terça-feira, 21 de fevereiro de 2012


                  The London Connection
                                   Eustace Mullins
           Dedicated to two of the finest scholars of the twentieth century
                                GEORGE STIMPSON
                                    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.
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
    University of Virginia, and the McCormick Library of Washington and Lee
 University, Lexington, Virginia, for their invaluable assistance in the completion
 of thirty years of further research for this definitive work on the Federal Reserve
                          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 Washington and Lee University, New York University, Ohio
University, the University of North Dakota, the Escuelas des Bellas Artes, San
Miguel de Allende, Mexico, and the Institute of Contemporary Arts, Washington,
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, Washington, D.C.
(a Federal institution for the insane). His release was accomplished largely
through the efforts of Mr. Mullins.
The research at the Library of Congress was directed and reviewed daily by
George Stimpson, founder of the National Press Club in Washington, whom The
New York Times on September 28, 1952 called, "A highly regarded reference
source in the capitol. Government officials, Congressmen, and reporters went to
him for information on any subject."
Published in 1952 by Kasper and Horton, New York, the original book was the
first nationally-circulated revelation of the secret meetings of the international
bankers at Jekyll Island, Georgia, 1907-1910, at which place the draft of the
Federal Reserve Act of 1913 was written.
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 Frankfurt, Germany, adapted by Mayer Amschel Bauer (1744-1812)
   who changed his name from Bauer to Rothschild ("Red Shield"). Rothschild
 added five golden arrows held in the eagle’s talons, signifying his five sons who
    operated the five banking houses of the international House of Rothschild:
                    Frankfurt, London, Paris, Vienna, and Naples.
                           Table of Contents
Chapter One Jekyll Island 1
Chapter Two The Aldrich Plan 10
Chapter Three The Federal Reserve Act 16
Chapter Four The Federal Advisory Council 40
Chapter Five The House of Rothschild 47
Chapter Six The London Connection 63
Chapter Seven The Hitler Connection 69
Chapter Eight World War One 82
Chapter Nine The Agricultural Depression 114
Chapter Ten The Money Creators 119
Chapter Eleven Lord Montagu Norman 131
Chapter Twelve The Great Depression 143
Chapter Thirteen The 1930's 151
Chapter Fourteen Congressional Expose 171
Addendum 179
Appendix I 181
Biographies 186
Bibliography 193
Index 197
 @The above facsimile is reproduced from page 60 of "HISTORICAL BEGINNINGS . . . .
    THE FEDERAL RESERVE", published by the Federal Reserve Bank of Boston in its
                                       seventh printing, 1982.
In 1949, while I was visiting Ezra Pound who was a political prisoner at St. Elizabeth’s
Hospital, Washington, D.C. (a Federal institution for the insane), Dr. Pound asked me if I
had ever heard of the Federal Reserve System. I replied that I had not, as of the age of 25.
He then showed me a ten dollar bill marked "Federal Reserve Note" and asked me if I
would do some research at the Library of Congress on the Federal Reserve System which
had issued this bill. Pound was unable to go to the Library himself, as he was being held
without trial as a political prisoner by the United States government. After he was denied
broadcasting time in the U.S., Dr. Pound broadcast from Italy in an effort to persuade
people of the United States not to enter World War II. Franklin D. Roosevelt had personally
ordered Pound’s indictment, spurred by the demands of his three personal assistants, Harry
Dexter White, Lauchlin Currie, and Alger Hiss, all of whom were subsequently identified as
being connected with Communist espionage.
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 America,
Ezra Pound, E.E. Cummings, and Elizabeth Bishop, all of the foundations refused to sponsor
this research. I then wrote up my findings to date, and in 1950 began efforts to market this
manuscript in New York. Eighteen publishers turned it down without comment, but the
nineteenth, Devin Garrity, president of Devin Adair Publishing Company, gave me some
friendly advice in his office. "I like your book, but we can’t print it," he told me. "Neither
can anybody else in New York. Why don’t you bring in a prospectus for your novel, and I
think we can give you an advance. You may as well forget about getting the Federal Reserve
book published. I doubt if it could ever be printed."
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 New Jersey, as The Federal Reserve Conspiracy. In 1955, Guido Roeder
brought out a German edition in Oberammergau, Germany. The book was seized and the
entire edition of 10,000 copies burned by government agents led by Dr. Otto John.
The burning of the book was upheld April 21, 1961 by judge Israel Katz of the Bavarian
Supreme Court. The U.S. Government refused to intervene, because U.S. High
Commissioner to Germany, James B. Conant (president of Harvard University 1933 to
1953), had approved the initial book burning order. This is the only book which has been
burned in Germany since World War II. In 1968 a pirated edition of this book appeared in
California. Both the FBI and the U.S. Postal inspectors refused to act, despite numerous
complaints from me during the next decade. In 1980 a new German edition appeared.
Because the U.S. Government apparently no longer dictated the internal affairs of Germany,
the identical book which had been burned in 1955 now circulates in Germany without
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 United States who
planned the Federal Reserve Act. I now discovered that the men whom I exposed in 1952 as
the shadowy figures behind the operation of the Federal Reserve System were themselves
shadows, the American fronts for the unknown figures who became known as the "London
Connection." I found that notwithstanding our successes in the Wars of Independence of
1812 against England, we remained an economic and financial colony of Great Britain. For
the first time, we located the original stockholders of the Federal Reserve Banks and traced
their parent companies to the London Connection.
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 Jekyll Island, Georgia, to the present time, the
machinations of the Federal Reserve bankers have been shrouded in secrecy. Today, that
secrecy has cost the American people a three trillion dollar debt, with annual interest
payments to these bankers amounting to some three hundred billion dollars per year, sums
which stagger the imagination, and which in themselves are ultimately unpayable. Officials
of the Federal Reserve System routinely issue remonstrances to the public, much as the
Hindu fakir pipes an insistent tune to the dazed cobra which sways its head before him, not
to resolve the situation, but to prevent it from striking him. Such was the soothing letter
written by Donald J. Winn, Assistant to the Board of Governors in response to an inquiry by
a Congressman, the Honorable Norman D. Shumway, on March 10, 1983. Mr. Winn states
that "The Federal Reserve System was established by an act of Congress in 1913 and is not
a ‘private corporation’." On the next page, Mr. Winn continues, "The stock of the Federal
Reserve Banks is held entirely by commercial banks that are members of the Federal
Reserve System." He offers no explanation as to why the government has never owned a
single share of stock in any Federal Reserve Bank, or why the Federal Reserve System is not
a "private corporation" when all of its stock is owned by "private corporations".
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 United States. Second, the Agricultural
Depression of 1920. Third, the Black Friday Crash on Wall Street of October, 1929 and the
ensuing Great Depression. Fourth, World War II. Fifth, the conversion of the assets of the
United States and its citizens from real property to paper assets from 1945 to the present,
transforming a victorious America and foremost world power in 1945 to the world’s largest
debtor nation in 1990. Today, this nation lies in economic ruins, devastated and destitute, in
much the same dire straits in which Germany and Japan found themselves in 1945. Will
Americans act to rebuild our nation, as Germany and Japan have done when they faced the
identical conditions which we now face--or will we continue to be enslaved by the Babylonian
debt money system which was set up by the Federal Reserve Act in 1913 to complete our total
destruction? This is the only question which we have to answer, and we do not have much
time left to answer it.
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 Temple--the Federal
Reserve". This heavily advertised book received reviews ranging from incredulous to
hilarious. Forbes Magazine advised its readers to read their review and save their money,
pointing out that "a reader will discover no secrets" and that "This is one of those books
whose fanfares far exceed their merit." This was not accidental, as this overblown whitewash
of the Federal Reserve bankers was published by the most famous nonbook publisher in 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
                                                               Eustace Mullins
                                                               Jackson Hole, Wyoming
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.)
                                        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
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.
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
1 Prof. Nathaniel Wright Stephenson, Paul Warburg’s Memorandum, Nelson Aldrich A
Leader in American Politics, Scribners, N.Y. 1930
     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
such rigid secrecy that the names of not one of them was once mentioned lest the servants
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
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
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.
York’s ubiquitous reporters had been foiled . . . Nelson (Aldrich) had confided to Henry,
Paul and Piatt that he was to keep them locked up at Jekyll Island, out of the rest of the
until they had evolved and compiled a scientific currency system for the United States, the
birth of the present Federal Reserve System, the plan done on Jekyll Island in the conference
Paul, Frank and Henry . . . . Warburg is the link that binds the Aldrich system and the
system together. He more than any one man has made the system possible as a working
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."3
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."4
2 "CURRENT OPINION", December, 1916, p. 382.
3 Nathaniel Wright Stephenson, Nelson W. Aldrich, A Leader in American Politics,
Scribners, N.Y. 1930, Chap. XXIV "Jekyll Island"
4 T.W. Lamont, Henry P. Davison, Harper, 1933
 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 pro-
fits. 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."5
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
"How was the Reserve Bank to be controlled? It must be controlled by Congress. The
was to be represented in the board of directors, it was to have full knowledge of all the
affairs, but a majority
5 Clarendon, Hist. Reb. 1647
  of the directors were to be chosen, directly or indirectly, by the banks of the association."6
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
6 Nathaniel Wright Stephenson, Nelson W. Aldrich, A Leader in American Politics,
Scribners, N.Y. 1930, Chap. XXIV "Jekyll Island" p. 379
    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
          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’ revelation8 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
7 Paul Warburg, The Federal Reserve System, Its Origin and Growth, Volume I, p. 58,
Macmillan, New York, 1930
8 CURRENT OPINION, December, 1916, p. 382
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.9
"This curious episode of Jekyll Island has been generally regarded as a myth. B.C. Forbes
some information from one of the reporters. It told in vague outline the Jekyll Island story,
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
there was an occasion near the close of 1910, when I was as secretive, indeed, as furtive, as
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
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
9 Nathaniel Wright Stephenson, Nelson W. Aldrich, A Leader in American Politics,
Scribners, N.Y. 1930, Chap. XXIV "Jekyll Island" p. 379
Vanderlip later wrote in his autobiography, From Farmboy to Financier:10
"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
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
         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.
10 Frank Vanderlip, From Farmboy to Financier
                                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
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
It is notable that Stephenson characterizes the work of the National Citizens League as
"propaganda", in line with Seligman’s exposition of
11 Nathaniel Wright Stephenson, Nelson W. Aldrich, A Leader in American Politics,
Scribners, N.Y. 1930
      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."12
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
12 Charles A. Lindbergh, Sr., Banking, Currency and the Money Trust, 1913, p. 131
* In 1911, the Aldrich Plan became part of the official platform of the Republican Party.
  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
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
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
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
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
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 government nothing.
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
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
rence 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 candi-
dates, 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
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
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
or increasing interest rates in concert by the banks to influence public opinion or the action
any legislative body. Within recent months, William McAdoo, Secretary of the Treasury of
United States was reported in the open press as charging specifically that there was a
among certain of the large banking interests to put a contraction upon the currency and to
interest rates for the sake of making the public force Congress into passing currency
desired by those interests. The so-called administration currency bill grants just what Wall
and the big banks for twenty-five years have been striving for, that is, PRIVATE INSTEAD
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,
vest in the banks exclusively the dangerous power to make money among the people scarce
plenty. The Aldrich Bill puts this power in one central bank. The Administration Bill puts it
twelve regional central banks, all owned exclusively by the identical private interests that
have owned and operated the Aldrich Bank. President Garfield shortly before his
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
the public currency was a greater menace to the liberties of the people than a standing
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
* Crozier’s book exposed the financiers plan to substitute "corporation currency" for the
lawful money of the U.S. as guaranteed by Article I, Sec. 8 Para. 5, of the Constitution.
    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
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
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
Street group, was removed. Immediately the Secretary and the Assistant Secretary, John
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
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
my own state that contributions to this exploitation fund had been demanded of them and
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
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
the author. This plan is nothing more than the Aldrich-Vreeland legislation which provided
currency issue against securities. Warburg knows that as well as I do. I am going to see him
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."13
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
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
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
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."
* Theodore Roosevelt
13 Elisha Ely Garrison, Roosevelt, Wilson and the Federal Reserve Law, Christopher
Publications, Boston, 1931
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
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,
"One of the institutions outlined in Philip Dru is the Federal Reserve System. The Schiffs,
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
contribution to Harvard by Felix Warburg and Paul
* See House note in "Biographies"
** See Viereck note in "Biographies"
14 George Sylvester Viereck, The Strangest Friendship in History, Woodrow Wilson and
Col. House, Liveright, New York, 1932
Warburg, and so we got Alger and Donald Hiss, Lee Pressman, Harry Dexter White and
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
inasmuch, among other things, as it restricted efficiency; that if society were properly
there would be none who were not sufficiently clothed and fed. The result, that the laws,
and ethical training in vogue were alike responsible for the inequalities in opportunity and
consequent wide difference between the few and the many; that the results of such conditions
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
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.
15 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.
  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.16
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."17
House told Viereck that when he went to Wilson at the White
* Dope, Inc., identifies Barings as follows: "Baring Brothers, the premier merchant bank of
the opium trade from 1783 to the present day, also maintained close contact with the Boston
families . . . The group’s leading banker became, at the close of the 19th century, the House of
Morgan--which also took its cut in Eastern opium traffic . . . 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."
16 Arthur Howden Smith, The Real Col. House, Doran Company, New York, 1918
17 George Sylvester Viereck, The Strangest Friendship in History, Woodrow Wilson and Col. House, Liveright, New York, 1932
           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
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."19
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
             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.
18 Col. Edward Mandell House, The Intimate Papers of Col. House, edited by Charles Seymour, Houghton Mifflin Co., 1926-28,
Vol. 1, p. 157
19 Ibid. Vol. 1, p. 163
* The most prominent banker in Boston.
               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."20
On page 45, Viereck notes, "Col. House looks upon the reform of the monetary system as the crowning internal achievement of the
Wilson Administration."21
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--
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."
20 George Sylvester Viereck, The Strangest Friendship In History, Woodrow Wilson and Col. House, Liveright, New York, 1932
21 Ibid.
"Unprecedented speed", says The New York Times. 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
     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
                  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
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."22
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.
22 H.W. Loucks, The Great Conspiracy of the House of Morgan, Privately printed, 1916
    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,23 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
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."24
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
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.
23 E.M. House, Philip Dru, Administrator, B. W. Heubsch, N.Y., 1912
24 Col. E.M. House, The Intimate Papers of Col. House, 4 v. 1926-1928, Houghton Mifflin Co.
 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
                      heads of European central banks which brought on the Great Depression of 1929-31."25
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
25 Ferdinand Lundberg, America’s Sixty Families, 1937
26 J. Laurence Laughlin, The Federal Reserve Act, It’s Origins and Purposes
                     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,
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
* See charts V through IX
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."28
27 Charles Seymour, The Intimate Papers of Col. House, 4 v. 1926-1928, Houghton Mifflin Co.
28 Paul Emden, The Money Power of Europe in the 19th and 20th Century, S. Low, Marston Co., London, 1937
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."29
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
* The New York Times April 30, 1914, 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.
29 Clarence W. Barron, More They Told Barron, Arno Press, New York Times, 1973, June 12, 1914. p. 204
  was correct. 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
* Warburg was confirmed August 8, 1914, 38-11, and principally opposed by Sen. Bristow of Kansas, who was denounced by The
New York Times as a "radical Republican", and whose excellent library of rare books on banking were acquired by the present
writer in 1983 for research on this work.
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.
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."30 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 of
30 Martin Mayer, The Bankers, Weybright and Talley, New York, 1974, p. 207.
       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."31 (J.B. Forgan to Ream, January 7, 1903.) 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,
31 F. Cyril James, The Growth of Chicago Banks, Harper, New York, 1938.
        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
 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 righthand 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."
(FROM: "Why Is Your Country At War?" by Charles Lindbergh, published in 1917). The above paragraph explains why Woodrow
Wilson ordered government agents to seize and destroy the printing plates and copies of this book in the spring of 1918.
could hardly be expected to travel to Washington to attend meetings of the Federal Reserve Board if his advice was to be considered
                                                             of no importance.**
** 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."32
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
   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 cld as soon change his skin as a Newport merchant cld 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 sub-
sidiary 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
33 Henry Clews, Twenty-eight Years in Wall Street, Irving Company, New York, 1888, page 157
   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,34 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."36
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.’37 Secrecy was
more profitable than valor.
34 Corsair, The Life of Morgan
35 John K. Winkler, Morgan the Magnificent, Vanguard, N.Y. 1930
36 Matthew Josephson, The Robber Barons, Harcourt Brace, N.Y. 1934
37 John Moody, The Masters of Capital
 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, page 17:
"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.
LaRouche39 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
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.
   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,42 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),
    (See Cover) "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
 42 William Guy Carr, Pawns In The Game, privately printed, 1956
       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
"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."38 (Preface)... 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."43
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."44
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."45 The encyclopaedia further described these companies as international
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
43 Frederick Morton, The Rothschilds, Fawcett Publishing Company, N.Y., 1961
44 E.C. Knuth, Empire of the City, p. 71
45 Great Soviet Encyclopaedia, Edition 3, 1973, Macmillan, London, Vol. 14, pg. 691
* "The original name of Rothschild was Bauer." p. 397, Henry Clews, Twenty-eight years in Wall Street.
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
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,
47 Richard Lewinsohn, The Profits of War, E.P. Dutton, 1937
     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."48
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.
48 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
Josephson49 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."50
             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
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.
50 Paul Emden, Behind The Throne, Hoddard Stoughton, London, 1934
51 Kent Cooper, Barriers Down, pg. 21
In Inside Europe52, 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".53 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.
52 John Gunther, Inside Europe, 1936
53 Ben H. Bagdikian, The Media Monopoly, Beacon Press, Boston 1983
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.
54 Lyndon H. LaRouche, Jr., Dope, Inc., New Benjamin Franklin House Publishing Co., New York, 1978
                                                       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 . . ."56
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
55 Coningsby, by Disraeli, Longmans Co., London, 1881, p. 252
56 McRae and Cairncross, Capital City, Eyre Methuen, London, 1963, p. 1
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.’"57
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. LaRouche58 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
57 Ibid, p. 225
58 Lyndon H. LaRouche, Dope, Inc., New Benjamin Franklin House Publishing Co., N.Y. 1978
 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.
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,
59 E.M. Josephson, The Strange Death of Franklin D. Roosevelt, Chedney Press, N.Y. 1948
              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."60
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 in The
60 Matthew Josephson, The Robber Barons, p. 409
   Capital City61 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.
61 McRae and Cairncross, Capital City, Eyre Methuen, London, 1963
                                                   CHAPTER SEVEN
                             The Hitler Connection
J. Henry Schroder Banking Company is listed as Number 2 in capitalization in Capital City62 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. Hoover63 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
62 McRae and Cairncross, Capital City, Eyre Methuen, London, 1963
63 John Hamill, The Strange Career of Mr. Hoover, William Faro, New York, 1931
* Copies of Hamill’s book were systematically located and destroyed by government agents, because it was published on the eve of
President Hoover’s re-election campaign.
 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
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
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
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.
 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."
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
  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
                     "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."65
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."66**
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."
66 The Great Soviet Encyclopaedia, Macmillan, London, 1973, v.2, p. 620
** 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."
                     force’, namely, Nazi Germany. 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."67 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
67 Antony C. Sutton, WALL STREET AND THE RISE OF HITLER, 76 Press, Seal Beach, California, 1976, p. 79
68 Ladislas Farago, The Game of the Foxes, 1973
                       was a member of the Anglo-German Fellowship with two other partners as members, and a
corporate membership."69
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
69 Victor Perlo, The Empire of High Finance, International Publishers, 1957, p. 177
   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.’"
  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 New York from 1962 to 1972, when he became Governor of the Bank of England. The "London Connection" has
                                never been more firmly in the saddle of the United States Government.
On July 3, 1983, The New York Times announced that Gordon Richardson, Governor of the Bank of England for the past ten years,
had been replaced by Robert Leigh-Pemberton, Chairman of the National Westminster Bank. The list of directors of National
Westminster Bank reads like a Who’s Who of the British ruling class. They include the Chairman, Lord Aldenham, who is also
Chairman of Antony Gibbs & Son, merchant bankers, one of the seventeen privileged firms chartered by the Bank of England; Sir
Walter Barrie, Chairman of the British Broadcasting System; F.E. Harmer, Governor of the London School of Economics, the
training school for the international bankers, and chairman of New Zealand Shipping Company; Sir E.C. Mieville, private secretary
to the King of England 1937-45; Marquess of Salisbury, Lord Cecil, Lord Privy Seal (the Cecils have been considered one of
England’s three ruling families since the Middle Ages); Lord Leathers, Baron of Purfleet, Minister of War Transport 1941-45,
chairman of William Cory group of companies; Sir W.H. Coates and W.J. Worboys of Imperial Chemical Industries (the English
DuPont); Earl of Dudley, chairman British Iron & Steel, Sir W. Benton Jones, chairman United Steel and many other steel
companies; Sir G.E. Schuster, Bank of New Zealand; East India Coal Company; A. d’A. Willis, Ashanti Goldfields and many banks,
tea companies and other firms; V.W. Yorke, chairman of Mexican Railways Ltd.
Richardson, former chairman of Schroders with a New York subsidiary holding Federal Reserve Bank of New York stock, was
replaced by the chairman of National Westminster, with a subsidiary in New York holding Federal Reserve Bank of New York stock.
Robert Leigh Pemberton, a director of Equitable Life Assurance Society (J.P. Morgan), married the daughter of the Marchioness of
Exeter, (the Cecil Burghley family). Thereby, the control of the London Connection remains constantly in effect.
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 Berlin, Germany, partner of Sullivan and Cromwell, and a
director of Schroder Trust Company. Bayless Manning, partner of the Wall Street law firm of Paul, Weiss, Rifkind and Wharton, is
also a director of J. Henry Schroder. He was president of the Council on Foreign Relations from 1971-1977, and is editor in chief of
the Yale Law Review.
Paul H. Nitze, the prominent "disarmament negotiator" for the United States government, is a director of Schroder’s Inc. He
married Phyllis Pratt, of the Standard Oil fortune, whose father gave the Pratt family mansion as the building which houses the
Council on Foreign Relations.
                                                      CHAPTER EIGHT
                                          World War One
                                     "Money is the worst of all contraband."--William Jennings Bryan
It is now apparent that there might have been no World War without the Federal Reserve System. A strange sequence of events,
none of which were accidental, had occurred. Without Theodore Roosevelt’s "Bull Moose" candidacy, the popular President Taft
would have been reelected, and Woodrow Wilson would have returned to obscurity.* If Wilson had not been elected, we might have
had no Federal Reserve Act, and World War One could have been avoided. The European nations had been led to maintain large
standing armies as the policy of the central banks which dictated their governmental decisions. In April, 1887, the Quarterly Journal
of Economics had pointed out:
"A detailed revue of the public debts of Europe shows interest and sinking fund payments of
$5,343 million annually (five and one-third billion). M. Neymarck’s conclusion is much like Mr.
Atkinson’s. The finances of Europe are so involved that the governments may ask whether war,
with all its terrible chances, is not preferable to the maintenance of such a precarious and costly
peace. If the military preparations of Europe do not end in war, they may well end in the
bankruptcy of the States. Or, if such follies lead neither to war nor to ruin, then they assuredly
point to industrial and economic revolution."
From 1887 to 1914, this precarious system of heavily armed but bankrupt European nations endured, while the United States
continued to be a debtor nation, borrowing money from abroad, but making few international loans, because we did not have a
central bank or "mobilization of credit". The system of national loans developed by the Rothschilds served to finance European
struggles during the nineteenth century, because they were spread out over Rothschild branches in several countries. By 1900, it was
obvious that the European countries could not afford a major war. They had large standing armies, universal military service, and
modern weapons, but their economies could not support the enormous expenditures. The Federal Reserve System began operations
*NOTE: P.34. "House revealed to me in a confidential moment, ‘Wilson was elected by Teddy Roosevelt.’" The Strangest Friendship
in History, Woodrow Wilson and Col. House, George Sylvester Viereck, Liveright, N.Y. 1932
 1914, forcing the American people to lend the Allies twenty-five billion dollars which was not repaid, although considerable interest
      was paid to New York bankers. The American people were driven to make war on the German people, with whom we had no
    conceivable political or economic quarrel. Moreover, the United States comprised the largest nation in the world composed of
Germans; almost half of its citizens were of German descent, and by a narrow margin, German had been voted down as the national
language.* The German Ambassador to Turkey, baron Wangeheim asked the American Ambassador to Turkey, Henry Morgenthau,
 why the United States intended to make war in Germany. "We Americans," replied Morgenthau, speaking for the group of Harlem
  real estate operators of which he was the head, "are going to war for a moral principle." J.P. Morgan received the proceeds of the
      First Liberty Loan to pay off $400,000,000 which he advanced to Great Britain at the outset of the war. To cover this loan,
 $68,000,000 in notes had been issued under the provisions of the Aldrich-Vreeland Act for issuing notes against securities, the only
  time this provision was employed. The notes were retired as soon as the Federal Reserve Banks began operation, and replaced by
                                                          Federal Reserve Notes.
During 1915 and 1916, Wilson kept faith with the bankers who had purchased the White House for him, by continuing to make loans
to the Allies. His Secretary of State, William Jennings Bryan, protested constantly, stating that "Money is the worst of all
contraband." By 1917, the Morgans and Kuhn, Loeb Company had floated a billion and a half dollars in loans to the Allies. The
bankers also financed a host of "peace" organizations which worked to get us involved in the World War. The Commission for Relief
in Belgium manufactured atrocity stories against the Germans, while a Carnegie organization, The League to Enforce Peace,
agitated in Washington for our entry into war. This later became the Carnegie Endowment for International Peace, which during the
1940s was headed by Alger Hiss. One writer* claimed that he had never seen any "peace movement" which did not end in war.
The U.S. Ambassador to Britain, Walter Hines Page, complained that he could not afford the position, and was given twenty-five
thousand dollars a year spending money by Cleveland H. Dodge, president of the National City Bank. H.L. Mencken openly accused
Page in 1916 of being a British agent, which was unfair. Page was merely a bankers’ agent.
On March 5, 1917, Page sent a confidential letter to Wilson. "I think that the pressure of this approaching crisis has gone beyond the
ability of the Morgan Financial Agency for the British and French Govern-
* 1787 Constitutional Convention
* NOTE: Emmett Tyrell, Jr., Richmond Times Dispatch, Feb. 15, 1983 "Every peace movement of this century has been followed by
    ments . . . The greatest help we could give the Allies would be a credit. Unless we go to war with Germany, our Government, of
                                           course, cannot make such a direct grant of credit."
The Rothschilds were wary of Germany’s ability to continue in the war, despite the financial chaos caused by their agents, the
Warburgs, who were financing the Kaiser, and Paul Warburg’s brother, Max, who, as head of the German Secret Service,
authorized Lenin’s train to pass through the lines and execute the Bolshevik Revolution in Russia. According to Under Secretary of
the Navy, Franklin D. Roosevelt, America’s heavy industry had been preparing for war for a year. Both the Army and Navy
Departments had been purchasing war supplies in large amounts since early in 1916. Cordell Hull remarks in his Memoirs:
"The conflict forced the further development of the income-tax principle. Aiming, as it did, at the
one great untaxed source of revenue, the income-tax law had been enacted in the nick of time to
meet the demands of the war. And the conflict also assisted the putting into effect of the Federal
Reserve System, likewise in the nick of time."70
One may ask, in the nick of time for whom? Certainly not for the American people, who had no need for "mobilization of credit" for
a European war, or to enact an income tax to finance a war. Hull’s statement affords a rare glimpse into the machinations of our
"public servants".
The Notes of the Journal of Political Economy, October, 1917, state:
"The effect of the war upon the business of the Federal Reserve Banks has required an immense
development of the staffs of these banks, with a corresponding increase in expenses. Without, of
course, being able to anticipate so early and extensive a demand for their services in this
connection, the framers of the Federal Reserve Act had provided that the Federal Reserve Banks
should act as fiscal agents of the Government."
The bankers had been waiting since 1887 for the United States to enact a central bank plan so that they could finance a European
war among the nations whom they had already bankrupted with armament and "defense" programs. The most demanding function
of the central bank mechanism is war finance.
On October 13, 1917, Woodrow Wilson made a major address, stating:
"It is manifestly imperative that there should be a complete mobilization of the banking reserves
of the United States. The burden and the privilege (of the Allied loans) must be shared by every
banking institution in the country. I believe that cooperation on the part of the banks is a patriotic
              duty at this time, and that membership in the Federal Reserve System is a distinct and
significant evidence of patriotism."
70 Cordell Hull, Memoirs, Macmillan, New York, 1948, v. 1, page 76
     E.W. Kemmerer writes that "As fiscal agents of the Government, the federal reserve banks rendered the nations services of
 incalculable value after our entrance into the war. They aided greatly in the conservation of our gold resources, in the regulation of
our foreign exchanges, and in the centralization of our financial energies. One shudders when he thinks what might have happened if
                         the war had found us with our former decentralized and antiquated banking system."
Mr. Kemmerer’s shudders ignore the fact that if we had kept "our antiquated banking system" we would not have been able to
finance the World War or to enter as a participant ourselves.
Woodrow Wilson himself did not believe in his crusade to save the world for democracy. He later wrote that "The World War was a
matter of economic rivalry."
On being questioned by Senator McCumber about the circumstances of our entry into the war, Wilson was asked, "Do you think if
Germany had committed no act of war or no act of injustice against our citizens that we would have gotten into this war?"
"I do think so," Wilson replied.
"You think we would have gotten in anyway?" pursued McCumber.
"I do," said Wilson.
In Wilson’s War Message in 1917, he included an incredible tribute to the Communists in Russia who were busily slaughtering the
middle class in that unfortunate country.
"Assurance has been added to our hope for the future peace of the world by the wonderful and
heartening things that have been happening in the last few weeks in Russia. Here is a fit partner
for a League of Honor."71
Wilson’s paean to a bloodthirsty regime which has since murdered sixty-six million of its inhabitants in the most barbarous manner
exposes his true sympathies and his true backers, the bankers who had financed the blood purge in Russia. When the Communist
Revolution seemed in doubt, Wilson sent his personal emissary, Elihu Root, to Russia with one hundred million dollars from his
Special Emergency War Fund to save the toppling Bolshevik regime.
The documentation of Kuhn, Loeb Company’s involvement in the establishment of Communism in Russia is much too extensive to
be quoted here, but we include one brief mention, typical of the literature on this subject. In his book, Czarism and the Revolution,
Gen. Arsene de Goulevitch writes,
71 Public Papers of Woodrow Wilson, Dodd & Baker, v.5, p. 12-13
"Mr. Bakmetiev, the late Russian Imperial Ambassador to the United States, tells us that the
Bolsheviks, after victory, transferred 600 million roubles in gold between the years 1918-1922 to
Kuhn, Loeb Company."
After our entry into World War I, Woodrow Wilson turned the government of the United States over to a triumvirate of his
campaign backers, Paul Warburg, Bernard Baruch and Eugene Meyer. Baruch was appointed head of the War Industries Board,
with life and death powers over every factory in the United States. Eugene Meyer was appointed head of the War Finance
Corporation, in charge of the loan program which financed the war. Paul Warburg was in control of the nation’s banking system*.
Knowing that the overwhelming sentiment of the American people during 1915 and 1916 had been anti-British and pro-German, our
British allies viewed with some trepidation the prominence of Paul Warburg and Kuhn, Loeb Company in the prosecution of the
war. They were uneasy about his high position in the Administration because his brother, Max Warburg, was at that time serving as
head of the German Secret Service. On December 12, 1918, the United States Naval Secret Service Report on Mr. Warburg was as
"WARBURG, PAUL: New York City. German, naturalized citizen, 1911. was decorated by the
Kaiser in 1912, was vice chairman of the Federal Reserve Board. Handled large sums furnished
by Germany for Lenin and Trotsky. Has a brother who is leader of the espionage system of
Strangely enough, this report, which must have been compiled much earlier, while we were at war with Germany, is not dated until
December 12, 1918. AFTER the Armistice had been signed. Also, it does not contain the information that Paul Warburg resigned
from the Federal Reserve Board in May, 1918, which indicates that it was compiled before May, 1918, when Paul Warburg would
theoretically have been open to a charge of treason because of his brother’s control of Germany’s Secret Service.
Paul Warburg’s brother Felix in New York was a director of the Prussian Life Insurance Company of Berlin, and presumably would
not have liked to see too many of his policyholders killed in the war. On September 26, 1920, The New York Times mentioned in its
obituary of Jacob Schiff in reference to Kuhn, Loeb and Company, "During the world War certain of its members were in constant
contact with the Government in an advisory capacity. It shared in the conferences which were held regarding the organization and
formation of the Federal Reserve System."
* NOTE: New York Times, August 10, 1918; "Mr. (Paul) Warburg was the author of the plan organizing the War Finance
 The 1920 Schiff obituary revealed for the first time that Jacob Schiff, like the Warburgs, also had two brothers in Germany during
  World War I, Philip and Ludwig Schiff, of Frankfurt-on-Main, who also were active as bankers to the German Government! This
  was not a circumstance to be taken lightly, as on neither side of the Atlantic were the said bankers obscure individuals who had no
  influence in the conduct of the war. On the contrary, the Kuhn, Loeb partners held the highest governmental posts in the United
States during World War I, while in Germany, Max and Fritz Warburg, and Philip and Ludwig Schiff, moved in the highest councils
of government. From Memoirs of Max Warburg, "The Kaiser thumbed the table violently and shouted, ‘Must you always be right?’
                                    but then listened carefully to Max’s view on financial matters."72
In June, 1918, Paul Warburg wrote a private note to Woodrow Wilson, "I have two brothers in Germany who are bankers. They
naturally now serve their country to their utmost ability, as I serve mine."73
Neither Wilson nor Warburg viewed the situation as one of concern, and Paul Warburg served out his term on the Federal Reserve
Board of Governors, while World War I continued to rage.
The background of Kuhn, Loeb & Company had been exposed in "Truth Magazine", edited by George Conroy:
"Mr. Schiff is head of the great private banking house of Kuhn, Loeb & Co. which represents the
Rothschild interest on this side of the Atlantic. He has been described as a financial strategist and
has been for years the financial minister to the great impersonal power known as Standard Oil.
He was hand-in-glove with the Harrimans, the Goulds and the Rockefellers, in all their railroad
enterprises and has become the dominant power in the railroad and financial world in America.
Louis Brandeis, because of his great ability as a lawyer and for other reasons which will appear
later, was selected by Schiff as the instrument through which Schiff hoped to achieve his
ambition in New England. His job was to carry on an agitation which would undermine public
confidence in the New Haven system and cause a decrease in the price of its securities, thus
forcing them on the market for the wreckers to buy."74
We mention Schiff’s lawyer, Brandeis, here because the first available appointment on the Supreme Court of the United States
which Woodrow Wilson was allowed to fill was given to the Kuhn, Loeb lawyer, Brandeis.
Not only was the U.S. Food Administration managed by Hoover’s director, Lewis Lichtenstein Strauss, who married into the Kuhn
Loeb Company by marrying Alice Hanauer, daughter of partner Jerome
72 Max Warburg, Memoirs of Max Warburg, Berlin, 1936
73 David Farrar, The Warburgs, Michael Joseph, Ltd., London, 1974
74 "Truth Magazine", George Conroy, editor, Boston, issue of December 16, 1912
 Hanauer, but in the most critical field, military intelligence, Sir William Wiseman, chief of the British Secret Service, was a partner
 of Kuhn, Loeb & Company. He worked most closely with Wilson’s alter ego, Col. House. "Between House and Wiseman there were
    soon to be few political secrets, and from their mutual comprehension resulted in large measure our close cooperation with the
One example of House’s cooperation with Wiseman was a confidential agreement which House negotiated pledging the United States
to enter into World War I on the side of the Allies. Ten months before the election which returned Wilson to the White House in 1916
‘because he kept us out of war’, Col. House negotiated a secret agreement with England and France on behalf of Wilson which
pledged the United States to intervene on behalf of the Allies. On March 9, 1916, Wilson formally sanctioned the undertaking.76
Nothing could more forcefully illustrate the duplicity of Woodrow Wilson’s nature than his nationwide campaign on the slogan, "He
kept us out of war", when he had pledged ten months earlier to involve us in the war on the side of England and France. This
explains why he was regarded with such contempt by those who learned the facts of his career. H.L. Mencken wrote that Wilson was
"the perfect model of the Christian cad", and that we ought "to dig up his bones and make dice of them."
According to The New York Times, Paul Warburg’s letter of resignation stated that some objection had been made because he had a
brother in the Swiss Secret Service. The New York Times has never corrected this blatant falsehood, perhaps because Kuhn, Loeb
Company owned a controlling interest in its stock. Max Warburg was not Swiss, and although he had probably come into contact
with the Swiss Secret Service during his term of office as head of the German Secret Service, no responsible editor at The New York
Times could have been unaware of the fact that Max Warburg was German, and that his family banking house was in Hamburg, and
that he held a number of high positions in the German Government. He represented Germany at the Versailles Peace Conference,
and remained peacefully in Germany until 1939, during a period when persons of his religion were being persecuted. To avoid injury
during the approaching war, when bombs would rain on Germany, Max Warburg was allowed to sail to New York, his funds intact.
At the outset of World War I, Kuhn, Loeb Company had figured in the transfer of German shipping interests to other control. Sir
75 Edward M. House, The Intimate Papers of Col. House, edited by Charles Seymour, Vol. II, p. 399. Houghton, Mifflin Co.
76 George Sylvester Viereck, The Strangest Friendship in History, Woodrow Wilson and Col. House, p. 106
                          Spring-Rice, British Ambassador to the United States, in a letter to Lord Grey wrote:
"Another matter is the question of the transfer of the flag to the Hamburg Amerika ships. The
company is practically a German Government affair. The ships are used for Government
purposes, the Emperor himself is a large shareholder, and so is the great banking house of Kuhn,
Loeb Company. A member of that house (Warburg) has been appointed to a very responsible
position in New York, although only just naturalized. He is concerned in business with the
Secretary of the Treasury, who is the President’s son-in-law. It is he who is negotiating on behalf
of the Hamburg Amerika Shipping Company."77
On November 13, 1914, in a letter to Sir Valentine Chirol, Spring-Rice wrote, (p. 241, v. 2)
"I was told today that The New York Times has been practically acquired by Kuhn, Loeb and
Schiff, special protégé of the (German) Emperor. Warburg, nearly related to Kuhn Loeb and
Schiff is a brother of the well known Warburg of Hamburg, the associate of Ballin (Hamburg)
Amerika line), is a member of the Federal Reserve Board or rather THE member. He practically
controls the financial policy of the Administration, and Paish & Blackett (England) had mainly
to negotiate with him. Of course, it was exactly like negotiating with Germany. Everything that
was said was German property."
Col. Garrison wrote in Roosevelt, Wilson and the Federal Reserve Law, that "Through the banking House of the Kuhn Loeb
Company, a powerful weapon would have been placed in the hands of the German Kaiser over the destiny of American business and
American citizens."78
Garrison was referring to the Hamburg Amerika affair.
It seemed strange that Woodrow Wilson felt it necessary to place the nation in the hands of three men whose personal history was
one of ruthless speculation and the quest for personal gain, or that during war with Germany, he found as persons of supreme trust
a German immigrant naturalized in 1911, the son of an immigrant from Poland, and the son of an immigrant from France. Bernard
Baruch first attracted attention on Wall Street in 1890 while working for A.A. Housman & Co.
In 1896 he merged the six principal tobacco companies of the United States into the Consolidated Tobacco Company, forcing James
Duke and the American Tobacco Trust to enter into this combination. The second great trust set up by Baruch brought the copper
industry into the hands
77 Letters and Friendships of Sir Cecil Spring-Rice, p. 219-220
78 Col. Elisha Garrison, Roosevelt, Wilson and the Federal Reserve Law, Christopher Publishing House, Boston, 1931, p. 260
 of the Guggenheim family, who have controlled it ever since. Baruch worked with Edward H. Harriman, who was Schiff’s front man
 in controlling America’s railway system for the Rothschild family. Baruch and Harriman also combined their talents to gain control
                    over the New York City transit system, which has been in perilous financial condition ever since.
In 1901, Baruch formed the firm of Baruch Brothers, bankers, with his brother Herman, in New York. In 1917, when Baruch was
appointed Chairman of the War Industries Board, the name was changed to Hentz Brothers.
Testifying before the Nye Committee on September 13, 1937, Bernard Baruch stated that "All wars are economic in their origin." So
much for religious and political disagreements, which had been specially touted as the cause of wars.*
A profile in the "New Yorker" magazine reported that Baruch made a profit of seven hundred fifty thousand dollars in one day
during World War I, after a phony peace rumor was planted in Washington. In "Who’s Who", Baruch mentions that he was a
member of the Commission which handled all purchasing for the Allies during World War I. In fact, Baruch WAS the Commission.
He spent the American taxpayer’s money at the rate of ten billion dollars a year, and was also the dominant member of the
Munitions Price-Fixing Committee. He set the prices at which the Government bought war materials. It would be naive to presume
that the orders did not go to firms in which he and his associates had more than a polite interest.
dictator over American manufacturers.* At the Nye Committee hearings in 1935, Baruch testified,
"President Wilson gave me a letter authorizing me to take over any industry or plant. There was
Judge Gary, President of United States Steel, whom we were having trouble with, and when I
showed him that letter, he said, ‘I guess we will have to fix this up’, and he did fix it up."
Some members of Congress were curious about Baruch’s qualifications to exercise life and death powers over American industry in
time of war. He was not a manufacturer, and had never been in a factory. When he was called before a Congressional Committee,
Bernard Baruch stated that his profession was "Speculator". A Wall Street gambler had been made Czar of American Industry.
* NOTE: Baruch also stated in this testimony, "I carried through the war three major investments, Alaska Juneau Gold Mining
Company (with partner Eugene Meyer), Texas Gulf Sulphur, and Atolia Mining Company (tungsten)." Rep. Mason, Illinois, told the
House on February 21, 1921 that Baruch made more than $50 million in copper during the war.
* Baruch chose as Assistant Chairman of the War Industries Board a fellow Wall Street speculator, Clarence Dillon (Lapowitz). See
                                              @insert Facsimile of New York Times article
Facsimile of an article which appeared in The New York Times dated September 23, 1914. Listed are major stockholders of the five
New York City banks which purchased 40% of the 203, 053 shares of the Federal Reserve Bank of New York when the System was
organized in 1914. They thus obtained control of that Federal Reserve Bank and have held it ever since. As of Tuesday, July 26,
1983, the top five surviving New York City banks have increased their ownership of the Federal Reserve Bank of New York to 53%
of the shares.
                                                           @insert CHART I
                                                            @CHART I cont.
                                                                CHART I
    Chart I reveals the linear connection between the Rothschilds and the Bank of England, and the London banking houses which
ultimately control the Federal Reserve Banks through their stockholdings of bank stock and their subsidiary firms in New York. The
    two principal Rothschild representatives in New York, J.P. Morgan Co., and Kuhn, Loeb & Co. were the firms which set up the
Jekyll Island Conference at which the Federal Reserve Act was drafted, who directed the subsequent successful campaign to have the
plan enacted into law by Congress, and who purchased the controlling amounts of stock in the Federal Reserve Bank of New York in
     1914. These firms had their principal officers appointed to the Federal Reserve Board of Governors and the Federal Advisory
                                                            Council in 1914.
In 1914 a few families (blood or business related) owning controlling stock in existing banks (such as in New York City) caused those
banks to purchase controlling shares in the Federal Reserve regional banks.
Examination of the charts and text in the House Banking Committee Staff Report of August, 1976 and the current stockholders list
of the 12 regional Federal Reserve Banks shows this same family control.
Baruch’s erstwhile partner, Eugene Meyer, (Alaska-Juneau Gold Mining Co.), later claimed that Baruch was a nitwit, and that
Meyer, with his family banking connections (Lazard Freres), had guided Baruch’s investment career. These claims appeared in the
fiftieth anniversary edition of The Washington Post, editorial page, June 4, 1983, with a parting shot from Meyer’s editor, Al
Friendly, that "Every journalist in Washington, Meyer included, knew that Bernard M. Baruch was a self-aggrandizing phony."
The third member of the Triumvirate, Eugene Meyer, was son of the partner in the international banking house of Lazard Freres, of
Paris and New York. In My Own Story Baruch explains how Meyer became head of the War Finance Corporation. "At the outset of
World War One," he says, "I sought out Eugene Meyer, Jr. . . . who was a man of the highest integrity with a keen desire to be of
public service."79
The nation has suffered greatly from persons who desired to be of public service, because their desires often went considerably
beyond their passion for office. In fact, Meyer and Baruch had operated an Alaska venture, Alaska-Juneau Gold Mining Company
in 1915, and had worked together on other financial schemes. Meyer’s family house of Lazard Freres specialized in international
gold movements.
79 Bernard Baruch, My Own Story, Henry-Holt Company, New York, 1957, p. 194
Eugene Meyer’s stewardship of the War Finance Corporation comprises one of the most amazing financial operations ever partially
recorded in this country. We say "partially recorded", because subsequent Congressional investigations revealed that each night, the
books were being altered before being brought in for the next day’s investigation. Louis McFadden, Chairman of the House Banking
and Currency Committee, figured in two investigations of Meyer, in 1925, and again in 1930, when Meyer was proposed as Governor
 of the Federal Reserve Board. The Select Committee to Investigate the Destruction of Government Bonds, submitted, on March 2,
               1925, "Preparation and Destruction of Government Bonds--68th Congress, 2d Session, Report No. 1635:
p.2. "Duplicate bonds amounting to 2314 pairs and duplicate coupons amounting to 4698 pairs
ranging in denominations from $50 to $10,000 have been redeemed to July 1, 1924. Some of
these duplications have resulted from error and some from fraud."
These investigations may explain why, at the end of World War One, Eugene Meyer was able to buy control of Allied Chemical and
Dye Corporation, and later on, the nation’s most influential newspaper, The Washington Post. The duplication of bonds, "one for
the government, one for me" in denominations to the amount of $10,000 each, resulted in a tidy sum.
p. 6 of these Hearings. "These transactions of the Treasury prior to June 20, 1920 (including
settlements for purchases and sales), executed by the War Finance Corporation (Eugene Meyer,
managing director), were largely directed by the managing director of the War Finance
             Corporation, and settlements with the Treasury were made principally by him with the Assistant Secretary
             of the Treasury, and the books show that the basis of the price paid by the Government
             for over $1,894 millions worth of bonds ($1,894,000,000.00), which the Treasury purchased
             through the War Finance Corporation was not the market price and was not the cost of the bond
             plus interest, and the elements entering into the settlement are not disclosed by the correspondence. The
             managing director of the War Finance Corporation stated that he and an
             Assistant Secretary of the Treasury (Jerome J. Hanauer, partner of Kuhn, Loeb Co. whose daughter
             married Lewis L. Strauss) agreed to the price, and it was simply an arbitrary figure set by an Assistant
             Secretary of the Treasury as to the bonds so purchased by the War Finance Corporation. During the period
             of these transactions and up until quite a recent date the managing director of the War Finance
             Corporation, Eugene Meyer, Jr., in his private capacity maintained an office at No. 14 Wall Street, New
             York City, and through the War Finance Corporation sold about $70 millions in bonds to the Government,
             and also bought through the War Finance Corporation about $10 millions in bonds, and approved the bills
             for most, if not all, of these bonds in his official capacity as managing director of the War Finance
             Corporation. When these transactions, just referred to, were disclosed to the committee in open hearing, the
             managing director
                                                                   CHART II
This chart shows the interlocking banking directorates which were revealed by the backgrounds of the officials selected to be the original
   members of the Federal Advisory Council in 1914. The principals were the same bankers who had been present or represented at the
Jekyll Island Conference in 1910, and during the campaign to have the Federal Reserve Act enacted into law by Congress in 1913. These
officials represented the largest stock holdings in the New York banks which bought the controlling stock in the Federal Reserve Bank of
  New York, and also were the principal correspondent banks of the banks in other Federal Reserve districts who, in turn, selected their
                                         officials to represent them on the Federal Advisory Council.
appeared before the committee and stated the fact that commissions were paid on these
transactions, they were in turn paid over to the brokers, selected by the managing director, who
executed the orders issued by his brokerage house, and immediately after this disclosure to the
committee, the managing director employed Ernst and Ernst, certified public accountants, to
audit the books of the War Finance Corporation, who did, upon completion of the examination of
these books, report to the committee that all moneys received by the brokerage house of the
managing director had been accounted for. While simultaneously with the examination being
made by the committee, the certified public accountants, heretofore referred to, were nightly
carrying on their examination, it was discovered by your committee that alterations and changes
were being made in the books of record covering these transactions, and when the same was
called to the attention of the treasurer of the War Finance Corporation, he admitted to the
committee that changes were being made. To what extent these books have been altered during
the process the committee have not been able to determine. After June, 1921, about $10 billions
worth of securities were destroyed."
It was Eugene Meyer’s Washington Post, (under the direction of his daughter, Katherine Graham) which was later to drive a
President of the United States from the White House on the grounds that he had knowledge of a burglary. What are we to think of
the revelations of duplications of hundreds of millions of dollars worth of bonds during
                                                              @insert CHART III
                                                                   CHART III
     The J. Henry Schroder Banking Company chart encompasses the entire history of the twentieth century, embracing as it does the
program (Belgian Relief Commission) which provisioned Germany from 1915-1918 and dissuaded Germany from seeking peace in 1916;
financing Hitler in 1933 so as to make a Second World War possible; backing the Presidential campaign of Herbert Hoover; and even at
    the present time, having two of its major executives of its subsidiary firm, Bechtel Corporation serving as Secretary of Defense and
                                                Secretary of State in the Reagan Administration.
The head of the Bank of England since 1973, Sir Gordon Richardson, Governor of the Bank of England (controlled by the House of
Rothschild), was chairman of J. Henry Schroder, New York, and Schroder Banking Corporation, New York, as well as Lloyd’s Bank of
London, and Rolls Royce. He maintains a residence on Sutton Place in New York City, and as head of "The London Connection", can be
said to be the single most influential banker in the world.
Meyer’s directorship of the War Finance Corporation, the alteration of the books during a Congressional investigation, and the fact
that Meyer came out of this situation with many millions of dollars with which he proceeded to buy Allied Chemical Corporation,
The Washington Post, and other properties? Incidentally, Lazard Brothers, Meyer’s family banking house, personally manages the
fortunes of many of our political luminaries, including the Kennedy family fortune.
Besides these men, Warburg, Baruch, and Meyer, a host of J.P. Morgan Co., and Kuhn, Loeb Co., partners, employees, and satellites
came to Washington after 1917 to administer the fate of the American people.
The Liberty Loans, which sold bonds to our citizens, were nominally in the jurisdiction of the United States Treasury, under the
leadership of Wilson’s Secretary of the Treasury, William G. McAdoo, whom Kuhn, Loeb Co. had placed in charge of the Hudson-
Manhattan Railway Co. in 1902. Paul Warburg had most of the Kuhn Loeb Co. firm with him in Washington during the War.
Jerome Hanauer, partner in Kuhn, Loeb Co., was Assistant Secretary of the Treasury in charge of Liberty Loans. The two Under-
secretaries of the Treasury during the War were S. Parker Gilbert and Roscoe C. Leffingwell. Both Gilbert and Leffingwell came to
the Treasury from the law firm of Cravath and Henderson, and returned
                                                          @insert CHART IV
                                                          CHART IV
The Peabody-Morgan chart shows the London Connection of these prominent banking firms, which have been headquartered in London
  since their inception. The Peabody fortune set up an Educational Fund in 1865, which was later absorbed by John D. Rockefeller into
                the General Educational Board in 1905, which, in turn, was absorbed by the Rockefeller Foundation in 1960.
to that firm when they had fulfilled their mission for Kuhn, Loeb Co. in the Treasury. Cravath and Henderson were the lawyers for
Kuhn Loeb Co. Gilbert and Leffingwell subsequently received partnerships in J.P. Morgan Co.
Kuhn, Loeb Company, the nation’s largest owners of railroad properties in this country and in Mexico, protected their interests
during the First World War by having Woodrow Wilson set up a United States Railroad Administration. The Director-General was
William McAdoo, Comptroller of the Currency. Warburg replaced this set up in 1918 with a tighter organization which he called the
Federal Transportation Council. The purpose of both of these organizations was to prevent strikes against Kuhn, Loeb Company
during the War, in case the railroad workers should try to get in wages some of the millions of dollars in wartime profits which
Kuhn, Loeb received from the United States Government.
Among the important bankers present in Washington during the War was Herbert Lehman, of the rapidly rising firm of Lehman
Brothers, Bankers, New York, Lehman was promptly put on the General Staff of the Army, and given the rank of Colonel.
The Lehmans had had prior experience in "taking the profits out of war", a double entendre and one of Baruch’s favorite phrases.
In Men Who Rule America, Arthur D. Howden Smith writes of the Lehmans during the Civil War, "They were often agents, fixers
for both sides, intermediaries for confidential communications and handlers of the many illicit transactions in cotton and drugs for
the Confederacy, purveyors of information for the North. The Lehmans, with Mayer in Montgomery, the first capital of the
Confederacy, Henry in New Orleans, and Emanuel in New York were ideally situated to take advantage of every opportunity for
profit which appeared. They seem to have missed few chances."80
80 Arthur D. Howden Smith, Men Who Rule America, Bobbs Merrill, N.Y. 1935, p. 112
                                                              CHART V
    The David Rockefeller chart shows the link between the Federal Reserve Bank of New York, Standard Oil of Indiana, General
                   Motors, and Allied Chemical Corporation (Eugene Meyer family) and Equitable Life (J.P. Morgan).
Other appointments during the First World War were as follows:
J.W. McIntosh, director of the Armour meat-packing trust, who was made chief of Subsistence for the United States Army in 1918.
He later became Comptroller of the Currency during Coolidge’s Administration, and ex-officio member of the Federal Reserve
Board. During the Harding Administration, he did his bit as Director of Finance for the United States Shipping Board when the
Board sold ships to the Dollar Lines for a hundredth of their cost and then let the Dollar Line default on its payments. After leaving
public service, J.W. McIntosh became a partner in J.W. Wollman Co., New York Stockbrokers.
W.P.G. Harding, Governor of the Federal Reserve Board, was also managing director of the War Finance Corporation under
Eugene Meyer.
George R. James, member of the Federal Reserve Board in 1923-24, had been Chief of the Cotton Section of the War Industries
Henry P. Davison, senior partner in J.P. Morgan Co., was appointed head of the American Red Cross in 1917 in order to get control
of the three hundred and seventy million dollars cash which was collected from the American people in donations.
Ronald Ransom, banker from Atlanta, and Governor of the Federal Reserve Board under Roosevelt in 1938-39, had been the
Director in Charge of Personnel for Foreign Service for the American Red Cross in 1918.
John Skelton Williams, Comptroller of the Currency, was appointed National Treasurer of the American Red Cross.
President Woodrow Wilson, the great liberal who signed the Federal Reserve Act and declared war against Germany, had an odd
career for a man who is now enshrined as a defender of the common people. His chief supporter in both his campaigns for the
Presidency was Cleveland H. Dodge, of Kuhn Loeb, who controlled National City Bank of New York. Dodge was also President of the
Winchester Arms Company and Remington Arms Company. He was very close to President Wilson
                                                          CHART VI
This chart shows the interlocks between the Federal Reserve Bank of New York, J. Henry Schroder Banking Corp., J. Henry
Schroder Trust Co., Rockefeller Center, Inc., Equitable Life Assurance Society (J.P. Morgan), and the Federal Reserve Bank of
throughout the great democrat’s political career. Wilson lifted the embargo on shipment of arms to Mexico on February 12, 1914, so
that Dodge could ship a million dollars worth of arms and ammunition to Carranza and promote the Mexican Revolution. Kuhn,
Loeb Co. which owned the Mexican National Railways System, had become dissatisfied with the administration of Huerta and had
him kicked out.
When the British naval auxiliary Lusitania was sunk in 1915, it was loaded with ammunition from Dodge’s factories. Dodge became
Chairman of the "Survivors of Victims of the Lusitania Fund", which did so much to arouse the public against Germany. Dodge also
was notorious for using professional gangsters against strikers in his plants, yet the liberal Wilson does not appear to have ever been
disturbed by this.
Another clue to Wilson’s peculiar brand of liberalism is to be found in Chaplin’s book Wobbly, which relates how Wilson scrawled
the word "REFUSED" across the appeal for clemency sent him by the aging and ailing Eugene Debs, who had been sent to Atlanta
Prison for "speaking and writing against war". The charge on which Debs was convicted was "spoken and written denunciation of
war". This was treason to the Wilson dictatorship, and Debs was imprisoned. As head of the Socialist Party, Debs ran for the
Presidency from Atlanta Prison, the only man ever to do so, and polled more than a million votes. It was ironic that Debs’ leadership
of the Socialist Party, which at that time represented the desires of many Americans for an honest government, should fall into the
sickly hands of Norman Thomas, a former student and admirer of Woodrow Wilson at Princeton University. Under Thomas’
leadership, the Socialist Party no longer stood for anything, and suffered a steady decline in influence and prestige.
Wilson continued to be deeply involved in the Bolshevik Revolution, as were House and Wiseman. Vol. 3, p. 421 of House Intimate
Papers records a cable from Sir William Wiseman to House from London, May 1, 1918, suggesting allied intervention at the
invitation of the Bolsheviki
                                                         @insert CHART VII
                                                               CHART VII
     This chart shows the interlocks of the Federal Reserve Bank of New York with Citibank, Guaranty Bank and Trust Co. (J.P.
 Morgan), J.P. Morgan Co., Morgan Guaranty Trust Co., Alex Brown & Sons (Brown Brothers Harriman), Kuhn Loeb & Co., Los
             Angeles and Salt Lake RR (controlled by Kuhn Loeb Co.), and Westinghouse (controlled by Kuhn Loeb Co.).
to help organize the Bolshevik forces. Lt. Col. Norman Thwaites, in his memoirs, Velvet and Vinegar says,
"Often during the years 1917-20 when delicate decisions had to be made, I consulted with Mr.
(Otto) Kahn, whose calm judgment and almost uncanny foresight as to political and economic
tendencies proved most helpful. Another remarkable man with whom I have been closely
associated is Sir William Wiseman who was advisor on American affairs to the British delegation
at the Peace Conference, and liaison officer between the American and British government
during the war. He was rather more the Col. House of this country in his relations with Downing
In the summer of 1917, Woodrow Wilson named Col. House to head the American War Mission to the Interallied War Conference,
the first American mission to a European council in history. House was criticized for naming his son-in-law, Gordon Auchincloss, as
his assistant on this mission. Paul Cravath, the lawyer for Kuhn, Loeb Company, was third in charge of the American War Mission.
Sir William Wiseman guided the American War Mission in its conferences. In The Strangest Friendship in History, Viereck writes,
"After America entered the War, Wiseman, according to Northcliffe, was the only man who had
access at all times to the Colonel and to the White House. Wiseman rented an apartment in the
              house where the Colonel lived. David Lawrence referred to the Fifty-Third Street house (New York City)
              jestingly as the American No. 10 Downing St. . . . Col. House had a special code used only with Sir William
              Wiseman. Col. House was Bush, the Morgans were Haslam, and Trotsky was Keble."82
Thus these two "unofficial" advisors to the British and American governments had a code solely for each other, which no one else
could understand. Even stranger was the fact that the international Communist
81 Lt. Col. Norman Thwaites, Velvet and Vinegar, Grayson Co., London, 1932
82 George Sylvester Viereck, The Strangest Friendship in History, Woodrow Wilson and Col. House, Liveright, N.Y. 1932, p. 172
                                                         @insert CHART VIII
                                                              CHART VIII
This chart shows the link between the Federal Reserve Bank of New York, Brown Brothers Harriman, Sun Life Assurance Co. (N.M.
                                         Rothschild and Sons), and the Rockefeller Foundation.
espionage apparatus for many years used Col. House’s book, Philip Dru, Administrator, as their official code book. Francois Coty
"Gorodin, Lenin’s agent in China, was alleged to have with him a copy of the book published by
Col. House, Philip Dru, Administrator and a code expert who lived in China told this writer that
the purpose of having constant access to this book by Gorodin was to use it for coding and
decoding messages."83
After the Armistice, Woodrow Wilson assembled the American Delegation to the Peace Conference, and embarked for Paris. It was,
on the whole, a most congenial group, consisting of the bankers who had always guided Wilson’s policies. He was accompanied by
Bernard Baruch, Thomas W. Lamont of J.P. Morgan Co., Albert Strauss of J & W Seligman bankers, who had been chosen by
Wilson to replace Paul Warburg on the Federal Reserve Board of Governors, J.P. Morgan, and Morgan lawyers Frank Polk and
John W. Davis. Accompanying them were Walter Lippmann, Felix Frankfurter, Justice Brandeis, and other interested parties.
Mason’s biography of Brandeis states that "In Paris in June of 1919, Brandeis met with such friends as Paul Warburg, Col. House,
Lord Balfour, Louis Marshall, and Baron Edmond de Rothschild."
Indeed, Baron Edmond de Rothschild served as the genial host to the leading members of the American Delegation, and even turned
over his Paris mansion to them, although the lesser members had to rough it at the elegant Hotel Crillon with Col. House and his
personal staff of 201 servants.
Baruch later testified before the Graham Committee of the Senate Foreign Relations Committee, "I was economic advisor with the
peace mission. GRAHAM: Did you frequently advise the President while there? BARUCH: Whenever he asked my advice I gave it.
I had something to do with the reparations clauses. I was the American Commissioner in charge of what they called the Economic
Section. I was a
83 Francois Coty, Tearing Away the Veil, Paris, 1940
                                                           @insert CHART IX
                                                               CHART IX
This chart shows the interlocks between the Federal Reserve Bank of New York and J.P. Morgan Co., Morgan Guaranty Trust Co.,
  and the Rothschild affiliates of Royal Bank of Canada, Sun Life Assurance Co. of Canada, Sun Alliance, and London Assurance
member of the Supreme Economic Council in charge of raw metals. GRAHAM: Did you sit in the council with the gentlemen who
were negotiating the treaty? BARUCH: Yes, sir, some of the time. GRAHAM: All except the meetings that were participated in by
the Five? (The Five being the leaders of the five allied nations). BARUCH: And frequently those also."
Paul Warburg accompanied Wilson on the American Commission to Negotiate Peace as his chief financial advisor. He was pleasantly
surprised to find at the head of the German delegation his brother, Max Warburg, who brought along Carl Melchior, also of M.M.
Warburg Company, William Georg von Strauss, Franz Urbig, and Mathias Erzberger.
Thomas W. Lamont states in his privately printed memoirs, Across World Frontiers, "The German delegation included two German
bankers of the Warburg firm whom I happened to know slightly and with whom I was glad to talk informally, for they seemed to be
striving earnestly to offer some reparations composition that might be acceptable to the Allies."84 Lamont was also pleased to see Sir
William Wiseman, chief advisor to the British delegation.
The bankers at the conference convinced Wilson that they needed an international government to facilitate their international
monetary operations. Vol. IV, p. 52, Intimate Papers of Col. House quotes a message from Sir William Wiseman to Lord Reading,
August 16, 1918, "The President has two main principles in view; there must be a League of Nations and it must be virile."
Wilson, who seems to have lived in a world of fantasy, was shocked when American citizens booed him during his campaign to have
them sign over their hard won independence to what appeared to many to be an international dictatorship. He promptly went into a
depression, and retired to his bedroom. His wife immediately shut the White House doors against Col. House, and from September
25, 1919 to April 13, 1920, she
84 Thomas W. Lamont, Across World Frontiers, (Privately printed) 1950, p. 138
  ruled the United States with the aid of an intimate friend, her "military aide", Col. Rixey Smith. As everyone was shut out of their
            deliberations, no one ever knew which of the pair functioned as the President, and which was the Vice President.
The admirers of Woodrow Wilson were led for decades by Bernard Baruch, who stated that Woodrow Wilson was the greatest man
he ever knew. Wilson’s appointments to the Federal Reserve Board, and that body’s responsibility for financing the First World
War, as well as Wilson’s handing over the United States to the immigrant triumvirate during the War, made him appear to be the
most important single effector of ruin in American history.
It is no wonder that after his abortive trip to Europe, where he was hissed and jeered in the streets by the French people, and
snickered at in the halls of Versailles by Orlando and Clemenceau, Woodrow Wilson returned home to take to his bed. The sight of
the destruction and death in Europe, for which he was directly responsible, was perhaps more of a shock than he could bear. The
Italian Minister Pentaleoni expressed the feelings of the European peoples when he wrote that:
"Woodrow Wilson is a type of Pecksniff who was now disappeared amid universal execration."
It is America’s misfortune that our subsidized press and educational system have been devoted to enshrining a man who colluded in
causing so much death and sorrow throughout the world.
The financial cartel suffered only minor setbacks in those crucial years. On February 12, 1917, The New York Times reported that
"The five members of the Federal Reserve Board were impeached on the floor of the House by Rep. Charles A. Lindbergh,
Republican member of the House Banking and Currency Committee. According to Mr. Lindbergh, ‘the conspiracy began in’ 1906
when the late J.P. Morgan, Paul M. Warburg, a present member of the Federal Reserve Board, the National City Bank and other
banking firms ‘conspired’ to obtain currency legislation in the interest of big business and the appointment of a special board to
administer such a law, in order to create industrial slaves of the masses, the aforesaid conspirators did conspire and are now
conspiring to have the Federal Reserve Board administered so as to enable the conspirators to coordinate all kinds of big business
and to keep themselves in control of big business in order to amalgamate all the trusts into one great trust in restraint and control of
trade and commerce." The impeachment resolution was not acted on by the House.
The New York Times reported on August 10, 1918, "Mr. Warburg’s term having expired, he voluntarily retired from the Federal
Reserve Board." Thus the previous intimation that Mr. Warburg left the Federal Reserve Board because he had a brother in the
Secret Service of a foreign
 country, namely, Germany, with whom we were at war, was not the cause of his retirement. In any case, he did not leave the Federal
    Reserve Administration, as he immediately took over J.P. Morgan’s seat on the Federal Advisory Council, from which post he
                               continued to administer the Federal Reserve System for the next ten years.
                                                      CHAPTER NINE
                   The Agricultural Depression
When Paul Warburg resigned from the Federal Reserve Board of Governors in 1918, his place was taken by Albert Strauss, partner
   in the international banking house of J & W Seligman. This banking house had large interests in Cuba and South America, and
 played a prominent part in financing the many revolutions in those countries. Its most notorious publicity came during the Senate
Finance Committee’s investigation in 1933, when it was brought out that J & W Seligman had given a $415,000 bribe to Juan Leguia,
                                 son of the President of Peru, in order to get that nation to accept a loan.
A partial list of Albert Strauss’ directorships, according to "Who’s Who", shows that he was: Chairman of the Board of the Cuba
Cane Sugar Corporation; director, Brooklyn Manhattan Transit Co., Coney Island Brooklyn RR, New York Rapid Transit, Pierce-
Arrow, Cuba Tobacco Corporation, and the Eastern Cuba Sugar Corporation.
Governor Delano resigned in August, 1918, to be commissioned a Colonel in the Army. The war ended on November 11, 1918.
William McAdoo was replaced in 1918 by Carter Glass as Secretary of the Treasury. Both Strauss and Glass were present during the
secret meeting of the Federal Reserve Board on May 18, 1920, when the Agricultural Depression of 1920-21 was made possible.
One of the main lies about the Federal Reserve Act when it was being ballyhooed in 1913 was its promise to take care of the farmer.
Actually, it has never taken care of anybody but a few big bankers. Prof. O.M.W. Sprague, Harvard economist, writing in the
Quarterly Journal of Economics of February, 1914, said:
"The primary purpose of the Federal Reserve Act is to make sure that there will always be an
available supply of money and credit in this country to meet unusual banking requirements."
There is nothing in that wording to help the farmer.
The First World War had introduced into this country a general prosperity, as revealed by the stocks of heavy industry on the New
York Exchange in 1917-1918, by the increase in the amount of money circulated, and by the enormous bank clearings during the
whole of 1918. It was the assigned duty of the Federal Reserve System to get back the vast amount
of money and credit which had escaped their control during this time of prosperity. This was done by the Agricultural Depression of
The operations of the Federal Reserve Open Market Committee in 1917-18, while Paul Warburg was still Chairman, show a
tremendous increase in purchases of bankers’ and trade acceptances. There was also a great increase in the purchase of United
States Government securities, under the leadership of the able Eugene Meyer, Jr. A large part of the stock market speculation in
1919, at the end of the War when the market was very unsettled, was financed with funds borrowed from Federal Reserve Banks with
Government securities as collateral. Thus the Federal Reserve System set up the Depression, first by causing inflation, and then
raising the discount rate and making money dear.
In 1914, Federal Reserve Bank rates had dropped from six percent to four percent, had gone to a further low of three percent in
1916, and had stayed at that level until 1920. The reason for the low interest rate was the necessity for floating the billion dollar
Liberty Loans. At the beginning of each Liberty Loan Drive, the Federal Reserve Board put a hundred million dollars into the New
York money market through its open market operations, in order to provide a cash impetus for the drive. The most important role of
the Liberty Bonds was to soak up the increase in circulation of the medium of exchange (integer of account) brought about by the
large amount of currency and credit put out during the war. Laborers were paid high wages, and farmers received the highest prices
for their produce they had ever known. These two groups accumulated millions of dollars in cash which they did not put into Liberty
Bonds. That money was effectively out of the hands of the Wall Street group which controlled the money and credit of the United
States. They wanted it back, and that is why we had the Agricultural Depression of 1920-21.
Much of the money was deposited in small country banks in the Middle West and West which had refused to have any part of the
Federal Reserve System, the farmers and ranchers of those regions seeing no good reason why they should give a group of
international financiers control of their money. The main job of the Federal Reserve System was to break these small country banks
and get back the money which had been paid out to the farmers during the war, in effect, ruin them, and this it proceeded to do.
First of all, a Federal Farm Loan Board was set up which encouraged the farmers to invest their accrued money in land on long term
loans, which the farmers were eager to do. Then inflation was allowed to take its course in this country and in Europe in 1919 and
1920. The purpose of the inflation in Europe was to cancel out a large portion of the war debts owed by the Allies to the American
people, and its purpose in this country was to draw in the excess moneys which had been distributed to
 the working people in the form of higher wages and bonuses for production. As prices went higher and higher, the money which the
     workers had accumulated became worth less and less, inflicting upon them an unfair drain, while the propertied classes were
  enriched by the inflation because of the enormous increase in the value of land and manufactured goods. The workers were thus
  effectively impoverished, but the farmers, who were as a class more thrifty, and who were more self-sufficient, had to be handled
                                                             more harshly.
G.W. Norris, in "Collier’s Magazine" of March 20, 1920, said:
"Rumor has it that two members of the Federal Reserve Board had a plain talk with some New
York bankers and financiers in December, 1919. Immediately afterwards, there was a notable
decline in transactions on the stock market and a cessation of company promotions. It is
             understood that action in the same general direction has already been taken in other sections of the country,
             as evidence of the abuse of the Federal Reserve System to promote speculation in land and commodities
Senator Robert L. Owen, Chairman of the Senate Banking and Currency Committee, testified at the Senate Silver Hearings in 1939
"In the early part of 1920, the farmers were exceedingly prosperous. They were paying off the
mortgages and buying a lot of new land, at the instance of the Government--had borrowed money
to do it--and then they were bankrupted by a sudden contraction of credit and currency which
took place in 1920. What took place in 1920 was just the reverse of what should have been taking
place. Instead of liquidating the excess of credits created by the war through a period of years, the
Federal Reserve Board met in a meeting which was not disclosed to the public. They met on the
18th of May, 1920, and it was a secret meeting. They spent all day conferring; the minutes made
sixty printed pages, and they appear in Senate Document 310 of February 19, 1923. The Class A
Directors, the Federal Reserve Advisory Council, were present, but the Class B Directors, who
represented business, commerce, and agriculture, were not present. The Class C Directors,
representing the people of the United States, were not present and were not invited to be present.
Only the big bankers were there, and their work of that day resulted in a contraction of credit
which had the effect the next year of reducing the national income fifteen billion dollars,
throwing millions of people out of employment, and reducing the value of lands and ranches by
twenty billion dollars."
Carter Glass, member of the Board in 1920 as Secretary of the Treasury, wrote in his autobiography, Adventure in Constructive
Finance published in 1928; "Reporters were not present, of course, as they should not have been and as they never are at any bank
board meeting in the world."85
85 Carter Glass, Adventure in Constructive Finance, Doubleday, N.Y. 1928
It was Carter Glass who had complained that, if a suggested amendment by Senator LaFollette were passed, on the Federal Reserve
 Act of 1913, to the effect that no member of the Federal Reserve Board should be an official or director or stockholder of any bank,
trust company, or insurance company, we would end up by having mechanics and farm laborers on the Board. Certainly mechanics
and farm laborers could have caused no more damage to the country than did Glass, Strauss, and Warburg at the secret meeting of
                                                        the Federal Reserve Board.
Senator Brookhart of Iowa testified that at that secret meeting Paul Warburg, also President of the Federal Advisory Council, had a
resolution passed to send a committee of five to the Interstate Commerce Commission and ask for an increase in railroad rates. As
head of Kuhn, Loeb Co. which owned most of the railway mileage in the United States, he was already missing the huge profits which
the United States Government had paid during the war, and he wanted to inflict new price raises on the American people.
Senator Brookhart also testified that:
"I went into Myron T. Herrick’s office in Paris, and told him that I came there to study
cooperative banking. He said to me, ‘as you go over the countries of Europe, you will find that
the United States is the only civilized country in the world that by law is prohibiting its people
             from organizing a cooperative system.’ I went up to New York and talked to about two hundred people.
             After talking cooperation and standing around waiting for my train--I did not specifically mention
             cooperative banking, it was cooperation in general--a man called me off to one side and said, ‘I think Paul
             Warburg is the greatest financier we have ever produced. He believes a lot more of your cooperative ideas
             than you think he does, and if you want to consult anybody about the business of cooperation, he is the man
             to consult, because he believes in you, and you can rely on him.’ A few minutes later I was steered up against
             Mr. Warburg himself, and he said to me, ‘You are absolutely right about this cooperative idea. I want to let
             you know that the big bankers are with you. I want to let you know that now, so that you will not start
             anything on cooperative
banking and turn them against you.’ I said, ‘Mr. Warburg, I have already prepared and tomorrow
I am going to offer an amendment to the Lant Bill authorizing the establishment of cooperative
national banks.’ That was the intermediate credit act which was then pending to authorize the
establishment of cooperative national banks. That was the extent of my conversation with Mr.
Warburg, and we have not had any since."
Mr. Wingo testified that in April, May, June and July of 1920, the manufacturers and merchants were allowed a very large increase
in credits. This was to tide them through the contraction of credit which was intended to ruin the American farmers, who, during this
period, were denied all credit.
   At the Senate Hearings in 1923, Eugene Meyer, Jr. put his finger on a primary reason for the Federal Reserve Board’s action in
                                   raising the interest rate to 7% on agricultural and livestock paper:
"I believe," he said, "that a great deal of trouble would have been avoided if a larger number of
the eligible non-member banks had been members of the Federal Reserve System."
Meyer was correct in pointing this out. The purpose of the Board’s action was to break those state and joint land stock banks which
had steadfastly refused to surrender their freedom to the banker’s dictatorship set up by the System. Kemmerer in the ABC of the
Federal Reserve System had written in 1919 that:
"The tendency will be toward unification and simplicity which will be brought about by the state
institutions, in increasing numbers, becoming stockholders and depositors in the reserve banks."
However, the state banks had not responded.
The Senate Hearings of 1923 investigating the causes of the Agricultural Depression of 1920-21 had been demanded by the American
people. The complete record of the secret meeting of the Federal Reserve Board on May 18, 1920 had been printed in the
"Manufacturers’ Record" of Baltimore, Maryland, a magazine devoted to the interests of small Southern manufacturers.
Benjamin Strong, Governor of the Federal Reserve Bank of New York, and close friend of Montagu Norman, the Governor of the
Bank of England, claimed at these Hearings:
"The Federal Reserve System has done more for the farmer than he has yet begun to realize."
Emmanuel Goldenweiser, Director of Research for the Board of Governors, claimed that the discount rate was raised purely as an
anti-inflationary measure, but he failed to explain why it was a raise aimed solely at farmers and workers, while at the same time the
System protected the manufacturers and merchants by assuring them increased credits.
The final statement on the Federal Reserve Board’s causing the Agricultural Depression of 1920-21 was made by William Jennings
Bryan. In "Hearst’s Magazine" of November, 1923, he wrote:
"The Federal Reserve Bank that should have been the farmer’s greatest protection has become his
greatest foe. The deflation of the farmer was a crime deliberately committed."
                                                             CHAPTER TEN
                                 The Money Creators
The editorial page of The New York Times, January 18, 1920, carried an interesting comment on the Federal Reserve System. The
unidentified writer, perhaps Paul Warburg, stated, "The Federal Reserve is a fount of credit, not of capital." This is one of the most
revealing statements ever made about the Federal Reserve System. It says that the Federal Reserve System will never add anything
to our capital structure, or to the formation of capital, because it is organized to produce credit, to create money for credit money
and speculations, instead of providing capital funds for the improvement of commerce and industry. Simply stated, capitalization
would mean the providing of notes backed by a precious metal or other commodity. Reserve notes are unbacked paper loaned at
On July 25, 1921, Senator Owen stated on the editorial page of The New York Times, The Federal Reserve Board is the most gigantic
financial power in all the world. Instead of using this great power as the Federal Reserve Act intended that it should, the
board....delegated this power to the banks, threw the weight of its influence toward the support of the policy of German inflation."
The senator whose name was on the Act saw that it was not performing as promised.
After the Agricultural Depression of 1920-21, the Federal Reserve Board of Governors settled down to eight years of providing rapid
credit expansion of the New York bankers, a policy which culminated in the Great Depression of 1929-31 and helped paralyze the
economic structure of the world. Paul Warburg had resigned in May, 1918, after the monetary system of the United States had been
changed from a bond-secured currency to a currency based upon commercial paper and the shares of the Federal Reserve Banks.
Warburg returned to his five hundred thousand dollar a year job with Kuhn, Loeb Company, but he continued to determine the
policy of the Federal Reserve System, as President of the Federal Advisory Council and as Chairman of the Executive Committee of
the American Acceptance Council.
From 1921 to 1929, Paul Warburg organized three of the greatest trusts in the United States, the International Acceptance Bank,
largest acceptance bank in the world, Agfa Ansco Film Corporation, with headquarters in Belgium, and I.G. Farben Corporation
whose American
          branch Warburg set up as I.G. Chemical Corporation. The Westinghouse Corporation is also one of his creations.
In the early 1920s, the Federal Reserve System played the decisive role in the re-entry of Russia into the international finance
structure. Winthrop and Stimson continued to be the correspondents between Russian and American bankers, and Henry L.
Stimson handled the negotiations concluding in our recognition of the Soviet after Roosevelt’s election in 1932. This was an anti-
climax, because we had long before resumed exchange relations with Russian financiers.
The Federal Reserve System began purchasing Russian gold in 1920, and Russian currency was accepted on the Exchanges.
According to Colonel Ely Garrison, in his autobiography, and according to the United States Naval Secret Service Report on Paul
Warburg, the Russian Revolution had been financed by the Rothschilds and Warburgs, with a member of the Warburg family
carrying the actual funds used by Lenin and Trotsky in Stockholm in 1918.
An article in the English monthly "Fortnightly", July, 1922, says:
"During the past year, practically every single capitalistic institution has been restored. This is
true of the State Bank, private banking, the Stock Exchange, the right to possess money to
unlimited amount, the right of inheritance, the bill of exchange system, and other institutions and
practices involved in the conduct of private industry and trade. A great part of the former
nationalized industries are now found in semi-independent trusts."
The organization of powerful trusts in Russia under the guise of Communism made possible the receipt of large amounts of financial
and technical help from the United States. The Russian aristocracy had been wiped out because it was too inefficient to manage a
modern industrial state. The international financiers provided funds for Lenin and Trotsky to overthrow the Czarist regime and
keep Russia in the First World War. Peter Drucker, spokesman for the oligarchy in America, declared in an article in the Saturday
Evening Post in 1948, that:
In Russia, the issuance of sufficient currency to handle the needs of their economy occurred only after a government had been put in
power which had absolute control of the people. During the 1920s, Russia issued large quantities of so-called "inflation money", a
managed currency. The same "Fortnightly" article (of July, 1922) observed that:
"As economic pressure produced the ‘astronomical dimensions system’ of currency; it can never
destroy it. Taken alone, the system is self-contained, logically perfected, even intelligent. And it
can perish only through the collapse or destruction of the political edifice which it decorates."
                                                "Fortnightly" also remarked, in 1929, that:
"Since 1921, the daily life of the Soviet citizen is no different from that of the American citizen,
and the Soviet system of government is more economical."
Admiral Kolchak, leader of the White Russian armies, was supported by the international bankers, who sent British and American
troops to Siberia in order to have a pretext for printing Kolchak rubles. At one time in 1920, the bankers were manipulating on the
London Exchange the old Czarist rubles, Kerensky rubles and Kolchak rubles, the values of all three fluctuating according to the
movements of the Allied troops aiding Kolchak. Kolchak also was in possession of considerable amounts of gold which had been
seized by his armies. After his defeat, a trainload of this gold disappeared in Siberia. At the Senate Hearings in 1921 on the Federal
Reserve System, it was brought out that the System had been receiving this gold. Congressman Dunbar questioned Governor W.P.G.
Harding of the Federal Reserve Board as follows:
DUNBAR: "In other words, Russia is sending a great deal of gold to the European countries, which in turn send it to us?"
HARDING: "This is done to pay for the stuff bought in this country and to create dollar exchange."
DUNBAR: "At the same time, that gold came from Russia through Europe?"
HARDING: "Some of it is thought to be Kolchak gold, coming through Siberia, but it is none of the Federal Reserve Banks’
business. The Secretary of the Treasury has issued instructions to the assay office not to take any gold which does not bear the mint
mark of a friendly nation."
Just what Governor Harding meant by "a friendly nation" is not clear. In 1921, we were not at war with any country, but Congress
was already beginning to question the international gold dealings of the Federal Reserve System. Governor Harding could very well
shrug his shoulders and say that it was none of the Federal Reserve Banks’ business where the gold came from. Gold knows no
nationality or race. The United States by law had ceased to be interested in where its gold came from in 1906, when Secretary of the
Treasury Shaw made arrangements with several of the larger New York banks (ones in which he had interests) to purchase gold with
advances of cash from the United States Treasury, which would then purchase the gold from these banks. The Treasury could claim
that it did not know where its gold came from since their office only registers the bank from which it made the purchase. Since 1906,
the Treasury has not known from which of the international gold merchants it was buying its gold.
The international gold dealings of the Federal Reserve System, and its active support in helping the League of Nations to force all the
of Europe and South America back on the gold standard for the benefit of international gold merchants like Eugene Meyer, Jr. and
                          Albert Strauss, is best demonstrated by a classic incident, the sterling credit of 1925.
J.E. Darling wrote, in the English periodical, "Spectator", on January 10, 1925 that:
"Obviously, it is of the first importance to the United States to induce England to resume the gold
standard as early as possible. An American controlled Gold Standard, which must inevitably
result in the United States becoming the world’s supreme financial power, makes England a
tributary and satellite, and New York the world’s financial centre."
Mr. Darling fails to point out that the American people have as little to do with this as the British people, and that resumption of the
gold standard by Britain would benefit only that small group of international gold merchants who own the world’s gold. No wonder
that "Banker’s Magazine" gleefully remarked in July, 1925 that:
"The outstanding event of the past half year in the banking world was the restoration of the gold
The First World War changed the status of the United States from that of a debtor nation to the position of the world’s greatest
creditor nation, a title formerly occupied by England. Since debt is money, according to the Governor Marriner Eccles of the Federal
Reserve Board, this also made us the richest nation of the world. The war also caused the removal of the headquarters of the world’s
acceptance market from London to New York, and Paul Warburg became the most powerful trade acceptance banker in the world.
The mainstay of the international financiers, however, remained the same. The gold standard was still the basis of foreign exchange,
and the small group of internationals who owned the gold controlled the monetary system of the Western nations.
Professor Gustav Cassel wrote in 1928:
"The American dollar, not the gold standard, is the world’s monetary standard. The American
Federal Reserve Board has the power to determine the purchasing power of the dollar by making
changes in the rate of discount, and thus controls the monetary standard of the world."
If this were true, the members of the Federal Reserve Board would be the most powerful financiers in the world. Occasionally their
membership includes such influential men as Paul Warburg or Eugene Meyer, Jr., but usually they are a rubber-stamp committee
for the Federal Advisory Council and the London bankers.
In May, 1925, the British Parliament passed the Gold Standard Act, putting Great Britain back on the gold standard. The Federal
Reserve System’s major role in this event came out on March 16, 1926, when George Seay, Governor of the Federal Reserve Bank of
Richmond, testified before the House Banking and Currency Committee that:
                    "A verbal understanding confirmed by correspondence, extended Great Britain a two hundred
million dollar gold loan or credit. All negotiations were conducted between Benjamin Strong,
Governor of the Federal Reserve Bank of New York and Mr. Montagu Norman, Governor of the
Bank of England. The purpose of this loan was to help England get back on the gold standard,
and the loan was to be met by investment of Federal Reserve funds in bills of exchange and
foreign securities."
The Federal Reserve Bulletin of June, 1925, stated that:
"Under its arrangement with the Bank of England the Federal Reserve Bank of New York
undertakes to sell gold on credit to the Bank of England from time to time during the next two
years, but not to exceed $200,000,000 outstanding at any one time."
A two hundred million dollar gold credit had been arranged by a verbal understanding between the international bankers, Benjamin
Strong and Montagu Norman. It was apparent by this time that the Federal Reserve System had other interests at heart than the
financial needs of American business and industry. Great Britain’s return to the gold standard was further facilitated by an
additional gold loan of a hundred million dollars from J.P. Morgan Company. Winston Churchill, British Chancellor of the
Exchequer, complained later that the cost to the British government of this loan was $1,125,000 the first year, this sum representing
the profit to J.P. Morgan Company in that time.
The matter of changing the discount rate, for instance, has never been satisfactorily explained. Inquiry at the Federal Reserve Board
in Washington elicited the reply that "the condition of the money market is the prime consideration behind changes in the rate."
Since the money market is in New York, it takes no imagination to deduce that New York bankers may be interested in changes of the
rate and often attempt to influence it.
Norman Lombard, in the periodical "World’s Work" writes that:
"In their consideration and disposal of proposed changes of policy, the Federal Reserve Board
should follow the procedure and ethics observed by our court of law. Suggestions that there
should be a change of rate or that the Reserve Banks should buy or sell securities may come from
anyone and with no formality or written argument. The suggestion may be made to a Governor or
Director of the Federal Reserve System over the telephone or at his club over the luncheon table,
or it may be made in the course of a casual call on a member of the Federal Reserve Board. The
interests of the one proposing the change need not be revealed, and his name and any suggestions
he makes are usually kept secret. If it concerns the matter of open market operations, the public
has no inkling of the decision until the regular weekly statement appears, showing changes in the
holdings of the Federal Reserve Banks. Meanwhile, there is no public discussion, there is no
statement of the reasons for the decision, or of the names of those opposing or favoring it."
            The chances of the average citizen meeting a Governor of the Federal Reserve System at his club are also slight.
The House Hearings on Stabilization of the Purchasing Power of the Dollar in 1928 proved conclusively that the Federal Reserve
Board worked in close cooperation with the heads of European central banks, and that the Depression of 1929-31 was planned at a
secret luncheon of the Federal Reserve Board and those heads of European central banks in 1927. The Board has never been made
responsible to the public for its decisions or actions. The constitutional checks and balances seem not to operate in finance.
The true allegiance of the members of the Federal Reserve Board has always been to the central bankers. The three features of the
central bank, its ownership by private stockholders who receive rent and profit for their use of the nation’s credit, absolute control
of the nation’s financial resources, and mobilization of the nation’s credit to finance foreigners, all were demonstrated by the Federal
Reserve System during the first fifteen years of its operations.
Further demonstration of the international purposes of the Federal Reserve Act of 1913 is provided by the "Edge Amendment" of
December 24, 1919, which authorizes the organization of corporations expressly for "engaging in international foreign banking and
other international or foreign financial operations, including the dealing in gold or bullion, and the holding of stock in foreign
corporations." In commenting on this amendment, E.W. Kemmerer, economist from Princeton University, remarked that:
"The federal reserve system is proving to be a great influence in the internationalizing of
American trade and American finance."
The fact that this internationalizing of American trade and American finance has been a direct cause for involving us in two world
wars does not disturb Mr. Kemmerer. There is plenty of evidence to show how Paul Warburg used the Federal Reserve System as
the instrument for getting trade acceptance adopted on a wide scale by American businessmen.
The use of trade acceptances, (which are the currency of international trade) by bankers and corporations in the United States prior
to 1915 was practically unknown. The rise of the Federal Reserve System exactly parallels the increase in the use of acceptances in
this country, nor is this a coincidence. The men who wanted the Federal Reserve System were the men who set up acceptance banks
and profited by the use of acceptances.
As early as 1910, the National Monetary Commission began to issue pamphlets and other propaganda urging bankers and
businessmen in this country to adopt trade acceptances in their transactions. For three
 years the Commission carried on this campaign, and the Aldrich Plan included a broad provision authorizing the introduction and
                                use of bankers’ acceptances into the American system of commercial paper.
The Federal Reserve Act of 1913 as passed by Congress did not specifically authorize the use of acceptances, but the Federal Reserve
Board in 1915 and 1916 defined "trade acceptance", further defined by Regulation A Series of 1920, and further defined by Series
1924. One of the first official acts of the Board of Governors in 1914 was to grant acceptances a preferentially low rate of discount at
Federal Reserve Banks. Since acceptances were not being used in this country at that time, no explanation of business exigency could
be advanced for this action. It was apparent that someone in power on the Board of Governors wanted the adoptance of acceptances.
The National Bank Act of 1864, which was the determining financial authority of the United States until November, 1914, did not
permit banks to lend their credit. Consequently, the power of banks to create money was greatly limited. We did not have a bank of
issue, that is, a central bank, which could create money. To get a central bank, the bankers caused money panic after money panic on
the business people of the United States, by shipping gold out of the country, creating a money shortage, and then importing it back.
After we got our central bank, the Federal Reserve System, there was no longer any need for a money panic, because the banks could
create money. However, the panic as an instrument of power over the business and financial community was used again on two
important occasions, in 1920, causing the Agricultural Depression, because state banks and trust companies had refused to join the
Federal Reserve System, and in 1929, causing the Great Depression, which centralized nearly all power in this country in the hands
of a few great trusts.
A trade acceptance is a draft drawn by the seller of goods on the purchaser, and accepted by the purchaser, with a time of expiration
stamped upon it. The use of trade acceptances in the wholesale market supplies short-term, assured credit to carry goods in process
of production, storage, transit, and marketing. It facilitates domestic and foreign commerce. Seemingly, then, the bankers who
wished to replace the open-book account system with the trade acceptance system were progressive men who wished to help
American import-export trade. Much propaganda was issued to that effect, but this was not really the story.
The open-book system, heretofore used entirely by American business people, allowed a discount for cash. The acceptance system
discourages the use of cash, by allowing a discount for credit. The open-book system also allowed much easier terms of payment,
with liberal extensions on the debt. The acceptance does not allow this, since it is
     a short-term credit with the time-date stamped upon it. It is out of the seller’s hands, and in the hands of a bank, usually an
  acceptance bank, which does not allow any extension of time. Thus, the adoption of acceptances by American businessmen during
  the 1920’s greatly facilitated the domination and swallowing up of small business into huge trusts, which accelerated the crash of
Trade acceptances had been used to some extent in the United States before the Civil War. During that war, exigencies of trade had
destroyed the acceptance as a credit medium, and it had not come back into favor in this country, our people preferring the
simplicity and generosity of the open-book system. Open-book accounts are a single-name commercial paper, bearing only the name
of the debtor. Acceptances are two-name paper, bearing the name of the debtor and the creditor. Thus they became commodities to
be bought and sold by banks. To the creditor, under the open-book system, the debt is a liability. To the acceptance bank holding an
acceptance, the debt is an asset. The men who set up acceptance banks in this country, under the leadership of Paul Warburg,
secured control of the billions of dollars of credit existing as open accounts on the books of American businessmen.
Governor Marriner Eccles of the Federal Reserve Board stated before the House Banking and Currency Committee that: "Debt is
the basis for the creation of money."
Large holders of trade acceptances got the use of billions of dollars worth of credit-money, besides the rate of interest charged upon
the acceptance itself. It is obvious why Paul Warburg should have devoted so much time, money, and energy to getting acceptances
adopted by this country’s banking machinery.
On September 4, 1914, the National City Bank accepted the first time-draft drawn on a national bank under provisions of the
Federal Reserve Act of 1913. This was the beginning of the end of the open-book account system as an important factor in wholesale
trade. Beverly Harris, vice-president of the National City Bank of New York, issued a pamphlet in 1915 stating that:
"Merchants using the open account system are usurping the functions of bankers."
In The New York Times on June 14, 1920, Paul Warburg, Chairman of the American Acceptance Council, said:
"Unless the Federal Reserve Board puts itself heart and soul behind the untrammeled
development of acceptances as a prime investment for banks of the Federal Reserve Banks the
future safe and sound development of the system will be jeopardized."
This was a statement of the purpose of Warburg and his bunch who wanted "monetary reform" in this country. They were out to get
  of all credit in the United States, and they got it, by means of the Federal Reserve System, the acceptance system, and the lack of
                                                           concern by the citizens.
The First World War was a boon to the introduction of trade acceptances, and the volume jumped to four hundred million dollars in
1917, growing through the 1920s to more than a billion dollars a year, which culminated in a high peak just before the Great
Depression of 1929-31. The Federal Reserve Bank of New York’s charts show that its use of acceptances reached a peak in
November, 1929, the month of the stock market crash, and declined sharply thereafter. The acceptance people by then had gotten
what they wanted, which was control of American business and industry. "Fortune Magazine" in February of 1950 pointed out that:
"Volume of acceptances declined from $1,732 million in 1929 to $209 million in 1940, because
of the concentration of acceptance banking in a few hands, and the Treasury’s low-interest
policy, which made direct loans cheaper than acceptance. There has been a slight upturn since
the war, but it is often cheaper for large companies to finance imports from their own coffers."
In other words, the "large companies" more accurately, the great trusts, now have control of credit and have not needed
acceptances. Besides the barrage of propaganda issued by the Federal Reserve System itself, the National Association of Credit Men,
the American Bankers’ Association, and other fraternal organizations of the New York bankers devoted much time and money to
distributing acceptance propaganda. Even their flood of lectures and pamphlets proved insufficient, and in 1919 Paul Warburg
organized the American Acceptance Council, which was devoted entirely to acceptance propaganda.
The first convention held by this association at Detroit, Michigan, on June 9, 1919, coincided with the annual convention of the
National Association of Credit Men, held there on that date, so that "interested observers might with facility participate in the
lectures and meetings of both groups," according to a pamphlet issued by the American Acceptance Council.
Paul Warburg was elected President of this organization, and later became chairman of the Executive Committee of the American
Acceptance Council, a position which he held until his death in 1932. The Council published lists of corporations using trade
acceptances, all of them businesses in which Kuhn, Loeb Co. or its affiliates held control. Lectures given before the Council or by
members of the Council were attractively bound and distributed free by the National City Bank of New York to the country’s
Louis T. McFadden, Chairman of the House Banking and Currency Committee, charged in 1922 that the American Acceptance
Council was
     exercising undue influence on the Federal Reserve Board and called for a Congressional investigation, but Congress was not
At the second annual convention of the American Acceptance Council, held in New York on December 2, 1920, President Paul
Warburg stated:
"It is a great satisfaction to report that during the year under review it was possible for the
American Acceptance Council to further develop and strengthen its relations with the Federal
Reserve Board."
During the 1920s Paul Warburg, who had resigned from the Federal Reserve Board after holding a position as Governor for a year
in wartime, continued to exercise direct personal influence on the Federal Reserve Board by meeting with the Board as President of
the Federal Advisory Council and as President of the American Acceptance Council. He was, from its organization in 1920 until his
death in 1932, Chairman of the Board of the International Acceptance Bank of New York, the largest acceptance bank in the world.
His brother, Felix M. Warburg, also a partner in Kuhn, Loeb Co., was director of the International Acceptance Bank and Paul’s son,
James Paul Warburg, was Vice-President. Paul Warburg was also a director on other important acceptance banks in this country,
such as Westinghouse Acceptance Bank, which were organized in the United States immediately after the World War, when the
headquarters of the international acceptance market was moved from London to New York, and Paul Warburg became the most
powerful acceptance banker in the world.
Paul Warburg became an even more legendary figure by his memorialization as "Daddy Warbucks" in the comic strip, "Little
Orphan Annie". The strip celebrated a homeless waif and her dog who are adopted by "the richest man in the world", Daddy
Warbucks, a takeoff on "Warburg", who has almost magical powers and can accomplish anything by the power of his limitless
wealth. Those in the know snickered when "Annie", the musical comedy version of this story, had a highly successful run of several
years on Broadway, because the vast majority of the audience had no idea that this was merely another Warburg operation.
It was the transference of the acceptance market from England to this country which gave rise to Thomas Lamont’s ecstatic speech
before the Academy of Political Science in 1917 that:
"The dollar, not the pound, is now the basis for international exchange."
Americans were proud to hear that, but they did not realize at what a price.
Visible proof of the undue influence of the American Acceptance Council on the Federal Reserve Board, about which Congressman
McFadden complained, is the chart showing the rate-pattern of the
 Federal Reserve Bank of New York during the 1920s. The Bank’s official discount rate follows exactly for nine years the ninety-day
     bankers’ acceptance rate, and the Federal Reserve Bank of New York sets the discount rate for the rest of the Reserve Banks.
Throughout the 1920s the Board of Governors retained two of its first members, C.S. Hamlin and Adolph C. Miller. These men
found themselves careers as arbiters of the nation’s monetary policy. Hamlin was on the Board from 1914 until 1936, when he was
appointed Special Counsel to the Board, while Miller served from 1914 until 1931. These two men were allowed to stay on the Board
so many years because they were both eminently respectable men who gave the Board a certain prestige in the eyes of the public.
During these years one important banker after another came on the Board, served for awhile, and went on to better things. Neither
Miller nor Hamlin ever objected to anything that the New York bankers wanted. They changed the discount rate and they performed
open market operation with Government securities whenever Wall Street wanted them to. Behind them was the figure of Paul
Warburg, who exercised a continuous and dominant influence as President of the Federal Advisory Council, on which he had such
men of common interests with himself as Winthrop Aldrich and J.P. Morgan. Warburg was never too occupied with his duties of
organizing the big international trusts to supervise the nation’s financial structures. His influence from 1902, when he arrived in this
country as immigrant from Germany, until 1932, the year of his death, was dependent on his European alliance with the banking
cartel. Warburg’s son, James Paul Warburg, continued to exercise such influence, being appointed Franklin D. Roosevelt’s Director
of the Budget when that great man assumed office in 1933, and setting up the Office of War Information, our official propaganda
agency during the Second World War.
In The Fight for Financial Supremacy, Paul Einzig, editorial writer for the London Economist, wrote that:
"Almost immediately after World War I a close cooperation was established between the Bank of
England and the Federal Reserve authorities, and more especially with the Federal Reserve Bank
of New York.* This cooperation was largely due to the cordial relations existing between Mr.
Montagu Norman of the Bank of England and Mr. Benjamin Strong, Governor of the Federal
Reserve Bank of New York until 1928. On several occasions the discount rate policy of the
Federal Reserve Bank of New York was guided by a desire to help the Bank of England.
* William Boyce Thompson (Wall Street operator) commented to Clarence Barron, Nov. 27, 1920, "Why should the Federal Reserve
Bank have private wires all over the country and talk daily by cable with the Bank of England?" p. 327 "They Told Barron".
                        There has been close cooperation in the fixing of discount rates between London and New
86 Paul Einzig, The Fight For Financial Supremacy, Macmillan, 1931
                                                   CHAPTER ELEVEN
                            Lord Montagu Norman
The collaboration between Benjamin Strong and Lord Montagu Norman is one of the greatest secrets of the twentieth century.
Benjamin Strong married the daughter of the president of Bankers Trust in New York, and subsequently succeeded to its presidency.
Carroll Quigley, in Tragedy and Hope says: "Strong became Governor of the Federal Reserve Bank of New York as the joint
nominee of Morgan and of Kuhn, Loeb Company in 1914."87
Lord Montagu Norman is the only man in history who had both his maternal grandfather and his paternal grandfather serve as
Governors of the Bank of England. His father was with Brown, Shipley Company, the London Branch of Brown Brothers (now
Brown Brothers Harriman). Montagu Norman (1871-1950) came to New York to work for Brown Brothers in 1894, where he was
befriended by the Delano family, and by James Markoe, of Brown Brothers. He returned to England, and in 1907 was named to the
Court of the Bank of England. In 1912, he had a nervous breakdown, and went to Switzerland to be treated by Jung, as was
fashionable among the powerful group which he represented.*
Lord Montagu Norman was Governor of the Bank of England from 1916 to 1944. During this period, he participated in the central
bank conferences which set up the Crash of 1929 and a worldwide depression. In The Politics of Money by Brian Johnson, he writes,
"Strong and Norman, intimate friends, spent their holidays together at Bar Harbour and in the South of France." Johnson says,
"Norman therefore became Strong’s alter ego. . . . "Strong’s easy money policies on the New York money market from 1925-28 were
the fulfillment of his agreement with Norman to keep New York interest rates below those of London. For the sake of international
cooperation, Strong withheld the steadying hand of high interest rates from New York until it was too late. Easy money in New
87 Carroll Quigley, Tragedy and Hope, Macmillan, New York, p. 326
* When people of this class are stricken by guilt feelings while plotting world wars and economic depressions which will bring misery,
suffering and death to millions of the world’s inhabitants, they sometimes have qualms. These qualms are jeered at by their peers as
"a failure of nerve". After a bout with their psychiatrists, they return to their work with renewed gusto, with no further digressions
of pity for "the little people" who are to be their victims.
            York had encouraged the surging American boom of the late 1920s, with its fantastic heights of speculation."88
Benjamin Strong died suddenly in 1928. The New York Times obituary, Oct. 17, 1928, describes the conference between the directors
of the three great central banks in Europe in July, 1927, "Mr. Norman, Bank of England, Strong of the New York Federal Reserve
Bank, and Dr. Hjalmar Schacht of the Reichsbank, their meeting referred to at the time as a meeting of ‘the world’s most exclusive
club’. No public reports were ever made of the foreign conferences, which were wholly informal, but which covered many important
questions of gold movements, the stability of world trade, and world economy."
The meetings at which the future of the world’s economy are decided are always reported as being "wholly informal", off the record,
no reports made to the public, and on the rare occasions when outraged Congressmen summon these mystery figures to testify about
their activities they merely trace the outline of steps taken, and develop no information about what was really said or decided.
At the Senate Hearings on the Federal Reserve System in 1931, H. Parker Willis, one of the authors and First Secretary of the
Federal Reserve Board from 1914 until 1920, pointedly asked Governor George Harrison, Strong’s successor as Governor of the
Federal Reserve Bank of New York:
"What is the relationship between the Federal Reserve Bank of New York and the money
committee of the Stock Exchange?"
"There is no relationship," Governor Harrison replied.
"There is no assistance or cooperation in fixing the rate in any way?", asked Willis.
"No," said Governor Harrison, "although on various occasions they advise us of the state of the
money situation, and what they think the rate ought to be." This was an absolute contradiction of
his statement that "There is no relationship". The Federal Reserve Bank of New York which set
the discount rate for the other Reserve Banks, actually maintained a close liaison with the money
committee of the Stock Exchange.
The House Stabilization Hearings of 1928 proved conclusively that the Governors of the Federal Reserve System had been holding
conferences with heads of the big European central banks. Even had the Congressmen known the details of the plot which was to
culminate in the Great Depression of 1929-31, there would have been nothing they could have done to stop it. The international
bankers who controlled gold movements could inflict their will on any country, and the United States was as helpless as any other.
Notes from these House Hearings follow:
88 Brian Johnson, The Politics of Money, McGraw Hill, New York, 1970, p. 63.
  MR. BEEDY: "I notice on your chart that the lines which produce the most violent fluctuations are found under ‘Money Rates in
   New York.’ As the rates of money rise and fall in the big cities the loans that are made on investments seem to take advantage of
 them, at present, a quite violent change, while industry in general does not seem to avail itself of these violent changes, and that line
                                           is fairly even, there being no great rises or declines.
GOVERNOR ADOLPH MILLER: This was all more or less in the interests of the international situation. They sold gold credits in
New York for sterling balances in London.
REPRESENTATIVE STRONG: (No relation to Benjamin): Has the Federal Reserve Board the power to attract gold to this
E.A. GOLDENWEISER, research director for the Board: The Federal Reserve Board could attract gold to this country by making
money rates higher.
GOVERNOR ADOLPH MILLER: I think we are very close to the point where any further solicitude on our part for the monetary
concerns of Europe can be altered. The Federal Reserve Board last summer, 1927, set out by a policy of open market purchases,
followed in course by reduction on the discount rate at the Reserve Banks, to ease the credit situation and to cheapen the cost of
money. The official reasons for that departure in credit policy were that it would help to stabilize international exchange and
stimulate the exportation of gold.
CHAIRMAN MCFADDEN: Will you tell us briefly how that matter was brought to the Federal Reserve Board and what were the
influences that went into the final determination?
GOVERNOR ADOLPH MILLER: You are asking a question impossible for me to answer.
CHAIRMAN MCFADDEN: Perhaps I can clarify it--where did the suggestion come from that caused this decision of the change of
rates last summer?
GOVERNOR ADOLPH MILLER: The three largest central banks in Europe had sent representatives to this country. There were
the Governor of the Bank of England, Mr. Hjalmar Schacht, and Professor Rist, Deputy Governor of the Bank of France. These
gentlemen were in conference with officials of the Federal Reserve Bank of New York. After a week or two, they appeared in
Washington for the better part of a day. They came down the evening of one day and were the guests of the Governors of the Federal
Reserve Board the following day, and left that afternoon for New York.
CHAIRMAN MCFADDEN: Were the members of the Board present at this luncheon?
GOVERNOR ADOLPH MILLER: Oh, yes, it was given by the Governors of the Board for the purpose of bringing all of us together.
CHAIRMAN MCFADDEN: Was it a social affair, or were matters of importance discussed?
GOVERNOR MILLER: I would say it was mainly a social affair. Personally, I had a long conversation with Dr. Schacht alone
before the luncheon, and also one of considerable length with Professor Rist. After the luncheon I began a conversation with Mr.
Norman, which was joined in by Governor Strong of New York.
CHAIRMAN MCFADDEN: Was that a formal meeting of the Board?
CHAIRMAN MCFADDEN: It was just an informal discussion of the matters they had been discussing in New York?
GOVERNOR MILLER: I assume so. It was mainly a social occasion. What I said was mainly in the nature of generalities. The heads
of these central banks also spoke in generalities.
MR. KING: What did they want?
GOVERNOR MILLER: They were very candid in answers to questions. I wanted to have a talk with Mr. Norman, and we both
stayed behind after luncheon, and were joined by the other foreign representatives and the officials of the New York Reserve Bank.
These gentlemen were all pretty concerned with the way the gold standard was working. They were therefore desirous of seeing an
easy money market in New York and lower rates, which would deter gold from moving from Europe to this country. That would be
very much in the interest of the international money situation which then existed.
MR. BEEDY: Was there some understanding arrived at between the representatives of these foreign banks and the Federal Reserve
Board or the New York Federal Reserve Bank?
MR. BEEDY: It was not reported formally?
GOVERNOR MILLER: No. Later, there came a meeting of the Open-Market Policy Committee, the investment policy committee of
the Federal Reserve System, by which and to which certain recommendations were made. My recollection is that about eighty million
dollars worth of securities were purchased in August consistent with this plan.
CHAIRMAN MCFADDEN: Was there any conference between the members of the Open Market Committee and those bankers
from abroad?
GOVERNOR MILLER: They may have met them as individuals, but not as a committee.
                                   MR. KING: How does the Open-Market Committee get its ideas?
GOVERNOR MILLER: They sit around and talk about it. I do not know whose idea this was. It was distinctly a time in which there
was a cooperative spirit at work.
CHAIRMAN MCFADDEN: You have outlined here negotiations of very great importance.
GOVERNOR MILLER: I should rather say conversations.
CHAIRMAN MCFADDEN: Something of a very definite character took place?
CHAIRMAN MCFADDEN: A change of policy on the part of our whole financial system which has resulted in one of the most
unusual situations that has ever confronted this country financially (the stock market speculation boom of 1927-1929). It seems to me
that a matter of that importance should have been made a matter of record in Washington.
GOVERNOR MILLER: I agree with you.
REPRESENTATIVE STRONG: Would it not have been a good thing if there had been a direction that those powers given to the
Federal Reserve System should be used for the continued stabilization of the purchasing power of the American dollar rather than
be influenced by the interests of Europe?
GOVERNOR MILLER: I take exception to that term "influence". Besides, there is no such thing as stabilizing the American dollar
without stabilizing every other gold currency. They are tied together by the gold standard. Other eminent men who come here are
very adroit in knowing how to approach the folk who make up the personnel of the Federal Reserve Board.
MR. STEAGALL: The visit of these foreign bankers resulted in money being cheaper in New York?
GOVERNOR MILLER: Yes, exactly.
CHAIRMAN MCFADDEN: I would like to put in the record all who attended that luncheon in Washington.
GOVERNOR MILLER: In addition to the names I have given you, there was also present one of the younger men from the Bank of
France. I think all members of the Federal Reserve Board were there. Under Secretary of the Treasury Ogden Mills was there, and
the Assistant Secretary of the Treasury, Mr. Schuneman, also, two or three men from the State Department and Mr. Warren of the
Foreign Department of the Federal Reserve Bank of New York. Oh yes, Governor Strong was present.
    CHAIRMAN MCFADDEN: This conference, of course, with all of these foreign bankers did not just happen. The prominent
                            bankers from Germany, France, and England came here at whose suggestion?
GOVERNOR MILLER: A situation had been created that was distinctly embarrassing to London by reason of the impending
withdrawal of a certain amount of gold which had been recovered by France and that had originally been shipped and deposited in
the Bank of England by the French Government as a war credit. There was getting to be some tension of mind in Europe because
France was beginning to put her house in order for a return to the gold standard. This situation was one which called for some
moderating influence.
MR. KING: Who was the moving spirit who got those people together?
GOVERNOR MILLER: That is a detail with which I am not familiar.
REPRESENTATIVE STRONG: Would it not be fair to say that the fellows who wanted the gold were the ones who instigated the
GOVERNOR MILLER: They came over here.
REPRESENTATIVE STRONG: The fact is that they came over here, they had a meeting, they banqueted, they talked, they got the
Federal Reserve Board to lower the discount rate, and to make the purchases in the open market, and they got the gold.
MR. STEAGALL: Is it true that action stabilized the European currencies and upset ours?
GOVERNOR MILLER: Yes, that was what it was intended to do.
CHAIRMAN MCFADDEN: Let me call your attention to the recent conference in Paris at which Mr. Goldenweiser, director of
research for the Federal Reserve Board, and Dr. Burgess, assistant Federal Reserve Agent of the Federal Reserve Bank of New York,
were in consultation with the representatives of the other central banks. Who called the conference?
GOVERNOR MILLER: My recollection is that it was called by the Bank of France.
GOVERNOR YOUNG: No, it was the League of Nations who called them together."
The secret meeting between the Governors of the Federal Reserve Board and the heads of the European central banks was not called
to stabilize anything. It was held to discuss the best way of getting the gold held in the United States by the System back to Europe to
force the nations of that continent back on the gold standard. The League of Nations had not yet succeeded in doing that, the
objective for which that body was set up in the first place, because the Senate of the United States
  had refused to let Woodrow Wilson betray us to an international monetary authority. It took the Second World War and Franklin
    D. Roosevelt to do that. Meanwhile, Europe had to have our gold and the Federal Reserve System gave it to them, five hundred
    million dollars worth. The movement of that gold out of the United States caused the deflation of the stock boom, the end of the
   business prosperity of the 1920s and the Great Depression of 1929-31, the worst calamity which has ever befallen this nation. It is
 entirely logical to say that the American people suffered that depression as a punishment for not joining the League of Nations. The
     bankers knew what would happen when that five hundred million dollars worth of gold was sent to Europe. They wanted the
                           Depression because it put the business and finance of the United States in their hands.
The Hearings continue:
MR. BEEDY: "Mr. Ebersole of the Treasury Department concluded his remarks at the dinner we attended last night by saying that
the Federal Reserve System did not want stabilization and the American businessman did not want it. They want these fluctuations
in prices, not only in securities but in commodities, in trade generally, because those who are now in control are making their profits
out of that very instability. If control of these people does not come in a legitimate way, there may be an attempt to produce it by
general upheavals such as have characterized society in days gone by. Revolutions have been promoted by dissatisfaction with
existing conditions, the control being in the hands of the few, and the many paying the bills.
CHAIRMAN MCFADDEN: I have here a letter from a member of the Federal Reserve Board who was summoned to appear here. I
would like to have it put in the record. It is from Governor Cunningham:
Dear Mr. Chairman:
For the past several weeks I have been confined to my home on account of illness and am
now preparing to spend a few weeks away from Washington for the purpose of hastening
Edward H. Cunningham
This is in answer to an invitation extended him to appear before our Committee. I also have a letter from George Harrison, Deputy
Governor of the Federal Reserve Bank of New York.
My dear Mr. Congressman:
Governor Strong sailed for Europe last week. He had not been at all well since the first of the
year, and, while he did appear before your Committee last March, it was only shortly after that
that he suffered a very severe attack of shingles, which has sorely racked his nerves.
George L. Harrison, May 19, 1928
I also desire to place in the record a statement in the New York Journal of Commerce, dated May 22, 1928, from Washington:
‘It is stated in well-informed circles here that the chief topic being taken up by Governor Strong
of the Federal Reserve Bank of New York on his present visit to Paris is the arrangement of
stabilization credits for France, Rumania, and Yugoslavia. A second vital question Mr. Strong
will take up is the amount of gold France is to draw from this country.’"
Further questioning by Chairman McFadden about the strange illness of Benjamin Strong brought forth the following testimony
from Governor Charles S. Hamlin of the Federal Reserve Board on May 23rd, 1928:
"All I know is that Governor Strong has been very ill, and he has gone over to Europe primarily,
I understand, as a matter of health. Of course, he knows well the various offices of the European
central banks and undoubtedly will call on them."
Governor Benjamin Strong died a few weeks after his return from Europe, without appearing before the Committee.
The purpose of these hearings before the House Committee on Banking and Currency in 1928 was to investigate the necessity for
passing the Strong bill, presented by Representative Strong (no relation to Benjamin, the international banker), which would have
provided that the Federal Reserve System be empowered to act to stabilize the purchasing power of the dollar. This had been one of
the promises made by Carter Glass and Woodrow Wilson when they presented the Federal Reserve Act before Congress in 1912, and
such a provision had actually been put in the Act by Senator Robert L. Owen, but Carter Glass’ House Committee on Banking and
Currency had struck it out. The traders and speculators did not want the dollar to become stable, because they would no longer be
able to make a profit. The citizens of this country had been led to gamble on the stock market in the 1920s because the traders had
created a nationwide condition of instability.
The Strong Bill of 1928 was defeated in Congress.
The financial situation in the United States during the 1920s was characterized by an inflation of speculative values only. It was a
trader-made situation. Prices of commodities remained low, despite the over-pricing of securities on the exchange.
The purchasers did not expect their securities to pay dividends. The idea was to hold them awhile and sell them at a profit. It had to
stop somewhere, as Paul Warburg remarked in March, 1929. Wall Street did not let it stop until the people had put their savings
into these over-priced securities. We had the spectacle of the President of the United States, Calvin Coolidge, acting as a shill for the
stock market operators when he recommended to the American people that they continue buying on the
   market, in 1927. There had been uneasiness about the inflated condition of the market, and the bankers showed their power by
getting the President of the United States, the Secretary of the Treasury, and the Chairman of the Board of Governors of the Federal
   Reserve System to issue statements that brokers’ loans were not too high, and that the condition of the stock market was sound.
Irving Fisher warned us in 1927 that the burden of stabilizing prices all over the world would soon fall on the United States. One of
the results of the Second World War was the establishment of an International Monetary Fund to do just that. Professor Gustav
Cassel remarked in the same year that:
"The downward movement of prices has not been a spontaneous result of forces beyond our
control. It is the result of a policy deliberately framed to bring down prices and give a higher
value to the monetary unit."
The Democratic Party, after passing the Federal Reserve Act and leading us into the First World War, assumed the role of an
opposition party during the 1920s. They were on the outside of the political fence, and were supported during those lean years by
liberal handouts from Bernard Baruch, according to his biography. How far outside of it they were and how little chance they had in
1928, is shown by a plank in the official Democratic Party platform adopted at Houston on June 28, 1928:
"The administration of the Federal Reserve System for the advantage of the stock-market
speculators should cease. It must be administered for the benefit of farmers, wage-earners,
merchants, manufacturers, and others engaged in constructive business."
This idealism insured defeat for its protagonist, Al Smith, who was nominated by Franklin D. Roosevelt. The campaign against Al
Smith also was marked by appeals to religious intolerance, because he was a Catholic. The bankers stirred up anti-Catholic
sentiment all over the country to achieve the election of their World War I protégé, Herbert Hoover.
Instead of being used to promote the financial stability of the country, as had been promised by Woodrow Wilson when the Act was
passed, financial instability has been steadily promoted by the Federal Reserve Board. An official memorandum issued by the Board
on March 13, 1939, stated that:
"The Board of Governors of the Federal Reserve System opposes any bill which proposes a stable
price level."
Politically, the Federal Reserve Board was used to advance the election of the bankers’ candidates during the 1920s. The "Literary
Digest" on August 4, 1928, said, on the occasion of the Federal Reserve Board raising the rate to five percent in a Presidential year:
                     "This reverses the politically desirable cheap money policy of 1927, and gives smooth conditions
on the stock market. It was attacked by the Peoples’ Lobby of Washington, D.C. which said that
‘This increase at a time when farmers needed cheap money to finance the harvesting of their
crops was a direct blow at the farmers, who had begun to get back on their feet after the
Agricultural Depression of 1920-21.
"The New York World" said on that occasion:
"Criticism of Federal Reserve Board policy by many investors is not based on its attempt to
deflate the stock market, but on the charge that the Board itself, by last year’s policy, is
completely responsible for such stock market inflation as exists."
A damning survey of the Federal Reserve System’s first fifteen years appears in the "North American Review" of May, 1929, by H.
Parker Willis, professional economist who was one of the authors of the Act and First Secretary of the Board from 1914 until 1920.
He expresses complete disillusionment.
"My first talk with President-elect Wilson was in 1912. Our conversation related entirely to
banking reform. I asked whether he felt confident we could secure the administration of a
suitable law and how we should get it applied and enforced. He answered: ‘We must rely on
American business idealism.’ He sought for something which could be trusted to afford
opportunity to American Idealism. It did serve to finance the World War and to revise American
banking practices. The element of idealism that the President prescribed and believed we could
get on the principle of noblesse oblige from American bankers and businessmen was not there.
Since the inauguration of the Federal Reserve Act we have suffered one of the most serious
financial depressions and revolutions ever known in our history, that of 1920-21. We have seen
our agriculture pass through a long period of suffering and even of revolution, during which one
million farmers left their farms, due to difficulties with the price of land and the odd status of
credit conditions. We have suffered the most extensive era of bank failures ever known in this
country. Forty-five hundred banks have closed their doors since the Reserve System began
functioning. In some Western towns there have been times when all banks in that community
failed, and given banks have failed over and over again. There has been little difference in
liability to failure between members and non-members of the Federal Reserve System.
"Wilson’s choice of the first members of the Federal Reserve Board was not especially happy.
They represented a composite group chosen for the express purpose of placating this, that, or the
other big interest. It was not strange that appointees used their places to pay debts. When the
Board was considering a resolution to the effect that future members of the reserve system should
be appointed solely on merit, because of the demonstrated incompetence of some of their number.
Comptroller John Skelton Williams moved to strike out the word ‘solely’ and in this he was
sustained by the Board. The inclusion of certain elements (Warburg,
                    Strauss, etc.) in the Board gave an opportunity for catering to special interests that was to prove
disastrous later on.
"President Wilson erred, as he often erred, in supposing that the holding of an important office
would transform an incumbent and revivify his patriotism. The Reserve Board reached the low
ebb of the Wilson period with the appointment of a member who was chosen for his ability to get
delegates for a Democratic candidate for the Presidency. However, this level was not the dregs
reached under President Harding. He appointed an old crony, D.R. Crissinger, as Governor of the
Board, and named several other super-serviceable politicians to other places. Before his death he
had done his utmost to debauch the whole undertaking. The System has gone steadily downhill
ever since.
"Reserve Banks had hardly assumed their first form when it became apparent that local bankers
had sought to use them as a means of taking care of ‘favorite sons’, that is, persons who had by
common consent become a kind of general charge upon the banking community, or inefficients
of various kinds. When reserve directors were to be chosen, the country bankers often refused to
vote, or, when they voted, cast their ballots as directed by city correspondents. In these
circumstances popular or democratic control of reserve banks was out of the question. Reasonable
efficiency might have been secured if honest men, recognizing their public duty, had assumed
power. If such men existed, they did not get on the Federal Reserve Board. In one reserve bank
today the chief management is in the hands of a man who never did a day’s actual banking in his
             life, while in another reserve institution both Governor and Chairman are the former heads of now defunct
             banks. They naturally have a high failure record in their district. In a majority of districts the standard of
             performance as judged by good banking standards is disgracefully low among reserve executive officials.
             The policy of the Federal Reserve Bank of Philadelphia is known in the System as the ‘Friends and Relatives
"It was while making war profits in considerable amounts that someone conceived the idea of
using the profits to provide themselves with phenomenally costly buildings. Today the Reserve
Banks must keep a full billion dollars of their money constantly at work merely to pay their own
expenses in normal times.
"The best illustration of what the System has done and not done is offered by the experience
which the country was having with speculation, in May, 1929. Three years prior to that, the
present bull market was just getting under way. In the autumn of 1926 a group of bankers, among
them one of world famous name, were sitting at a table in a Washington hotel. One of them
raised the question whether the low discount rates of the System were not likely to encourage
"‘Yes’, replied the famous banker, ‘they will, but that cannot be helped. It is the price we must
pay for helping Europe.’
"It may well be questioned whether the encouragement of speculation by the Board has been the
price paid for helping Europe or whether
it is the price paid to induce a certain class of financiers to help Europe, but in either case
European conditions should not have had anything to do with the Board’s discount policy. The
fact of the matter is that the Federal Reserve Banks do not come into contact with the community.
"The ‘small man’ from Maine to Texas has gradually been led to invest his savings in the stock
market, with the result that the rising tide of speculation, transacted at a higher and higher rate
of speed, has swept over the legitimate business of the country.
"In March, 1928, Roy A. Young, Governor of the Board, was called before a Senate committee.
‘Do you think the brokers’ loans are too high?", he was asked.
"‘I am not prepared to say whether brokers’ loans are too high or too low,’ he replied, ‘but I am
sure they are safely and conservatively made.’
"Secretary of the Treasury Mellon in a formal statement assured the country that they were not
too high, and Coolidge, using material supplied him by the Federal Reserve Board, made a plain
              statement to the country that they were not too high. The Federal Reserve Board, charged with the duty of
              protecting the interests of the average man, thus did its utmost to assure the average man that he should feel
              no alarm about his savings. Yet the Federal Reserve Board issued on February 2, 1929, a letter addressed to
              the Reserve Bank Directors cautioning them against grave danger of further speculation.
"What could be expected from a group of men such as composed the Board, a set of men who
were solely interested in standing from under when there was any danger of friction, displaying a
bovine and canine appetite for credit and praise, while eager only to ‘stand in’ with the ‘big men’
whom they know as the masters of American finance and banking?"
H. Parker Willis omitted any reference to Lord Montague Norman and the machinations of the Bank of England which were about
to result in the Crash of 1929 and the Great Depression.
                                                    CHAPTER TWELVE
                               The Great Depression
R.G. Hawtrey, the English economist, said, in the March, 1926 American Economic Review:
"When external investment outstrips the supply of general savings the investment market must
carry the excess with money borrowed from the banks. A remedy is control of credit by a rise in
bank rate."
The Federal Reserve Board applied this control of credit, but not in 1926, nor as a remedial measure. It was not applied until 1929,
and then the rate was raised as a punitive measure, to freeze out everybody but the big trusts.
Professor Cassel, in the Quarterly Journal of Economics, August 1928, wrote that:
"The fact that a central bank fails to raise its bank rate in accordance with the actual situation of
the capital market very much increases the strength of the cyclical movement of trade, with all its
pernicious effects on social economy. A rational regulation of the bank rate lies in our hands, and
may be accomplished only if we perceive its importance and decide to go in for such a policy.
With a bank rate regulated on these lines the conditions for the development of trade cycles
would be radically altered, and indeed, our familiar trade cycles would be a thing of the past."
This is the most authoritative premise yet made relating that our business depressions are artificially precipitated. The occurrence of
the Panic of 1907, the Agricultural Depression of 1920, and the Great Depression of 1929, all three in good crop years and in periods
of national prosperity, suggests that premise is not guesswork. Lord Maynard Keynes pointed out that most theories of the business
cycle failed to relate their analysis adequately to the money mechanism. Any survey or study of a depression which failed to list such
factors as gold movements and pressures on foreign exchange would be worthless, yet American economists have always dodged this
The League of Nations had achieved its goal of getting the nations of Europe back on the gold standard by 1928, but three-fourths of
the world’s gold was in France and the United States. The problem was how to get that gold to countries which needed it as a basis
for money and credit. The answer was action by the Federal Reserve System.
 Following the secret meeting of the Federal Reserve Board and the heads of the foreign central banks in 1927, the Federal Reserve
  Banks in a few months doubled their holdings of Government securities and acceptances, which resulted in the exportation of five
    hundred million dollars in gold in that year. The System’s market activities forced the rates of call money down on the Stock
  Exchange, and forced gold out of the country. Foreigners also took this opportunity to purchase heavily in Government securities
                                                    because of the low call money rate.
"The agreement between the Bank of England and the Washington Federal Reserve authorities
many months ago was that we would force the export of 725 million of gold by reducing the bank
rates here, thus helping the stabilization of France and Europe and putting France on a gold
basis."89 (April 20, 1928)
On February 6, 1929, Mr. Montagu Norman, Governor of the Bank of England, came to Washington and had a conference with
Andrew Mellon, Secretary of the Treasury. Immediately after that mysterious visit, the Federal Reserve Board abruptly changed its
policy and pursued a high discount rate policy, abandoning the cheap money policy which it had inaugurated in 1927 after Mr.
Norman’s other visit. The stock market crash and the deflation of the American people’s financial structure was scheduled to take
place in March. To get the ball rolling, Paul Warburg gave the official warning to the traders to get out of the market. In his annual
report to the stockholders of his International Acceptance Bank, in March, 1929, Mr. Warburg said:
"If the orgies of unrestrained speculation are permitted to spread, the ultimate collapse is certain
not only to affect the speculators themselves, but to bring about a general depression involving
the entire country."
During three years of "unrestrained speculation", Mr. Warburg had not seen fit to make any remarks about the condition of the
Stock Exchange. A friendly organ, The New York Times, not only gave the report two columns on its editorial page, but editorially
commented on the wisdom and profundity of Mr. Warburg’s observations. Mr. Warburg’s concern was genuine, for the stock
market bubble had gone much farther than it had been intended to go, and the bankers feared the consequences if the people
realized what was going on. When this report in The New York Times started a sudden wave of selling on the Exchange, the bankers
grew panicky, and it was decided to ease the market somewhat. Accordingly, Warburg’s National City Bank rushed twenty-five
million dollars in cash to the call money market, and postponed the day of the crash.
The revelation of the Federal Reserve Board’s final decision to trigger the Crash of 1929 appears, amazingly enough, in The New
York Times. On April 20, 1929, the Times headlined, "Federal Advisory Council Mystery
89 Clarence W. Barron, They Told Barron, Harpers, New York, 1930, p. 353
    Meeting in Washington. Resolutions were adopted by the council and transmitted to the board, but their purpose was closely
  guarded. An atmosphere of deep mystery was thrown about the proceedings both by the board and the council. Every effort was
       made to guard the proceedings of this extraordinary session. Evasive replies were given to newspaper correspondents."
Only the innermost council of "The London Connection" knew that it had been decided at this "mystery meeting" to bring down
the curtain on the greatest speculative boom in American history. Those in the know began to sell off all speculative stocks and put
their money in government bonds. Those who were not privy to this secret information, and they included some of the wealthiest men
in America, continued to hold their speculative stocks and lost everything they had.
In FDR, My Exploited Father-in-Law, Col. Curtis B. Dall, who was a broker on Wall Street at that time, writes of the Crash,
"Actually it was the calculated ‘shearing’ of the public by the World Money-Powers, triggered by the planned sudden shortage of the
supply of call money in the New York money market."90 Overnight, the Federal Reserve System had raised the call rate to twenty
percent. Unable to meet this rate, the speculators’ only alternative was to jump out of windows.
The New York Federal Reserve Bank rate, which dictated the national interest rate, went to six percent on November 1, 1929. After
the investors had been bankrupted, it dropped to one and one-half percent on May 8, 1931. Congressman Wright Patman in "A
Primer On Money", says that the money supply decreased by eight billion dollars from 1929 to 1933, causing 11,630 banks of the
total of 26,401 in the United States to go bankrupt and close their doors.
The Federal Reserve Board had already warned the stockholders of the Federal Reserve Banks to get out of the Market, on
February 6, 1929, but it had not bothered to say anything to the rest of the people. Nobody knew what was going on except the Wall
Street bankers who were running the show. Gold movements were completely unreliable. The Quarterly Journal of Economics noted
"The question has been raised, not only in this country, but in several European
countries, as to whether customs statistics record with accuracy the movements of
precious metals, and, when investigation has been made, confidence in such
figures has been weakened rather than strengthened. Any movement between
France and England, for instance, should be recorded in each country, but such
comparison shows an average yearly discrepancy of fifty million francs for France
and eighty-five million francs for England. These enormous discrepancies are not
accounted for."
The Right Honorable Reginald McKenna stated that:
90 Col. Curtis B. Dall, F.D.R., My Exploited Father-in-Law, Liberty Lobby, Wash., D.C. 1970
                     "Study of the relations between changes in gold stock and movement in price levels shows what
should be very obvious, but is by no means recognized, that the gold standard is in no sense
automatic in operation. The gold standard can be, and is, usefully managed and controlled for the
benefit of a small group of international traders."
In August 1929, the Federal Reserve Board raised the rate to six percent. The Bank of England in the next month raised its rate from
five and one-half percent to six and one-half percent. Dr. Friday in the September, 1929, issue of Review of Reviews, could find no
reason for the Board’s action:
"The Federal Reserve statement for August 7, 1929, shows that signs of inadequacy for autumn
requirements do not exist. Gold resources are considerably more than the previous year, and gold
continues to move in, to the financial embarrassment of Germany and England. The reasons for
the Board’s action must be sought elsewhere. The public has been given only the hint that ‘This
problem has presented difficulties because of certain peculiar conditions’. Every reason which
Governor Young advanced for lowering the bank rate last year exists now. Increasing the rate
means that not only is there danger of drawing gold from abroad, but imports of the yellow metal
have been in progress for the last four months. To do anything to accentuate this is to take the
responsibility for bringing on a world-wide credit deflation."
Thus we find that not only was the Federal Reserve System responsible for the First World War, which it made possible by enabling
the United States to finance the Allies, but its policies brought on the world-wide depression of 1929-31. Governor Adolph C. Miller
stated at the Senate Investigation of the Federal Reserve Board in 1931 that:
"If we had had no Federal Reserve System, I do not think we would have had as bad a speculative
situation as we had, to begin with."
Carter Glass replied, "You have made it clear that the Federal Reserve Board provided a terrific credit expansion by these open
market transactions."
Emmanuel Goldenweiser said, "In 1928-29 the Federal Board was engaged in an attempt to restrain the rapid increase in security
loans and in stock market speculation. The continuity of this policy of restraint, however, was interrupted by reduction in bill rates
in the autumn of 1928 and the summer of 1929."
Both J.P. Morgan and Kuhn, Loeb Co. had "preferred lists" of men to whom they sent advance announcements of profitable stocks.
The men on these preferred lists were allowed to purchase these stocks at cost, that is, anywhere from 2 to 15 points a share less than
they were sold to the public. The men on these lists were fellow bankers, prominent industrialists, powerful city politicians, national
Committeemen of the Republican and Democratic Parties, and rulers of foreign countries. The men on these lists were notified of the
coming crash, and sold all but so-called gilt-edged stocks, General Motors, Dupont, etc. The prices on these stocks also sank to
record lows, but they came up soon afterwards. How the big bankers operated in
 1929 is revealed by a Newsweek story on May 30, 1936, when a Roosevelt appointee, Ralph W. Morrison, resigned from the Federal
                                                               Reserve Board:
"The consensus of opinion is that the Federal Reserve Board has lost an able man. He sold his
Texas utilities stock to Insull for ten million dollars, and in 1929 called a meeting and ordered
his banks to close out all security loans by September 1. As a result, they rode through the
depression with flying colors."
Predictably enough, all of the big bankers rode through the depression "with flying colors." The people who suffered were the
workers and farmers who had invested their money in get-rich stocks, after the President of the United States, Calvin Coolidge, and
the Secretary of the Treasury, Andrew Mellon, had persuaded them to do it.
There had been some warnings of the approaching crash in England, which American newspapers never saw. The London Statist on
May 25, 1929 said:
"The banking authorities in the United States apparently want a business panic to curb
The London Economist on May 11, 1929, said:
"The events of the past year have seen the beginnings of a new technique, which, if maintained
and developed, may succeed in ‘rationing the speculator without injuring the trader.’"
Governor Charles S. Hamlin quoted this statement at the Senate hearings in 1931 and said, in corroboration of it:
"That was the feeling of certain members of the Board, to remove Federal Reserve credit from the
speculator without injuring the trader."
Governor Hamlin did not bother to point out that the "speculators" he was out to break were the school-teachers and small town
merchants who had put their savings into the stock market, or that the "traders" he was trying to protect were the big Wall Street
operators, Bernard Baruch and Paul Warburg.
When the Federal Reserve Bank of New York raised its rate to six percent on August 9, 1929, market conditions began which
culminated in tremendous selling orders from October 24 into November, which wiped out a hundred and sixty billion dollars worth
of security values. That was a hundred and sixty billions which the American citizens had one month and did not have the next. Some
idea of the calamity may be had if we remember that our enormous outlay of money and goods in the Second World War amounted
to not much more than two hundred billions of dollars, and a great deal of that remained as negotiable securities in the national
debt. The stock market crash is the greatest misfortune which the United States has ever suffered.
The Academy of Political Science of Columbia University in its annual meeting in January, 1930, held a post-mortem on the Crash of
1929. Vice-
  President Paul Warburg was to have presided, and Director Ogden Mills was to have played an important part in the discussion.
    However, these two gentlemen did not show up. Professor Oliver M.W. Sprague of Harvard University remarked of the crash:
"We have here a beautiful laboratory case of the stock market’s dropping apparently from its own
It was pointed out that there was no exhaustion of credit, as in 1893, nor any currency famine, as in the Panic of 1907, when clearing-
house certificates were resorted to, nor a collapse of commodity prices, as in 1920. What then, had caused the crash? The people had
purchased stocks at high prices and expected the prices to continue to rise. The prices had to come down, and they did. It was
obvious to the economists and bankers gathered over their brandy and cigars at the Hotel Astor that the people were at fault.
Certainly the people had made a mistake in buying over-priced securities, but they had been talked into it by every leading citizen
from the President of the United States on down. Every magazine of national circulation, every big newspaper, and every prominent
banker, economist, and politician, had joined in the big confidence game of urging people to buy those over-priced securities. When
the Federal Reserve Bank of New York raised its rate to six percent, in August 1929, people began to get out of the market, and it
turned into a panic which drove the prices of securities down far below their natural levels. As in previous panics, this enabled both
Wall Street and foreign operators in the know to pick up "blue-chip" and gilt-edged" securities for a fraction of their real value.
The Crash of 1929 also saw the formation of giant holding companies which picked up these cheap bonds and securities, such as the
Marine Midland Corporation, the Lehman Corporation, and the Equity Corporation. In 1929 J.P. Morgan Company organized the
giant food trust, Standard Brands. There was an unequaled opportunity for trust operators to enlarge and consolidate their
Emmanuel Goldenweiser, director of research for the Federal Reserve System, said, in 1947:
"It is clear in retrospect that the Board should have ignored the speculative expansion and
allowed it to collapse of its own weight."
This admission of error eighteen years after the event was small comfort to the people who lost their savings in the Crash.
The Wall Street Crash of 1929 was the beginning of a world-wide credit deflation which lasted through 1932, and from which the
Western democracies did not recover until they began to rearm for the Second World War. During this depression, the trust
operators achieved further control by their backing of three international swindlers, The Van Sweringen brothers, Samuel Insull,
and Ivar Kreuger. These men pyramided billions of dollars worth of securities to fantastic heights. The bankers who promoted
  them and floated their stock issue could have stopped them at any time, by calling loans of less than a million dollars, but they let
 these men go on until they had incorporated many industrial and financial properties into holding companies, which the banks then
 took over for nothing. Insull piled up public utility holdings throughout the Middle West, which the banks got for a fraction of their
  worth. Ivar Kreuger was backed by Lee Higginson Company, supposedly one of the nation’s most reputable banking houses. The
    Saturday Evening Post called him "more than a financial titan", and the English review Fortnightly said, in an article written
December 1931, under the title, "A Chapter in Constructive Finance": "It is as a financial irrigator that Kreuger has become of such
                                                       vital importance to Europe."*
"Financial irrigator" we may remember, was the title bestowed upon Jacob Schiff by Newsweek Magazine, when it described how
Schiff had bought up American railroads with Rothschild’s money.
The New Republic remarked on January 25th, 1933, when it commented on the fact that Lee Higginson Company had handled
Kreuger and Toll Securities on the American market:
"Three-quarters of a billion dollars was made away with. Who was able to dictate to the French
police to keep secret the news of this extremely important suicide for some hours, during which
somebody sold Kreuger securities in large amounts, thus getting out of the market before the
The Federal Reserve Board could have checked the enormous credit expansion of Insull and Kreuger by investigating the security
on which their loans were being made, but the Governors never made any examination of the activities of these men.
The modern bank with the credit facilities it affords, gives an opportunity which had not previously existed for such operators as
Kreuger to make an appearance of abundant capital by the aid of borrowed capital. This enables the speculator to buy securities
with securities. The only limit to the amount he can corner is the amount to which the banks will back him, and, if a speculator is
being promoted by a reputable banking house, as Kreuger was promoted by Lee Higginson Company, the only way he could be
stopped would be by an investigation of his actual financial resources, which in Kreuger’s case would have proved to be nil.
The leader of the American people during the Crash of 1929 and the subsequent depression was Herbert Hoover. After the first
break of the
* NOTE: Ivar Kreuger, we may recall, was occasionally the personal guest of his old friend, President Herbert Hoover, at the White
House. Hoover seems to have maintained a cordial relationship with many of the most prominent swindlers of the twentieth century,
including his partner, Emile Francqui. The receivership of the billion dollar Kreuger Fraud was handled by Samuel Untermeyer,
former counsel for Pujo Committee hearings.
           market (the five billion dollars in security values which disappeared on October 24, 1929) President Hoover said:
"The fundamental business of the country, that is, production and distribution of commodities, is
on a sound and prosperous basis."
His Secretary of the Treasury, Andrew Mellon, stated on December 25, 1929, that:
"The Government’s business is in sound condition."
His own business, the Aluminum Company of America, apparently was not doing so well, for he had reduced the wages of all
employees by ten percent.
The New York Times reported on April 7, 1931, "Montagu Norman, Governor of the Bank of England, conferred with the Federal
Reserve Board here today. Mellon, Meyer, and George L. Harrison, Governor of the Federal Reserve Bank of New York, were
The London Connection had sent Norman over this time to ensure that the Great Depression was proceeding according to schedule.
Congressman Louis McFadden had complained, as reported in The New York Times, July 4, 1930, "Commodity prices are being
reduced to 1913 levels. Wages are being reduced by the labor surplus of four million unemployed. The Morgan control of the
Federal Reserve System is exercised through control of the Federal Reserve Bank of New York, the mediocre representation and
acquiescence of the Federal Reserve Board in Washington." As the depression deepened, the trust’s lock on the American economy
strengthened, but no finger was pointed at the parties who were controlling the system.
                                                CHAPTER THIRTEEN
                                                  The 1930’s
In 1930 Herbert Hoover appointed to the Federal Reserve Board an old friend from World War I days, Eugene Meyer, Jr., who had
a long record of public service dating from 1915, when he went into partnership with Bernard Baruch in the Alaska-Juneau Gold
Mining Company. Meyer had been a Special Advisor to the War Industries Board on Non-Ferrous Metals (gold, silver, etc.); Special
Assistant to the Secretary of War on aircraft production; in 1917 he was appointed to the National Committee on War Savings, and
was made Chairman of the War Finance Corporation from 1918-1926. He then was appointed chairman of the Federal Farm Loan
Board from 1927-29. Hoover put him on the Federal Reserve Board in 1930, and Franklin D. Roosevelt created the Reconstruction
Bank for Reconstruction and Development in 1946. Meyer must have been a man of exceptional ability to hold so many important
posts. However, there were some Senators who did not believe he should hold any Government office, because of his family
background as an international gold dealer and his mysterious operations in billions of dollars of Government securities in the First
World War. Consequently, the Senate held Hearings to determine whether Meyer ought to be on the Federal Reserve Board.
At these Hearings, Representative Louis T. McFadden, Chairman of the House Banking and Currency Committee, said:
"Eugene Meyer, Jr. has had his own crowd with him in the government since he started in 1917.
His War Finance Corporation personnel took over the Federal Farm Loan System, and almost
immediately afterwards, the Kansas City Join Stock Land Bank and the Ohio Joint Stock Land
Bank failed."
REPRESENTATIVE RAINEY: Mr. Meyer, when he nominally resigned as head of the Federal Farm Loan Board, did not really
cease his activities there. He left behind him an able body of wreckers. They are continuing his policies and consulting with him.
Before his appointment, he was frequently in consultation with Assistant Secretary of the Treasury Dewey. Just before his
appointment, the Chicago Joint Land Stock Bank, the Dallas Joint Stock Land Bank, the Kansas City Joint Land Stock Bank, and
the Des Moines Land Bank were all functioning. Their bonds
  were selling at par. The then farm commissioner had an understanding with Secretary Dewey that nothing would be done without
 the consent and approval of the Federal Farm Loan Board. A few days afterwards, United States Marshals, with pistols strapped at
 their sides, and sometimes with drawn pistols, entered these five banks and demanded that the banks be turned over to them. Word
 went out all over the United States, through the newspapers, as to what had happened, and these banks were ruined. This led to the
 breach with the old Federal Farm Loan Board, and to the resignation of three of its members, and the appointment of Mr. Meyer to
                                                         be head of that Board.
SENATOR CAREY: Who authorized the marshals to take over the banks?
REP. RAINEY: Assistant Secretary of the Treasury Dewey. That started the ruin of all these rural banks, and the Gianninis bought
them up in great numbers."
World’s Work of February 1931, said:
"When the World War began for us in 1917, Mr. Eugene Meyer, Jr. was among the first to be
called to Washington. In April, 1918, President Wilson named him Director of the War Finance
Corporation. This corporation loaned out 700 million dollars to banking and financial
The Senate Hearings on Eugene Meyer, Jr. continued:
REPRESENTATIVE MCFADDEN: "Lazard Freres, the international banking house of New York and Paris, was a Meyer family
banking house. It frequently figures in imports and exports of gold, and one of the important functions of the Federal Reserve
System has to do with gold movements in the maintenance of its own operations. In looking over the minutes of the hearing we had
last Thursday, Senator Fletcher had asked Mr. Meyer, ‘Have you any connections with international banking?’ Mr. Meyer had
answered, ‘Me? Not personally.’ This last question and answer do not appear in the stenographic transcript. Senator Fletcher
remembers asking the question and the answer. It is an odd omission.
SENATOR BROOKHART: I understand that Mr. Meyer looked it over for corrections.
REPRESENTATIVE MCFADDEN: Mr. Meyer is a brother-in-law of George Blumenthal, a member of the firm of J.P. Morgan
Company, which represents the Rothschild interests. He also is a liaison officer between the French Government and J.P. Morgan.
Edmund Platt, who had eight years to go on a term of ten years as Governor of the Federal Reserve Board, resigned to make room
for Mr. Meyer. Platt was given a Vice-Presidency of Marine Midland Corporation by Meyer’s brother-in-law Alfred A. Cook.
Eugene Meyer, Jr. as head of the War Finance Corporation, engaged in the placing of two billion dollars in Government
 securities, placed many of those orders first with the banking house now located at 14 Wall Street in the name of Eugene Meyer, Jr.
   Mr. Meyer is now a large stockholder in the Allied Chemical Corporation. I call your attention to House Report No. 1635, 68th
 Congress, 2nd Session, which reveals that at least twenty-four million dollars in bonds were duplicated. Ten billion dollars worth of
bonds surreptitiously destroyed. Our committee on Banking and Currency found the records of the War Finance Corporation under
Eugene Meyer, Jr. extremely faulty. While the books were being brought before our committee by the people who were custodians of
     them and taken back to the Treasury at night, the committee discovered that alterations were being made in the permanent
The record of public service did not prevent Eugene Meyer, Jr. from continuing to serve the American people on the Federal
Reserve Board, as Chairman of the Reconstruction Finance Corporation, and as head of the International Bank.
President Rand, of the Marine Midland Corporation, questioned about his sudden desire for the services of Edmund Platt, said:
"We pay Mr. Platt $22,000 a year, and we took his secretary over, of course." This meant another five thousand a year.
Senator Brookhart showed that Eugene Meyer, Jr. administered the Federal Farm Loan Board against the interests of the American
farmer, saying:
"Mr. Meyer never loaned more than 180 million dollars of the capital stock of 500 million dollars
of the farm loan board, so that in aiding the farmers he was not even able to use half of the
MR. MEYER: Senator Kenyon wrote me a letter which showed that I cooperated with great advantage to the people of Iowa.
SENATOR BROOKHART: "You went out and took the opposite side from the Wall Street crowd. They always send somebody out
to do that. I have not yet discovered in your statements much interest in making loans to the farmers at large, or any real effort to
help their condition. In your two years as head of the Federal Farm Loan Board you made very few loans compared to your capital.
You loaned only one-eighth of the demand, according to your own statement."
Despite the damning evidence uncovered at these Senate Hearings, Eugene Meyer, Jr. remained on the Federal Reserve Board.
During this tragic period, chairman Louis McFadden of the House Banking and Currency Committee continued his lone crusade
against the "London Connection" which had wrecked the nation. On June 10, 1932, McFadden addressed the House of
"Some people think the Federal Reserve banks are United States Government institutions. They
are not government institutions. They are private credit monopolies which prey upon the people
of the United
                     States for the benefit of themselves and their foreign customers. The Federal Reserve banks are
the agents of the foreign central banks. Henry Ford has said, ‘The one aim of these financiers is
world control by the creation of inextinguishable debts.’ The truth is the Federal Reserve Board
has usurped the Government of the United States by the arrogant credit monopoly which operates
the Federal Reserve Board and the Federal Reserve Banks."
On January 13, 1932, McFadden had introduced a resolution indicting the Federal Reserve Board of Governors for "Criminal
"Whereas I charge them, jointly and severally, with the crime of having treasonably conspired
and acted against the peace and security of the United States and having treasonably conspired to
destroy constitutional government in the United States. Resolved, that the Committee on the
Judiciary is authorized and directed as a whole or by subcommittee to investigate the official
conduct of the Federal Reserve Board and agents to determine whether, in the opinion of the said
committee, they have been guilty of any high crime or misdemeanour which in the contemplation
of the Constitution requires the interposition of the Constitutional powers of the House."
No action was taken on this Resolution. McFadden came back on December 13, 1932 with a motion to impeach President Herbert
Hoover. Only five Congressmen stood with him on this, and the resolution failed. The Republican majority leader of the House
remarked, "Louis T. McFadden is now politically dead."
On May 23, 1933, McFadden introduced House Resolution No. 158, Articles of Impeachment against the Secretary of the Treasury,
two Assistant Secretaries of the Treasury, the Federal Reserve Board of Governors, and officers and directors of the Federal Reserve
Banks for their guilt and collusion in causing the Great Depression. "I charge them with having unlawfully taken over 80 billion
dollars from the United States Government in the year 1928, the said unlawful taking consisting of the unlawful recreation of claims
against the United States Treasury to the extent of over 80 billion dollars in the year 1928, and in each year subsequent, and by
having robbed the United States Government and the people of the United States by their theft and sale of the gold reserve of the
United States."
The Resolution never reached the floor. A whispering campaign that McFadden was insane swept Washington, and in the next
Congressional elections, he was overwhelmingly defeated by thousands of dollars poured into his home district of Canton,
In 1932, the American people elected Franklin D. Roosevelt President of the United States. This was hailed as the freeing of the
American people from the evil influence which had brought on the Great Depres-
                  sion, the ending of Wall Street domination, and the disappearance of the banker from Washington.
Roosevelt owed his political career to a fortuitous circumstance. As Assistant Secretary of the Navy during World War I, because of
old school ties, he had intervened to prevent prosecution of a large ring of homosexuals in the Navy which included several Groton
and Harvard chums. This brought him to the favorable appreciation of a wealthy international homosexual set which travelled back
and forth between New York and Paris, and which was presided over by Bessie Marbury, of a very old and prominent New York
family. Bessie’s "wife", who lived with her for a number of years, was Elsie de Wolfe, later Lady Mendl in a "mariage de
convenance", the arbiter of the international set. They recruited J.P. Morgan’s youngest daughter, Anne Morgan, into their circle,
and used her fortune to restore the Villa Trianon in Paris, which became their headquarters. During World War I, it was used as a
hospital. Bessie Marbury expected to be awarded the Legion of Honor by the French Government as a reward, but J.P. Morgan, Jr.,
who despised her for corrupting his youngest sister, requested the French Government to withhold the award, which they did.
Smarting from this rebuff, Bessie Marbury threw herself into politics, and became a power in the Democratic National Party. She
had also recruited Eleanor Roosevelt into her circle, and, during a visit to Hyde Park, Eleanor confided that she was desperate to
find something for "poor Franklin" to do, as he was confined to a wheelchair, and was very depressed.
"I know what we’ll do," exclaimed Bessie, "We’ll run him for Governor of New York!" Because of her power, she succeeded in this
goal, and Roosevelt later became President.
One of the men Roosevelt brought down from New York with him as a Special Advisor to the Treasury was Earl Bailie of J & W
Seligman Company, who had become notorious as the man who handed the $415,000 bribe to Juan Leguia, son of the President of
Peru, in order to get the President to accept a loan from J & W Seligman Company. There was a great deal of criticism of this
appointment, and Mr. Roosevelt, in keeping with his new role as defender of the people, sent Earl Bailie back to @bringing in New
Franklin D. Roosevelt himself was an international banker of ill repute, having floated large issues of foreign bonds in this country in
the 1920s. These bonds defaulted, and our citizens lost millions of dollars, but they still wanted Mr. Roosevelt as President. The New
York Directory of Directors lists Mr. Roosevelt as President and Director of United European Investors, Ltd., in 1923 and 1924,
which floated many millions of German marks in this country, all of which defaulted. Poor’s Directory of Directors lists him as a
director of The International Germanic Trust Company in 1928. Franklin D. Roosevelt was also an advisor to the
         Federal International Banking Corporation, an Anglo-American outfit dealing in foreign securities in the United States.
Roosevelt’s law firm of Roosevelt and O’Connor during the 1920s represented many international corporations. His law partner,
Basil O’Connor, was a director in the following corporations:
Cuban-American Manganese Corporation, Venezuela-Mexican Oil Corporation, West Indies Sugar Corporation, American Reserve
Insurance Corporation, Warm Springs Foundation. He was director in other corporations, and later head of the American Red
When Franklin D. Roosevelt took office as President of the United States, he appointed as Director of the Budget James Paul
Warburg, son of Paul Warburg, and Vice President of the International Acceptance Bank and other corporations. Roosevelt
appointed as Secretary of the Treasury W.H. Woodin, one of the biggest industrialists in the country, Director of the American Car
Foundry Company and numerous other locomotive works, Remington Arms, The Cuba Company, Consolidated Cuba Railroads,
and other big corporations. Woodin was later replaced by Henry Morgenthau, Jr., son of the Harlem real estate operator who had
helped put Woodrow Wilson in the White House. With such a crew as this, Roosevelt’s promises of radical social changes showed
little likelihood of fulfillment. One of the first things he did was to declare a bankers’ moratorium, to help the bankers get their
records in order.
World’s Work says:
"Congress has left Charles G. Dawes and Eugene Meyer, Jr. free to appraise, by their own
methods, the security which prospective borrowers of the two billion dollar capital may offer."
Roosevelt also set up the Securities Exchange Commission, to see to it that no new faces got into the Wall Street gang, which caused
the following colloquy in Congress:
REPRESENTATIVE WOLCOTT: At hearings before this committee in 1933, the economists showed us charts which proved beyond
all doubt that the dollar value commodities followed the price level of gold. It did not, did it?
REPRESENTATIVE GIFFORD: Wasn’t Joe Kennedy put in [as Chairman of the Securities Exchange Committee] by President
Roosevelt because he was sympathetic with big business?
Paul Einzig pointed out in 1935 that:
                     "President Roosevelt was the first to declare himself openly in favor of a monetary policy aiming
at a deliberately engineered rise in prices. In a negative sense his policy was successful. Between
1933 and 1935 he succeeded in reducing private indebtedness, but this was done at the cost of
increasing public indebtedness."
In other words, he eased the burden of debts off of the rich onto the poor, since the rich are few and the poor many.
Senator Robert L. Owen, testifying before the House Committee on Banking and Currency in 1938, said:
"I wrote into the bill which was introduced by me in the Senate on June 26, 1913, a provision
that the powers of the System should be employed to promote a stable price level, which meant a
dollar of stable purchasing, debt-paying power. It was stricken out. The powerful money interests
got control of the Federal Reserve Board through Mr. Paul Warburg, Mr. Albert Strauss, and Mr.
Adolph C. Miller and they were able to have that secret meeting of May 18, 1920, and bring
about a contraction of credit so violent it threw five million people out of employment. In 1920
that Reserve Board deliberately caused the Panic of 1921. The same people, unrestrained in the
stock market, expanding credit to a great excess between 1926 and 1929, raised the price of
stocks to a fantastic point where they could not possibly earn dividends, and when the people
realized this, they tried to get out, resulting in the Crash of October 24, 1929."
Senator Owen did not go into the question of whether the Federal Reserve Board could be held responsible to the public. Actually,
they cannot. They are public officials who are appointed by the President, but their salaries are paid by the private stockholders of
the Federal Reserve Banks.
Governor W.P.G. Harding of the Federal Reserve Board testified in 1921 that:
"The Federal Reserve Bank is an institution owned by the stockholding member banks. The
Government has not a dollar’s worth of stock in it."
However, the Government does give the Federal Reserve System the use of its billions of dollars of credit, and this gives the Federal
Reserve its characteristic of a central bank, the power to issue currency on the Government’s credit. We do not have Federal
Government notes or gold certificates as currency. We have Federal Reserve Bank notes, issued by the Federal Reserve Banks, and
every dollar they print is a dollar in their pocket.
W. Randolph Burgess, of the Federal Reserve Bank of New York, stated before the Academy of Political Science in 1930 that:
"In its major principles of operation the Federal Reserve System is no different from other banks
of issue, such as the Bank of England, the Bank of France, or the Reichsbank."
  All of these central banks have the power of issuing currency in their respective countries. Thus, the people do not own their own
money in Europe, nor do they own it here. It is privately printed for private profit. The people have no sovereignty over their money,
               and it has developed that they have no sovereignty over other major political issues such as foreign policy.
As a central bank of issue, the Federal Reserve System has behind it all the enormous wealth of the American people. When it began
operations in 1913, it created a serious threat to the central banks of the impoverished countries of Europe. Because it represented
this great wealth, it attracted far more gold than was desirable in the 1920s, and it was apparent that soon all of the world’s gold
would be piled up in this country. This would make the gold standard a joke in Europe, because they would have no gold over there
to back their issue of money and credit. It was the Federal Reserve’s avowed aim in 1927, after the secret meeting with the heads of
the foreign central banks, to get large quantities of that gold sent back to Europe, and its methods of doing so, the low interest rate
and heavy purchases of Government securities, which created vast sums of new money, intensified the stock market speculation and
made the stock market crash and resultant depression a national disaster.
Since the Federal Reserve System was guilty of causing this disaster, we might suppose that they would have tried to alleviate it.
However, through the dark years of 1931 and 1932, the Governors of the Federal Reserve Board saw the plight of the American
people worsening and did nothing to help them. This was more criminal than the original plotting of the Depression. Anyone who
lived through those years in this country remembers the widespread unemployment, the misery, and the hunger of our people. At any
time during those years the Federal Reserve Board could have acted to relieve this situation.
The problem was to get some money back into circulation. So much of the money normally used to pay rent and food bills had been
sucked into Wall Street that there was no money to carry on the business of living. In many areas, people printed their own money
on wood and paper for use in their communities, and this money was good, since it represented obligations to each other which
people fulfilled.
The Federal Reserve System was a central bank of issue. It had the power to, and did, when it suited its owners, issue millions of
dollars of money. Why did it not do so in 1931 and 1932? The Wall Street bankers were through with Mr. Herbert Hoover, and they
wanted Franklin D. Roosevelt to come in on a wave of glory as the saviour of the nation. Therefore, the American people had to
starve and suffer until March of 1933, when the White Knight came riding in with his crew of Wall Street
 bribers and put some money into circulation. That was all there was to it. As soon as Mr. Roosevelt took office, the Federal Reserve
 began to buy Government securities at the rate of ten million dollars a week for ten weeks, and created a hundred million dollars in
          new money, which alleviated the critical famine of money and credit, and the factories started hiring people again.
During the Roosevelt Administration, The Federal Reserve Board, insofar as the public was concerned, was Marriner Eccles, an
emulator and admirer of "the Chief". Eccles was a Utah banker, President of the First Securities Corporation, a family investment
trust consisting of a number of banks which Eccles had picked up cheap during the Agricultural Depression of 1920-21. Eccles also
was a director of such corporations as Pet Milk Company, Mountain States Implement Company, and Amalgamated Sugar. As a big
banker, Eccles fitted in well with the group of powerful men who were operating Roosevelt.
There was some discussion in Congress as to whether Eccles ought to be on the Federal Reserve Board at the same time he had all of
these banks in Utah, but he testified that he had very little to do with the First Securities Corporation besides being President of it,
and so he was confirmed as Chairman of the Board.
Eugene Meyer, Jr. now resigned from the Board to spend more of his time lending the two billion dollar capital of the
Reconstruction Finance Corporation, and determining the value of collateral by his own methods.
The Banking Act of 1935, which greatly increased Roosevelt’s power over the nation’s finances, was an integral part of the legislation
by which he proposed to extend his reign in the United States. It was not opposed by the people as was the National Recovery Act,
because it was not so naked an infringement of their liberties. It was, however, an important measure. First of all, it extended the
terms of office of the Federal Reserve Board of Governors to fourteen years, or, three and a half times the length of a Presidential
term. This meant that a President assuming office who might be hostile to the Board could not appoint a majority to it who would be
favorable to him. Thus, a monetary policy inaugurated before a President came into the White House would go on regardless of his
The Banking Act of 1935 also repealed the clause of the Glass-Steagall Banking Act of 1933, which had provided that a banking
house could not be on the Stock Exchange and also be involved in investment banking. This clause was a good one, since it prevented
a banking house from lending money to a corporation which it owned. Still it is to be remembered that this clause covered up some
other provisions in that Act, such as the creation of the Federal Deposit Insurance Corporation, providing insurance money to the
amount of 150 million dollars, to
    guarantee fifteen billion dollars worth of deposits. This increased the power of the big bankers over small banks and gave them
  another excuse to investigate them. The Banking Act of 1933 also legislated that all earnings of the Federal Reserve Banks must by
   law go to the banks themselves. At last the provision in the Act that the Government share in the profits was gotten rid of. It had
never been observed, and the increase in the assets of the Federal Reserve Banks from 143 million dollars in 1913 to 45 billion dollars
  in 1949 went entirely to the private stockholders of the banks. Thus, the one constructive provision of the Banking Act of 1933 was
  repealed in 1935, and also the Federal Reserve Banks were now permitted to loan directly to industry, competing with the member
                               banks, who could not hope to match their capacity in arranging large loans.
When the provision that banks could not be involved in investment banking and operate on the Stock Exchange was repealed in
1935, Carter Glass, originator of that provision, was asked by reporters:
"Does that mean that J.P. Morgan can go back into investment banking?"
"Well, why not?" replied Senator Glass. "There has been an outcry all over the country that the banks will not make loans. Now the
Morgans can go back to underwriting."
Because that provision was unfavorable to them, the bankers had simply clamped down on making loans until it was repealed.
Newsweek of March 14, 1936, noted that:
"The Federal Reserve Board fired nine chairmen of Reserve Banks, explaining that ‘it intended
to make the chairmanships of the Reserve Banks largely a part-time job on an honorary basis.’"
This was another instance of the centralization of control in the Federal Reserve System. The regional district system had never been
an important factor in the administration of monetary policy, and the Board was not cutting down on its officials outside of
Washington. The Chairman of the Senate Committee on Banking and Currency had asked, during the Gold Reserve Hearings of
"Is it not true, Governor Young, that the Secretary of the Treasury for the past twelve years has
dominated the policy of the Federal Reserve Banks and the Federal Reserve Board with respect to
the purchase of United States bonds?"
Governor Young had denied this, but it had already been brought out that on both of his hurried trips to this country in 1927 and
1929 to dictate Federal Reserve policy, Governor Montagu Norman of the Bank of England had gone directly to Andrew Mellon,
Secretary of the Treasury, to get him to purchase Government securities on the open market and start the movement of gold out of
this country back to Europe.
 The Gold Reserve Hearings had also brought in other people who had more than a passing interest in the operations of the Federal
Reserve System. James Paul Warburg, just back from the London Economic Conference with Professor O.M.W. Sprague and Henry
L. Stimson, came in to declare that he thought we ought to modernize the gold standard. Frank Vanderlip suggested that we do away
   with the Federal Reserve Board and set up a Federal Monetary Authority. This would have made no difference to the New York
   bankers, who would have selected the personnel anyway. And Senator Robert L. Owen, longtime critic of the system, made the
                                                          following statement:
"The people did not know the Federal Reserve Banks were organized for profit-making. They
were intended to stabilize the credit and currency supply of the country. That end has not been
accomplished. Indeed, there has been the most remarkable variation in the purchasing power of
money since the System went into effect. The Federal Reserve men are chosen by the big banks,
through discreet little campaigns, and they naturally follow the ideals which are portrayed to
them as the soundest from a financial point of view."
Benjamin Anderson, economist for the Chase National Bank of New York, said:
"At the moment, 1934, we have 900 million dollars excess reserves. In 1924, with increased
reserves of 300 million, you got some three or four billion in bank expansion of credit very
quickly. That extra money was put out by the Federal Reserve Banks in 1924 through buying
government securities and was the cause of the rapid expansion of bank credit. The banks
continued to get excess reserves because more gold came in, and because, whenever there was a
slackening, the Federal Reserve people would put out some more. They held back a bit in 1926.
Things firmed up a bit that year. And then in 1927 they put out less than 300 million additional
reserves, set the wild stock market going, and that led us right into the smash of 1929."
Dr. Anderson also stated that:
"The money of the Federal Reserve Banks is money they created. When they buy Government
securities they create reserves. They pay for the Government securities by giving checks on
themselves, and those checks come to the commercial banks and are by them deposited in the
Federal Reserve Banks, and then money exists which did not exist before."
SENATOR BULKLEY: It does not increase the circulating medium at all?
This is an explanation of the manner in which the Federal Reserve Banks increased their assets from 143 million dollars to 45 billion
dollars in thirty-five years. They did not produce anything, they were non-productive enterprises, and yet they had this enormous
profit, merely by creating money, 95 percent of it in the form of credit, which did not add
 to the circulating medium. It was not distributed among the people in the form of wages, nor did it increase the buying power of the
 farmers and workers. It was credit-money created by bankers for the use and profit of bankers, who increased their wealth by more
than forty billion dollars in a few years because they had obtained control of the Government’s credit in 1913 by passing the Federal
                                                              Reserve Act.
Marriner Eccles also had much to say about the creation of money. He considered himself an economist, and had been brought into
the Government service by Stuart Chase and Rexford Guy Tugwell, two of Roosevelt’s early brain-trusters. Eccles was the only one
of the Roosevelt crowd who stayed in office throughout his administration.
Before the House Banking and Currency Committee on June 24, 1941, Governor Eccles said:
"Money is created out of the right to issue credit-money."
Turning over the Government’s credit to private bankers in 1913 gave them unlimited opportunities to create money. The Federal
Reserve System could also destroy money in large quantities through open market operations. Eccles said, at the Silver Hearings of
"When you sell bonds on the open market, you extinguish reserves."
Extinguishing reserves means wiping out a basis for money and credit issue, or, tightening up on money and credit, a condition
which is usually even more favorable to bankers than the creation of money. Calling in or destroying money gives the banker
immediate and unlimited control of the financial situation, since he is the only one with money and the only one with the power to
issue money in a time of money shortage. The money panics of 1873, 1893, 1920-21, and 1929-31, were characterized by a drawing in
of the circulating medium. In economical terms, this does not sound like such a terrible thing, but when it means that people do not
have money to pay their rent or buy food, and when it means that an employer has to lay off three-fourths of his help because he
cannot borrow the money to pay them, the enormous guilt of the bankers and the long record of suffering and misery for which they
are responsible would suggest that no punishment might be too severe for their crimes against their fellowmen.
On September 30, 1940, Governor Eccles said:
"If there were no debts in our money system, there would be no money."
This is an accurate statement about our money system. Instead of money being created by the production of the people, the annual
increase in goods and services, it is created by the bankers out of the debts of the people. Because it is inadequate, it is subject to
great fluctuations and is basically unstable. These fluctuations are also a source of great profit. For that reason, the Federal Reserve
Board has consistently opposed any
  legislation which attempts to stabilize the monetary system. Its position has been set forth definitively in Chairman Eccles’ letter to
                   Senator Wagner on March 9, 1939, and the Memorandum issued by the Board on March 13, 1939.
Chairman Eccles wrote that:
". . . you are advised that the Board of Governors of the Federal Reserve System does not favor
the enactment of Senate Bill No. 31, a bill to amend the Federal Reserve Act, or any other
legislation of this general character."
The Memorandum of the Board stated, in its "Memorandum on Proposals to maintain prices at fixed levels":
"The Board of Governors opposes any bill which proposes a stable price level, on the grounds
that prices do not depend primarily on the price or cost of money; that the Board’s control over
money cannot be made complete; and that steady average prices, even if obtainable by official
action, would not insure lasting prosperity."
Yet William McChesney Martin, the Chairman of the Board of Governors in 1952, said before the Subcommittee on Debt Control,
the Patman Committee, on March 10, 1952 that "One of the fundamental purposes of the Federal Reserve Act is to protect the value
of the dollar."
Senator Flanders questioned him: "Is that specifically stated in the original legislation setting up the Federal Reserve System?"
"No," replied Mr. Martin, "but it is inherent in the entire legislative history and in the surrounding circumstances."
Senator Robert L. Owen has told us how it was taken out of the original legislation against his will, and that the Board of Governors
has opposed such legislation. Apparently Mr. Martin does not know this.
Steady average prices, indeed, are impossible so long as we have the speculators on the stock exchange driving prices up and down in
order to reap profits for themselves. Despite Governor Eccles’ insistence that steady average prices would not insure lasting
prosperity, they could do much to bring about this condition. A man on a yearly wage of $2,500 is not more prosperous if the price of
bread increases five cents a loaf during the year.
In 1935, Eccles said before the House Committee on Banking and Currency:
"The Government controls the gold reserve, that is, the power to issue money and credit, thus
largely regulating the price structure."
This is an almost direct contradiction of Eccles’ statement in 1939 that prices do not depend, primarily, on the price or cost of
In 1935, Governor Eccles stated before the House Committee:
"The Federal Reserve Board has the power of open market operations. Open-market
operations are the most important single instrument of
                    control over the volume and cost of credit in this country. When I say "credit" in this connection,
I mean money, because by far the largest part of money in use by the people of this country is in
the form of bank credit or bank deposits. When the Federal Reserve Banks buy bills or securities
in the open market, they increase the volume of the people’s money and lower its cost; and when
they sell in the open market they decrease the volume of money and increase its cost. Authority
over these operations, which affect the welfare of the whole people, must be invested in a body
representing the national interest."
Governor Eccles testimony exposes the heart of the money machine which Paul Warburg revealed to his incredulous fellow bankers
at Jekyll Island in 1910. Most Americans comment that they cannot understand how the Federal Reserve System operates. It
remains beyond understanding, not because it is complex, but because it is so simple. If a confidence man comes up to you and offers
to demonstrate his marvelous money machine, you watch while he puts in a blank piece of paper, and cranks out a $100 bill. That is
the Federal Reserve System. You then offer to buy this marvelous money machine, but you cannot. It is owned by the private
stockholders of the Federal Reserve Banks, whose identities can be traced partially, but not completely, to "the London Connection."
At the House Banking and Currency Committee Hearings on June 6, 1960, Congressman Wright Patman, Chairman, questioned
Carl E. Allen, President of the Federal Reserve Bank of Chicago. (p. 4). PATMAN: "Now Mr. Allen, when the Federal Reserve Open
Market Committee buys a million dollar bond you create the money on the credit of the Nation to pay for that bond, don’t you?
ALLEN: That is correct. PATMAN: And the credit of the Nation is represented by Federal Reserve Notes in that case, isn’t it? If the
banks want the actual money, you give Federal Reserve notes in payment, don’t you? ALLEN: That could be done, but nobody
wants the Federal Reserve notes. PATMAN: Nobody wants them, because the banks would rather have the credit as reserves."
This is the most incredible part of the Federal Reserve operation and one which is difficult for anyone to understand. How can any
American citizen grasp the concept that there are people in this country who have the power to make an entry in a ledger that the
government of the United States now owes them one billion dollars, and to collect the principal and interest on this "loan"?
Congressman Wright Patman tells us in "The Primer of Money", p. 38 of going into a Federal Reserve Bank and asking to see their
bonds on which the American people are paying interest. After being shown the bonds, he asked to see their cash, but they only had
some ledgers and blank checks. Patman says,
"The cash, in truth, does not exist and has never existed. What we call ‘cash reserves’ are simply
bookkeeping credits entered upon ledgers
                     of the Federal Reserve Banks. The credits are created by the Federal Reserve Banks and then
passed along through the banking system."
Peter L. Bernstein, in A Primer On Money, Banking and Gold says:
"The trick in the Federal Reserve notes is that the Federal reserve banks lose no cash when they
pay out this currency to the member banks. Federal Reserve notes are not redeemable in anything
except what the Government calls ‘legal tender’--that is, money that a creditor must be willing to
accept from a debtor in payment of sums owed him. But since all Federal Reserve notes are
themselves declared by law to be legal money, they are really redeemable only in themselves . . .
they are an irredeemable obligation issued by the Federal Reserve Banks."91
As Congressman Patman puts it,
"The dollar represents a one dollar debt to the Federal Reserve System. The Federal Reserve Banks create money out of thin air to
buy Government bonds from the United States Treasury, lending money into circulation at interest, by bookkeeping entries of
checkbook credit to the United States Treasury. The Treasury writes up an interest bearing bond for one billion dollars. The Federal
Reserve gives the Treasury a one billion dollar credit for the bond, and has created out of nothing a one billion dollar debt which the
American people are obligated to pay with interest." (Money Facts, House Banking and Currency Committee, 1964, p. 9)
Patman continues,
"Where does the Federal Reserve system get the money with which to create Bank Reserves?
Answer. It doesn’t get the money, it creates it. When the Federal Reserve writes a check, it is
creating money. The Federal Reserve is a total moneymaking machine. It can issue money or
In 1951, the Federal Reserve Bank of New York published a pamphlet, "A Day’s Work at the Federal Reserve Bank of New York."
On page 22, we find that:
"There is still another and more important element of public interest in the operation of banks
besides the safekeeping of money; banks can ‘create’ money. One of the most important factors to
remember in this connection is that the supply of money affects the general level of prices--the
cost of living. The Cost of Living Index and money supply are parallel."
The decisions of the Federal Reserve Board, or rather, the decisions which they are told to make by "parties unknown", affect the
daily lives of every American by the effect of these decisions on prices. Raising the interest rate, or causing money to became
"dearer" acts to limit the amount of money available in the market, as does the raising of reserve
91 Peter L. Bernstein, A Primer On Money, Banking and Gold, Vintage Books, New York, 1965, p. 104
 requirements by the Federal Reserve System. Selling bonds by the Open Market Committee also extinguishes and lowers the money
   supply. Buying government securities on the open market "creates" more money, as does lowering the interest rate and making
  money "cheaper". It is axiomatic that an increase in the money supply brings prosperity, and that a decrease in the money supply
  brings on a depression. Dramatic increases in the money which outstrip the supply of goods brings on inflation, "too much money
     chasing too few goods". A more esoteric aspect of the monetary system is "velocity of circulation", which sounds much more
technical than it is. This is the speed at which money changes hands; if it is gold buried in the peasant’s garden, that is a slow velocity
    of circulation, caused by a lack of confidence in the economy or the nation. Very rapid velocity of circulation, such as the stock
     market boom of the late 1920s, means quick turnover, spending and investment of money, and its stems from confidence, or
  overconfidence, in the economy. With a high velocity of circulation, a smaller money supply circulates among as many people and
     goods as a larger money supply would circulate with a slower velocity of circulation. We mention this because the velocity of
   circulation, or confidence in the economy, also is greatly affected by the Federal Reserve actions. Milton Friedman comments in
  Newsweek, May 2, 1983, "The Federal Reserve’s major function is to determine the money supply. It has the power to increase or
                                             decrease the money supply at any rate it chooses."
This is an enormous power, because increasing the money supply can cause the re-election of an administration, while decreasing it
can cause an administration to be defeated. Friedman goes on to criticize the Federal Reserve, "How is it that an institution which
has so poor a record of performance nevertheless has so high a public reputation and even commands a considerable measure of
credibility for its forecasts?"
All open market transactions, which affect the money supply, are conducted for a single System account by the Federal Reserve
Bank of New York on the behalf of all the Federal Reserve Banks, and supervised by an officer of the Federal Reserve Bank of New
York. The conferences at which decisions are made to buy or sell securities by the Open Market Committee remain closed to the
public, and the deliberations also remain a mystery. On May 8, 1928, The New York Times reported that Adolph C. Miller,
Governor of the Federal Reserve Board, testifying before the House Banking and Currency Committee, stated that open market
purchases and rediscount rates were established through "conversations". At that time, the purchases on the open market amounted
to seventy or eighty million dollars a day, and would be ten times that today. These are vast sums to be manipulated on the basis of
mere "conversations", but that is as much information as we can obtain.
   Because of these mysterious transactions which affect the life, liberty and happiness of every American citizen, there have been
 numerous proposals such as Senate Document No. 23, presented by Mr. Logan on January 24, 1939, that "The Government should
create, issue and circulate all the currency and credit needed to satisfy the spending power of the Government and the buying power
    of the consumers. The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the
                                               Government’s greatest creative opportunity."
On March 21, 1960, Congressman Wright Patman used a simple illustration in the Congressional Record of how banks "create
"If I deposit $100 with my bank and the reserve requirements imposed by the Federal Reserve
Bank are 20% then the bank can make a loan to John Doe of up to $80. Where does the $80
              come from? It does not come out of my deposit of $100; on the contrary, the bank simply credits John Doe’s
              account with $80. The bank can acquire Government obligations by the same procedure, by simply creating
             deposits to the credit of the government. Money creating is a power of the commercial banks . . . Since 1917
             the Federal Reserve has given the private banks forty-six billion dollars of reserves."
How this is done is best revealed by Governor Eccles at Hearings before the House Committee on Banking and Currency on June 24,
ECCLES: "The banking system as a whole creates and extinguishes the deposits as they make
             loans and investments, whether they buy Government Bonds or whether they buy utility bonds or whether
             they make Farmer’s loans.
MR. PATMAN: I am thoroughly in accord with what you say, Governor, but the fact remains
that they created the money, did they not?
ECCLES: Well, the banks create money when they make loans and investments."
On September 30, 1941, before the same Committee, Governor Eccles was asked by Representative Patman:
"How did you get the money to buy those two billion dollars worth of Government securities in
ECCLES: We created it.
MR. PATMAN: Out of what?
ECCLES: Out of the right to issue credit money.
MR. PATMAN: And there is nothing behind it, is there, except our Government’s credit?
ECCLES: That is what our money system is. If there were no debts in our money system, there
wouldn’t be any money."
On June 17, 1942, Governor Eccles was interrogated by Mr. Dewey.
ECCLES: "I mean the Federal Reserve, when it carries out an open market operation, that is, if it
purchases Government securities in the
                        open market, it puts new money into the hands of the banks which creates idle deposits.
DEWEY: There are no excess reserves to use for this purpose?
ECCLES: Whenever the Federal Reserve System buys Government securities in the open market,
or buys them direct from the Treasury, either one, that is what it does.
DEWEY: What are you going to use to buy them with? You are going to create credit?
ECCLES: That is all we have ever done. That is the way the Federal Reserve System operates.
The Federal Reserve System creates money. It is a bank of issue."
At the House Hearing of 1947, Mr. Kolburn asked Mr. Eccles:
"What do you mean by monetization of the public debt?
ECCLES: I mean the bank creating money by the purchase of Government securities. All
is created by debt--either private or public debt.
FLETCHER: Chairman Eccles, when do you think there is a possibility of returning to a free and
open market, instead of this pegged and artificially controlled financial market we now have?
ECCLES: Never. Not in your lifetime or mine."
Congressman Jerry Voorhis is quoted in U.S. News, August 31, 1959, as questioning Secretary of Treasury Anderson, "Do you mean
that Banks, in buying Government securities, do not lend out their customers’ deposits? That they create the money they use to buy
the securities? ANDERSON: That is correct. Banks are different from other lending institutions. When a savings association, an
insurance company, or a credit union makes a loan, it lends the very dollar that its customers have previously paid in. But when a
bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken
from anyone. It is new money, recreated by the bank, for the use of the borrower."
Strangely enough, there has never been a court trial on the legality or Constitutionality of the Federal Reserve Act. Although it is on
much the same shaky grounds as the National Recovery Act, or NRA, which was challenged in Schechter Poultry v. United States of
America, 29 U.S. 495, 55 US 837.842 (1935), the NRA was ruled unconstitutional by the Supreme Court on the grounds that
"Congress may not abdicate or transfer to others its legitimate functions. Congress cannot Constitutionally delegate its legislative
authority to trade or industrial associations or groups so as to empower them to make laws."
Article 1, Sec. 8 of the Constitution provides that "The Congress shall have power to borrow money on the credit of the United
States . . . and to coin Money, regulate the value thereof, and of foreign Coin, and fix the Standard of Weights and Measures."
According to the NRA deci-
 sion, Congress cannot delegate this power to the Federal Reserve System, nor can it delegate its legislative authority to the Federal
   Reserve System to allow the System to fix the rate of bank reserves, the rediscount rate, or the volume of money. All of these are
     "legislated" by the Federal Reserve Board, meeting in legislative sessions to determine these matters and to issue "laws" or
                                                           regulations fixing them.
The Second World War gave the big bankers who owned the Federal Reserve System a chance to unload on the country billions of
dollars printed early in 1930, in the biggest counterfeiting operation in history, all legalized by Roosevelt’s government, of course.
Henry Hazlitt writes in the January 4, 1943 issue of Newsweek Magazine:
"The money that began to appear in circulation a week ago, December 21, 1942, was really
               printing press money in the fullest sense of the term, that is, money which has no collateral of any kind
               behind it. The Federal Reserve statement that ‘The Board of Governors, after consultation with the Treasury
               Department, has authorized Federal Reserve Banks to utilize at this time the existing stocks of currency
               printed in the early thirties, known as ‘Federal Reserve Banknotes’. We repeat, these notes have absolutely
               no collateral of any kind behind them."
Governor Eccles also testified to some other interesting matters of the Federal Reserve and war finance at the Senate Hearings on
the Office of Price Administration in 1944:
"The currency in circulation was increased from seven billion dollars in four years to twenty-one
and a half billion. We are losing some considerable amounts of gold during the war period. As
our exports have gone out, largely on a lend-lease basis, we have taken imports on which we have
given dollar balances. These countries are now drawing off these dollar balances in the form of
MR. SMITH: Governor Eccles, what is the objective that the foreign governments are after in
this projected program whereby we would contribute gold to an international fund?
GOVERNOR ECCLES: I would like to discuss OPA, and leave the stabilization fund for a time
when I am prepared to go into it.
MR. SMITH: Just a minute. I feel that this fund is very pertinent to what we are talking about
MR. FORD: I believe that the stabilization fund is entirely off the @OPA and consequently we
ought to stick to the business at hand."
The Congressmen never did get to discuss the Stabilization Fund, another setup whereby we would give the impoverished countries
of Europe back the gold which had been sent over here. In 1945, Henry Hazlitt, commenting in Newsweek of January 22, on
Roosevelt’s annual budget message to Congress, quoted Roosevelt as saying:
"I shall later recommend legislation reducing the present high gold reserve requirements of the
Federal Reserve Banks."
   Hazlitt pointed out that the reserve requirement was not high, it was just what it had been for the past thirty years. Roosevelt’s
  purpose was to free more gold from the Federal Reserve System and make it available for the Stabilization Fund, later called the
 International Monetary Fund, part of the World Bank for Reconstruction and Development, the equivalent of the League Finance
         Committee which would have swallowed the financial sovereignty of the United States if the Senate had let us join it.
                                               CHAPTER FOURTEEN
                              Congressional Exposé
                                 "Mr. Volcker’s politics is something of an enigma."--New York Times
Since 1933 when Eugene Meyer resigned from the Federal Reserve Board of Governors, no member of the international banking
families has personally served on the Board of Governors. They have chosen to work from behind the scenes through carefully
selected presidents of the Federal Reserve Bank of New York and other employees.
The present chairman of the Federal Reserve Board of Governors is Paul Volcker. His appointment was greeted by one well-known
economist with the following prediction, "Volcker’s selection has been by far the worst. Carter has put Dracula in charge of the
blood bank. To us, it means a crash and depression in the 80s is more certain than ever."
Col. E.C. Harwood’s Research Report, August 6, 1979, gave much the same view. "Paul Volcker is from the same mold as the
unsound money men who have misguided the monetary actions of this nation for the past five decades. The outcome probably will be
equally disastrous for the dollar and the U.S. economy."
Despite these gloomy views, the report from The New York Times on the selection of Volcker was positively ecstatic. On July 26, 1979,
The Times commented that Volcker learned "the business" from Robert Roosa, now partner of Brown Brothers Harriman, and that
Volcker had been part of the Roosa Brain Trust at the Federal Reserve Bank of New York, and, later, at the Treasury in the
Kennedy administration. "David Rockefeller, the chairman of Chase, and Mr. Roosa were strong influences in the Mr. Carter
decision to name Mr. Volcker for the Reserve Board chairmanship." The New York Times did not point out that David Rockefeller
and Robert Roosa had previously chosen Mr. Carter, a member of the Trilateral Commission, as the presidential candidate of the
Democratic Party, or that Mr. Carter would hardly refuse to appoint their choice of Paul Volcker as the new Chairman of the
Federal Reserve Board. Nor is it straining the point to be reminded that this manner of selection of the Chairman of the Board of
Governors is directly in the line of royal prerogative going back to George Peabody’s initial agreement with N.M. Rothschild, to the
Jekyll Island meeting, and to the enactment of the Federal Reserve Act.
The Times noted that "Volcker’s choice was approved by European banks in Bonn, Frankfurt and Zurich." William Simon, former
 Secretary of Treasury, was quoted as saying "a marvelous choice." The Times further noted that the Dow market rose on Volcker’s
nomination, registering the best gains in three weeks for a rise of 9.73 points, and that the dollar rose sharply on foreign exchange@
                                                          at home and abroad.
Who was Volcker, that his appointment could have such an effect on the stock market and the value of the dollar in foreign
exchange? He represented the most powerful house of "the London Connection," Brown Brothers Harriman, and the London
houses which directed the Rockefeller empire. On July 29, 1979, The Times had said of Volcker, "New Man Will Chart His Own
Volcker’s background shows that this was nonsense. His course has always been charted for him by his masters in London. He
attended Princeton, obtained an M.A. at Harvard, and went to the London School of Economics 1951-52, the banker’s graduate
school. He then came to the Federal Reserve Bank of New York as an economist from 1952-57, economist at Chase Manhattan Bank,
1957-61, with Treasury Department 1961-65, as deputy under secretary for monetary affairs, 1963-65, and under secretary for
monetary affairs, 1969-74. He then became President of the Federal Reserve Bank of New York from 1975-79, when Carter, at the
behest of Robert Roosa and David Rockefeller, appointed him Chairman of the Federal Reserve Board of Governors. He was
succeeded as President of Federal Reserve Bank of New York by Anthony Solomon, a Harvard Ph.D. who was with the OPA 1941-42
and with the government financial mission to Iran 1942-46. He operated a canned food company in Mexico from 1951-61, was
president of International Investment Corp. for Yugoslavia 1969-72 (a communist country), under secretary for monetary affairs at
Treasury 1977-80. In short, Solomon’s background was much the same as Paul Volcker’s.
The New York Times stated on December 2, 1981, "For years the Federal Reserve was the second or third most secret institution in
town. The Sunshine Act of 1976 penetrated the curtain a trifle. The board now holds a public meeting once a week on Wednesday at
10 a.m., but not to discuss Monetary policy, which is still regarded as top secret and not to be discussed in public." The Times
mentioned that when Open Market Committee meetings are held, Solomon and Volcker sit together at the head of the table and
relay the instructions which they have received from abroad.
Behind Volcker and Solomon stands Robert Roosa, Secretary of the Treasury in Carter’s shadow cabinet, and representing Brown
Brothers Harriman, the Trilateral Commission, the Council on Foreign Relations, the Bilderbergers, and the Royal Economic
Institute. He is a trustee of the
    Rockefeller Foundation*, and a director of Texaco and American Express companies. Dr. Martin Larson points out that "The
 international consortium of financiers known as the Bilderbergers, who meet annually in profound secrecy to determine the destiny
of the western world, is a creature of the Rockefeller-Rothschild alliance, and that it held its third meeting on St. Simons Island, only
  a short distance from Jekyll Island." Larson also states that "The Rockefeller interests work in close alliance with the Rothschilds
                                                       and other central banks."**
On June 18, 1983, President Ronald Reagan ended months of speculation by announcing that he was reappointing Paul Volcker as
Chairman of the Federal Reserve Board of Governors for another four year term, although Volcker’s term was not up until August
6, 1983. Reagan’s reappointment of a Carter appointee puzzled some political observers, but apparently he had succumbed to
considerable pressure, as indicated by a lead editorial in The Washington Post, June 10, 1983, "There is no one who matches Mr.
Volcker in both political standing and grasp of the intricate networks that make up the world’s financial system." The anonymous
writer gave no documentation for his elevation of Volcker to the standing of the world’s greatest financier, and as for his political
standing, The New York Times commented on June 19, 1983, "Mr. Volcker’s politics is something of an enigma." His "non-political"
stance conforms with the Washington tradition of "the political independence of the Fed" which has been maintained for many
years. However, the problem of its dependence on "the London connection" has never been discussed in Washington.
In reality, Volcker is more of a politician than an economist. After attending the London School of Economics, and finding out who
issues the orders of the international financial community, Volcker has ever since played the game. Not once has he failed to carry
out the orders of the "London Connection".
Can it really be possible that "The London Connection" exists, and that men like Volcker and Solomon receive their instructions, in
however devious or indirect a manner, from foreign bankers? Let us look at the evidence, circumstantial, to be sure, but
circumstantial evidence of the quality which has often sent men to the penitentiary or to the electric chair. John Moody pointed out
in 1911 that seven men of the Morgan group, allied with the Standard Oil-Kuhn, Loeb group, ruled the United States. Where do
these groups stand in the financial picture today?
U.S. News published on April 11, 1983, a list of the largest bank holding companies in the United States by assets as of December 31,
1982. Number 1 is Citicorp, New York, with assets of $130 billion. This is Baker and
* See Chart V
** See Chart I
    Morgan’s First National Bank of New York, merged with National City Bank in 1955, two of the largest purchasers of Federal
  Reserve Bank of New York stock in 1914. Number 3, is Chase Manhattan, New York, with assets of $80.9 billion. This is Chase and
  Bank of Manhattan merged, the Rockefeller and Kuhn Loeb group, also purchasers of Federal Reserve Bank of New York stock in
  1914. Number 4 is Manufacturers Hanover of New York $64 billion, also purchaser of Federal Reserve Bank of New York stock in
1914. Number 5 is J.P. Morgan Company of New York, $58.6 billion in assets and holder of considerable Federal Reserve Bank stock.
    Number 6 is Chemical Bank of New York, $48.3 billion also purchaser of Federal Reserve stock in 1914. And Number 11, First
   Chicago Corporation, the First National Bank of Chicago which was principal correspondent of the Morgan-Baker bank in New
                          York, and which furnished the first two presidents of the Federal Advisory Council.
The direct line which leads from the participants in the Jekyll Island Conference of 1910 to the present day is illustrated by a
passage from "A Primer on Money", Committee on Banking and Currency, U.S. House of Representatives, 88th Congress, 2d
session, August 5, 1964, p. 75:
"The practical effect of requiring all purchases to be made through the open market is to take
money from the taxpayer and give it to the dealers. It forces the Government to pay a toll for
borrowing money. There are six ‘bank’ dealers: First National City Bank of New York; Chemical
             Crop. Exchange Bank, New York, Morgan Guaranty Trust Co., New York, Bankers Trust of New York, First
             National Bank of Chicago, and Continental Illinois Bank of Chicago."
Thus the banks which receive a "toll" on all money borrowed by the Government of the United States are the same banks which
planned the Federal Reserve Act of 1913. There is ample evidence demonstrating the present preeminence of the same banks which
set up the Federal Reserve System in 1914. For instance, Warren Brookes writes on the editorial page of The Washington Post, June
6, 1983:
"Citicorp (National City Bank and First National Bank of New York, merged in 1955) just
             recorded an 18.6% return on equity, J.P. Morgan, 17%, Chemical Bank and Bankers Trust, nearly 16%, an
             exceptional rate of return."
These are the banks which bought the first issue of Federal Reserve Bank stock in 1914, and which owned the controlling interest in
the Federal Reserve Bank of New York, which sets the interest rate and is the bank for all open market operations.
These banks also profit steadily from the otherwise inexplicable fluctuations in monetary growth and interest rates. Brookes further
comments on "actual monetary growth rates alternately gyrating from 0 to 17% in successive six month periods for three recession-
wracked years. The two measures of money growth most admired by Milton Friedman M2 and M3,
                            have actually shown little change on a year to year basis in the 1972-82 period."
Thus we have money growth rates gyrating from 0 to 17% but no actual year to year changes, which raises the question of why we
cannot have stability of monetary growth throughout the year. The answer is that the big profits are made by these gyrations, and
the next question is, who sets in motion these gyrations? The answer is "the London Connection".
To draw attention from the continued control of the bankers and their heirs, who obtained the government monopoly of the nation’s
money and credit in 1913, the paid propagandists of the controlled media monopoly and academia are constantly trotting forth new
and more exotic theories of economics. Thus James Burnham, one of the National Review propagandists, won fame with a ridiculous
theory of "the managers". He postulated that the old arbiters of wealth, the J.P. Morgans, the Warburgs and the Rothschilds had, by
1950, disappeared from the scene, being replaced by a new class of "managers". This theory, which had no foundation in fact, served
to obscure the fact that the same people still controlled the monetary system of the world. The "managers" were just that, executives
like Volcker who were front men, paid employees who would continue to receive their paychecks only as long as they carried out their
employers’ instructions. Burnham remains a well-paid propagandist at the National Review, which many prominent leaders,
including President Reagan, believe to be a "conservative" publication.
From 1914 to 1982, a period in which many thousands of American banks went bankrupt, the original purchasers of Federal Reserve
Bank stock have not only survived but they have consolidated their power. And what of "the London Connection"? Does it still exist,
and is it still dictating the economic destiny of the United States? The Washington Post, May 19, 1983, carried a story datelined
Nairobi, Kenya, noting the meeting of the African Development Bank. "The British merchant bank, Morgan Grenfell and a
syndicate of the United States, Kuhn Loeb, Lehman Brothers International, the French Lazard Freres and Britain’s Warburg are
discreetly acting as financial advisors to about ten debt-plagued African states."
There are the same names we encountered in 1914, still managing the finances of the world, with profits for themselves but with
disastrous results for everyone else. Perhaps we can look for relief to the present Administration of President Reagan. Unfortunately,
before reaching him we have to run the gamut of the long list of his principal staff, composed of men from J. Henry Schroder, Brown
Brothers Harriman, and other leading components of "The London Connection".
Lopez Portillo, President of Mexico, in addressing the Mexican National Congress of Mexico in September, 1982, called the world
credit boom of the past decade a financial pestilence akin to the Black Death which swept
  Europe in the fourteenth century. "As in mediaeval times, it flattens country after country. It is transmitted by rats and it yields
 unemployment and misery, industrial bankruptcy and enrichment by speculation. The remedy prescribed by faith healers is forced
                                               inactivity and depriving the patient of food."
Forbes Magazine stated October 11, 1982, "The world gasps for liquidity, not because the supply of money has contracted but
because too much of it now goes to pay off old debts rather than fund new productive investments."
The policy of high interest rates and tight money has been disastrous for the United States. In early 1983, a slight easing of money
and credit promises some relief, but as long as the Federal Reserve system and its unseen manipulators continue their control of the
money supply, we can expect more problems. The Nation on December 11, 1982, in commenting on economic problems, stated, "The
blame for all this lies at the door of the Federal Reserve System working as usual on behalf of the international banking system."
The evidence of how the Federal Reserve System works on behalf of the international banking system is graphically illustrated by a
series of charts drawn up by the staff of the Committee on Banking, Currency and Housing of the House of Representatives, 94th
INFLUENCE".* We present as our Chart V page 49 of this study, showing the interlocking directorates of David Rockefeller. As our
Chart VI we reproduce page 55 of this study, showing the interlocking directorates of Frank R. Milliken, one of the Class C
Directors** of the Federal Reserve Bank of New York. In this chart are all the main personages in our story of the Jekyll Island
conference: Citibank, J.P. Morgan and Company, Kuhn Loeb and Company, and many related firms. As Chart VII we reproduce
page 53 of this study, showing the interlocking directorates of another Class C Director of the Federal Reserve Bank of New York,
Alan Pifer. As President of the Carnegie Corporation of New York, he interlocks with J. Henry Schroder Trust Company, J. Henry
Schroder Banking Corporation, Rockefeller Center, Inc., Federal Reserve Bank of Boston, Equitable Life Assurance Society (J.P.
Morgan), and others. Thus an August, 1976 study from the House Committee on Banking, Currency and Housing, brings before us
all of our main cast of personages, functioning today just as they did in 1914.
* Due to space limitations, only five of the seventy-five charts in the study, all of which show the connections between prominent,
powerful individuals with control in the Federal Reserve System have been selected to illustrate the connections between officers and
directors of the twelve Federal Reserve Banks in 1976 and the firms listed in this book.
** "The three Class C Directors are appointed by the Board of Governors as representatives of the public interest as a whole." p. 34,
Congressional Study, 1976.
 This 120 page Congressional study details public policy functions of the Federal Reserve District Banks, how directors are selected,
 who is selected, the public relations lobbying factor, bank domination and bank examination, and corporate interlocks with Reserve
banks. Charts were used to illustrate Class A, Class B, and Class C directorships of each district bank. For each branch bank a chart
 was designed giving information regarding bank appointed directors and those appointed by the Board of Governors of the Federal
                                                              Reserve System.
In his Foreword to the study, Chairman Henry S. Reuss, (D-Wis) wrote:
"This Committee has observed for many years the influence of private interests over the
essentially public responsibilities of the Federal Reserve System.
As the study makes clear, it is difficult to imagine a more narrowly based board of directors for a
public agency than has been gathered together for the twelve banks of the Federal Reserve
Only two segments of American society--banking and big business--have any substantial
representation on the boards, and often even these become merged through interlocking
directorates . . . . Small farmers are absent. Small business is barely visible. No women appear on
the district boards and only six among the branches. Systemwide--including district and branch
boards--only thirteen members from minority groups appear.
The study raises a substantial question about the Federal Reserve’s oft-repeated claim of
"independence". One might ask, independent from what? Surely not banking or big business, if
we are to judge from the massive interlocks revealed by this analysis of the district boards.
             The big business and banking dominance of the Federal Reserve System cited in this report can be traced, in
             part, to the original Federal Reserve Act, which gave member commercial banks the
right to select two-thirds of the directors of each district bank. But the Board of Governors in
Washington must share the responsibility for this imbalance. They appoint the so-called "public"
members of the boards of each district bank, appointments which have largely reflected the same
narrow interests of the bank-elected members . . . . Until we have basic reforms, the Federal
Reserve System will be handicapped in carrying out its public responsibilities as an economic
stabilization and bank regulatory agency. The System’s mandate is too essential to the nation’s
welfare to leave so much of the machinery under the control of narrow private interests.
Concentration of economic and financial power in the United States has gone too far."
In a section of the text entitled "The Club System", the Committee noted:
"This ‘club’ approach leads the Federal Reserve to consistently dip into the same pools--the
same companies, the same universities, the same bank holding companies--to fill directorships."
This Congressional study concludes as follows:
  "Many of the companies on these tables, as mentioned earlier, have multiple interlocks to the Federal Reserve System. First Bank
Systems; Southeast Banking Corporation; Federated Department Stores; Westinghouse Electric Corporation; Proctor and Gamble;
   Alcoa; Honeywell, Inc.; Kennecott Copper; Owens-Corning Fiberglass; all have two or more director ties to district or branch
In Summary, the Federal Reserve directors are apparently representatives of a small elite group which dominates much of the
economic life of this nation." END OF CONGRESSIONAL REPORT.
As of 11:05 Tuesday, July 26, 1983, the list of member banks holding Federal Reserve Bank of New York stock includes twenty-seven
New York City banks. Listed below are the number of shares held by ten of these banks, amounting to 66% of the total outstanding
number of shares, namely 7,005,700:
                                                                 Shares             Percent
Bankers Trust Company                                            438,831            ( 6%)
Bank of New York                                                 141,482            ( 2%)
Chase Manhattan Bank                                             1,011,862          (14%)
Chemical Bank                                                    544,962            ( 8%)
Citibank                                                         1,090,813          (15%)
European American Bank & Trust                                   127,800            ( 2%)
J. Henry Schroder Bank & Trust                                   37,493             ( .5%)
Manufacturers Hanover                                            509,852            ( 7%)
Morgan Guaranty Trust                                            655,443            ( 9%)
National Bank of North America                                   105,600            ( 2%)
            The tremendous number of shares held today as against the original purchases in 1914 is brought about by Section 5 of the original
            Federal Reserve Act which called for a member bank to buy and hold stock in the district Federal Reserve Bank equal to 6% of its
                                                                       capital and surplus.
           Currently, shares held by five of the above named banks comprise 53% of the total Federal Reserve Bank of New York stock. An
           examination of the major stockholders of the New York City banks shows clearly that a few families, related by blood marriage, or
           business interests, still control the New York City banks which, in turn, hold the controlling stock of the Federal Reserve Bank of
           New York.
           It is notable that three of the banks holding Federal Reserve Bank of New York stock, in the amount of 270,893 shares, are
           subsidiaries of foreign banks. J. Henry Schroder Bank and Trust is listed by Standard and Poors as a subsidiary of Schroders Ltd. of
           London. The National Bank of North America is a subsidiary of the National Westminster Bank, one of London’s "Big Five".
           European American Bank is a subsidiary of the European American Bank, Bahamas, LTD. It is interesting to note that the directors
           of the European American Bank & Trust include Milton F. Rosenthal, president and Chief Operating Officer of the international
           gold company,
               Engelhard Minerals and Chemical; Hamilton F. Potter, a partner in Sullivan and Cromwell (J. Henry Schroder Bank & Trust
           attorneys); Edward H. Tuck, partner of Shearman and Sterling (Citibank’s attorneys); F.H. Ulrich and Hans Liebkutsch, managing
               directors of the giant Midland Bank of London, one of the "Big Five"; and Roger Alloo, Paul-Emmanuel Janssen, and Maurice
                                          Laure of the Societe Generale de Banque (Brussels, Belgium). [See Chart III]
           This information, derived from the latest issue of the tabulation available from the Board of Governors, Federal Reserve System, is
           cited as current evidence which indicates that the controlling stock in the Federal Reserve Bank of New York, which sets the rate and
           scale of operations for the entire Federal Reserve System is heavily influenced by banks directly controlled by "The London
           Connection", that is, the Rothschild-controlled Bank of England. [See Chart I]
                                                                     APPENDIX I
             E.C. Knuth, in The Empire of the City, priv. printed, 1946, p. 27, refers to "the Bank of England, the full partner of the American
                 Administration in the conduct of the financial affairs of all the world" and cites the Encyclopaedia Americana, 1943 edition.
           Barron cites Lord Swaythling, (April 8, 1923), "Lord Swaythling said, ‘Exchange can only be run from London. This is the center in
           Exchange.’" (They Told Barron, by Clarence W. Barron, founder of Baron’s Weekly, Harpers, New York, 1930, p. 27.)
           Exchange, in the international financial world, means the transactions in money or securities, or simply, the "exchange" of the values
           of these securities. It is necessary that this "exchange" take place where the values can be established, and this place is the "City" in
           London was established as the primary center of exchange because of the "Consols" of the Bank of England, bonds which could
           never be redeemed, but which paid a stable rate of return. Henry Clews writes, in The Wall Street View, Silver Burdett Co. 1900, p.
255, "The Consolidated Act of 1757 consolidated the debts of the nation of England at 3%, which were kept in an account at the
Bank of England and is the great bulwark of its deposits." By ostentatiously "dumping" "Consols" on the London Exchange after
the Battle of Waterloo, in a pretended panic, Nathan Meyer Rothschild then secretly bought up the Consols sold in the panic by
other holders at a low rate, and became the largest holder of Consols, and thus won control of the Bank of England in 1815.
                                                                12% Dividends
Although a Labor government nationalized the Bank of England in 1946, The Great Soviet Encyclopaedia points out (vol. I, p. 490c)
that the Bank of England continues to pay 12% dividends per annum, just as it had done prior to the nationalization. The
"Governor" is appointed by the government, in a situation similar to that in the United States, where the Governors of the Federal
Reserve System are appointed by the President. However, as is pointed out in the Encyclopaedia Americana v. 13, p. 272, "In
practice, the governors of the Bank of England have not hesitated to criticize and bring pressure on the government in public."
                                                                   Bank Rate
The interest rate set by the Bank of England is known as "the Bank rate", and it is a controlling factor in interest rates throughout
the world,
although rates in other countries may be higher or lower than this "Bank rate". The Bank of England manages the government debt,
  and is called upon to arbitrate in political affairs. It served as the intermediary with the Iran revolutionaries in negotiating for the
                                            return of the American hostages--a recent example.
We should not be surprised that the present Governor of the Bank of England, Sir Gordon Richardson is a prominent international
financial figure, who appears elsewhere in these pages because of his connection with the J. Henry Schroder @Wagg in London from
1962 to 1972, when he became Governor of the Bank of England. He was also director of J. Henry Schroder Co., New York, and
Schroder Banking Corp., New York. He also serves as director of Rolls Royce and Lloyd’s Bank. Although he resides in London, he
maintains a home in New York, and is listed in the current Manhattan directory simply as "G. Richardson, 45 Sutton Place S.",
although a prior listing showed him at 4 Sutton Place. Sutton Place was developed as a fashionable address for the international set
by Bessie Marbury, whom we earlier cited for her connection with the Morgan family and the Roosevelts.
The present directors of the Bank of England (1982) include Leopold de Rothschild of N.M. Rothschild & Sons, Sir Robert Clark,
chairman of Hill Samuel Bank, the most influential bank after Rothschilds, John Clay, of Hambros Bank, and David Scholey, of
Warburg Bank, and joint chairman of S.C. Warburg Co.
Anthony Sampson writes, in "The Changing Anatomy of Britain", Random House, New York, 1982, p. 279, "The more cosmopolitan
banks with foreign experts and directors, such as Warburgs, Montagus, Rothschilds and Kleinworts, had also discovered a huge new
source of profits in the market for Eurodollars which began in the late fifties and multiplied through the 60s . . . British bankers
themselves controlled relatively small funds, but they knew how to make money out of other people’s money."
The Eurodollar market, a new development in "created money" is monopolized by the above firms.
                                                              Eurodollar Empire
"Today, together with allies on the island of Manhattan (Britain’s most important piece of real estate), the British Empire controls
the entire $1.5 trillion Eurodollar financial market, another $300-$500 billion in the Cayman Islands, Bahamas, and $50-$100 billion
in the Hong-Kong Singapore "Asia-dollar market". . . . Consider the $1.5 trillion Eurodollar market an "outlaw" market in the U.S.
dollars over which this nation has no control. Here control and profits are overwhelmingly in the hands of London banks, who set the
terms of lending and the interest rate on this mass of American dollars in relation to the London Interbank Borrowing
  Rate (LIBOR) . . . U.S. banks like Citibank (New York City), on whose board of directors sits the powerful British financier, Lord
Aldington, collaborate openly in this market. At the same time, British banks including the known central bank for the world’s drug
   trade, the Hongkong and Shanghai Bank, pour into America to devour U.S. banks. In 1978 the Hongshang (Ed.--Hongkong and
 Shanghai Bank) took over New York’s Marine Midland Bank, the state’s 11th largest commercial bank. . . The British also control
     the creation of American dollars. While Federal Reserve Board Chairman Paul Volcker tightens credit against the domestic
economy, British-controlled banks in the Cayman Islands (such as the European American Bank--Ed.) a British possession 200 miles
   off Florida, and in the Bermudas and a dozen other "free banking" computer terminals create hundreds of billions of American
    dollars. How is this done? There are no reserve ratios or other restrictions on the creation of dollar-denominated credits in the
   Empire’s "free enterprise" banking. A $1 million bona fide credit coming from the United States can be turned into $20 to $100
                 million in dollar-denominated credits as it passes through the British system without reserve ratios."*
Not only the financial power, but also the legal power, has remained seated in Britain. The Washington Post commented on June 18,
1983 that after the American Revolution, all the old laws remained in effect in the new United States: Some of these laws of "English
common law" dated back to 1278, long before America was discovered.
This enormous financial power of "the City" is revealed in many areas. Dean Acheson states, in "Present at the Creation", 1969,
W.W. Norton, New York, p. 779, "We stayed at the embassy residence, the old J.P. Morgan mansion, 14 Prince’s Gate, facing Hyde
Park." How many Americans are aware that the U.S. Embassy residence in London is the J.P. Morgan home, or that Dean Acheson,
a former Morgan employee, described himself as Secretary of State on p. 505, "My own attitude had long been, and was known to
have been, pro-British." No one commented on an American Secretary of State’s open bias in favor of England.
The Federal Reserve "created" money is not used only for financial matters; this money is also used to maintain the bankers’ control
of every aspect of political, economic and social life. It is used to bankroll the enormous expenditures of political candidates, the
swollen budgets of universities, the huge outlays required to start newspapers or magazines, and a vast array of foundations, "think-
tanks" and other instruments of mind control.
                                                            Psychological Warfare
Few Americans know that almost every development in psychology in the United States in the past sixty-five years has been directed
by the Bureau of Psychological Warfare of the British Army. A short time ago,
* Harpers Magazine, Feb. 1980
     the present writer learned a new name, The Tavistock Institute of London, also known as the Tavistock Institute of Human
 Relations. "Human relations" covers every aspect of human behavior, and it is the modest goal of the Tavistock Institute to obtain
                             and exercise control over every aspect of human behavior of American citizens.
Because of the intensive artillery barrages of World War I, many soldiers were permanently impaired by shell shock. In 1921, the
Marquees of Tavistock, 11th Duke of Bedford, gave a building to a group which planned to conduct rehabilitation programs for shell
shocked British soldiers. The group took the name of "Tavistock Institute" after its benefactor. The General Staff of the British
Army decided it was crucial that they determine the breaking point of the soldier under combat conditions. The Tavistock Institute
was taken over by Sir John Rawlings Reese, head of the British Army Psychological Warfare Bureau. A cadre of highly trained
specialists in psychological warfare was built up in total secrecy. In fifty years, the name "Tavistock Institute’ appears only twice in
the Index of the New York Times, yet this group, according to LaRouche and other authorities, organized and trained the entire staffs
of the Office of Strategic Services (OSS), the Strategic Bombing Survey, Supreme Headquarters of the Allied Expeditionary Forces,
and other key American military groups during World War II. During World War II, the Tavistock Institute combined with the
medical sciences division of the Rockefeller Foundation for esoteric experiments with mind-altering drugs. The present drug culture
of the United States is traced in its entirety to this Institute, which supervised the Central Intelligence Agency’s training programs.
The "LSD counter culture" originated when Sandoz A.G., a Swiss pharmaceutical house owned by S.G. Warburg & Co., developed
a new drug from lysergic acid, called LSD. James Paul Warburg (son of Paul Warburg who had written the Federal Reserve Act in
1910), financed a subsidiary of the Tavistock Institute in the United States called the Institute for Policy Studies, whose director,
Marcus Raskin, was appointed to the National Security Council. James Paul Warburg set up a CIA program to experiment with
LSD on CIA agents, some of whom later committed suicide. This program, MK-Ultra, supervised by Dr. Gottlieb, resulted in huge
lawsuits against the United States Government by the families of the victims.
The Institute for Policy Studies set up a campus subsidiary, Students for Democratic Society (SDS), devoted to drugs and revolution.
Rather than finance SDS himself, Warburg used CIA funds, some twenty million dollars, to promote the campus riots of the 1960s.
The English Tavistock Institute has not restricted its activities to left-wing groups, but has also directed the programs of such
supposedly "conservative" American think tanks as the Herbert Hoover Institute at Stanford University, Heritage Foundation,
Wharton, Hudson, Massachusetts Institute of Technology, and Rand. The "sensitivity train-
ing" and "sexual encounter" programs of the most radical California groups such as Esalen Institute and its many imitators were all
                                    developed and implemented by Tavistock Institute psychologists.
 One of the rare items concerning the Tavistock Institute appears in Business Week, Oct. 26, 1963, with a photograph of its building in
 the most expensive medical offices area of London. The story mentions "the Freudian bias" of the Institute, and comments that it is
 amply financed by British blue-chip corporations, including Unilever, British Petroleum, and Baldwin Steel. According to Business
 Week, the psychological testing programs and group relations training programs of the Institute were implemented in the United
 States by the University of Michigan and the University of California, which are hotbeds of radicalism and the drug network.
 It was the Marquees of Tavistock, 12th Duke of Bedford, whom Rudolf Hess flew to England to contact about ending World War II.
 Tavistock was said to be worth $40 million in 1942. In 1945, his wife committed suicide by taking an overdose of pills.
                                                    NELSON ALDRICH (1841-1915)
 Senator from Rhode Island; head of National Monetary Commission; his daughter Abby Aldrich married John D. Rockefeller, Jr.;
 he became the grandfather of his namesake. Nelson Aldrich Rockefeller, as well as the present David Rockefeller and Laurence
 Woodrow Wilson’s Secretary of State, three times losing presidential candidate of the Democratic Party, in 1896, 1900, and 1908,
 and head of the Democratic Party.
 A prominent attorney in Grand Rapids, Cincinnati, and New York, Crozier wrote eight books on legal and monetary problems,
 focussing on his opposition to the supplanting of Constitutional money by the corporation currency printed by private firms for their
 CLARENCE DILLON (1882-1979)
 Born in San Antonio, Texas, son of Samuel Dillon and Bertha Lapowitz. Harvard, 1905. Married Anne Douglass of Milwaukee. His
 son, C. Douglas Dillon (later Secretary of the Treasury, 1961-65) was born in Geneva, Switzerland in 1909 while they were abroad.
 Dillon met William A. Read, founder of the Wall Street bond broker William A. Read and Company, through introduction by
 Harvard classmate William A. Phillips in 1912 and Dillon joined Read’s Chicago office in that year. He moved to New York in 1914.
 Read died in 1916, and Dillon bought a majority interest in the firm. During World War 1, Bernard Baruch, chairman of the War
 Industries Board, (known as the Czar of American industry) asked Dillon to be assistant chairman of the War Industries Board. In
 1920, William A. Read & Company name was changed to Dillon, Read & Company. Dillon was director of American Foreign
 Securities Corporation, which he had set up in 1915 to finance the French Government’s purchases of munitions in the United
 States. His righthand man at Dillon Read, James Forrestal, became Secretary of the Navy, later Secretary of Defense, and died under
 mysterious circumstances at a Federal hospital. In 1957, Fortune Magazine listed Dillon as one of the richest men in the United
 States, with a fortune then estimated to be from $150 to $200 million.
 Appointed by President Reagan to succeed Paul Volcker as Chairman of the Board of Governors of the Federal Reserve System in
 1987. Greenspan had succeeded Herbert Stein as chairman of the President’s Council of Economic
Advisors in 1974. He was the protégé of former chairman of the Board of Governors, Arthur Burns of Austria (Bernstein). Burns was
   a monetarist representing the Rothschild’s Viennese School of Economics, which manifested its influence in England through the
Royal Colonial Society, a front for Rothschilds and other English bankers who stashed their profits from the world drug trade in the
    Hong Kong Shanghai Bank. The staff economist for the Royal Colonial Society was Alfred Marshall, inventor of the monetarist
      theory, who, as head of the Oxford Group, became the patron of Wesley Clair Mitchell, who founded the National Bureau of
    Economic Research for the Rockefellers in the United States. Mitchell, in turn, became the patron of Arthur Burns and Milton
 Friedman, whose theories are now the power techniques of Greenspan at the Federal Reserve Board. Greenspan is also the protégé
   of Ayn Rand, a weirdo who interposed her sexual affairs with guttural commands to be selfish. Rand was also the patron of CIA
  propagandist William Buckeley and the National Review. Greenspan was director of major Wall Street firms such as J.P. Morgan
   Co., Morgan Guaranty Trust (the American bank for the Soviets after the Bolshevik Revolution of 1917), Brookings Institution,
Bowery Savings Bank, the Dreyfus Fund, General Foods, and Time, Inc. Greenspan’s most impressive achievement was as chairman
  of the National Commission on Social Security from 1981-1983. He juggled figures to convince the public that Social Security was
bankrupt, when in fact it had an enormous surplus. These figures were then used to fasten onto American workers a huge increase in
  Social Security withholding tax, which invoked David Ricardo’s economic dictum of the iron law of wages, that workers could only
   be paid a subsistence wage, and any funds beyond that must be extorted from them forcibly by tax increases. As a partner of J.P.
Morgan Co. since 1977, Greenspan represented the unbroken line of control of the Federal Reserve System by the firms represented
     at the secret meeting on Jekyll Island in 1910, where Henry P. Davison, righthand man of J.P. Morgan, was a key figure in the
 drafting of the Federal Reserve Act. Within days of taking over as chairman of the Federal Reserve Board, Greenspan immediately
raised the interest rate on Sept. 4, 1987, the first such increase in three years of general prosperity, and precipitated the stock market
    crash of Oct., 1987, Black Monday, when the Dow Jones average plunged 508 points. Under Greenspan’s direction, the Federal
      Reserve Board has steadily nudged the United States deeper and deeper into recession, without a word of criticism from the
                                                      complaisant members of Congress.
Son of a Rothschild agent in Texas. Succeeded in electing five consecutive governors of Texas; became Woodrow Wilson’s advisor in
1912. Cooperated with Paul Warburg to get the Federal Reserve Act passed by Congress in 1913.
Served in Senate from Wisconsin 1905-25. Led agrarian reformers in opposing Eastern bankers and their plans for the Federal
Reserve Act. Ran for President in 1924 on Progressive-Socialist ticket.
                                         CHARLES AUGUSTUS LINDBERGH, SR. (1860-1924)
Congressman from Minnesota (1907-1917) who led the fight against enactment of the Federal Reserve Act in 1913. He served until
1917 when he resigned to run for governor of Minnesota. He ran a good campaign despite adverse newspaper attacks led by The
New York Times. His campaign was adversely affected when Federal agents burned his books, including Why Is Your Country At
War? and the papers and contents of his home office in Little Falls, Minnesota.
LOUIS T. McFADDEN (1876-1936)
Congressman and Chairman of the House Banking and Currency Committee, 1927-33; courageously opposed the manipulators of
the Federal Reserve System in the 1920’s and the 1930’s. Introduced bills to impeach Federal Reserve Board of Governors and allied
officials. After three attempts on his life, he died mysteriously.
Considered the dominant American financier at the turn of the century. Who’s Who in 1912 stated he "controls over 50,000 miles of
railroads in the United States." Organized United States Steel Corporation. Became representative of House of Rothschild through
his father, Junius S. Morgan, who had become London partner of George Peabody & Company, later Junius S. Morgan Company, a
Rothschild agent. John Pierpont Morgan, Jr. succeeded his father as head of the Morgan empire.
Appointed Governor of the Federal Reserve Board May 21, 1990, David Mullins’ term runs to Jan. 31, 1996. He was recently
nominated to serve as Vice Chairman of the Federal Reserve Board, and served as Assistant Secretary of the Treasury for Domestic
Finance 1988-90, receiving the department’s highest award, the Alexander Hamilton Award, for his service in such programs as
synthetic fuels, federal finance, Farm Credit Assistance Board, and author of the President’s Plan for rescuing the savings and loan
institutions. He is a distant cousin of the author, descended from John Mullins, the first recorded settler in the western area of
Virginia, hero of the battle of King’s Mountain, and recipient of a 200 acre grant of land for his service in the American Revolution.
WRIGHT PATMAN (1893-1976)
Congressman and Chairman of the House Banking and Currency Committee 1963-74. Led the fight in Congress to stop the
manipulators of the Federal Reserve System from 1937 to his death in 1976.
Served in Congress 1903-1913. Democrat from Louisiana. Chairman of House Banking and Currency Committee. Chairman of
"Pujo Hearings" Subcommittee, 1912.
                                                 SIR GORDON RICHARDSON (1915- )
Head of the Bank of England since 1973. Chairman J. Henry Schroder Wagg, London, 1962-72; director of J. Henry Schroder
Banking Corporation, New York; Schroder Banking Corporation, New York; Lloyd’s Bank, London; Rolls Royce.
JACOB SCHIFF (1847-1920)
Born in Rothschild house in Frankfurt, Germany. Emigrated to United States, married Therese Loeb, daughter of Solomon Loeb,
founder of Kuhn, Loeb and Co. Schiff became senior partner of Kuhn, Loeb and Co., and as representative of Rothschild interests
gained control of most of railway mileage in United States.
Adolph Hitler’s personal banker, advanced funds for Hitler’s accession to power in Germany in 1933; German representative of the
London and New York branches of J. Henry Schroder Banking Corporation; SS Senior Group Leader; director of all German
subsidiaries of I.T.T; Himmler’s Circle of Friends; advisor to board of directors, Deutsche Reichsbank (German central bank).
Educated at Harvard, economist Office of Price Administration, 1941-42; financial mission to Iran, 1942-46; Agency for
international Development South America, 1965-69; president international Investment Corporation for Yugoslavia 1969-72;
advisor to Chairman, Ways and Means Committee, House of Representatives, 1972-73; Undersecretary Monetary Affairs, U.S.
Treasury, 1977-80; president Federal Reserve Bank of New York, 1980-
A partner of the law firm of Guggenheimer and Untermyer of New York, who conducted the "Pujo Hearings" of the House Banking
and Currency Committee in 1912. Counsel for Rogers and Rockefeller in many large suits against F. Augustus Heinze, Thomas W
Lawson and others. Earned a single fee of $775,000 for handling merger of Utah Copper Company. Reported in The New York
Times May 26, 1924 as urging immediate recognition of Soviet Russia at Carnegie Hall meeting. Untermyer’s prestige and power is
illustrated by the fact that this front page obituary in The New York Times covered six columns. His listing in Who’s Who was the
longest for thirteen years.
Assistant Secretary of Treasury 1897-1901; won prestige for financing Spanish American War by floating $200,000,000 in bonds
during his incumbency for what is known as "National City Bank’s War" President of National City Bank 1909-19. One of the
original Jekyll Island group who wrote Federal Reserve Act in November, 1910. No mention of this important fact is made in
extensive obituary in The New York Times, June 30, 1937.
Author of the definitive study The Strangest Friendship in History, Woodrow Wilson and Col. House, Liveright, 1932. A leading poet
of the early 1900’s, reviewed on the front page of The New York Times Book Review, and known as the leading German-American
citizen of the United States.
Chairman of the Federal Reserve Board of Governors since 1979, appointed by President Carter, reappointed by President Reagan
for another four year term beginning August 6, 1983. Educated at Princeton, Harvard and London School of Economics; employed
by Federal Reserve Bank of New York, 1952-57; Chase Manhattan Bank, 1957-61; Treasury Department, 1961-74; president Federal
Reserve Bank of New York, 1975-79.
PAUL WARBURG (1868-1932)
Conceded to be the actual author of our central bank plan, the Federal Reserve System, by knowledgeable authorities. Emigrated to
the United States from Germany 1904; partner, Kuhn Loeb and Company bankers, New York; naturalized 1911. Member of the
original Federal Reserve Board of Governors, 1914-1918; president Federal Advisory Council, 1918-1928. Brother of Max Warburg,
who was head of German Secret Service during World War I and who represented Germany at the Peace Conference, 1918-1919,
while Paul was chairman of the Federal Reserve System.
Partner of Kuhn, Loeb and Company; head of British Secret Service during World War I. Worked closely with Col. House
dominating the United States and England.
New York Times 1858-1983
Washington Post 1933-1983
Barron’s Weekly 1921-1983
Business Week 1929-1983
Forbes Magazine 1917-1983
Fortune 1930-1983
Harper’s 1850-1983
National Review 1955-1983
Newsweek 1933-1983
The Nation 1865-1983
The New Republic 1914-1983
Time 1923-1983
Current Biography 1940-1983 H.W. Wilson Co., N.Y.
Dictionary of National Biography, Scribners, N.Y. 1934-1965
Directory of Directors, London 1896-1983
Directory of Directors In The City of New York 1898-1918
The Concise Dictionary of National Biography, 1903-1979, Oxford University
Congressional Record 1910-1983
International Index to Periodicals 1920-1965, H.W. Wilson Co., N.Y.
Poole’s Index to Periodical Literature 1802-1906, Wm. T Poole, Chicago
Readers Guide to Periodicals 1900-1983
Rand McNally’s Bankers Guide 1904-1928
Moody’s Banking and Finance 1928-1968
Who’s Who in America 1890-1983, A.N. Marquis Co.
Who’s Who, Great Britain 1921-1983
Who Was Who In America 1607-1906, A.N. Marquis Co.
Who’s Who in the World 1972-1983, A.N. Marquis Co.
Who’s Who in Finance and Industry 1936-1969, A.N. Marquis Co.
                                        Standard and Poor’s Register of Directors 1928-1983
Senate Committee Hearings on Federal Reserve Act, 1913
House Committee Hearings on Federal Reserve Act, 1913
House Committee Hearings on the Money Trust (Pujo Committee) 1913
House Investigation of Federal Reserve System, 1928
Senate Investigation of Fitness of Eugene Meyer to be a Governor of the Federal
Reserve Board, 1930
Senate Hearings on Thomas B. McCabe to be a Governor of the Federal Reserve
System, 1948
House Committee Hearings on Extension of Public Debt, 1945
Federal Reserve Directors: A Study of Corporate and Banking Influence.
Staff Report, Committee on Banking, Currency and Housing, House of
Representatives, 94th Congress, 2d Session, August, 1976.
The Federal Reserve System, Purposes and Functions, Board of Governors, 1963
A History of Monetary Crimes, Alexander Del Mar, the Del Mar Society, 1899
Fiat Money Inflation in France, Andrew Dickson White, Foundation for
Economic Education, N.Y. 1959
The War on Gold, Antony C. Sutton, 76 Press, California, 1977
Wall Street and the Rise of Hitler, Antony C. Sutton, 76 Press, California, 1976
Collected Speeches of Louis T McFadden, Congressional Record
The Truth About Rockefeller, E.M. Josephson, Chedney Press, N.Y. 1964
The Strange Death of Franklin D. Roosevelt, E.M. Josephson, Chedney Press,
N.Y. 1948
Behind the Throne, Paul Emden, Hoddard Stoughton, London, 1934
The Money Power of Europe, Paul Emden, Hoddard Stoughton, London
The Robber Barons, Mathew Josephson, Harcourt Brace, N.Y. 1934
The Rothschilds, Frederic Morton, Curtis Publishing Co., 1961
The Magnificent Rothschilds, Cecil Roth, Robert Hale Co., 1939
Pawns In The Game, William Guy Carr, (privately printed), 1956
Tearing Away the Veils, Francois Coty, Paris, 1940
Writers on English Monetary History, 1626-1730, London, 1896
The Federal Reserve System After Fifty Years, Committee on Banking and
Currency, Jan., Feb. 1964
The Bankers’ Conspiracy, Arthur Kitson, 1933
Laws Of The United States Relating to Currency, Finance and Banking From
1789 to 1891, Charles F. Dunbar, Ginn & Co., Boston, 1893
Monetary Policy of Plenty Instead of Scarcity, Committee on Banking and
Currency, 1937-1938
The Strangest Friendship In History, Woodrow Wilson and Col. House, George
Sylvester Viereck, Liveright, N.Y. 1932
Federal Reserve Policy Making, G.L. Bach, Knapf, N.Y. 1950
Rulers of America, A Study of Finance Capital, Anna Rockester, International
Publishers, N.Y. 1936
                               Banking in the United States Before the Civil War, National Monetary
Commission, 1911
National Banking System, National Monetary Commission, 1911
The Federal Reserve System, Paul Warburg, Macmillan, N.Y. 1930
Roosevelt, Wilson and the Federal Reserve Law, Col. Elisha Garrison,
Christopher Publishing House, Boston, 1931
Men Who Run America, Arthur D. Howden Smith, Bobbs Merrill, N.Y., 1935
Financial Giants of America, George E Redmond, Stratford, Boston, 1922
The Great Soviet Encyclopaedia, Macmillan, London, 1973
Encyclopaedia Britannica, 1979
Encyclopaedia Americana, 1982
Dope, Inc., Goldman, Steinberg et at, New Benjamin Franklin House Publishing
Company, N.Y. 1978
Banking and Currency and the Money Trust, Charles A. Lindbergh, Sr. 1913
The Strange Career of Mr. Hoover Under Two Flags, John Hamill, William Faro,
N.Y. 1931
The Federal Reserve System, H. Parker Willis, Ronald Co., 1923
A.B.C. of the Federal Reserve System, E.W. Kemmerer, Princeton Univ., 1919
Adventures in Constructive Finance, Carter Glass, Doubleday, N.Y. 1927
Banking Reform in the United States, Paul Warburg, Columbia Univ., 1914
U.S. Money vs. Corporation Currency, Alfred Crozier, Cleveland, 1912
Philip Dru, Administrator, E.M. House, B.W. Huebsch, N.Y. 1912
The Intimate Papers of Col. House, edited by Charles Seymour, 4 v. 1926-1928,
Houghton Mifflin Co.
The Great Conspiracy of the House of Morgan, H.W. Loucks, 1916
Capital City, McRae and Cairncross, Eyre Methuen, London, 1963
Aggression, Otto Lehmann-Russbeldt, Hutchinson, London, 1934
The Empire of High Finance, Victor Perlo, International Pub., 1957
Memoirs of Max Warburg, Berlin, 1936
Letters and Friendships of Sir Cecil Spring-Rice
Tragedy and Hope, Carroll Quigley, Macmillan, N.Y.
The Politics of Money, Brian Johnson, McGraw Hill, N.Y. 1970
A Primer on Money, House Banking and Currency Committee, 1964
Pierpont Morgan and Friends, The Anatomy of A Myth, George Wheeler,
Prentice Hall, N.J., 1973
Pierpont Morgan, Herbert Satterleee, Macmillan, N.Y., 1940
Morgan the Magnificent, John K. Winkler, Vanguard, N.Y., 1930
Wilson, Arthur Link (5 vol.) Princeton University Press, Princeton, N.J.
Historical Beginning... The Federal Reserve, Roger T Johnson, Federal Reserve
Bank of Boston, 1977 (7 printings, 1977-1982, totaling 92,000 copies.) [It
is noteworthy that this 64 page booklet makes no mention of Jekyll Island,
Paul Warburg’s authorship, or source of promotion funds which resulted
in enactment of the Federal Reserve Act on December 23, 1913.]
The Federal Reserve and Our Manipulated Dollar, Martin A. Larson, Devin Adair
Co., Old Greenwich, Conn., 1975
                             Chain Banking, Stockholder and Loan Links of 200 Largest Member Banks,
House Banking and Currency Committee, Jan. 3, 1963
International Banking, Staff Report, Committee on Banking Currency and
Housing, May 1976
Audit of the Federal Reserve System, Hearings Before the House Banking and
Currency Committee, 1975.
A Abbot, Lawrence--22 Adams, John Quincy--48 Aldrich, Nelson--1, 2, 3, Brandeis, Justice Louis--87, 109 Bristow, Senator--38 Brookhart,
6, 7, 8, 9, 10, 11, 19, 21, 22, 30, 33, 36 Aldrich-Vreeland Emergency             Senator--117 Brown, Alexander--49 Alex Brown & Son--49 Brown
Currency Bill--12, 19, 20, 22 Allen, W.H.--33 American Acceptance                 Brothers Bankers--22, 49, 131 Brown Brothers Harriman--22, 48, 49, 61,
Council--128 American Bankers Association--13, 127 American Relief                68, 79, 131, 171, 172, 175 Brown Shipley & Company--49, 68 Bryan,
Administration-- 74, 78 Andrew, A. Piatt--1 Astor, John Jacob--64, 65             William Jennings--26, 29, 82, 83, 118 Bull Moose Party--18 Bush,
Auchincloss, Gordon--107 B Bagdikian, Ben H.--61 Baker, George                    George--49 Bush, Prescott--49 Byrnes, James--17 C Canaris, Admiral--62
F.--16, 42, 43, 47, 66, 67 Baker, George F., Jr.--66 Bank of England--32,         Carr, William Guy--53, 55 Carter, Jimmy--171, 172, 173 Cassel,
42, 51, 52, 58, 59, 68, 69, 80, 123, 129, 131, 133, 142, 146, 180 Bank of         Ernest--59 Cavell, Edith--72, 73 Central Bank--5 Chamberlain,
France--32, 135 Banking Act of 1935--29, 159 Barnes, Julius--73, 74               Neville--78 Churchill, Winston--78, 123 Clark, Champ--29 Clay,
Barron, Clarence W.--30 Baruch, Bernard--17, 26, 28, 74, 86, 89, 90, 94,          John--182 Clews, Henry--50 Cooper, Kent--60 Council on Foreign
99, 109, 111, 112, 139, 147, 151 Bechtel Corporation--77, 79 Belgian              Relations--35, 54, 81, 172 Crissinger, D.R.--141 Cromwell, Oliver--58
Relief Commission--69, 70, 72, 73, 74, 78, 83 Belmont, August--53 Biddle, Crozier, Alfred--20 D Dabney, Charles H.--50, 51 Davison, Daniel--63
Nicholas--6, 50 Bilderbergers--54, 172 Bleichroder, Samuel--59
Blumenthal, George--14
Davison, Henry P.--1, 2, 4, 33, 43, 44, 66, 103 Debs, Eugene--105 Delano,         Ferdinand, Archduke--69 First Name Club--3, 8, 33 First National Bank
F.A.--36, 114 Delano, Warren--36 Dodge, Cleveland H.--103, 105 Drexel, of N.Y.--1, 34, 41, 42, 44, 47, 64, 66, 67 Forbes, B.C.--2, 7 Forbes,
Anthony--53 Drexel & Company--48, 54 Dulles, Allen--62, 75, 76 Dulles, Malcom--2 Forgan, James B.--41, 42 Frame, Andrew--13, 14 Francqui,
John Foster--75, 81 Duncan Sherman Company--50 E Eccles,                          Emile--69, 70, 71, 72 G Garfield, James A.--20 Garrison, Col. Ely--22, 23,
Marriner--122, 126, 159, 162, 163, 164, 167, 168, 169 Eisenhower, Dwight 120 Gates, Thomas S.--48 Glass, Carter--13, 14, 19, 21, 22, 29, 30, 34, 40,
D.--75, 81 Ellery, William--48 Emden, Paul--36, 60 F Federal Advisory             45, 114, 116, 117, 138, 160 Glass-Steagall Banking Act--159 Goldenweiser,
Council--6, 19, 40, 41, 42, 43, 44, 45, 113, 116, 117, 119, 128, 129, 144         Emanuel--118, 136, 146, 148 Graham, Katherine--97 Gray, Prentiss--73,
Federal Reserve Act--7, 9, 15, 16, 18, 19, 21, 23, 26, 27, 28, 29, 30, 31, 33,    78 Guggenheim--90 H Hamill, John--69, 70 Hamilton, Alexander--5
34, 35, 40, 45, 64, 82, 125, 126, 139, 162, 168, 171 Federal Reserve              Hamlin, Charles S.--36, 129, 138, 147 Hanauer, Jerome J.--87, 95, 99
Banks--6, 8, 34, 35, 40, 41, 44, 83 Federal Reserve Board of                      Harding, W.P.G.--36, 103, 121, 157 Harriman, E.H.--67, 90 Harriman,
Governors--6, 14, 19, 23, 29, 31, 32, 34, 35, 36, 37, 38, 39, 41, 42, 44, 45,     Mary--67 Harrison, George L.--132 Herrick, Myron T.--117 Hess,
64, 78, 86, 87, 95, 112, 119, 124, 125, 126 128, 129, 133, 139, 140, 143, 144, Rudolf--78 Hill, James J.--47 Hiss, Alger--24, 83 Hiss, Donald--24 Hitler,
145, 146, 149, 154, 157, 159, 162, 163, 165, 169, 171, 172, 180 Federal           Adolf--75, 76, 77, 78, 79, 81 Hoover, Herbert H.--69, 70, 71, 72, 73, 74, 78,
Reserve System--5, 6, 7, 8, 19, 21, 29, 30, 32, 35, 40, 41, 42, 43, 63, 67, 82, 139, 149, 150, 151, 158 House, Col. Edward Mandel--21, 23, 24, 25, 26, 27,
84, 113, 114, 115, 118, 119, 120, 121, 122, 127, 128, 132, 134, 139, 140, 141, 29, 30, 31, 36, 79, 88, 107, 109, 111 Hull, Cordell--84
143, 146, 158, 162, 163, 164, 165, 166, 168, 169, 170, 176, 180
I International Acceptance Bank-- 128, 144 Insull, Samuel--148 J                  Manati Sugar Corporation--73, 80, 81 Marbury, Bessie--155 Markoe,
Jackson, Andrew--5, 50 Jaffray, C.T.--43 James, F. Cyril--42 Jefferson,           James --131 Marshall, Louis--29 Martin, William McChesney--163
Thomas--5, 7, 35 Jekyll Island--2, 3, 4, 5, 8, 9, 10, 11, 12, 20, 29, 33, 41,     McAdoo, William--19, 21, 26, 29, 32, 39, 99, 101, 114 McFadden,
44, 171 Jekyll Island Club--3 Jones, Thomas D.--36, 38, 39 Josephson,             Louis--71, 72, 74, 75, 95, 127, 128, 133, 134, 135, 136, 137, 150, 151, 152,
Matthew--60, 67 Juillard, A.D.--67 K Kahn, Otto--19, 38, 66, 107 Kains,           153, 154 McIntosh, J.W.--103 Mellon, Andrew--142, 147, 150 Meyer,
Archibald--43 Kaiping Coal Mines--70 Kemmerer, E.W.--85, 124                      Eugene--14, 17, 34, 61, 72, 74, 75, 94, 95, 99, 118, 122, 150, 151, 152, 153,
Kreuger, Ivar--71, 148, 149 Kuhn, Loeb Company--1, 17, 18, 21, 33, 35,            159, 171 Miller, Adolph C.--36, 129, 133, 134, 135, 136, 157, 166
36, 37, 38, 39, 41, 44, 47, 48, 61, 66, 67, 71, 72, 74, 81, 83, 85, 86, 87, 88,   Minsky--67 Money Trust--11, 12, 16 Montague, Samuel & Co.--38, 68
89, 99, 101, 103, 119, 127, 128, 146, 174, 175 L LaFollette, Senator Robert Moody, John--47, 52 Morgan Grenfell Company--63, 68 Morgan Harjes
M.--16, 17, 18 Lamont, T.W.--2, 109, 111, 128 Laughlin, J. Lawrence--10, Company--54 Morgan, J.P.--1, 2, 3, 10, 16, 17, 18, 26, 32, 35, 41, 42, 43, 44,
11, 33 Lazard Freres--14, 34, 53, 61, 68, 74, 76, 94, 99, 152 League of           47, 48, 49, 50, 51, 52, 53, 54, 66, 67, 75, 83, 101, 129, 146, 150, 160, 174, 176
Nations--136, 143, 170 Leguia, Juan--155 Lehman, Herbert--101                     Morgan, J.P. Company--1, 33, 35, 41, 47, 48, 53, 66, 123, 148, 174 Morgan,
Lehman Brothers--35, 66, 101, 175 Lincoln, Abraham--20, 65 Lindbergh, Joseph--51 Morgan, Junius S.--50, 51, 53, 65, 66 Morton, Frederic--56
Charles A., Sr.--11, 16, 17, 18, 28, 112 Loeb, Solomon--33 Lovett,         Morton, Levi P.--67 Mountbatten, Philip--60 N Napoleon de
Robert--48 Lundberg, Ferdinand--32                                         Bonaparte--57 Nation, The--12, 16, 19, 30, 37 National Bank Act of
                                                                           1864--125 National Citizen’s League--10, 11 National City Bank--21, 33,
                                                                           34, 41, 64, 65, 66, 112, 126, 127 National Monetary Commission--1,
4, 5, 10, 11, 12, 13, 14, 15, 33, 124, 125 National Recovery Act--159, 168 Richardson, Sir Gordon--80 Rickard, Edgar--74 Rionda, M.E.--73
National Reserve Plan--7 New York Times--27, 28, 29, 33, 35, 37, 40, 44,   Rockefeller, David--171, 172, 176 Rockefeller, John D.--47, 65 Rockefeller,
61, 71, 74, 75, 80, 112, 119, 126, 144, 166, 171 Norman, Lord              William--47, 65 Rockefeller, William, Jr.--65 Roosa, Robert--54, 171, 172
Montagu--49, 76, 77, 123, 129, 131, 132, 133, 142, 150 Norten, Charles     Roosevelt, Franklin Delano--23, 24, 30, 31, 84, 129, 137, 139, 145, 151, 155,
D.--1, 33 O O’Gorman, Senator--14, 38 Owen, Robert L.--17, 19, 29, 38,     156, 158, 159, 162, 169, 170 Roosevelt, Theodore--1, 18, 19, 22, 38, 82
39, 40, 41, 116, 119, 138, 157, 161 Owen-Glass Bill--21 P Page, Walter     Rosebury, Lord--53 Rothschild, Baron Alfred--23, 60 Rothschild, House
Hines--83 Panic of 1837--5, 50, 51, 65 Panic of 1857--51, 52, 65 Panic of  of--17, 47, 48, 50, 52, 53, 54, 60 Rothschild, James--5, 50, 57, 59, 61, 66, 109
1907--1, 2, 5, 10, 12, 21 Paterson, William--58, 59 Patman, Wright--34,    Rothschild, Leopold--60 Rothschild, Mayer Amschel--55, 56 Rothschild,
164, 165, 167 Peabody, George--49, 50, 51, 52, 54, 65, 171 Peabody, Riggs N.M.--48, 49, 51, 53, 57, 58, 59, 68, 171 Round Table--53, 54, 62 Rowe,
& Co.--49 Pegler, Westbrook--23 Pemberton, Robert Leigh--80 Pound,         W.S.--43, 70 Rue, Levi L.--42 Ryan, John Barry--66 Ryan, Thomas
Ezra--58 Pressman, Lee--24 Princeps, Gavrel--69 Pujo, Arsene--16 Pujo      Fortune--66 Ryan, Virginia Fortune--66 S Schiff, Jacob--17, 19, 26, 29, 42,
Committee--16, 17, 18, 149 Pyne, Moses Taylor--66 Pyne, Percy--65, 66      47, 66, 67, 86, 87, 90, 149 Schiff, John--66 Schiff, Ludwig--87 Schiff,
Q Quigley, Dr. Carrol--53, 131 R Reagan, Ronald--77, 79, 80, 173, 175      Philip--87 Schoellkopf Family--34 Scholey, David--182 Schroder, Baron
Reichsbank--12, 132 Rhodes, Cecil--53                                      Bruno Von--69, 76 Schroder, Baron Rudolph Von--76 Schroder, J. Henry
                                                                           Co.--48, 67, 68, 69, 71, 73, 74, 75, 76, 77, 78, 79, 80, 81, 175, 176, 179, 180
                                                                           Schultz, George--79 Seligman, E.R.A.--9 Seligman, J. & W.--9, 17, 71, 109,
                                                                           114, 155
Seymour, Charles--31 Shaw, Leslie--14 Shelton--1, 2 Simpson, John          Vickers Sons & Maxim--60 Viereck, George--23, 25, 27 Volcker, Paul--34,
Lowery--78 Smith, Rixey--29, 112 Sontag, Susan--61 Sprague,                171, 172, 173, 183 Vreeland, Edward--12 W War Finance
O.M.W.--11, 114, 161 Spring-Rice, Sir Cecil--89 St. George, George         Corporation--24, 86, 94, 95, 97, 99, 151, 153 War Industries Board--74, 86,
F.--66 St. George, Katherine--66 Sterling, John W.--66 Stillman, Don       90, 151 Warburg, Felix--38, 86, 87, 128, 129 Warburg, James Paul--128,
Carlos--65 Stillman, James--8, 47, 65, 66 Stimson, Henry L.--161 Stone,    129, 156, 161 Warburg, M.M. Company--12, 17, 34, 54 Warburg,
Senator--21 Strauss, Albert--112, 114, 122, 140, 141, 157 Strong,          Max--84, 86, 87, 88, 111 Warburg, Paul Moritz--1, 2, 3, 4, 5, 6, 7, 8, 9, 12,
Benjamin--1, 3, 32, 33, 44, 118, 123, 129, 131, 132, 133, 137, 138 Sugar   14, 19, 21, 22, 23, 24, 26, 28, 29, 30, 33, 34, 36, 37, 38, 40, 41, 42, 43, 44, 48,
Equalization Board--74 Swinney, E.F.--43 T Taft, William Howard--18,       66, 71, 74, 84, 86, 87, 88, 89, 99, 111, 112, 115, 117, 119, 120, 122, 126, 127,
19, 38, 82 Taylor, Congressman--14 Taylor, H.A.C.--66 Taylor,              128, 138, 144, 148, 156, 157, 164 Weinberger, Caspar--79 Wetmore, Frank
Moses--64, 65, 66 Tavistock Institute--80, 184, 185 Thalmman,              O.--42 White, Harry Dexter--24 Williams, John Skelton--21, 32, 39, 101,
Ladenburg--17 Tiarks, Frank Cyril--69, 73, 76, 77 Tientsin Railroad--72 103, 140 Willis, H. Parker--132, 140, 142 Wilson, Woodrow--10, 17, 18, 19,
Tobacco Trust--89 Trilateral Commission--35, 54, 172 Tugwell, Rexford 22, 23, 24, 25, 26, 28, 29, 30, 32, 36, 38, 39, 41, 82, 83, 84, 85, 86, 87, 88, 89,
Guy--162 U Untermeyer, Samuel--17, 18 U.S. Food Administration--73,        90, 99, 101, 103, 105, 107, 109, 111, 112, 117, 137, 139, 140, 141, 156 Wing,
74, 78, 87 V Vanderlip, Frank--1, 2, 3, 8, 9, 19, 33, 44, 161              Daniel S.--43 Wiseman, Sir William--73, 88, 105, 107, 111 Z Zabriskie,
                                                                           G.A.--73, 74
                                          Questions and Answers
                  While lecturing in many countries, and appearing on radio and television programs as a guest, the author is frequently asked
                        questions about the Federal Reserve System. The most frequently asked questions and the answers are as follows:
Q: What is the Federal Reserve System?
A: The Federal Reserve System is not Federal; it has no reserves; and it is not a system, but rather, a criminal syndicate. It is the
product of criminal syndicalist activity of an international consortium of dynastic families comprising what the author terms "The
World Order" (see "THE WORLD ORDER" and "THE CURSE OF CANAAN", both by Eustace Mullins). The Federal Reserve
system is a central bank operating in the United States. Although the student will find no such definition of a central bank in the
textbooks of any university, the author has defined a central bank as follows: It is the dominant financial power of the country which
harbors it. It is entirely private-owned, although it seeks to give the appearance of a governmental institution. It has the right to
print and issue money, the traditional prerogative of monarchs. It is set up to provide financing for wars. It functions as a money
monopoly having total power over all the money and credit of the people.
Q: When Congress passed the Federal Reserve Act on December 23, 1913, did the Congressmen know that they were creating a
central bank?
A: The members of the 63rd Congress had no knowledge of a central bank or of its monopolistic operations. Many of those who
voted for the bill were duped; others were bribed; others were intimidated. The preface to the Federal Reserve Act reads "An Act to
provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial
papers, to establish a more effective supervision of banking in the United States, and for other purposes." The unspecified "other
purposes" were to give international conspirators a monopoly of all the money and credit of the people of the United States; to
finance World War I through this new central bank, to place American workers at the mercy of the Federal Reserve system’s
collection agency, the Internal Revenue Service, and to allow the monopolists to seize the assets of their competitors and put them
out of business.
Q: Is the Federal Reserve system a government agency?
A: Even the present chairman of the House Banking Committee claims that the Federal Reserve is a government agency, and that it
is not privately owned. The fact is that the government has never owned a single share of Federal Reserve Bank stock. This charade
stems from the fact that the President of the United States appoints the Governors of the Federal Reserve Board, who are then
confirmed by the Senate. The secret author of the Act, banker Paul Warburg, a representative of the Rothschild bank, coined the
name "Federal" from thin air for the Act, which he wrote to achieve two of his pet aspirations, an "elastic currency", read (rubber
check), and to facilitate trading in acceptances, international trade credits. Warburg was founder and president of the International
Acceptance Corporation, and made billions in profits by trading in this commercial paper. Sec. 7 of the Federal Reserve Act
provides "Federal reserve banks, including the capital and surplus therein, and income derived therefrom, shall be exempt from
Federal, state and local taxation, except taxes on real estate." Government buildings do not pay real estate tax.
Q: Are our dollar bills, which carry the label "Federal Reserve notes" government money?
A: Federal Reserve notes are actually promissory notes, promises to pay, rather than what we traditionally consider money. They are
interest bearing notes issued against interest bearing government bonds, paper issued with nothing but paper backing, which is
known as fiat money, because it has only the fiat of the issuer to guarantee these notes. The Federal Reserve Act authorizes the
issuance of these notes "for the purposes of making advances to Federal reserve banks... The said notes shall be obligations of the
United States. They shall be redeemed in gold on demand at the Treasury Department of the United States in the District of
Columbia." Tourists visiting the Bureau of Printing and Engraving on the Mall in Washington, D.C. view the printing of Federal
Reserve notes at this governmental agency on contract from the Federal Reserve System for the nominal sum of .00260 each in units
of 1,000, at the same price regardless of the denomination. These notes, printed for a private bank, then become liabilities and
obligations of the United States government and are added to our present $4 trillion debt. The government had no debt when the
Federal Reserve Act was passed in 1913.
Q: Who owns the stock of the Federal Reserve Banks?
A: The dynastic families of the ruling World Order, internationalists who are loyal to no race, religion, or nation. They are families
such as the Rothschilds, the Warburgs, the Schiffs, the Rockefellers, the Harrimans, the Morgans and others known as the elite, or
"the big rich".
Q: Can I buy this stock?
A: No. The Federal Reserve Act stipulates that the stock of the Federal Reserve Banks cannot be bought or sold on any stock
exchange. It is passed on by inheritance as the fortune of the "big rich". Almost half of the owners of Federal Reserve Bank stock
are not Americans.
Q: Is the Internal Revenue Service a governmental agency?
A: Although listed as part of the Treasury Department, the IRS is actually a private collection agency for the Federal Reserve
System. It originated as the Black Hand in mediaeval Italy, collectors of debt by force and extortion for the ruling Italian mob
families. All personal income taxes collected by the IRS are required by law to be deposited in the nearest Federal Reserve Bank,
under Sec. 15 of the Federal Reserve Act, "The moneys held in the general fund of the Treasury may be ....deposited in Federal
reserve banks, which banks, when required by the Secretary of the Treasury, shall act as fiscal agents of the United States."
Q: Does the Federal Reserve Board control the daily price and quantity of money?
A: The Federal Reserve Board of Governors, meeting in private as the Federal Open Market Committee with presidents of the
Federal Reserve Banks, controls all economic activity throughout the United States by issuing orders to buy government bonds on
the open market, creating money out of nothing and causing inflationary pressure, or, conversely, by selling government bonds on
the open market and extinguishing debt, creating deflationary pressure and causing the stock market to drop.
Q: Can Congress abolish the Federal Reserve System?
A: The last provision of the Federal Reserve Act of 1913, Sec. 30, states, "The right to amend, alter or repeal this Act is expressly
reserved." This language means that Congress can at any time move to abolish the Federal Reserve System, or buy back the stock
and make it part of the Treasury Department, or to altar the System as it sees fit. It has never done so.
Q: Are there many critics of the Federal Reserve beside yourself?
A: When I began my researches in 1948, the Fed was only thirty-four years old. It was never mentioned in the press. Today the Fed is
discussed openly in the news section and the financial pages. There are bills in congress to have the Fed audited by the Government
Accounting Office. Because of my expose, it is no longer a sacred cow, although the Big Three candidates for President in 1992,
Bush, Clinton and Perot, joined in a unanimous chorus during the debates that they were pledged not to touch the Fed.
Q: Have you suffered any personal consequences because of your expose of the Fed?
A: I was fired from the staff of the Library of Congress after I published this expose in 1952, the only person ever discharged from
the staff for political reasons. When I sued, the court refused to hear the case. The entire German edition of this book was burned in
1955, the only book burned in Europe since the Second World War. I have endured continuous harassment by government agencies,
as detailed in my books "A WRIT FOR MARTYRS" and "MY LIFE IN CHRIST". My family also suffered harassment. When I
spoke recently in Wembley Arena in London, the press denounced me as "a sinister lunatic".
Q: Does the press always support the Fed?
A: There have been some encouraging defections in recent months. A front page story in the Wall Street Journal, Feb. 8, 1993,
stated, "The current Fed structure is difficult to justify in a democracy. It’s an oddly undemocratic institution. Its organization is so
dated that there is only one Reserve bank west of the Rockies, and two in Missouri...Having a central bank with a monopoly over the
issuance of the currency in a democratic society is a very difficult balancing act."
Congressman McFadden
on the Federal Reserve Corporation
Remarks in Congress, 1934
The Bankruptcy of the United States
The Fed, The Fed, The Fed
The Declaration of Independence
       The Federal Reserve - What Is It? Who Is It?
       The Coming Battle (The Book)
       The United Nations plans to CONFISCATE your profit and ---.
       The 545 People Responsible For All of America's Woes
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