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INTERNATIONAL CAMPAIGN TO RESTORE GLASS-STEAGALL
Former Secretary of State of the Argentine Republic : a letter to the Congress of the United States regarding the Glass-Steagall Reform
19 mai 2013
Buenos Aires, Argentina The Honorable Representatives Marcy Kaptur and Walter Jones, It is my great honor to write you to offer my congratulations and respect for your globally-important proposed bill H.R. 129 to reinstate the Glass-Steagall law, passed in 1933 as the centerpiece of the New Deal program of the great President Franklin Delano Roosevelt. That law separating commercial banks, which promote the physical economy, from the speculative investment banks, allowed the United States and the world to recover from the Great Depression brought about by the stock market crisis of 1929-1930. Here in the Argentine Republic, a law like Glass-Steagall would mean a new awakening that would reestablish our industrial, technological and scientific economy, which was launched in 1946 with the following measures introduced by our Constitutional President and General of the Army, Don Juan Domingo Peron. Through these laws, he began to change the structure of our economy : 1. Nationalization of the Central Bank of the Argentine Republic : Since 1933, this had been a mixed Anglo-Argentine entity in which nine directors represented the private speculative banks while only three represented the State, meaning that the speculative sector ran the Central Bank and the industrial economy had no financial support. Worse, this had been the case since Feb. 2, 1825, when the Anglo-Argentine Treaty of Friendship, Trade and Navegation, as expressed by Great Britain’s Minister of Foreign Trade, Cobden, asserted that from that point on, Great Britain would be the factory of the world and Hispano-America, now freed from Spain, would be its farm—the suppliers of raw materials and takers of loans. Hispano America was absolutely prohibited from developing its industrial production or its scientific or technological capabilities. 2. Nationalization of bank deposits. The Central Bank guaranteed all deposits in both private or state-owned banks, thus making it possible to create three great sources of public credit : the Industrial Credit Bank, the National Mortgage Bank, and the Ministry of Public Works. As a result, in the decade 1946-1956 that followed, we saw : a) the industrialization of the entire nation, reflected in the trademark "Industry of Argentina ;" b) creation of thirty-year, interest-free loans for housing construction ; c) construction of large infrastructure projects, among which were Ezeiza International Airport, the 800-km. Comodoro Rivadavia-Buenos Aires gas pipeline ; electricity plants throughout the country built by the Water and Energy Directorate, and roads, schools and hospitals built around the country. Accompanying this was the growth of heavy industry with the building of Altos Hornos Zapla Palpala steel complex in Jujuy province, the Altos Hornos steel complex (SOMISA) in San Nicolas, and the state-owned merchant marine with a 1.5 million-ton transport capability. 3. Exchange Controls : The Central Bank’s sale of dollars permitted imports of capital goods not produced in the country ; the import of medicine for public health, material for scientific research, as well as the creation of a National Atomic Energy Commission, which built the Atucha I and Atucha II nuclear plants, completed during President Peron’s third term in office (1973-1976). 4. Promotion of State-Directed Foreign Trade : This was achieved through the creation of the Argentine Institute for Trade Promotion (IAPI). Through these four essential measures, Argentina was able to put an end to banking speculation, creating the State’s first Public Credit Service, as stipulated by the Constitution of December 9, 1853 by then-Finance Minister Mariano Fragueiro, a devoted follower of the principles of Alexander Hamilton and Fredrich List. The coups of Sept. 16, 1955 and March 24, 1976, in whose wake occurred the macabre accumulation of assassinations and disappearances totalling 30,000 people, were the means by which Argentina’s financier sector destroyed everything described above, creating instead an absolute market economy that maximized financial benefits. To that end, the genocidal military government that took power on March 24, 1976, decreed on February 21, 1977 the Financial Entities Law (No. 21576) which authorized speculative and financial agencies to engage in unbridled speculative operations not expressly prohibited. As a result, public and private banks in Argentina changed course, engaging in ferocious and permanent speculation which unleashed hyperinflation and a brutal increase in interest rates. Inflation isn’t caused by a surplus of money, but rather by an increase in interest rates ; that is, by credit that is expensive and scarce, ensuring that rather than being liberated by the simple relationship between entrepreneur-producer and worker-consumer, the productive cycle is dominated by a financier banking structure whose role is to speculate with interest rates that destroy physical economy. This shadowy conception held by the authors of the 1976 military coup was then continued by the financier elite that controlled the subsequent governments of Presidents Carlos Menem, Fernando de la Rua and Eduardo Duhalde. This rampant financial speculation led to : 1. Taking of Foreign Loans : These were issued by the International Monetary Fund, the World Bank and the Club of Paris to cover regular budgetary expenditures. As a result, from 1976 to the present, we have paid out approximately $250 billion for such fraudulently-granted loans, and still owe enormous sums to the World Bank and the Club of Paris for the bonds issued by former President Carlos Menem. President Nestor Kirchner paid off all the debt owed to the IMF and even got some of the vulture funds who were holding our bonds to accept a swap for lesser sums. But other such creditors continue to attack our country, as seen in the rulings of New York Federal Judge Thomas Griesa, who even abetted the embargoing of our Naval ship Libertad. 2. Deindustrialization : Between March 24, 1976 when the military dictatorship began, until December 11, 1999 when the neo-military President Carlos Menem left office, 178,000 factories were shut down. (Source : Argentine Industrial Council and the Argentine Industrial Union). 3. Unemployment : Deindustrialization created mass unemployment and wage slashing, which the State tried to address by creating permanent subsidies to avoid a social tragedy. Although President Cristina Kirchner has attempted to ameliorate this crisis, it remains a threat, such that the factories built in the country don’t actually produce a finished product but rather assemble equipment and machinery imported from China. The fragility of the situation is obvious. As the Honorable Congressmen can observe, the reinstatement of the Glass-Steagall law would not only allow the United States to revive its exemplary physical economy, but also allow the rest of the world—Europe, Latin America, etc.—to embrace this law as a universal model and adopt analogous laws to put an end to the speculative economy which destroys the life and civilization of human labour. These fundamental principles of economics which preserve the sacred character of human beings and nations, have in Lyndon LaRouche and Helga Zepp-LaRouche the fathers who carry on the legacy of the Founding Fathers. To them we pay homage and offer our public recognition, and pray that the Lord our God, force of all forces and cause of all causes may allow H.R. 129 to immediately become federal law in the United States, and extend its redemptive power throughout the world. With my most respectful greetings, Julio C. González |