Suggested Contribution

$5

The U.S.Economic Recovery Act Of 2006

The U.S.Economic Recovery Act Of 2006

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P.O. Box 6157 Leesburg, Virginia 20178

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Paid for by the Lyndon LaRouche PAC, P.O. Box 6157, Leesburg, VA 20178.www.larouchepac.com and Not Authorized by Any Candidate or Candidate's Committee

LaRoucheP �A �C �

The U.S. Economic

Recovery ActOf 2006

Includes Lyndon LaRouche’s ‘Emergency Legislation, Now!’

COVER: Franklin D. Roosevelt signs TVA legislation, 1933: Library of Congress.

© May 2006 LLPPA-2006-8

2

Vacuum in Bush-Cheney Administration:

Crisis Requires EmergencyAction by Congress

On Launching EmergencyEconomic Action Now

by Lyndon H. LaRouche, Jr.May 14, 2006

Aseries of crucial devel-opments around the

looming indictment of for-mer White House DeputyChief of Staff Karl Rovehas created a situation inwhich Vice PresidentCheney is now overripefor emergency impeach-ment proceedings, and thePresident himself is expe-riencing the onset of athreatened personal sys-temic crisis. The mere factof this situation, so fairlydescribed, creates athreatened discontinuityin the functions of theFederal government, a dis-continuity we can not per-mit to develop under thepresently perilous globalfinancial-monetary andrelated crises.

In such a setting, it is imperative that sensibleleaders within the Congress take some appropriateform of prompt initiative, to restore a sense of faithin our Federal government among the relevant insti-tutions here, among foreign governments, and ourcitizenry generally.

The pivotal economic and social crisis of theU.S.A. at this instant is the implications of anonrushing destruction of as much as two-thirds ofthe U.S. automobile industry. Failure to act immedi-ately to prevent that catastrophe from being allowed

to proceed, would haveincalculable effects on pub-lic confidence in the U.S.society here at home, andabroad.

At this juncture, myassociates and I have elab-orated a programmaticemergency action neededto prevent the collapse ofthe U.S. as a modern econ-omy, through adapting theidled capacity of our auto-motive industry for urgent-ly needed measures ofreconstruction of lost anddisintegrating basic eco-nomic infrastructure ofour nation. Action to accel-erate the adoption andimplementation of thatprogram now being pre-pared for Federal legisla-tive action would restore

public confidence in our Federal government at atime the Presidency itself has the lowest level of stillsinking public confidence in its recent history.

Cleaning the rascals out of the White House andVice President’s office is, unfortunately, an urgentlyneeded action, but it is not an uplifting experience.Action by the Congress which gives our people rea-son for confidence in our Federal system, is thepositive note urgently needed at the perilousmoment of Vice President Cheney’s looming, overduedownfall.

EIRNS/Stuart Lewis

Lyndon H. LaRouche, Jr. speaking at a recentinternational webcast in Washington.

The drive by the LaRouche Political Action Committee(LPAC) to pass Congressional legislation to save the

American auto industry from shutdown, is Congress’schance to stop the globalization wrecking ball before itcompletely destroys the United States’ remaining industri-al power. LaRouche put his movement on “war-room”mobilization May 1, with a report that more than 65 majorauto-sector plants, with over 75 million square feet ofmachine-tool capacity, were being shut down this year andnext.

“What is needed, therefore, is the creation of a FederalPublic Corporation, by Act of Congress. This action shouldadopt the elements of the automotive industry which arebeing discarded by the automobile corporations, andwhich fit the characteristics which I have identified,”LaRouche wrote in his May 2 message to “economists, leg-islators, and labor leaders.”

The objective of the mobilization: to activate con-stituency demand and push Congress to intervene to“retool” the 50% or more unutilized capacity of the autoindustry for production of new national infrastructure,particularly high-speed rail corridors and new electricitygrids centered on nuclear power.

The pamphlet you have in your hands is the vital pieceof ammunition you need in order to join this mobilization,a mobilization that will determine whether our nation, andthe world, turn onto a course of prosperity, or descendinto a New Dark Age.

The Emergency Actions“They’re outsourcing this nation to death,” LaRouche

said on May 9, referring to the bankrupt internationalfinancial circles and banks controlling the biggest industri-al corporations. “Globalization is destroying us. We’re los-ing all of our machine-tool capabilities and ability to pro-duce industrial infrastructure. Let auto be dismantled, andthe United States becomes a Third World economic coun-try. Let’s end this crap!”

Unless LaRouche’s action is taken—and leads to newmonetary reforms fostering Federal production credits andclamping down on speculation—a global financial crashwill strike by October at the latest. Speculative hyperinfla-

tion, centered on the wildly expanding bubble in theworld’s primary commodities markets this year, showswhere the “Greenspan era” of financial bubbles is going toend, and fast.

LaRouche’s bold outline to lawmakers and unionists,“Emergency Legislation, Now!” is already on the desks ofCongress and under serious consideration by half a dozenCongressmen. On May 9 and 10, the Vermont and RhodeIsland Houses of Representatives weighed in with memori-als to Congress asking for the “retooling” legislation, join-ing Alabama, and a number of city councils in hard-hitauto areas, which had already done acted on such memo-rials. A DVD documentary produced by LPAC—“Auto andWorld Economic Recovery”—on how to produce newinfrastructure with unutilized auto-plant capacity, is beingwatched and circulated in Democratic organizations, citycouncils, unions, and on Capitol Hill.

Some Members of Congress see the protection andretooling of the shrinking auto industry, as LaRouchedoes, as the core of a package of urgently necessary legisla-tion to rescue the U.S. industrial economy, and theGeneral Welfare of America’s people. This includes, forexample, an increase and reform of the armed forces’structure around a much larger and more capable ArmyCorps of Engineers for “nation-building at home”; legisla-tion funding specific parts of a new national infrastructurelike high-speed rail and new river-navigation systems;national Medicare-modelled universal health insurancelegislation sponsored by Rep. John Conyers of Michigan;and bankruptcy reform legislation to block corporationsfrom blatant “globalization by bankruptcy” swindles.

The Machine-Tool PrincipleMany interviews with unionists and engineers in auto

facilities around the country, by EIR staff, make clearthose employees’ conviction that the underutilized autoindustry, with its extraordinary density of machine tools,“can build anything,” and is capable of retooling rapidlyon specific plants for railroad stock, for lock-and-damconstruction, for elements of power plants, and so forth.But these machine tools are being put in storage, trans-ported to outsourced auto production in Mexico or

3

INTRODUCTION

We Must Save Our Auto Capacity Now

China, and even auctioned off cheap on websites, as thehighly skilled machine-tool workforce is losing itsemployment.

The shutdowns will cost 75,000 skilled industrial jobsdirectly; and through immediate radiating effects on small-er supply plants and machine-tool shops, 300,000 more.What is about to be shut represents, in automobile-indus-try terms, the capacity to build 2.5 million or more carsand light trucks a year. But in terms of urgent nationaleconomic investment, it represents a unique industrialcapability to build “a new national infrastructure” of trans-portation, power, and more.

And this is not the full measure of unutilized, “lost”capacity which could be restored. Since about 1985, fivejobs have disappeared for every one which remains in atypical auto parts or supply plant; and two jobs have gonefor every one that remains in a typical assembly or engineplant.

The tool-and-die centers of the auto sector are the coreof its industrial creativity—“new-build” as some arecalled—where the machines and forms used by the rest ofthe industry are designed and built. They are alreadyrazor-thin lines of skills and capacity, in grave danger ofdisappearing entirely, outsourced to Asia.

Typical tool-and-die and metal shops are losing 50% ormore of their workers. General Motors has five tool-and-die centers: the Mansfield Metal Center in Ohio; theMarion Metal Center in Indiana; Flint Tool and Die,Pontiac Metal Center, and Grand Rapids Metal Center, allin Michigan. Three of the five are being idled. Theiremployment—which makes possible the work of all100,000 GM production employees nationwide—is fallingthis year from about 1,600 to just 1,275 workers now, andlikely to 750 tool-and-die workers by July.

The clear threat now exists, that this creative core of thewhole industry will completely disappear in the near term,with tooling completely outsourced to (typically) India,China, and Korea, and to small U.S. machine shops whichoften have to partner by computer with Indian or Chinesecorporate operations. The loss to U.S. national industrialcapabilities would be immense, all out of proportion to thenumbers of employees involved. This is doubly dangerousbecause nearly the same degree of loss of machine toolingand product control by outsourcing, is occurring in theU.S. aerospace sector, the other remaining American fountof machine-tool capability, which has shrunk even fasterthan auto.

Saving OurselvesIn a radio interview on May 11, with a station in the

auto city of Lockport, New York, LaRouche summarizedthe task this way:

“So we have the possibility of saving ourselves. And theUnited States is the nation which has—in our traditionsand our legacy, we have the ability to deal with these prob-lems. So, what we’re doing is to say: Let the Federal gov-ernment adopt responsibility for keeping these plantsfunctioning; accept the fact that they’re not going to beproducing automobiles. Take the section that is not goingto be producing automobiles, and use it for other things,with a heavy emphasis on restoring the machine-tool-design capability. Build systems for locks and dams for theriver system; build power plants; build railway systems;build other basic economic infrastructure that’s needed inthe states, the communities and so forth, and the nation asa whole.

“In addition to the labor force, build up six divisions, ofmilitary Corps of Engineers divisions: Because, if you’regoing to build these things, like assemblies for locks onrivers and things like that that you’re acquainted with inLockport, you’re going to have to have the labor to installthem. . . .

“. . . We’re going to make a change in the world. We’regoing to have to go to high technology that we’re not usingnow. The United States and Western Europe, and Europein general, will have to become leaders in this. So, we’regoing to think about, not trying to maintain the standardof living, we’re trying to maintain the condition of the envi-ronment; we’re trying to have a clean, safe environment;we’re trying to have a higher standard of living; we wantprogress in health care. We want people to live longer andto live better. So therefore, that means we’re going to bespending more effort on those kinds of things. Therefore,to do that, we must increase per-capita physical productiv-ity: That means science and technology.

“. . . Our Constitution gives us the best, as Rooseveltshowed: When we use our Constitution as a structure fordetermining the way our economy works, as Roosevelt didin pulling us out back of the mess we were in in 1933,when we do that, we have the greatest potential in terms ofour system, for rapid improvement in economic perfor-mance. That’s there. We could become, in a generation,within 25 years, we could become again, the greatest econ-omy in the world.”

—Paul GallagherMay 13, 2006

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5

T he purpose of the following communication is toprompt the immediate crafting of urgently need-ed emergency Federal legislation: Legislation to

prevent the threatened immediate collapse of the U.S.national automobile industry from becoming the begin-ning of a virtually irreversible chain-reaction ofdestruction of approximately the entirety of the presentphysical economy of the U.S.A.

This communication has two sets of elements.The first part, which is presented immediately

below, is the proposal which summarizes the nature ofthe proposed emergency legislation.

The second part, the attached documentation, is asample of the relevant facts assembled in raw form fromdiscussions and related researches compiled, to date,since a meeting of automobile industry figures and oth-ers convened in Washington, D.C. during the evening ofApril 27, 2006.

Much work needs to be done, urgently, to refine thekinds of data identified in the appended, second por-tion of this transmission. The purpose of presentingthat latter collation here, is to sketch the general pro-portions and characteristics of the challenge to be metif our nation is to meet the challenge of this nationalemergency. Despite the need for refinement respectingdetails, the legislative intention required for this crisisis already clear as a matter of principle.

The Policy1. The Threat To Be Defeated

For a little less than two generations, about forty-twoyears, the presently leading circles of government and pri-vate enterprise in our national economy have been per-suaded to adopt the delusion that a so-called “post-industri-al” orientation for our nation’s economy is both an avail-able, and even an inevitable long-term option. Under influ-ence of what has been this increasingly popular delusion,the independent agriculture, manufacturing, health-caresystems, and our republic’s basic economic infrastructure

generally, have been collapsing, per capita and per squarekilometer, throughout virtually all of our national territory.

The best illustration of these effects is the case of whathad been the Midwest heartland on which our victory inWorld War II had largely depended. We are now faced withthe presently accelerating, cumulative collapse of the onceeminently powerful agro-industrial potential, per capitaand per square kilometer, of an area including the westernportions of the states of New York and Pennsylvania, andthe entire states of Ohio, Michigan, and Indiana. Thisregion is otherwise identified as including the heart of theU.S. national automotive industry.

Over these recent decades, as the leadership of our econ-omy shifted into the hands of the white-collar generation ofthe so-called “68ers,” the emerging leadership of our econo-my, including the leaders in the institutions of government,became accustomed to the spectrum of special ideologiesassociated with “post-industrial society,” “outsourcing,”and “globalization.” As a result of this cultural-paradigm-shift over the intervening decades, most of the people whohave come to occupy relevant positions of leadership inindustry and government, lack any instinctive appreciationof the effect of a collapse of the U.S. automotive manufac-turing industry as now combined with the currently accel-erating, hyperinflationary rocketing of the prices of prima-ry materials globally.

This pattern is illustrated by the contrast between thestrong political reaction to the obvious impact of soaringpetroleum prices, and the contrasting, more or less negli-gent reaction to the even more rapidly accelerating hyper-inflation in other categories of primary materials. Thus,whereas our more kindly souls among those in leadingpositions of power and influence, are concerned with theneed for measures to ameliorate the effects of sudden massunemployment and pension cancellations in the five-stateregion to which I have pointed here, and relevant otherlocations, they have shown virtually no grasp of the threatof being very continued existence of our nation in the com-bined effects of an early disintegration of the U.S.-ownednational automotive industry and the currently hyperbolic

For Economists, Legislators, and Labor

EmergencyLegislation, Now!by Lyndon H. LaRouche, Jr.May 2, 2006

rate of global hyperinflation in prices of pri-mary materials.

In other words, the ideology which cameto the surface as the “post-industrial” outlookamong the university-bred “68ers,” produceda politically influential generation of today,which has become conditioned to think ofeconomy in terms of money as such, ratherthan in terms of the production and distribu-tion of the essential products on whichhuman life depends for its physical perpetua-tion. In these layers, there is virtually nocomprehension of the actual role of techno-logical progress as such in the process ofdesign and production of the physical meansof human existence.

Usually, influential circles in these indicat-ed strata of leading influence, have rarelyexhibited a comprehension of those featuresof our economy which defend us against anincreasing threat of being thrown back now,suddenly, into something which would beconsidered by most people, as being dumpedvirtually into a relatively stone-age existence.It is not understood that, in light of thedegree of concentration of the entiremachine-tool-design capability in the aircraftand automobile industries, the immediately threatened col-lapse of Ford, General Motors, et al., would mean a threat-ened collapse in the direction of what would suggest“stone-age” conditions for nearly us all.

The object of appropriate forms of Federal legislationnow, should be to prevent such a colossal national tragedy,while we still have a true national automotive industry todefend.

2. The Urgent First StepAs the appended facts illustrate, the U.S. is now faced

with the apparent inevitability of the more or less immedi-ate junking of a majority of the productive capacity of thepresent roster of U.S. national capacity for the productionof automobiles and related elements.

Apart from the physical facilities of the relevant, threat-ened plants, these plants represent not only a current, butalso a much larger labor-force, representing those eithernow, or recently associated with production in these plants.These plants represent not only employment of the laborassociated with production there; entire communities,including many business organizations, hospitals, schools,and so forth, depend upon those plants’ continued opera-tion for their life. Taking the list of what are known to bethe immediately threatened plants already identified in theattachment to this report, we must recognize that a largepart of the entirety of the indicated, five-state, core areadepends as a whole on the contributing part these plantshave represented.

In considering the options for employment of the sec-tions of the labor-force associated with those listed plants,we should divide the principal body of operatives associated

with the plants, into two major categories: those associatedwith production of the product issued from such premises,and those associated with the design of the product andmachine-tools on which the required quality of productionby the larger portion of the labor-force depends. It is thecombination of these two interdependent components ofthe productive labor-force which will be required for theurgent missions indicated in this report. It is that two-faceted feature of those combined, assorted places ofemployment, which ought to occupy the center of the atten-tion to these matters by the U.S. Congress and others.

As Walter Reuther and others emphasized at the vergeof the war against Adolf Hitler, these plants can producemany other things of national importance besides automo-biles. Railroad systems, power plants, essential elementsfor rebuilding the port and inland-waterway systems, areonly typical of the work for which these industries are aswell suited as production of automobiles as such.

From our national experience of the past, including theimportant example of the Kennedy Moon-Landing mission’snet benefit to our national economy, we know that the kindsof projects needed for repair of our currently decadent, andother collapsing national basic economic infrastructure, inwater, power, mass-transit, and other essentials, are bestsuited to the work to be done by government at the Federal,state, and local level. The inevitable employment of privatecontractors in furthering the success of these governmentprojects in public infrastructure, is the natural stimulant,under our constitutional system of government, for the pro-motion of rapid recovery in the private sector.

As we should have learned from the way in which theReconstruction Finance Corporation operated under

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U.S. Army Corps of Engineers

Some auto facilities can produce the structural elements for the infrastructurecritically needed all over the upper Mississippi, Ohio, and Missouri Riversystems. Here, construction under way (on the Ohio at Louisville) of a modern,1,200-foot lock chamber and gates (center) to replace the aged, undersizedexisting lock (right). U.S. Army Corps capacity and funding are lacking: Thisproject was delayed so long, the old lock cracked and closed the river.

7

President Franklin Roosevelt, when labor employed in suchpublic works is employed efficiently, the increase in the netincome of the nation per capita and per square kilometer isgreater, per annum, than the rate of annual amortization ofthe investment.

For example: The continued increase of the average pro-ductive power of labor in the U.S. from the beginning ofrecovery measures launched under Harry Hopkins’ mis-sion, until the 1964 beginning of the official U.S. war inIndo-China, was a period of the highest rate of net physicalgrowth during the Twentieth Century as a whole, and thegreatest rate of improvement of the U.S. standard of living.

The net gain to the nation as a whole, from publiclysponsored programs such as the Tennessee Valley projectand the space program, is not measured in profit as privateentrepreneurship is usually measured, but, rather in the netphysical gain to national or regional productivity as awhole from the installation of relevant public works.

However, especially since the 1977 advent of deregula-tion, the net physical income of the lower eighty percentileof our population has been consistently declining overabout three decades; the current, net effect of that cumula-tive decline, is now imminently catastrophic. When theunpaid costs of production represented by neglected basiceconomic infrastructure are taken into account, for most ofour population, the years since 1977 have been a frighteningsaga of decline toward the brink of what is presently athreatened global economic breakdown-crisis for sometimein the relatively near future. The cumulative physical effectsshow that the official arguments which deny such physicalreality of recent U.S. economic history, are simply a reflec-tion of wildly fraudulent, willful, and often hysterical formsof so-called “marginal-utilitarian” miscalculations of therate of inflation, over about a quarter-century to date.

What is needed, therefore, is the creation of a FederalPublic Corporation, by Act of Congress. This action shouldadopt the elements of the automotive industry which arebeing discarded by the automobile corporations, and whichfit the characteristics which I have identified broadly in thispresent report.

3. The Superiority of the U.S. SystemThe ability of the U.S. Federal government to launch a

general economic recovery of this type, for the sectors andalso the whole of the U.S. economy, is implicitly defined, asa matter of principle of government, in Treasury SecretaryAlexander Hamilton’s Reports to the U.S. Congress.

That, our nation’s constitutional system, reflects ourfounders’ attention to the lessons of the practice of the pre-1689 Massachusetts Bay Colony and the proposals respect-ing paper money by Benjamin Franklin.

Our constitutional form of government and economy,unlike the typical economies of Europe, defines a credit-sys-tem, rather than a European style of monetary system. Thisis expressed by the monopoly over the utterance of and regu-lation of the circulation of money created by the Federal gov-ernment. This contrasts with the typical European govern-ment, whose economic policies are subject to control bymonetary systems which are dominated by private, often

also predatory financier interests which have been expressedas central banking systems. Under our Constitution, ourbanking system is subject to regulation by the Federal gov-ernment through those instrumentalities of national bankingwhich rely on the lawful monetary credit created by theFederal government, rather than the inferior mechanismsassociated with the prevalent practice of European states.

The issue and circulation of our republic’s lawful moneyserves us not only to promote the circulation of commodi-ties, but as credit invested in the creation and maintenanceof long-term capital improvements in both the public andprivate sectors.

For example, the most important categories of invest-ment have a physical life-span of between one and two gen-erations, a span of longer than approximately twenty-fiveto fifty years. The Tennessee Valley development is a usefulillustration of the point. Or, as post-war Germany’s emula-tion of our President Roosevelt’s investment of public cred-it in promoting both public infrastructure and privateentrepreneurship illustrates, the growth of the economy asa whole is accelerated not only by the initial outlay of pub-lic credit, but, additionally, by the circulation of progressivechunks of repayments which serve as additional increase ofthe total financial capital in circulation for investment inthe economy as a whole.

Take the case of the impact of the operations of theKreditanstalt für Wiederaufbau in post-war Germany, aprogram which Deutsche Bank’s Hermann Abs promotedas a way of capturing the method of President FranklinRoosevelt’s use of the RFC for such effects. Under the pro-tection of the post-war, fixed-exchange-rate system estab-lished by the initiative of President Franklin Roosevelt’sU.S.A., during the period into about the mid-1960s, themonetary depreciation of medium- to long-term invest-ments was protected by a U.S.-dollar-denominated fixed-exchange-rate world system. It was only when that systemwas disrupted, chiefly by the combined actions of the firstHarold Wilson government of the United Kingdom and theprolonged effects of U.S. government policies under theruinous conditions of the prolonged U.S. war in Indo-China, that the Bretton Woods system was wrecked by thegrowing influences of policies contrary to the discipline ofFranklin Roosevelt’s fixed-exchange-rate system.

The following summary point of explanation is requiredat this point.

This important distinction was implicit in PresidentJohn F. Kennedy’s investment tax-credit program. A fixed-exchange-rate system is implicitly a “fair trade” system,rather than a “free trade” system.

The “free trade” system of the post-1763 British EastIndia Company and later British Empire, the “free trade”system praised by London-educated Karl Marx, is a prod-uct of a modern, Anglo-Dutch Liberal outgrowth of amedieval system, the Venice-directed Lombard bankingsystem, which had crashed during Europe’s Fourteenth-Century New Dark Age. Indeed, the presently onrushingcrash of the revised system of financial-derivatives bubblesunleashed by former U.S. Federal Reserve Chairman AlanGreenspan during the 1987-2006 interval, is essentially a

reflection of the same follies seen in the collapse of themedieval Lombard League and the John Law bubbles ofthe early Eighteenth Century.

In contrast to such European models of liberal financialsystems under the boot of independent central banking sys-tems, the American System’s constitutional design waspremised on the vigorous defense of the integrity of publiccredit.

In general, although the Federal government must mobi-lize credit for any purpose where this is urgently required inthe public interest, the objective of a competent U.S. Federaladministration is to capture the relatively greatest portion ofissue of monetized and other public credit in the form oflong-term physical investments in productive improvementof basic economic infrastructure, private industry, theimprovement of the productive powers of labor, and in thedevelopment of those individual creative mental potentialson which all forms of human progress ultimately depend.

Wise U.S. policy measures progress today in intervals ofapproximately twenty-five years, a quarter-century, thespan of development of new individuals from birth throughintellectually developed maturity for the work and life of acontemporary truly modern, productive society. In accord

with that concern, rather than strewing utterances of creditas money along the streets, we tie up the utterance of newcredit, as much as possible, in long-term investments, withemphasis on investments which have a foreseeable, usefulphysical life of one or more generations.

To secure the inherent fungibility of such utterances ofcredit, we require the governing instruments of a fixed-exchange-rate, “fair trade” policy.

Thus, as long as there is a net improvement in theexpression of the productive powers of labor year by year,the ability of society to invest in combined public and pri-vate capital improvements is limited chiefly by the limits ofopportunity for successful such added investments.

Flooding money virtually into the streets of wild-eyedreal-estate and other forms of gambling, as misguidedKemp-Roth was such a piece of folly, and as “M3” was flood-ed under Chairman Greenspan, and still today, is what mustbe curbed in the interest of fiscal responsibility. The chiefeffect of the utterance of Federal issue of public credit mustbe tied up in, predominantly, long-term and inherently pro-ductive investments in basic economic infrastructure andtechnological progress in increasing the physical quality andproductivity of accumulated investment in private entrepre-

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Fla.

N.Mex.

Del.Md.

Tex.

Okla.

Kan.

Neb.

S.D.

N.D.Mont.

Wy.

Colo.Utah

Idaho

Ariz.

Nev.

Wash.

Calif.

Ore.

Ky.

Maine

N.Y.

Penn.

Mich.

Vt.

N.H.

Mass.

R.I.Conn.

Va.

W.Va.

OhioInd.Ill.

N.C.Tenn.

S.C.

Ala.

Miss.

Ark.

La.

Mo.

Iowa

Minn.

Wis.

N.J.

Ga.

Seattle

Los Angeles

San Francisco

St. LouisKansas City

New YorkChicago

Minot

Fort Worth

Houston

FIGURE 1

Proposed 42,000-Mile-Long Network of National Electrified Rail

Source: Hal Cooper.

This intercity route network of electrified rail would transport freight and passengers, largely on upgraded existing rail lines. A newhigh-speed maglev network will be constructed along the existing interstate highway system.

9

neurship. This rule of prudence is the indispensable key tothe measures by the U.S. government required to addressand conquer the problem typified by the presently onrushingcollapse of the U.S.’s machine-tool-design sector.

Government can efficiently utter vast floods of credit ascapital for improvements, on the condition that this capitalis directed to, and tied up within suitable long-term invest-ments in public improvements and efficient private entre-preneurship. Investments in financial instruments for pure-ly financial speculative purposes or conspicuous consump-tion of the relatively financially privileged, should be veryhighly taxed, relatively, whereas investments for physicalincreases in the quantity and productivity of the economy,are to be treated preferentially. The rule is not “soak therich,” but give preference to prudence.

It must be taken fully into account, that the presentworld monetary and financial system has entered the end-phase of a global economic breakdown crisis, a phenome-non absolutely more serious than any mere general eco-nomic depression of the type experienced during the rele-vant part of the 1930s.

The economies of western and central Europe, like thatof the U.S.A. presently, are currently operating at levels farbelow sustainable breakeven. These economies are, in turn,the essential market on which the economies of all Asiadepend, a dependency of such degree that a collapse of theU.S. dollar would set off a chain-reaction which wouldbring down every part of the world system, such as Indiaand China, which attempted to continue to operate withinthe bounds of the present IMF system. The present hyper-inflationary spiral of financier speculation in primarymaterials such as metals and petroleum, has no other causethan the fact that leading financial circles are rushing intosuch holdings in their recognition of the imminent collapseof the entire world’s present financial-monetary system.

At present, regard for safe policy requires that we mustestimate the threatened collapse to be no more thanmonths distant, unless a drastic reform were to preventthat collapse. What is being proposed in this report is suchan urgently needed immediate reform. Any governmentwhich would not make such a change, must either bereformed, or events will reform it in the most unpleasantmanner conceivable.

4. The Concrete Action RequiredThe listed and other comparable elements of the automo-

tive industry scheduled for discard must be taken over imme-diately by the U.S. Federal government. Their essential pro-ductive personnel and present facilities must be promptlyassigned to suitable categories of work consonant with thespecial capabilities of a modern, machine-tool-design-drivenengineering and manufacturing function.

The following list is exemplary:

1.) Ocean ports and inland waterways oftransportation. This indicates an associated roleof these adopted industrial capacities, and theU.S. Corps of Engineers.

The enlargement of the U.S. Corps of military engineers,

together with its complements in the National Guard orga-nizations of the states, should be a leading, greatly expand-ed element of the proposed reforms. This should anticipatethe needed role of organizations paralleling the intention ofthe CCC program of the 1930s, for the cooption of youthwho may be taken out of tracks of social desperation intoeducational and related programs of development leadingthem toward a fruitful future as citizens with prospects ofhealthy families of their own.

The depletion and other wrecking of the engineeringand other national-security functions of our military ser-vices redouble the importance of the natural civilian func-tions of a military Corps of Engineers in today’s world, athome, and at large.

The prime example is the complex of river systems feed-ing, chiefly, into the Mississippi, between the Rocky andAllegheny mountains, from the Canadian border to theGulf of Mexico.

2.) Reversing the depletion of national aquifers, byaid of nuclear-power application to desalinationand related water purification programs, butintegrated with the sundry programs complement-ing development of ocean ports and waterways.

TABLE 1

Large-Volume Components for aNew Advanced Nuclear Plant(1200-1500-MW range)

Equipment Number (Range) Comments

Pumps, large 71-100

Pumps, small 80-484

Tanks 49-150 from 600-150,000 pounds

Heat exchangers 47-104 All sizes, types, material2,100-250,000 pounds

Compressors, 12-26vacuum pumps

Fans 61-123 600-45,000 pounds

Damper/louvers 730-1,170

Cranes and hoists 25-50

Diesel generators 2 10 MWe

Prefabricated 64-133 Preassembled packagesequipment including mechanicalmodules equipment, piping, valves,

instruments, wiring, etc.

Instruments of all 1,852-3,440kinds

Valves of all kinds 9,633-17,891

Source: U.S. Job Creation Due to Nuclear Power Resurgence in the UnitedStates, Volume 2, page A-125, November 2004, Idaho National Engineeringand Environmental Laboratory.

Construction of the large numbers of nuclear power plantsrequired to revitalize the nation’s power and transportationsectors, and to provide fresh water by nuclear desalination,means gearing up U.S. industry to produce all kinds ofequipment, large and small. Auto-parts-producing facilities,now idle, could be converted to manufacture for the nuclearindustry.

10

3.) Aggressive development of power from sourcesof high energy-flux density, such as nuclearfission, and a quarter-century mission to bringfunctioning thermonuclear fusion applications online.

This element of the program takes into account the factthat the growth of human requirements has tended todeplete the relatively richest concentrations of essential rawmaterials found within the sediments of the Earth’sBiosphere. The foreseeable problem for the two genera-tions immediately ahead, is not a set of absolute limits,excepting the case of depletion of fossil fresh-waterresources. Rather, the threat is, that without an early andrapid increase in the energy-flux-density of relevantprocesses, the increase of cost of production, as measuredin per-capita terms, would soon produce a critical worldsituation. To cope with the rising cost of employment ofsuch resources, the world must now undertake some dra-matic shifts in economic perspectives.

The first step of reform, must feature the use of high-temperature, gas-cooled nuclear-fission reactors, for notonly desalination and related tasks, but the production ofsynthetic, hydrogen-based fuels, to replace the presentdegree of reliance on the transport and combustion ofpetroleum and natural gas, and to shift the use of those lat-ter resources toward their better role as chemical feed-stocks for production of needed products. This is also to beviewed as a mission of cleaning up the messes which clingstubbornly to current practices.

This means the immediate development of generallyusable prototypes in production and use of such syntheticfuels.

The longer-range mission must be the management ofmineral resources generally, to reverse the present trend ofrapidly increasing the per-capita cost of production ofrefined primary commodities.

4.) Reorganization anddevelopment of masstransportation.

From the late SeventeenthCentury onward, the process of colo-nization of North America wasfocussed on the development ofroads, developed waterways, and,later, railroads. This was associat-ed with a clearer conception,established during John QuincyAdams’ tenure as Secretary ofState, of an integrated territory ofa continental nation, from Atlanticto Pacific, limited only by a north-ern border with Canada and asouthern border with Mexico. Theintegration of the U.S. by trans-continental railway systems, asunder John Quincy Adams’ one-timeprotégé, President Abraham Lincoln,established the U.S. as a continentalpower too powerful to be conquered

by foreign military attack.During the course of the post-1968 shift to a “post-indus-

trial utopia,” this integrity of the U.S.A. within its own terri-tory has been ruined, and almost destroyed.

This degeneration of the U.S. has been marked by coin-ciding relative abandonment of large, formerly developedagro-industrial regions of the nation, and a congestion offlimsy structures, often of Hollywood-set-style constructionin areas of suburban sprawl, and skyrocketing urban pricesof housing and other tenancy.

This functional degeneration of the internal physicalorganization should remind us of the ills of Mexico City,Cairo, Alexandria, and generally comparable, bloated andmass-poverty-stricken regions of the world’s developingsector.

There is a desirable setting of limits on the size of func-tioning urban areas, and similar sorts of functionallydefined limits on efficient suburban sprawl around cities.

Much of this decadence and its concomitant disorder,has been a by-product of the campaign of radical deregula-tion launched, during 1977-1981, under the auspices of theTrilateral Commission. The addition of deregulation to thegrowing 1968-1976 post-industrial orientation, was contin-ued after 1981 as a generation-long degeneration of landoccupancy and use throughout the U.S. territory consid-ered as a whole.

This process of decadence, extended now over morethan a quarter-century—i.e., more than a generation of thelives of our citizens—has too many people losing much oftheir lives in inherently wasteful lapsed-time for daily com-muting, and similar waste of lives in travel associated withdaily routines. Residence, regular community functions,and work should be accomplished within incurred lapses oftimes not in excess of that during the days when the typicalresident could walk to a number of available options foremployment, to shop, to school, and so on. The develop-

Transrapid

A maglev train at Long Yang Road Station in Shanghai, China; the train was built byGermany’s Siemens Corp.

ment of the whole area of the U.S.A. should,once again, emphasize decentralized, econom-ical scales of daily life’s routine, distributedrationally over the territory of our nation.

This means a complementary return toproper emphasis on mass transport of peopleand goods. This means a relative deemphasison long-haul highway transport of freight, andgreatly increased emphasis on a functionallyintegrated, rational configuration of water,rail, and air transport. This means, inclusively,the use of maglev trunk-routes for high-densi-ty transport of people, and also of freight, Itmeans high-speed rail for intermediate con-nections among urban and suburban areas. Itmeans rationalized organization of air trans-port, relative to these improvements in rail. Itmeans, inclusively, cutting back on the vastwaste of human life caused by what should beconsidered unjustified time lost in commutingby highway and other means.

Under this same general heading of eco-nomic mission-orientations, we must take intoaccount the presently inevitable, now onrush-ing general collapse of the nation’s great real-estate bubbles. As suburban areas aroundWashington, D.C. exemplify an important aspect of thisanomaly, most of the development so-called is of poor,sometimes unspeakably poor quality, and situated in areasin which necessary infrastructure is not supplied, or is vast-ly inadequate relative to any reasonable standard of urbanand suburban planning. The inevitable collapse of the lead-ing real-estate bubbles of this and related areas, definesimperatives for distributing economic functions of thenation widely, thus reversing the trends of the recent quar-ter-century.

Moving people into rationally designed communities of arelatively decentralized character, around the nation, meansa shift of places of employment and so forth, to the effect ofa health-promoting decompression of congested localities,and the need for a highly efficient national transport sys-tem, which shifts the daily costs and lost time of commutingdownward, in favor of highly efficient modes of mass trans-port among population centers.

This needed change means shifts in the distribution ofpower plants, shifts in the development and managementof fresh-water supplies, and promotion of the developmentof green in presently decadent and arid regions of thenational territory. This is also required to prepare us tomeet the growth of population we must reasonably expectfor the coming two generations.

5.) In principle, the relevant portions of thepresent automotive sector have an alreadyestablished overlap with our space and generalaeronautics programs.

So far, the accomplishments of our space program haveimplied less and less emphasis in fact on exploring otherplanets, than on exploring the common systemic nature of

the Solar System which we share with the other regions ofour Solar System as a whole. As the demand for scientificprogress grows relative to life on even this, our immediateplanet, the distinction between life and physical chemistryon Earth and the physical chemistry of the Solar Systemgenerally will tend to vanish. There are processes in theSolar System and even beyond which represent the powerto control crucial aspects of the conditions for our exis-tence on Earth itself; we must go out to explore and meetthose processes. The natural commonality of space-orient-ed aeronautics and the work and products of the machine-tool sector back here on Earth will naturally meld as thename for physical science becomes, quite naturally, appliedastrophysical science.

The immediate practical implication of that same point,is that the current requirement for mastering the Biospherein depth, is a requirement which includes the need to raisethe qualitative level of production in Asian society andAfrica, for example. This means that those more developedregions presently in places such as Europe and theAmericas, must emphasize mobilization of their ownefforts in the direction of science-intensive approaches tothe needs of the planet and its populations as a whole.

On this account, it is to be stressed that the same machine-tool-design principle which marks the driver of a successfulautomotive and aeronautic industry, is the principled featureof experimental designs of test of principle in fundamentalscientific work. The challenge of industry during comingdecades, will be to upgrade the natural potential of allmachine-tool-design work to the level of the refined use ofthose skills in fundamental scientific discovery. This is workto be carried forth in ways which echo the mobilization of theautomobile industry for victory against Hitler’s warfare.

11

Ford Motor Co.

This Windsor, Ontario Ford assembly complex, still employing 2,200 productionworkers, is being closed despite recent heavy capital investment of hundreds ofmillions of dollars into its machine-tool and flexible production capabilities.

12

The large assemblage of critical auto-industry capaci-ty whose near-term closing or sell-off has alreadybeen announced, is represented in part by the map

and table of 64 auto assembly, production, parts and sup-ply complexes on pages 12-14. It comprises 73 millionsquare feet of industrial capacity, much of it richly sup-plied with machine tools, and with machines of both highprecision and flexibility, and large force and lifting capa-bility. If you add the square footage not being utilized inplants that are scheduled to remain open, the totalamount of industrial capacity not being used is at least100 million square feet.

The planned shutdowns will cost 75,000 skilled indus-trial jobs directly; and through immediate radiating effectson smaller supply plants and machine-tool shops, 300,000more. What is about to be shut represents, in automobile-industry terms, the capacity to build 2.5 million or morecars and light trucks a year. But in terms of urgent nation-al economic investment, it represents a unique industrialcapability to build the United States “a new national infra-structure” of transportation, power, and so forth.

Interviews with representatives of the engineering andproduction workforces in the industry make clear, amongother things, that this is by no means the full measure ofunutilized, “lost” capacity which could be restored. Sinceabout 1985, five jobs have disappeared for every onewhich remains in a typical auto parts or supply plant; andtwo jobs have gone for every one that remains in a typicalassembly or engine plant. The Lockport, New York DelphiCorporation facility which makes heating and cooling sys-tems—one of the very few not marked for shutdown byDelphi’s bankrupt management—serves as an example.Though the complex will apparently remain open, thelargest production building at Lockport is completelyempty and used only for storage now; two other produc-tion buildings operate at 50% and 33% capacity; themachine-tool-making part of the complex has shrunkfrom 550 to 250 highly skilled employees; and the overallworkforce has fallen in 15 years from 11-12,000, to about3,700 now, and still shrinking.

And among some of those plants about to close thisyear or next: Delphi in Columbus, Ohio employs 845 ofwhat was once a workforce of 5,000; Vandalia, OhioDelphi electronics has 650 workers of its 1990 total of

2,400; General Motors’ Pittsburgh Metal Center has 600remaining of a peak of 3,500 workers; the Ypsilanti,Michigan Visteon parts employed 4,000 workers at onetime, and now has 700, with 9 of its 12 stamping pressesrecently unused; and the Adrian, Michigan Delphi plasticinjection mold plant, with a legacy of many industrial mis-sions since World War II (see article, p. 24), has 385 work-ers left of its 1,150 workforce 20 years ago. Among assem-bly plants, Ford’s Hazelwood facility outside St. Louis istypical: It employed 3,000 skilled production workers only11 years ago; but had shrunk to 1,700 employed when itclosed down on March 11.

Thus, take this highly adaptable unutilized auto sectorcapacity, and employ it in building a critically needed newnational infrastructure under a Federal reorganization;and as many as 2 million Americans would be newlyemployed, or re-employed in industry—in a nation whichhas lost 2 million industrial jobs in five years.

Fail to do so, and recent reports show that the majorityof this unutilized capacity will have been demolished by2008. Its rich stock of machine tools will be sold for scrapor “wind up in Mexico” and low-wage outsourcing loca-tions in Asia and South America, where auto firms are“parking” increasing amounts of that machine-tool stockin their globalized operations.

Plant Capabilities for the Legislation’sPurposes

A survey of some examples of closing, and otherwiseunderutilized, auto capacity shows that not only can it beemployed for Federal, general-welfare purposes of con-struction of vital economic infrastructure: It has been soemployed. Older facilities all over Western New York,Ohio, Michigan, Missouri, and elsewhere famously pro-duced aircraft and many other munitions during WorldWar II, as the result of a national “conversion” processproposed by the United Auto Workers’ Walter Reutheralready at the end of the 1930s. In 1945 Reuther proposedthey be reconverted to railroad building and housing con-struction, through Federal authorities; though this wasn’timplemented, many plants continued to convert to makeother products besides automobiles.

Veteran auto workers report that the older autoplants—with their larger spaces, heavy machinery, and

Use It or Lose It:Auto Capacity 50% UnusedAnd Going, Going, Goneby the Staff of Executive Intelligence Review

rail as well as truck doors, are industrially more adaptablethan newer plants often built to produce a single product.It is a striking fact that the automakers, in many cases,have recently poured hundreds of millions in new machin-ery and equipment investments into these establishedplants, only to turn around and shut them down under thesavage “demands” of globalization. This is true of theNorfolk, Virginia Ford assembly plant, for example, of theFord and GM plants in Oshawa and St. Catherines,Ontario, and others. These plants are capable and versa-tile.

Nuclear fuel rods were fabricated and other nuclear-plant parts made—as in LaRouche’s proposed legislation—by both the Fenton (St. Louis) Chrysler facility, and the

Adrian, Michigan Delphi instrumentation plant in the1950s. The Adrian plant produced aluminum duringWorld War II and the late 1940s; aircraft parts and brakesfor aircraft and army trucks during the Korean War; fabri-cated nuclear fuel rods and piping in the 1950s forBridgeport Brass Company; then produced aluminumagain in the 1960s, for Harvey Aluminum and for MartinMarietta; and then from 1974 until now, built and operat-ed plastic injection molding presses for Chevrolet and forDelphi.

The necessity to completely rebuild and refurbish theancient, too-small, and outworn dams of the entire upperMississippi River system, has been recognized by many inCongress. As LaRouche proposes, the large modern mitre

13

36

60

3913

52

58

453-54

40 12

5756

1

2

37-38

3 6-7

5

55

43

4444444444144414

59

FL

NM

MDMMDD

TX

OK

KS

NE

SD

NDMT

WY

COUT

ID

AZ

NV

WA

CA

OR

KY

ME

NY

PAPAP

MI

VT

NH

MARITCTT

VAWV

OH

IN

IL

NCTN

SC

AL

MSAR

LA

MO

IA

MN

WI

NNNJNNJNJNJ

GA

Shutdown—Actual, Announced, or Threatened

Plant Numbers Refer to Table 1, page 14

FIGURE 1

64 ‘Excess’ Auto Plants Available for Operation by a Federal Infrastructure Corporation

MICHIGAN

OHIO

INDIANA

32-34 3529-31

2526-28 24

1817

2116 19

612022

23

49,51

11 109

8

5048

4745-4644

62

63-64

Industrial Capacity Challenges Congress:Use It or Lose It“Here’s how this thing is going to work. You’ve got somewhere in therange of 35-40% capacity utilization, among the Big Three autocompanies. We know it most concretely in the case of GeneralMotors, that it’s about a 35% utilization, in order to actuallyproduce their market share of cars and trucks and SUVs and all ofthis. . . . So, that section of these auto companies, we’re going to hiveoff, and they’re going to continue to operate the way they’re operated.But we’re going to take the unused capacity under receivership ofsome kind of temporary government agency, and take that idle plantcapacity, the laid-off workers, and give them specific, vitalassignments in this rebuilding of the country’s infrastructure. Sowe’re going to actually put those elements of the auto sector that areright now either unused, or underutilized,. . . into Federalgovernment receivership reorganization. And we’re going to hireworkers back, and we’re going to emit Federal credit.”

14

gates for these many scores of obsolete lock-and-dam sys-tems, could be built at the Delphi plants in Buena VistaTownship, or at Lockport, New York. The latter has raildoors and a “North High Bay,” with 80-foot ceilings, 100-ton cranes, and large presses, where aircraft were built 60years ago; the former has a huge bay with 2,000-ton press-

es and drop forges, three stories tall and set three storiesinto the ground, and two railroad doors. This plant couldalso build high-speed railroad stock or other heavy infra-structure. There are numerous other such plant layoutsbeing closed or going unused.

The St. Louis area’s five major auto assembly plants of

Hourly Salaried Plant MillionsNo. State City Type of Facility Workers Workers Sq. Ft

1 Alabama Athens Delphi Electrical/Steering 2,037 174 0.72 Alabama Cottondale/Tuscaloosa Delphi thermal and interior 225 40 0.23 Alabama Gadsden Delphi thermal and interior 185 40 0.34 California Irvine Delphi electronic systems 89 4 0.25 Georgia Fitzgerald Delphi Batteries 363 226 Georgia Atlanta/Hapeville Ford Assembly 1,978 174 2.87 Georgia Doraville GM Assembly 2,856 220 3.68 Indiana A Indianapolis Visteon Steering Components 1,800 3009 Indiana Anderson Delphi Energy & Chassis 791 89 0.5

10 Indiana Muncie GM Transmission 38511 Indiana Kokomo Delphi Environment & Safety 2,421 2,913 2.312 Indiana Corydon Tower Automotive stamping 80013 Kansas A Kansas City Visteon IP/Lamp Assembly 95 1514 Maryland Baltimore GM Assembly 883 120 3.015 Maryland Baltimore GM Transmission (PT) 376 68 0.416 Michigan Adrian Delphi thermal and interior 387 66 0.317 Michigan Grand Rapids Delphi energy and chassis 543 110 1.818 Michigan Coopersville Delphi energy and chassis 575 95 0.319 Michigan A Monroe Visteon Chassis 1,330 22020 Michigan A Milan Visteon Powertrain 900 15021 Michigan A Saline Visteon Interiors 1,585 26522 Michigan A Ypsilanti Visteon Chassis 770 13023 Michigan A Plymouth Visteon Climate Control 1,245 20524 Michigan Wixom Ford Assembly 1,663 167 4.725 Michigan A Chesterfield Twnship Visteon Seating Foam 155 2526 Michigan Lansing/Delta Twnshp GM Assembly 130 1627 Michigan Lansing/Grand River GM Assembly 1,303 185 2.28 Michigan Lansing GM Metal Center 1,514 144 1.29 Michigan Flint East Delphi Exhaust Systems 649 84 1.130 Michigan Flint East Delphi Energy, Engine 2,173 257 4.231 Michigan Flint North GM Powertrain 2,262 36032 Michigan Saginaw GM Malleable Iron (PT) 292 41 0.333 Michigan Saginaw Delphi energy and chassis 1,015 185 0.734 Michigan Saginaw Delphi steering systems 3,780 1,200 1.035 Michigan A Shelby Township Visteon Interiors/Exteriors 1,415 21536 Minnesota St. Paul Ford Assembly 1,805 160 2.137 Mississippi Brookhaven Delphi electronic 479 44 0.238 Mississippi Laurel Delphi Energy Systems 73 9 0.239 Missouri St. Louis/Hazelwood Ford Assembly 1,589 153 3.240 Missouri A Kansas City Visteon lamp assembly 95 1541 New Jersey New Brunswick Delphi Batteries 283 2942 New Jersey Linden GM Assembly 1,654 88 2.643 New York A West Seneca Visteon Compressors 110 85 0.344 Ohio Kettering Delphi Thermal Systems 1,094 147 2.645 Ohio Moraine Delphi Energy & Chassis 1,145 113 0.346 Ohio* Moraine GM Assembly 3,821 344 4.147 Ohio Dayton Delphi Compressors 1,409 252 1.248 Ohio Vandalia Delphi Interiors 641 3 0.749 Ohio A Sandusky Visteon Lighting 1,285 21550 Ohio Columbus Delphi thermal and interior 737 105 1.451 Ohio Sandusky Delphi energy and chassis 930 212 1.3

(continued)

TABLE 1

Shutdowns/Sell-Offs Ongoing, of Major Auto Plants

GM, Ford, and Chrysler (the Ford plant just having closedto auto production), together with the many surroundingsuppliers and machine shops, are served by railroads at akind of national hub; the city area also features railroadrepair yards. They constitute an ideal center for new con-struction of electric locomotives, rolling stock, and othercomponents of a high-speed rail system for the nation—asLaRouche’s outlined legislation intends. The Chryslerplants and one of the Ford plants have had major invest-ment into new tools, robotics, etc. in the past decade. TheChrysler plants built aircraft in the 1940s, then tanksthrough the Korean War, and finally nuclear fuel assem-blies in the 1950s.

The Michaud, Louisiana plants where NASA has builtmajor rocketry were Chrysler plants; the connection toaeronautics is clear in many parts of the auto industry.

The Lima, Ohio Chrysler plant, about to shut down withonly 200 of its 3,800 workers remaining in 2001, was takenby General Dynamics to produce the Abrams Tank, nowhaving a production workforce of 800.

And ironically, several Michigan auto-parts productionplants have long had contracts to produce quality personaland automotive armor for police departments—even asMembers of Congress complained bitterly that U.S. sol-diers were dying needlessly in Iraq due to inadequate pro-duction of armor for Humvees. Why was the Pentagon notinstructed to get the Humvee armor built in auto plants,which could have rapidly retooled to mass-produce it?

Specifically, Machine ToolsThe tool-and-die centers of the auto sector are its cen-

ters of industrial creativity—“new-build” as some are

15

Hourly Salaried Plant MillionsNo. State City Type of Facility Workers Workers Sq. Ft

52 Oklahoma Oklahoma City GM Assembly 2,534 200 3.953 Oklahoma A Tulsa Visteon Glass 600 10054 Oklahoma Tulsa Delphi 118 655 Pennsylvania Pittsburgh GM Metal Fabricating 541 72 0.956 Tennessee Spring Hill GM Assembly 5,067 709 5.257 Tennessee A Nashville Visteon Glass 730 12058 Texas Wichita Falls Delphi energy and chassis 198 30 0.559 Virginia Norfolk Ford assembly 2,40060 Wisconsin Milwaukee Delphi energy and chassis 485 70 0.5

Canada

61 Ontario Windsor Ford Engines 2,20062 Ontario St. Catherines GM Powertrain 30063 Ontario* Oshawa Plant #1 GM Assembly 1,00064 Ontario Oshawa Plant #2 GM Assembly 2,300

The Last Decade: 1996-2005

State City Type of Facility Workers Company Year Closed

Alabama Athens Electrical, Steering 2,037 Delphi 2001Indiana Indianapolis Foundry 881 Chrysler 2005Maryland Baltimore Assembly 883 GM 2005Michigan Detroit McGraw Glass 717 Chrysler 2003Michigan Detroit/Mound Rd. Engine Plant Chrysler 2002Michigan Dearborn Assembly 2,000 Ford 2004Michigan Detroit/Mt. Elliot Tool & Die 290 Chrysler 2003Michigan Dearborn Vulcan Forge 80 Ford 2003Michigan Detroit Tank 536 Chrysler 1998Michigan Flint/ 1,200 GM 1999Michigan Saginaw Malleable Iron (PT) 292 GMNew Jersey Linden Assembly 1,654 GMNew Jersey Edison Truck Assembly 900 Ford 2004New York Tarrytown 3,456 GM 1996Ohio Brook Park/Cleveland Aluminum Casting 78 Ford 2003Ohio Toledo Machining 1,628 Chrysler 2003Ontario Windsor/Pillette Rd. GM 2001-03Quebec St. Therese Assembly GM 2002

A = Facility in Ford Motor Company’s “Automotive Components Holdings, LLC,” as of Oct. 1, 2005*Third shift at the plant will be eliminated; figure represents one-third of the plant’s production workforce.Sources: Industry employees; General Motors Corp.; Ford Motor Co.; Delphi Automotive; Visteon Corp.; EIR.

TABLE 1 (Continued)

Shutdowns/Sell-Offs Ongoing, of Major Auto Plants

called—where the machines and forms used by the rest ofthe industry are designed and built. They are alreadyrazor-thin lines of skills and capacity, in grave danger ofdisappearing entirely, outsourced to Asia.

Typical tool-and-die and metal shops are losing 50% ormore of their workers. General Motors has five tool-and-die centers: the Mansfield Metal Center in Ohio; theMarion Metal Center in Indiana; Flint Tool and Die,Pontiac Metal Center, and Grand Rapids Metal Center, allin Michigan. Three of the five are being idled. Theiremployment—which makes possible the work of all100,000 GM production employees nationwide—is fallingthis year from about 1,600 to just 1,275 workers now, andlikely to 750 tool-and-die workers by July. (A comparableDelphi Corp. “new-build” center at Lockport has fallenfrom 550 to 250 millwrights, tool designers, die makers,plastic form makers, an so on.) A “corporate standard die”is the basic measuring unit of highly skilled machine-toolwork, and GM’s machine-tool centers have alreadydropped from 1,600 to 1,000 corporate standard dies/yearof work, a 40% fall-off.

The clear threat now exists, that this creative core ofthe whole industry will completely disappear in the nearterm, with tooling completely outsourced to (typically)India, China, and Korea, and to small U.S. machineshops which often have to partner by computer withIndian or Chinese corporate operations. The loss to U.S.national industrial capabilities would be immense, all outof proportion to the numbers of employees involved. Thisis doubly dangerous because nearly the same degree ofloss of machine tooling and product control by outsourc-ing, is occurring in the U.S. aerospace sector, the otherremaining American fount of machine-tool capability,

which has shrunk even faster than auto.In a DVD on auto retooling just released by

LaRouche PAC, “Auto and World EconomicRecovery,” several auto union leaders and localelected officials stress the national securityquestion constantly brought up by auto andaerospace workers. What happens if, in a timeof extended war, United States industry hasbecome completely dependent for machinetooling, on Asian nations, and can’t designweaponry, or NASA space activity, withoutpurchasing “outsourced” machine design? Asone union representative put it: Through glob-alization, we are actually oppressing China bythe massive outsourcing of manufacturingthere, exploiting super-low wages. What if ten-sions over this, lead to real hostilities, and wehave at the same time become strategicallydependent on China or other Asian nations forour machine-tool capabilities?

Congress can head off just such a potentialstrategic predicament, as well as serving thenation’s general welfare, by intervening asLaRouche proposes.

Engineering and design workforces in theauto industry perform a function related to

creation of machine tools, though also heavily involved in“styling.” These workforces would play an important roleas the mobile inspection/planning force for an industry-wide “retooling,” assessing the rapid conversion of appro-priate plants to specific infrastructure building. Thoughnot yet in extremis like the teams of tool-and-die workers,they are also shrinking. Ford’s workforce, for example, is11,000 for engineering, design, and analysis. One designteam there had 1,500 engineers and designers at its peak inthe early 1980s; 7-800 in 1995; and now, 350. Outsourcing,in this case, has gone primarily to India.

The potential represented by this engineering capacityis breathtaking. One employee of a leading automakingengineering department told EIR that there has been a rev-olution in machining through the use of what is called the“flexible design process.” Built into the flexible designprocess are hundreds of robots and advanced machinetools. There are transfer machines: for example, one trans-fer machine may move a work-product to say 12 coordi-nated work stations, where a specific operation is done, ina specific time and order, and then it is moved throughand between successive work station. This process dramat-ically increases the speed of oerations, because the robotcan choose and load parts much faster than people.

In retooling, the engineer indicated, the machine tooldesigns for new products are typically able to be installedwithin two weeks, after they are designed. In some cases,the old production lines don’t even have to be shut down,but installation of the new line can go on in parallel.

State-City Function and RevenueLocal elected officials throughout the auto plant-clos-

ings locations of the Upper Midwest and South, are hold-

16

Niagara Falls Historical Society

Just a portion of the Lockport, New York auto plant complex now owned byDelphi Corporation, a part of which has been closed down—and other parts50-70% underutilized. Served by railways (below) and highways, with heavylifting machinery in one huge bay, the plants here have built aircraft in thepast, and could build rail systems in the immediate future.

ing meetings, hearings—the case of Lansing on April 29,attending demonstrations—and searching for solutions tothe loss of a large portion of their revenue base. The immi-nent closing of Saginaw, Michigan’s remaining two partsplants, for example, lays off the equivalent of 10% of thecity’s shrinking population, and takes away even more ofits tax base. The school system revenues of two Ohio cities,Batavia and Sharonville, are knocked down 30% by theclosing of a Batavia plant. Hazelwood, Missouri will prob-ably lose its police force and other services along with itsFord plant, having to turn to the state or county for policeprotection. In Michigan, Ohio, and Indiana, home realestate valuations are falling statewide, and tax revenuewith them.

The desperation solution of huge tax giveaways toauto companies, to try to induce them to maintain oper-ations or start new ones, can’t work. The State ofMississippi (see article, p. 60) in 2004 gave up $460 mil-lion in tax breaks, free land, and straight subsidies to

Nissan, averaging $60-70,000 per job “created” byNissan with its Canton plant. Now Mississippi is find-ing, due to Nissan’s extreme low wage policy, that atbest it will take 20 years of payroll taxes to recover therevenue lost. Note the small city of Fenton, Missourifloating $1 billion (!) in industrial development bonds toimplement tax abatements for the Fenton Chryslerplants. And note Missouri proposing to eliminate entire-ly its state sales tax on cars made in Missouri, forgoing$1,000 per vehicle to try to keep the assembly plantsopen.

Such local “solutions,” like local attempts to find away of saving an auto plant by “converting” it to fit aniche in the local service economy, are just straws in thewind of the collapse of auto under globalization. AFederal solution as LaRouche puts forward, through theissuance of Federal infrastructure-building credit, canmaintain and expand these bases of state and local taxrevenue as well.

17

The proposal to retool the auto industry in order tomeet the vital needs of our nation, has a precedent

in the period of World War II. On the initiative of UAWleader Walter Reuther, in 1940, the FDR governmentcarried out a dramatic transformation of auto plantcapacity, from making cars, to making materiel for thewar. Reuther’s plan, entitled “500 Planes a Day,” was, infact, surpassed, once the transformation got underway.

At the conclusion of the war, Reuther made an equal-ly dramatic proposal for reconverting the auto plantsback to meet not only transportation, but other urgentneeds. Unfortunately, that proposal was not acted upon.

We quote Reuther:1940: “The workers in the automotive industry believe

that the way to produce planes quickly, is to manufac-ture them in automobile plants. The automotive industryis operating at only half its potential capacity.”

“New plants cannot be built and put into operation inless than 18 months. In 18 months Britain’s battle . . .may be lost, and our own country left to face a totalitar-ian Europe alone.” And then the key driver-concept:“We propose, instead of building entirely new machines,to make the tools required to adapt existing automotivemachinery to aircraft manufacture.

“We propose to transform the entire unused capacityof the automotive industry into one huge plane produc-tion unit. . . . No industry in the world has the tremen-dous unused potential productive capacity of theAmerican automotive industry, and no industry is aseasily adaptable to the mass production of planes.”

1945: In July of that year, as it was clear the war waswon, Reuther published a paper entitled, “Are WarPlants Expendable?: A Program for the Conversion ofGovernment-Owned War Plants to the Mass Production

of Modern Railroad Equipment and Low-CostHousing.” Excerpts follow:

“There will be those who will label this programimpracticable; who will assert that wartime productionfacilities cannot be converted. A similar cry was raisedby spokesmen of the automotive industry in the fall of1940, when labor called for conversion of that industryto war production. At that time, we heard that only 10-15% of the industry’s machinery was convertible. Yetthree years later, on November 22, 1943 . . . Mr. K.T.Keller, President of the Chrysler Corporation, testifiedbefore the Truman Committee of the United StatesSenate that ‘around 89%’ of Chrysler’s machines hadbeen converted to war production—and could be con-verted back to civilian production. . . .”

Public Authorities Proposed“We propose that the Congress set up two public

authorities, similar in organization and function to theTennessee Valley Authority: a Housing ProductionAuthority, and a Railroad Equipment ProductionAuthority.

“These public corporations will be authorized tooperate government-owned war plants as they becomeavailable in a comprehensive program for the manufac-ture and distribution of low-cost housing and modernrailroad rolling stock.

“Within 90 days after this program had been autho-rized, modern railroad cars could be rolling out of theWillow Run plant. . . .

“With final victory, we can employ, through thistwofold program, six million people who would beengaged directly and indirectly in the mass production andmass distribution of rolling stock and low-cost housing.”

It’s Been Done Before!

In recent conversations with Lyndon LaRouche, the fol-lowing set of basic observations and proposals emerged.1. During his 1989-1993 tenure as Secretary of Defense

in the George H.W. Bush Administration, Dick Cheneypresided over a radical transformation of the U.S. military,which has now reached a crisis point, where many flagofficers, active-duty and retired, have warned that theentire military structure has been hollowed out, nearly to apoint of total destruction. The extension of the Iraq mis-sion, and the looming prospect of a broader Persian Gulfmilitary engagement targetting Iran, would be the prover-bial “straw that broke the camel’s back” of the U.S. mili-tary altogether.

As Secretary of Defense, Cheney first cut the size of theU.S. Army by one-third. During his tenure, the U.S. Armywent from 18 divisions down to 12 divisions. Once the mil-itary had been severely downsized, under the ostensible“peace dividend,” brought about with the collapse of theSoviet Union, the United States shipped 500,000 troops tothe Persian Gulf for Operation Desert Storm. Then Cheneyturned around and hired Halliburton to conduct a $10 mil-lion study into how to “outsource” and “privatize” key mili-tary support functions. Having created a gaping hole in themilitary’s readiness, Cheney shoved privatization and out-sourcing down the throats of the uniformed military. Itwas a carefully orchestrated seduction, one in whichCheney played an important, albeit bit part. Others withgreater intellectual capacity, like George Shultz and FelixRohatyn, did the planning. Cheney was the compliant thugwho did the implementation. And, of course, when theClinton Administration came into office, Cheney steppedin as president and CEO of Halliburton, and transformedthe petroleum-infrastructure company into the primoPentagon contractor, once he became Vice President in2001.

2. In reviewing this rough chronology, in light ofExecutive Intelligence Review’s recent in-depth and highlycritical study of the outsourcing of national security,Lyndon LaRouche proposed a simple solution to thedilemma of the military’s increasing dependence onPrivate Military Corporations (PMCs): Reverse direction

altogether, and build back up to an 18-division Army onceagain. But the focus should be on a real expansion of thosecapabilities—active and active reserve—that are todayvitally needed.

3. First and foremost, LaRouche emphasized the needto revitalize and vastly expand the Army Corps ofEngineers, and similar engineering components of theother services, active duty, Reserve, and National Guard.Taken in the context of LaRouche’s May 2 legislativeproposal for emergency action to create a Federal bank-ruptcy administration to revive the dormant productioncapacity of the automobile-manufacturing sector, withits vital machine-tool capacity, the build-up of the mili-tary engineering capacity serves a number of vitalrequirements. First, the Corps of Engineers plays a criti-cal role in any major expansion of U.S. infrastructure,from water management and high-speed rail, to a vastexpansion of America’s power grid, to rebuilding urbancenters with new hospitals, schools, etc. There is virtual-ly no ceiling on the amount of vital work that the ArmyCorps of Engineers can achieve, provided there is a vastFederal government emission of low-interest, long-termcredit for these vital infrastructure projects. Even in itspresent vastly reduced capacity, LaRouche believes thatthe Army Corps of Engineers still has blueprints formany of the key infrastructure programs that are vitallyneeded for our nation’s future well-being, and whichwould provide employment for the soon-to-be-extinctAmerican skilled auto worker. Second, the Corps ofEngineers also has a vital overseas mission, trainingengineering corps from friendly nations, playing a lead-ing role in the launching of vitally needed, large infra-structure projects in Africa, Southeast Asia, South andCentral America, etc.

4. The Corps of Engineers, along with the VeteransAdministration, and the Public Health Service, represent acritical component of our national disaster responsecapacity. The Department of Homeland Security hasalready shown itself to be a bureaucratic nightmare. DHScould be eliminated or significantly downgraded. A studyof the Clinton Administration will show that when FEMA

18

DISCUSSION MEMORANDUM

Rebuild U.S.Military AroundA Corps of Engineers Functionby Jeffrey Steinberg

was upgraded to full Cabinet status, and placed under thecommand of a competent specialist, it was able to performat a very high level. A revived FEMA, working in conjunc-tion with a revived Army Corps of Engineers, VeteransAdministration, and Public Health Service, could play acentral role in kick-starting an American economic revival,reversing the past 40 years’ trend to deindustrialization,outsourcing, and post-industrial service and entertainment(“Bread and Circus”) insanity.

5. LaRouche also emphasized two important psycholog-ical benefits from such an expansion of the military, withthis reorientation back to the traditional notion of militaryengineering. There are two segments of the American pop-ulation that are in big trouble, as the result of collapse ofthe U.S. physical economy and the disastrous U.S. occupa-tion of Iraq. In every American city, there are a majority ofyoung people who are truly facing a “no future” world. Inthe poorest areas, there are young people already caught ina life of drugs, crime, hopeless poverty, lack of basic edu-cation, and no job opportunities. Many are already second-generation victims of this deep lumpenization and cultureof despair and brutality. These young people represent acritical part of the future of our country, and they must berescued from this disaster. They represent a criticalresource for this expanded military-engineering capability.In the 1930s, under the New Deal, it was the Army Corpsof Engineers that ran the Civilian Conservation Corps(CCC). Then, as now, there were young men and women,caught in the grip of poverty and hopelessness. They weregiven job skills. Furthermore, they were taken out of theirenvironment and given a chance, and thrown togetherwith people from other parts of the country with similar

experiences and feelings of helplessness. Given a mission,a job, and a sense that the nation could be turned around,they responded. They later became the soldiers whodefeated Fascism in World War II. Along with the urbanand rural poor youth, there is another element of the “for-gotten America” that must be given a real sense of missionand opportunity. These are the returning Iraqi war wound-ed, many in their early 20s. Many have suffered life-alter-ing injuries, amputations, etc., and are now suffering fromthe shock of having their futures taken away. These peoplecould be vital to a revived Corps of Engineers and similarmilitary expansion. They may no longer be able to play arole in a combat unit, but their experience, their valor,their leadership skills, can be put to use, in various train-ing and other capacities. Give them a sense of meaningagain in their lives. They more than deserve it for whatthey have sacrificed for their country.

6. Such a revival of the American System tradition ofmilitary engineering, through an expansion of the U.S.military, would more than pay for itself. Right now, ournational economy is on the verge of total destruction. AsLaRouche has emphasized, if we allow the automobile-manufacturing sector to be wrecked, the United States willbecome a junk nation. Launch a major infrastructurerevival, using the idle capacity of the automobile-manufac-turing sector, with its strong machine-tool component, torebuild our nation’s infrastructure; expand the Corps ofEngineering function to play a pivotal role in that effort, asthe Corps was pivotal to the New Deal job-creation andinfrastructure expansion; and the net increase in realwealth of the United States will sustain the effort—andthen some.

19

The Army Corpsof Engineers willhave to play avital role inexpandingAmericaninfrastructure andupgrading theskills of theworkforce. Here,construction bythe Army Corps atthe Dalles Dam inOregon.

U.S. Army Corps of Engineers/Bob Heims

The fakery of the outgoing Alan Greenspan administra-tion, in burying the “M3” report, was clearly intended

to conceal the fact that the rate of rate of increase of worldprices of primary materials has the world as a whole cur-rently on the same kind of “least-action pathway” curve ofhyperinflation which gripped Weimar Germany during thesecond half of the year 1923 (Figure 1).

Comparing the present rates of rates of increase of pri-mary materials prices with the pattern for Germany 1923,indicates the likelihood that, under present U.S. andEuropean policies, the world system could reach a point ofcollapse of the monetary system by not much later thanSeptember 2006, if not earlier.

Under the present trends in policy-making in the U.S.government, both in the careening economic-financiallunacy of the current Bush Administration, but also the“Alfred E. Newman”-like diffidence of a negligent U.S.Congressional fraction of the Democratic Party, the likeli-hood is that the world system as a whole will be in a U.S.-dollar-triggered collapse-phase before Autumn.

The point is not to predict what could happen byAutumn; the point is to kick the relevant political circlesin the Democratic Party with the proverbial two-by-fourprescribed for reluctant donkeys, and to do so hardenough, soon enough, and often enough, to move to thekind of emergency reform of U.S. policy which couldstave off an otherwise onrushing general breakdown-cri-sis of not only the U.S. system, but the world system aswell.

There is a relative handful of persons, typified by theBrookings Institution-based Hamilton Project team, whoare capable of understanding this, and who already havecommand of most of the essential facts to be considered.There are professionals in other parts of the world, whocould begin to understand this quickly, if they werekicked hard enough to come to the necessary state ofwakefulness.

The world is thus, now, in the terminal phase of a hyper-inflationary collapse of not only the dollar-system, but theworld-system as a whole. To bring this into focus, considerthe elementary features of the way in which Federal

Reserve Chairman Greenspan’s lunacy orchestrated the1987-2006 phase of the relevant hyperinflationary cycle.Keep three illustrative curves in view: 1.) my “Triple Curve,”which, since January 1996, has described the general char-

20

HYPERINFLATION LIKE WEIMAR 1923

World System onWeimar Collapse Curveby Lyndon H. LaRouche, Jr. April 20, 2006

A German housewife in 1923—lighting a fire with worthlesscurrency to cook her breakfast.

acteristics of the ongoing collapse-function of the 1995-1996 interval (Figures 3-4); 2.) The curve of 1923 Weimar,Germany hyperinflation (Figure 1); and, 3.) The currenthyperinflationary rate of rate of increase of primary com-modity prices, as led by petroleum and metals (Figures 2and 5).

(Leave the “supply-and-demand” freaks, and other sta-tisticians from Swift’s Island of Laputa, to play with them-selves behind the barn, where they will be happy.)

Essentially, what Greenspan did, was to bail out thebanks whose coffers had been emptied by the events ofOctober 1987, by laundering the mortgage-based securi-ties packages of Fannie Mae and Freddie Mac. The real-estate bubble was built up to its presently cancerous pro-portions for this continuing purpose. This, in turn, provid-

ed the baseline of monetary and derived financial emis-sion for what was to become a hyperinflationary expan-sion of a physically contracting economy. (See my TripleCurve.)

In the end, this became the core of a global financial-monetary bubble comparable to that of medieval Venice’stool, the Lombard League of Europe’s Fourteenth-Century collapse into a New Dark Age. However, in thiscase, the end-game phase of this hyperinflationaryprocess was cornering of the world market in primarymaterials.

For those shrewd enough to recognize that the present

21

FIGURE 1

Weimar Hyperinflation in 1923: Wholesale Prices (1913 = 1)(logarithmic scale)

Jan. March May July Sept. Nov.1,000

10,000

100,000

1,000,000

10,000,000

100,000,000

1,000,000,000

10,000,000,000

100,000,000,000

1,000,000,000,000

FIGURE 3

LaRouche's Typical Collapse Function

+

−

Financial aggregates

Monetaryaggregates

Physical-economicinput/output

Time

FIGURE 2

Futures Market Mean Price Inflation for 14 Primary Commodities, January 2005-April 2006(% Rise from January 2005)

Jan2005

April July Oct Jan2006

April0

20

40

60

80

100

Sources: www.thefinancials.com; ICIS Chemical Business; EIR files.

27% Annual Rate 2005

122% Annual

Rate 1st Quarter

2006

528% Annual RateApril 2006

FIGURE 4

The Collapse Reaches a Critical Point Of Instability

+

−

Financial aggregates

Monetaryaggregates

Physical-economicinput/output

Time

world financial system is alreadyhopelessly doomed, the witting classof predators must have a “landingplace” outside the bounds of such ageneral financial-monetary collapse.Essential raw materials representthat landing-place.

Therefore the rate of inflation ofthe rate of inflation in the marketfor primary commodities is thecharacteristic curve of the presentworld monetary-financial system.This rate of rate of inflation, asreflected in the concealed behaviorof M3, is the curve which corre-sponds to the Weimar Germanyhyperinflationary curve of June-November 1923.

Underneath it all, is Leibniz’s catenary-cued principleof physical least action, the fundamental principle of theLeibniz infinitesimal calculus and Leibniz’s original cor-rect discovery of the natural-logarithmic function

derived from the double-catenary characteristic of theleast-action principle. The comprehension of such sys-tems in general, is found in the work of Riemann onhypergeometries.

22

3,050

3,700

4,350

5,000

5,650

6,300

May Jun Jul Aug Sep Oct Nov Dec Jan2006

Feb Mar Apr

FIGURE 5

Copper Prices(April 18, 2005-April 17, 2006)

A Flood of Funds, Central Banks Feed ItFigure 2 shows the average annualized rate of infla-

tion of the futures-market prices of a basket of 14 “pri-mary commodities,” into which speculative funds’money has been flooding, while their last gulf—theU.S. real estate/housing bubble—has started to shrink.The rates are shown for three periods: a year, followedby a quarter; followed by a month; graphically illus-trating the continuing acceleration of the rate of infla-tion in those commodities. The commodities are:Brent crude oil, propane, and gasoline; the commonplastic base HDPE (high-density polyethylene extru-sion); the metals zinc, copper, aluminum, tin, lead,nickel, and platinum; and the precious metals gold, sil-ver, and palladium. Figure 5 shows the actual futuresprice of one of those—copper—over the last 12months, as a sample which shows the same increasingrate of the rate of inflation as the basket of 14, withoutthe brief, wild fluctuations shown by some of themalong the way.

For 2005 as a whole, the futures prices of the basketof 14 primary commodities inflated by 27.3%; then injust the first quarter of 2006, they inflated by another22.2%; and in April 2006 (actually, in just the first 19days of April), by a further 14.9%.

The modern-era’s model for this accelerating infla-tion—hyperinflation—is 1923 Weimar Germany(Figure 1), particularly the June-November period ofthat year which ended with Reichsmarks losing theirvalue entirely.

The driver for this hyperinflationary process is hedgefunds and commodity index funds pouring speculative

money in, irrespective of any “fundamentals” of supplyor demand. While forecasts had been that speculativefunds flows into commodity index funds would increasefrom $80 billion in 2005 to $120 billion this year, thefigure appears to already have reached $100 billion byApril. And these index funds are only one part of thehuge flows from banks, hedge funds, private equityfunds, derivatives speculators, and even the now-besot-ted “conservative” institutional funds like pensions. Thisflood of funds begets a second inflation driver—merg-ers. In gold, for example, since September 2005, therehave been at least 20 significant mergers and/or acquisi-tions (M&A) in the global gold industry alone (com-pared to just 5 in the first half of 2005), reports MerrillLynch. The same is true for aluminum, nickel, and espe-cially energy companies.

Central bank monetary emissions are fueling thisbubble process, the extreme point shown in Figure 3 ofLyndon LaRouche’s Triple Curve Collapse Function. AsLaRouche notes, the U.S. Federal Reserve, from itsMarch 23 weekly report on, suddenly suppressed publicrelease of information on its broadest money-supplymeasure, known as M3, although acknowledging thatthe Fed is, of course, still gathering and computing thisinformation.

The rate of expansion of M3 has accelerated, even asthe financial press abounds with talk of “tightening” bythe central bank. For the 13 weeks ended Feb. 27, M3had grown at a very high 8.7% annual rate. Since then,the data are “classified.”

—Paul Gallagher

The significance of saving the machine-tool sector of the U.S.economy, which largely resides in the auto industry, goesdirectly to the issue of the national security of the UnitedStates, as the following statements by Midwest political andunion leaders point out.

Phil CavanaghWayne County Commissioner

“. . .The tool and die industry is gone, for all intentsand purposes. And that worries me, because in WorldWar II, it was the Arsenal of Democracy. So, in war, wecould look upon our own people, we could look upon ourown industries, to defeat the enemy. Now, if we have awar, America has all these planes and bombs, etc., but wedon’t have the tool-and-die industry, we don’t have themechanisms to make things ourselves, because weshipped that all over seas. We’re going to globalization.But I consider it a national security issue. We can’t takecare of ourselves.”

Marty GreenTool and Die Committeeman, Local 730 UAWGrand Rapids, Michigan

“It is scary. I’m in the automotive type industry. But thedie-making groups are spread among the aeronauticindustry, or the agriculture industry. And, without tool anddie, or without plastic injection molders, if we’re goingyears from now, and we become involved in some smallwar where we need bombs to be made, or planes to bemade—or guns to be made, anything like that—it’s goingto require a tooling base, to make those things. So, it doesbother me. So, I’m hoping that it never happens, I’m hop-ing we’re never in that type of war again. But somewhere

along the line, I don’t want to be the one relying, or I hopeour country is not relying, on a country—say, China, thathas maybe bought up our raw materials and owns the die-making or tool-making knowledge to build those things.And if we’re needing bombs, weapons, seals made forspace shuttles—it’d be nice to have some control here inAmerica.

“And, I’m hoping that our political people are in tune tothat, because it’s very scary. I mean, we have a space shut-tle blow up, because of a seal not working one time. Iwould hope that we have complete control of some ofthose things in this country. Because, if we start outsourc-ing everything, we’ve lost our manufacturing base to pro-duce those things, and we’re relying on other people. Andit’s awful scary, and it’s putting yourself in a very poorposition. . . .”

Oscar BunchUAW LeaderToledo, Ohio

“I think if we had an all-out drive by our government,yes, I sure do [think we could get a mobilization to savethe industry—ed]. I think if we can motivate the people torealize this is something we had to do to save our industri-al base. Because this is the biggest threat we’ve got. Wetalk about the terrorists. The biggest threat we’ve got isbeing attacked, and not having the industrial base to fightback. That’s a major threat to us. And people don’t evenrealize that today.

“So, we’re not equipped to fight a war. We see that now,just with this little war in Iraq. We’re talking about 150,000people there. World War II, we have 15 million people atthe war.”

23

Machine Tools CrucialFor National Security

You, as an American citizen, have the responsibili-ty to act now, to save the auto industry, with its

vital machine tool capability, and the nation. LPAC’scampaign to win the battle for LaRouche’s emer-gency legislation is deadly serious, and we need yourhelp.

Among the immediate steps you can take:• Immediately call one of LPAC’s offices, listed

on the back cover, and find out how you can get morecopies of this pamphlet for distribution.

• Call the offices of your Congressman, Senators,local representative, trade union leader, or othercivic leader, and demand that they inform themselvesabout this campaign, and lend it their support.

• Order a copy of LPAC’s latest DVD, “Retoolthe Auto Industry to Save the Nation,” and begin toorganize showings for your friends and neighbors.

• Log on to www.larouchepac.com and find outwhere you can send a contribution to support this vitaleffort to save our economy.

What You Can Do

In March 2005, Lyndon LaRouche sent a message to theSenate, urging them to save the auto industry, which is

the chief center of U.S. machine tool capacity. Among thevarious actions taken by localities since then, are officialappeals demanding Congressional attention.

In May 2005, the Cleveland City Council passed a resolu-tion of this type. Other major auto-belt cities did likewise overthe ensuing weeks, including Detroit (May 8, 2005), WayneCounty (Mich.) Commission (June 1), Buffalo, N.Y. (June 14),Columbus, Ohio (June 20), Pontiac, Mich. (June 21), Flint(June 27), St. Louis (July 8), and Louisville, Ky. (Oct. 13).

Vermont is the tenth state in which such a resolutionhas been introduced, and the third state in which at leastone legislative chamber has passed the measure, the other

two being Rhode Island and Alabama.On May 11, 2005, a resolution was filed in the Kentucky

House of Representatives, followed by states includingMissouri (May 13), Michigan (concurrent House andSenate, May 18), Rhode Island (June 28), Tennessee (July6), Alabama (July 20), Mississippi (Aug. 8), New Jersey(Aug. 29, 2005 and again March 6, 2006), Ohio (Aug. 2),Rhode Island (February 2006), Vermont (April 2006),Kentucky State Senate (March 16, 2006). In Alabama, onJuly 20, 2005, an emergency resolution was passed by theHouse of Representatives.

The texts of all these resolutions are available onwww.larouchepac.com. We include here, as a model, theresolution just passed in Rhode Island.

24

Resolutions To Save the Auto Industry

WHEREAS, An increasing number and variety ofrelevant specialists are warning that the collapse of thenational economy could occur if certain stop-gap andlong-term actions are not adopted and implemented toforestall the threats to our economy from the problemsassociated with the automotive and machine tool sec-tors of our economy. The loss of the physical capabili-ties of the automotive industry, and especially its toolsector, could mean the end of America’s leadership as aworld economic power; and

WHEREAS, It is in the best interests of our nationalhomeland security to have a strong and vibrant manufac-turing and industrial sector, capable of producing thenecessary machinery and technology to defend the citi-zens of the United States and protect our interests abroad,but sadly our manufacturing and industrial sectors havebeen experiencing a dramatic reduction in capacity andproduction over the last several decades; and

WHEREAS, Government has an obligation to pro-mote economic activity through the creation of newcapital investment, which will result in the expansionof employment opportunities and help jumpstart long-term capital investment by private investors. As govern-ment leaders, we must ensure the continued viability ofour automotive and machine tool industries, whichcreates the bedrock of Rhode Island and America’seconomy. The loss of these vital economic anchorswould be a disaster with incalculable chain-reactionconsequences for our nation and the world; and

WHEREAS, One of the key options is federal capitalinvestment in diversification of the productive poten-tial of the automotive and machine tool industries intoa broader mixture of production. Our nation needs toshift into the domain of essential capital goods andeconomic infrastructure, such as the repair, expansion,

and improvement of our national railway systems, andthe development of other urgently needed infrastruc-ture projects. The result of this will be to save existingmanufacturing jobs and create large new areas ofemployment in infrastructure and manufacturing forour citizenry in a manner comparable to the best of theNew Deal programs that rescued the nation and theworld from the ravages of the Great Depression; now,therefore be it

RESOLVED, That this House of Representatives ofthe State of Rhode Island and Providence Plantationshereby urges Congress to intervene on behalf of nation-al and related interests to ensure that the productivepotential of the automobile industry, with its featuredtechnology and machine tool capability, be held togeth-er in place; and be it further

RESOLVED, That this House of Representatives ofthe State of Rhode Island and Providence Plantationshereby urges the United States government to inter-vene to vastly expand the construction and mainte-nance of infrastructure projects and related industriesin the nation. The impact of this intervention on thestate of Rhode Island will be to provide thousands ofproductive jobs, repairing our infrastructure. At leastten million jobs could be created nationally in theseendeavors, while at the same time maintaining theauto production of General Motors Corporation, FordMotor Company and their respective subsidiaries. Thisinitiative will restore our tax base and increase thestandard of living, in physical terms of our citizenry;and be it further

RESOLVED, That the Secretary of State be and hehereby is authorized and directed to transmit duly cer-tified copies of this resolution to the Rhode IslandDelegation to the Congress of the United States.