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Restore the American Republic's Constitution! 

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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 subj ect. " 

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. 

@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 interference. 

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 

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 proteges 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 world. 

After my initial shock at discovering that the most influential literary 
personality of the twentieth century, Ezra Pound, was imprisoned in "the 
Hellhole" in Washington, I immediately wrote for assistance to a Wall Street 
financier at whose estate I had frequently been a guest. I reminded him that 
as a patron of the arts, he could not afford to allow Pound to remain in such 
inhuman captivity. His reply shocked me even more. He wrote back that 
"your friend can well stay where he is." It was some years before I was able 
to understand that, for this investment banker and his colleagues, Ezra 
Pound would always be "the enemy". 


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. 

(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. Ill, p. 145 ff.) 

The bill for establishing a national bank, in 1791, undertakes, among other 


1. To form the subscribers into a corporation. 

2. To enable them, in their corporate capacities, to receive grants of lands; 
and, so far, is against the laws of mortmain. 

3. To make alien subscribers capable of holding lands; and so far is against 
the laws of alienage. 

4. To transmit these lands, on the death of a proprietor, to a certain line of 
successors; and so far, changes the course of descents. 

5. To put the lands out of the reach of forfeiture, or escheat; and so far, is 
against the laws of forfeiture and escheat. 

6. To transmit personal chattels to successors, in a certain line; and so far, is 
against the laws of distribution. 

7. To give them the sole and exclusive right of banking, under the national 
authority; and, so far, is against the laws of monopoly. 

8. To communicate to them a power to make laws, paramount to the laws of 
the states; for so they must be construed, to protect the institution from the 
control of the state legislatures; and so probably they will be construed. 

I consider the foundation of the Constitution as laid on this ground—that all 
powers not delegated to the United States, by the Constitution, nor 
prohibited by it to the states, are reserved to the states, or to the people (12th 
amend.). To take a single step beyond the boundaries thus specially drawn 
around the powers of Congress, is to take possession of a boundless field of 
power, no longer susceptible of any definition. 

The incorporation of a bank, and the powers assumed by this bill, have not, 
in my opinion, been delegated to the United States by the Constitution. 


Jekyll Island 

"The matter of a uniform discount rate was discussed and settled at Jekyll 
Island."-Paul M. Warburgl 

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), 

"Picture a party of the nation's greatest bankers stealing out of New York 
on a private railroad car under cover of darkness, stealthily 
hieing hundred of miles South, embarking on a mysterious 

launch, sneaking onto an island deserted by all but a few servants, living 
there a full week under 

such rigid secrecy that the names of not one of them was once mentioned lest 
the servants learn 

the identity and disclose to the world this strangest, most secret expedition in 
the history of 

American finance. I am not romancing; I am giving to the world, for the first 
time, the real story 

of how the famous Aldrich currency report, the foundation of our new 
currency system, was 

written .... The utmost secrecy was enjoined upon all. The public must not 
glean a hint of what 

was to be done. Senator Aldrich notified each one to go quietly into a private 
car of which the 

railroad had received orders to draw up on an unfrequented platform. Off 
the party set. New 

York's ubiquitous reporters had been foiled . . . Nelson (Aldrich) had 
confided to Henry, Frank, 

Paul and Piatt that he was to keep them locked up at Jekyll Island, out of the 
rest of the world, 

until they had evolved and compiled a scientific currency system for the 
United States, the real 

birth of the present Federal Reserve System, the plan done on Jekyll Island 
in the conference with 

Paul, Frank and Henry .... Warburg is the link that binds the Aldrich 
system and the present 

system together. He more than any one man has made the system possible as 
a working reality. "2 

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, 

"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 Hobo ken 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 

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 

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 conference: 

"How was the Reserve Bank to be controlled? It must be controlled by 
Congress. The government 

was to be represented in the board of directors, it was to have full knowledge 
of all the Bank's, 

affairs, but a majority 

5 Clarendon, Hist. Reb. 1647 

of the directors were to be chosen, directly or indirectly, by the banks of the 


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 later 

became the Aldrich Bill had been agreed upon, and a plan had 
been outlined which provided for a 'National Reserve 

Association,' meaning a central reserve organization with an elastic note 
issue based on gold and commercial paper." 

On page 60, Warburg writes, "The results of the conference were entirely 
confidential. Even the fact there had been a meeting was not permitted to 
become public." He adds in a footnote, "Though eighteen [sic] years have 
since gone by, I do not feel free to give a description of this most interesting 
conference concerning which Senator Aldrich pledged all participants to 

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 got 

some information from one of the reporters. It told in vague outline the 
Jekyll Island story, but 

made no impression and was generally regarded as a mere yarn." 

The coverup of the Jekyll Island conference proceeded along two lines, both 
of which were successful. The first, as Stephenson mentions, was to dismiss 
the entire story as a romantic concoction which never actually took place. 
Although there were brief references to Jekyll Island in later books 
concerning the Federal Reserve System, these also attracted little public 
attention. As we have noted, Warburg's massive and supposedly definite 
work on the Federal Reserve System does not mention Jekyll Island at all, 
although he does admit that a conference took place. In none of his 
voluminous speeches or writings do the words "Jekyll Island" appear, with a 
single notable exception. He agreed to Professor Stephenson's request that he 
prepare a brief statement for the Aldrich biography. This appears on page 
485 as part of "The Warburg Memorandum". In this excerpt, Warburg 
writes, "The matter of a uniform discount rate was discussed and settled at 
Jekyll Island." 

Another member of the "First Name Club" was less reticent. Frank Vanderlip 
later published a few brief references to the conference. In the Saturday 
Evening Post, February 9, 1935, p. 25, Vanderlip wrote: 

"Despite my views about the value to society of greater publicity for the 
affairs of corporations, 

there was an occasion near the close of 1910, when I was as secretive, indeed, 
as furtive, as any 

conspirator. . . . Since it would have been fatal to Senator Aldrich's plan to 
have it known that he 

was calling on anybody from Wall Street to help him in 
preparing his bill, precautions were taken that would have 
delighted the heart of James Stillman (a colorful and secretive 
banker who was President of the National City Bank during 
the Spanish-American War, and who was thought to have been 
involved in getting us into that war) ... I do not feel it is any 
exaggeration to speak of our secret expedition to Jekyll Island 
as the occasion of the actual conception of what eventually 
became the Federal Reserve System." 

In a Travel feature in The Washington Post, March 27, 1983, "Follow The 
Rich to Jekyll Island", Roy Hoopes writes: 

"In 1910, when Aldrich and four financial experts wanted a place to meet in 
secret to reform the 

country's banking system, they faked a hunting trip to Jekyll and for 10 days 
holed up in the 

Clubhouse, where they made plans for what eventually would become the 
Federal Reserve Bank." 

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 Reserve 

Act is the work of Mr. Warburg more than any other man in the country. 
The existence of a 

Federal Reserve Board creates, in everything but in name, a real central 
bank. In the two 

fundamentals of command of reserves and of a discount policy, the Federal 
Reserve Act has 

frankly accepted the principle of the Aldrich Bill, and these 
principles, as has been stated, were the creation of Mr. 
Warburg and Mr. Warburg alone. It must not be forgotten 
that Mr. Warburg had a practical object in view. In 
formulating his plans and in advancing in them slightly 

suggestions from time to time, it was incumbent on him to remember that the 
education of the 

country must be gradual and that a large part of the task was 
to break down prejudices and remove suspicion. His plans 
therefore contained all sorts of elaborate suggestions designed 
to guard the public against fancied dangers and to persuade 
the country that the general scheme was at all practicable. It 
was the hope of Mr. Warburg that with the lapse of time it 
might be possible to eliminate from the law a few clauses which 
were inserted largely at his suggestion for educational 

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 


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 propaganda." 11 

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 


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 

"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 panic." 

Edward Vreeland, co-author of the bill, wrote in the August 25, 1910 
Independent (which was owned by Aldrich), "Under the proposed monetary 
plan of Senator Aldrich, monopolies will disappear, because they will not be 
able to make more than four percent interest and monopolies cannot 
continue at such a low rate. Also, this will mark the disappearance of the 
Government from the banking business." 

Vreeland's fantastic claims were typical of the propaganda flood unleashed 
to pass the Aldrich Plan. Monopolies would disappear, the Government 
would disappear from the banking business. Pie in the sky. 

Nation Magazine, January 19, 1911, noted, "The name of Central Bank is 
carefully avoided, but the 'Federal Reserve Association', the name given to 
the proposed central organization, is endowed with the usual powers and 
responsibilities of a European Central Bank." 

After the National Monetary Commission had returned from Europe, it held 
no official meetings for nearly two years. No records or minutes were ever 
presented showing who had authored the Aldrich Plan. Since they held no 
official meetings, the members of the commission could hardly claim the Plan 

as their own. The sole tangible result of the Commission's three hundred thousand 
dollar expenditure was a library of thirty massive volumes on European 
banking. Typical of these works is a thousand page history of the 
Reichsbank, the central bank which controlled money and credit in 
Germany, and whose principal stockholders, were the Rothschilds and Paul 
Warburg's family banking house of M.M. Warburg Company. The 
Commission's records show that it never functioned as a deliberative body. 
Indeed, its only "meeting" was the secret conference held at Jekyll Island, 
and this conference is not mentioned in any publication of the Commission. 
Senator Cummins passed a resolution in Congress ordering the Commission 
to report on January 8, 1912, and show some constructive results of its three 
years' work. In the face of this challenge, the National Monetary Commission 
ceased to exist. 

With their five million dollars as a war chest, the Aldrich Plan propagandists 

waged a no-holds barred war against their opposition. Andrew Frame 

testified before the House Banking and Currency Committee of the 

American Bankers Association. He represented a group of Western bankers 

who opposed the Aldrich Plan: 

CHAIRMAN CARTER GLASS: "Why didn't the Western bankers make 
themselves heard when the American Bankers Association gave its 
unqualified and, we are assured, unanimous approval of the scheme 
proposed by the National Monetary Commission?" 

ANDREW FRAME: "I'm glad you called my attention to that. When that 
monetary bill was given to the country, it was but a few days previous to the 
meeting of the American Bankers Association in New Orleans in 1911. There 
was not one banker in a hundred who had read that bill. We had twelve 
addresses in favor of it. General Hamby of Austin, Texas, wrote a letter to 
President Watts asking for a hearing against the bill. He did not get a very 
courteous answer. I refused to vote on it, and a great many other bankers did 

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 

ANDREW FRAME: "The bill had already been prepared by Senator 
Aldrich and presented to the executive council of the American Bankers 
Association in May, 1911. As a member of that council, I received a copy the 
day before they acted upon it. When the bill came in at New Orleans, the 
bankers of the United States had not read it." 

MR. KINDRED: "Did the presiding officer simply rule out those who wanted to 
discuss it negatively?" 

ANDREW FRAME: "They would not allow anyone on the program who was 
not in favor of the bill." 

CHAIRMAN GLASS: "What significance has the fact that at the next 
annual meeting of the American Bankers Association held at Detroit in 1912, 
the Association did not reiterate its endorsement of the plan of the National 
Monetary Commission, known as the Aldrich scheme?" 

ANDREW FRAME: "It did not reiterate the endorsement for the simple fact 
that the backers of the Aldrich Plan knew that the Association would not 
endorse it. We were ready for them, but they did not bring it up." 

Andrew Frame exposed the collusion which in 1911 procured an 

endorsement of the Aldrich Plan from the American Bankers Association but 

which in 1912 did not even dare to repeat its endorsement, for fear of an 

honest and open discussion of the merits of the plan. 

Chairman Glass then called as witness one of the ten most powerful bankers 
in the United States, George Blumenthal, partner of the international 
banking house of Lazard Freres and brother-in-law of Eugene Meyer, Jr. 
Carter Glass effusively welcomed Blumenthal, stating that "Senator 
O'Gorman of New York was kind enough to suggest your name to us." A 
year later, O'Gorman prevented a Senate Committee from asking his master, 
Paul Warburg, any embarrassing questions before approving his nomination 
as the first Governor of the Federal Reserve Board. 

George Blumenthal stated, "Since 1893 my firm of Lazard Freres has been 
foremost in importations and exportations of gold and has thereby come into 
contact with everybody who had anything to do with it." 

Congressman Taylor asked, "Have you a statement there as to the part you 
have had in the importation of gold into the United States?" Taylor asked 
this because the Panic of 1893 is known to economists as a classic example of 
a money panic caused by gold movements. 

"No," replied George Blumenthal, "I have nothing at all on that, because it is 
not bearing on the question." 

A banker from Philadelphia, Leslie Shaw, dissented with other witnesses at 
these hearings, criticizing the much vaunted "decentralization" of the 
System. He said, "Under the Aldrich Plan the bankers are to have local 
associations and district associations, and when you have a local 
organization, the centered control is assured. Suppose we have a local 
association in Indianapolis; can you not name the three men who will 
dominate that association? And then can you not name the one man 

everywhere else. When you have hooked the banks together, they can have the 
biggest influence of anything in this country, with the exception of the 

To promote the Democratic currency bill, Carter Glass made public the 
sorry record of the Republican efforts of Senator Aldrich's National 
Monetary Commission. His House Report in 1913 said, "Senator MacVeagh 
fixes the cost of the National Monetary Commission to May 12, 1911 at 
$207,130. They have since spent another hundred thousand dollars of the 
taxpayer's money. The work done at such cost cannot be ignored, but, having 
examined the extensive literature published by the Commission, the Banking 
and Currency Committee finds little that bears upon the present state of the 
credit market of the United States. We object to the Aldrich Bill on the 
following points: 

Its entire lack of adequate government or public control of the banking 

mechanism it sets up. 

Its tendency to throw voting control into the hands of the large banks of the 

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 

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. 



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 

Senator LaFollette publicly charged that a money trust of fifty men 
controlled the United States. George F. Baker, partner of J.P. Morgan, on 
being queried by reporters as to the truth of the charge, replied that it was 
absolutely in error. He said that he knew from personal knowledge that not 
more than eight men ran this country. 

The Nation Magazine replied editorially to Senator LaFollette that "If there 
is a Money Trust, it will not be practical to establish that it exercises its 
influence either for good or for bad." 

Senator LaFollette remarks in his memoirs that his speech against the Money 
Trust later cost him the Presidency of the United States, just as Woodrow 
Wilson's early support of the Aldrich Plan had brought him into 
consideration for that office. 

Congress finally made a gesture to appease popular feeling by appointing a 
committee to investigate the control of money and credit in the United States. 
This was the Pujo Committee , a subcommittee of the House Banking and 
Currency Committee, which conducted the famous "Money Trust" hearings 
in 1912, under the leadership of Congressman Arsene Pujo of Louisiana, who 
was regarded as a spokesman for the oil interests. These hearings were 
deliberately dragged on for five months, and resulted in six-thousand pages 
of printed testimony in four volumes. Month after month, the bankers made 
the train trip from New York to Washington, testified before the Committee 
and returned to New York. The hearings were extremely dull, and no 
startling information turned up at these sessions. The bankers solemnly 
admitted that they 

were indeed bankers, insisted that they always operated in the public interest, and 
claimed that they were animated only by the highest ideals of public service, 
like the Congressmen before whom they were testifying. 

The paradoxical nature of the Pujo Money Trust Hearings may better be 
understood if we examine the man who single-handedly carried on these 
hearings, Samuel Untermyer. He was one of the principal contributors to 
Woodrow Wilson's Presidential campaign fund, and was one of the 
wealthiest corporation lawyers in New York. He states in his autobiography 
in "Who's Who" of 1926 that he once received a $775,000 fee for a single 
legal transaction, the successful merger of the Utah Copper Company and 
the Boston Consolidated and Nevada Company, a firm with a market value 
of one hundred million dollars. He refused to ask either Senator LaFollette 
or Congressman Lindbergh to testify in the investigation which they alone 
had forced Congress to hold. As Special Counsel for the Pujo Committee, 
Untermyer ran the hearings as a one-man operation. The Congressional 
members, including its chairman, Congressman Arsene Pujo, seemed to have 
been struck dumb from the commencement of the hearings to their 
conclusion. One of these silent servants of the public was Congressman 
James Byrnes, of South Carolina, representing Bernard Baruch's home 
district, who later achieved fame as "Baruch's man", and was placed by 
Baruch in charge of the Office of War Mobilization during the Second World 

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 occur- 

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 


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 blase 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 

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 moneys." 

Frank Vanderlip's claims were so bizarre that Senator Robert L. Owen, 
chairman of the newly formed Senate Banking and Currency Committee, 
which had been formed on March 18, 1913, accused him of openly carrying 
on a campaign of misrepresentation about the bill. The interests of the 
public, so Carter Glass claimed in a speech on September 10, 1913 to 
Congress, would be protected by an advisory council of bankers. "There can 
be nothing sinister about its transactions. Meeting with it at least four times a 
year will be a bankers' advisory council representing every regional reserve 
district in the system. How could we have exercised greater caution in 
safeguarding the public interests?" 

Glass claimed that the proposed Federal Advisory Council would force the 
Federal Reserve Board of Governors to act in the best interest of the people. 

Senator Root raised the problem of inflation, claiming that under the Federal 
Reserve Act, note circulation would always expand indefinitely, causing great 
inflation. However, the later history of the Federal Reserve 

System showed that it not only caused inflation, but that the issue of notes could 
also be restricted, causing deflation, as occurred from 1929 to 1939. 

One of the critics of the proposed "decentralized" system was a lawyer from 
Cleveland, Ohio, Alfred Crozier: Crozier was called to testify for the Senate 
Committee because he had written a provocative book in 1912, U.S. Money 
vs. Corporation Currency.* He attacked the Aldrich-Vreeland Act of 1908 as 
a Wall Street instrument, and he pointed out that when our government had 
to issue money based on privately owned securities, we were no longer a free 

Crozier testified before the Senate Committee that, "It should prohibit the 
granting or calling in 

of loans for the purpose of influencing quotation prices of securities and the 
contracting of loans 

or increasing interest rates in concert by the banks to influence public 
opinion or the action of 

any legislative body. Within recent months, William McAdoo, Secretary of 
the Treasury of the 

United States was reported in the open press as charging specifically that 
there was a conspiracy 

among certain of the large banking interests to put a contraction upon the 
currency and to raise 

interest rates for the sake of making the public force Congress into passing 
currency legislation 

desired by those interests. The so-called administration currency bill grants 
just what Wall Street 

and the big banks for twenty-five years have been striving for, that is, 

PUBLIC CONTROL OF CURRENCY. It does this as completely as the 
Aldrich Bill. Both 

measures rob the government and the people of all effective control over the 
public's money, and 

vest in the banks exclusively the dangerous power to make money among the 
people scarce or 

plenty. The Aldrich Bill puts this power in one central bank. The 
Administration Bill puts it in 

twelve regional central banks, all owned exclusively by the identical private 
interests that would 

have owned and operated the Aldrich Bank. President Garfield shortly 
before his assassination 

declared that whoever controls the supply of currency would control the 
business and activities of 

the people. Thomas Jefferson warned us a hundred years ago that a private 
central bank issuing 

the public currency was a greater menace to the liberties of the people than a 
standing army." 

It is interesting to note how many assassinations of Presidents of the United 
States follow their concern with the issuing of public currency; Lincoln with 
his Greenback, non-interest-bearing notes, and Garfield, making a 
pronouncement on currency problems just before he was assassinated. 

We now begin to understand why such a lengthy campaign of planned 
deception was necessary, from the secret conference at Jekyll Island to the 
identical "reform" plans proposed by the Democratic and 

* 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 


Paul Warburg made an appearance before the House Banking and Currency 
Committee in 1913, in which he briefly stated his background: "I am a 
member of the banking house of Kuhn, Loeb Company. I came over to this 
country in 1902, having been born and educated in the banking business in 
Hamburg, Germany, and studied banking in London and Paris, and have 
gone all around the world. In the Panic of 1907, the first suggestion I made 
was 'Let us get a national clearing house.' The Aldrich Plan contains some 
things which are simply fundamental rules of banking. Your aim in this plan 

(the Owen-Glass bill) must be the same—centralizing of reserves, mobilizing 
commercial credit, and getting an elastic note issue." 

Warburg's phrase, "mobilization of credit" was an important one, because 
the First World War was due to begin shortly, and the first task of the 
Federal Reserve System would be to finance the World War. The European 
nations were already bankrupt, because they had maintained large standing 
armies for almost fifty years, a situation created by their own central banks, 
and therefore they could not finance a war. A central bank always imposes a 
tremendous burden on the nation for "rearmament" and "defense", in order 
to create inextinguishable debt, simultaneously creating a military 
dictatorship and enslaving the people to pay the "interest" on the debt which 
the bankers have artificially created. 

In the Senate debate on the Federal Reserve Act, Senator Stone said on 
December 12, 1913, 

"The great banks for years have sought to have and control agents in the 
Treasury to serve their 

purposes. Let me quote from this World article, 'Just as soon as Mr. McAdoo 
came to 

Washington, a woman whom the National City Bank had installed in the 
Treasury Department to 

get advance information on the condition of banks, and other matters of 
interest to the big Wall 

Street group, was removed. Immediately the Secretary and the Assistant 
Secretary, John Skelton 

Williams, were criticized severely by the agents of the Wall Street group.'" 

"I myself have known more than one occasion when bankers refused credit 
to men who opposed 

their political views and purposes. When Senator Aldrich and others were 
going around the 

country exploiting this scheme, the big banks of New York and Chicago were 
engaged in 

raising a munificent fund to bolster up the Aldrich propaganda. I have been 

told by bankers of 

my own state that contributions to this exploitation fund had been demanded 
of them and that 

they had contributed because they were afraid of being blacklisted or boycotted. 
There are 

bankers of this country who are enemies of the public welfare. In the past, a 
few great banks have 

followed policies and projects that have paralyzed the industrial energies of 
the country to 

perpetuate their tremendous power over the financial and business industries 
of America." 

Carter Glass states in his autobiography that he was summoned by Woodrow 
Wilson to the White House, and that Wilson told him he intended to make 
the reserve notes obligations of the United States. Glass says, "I was for an 
instant speechless. I remonstrated. There is not any government obligation 
here, Mr. President. Wilson said he had had to compromise on this point in 
order to save the bill." 

The term "compromise" on this point came directly from Paul Warburg. 
Col. Elisha Ely Garrison, in Roosevelt,* Wilson and the Federal Reserve Law 

"In 1911, Lawrence Abbot, Mr. Roosevelt's private officer at 'The Outlook' 
handed me a copy of 

the so-called Aldrich Plan for currency reform. I said, I could not believe 
that Mr. Warburg was 

the author. This plan is nothing more than the Aldrich- Vreeland legislation 
which provided for 

currency issue against securities. Warburg knows that as well as I do. I am 
going to see him at 

once and ask him about it. All right, the truth. Yes, I wrote it, he said. Why? 
I asked. It was a 

compromise, answered Warburg." 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 will 

see it yours— but I hope you will see it mine." 

This was another famous Warburg saying when he secretly lobbied 
Congressmen to support his interest, the veiled threat that they should "see it 

his way". Those who did not found large sums contributed to their opponents at 
the next elections, and usually went down in defeat. 

Col. Garrison, an agent of Brown Brothers bankers, later Brown Brothers 
Harriman, had entree everywhere in the financial community. He writes of 
Col. House, "Col. House agreed entirely with the early writing of Mr. 
Warburg." Page 337, he quotes Col. House: 

"I am also suggesting that the Central Board be increased from four 
members to five and their 

terms lengthened from eight to ten years. This would give stability and would 
take away the 

power of a President to change the personnel of the board during a single 
term of office." 

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 Baron 

Alfred Rothschild of London." 

Colonel Edward Mandell House* was referred to by Rabbi Stephen Wise in 
his autobiography, Challenging Years as "the unofficial Secretary of State". 
House noted that he and Wilson knew that in passing the Federal Reserve 
Act, they had created an instrument more powerful than the Supreme Court. 
The Federal Reserve Board of Governors actually comprised a Supreme 
Court of Finance, and there was no appeal from any of their rulings. 

In 1911, prior to Wilson's taking office as President, House had returned to 
his home in Texas and completed a book called Philip Dru, Administrator. 
Ostensibly a novel, it was actually a detailed plan for the future government 
of the United States, "which would establish Socialism as dreamed by Karl 

Marx", according to House. This "novel" predicted the enactment of the 
graduated income tax, excess profits tax, unemployment insurance, social 
security, and a flexible currency system. In short, it was the blueprint which 
was later followed by the Woodrow Wilson and Franklin D. Roosevelt 
administrations. It was published "anonymously" by B. W. Huebsch of New 
York, and widely circulated among government officials, who were left in no 
doubt as to its authorship. George Sylvester Viereck**, who knew House for 
years, later wrote an account of the Wilson-House relationship, The 
Strangest Friendship in History.14 In 1955, WestbrookPegler, the Hearst 
columnist from 1932 to 1956, heard of the Philip Dru book and called 
Viereck to ask if he had a copy. Viereck sent Pegler his copy of the book, and 
Pegler wrote a column about it, stating: 

"One of the institutions outlined in Philip Dru is the Federal Reserve System. 
The Schiffs, the 

Warburgs, the Kahns, the Rockefellers and Morgans put their faith in 
House. The Schiff, 

Warburg, Rockefeller and Morgan interests were personally represented in 
the mysterious 

conference at Jekyll Island. Frankfurter landed on the Harvard law faculty, 
thanks to a financial 

contribution to Harvard by Felix Warburg and Paul 

* 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 many 

other proteges of Little Weenie."* 

House's openly Socialistic views were forthrightly expressed in Philip Dru, 
Administrator; on pages 57-58, House wrote: 

"In a direct and forceful manner, he pointed out that our civilization was 
fundamentally wrong, 

inasmuch, among other things, as it restricted efficiency; that if society were 
properly organized, 

there would be none who were not sufficiently clothed and fed. The result, that the 
laws, habits 

and ethical training in vogue were alike responsible for the inequalities in 
opportunity and the 

consequent wide difference between the few and the many; that the results of 
such conditions was 

to render inefficient a large part of the population, the percentage differing 
in each country in the ratio that education and enlightenment and unselfish 
laws bore to ignorance, bigotry and selfish 

laws." 15 

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, 

* 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, 

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 end.' "18 

House recorded some of his efforts on behalf of the Federal Reserve Act in 
The Intimate Papers of Col. House, 

"December 19, 1912. 1 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 

"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. 1 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 

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, 
unprecedented speed, the conference to adjust the House and Senate 
differences on the Currency Bill practically completed its labours early this 
morning. On Saturday the Conferees did little more than dispose of the 
preliminaries, leaving forty essential differences to be thrashed out Sunday. . 
. . No other legislation of importance will be taken up in either House of 
Congress this week. Members of both houses are already preparing to leave 

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 

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. 

"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 

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 

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 income. 

House's biographer, Charles Seymour, wrote: "He was wearied by the 
details of party politics 

and appointments. Even the share he had taken in constructive domestic 
legislation (the 

Federal Reserve Act, tariff revision, and the Income Tax amendment) did not 
satisfy him. From 

the beginning of 1914 he gave more and more of his time to what he regarded 
as the highest 

form of politics and that for which he was particularly suited—international 

In 1938, shortly before he died, House told Charles Seymour, "During the 
last fifteen years I have been close to the center of things, although few 
people suspect it. No important foreigner has come to the United States 
without talking to me. I was close to the movement that nominated Roosevelt. 
He has given me a free hand in advising him. All the Ambassadors have 
reported to me frequently." 

A comparative print of the Federal Reserve Act of 1913 as passed by the 
House of Representatives and amended by the Senate shows the following 
striking change: 

The Senate struck out, "To suspend the officials of Federal Reserve banks 
for cause, stated in writing with opportunity of hearing, require the removal 
of said official for incompetency, dereliction of duty, fraud or deceit, such 
removal to be subject to approval by the President of the United States." 
This was changed by the Senate to read "To suspend or remove any officer 
or director of any Federal Reserve Bank, the cause of such removal to be 
forthwith communicated in writing by the Federal Reserve Board to the 
removed officer or director and to said bank." This completely altered the 
conditions under which an officer or director might be removed. We no 
longer know what the conditions for removal are, or the cause. Apparently 

incompetency, dereliction of duty, fraud or deceit do not matter to the Federal 
Reserve Board. Also, the removed officer does not have the opportunity of 
appeal to the President. In answer to written inquiry, the Assistant Secretary 
of the Federal Reserve Board replied that only one officer has been removed 
"for cause" in the thirty-six years, the name and details of this matter being 
a "private concern" between the individual, the Reserve Bank concerned, 
and the Federal Reserve Board. 

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 


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 

"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 

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 


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 

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 


* 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 


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 

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." 



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 


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. 


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 

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 

Archibald Kains represented the San Francisco district on the Federal 
Advisory Council, although he maintained his office in New York, as 
president of the American Foreign Banking Corporation. 

After serving as a Governor of the Federal Reserve Board from 1914-1918, 
Paul Warburg did not request another term. However, he was not ready to 
sever his connection with the Federal Reserve System which he had done so 
much to set up and put into operation. J.P. Morgan obligingly gave up his 
seat on the Federal Advisory Council, and for the next ten years, Paul 
Warburg continued to represent the Federal Reserve district of New York on 
the Council. He was vice president of the council 1922-25, and president 

1926-27. Thus Warburg remained the dominant presence at Federal Reserve 
Board meetings throughout the 1920s, when the European central banks 
were planning the great contraction of credit which precipitated the Crash of 
1929 and the Great Depression. 

Although most of the Federal Advisory Council's "advice" to the Board of 
Governors has never been reported, on rare instances a few glimpses into its 

deliberations were afforded by brief items in The New York Times. On 

November 21, 1916, The Times reported that the Federal Advisory Council 

had met in Washington for its quarterly conference. 

"There was talk about absorbing Europe's extension of credit to South 
America and other 

countries. Federal Reserve officials said that to maintain a position as one of 
the world's bankers 

the United States must expect to be called upon to render a good deal of the 
service performed 

largely by England in the past, in extending short term credits necessary in 
the production and 

transportation of goods of all kinds in the world's trade, and that 
acceptances in foreign trade 

require lower discounts and the freest and most reliable gold markets." (The 
First World War 

was at its zenith in 1916.) 

In addition to his service on the Board of Governors and the Federal 
Advisory Council, Paul Warburg continued to address bankers' groups 
about the monetary policies they were expected to follow. On October 22, 
1915, he addressed the Twin City Bankers Club, St. Paul, Minnesota during 
which speech he stated, 

"It is to your interest to see the Federal Reserve banks as strong as they 
possibly can be. It 

staggers the imagination to think what the future may have in store for the 
development of 

American banking. With Europe's foremost powers limited to their own 
field, with the United 

States turned into a creditor nation for all the world, the boundaries of the 
field that lies open for 

us are determined only by our power of safe expansion. The scope of our banking 
future will 

ultimately be limited by the amount of gold that we can muster as the 
foundation of our banking 

and credit structure." 

The composition of the Federal Reserve Board of Governors and the Federal 
Reserve Advisory Council, from its initial membership to the present day, 
shows links to the Jekyll Island conference and the London banking 
community which offers incontrovertible evidence, acceptable in any court of 
law, that there was a plan to gain control of the money and credit of the 
people of the United States, and to use it for the profit of the architects. Old 
Jekyll Island hands were Frank Vanderlip, president of the National City 
Bank, which bought a large portion of the shares of the Federal Reserve 
Bank of New York in 1914; Paul Warburg of Kuhn, Loeb Company; Henry 
P. Davison, J.P. Morgan's 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. 



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... 

process is not only economically logical; it is now practically 

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. 

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: 

" Ethiopian eld as soon change his skin as a Newport merchant eld 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 

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 

* "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 

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 Bankers 

38 George Wheeler, Pierpont Morgan and Friends, the Anatomy of a Myth, 
Prentice Hall, N.J. 1973 

39 Lyndon H. LaRouche, Jr., Dope, Inc., The New Benjamin Franklin House 
Publishing Company, N.Y. 1978 

40 Dr. Carrol Quigley, Tragedy and Hope, Macmillan Co., N.Y. 

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 writes: 

"For the last one hundred and fifty years the history of the House of 
Rothschild has been to an amazing extent the backstage history of Western 
Europe."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 monopolies. 

The sire of the family, Mayer Amschel Rothschild, established a small 
business as a coin dealer in Frankfurt in 1743. Although previously known as 
Bauer*, he advertised his profession by putting up a sign depicting an eagle 
on a red shield, an adaptation of the coat of arms of the City of Frankfurt, to 
which he added five golden arrows extending from the talons, signifying his 
five sons. Because of this sign, he took the 

43 Frederick Morton, The Rothschilds, Fawcett Publishing Company, N.Y., 


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 Ball a 
in The Romance of the Rothschilds46 tells us how the London Rothschild 
established his fortune. He went to Waterloo, where the fate of Europe hung 
in the balance, saw that Napoleon was losing the battle, and rushed back to 
Brussels. At Ostend, he tried to hire a boat to England, but because of a 
raging storm, no one was willing to go out. Rothschild offered 500 francs, 
then 700, and finally 1,000 francs for a boat. One sailor said, "I will take you 
for 2000 francs; then at least my widow will have something if we are 
drowned." Despite the storm, they crossed the Channel. 

The next morning, Rothschild was at his usual post in the London Exchange. 
Everyone noticed how pale and exhausted he looked. Suddenly, he started 
selling, dumping large quantities of securities. Panic immediately swept the 
Exchange. Rothschild is selling; he knows we have lost the Battle of 
Waterloo. Rothschild and all of his known agents continued to throw 
securities onto the market. Balla says, "Nothing could arrest the disaster. At 
the same time he was quietly buying up all securities by means of secret 
agents whom no one knew. In a single day, he had gained nearly a million 
sterling, giving rise to the saying, 'The Allies won the Battle of Waterloo, but 
it was really Rothschild who won.'"* 

In The Profits of War, Richard Lewinsohn says, "Rothschild's war profits 
from the Napoleonic Wars financed their later stock speculations. Under 
Metternich, Austria after long hesitation, finally agreed to accept financial 
direction from the House of Rothschild."47 

46 Ignatius Balla, The Romance of the Rothschilds, Everleigh Nash, London, 

* The New York Times, April 1, 1915 reported that in 1914, Baron Nathan Mayer 
de Rothschild went to court to suppress Ignatius Balla's book on the grounds 
that the Waterloo story about his grandfather was untrue and libelous. The 
court ruled that the story was true, dismissed Rothschild's suit, and ordered 
him to pay all costs. The New York Times noted in this story that "The total 
Rothschild wealth has been estimated at $2 billion." A previous story in The 
New York Times (May 27, 1905) noted that Baron Alphonse de Rothschild, 
head of the French house of Rothschild, possessed $60 million in American 
securities in his fortune, although the Rothschilds reputedly were not active 
in the American field. This explains why their agent, J.P. Morgan, had only 
$19 million in securities in his estate when he died in 1913, and securities 
handled by Morgan were actually owned by his employer, Rothschild." 

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 

"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 

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 


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 

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. 

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 

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 

"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 

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 



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 

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 

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 

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 protege. 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 SchifPs 
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 



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 mining 

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 


Although his name is unknown in the United States, Emile Francqui was the 
guiding spirit behind Herbert Hoover's rise to fortune. Hamill (on page 156) 
identifies Francqui as the director of many atrocities committed against 
natives in the Congo. "For every cartridge they spent, they had to bring in a 
man's hand". Francqui's frightful record may have been the source for the 
charge later leveled against German soldiers in Belgium, that they chopped 
off the hands of women and children, a claim which proved to be groundless. 
Hamill also says that Francqui "tricked the Americans out of the Hankow- 
Canton railroad concession in China in 1901, and at the same time had 
'stood by' in case Hoover needed any further help in the 'taking' of the 
Kaiping coal mines. This is the humanitarian who had sole charge of the 
distribution of the Belgian 'relief during the World War, for which Hoover 
did the buying and shipping. Francqui was a director with Hoover, in the 
Chinese Engineering and Mining Company (the Kaiping mines), through 
which Hoover transported 200,000 Chinese slave workers to the Congo to 
work Francqui's copper mines." 

Hamill says on page 311 that "Francqui opened the offices of the Belgian 
Relief in his bank, Societe Generale, as a one-man show, with a letter of 
permission from the German Governor General von der Goltz dated October 
16, 1914. 

The New York Herald Tribune of February 18, 1930, quoted by 
Congressman Louis McFadden in the House on February 26, 1930, said, 
"One of Belgium's two directors on the Bank for International Settlements 
will be Emile Francqui of the Societe Generale, a member of both the Young 
and Dawes Plan Committees. The board of directors of the international 
bank will have no more colorful character than Emile Francqui, former 
Minister of Finance, veteran of the Congo and China ... he is rated as the 
richest man in Belgium, and among the twelve richest men in Europe." 

Despite his prominence, The New York Times Index mentions Francqui only 
a few times during two decades before his death. On October 3, 1931, The 
New York Times quoted Le Peuple of Brussels that Francqui would visit the 
United States. "As a friend of President Hoover, Monsieur Francqui will not 
fail to pay a visit to the President." 

On October 30, 1931, The New York Times reported this visit with the headline, 

"Hoover-Francqui Talk was Unofficial". "It was stated that Mr. Francqui 

spent Tuesday night as a personal guest of the President, and that they talked 

of world financial problems in general, strictly unofficial. Mr. Francqui was 

an associate of President Hoover during the latters ministrations in Belgium 

during the war. Their visit had no official significance. Mr. Francqui is a 

private citizen and not engaged in any official mission." 

No reference is made to the Hoover-Francqui business associations which 
were the subject of huge lawsuits in London. The Francqui visit probably 
involved Hoover's Moratorium on German War Debts, which stunned the 
financial world. On December 15, 1931, Chairman McFadden informed the 
House of a dispatch in the Public Ledger of Philadelphia, October 24, 1931, 
"GERMAN REVEALS HOOVER'S SECRET. The American President was 
in intimate negotiations with the German government regarding a year's 
debt holiday as early as December, 1930." McFadden continued, "Behind the 
Hoover announcement there were many months of hurried and furtive 
preparations both in Germany and in Wall Street offices of German bankers. 
Germany, like a sponge, had to be saturated with American money. Mr. 
Hoover himself had to be elected, because this scheme began before he 
became President. If the German international bankers of Wall Street—that 
is Kuhn Loeb Company, J. & W. Seligman, Paul Warburg, J. Henry 
Schroder—and their satellites had not had this job waiting to be done, 
Herbert Hoover would never have been elected President of the United 
States. The election of Mr. Hoover to the Presidency was through the 
influence of the Warburg Brothers, directors of the great bank of Kuhn Loeb 
Company, who carried the cost of his election. In exchange for this 
collaboration Mr. Hoover promised to impose the moratorium of German 
debts. Hoover sought to exempt Kreuger's loan to Germany of $125 million 
from the operation of the Hoover Moratorium. The nature of Kreuger's 
swindle was known here in January when he visited his friend, Mr. Hoover, 
in the White House." 

Not only did Hoover entertain Francqui in the White House, but also Ivar 
Kreuger, the most famous swindler of the twentieth century. 

When Francqui died on November 13, 1935, The New York Times 
memorialized him as "the copper king of the Congo . . . Mr. Francqui, last 
year having gained dictatorial powers over the belga, maintained it on the 
gold standard during a crisis. In 1891 he led an expedition into the Congo 
and gained it for King Leopold. A man of great wealth, rated among the 
twelve richest men in Europe, he secured enormous copper deposits. He was 
Minister of State in 1926 and Minister of Finance in 1934. It was his pride 
that he never accepted a centime of remuneration for his services to the 
government. While consul general at Shanghai, he secured valuable 
concessions, notably the Kaiping coal mines and the 

railway concession for the Tientsin Railroad. He was governor of the Societe 
Generale de Belgique, Lloyd Royal Beige, and regent of La Banque Nationale 

de Belgique." 

The Times does not mention Francqui's business partnerships with Hoover. 
Like Francqui, Hoover also refused remuneration for "government service", 
and as Secretary of Commerce and as President of the United States, he 
turned his salary back to the government. 

On December 13, 1932, Chairman McFadden introduced a resolution of 
impeachment against President Hoover for high crimes and misdemeanors, 
which covers many pages, including violation of contracts, unlawful 
dissipation of the financial resources of the United States, and his 
appointment of Eugene Meyer to the Federal Reserve Board. The resolution 
was tabled and never acted upon by the House. 

In criticizing Hoover's Moratorium of German War Debts, McFadden had 
referred to Hoover's "German" backers. Although all of the principals of 
"the London Connection" did originate in Germany, most of them in 
Frankfurt, at the time they sponsored Hoover's candidacy for the Presidency 
of the United States, they were operating from London, as Hoover himself 
had done for most of his career. 

Also, the Hoover Moratorium was not intended to "help" Germany, as 
Hoover had never been "pro-German". The Moratorium on Germany's war 
debts was necessary so that Germany would have funds for rearming. In 
1931, the truly forward-looking diplomats were anticipating the Second 
World War, and there could be no war without an "aggressor". 

Hoover had also carried out a number of mining promotions in various parts 
of the world as a secret agent for the Rothschilds, and had been rewarded 
with a directorship in one of the principal Rothschild enterprises, the Rio 
Tinto Mines in Spain and Bolivia. Francqui and Hoover threw themselves 
into the seemingly impossible task of provisioning Germany during the First 
World War. Their success was noted in Nordeutsche Allgemeine Zeitung, 
March 13, 1915, which noted that large quantities of food were now arriving 
from Belgium by rail. Schmoller's Yearbook for Legislation, Administration 
and Political Economy for 1916, shows that one billion pounds of meat, one 
and a half billion pounds of potatoes, one and a half billion pounds of bread, 
and one hundred twenty-one millions pounds of butter had been shipped 
from Belgium to Germany in that year. A patriotic British woman who had 
operated a small hospital in Belgium for several years, Edith Cavell, wrote to 
the Nursing Mirror in London, April 15, 1915, complaining that the "Belgian 
Relief supplies were being shipped to Germany to feed the German army. 
The Germans considered Miss Cavell to be of no importance, and paid no 
attention to her, but the British Intelligence Service in London was appalled 

by Miss Cavell's discovery, and demanded that the Germans arrest her as a spy. 

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 

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 

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 

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 

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 released, 

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. 



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 in 


*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. 

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 war." 

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 

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 

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 

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 Corporation." 

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 Setoffs 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, 

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 British."75 

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 Cecil 

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 

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 protege 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 SchifPs 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 

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 often 
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 biographies. 

@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 


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 stockholdings 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 


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 


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 

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 


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. 


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 Board. 

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 


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 Boston. 

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 


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 

Street. "81 

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 

"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, 

82 George Sylvester Viereck, The Strangest Friendship in History, Woodrow 
Wilson and Col. House, Liveright, N.Y. 1932, p. 172 

@insert 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 writes, 

"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 


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 Group. 

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 

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. 

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. 



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 

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 1920-21. 

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 

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 


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 appeared." 

Senator Robert L. Owen, Chairman of the Senate Banking and Currency 
Committee, testified at the Senate Silver Hearings in 1939 that: 

"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 

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 

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 

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 

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 



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 interest. 

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 

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 

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 nations 

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 

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 1929. 

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 

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 

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 

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 control 

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 


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 

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 interested. 

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 



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 

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 

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 

"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. 

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 country? 

E.A. GOLDENWEISER, research director for the Board: The Federal 
Reserve Board could attract gold to this country by making money rates 

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 

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 

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 


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 meeting? 

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 

GOVERNOR YOUNG: No, it was the League of Nations who called them 

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 

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 

"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 

speculators should cease. It must be administered for the benefit of farmers, 

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 protege, 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 

"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 Banks.' 

"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. 



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 

"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 issue. 

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 


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 that: 

"The question has been raised, not only in this country, but in several 

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 

France and England, for instance, should be recorded in each country, but 

comparison shows an average yearly discrepancy of fifty million francs for 

and eighty-five million francs for England. These enormous discrepancies are 

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 

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 

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 

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 

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 pickup "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 holdings. 

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, 

"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 present." 

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. 



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 


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 

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 


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 

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 Piatt, 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. Piatt 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 records." 

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 Piatt, said: 

"We pay Mr. Piatt $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 Representatives: 

"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 Conspiracy": 

"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, Pennsylvania. 

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 York. 

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 Cross. 

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 


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? 

LEON HENDERSON: I think so. 

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, 

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 

"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 

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 

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 often 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 


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 wishes. 

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 1934: 

"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, 

"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 1939: 

"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, 


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 money. 

In 1935, Governor Eccles stated before the House Committee: 

"The Federal Reserve Board has the power of open market operations. 

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 

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 

"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 money". 

"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, 1941: 

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 

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 

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 

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. 



Congressional Expose 

"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. 

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 Course". 

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 

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 


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 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 


Thus we have money growth rates gyrating from 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 


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 

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 Congress, 2d session, August, 1976, 
BANKING 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, 

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 

representation on the boards, and often even these become merged through 

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 

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 banks. 

In Summary, the Federal Reserve directors are apparently representatives of 
a small elite group which dominates much of the economic life of this 


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 



Bankers Trust Company 



Bank of New York 



Chase Manhattan Bank 



Chemical Bank 






European American Bank & Trust 



J. Henry Schroder Bank & Trust 



Manufacturers Hanover 



Morgan Guaranty Trust 



National Bank of North America 



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] 



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. 

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 Rockefeller. 


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 profit. 

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 protege 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 protege 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 


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. 


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. 


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 

FRANK VANDERLIP (1864-1937) 

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 

PAUL VOLCKER (1927- ) 

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 

Reserve Board, 1930 

Senate Hearings on Thomas B. McCabe to be a Governor of the Federal 

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, 

A History of Monetary Crimes, Alexander Del Mar, the Del Mar Society, 

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, 

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 

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 

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, 

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., 

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 

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 

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., 

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 

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 

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 

Currency Committee, 1975. 



A Abbot, Lawrence~22 Adams, John Quincy~48 
Aldrich, Nelson-1, 2, 3, 6, 7, 8, 9, 10, 11, 19, 21, 
22, 30, 33, 36 Aldrich-Vreeland Emergency 
Currency Bill- 12, 19, 20, 22 Allen, W.H.-33 
American Acceptance Council~128 American 
Bankers Association~13, 127 American Relief 
Administration— 74, 78 Andrew, A. Piatt~l 
Astor, John Jacob— 64, 65 Auchincloss, Gordon— 
107 B Bagdikian, Ben H.--61 Baker, George F.~ 
16, 42, 43, 47, 66, 67 Baker, George F., Jr.-66 
Bank of England-32, 42, 51, 52, 58, 59, 68, 69, 
80, 123, 129, 131, 133, 142, 146, 180 Bank of 
France-32, 135 Banking Act of 1935-29, 159 
Barnes, Julius— 73, 74 Barron, Clarence W.~ 30 
Baruch, Bernard-17, 26, 28, 74, 86, 89, 90, 94, 
99, 109, 111, 112, 139, 147, 151 Bechtel 
Corporation— 77, 79 Belgian Relief Commission— 
69, 70, 72, 73, 74, 78, 83 Belmont, August-53 
Biddle, Nicholas-6, 50 Bilderbergers-54, 172 
Bleichroder, Samuel— 59 Blumenthal, George— 14 

Brandeis, Justice Louis— 87, 109 Bristow, 
Senator— 38 Brookhart, Senator— 117 Brown, 
Alexander— 49 Alex Brown & Son— 49 Brown 
Brothers Bankers— 22, 49, 131 Brown Brothers 
Harriman-22, 48, 49, 61, 68, 79, 131, 171, 172, 
175 Brown Shipley & Company— 49, 68 Bryan, 
William Jennings-26, 29, 82, 83, 118 Bull Moose 
Party— 18 Bush, George— 49 Bush, Prescott— 49 
Byrnes, James— 17 C Canaris, Admiral— 62 Carr, 
William Guy-53, 55 Carter, Jimmy-171, 172, 
173 Cassel, Ernest-59 Cavell, Edith-72, 73 
Central Bank— 5 Chamberlain, Neville— 78 
Churchill, Winston-78, 123 Clark, Champ-29 
Clay, John— 182 Clews, Henry— 50 Cooper, Kent- 
-60 Council on Foreign Relations— 35, 54, 81, 172 
Crissinger, D.R.— 141 Cromwell, Oliver— 58 
Crozier, Alfred-20 D Dabney, Charles H.--50, 51 
Davison, Daniel— 63 

Davison, Henry P.--1, 2, 4, 33, 43, 44, 66, 103 
Debs, Eugene-105 Delano, F.A.--36, 114 Delano, 
Warren-36 Dodge, Cleveland H.--103, 105 
Drexel, Anthony— 53 Drexel & Company— 48, 54 
Dulles, Allen— 62, 75, 76 Dulles, John Foster— 75, 
81 Duncan Sherman Company— 50 E Eccles, 
Marriner-122, 126, 159, 162, 163, 164, 167, 168, 
169 Eisenhower, Dwight D.--75, 81 Ellery, 
William-48 Emden, Paul-36, 60 F Federal 
Advisory Council-6, 19, 40, 41, 42, 43, 44, 45, 
113, 116, 117, 119, 128, 129, 144 Federal Reserve 
Act-7, 9, 15, 16, 18, 19, 21, 23, 26, 27, 28, 29, 30, 
31, 33, 34, 35, 40, 45, 64, 82, 125, 126, 139, 162, 
168, 171 Federal Reserve Banks-6, 8, 34, 35, 40, 

41, 44, 83 Federal Reserve Board of Governors— 
6, 14, 19, 23, 29, 31, 32, 34, 35, 36, 37, 38, 39, 41, 

42, 44, 45, 64, 78, 86, 87, 95, 112, 119, 124, 125, 
126 128, 129, 133, 139, 140, 143, 144, 145, 146, 
149, 154, 157, 159, 162, 163, 165, 169, 171, 172, 
180 Federal Reserve System-5, 6, 7, 8, 19, 21, 29, 
30, 32, 35, 40, 41, 42, 43, 63, 67, 82, 84, 113, 114, 
115, 118, 119, 120, 121, 122, 127, 128, 132, 134, 
139, 140, 141, 143, 146, 158, 162, 163, 164, 165, 
166, 168, 169, 170, 176, 180 

Ferdinand, Archduke— 69 First Name Club— 3, 8, 
33 First National Bank of N.Y.-l, 34, 41, 42, 44, 
47, 64, 66, 67 Forbes, B.C.--2, 7 Forbes, Malcom- 
-2 Forgan, James B.— 41, 42 Frame, Andrew— 13, 
14 Francqui, Emile-69, 70, 71, 72 G Garfield, 
James A.--20 Garrison, Col. Ely-22, 23, 120 
Gates, Thomas S.--48 Glass, Carter-13, 14, 19, 
21, 22, 29, 30, 34, 40, 45, 114, 116, 117, 138, 160 
Glass-Steagall Banking Act— 159 Goldenweiser, 
Emanuel— 118, 136, 146, 148 Graham, Katherine- 
-97 Gray, Prentiss~73, 78 Guggenheim~90 H 
Hamill, John— 69, 70 Hamilton, Alexander— 5 
Hamlin, Charles S.--36, 129, 138, 147 Hanauer, 
Jerome J. -87, 95, 99 Harding, W.P.G.-36, 103, 
121, 157 Harriman, E.H.--67, 90 Harriman, 
Mary— 67 Harrison, George L.— 132 Herrick, 
Myron T.--117 Hess, Rudolf~78 Hill, James J.~ 
47 Hiss, Alger-24, 83 Hiss, Donald-24 Hitler, 
Adolf-75, 76, 77, 78, 79, 81 Hoover, Herbert H.~ 
69, 70, 71, 72, 73, 74, 78, 139, 149, 150, 151, 158 
House, Col. Edward Mandel~21, 23, 24, 25, 26, 
27, 29, 30, 31, 36, 79, 88, 107, 109, 111 Hull, 


I International Acceptance Bank— 128, 144 
Insull, Samuel--148 J Jackson, Andrew~5, 50 
Jaffray, C.T.--43 James, F. Cyril~42 Jefferson, 
Thomas-5, 7, 35 Jekyll Island-2, 3, 4, 5, 8, 9, 10, 
11, 12, 20, 29, 33, 41, 44, 171 Jekyll Island Club- 
3 Jones, Thomas D.— 36, 38, 39 Josephson, 
Matthew-60, 67 Juillard, A.D.-67 K Kahn, 
Otto-19, 38, 66, 107 Kains, Archibald-43 
Kaiping Coal Mines~70 Kemmerer, E.W.--85, 
124 Kreuger, Ivar-71, 148, 149 Kuhn, Loeb 
Company-1, 17, 18, 21, 33, 35, 36, 37, 38, 39, 41, 
44, 47, 48, 61, 66, 67, 71, 72, 74, 81, 83, 85, 86, 87, 
88, 89, 99, 101, 103, 119, 127, 128, 146, 174, 175 L 
LaFollette, Senator Robert M.--16, 17, 18 
Lamont, T.W.--2, 109, 111, 128 Laughlin, J. 
Lawrence~10, 11, 33 Lazard Freres— 14, 34, 53, 
61, 68, 74, 76, 94, 99, 152 League of Nations-136, 
143, 170 Leguia, Juan~155 Lehman, Herbert— 
101 Lehman Brothers~35, 66, 101, 175 Lincoln, 
Abraham— 20, 65 Lindbergh, Charles A., Sr.— 11, 
16, 17, 18, 28, 112 Loeb, Solomon-33 Lovett, 
Robert~48 Lundberg, Ferdinand— 32 

Manati Sugar Corporation—73, 80, 81 Marbury, 
Bessie— 155 Markoe, James —131 Marshall, 
Louis-29 Martin, William McChesney-163 
McAdoo, William-19, 21, 26, 29, 32, 39, 99, 101, 
114 McFadden, Louis-71, 72, 74, 75, 95, 127, 
128, 133, 134, 135, 136, 137, 150, 151, 152, 153, 
154 Mcintosh, J.W.-103 Mellon, Andrew-142, 
147, 150 Meyer, Eugene-14, 17, 34, 61, 72, 74, 
75, 94, 95, 99, 118, 122, 150, 151, 152, 153, 159, 
171 Miller, Adolph C.--36, 129, 133, 134, 135, 
136, 157, 166 Minsky-67 Money Trust-11, 12, 
16 Montague, Samuel & Co.-38, 68 Moody, 
John—47, 52 Morgan Grenfell Company— 63, 68 
Morgan Harjes Company—54 Morgan, J.P.— 1, 2, 
3, 10, 16, 17, 18, 26, 32, 35, 41, 42, 43, 44, 47, 48, 
49, 50, 51, 52, 53, 54, 66, 67, 75, 83, 101, 129, 146, 
150, 160, 174, 176 Morgan, J.P. Company-1, 33, 
35, 41, 47, 48, 53, 66, 123, 148, 174 Morgan, 
Joseph— 51 Morgan, Junius S.— 50, 51, 53, 65, 66 
Morton, Frederic— 56 Morton, Levi P.— 67 
Mountbatten, Philip~60 N Napoleon de 
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 National Reserve Plan— 7 
New York Times-27, 28, 29, 33, 35, 37, 40, 44, 
61, 71, 74, 75, 80, 112, 119, 126, 144, 166, 171 
Norman, Lord Montagu-49, 76, 77, 123, 129, 
131, 132, 133, 142, 150 Norten, Charles D.--1, 33 
O O'Gorman, Senator— 14, 38 Owen, Robert L.— 
17, 19, 29, 38, 39, 40, 41, 116, 119, 138, 157, 161 
Owen-Glass Bill— 21 P Page, Walter Hines-83 
Panic of 1837-5, 50, 51, 65 Panic of 1857-51, 52, 
65 Panic of 1907-1, 2, 5, 10, 12, 21 Paterson, 
William-58, 59 Patman, Wright-34, 164, 165, 
167 Peabody, George-49, 50, 51, 52, 54, 65, 171 
Peabody, Riggs & Co.— 49 Pegler, Westbrook— 23 
Pemberton, Robert Leigh— 80 Pound, Ezra— 58 
Pressman, Lee— 24 Princeps, Gavrel— 69 Pujo, 
Arsene— 16 Pujo Committee— 16, 17, 18, 149 
Pyne, Moses Taylor— 66 Pyne, Percy— 65, 66 Q 
Quigley, Dr. Carrol— 53, 131 R Reagan, Ronald— 
77, 79, 80, 173, 175 Reichsbank-12, 132 Rhodes, 

Richardson, Sir Gordon— 80 Rickard, Edgar— 74 
Rionda, M.E.-73 Rockefeller, David-171, 172, 
176 Rockefeller, John D.--47, 65 Rockefeller, 
William-47, 65 Rockefeller, William, Jr.-65 
Roosa, Robert— 54, 171, 172 Roosevelt, Franklin 
Delano-23, 24, 30, 31, 84, 129, 137, 139, 145, 151, 
155, 156, 158, 159, 162, 169, 170 Roosevelt, 
Theodore-1, 18, 19, 22, 38, 82 Rosebury, Lord- 
53 Rothschild, Baron Alfred-23, 60 Rothschild, 
House of-17, 47, 48, 50, 52, 53, 54, 60 Rothschild, 
James-5, 50, 57, 59, 61, 66, 109 Rothschild, 
Leopold— 60 Rothschild, Mayer Amschel— 55, 56 
Rothschild, N.M.-48, 49, 51, 53, 57, 58, 59, 68, 
171 Round Table-53, 54, 62 Rowe, W.S.-43, 70 
Rue, Levi L.~ 42 Ryan, John Barry— 66 Ryan, 
Thomas Fortune— 66 Ryan, Virginia Fortune— 66 
S Schiff, Jacob-17, 19, 26, 29, 42, 47, 66, 67, 86, 
87, 90, 149 Schiff, John-66 Schiff, Ludwig-87 
Schiff, Philip-87 Schoellkopf Family-34 
Scholey, David— 182 Schroder, Baron 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 Lowery~78 Smith, Rixey~29, 
112 Sontag, Susan-61 Sprague, O.M.W.-ll, 
114, 161 Spring-Rice, Sir Cecil-89 St. George, 
George F.--66 St. George, Katherine~66 Sterling, 
John W.--66 Stillman, Don Carlos~65 Stillman, 
James— 8, 47, 65, 66 Stimson, Henry L.--161 
Stone, Senator-21 Strauss, Albert-112, 114, 122, 
140, 141, 157 Strong, Benjamin-1, 3, 32, 33, 44, 
118, 123, 129, 131, 132, 133, 137, 138 Sugar 
Equalization Board~74 Swinney, E.F.--43 T 
Taft, William Howard-18, 19, 38, 82 Taylor, 
Congressman~14 Taylor, H.A.C.— 66 Taylor, 
Moses-64, 65, 66 Tavistock Institute-80, 184, 
185 Thalmman, Ladenburg~17 Tiarks, Frank 
Cyril-69, 73, 76, 77 Tientsin Railroad-72 
Tobacco Trust— 89 Trilateral Commission— 35, 
54, 172 Tugwell, Rexford Guy-162 U 
Untermeyer, Samuel—17, 18 U.S. Food 
Administration—73, 74, 78, 87 V Vanderlip, 
Frank-1, 2, 3, 8, 9, 19, 33, 44, 161 

Vickers Sons & Maxim—60 Viereck, George— 23, 

25, 27 Volcker, Paul-34, 171, 172, 173, 183 
Vreeland, Edward—12 W War Finance 
Corporation-24, 86, 94, 95, 97, 99, 151, 153 War 
Industries Board-74, 86, 90, 151 Warburg, 
Felix-38, 86, 87, 128, 129 Warburg, James Paul- 
128, 129, 156, 161 Warburg, M.M. Company-12, 
17, 34, 54 Warburg, Max-84, 86, 87, 88, 111 
Warburg, Paul Moritz-1, 2, 3, 4, 5, 6, 7, 8, 9, 12, 
14, 19, 21, 22, 23, 24, 26, 28, 29, 30, 33, 34, 36, 37, 
38, 40, 41, 42, 43, 44, 48, 66, 71, 74, 84, 86, 87, 88, 
89, 99, 111, 112, 115, 117, 119, 120, 122, 126, 127, 
128, 138, 144, 148, 156, 157, 164 Weinberger, 
Caspar~79 Wetmore, Frank 0.--42 White, 
Harry Dexter— 24 Williams, John Skelton— 21, 32, 
39, 101, 103, 140 Willis, H. Parker-132, 140, 142 
Wilson, Woodrow-10, 17, 18, 19, 22, 23, 24, 25, 

26, 28, 29, 30, 32, 36, 38, 39, 41, 82, 83, 84, 85, 86, 
87, 88, 89, 90, 99, 101, 103, 105, 107, 109, 111, 
112, 117, 137, 139, 140, 141, 156 Wing, 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 

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."