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Repeal of Glass-Steagall Caused the Financial Crisis

The repeal of the law separating commercial and investment banking caused the 2008 financial crisis.   See the article By James Rickards on Aug. 27, 2012.  It is reprinted below.


The oldest propaganda technique is to repeat a lie emphatically and often until it is taken for the truth. Something like this is going on now with regard to banks and the financial crisis. The big bank boosters and analysts who should know better are repeating the falsehood that repeal of Glass-Steagall had nothing to do with the Panic of 2008.

In fact, the financial crisis might not have happened at all but for the 1999 repeal of the Glass-Steagall law that separated commercial and investment banking for seven decades. If there is any hope of avoiding another meltdown, it's critical to understand why Glass-Steagall repeal helped to cause the crisis. Without a return to something like Glass-Steagall, another greater catastrophe is just a matter of time.

History is a good place to begin. After the Depression of 1920-21, the United States embarked on a period of economic prosperity known as the Roaring Twenties. It was a time of innovation, especially in consumer goods such as automobiles, radio, and refrigeration. Along with these goods came new forms of consumer credit and bank expansion. National City Bank (forerunner of today's Citibank) and Chase Bank opened offices to sell securities side-by-side with traditional banking products like deposits and loans.

As the decade progressed, the stock market boomed and eventually reached bubble territory. Along with the bubble came market manipulation in the form of organized pools that would ramp up the price of stocks and dump them on unsuspecting suckers just before the stock collapsed. Banks joined in by offering stocks of holding companies that were leveraged pyramid schemes and other securities backed by dubious assets.

In 1929, the music stopped, the stock market crashed and the Great Depression began. It took eight years from the start of the boom to the bust. Subsequent investigations revealed the extent of the fraud that preceded the crash. In 1933, Congress passed Glass-Steagall in response to the abuses. Banks would be allowed to take deposits and make loans. Brokers would be allowed to underwrite and sell securities. But no firm could do both due to conflicts of interest and risks to insured deposits. From 1933 to 1999, there were very few large bank failures and no financial panics comparable to the Panic of 2008. The law worked exactly as intended.

In 1999, Democrats led by President Bill Clinton and Republicans led by Sen. Phil Gramm joined forces to repeal Glass-Steagall at the behest of the big banks. What happened over the next eight years was an almost exact replay of the Roaring Twenties. Once again, banks originated fraudulent loans and once again they sold them to their customers in the form of securities. The bubble peaked in 2007 and collapsed in 2008. The hard-earned knowledge of 1933 had been lost in the arrogance of 1999.

The bank supporters' attacks on this clear-as-a-bell narrative deserve a hearing to show how flimsy they are. One bank supporter says you cannot blame banks for fraudulent loan originations because that was done by unscrupulous mortgage brokers. This is nonsense. The brokers would not have been able to fund the loans in the first place if the banks had not been buying their production.

Another apologist says the fact that no big banks failed in the crisis proves they were not the cause of the problem. This is also ludicrous. The reason the big banks did not fail was because they were bailed out by the government. Clearly the banks would have failed but for the bailouts. Bank balance sheets were neck-deep in liar loans and underwater home equity lines of credit. The fact that banks did not fail proves nothing except that they were too big to fail.

Yet another big bank spokesman says that nonbanks such as Lehman and Bear Stearns were more to blame for the crisis. This ignores the fact that nonbanks get their funding from banks in the form of mortgages, repurchase agreements, and lines of credit. Without the big banks providing easy credit on bad collateral like structured products, the nonbanks would not have been able to leverage themselves.

It is true that the financial crisis has enough blame to go around. Borrowers were reckless, brokers were greedy, rating agencies were negligent, customers were naïve, and government encouraged the fiasco with unrealistic housing goals and unlimited lines of credit at Fannie Mae and Freddie Mac.

Yet, the fact that there were so many parties to blame should not be used to deflect blame from the most responsible parties of all—the big banks. Without the banks providing financing to the mortgage brokers and Wall Street while underwriting their own issues of toxic securities, the entire pyramid scheme would never have got off the ground.

It was Glass-Steagall that prevented the banks from using insured depositories to underwrite private securities and dump them on their own customers. This ability along with financing provided to all the other players was what kept the bubble-machine going for so long.

Now, when memories are fresh, is the time to reinstate Glass-Steagall to prevent a third cycle of fraud on customers. Without the separation of banking and underwriting, it's just a matter of time before banks repeat their well-honed practice of originating garbage loans and stuffing them down customers' throats. Congress had the answer in 1933. Congress lost its way in 1999. Now is the chance to get back to the garden.


Too Big to Fail, Too Big to Jail 

From MSNBC on March 7, 2013 (

Oh really, banks are 'too big to jail?' Elizabeth Warren isn't having it.  Elizabeth Warren isn't handing out any "get out of jail free" cards to big banks that violate anti-money laundering laws.

During a Senate Banking Committee hearing, the new Democrat on the block from Massachusetts questioned why banking institutions, such as HSBC, have been allowed to get off so easy with the Justice Department.

In December, the U.S. government reached a deal with the British bank, which agreed to pay more than $1.9 billion in fines to settle charges of money laundering for Mexican drug cartels and completing transactions for countries under U.S. sanctions. Yet, no criminal charges were filed against individuals within the company.

Noting the discrepancy, Warren suggested banks get treated differently than the average citizen. "If you're caught with an ounce of cocaine, the chances are good you go to jail. If you're caught repeatedly, you can go to jail for life," said Warren. "Incidentally, if you launder nearly a billion dollars in drug money, your company pays a fine and you go home and sleep in your own bed at night."

At the meeting, top officials at the Office of the Comptroller of Currency and the Treasury Department told senators they are exploring rules, both new and old, that would more aggressively punish bank employees and executives in these situations.

Appearing before the Senate Judiciary Committee, however, U.S. Attorney General Eric Holder admitted it’s hard to prosecute these megabanks who are in the wrong and argued it could do more harm than good.

"I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute — if we do bring a criminal charge — it will have a negative impact on the national economy, perhaps even the world economy," Holder said on Wednesday. "I think that is a function of the fact that some of these institutions have become too large." Translation: He literally confirmed that “too big to fail” translates to “too big for trial.”

On Wednesday, Warren fired back a feisty statement in response. “It has been almost five years since the financial crisis, but the big banks are still too big to fail," Warren said in a statement. "That means they are subsidized by about $83 billion a year by American taxpayers and are still not being held fully accountable for breaking the law. Attorney General Holder’s testimony that the biggest banks are too-big-to-jail shows once again that it is past time to end too-big-to-fail."


Henry Ford and Thomas Edison  

The New York Times published an article on December 6, 1921 about Henry Ford’s offer to take on a 99-year lease on unfinished Wilson Hydroelectric Dam for 5 million dollars, in which he promised to finish the dam and construct a new one upstream. He promised to use the dam and create a planned city in the yet-nonexistent Muscle Shoals which he would make the "Detroit of the South”.  See the Wikipedia entry for some of the history.  

Excerpts from the article, Thomas Edison’s quotes, relevant to the money issue.  Read the whole article at this link.

“I will recommend to Congress that it complete the dam and give the lease to Mr. Ford, for three reasons.

First.  The Capacity of power here and the industrial plants built on the Sheffield shore make this the greatest munitions plant in the country. Its possibilities for providing quickly and in tremendous quantities all sorts of war materials is almost incomprehensible. Whether or not any one operate the plant, it should be completed and kept ready to go into operation. With that done, no nation would attack without hesitation. It would be the greatest insurance against war that we have. 

Second. To get the property is one thing, to operate it successfully is another. Ford is known as a great manufacturer, with great conceptions, who moves rapidly to their realization. He is the one logical man to do this thing. 

Third. The whole country has an abiding faith that Ford will not operate it to get every dollar possible out of it for himself. He will make it an American institution, doing the greatest good for the greatest possible number.”

“Make it perfectly clear that I’m not advocating any changes in banks and banking. Banks are a mighty good thing. They are essential to the commerce of the country. It’s the money broker, the money profiteer, the private banker, that I oppose. They gain their power through a [unclear] and false value given to gold. 

Gold is a relic of Julius Caesar and interest is an invention of Satan.  Gold is intrinsical of less utility than most metals. The probable reason why it is retained as the basis of money is that it is easy to control. And it is the control of money that constitutes the money question. It is the control of money that is the root of all evil.

Then there is another way – the method my friend Ford proposed the other day. He proposes just to go along and forget about gold. He says that the Government can finance Muscle Shoals without applying to money brokers for permission, and I think he is absolutely right about it.

Of course, as long as the world is on the gold basis, we shall have to recognize it as an element in international trade, but it is not necessary for commerce within our own borders. In internal business we can forget it. And we do forget it. If everybody in the United States suddenly demanded gold for their money, there would not be enough gold. 

Gold and money are separate things, you see. Gold is the trick mechanism by which you can control money. 

Gold is not money until the people of the United States and other nations put their stamp on it. It is not the gold that makes the dollar. It is the dollar that makes the gold. Take the dollar out of the gold, and leave it merely yellow metal, and it sinks in value. Gold is established by law, just as silver was, and gold could be disestablished, demonetized by law, just as silver was. When silver was demonetized, the former so-called dollar became worth about 50 cents.”

“But would not Mr. Ford’s suggestion that Muscle Shoals be financed by a currency issue raise some objections?” Mr. Edison was asked.

“Certainly. There is a complete set of misleading slogans kept on hand for just such outbreaks of common sense among people. The people are so ignorant of what they think are the intricasies of the money system that they are easily impressed by big words. There would be new shrieks of ‘fiat money,’ and ‘paper money’ and ‘green-backism,’ and all the rest of it – the same old cries with which the people have been shouted down from the beginning.

But maybe we have passed beyond the time when the thoughtful 2 percent – you know, I gather from my questionnaire that only 2 percent of the people think,” and Mr. Edison smiled broadly. “Maybe they can’t shout down American thinkers any longer. The only dynamite that works in this country is the dynamite of a sound idea. I think we are getting a sound idea of the money question. The people have an instinct which tells them that something is wrong, and that the wrong somehow centers in money. They have an instinct also, which tells them when a proposal is made in their interests or against them.

Now, as to paper money, so called everyone knows that paper money is the money of civilized people. The higher you go in civilization the less actual money you see. It is all bills and checks. What are bills and checks? Mere promises and orders. What are they based on? Principally on two sources – human energy and the productive earth. Humanity and the soil – they are the only real basis of money.

Don’t allow them to confuse you with the cry of ‘paper money.’ The danger of paper money is precisely the danger of gold – if you get too much it is no good. They say we have all the gold of the world now. Well, what good does it do us? When America gets all the chips in a game, the game stops. We would be better off if we had less gold. Indeed, we are trying to get rid of our gold to start something going. But the trade machine is at present jammed. Too much paper money operates the same way. There is just one rule for money, and that is, to have enough to carry all the legitimate trade that is waiting to move. Too little or too much are both bad. But enough to move trade, enough to prevent stagnation on the one hand and not enough to permit speculation on the other hand, is the proper ratio.”

“Then you see no difference between currency and Government bonds?” Mr. Edison was asked.

“Yes, there is a difference, but it is neither the likeness nor the difference that will determine the matter; the attack will be directed against thinking of bonds and currency together and comparing them. If people ever get to thinking of bonds and bills at the same time, the game is up.

Now, here is Ford proposing to finance Muscle Shoals by an issue of currency. Very well, let us suppose for a moment that Congress follows his proposal. Personally, I don’t think Congress has imagination enough to do it, but let us suppose that it does. The required sum is authorized – say 30 million dollars. The bills are issued directly by the Government, as all money ought to be. When the workmen are paid off, they receive these United States bills. When the material is bought it is paid in these United States bills. Except that perhaps the bills may have the engraving of a water dam, instead of a railroad train and a ship, as some of the Federal Reserve notes have. They will be the same as any other currency put out by the Government; that is, they will be money. They will be based on the public wealth already in Muscle Shoals, and their circulation will increase that public wealth, not only the public money but the public wealth – real wealth.

When these bills have answered the purpose of building and completing Muscle Shoals, they will be retired by the earnings of the power dam. That is, the people of the United States will have all that they put into Muscle Shoals and all that they can take out for centuries – the endless wealth-making water power of that great Tennessee River – with no tax and no increase of the national debt.”

“But suppose Congress does not see this, what then?” Mr. Edison was asked.

“Well, Congress must fall back on the old way of doing business. It (Congress) must authorize an issue of bonds. That is, it must go out to the money brokers and borrow enough of our own national currency to complete great national resources, and we then must pay interest to the money brokers for the use of our own money. That is to say, under the old way any time we wish to add to the national wealth we are compelled to add to the national debt.

Now, that is what Henry Ford wants to prevent. He thinks it is stupid, and so do I, that for the loan of 30 million dollars of their own money the people of the United States should be compelled to pay 66 million dollars – that is what it amounts to with interest. People who will not turn a shovelful of dirt nor contribute a pound of material will collect more money from the United States than will the people who supply the material and do the work. That is the terrible thing about interest. In all our great bond issues the interest is always greater than the principal. All of the great public works cost more than twice the actual cost, on that account. Under the present system of doing business we simply add 120 to 150 percent to the stated cost.

But here is the point. If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good also. The difference between the bond and the bill is that the bond lets the money brokers collect twice the amount of the bond and an additional 20 percent, whereas the currency pays nobody but those who directly contribute to Muscle Shoals in some useful way.

If the Government issues bonds, it simply induces the money brokers to draw 30 million dollars out of the other channels of trade and turn it into Muscle Shoals; if the Government issues currency, it provides itself with enough money to increase the national wealth at the Muscle Shoals without disturbing the business of the rest of the country. And in doing this it increases its income without adding a penny to its debt.

It is absurd to say that our country can issue 30 million dollars in bonds and not 30 million dollars in currency. Both are promises to pay; but the one (promise) fattens the usurer, and the other helps the people. If the currency issued by the Government were no good, then the bonds issued would be no good either. It is a terrible situation when the Government, to increase the national wealth, must go into debt and submit to ruinous interest charges at the hands of men who control the fictitious values of gold.

Look at it another way. If the Government issues bonds, the brokers will sell them. The bonds will be negotiable; they will be considered as gilt-edged paper. Why? Because the Government is behind them, but who is behind the Government? The people. Therefore it is the people who constitute the basis of Government credit. Why then cannot the people have the benefit of their own gilt-edged credit by receiving non-interest bearing currency on Muscle Shoals, instead of the bankers receiving the benefit of the people’s credit in interest-bearing bonds?

The people must pay anyway; why should they be compelled to pay twice, as the bond system compels them to pay? The people of the United States always accept their Government’s currency. If the United States Government will adopt this policy of increasing its national wealth without contributing to the interest collect – for the whole national debt is made up of interest charges – then you will see an era of progress and prosperity in this country such as could never have come otherwise.

“Are you going to have anything to do with outlining this proposed policy?” Mr. Edison was asked.

I am just expressing my opinion as a citizen. Ford’s idea is flawless. They won’t like it. They will fight it, but the people of this country ought to take it up and think about it. I believe it points the way to many reforms and achievements which cannot come under the old system.”


President Lincoln Issued the Greenback 

Abraham Lincoln was fond of saying that the only proper role of government is to provide the infrastructure so that the people may enjoy rising standards of living.  On the day after Christmas in 1839 when he was 30 years old, he gave a speech in which he said:  

“Broken by it, I, too may be; bow to it I never will.  The probability that we may fall in the struggle ought not to deter us from the support of a cause we believe to be just; it shall not deter me.”  

(The above quote is from Gabor Boritt’s, Lincoln and the Economics of the American Dream, page vii)

Was he talking about slavery?  NO!  He was talking about Banking!

Abraham Lincoln (1809-1865) letter to Colonel William F. Elkins, 21 Nov 1864.

"The money powers prey upon the nation in times of peace and conspire against it in times of adversity. It is more despotic than a monarchy, more insolent than autocracy, (and) more selfish than bureaucracy. It denounces, as public enemies, all who question its methods or throw light upon its crimes. I have two great enemies, the Southern Army in front of me and the bankers in the rear. Of the two, the one at my rear is my greatest foe...corporations have been enthroned, and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until the wealth is aggregated in the hands of a few, and the Republic is destroyed." 

Abraham Lincoln on the subject of Constitutional Money; from an address to Congress in 1865.  (There is no authoritative source for this quote, but according to Gabor Boritt it accurately represents Lincoln’s views.  Let the quote speak for itself.)

“Money is the creature of law and the creation of the original issue of money should be maintained as the exclusive monopoly of national Government.  Money possesses no value to the State other than that given to it by circulation.

 Capital has its proper place and is entitled to every protection. The wages of men should be recognized in the structure of and in the social order as more important than the wages of money.  

No duty is more imperative for the Government than the duty it owes the People to furnish them with a sound and uniform currency, and of regulating the circulation of the medium of exchange so that labor will be protected from a vicious currency, and commerce will be facilitated by cheap and safe exchanges.

 The available supply of Gold and Silver being wholly inadequate to permit the issuance of coins of intrinsic value or paper currency convertible into coin in the volume required to serve the needs of the People, some other basis for the issue of currency must be developed, and some means other than that of convertibility into coin must be developed to prevent undue fluctuation in the value of paper currency or any other substitute for money of intrinsic value that may come into use.

The monetary needs of increasing numbers of People advancing towards higher standards of living can and should be met by the Government. Such needs can be served by the issue of National Currency and Credit through the operation of a National Banking system. The circulation of a medium of exchange issued and backed by the Government can be properly regulated and redundancy of issue avoided by withdrawing from circulation such amounts as may be necessary by Taxation, Redeposit, and otherwise. Government has the power to regulate the currency and credit of the Nation.

 Government should stand behind its currency and credit and the Bank deposits of the Nation. No individual should suffer a loss of money through depreciation or inflated currency or Bank bankruptcy. 

Government, possessing the power to create and issue currency and credit as money and enjoying the right to withdraw both currency and credit from circulation by Taxation and otherwise, need not and should not borrow capital at interest as a means of financing Governmental work and public enterprise. The Government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the Government and the buying power of the consumers. The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government’s greatest creative opportunity.  

By the adoption of these principles the long felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts, and exchanges. The financing of all public enterprise, the maintenance of stable Government and ordered progress, and the conduct of the Treasury will become matters of practical administration. 

The people can and will be furnished with a currency as safe as their own Government. Money will cease to be master and become the servant of humanity. Democracy will rise superior to the money power.”


Cross of Gold Speech  

The most famous speech in American political history was delivered by William Jennings Bryan on July 9, 1896, at the Democratic National Convention in Chicago. The issue was whether to endorse the free coinage of silver at a ratio of silver to gold of 16 to 1.   See  .  There is even a recording of it in 1921 (25 years after the original speech), when Byran recorded portions of the speech for Gennett Records in Richmond, Indiana. Although the recording does not capture the power and drama of the original address, it does allow us to hear Bryan delivering this famous speech.


“Mr. Jefferson, who was once regarded as good Democratic authority, seems to have a different opinion from the gentleman who has addressed us on the part of the minority. Those who are opposed to this proposition tell us that the issue of paper money is a function of the bank and that the government ought to go out of the banking business. I stand with Jefferson rather than with them, and tell them, as he did, that the issue of money is a function of the government and that the banks should go out of the governing business.”

“Here is the line of battle. We care not upon which issue they force the fight. We are prepared to meet them on either issue or on both. If they tell us that the gold standard is the standard of civilization, we reply to them that this, the most enlightened of all nations of the earth, has never declared for a gold standard, and both the parties this year are declaring against it. If the gold standard is the standard of civilization, why, my friends, should we not have it? So if they come to meet us on that, we can present the history of our nation. More than that, we can tell them this, that they will search the pages of history in vain to find a single instance in which the common people of any land ever declared themselves in favor of a gold standard. They can find where the holders of fixed investments have.”

“There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it.”

“If they dare to come out in the open field and defend the gold standard as a good thing, we shall fight them to the uttermost, having behind us the producing masses of the nation and the world. Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.”


Public Banks  


The Bank of North Dakota is the State of North Dakota doing business as the Bank of North Dakota (BND).  If every State were doing business as the Bank of (Name of State) there may be a questioning of the legitimacy of debt and usury, but I doubt it. However, the benefit to the people of a State if it had its own bank is substantial. Ellen Brown describes that the State of North Dakota, because of the BND was unaffected by the housing bubble and collapse that so occupied the rest of the country in 2008-9. 


From the 2008 Annual Report (:


President’s Message

The beginning of 2008 started with great expectations; we moved into a new state-of-the-art facility and we were fresh off of our fifth straight year of record profits, but a few gathering clouds quickly appeared on the horizon.


The challenges that impacted much of the country’s financial sector throughout the year had minimal effect on Bank of North Dakota (BND). Our earnings remained strong at $57 million, our sixth straight year of record profits. Loan activity, quality and variety remained very good. In fact, loan growth for 2008 was a remarkable $613 million, for a 30.6 percent increase.


As challenges mounted throughout the year, we reviewed internal procedures and best practices. We found that our straightforward approach to banking is something in which we can take pride. The instruments we use to hedge our balance sheet and manage interest rate risk are tried and true. Consequently, our exposure to the volatile derivative markets that has caused much upheaval and uncertainty in the marketplace was not a factor for us. 


In many respects, 2008 provided more opportunities for BND to expand services than we have had in many years. As the financial crisis exploded across the country, North Dakota began to feel the effects as bank regulators called on financial institutions to increase their reserves and liquidity. Many North Dakota banks looked to BND for reassurance and used our programs including Letter of Credit for Public Deposits, loan sales, and bank stock to assist them with these issues.  


The student loan industry experienced upheaval as action by the federal government eroded profit margins and the securities market for secondary loan providers dried up.  Significant volume increases, attributed to 25 percent of student loan lenders leaving the industry, have not stopped earnings from falling dramatically in the student loan portfolio. Regardless, we remain deeply committed to ensuring that North Dakota students have access to financing. 


We understand 2009 will bring many more challenges to the banking industry. With this in mind, we began the process of creating a new strategic plan that will be implemented in 2009 and will take us through 2012. Our capital position and strong performing loan portfolio has positioned us as a stabilizing factor in North Dakota.  We will weather this financial storm and strengthen our partnerships to ensure that we continue to meet our mission.


Eric Hardmeyer, President


The Annual Report for 2009: (


Despite the national financial challenges, BND had a successful year with earnings of $58 million, a seventh straight year of record profits. Loan activity was moderate with total growth of $95 million. Total assets grew by over $400 million as the State of North Dakota’s economy proved to be resilient. Equity grew nearly $50 million to $272 million as most of 2009 income was retained.  


During Covid, the BND had numerous programs to help the people weather the lockdown.   See 


The Public Bank Movement led by Ellen Brown was initiated by her book:  The Web of Debt, the Shocking Truth About Our Money System and How We Can Break Free.  It is an excellent source for understanding how the private creation of money by banks turns us into debt and wage slaves and why it would be helpful if our governments had their own banks.  Although I am hopeful that one or other of the efforts to establish a public bank will succeed, I am very aware of how often in our past monetary reform of one kind or another has been top of the political agenda, and nevertheless failed.  

I believe that when we create what we want from first principles, through conversation and inspired individual initiative we will get the society that benefits everyone, and it will be secure because it will not be based on lies or propaganda or the threat of deadly force.


Author’s Note

I had an interesting experience when I was testifying before the Commission to Study the Feasibility of a Public Bank for Massachusetts.  Governor Patrick appointed a commission in response to a bill submitted by my good friend David Snieckus.  David and I attended each of the public hearings and at each one I said something about how banks issue money and why it should be done by a public bank.  They would only allow us to speak for 3 minutes.  At the last public hearing in Plymouth, MA when the very few speakers had spoken, the Chairman of the Committee said, “Ok Mr Root, pull up a chair and give us what you got”.  I now had time to explain the banking fraud, that banks issue the money we believe they are lending us as what they owe us.  

There were three responses to what I said:

  • the Massachusetts Banking Commissioner asked me if I were a Waldorf School graduate, to which I responded yes.  

  • The President of the Greenfield Cooperative Bank said:  “Wow, that explains a lot!”   

  • The President of the Middlesex Mutual Bank said:  “That is not true, I know I lend my depositors money, I do it every day!”  I asked her “So you tell your depositors that they may not withdraw their money because you have lent it to someone else?”  To which she responded indignantly “No - That is NOT how banking works!”  

Months later, the Commission decided that everything that is credit worthy is getting funded and therefore no Public Bank was needed.  In talking with the Chairman of the Commission after the report was published, he pointed out that I made the mistake of not talking about all the things that are not credit worthy that a public bank could fund.  

On numerous occasions afterwards, David and I testified before the banking committee at the Massachusetts State House regarding  foreclosures.  After one hearing requesting a moratorium on Foreclosures to give time to expose the mortgage fraud, we talked briefly with the Lobbyist for the Banking Association who confided in us that he found what we were saying intriguing but that we should have no expectation of succeeding because the banking system is so entrenched.  

Common Good Payment System

The slide show from the Unity Team Seminar 


A few sample pages:









The video: 


Open Book Management

I first learned of Open Book Management from Inc. Magazine, which wrote enthusiastically about it and thought it would revolutionize business practices. I thought Dan Pink’s Drive would do something similar.  That they haven’t means that the powers-that-ought-not-to-be are busy ignoring and denigrating both Open Book and the Purpose Economy.


The National Center for Employee Ownership did a study comparing 54 companies that practiced Open-Book Management with 54 very similar companies that did not and found a significant advantage in the Open-Book Companies.  One may read their article about it here 


And their article about What Is Ownership Culture?  is well worth reading: 

Just about every ESOP company desires to have employees who think and act like the employee-owners. Compelling research and decades of experience show that employee ownership is in fact a powerful tool to improve corporate performance – but only when companies have “ownership cultures” in which employees think and act like owners. That is a lot more than being nice to customers, cutting down on waste, coming to work on time, and even working hard on the job.

An effective ownership culture, the research shows, is one that generates lots of ideas from a well informed and highly involved workforce. Companies that have these high-involvement, idea-generating cultures, generate an incremental 6% to 11% added growth per year over what their prior performance relative to their industries would have predicted.

Creating an ownership culture involves at least these six elements:

  • Provide a financially meaningful ownership stake, enough to be an important part of employees’ financial security.

  • Provide ownership education that teaches people how the company makes money and their role in making that happen.

  • Share performance data about how the company is doing overall and how each work group contributes to that.

  • Train people in business literacy so they understand the numbers the company shares.

  • Often (but not always) share profits through incentive plans, profit sharing, or other tools.

  • Build employee involvement not just by allowing employees to contribute ideas and information but by making that part of their everyday work through teams, feedback opportunities, devolution of authority, and other structures.

Creating high engagement cultures is hard work. But it is work that pays off. We know of very few companies that backed away from these systems once they started them, although they are often changed. It’s common to start with one system, then find as people get used to that, their skills and confidence rise to a level where a different system is needed.

High engagement cultures have been repeatedly shown to be the most effective intervention a company can create to improve performance. But go to an NCEO conference and witness the enthusiasm and energy coming from managers and employees of these companies and one will learn something else—they are also the most fun way to run a company.

From Wikipedia, the free encyclopedia. See:



Open-book management (OBM) is a management phrase coined by John Case of Inc. magazine, who began using the term in 1993. The concept's most visible success has been achieved by Jack Stack and his team at SRC Holdings.

The basis of open-book management is that the information received by employees should not only help them do their jobs effectively but help them understand how the company is doing as a whole. According to Case, "a company performs best when its people see themselves as partners in the business rather than as hired hands" (Case,1998 as cited in Pascarella, 1998). The technique is to give employees all relevant financial information about the company so they can make better decisions as workers. This information includes, but is not limited to, revenue, profit, cost of goods, cash flow and expenses.

Stack and Case conceptualize open-book principles in similar ways.

Stack uses three basic principles in his management practice called, The Great Game of Business.[5] His basic rules for open-book management are:

  • Know and teach the rules: every employee should be given the measures of business success and taught to understand them

  • Follow the Action & Keep Score: Every employee should be expected and enabled to use their knowledge to improve performance

  • Provide a Stake in the Outcome: Every employee should have a direct stake in the company's success-and in the risk of failure

Similarly, in 1995, Case made sense of open-book with three main points:[6]

  • The company should share finances as well as critical data with all employees

  • Employees are challenged to move the numbers in a direction that improves the company

  • Employees share in company prosperity

In a company fully employing open-book management employees at all levels are very knowledgeable about how their job fits into the financial plan for the company. However, taking a company from "normal" to open is not as easy as just sharing financial statements with employees. Open-book management is considered to be a success when companies allow improvements on their financial numbers to come from the bottom tier of employees rather than pressure exerted by a traditional top-down management system. (Johnson, 1992[7] as cited in Aggarwal & Simkins, 2001[1]). While employees need to be trained to understand income statements and balance sheets; open-book management aims to achieve a level of understanding of company finances between all employees to the degree that they are able to report predictions to upper management.[5] In order to motivate employees to strive for change, open-book management focuses on a "Critical Number". The number is different for every company but it is a number that represents a prime indicator of profitability or break-even point. Discovering this Critical Number is a key component of creating an open-book company. Once this is discovered, a "Scoreboard" is developed that brings together all the numbers needed to calculate the critical number. The Scoreboard is open for all to see and meetings take place to discuss how individuals can influence the direction of the "Score" and therefore, ultimately, the performance against the Critical Number. Finally a Stake in the Outcome is provided which can be a bonus plan that is tied to Critical Number performance or it can include Equity sharing or both.


A short YouTube description of Open-Book Management:

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