SECRETS OF THE FEDERAL RESERVE
The
Dedicated to two of the finest scholars of the
twentieth century GEORGE STIMPSON and
EZRA POUND who generously gave of their vast knowledge to a young writer to
guide him in a field which he could not have managed alone.
ACKNOWLEDGEMENTS I wish to thank my former
fellow members of the staff of the Library of Congress whose very kind
assistance, cooperation and suggestions made the early versions of this book
possible. I also wish to thank the staffs of the Newberry Library, Chicago, the
New York City Public Library, the Alderman Library of the
About the Author Eustace Mullins is a veteran
of the United States Air Force, with thirty-eight months of active service
during World War II. A native Virginian, he was educated at
The original book, published under the title
Mullins On The Federal Reserve, was commissioned by the poet Ezra Pound in
1948. Ezra Pound was a political prisoner for thirteen and a half years at St.
Elizabeth’s Hospital,
Published in 1952 by Kasper and
During the intervening years, the author
continued to gather new and more startling information about the backgrounds of
the people who direct the Federal Reserve policies. New information gathered
over the years from hundreds of newspapers, periodicals, and books give
corroborating insight into the connections of the international banking houses.
While researching this material, Eustace
Mullins was on the staff of the Library of Congress. Mullins later was a
consultant on highway finance for the American Petroleum Institute, consultant
on hotel development for Institutions Magazine, and editorial director for the
Chicago Motor Club’s four publications.
The
London Acceptance Council is limited to seventeen international banking houses
authorized by the Bank of England to handle foreign exchange.
ABOUT
THE COVER
The
cover reproduces the outline of the eagle from the red shield, the coat of arms
of the city of
Table of
Contents
Forward
Introduction
Chapter One:
Chapter Two: The Aldrich Plan
Chapter Three: The Federal Reserve
Act
Chapter Four: The Federal Advisory
Council
Chapter Five: The House of
Rothschild
Chapter Six: The
Chapter Seven: The Hitler Connection
Chapter Eight: World War One
Chapter Nine: The Agricultural
Depression
Chapter Ten: The Money Creators
Chapter Eleven: Lord Montagu Norman
Chapter Twelve: The Great Depression
Chapter Thirteen: The 1930's
Chapter Fourteen: Congressional
Expose
Foreword
In 1949,
while I was visiting Ezra Pound who was a political prisoner at St. Elizabeth’s
Hospital,
I had no interest in money or banking as a
subject, because I was working on a novel. Pound offered to supplement my
income by ten dollars a week for a few weeks. My initial research revealed
evidence of an international banking group which had secretly planned the
writing of the Federal Reserve Act and Congress’ enactment of the plan into
law. These findings confirmed what Pound had long suspected. He said, "You
must work on it as a detective story." I was fortunate in having my
research at the Library of Congress directed by a prominent scholar, George
Stimpson, founder of the National Press Club, who was described by The New York
Times of September 28, 1952: "Beloved by Washington newspapermen as ‘our
walking Library of Congress’, Mr. Stimpson was a highly regarded reference
source in the Capitol. Government officials, Congressmen and reporters went to
him for information on any subject." I did research four hours each day at
the Library of Congress, and went to St. Elizabeth’s Hospital in the afternoon.
Pound and I went over the previous day’s notes. I then had dinner with George
Stimpson at Scholl’s Cafeteria while he went over my material, and I then went
back to my room to type up the corrected notes. Both Stimpson and Pound made
many suggestions in guiding me in a field in which I had no previous
experience. When Pound’s resources ran low, I applied to the Guggenheim
Foundation, Huntington Hartford Foundation, and other foundations to complete
my research on the Federal Reserve. Even though my foundation applications were
sponsored by the three leading poets of
This was devastating news, coming after two
years of intensive work. I reported back to Pound, and we tried to find a
publisher in other parts of the country. After two years of fruitless
submissions, the book was published in a small edition in 1952 by two of
Pound’s disciples, John Kasper and David Horton, using their private funds,
under the title Mullins on the Federal Reserve. In 1954, a second edition, with
unauthorized alterations, was published in
The burning of the book was upheld
I had collaborated on several books with Mr.
H.L. Hunt and he suggested that I should continue my long-delayed research on
the Federal Reserve and bring out a more definitive version of this book. I had
just signed a contract to write the authorized biography of Ezra Pound, and the
Federal Reserve book had to be postponed. Mr. Hunt passed away before I could
get back to my research, and once again I faced the problem of financing
research for the book.
My original book had traced and named the
shadowy figures in the
This research is substantiated by citations
and documentation from hundreds of newspapers, periodicals and books and charts
showing blood, marriage, and business relationships. More than a thousand
issues of The New York Times on microfilm have been checked not only for
original information, but verification of statements from other sources.
It is a truism of the writing profession that a
writer has only one book within him. This seems applicable in my case, because
I am now in the fifth decade of continuous writing on a single subject, the
inside story of the Federal Reserve System. This book was from its inception
commissioned and guided by Ezra Pound. Four of his protégés have previously
been awarded the Nobel Prize for Literature, William Butler Yeats for his later
poetry, James Joyce for "Ulysses", Ernest Hemingway for "The Sun
Also Rises", and T.S. Elliot for "The Waste Land". Pound played
a major role in the inspiration and in the editing of these works--which leads
us to believe that this present work, also inspired by Pound, represents an
ongoing literary tradition.
Although this book in its inception was
expected to be a tortuous work on economic and monetary techniques, it soon
developed into a story of such universal and dramatic appeal that from the
outset, Ezra Pound urged me to write it as a detective story, a genre which was
invented by my fellow Virginian, Edgar Allan Poe. I believe that the continuous
circulation of this book during the past forty years has not only exonerated
Ezra Pound for his much condemned political and monetary statements, but also
that it has been, and will continue to be, the ultimate weapon against the
powerful conspirators who compelled him to serve thirteen and a half years
without trial, as a political prisoner held in an insane asylum a la KGB. His
earliest vindication came when the government agents who represented the
conspirators refused to allow him to testify in his own defense; the second
vindication came in 1958 when these same agents dropped all charges against
him, and he walked out of St. Elizabeth’s Hospital, a free man once more. His
third and final vindication is this work, which documents every aspect of his
exposure of the ruthless international financiers to whom Ezra Pound became but
one more victim, doomed to serve years as the Man in the Iron Mask, because he
had dared to alert his fellow-Americans to their furtive acts of treason
against all people of the United States.
In my lectures throughout this nation, and in
my appearances on many radio and television programs, I have sounded the toxin
that the Federal Reserve System is not Federal; it has no reserves; and it is
not a system at all, but rather, a criminal syndicate. From November, 1910,
when the conspirators met on
American history in the twentieth century has
recorded the amazing achievements of the Federal Reserve bankers. First, the
outbreak of World War I, which was made possible by the funds available from
the new central bank of the
Because of the depth and the importance of the
information which I had developed at the Library of Congress under the tutelage
of Ezra Pound, this work became the happy hunting ground for many other
would-be historians, who were unable to research this material for themselves.
Over the past four decades, I have become accustomed to seeing this material
appear in many other books, invariably attributed to other writers, with my
name never mentioned. To add insult to injury, not only my material, but even
my title has been appropriated, in a massive, if obtuse, work called
"Secrets of the
After my initial shock at discovering that the
most influential literary personality of the twentieth century, Ezra Pound, was
imprisoned in "the Hellhole" in Washington, I immediately wrote for
assistance to a Wall Street financier at whose estate I had frequently been a
guest. I reminded him that as a patron of the arts, he could not afford to
allow Pound to remain in such inhuman captivity. His reply shocked me even
more. He wrote back that "your friend can well stay where he is." It
was some years before I was able to understand that, for this investment banker
and his colleagues, Ezra Pound would always be "the enemy". Eustace
Mullins Jackson Hole, Wyoming 1991 Introduction Here are the simple facts of
the great betrayal. Wilson and House knew that they were doing something
momentous. One cannot fathom men’s motives and this pair probably believed in what
they were up to. What they did not believe in was representative government.
They believed in government by an uncontrolled oligarchy whose acts would only
become apparent after an interval so long that the electorate would be forever
incapable of doing anything efficient to remedy depredations.
EZRA POUND (St. Elizabeth’s Hospital,
Washington, D.C. 1950) (AUTHOR’S NOTE: Dr. Pound wrote this introduction for
the earliest version of this book, published by Kasper and Horton, New York,
1952. Because he was being held as a political prisoner without trial by the
Federal Government, he could not afford to allow his name to appear on the book
because of additional reprisals against him. Neither could he allow the book to
be dedicated to him, although he had commissioned its writing. The author is
gratified to be able to remedy these necessary omissions, thirty-three years
after the events.)
JEFFERSON’S
OPINION ON THE CONSTITUTIONALITY OF THE BANK February 15, 1791 (The Writings of
Thomas Jefferson, ed. by H. E. Bergh, Vol. III, p. 145 ff.)
The bill
for establishing a national bank, in 1791, undertakes, among other things,--
1. To form the subscribers into a
corporation.
2. To enable them, in their
corporate capacities, to receive grants of lands; and, so far, is against the
laws of mortmain.
3. To make alien subscribers capable
of holding lands; and so far is against the laws of alienage.
4. To transmit these lands, on the
death of a proprietor, to a certain line of successors; and so far, changes the
course of descents.
5. To put the lands out of the reach
of forfeiture, or escheat; and so far, is against the laws of forfeiture and
escheat.
6. To transmit personal chattels to
successors, in a certain line; and so far, is against the laws of distribution.
7. To give them the sole and
exclusive right of banking, under the national authority; and, so far, is
against the laws of monopoly.
8. To communicate to them a power to
make laws, paramount to the laws of the states; for so they must be construed,
to protect the institution from the control of the state legislatures; and so
probably they will be construed.
I consider the foundation of the Constitution
as laid on this ground--that all powers not delegated to the United States, by
the Constitution, nor prohibited by it to the states, are reserved to the
states, or to the people (12th amend.). To take a single step beyond the
boundaries thus specially drawn around the powers of Congress, is to take
possession of a boundless field of power, no longer susceptible of any
definition. The incorporation of a bank, and the powers assumed by this bill,
have not, in my opinion, been delegated to the United States by the
Constitution.
CHAPTER ONE
Jekyll Island
"The matter of a uniform discount rate
was discussed and settled at Jekyll Island."--Paul M. Warburg1 On the
night of November 22, 1910, a group of newspaper reporters stood disconsolately
in the railway station at Hoboken, New Jersey. They had just watched a
delegation of the nation’s leading financiers leave the station on a secret
mission. It would be years before they discovered what that mission was, and
even then they would not understand that the history of the United States
underwent a drastic change after that night in Hoboken.
The delegation had left in a sealed railway
car, with blinds drawn, for an undisclosed destination. They were led by
Senator Nelson Aldrich, head of the National Monetary Commission. President
Theodore Roosevelt had signed into law the bill creating the National Monetary
Commission in 1908, after the tragic Panic of 1907 had resulted in a public
outcry that the nation’s monetary system be stabilized. Aldrich had led the
members of the Commission on a two-year tour of Europe, spending some three
hundred thousand dollars of public money. He had not yet made a report on the
results of this trip, nor had he offered any plan for banking reform.
Accompanying Senator Aldrich at the Hoboken
station were his private secretary, Shelton; A. Piatt Andrew, Assistant
Secretary of the Treasury, and Special Assistant of the National Monetary
Commission; Frank Vanderlip, president of the National City Bank of New York,
Henry P. Davison, senior partner of J.P. Morgan Company, and generally regarded
as Morgan’s personal emissary; and Charles D. Norton, president of the
Morgan-dominated First National Bank of New York. Joining the group just before
the train left the station were Benjamin Strong, also known as a lieutenant of
J.P. Morgan; and Paul Warburg, a recent immigrant from Germany who had joined
the banking house of Kuhn, Loeb and Company, New York as a partner earning five
hundred thousand dollars a year.
Six years later, a financial writer named
Bertie Charles Forbes (who later founded the Forbes Magazine; the present
editor, Malcom Forbes, is his son), wrote: "Picture a party of the
nation’s greatest bankers stealing out of New York on a private railroad car
under cover of darkness, stealthily hieing hundred of miles South, embarking on
a mysterious launch, sneaking onto an island deserted by all but a few
servants, living there a full week under such rigid secrecy that the names of
not one of them was once mentioned lest the servants learn the identity and
disclose to the world this strangest, most secret expedition in the history of
American finance. I am not romancing; I am giving to the world, for the first
time, the real story of how the famous Aldrich currency report, the foundation
of our new currency system, was written . . . . The utmost secrecy was enjoined
upon all. The public must not glean a hint of what was to be done. Senator
Aldrich notified each one to go quietly into a private car of which the
railroad had received orders to draw up on an unfrequented platform. Off the
party set. New York’s ubiquitous reporters had been foiled . . . Nelson
(Aldrich) had confided to Henry, Frank, Paul and Piatt that he was to keep them
locked up at Jekyll Island, out of the rest of the world, until they had
evolved and compiled a scientific currency system for the United States, the
real birth of the present Federal Reserve System, the plan done on Jekyll
Island in the conference with Paul, Frank and Henry . . . . Warburg is the link
that binds the Aldrich system and the present system together. He more than any
one man has made the system possible as a working reality."
The official biography of Senator Nelson
Aldrich states: "In the autumn of 1910, six men went out to shoot ducks,
Aldrich, his secretary Shelton, Andrews, Davison, Vanderlip and Warburg.
Reporters were waiting at the Brunswick (Georgia) station. Mr. Davison went out
and talked to them. The reporters dispersed and the secret of the strange
journey was not divulged. Mr. Aldrich asked him how he had managed it and he
did not volunteer the information."
Davison had an excellent reputation as the
person who could conciliate warring factions, a role he had performed for J.P.
Morgan during the settling of the Money Panic of 1907. Another Morgan partner,
T.W. Lamont, says: "Henry P. Davison served as arbitrator of the Jekyll
Island expedition."
From these references, it is possible to piece
together the story. Aldrich’s private car, which had left Hoboken station with
its shades drawn, had taken the financiers to Jekyll Island, Georgia. Some
years earlier, a very exclusive group of millionaires, led by J.P. Morgan, had
purchased the island as a winter retreat. They called themselves the Jekyll
Island Hunt Club, and, at first, the island was used only for hunting expeditions,
until the millionaires realized that its pleasant climate offered a warm
retreat from the rigors of winters in New York, and began to build splendid
mansions, which they called "cottages", for their families’ winter
vacations. The club building itself, being quite isolated, was sometimes in
demand for stag parties and other pursuits unrelated to hunting. On such
occasions, the club members who were not invited to these specific outings were
asked not to appear there for a certain number of days. Before Nelson Aldrich’s
party had left New York, the club’s members had been notified that the club
would be occupied for the next two weeks.
The Jekyll Island Club was chosen as the place
to draft the plan for control of the money and credit of the people of the
United States, not only because of its isolation, but also because it was the
private preserve of the people who were drafting the plan. The New York Times
later noted, on May 3, 1931, in commenting on the death of George F. Baker, one
of J.P. Morgan’s closest associates, that "Jekyll Island Club has lost one
of its most distinguished members. One-sixth of the total wealth of the world
was represented by the members of the Jekyll Island Club." Membership was
by inheritance only.
The Aldrich group had no interest in hunting.
Jekyll Island was chosen for the site of the preparation of the central bank
because it offered complete privacy, and because there was not a journalist
within fifty miles. Such was the need for secrecy that the members of the party
agreed, before arriving at Jekyll Island, that no last names would be used at
any time during their two week stay. The group later referred to themselves as
the First Name Club, as the last names of Warburg, Strong, Vanderlip and the
others were prohibited during their stay. The customary attendants had been
given two week vacations from the club, and new servants brought in from the
mainland for this occasion who did not know the names of any of those present.
Even if they had been interrogated after the Aldrich party went back to New
York, they could not have given the names. This arrangement proved to be so
satisfactory that the members, limited to those who had actually been present
at Jekyll Island, later had a number of informal get-togethers in New York.
Why all this secrecy? Why this thousand mile
trip in a closed railway car to a remote hunting club? Ostensibly, it was to
carry out a program of public service, to prepare banking reform which would be
a boon to the people of the United States, which had been ordered by the
National Monetary Commission. The participants were no strangers to public
benefactions. Usually, their names were inscribed on brass plaques, or on the
exteriors of buildings which they had donated. This was not the procedure which
they followed at Jekyll Island. No brass plaque was ever erected to mark the
selfless actions of those who met at their private hunt club in 1910 to improve
the lot of every citizen of the United States.
In fact, no benefaction took place at Jekyll
Island. The Aldrich group journeyed there in private to write the banking and
currency legislation which the National Monetary Commission had been ordered to
prepare in public. At stake was the future control of the money and credit of the
United States. If any genuine monetary reform had been prepared and presented
to Congress, it would have ended the power of the elitist one world money
creators. Jekyll Island ensured that a central bank would be established in the
United States which would give these bankers everything they had always wanted.
As the most technically proficient of those
present, Paul Warburg was charged with doing most of the drafting of the plan.
His work would then be discussed and gone over by the rest of the group.
Senator Nelson Aldrich was there to see that the completed plan would come out
in a form which he could get passed by Congress, and the other bankers were
there to include whatever details would be needed to be certain that they got
everything they wanted, in a finished draft composed during a onetime stay.
After they returned to New York, there could be no second get together to
rework their plan. They could not hope to obtain such secrecy for their work on
a second journey.
The Jekyll Island group remained at the club
for nine days, working furiously to complete their task. Despite the common
interests of those present, the work did not proceed without friction. Senator
Aldrich, always a domineering person, considered himself the chosen leader of
the group, and could not help ordering everyone else about. Aldrich also felt
somewhat out of place as the only member who was not a professional banker. He
had had substantial banking interests throughout his career, but only as a
person who profited from his ownership of bank stock. He knew little about the
technical aspects of financial operations. His opposite number, Paul Warburg,
believed that every question raised by the group demanded, not merely an
answer, but a lecture. He rarely lost an opportunity to give the members a long
discourse designed to impress them with the extent of his knowledge of banking.
This was resented by the others, and often drew barbed remarks from Aldrich.
The natural diplomacy of Henry P. Davison proved to be the catalyst which kept
them at their work. Warburg’s thick alien accent grated on them, and constantly
reminded them that they had to accept his presence if a central bank plan was
to be devised which would guarantee them their future profits. Warburg made
little effort to smooth over their prejudices, and contested them on every
possible occasion on technical banking questions, which he considered his
private preserve.
"In all conspiracies there must be great
secrecy."
The "monetary reform" plan prepared
at Jekyll Island was to be presented to Congress as the completed work of the
National Monetary Commission. It was imperative that the real authors of the
bill remain hidden. So great was popular resentment against bankers since the
Panic of 1907 that no Congressman would dare to vote for a bill bearing the
Wall Street taint, no matter who had contributed to his campaign expenses. The
Jekyll Island plan was a central bank plan, and in this country there was a
long tradition of struggle against inflicting a central bank on the American
people. It had begun with Thomas Jefferson’s fight against Alexander Hamilton’s
scheme for the First Bank of the United States, backed by James Rothschild. It
had continued with President Andrew Jackson’s successful war against Alexander
Hamilton’s scheme for the Second Bank of the United States, in which Nicholas
Biddle was acting as the agent for James Rothschild of Paris. The result of
that struggle was the creation of the Independent Sub-Treasury System, which
supposedly had served to keep the funds of the United States out of the hands
of the financiers. A study of the panics of 1873, 1893, and 1907 indicates that
these panics were the result of the international bankers’ operations in
London. The public was demanding in 1908 that Congress enact legislation to
prevent the recurrence of artificially induced money panics. Such monetary
reform now seemed inevitable. It was to head off and control such reform that
the National Monetary Commission had been set up with Nelson Aldrich at its
head, since he was majority leader of the Senate.
The main problem, as Paul Warburg informed his
colleagues, was to avoid the name "Central Bank". For that reason, he
had decided upon the designation of "Federal Reserve System". This
would deceive the people into thinking it was not a central bank. However, the
Jekyll Island plan would be a central bank plan, fulfilling the main functions
of a central bank; it would be owned by private individuals who would profit
from ownership of shares. As a bank of issue, it would control the nation’s
money and credit.
In the chapter on Jekyll Island in his
biography of Aldrich, Stephenson writes of the conference: "How was the
Reserve Bank to be controlled? It must be controlled by Congress. The
government was to be represented in the board of directors, it was to have full
knowledge of all the Bank’s, affairs, but a majority of the directors were to
be chosen, directly or indirectly, by the banks of the association."
Thus the proposed Federal Reserve Bank was to
be "controlled by Congress" and answerable to the government, but the
majority of the directors were to be chosen, "directly or indirectly"
by the banks of the association. In the final refinement of Warburg’s plan, the
Federal Reserve Board of Governors would be appointed by the President of the
United States, but the real work of the Board would be controlled by a Federal
Advisory Council, meeting with the Governors. The Council would be chosen by
the directors of the twelve Federal Reserve Banks, and would remain unknown to
the public.
The next consideration was to conceal the fact
that the proposed "Federal Reserve System" would be dominated by the
masters of the New York money market. The Congressmen from the South and the
West could not survive if they voted for a Wall Street plan. Farmers and small
businessmen in those areas had suffered most from the money panics. There had
been great popular resentment against the Eastern bankers, which during the
nineteenth century became a political movement known as "populism".
The private papers of Nicholas Biddle, not released until more than a century
after his death, show that quite early on the Eastern bankers were fully aware
of the widespread public opposition to them.
Paul Warburg advanced at Jekyll Island the
primary deception which would prevent the citizens from recognizing that his
plan set up a central bank. This was the regional reserve system. He proposed a
system of four (later twelve) branch reserve banks located in different
sections of the country. Few people outside the banking world would realize
that the existing concentration of the nation’s money and credit structure in
New York made the proposal of a regional reserve system a delusion.
Another proposal advanced by Paul Warburg at
Jekyll Island was the manner of selection of administrators for the proposed
regional reserve system. Senator Nelson Aldrich had insisted that the officials
should be appointive, not elected, and that Congress should have no role in
their selection. His Capitol Hill experience had taught him that congressional
opinion would often be inimical to the Wall Street interests, as Congressmen
from the West and South might wish to demonstrate to their constituents that
they were protecting them against the Eastern bankers.
Warburg responded that the administrators of
the proposed central banks should be subject to executive approval by the
President. This patent removal of the system from Congressional control meant
that the Federal Reserve proposal was unconstitutional from its inception,
because the Federal Reserve System was to be a bank of issue. Article 1, Sec.
8, Par. 5 of the Constitution expressly charges Congress with "the power
to coin money and regulate the value thereof.". Warburg’s plan would
deprive Congress of its sovereignty, and the systems of checks and balances of
power set up by Thomas Jefferson in the Constitution would now be destroyed.
Administrators of the proposed system would control the nation’s money and
credit, and would themselves be approved by the executive department of the
government. The judicial department (the Supreme Court, etc.) was already
virtually controlled by the executive department through presidential
appointment to the bench. Paul Warburg later wrote a massive exposition of his
plan, The Federal Reserve System, Its Origin and Growth7 of some 1750 pages,
but the name "Jekyll Island" appears nowhere in this text. He does
state (Vol. 1, p. 58): "But then the conference closed, after a week of
earnest deliberation, the rough draft of what later became the Aldrich Bill had
been agreed upon, and a plan had been outlined which provided for a ‘National
Reserve Association,’ meaning a central reserve organization with an elastic
note issue based on gold and commercial paper."
On page 60, Warburg writes, "The results
of the conference were entirely confidential. Even the fact there had been a
meeting was not permitted to become public." He adds in a footnote,
"Though eighteen [sic] years have since gone by, I do not feel free to
give a description of this most interesting conference concerning which Senator
Aldrich pledged all participants to secrecy." B.C. Forbes’ revelation 8 of
the secret expedition to Jekyll Island, had had surprisingly little impact. It
did not appear in print until two years after the Federal Reserve Act had been
passed by Congress, hence it was never read during the period when it could
have had an effect, that is, during the Congressional debate on the bill.
Forbes’ story was also dismissed, by those "in the know," as preposterous,
and a mere invention. Stephenson mentions this on page 484 of his book about
Aldrich.
"This curious episode of Jekyll Island
has been generally regarded as a myth. B.C. Forbes got some information from one
of the reporters. It told in vague outline the Jekyll Island story, but made no
impression and was generally regarded as a mere yarn." The coverup of the
Jekyll Island conference proceeded along two lines, both of which were
successful. The first, as Stephenson mentions, was to dismiss the entire story
as a romantic concoction which never actually took place. Although there were
brief references to Jekyll Island in later books concerning the Federal Reserve
System, these also attracted little public attention. As we have noted,
Warburg’s massive and supposedly definite work on the Federal Reserve System
does not mention Jekyll Island at all, although he does admit that a conference
took place. In none of his voluminous speeches or writings do the words "Jekyll
Island" appear, with a single notable exception. He agreed to Professor
Stephenson’s request that he prepare a brief statement for the Aldrich
biography. This appears on page 485 as part of "The Warburg
Memorandum". In this excerpt, Warburg writes, "The matter of a
uniform discount rate was discussed and settled at Jekyll Island." Another
member of the "First Name Club" was less reticent. Frank Vanderlip
later published a few brief references to the conference. In the Saturday Evening
Post, February 9, 1935, p. 25, Vanderlip wrote:
"Despite my views about the value to
society of greater publicity for the affairs of corporations, there was an
occasion near the close of 1910, when I was as secretive, indeed, as furtive,
as any conspirator. . . . Since it would have been fatal to Senator Aldrich’s
plan to have it known that he was calling on anybody from Wall Street to help
him in preparing his bill, precautions were taken that would have delighted the
heart of James Stillman (a colorful and secretive banker who was President of
the National City Bank during the Spanish-American War, and who was thought to
have been involved in getting us into that war) . . .I do not feel it is any
exaggeration to speak of our secret expedition to Jekyll Island as the occasion
of the actual conception of what eventually became the Federal Reserve
System."
In a Travel feature in The Washington Post,
March 27, 1983, "Follow The Rich to Jekyll Island", Roy Hoopes
writes: "In 1910, when Aldrich and four financial experts wanted a place
to meet in secret to reform the country’s banking system, they faked a hunting
trip to Jekyll and for 10 days holed up in the Clubhouse, where they made plans
for what eventually would become the Federal Reserve Bank." Vanderlip
later wrote in his autobiography, From Farmboy to Financier: "Our secret
expedition to Jekyll Island was the occasion of the actual conception of what
eventually became the Federal Reserve System. The essential points of the
Aldrich Plan were all contained in the Federal Reserve Act as it was
passed." Professor E.R.A. Seligman, a member of the international banking
family of J. & W. Seligman, and head of the Department of Economics at
Columbia University, wrote in an essay published by the Academy of Political
Science, Proceedings, v. 4, No. 4, p. 387-90: "It is known to a very few
how great is the indebtedness of the United States to Mr. Warburg. For it may
be said without fear of contradiction that in its fundamental features the
Federal Reserve Act is the work of Mr. Warburg more than any other man in the
country.
The
existence of a Federal Reserve Board creates, in everything but in name, a real
central bank. In the two fundamentals of command of reserves and of a discount
policy, the Federal Reserve Act has frankly accepted the principle of the
Aldrich Bill, and these principles, as has been stated, were the creation of
Mr. Warburg and Mr. Warburg alone. It must not be forgotten that Mr. Warburg
had a practical object in view. In formulating his plans and in advancing in
them slightly varying suggestions from time to time, it was incumbent on him to
remember that the education of the country must be gradual and that a large
part of the task was to break down prejudices and remove suspicion. His plans
therefore contained all sorts of elaborate suggestions designed to guard the
public against fancied dangers and to persuade the country that the general
scheme was at all practicable. It was the hope of Mr. Warburg that with the
lapse of time it might be possible to eliminate from the law a few clauses
which were inserted largely at his suggestion for educational purposes."
Now that the public debt of the United States
has passed a trillion dollars, we may indeed admit "how great is the
indebtedness of the United States to Mr. Warburg." At the time he wrote
the Federal Reserve Act, the public debt was almost nonexistent.
Professor Seligman points out Warburg’s
remarkable prescience that the real task of the members of the Jekyll Island
conference was to prepare a banking plan which would gradually "educate
the country" and "break down prejudices and remove suspicion".
The campaign to enact the plan into law succeeded in doing just that.
CHAPTER TWO
The Aldrich Plan
"Finance and the tariff are reserved by
Nelson Aldrich as falling within his sole purview and jurisdiction. Mr. Aldrich
is endeavoring to devise, through the National Monetary Commission, a banking
and currency law. A great many hundred thousand persons are firmly of the
opinion that Mr. Aldrich sums up in his personality the greatest and most
sinister menace to the popular welfare of the United States. Ernest Newman
recently said, ‘What the South visits on the Negro in a political way, Aldrich
would mete out to the mudsills of the North, if he could devise a safe and
practical way to accomplish it.’"--Harper’s Weekly, May 7, 1910."
The participants in the Jekyll Island
conference returned to New York to direct a nationwide propaganda campaign in
favor of the "Aldrich Plan". Three of the leading universities,
Princeton, Harvard, and the University of Chicago, were used as the rallying
points for this propaganda, and national banks had to contribute to a fund of
five million dollars to persuade the American public that this central bank
plan should be enacted into law by Congress.
Woodrow Wilson, governor of New Jersey and
former president of Princeton University, was enlisted as a spokesman for the
Aldrich Plan. During the Panic of 1907, Wilson had declared, "All this
trouble could be averted if we appointed a committee of six or seven
public-spirited men like J.P. Morgan to handle the affairs of our
country."
In his biography of Nelson Aldrich in 1930,
Stephenson says: "A pamphlet was issued January 16, 1911, ‘Suggested Plan
for Monetary Legislation’, by Hon. Nelson Aldrich, based on Jekyll Island
conclusions." Stephenson says on page 388, "An organization for
financial progress has been formed. Mr. Warburg introduced a resolution
authorizing the establishment of the Citizens’ League, later the National Citizens
League . . . Professor Laughlin of the University of Chicago was given charge
of the League’s propaganda."
It is notable that Stephenson characterizes
the work of the National Citizens League as "propaganda", in line
with Seligman’s exposition of Warburg’s work as "the education of the
country" and "to break down prejudices".
Much of the five million dollars of the
bankers slush fund was spent under the auspices of the National Citizens’
League, which was made up of college professors. The two most tireless
propagandists for the Aldrich Plan were Professor O.M. Sprague of Harvard, and
J. Laurence Laughlin of the University of Chicago.
Congressman Charles A. Lindbergh, Sr., notes:
"J. Laurence Laughlin, Chairman of the Executive Committee of the National
Citizens’ League since its organization, has returned to his position as
professor of political economics in the University of Chicago. In June, 1911,
Professor Laughlin was given a year’s leave from the university, that he might
give all of his time to the campaign of education undertaken by the League . .
. He has worked indefatigably, and it is largely due to his efforts and his
persistence that the campaign enters the final stage with flattering prospects
of a successful outcome . . . The reader knows that the University of Chicago
is an institution endowed by John D. Rockefeller, with nearly fifty million
dollars." In his biography of Nelson Aldrich, Stephenson reveals that the
Citizens’ League was also a Jekyll Island product.
In
chapter 24 we find that: The Aldrich Plan was represented to Congress as the
result of three years of work, study and travel by members of the National
Monetary Commission, with expenditures of more than three hundred thousand
dollars. Testifying before the Committee on Rules, December 15, 1911, after the
Aldrich plan had been introduced in Congress, Congressman Lindbergh stated,
"Our financial system is a false one and a huge burden on the people . . .
I have alleged that there is a Money Trust. The Aldrich plan is a scheme
plainly in the interest of the Trust . . . Why does the Money Trust press so
hard for the Aldrich Plan now, before the people know what the money trust has
been doing?" Lindbergh continued his speech, "The Aldrich Plan is the
Wall Street Plan. It is a broad challenge to the Government by the champion of
the Money Trust. It means another panic, if necessary, to intimidate the
people. Aldrich, paid by the Government to represent the people, proposes a
plan for the trusts instead. It was by a very clever move that the National
Monetary Commission was created. In 1907 nature responded most beautifully and
gave this country the most bountiful crop it had ever had. Other industries
were busy too, and from a natural standpoint all the conditions were right for
a most prosperous year. Instead, a panic entailed enormous losses upon us. Wall
Street knew the American people were demanding a remedy against the recurrence
of such a ridiculously unnatural condition. Most Senators and Representatives fell
into the Wall Street trap and passed the Aldrich Vreeland Emergency Currency
Bill. But the real purpose was to get a monetary commission which would frame a
proposition for amendments to our currency and banking laws which would suit
the Money Trust. The interests are now busy everywhere educating the people in
favor of the Aldrich Plan.
It is
reported that a large sum of money has been raised for this purpose. Wall
Street speculation brought on the Panic of 1907. The depositors’ funds were
loaned to gamblers and anybody the Money Trust wanted to favour. Then when the
depositors wanted their money, the banks did not have it. That made the
panic." Edward Vreeland, co-author of the bill, wrote in the August 25,
1910 Independent (which was owned by Aldrich), "Under the proposed
monetary plan of Senator Aldrich, monopolies will disappear, because they will
not be able to make more than four percent interest and monopolies cannot
continue at such a low rate. Also, this will mark the disappearance of the Government
from the banking business." Vreeland’s fantastic claims were typical of
the propaganda flood unleashed to pass the Aldrich Plan. Monopolies would
disappear, the Government would disappear from the banking business. Pie in the
sky. Nation Magazine, January 19, 1911, noted, "The name of Central Bank
is carefully avoided, but the ‘Federal Reserve Association’, the name given to
the proposed central organization, is endowed with the usual powers and
responsibilities of a European Central Bank." After the National Monetary
Commission had returned from Europe, it held no official meetings for nearly
two years. No records or minutes were ever presented showing who had authored
the Aldrich Plan. Since they held no official meetings, the members of the
commission could hardly claim the Plan as their own. The sole tangible result
of the Commission’s three hundred thousand dollar expenditure was a library of
thirty massive volumes on European banking. Typical of these works is a
thousand page history of the Reichsbank, the central bank which controlled
money and credit in Germany, and whose principal stockholders, were the
Rothschilds and Paul Warburg’s family banking house of M.M. Warburg Company.
The Commission’s records show that it never functioned as a deliberative body.
Indeed, its only "meeting" was the secret conference held at Jekyll
Island, and this conference is not mentioned in any publication of the
Commission. Senator Cummins passed a resolution in Congress ordering the
Commission to report on January 8, 1912, and show some constructive results of
its three years’ work. In the face of this challenge, the National Monetary
Commission ceased to exist.
With their five million dollars as a war
chest, the Aldrich Plan propagandists waged a no-holds barred war against their
opposition. Andrew Frame testified before the House Banking and Currency
Committee of the American Bankers Association. He represented a group of
Western bankers who opposed the Aldrich Plan: CHAIRMAN CARTER GLASS: "Why
didn’t the Western bankers make themselves heard when the American Bankers
Association gave its unqualified and, we are assured, unanimous approval of the
scheme proposed by the National Monetary Commission?"
ANDREW FRAME: "I’m glad you called my
attention to that. When that monetary bill was given to the country, it was but
a few days previous to the meeting of the American Bankers Association in New
Orleans in 1911. There was not one banker in a hundred who had read that bill.
We had twelve addresses in favor of it. General Hamby of Austin, Texas, wrote a
letter to President Watts asking for a hearing against the bill. He did not get
a very courteous answer. I refused to vote on it, and a great many other
bankers did likewise." MR. BULKLEY: "Do you mean that no member of
the Association could be heard in opposition to the bill?" ANDREW FRAME:
"They throttled all argument." MR. KINDRED: "But the report was
given out that it was practically unanimous." ANDREW FRAME: "The bill
had already been prepared by Senator Aldrich and presented to the executive
council of the American Bankers Association in May, 1911. As a member of that
council, I received a copy the day before they acted upon it. When the bill
came in at New Orleans, the bankers of the United States had not read it."
MR. KINDRED: "Did the presiding officer simply rule out those who wanted
to discuss it negatively?" ANDREW FRAME: "They would not allow anyone
on the program who was not in favor of the bill." CHAIRMAN GLASS:
"What significance has the fact that at the next annual meeting of the
American Bankers Association held at Detroit in 1912, the Association did not
reiterate its endorsement of the plan of the National Monetary Commission,
known as the Aldrich scheme?" ANDREW FRAME: "It did not reiterate the
endorsement for the simple fact that the backers of the Aldrich Plan knew that
the Association would not endorse it. We were ready for them, but they did not
bring it up."
Andrew Frame exposed the collusion which in
1911 procured an endorsement of the Aldrich Plan from the American Bankers
Association but which in 1912 did not even dare to repeat its endorsement, for
fear of an honest and open discussion of the merits of the plan.
Chairman Glass then called as witness one of
the ten most powerful bankers in the United States, George Blumenthal, partner
of the international banking house of Lazard Freres and brother-in-law of
Eugene Meyer, Jr. Carter Glass effusively welcomed Blumenthal, stating that
"Senator O’Gorman of New York was kind enough to suggest your name to
us." A year later, O’Gorman prevented a Senate Committee from asking his
master, Paul Warburg, any embarrassing questions before approving his
nomination as the first Governor of the Federal Reserve Board.
George Blumenthal stated, "Since 1893 my firm
of Lazard Freres has been foremost in importations and exportations of gold and
has thereby come into contact with everybody who had anything to do with
it."
Congressman Taylor asked, "Have you a
statement there as to the part you have had in the importation of gold into the
United States?" Taylor asked this because the Panic of 1893 is known to
economists as a classic example of a money panic caused by gold movements.
"No," replied George Blumenthal,
"I have nothing at all on that, because it is not bearing on the
question."
A banker from Philadelphia, Leslie Shaw,
dissented with other witnesses at these hearings, criticizing the much vaunted
"decentralization" of the System. He said, "Under the Aldrich
Plan the bankers are to have local associations and district associations, and
when you have a local organization, the centered control is assured. Suppose we
have a local association in Indianapolis; can you not name the three men who
will dominate that association? And then can you not name the one man
everywhere else. When you have hooked the banks together, they can have the
biggest influence of anything in this country, with the exception of the
newspapers."
To promote the Democratic currency bill,
Carter Glass made public the sorry record of the Republican efforts of Senator
Aldrich’s National Monetary Commission. His House Report in 1913 said,
"Senator MacVeagh fixes the cost of the National Monetary Commission to
May 12, 1911 at $207,130. They have since spent another hundred thousand dollars
of the taxpayer’s money. The work done at such cost cannot be ignored, but,
having examined the extensive literature published by the Commission, the
Banking and Currency Committee finds little that bears upon the present state
of the credit market of the United States. We object to the Aldrich Bill on the
following points:
Its entire lack of adequate government or
public control of the banking mechanism it sets up.
Its tendency to throw voting control into the
hands of the large banks of the system.
The extreme danger of inflation of currency
inherent in the system. The insincerity of the bond-funding plan provided for
by the measure, there being a barefaced pretense that this system was to cost
the governmentnothing.
The dangerous monopolistic aspects of the
bill. Our Committee at the outset of its work was met by a well-defined
sentiment in favor of a central bank which was the manifest outgrowth of the
work that had been done by the National Monetary Commission."
Glass’s denunciation of the Aldrich Bill as a
central bank plan ignored the fact that his own Federal Reserve Act would
fulfill all the functions of a central bank. Its stock would be owned by
private stockholders who could use the credit of the Government for their own
profit; it would have control of the nation’s money and credit resources; and
it would be a bank of issue which would finance the government by
"mobilizing" credit in time of war. In "The Rationale of Central
Banking," Vera C. Smith (Committee for Monetary Research and Education,
June, 1981) writes, "The primary definition of a central bank is a banking
system in which a single bank has either a complete or residuary monopoly in
the note issue. A central bank is not a natural product of banking development.
It is imposed from outside or comes into being as the result of Government
favors."
Thus a central bank attains its commanding
position from its government granted monopoly of the note issue. This is the key
to its power. Also, the act of establishing a central bank has a direct
inflationary impact because of the fractional reserve system, which allows the
creation of book-entry loans and thereby, money, a number of times the actual
"money" which the bank has in its deposits or reserves.
The Aldrich Plan never came to a vote in
Congress, because the Republicans lost control of the House in 1910, and
subsequently lost the Senate and the Presidency in 1912.
CHAPTER THREE
The Federal Reserve Act
"Our financial system is a false one and
a huge burden on the people . . . This Act establishes the most gigantic trust
on earth."--Congressman Charles Augustus Lindbergh, Sr.
The speeches of Senator LaFollette and
Congressman Lindbergh became rallying points of opposition to the Aldrich Plan
in 1912. They also aroused popular feeling against the Money Trust. Congressman
Lindbergh said, on December 15, 1911, "The government prosecutes other
trusts, but supports the money trust. I have been waiting patiently for several
years for an opportunity to expose the false money standard, and to show that
the greatest of all favoritism is that extended by the government to the money
trust."
Senator LaFollette publicly charged that a
money trust of fifty men controlled the United States. George F. Baker, partner
of J.P. Morgan, on being queried by reporters as to the truth of the charge,
replied that it was absolutely in error. He said that he knew from personal
knowledge that not more than eight men ran this country.
The Nation Magazine replied editorially to
Senator LaFollette that "If there is a Money Trust, it will not be
practical to establish that it exercises its influence either for good or for
bad."
Senator LaFollette remarks in his memoirs that
his speech against the Money Trust later cost him the Presidency of the United
States, just as Woodrow Wilson’s early support of the Aldrich Plan had brought
him into consideration for that office.
Congress finally made a gesture to appease
popular feeling by appointing a committee to investigate the control of money
and credit in the United States. This was the Pujo Committee , a subcommittee
of the House Banking and Currency Committee, which conducted the famous
"Money Trust" hearings in 1912, under the leadership of Congressman
Arsene Pujo of Louisiana, who was regarded as a spokesman for the oil
interests. These hearings were deliberately dragged on for five months, and
resulted in six-thousand pages of printed testimony in four volumes. Month
after month, the bankers made the train trip from New York to Washington,
testified before the Committee and returned to New York.
The
hearings were extremely dull, and no startling information turned up at these
sessions. The bankers solemnly admitted that they were indeed bankers, insisted
that they always operated in the public interest, and claimed that they were
animated only by the highest ideals of public service, like the Congressmen
before whom they were testifying. The paradoxical nature of the Pujo Money
Trust Hearings may better be understood if we examine the man who
single-handedly carried on these hearings, Samuel Untermyer. He was one of the
principal contributors to Woodrow Wilson’s Presidential campaign fund, and was
one of the wealthiest corporation lawyers in New York. He states in his
autobiography in "Who’s Who" of 1926 that he once received a $775,000
fee for a single legal transaction, the successful merger of the Utah Copper
Company and the Boston Consolidated and Nevada Company, a firm with a market
value of one hundred million dollars. He refused to ask either Senator
LaFollette or Congressman Lindbergh to testify in the investigation which they
alone had forced Congress to hold. As Special Counsel for the Pujo Committee,
Untermyer ran the hearings as a one-man operation. The Congressional members,
including its chairman, Congressman Arsene Pujo, seemed to have been struck
dumb from the commencement of the hearings to their conclusion. One of these
silent servants of the public was Congressman James Byrnes, of South Carolina,
representing Bernard Baruch’s home district, who later achieved fame as
"Baruch’s man", and was placed by Baruch in charge of the Office of
War Mobilization during the Second World War.
Although he was a specialist in such matters,
Untermyer did not ask any of the bankers about the system of interlocking
directorates through which they controlled industry. He did not go into
international gold movements, which were known as a factor in money panics, or
the international relationships between American bankers and European bankers.
The international banking houses of Eugene Meyer, Lazard Freres, J. & W.
Seligman, Ladenburg Thalmann, Speyer Brothers, M. M. Warburg, and the
Rothschild Brothers did not arouse Samuel Untermyer’s curiosity, although it
was well known in the New York financial world that all of these family banking
houses either had branches or controlled subsidiary houses in Wall Street. When
Jacob Schiff appeared before the Pujo Committee, Mr. Untermyer’s adroit
questioning allowed Mr. Schiff to talk for many minutes without revealing any
information about the operations of the banking house of Kuhn Loeb Company, of
which he was senior partner, and which Senator Robert L. Owen had identified as
the representative of the European Rothschilds in the United States.
The aging J.P. Morgan, who had only a few more
months to live, appeared before the Committee to justify his decades of
international financial deals. He stated for Mr. Untermyer’s edification that
"Money is a commodity." This was a favorite ploy of the money
creators, as they wished to make the public believe that the creation of money
was a natural occurrence akin to the growing of a field of corn, although it
was actually a bounty conferred upon the bankers by governments over which they
had gained control.
J.P. Morgan also told the Pujo Committee that,
in making a loan, he seriously considered only one factor, a man’s character;
even the man’s ability to repay the loan, or his collateral, were of little
importance. This astonishing observation startled even the blasé members of the
Committee.
The farce of the Pujo Committee ended without
a single well-known opponent of the money creators being allowed to appear or testify.
As far as Samuel Untermyer was concerned, Senator LaFollette and Congressman
Charles Augustus Lindbergh had never existed. Nevertheless, these Congressmen
had managed to convince the people of the United States that the New York
bankers did have a monopoly on the nation’s money and credit. At the close of
the hearings, the bankers and their subsidized newspapers claimed that the only
way to break this monopoly was to enact the banking and currency legislation
now being proposed to Congress, a bill which would be passed a year later as
the Federal Reserve Act. The press seriously demanded that the New York banking
monopoly be broken by turning over the administration of the new banking system
to the most knowledgeable banker of them all, Paul Warburg.
The Presidential campaign of 1912 records one
of the more interesting political upsets in American history. The incumbent,
William Howard Taft, was a popular president, and the Republicans, in a period
of general prosperity, were firmly in control of the government through a
Republican majority in both houses. The Democratic challenger, Woodrow Wilson,
Governor of New Jersey, had no national recognition, and was a stiff, austere
man who excited little public support. Both parties included a monetary reform
bill in their platforms: The Republicans were committed to the Aldrich Plan,
which had been denounced as a Wall Street plan, and the Democrats had the
Federal Reserve Act. Neither party bothered to inform the public that the bills
were almost identical except for the names. In retrospect, it seems obvious
that the money creators decided to dump Taft and go with Wilson. How do we know
this? Taft seemed certain of reelection, and Wilson would return to obscurity.
Suddenly, Theodore Roosevelt "threw his hat into the ring." He
announced that he was running as a third party candidate, the "Bull
Moose". His candidacy would have been ludicrous had it not been for the
fact that he was exceptionally well-financed. Moreover, he was given unlimited
press coverage, more than Taft and Wilson combined. As a Republican
ex-president, it was obvious that Roosevelt would cut deeply into Taft’s vote.
This
proved the case, and Wilson won the election. To this day, no one can say what
Theodore Roosevelt’s program was, or why he would sabotage his own party. Since
the bankers were financing all three candidates, they would win regardless of
the outcome. Later Congressional testimony showed that in the firm of Kuhn Loeb
Company, Felix Warburg was supporting Taft, Paul Warburg and Jacob Schiff were
supporting Wilson, and Otto Kahn was supporting Roosevelt. The result was that
a Democratic Congress and a Democratic President were elected in 1912 to get
the central bank legislation passed. It seems probable that the identification
of the Aldrich Plan as a Wall Street operation predicted that it would have a
difficult passage through Congress, as the Democrats would solidly oppose it,
whereas a successful Democratic candidate, supported by a Democratic Congress,
would be able to pass the central bank plan. Taft was thrown overboard because
the bankers doubted he could deliver on the Aldrich Plan, and Roosevelt was the
instrument of his demise. The final electoral vote in 1912 was Wilson - 409;
Roosevelt - 167; and Taft - 15.
To further confuse the American people and
blind them to the real purpose of the proposed Federal Reserve Act, the
architects of the Aldrich Plan, powerful Nelson Aldrich, although no longer a
senator, and Frank Vanderlip, president of the National City Bank, set up a hue
and cry against the bill. They gave interviews whenever they could find an
audience denouncing the proposed Federal Reserve Act as inimical to banking and
to good government. The bugaboo of inflation was raised because of the Act’s
provisions for printing Federal Reserve notes. The Nation, on October 23, 1913,
pointed out, "Mr. Aldrich himself raised a hue and cry over the issue of
government "fiat money", that is, money issued without gold or
bullion back of it, although a bill to do precisely that had been passed in
1908 with his own name as author, and he knew besides, that the ‘government’
had nothing to do with it, that the Federal Reserve Board would have full
charge of the issuing of such moneys." Frank Vanderlip’s claims were so
bizarre that Senator Robert L. Owen, chairman of the newly formed Senate
Banking and Currency Committee, which had been formed on March 18, 1913,
accused him of openly carrying on a campaign of misrepresentation about the
bill. The interests of the public, so Carter Glass claimed in a speech on
September 10, 1913 to Congress, would be protected by an advisory council of
bankers. "There can be nothing sinister about its transactions. Meeting
with it at least four times a year will be a bankers’ advisory council representing
every regional reserve district in the system. How could we have exercised
greater caution in safeguarding the public interests?"
Glass claimed that the proposed Federal
Advisory Council would force the Federal Reserve Board of Governors to act in
the best interest of the people. Senator Root raised the problem of inflation,
claiming that under the Federal Reserve Act, note circulation would always
expand indefinitely, causing great inflation. However, the later history of the
Federal Reserve System showed that it not only caused inflation, but that the
issue of notes could also be restricted, causing deflation, as occurred from
1929 to 1939. One of the critics of the proposed "decentralized"
system was a lawyer from Cleveland, Ohio, Alfred Crozier: Crozier was called to
testify for the Senate Committee because he had written a provocative book in
1912, U.S. Money vs. Corporation Currency. He attacked the Aldrich-Vreeland Act
of 1908 as a Wall Street instrument, and he pointed out that when our government
had to issue money based on privately owned securities, we were no longer a
free nation. Crozier testified before the Senate Committee that, "It
should prohibit the granting or calling in of loans for the purpose of
influencing quotation prices of securities and the contracting of loans or
increasing interest rates in concert by the banks to influence public opinion
or the action of any legislative body.
Within
recent months, William McAdoo, Secretary of the Treasury of the United States
was reported in the open press as charging specifically that there was a
conspiracy among certain of the large banking interests to put a contraction
upon the currency and to raise interest rates for the sake of making the public
force Congress into passing currency legislation desired by those interests.
The so-called administration currency bill grants just what Wall Street and the
big banks for twenty-five years have been striving for, that is, PRIVATE INSTEAD OF PUBLIC CONTROL OF
CURRENCY. It does this as completely as the Aldrich Bill. Both measures rob
the government and the people of all effective control over the public’s money,
and vest in the banks exclusively the dangerous power to make money among the
people scarce or plenty. The Aldrich Bill puts this power in one central bank.
The Administration Bill puts it in twelve regional central banks, all owned
exclusively by the identical private interests that would have owned and
operated the Aldrich Bank. President Garfield shortly before his assassination
declared that whoever controls the supply of currency would control the
business and activities of the people. Thomas Jefferson warned us a hundred
years ago that a private central bank issuing the public currency was a greater
menace to the liberties of the people than a standing army."
It is interesting to note how many
assassinations of Presidents of the United States follow their concern with the
issuing of public currency; Lincoln with his Greenback, non-interest-bearing
notes, and Garfield, making a pronouncement on currency problems just before he
was assassinated.
We now begin to understand why such a lengthy
campaign of planned deception was necessary, from the secret conference at
Jekyll Island to the identical "reform" plans proposed by the Democratic
and Republican parties under different names. The bankers could not wrest
control of the issuance of money from the citizens of the United States, to
whom it had been designated through its Congress by the Constitution, until the
Congress granted them their monopoly for a central bank. Therefore, much of the
influence exerted to get the Federal Reserve Act passed was done behind the
scenes, principally by two shadowy, non-elected persons: The German immigrant,
Paul Warburg, and Colonel Edward Mandell House of Texas. Paul Warburg made an
appearance before the House Banking and Currency Committee in 1913, in which he
briefly stated his background: "I am a member of the banking house of
Kuhn, Loeb Company. I came over to this country in 1902, having been born and
educated in the banking business in Hamburg, Germany, and studied banking in
London and Paris, and have gone all around the world. In the Panic of 1907, the
first suggestion I made was ‘Let us get a national clearing house.’ The Aldrich
Plan contains some things which are simply fundamental rules of banking. Your
aim in this plan (the Owen-Glass bill) must be the same--centralizing of
reserves, mobilizing commercial credit, and getting an elastic note
issue."
Warburg’s phrase, "mobilization of credit"
was an important one, because the First World War was due to begin shortly, and
the first task of the Federal Reserve System would be to finance the World War.
The European nations were already bankrupt, because they had maintained large
standing armies for almost fifty years, a situation created by their own
central banks, and therefore they could not finance a war. A central bank
always imposes a tremendous burden on the nation for "rearmament" and
"defense", in order to create inextinguishable debt, simultaneously
creating a military dictatorship and enslaving the people to pay the
"interest" on the debt which the bankers have artificially created.
In the Senate debate on the Federal Reserve
Act, Senator Stone said on December 12, 1913, "The great banks for years
have sought to have and control agents in the Treasury to serve their purposes.
Let me quote from this World article, ‘Just as soon as Mr. McAdoo came to
Washington, a woman whom the National City Bank had installed in the Treasury
Department to get advance information on the condition of banks, and other
matters of interest to the big Wall Street group, was removed. Immediately the
Secretary and the Assistant Secretary, John Skelton Williams, were criticized
severely by the agents of the Wall Street group.’" "I myself have
known more than one occasion when bankers refused credit to men who opposed
their political views and purposes. When Senator Aldrich and others were going
around the country exploiting this scheme, the big banks of New York and
Chicago were engaged in raising a munificent fund to bolster up the Aldrich
propaganda. I have been told by bankers of my own state that contributions to
this exploitation fund had been demanded of them and that they had contributed
because they were afraid of being blacklisted or boycotted.
There
are bankers of this country who are enemies of the public welfare. In the past,
a few great banks have followed policies and projects that have paralyzed the
industrial energies of the country to perpetuate their tremendous power over
the financial and business industries of America." Carter Glass states in
his autobiography that he was summoned by Woodrow Wilson to the White House,
and that Wilson told him he intended to make the reserve notes obligations of
the United States. Glass says, "I was for an instant speechless. I
remonstrated. There is not any government obligation here, Mr. President.
Wilson said he had had to compromise on this point in order to save the
bill."
The term "compromise" on this point
came directly from Paul Warburg. Col. Elisha Ely Garrison, in Roosevelt, Wilson
and the Federal Reserve Law wrote, "In 1911, Lawrence Abbot, Mr.
Roosevelt’s private officer at ‘The Outlook’ handed me a copy of the so-called
Aldrich Plan for currency reform. I said, I could not believe that Mr. Warburg
was the author. This plan is nothing more than the Aldrich-Vreeland legislation
which provided for currency issue against securities. Warburg knows that as
well as I do. I am going to see him at once and ask him about it. All right,
the truth. Yes, I wrote it, he said. Why? I asked. It was a compromise,
answered Warburg."
Garrison says that Warburg wrote him on
February 8, 1912. "I have no doubt that at the end of a thorough
discussion, either you will see it my way or I will see it yours--but I hope
you will see it mine."
This was another famous Warburg saying when he
secretly lobbied Congressmen to support his interest, the veiled threat that
they should "see it his way". Those who did not found large sums
contributed to their opponents at the next elections, and usually went down in
defeat.
Col. Garrison, an agent of Brown Brothers
bankers, later Brown Brothers Harriman, had entree everywhere in the financial
community. He writes of Col. House, "Col. House agreed entirely with the
early writing of Mr. Warburg." Page 337, he quotes Col. House: "I am
also suggesting that the Central Board be increased from four members to five
and their terms lengthened from eight to ten years. This would give stability
and would take away the power of a President to change the personnel of the
board during a single term of office." House’s phrase, "take away the
power of a President" is significant, because later Presidents found
themselves helpless to change the direction of the government because they did
not have the power to change the composition of the Federal Reserve Board to
attain a majority on it during that President’s term of office.
Garrison
also wrote in this book, "Paul Warburg is the man who got the Federal
Reserve Act together after the Aldrich Plan aroused such nationwide resentment
and opposition. The mastermind of both plans was Baron Alfred Rothschild of
London." Colonel Edward Mandell House was referred to by Rabbi Stephen
Wise in his autobiography, Challenging Years as "the unofficial Secretary
of State". House noted that he and Wilson knew that in passing the Federal
Reserve Act, they had created an instrument more powerful than the Supreme
Court. The Federal Reserve Board of Governors actually comprised a Supreme
Court of Finance, and there was no appeal from any of their rulings.
In 1911, prior to Wilson’s taking office as
President, House had returned to his home in Texas and completed a book called
Philip Dru, Administrator. Ostensibly a novel, it was actually a detailed plan
for the future government of the United States, "which would establish
Socialism as dreamed by Karl Marx", according to House. This
"novel" predicted the enactment of the graduated income tax, excess
profits tax, unemployment insurance, social security, and a flexible currency
system. In short, it was the blueprint which was later followed by the Woodrow
Wilson and Franklin D. Roosevelt administrations. It was published
"anonymously" by B. W. Huebsch of New York, and widely circulated
among government officials, who were left in no doubt as to its authorship.
George Sylvester Viereck, who knew House for years, later wrote an account of
the Wilson-House relationship, The Strangest Friendship in History.14 In 1955,
Westbrook Pegler, the Hearst columnist from 1932 to 1956, heard of the Philip
Dru book and called Viereck to ask if he had a copy. Viereck sent Pegler his
copy of the book, and Pegler wrote a column about it, stating:
"One of the institutions outlined in
Philip Dru is the Federal Reserve System. The Schiffs, the Warburgs, the Kahns,
the Rockefellers and Morgans put their faith in House. The Schiff, Warburg,
Rockefeller and Morgan interests were personally represented in the mysterious
conference at Jekyll Island. Frankfurter landed on the Harvard law faculty,
thanks to a financial contribution to Harvard by Felix Warburg and Paul
Warburg, and so we got Alger and Donald Hiss, Lee Pressman, Harry Dexter White
and many other protégés of Little Weenie."
House’s openly Socialistic views were
forthrightly expressed in Philip Dru, Administrator; on pages 57-58, House
wrote: "In a direct and forceful manner, he pointed out that our
civilization was fundamentally wrong, inasmuch, among other things, as it
restricted efficiency; that if society were properly organized, there would be
none who were not sufficiently clothed and fed. The result, that the laws,
habits and ethical training in vogue were alike responsible for the
inequalities in opportunity and the consequent wide difference between the few
and the many; that the results of such conditions was to render inefficient a
large part of the population, the percentage differing in each country in the
ratio that education and enlightenment and unselfish laws bore to ignorance,
bigotry and selfish laws."
In his book, House (Dru) envisions himself
becoming a dictator and forcing on the people his radical views, page 148:
"They recognized the fact that Dru dominated the situation and that a
master mind had at last risen in the Republic." He now assumes the title
of General. "General Dru announced his purpose of assuming the powers of a
dictator . . . they were assured that he was free from any personal ambition .
. . he proclaimed himself ‘Administrator of the Republic.’"
This pensive dreamer who imagined himself a
dictator actually managed to place himself in the position of the confidential
advisor to the President of the United States, and then to have many of his
desires enacted into law! On page 227, he lists some of the laws he wishes to
enact as dictator. Among them are an old age pension law, laborers insurance
compensation, cooperative markets, a federal reserve banking system,
cooperative loans, national employment bureaus, and other "social
legislation", some of which was enacted during Wilson’s administration,
and others during the Franklin D. Roosevelt’s administration. The latter was
actually a continuation of the Wilson Administration. The present writer was
with Viereck in his suite at the Hotel Belleclaire when Pegler called and asked
for the book. Viereck sent it over by his secretary. He grinned and said Pegler
seemed very excited. "He ought to get a good column out of that,"
Viereck told me. Indeed Pegler did get a good column out of it. Unfortunately
for him, he had gone too far in mentioning the Warburgs. As long as he confined
his attacks to La Grand Bouche (Eleanor Roosevelt), and her spouse, he had been
permitted to continue, but now that he had exposed the Warburg connection with
the Communist spy ring in Washington, his column was immediately dropped by the
big city dailies, and Pegler’s long run was over.
Col.
Edward M. House, Philip Dru, Administrator, B. W. Heubsch, New York, 1912. This quotation from Philip Dru,
Administrator, written by Col. House in 1912, is included here to show his
totalitarian Marxist philosophy. House was to become for 8 years with Wilson,
the President’s closest advisor. Later he continued his influence in the
Franklin D. Roosevelt administration. From his home in Magnolia, Mass., House
advised FDR through frequent trips of Felix Frankfurter to the White House.
Frankfurter was later appointed to the Supreme Court by F.D.R. 24 with many of
the same personnel, and with House guiding the administration from behind the
scenes. Like most of the behind-the-scenes operators in this book, Col. Edward
Mandell House had the obligatory "London connection". Originally a
Dutch family, "Huis", his ancestors had lived in England for three
hundred years, after which his father settled in Texas, where he made a fortune
in blockade-running during the Civil War, shipping cotton and other contraband
to his British connections, including the Rothschilds, and bringing back
supplies for the beleaguered Texans. The senior House, not trusting the volatile
Texas situation, prudently deposited all his profits from his blockade-running
in gold with Baring banking house in London.
At the
close of the Civil War, he was one of the wealthiest men in Texas. He named his
son "Mandell" after one of his merchant associates. According to
Arthur Howden Smith, when House’s father died in 1880, his estate was
distributed among his sons as follows: Thomas William got the banking business;
John, the sugar plantation; and Edward M. the cotton plantations, which brought
him an income of $20,000 a year. At the age of twelve, the young Edward Mandell
House had brain fever, and was later further crippled by sunstroke. He was a
semi-invalid, and his ailments gave him an odd Oriental appearance. He never
entered any profession, but used his father’s money to become the kingmaker of
Texas politics, successively electing five governors from 1893 to 1911. In 1911
he began to support Wilson for president, and threw the crucial Texas
delegation to him which ensured his nomination. House met Wilson for the first
time at the Hotel Gotham, May 31, 1912. In The Strangest Friendship In History,
Woodrow Wilson and Col. House, by George Sylvester Viereck, Viereck writes:
"What," I asked House, "cemented your friendship?"
"The identity of our temperaments and our public policies," answered
House. "What was your purpose and his?" "To translate into
legislation certain liberal and progressive ideas."
Morgan’s
Far Eastern operations were the officially conducted British opium traffic . .
. Morgan’s case deserves special scrutiny from American police and regulatory
agencies, for the intimate associations of Morgan Guaranty Trust with the
identified leadership of the British dope banks."
House,
he handed him $35,000. This was exceeded only by the $50,000 which Bernard
Baruch had given Wilson. The successful enactment of House’s programs did not
escape the notice of other Wilson associates. In Vol. 1, page 157 of The
Intimate Papers of Col. House, House notes, "Cabinet members like Mr. Lane
and Mr. Bryan commented upon the influence of Dru with the President. ‘All that
the book has said should be,’ wrote Lane, ‘comes about. The President comes to
‘Philip Dru’ in the end.’" House recorded some of his efforts on behalf of
the Federal Reserve Act in The Intimate Papers of Col. House, "December
19, 1912. I talked with Paul Warburg over the phone concerning currency reform.
I told of my trip to Washington and what I had done there to get it in working
order. I told him that the Senate and the Congressmen seemed anxious to do what
he desired, and that President- elect Wilson thought straight concerning the
issue."
Thus we
have Warburg’s agent in Washington, Col. House, assuring him that the Senate
and Congressmen will do what he desires, and that the President-elect
"thought straight concerning the issue." In this context,
representative government seems to have ceased to exist. House continues in his
"Papers": "March 13, 1913. Warburg and I had an intimate
discussion concerning currency reform. March 27, 1913. Mr. J.P. Morgan, Jr. and
Mr. Denny of his firm came promptly at five. McAdoo came about ten minutes
afterward. Morgan had a currency plan already printed. I suggested he have it
typewritten, so it would not seem too prearranged, and send it to Wilson and
myself today. July 23, 1913. I tried to show Mayor Quincy (of Boston) the folly
of the Eastern bankers taking an antagonistic attitude towards the Currency
Bill. I explained to Major Henry Higginson with what care the bill had been
framed. Just before he arrived, I had finished a review by Professor Sprague of
Harvard of Paul Warburg’s criticism of the Glass-Owen Bill, and will transmit
it to Washington tomorrow. Every banker known to Warburg, who knows the subject
practically, has been called up about the making of the bill. October 13, 1913.
Paul Warburg was my first caller today. He came to discuss the currency
measure.
There
are many features of the Owen-Glass Bill that he does not approve. I promised
to put him in touch with McAdoo and Senator Owen so that he might discuss it
with them. November 17, 1913. Paul Warburg telephoned about his trip to
Washington. Later, he and Mr. Jacob Schiff came over for a few minutes. Warburg
did most of the talking. He had a new suggestion in regard to grouping the
regular reserve banks so as to get the units welded together and in easier
touch with the Federal Reserve Board." George Sylvester Viereck in The
Strangest Friendship in History, Woodrow Wilson and Col. House wrote: "The
Schiffs, the Warburgs, the Kahns, the Rockefellers, the Morgans put their faith
in House. When the Federal Reserve legislation at last assumed definite shape,
House was the intermediary between the White House and the financiers."
On page
45, Viereck notes, "Col. House looks upon the reform of the monetary
system as the crowning internal achievement of the Wilson Administration."
The Glass Bill (the House version of the final Federal Reserve Act) had passed
the House on September 18, 1913 by 287 to 85. On December 19, 1913, the Senate
passed their version by a vote of 54-34. More than forty important differences
in the House and Senate versions remained to be settled, and the opponents of
the bill in both houses of Congress were led to believe that many weeks would
yet elapse before the Conference bill would be ready for consideration. The
Congressmen prepared to leave Washington for the annual Christmas recess,
assured that the Conference bill would not be brought up until the following
year. Now the money creators prepared and executed the most brilliant stroke of
their plan. In a single day, they ironed out all forty of the disputed passages
in the bill and quickly brought it to a vote. On Monday, December 22, 1913, the
bill was passed by the House 282-60 and the Senate 43-23. On December 21, 1913,
The New York Times commented editorially on the act, "New York will be on
a firmer basis of financial growth, and we shall soon see her the money centre
of the world." The New York Times reported on the front page, Monday,
December 22, 1913 in headlines: MONEY
BILL MAY BE LAW TODAY--CONFEREES HAD ADJUSTED NEARLY ALL DIFFERENCES AT 1:30
THIS MORNING--NO DEPOSIT GUARANTEES--SENATE YIELDS ON THIS POINT BUT PUTS
THROUGH MANY OTHER CHANGES "With almost unprecedented speed, the
conference to adjust the House and Senate differences on the Currency Bill
practically completed its labours early this morning. On Saturday the Conferees
did little more than dispose of the preliminaries, leaving forty essential
differences to be thrashed out Sunday. . . . No other legislation of importance
will be taken up in either House of Congress this week. Members of both houses
are already preparing to leave Washington."
One sees
the fine hand of Paul Warburg in this final strategy. Some of the bill’s most
vocal critics had already left Washington. It was a long-standing political
courtesy that important legislation would not be acted upon during the week
before Christmas, but this tradition was rudely shattered in order to
perpetrate the Federal Reserve Act on the American people. The Times buried a
brief quote from Congressman Lindbergh that "the bill would establish the
most gigantic trust on earth," and quoted Representative Guernsey of
Maine, a Republican on the House Banking and Currency Committee, that
"This is an inflation bill, the only question being the extent of the
inflation."
Congressman
Lindbergh said on that historic day, to the House: "This Act establishes
the most gigantic trust on earth. When the President signs this bill, the
invisible government by the Monetary Power will be legalized. The people may
not know it immediately, but the day of reckoning is only a few years removed.
The trusts will soon realize that they have gone too far even for their own
good. The people must make a declaration of independence to relieve themselves
from the Monetary Power. This they will be able to do by taking control of
Congress. Wall Streeters could not cheat us if you Senators and Representatives
did not make a humbug of Congress. . . . If we had a people’s Congress, there
would be stability. The greatest crime of Congress is its currency system. The
worst legislative crime of the ages is perpetrated by this banking bill. The
caucus and the party bosses have again operated and prevented the people from getting
the benefit of their own government."
The
December 23, 1913 New York Times editorially commented, in contrast to
Congressman Lindbergh’s criticism of the bill, "The Banking and Currency
Bill became better and sounder every time it was sent from one end of the
Capitol to the other. Congress worked under public supervision in making the
bill." By "public supervision", The Times apparently meant Paul
Warburg, who for several days had maintained a small office in the Capitol
building, where he directed the successful pre-Christmas campaign to pass the
bill, and where Senators and Congressmen came hourly at his bidding to carry
out his strategy. The "unprecedented speed" with which the Federal
Reserve Act had been passed by Congress during what became known as "the
Christmas massacre" had one unforeseen aspect. Woodrow Wilson was taken
unaware, as he, like many others, had been assured the bill would not come up
for a vote until after Christmas. Now he refused to sign it, because he
objected to the provisions for the selection of Class B. Directors.
William
L. White relates in his biography of Bernard Baruch that Baruch, a principal
contributor to Wilson’s campaign fund, was stunned when he was informed that
Wilson refused to sign the bill. He hurried 28 to the White House and assured
Wilson that this was a minor matter, which could be fixed up later through
"administrative processes". The important thing was to get the
Federal Reserve Act signed into law at once. With this reassurance, Wilson
signed the Federal Reserve Act on December 23, 1913. History proved that on
that day, the Constitution ceased to be the governing covenant of the American
people, and our liberties were handed over to a small group of international
bankers. The December 24, 1913 New York Times carried a front page headline
"WILSON SIGNS THE CURRENCY BILL!" Below it, also in capital letters,
were two further headlines, "PROSPERITY TO BE FREE" and "WILL
HELP EVERY CLASS". Who could object to any law which provided benefits to
everyone? The Times described the festive atmosphere while Wilson’s family and
government officials watched him sign the bill. "The Christmas spirit
pervaded the gathering," exulted The Times. In his biography of Carter
Glass, Rixey Smith states that those present at the signing of the bill
included Vice President Marshall, Secretary Bryan, Carter Glass, Senator Owen,
Secretary McAdoo, Speaker Champ Clark, and other Treasury officials. None of
the real writers of the bill, the draftees of Jekyll Island, were present. They
had prudently absented themselves from the scene of their victory. Rixey Smith
also wrote, "It was as though Christmas had come two days early."
On
December 24, 1913, Jacob Schiff wrote to Col. House, "My dear Col. House.
I want to say a word to you for the silent, but no doubt effective work you
have done in the interest of currency legislation and to congratulate you that
the measure has finally been enacted into law. I am with good wishes,
faithfully yours, JACOB SCHIFF." Representative Moore of Kansas, in
commenting on the passage of the Act, said to the House of Representatives:
"The President of the United States now becomes the absolute dictator of
all the finances of the country.
He
appoints a controlling board of seven men, all of whom belong to his political
party, even though it is a minority. The Secretary of the Treasury is to rule
supreme whenever there is a difference of opinion between himself and the
Federal Reserve Board. AND, only one member of the Board is to pass out of
office while the President is in office." The ten year terms of office of
the members of the Board were lengthened by the Banking Act of 1935 to fourteen
years, which meant that these directors of the nation’s finances, although not
elected by the people, held office longer than three presidents. While Col.
House, Jacob Schiff and Paul Warburg basked in the glow of a job well done, the
other actors in this drama were subject to later afterthoughts. Woodrow Wilson
wrote in 1916, National Economy and the Banking System, Sen. Doc. No. 3, No.
223, 76th Congress, 1st session, 1939: "Our system of credit is
concentrated (in the Federal Reserve 29 System).
The
growth of the nation, therefore, and all our activities, are in the hands of a
few men." When he was asked by Clarence W. Barron whether he approved of
the bill as it was finally passed. Warburg remarked, "Well, it hasn’t got
quite everything we want, but the lack can be adjusted later by administrative
processes." Woodrow Wilson and Carter Glass are given credit for the Act
by most contemporary historians, but of all those concerned, Wilson had least
to do with Congressional action on the bill. George Creel, a veteran Washington
correspondent, wrote in Harper’s Weekly, June 26, 1915: "As far as the
Democratic Party was concerned, Woodrow Wilson was without influence, save for
the patronage he possessed. It was Bryan who whipped Congress into line on the
tariff bill, on the Panama Canal tolls repeal, and on the currency bill."
Mr. Bryan later wrote, "That is the one thing in my public career that I
regret--my work to secure the enactment of the Federal Reserve Law." On
December 25, 1913, The Nation pointed out that "The New York Stock Market
began to rise steadily upon news that the Senate was ready to pass the Federal
Reserve Act."
This
belies the claim that the Federal Reserve Act was a monetary reform bill. The
New York Stock Exchange is generally considered an accurate barometer of the
true meaning of any financial legislation passed in Washington. Senator Aldrich
also decided that he no longer had misgivings about the Federal Reserve Act. In
a magazine which he owned, and which he called The Independent, he wrote in
July, 1914: "Before the passage of this Act, the New York bankers could
only dominate the reserves of New York. Now we are able to dominate the bank
reserves of the entire country." H.W. Loucks denounced the Federal Reserve
Act in The Great Conspiracy of the House of Morgan, "In the Federal
Reserve Law, they have wrested from the people and secured for themselves the
constitutional power to issue money and regulate the value thereof." On
page 31, Loucks writes, "The House of Morgan is now in supreme control of
our industry, commerce and political affairs. They are in complete control of
the policy making of the Democratic, Republican and Progressive parties. The
present extraordinary propaganda for ‘preparedness’ is planned more for home
coercion than for defense against foreign aggression." The signing of the
Federal Reserve Act by Woodrow Wilson represented the culmination of years of
collusion with his intimate friend, Col. House, and Paul Warburg. One of the
men with whom House became acquainted in the Wilson Administration was Franklin
D. Roosevelt, Assistant Secretary of Navy. As soon as he obtained the
Democratic nomination for President, in 1932, Franklin D. Roosevelt made a
"pilgrimage" to Col. House’s home at Magnolia, Mass. Roosevelt, after
the Republican hiatus of the 1920s, filled in the goals of Philip Dru,
Administrator, which Wilson had not been able to carry out. The late Roosevelt
achievements included the enactment of the social security program, excess
profits tax, and the expansion of the graduated income tax to 90% of earned
income. House’s biographer, Charles Seymour, wrote: "He was wearied by the
details of party politics and appointments. Even the share he had taken in
constructive domestic legislation (the Federal Reserve Act, tariff revision,
and the Income Tax amendment) did not satisfy him. From the beginning of 1914
he gave more and more of his time to what he regarded as the highest form of
politics and that for which he was particularly suited--international
affairs."
In 1938,
shortly before he died, House told Charles Seymour, "During the last
fifteen years I have been close to the center of things, although few people
suspect it. No important foreigner has come to the United States without
talking to me. I was close to the movement that nominated Roosevelt. He has
given me a free hand in advising him. All the Ambassadors have reported to me
frequently." A comparative print of the Federal Reserve Act of 1913 as
passed by the House of Representatives and amended by the Senate shows the
following striking change: The Senate struck out, "To suspend the
officials of Federal Reserve banks for cause, stated in writing with
opportunity of hearing, require the removal of said official for incompetency,
dereliction of duty, fraud or deceit, such removal to be subject to approval by
the President of the United States." This was changed by the Senate to
read "To suspend or remove any officer or director of any Federal Reserve
Bank, the cause of such removal to be forthwith communicated in writing by the
Federal Reserve Board to the removed officer or director and to said
bank." This completely altered the conditions under which an officer or
director might be removed. We no longer know what the conditions for removal
are, or the cause. Apparently incompetency, dereliction of duty, fraud or
deceit do not matter to the Federal Reserve Board. Also, the removed officer
does not have the opportunity of appeal to the President. In answer to written
inquiry, the Assistant Secretary of the Federal Reserve Board replied that only
one officer has been removed "for cause" in the thirty-six years, the
name and details of this matter being a "private concern" between the
individual, the Reserve Bank concerned, and the Federal Reserve Board.
The
Federal Reserve System began its operations in 1914 with the activity of the
Organization Committee, appointed by Woodrow Wilson, and composed of Secretary
of the Treasury William McAdoo, who was his son-in-law, Secretary of
Agriculture Houston and Comptroller of the Currency John Skelton Williams. On
January 6, 1914. J.P. Morgan met with the Organizing Committee in New York. He
informed them that there should not be more than seven regional districts in
the new system. This committee was to select the locations of the
"decentralized" reserve banks. They were empowered to select from
eight to twelve reserve banks, although J.P. Morgan had testified he thought
that not more than four should be selected. Much politicking went into the
selection of these sites, as the twelve cities thus favored would become
enormously important as centers of finance. New York, of course, was a foregone
conclusion. Richmond was the next selection, as a payoff to Carter Glass and
Woodrow Wilson, the two Virginians who had been given political credit for the
Federal Reserve Act. The other selections of the Committee were Boston,
Philadelphia, Cleveland, Chicago, St. Louis, Atlanta, Dallas, Minneapolis,
Kansas City, and San Francisco. All of these cities later developed important
"financial districts" as the result of this selection.
These
local battles, however, paled in view of the complete dominance of the Federal
Reserve bank of New York in the system. Ferdinand Lundberg pointed out, in
America’s Sixty Families, that, "In practice, the Federal Reserve Bank of
New York became the fountainhead of the system of twelve regional banks, for New
York was the money market of the nation. The other eleven banks were so many
expensive mausoleums erected to salve the local pride and quell the Jacksonian
fears of the hinterland. Benjamin Strong, president of the Bankers Trust (J.P.
Morgan) was selected as the first Governor of the New York Federal Reserve
Bank. Adept in high finance, Strong for many years manipulated the country’s
monetary system at the discretion of directors representing the leading New
York banks. Under Strong, the Reserve System was brought into interlocking
relations with the Bank of England and the Bank of France. Benjamin Strong held
his position as Governor of the Federal Reserve Bank of New York until his
sudden death in 1928, during a Congressional investigation of the secret meetings
between Reserve Governors and 32 heads of European central banks which brought
on the Great Depression of 1929-31."
Strong
had married the daughter of the President of Bankers Trust, which brought him
into the line of succession in the dynastic intrigues which play such an
important role in the world of high finance. He also had been a member of the
original Jekyll Island group, the First Name Club, and was thus qualified for
the highest position in the Federal Reserve System, as the Governor of the
Federal Reserve Bank of New York which dominated the entire system. Paul
Warburg also is mentioned in J. Laurence Laughlin’s definitive volume, The
Federal Reserve Act, Its Origins and Purposes, "Mr. Paul Warburg of Kuhn,
Loeb Company offered in March, 1910 a fairly well thought out plan to be known
as the United Reserve Bank of the United States. This was published in The New
York Times of March 24, 1910. The group interested in the purposes of the
National Monetary Commission met secretly at Jekyll Island for about two weeks
in December, 1910, and concentrated on the preparation of a bill to be
presented to Congress by the National Monetary Commission. The men who were
present at Jekyll Island were Senator Aldrich, H. P. Davison of J.P. Morgan
Company, Paul Warburg of Kuhn, Loeb Company, Frank Vanderlip of the National
City Bank, and Charles D. Norton of the First National Bank. No doubt the
ablest banking mind in the group was that of Mr. Warburg, who had had a
European banking training. Senator Aldrich had no special training in
banking."26 A mention of Paul Warburg, written by Harold Kelloch, and
titled, "Warburg the Revolutionist" appeared in the Century Magazine,
May, 1915. Kelloch writes: "He imposed his ideas on a nation of a hundred
million people . . . Without Mr. Warburg there would have been no Federal
Reserve Act. The banking house of Warburg and Warburg in Hamburg has always
been strictly a family business. None but a Warburg has been eligible for it,
but all Warburgs have been born into it. In 1895 he married the daughter of the
late Solomon Loeb of Kuhn Loeb Company. He became a member of Kuhn Loeb Company
in 1902. Mr. Warburg’s salary from his private business has been approximately
a half million a year. Mr. Warburg’s motives had been purely those of patriotic
self-sacrifice." The true purposes of the Federal Reserve Act soon began
to disillusion many who had at first believed in its claims. W. H. Allen wrote
in Moody’s Magazine, 1916, "The purpose of the Federal Reserve Act was to
prevent concentration of money in the New York banks by making it profitable
for country bankers to use their funds at home, but the movement of currency
shows that the New York banks gained from the interior in every month except
December, 1915, since the Act went into effect. The stabilization of rates has
taken place in New York alone. In other parts, high rates continue.
The Act,
which was to deprive Wall Street of its funds for speculation, has really given
the bulls and the bears such a supply as they have never had before. The truth
is that far from having clogged the channel to Wall Street, as Mr. Glass so
confidently boasted, it actually widened the old channels and opened up two new
ones. The first of these leads directly to Washington and gives Wall Street a
string on all the surplus cash in the United States Treasury. Besides, in the
power to issue bank-note currency, it furnishes an inexhaustible supply of
credit money; the second channel leads to the great central banks of Europe,
whereby, through the sale of acceptances, virtually guaranteed by the United
States Government, Wall Street is granted immunity from foreign demands for
gold which have precipitated every great crisis in our history." For many
years, there has been considerable mystery about who actually owns the stock of
the Federal Reserve Banks. Congressman Wright Patman, leading critic of the
System, tried to find out who the stockholders were.
The
stock in the original twelve regional Federal Reserve Banks was purchased by
national banks in those twelve regions. Because the Federal Reserve Bank of New
York was to set the interest rates and direct open market operations, thus
controlling the daily supply and price of money throughout the United States,
it is the stockholders of that bank who are the real directors of the entire
system. For the first time, it can be revealed who those stockholders are. This
writer has the original organization certificates of the twelve Federal Reserve
Banks, giving the ownership of shares by the national banks in each district.
The Federal Reserve Bank of New York issued 203,053 shares, and, as filed with
the Comptroller of the Currency May 19, 1914, the large New York City banks
took more than half of the outstanding shares. The Rockefeller Kuhn, Loeb-controlled
National City Bank took the largest number of shares of any bank, 30,000
shares. J.P. Morgan’s First National Bank took 15,000 shares. When these two
banks merged in 1955, they owned in one block almost one fourth of the shares
in the Federal Reserve Bank of New York, which controlled the entire system,
and thus they could name Paul Volcker or anyone else they chose to be Chairman
of the Federal Reserve Board of Governors. Chase National Bank took 6,000
shares. The Marine Nation Bank of Buffalo, later known as Marine Midland, took
6,000 shares. This bank was owned by the Schoellkopf family, which controlled
Niagara Power Company and other large interests.
National
Bank of Commerce of New York City took 21,000 shares. The shareholders of these
banks which own the stock of the Federal Reserve Bank of New York are the
people who have controlled our political and economic destinies since 1914.
They are the Rothschilds, of Europe, Lazard Freres (Eugene Meyer), Kuhn Loeb
Company, Warburg Company, Lehman Brothers, 34 Goldman Sachs, the Rockefeller
family, and the J.P. Morgan interests. These interests have merged and
consolidated in recent years, so that the control is much more concentrated.
National Bank of Commerce is now Morgan Guaranty Trust Company. Lehman Brothers
has merged with Kuhn, Loeb Company, First National Bank has merged with the
National City Bank, and in the other eleven Federal Reserve Districts, these
same shareholders indirectly own or control shares in those banks, with the
other shares owned by the leading families in those areas who own or control
the principal industries in these regions. The "local" families set
up regional councils, on orders from New York, of such groups as the Council on
Foreign Relations, The Trilateral Commission, and other instruments of control
devised by their masters.
They
finance and control political developments in their area, name candidates, and
are seldom successfully opposed in their plans. With the setting up of the
twelve "financial districts" through the Federal Reserve Banks, the
traditional division of the United States into the forty-eight states was
overthrown, and we entered the era of "regionalism", or twelve
regions which had no relation to the traditional state boundaries. These
developments following the passing of the Federal Reserve Act proved every one
of the allegations Thomas Jefferson had made against a central bank in 1791:
that the subscribers to the Federal Reserve Bank stock had formed a
corporation, whose stock could be and was held by aliens; that this stock would
be transmitted to a certain line of successors; that it would be placed beyond
forfeiture and escheat; that they would receive a monopoly of banking, which
was against the laws of monopoly; and that they now had the power to make laws,
paramount to the laws of the states. No state legislature can countermand any
of the laws laid down by the Federal Reserve Board of Governors for the benefit
of their private stockholders. This board issues laws as to what the interest
rate shall be, what the quantity of money shall be and what the price of money
shall be. All of these powers abrogate the powers of the state legislatures and
their responsibility to the citizens of those states. The New York Times stated
that the Federal Reserve Banks would be ready for business on August 1, 1914,
but they actually began operations on November 16, 1914.
At that
time, their total assets were listed at $143,000,000, from the sale of shares
in the Federal Reserve Banks to stockholders of the national banks which
subscribed to it. The actual part of this $143,000,000 which was paid in for
these shares remains shrouded in mystery. Some historians believe that the
shareholders only paid about half of the amount in cash; others believe that they
paid in no cash at all, but merely sent in checks which they drew on the
national banks which they owned. This seems most likely, that from the very
outset, the Federal Reserve operations were "paper issued against
paper", that bookkeeping entries comprised the only values which changed
hands. The men whom President Woodrow Wilson chose to make up the first Federal
Reserve Board of Governors were men drawn from the banking group. He had been
nominated for the Presidency by the Democratic Party, which had claimed to
represent the "common man" against the "vested interests".
According to Wilson himself, he was allowed to choose only one man for the
Federal Reserve Board. The others were chosen by the New York bankers.
Wilson’s
choice was Thomas D. Jones, a trustee of Princeton and director of
International Harvester and other corporations. The other members were Adolph
C. Miller, economist from Rockefeller’s University of Chicago and Morgan’s
Harvard University, and also serving as Assistant Secretary of the Interior;
Charles S. Hamlin, who had served previously as an Assistant Secretary to the
Treasury for eight years; F.A. Delano, a Roosevelt relative, and railroad
operator who took over a number of railroads for Kuhn, Loeb Company, W.P.G.
Harding, President of the First National Bank of Atlanta; and Paul Warburg of
Kuhn, Loeb Company. According to The Intimate Papers of Col. House, Warburg was
appointed because "The President accepted (House’s) suggestion of Paul
Warburg of New York because of his interest and experience in currency problems
under both Republican and Democratic Administrations."27 Like Warburg,
Delano had also been born outside the continental limits of the United States,
although he was an American citizen. Delano’s father, Warren Delano, according
to Dr. Josephson and other authorities, was active in Hong Kong in the Chinese
opium trade, and Frederick Delano was born in Hong Kong in 1863. In The Money
Power of Europe, Paul Emden writes that "The Warburgs reached their
outstanding eminence during the last twenty years of the past century,
simultaneously with the growth of Kuhn, Loeb Company in New York, with whom
they stood in a personal union and family relationship. Paul Warburg with
magnificent success carried through in 1913 the reorganization of the American
banking system, at which he had with Senator Aldrich been working since 1911,
and thus most thoroughly consolidated the currency and finances of the United
States."
The New
York Times had noted on May 6, 1914 that Paul Warburg had "retired"
from Kuhn, Loeb Company in order to serve on the Federal Reserve Board,
although he had not resigned his directorships of American Surety Company,
Baltimore and Ohio Railroad, National Railways of Mexico, Wells Fargo, or
Westinghouse Electric Corporation, but would continue to serve on these boards
of directors. "Who’s Who" listed him as holding these directorships
and in addition, American I.G. Chemical Company (branch of I.G. Farben), Agfa
Ansco Corporation, Westinghouse Acceptance Company, Warburg Company of
Amsterdam, chairman of the Board of International Acceptance Bank, and numerous
other banks, railways and corporations. "Kuhn Loeb & Co. with Warburg
have four votes or the majority of the Federal Reserve Board."
Despite
his retirement from Kuhn, Loeb Company in May of 1914 to serve on the Federal
Reserve Board of Governors, Warburg was asked to appear before a Senate
Subcommittee in June of 1914 and answer some questions about his
behind-the-scenes role in getting the Federal Reserve Act through Congress.
This might have meant some questions about the secret conference in Jekyll
Island, and Warburg refused to appear. On July 7, 1914 he wrote a letter to
G.M. Hitchcock, Chairman of the Senate Banking and Currency Committee, stating
that it might impair his usefulness on the Board if he were required to answer
any questions, and that he would therefore withdraw his name. It seemed that
Warburg was prepared to bluff the Senate Committee into confirming him without
any questions asked.
On July
10, 1914, The New York Times defended Warburg on the editorial page and
denounced the "Senatorial Inquisition". Since Warburg had not yet
been asked any questions, the term "Inquisition" seemed remarkably
inappropriate, nor was there any real danger that the Senators were preparing
to use instruments of torture on Mr. Warburg. The imbroglio was resolved when
the Senate Committee, in abject surrender, agreed that Mr. Warburg would be
given a list of questions in advance of his appearance so that he could go over
them, and that he could be excused from answering any questions which might
tend to impair his service on the Board of Governors. The Nation reported on
July 23, 1914 that "Mr. Warburg finally had a conference with Senator
O’Gorman and agreed to meet the members of the Senate Subcommittee informally,
with a view to coming to an understanding, and to giving them any reasonable
information they might desire. The opinion in Washington is that Mr. Warburg’s
confirmation is assured." The Nation reported that the 12 districts had
subscriptions of $74,740,800 and that the subscribing banks would pay one-half
of this sum in six months.
Mr.
Warburg was confirmed, the way having been smoothed by his "fixer",
Senator O’Gorman of New York, more familiarly known as "the Senator from
Wall Street". Senator Robert L. Owen had previously charged that Warburg
was the American representative of the Rothschild family, but questioning him
about this would indeed have smacked of the mediaeval "Inquisition",
and his fellow Senators were too civilized to indulge in such barbarity. During
the Senate Hearings on Paul Warburg before the Senate Banking and Currency
Committee, August 1, 1914, Senator Bristow asked, "How many of these
partners (of Kuhn, Loeb Company) are American citizens?" WARBURG:
"They are all American citizens except Mr. Kahn. He is a British
subject." BRISTOW: "He was at one time a candidate for Parliament,
was he not?" WARBURG: "There was talk about it, it had been suggested
and he had it in his mind." Paul Warburg also stated to the Committee,
"I went to England, where I stayed for two years, first in the banking and
discount firm of Samuel Montague & Company. After that I went to France,
where I stayed in a French bank." CHAIRMAN: "What French bank was
that?" WARBURG: "It is the Russian bank for foreign trade which has
an agency in Paris." BRISTOW: "I understand you to say that you were
a Republican, but when Mr. Theodore Roosevelt came around, you then became a
sympathizer with Mr. Wilson and supported him?" WARBURG: "Yes."
BRISTOW: "While your brother (Felix Warburg) was supporting Taft?"
WARBURG: "Yes." Thus three partners of Kuhn, Loeb Company were
supporting three different candidates for President of the United States. Paul
Warburg was supporting Wilson, Felix Warburg was supporting Taft, and Otto Kahn
was supporting Theodore Roosevelt. Paul Warburg explained this curious
situation by telling the Committee that they had no influence over each other’s
political beliefs, "as finance and politics don’t mix." Questions
about Warburg’s appointment vanished in a hue and cry with Wilson’s sole
appointment to the Board of Governors, Thomas B. Jones. Reporters had
discovered that Jones, at the time of his appointment, was under indictment by
the Attorney General of the United States.
Wilson
leaped to the defense of his choice, telling reporters that "The majority
of the men connected with what we have come to call ‘big business’ are honest,
incorruptible and patriotic." Despite Wilson’s protestations, the Senate
Banking and Currency Committee scheduled hearings on the fitness of Thomas D.
Jones to be a member of the Board of Governors. Wilson then wrote a letter to
Senator Robert L. Owen, Chairman of that Committee: White House June 18, 1914
Dear Senator Owen: Mr. Jones has always stood for the rights of the people
against the rights of privilege. His connection with the Harvester Company was
a public service, not a private interest. He is the one man of the whole number
who was in a peculiar sense my personal choice. Sincerely, Woodrow Wilson
Woodrow Wilson said, "There is no reason to believe that the unfavorable
report represents the attitude of the Senate itself." After several weeks,
Thomas D. Jones withdrew his name, and the country had to do without his
services. The other members of the first Board of Governors were Secretary of
the Treasury, William McAdoo, Wilson’s son-in-law, and President of the
Hudson-Manhattan Railroad, a Kuhn, Loeb Company controlled enterprise, and
Comptroller of the Currency John Skelton Williams.
When the
Federal Reserve Banks were opened for business on November 16, 1914, Paul
Warburg said, "This date may be considered as the Fourth of July in the
economic history of the United States."
CHAPTER FOUR
The Federal Advisory Council
In steamrolling the Federal Reserve Act
through the House of Representatives, Congressman Carter Glass declared on
September 30, 1913 on the floor of the House that the interests of the public
would be protected by an advisory council of bankers. "There can be
nothing sinister about its transactions. Meeting with it at least four times a
year will be a bankers’ advisory council representing every regional reserve
district in the system. How could we have exercised greater caution in
safeguarding the public interest? Carter Glass neither then nor later gave any
substantiation for his belief that a group of bankers would protect the
interests of the public, nor is there any evidence in the history of the United
States that any group of bankers has ever done so. In fact, the Federal
Advisory Council proved to be the "administrative process" which Paul
Warburg had inserted into the Federal Reserve Act to provide just the type of
remote but unseen control over the System which he desired. When he was asked
by financial reporter C.W. Barron, just after the Federal Reserve Act was
enacted into law by Congress, whether he approved of the bill as it was finally
passed, Warburg replied, "Well, it hasn’t got quite everything we want,
but the lack can be adjusted later by administrative processes." The
council proved to be the ideal vehicle for Warburg’s purposes, as it has
functioned for seventy years in almost complete anonymity, its members and
their business associations, unnoticed by the public.
Senator
Robert Owen, chairman of the Senate Banking and Currency Committee, had said,
as quoted in The New York Times, August 3, 1913 before passage of the act:
"The Federal Reserve Act will furnish the bank and industrial and
commercial interests with the discount of qualified commercial paper and thus
stabilize our commercial and industrial life. The Federal Reserve banks are not
intended as money making banks, but to serve a great national purpose of
accommodating commerce and businessmen and banks, safeguard a fixed market for
manufactured goods, for agricultural products and for labor. There is no reason
why the banks should be in control of the Federal Reserve System. Stability
will make our commerce expand healthfully in every direction."
Senator
Owen’s optimism was doomed by the domination of the Jekyll Island promoters
over the initial composition of the Federal Reserve System. Not only did the
Morgan-Kuhn, Loeb alliance purchase the dominant control of stock in the
Federal Reserve Bank of New York, with almost half of the shares owned by the
five New York banks under their control, First National Bank, National City
Bank, National Bank of Commerce, Chase National Bank and Hanover National Bank,
but they also persuaded President Woodrow Wilson to appoint one of the Jekyll
Island group, Paul Warburg, to the Federal Reserve Board of Governors. Each of
the twelve Federal Reserve Banks was to elect a member of the Federal Advisory
Council, which would meet with the Federal Reserve Board of Governors four
times a year in Washington, in order to "advise" the Board on future
monetary policy. This seemed to assure absolute democracy, as each of the
twelve "advisors", representing a different region of the United
States, would be expected to speak up for the economic interests of his area,
and each of the twelve members would have an equal vote. The theory may have
been admirable in its concept, but the hard facts of economic life resulted in
a quite different picture.
The
president of a small bank in St. Louis or Cincinnati, sitting in conference
with Paul Warburg and J.P. Morgan to "advise" them on monetary
policy, would be unlikely to contradict two of the most powerful international
financiers in the world, as a scribbled note from either one of them would be
sufficient to plunge his little bank into bankruptcy. In fact, the small banks
of the twelve Federal Reserve districts existed only as satellites of the big
New York financial interests, and were completely at their mercy. Martin Mayer,
in The Bankers, points out that "J.P. Morgan maintained correspondent
relationships with many small banks all over the country."
The big
New York banks did not confine themselves to multi-million dollar deals with
other great financial interests, but carried on many smaller and more routine
dealings with their "correspondent" banks across the United States.
Apparently secure in their belief that their activities would never be exposed
to the public, the Morgan-Kuhn, Loeb interests boldly selected the members of
the Federal Advisory Council from their correspondent banks and from banks in
which they owned stock. No one in the financial community seemed to notice, as
nothing was said about it during seventy years of the Federal Reserve System’s
operation. To avoid any suspicion that New York interests might control the
Federal Advisory Council, its first president, elected in 1914 by the other
members, was J.B. Forgan, president of the First National Bank Chicago.
Rand
McNally Bankers Directory for 1914 lists the principal correspondents of the
large banks. The principal correspondent bank of the Baker-Morgan controlled
First National Bank of New York is listed as the First National Bank of
Chicago. The principal correspondent listed by the First National Bank of
Chicago is the Bank of Manhattan in New York, controlled by Jacob Schiff and
Paul Warburg of Kuhn, Loeb Company. James B. Forgan also was listed as a
director of Equitable Life Insurance Company, also controlled by Morgan.
However, the relationship between First National Bank of Chicago and these New
York banks was even closer than these listings indicate. On page 701 of The
Growth of Chicago Banks by F. Cyril James, we find mention of "the First
National Bank of Chicago’s profitable connection with the Morgan interests. A
goodwill ambassador was hastily sent to New York to invite George F. Baker to
become a director of the First National Bank of Chicago."
In
effect, Baker and Morgan had personally chosen the first president of the
Federal Advisory Council. James B. Forgan (1852-1924) also shows the obligatory
"London Connection" in the operation of the Federal Reserve System.
Born in St. Andrew’s, Scotland, he began his banking career there with the
Royal Bank of Scotland, a correspondent of the Bank of England. He came to
Canada for the Bank of British North America, worked for the Bank of Nova
Scotia, which sent him to Chicago in the 1880’s, and by 1900 he had become
president of the First National Bank of Chicago. He served for six years as
president of the Federal Advisory Council, and when he left the council, he was
replaced by Frank O. Wetmore, who had also replaced him as president of the
First National Bank of Chicago when Forgan was named chairman of the board.
Representing the New York Federal Reserve district on the first Federal
Advisory Council was J.P. Morgan.
He was
named chairman of the Executive Committee. Thus, Paul Warburg and J.P. Morgan
sat in conference at the meetings of the Federal Reserve Board during the first
four years of its operation, surrounded by the other Governors and members of
the council, who could hardly have been unaware that their futures would be
guided by these two powerful bankers. Another member of the Federal Advisory
Council in 1914 was Levi L. Rue, representing the Philadelphia district. Rue
was president of the Philadelphia National Bank. Rand McNally Bankers Directory
of 1914 listed as principal correspondent of the First National Bank of New
York, the Philadelphia National Bank. First National Bank of Chicago also
listed Philadelphia National Bank as its principal correspondent in
Philadelphia. The other members of the Federal Advisory Council included Daniel
S. Wing, president of the First National Bank of Boston, W.S. Rowe, president
of the First National Bank of Cincinnati, and C.T. Jaffray, president of the
First National Bank of Minneapolis. These were all correspondent banks of the
New York "big five" banks who controlled the money market in the
United States. Jaffray had an even closer connection with the Baker-Morgan
interests. In 1908, to reinvest the large annual dividends from their First
National Bank of New York stock, Baker and Morgan set up a holding company,
First Security Corporation, which bought 500 shares of the First National Bank
of Minneapolis. Thus Jaffray was little more than a wage-earning employee of
Baker and Morgan, although he had been "selected" by stockholders of
the Federal Reserve Bank of Minneapolis to represent their interests. First
Security Corporation also owned 50,000 shares of Chase National Bank, 5400
shares of National Bank of Commerce, 2500 shares of Bankers Trust, 928 shares
of Liberty National Bank, the bank of which Henry P. Davison had been president
when he was tapped to join the J.P. Morgan firm, and shares of New York Trust,
Atlantic Trust and Brooklyn Trust. First Security concentrated on bank stocks
which rapidly appreciated in value, and paid handsome annual dividends.
In 1927,
it earned five million dollars, but paid the shareholders eight million, taking
the rest from its surplus. Another member of the initial Federal Advisory
Council was E.F. Swinney, president of the First National Bank of Kansas City.
He was also a director of Southern Railway, and lists himself in Who’s Who as
"independent in politics". Archibald Kains represented the San
Francisco district on the Federal Advisory Council, although he maintained his
office in New York, as president of the American Foreign Banking Corporation.
After serving as a Governor of the Federal Reserve Board from 1914-1918, Paul
Warburg did not request another term. However, he was not ready to sever his
connection with the Federal Reserve System which he had done so much to set up
and put into operation. J.P. Morgan obligingly gave up his seat on the Federal
Advisory Council, and for the next ten years, Paul Warburg continued to
represent the Federal Reserve district of New York on the Council. He was vice
president of the council 1922-25, and president 1926-27. Thus Warburg remained
the dominant presence at Federal Reserve Board meetings throughout the 1920s,
when the European central banks were planning the great contraction of credit
which precipitated the Crash of 1929 and the Great Depression.
Although
most of the Federal Advisory Council’s "advice" to the Board of
Governors has never been reported, on rare instances a few glimpses into its
deliberations were afforded by brief items in The New York Times. On November
21, 1916, The Times reported that the Federal Advisory Council had met in
Washington for its quarterly conference. "There was talk about absorbing
Europe’s extension of credit to South America and other countries. Federal
Reserve officials said that to maintain a position as one of the world’s
bankers the United States must expect to be called upon to render a good deal
of the service performed largely by England in the past, in extending short
term credits necessary in the production and transportation of goods of all
kinds in the world’s trade, and that acceptances in foreign trade require lower
discounts and the freest and most reliable gold markets." (The First World
War was at its zenith in 1916.) In addition to his service on the Board of
Governors and the Federal Advisory Council, Paul Warburg continued to address
bankers’ groups about the monetary policies they were expected to follow. On
October 22, 1915, he addressed the Twin City Bankers Club, St. Paul, Minnesota
during which speech he stated,
"It
is to your interest to see the Federal Reserve banks as strong as they possibly
can be. It staggers the imagination to think what the future may have in store
for the development of American banking. With Europe’s foremost powers limited
to their own field, with the United States turned into a creditor nation for
all the world, the boundaries of the field that lies open for us are determined
only by our power of safe expansion. The scope of our banking future will
ultimately be limited by the amount of gold that we can muster as the
foundation of our banking and credit structure." The composition of the
Federal Reserve Board of Governors and the Federal Reserve Advisory Council,
from its initial membership to the present day, shows links to the Jekyll
Island conference and the London banking community which offers
incontrovertible evidence, acceptable in any court of law, that there was a
plan to gain control of the money and credit of the people of the United
States, and to use it for the profit of the architects. Old Jekyll Island hands
were Frank Vanderlip, president of the National City Bank, which bought a large
portion of the shares of the Federal Reserve Bank of New York in 1914; Paul
Warburg of Kuhn, Loeb Company; Henry P. Davison, J.P. Morgan’s right-hand man,
and director of the First National Bank of New York and the National Bank of
Commerce, which took a large portion of Federal Reserve Bank of New York stock;
and Benjamin Strong, also known as a Morgan lieutenant, who served as Governor
of the Federal Reserve Bank of New York during the 1920’s.
The
selection of the regional members of the Federal Advisory Council from the list
of bankers who worked most closely with the "big five" banks of New
York, and who were their principal correspondent banks, proves that the
much-touted "regional safeguarding of the public interest" by Carter
Glass and other Washington proponents of the Federal Reserve Act was from its
very inception a deliberate deception. The fact that for seventy years this
council was able to meet with the Federal Reserve Board of Governors and to
"advise" the Governors on decisions of monetary policy which affected
the daily lives of every person in the United States, without the public being
aware of their existence, demonstrates that the planners of the central bank
operation knew exactly how to achieve their objectives through
"administrative processes" of which the public would remain ignorant.
The claim that the "advice" of the council members is not binding on
the Governors or that it carries no weight is to claim that four times a year,
twelve of the most influential bankers in the United States take time from
their work to travel to Washington to meet with the Federal Reserve Board
merely to drink coffee and exchange pleasantries. It is a claim which anyone
familiar with the workings of the business community will find impossible to
take seriously.
In 1914,
it was a four-day trip each way for bankers from the Far West to come to
Washington for a council meeting with the Federal Reserve Board. These men had
extensive business interests which demanded their time. J.P. Morgan was a
director of sixty-three corporations which held annual meetings, and "The Federal Advisory Council has great
influence with the Federal Reserve Board. Conspicuously upon that council is
J.P. Morgan, the leading member of J.P. Morgan Company and son of the late J.P.
Morgan. Every one of the twelve members of the Advisory Council, as you well
know, was educated in the same atmosphere. The Federal Reserve Act is not only
a special privilege act but privileged persons have been placed in control and are
its advisors in its administration. The Federal Reserve Board and the Federal
Advisory Council administer the Federal Reserve System as its head authority,
and no one of the lesser officials, even if they wished, would dare to cross
swords with them."
The J.P.
Morgan connection has remained predominant on the Federal Advisory Council. For
the past several years, the prestigious Federal Reserve District No. 2, the New
York District, has been represented on the Federal Advisory Council by Lewis
Preston. Preston is Chairman of J.P. Morgan Company and also Chairman and Chief
Executive Officer of Morgan Guaranty Trust, New York. An heir to the Baldwin
fortune (a company controlled by Morgan), Preston married the heiress to the
Pulitzer newspaper fortune. On February 26, 1929, The New York Times noted that
a merger had been effected between National Bank of Commerce and Guaranty
Trust, making them the largest bank in the United States, with a capital of two
billion dollars. The merger was negotiated by Myron C. Taylor, president of
U.S. Steel, a Morgan firm. The banks occupied adjoining buildings on Wall
Street, and, as The New York Times noted, "The Guaranty Trust Company long
has been known as one of ‘the Morgan group’ of banks." The National Bank of
Commerce has also been identified with Morgan interests.
CHAPTER FIVE
The House of Rothschild
The
success of the Federal Reserve Conspiracy will raise many questions in the
minds of readers who are unfamiliar with the history of the United States and
finance capital. How could the Kuhn, Loeb-Morgan alliance, powerful though it
might be, believe that it would be capable, first, of devising a plan which
would bring the entire money and credit of the people of the United States into
their hands, and second, of getting such a plan enacted into law? The
capability of devising and enacting the "National Reserve Plan", as
the immediate result of the Jekyll Island expedition was called, was easily
within the powers of the Kuhn, Loeb-Morgan alliance, according to the following
from McClure’s Magazine, August 1911, "The Seven Men" by John Moody:
"Seven men in Wall Street now control a great share of the fundamental
industry and resources of the United States. Three of the seven men, J.P.
Morgan, James J. Hill, and George F. Baker, head of the First National Bank of
New York belong to the so-called Morgan group; four of them, John D. and
William Rockefeller, James Stillman, head of the National City Bank, and Jacob
H. Schiff of the private banking firm of Kuhn, Loeb Company, to the so-called
Standard Oil City Bank group... the central machine of capital extends its
control over the United States. The process is not only economically logical;
it is now practically automatic."
Thus we
see that the 1910 plot to seize control of the money and credit of the people
of the United States was planned by men who already controlled most of the
country’s resources. It seemed to John Moody "practically automatic"
that they should continue with their operations. What John Moody did not know,
or did not tell his readers, was that the most powerful men in the United
States were themselves answerable to another power, a foreign power, and a
power which had been steadfastly seeking to extend its control over the young republic
of the United States since its very inception. This power was the financial
power of England, centered in the London Branch of the House of Rothschild. The
fact was that in 1910, the United States was for all practical purposes being
ruled 32 John Moody, "The Seven Men", McClure’s Magazine, August,
1911, p. 418 47 from England, and so it is today.
The ten
largest bank holding companies in the United States are firmly in the hands of
certain banking houses, all of which have branches in London. They are J.P.
Morgan Company, Brown Brothers Harriman, Warburg, Kuhn Loeb and J. Henry
Schroder. All of them maintain close relationships with the House of
Rothschild, principally through the Rothschild control of international money
markets through its manipulation of the price of gold. Each day, the world
price of gold is set in the London office of N.M. Rothschild and Company.
Although these firms are ostensibly American firms, which merely maintain
branches in London, the fact is that these banking houses actually take their
direction from London. Their history is a fascinating one, and unknown to the
American public, originating as it did in the international traffic in gold,
slaves, diamonds, and other contraband. There are no moral considerations in
any business decision made by these firms. They are interested solely in money
and power.
Tourists
today gape at the magnificent mansions of the very rich in Newport, Rhode
Island, without realizing that not only do these "cottages" stand as
a memorial to the baronial desires of our Victorian millionaires, but that
their erection in Newport represented a nostalgic memorialization of the great
American fortunes, which had their beginnings in Newport when it was the
capital of the slave trade. The slave trade for centuries had its headquarters
in Venice, until Seventeenth Century Britain, the new master of the seas, used
its control of the oceans to gain a monopoly. As the American colonies were
settled, its fiercely independent people, most of whom did not want slaves,
found to their surprise that slaves were being sent to our ports in great
numbers. For many years, Newport was the capital of this unsavory trade.
William Ellery, the Collector of the Port of Newport, said in 1791: "...an
Ethiopian clod as soon change his skin as a Newport merchant clod be induced to
change so lucrative a trade.... for the slow profits of any manufactory."
John
Quincy Adams remarked in his Diary, page 459, "Newport’s former prosperity
was chiefly owing to its extensive employment in the African slave trade."
The pre-eminence of J.P. Morgan and the Brown firm in American finance can be
dated to the development of Baltimore as the nineteenth century capital of the
slave trade. Both of these firms originated in Baltimore, opened branches in
London, came under the aegis of the House of Rothschild, and returned to the
United States to open branches in New York and to become the dominant power,
not only in finance, but also in government. In recent years, key posts such as
Secretary of Defense have been held by Robert Lovett, partner of Brown Brothers
Harriman, and Thomas S. Gates, partner of Drexel and Company, a J.P. Morgan
subsidiary firm. The present Vice President, George Bush, is the son of
Prescott Bush, a partner of Brown Brothers Harriman, for many years the senator
from Connecticut, and the financial organizer of Columbia Broadcasting System
of which he also was a director for many years. To understand why these firms
operate as they do, it is necessary to give a brief history of their origins.
Few Americans know that J.P. Morgan Company began as George Peabody and
Company.
George
Peabody (1795-1869), born at South Danvers, Massachusetts, began business in
Georgetown, D.C. in 1814 as Peabody, Riggs and Company, dealing in wholesale
dry goods, and in operating the Georgetown Slave Market. In 1815, to be closer
to their source of supply, they moved to Baltimore, where they operated as
Peabody and Riggs, from 1815 to 1835. Peabody found himself increasingly
involved with business originating from London, and in 1835, he established the
firm of George Peabody and Company in London. He had excellent entree in London
business through another Baltimore firm established in Liverpool, the Brown
Brothers.
Alexander
Brown came to Baltimore in 1801, and established what is now known as the
oldest banking house in the United States, still operating as Brown Brothers
Harriman of New York; Brown, Shipley and Company of England; and Alex Brown and
Son of Baltimore. The behind the scenes power wielded by this firm is indicated
by the fact that Sir Montagu Norman, Governor of the Bank of England for many
years, was a partner of Brown, Shipley and Company. Considered the single most
influential banker in the world, Sir Montagu Norman was organizer of
"informal talks" between heads of central banks in 1927, which led
directly to the Great Stockmarket Crash of 1929. Soon after he arrived in
London, George Peabody was surprised to be summoned to an audience with the
gruff Baron Nathan Mayer Rothschild. Without mincing words, Rothschild revealed
to Peabody, that much of the London aristocracy openly disliked Rothschild and
refused his invitations. He proposed that Peabody, a man of modest means, be
established as a lavish host whose entertainments would soon be the talk of
London. Rothschild would, of course, pay all the bills.
Peabody
accepted the offer, and soon became known as the most popular host in London.
His annual Fourth of July dinner, celebrating American Independence, became
extremely popular with the English aristocracy, many of whom, while drinking
Peabody’s wine, regaled each other with jokes about Rothschild’s crudities and
bad manners, without realizing that every drop they drank had been paid for by
Rothschild. "There is an informal understanding that a director of Brown,
Shipley should be on the Board of the Bank of England, and Norman was elected
to it in 1907." Montagu Norman, Current Biography, 1940.
It is
hardly surprising that the most popular host in London would also become a very
successful businessman, particularly with the House of Rothschild supporting
him behind the scenes. Peabody often operated with a capital of 500,000 pounds
on hand, and became very astute in his buying and selling on both sides of the
Atlantic. His American agent was the Boston firm of Beebe, Morgan and Company,
headed by Junius S. Morgan, father of John Pierpont Morgan. Peabody, who never
married, had no one to succeed him, and he was very favorably impressed by the
tall, handsome Junius Morgan. He persuaded Morgan to join him in London as a
partner in George Peabody and Company in 1854. In 1860, John Pierpont Morgan
had been taken on as an apprentice by the firm of Duncan, Sherman in New York.
He was not very attentive to business, and in 1864, Morgan’s father was
outraged when Duncan, Sherman refused to make his son a partner. He promptly
extended an arrangement whereby one of the chief employees of Duncan, Sherman,
Charles H. Dabney, was persuaded to join John Pierpont Morgan in a new firm,
Dabney, Morgan and Company. Bankers Magazine, December, 1864, noted that
Peabody had withdrawn his account from Duncan, Sherman, and that other firms
were expected to do so.
The
Peabody account, of course, went to Dabney, Morgan Company. John Pierpont
Morgan was born in 1837, during the first money panic in the United States.
Significantly, it had been caused by the House of Rothschild, with whom Morgan
was later to become associated. In 1836, President Andrew Jackson, infuriated
by the tactics of the bankers who were attempting to persuade him to renew the
charter of the Second Bank of the United States, said, "You are a den of
vipers. I intend to rout you out and by the Eternal God I will rout you out. If
the people only understood the rank injustice of our money and banking system,
there would be a revolution before morning." Although Nicholas Biddle was
President of the Bank of the United States, it was well known that Baron James
de Rothschild of Paris was the principal investor in this central bank. Although
Jackson had vetoed the renewal of the charter of the Bank of the United States,
he probably was unaware that a few months earlier, in 1835, the House of
Rothschild had cemented a relationship with the United States Government by
superseding the firm of Baring as financial agent of the Department of State on
January 1, 1835. Henry Clews, the famous banker, in his book, Twenty-eight
Years in Wall Street33, states that the Panic of 1837 was engineered because
the charter of the Second Bank of the United States had run out in 1836. Not
only did President Jackson promptly withdraw government funds from the Second
Bank of the United States, but he deposited these funds, $10 million, in state
banks.
The
immediate result, Clews tells us, is that the country began to enjoy great
prosperity. This sudden flow of cash caused an immediate expansion of the
national economy, and the government paid off the entire national debt, leaving
a surplus of $50 million in the Treasury. The European financiers had the
answer to this situation. Clews further states, "The Panic of 1837 was
aggravated by the Bank of England when it in one day threw out all the paper
connected with the United States." The Bank of England, of course, was
synonymous with the name of Baron Nathan Mayer Rothschild. Why did the Bank of
England in one day "throw out" all paper connected with the United
States, that is, refuse to accept or discount any securities, bonds or other
financial paper based in the United States? The purpose of this action was to
create an immediate financial panic in the United States, cause a complete
contraction of credit, halt further issues of stocks and bonds, and ruin those
seeking to turn United States securities into cash. In this atmosphere of
financial panic, John Pierpont Morgan came into the world. His grandmother,
Joseph Morgan, was a well to do farmer who owned 106 acres in Hartford,
Connecticut.
He later
opened the City Hotel, and the Exchange Coffee Shop, and in 1819, was one of
the founders of the Aetna Insurance Company. George Peabody found that he had
chosen well in selecting Junius S. Morgan as his successor. Morgan agreed to
continue the sub rosa relationship with N.M. Rothschild Company, and soon
expanded the firm’s activities by shipping large quantities of railroad iron to
the United States. It was Peabody iron which was the foundation for much of
American railroad tracks from 1860 to 1890. In 1864, content to retire and
leave his firm in the hands of Morgan, Peabody allowed the name to be changed
to Junius S. Morgan Company. The Morgan firm then and since has always been
directed from London. John Pierpont Morgan spent much of his time at his
magnificent London mansion, Prince’s Gate. One of the high water marks of the
successful Rothschild-Peabody Morgan business venture was the Panic of 1857. It
had been twenty years since the Panic of 1837: its lessons had been forgotten
by hordes of eager investors who were anxious to invest the profits of a
developing America. It was time to fleece them again. The stock market operates
like a wave washing up on the beach.
It
sweeps with it many minuscule creatures who derive all of their life support
from the oxygen and water of the wave. They coast along at the crest of the
"Tide of Prosperity". Suddenly the wave, having reached the high
water mark on the beach, recedes, leaving all of the creatures gasping on the
sand. Another wave may come in time to save them, but in all likelihood it will
not come as far, and some of the sea creatures are doomed. In the same manner,
waves of prosperity, fed by newly created money, through an artificial
contraction of credit, recedes, leaving those it had borne high to gasp and die
without hope of salvation. Corsair, the Life of J.P. Morgan, tells us that the
Panic of 1857 was caused by the collapse of the grain market and by the sudden
collapse of Ohio Life and Trust, for a loss of five million dollars. With this
collapse nine hundred other American companies failed. Significantly, one not
only survived, but prospered from the crash.
In Corsair,
we learn that the Bank of England lent George Peabody and Company five million
pounds during the panic of 1857. Winkler, in Morgan the Magnificent35 says that
the Bank of England advanced Peabody one million pounds, an enormous sum at
that time, and the equivalent of one hundred million dollars today, to save the
firm. However, no other firm received such beneficence during this Panic. The
reason is revealed by Matthew Josephson, in The Robber Barons. He says on page
60: "For such qualities of conservatism and purity, George Peabody and
Company, the old tree out of which the House of Morgan grew, was famous. In the
panic of 1857, when depreciated securities had been thrown on the market by
distressed investors in America, Peabody and the elder Morgan, being in
possession of cash, had purchased such bonds as possessed real value freely,
and then resold them at a large advance when sanity was restored."
Thus,
from a number of biographies of Morgan, the story can be pieced together. After
the panic had been engineered, one firm came into the market with one million
pounds in cash, purchased securities from distressed investors at panic prices,
and later resold them at an enormous profit. That firm was the Morgan firm, and
behind it was the clever maneuvering of Baron Nathan Mayer Rothschild. The
association remained secret from the most knowledgeable financial minds in
London and New York, although Morgan occasionally appeared as the financial
agent in a Rothschild operation. As the Morgan firm grew rapidly during the
late nineteenth century, until it dominated the finances of the nation, many
observers were puzzled that the Rothschilds seemed so little interested in
profiting by investing in the rapidly advancing American economy. John Moody
notes, in The Masters of Capital, page 27, "The Rothschilds were content
to remain a close ally of Morgan.as far as the American field was concerned.’
Secrecy
was more profitable than valor. The reason that the European Rothschilds
preferred to operate anonymously in the United States behind the facade of J.P.
Morgan and Company is explained by George Wheeler, in Pierpont Morgan and
Friends, the Anatomy of a Myth, page17: "But there were steps being taken
even now to bring him out of the financial backwaters--and they were not being
taken by Pierpont Morgan himself. The first suggestion of his name for a role
in the recharging of the reserve originated with the London branch of the House
of Rothschild, Belmont’s employers."38 Wheeler goes on to explain that a
considerable anti-Rothschild movement had developed in Europe and the United
States which focused on the banking activities of the Rothschild family. Even
though they had a registered agent in the United States, August Schoenberg, who
had changed his name to Belmont when he came to the United States as the
representative of the Rothschilds in 1837, it was extremely advantageous to
them to have an American representative who was not known as a Rothschild
agent. Although the London house of Junius S. Morgan and Company continued to
be the dominant branch of the Morgan enterprises, with the death of the senior
Morgan in 1890 in a carriage accident on the Riviera, John Pierpont Morgan
became the head of the firm. After operating as the American representative of
the London firm from 1864-1871 as Dabney Morgan Company, Morgan took on a new
partner in 1871, Anthony Drexel of Philadelphia and operated as Drexel Morgan
and Company until 1895.
Drexel
died in that year, and Morgan changed the name of the American branch to J.P.
Morgan and Company. LaRouche tells us that on February 5, 1891, a secret
association known as the Round Table Group was formed in London by Cecil
Rhodes, his banker, Lord Rothschild, the Rothschild in-law, Lord Rosebery, and
Lord Curzon. He states that in the United States the Round Table was
represented by the Morgan group. Dr. Carrol Quigley refers to this group as
"The British-American Secret Society" in Tragedy and Hope, stating
that "The chief backbone of this organization grew up along the already
existing financial cooperation running from the Morgan Bank in New York to a
group of international financiers in London led by Lazard Brothers (in
1901)."40 William Guy Carr, in Pawns In The Game states that, "In
1899, J.P. Morgan and Drexel went to England to attend the International
Bankers 38 George Wheeler, Pierpont Morgan and Friends, the Anatomy of a Myth,
Prentice Hall, N.J. 1973 39 Lyndon H. LaRouche, Jr., Dope, Inc., The New
Benjamin Franklin House Publishing Company, N.Y. 1978 40 Dr. Carrol Quigley,
Tragedy and Hope, Macmillan Co., N.Y. 53 Convention.
When
they returned, J.P. Morgan had been appointed head representative of the
Rothschild interests in the United States. As the result of the London
Conference, J.P. Morgan and Company of New York, Drexel and Company of
Philadelphia, Grenfell and Company of London, and Morgan Harjes Cie of Paris,
M.M. Warburg Company of Germany and America, and the House of Rothschild were
all affiliated."41 Apparently unaware of the Peabody connection with the
Rothschilds and the fact that the Morgans had always been affiliated with the
House of Rothschild, Carr supposed that he had uncovered this relationship as
of 1899, when in fact it went back to 1835. After World War I, the Round Table
became known as the Council on Foreign Relations in the United States, and the
Royal Institute of International Affairs in London. The leading government
officials of both England and the United States were chosen from its members.
In the 1960s, as growing attention centered on the surreptitious governmental
activities of the Council on Foreign Relations, subsidiary groups, known as the
Trilateral Commission and the Bilderbergers, representing the identical
financial interests, began operations, with the more important officials, such
as Robert Roosa, being members of all three groups. 41 William Guy Carr, Pawns
In The Game, privately printed, 1956, pg. 60
July 30, 1930 McFadden Basis of Control of Economic Conditions.
This
control of the world business structure and of human happiness and progress by
a small group is a matter of the most intense public interest. In analyzing it,
we must begin with the internal group which centers itself around J.P. Morgan
Company. Never before had there been such a powerful centralized control over
finance, industrial production, credit and wages as is at this time vested in
the Morgan group... The Morgan control of the Federal Reserve System is
exercised through control of the management of the Federal Reserve Bank of New
York. George F. Peabody History of the Great American Fortunes, Gustavus Myers,
Mod. Lib. 537, notes that J.P. Morgan’s father, Junius S. Morgan, had become a
partner of George Peabody in the banking business. "When the Civil War
came on, George Peabody and Company were appointed the financial
representatives in England of the U.S. Government with this appointment their
wealth suddenly began to pile up; where hitherto they had amassed the riches by
stages not remarkably rapid, they now added many millions within a very few years."
According
to writers of the day, the methods of George Peabody & Company were not
only unreasonable but double treason, in that, while in the act of giving
inside aid to the enemy, George Peabody & Company were the potentiaries of
the U.S. Government and were being well paid to advance its interests.
"Springfield Republic", 1866: "For all who know anything on the
subject know very well that Peabody and his partners gave us no faith and no
help in our struggle for national existence. They participated to the fullest
in the common English distrust of our cause and our success, and talked and
acted for the South rather than for our nation. No individuals contributed so
much to flooding our money markets and weakening financial confidence in our
nationality than George Peabody & Company, and none made more money by the
operation. All the money that Mr. Peabody is giving away so lavishly among our
institutions of learning was gained by the speculations of his house in our
misfortunes."
Also,
New York Times, Oct. 31, 1866: Reconstruction Carpetbaggers Money Fund.
Lightning over the Treasury Building, John Elson, Meador Publishing Co., Boston
41, pg. 53, "The Bank of England with its subsidiary banks in America
(under the domination of J.P. Morgan) the Bank of France, and the Reichsbank of
Germany, composed an interlocking and cooperative banking system, the main
objective of which was the exploitation of the people." According to
William Guy Carr, in Pawns In The Game, the initial meeting of these ex officio
planners took place in Mayer Amschel Bauer’s Goldsmith Shop in Frankfurt in
1773. Bauer, who adopted the name of "Rothschild" or Red Shield, from
the red shield which he hung over his door to advertise his business (the red
shield today is the official coat of arms of the City of Frankfurt), "was
only thirty years of age when he invited twelve other wealthy and influential
men to meet him in Frankfurt. His purpose was to convince them that if they
agreed to pool their resources they could then finance and control the World
Revolutionary Movement and use it as their Manual of Action to win ultimate
control of the wealth, natural resources, and manpower of the entire world.
This
agreement reached, Mayer unfolded his revolutionary plan. The project would be
backed by all the power that could be purchased with their pooled resources. By
clever manipulation of their combined wealth it would be possible to create
such adverse economic conditions that the masses would be reduced to a state
bordering on starvation by unemployment... Their paid propagandists would
arouse feelings of hatred and revenge against the ruling classes by exposing
all real and alleged cases of extravagance, licentious conduct, injustice,
oppression, and persecution. They would also invent infamies to bring into
disrepute others who might, if left alone, interfere with their overall
plans... Rothschild turned to a manuscript and proceeded to read a carefully
prepared plan of action.
1. He argued that LAW was FORCE only
in disguise. He reasoned it was logical to conclude ‘By the laws of nature
right lies in force.’
2. Political freedom is an idea, not a fact.
In order to usurp political power all that was necessary was to preach
‘Liberalism’ so that the electorate, for the sake of an idea, would yield some
of their power and prerogatives which the plotters could then gather into their
own hands.
3. The speaker asserted that the
Power of Gold had usurped the power of Liberal rulers.... He pointed out that
it was immaterial to the success of his plan whether the established
governments were destroyed by external or internal foes because the victor had
to of necessity ask the aid of ‘Capital’ which ‘Is entirely in our hands’.
4. He argued that the use of any and
all means to reach their final goal was justified on the grounds that the ruler
who governed by the moral code was not a skilled politician because he left
himself vulnerable and in an unstable position.
5. He asserted that ‘Our right lies
in force. The word RIGHT is an abstract thought and proves nothing. I find a
new RIGHT... to attack by the Right of the Strong, to reconstruct all existing
institutions, and to become the sovereign Lord of all those who left to us the
Rights to their powers by laying them down to us in their liberalism.
6. The power of our resources must
remain invisible until the very moment when it has gained such William Guy
Carr, Pawns In The Game, privately printed, 1956 55 strength that no cunning or
force can undermine it. He went on to outline twenty-five points.
Number 8 dealt with the use of
alcoholic liquors, drugs, moral corruption, and all vice to systematically
corrupt youth of all nations.
9. They had the right to seize
property by any means, and without hesitation, if by doing so they secured
submission and sovereignty.
10. We were the first to put the
slogans Liberty, Equality, and Fraternity into the mouths of the masses, which
set up a new aristocracy. The qualification for this aristocracy is WEALTH
which is dependent on us.
11. Wars should be directed so that
the nations engaged on both sides should be further in our debt.
12. Candidates for public office
should be servile and obedient to our commands, so that they may readily be
used.
13. Propaganda--their combined wealth
would control all outlets of public information.
14. Panics and financial depressions
would ultimately result in World Government, a new order of one world
government."
The
Rothschild family has played a crucial role in international finance for two centuries,
as Frederick Morton, in The Rothschilds writes: "For the last one hundred
and fifty years the history of the House of Rothschild has been to an amazing
extent the backstage history of Western Europe."
Because
of their success in making loans not to individuals, but to nations, they
reaped huge profits, although as Morton writes, p. 36, "Someone once said
that the wealth of Rothschild consists of the bankruptcy of nations."
E.C.
Knuth writes, in The Empire of the City, "The fact that the House of
Rothschild made its money in the great crashes of history and the great wars of
history, the very periods when others lost their money, is beyond
question."
The
Great Soviet Encyclopaedia, states, "The clearest example of a personal
linkup (international directorates) on a Western European scale is the
Rothschild family. The London and Paris branches of the Rothschilds are bound
not just by family ties but also by personal link-ups in jointly controlled
companies."
The
encyclopaedia further described these companies as international monopolies.
The sire of the family, Mayer Amschel Rothschild, established a small business
as a coin dealer in Frankfurt in 1743. Although previously known as Bauer, he
advertised his profession by putting up a sign depicting an eagle on a red
shield, an adaptation of the coat of arms of the City of Frankfurt, to which he
added five golden arrows extending from the talons, signifying his five sons.
Because of this sign, he took the name ‘Rothschild" or "Red Shield".
When the Elector of Hesse earned a fortune by renting Hessian mercenaries to
the British to put down the rebellion in the American colonies, Rothschild was
entrusted with this money to invest. He made an excellent profit both for
himself and the Elector, and attracted other accounts. In 1785 he moved to a
larger house, 148 Judengasse, a five story house known as "The Green
Shield" which he shared with the Schiff family.
The five
sons established branches in the principal cities of Europe, the most
successful being James in Paris and Nathan Mayer in London. Ignatius Balla in
The Romance of the Rothschilds46 tells us how the London Rothschild established
his fortune. He went to Waterloo, where the fate of Europe hung in the balance,
saw that Napoleon was losing the battle, and rushed back to Brussels. At
Ostend, he tried to hire a boat to England, but because of a raging storm, no
one was willing to go out. Rothschild offered 500 francs, then 700, and finally
1,000 francs for a boat. One sailor said, "I will take you for 2000
francs; then at least my widow will have something if we are drowned."
Despite the storm, they crossed the Channel. The next morning, Rothschild was
at his usual post in the London Exchange. Everyone noticed how pale and
exhausted he looked. Suddenly, he started selling, dumping large quantities of
securities.
Panic
immediately swept the Exchange. Rothschild is selling; he knows we have lost
the Battle of Waterloo. Rothschild and all of his known agents continued to
throw securities onto the market. Balla says, "Nothing could arrest the
disaster. At the same time he was quietly buying up all securities by means of
secret agents whom no one knew. In a single day, he had gained nearly a million
sterling, giving rise to the saying, ‘The Allies won the Battle of Waterloo,
but it was really Rothschild who won.’"
In The
Profits of War, Richard Lewinsohn says, "Rothschild’s war profits from the
Napoleonic Wars financed their later stock speculations. Under Metternich,
Austria after long hesitation, finally agreed to accept financial direction
from the House of Rothschild."47 46 Ignatius Balla, The Romance of the
Rothschilds, Everleigh Nash, London,1913
The New York Times, April 1, 1915 reported that in 1914, Baron Nathan
Mayer de Rothschild went to court to suppress Ignatius Balla’s book on the
grounds that the Waterloo story about his grandfather was untrue and libelous.
The court ruled that the story was true, dismissed Rothschild’s suit, and
ordered him to pay all costs. The New York Times noted in this story that
"The total Rothschild wealth has been estimated at $2 billion." A
previous story in The New York Times (May 27, 1905) noted that Baron Alphonse
de Rothschild, head of the French house of Rothschild, possessed $60 million in
American securities in his fortune, although the Rothschilds reputedly were not
active in the American field. This explains why their agent, J.P. Morgan, had
only $19 million in securities in his estate when he died in 1913, and
securities handled by Morgan were actually owned by his employer,
Rothschild."
After
the success of his Waterloo exploit, Nathan Mayer Rothschild gained control of
the Bank of England through his near monopoly of "Consols" and other
shares. Several "central" banks, or banks which had the power to issue
currency, had been started in Europe: The Bank of Sweden, in 1656, which began
to issue notes in 1661, the earliest being the Bank of Amsterdam, which
financed Oliver Cromwell’s seizure of power in England in 1649, ostensibly
because of religious differences. Cromwell died in 1657 and the throne of
England was re-established when Charles II was crowned in 1660. He died in
1685. In 1689, the same group of bankers regained power in England by putting
King William of Orange on the throne. He soon repaid his backers by ordering
the British Treasury to borrow 1,250,000 pounds from these bankers. He also
issued them a Royal Charter for the Bank of England, which permitted them to
consolidate the National debt (which had just been created by this loan) and to
secure payments of interest and principal by direct taxation of the people. The
Charter forbade private goldsmiths to store gold and to issue receipts, which
gave the stockholders of the Bank of England a money monopoly.
The
goldsmiths also were required to store their gold in the Bank of England
vaults. Not only had their privilege of issuing circulating medium been taken
away by government decree, but their fortunes were now turned over to those who
had supplanted them. In his "Cantos", 46; 27, Ezra Pound refers to
the unique privileges which William Paterson advertised in his prospectus for
the Charter of the Bank of England: "Said Paterson Hath benefit of
interest on all the moneys which it, the bank, creates out of nothing."
The "nothing" which is referred to, of course, is the bookkeeping
operation of the bank, which "creates" money by entering a notation
that it has "lent" you one thousand dollars, money which did not
exist until the bank made the entry. By 1698, the British Treasury owed 16
million pounds sterling to the Bank of England.
By 1815,
principally due to the compounding of interest, the debt had risen to 885
million pounds sterling. Some of this increase was due to the wars which had
flourished during that period, including the Napoleonic Wars and the wars which
England had fought to retain its American Colony. NOTE: In the United States, after the
stockholders of the Federal Reserve System had consolidated their power in
1934, our government also issued orders that private citizens could not store
or hold gold.
William
Paterson (1658-1719) himself benefited little from "the moneys which the
bank creates out of nothing", as he withdrew, after a policy disagreement,
from the Bank of England a year after it was founded. A later William Paterson
became one of the framers of the United States Constitution, while the name
lingers on, like the pernicious central bank itself. Paterson had found himself
unable to work with the Bank of England’s stockholders. Many of them remained
anonymous, but an early description of the Bank of England stated it was
"A society of about 1330 persons, including the King and Queen of England,
who had 10,000 pounds of stock, the Duke of Leeds, Duke of Devonshire, Earl of
Pembroke, and the Earl of Bradford." Because of his success in his
speculations, Baron Nathan Mayer de Rothschild, as he now called himself,
reigned as the supreme financial power in London.
He
arrogantly exclaimed, during a party in his mansion, "I care not what
puppet is placed upon the throne of England to rule the Empire on which the sun
never sets. The man that controls Britain’s money supply controls the British
Empire, and I control the British money supply." His brother James in
Paris had also achieved dominance in French finance. In Baron Edmond de
Rothschild, David Druck writes, "(James) Rothschild’s wealth had reached
the 600 million mark. Only one man in France possessed more. That was the King,
whose wealth was 800 million. The aggregate wealth of all the bankers in France
was 150 million less than that of James Rothschild. This naturally gave him
untold powers, even to the extent of unseating governments whenever he chose to
do so. It is well known, for example, that he overthrew the Cabinet of Prime Minister
Thiers."
The
expansion of Germany under Bismarck was accompanied by his dependence on Samuel
Bleichroder, Court Bankers of the Prussian Emperor, who had been known as an
agent of the Rothschilds since 1828. The later Chancellor of Germany, Dr. von
Bethmann Hollweg, was the son of Moritz Bethmann of Frankfurt, who had
intermarried with the Rothschilds. Emperor Wilhelm I also relied heavily on
Bischoffsheim, Goldschmidt, and Sir Ernest Cassel of Frankfurt, who emigrated
to England and became personal banker to the Prince of Wales, later Edward VII.
Cassel’s daughter married Lord Mountbatten, giving the family a direct
relationship to the present British Crown.
David
Druck, Baron Edmond de Rothschild, (Privately printed), N.Y. 1850 49 E.M.
Josephson, The Strange Death of Franklin D. Roosevelt, pg. 39, Chedney Press,
N.Y. 1948 59 Josephson states that Philip Mountbatten was related through the
Cassels to the Meyer Rothschilds of Frankfurt. Thus, the English royal House of
Windsor has a direct family relationship to the Rothschilds. In 1901, when
Queen Victoria’s son, Edward, became King Edward VII, he re-established the
Rothschild ties. Paul Emden in Behind The Throne says, "Edward’s
preparation for his metier was quite different from that of his mother, hence
he ‘ruled’ less than she did. Gratefully, he retained around him men who had
been with him in the age of the building of the Baghdad Railway...there were
added to the advisory staff Leopold and Alfred de Rothschild, various members
of the Sassoon family, and above all his private financial advisor Sir Ernest
Cassel."
The
enormous fortune which Cassel made in a relatively short time gave him an
immense power which he never misused. He amalgamated the firm of Vickers Sons
with the Naval Construction Company and the Maxim-Nordenfeldt Guns and
Ammunition Company, a fusion from which there arose the worldwide firm of
Vickers Sons and Maxim. On an entirely different capacity from Cassel were
businessmen like the Rothschilds. The firm was run on democratic principles,
and the various partners all had to be members of the family. With great
hospitality and in a princely manner they led the lives of grand seigneurs, and
it was natural that Edward VII should find them congenial. Thanks to their
international family relationships and still more extended business
connections, they knew the whole world, were well informed about everybody, and
had reliable knowledge of matters which did not appear on the surface. This
combination of finance and politics had been a trademark of the Rothschilds
from the very beginning. The House of Rothschild always knew more than could be
found in the papers and even more than could be read in the reports which
arrived at the Foreign Office. In other countries also the relations of the
Rothschilds extended behind the throne. Not until numerous diplomatic
publications appeared in the years after the war did a wider public learn how
strongly Alfred de Rothschild’s hand affected the politics of Central Europe
during the twenty years before the war (World War I)." With the control of
the money came the control of the news media. Kent Cooper, head of the
Associated Press, writes in his autobiography, Barriers Down,
"International bankers under the House of Rothschild acquired an interest in
the three leading European agencies."
Thus the
Rothschilds bought control of Reuters International News Agency, based in
London, Havas of France, and Wolf in Germany, which controlled the
dissemination of all news in Europe. Paul Emden, Behind The Throne, Hoddard
Stoughton, London, 1934 51 Kent Cooper, Barriers Down, pg. 21 60 In Inside
Europe, John Gunther wrote in 1936 that any French prime minister, at the end
of 1935, was a creature of the financial oligarchy, and that this financial
oligarchy was dominated by twelve regents, of whom six were bankers, and were
headed by Baron Edmond de Rothschild. The iron grip of the "London
Connection" on the media was exposed in a recent book by Ben J. Bagdikian
The Media Monopoly, described as "A startling report on the 50
corporations that control what America sees, hears, reads".
Bagdikian,
who edited the nation’s most influential magazine the Saturday Evening Post
until the monopoly suddenly closed it down, reveals the interlocking
directorates among the fifty corporations which control the news, but fails to
trace them back to the five London banking houses which control them. He
mentions that CBS interlocks with the Washington Post, Allied Chemical, Wells
Fargo Bank, and others, but does not tell the reader that Brown Brothers
Harriman controls CBS, or that the Eugene Meyer family (Lazard Freres) controls
Allied Chemical and the Washington Post, and Kuhn Loeb Co. the Wells Fargo
Bank. He shows the New York Times interlocked with Morgan Guaranty Trust,
American Express, First Boston Corporation and others, but does not show how
the banking interlocks. He does not mention the Federal Reserve System in his
entire book, which is conspicuous by its absence. Bagdikian documents that the
media monopoly is steadily closing down more newspapers and magazines.
Washington D.C., with one paper, The Post, is unique among world capitols.
London has eleven daily newspapers, Paris fourteen, Rome eighteen, Tokyo
seventeen, and Moscow nine. He cites a study from the 1982 World Press
Encyclopaedia that the United States is at the bottom of industrial nations in
the number of daily newspapers sold per 1,000 population. Sweden leads the list
with 572, the United States is at the bottom with 287.
There is
universal distrust of the media by Americans, because of their notorious
monopoly and bias. The media unanimously urge higher taxes on working people,
more government spending, a welfare state with totalitarian powers, close
relations with Russia, and a rabid denunciation of anyone who opposes
Communism. This is the program of "the London Connection." It flaunts
a maniacal racism, and has as its motto the dictum of its high priestess, Susan
Sontag, that "The white race is the cancer of history." Everyone
should be against cancer. The media monopoly deals with its opponents in one of
two ways; either frontal assault of libel which the average person cannot
afford to litigate, or an iron curtain of silence, the standard treatment for
any work which exposes its clandestine activities.
Although
the Rothschild plan does not match any single political or economic movement
since it was enunciated in 1773, vital parts of it can be discerned in all
political revolution since that date. LaRouche54 points out that the Round
Tables sponsored Fabian Socialism in England, while backing the Nazi regime
through a Round Table member in Germany, Dr. Hjalmar Schacht, and that they
used the Nazi Government throughout World War II through Round Table member
Admiral Canaris, while Allen Dulles ran a collaborating intelligence operation
in Switzerland for the Allies.
CHAPTER SIX
The London Connection
"So
you see, my dear Coningsby, that the world is governed by very different
personages from what is imagined by those who are not behind the
scenes."55--Disraeli, Prime Minister of England during Queen Victoria’s
reign. In 1775, the colonists of America declared their independence from Great
Britain, and subsequently won their freedom by the American Revolution.
Although they achieved political freedom, financial independence proved to be a
more difficult matter. In 1791, Alexander Hamilton, at the behest of European
bankers, formed the first Bank of the United States, a central bank with much
the same powers as the Bank of England. The foreign influences behind this
bank, more than a century later, were able to get the Federal Reserve Act
through Congress, giving them at last the central bank of issue for our
economy.
Although
the Federal Reserve Bank was neither Federal, being owned by private
stockholders, nor a Reserve, because it was intended to create money, instead
of to hold it in reserve, it did achieve enormous financial power, so much so
that it has gradually superseded the popular elected government of the United
States. Through the Federal Reserve System, American independence was
stealthily but invincibly absorbed back into the British sphere of influence.
Thus the London Connection became the arbiter of policy of the United States.
Because of England’s loss of her colonial empire after the Second World War, it
seemed that her influence as a world political power was waning. Essentially,
this was true. The England of 1980 is not the England of 1880. She no longer
rules the waves; she is a second rate, perhaps third rate, military power, but
paradoxically, as her political and military power waned, her financial power
grew. In Capital City we find, "On almost any measure you care to take,
London is the world’s leading financial centre . . . In the 1960s London
dominance increased . . ."
A
partial explanation of this fact is given: "Daniel Davison, head of
London’s Morgan Grenfell, said, ‘The American banks have brought the necessary
money, customers, capital and skills which have established London in its
present preeminence . . . . only the American banks have a lender of last
resort. The Federal Reserve Board of the United States can, and does, create
dollars when necessary. Without the Americans, the big dollar deals cannot be put
together. Without them, London would not be credible as an international
financial centre.’"
Thus
London is the world’s financial center, because it can command enormous sums of
capital, created at its command by the Federal Reserve Board of the United States.
But how is this possible? We have already established that the monetary
policies of the United States, the interest rates, the volume and value of
money, and sales of bonds, are decided, not by the figurehead of the Federal
Reserve Board of Governors, but by the Federal Reserve Bank of New York. The
pretended decentralization of the Federal Reserve System and its twelve,
equally autonomous "regional" banks, is and has been a deception
since the Federal Reserve Act became law in 1913. That United States monetary
policy stems solely from the Federal Reserve Bank of New York is yet another
fallacy. That the Federal Reserve Bank of New York is itself autonomous, and
free to set monetary policy for the entire United States without any outside
interference is especially untrue. We might believe in this autonomy if we did
not know that the majority stock of the Federal Reserve Bank of New York was
purchased by three New York City banks: First National Bank, National City
Bank, and the National Bank of Commerce. An examination of the principal
stockholders in these banks, in 1914, and today, reveals a direct London
connection. In 1812, the National City Bank began business as the City Bank, in
the same room in which the defunct Bank of the United States, whose charter had
expired, had been doing business. It represented many of the same stockholders,
who were now functioning under a legitimate American charter.
During
the early 1800s, the most famous name associated with City Bank was Moses
Taylor (1806-1882). Taylor’s father had been a confidential agent employed in
buying property for the Astor interests while concealing the fact that Astor
was the purchaser. Through this tactic, Astor succeeded in buying many farms,
and also a great deal of potentially valuable real estate in Manhattan.
Although Astor’s capital was reputed to come from his fur trading, a number of
sources indicate that he also represented foreign interests. LaRouche states
that Astor, in exchange for providing intelligence to the British during the
years before and after the Revolutionary War, and for inciting Indians to
attack and kill American settlers along the frontier, received a handsome
reward. He was not paid cash, but was given a percentage of the British opium
trade with China. It was the income from this lucrative concession which
provided the basis for the Astor fortune. With his father’s connection with the
Astors, young Moses Taylor had no difficulty in finding a place as apprentice
in a banking house at the age of 15.
Like so many
others in these pages, he found his greatest opportunities when many other
Americans were going bankrupt during an abrupt contraction of credit. During
the Panic of 1837, when more than half the business firms in New York failed,
he doubled his fortune. In 1855, he became president of City Bank. During the
Panic of 1857, the City Bank profited by the failure of many of its
competitors. Like George Peabody and Junius Morgan, Taylor seemed to have an
ample supply of cash for buying up distressed stocks. He purchased nearly all
the stock of Delaware Lackawanna Railroad for $5 a share. Seven years later, it
was selling for $240 a share. Moses Taylor was now worth fifty million dollars.
In August, 1861, Taylor was named Chairman of the Loan Committee to finance the
Union Government in the Civil War. The Committee shocked Lincoln by offering
the government $5,000,000 at 12% to finance the war. Lincoln refused and
financed the war by issuing the famous "Greenbacks" through the U.S.
Treasury, which were backed by gold. Taylor continued to increase his fortune
throughout the war, and in his later years, the youthful James Stillman became
his protégé. In 1882, when Moses Taylor died, he left seventy million dollars.
His son-in-law, Percy Pyne, succeeded him as president of City Bank, which had
now become National City Bank. Pyne was paralyzed, and was barely able to
function at the bank. For nine years, the bank stagnated, nearly all its
capital being the estate of Moses Taylor. William Rockefeller, brother of John D.
Rockefeller, had bought into the bank, and was anxious to see it progress. He
persuaded Pyne to step aside in 1891 in favor of James Stillman, and soon the
National City Bank became the principal repository of the Rockefeller oil
income.
William
Rockefeller’s son, William, married Elsie, James Stillman’s daughter, Isabel.
Like so many others in New York banking, James Stillman also had a British
connection. His father, Don Carlos Stillman, had come to Brownsville, Texas, as
a British agent and blockade runner during the Civil War. Through his banking
connections in New York, Don Carlos had been able to find a place for The New York Times noted on May 24, 1882 that
Moses Taylor was chairman of the Loan Committee of the Associated Banks of New
York City in 1861. Two hundred million dollars worth of securities were
entrusted to him. It is probably due to him more than any other one man that
the government in 1861 found itself with the means to prosecute the war. 65 his
son as apprentice in a banking house. In 1914, when National City Bank
purchased almost ten per cent of the shares of the newly organized Federal
Reserve Bank of New York, two of Moses Taylor’s grandsons, Moses Taylor Pyne
and Percy Pyne, owned 15,000 shares of National City stock. Moses Taylor’s son,
H.A.C. Taylor, owned 7699 shares of National City Bank.
The
bank’s attorney, John W. Sterling, of the firm of Shearman and Sterling, also
owned 6000 shares of National City Bank. However, James Stillman owned 47,498
shares, or almost twenty percent of the bank’s total shares of 250,000. [See
Chart I] The second largest purchaser of Federal Reserve Bank of New York
shares in 1914, First National Bank, was generally known as "the Morgan
Bank", because of the Morgan representation on the board, although the
bank’s founder George F. Baker held 20,000 shares, and his son G.F. Baker, Jr.,
had 5,000 shares for twenty-five percent of the bank’s total stock of 100,000
shares. George F. Baker Sr.’s daughter married George F. St. George of London.
The St. Georges later settled in the United States, where their daughter,
Katherine St. George, became a prominent Congresswoman for a number of years.
Dr. E.M. Josephson wrote of her, "Mrs. St. George, a first cousin of FDR
and New Dealer, said, ‘Democracy is a failure’." George Baker, Jr.’s
daughter, Edith Brevoort Baker, married Jacob Schiff’s grandson, John M.
Schiff, in 1934. John M. Schiff is now honorary chairman of Lehman Brothers
Kuhn Loeb Company. The third large purchase of Federal Reserve Bank of New York
stock in 1914 was the National Bank of Commerce which issued 250,000 shares.
J.P. Morgan, through his controlling interest in Equitable Life, which held
24,700 shares and Mutual Life, which held 17,294 shares of National Bank of
Commerce, also held another 10,000 shares of National Bank of Commerce through
J.P. Morgan and Company (7800 shares), J.P. Morgan, Jr. (1100 shares), and
Morgan partner H.P. Davison (1100 shares). Paul Warburg, a Governor of the
Federal Reserve Board of Governors, also held 3000 shares of National Bank of
Commerce. His partner, Jacob Schiff had 1,000 shares of National Bank of
Commerce. This bank was clearly controlled by Morgan, who was really a
subsidiary of Junius S. Morgan Company in London and the N.M. Rothschild
Company of London, and Kuhn, Loeb Company, which was also known as a principal
agent of the Rothschilds. The financier Thomas Fortune Ryan also held 5100
shares of National Bank of Commerce stock in 1914. His son, John Barry Ryan,
married Otto Kahn’s daughter, Kahn was a partner of Warburg and Schiff in Kuhn,
Loeb Company, Ryan’s granddaughter, Virginia Fortune Ryan, married Lord Airlie,
the present head of J. Henry Schroder Banking Corporation in London and New
York. Another director of National Bank of Commerce in 1914, A.D. Juillard, was
president of A.D. Juillard Company, a trustee of New York Life, and Guaranty
Trust, all of which were controlled by J.P. Morgan. Juillard also had a British
connection, being a director of the North British and Mercantile Insurance Company.
Juillard
owned 2000 shares of National Bank of Commerce stock, and was also a director
of Chemical Bank. In The Robber Barons, by Matthew Josephson, Josephson tells
us that Morgan dominated New York Life, Equitable Life and Mutual Life by 1900,
which had one billion dollars in assets, and which had fifty million dollars a
year to invest. He says, "In this campaign of secret alliances he (Morgan)
acquired direct control of the National Bank of Commerce; then a part ownership
in the First National Bank, allying himself to the very strong and conservative
financier, George F. Baker, who headed it; then by means of stock ownership and
interlocking directorates he linked to the first named banks other leading
banks, the Hanover, the Liberty, and Chase." Mary W. Harriman, widow of
E.H. Harriman, also owned 5,000 shares of National Bank of Commerce in 1914.
E.H. Harriman’s railroad empire had been entirely financed by Jacob Schiff of
Kuhn, Loeb Company. Levi P. Morton also owned 1500 shares of National Bank of
Commerce stock in 1914.
He had
been the twenty-second vice-president of the United States, was an ex-Minister
from the U.S. to France, and president of L.P. Morton Company, New York,
Morton-Rose and Company and Morton Chaplin of London. He was a director of
Equitable Life Insurance Company, Home Insurance Company, Guaranty Trust, and
Newport Trust. The astounding idea that the Federal Reserve System of the
United States is actually operated from London will probably be rejected at
first hearing by most Americans. However, Minsky has become famous for his
theory of the "dominant frame". He states that in any particular
situation, there is a "dominant frame" to which everything in that
situation is related and through which it can be interpreted. The "dominant
frame" in the monetary policy decisions of the Federal Reserve System is
that these decisions are made by those who stand to benefit most from them. At
first glance, this would seem to be the principal stockholders of the Federal
Reserve Bank of New York. However, we have seen that these stockholders all
have a "London Connection". The "London Connection" becomes
more obvious as the dominant power when we find that only seventeen firms are
allowed to operate as merchant bankers in the City of London, England’s
financial district. All of them must be approved by the Bank of England. In
fact, most of the Governors of the Bank of England come from the partners of
these seventeen firms. Clarke ranks the seventeen in order of their
capitalization. Number 2 is the Schroder Bank. Number 6 is Morgan Grenfell, the
London branch of the House of Morgan and actually its dominant branch. Lazard
Brothers is Number 8. N.M. Rothschild is Number 9. Brown Shipley Company, the
London branch of Brown Brothers Harriman, is Number 14. These five merchant
banking firms of London actually control the New York banks which own the
controlling interest in the Federal Reserve Bank of New York. The control over
Federal Reserve System decisions is also founded in another unique situation.
Each
day, representatives of four other London banking firms meet in the offices of
N.M. Rothschild Company in London to fix the price of gold for that day. The
other four bankers are from Samuel Montagu Company, which ranks Number 5 on the
list of seventeen London merchant banking firms, Sharps Pixley, Johnson
Matheson, and Mocatta and Goldsmid. Despite the huge tide of paper pyramided
currency and notes which are now flooding the world, at some point, every
credit extension must return to be based, in however minuscule a fashion, on
some deposit of gold in some bank somewhere in the world. Because of this
factor, the London merchant bankers, with their power to set the price of gold
each day, become the final arbiters of the volume of money and the price of
money in those countries which must bow to their power. Not the least of these
is the United States. No official of the Federal Reserve Bank of New York, or
of the Federal Reserve Board of Governors, can command the power over the money
of the world which is held by these London merchant bankers. Great Britain,
while waning in political and military power, today exercises the greatest
financial power. It is for this reason that London is the present financial
center of the world.
CHAPTER SEVEN
The Hitler Connection
J. Henry
Schroder Banking Company is listed as Number 2 in capitalization in Capital
City on the list of the seventeen merchant bankers who make up the exclusive
Accepting Houses Committee in London. Although it is almost unknown in the
United States, it has played a large part in our history. Like the others on
this list, it had first to be approved by the Bank of England. And, like the
Warburg family, the von Schroders began their banking operations in Hamburg,
Germany. At the turn of the century, in 1900, Baron Bruno von Schroder
established the London branch of the firm. He was soon joined by Frank Cyril
Tiarks, in 1902. Tiarks married Emma Franziska of Hamburg, and was a director
of the Bank of England from 1912 to 1945. During World War I, J. Henry Schroder
Banking Company played an important role behind the scenes.
No
historian has a reasonable explanation of how World War I started. Archduke
Ferdinand was assassinated at Sarajevo by Gavril Princeps, Austria demanded an
apology from Serbia, and Serbia sent the note of apology. Despite this, Austria
declared war, and soon the other nations of Europe joined the fray. Once the
war had gotten started, it was found that it wasn’t easy to keep it going. The
principal problem was that Germany was desperately short of food and coal, and
without Germany, the war could not go on. John Hamill in The Strange Career of
Mr. Hoover explains how the problem was solved.
He
quotes from Nordeutsche Allgemeine Zeitung, March 4, 1915, "Justice,
however, demands that publicity should be given to the preeminent part taken by
the German authorities in Belgium in the solution of this problem. The
initiative came from them and it was only due to their continuous relations
with the American Relief Committee that the provisioning question was
solved." Hamill points out "That is what the Belgian Relief Committee
was organized for--to keep Germany in food." The Belgian Relief Commission
was organized by Emile Francqui, director of a large Belgian bank, Societe
Generale, and a London mining promoter, an American named Herbert Hoover, who
had been associated with Francqui in a number of scandals which had become
celebrated court cases, notably the Kaiping Coal Company scandal in China, said
to have set off the Boxer Rebellion, which had as its goal the expulsion of all
foreign businessmen from China.
Hoover
had been barred from dealing on the London Stock Exchange because of one
judgement against him, and his associate, Stanley Rowe, had been sent to prison
for ten years. With this background, Hoover was called an ideal choice for a
career in humanitarian work. Although his name is unknown in the United States,
Emile Francqui was the guiding spirit behind Herbert Hoover’s rise to fortune.
Hamill (on page 156) identifies Francqui as the director of many atrocities
committed against natives in the Congo. "For every cartridge they spent,
they had to bring in a man’s hand". Francqui’s frightful record may have
been the source for the charge later leveled against German soldiers in
Belgium, that they chopped off the hands of women and children, a claim which
proved to be groundless. Hamill also says that Francqui "tricked the
Americans out of the Hankow-Canton railroad concession in China in 1901, and at
the same time had ‘stood by’ in case Hoover needed any further help in the
‘taking’ of the Kaiping coal mines. This is the humanitarian who had sole
charge of the distribution of the Belgian ‘relief’ during the World War, for
which Hoover did the buying and shipping. Francqui was a director with Hoover,
in the Chinese Engineering and Mining Company (the Kaiping mines), through
which Hoover transported 200,000 Chinese slave workers to the Congo to work
Francqui’s copper mines." Hamill says on page 311 that "Francqui
opened the offices of the Belgian Relief in his bank, Societe Generale, as a
one-man show, with a letter of permission from the German Governor General von
der Goltz dated October 16, 1914.
The New
York Herald Tribune of February 18, 1930, quoted by Congressman Louis McFadden
in the House on February 26, 1930, said, "One of Belgium’s two directors
on the Bank for International Settlements will be Emile Francqui of the Societe
Generale, a member of both the Young and Dawes Plan Committees. The board of
directors of the international bank will have no more colorful character than
Emile Francqui, former Minister of Finance, veteran of the Congo and China . .
. he is rated as the richest man in Belgium, and among the twelve richest men
in Europe." Despite his prominence, The New York Times Index mentions
Francqui only a few times during two decades before his death. On October 3,
1931, The New York Times quoted Le Peuple of Brussels that Francqui would visit
the United States. "As a friend of President Hoover, Monsieur Francqui
will not fail to pay a visit to the President."
On
October 30, 1931, The New York Times reported this visit with the headline,
"Hoover-Francqui Talk was Unofficial". "It was stated that Mr.
Francqui spent Tuesday night as a personal guest of the President, and that
they talked of world financial problems in general, strictly unofficial. Mr.
Francqui was an associate of President Hoover during the latters ministrations
in Belgium during the war. Their visit had no official significance. Mr.
Francqui is a private citizen and not engaged in any official mission." No
reference is made to the Hoover-Francqui business associations which were the
subject of huge lawsuits in London. The Francqui visit probably involved
Hoover’s Moratorium on German War Debts, which stunned the financial world. On
December 15, 1931, Chairman McFadden informed the House of a dispatch in the
Public Ledger of Philadelphia, October 24, 1931, "GERMAN REVEALS HOOVER’S
SECRET. The American President was in intimate negotiations with the German
government regarding a year’s debt holiday as early as December, 1930."
McFadden
continued, "Behind the Hoover announcement there were many months of
hurried and furtive preparations both in Germany and in Wall Street offices of
German bankers. Germany, like a sponge, had to be saturated with American
money. Mr. Hoover himself had to be elected, because this scheme began before
he became President. If the German international bankers of Wall Street--that
is Kuhn Loeb Company, J. & W. Seligman, Paul Warburg, J. Henry
Schroder--and their satellites had not had this job waiting to be done, Herbert
Hoover would never have been elected President of the United States. The
election of Mr. Hoover to the Presidency was through the influence of the
Warburg Brothers, directors of the great bank of Kuhn Loeb Company, who carried
the cost of his election. In exchange for this collaboration Mr. Hoover
promised to impose the moratorium of German debts. Hoover sought to exempt
Kreuger’s loan to Germany of $125 million from the operation of the Hoover
Moratorium. The nature of Kreuger’s swindle was known here in January when he
visited his friend, Mr. Hoover, in the White House." Not only did Hoover
entertain Francqui in the White House, but also Ivar Kreuger, the most famous
swindler of the twentieth century. When Francqui died on November 13, 1935, The
New York Times memorialized him as "the copper king of the Congo . . . Mr.
Francqui, last year having gained dictatorial powers over the belga, maintained
it on the gold standard during a crisis. In 1891 he led an expedition into the
Congo and gained it for King Leopold. A man of great wealth, rated among the
twelve richest men in Europe, he secured enormous copper deposits.
He was
Minister of State in 1926 and Minister of Finance in 1934. It was his pride
that he never accepted a centime of remuneration for his services to the
government. While consul general at Shanghai, he secured valuable concessions,
notably the Kaiping coal mines and the 71 railway concession for the Tientsin
Railroad. He was governor of the Societe Generale de Belgique, Lloyd Royal
Belge, and regent of La Banque Nationale de Belgique." The Times does not
mention Francqui’s business partnerships with Hoover. Like Francqui, Hoover
also refused remuneration for "government service", and as Secretary
of Commerce and as President of the United States, he turned his salary back to
the government. On December 13, 1932, Chairman McFadden introduced a resolution
of impeachment against President Hoover for high crimes and misdemeanors, which
covers many pages, including violation of contracts, unlawful dissipation of
the financial resources of the United States, and his appointment of Eugene
Meyer to the Federal Reserve Board. The resolution was tabled and never acted
upon by the House. In criticizing Hoover’s Moratorium of German War Debts,
McFadden had referred to Hoover’s "German" backers. Although all of
the principals of "the London Connection" did originate in Germany,
most of them in Frankfurt, at the time they sponsored Hoover’s candidacy for
the Presidency of the United States, they were operating from London, as Hoover
himself had done for most of his career. Also, the Hoover Moratorium was not
intended to "help" Germany, as Hoover had never been
"pro-German".
The
Moratorium on Germany’s war debts was necessary so that Germany would have
funds for rearming. In 1931, the truly forward-looking diplomats were
anticipating the Second World War, and there could be no war without an
"aggressor". Hoover had also carried out a number of mining
promotions in various parts of the world as a secret agent for the Rothschilds,
and had been rewarded with a directorship in one of the principal Rothschild
enterprises, the Rio Tinto Mines in Spain and Bolivia. Francqui and Hoover
threw themselves into the seemingly impossible task of provisioning Germany
during the First World War. Their success was noted in Nordeutsche Allgemeine
Zeitung, March 13, 1915, which noted that large quantities of food were now
arriving from Belgium by rail. Schmoller’s Yearbook for Legislation,
Administration and Political Economy for 1916, shows that one billion pounds of
meat, one and a half billion pounds of potatoes, one and a half billion pounds
of bread, and one hundred twenty-one millions pounds of butter had been shipped
from Belgium to Germany in that year. A patriotic British woman who had
operated a small hospital in Belgium for several years, Edith Cavell, wrote to
the Nursing Mirror in London, April 15, 1915, complaining that the
"Belgian Relief" supplies were being shipped to Germany to feed the
German army. The Germans considered Miss Cavell to be of no importance, and
paid no attention to her, but the British Intelligence Service in London was
appalled by Miss Cavell’s discovery, and demanded that the Germans arrest her
as a spy. 72 Sir William Wiseman, head of British Intelligence, and partner of
Kuhn Loeb Company, feared that the continuance of the war was at stake, and
secretly notified the Germans that Miss Cavell must be executed.
The
Germans reluctantly arrested her and charged her with aiding prisoners of war
to escape. The usual penalty for this offense was three months imprisonment,
but the Germans bowed to Sir William Wiseman’s demands, and shot Edith Cavell,
thus creating one of the principal martyrs of the First World War. With Edith
Cavell out of the way, the "Belgian Relief" operation continued,
although in 1916, German emissaries again approached London officials with the
information that they did not believe Germany could continue military
operations, not only because of food shortages, but because of financial
problems. More "emergency relief" was sent, and Germany continued in
the war until November, 1918. Two of Hoover’s principal assistants were a
former lumber shipping clerk from the West Coast, Prentiss Gray, and Julius H.
Barnes, a grain salesman from Duluth. Both men became partners in J. Henry
Schroder Banking Corporation in New York after the war, and amassed large
fortunes, principally in grain and sugar. With the entry of the United States
into the war, Barnes and Gray were given important posts in the newly created
U.S. Food Administration, which also was placed under Herbert Hoover’s
direction. Barnes became President of the Grain Corporation of the U.S. Food
Administration from 1917 to 1918, and Gray was chief of Marine Transportation.
Another J. Henry Schroder partner, G. A. Zabriskie, was named head of the U.S.
Sugar Equalization Board. Thus the London Connection controlled all food in the
United States through its grain and sugar "Czars" during the First
World War. Despite many complaints of corruption and scandal in the U.S. Food
Administration, no one was ever indicted. After the war, the partners of J.
Henry Schroder Company found that they now owned most of Cuba’s sugar industry.
One partner, M.E. Rionda, was president of Cuba Cane Corporation, and director
of Manati Sugar Company, American British and Continental Corporation, and
other firms.
Baron
Bruno von Schroder, senior partner of the firm, was a director of North British
and Mercantile Insurance Company. His father, Baron Rudolph von Schroder of
Hamburg, was a director of Sao Paulo Coffee Ltd., one of the largest Brazilian
coffee companies, with F.C. Tiarks, also of the Schroder firm. The New York Times noted on October 11, 1923:
"Frank C. Tiarks, Governor of the Bank of England, will spend two weeks
here to set up the opening of the banking house branch of J. Henry Schroder of
London." 73 After the war, Zabriskie, who had been sugar Czar of the
United States by presiding over the U.S. Sugar Equalization Board, became the
president of several of the largest baking corporations in the United States:
Empire Biscuit, Southern Baking Corporation, Columbia Baking, and other firms.
As his principal assistant in the U.S. Food Administration, Hoover chose Lewis
Lichtenstein Strauss, who was soon to become a partner in Kuhn Loeb Company,
marrying the daughter of Jerome Hanauer of Kuhn Loeb. Throughout his
distinguished humanitarian service with the Belgian Relief Commission, the U.S.
Food Administration, and, after the war, the American Relief Administration,
Hoover’s closest associate was one Edgar Rickard, born in Pontgibaud, France.
In Who’s
Who, he states that he was "World War administrative assistant to Herbert
Hoover in all war and post-war organizations including the Commission For
Relief in Belgium. He also served on the U.S. Food Administration from
1914-1924." He remained one of Hoover’s closest friends, and usually the
Rickards and Hoovers took their vacations together. After Hoover became
Secretary of Commerce under Coolidge, Hamill tells us that Hoover awarded his
friend the Hazeltine Radio patents, which paid him one million dollars a year
in royalties. In 1928, "the London Connection" decided to run Herbert
Hoover for president of the United States. There was only one problem; although
Herbert Hoover had been born in the United States, and was thus eligible for
the office of the presidency, according to the Constitution, he had never had a
business address or a home address in the United States, as he had gone abroad
just after completing college at Stanford. The result was that during his
campaign for the presidency, Herbert Hoover listed as his American address Suite
2000, 42 Broadway, New York, which was the office of Edgar Rickard. Suite 2000
was also shared by the grain tycoon and partner of J. Henry Schroder Banking
Corporation, Julius H. Barnes. After Herbert Hoover was elected president of
the United States, he insisted on appointing one of the old London crowd,
Eugene Meyer, as Governor of the Federal Reserve Board. Meyer’s father had been
one of the partners of Lazard Freres of Paris, and Lazard Brothers of London.
Meyer, with Baruch, had been one of the most powerful men in the United States
during World War I, a member of the famous Triumvirate which exercised
unequalled power; Meyer as Chairman of the War Finance Corporation, Bernard
Baruch as Chairman of the War Industries Board, and Paul Warburg as Governor of
the Federal Reserve System.
A
longtime critic of Eugene Meyer, Chairman Louis McFadden of the House Banking
and Currency Committee, was quoted in The New York Times, December 17, 1930, as
having made a speech on the floor of the House attacking Hoover’s appointment
of Meyer, and charging that "He 74 represents the Rothschild interest and
is liaison officer between the French Government and J.P. Morgan." On
December 18, The Times reported that "Herbert Hoover is deeply concerned"
and that McFadden’s speech was "an unfortunate occurrence." On
December 20, The Times commented on the editorial page, under the headline,
"McFadden Again", "The speech ought to insure the Senate
ratification of Mr. Meyer as head of the Federal Reserve. The speech was incoherent,
as Mr. McFadden’s speeches usually are." As The Times predicted, Meyer was
duly approved by the Senate. Not content with having a friend in the White
House, J. Henry Schroder Corporation was soon embarked on further international
adventures, nothing less than a plan to set up World War II. This was to be
done by providing, at a crucial juncture, the financing for Adolf Hitler’s
assumption of power in Germany. Although any number of magnates have been given
credit for the financing of Hitler, including Fritz Thyssen, Henry Ford, and
J.P. Morgan, they, as well as others, did provide millions of dollars for his
political campaigns during the 1920s, just as they did for others who also had
a chance of winning, but who disappeared and were never heard from again. In
December of 1932, it seemed inevitable to many observers of the German scene
that Hitler was also ready for a toboggan slide into oblivion. Despite the fact
that he had done well in national campaigns, he had spent all the money from
his usual sources and now faced heavy debts. In his book Aggression, Otto
Lehmann-Russbeldt tells us that "Hitler was invited to a meeting at the
Schroder Bank in Berlin on January 4, 1933.
The
leading industrialists and bankers of Germany tided Hitler over his financial
difficulties and enabled him to meet the enormous debt he had incurred in
connection with the maintenance of his private army. In return, he promised to
break the power of the trade unions. On May 2, 1933, he fulfilled his
promise."64 Present at the January 4, 1933 meeting were the Dulles
brothers, John Foster Dulles and Allen W. Dulles of the New York law firm,
Sullivan and Cromwell, which represented the Schroder Bank. The Dulles brothers
often turned up at important meetings. They had represented the United States
at the Paris Peace Conference (1919); John Foster Dulles would die in harness
as Eisenhower’s Secretary of State, while Allen Dulles headed the Central
Intelligence Agency for many years. Their apologists have seldom attempted to
defend the Dulles brothers appearance at the meeting which installed Hitler as
the Chancellor of Germany, preferring to pretend that it never happened.
Obliquely, one biographer Leonard Mosley, bypasses it in Dulles when he states,
64 Otto Lehmann-Russbeldt, Aggression, Hutchinson & Co., Ltd., London,
1934, p. 44 75 "Both brothers had spent large amounts of time in Germany,
where Sullivan and Cromwell had considerable interest during the early 1930’s,
having represented several provincial governments, some large industrial
combines, a number of big American companies with interests in the Reich, and
some rich individuals."
Allen
Dulles later became a director of J. Henry Schroder Company. Neither he nor J.
Henry Schroder were to be suspected of being pro-Nazi or pro-Hitler; the
inescapable fact was that if Hitler did not become Chancellor of Germany, there
was little likelihood of getting a Second World War going, the war which would
double their profits. The Great Soviet Encyclopaedia states "The banking
house Schroder Bros. (it was Hitler’s banker) was established in 1846; its
partners today are the barons von Schroeder, related to branches in the United
States and England." The financial editor of "The Daily Herald"
of London wrote on Sept. 30, 1933 of "Mr. Norman’s decision to give the
Nazis the backing of the Bank (of England.)" John Hargrave, in his
biography of Montagu Norman says, "It is quite certain that Norman did all
he could to assist Hitlerism to gain and maintain political power, operating on
the financial plane from his stronghold in Threadneedle Street." [i.e.
Bank of England.--Ed.] Baron Wilhelm de Ropp, a journalist whose closest friend
was Major F.W. Winterbotham, chief of Air Intelligence of the British Secret
Service, brought the Nazi philosopher, Alfred Rosenberg, to London and
introduced him to Lord Hailsham, Secretary for War, Geoffrey Dawson, editor of
The Times, and Norman, Governor of the Bank of England. After talking with
Norman, Rosenberg met with the representative of the Schroder Bank of London.
The managing director of the Schroder Bank, F.C. Tiarks, was also a director of
the Bank of England. Hargrave says (p. 217), "Early in 1934 a select group
of City financiers gathered in Norman’s room behind the windowless walls, Sir
Robert Kindersley, partner of Lazard Brothers, Charles Hambro, F.C. Tiarks, Sir
Josiah Stamp, (also a director of the Bank of England).
Governor
Norman spoke of the political situation in Europe. A new power had established
itself, a great ‘stabilizing 65 Leonard Mosley, Dulles, Dial Publishing Co.,
New York 1978, p. 88 Ezra Pound, in an
April 18, 1943 broadcast over Radio Rome stated, ". . .and men in America,
not content with this war are already aiming at the next one. The time to
object is now."
The New
York Times noted on October 11, 1944: "Senator Claude Pepper criticized
John Foster Dulles, Gov. Dewey’s foreign relations advisor for his connection
with the law firm of Sullivan and Cromwell and having aided Hitler financially
in 1933. Pepper described the January 4, 1933 meeting of Franz von Papen and
Hitler in Baron Schroder’s home in Cologne, and from that time on the Nazis
were able to continue their march to power."
Norman
advised his co-workers to include Hitler in their plans for financing Europe.
There was no opposition. In Wall Street and the Rise of Hitler, Antony C.
Sutton writes "The Nazi Baron Kurt von Schroeder acted as the conduit for
I.T.T. money funneled to Heinrich Himmler’s S.S. organization in 1944, while
World War II was in progress, and the United States was at war with
Germany."
Kurt von
Schroeder, born in 1889, was partner in the Cologne Bankhaus, J.H. Stein &
Co., which had been founded in 1788. After the Nazis gained power in 1933,
Schroeder was appointed the German representative at the Bank of International
Settlements. The Kilgore Committee in 1940 stated that Schroeder’s influence
with the Hitler Administration was so great that he had Pierre Laval appointed
head of the French Government during the Nazi Occupation. The Kilgore Committee
listed more than a dozen important titles held by Kurt von Schroeder in the
1940’s, including President of Deutsche Reichsbahn, Reich Board of Economic
Affairs, SS Senior Group Leader, Council of Reich Post Office, Deutsche
Reichsbank and other leading banks and industrial groups. Schroeder served on
the board of all International Telephone and Telegraph subsidiaries in Germany.
In 1938, the London Schroder Bank became the German financial agent in Great
Britain. The New York branch of Schroder had been merged in 1936 with the
Rockefellers, as Schroder, Rockefeller, Inc. at 48 Wall Street. Carlton P.
Fuller of Schroder was president of this firm, and Avery Rockefeller was
vice-president. He had been a behind the scenes partner of J. Henry Schroder
for years, and had set up the construction firm of Bechtel Corporation, whose
employees (on leave) now play a leading role in the Reagan Administration, as
Secretary of Defense and Secretary of State. Ladislas Farago, in The Game of
the Foxes,68 reported that Baron William de Ropp, a double agent, had
penetrated the highest echelons in pre-World War II days, and Hitler relied
upon de Ropp as his confidential consultant about British affairs.
It was
de Ropp’s advice which Hitler followed when he refused to invade England.
Victor Perlo writes, in The Empire of High Finance: "The Hitler government
made the London Schroder Bank their financial agent in Britain and America.
Hitler’s personal banking account was with J.M. Stein Bankhaus, the German subsidiary
of the Schroder Bank. F.C. Tiarks of the British J. Henry Schroder Company
Antony
C. Sutton was a member of the Anglo-German Fellowship with two other partners
as members, and a corporate membership." The story goes much further than
Perlo suspects. J. Henry Schroder WAS the Anglo-German Fellowship, the English
equivalent of the America First movement, and also attracting patriots who did
not wish to see their nation involved in a needless war with Germany. During
the 1930’s, until the outbreak of World War II, the Schroders poured money into
the Anglo-German Fellowship, with the result that Hitler was convinced he had a
large pro-German fifth column in England composed of many prominent politicians
and financiers. The two divergent political groups in the 1930’s in England
were the War Party, led by Winston Churchill, who furiously demanded that
England go to war against Germany, and the Appeasement Party, led by Neville
Chamberlain. After Munich, Hitler believed the Chamberlain group to be the dominant
party in England, and Churchill a minor rabble-rouser.
Because
of his own financial backers, the Schroders, were sponsoring the Appeasement
Party, Hitler believed there would be no war. He did not suspect that the
backers of the Appeasement Party, now that Chamberlain had served his purpose
in duping Hitler, would cast Chamberlain aside and make Churchill the Prime
Minister. It was not only Chamberlain, but also Hitler, who came away from
Munich believing that it would be "Peace in our time." The success of
the Schroders in duping Hitler into this belief explains several of the most
puzzling questions of World War II. Why did Hitler allow the British Army to
decamp from Dunkirk and return home, when he could have wiped them out? Against
the frantic advice of his generals, who wished to deliver the coup de grace to
the English Army, Hitler held back because he did not wish to alienate his
supposed vast following in England. For the same reason, he refused to invade
England during a period when he had military superiority, believing that it
would not be necessary, as the Anglo-German Fellowship group was ready to make
peace with him. The Rudolf Hess flight to England was an attempt to confirm
that the Schroder group was ready to make peace and form a common bond against
the Soviets.
Rudolf
Hess continues to languish in prison today, many years after the war, because
he would, if released, testify that he had gone to England to contact the
members of the Anglo-German Fellowship, that is, the Schroder group, about
ending the war. If anyone supposes this is all ancient history, with no
application to the present political scene, we introduce the name of John
Lowery Simpson of Sacramento, California. Although he appears for the first
time in Who’s Who in America for 1952, Mr. Simpson states that he served under
Herbert Hoover on the Commission for Relief in Belgium from 1915 to 1917; U.S.
Food Administration, 1917 to 1918, American Relief Commission, 1919, and with
P.N. Gray Company, Vienna, 1919 to 1921.
Gray was
the Chief of Maritime Transportation for the U.S. Food Administration, which
enabled him to set up his own shipping company after the war. Like other Hoover
humanitarians, Simpson also joined the J. Henry Schroder Banking Company (Adolf
Hitler’s personal bankers) and the J. Henry Schroder Trust Company. He also
became a partner of Schroder-Rockefeller Company when that investment trust
backed a construction company which became the world’s largest, the firm of
Bechtel Incorporated. Simpson was chairman of the finance committee of Bechtel
Company, Bechtel International, and Canadian Bechtel. Simpson states he was
consultant to the Bechtel-McCone interests in war production during World War
II. He served on the Allied Control Commission in Italy 1943-44. He married
Margaret Mandell, of the merchant family for whom Col. Edward Mandell House was
named, and he backed a California personality, first for Governor, then for
President. As a result, Simpson and J. Henry Schroder Company now have serving
them as Secretary of Defense, former Bechtel employee Caspar Weinberger. As
Secretary of State they have serving them George Pratt Schultz, also a Bechtel
employee, who happens to be a Standard Oil heir, reaffirming the
Schroder-Rockefeller company ties. Thus the "conservative" Reagan
Administration has a Secretary of Defense from Schroder Company, a Secretary of
State from Schroder-Rockefeller, and a vice president whose father was senior
partner of Brown Brothers Harriman.
The
following accounts are from The New York Times: October 21, 1945, "A
broadcast over the Luxembourg radio said tonight that Baron Kurt von Schroder,
former banker who helped finance the rise of the Nazi party, had been
recognized in an American prison camp and arrested." November 1, 1945, "British
Army Headquarters: Baron Kurt von Schroder, 55 year old banker and friend of
Heinrich Himmler is being held in Dusseldorf pending decision on his indictment
as a war criminal, the Military Government official announcement said
today." February 29, 1948, "An immediate investigation was demanded
yesterday by the Society for the Prevention of World War III as to why the
German Nazi banker, Kurt von Schroder, was not tried as a war criminal by an
allied military tribunal. Noting that von Schroder was sentenced last November
to three months imprisonment and fined 1500 Reichsmarks by a German
denazification court in Bielefeld, in the British Zone, C. Monteith Gilpin,
secretary for the society said the question should be asked why von Schroder
was allowed to escape allied justice, and why our own officials have not
demanded that von Schroder be tried by an Allied military tribunal. ‘Von
Schroder is as guilty as Hitler or Goering.’" 79 The Heritage Foundation
has also been an important factor in the policy-making of the Reagan
Administration. Now we find that the Heritage Foundation is part of the
Tavistock Institute network, directed by British Intelligence.
The
financial decisions are still made at the Bank of England, and who is head of
the Bank of England? Sir Gordon Richardson, chairman of J. Henry Schroder Co.
of London and
The list
of the present directors of J. Henry Schroder Bank and Trust shows the
continuing international influence since the First World War. George A. Braga
is also director of Czarnikow-Rionda Company, vice-president of Francisco Sugar
Company, president of Manati Sugar Company, and vice-president of New Tuinicui
Sugar Company. His relative, Rionda B. Braga, is president of Francisco Sugar
Company and vice-president of Manati Sugar Company. The Schroder control of
sugar goes back to the U.S. Food Administration under Herbert Hoover and Lewis
L. Strauss of Kuhn, Loeb, Company during World War I. Schroder’s attorneys are
the firm of Sullivan and Cromwell. John Foster Dulles of this firm was present
during the historic agreement to finance Hitler, and was later Secretary of
State in the Eisenhower administration. Alfred Jaretzki, Jr., of Sullivan and
Cromwell is also a director of Manati Sugar Company and Francisco Sugar
Company. Another director of J. Henry Schroder is Norris Darrell, Jr., born in