A Serialised Story - Part 1 of 20 (publishing August/September 2007)
Dillon Read & Co. Inc.
And the Aristocracy of Stock Profits
(Bookmark this page and return to find links to new chapters as they are published.)
Why I Wrote This Story
I made the decision to write “Dillon, Read & Co. Inc. and the Aristocracy of Stock Profits” in the middle of a vegetable garden in Montana during the summer of
2005. I had come to Montana to develop a venture capital model to support a healthier, fresher local food supply. If we
want clean water, fresh food, sustainable infrastructure, and healthy communities, we are going to have to finance and
govern these resources ourselves. We cannot invest in the stocks and bonds of large corporations, banks and governments
that are harming our food, water, environment and all living things and then expect these resources to be available when
we need them.
Surviving and thriving as a free people depends on creating and transacting with currencies and investments other than
those printed and manipulated by Wall Street and Washington to the eventual end of our rights and assets.
What I found in Montana, however, was what I have found in communities all across America. We are so financially
entangled in the federal government and large corporations and banks that we cannot see our complicity in everything we
say we abhor. Our social networks are so interwoven with the institutional leadership — government officials, bankers,
lawyers, professors, foundation heads, corporate executives, investors, fellow alumni — that we dare not hold our own
families, friends, colleagues and neighbors accountable for our very real financial and operational complicity. While we
hate "the system," we keep honoring and supporting the people and institutions that are implementing the system when we
interact and transact with them in our day-to-day lives. Enjoying the financial benefits and other perks that come from
that intimate support ensures our continued complicity and contribution to fueling that which we say we hate.
Standing among the beautiful vegetables and flowers that Montana summer day, I was facing the futility of trying to
craft investment solutions without some basic consensus about the economic tapeworm that is killing us and all living
things — while we blindly feed the worm. In a world of economic warfare, we have to see the strategy behind each play in
the game. We have to see the economic tapeworm and how it works parasitically in our lives. A tapeworm injects chemicals
into a host that causes the host to crave what is good for the tapeworm. In America, we despair over our deterioration,
but we crave the next injection of chemicals from the tapeworm.
With this in mind, I decided to write “Dillon Read & Co Inc. and the Aristocracy of Stock Profits” as a case study designed to help illuminate the deeper system. It details
the story of two teams with two competing visions for America. The first was a vision shared by my old firm on Wall
Street — Dillon Read — and the Clinton Administration with the full support of a bipartisan Congress. In this vision,
America's aristocracy makes money by ensnaring our youth in a pincer movement of drugs and prisons and wins middle class
support for these policies through a steady and growing stream of government funding and contracts for War on Drugs
activities at federal, state and local levels. This consensus is made all the more powerful by the gush of growing debt
and derivatives used to bubble the housing and mortgage markets, manipulate the stock and precious metals markets and
finance trillions missing from the US government in the largest pump and dump in history — the pump and dump of the
entire American economy. This is more than a process designed to wipe out the middle class. This is genocide — a much
more subtle and lethal version than ever before perpetrated by the scoundrels of our history texts.
This case study provides a detailed example of the financial kickback machinery that makes the process go. It works
something like this. A group of executives and investors start a company. Rather than build a business the old fashioned
way, company profits are pumped up with government legislation, contracts, regulation, financing, subsidies and/or
enforcement. This dramatically increases the value of the company's financial equity. The company and its initial
investors then sell their stock at a profit. Such profits replenish contributions made to the kind of politicians who
can arrange such government benefits. Such profits also fund philanthropy to foundations and universities that have
large endowments that invest along side the investors. These tax-exempt organizations provide graduates to staff
positions in the game, intellectual justification to attract popular support and photo opportunities which bestow
legitimacy and social stature. Personnel cycle through the management and boards of business, government and academia,
as real productivity falls and government deficits grow.
The second vision was shared by my investment bank in Washington — The Hamilton Securities Group — and a small group of
excellent government civil servants and appointees who believed in the power of education, hard work and a new
partnership between people, land and technology. This vision would allow us to pay down public and private debt and
create new business, infrastructure and equity. We believed that new times and new technologies called for a revival
that would permit decentralized efforts to go to work on the hard challenges upon us — population, environment, resource
management and the rapidly growing cultural gap between the most technologically proficient and the majority of people.
We believed that private and public capital should flow to that which was most economically productive rather than be
mixed in a complex cocktail of insider deals designed to hollow out the American economy and culture.
My hope is that “Dillon, Read & the Aristocracy of Stock Profits” will help you to see the game sufficiently to recognize the dividing line between two
visions. One centralizes power and knowledge in a manner that tears down communities and infrastructure as it dominates
wealth and shrinks freedom. The other diversifies power and knowledge to create new wealth through rebuilding
infrastructure and communities and nourishing our natural resources in a way that reaffirms our ancient and deepest
dream of freedom.
My hope is that as your powers grow to see the financial game and the true dividing lines, you will be better able to
build networks of authentic people inventing authentic solutions to the real challenges we face. My hope is that you
will no longer invite into your lives and work the people and organizations that sabotage real change. If enough of us
come clean and hold true to the intention to transform the game, we invite in the magic that comes in dangerous times.
Yes, there is a better way and, yes, we can create it.
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Table of Contents
Dillon Read’s Chairman, Nicholas F. Brady, was considered one of George H. W. Bush’s most intimate friends and advisors
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Dillon Read’s Chairman, Nicholas F. Brady, was considered one of George H. W. Bush’s most intimate friends and advisors
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The French Rothschilds, in response to the nationalization of Banque Rothschild by President Mitterrand, moved
significant operations and focus to the U.S. ...
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In 1984 and 1985, Dillon Read helped RJR merge with Nabisco Brands, making the combined RJR Nabisco one of the world’s
largest consumer products corporations ...
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Gary Webb’s "Dark Alliance" story was persuasive that the U.S. government and their allies were involved in narcotics
trafficking ...
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Perhaps KKR had simply sheltered one of the worlds premier money laundering networks and, behind the veil of a private
company, taken this network to a whole new level ...
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That was when I decided that we might be losing sight of the line between financial engineering and financial fraud. I
left the boardroom to make a call to Washington, D.C. There was nothing else to learn at Dillon Read ...
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When I told Nick Brady in 1989 that I was going to work at HUD, he said, “You can’t go to HUD — HUD is a sewer.”
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To understand Dillon’s investments in Cornell it is essential to understand who governed Dillon Read, who at Dillon
invested personally, as well as who at Dillon helped to govern the venture funds that invested in Cornell ...
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Cornell arranged for the prison to be constructed by Brown & Root of Houston, Texas, a subsidiary of Halliburton.
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The Clinton Administration took the groundwork laid by Nixon, Reagan and Bush and embraced the promotion of federal
support for police, enforcement and the War on Drugs with a passion that was hard to understand ...
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One of Hamilton Securities’ goals was to map out how the flows of money worked in the U.S. and create software tools
that would make this information accessible to communities ...
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The supremacy of the central banking-warfare investment model that has ruled our planet for the last 500 years depends
on being able to combine the high margin profits of organized crime with a low cost of capital ...
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One day I was a wealthy entrepreneur with a successful business and money in the bank. The next day I was hunted,
business assets seized, living through eighteen audits and investigations, a smear campaign directed not just at me but
also members of my family ...
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My favorite Judge Sporkin quote was his retort from the bench, something to the effect of “I disagree with the law and
if you have a problem with that, take it up with Congress.”
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These are the kind of profits you get when you buy stock for a price of $3.8 million and several years later sell that
stock for $29.9 million — or an almost 800% increase on your investment ...
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In June of 1999, Richard Grasso, Chairman of the New York stock exchange, went to Colombia to visit a Revolutionary
Armed Forces of Colombia Commander to encourage him to reinvest in the New York Stock Exchange ...
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An all-to-familiar impersonal financial mechanism was now in place that created yet another incentive system with global
reach, to drive the financial returns of investors up by driving down the Popsicle Index of faceless people and
communities, far removed.
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The Via Dolorosa is the street in the Old City of Jerusalem which Jesus is said to have walked on the way to his
crucifixion. It means “the way of grief.”
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Mapping The Real Deal is a column on Scoop supervised by Catherine Austin Fitts. Ms Fitts is the President of Solari, Inc. http://www.solari.com/. Ms. Fitts is the former Assistant Secretary of Housing-Federal Housing Commissioner during the first Bush Administration, a former managing director and member of the board of directors of Dillon Read & Co. Inc. and President of The Hamilton Securities Group, Inc.
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