texas and Pennsylvania was work enough. But things developed. Then there were persons who were oil engineers, and they had a commission to go all over the world and see what the ground was like. They even went as far as Spitsbergen; in fact, some findings were there. God knows where He put oil, and we should know after Him.

Vreeland writes, about a central banking system: “Others say that eventually the Standard Oil and Morgan interests would get hold of and control such an institution.” But he is very optimistic: “The suggestions I have made as to the law regulating the foundation of this bank would render such a thing forever impossible.” Well, that’s what’s here, 1910. It’s a lively article.