Penthouse Retrospective

by Robert Sherrill Originally Published: June, 1980

Big Oil Big Banks | 40 Years Ago This Month

Driven by green the international oil companies and their colleagues have sold America into economic slavery.

Big Oil, Big Banks, Big Trouble

Penthouse Magazine - June, 1980Big Oil, Big Banks, and OPEC — the oil-banking complex — have taken the place of the military-industrial complex as the most influential and most threating force in our lives.

Melodramatic as the statement may sound, it is nonetheless true that the major international oil companies and their colleagues in the international banking industry have reduced America to economic helplessness. Albert M. Wojnilower, chief economist for the First Boston corporation, says it right: “More and more, oil is money. Oil is the store of value and the medium of exchange.” And because of this transformation the United States has “lost it’s ability to run an independent economic policy,” our government is unable to solve the energy crisis because the energy crisis has been transformed into a money crisis as well. We cannot separate the oil and money industries. The last Senate investigation of their interlocking relationship found, for example, that Citicorp ($103 billion in assets_ Chase Manhattan Bank ($65 billion), two of the ten largest banks in the world, were affiliated with 12 oil companies through a total of 27 directors. This kind of intertwining runs through the two industries, and the addition of the Organization of Petroleum-Exporting Countries (OPEC) to the oil-banking complex in recent years has made it all the more tightly knit.

They have become like Siamese twins joined at the cash register. Separate them, and you could kill one or both, but you could also kill our economy at the same time. With a great exertion of national will, through conservation and competition from other fuels, we might control energy prices. But that solution works only in the abstract. In reality, we cannot afford to do anything to upset seriously the profits of the major international oil companies, because to do so would at the same time seriously reduce the income of OPEC, and a financially injured and angered OPEC might easily strike back in such a way as to shatter our financial system. Indeed, as will be shown later, we may now be approaching that point.

The fear of this happening has paralyzed our government in its relationship with the oil-producing countries of the Middle East. In a very real sense, the Arabs now control the U.S. economic pacemaker. We have become hostage to that portion of their riches — many billions of dollars — deposited with our banks and invested in our corporations and in our government itself.

Always there is the fear that the Arabs may take their money and go elsewhere. Sen. Charles Percy, one of the Senate’s foreign-relations and economic experts, described the threat in its rawest terms:

“There could be another war out there in the Middle East, and as part of it the Arab league could say, “Pull out every last cent you have deposited in the United States.’ What happens if this theoretical possibility occurs? What happens if the plug is pulled on us altogether?” Could the targeted banks stand the trauma, or would they fold? And if they folded, would they bring down our financial house of cards? A senior State Department official recently acknowledged that “just the fear that they might withdraw gives them significant leverage. We have added a second layer of potential vulnerability — dependence on Arab petrodollars — to our initial dependence on their oil.”

The hub of Arab strength lies preeminently in Saudi Arabia. It is OPEC’s biggest producer, biggest earner, biggest investor abroad. It is the nation with the most deposits in U.S. banks, the most investments in commercial real estate, the most investments in U.S. government securities. From 18 weeks. of pumping oil, the Saudis earn enough to buy General Motors; in 24 weeks they earn enough to buy Exxon, the largest industrial corporation in the United States; Tiffany’s could be purchased from the income of a mere 18 hours of pumping. In a confidential report to the International Monetary Fund in 1978, the Saudis estimated that their international investments totaled $133 billion. Since then they have probably added another $100 billion or so.

So wide and deep is the Saudis’ presence in the world’s treasury that any time they choose to do so, they could launch a monetary crisis by selling off their dollars and switching to, say, deutsche marks. They could achieve the same end by unloading their dollars and turning to gold instead. To be sure, they might lose a few billion in the switch, but if they felt that their pride or their national security called for it, or if they felt sufficiently piqued by our foreign policy, they would undoubtedly be willing to make the slight sacrifice of a few billion — knowing that a couple of months’ pumping would replenish whatever losses they suffered.

We are indeed at the Saudis’ mercy. Louis J. Walinsky, who did a study of Arab investments in this country for B’nai B’rith, sizes up the situation accurately:

“Partly because the politically powerful financial and banking communities have a strong vested interest in these investments, partly because public officials have viewed them as beneficial, and partly because these investments have reinforced, and been reinforced by, other factors, like control over oil supply and surplus, and Arab purchases here, Saudi Arabia has acquired a degree of influence and power over the United States never achieved by any other nation in our history.”

Give a few people a majority of the money. Then give them control over ALL the money. Gosh, what could possibly go wrong with that plan?