THE CREATURE FROM JEKYLL ISLAND
A Second Look at the Federal Reserve
by G. Edward Griffin
Section III
A Second Look at the Federal Reserve
by G. Edward Griffin
Section III
THE NEW
ALCHEMY
The ancient alchemists sought in vain to convert
lead into gold. Modern alchemists have
succeeded in that quest. The lead bullets of war
have yielded an endless source of gold for those
magicians who control the Mandrake
Mechanism. The startling fact emerges that,
without the ability to create fiat money, most
modern wars simply would not have occurred.
As long as the Mechanism is allowed to function,
future wars are inevitable. This is the story of how
that came to pass.
Chapter Eleven
THE ROTHSCHILD
FORMULA
The rise of the House of Rothschild in Europe; the
tradition among financiers of profiting from both
sides of armed conflict; the formula by which war
is converted into debt and debt converted back
into war.
So far we have adhered closely to the subject of money and the
history of its manipulation by political and monetary scientists.
Now we are going to take a short detour along a parallel path and
view some of the same historical scenery from a different perspective.
As we progress, it may seem that we have lost our way, and
you may wonder what connection any of this can possibly have
with the Federal Reserve System. Please be assured, however, it has
everything to do with it, and, when we finally return to that topic,
the connection will have become painfully clear.
THE PROFITS OF WAR
The focus of this chapter is on the profits of war and, more
specifically, the tendency of those who reap those profits to
manipulate governments into military conflicts, not for national or
patriotic reasons, but for private gain. The mechanism by which
this was accomplished in the past was more complex than simply
lending money to warring governments and then collecting interest,
although that was part of it. The real payoff has always been in
the form of political favoritism in the market place. Writing in the
year 1937, French historian Richard Lewinsohn explains:
Although often called bankers, those who financed wars in the
pre-capitalist period ... were not bankers in the modern sense of the
word. Unlike modern bankers who operate with money deposited
with them by their clients [or, in more recent times, created out of
nothing by a central bank—E.G.], they generally worked with the
fortune which they themselves had amassed or inherited, and which they lent at a high rate of interest. Thus those who risked the financing
of a war were for the most part already very rich, and this was the case
down to the seventeenth century.
When they agreed to finance a war, these rich lenders did not, however, always attach great importance to the rate of interest In this respect they often showed the greatest compliance to their august clients. But in return they secured for themselves privileges which could be turned into industrial or commercial profit, such as mining concessions, monopolies of sale or importation etc. Sometimes even they were given the right to appropriate certain taxes as a guarantee of their loans. So though the loan itself carried a very real risk and often did not bring in much interest, the indirect profits were very considerable, and the lenders' leniency well rewarded.1[And thus eventually control of the government by corporate infiltration D.C]
1. Richard Lewinsohn, The Profits of War through the Ages (New York: E.P. Dutton, 1937), pp. 55-56.
No discussion of banking as a mechanism for financing wars
would be complete without turning eventually to the name
Rothschild. It was Mayer Amschel Rothschild who is quoted as
saying: "Let me issue and control a nation's money and I care not
who writes the laws."2 Biographer Frederic Morton concluded that
the Rothschild dynasty had: "...conquered the world more thoroughly,
more cunningly, and much more lastingly than all the Caesars before or all the Hitlers after them."3 The dynasty was
begun in Frankfurt, Germany, in the middle of the eighteenth
century by Mayer Amschel Bauer, the son of a goldsmith. Mayer
became a clerk in the Oppenheimer Bank in Hanover and was
eventually promoted to junior partner. After his father's death, he
returned to his home in Frankfurt to continue the family business.
Over the door hung a red shield with an eagle as a sign to identify
the establishment. The German words for red shield are rothschild,
so he changed his name from Bauer to Rothschild and added five
gold arrows held in the talons of the eagle to represent his five sons.
2. Quoted by Senator Robert L. Owen, former Chairman of the Senate Committee on Banking and Currency and one of the sponsors of the Federal Reserve Act, National Economy and the Banking System, (Washington, D.C.: U.S. Govern ment Printing Office, 1939), p. 99. This quotation could not be verified in a primary reference work. However, when one considers the life and accomplishments of the elder Rothschild, there can be little doubt that this sentiment was, in fact, his outlook and guiding principle.
3. Frederic Morton, The Rothschilds: A Family Portrait (New York: Atheneum, 1962), p. 14.
The Rothschild fortune began when Mayer adopted the practice of fractional-reserve banking. As we have seen, he was not alone in this, but the House of Rothschild greatly surpassed the competition. That was due to his sharp business acumen and also because of his five most unusual sons, all of whom became financial power centers of their own. As they matured and learned the magic of converting debt into money, they moved beyond the confines of Frankfurt and established additional operations in the financial centers, not only of Europe, but of much of the civilized world.
Throughout the first half of the nineteenth century, the brothers conducted important transactions on behalf of the governments of England, France, Prussia, Austria, Belgium, Spain, Naples, Portugal, Brazil, various German states, and other smaller countries. They were the personal bankers of many of the crowned heads of Europe. They made large investments, through agents, in markets as distant as the United States, India, Cuba, and Australia. They were financiers to Cecil Rhodes, making it possible for him to establish a monopoly over the diamond fields of South Africa. They are still connected with the de Beers.1
1 Morton, pp. 145, 219.
Biographer Derek Wilson writes:
Those who lampooned or vilified the Rothschilds for their "sinister" influence had a considerable amount of justification for their anger and anxiety. The banking community had always constituted a "fifth estate" whose members were able, by their control of royal purse strings, to affect important events. But the house of Rothschild was immensely more powerful than any financial empire that had ever preceded it. It commanded vast wealth. It was international. It was independent. Royal governments were nervous of it because they could not control it. Popular movements hated it because it was not answerable to the people. Constitutionalists resented it because its influence was exercised behind the scenes—secretly.2
2 Derek Wilson, Rothschild: The Wealth and Power of A Dynasty (New York: Charles Scribner's Sons, 1988), pp. 79, 98-99.
Secrecy, of course, is essential for the success of a cabal, and the Rothschilds perfected the art. By remaining behind the scenes, they were able to avoid the brunt of public anger which was directed, instead, at the political figures which they largely controlled. This is a technique which has been practiced by financial manipulators ever since, and it is fully utilized by those who operate the Federal Reserve System today. Wilson continues:
Clandestinity was and remained a feature of Rothschild political activity. Seldom were they to be seen engaging in open public debate on important issues. Never did they seek government office. Even when, in later years, some of them entered parliament, they did not feature prominently in the assembly chambers of London, Paris or Berlin. Yet all the while they were helping to shape the major events of the day: by granting or withholding funds; by providing statesmen with an official diplomatic service; by influencing appointments to high office; and by an almost daily intercourse with the great decision makers.1
1. Derek Wilson, p. 99.
2. Morton, pp. 40-41.
It is generally true that, one man's loss is another man's gain. And even the friendliest of biographers admit that, for more than two centuries, the House of Rothschild profited handsomely from wars and economic collapses, the very occasions on which others sustained the greatest losses.
It is generally true that, one man's loss is another man's gain. And even the friendliest of biographers admit that, for more than two centuries, the House of Rothschild profited handsomely from wars and economic collapses, the very occasions on which others sustained the greatest losses.
It was ordained by him that money should not be exported from France on any pretext whatever except with the consent of the Government, and that in no circumstance should loans be employed to meet current expenditure whether civil or military.... "One has only to consider," Napoleon remarked, "what loans can lead to in order to realize their danger. Therefore, I would never have anything to do with them and have always striven against them."...
The object was to withhold from finance the power to embarrass the Government as it had embarrassed the Government of Louis XVI. When a Government, Bonaparte declared, is dependent for money upon bankers, they and not the leaders of that Government control the situation, since "the hand that gives is above the hand that takes."...
"Money," he declared, "has no motherland; financiers are without patriotism and without decency: their sole object is gain."1
1. R. McNair Wilson, Monarchy or Money Power (London: Eyre and Spottiswoode, Ltd., 1933), pp. 68,72.
One of Napoleon's first blows against the bankers was to establish an independent Bank of France with himself as president. But even this bank was not trusted, and government funds were never placed into it. It was his refusal to borrow, however, that caused the most concern among the financiers. Actually, to them this was a mixture of both bad and good news. The bad news was that they were denied the benefit of royalty payments on fractional money. The good news was that, without resorting to debt, they were confident Napoleon could not militarily defend himself. Thus, he easily could be toppled and replaced by Louis XVI of the old monarchic dynasty who was receptive to banker influence. Wilson continues:
They had good hope of compassing his downfall. None believed that he could finance war on a great scale now that the resource of paper money had been denied him by the destruction of the Assignat.2 Where would he obtain the indispensable gold and silver to feed and equip a great army? Pitt [the Prime Minister of England] counted already on a coalition of England, Austria, Prussia, Russia, Spain, Sweden, and numerous small states. Some 600,000 men would be put into the field. All the resources of England's wealth—that is to say, of the world's wealth—would be placed at the disposal of this overwhelming force. Could the Corsican muster 200,000? Could he arm them? Could he feed them? If the lead bullets did not destroy him, the gold bullets would soon make an end. He would be forced, like his neighbors, to come, hat in hand, for loans and, like them, to accept the banker's terms....
2. The Assignat was pure fiat money which rapidly became totally worthless in commerce and which all but destroyed the French economy.
He could not put his hands on £2,000,000, so empty was the Treasury and so depleted the nation's stock of metallic money. London waited with interest to see how the puzzle would be solved. 1
1. R. McNair Wilson, pp. 71-72.
Napoleon solved the puzzle quite simply by selling off some real estate. Those crazy Americans gave him £3,000,000 for a vast swamp called Louisiana.
The negotiations were handled by the banker, Pierre-Cesar Labouchere, who was sent by the Dutch, and the English banker, Sir Francis Baring who was Labouchere's father-in-law. Although this was an attractive proposal to the bankers, at least on a short-term basis, it was still against their nature to forego the immense profits of war and mercantilism. They revised the proposal, therefore, to include a plan whereby both England and France would combine forces to destroy the newly independent United States and bring at least half of it—the industrial half—back under the domination of England. The incredible plan, conceived by the French banker, Ouvard, called for military invasion and conquest followed by division of the spoils. England would receive the northern states, united with Canada, while the southern states would fall to France. Napoleon was to be tempted by offering him the awesome title of "King of America." McNair Wilson tells us:
Labouchere wrote to Baring on March 21, and enclosed a note for [British Foreign Secretary] Wellesley dictated by Ouvrard which ran:
"From a conqueror he (Napoleon) is becoming a preserver; the first result of his marriage with Marie Louise will be that he will make an offer of peace to England. It is to this nation's (i.e., England's) interest to make peace, for it has the command of the sea; on the contrary, it is really in the interest of France to continue war, which allows her to expand indefinitely and make a fresh fleet, which cannot be done once peace is established. Why does not the English Cabinet make a proposal to France to destroy the United States of America, and by making them again dependent on England, persuade Napoleon to lend his aid to destroy the life-work of Louis XVI?... It is to her (England's) interest to conclude peace and to flatter Napoleon's vanity by recognizing his work and his imperial title."...
The Cabinet discussed the proposals and approved them. Wellesley at once hurried to Baring's house to give him the good news.... The Dutch would be able to pay and would be compelled to pay in gold.
Unhappily Napoleon found out what was afoot and took somewhat strong objections to the plan of a joint attack on the United States. He arrested Ouvrard, dismissed and exiled Fouche, and published the whole story, to the grave distress of Wellesley and Baring. 1
1. R. McNair Wilson, pp. 81-82.
It must not be concluded from this that Napoleon was a paragon of virtue or a champion of honest money. His objection to the bankers was that their monetary power was able to threaten the sovereignty of his own political power. He allowed them a free hand while they served the purpose of the state. Then, when the need for military financing subsided, he would condemn them for making "unholy profits" and simply take it from them in the name of the people. If the bankers protested, they were sent to prison.
And so the battle lines were drawn. Napoleon had to be destroyed at all costs. To make this possible, the Bank of England created vast new amounts of fiat money to "lend" to the government so it could finance an overpowering army. A steady stream of gold flowed out of the country to finance the armies of Russia, Prussia, and Austria. The economy staggered once again under the load of war debt, and the little people paid the bill with hardly a grumble because they hadn't the slightest knowledge it was being charged to their account. Wilson concludes the story:
The bankers won. Louis XVIII was restored by British arms and British diplomacy to the throne of his ancestors. Loans were placed at his disposal, though Napoleon had left a France which enjoyed a credit balance.
A year later the man whom every King and every banker in Europe called "usurper" won back his throne with 800 men and without the firing of a single shot. On this occasion he had no option but to raise a loan for the defense of France. The City of London [banking district] accommodated him with £5,000,000. With this sum he equipped the army which Wellington defeated at Waterloo. 1
1. R. McNair Wilson, p. 83
It was not at all certain that Wellington would be able to defeat Napoleon in the coming battle, and the Duke was hard pressed to convince bankers and merchants in Portugal and Spain to accept his written promises-to-pay, even though they were officially guaranteed by the British government. These notes were deeply discounted, and Wellington was desperate for gold coin. It was at this point that Nathan Rothschild offered the services of himself and his brothers. With an efficient smuggling apparatus already functioning throughout Europe, he was able to offer Wellington much better terms while still making a magnificent profit. But, to accomplish this, the gold had to pass right under Napoleon's nose. Frederic Morton describes the scene:
There was only one way to route the cash: through the very France England' s army was fighting. Of course , the Rothschild blockade-running machine already had superb cogs whirring all over Germany, Scandinavia and England, even in Spain and Southern France. But a very foxy new wheel was needed in Napoleon's capital itself. Enter Jacob—henceforth called James—the youngest of Mayer's sons.2
2. Morton, p. 46.
James was only nineteen years old but was well trained by his father in the art of deception. He arrived in Paris with a dual mission. First, he was to provide the French authorities with a false report about the British gold movement, with just enough truth in it to sound convincing. He presented the government with falsified letters indicating that the English were desperate to halt the flow of their gold into France. The ploy paid off when the French authorities then actually encouraged the financial community to accept British gold and to convert it into commercially sound banknotes. Second, James was to serve as a vital link in a financial chain stretching between London and the Pyrenees. He was to coordinate the receipt of the gold into France, the conversion of that gold into Spanish banknotes, and the movement of those notes out of the country on their way to Wellington. All of this he did with amazing dexterity, especially considering his youth. Morton concludes:
In the space of a few hundred hours Mayer's youngest had not only gotten the English gold rolling through France, but conjured a fiscal mirage that took in Napoleon himself. A teen-age Rothschild tricked the imperial government into sanctioning the very process that helped to ruin it....
The family machine began to hum. Nathan sent big shipments of British guineas, Portuguese gold ounces, French napoleons d'or (often freshly minted in London) across the Channel. From the coast James saw them to Paris and secretly transmuted the metal into bills on certain Spanish bankers. South of the capital, Kalmann [another of Mayer's sons] materialized, took over the bills, blurred into a thousand shadowed canyons along the Pyrenees—and reappeared, with Wellington's receipts in hand. Salomon [another son] was everywhere, troubleshooting, making sure the transit points were diffuse and obscure enough not to disturb either the French delusion or the British guinea rate. Amschel stayed in Frankfurt and helped father Mayer to staff headquarters.
The French did catch a few whiffs of the truth. Sometimes the suspicious could be prosperously purged of their suspicion. The police chief of Calais, for example, suddenly was able to live in such distracting luxury that he found it difficult to patrol the shoreline thoroughly....
While Napoleon struggled his might away in the Russian Winter, there passed through France itself a gold vein to the army staving in the Empire's back door.1
1. Morton, p. 47.
At a dinner party in later years, Nathan casually summed up the episode as though it were merely a good piece of routine business. He said:
The East India Company had £800,000 worth of gold to sell. I went to the sale and bought it all. I knew the Duke of Wellington must have it. The government sent for me and said they must have the gold. I sold the gold to them, but they didn't know how to get it to the Duke in Portugal. I undertook all that and sent it through France. It was the best business I have ever done. 1
1. Morton, p. 45.
It was well known that the Rothschilds had developed a private courier service that was used, not only to transport gold and other tangible cargo, but to rapidly move information that could be useful in making investment decisions. It was expected, therefore, that Nathan in London would be the first to know the name of the victor after the cannon smoke had cleared from the battlefield. And they were not to be disappointed. The first news of Wellington's victory arrived in Brussels around midnight on June 18, 1815, where a Rothschild agent named Rothworth was waiting in readiness. He immediately mounted a fresh horse and set off for the port of Ostend where a boat was standing by to speed him across the channel to London. In the early hours of June 20, the exhausted messenger was pounding on Nathan's door, a full twenty-four hours before Wellington's own courier, Major Henry Percy, arrived.
At least one friendly biographer claims that Nathan's first act was to deliver the news to the Prime Minister, but that government officials were hesitant at first to believe it, because it ran contrary to reports they had received previously telling of serious British setbacks. At any rate, there is no doubt that Nathan's second act of the morning was to set off for the stock exchange to take up a position at his usual pillar.
All eyes were upon him as he slumped dejectedly, staring at the floor. Then, he raised his gaze and, with pained expression, began to sell. The whisper went through the crowded room, "Nathan is selling?" "Nathan is selling!" "Wellington must have lost." "Our government bonds will never be repaid." "Sell them now. Sell. Sell!"
Prices tumbled, and Nathan sold again. Prices plummeted, and still Nathan sold. Finally, prices collapsed altogether and, in one quick move, Nathan reversed his call and purchased the entire market in government bonds. In a matter of just a few hours, he had acquired the dominant holding of England's entire debt at but a tiny fraction of its worth.1
1.The New York Times, in its April 1, 1915, edition, reported that Baron Nathan Mayer de Rothschild had attempted to secure a court order to suppress a book written by Ignatious Balla entitled The Romance of the Rothschilds on the grounds that the Waterloo story about his grandfather was untrue and libelous. The court ruled that the story was true, dismissed the suit, and ordered Rothschild to pay all court costs.
Europe did require money, and Sidonia was ready to lend it to Europe. France wanted some; Austria more; Prussia a little; Russia a few millions. Sidonia could furnish them all....
It is not difficult to conceive that, after having pursued the career we have intimated for about ten years, Sidonia had become one of the most considerable personages in Europe. He had established a brother, or a near relative, in whom he could confide, in most of the principal capitals. He was lord and master of the money market of the world, and of course virtually lord and master of everything else. He literally held the revenues of Southern Italy in pawn; and monarchs and ministers of all countries courted his advice and were guided by his suggestions.1
1. Benjamin Disraeli, Coningsby (New York: Alfred A. Knopf, originally published in England in 1844), p. 225.
That Disraeli was not exaggerating was made clear by the boast
of James Rothschild himself. When U.S. Treasury agents approached
him in Paris in 1842 with a request for a loan to the
American government, he said to them: "You have seen the man
who is at the head of the finances of Europe."2
2. Stephen Birmingham, "Our Crowd": The Great Jewish Families of New York (New York: Harper & Row, 1986), p. 73.
There have always been men who were in a position to make private fortunes out of cooperating with both sides in a war. The Rothschilds were not unique in this, but they no doubt perfected the art and became the personification of that breed. They were not necessarily evil in a moral sense. What preoccupied their minds were not questions of right or wrong but of profit and loss. This analytical indifference to human suffering was aptly described by one Rothschild when he said: "When the streets of Paris are 3 running with blood, I buy." They may have held citizenship in the country of their residence, but patriotism was beyond their comprehension. They were also very bright, if not cunning, and these combined traits made them the role model of the cool pragmatists who dominate the political and financial world of today. Disraeli well described this type when he wrote of Sidonia:
3. Quoted in The Neiv York Times, October 21,1987, cited by Chernow, p. 13.
He was a man without affections. It would be harsh to say he had no heart, for he was susceptible of deep emotions, but not for individuals.... The individual never touched him. Woman was to him a toy, man a machine. 4
4. Disraeli, p. 229.
It would seem that an absence of patriotism and a cold,
analytical outlook would lead financiers to avoid making loans to
governments, particularly foreign ones. Private borrowers can be
hauled into court and their assets confiscated to make good on their debts. But governments control the legalized use of force. They are
the courts. They are the police. Who will seize their assets? The
answer is another government. Speaking of a relatively modern
example of this principle, Ron Chernow explains:
The new alliance [between the monetary and political scientists] was mutually advantageous. Washington wanted to harness the new financial power to coerce foreign governments into opening their markets to American goods or adopting pro-American policies. The banks, in turn, needed levers to force debt repayment and welcomed the government's police powers in distant places. The threat of military intervention was an excellent means by which to speed loan repayment. When Kuhn, Loeb considered a loan to the Dominican Republic, backed by customs receipts, Jacob Schiff inquired of his London associate Sir Ernest Cassel, "If they do not pay, who will collect these customs duties?" Cassel replied, "Your marines and ours."1
1- Quoted by Jacques Attali, translated by Barbara Ellis, A Man of Influence- Sir Siegmund Warburg, 1902-82 (London: Weidenfeld, & Nicolson, 1986), p. 57.
One of the great puzzles of history is why governments always go into debt and seldom attempt to put themselves on a "pay-as you-go" basis. A partial answer is that kings and politicians lack the courage to tax their subjects the enormous sums that would be required under such an arrangement. There is also the deeper question of why the expenditures are so high in the first place.
Given the mentality of the world's financial lords and masters, as Disraeli described them, it is conceivable that a coldly calculated strategy has been developed over the years to insure this result. In fact, the historical evidence strongly suggests that just such a plan was developed in eighteenth-century Europe and perfected in twentieth-century America. For the purposes of hypothetical analysis, let us identify this strategy as The Rothschild Formula.
1. War is the ultimate discipline to any government. If it can successfully meet the challenge of war, it will survive. If tt cannot, it will perish. All else is secondary. The sanctity of its laws, the prosperity of its citizens, and the solvency of its treasury will be quickly sacrificed by any government in its primal act of self-survival.
2. All that is necessary, therefore, to insure that a government will maintain or expand its debt is to involve it in war or the threat of war. The greater the threat and the more destructive the war, the greater the need for debt.
3. To involve a country in war or the threat of war, it will be necessary for it to have enemies with credible military might. If such enemies already exist, all the better. If they exist but lack military strength, it will be necessary to provide them the money to build their war machine. If an enemy does not exist at all, then it will be necessary to create one by financing the rise of a hostile regime.
4. The ultimate obstacle is a government which declines to finance its wars through debt. Although this seldom happens, when it does, it will be necessary to encourage internal political opposition, insurrection, or revolution to replace that government with one that is more compliant to our will. The assassination of heads of state could play an important role in this process.
5. No nation can be allowed to remain militarily stronger than its adversaries, for that could lead to peace and a reduction of debt. To accomplish this balance of power, it may be necessary to finance both sides of the conflict. Unless one of the combatants is hostile to our interests and, therefore, must be destroyed, neither side should be allowed a decisive victory or defeat. While we must always proclaim the virtues of peace, the unspoken objective is perpetual war.
Whether anyone actually put this strategy into words or passed it along from generation to generation is not important. In fact, it is doubtful it has ever worked that way. Whether it is the product of conscious planning or merely the consequence of men responding to the profit opportunities inherent in fiat money, the world's financial lords have acted as though they were following such a plan, and this has become especially apparent since the creation of the central-bank Mandrake Mechanism three centuries ago.
The "balance-of-power" question is particularly intriguing. Most history texts present the concept as though it were some kind of natural, social phenomenon which, somehow, has worked to the benefit of mankind. The implication is that it's just wonderful how, after all those European wars, no nation was strong enough to completely dominate the others. When the United States emerged from World War II with exactly such power, it was widely deplored, and massive political/financial mechanisms such as foreign aid and disarmament were set in motion to restore the balance. This has become almost a revered doctrine of international democracy. But the overlooked consequence of this sentimental notion is that wars "between equals" have become the permanent landscape of history.
This does not mean that every war-like group that comes along will find easy financing from the lords and masters. It depends on whom they threaten and how likely they are to succeed. In 1830, for example, the Dutch were facing an uprising of their subjects in Belgium. Both the ruling government and the revolutionaries were dependent upon the Rothschilds for financing their conflict. The Dutch rulers were reliable customers for loans and, just as important, they were reliable in their payment of interest on those loans. It would have been foolhardy to provide more than token assistance to the rebels who, if they came to power, quite likely would have refused to honor the debts of the former puppet regime. Salomon Rothschild explained:
These gentlemen should not count on us unless they decide to follow a line of prudence and moderation.... Our goodwill does not yet extend to the point of putting clubs into the hands that would beat us, that is, lending money to make war and ruin the credit that we sustain with all our efforts and all our means. 1
1- As quoted by Derek Wilson, p. 100.
After the revolution was resolved by negotiation rather than by arms, the new government in Brussels was a natural target for financial takeover. James Rothschild laid out the strategy that has become the model of such operations ever since:
Now is the moment of which we should take advantage to make ourselves absolute masters of that country's finances. The first step will be to establish ourselves on an intimate footing with Belgium's new Finance Minister, to gain his confidence ... and to take all the treasury bonds he may offer us.
1689-1697 The War of the League of Augsberg
1702-1713 The War of Spanish Succession
1739-1742 The War of Jenkin's Ear
1744—1748 The War of Austrian Succession
1754—1763 The French and Indian War
1793-1801 The War against Revolutionary France 1803-1815 The Napoleonic Wars
In addition to these European conflicts, there also were two wars with America: the War for Independence and the War of 1812. In the 126 years between 1689 and 1815, England was at war 63 of them. That is one out of every two years in combat. The others were spent preparing for combat.
The mark of the Rothschild Formula is unmistakable in these conflicts. The monetary scientists often were seen financing both sides. Whether ending in victory or defeat, the outcome merely preserved or restored the European "balance of power." And the most permanent result of any of these wars was expanded government debt for all parties.
The Rothschilds also had mastered the art of smuggling on a grand scale, often with the tacit approval of the governments whose laws they violated. This was perceived by all parties as an unofficial bonus for providing needed funding to those same governments, particularly in time of war. The fact that different branches of the Rothschild network also might be providing funds for the enemy was pragmatically ignored. Thus, a time-honored practice among financiers was born: profiting from both sides.
The Rothschilds operated a highly efficient intelligence gathering system which provided them with advance knowledge of important events, knowledge which was invaluable for investment decisions. When an exhausted Rothschild courier delivered the first news of the Battle of Waterloo, Nathan was able to deceive the London bond traders into a selling panic, and that allowed him to acquire the dominant holding of England's entire debt at but a tiny fraction of its worth.
A study of these and similar events reveals a personality profile, not just of the Rothschilds, but of that special breed of international financiers whose success typically is built upon certain character traits. Those include cold objectivity, immunity to patriotism, and indifference to the human condition. That profile is the basis for proposing a theoretical strategy, called the Rothschild Formula, which motivates such men to propel governments into war for the profits they yield. This formula most likely has never been consciously phrased as it appears here, but subconscious motivations and personality traits work together to implement it nevertheless. As long as the mechanism of central banking exists, it will be to such men an irresistible temptation to convert debt into Perpetual war and war into perpetual debt.
In the following chapters we shall track the distinctive footprint of the Rothschild Formula as it leads up to our own doorstep in the present day.
The origin of World War I usually is attributed to the assassination of Archduke Francis Ferdinand of Austria-Hungary by a Serbian nationalist in 1914. This was a serious affront to Austria but hardly sufficient reason to plunge the world into a mortal conflict that would claim over ten million lives and twenty million wounded. American schoolchildren are taught that Uncle Sam came into the war "to make the world safe for democracy." But, as we shall see, the American war drums were pounded by men with far less idealistic objectives.
Since the latter part of the eighteenth century, the Rothschild Formula had controlled the political climate of Europe. Nations had increasingly confronted each other over border disputes, colonial territories, and trade routes. An arms race had been in progress for many years; large, standing armies had been recruited and trained; military alliances had been hammered together; all in preparation for war. The assassination of Ferdinand was not the cause but the trigger. It was merely the spark that lit the fuse that fired the first loaded cannon.
Writing in the year 1919, just a few months after the end of the war, John Moody says:
Not only did England and France pay for their supplies with money furnished by Wall Street, but they made their purchases through the same medium.... Inevitably the house of Morgan was selected for this important task. Thus the war had given Wall Street an entirely new role. Hitherto it has been exclusively the headquarters of finance; now it became the greatest industrial mart the world had ever known. In addition to selling stocks and bonds, financing railroads, and performing the other tasks of a great banking center, Wall Street began to deal in shells, cannon, submarines, blankets, clothing, shoes, canned meats, wheat, and the thousands of other articles needed for the prosecution of a great war. 1
1. John Moody, The Masters of Capital (New Haven: Yale University Press, 1919), pp. 164-165 .
The money began to flow in January of 1915 when the House of Morgan signed a contract with the British Army Council and the Admiralty. The first purchase, curiously, was for horses, and the amount tendered was $12 million. But that was but the first drop of rain before the deluge. Total purchases would eventually climb to an astronomical $3 billion. The firm became the largest consumer on earth, spending up to $10 million per day. Morgan offices at 23 Wall Street were mobbed by brokers and manufacturers seeking to cut a deal. The bank had to post guards at every door and at the partners' homes as well. Each month, Morgan presided over purchases which were equal to the gross national product of the entire world just one generation before.
Throughout all this, Morgan vigorously claimed to be a pacifist. "Nobody could hate war more than I do," he told the Senate Munitions Committee. But such professions of righteousness were difficult to accept. Lewinsohn comments:
The 500 million dollar loan contracted in autumn 1915 brought to the group of bankers, at whose head Morgan was, a net profit of 9 million dollars.... Again, in 1917, the French government paid to Morgan's and other banks a commission of 1,500,000 dollars, and a further million in 1918.
Besides the issue of loans there was another source of profit: the purchase and sale of American stock which the Allies surrendered so that they could buy munitions in the States. It is estimated that in the course of the war some 2000 million [two billion] dollars passed in this way through Morgan's hands. Even if the commission was very small, transactions of such dimensions would give him an influence on the stock market which would carry very real advantages....
His hatred against war did not prevent him, citizen of a neutral country, from furnishing belligerent powers with 4,400,000 rifles for a matter of $194,000,000.... The profits were such as to compensate to some degree his hatred of warfare. According to his own account, he received, as agent of the English and French governments , a commission of 1% on orders totalling $3,000,000,000. That is, he received some $30,000,000.... Besides these two chief principals, Morgan, however, also acted for Russia (for whom he did business amounting to $412,000,000) and for Italy and Canada (figures for his business with the last two not having been published)....
J.P. Morgan, and some of his partners in the bank, were at the time shareholders in companies that were ... concerns which made substantial profits from the orders he placed with them. .. It is really astonishing that a central buying organization should have been confided to one who was buyer and seller at the same time.1
1. Lewinsohn, pp. 103-4,222-24.
1. Balfour MSS, FO/800/208, British Foreign Office records, Public Record Office, London, as cited by Robert H. Ferrell, Woodrow Wilson and World War I (New York: Harper & Row, 1985), p. 35.
2. Ferrell, p. 12.
Across the sea came the dismay of the British—a dismay that carried a deepening note of disaster. There was a fear, and a well-grounded one, that England might be starved into abject surrender.... On April 27,1917, Ambassador Walter H. Page reported confidentially to the President that the food in the British Isles was not more than enough to feed the civil population for six weeks or two months.3
3. William G. McAdoo, Crowded Years (New York: Houghton Mifflin, 1931; rpt. New York: Kennikat Press, 1971), p. 392.
Under these circumstances, it became impossible for Morgan to find new buyers for the Allied war bonds, neither for fresh funding nor to replenish the old bonds which were coming due and facing default. This was serious on several counts. If bond sales came to a halt, there would be no money to continue purchasing war materials. Commissions would be lost at both ends. Furthermore if the previously sold bonds were to go into default, as they certainly would if Britain and France were forced to accept peace on Germany's terms, the investors would sustain gigantic losses. Something had to be done. But what? Robert Ferrell hints at the answer:
In the mid thirties a Senate committee headed by Gerald P. Nye of North Dakota investigated the pre-1917 munitions trade and raised a possibility that the Wilson administration went to war because American bankers needed to protect their Allied loans.4
4. Ferrell, p. 88.
As previously mentioned by William McAdoo, the American ambassador to England at that time was Walter Hines Page, a trustee of Rockefeller's social-engineering foundation called the General Education Board. It was learned by the Nye committee that, in addition to his government salary, which he complained was not high enough, Page also received an allowance of $25,000 a year (an enormous amount in 1917) from Cleveland Dodge, president of Rockefeller's National City Bank. On March 15, 1917, Ambassador Page sent a telegram to the State Department outlining the financial crisis in England. Since sources of new capital had dried up, the only way to keep the war going, he said, was to make direct grants from the U.S. Treasury. But, since this would be a violation of neutrality treaties, the United States would have to abandon its neutrality and enter the war. He said:
I think that the pressure of this approaching crisis has gone beyond the ability of the Morgan Financial Agency for the British and French Governments.... The greatest help we could give the Allies would be such a credit.... Unless we go to war with Germany, our Government, of course, cannot make such a direct grant of credit.1
1. Quoted by Ferdinand Lundberg, America's Sixty Families (New York: Vanguard Press, 1937), p. 141. Also see Link et al., eds., The Papers of Woodrow Wilson, Vol. 41 (1983), pp. 336-37, cited by Ferrell, p. 90.
2. Lundberg, pp. 141-42.
The Morgan group had floated one-and-a-half billion dollars in
loans to Britain and France. With the fortunes of war turning against
them, investors were facing the threat of a total loss. As Ferdinand
Lundberg observed: "The declaration of war by the United States, in
addition to extricating the wealthiest American families from a dangerous
situation, also opened new vistas of profits."2
One of the most influential men behind the scenes at this time
was Colonel Edward Mandell House, personal adviser to Woodrow
Wilson and, later, to F.D.R. House had close contacts with both J.P.
Morgan and the old banking families of Europe. He had received
several years of his schooling in England and, in later years, surrounded
himself with prominent members of the Fabian Society.
Furthermore, he was a man of great personal wealth, most of it
acquired during the War Between the States. His father, Thomas
William House, had acted as the confidential American agent of unknown banking interests in London. It was commonly believed
he represented the Rothschilds. Although settled in Houston, Texas,
the elder often remarked that he wanted his sons to "know and
serve England." He was one of the few residents of a Confederate
state who emerged from the War with a great fortune.
It is widely acknowledged that Colonel House was the man who selected Wilson as a presidential candidate and who secured his nomination.1 He became Wilson's constant companion, and the President admitted publicly that he depended on him greatly for instruction and guidance. Many of Wilson's important appointive posts in government were hand selected by House.2 He and Wilson even went so far as to develop a private code so they could communicate freely over the telephone. The President himself had written: "Mr. House is my second personality. He is my independent self. His thoughts and mine are one."3
1. The Columbia Encyclopedia (Third Edition, 1962, p. 2334) says the Democratic Party nomination went to Wilson when William Jennings Bryan switched his support to him "prompted by Edward M. House." For details, see Martin, p. 155.
2. Charles Seymour, The Intimate Papers of Colonel House (New York: Houghton Mifflin Co., 1926), Vol. 1, pp. 114-15.
3. Seymour, Vol. I, p. 114.
George Viereck, an admiring biographer of House, tells us:
House had the Texas delegation in his pocket.... Always moving quietly in the background, he made and unmade several governors of Texas.... House selected Wilson because he regarded him as the best available candidate....
For seven long years Colonel House was Woodrow Wilson's other self. For six long years he shared with him all but the title of the Chief Magistracy of the Republic. For six years two rooms were al his disposal in the North Wing of the White House.... It was House who made the slate for the Cabinet, formulated the first policies of the Administration and practically directed the foreign affairs of the United States. We had, indeed, two Presidents for one!... Super-ambassador, he talked to emperors and kings as an equal He was the spiritual generalissimo of the Administration. He was the pilot who guided the ship.4
4. George Sylvester Viereck, The Strangest Friendship in History: Woodrow Wilson and Colonel House (New York: Liveright Publishers, 1932), pp. 4,18-19,33,35.
1. Seymour, Vol. 11, p. 399.
2. William Jennings Bryan and Mary Baird Bryan, The Memoirs of William Jennings Bryan (New York: Kennikat Press, 1925), Vol. 11, pp. 404-5.
While Secretary Bryan was bearing the heavy responsibility of the Department of State, there arose the curious conditions surrounding Mr. E.M. House's unofficial connection with the President and his voyages abroad on affairs of State, which were not communicated to Secretary Bryan.... The President was unofficially dealing with foreign governments.2
What was the purpose of those dealings? It was nothing less than to work out the means whereby the United States could be brought into the war. Viereck explains:
Ten months before the election which returned Wilson to the White House in 1916 "because he kept us out of war," Colonel 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, Woodrow Wilson formally sanctioned the undertaking. If an inkling of the conversations between Colonel House and the leaders of England and France had reached the American people before the election, it might have caused incalculable revulsions of public opinion....
From this conversation and various conferences with Sir Edward Grey grew the Secret Treaty, made without the knowledge and consent of the United States Senate, by which Woodrow Wilson and House chained the United States to the chariot of the Entente.... After the War the text of the agreement leaked out. Grey was the first to tattle. Page discussed it at length. Colonel House tells its history. C. Hartley Grattan discusses it at length in his book, Why We Fought. But for some incomprehensible reason the enormous significance of the revelation never penetrated the consciousness of the American people.3
3. Viereck, pp. 106-08. This matter, along with the complete text of Sir Grey's memorandum, is discussed in The Memoirs of William Jennings Bryan Vol. 11, pp.
The basic terms of the agreement were that the United States government would offer to negotiate a peaceful settlement between Germany and the Allies and would then put forth a specific proposal for the terms of that settlement. If either side refused to accept the proposal, then the United States would come into the war as an ally of the other side. The catch was that the terms of the proposal were carefully drafted so that Germany could not possibly accept them. Thus, to the world, it would look as though Germany was at fault and the United States was humanitarian. As Ambassador Page observed in a memorandum dated February 9,1916:
House arrived from Berlin-Havre-Paris full of the idea of American intervention. First his plan was that he and I and a group of the British Cabinet (Grey, Asquith, Lloyd George, Reading, etc.) should at once work out a minimum programme of peace—the least that the Allies would accept, which, he assumed, would be unacceptable to the Germans; and that the President would take this programme and present it to both sides; the side that declined would be responsible for continuing the war.... Of course, the fatal moral weakness of the foregoing scheme is that we should plunge into the War, not on the merits of the cause, but by a carefully sprung trick 1
1. Quoted by Viereck, pp. 112-13.
On the surface it is a paradox that Wilson, who had always been a pacifist, should now enter into a secret agreement with foreign powers to involve the United States in a war which she could easily avoid. The key that unlocks this mystery is the fact that Wilson also was an internationalist. One of the strongest bonds between House and himself was their common dream of a world government. They both recognized that the American people would never accept such a concept unless there were extenuating circumstances. They reasoned that a long and bloody war was probably the only event that could condition the American mind to accept the loss of national sovereignty, especially if it were packaged with the promise of putting an end to all wars in the future. Wilson knew, also, that, if the United States came into the war early enough to make a real difference on the battlefield and if large amounts of American dollars could be loaned to the Allied powers, he would be in a position after the war to dictate the terms of peace. He wrote to Colonel House: "England and France have not the same views with regard to peace as we have by any means. When the war is over, we can force them to our way of thinking, because by that time they will among other things be financially in our hands."1 And so Wilson tolerated the agony of mixed emotions as he plotted for war as a necessary evil to bring about what he perceived as the ultimate good of world government.
1- Quoted by Ferrell, p. 88.
2- Ferrell, p. 12.
With the arrival of 1917, the President was planting hints of both war and world government in almost every public utterance. In a typical statement made in March of that year, he said: "The tragic events of the thirty months of vital turmoil through which we have just passed have made us citizens of the world. There can be no turning back. Our own fortunes as a nation are involved, whether we would have it so or not."2 [Wilson is the original POS who would sell us out to the globalists,who in reality is really England and demon child Rothschild DC]
It was about this same time that Wilson called together the Democratic leaders of Congress to a special breakfast meeting at the White House. He told them that, in spite of public sentiment, there were many sound reasons for the country to enter the war and he asked them to help him sell this plan to Congress and the voters. Harry Elmer Barnes tells us:
These men were opposed to war and, hence, rejected his proposals somewhat heatedly. Wilson knew that it was a poor time to split the party just before an election, so he dropped the matter at once and, with Col. House, mapped out a pacifist platform for the coming campaign. Governor Martin Glynn of New York and Senator Ollie James of Kentucky were sent to the St. Louis convention to make keynote speeches, which were based on the slogan: "He kept us out of war!"... Before he had been inaugurated a second time, the Germans played directly into his hands by announcing the resumption of submarine warfare.... It was fortunate for Britain and the bankers that the German's made this timely blunder, as Great Britain had overdrawn her American credit by some $450,000,000 and the bankers were having trouble in floating more large private loans. It was necessary now to pass on the burden of financing the Entente to the Federal Treasury. 3
3. Harry Elmer Barnes, In Quest of Truth and Justice: De-Bunking the War Guilt Myth (Chicago: National Historical Society, 1928; rpt. New York: Arno Press & The New York Times, 1972), p. 104. For an additional account of this meeting, see Viereck, pp.
Wall Street control over important segments of the media was considerable. George Wheeler tells us: "Around this time the Morgan firm was choosing the top executives for the old and troubled Harper & Brothers publishing house.... In the newspaper field, Pierpont Morgan at this period was in effective control of the New York Sun,... the Boston News Bureau, Barron's magazine, and the Wall Street Journal"1
1. George Wheeler, Pierpont Morgan and Friends: The Anatomy of a Myth (Englewood Cliffs, New Jersey: Prentice Hall, 1973), pp. 283-84.
On February 9,1917, Representative Callaway from Texas took the floor of Congress and provided further insight. He said:
In March, 1915, the J.P. Morgan interests, the steel, shipbuilding, and powder interests, and their subsidiary organizations, got together 12 men high up in the newspaper world and employed them to select the most influential newspapers in the United States and sufficient number of them to control generally the policy of the daily press.. They found it was only necessary to purchase the control of 25 of the greatest papers.... An agreement was reached; the policy of the papers was bought, to be paid for by the month; an editor was furnished for each paper to properly supervise and edit information regarding the questions of preparedness, militarism, financial policies, and other things of national and international nature considered vital to the interests of the purchasers 2
2. Congressional Record, Vol. 54, Feb. 9,1917, p. 2947
Charles S. Mellen of the New Haven Railroad testified before Congress that his Morgan-owned railroad had more than one thousand New England newspapers on the payroll, costing about $400,000 annually. The railroad also held almost a half-million dollars in bonds issued by the Boston Herald. 3 This web of control was multiplied by hundreds of additional companies which also were controlled by Morgan and other investment-banking houses.
3. Lundberg, p. 257.
In addition, the Morgan trust exercised media control by its power of advertising. Writing in 1937, Lundberg says: "More advertising is controlled by the J.P. Morgan junta than by any single financial group, a factor which immediately gives the banking house the respectful attention of all alert independent publishers." 1
1. Lundberg, p. 252.
Morgan control over the media at that time is well documented,
but he was by no means alone in this. During the 1912 hearings held
by the Senate Privileges and Elections Committee, it was revealed
that Representative Joseph Sibley from Pennsylvania was acting as
a funnel for Rockefeller money to various cooperative Congressmen.
A letter was introduced to the Committee written by Sibley in
1905 to John D. Archbold, the man at Rockefeller's Standard Oil
Company who provided the money. In that letter Sibley said: "An
efficient literary bureau is needed, not for a day or a crisis but a
permanent healthy control of the Associated Press and kindred
avenues. It will cost money but will be the cheapest in the end."2
2. Ibid , pp. 97,249.
Lundberg comments further:
So far as can be learned, the Rockefellers have given up their old policy of owning newspapers and magazines outright, relying now upon the publications of all camps to serve their best interests in return for the vast volume of petroleum and allied advertising under Rockefeller control. After the J.P. Morgan bloc, the Rockefellers have the most advertising of any group to dispose of. And when advertising alone is not sufficient to insure the fealty of a newspaper, the Rockefeller companies have been known to make direct payments in return for a friendly editorial attitude.3
3. Ibid., p. 247. 246
It is not surprising, therefore, that a large part of the nation's
press, particularly in the East, began to editorially denounce
Germany. The cry spread across the land to take up arms against
"the enemy of western civilization." Editors became eloquent on the
patriotic duty of all Americans to defend world democracy. Massive
"preparedness" demonstrations and parades were organized.
But it was not enough. In spite of this massive sales campaign, the American people still were not buying. Polls conducted at the time showed popular sentiment continuing to run ten-to-one in favor of staying out of Europe's war. Clearly, what was needed was something both drastic and dramatic to change public opinion.
Pierpont assembled a plan for an American-owned shipping trust that would transpose his "community of interest " principle—cooperation among competitors in a given industry—to a global plane. He created ... the world's largest fleet under private ownership.... An important architect of the shipping trust was Albert Ballin, whose Hamburg-Amerika Steamship Line, with hundreds of vessels, was the world's largest shipping company.... Pierpont had to contend with a single holdout, Britain's Cunard Line.... After the Boer War, the Morgan combine and Cunard exhausted each other in debilitating rate wars."1
As stated previously, Morgan had been retained as the official trade agent for Britain. He handled the purchasing of all war materials in the United States and coordinated their shipping as well. Following in the footsteps of the Rothschilds of centuries past, he quickly learned the profitable skills of war-time smuggling. Colin Simpson, author of The Lusitania, describes the operation:
Throughout the period of America's neutrality, British servicemen in civilian clothes worked at Morgan's. This great banking combine rapidly established such a labyrinthine network of false shippers, bank accounts and all the paraphernalia of smuggling that, although they fooled the Germans, there were also some very serious occasions when they flummoxed the Admiralty and Cunard, not to speak of the unfortunate passengers on the liners which carried the contraband.2
1. Chernow, pp. 100-01.
2. Colin Simpson, The Lusitania (Boston: Little, Brown & Co., 1972), p. 50.
The fact that the Lusitania was a passenger ship is misleading. Although she was built as a luxury liner, her construction specifications were drawn up by the British Admiralty so that she could be converted, if necessary, into a ship of war. Everything from the horsepower of her engines and the shape of her hull to the placement of ammunition storage areas were, in fact, military designs. She was built specifically to carry twelve six-inch guns. The construction costs for these features were paid for by the British government. Even in times of peace, it was required that her crew include officers and seamen from the Royal Navy Reserve.
In May of 1913, she was brought back into dry dock and outfitted with extra armor, revolving gun rings on her decks, and shell racks in the hold for ammunition. Handling elevators to lift the shells to the guns were also installed. Twelve high-explosive cannons were delivered to the dry dock. All this is a matter of public record at the National Maritime Museum in Greenwich, England, but whether the guns were actually installed at that time is still hotly debated. There is no evidence that they were. In any event, on September 17, the Lusitania returned to sea ready for the rigors of war, and she was entered into the Admiralty fleet register, not as a passenger liner, but an armed auxiliary cruiser] From then on, she was listed in Jane's Fighting Ships as an auxiliary cruiser and in the British publication, The Naval Annual, as an armed merchant man.1
1- Simpson, pp. 17-28, 70.
Part of the dry dock modification as to remove all the passenger accommodations in the lower deck to make room for more military cargo. Thus, the Lusitania became one of the most important carriers of war materials—including munitions—from the United States to England. On March 8, 1915, after several close calls with German submarines, the captain of the Lusitania turned in his resignation. He was willing to face the U-boats, he said, but he was no longer willing "to carry the responsibility of mixing passengers with munitions or contraband." 1
Let's take a closer look at this conspiracy theory. Winston Churchill, who was First Lord of the Admiralty at that time, said:
There are many kinds of maneuvers in war... . There are maneuvers in time, in diplomacy, in mechanics, in psychology; all of which are removed from the battlefield, but react often decisively upon it.... The maneuver which brings an ally into the field is as serviceable as that which wins a great battle. The maneuver which gains an important strategic point may be less valuable than that which placates or overawes a dangerous neutral.3
1. Simpson, p. 87.
2. "Riddle of the Lusitania," by Robert Ballard, National Geographic, April, 1994, p. 74.
3. Winston Churchill, The World Crisis (New York: Scribner's Sons, 1949), p. 300. This appears on p. 464 of the Barnes & Noble 1993 reprint.
The maneuver chosen by Churchill was particularly ruthless.
Under what was called the Cruiser Rules, warships of both England
and Germany gave the crews of unarmed enemy merchant ships a chance to take to the lifeboats before sinking them. But, in October of 1914, Churchill issued orders that British merchant ships must no
longer obey a U-boat order to halt and be searched. If they had
armament, they were to engage the enemy. If they did not, they
were to attempt to ram the sub. The immediate result of this change
was to force German U-boats to remain submerged for protection
and to simply sink the ships without warning.
Why would the British want to do such a stupid thing that would cost the lives of thousands of their own seamen? The answer is that it was not an act of stupidity. It was cold blooded strategy. Churchill boasted:
The first British countermove, made on my responsibility,... was to deter the Germans from surface attack. The submerged U-boat had to rely increasingly on underwater attack and thus ran the greater risk of mistaking neutral for British ships and of drowning neutral crews and thus embroiling Germany with other Great Powers.1
To increase the likelihood of accidentally sinking a ship from a neutral "Great Power," Churchill ordered British ships to remove their names from their hulls and, when in port, to fly the flag of a neutral power, preferably that of the United States. As further provocation, the British navy was ordered to treat captured U-boat crew members not as prisoners of war but as felons. "Survivors," wrote Churchill, "should be taken prisoner or shot—whichever is the most convenient."2 Other orders, which now are an embarrassing part of official navy archives, were even more ruthless: "In all actions, white flags should be fired upon with promptitude." 3
The trap was carefully laid. The German navy was goaded into a position of shoot-first and ask questions later and, under those conditions, it was inevitable that American lives would be lost.
1.Churchill, pp. 274-75.
2. Taken from the Diaries of Admiral Sir Hubert Richmond, Feb. 27,1915, National Maritime Museum, Greenwich, as quoted by Simpson, p. 37.
3. P.R.O., ADM/116/1359, Dec. 23,1914, quoted by Simpson, p. 37.
4. Gun cotton explodes with three-times the force of gunpowder in a confined space and can be ignited at a much lower flash point. See Eissler, Manuel, Modern High Explosives (New York: John Wiley & Sons, 1914), pp. 110,112,372.
The German embassy in Washington was well aware of the nature of the cargo being loaded aboard the Lusitania and filed a formal complaint to the United States government, because almost all of it was in direct violation of international neutrality treaties. The response was a flat denial of any knowledge of such cargo. Seeing that the Wilson Administration was tacitly approving the shipment, the German embassy made one final effort to avert disaster. It placed an ad in fifty East Coast newspapers, including those in New York City, warning Americans not to take passage on the Lusitania. The ad was prepaid and requested to be placed on the paper's travel page a full week before the sailing date. It read as follows:
Although the ad was in the hands of newspapers in time for the requested deadline, the State Department intervened and, raising the specter of possible libel suits, frightened the publishers into not printing it without prior clearance from State Department attorneys. Of the fifty newspapers, only the Des Moines Register carried the ad on the requested date. What happened next is described by Simpson:
George Viereck [who was the editor of a German-owned newspaper at that time and who had placed the ads on behalf of the embassy ] spent April 26 asking the State Department why his advertisement had not been published. Eventually he managed to obtain an interview with [Secretary of State, William Jennings] Bryan and pointed out to him that on all but one of her wartime voyages the Lusitania ha d carried munitions. He produced copies of her supplementary manifests, which were open to public inspection at the collector's office. More important, he informed Bryan, no fewer than six million rounds of ammunition were due to be shipped on the Lusitania the following Friday and could be seen at that moment being loaded on pier 54. Bryan picked up the telephone and cleared the publication of the advertisement. He promised Viereck that he would endeavor to persuade the President publicly to warn Americans not to travel. No such warning was issued by the President, but there can be no doubt that President Wilson was told of the character of the cargo destined for the Lusitania. He did nothing, but was to concede on the day he was told of her sinking that his foreknowledge had given him many sleepless hours. 1
1. Simpson, p. 97.
It is probably true that Wilson was a pacifist at heart, but it is equally certain that he was not entirely the master of his own destiny. He was a transplanted college professor from the ivy-covered walls of Princeton, an internationalist at heart who dreamed of helping to create a world government and to usher in a millennium of peace. But he found himself surrounded by and dependent upon men of strong wills, astute political aptitudes, and powerful financial resources. Against these forces, he was all but powerless to act on his own, and there is good reason to believe that he inwardly suffered over many of the events in which he was compelled to participate. We shall leave it to others to moralize about a man who, by his deliberate refusal to warn his countrymen of their mortal peril, sends 195 of them to their watery graves. We may wonder, also, about how such a man can commit the ultimate hypocrisy of condemning the Germans for this act and then doing everything possible to prevent the American public from learning the truth. It would be surprising if the extent of his private remorse was not greater than merely a few sleepless hours.
As the Lusitania drew closer to hostile waters, almost everyone knew she was in grave danger. Newspapers in London were alive with the story of German warnings and recent sinkings. In the map room of the British Admiralty, Churchill watched the play unfold and coldly called the shots. Small disks marked the places where two ships had been torpedoed the day before. A circle indicated the area within which the U-boat must still be operating. A larger disk represented the Lusitania travelling at nineteen knots directly into the circle. Yet, nothing was done to help her. Admiral Coke at Queenstown was given perfunctory instructions to protect her as best he could, but he had no means to do so and, in fact, no one even bothered to notify the captain of the Lusitania that the rendezvous with the Juno had been canceled.
One of the officers present in the high-command map room on that fateful day was Commander Joseph Kenworthy, who previously had been called upon by Churchill to submit a paper on what would be the political results of an ocean liner being sunk with American passengers aboard. He left the room in disgust at the cynicism of his superiors. In 1927, in his book, The Freedom of the Seas, he wrote without further comment: "The Lusitania was sent at considerably reduced speed into an area where a U-boat was known to be waiting and with her escorts withdrawn." Further comment is not needed. 1
Colonel House was in England at that time and, on the day of the sinking, was scheduled to have an audience with King George V. He was accompanied by Sir Edward Grey and, on the way, Sir Grey asked him: "What will America do if the Germans sink an ocean liner with American passengers on board?" As recorded in House's diaries, he replied: "I told him if this were done, a flame of indignation would sweep America, which would in itself probably carry us into the war."2 Once at Buckingham Palace, King George also brought up the subject and was even more specific about the possible target. He asked, "Suppose they should sink the Lusitania with American passengers on board...."
1. Joseph M. Kenworthy and George Young, The Freedom of the Seas (New York: Ayer Company, 1929), p. 211.
2. Seymour, Vol I, p. 432
Survivors among the crew who were working in the boiler rooms during the attack have attested that the boilers did not blow at that time. Simpson tells us:
The G torpedo had failed to blow in the inner bulkhead of No 1 boiler room, but just further forward something blew out most of the bottom of the bow of the ship. It may have been the Bethlehem Company's 3-inch shells, the six million rounds of rifle ammunition or the highly dubious contents of the bales of furs or the small forty-pound boxes of cheese. Divers who have been down to the wreck unanimously testify that the bow was blasted by a massive internal explosion, and large pieces of the bow plating, buckled from the inside, are to be found some distance from the hull.1
When a search team from the Woods Hole Oceanographic Institute surveyed the wreckage in the summer of 1993, they reported: "When our cameras swept across the hold, we got a big surprise. There was no hole.... We found no evidence that U-20's torpedo had detonated an explosion, undermining one theory of why the liner sank." 2
It is difficult to share the team's surprise. Photographs show that the wreck is resting on its starboard (right) side. Since that is where the torpedo struck, it is logical that the hole would not be visible. It would be on the side buried in the ocean floor. The team reported that they were able to inspect only part of the hull's underside. That is because most of it—plus the entire starboard side—is buried in the muck. Since the torpedo struck only nine feet below the waterline, the hole would not logically be anywhere near the bottom of the hull but at a point midway between the main deck and the bottom. In other words, it would be at the midpoint of the side that is now facing down. Failure to see the hole does not undermine the theory of internal explosion. It is exactly what one would expect.
In any event, it should be obvious that the Lusitania would not have gone to the bottom in eighteen minutes without a hole somewhere. Even the search team had to acknowledge that fact indirectly when it addressed the question of what might have caused the second explosion. In an obvious effort to avoid giving support to a "conspiracy theory," the report concluded that the explosion probably was caused, not by munitions, but by coal dust.
1. Simpson, p. 157.
2. Ballard, "Riddle of the Lusitania," pp. 74, 76
In the final analysis, it makes little difference whether the explosion was caused by munitions or coal dust. The fact that it could have been caused by munitions is sufficient for the case.
The final report was a most interesting document. Anyone reading it without knowledge of the facts would conclude that Captain William Turner was to blame for the disaster. Even so, Mersey attempted to soften the blow. He wrote: "...blame ought not to be imputed to the captain.... His omission to follow the advice in all respects cannot fairly be attributed either to negligence or incompetence." And then he added a final paragraph which, on the surface, appears to be a condemnation of the Germans but which, if read with understanding of the background, was an indictment of Churchill, Wilson, House and Morgan. He wrote:
The whole blame for the cruel destruction of life in this catastrophe must rest solely with those who plotted and with those who committed the crime.2
Did Lord Mersey know that there could be a dual meaning to his Words? Perhaps not, but, two days after delivering his judgment, he wrote to Prime Minister Asquith and turned down his fee for services. He added: "I must request that henceforth I be excused from administering His Majesty's Justice." In later years, his only comment on the event was: "The Lusitania case was a damn dirty business."3
1.The Papers of Lord Mersey, Bignor Park, Sussex, as quoted by Simpson, p. 190.
2. Simpson, p. 241.
3. Ibid., p. 241.
THE CRY FOR WAR The purposes of the Cabal would have been better served had an American ship been sunk by the Germans, but a British ship with 195 Americans drowned was sufficient to do the job. The players wasted no time in whipping up public sentiment. Wilson sent a note of outraged indignation to the Imperial German Government, and this was widely quoted in the press.
By that time, Bryan had become completely disillusioned by the duplicity of his own government. On May 9, he sent a dour note to Wilson:
Germany has a right to prevent contraband going to the Allies and a ship carrying contraband should not rely upon passengers to protect her from attack-it would be like putting women and children in front of an army.
This did not deter Wilson from his commitment. The first note was followed by an even stronger one with threatening overtones which was intensely discussed at the Cabinet meeting on the first of June. McAdoo, who was present at the meeting, says:
I remember that Bryan had little to say at this meeting; he sat throughout the proceedings with his eyes half closed most of the time. After the meeting he told the President, as I learned later, that he could not sign the note.... Bryan went on to say that he thought his usefulness as Secretary of State was over, and he proposed to resign 2
At the request of Wilson, McAdoo was dispatched to the Bryan's home to persuade the Secretary to change his mind, lest his resignation be taken as a sign of disunity within the President's Cabinet.Bryan agreed to think it over one more day but, the following morning, his decision remained firm. In his memoirs, annotated by his wife, Mrs. Bryan reveals that her husband could not sleep that night He was so restless I suggested that he read a little till he should become drowsy. He had in his handbag a copy of an old book printed in 1829 and called 'A Wreath of Appreciation of Andrew Jackson. He found it very interesting."3 [At least there was one person in Wilson's entourage who had principles,what a disgusting coward Wilson was DC]
1 . Bryan, Vol II, pp. 398-9.
2. McAdoo, p. 333.
3. Bryan, Vol. II, p. 424
What irony. In chapter seventeen we shall review the total war waged by President Jackson against the Bank of the United States, the predecessor of the Federal Reserve System, and we shall be reminded that it was Jackson who prophesied:
Is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country?... [Is there not] cause to tremble for the purity of our elections in peace and for the independence of our country in war?... Controlling our currency, receiving our public monies, and holding thousands of our citizens independence, it would be more formidable and dangerous than a naval and military power of the enemy.1
One can only wonder what thoughts went through Bryan's mind as he recalled Jackson's warning and applied it to the artificially created war hysteria that, at that very moment, was being generated by the financial powers on Wall Street and at the newly created Federal Reserve.
From England, Colonel House sent a telegram to President Wilson which he, in turn, read to his Cabinet. It became the genesis of thousands of newspaper editorials across the land. He said piously:
America has come to the parting of the ways, when she must determine whether she stands for civilized or uncivilized warfare. We can no longer remain neutral spectators. Our action in this crisis will determine the part we will play when peace is made, and how far we may influence a settlement for the lasting good of humanity. We are being weighed in the balance, and our position amongst nations is being assessed by mankind.2 [Lying POS DC]
In another telegram two days later, House reveals himself as the master psycho-politician playing on Wilson's ego like a violinist stroking the strings of a Stradivarius. He wrote:
If, unhappily, it is necessary to go to war, I hope you will give the world an exhibition of American efficiency that will be a lesson for a century or more. It is generally believed throughout Europe that we are so unprepared and that it would take so long to put our resources into action, that our entering would make but little difference.
In the event of war, we should accelerate the manufacture of munitions to such an extent that we could supply not only ourselves but the Allies, and so quickly that the world would be astounded.3
1 Herman E. Krooss, ed., Documentary History of Banking and Currency in the Unites States (New York: Chelsea House, 1983), Vol. Ill, pp. 26-27.
2- Seymour, p. 434.
3. Ibid., p. 435.
Congress could not resist the combined pressure of the press and the President. On April 16, 1917, the United States officially declared war on the Axis powers. Eight days later, Congress dutifully passed the War Loan Act which extended $1 billion in credit to the Allies. The first advance of $200 million went to the British the next day and was immediately applied as payment on the debt to Morgan. A few days later, $100 million went to France for the same purpose. But the drain continued. Within three months the British had run up their overdraft with Morgan to $400 million dollars, and the firm presented it to the government for payment. The Treasury, however, was unable to put its hands on that amount of money without jeopardizing its own spendable funds and, at first, refused to pay. The problem was quickly solved, however, through a maneuver described at some length in chapter ten. The Federal Reserve System under Benjamin Strong simply created the needed money through the Mandrake Mechanism. "The Wilson Administration found itself in an extremely awkward position, having to bail out J.P. Morgan," wrote Ferrell, but Benjamin Strong "offered to help [Treasury-Secretary] McAdoo out of the difficulty. Over the following months in 1917-18 the Treasury quietly paid Morgan piecemeal for the overdraft." By the time the war was over, the Treasury had loaned a total of $9,466,000,000 including $2,170,000,000 given after the Armistice. 1
That was the cash flow they had long awaited. In addition to saving the Morgan loans, even larger profits were to be made from war production. The government had been secretly preparing for war for six months prior to the actual declaration. According to Franklin D. Roosevelt, then Assistant Secretary of the Navy, the Navy Department began extensive purchasing of war supplies in the Fall of 1916.2 Ferdinand Lundberg adds this perspective:
1. Ferrell, p. 89,90.
2. Clarence W. Barron, They Told Barron; Notes of Clarence Walker Barron, edited by Arthur Pound and Samuel Taylor Moore (New York: Harper and Brothers,1930 )P 51
By no accident all the strategic government posts, notably those
concerned with buying, were reserved for the Wall Street patriots. On
the most vital appointments, Wilson consulted with Dodge [President
of Rockefeller' s National City Bank], who ... recommended the
hitherto unknown [Bernard] Baruch, speculator in copper stocks, as
chairman of the all-powerful War Industries Board....
As head of the War Industries Board, Baruch spent government funds at the rate of $10,000,000,000 annually.... Baruch packed the War Industries Board and its committees with past and future Wall Street manipulators, industrialists, financiers, and their agents ... who fixed prices on a cost-plus basis and, as subsequent investigations revealed, saw to it that costs were grossly padded so as to yield hidden profits....
The American soldiers fighting in the trenches , the people working at home,the entire nation under arms, were fighting, not only to subdue Germany, but to subdue themselves. That there is nothing metaphysical about this interpretation becomes clear when we observe that the total wartime expenditure of the United States government from April 6, 1917, to October 31, 1919, when the last contingent of troops returned from Europe, was $35,413,000,000. Net corporation profits for the period January 1,1916, to July, 1921, when wartime industrial activity was finally liquidated, were $38,000,000,000 , or approximately the amount of the war expenditures. More than two-thirds of these corporation profits were taken by precisely those enterprises which the Pujo Committee had found to be under the control of the "Money Trust." 1
The banking cartel was able, through the operation of the Federal Reserve System, to create the money to give to England and France so they, in turn, could pay back the American banks— exactly as was to be done again in World War II and again in the Big Bailout of the 1980s and '90s. It is true that, in 1917, the recently enacted income tax was useful for raising a sizable amount of revenue to conduct the war and also, as Beardsley Ruml pointed out a few years later, to take purchasing power away from the middle class. But the greatest source of funding came, as it always does in wartime, not from direct taxes, but from the hidden tax called inflation. Between 1915 and 1920, the money supply doubled from $20.6 billion to $39.8 billion.2 Conversely, during World War I, the purchasing power of the currency fell by almost 50%. That means Americans unknowingly paid to the government approximately one-half of every dollar that existed. And that was in addition to their taxes. This massive infusion of money was the product of the Mandrake Mechanism and cost nothing to create. Yet, the banks were able to collect interest on it all. The ancient partnership between the political and monetary scientists had performed its mission well.
1. Lundberg, pp. 134,144-45.
2. "Deposits and Currency—Adjusted Deposits of AH Banks and Currency Outside Banks, 1892-1941," Banking and Monetary Statistics, 1914-1942 (Washington, D.C.: Board of Governors of the Federal Reserve System, 1976), p. 34. between the political and monetary scientists had performed its mission well.
The only way to save the British Empire, to restore the value of the bonds, and to sustain the Morgan cash flow was for the United States government to provide the money. But, since neutral nations were prohibited from doing that by treaty, America would have to be brought into the war. A secret agreement to that effect was made between British officials and Colonel House, with the concurrence of the President. From that point forward, Wilson began to pressure Congress for a declaration of war. This was done at the very time he was campaigning for reelection on the slogan "He kept us out of war." Meanwhile, Morgan purchased control over major segments of the news media and engineered a nation-wide editorial blitz against Germany, calling for war as an act of American patriotism.
Morgan had created an international shipping cartel, including Germany's merchant fleet, which maintained a near monopoly on the high seas. Only the British Cunard Lines remained aloof. The Lusitania was owned by Cunard and operated in competition with Morgan's cartel. The Lusitania was built to military specifications and was registered with the British Admiralty as an armed auxiliary cruiser. She carried passengers as a cover to conceal her real mission, which was to bring contraband war materials from the United States. This fact was known to Wilson and others in his administration, but they did nothing to stop it.
When the German embassy tried to publish a warning to American passengers, the State Department intervened and prevented newspapers from printing it When the Lusitania left New York harbor on her final voyage, she was virtually a floating ammunition depot. The British knew that to draw the United States into the war would mean the difference between defeat and victory and anything that could accomplish that was proper even the coldly calculated sacrifice of one of her great ships with Englishmen aboard.
But the trick was to have Americans on board also in order to create the proper emotional climate in the United States. As the Lusitania moved into hostile waters, where a German U-boat was known to be operating, First Lord of the Admiralty, Winston Churchill ordered her destroyer protection to abandon her. This, plus the fact that she had been ordered to travel at reduced speed, made her an easy target. After the impact of one well placed torpedo, a mighty second explosion from within ripped her apart, and the ship that many believed could not be sunk, gurgled to the bottom in less than 18 minutes.
The deed had been done, and it set in motion great waves of revulsion against the Germans. These waves eventually flooded through Washington and swept the United States into war. Within days of the decoration, Congress voted $1 billion in credit for England and France. $200 million was sent to England immediately and was applied to the Morgan account. The vast quantity of money needed to finance the war was created by the Federal Reserve System, which means it was collected from Americans through that hidden tax called inflation. Within just five years, fully one-half of all they had saved.
The infinitely higher cost in American blood was added to the bill. Thus it was that the separate motives of such diverse personalities as Winston Churchill, J.P. Morgan, Colonel House, and Woodrow Wilson all found common cause in bringing America into World War I. Churchill maneuvered for military advantage, Morgan sought the profits of war, House schemed for power, and Wilson dreamed of a chance to dominate a post war League of Nations.
next
MASQUERADE IN MOSCOW
271s
When they agreed to finance a war, these rich lenders did not, however, always attach great importance to the rate of interest In this respect they often showed the greatest compliance to their august clients. But in return they secured for themselves privileges which could be turned into industrial or commercial profit, such as mining concessions, monopolies of sale or importation etc. Sometimes even they were given the right to appropriate certain taxes as a guarantee of their loans. So though the loan itself carried a very real risk and often did not bring in much interest, the indirect profits were very considerable, and the lenders' leniency well rewarded.1[And thus eventually control of the government by corporate infiltration D.C]
1. Richard Lewinsohn, The Profits of War through the Ages (New York: E.P. Dutton, 1937), pp. 55-56.
THE ROTHSCHILD DYNASTY
2. Quoted by Senator Robert L. Owen, former Chairman of the Senate Committee on Banking and Currency and one of the sponsors of the Federal Reserve Act, National Economy and the Banking System, (Washington, D.C.: U.S. Govern ment Printing Office, 1939), p. 99. This quotation could not be verified in a primary reference work. However, when one considers the life and accomplishments of the elder Rothschild, there can be little doubt that this sentiment was, in fact, his outlook and guiding principle.
3. Frederic Morton, The Rothschilds: A Family Portrait (New York: Atheneum, 1962), p. 14.
The Rothschild fortune began when Mayer adopted the practice of fractional-reserve banking. As we have seen, he was not alone in this, but the House of Rothschild greatly surpassed the competition. That was due to his sharp business acumen and also because of his five most unusual sons, all of whom became financial power centers of their own. As they matured and learned the magic of converting debt into money, they moved beyond the confines of Frankfurt and established additional operations in the financial centers, not only of Europe, but of much of the civilized world.
Throughout the first half of the nineteenth century, the brothers conducted important transactions on behalf of the governments of England, France, Prussia, Austria, Belgium, Spain, Naples, Portugal, Brazil, various German states, and other smaller countries. They were the personal bankers of many of the crowned heads of Europe. They made large investments, through agents, in markets as distant as the United States, India, Cuba, and Australia. They were financiers to Cecil Rhodes, making it possible for him to establish a monopoly over the diamond fields of South Africa. They are still connected with the de Beers.1
1 Morton, pp. 145, 219.
Biographer Derek Wilson writes:
Those who lampooned or vilified the Rothschilds for their "sinister" influence had a considerable amount of justification for their anger and anxiety. The banking community had always constituted a "fifth estate" whose members were able, by their control of royal purse strings, to affect important events. But the house of Rothschild was immensely more powerful than any financial empire that had ever preceded it. It commanded vast wealth. It was international. It was independent. Royal governments were nervous of it because they could not control it. Popular movements hated it because it was not answerable to the people. Constitutionalists resented it because its influence was exercised behind the scenes—secretly.2
2 Derek Wilson, Rothschild: The Wealth and Power of A Dynasty (New York: Charles Scribner's Sons, 1988), pp. 79, 98-99.
Secrecy, of course, is essential for the success of a cabal, and the Rothschilds perfected the art. By remaining behind the scenes, they were able to avoid the brunt of public anger which was directed, instead, at the political figures which they largely controlled. This is a technique which has been practiced by financial manipulators ever since, and it is fully utilized by those who operate the Federal Reserve System today. Wilson continues:
Clandestinity was and remained a feature of Rothschild political activity. Seldom were they to be seen engaging in open public debate on important issues. Never did they seek government office. Even when, in later years, some of them entered parliament, they did not feature prominently in the assembly chambers of London, Paris or Berlin. Yet all the while they were helping to shape the major events of the day: by granting or withholding funds; by providing statesmen with an official diplomatic service; by influencing appointments to high office; and by an almost daily intercourse with the great decision makers.1
1. Derek Wilson, p. 99.
☠A FORTUNE IN SMUGGLING⛨
Continual war in Europe created excellent opportunities for
profit from smuggling scarce consumer goods past military blockades.
Since the Rothschilds often financed both sides in a conflict
and were known to have great political influence, the mere sight of
the red shield on a leather pouch, a carriage, or a ship's flag was
sufficient to insure that the messenger or his cargo could pass
through check points in either direction. This immunity allowed
them to deal in a thriving black market for cotton goods, yam,
tobacco, coffee, sugar, and indigo; and they moved freely through
the borders of Germany, Scandinavia, Holland, Spain, England,
and France.2 This government protection was one of those indirect
benefits that generated commercial profits far in excess of the
interest received on the underlying government loans. 2. Morton, pp. 40-41.
It is generally true that, one man's loss is another man's gain. And even the friendliest of biographers admit that, for more than two centuries, the House of Rothschild profited handsomely from wars and economic collapses, the very occasions on which others sustained the greatest losses.
It is generally true that, one man's loss is another man's gain. And even the friendliest of biographers admit that, for more than two centuries, the House of Rothschild profited handsomely from wars and economic collapses, the very occasions on which others sustained the greatest losses.
☨NAPOLEON VS THE BANKERS♚
If one picture is worth a thousand words, then one example
surely must be worth a dozen explanations. There is no better
example than the economic war waged by the financiers
of
nineteenth-century Europe against Napoleon Bonaparte. It is an
easily forgotten fact of history that Napoleon had restored law and order to a chaotic, post-revolutionary France and had turned his
attention, not to war, but to establishing peace and improving
economic conditions at home. He was particularly anxious to get
his country and his people out of debt and out of the control of
bankers. R. McNair Wilson, in Monarchy or Money Power, says: It was ordained by him that money should not be exported from France on any pretext whatever except with the consent of the Government, and that in no circumstance should loans be employed to meet current expenditure whether civil or military.... "One has only to consider," Napoleon remarked, "what loans can lead to in order to realize their danger. Therefore, I would never have anything to do with them and have always striven against them."...
The object was to withhold from finance the power to embarrass the Government as it had embarrassed the Government of Louis XVI. When a Government, Bonaparte declared, is dependent for money upon bankers, they and not the leaders of that Government control the situation, since "the hand that gives is above the hand that takes."...
"Money," he declared, "has no motherland; financiers are without patriotism and without decency: their sole object is gain."1
1. R. McNair Wilson, Monarchy or Money Power (London: Eyre and Spottiswoode, Ltd., 1933), pp. 68,72.
One of Napoleon's first blows against the bankers was to establish an independent Bank of France with himself as president. But even this bank was not trusted, and government funds were never placed into it. It was his refusal to borrow, however, that caused the most concern among the financiers. Actually, to them this was a mixture of both bad and good news. The bad news was that they were denied the benefit of royalty payments on fractional money. The good news was that, without resorting to debt, they were confident Napoleon could not militarily defend himself. Thus, he easily could be toppled and replaced by Louis XVI of the old monarchic dynasty who was receptive to banker influence. Wilson continues:
They had good hope of compassing his downfall. None believed that he could finance war on a great scale now that the resource of paper money had been denied him by the destruction of the Assignat.2 Where would he obtain the indispensable gold and silver to feed and equip a great army? Pitt [the Prime Minister of England] counted already on a coalition of England, Austria, Prussia, Russia, Spain, Sweden, and numerous small states. Some 600,000 men would be put into the field. All the resources of England's wealth—that is to say, of the world's wealth—would be placed at the disposal of this overwhelming force. Could the Corsican muster 200,000? Could he arm them? Could he feed them? If the lead bullets did not destroy him, the gold bullets would soon make an end. He would be forced, like his neighbors, to come, hat in hand, for loans and, like them, to accept the banker's terms....
2. The Assignat was pure fiat money which rapidly became totally worthless in commerce and which all but destroyed the French economy.
He could not put his hands on £2,000,000, so empty was the Treasury and so depleted the nation's stock of metallic money. London waited with interest to see how the puzzle would be solved. 1
1. R. McNair Wilson, pp. 71-72.
Napoleon solved the puzzle quite simply by selling off some real estate. Those crazy Americans gave him £3,000,000 for a vast swamp called Louisiana.
A PLAN TO DESTROY
THE UNITED STATES
Napoleon did not want war, but he knew that Europe's
financial rulers would not settle for peace—unless, of course, they
were forced into it by the defeat of their puppet regimes or unless,
somehow, it would be to their monetary advantage. It was in
pursuit of the latter tactic that he threatened to take direct possession
of Holland, which then was ruled by his brother, King Louis.
Napoleon knew that the Dutch were heavily in debt to the English
bankers. If Holland were to be annexed by France, this debt would
never be repaid. So Napoleon made a proposal to England's
bankers that, if they would convince the English government to
accept peace with France, he would agree to leave Holland alone. The negotiations were handled by the banker, Pierre-Cesar Labouchere, who was sent by the Dutch, and the English banker, Sir Francis Baring who was Labouchere's father-in-law. Although this was an attractive proposal to the bankers, at least on a short-term basis, it was still against their nature to forego the immense profits of war and mercantilism. They revised the proposal, therefore, to include a plan whereby both England and France would combine forces to destroy the newly independent United States and bring at least half of it—the industrial half—back under the domination of England. The incredible plan, conceived by the French banker, Ouvard, called for military invasion and conquest followed by division of the spoils. England would receive the northern states, united with Canada, while the southern states would fall to France. Napoleon was to be tempted by offering him the awesome title of "King of America." McNair Wilson tells us:
Labouchere wrote to Baring on March 21, and enclosed a note for [British Foreign Secretary] Wellesley dictated by Ouvrard which ran:
"From a conqueror he (Napoleon) is becoming a preserver; the first result of his marriage with Marie Louise will be that he will make an offer of peace to England. It is to this nation's (i.e., England's) interest to make peace, for it has the command of the sea; on the contrary, it is really in the interest of France to continue war, which allows her to expand indefinitely and make a fresh fleet, which cannot be done once peace is established. Why does not the English Cabinet make a proposal to France to destroy the United States of America, and by making them again dependent on England, persuade Napoleon to lend his aid to destroy the life-work of Louis XVI?... It is to her (England's) interest to conclude peace and to flatter Napoleon's vanity by recognizing his work and his imperial title."...
The Cabinet discussed the proposals and approved them. Wellesley at once hurried to Baring's house to give him the good news.... The Dutch would be able to pay and would be compelled to pay in gold.
Unhappily Napoleon found out what was afoot and took somewhat strong objections to the plan of a joint attack on the United States. He arrested Ouvrard, dismissed and exiled Fouche, and published the whole story, to the grave distress of Wellesley and Baring. 1
1. R. McNair Wilson, pp. 81-82.
It must not be concluded from this that Napoleon was a paragon of virtue or a champion of honest money. His objection to the bankers was that their monetary power was able to threaten the sovereignty of his own political power. He allowed them a free hand while they served the purpose of the state. Then, when the need for military financing subsided, he would condemn them for making "unholy profits" and simply take it from them in the name of the people. If the bankers protested, they were sent to prison.
And so the battle lines were drawn. Napoleon had to be destroyed at all costs. To make this possible, the Bank of England created vast new amounts of fiat money to "lend" to the government so it could finance an overpowering army. A steady stream of gold flowed out of the country to finance the armies of Russia, Prussia, and Austria. The economy staggered once again under the load of war debt, and the little people paid the bill with hardly a grumble because they hadn't the slightest knowledge it was being charged to their account. Wilson concludes the story:
The bankers won. Louis XVIII was restored by British arms and British diplomacy to the throne of his ancestors. Loans were placed at his disposal, though Napoleon had left a France which enjoyed a credit balance.
A year later the man whom every King and every banker in Europe called "usurper" won back his throne with 800 men and without the firing of a single shot. On this occasion he had no option but to raise a loan for the defense of France. The City of London [banking district] accommodated him with £5,000,000. With this sum he equipped the army which Wellington defeated at Waterloo. 1
1. R. McNair Wilson, p. 83
GOLD FOR THE
DUKE OF WELLINGTON
One of the most fascinating and revealing episodes to be
recorded by Rothschild biographers concerns the smuggling of a
large shipment of gold to finance the Duke of Wellington who was
attempting to feed and equip an army in Portugal and in the
Pyrenees mountains between Spain and France.It was not at all certain that Wellington would be able to defeat Napoleon in the coming battle, and the Duke was hard pressed to convince bankers and merchants in Portugal and Spain to accept his written promises-to-pay, even though they were officially guaranteed by the British government. These notes were deeply discounted, and Wellington was desperate for gold coin. It was at this point that Nathan Rothschild offered the services of himself and his brothers. With an efficient smuggling apparatus already functioning throughout Europe, he was able to offer Wellington much better terms while still making a magnificent profit. But, to accomplish this, the gold had to pass right under Napoleon's nose. Frederic Morton describes the scene:
There was only one way to route the cash: through the very France England' s army was fighting. Of course , the Rothschild blockade-running machine already had superb cogs whirring all over Germany, Scandinavia and England, even in Spain and Southern France. But a very foxy new wheel was needed in Napoleon's capital itself. Enter Jacob—henceforth called James—the youngest of Mayer's sons.2
2. Morton, p. 46.
James was only nineteen years old but was well trained by his father in the art of deception. He arrived in Paris with a dual mission. First, he was to provide the French authorities with a false report about the British gold movement, with just enough truth in it to sound convincing. He presented the government with falsified letters indicating that the English were desperate to halt the flow of their gold into France. The ploy paid off when the French authorities then actually encouraged the financial community to accept British gold and to convert it into commercially sound banknotes. Second, James was to serve as a vital link in a financial chain stretching between London and the Pyrenees. He was to coordinate the receipt of the gold into France, the conversion of that gold into Spanish banknotes, and the movement of those notes out of the country on their way to Wellington. All of this he did with amazing dexterity, especially considering his youth. Morton concludes:
In the space of a few hundred hours Mayer's youngest had not only gotten the English gold rolling through France, but conjured a fiscal mirage that took in Napoleon himself. A teen-age Rothschild tricked the imperial government into sanctioning the very process that helped to ruin it....
The family machine began to hum. Nathan sent big shipments of British guineas, Portuguese gold ounces, French napoleons d'or (often freshly minted in London) across the Channel. From the coast James saw them to Paris and secretly transmuted the metal into bills on certain Spanish bankers. South of the capital, Kalmann [another of Mayer's sons] materialized, took over the bills, blurred into a thousand shadowed canyons along the Pyrenees—and reappeared, with Wellington's receipts in hand. Salomon [another son] was everywhere, troubleshooting, making sure the transit points were diffuse and obscure enough not to disturb either the French delusion or the British guinea rate. Amschel stayed in Frankfurt and helped father Mayer to staff headquarters.
The French did catch a few whiffs of the truth. Sometimes the suspicious could be prosperously purged of their suspicion. The police chief of Calais, for example, suddenly was able to live in such distracting luxury that he found it difficult to patrol the shoreline thoroughly....
While Napoleon struggled his might away in the Russian Winter, there passed through France itself a gold vein to the army staving in the Empire's back door.1
1. Morton, p. 47.
At a dinner party in later years, Nathan casually summed up the episode as though it were merely a good piece of routine business. He said:
The East India Company had £800,000 worth of gold to sell. I went to the sale and bought it all. I knew the Duke of Wellington must have it. The government sent for me and said they must have the gold. I sold the gold to them, but they didn't know how to get it to the Duke in Portugal. I undertook all that and sent it through France. It was the best business I have ever done. 1
1. Morton, p. 45.
THE BATTLE OF WATERLOO
The final outcome of the battle at Waterloo between Wellington
and Napoleon was crucial to Europe both politically and economically.
If Napoleon had been victorious, England would have been
in even greater economic trouble than before. Not only would she
have lost international power and prestige, but even at home, her
subjects would have been further disgruntled over such great
personal and financial wartime sacrifices. Her defeat almost surely
would have resulted in not being able to repay the great amounts
she had borrowed to conduct the war. In the London stock
exchange, therefore, where British government bonds were traded
along with other securities, everyone waited anxiously for news of
the outcome. It was well known that the Rothschilds had developed a private courier service that was used, not only to transport gold and other tangible cargo, but to rapidly move information that could be useful in making investment decisions. It was expected, therefore, that Nathan in London would be the first to know the name of the victor after the cannon smoke had cleared from the battlefield. And they were not to be disappointed. The first news of Wellington's victory arrived in Brussels around midnight on June 18, 1815, where a Rothschild agent named Rothworth was waiting in readiness. He immediately mounted a fresh horse and set off for the port of Ostend where a boat was standing by to speed him across the channel to London. In the early hours of June 20, the exhausted messenger was pounding on Nathan's door, a full twenty-four hours before Wellington's own courier, Major Henry Percy, arrived.
At least one friendly biographer claims that Nathan's first act was to deliver the news to the Prime Minister, but that government officials were hesitant at first to believe it, because it ran contrary to reports they had received previously telling of serious British setbacks. At any rate, there is no doubt that Nathan's second act of the morning was to set off for the stock exchange to take up a position at his usual pillar.
All eyes were upon him as he slumped dejectedly, staring at the floor. Then, he raised his gaze and, with pained expression, began to sell. The whisper went through the crowded room, "Nathan is selling?" "Nathan is selling!" "Wellington must have lost." "Our government bonds will never be repaid." "Sell them now. Sell. Sell!"
Prices tumbled, and Nathan sold again. Prices plummeted, and still Nathan sold. Finally, prices collapsed altogether and, in one quick move, Nathan reversed his call and purchased the entire market in government bonds. In a matter of just a few hours, he had acquired the dominant holding of England's entire debt at but a tiny fraction of its worth.1
1.The New York Times, in its April 1, 1915, edition, reported that Baron Nathan Mayer de Rothschild had attempted to secure a court order to suppress a book written by Ignatious Balla entitled The Romance of the Rothschilds on the grounds that the Waterloo story about his grandfather was untrue and libelous. The court ruled that the story was true, dismissed the suit, and ordered Rothschild to pay all court costs.
SIDONIA
Benjamin Disraeli, the Prime Minister of England, wrote a book
in 1844 called Coningsby. It was a political novel in which the author
expressed his views about contemporary issues. One of the strong
characters in the book was a financier named Sidonia, but every
detail of Sidonia's actions was an exact replica of the real Lord
Rothschild, whom Disraeli greatly admired. In the guise of a novel,
we read about Rothschild's emigration from Germany, his family
and banking ties throughout Europe, his handling of the gold for
Wellington, and his financial coup after Waterloo. Then Disraeli
wrote: Europe did require money, and Sidonia was ready to lend it to Europe. France wanted some; Austria more; Prussia a little; Russia a few millions. Sidonia could furnish them all....
It is not difficult to conceive that, after having pursued the career we have intimated for about ten years, Sidonia had become one of the most considerable personages in Europe. He had established a brother, or a near relative, in whom he could confide, in most of the principal capitals. He was lord and master of the money market of the world, and of course virtually lord and master of everything else. He literally held the revenues of Southern Italy in pawn; and monarchs and ministers of all countries courted his advice and were guided by his suggestions.1
1. Benjamin Disraeli, Coningsby (New York: Alfred A. Knopf, originally published in England in 1844), p. 225.
2. Stephen Birmingham, "Our Crowd": The Great Jewish Families of New York (New York: Harper & Row, 1986), p. 73.
There have always been men who were in a position to make private fortunes out of cooperating with both sides in a war. The Rothschilds were not unique in this, but they no doubt perfected the art and became the personification of that breed. They were not necessarily evil in a moral sense. What preoccupied their minds were not questions of right or wrong but of profit and loss. This analytical indifference to human suffering was aptly described by one Rothschild when he said: "When the streets of Paris are 3 running with blood, I buy." They may have held citizenship in the country of their residence, but patriotism was beyond their comprehension. They were also very bright, if not cunning, and these combined traits made them the role model of the cool pragmatists who dominate the political and financial world of today. Disraeli well described this type when he wrote of Sidonia:
3. Quoted in The Neiv York Times, October 21,1987, cited by Chernow, p. 13.
He was a man without affections. It would be harsh to say he had no heart, for he was susceptible of deep emotions, but not for individuals.... The individual never touched him. Woman was to him a toy, man a machine. 4
4. Disraeli, p. 229.
The new alliance [between the monetary and political scientists] was mutually advantageous. Washington wanted to harness the new financial power to coerce foreign governments into opening their markets to American goods or adopting pro-American policies. The banks, in turn, needed levers to force debt repayment and welcomed the government's police powers in distant places. The threat of military intervention was an excellent means by which to speed loan repayment. When Kuhn, Loeb considered a loan to the Dominican Republic, backed by customs receipts, Jacob Schiff inquired of his London associate Sir Ernest Cassel, "If they do not pay, who will collect these customs duties?" Cassel replied, "Your marines and ours."1
1- Quoted by Jacques Attali, translated by Barbara Ellis, A Man of Influence- Sir Siegmund Warburg, 1902-82 (London: Weidenfeld, & Nicolson, 1986), p. 57.
One of the great puzzles of history is why governments always go into debt and seldom attempt to put themselves on a "pay-as you-go" basis. A partial answer is that kings and politicians lack the courage to tax their subjects the enormous sums that would be required under such an arrangement. There is also the deeper question of why the expenditures are so high in the first place.
Given the mentality of the world's financial lords and masters, as Disraeli described them, it is conceivable that a coldly calculated strategy has been developed over the years to insure this result. In fact, the historical evidence strongly suggests that just such a plan was developed in eighteenth-century Europe and perfected in twentieth-century America. For the purposes of hypothetical analysis, let us identify this strategy as The Rothschild Formula.
THE FORMULA
Let us imagine a man who is totally pragmatic. He is smarter
and more cunning than most men and, in fact, holds them in thinly
disguised contempt. He may respect the talents of a few, but has
little concern over the condition of mankind. He has observed that
kings and politicians are always fighting over something or other
and has concluded that wars are inevitable. He also has learned
that wars can be profitable, not only by lending or creating the money to finance them, but from government favoritism in the
granting of commercial subsidies or monopolies. He is not capable
of such a primitive feeling as patriotism, so he is free to participate
in the funding of any side in any conflict, limited only by factors of
self interest. If such a man were to survey the world around him, it
is not difficult to imagine that he would come to the following
conclusions which would become the prime directives of his career: 1. War is the ultimate discipline to any government. If it can successfully meet the challenge of war, it will survive. If tt cannot, it will perish. All else is secondary. The sanctity of its laws, the prosperity of its citizens, and the solvency of its treasury will be quickly sacrificed by any government in its primal act of self-survival.
2. All that is necessary, therefore, to insure that a government will maintain or expand its debt is to involve it in war or the threat of war. The greater the threat and the more destructive the war, the greater the need for debt.
3. To involve a country in war or the threat of war, it will be necessary for it to have enemies with credible military might. If such enemies already exist, all the better. If they exist but lack military strength, it will be necessary to provide them the money to build their war machine. If an enemy does not exist at all, then it will be necessary to create one by financing the rise of a hostile regime.
4. The ultimate obstacle is a government which declines to finance its wars through debt. Although this seldom happens, when it does, it will be necessary to encourage internal political opposition, insurrection, or revolution to replace that government with one that is more compliant to our will. The assassination of heads of state could play an important role in this process.
5. No nation can be allowed to remain militarily stronger than its adversaries, for that could lead to peace and a reduction of debt. To accomplish this balance of power, it may be necessary to finance both sides of the conflict. Unless one of the combatants is hostile to our interests and, therefore, must be destroyed, neither side should be allowed a decisive victory or defeat. While we must always proclaim the virtues of peace, the unspoken objective is perpetual war.
Whether anyone actually put this strategy into words or passed it along from generation to generation is not important. In fact, it is doubtful it has ever worked that way. Whether it is the product of conscious planning or merely the consequence of men responding to the profit opportunities inherent in fiat money, the world's financial lords have acted as though they were following such a plan, and this has become especially apparent since the creation of the central-bank Mandrake Mechanism three centuries ago.
The "balance-of-power" question is particularly intriguing. Most history texts present the concept as though it were some kind of natural, social phenomenon which, somehow, has worked to the benefit of mankind. The implication is that it's just wonderful how, after all those European wars, no nation was strong enough to completely dominate the others. When the United States emerged from World War II with exactly such power, it was widely deplored, and massive political/financial mechanisms such as foreign aid and disarmament were set in motion to restore the balance. This has become almost a revered doctrine of international democracy. But the overlooked consequence of this sentimental notion is that wars "between equals" have become the permanent landscape of history.
This does not mean that every war-like group that comes along will find easy financing from the lords and masters. It depends on whom they threaten and how likely they are to succeed. In 1830, for example, the Dutch were facing an uprising of their subjects in Belgium. Both the ruling government and the revolutionaries were dependent upon the Rothschilds for financing their conflict. The Dutch rulers were reliable customers for loans and, just as important, they were reliable in their payment of interest on those loans. It would have been foolhardy to provide more than token assistance to the rebels who, if they came to power, quite likely would have refused to honor the debts of the former puppet regime. Salomon Rothschild explained:
These gentlemen should not count on us unless they decide to follow a line of prudence and moderation.... Our goodwill does not yet extend to the point of putting clubs into the hands that would beat us, that is, lending money to make war and ruin the credit that we sustain with all our efforts and all our means. 1
1- As quoted by Derek Wilson, p. 100.
After the revolution was resolved by negotiation rather than by arms, the new government in Brussels was a natural target for financial takeover. James Rothschild laid out the strategy that has become the model of such operations ever since:
Now is the moment of which we should take advantage to make ourselves absolute masters of that country's finances. The first step will be to establish ourselves on an intimate footing with Belgium's new Finance Minister, to gain his confidence ... and to take all the treasury bonds he may offer us.
PERPETUAL WAR IN
EIGHTEENTH CENTURY ENGLAND
Wars, great and small, have always been a plague to Europe,
but it was not until they were easy to finance through central
banking and fiat money that they became virtually perpetual. For
example, the following war chronicle begins immediately following
the formation of the Bank of England which, as you recall, was
created for the specific purpose of financing a war: 1689-1697 The War of the League of Augsberg
1702-1713 The War of Spanish Succession
1739-1742 The War of Jenkin's Ear
1744—1748 The War of Austrian Succession
1754—1763 The French and Indian War
1793-1801 The War against Revolutionary France 1803-1815 The Napoleonic Wars
In addition to these European conflicts, there also were two wars with America: the War for Independence and the War of 1812. In the 126 years between 1689 and 1815, England was at war 63 of them. That is one out of every two years in combat. The others were spent preparing for combat.
The mark of the Rothschild Formula is unmistakable in these conflicts. The monetary scientists often were seen financing both sides. Whether ending in victory or defeat, the outcome merely preserved or restored the European "balance of power." And the most permanent result of any of these wars was expanded government debt for all parties.
SUMMARY
By the end of the eighteenth century, the House of Rothschild
had become one of the most successful financial institutions the world has ever known. Its meteoric rise can be attributed to the
great industry and shrewdness of the five brothers who established
themselves in various capitals of Europe and forged the world's
first international financial network. As pioneers in the practice of
lending money to governments, they soon learned that this provided
unique opportunities to parlay wealth into political power as
well. Before long, most of the princes and kings of Europe had
come within their influence. The Rothschilds also had mastered the art of smuggling on a grand scale, often with the tacit approval of the governments whose laws they violated. This was perceived by all parties as an unofficial bonus for providing needed funding to those same governments, particularly in time of war. The fact that different branches of the Rothschild network also might be providing funds for the enemy was pragmatically ignored. Thus, a time-honored practice among financiers was born: profiting from both sides.
The Rothschilds operated a highly efficient intelligence gathering system which provided them with advance knowledge of important events, knowledge which was invaluable for investment decisions. When an exhausted Rothschild courier delivered the first news of the Battle of Waterloo, Nathan was able to deceive the London bond traders into a selling panic, and that allowed him to acquire the dominant holding of England's entire debt at but a tiny fraction of its worth.
A study of these and similar events reveals a personality profile, not just of the Rothschilds, but of that special breed of international financiers whose success typically is built upon certain character traits. Those include cold objectivity, immunity to patriotism, and indifference to the human condition. That profile is the basis for proposing a theoretical strategy, called the Rothschild Formula, which motivates such men to propel governments into war for the profits they yield. This formula most likely has never been consciously phrased as it appears here, but subconscious motivations and personality traits work together to implement it nevertheless. As long as the mechanism of central banking exists, it will be to such men an irresistible temptation to convert debt into Perpetual war and war into perpetual debt.
In the following chapters we shall track the distinctive footprint of the Rothschild Formula as it leads up to our own doorstep in the present day.
Chapter Twelve
SINK THE LUSITANIA!
The role of J.P. Morgan in providing loans to
England and France in World War I; the souring
of those loans as it became apparent that Germany
would win; the betrayal of a British ship and the
sacrifice of American passengers as a stratagem to
bring America into the war; the use of American
taxes to pay off the loans. The origin of World War I usually is attributed to the assassination of Archduke Francis Ferdinand of Austria-Hungary by a Serbian nationalist in 1914. This was a serious affront to Austria but hardly sufficient reason to plunge the world into a mortal conflict that would claim over ten million lives and twenty million wounded. American schoolchildren are taught that Uncle Sam came into the war "to make the world safe for democracy." But, as we shall see, the American war drums were pounded by men with far less idealistic objectives.
Since the latter part of the eighteenth century, the Rothschild Formula had controlled the political climate of Europe. Nations had increasingly confronted each other over border disputes, colonial territories, and trade routes. An arms race had been in progress for many years; large, standing armies had been recruited and trained; military alliances had been hammered together; all in preparation for war. The assassination of Ferdinand was not the cause but the trigger. It was merely the spark that lit the fuse that fired the first loaded cannon.
AN INVESTMENT IN WAR
The exigencies of war in Europe required England and France to
go heavily into debt. When their respective central banks and local
merchant banks could no longer meet that need, the beleaguered
governments turned to the Americans and selected the House of
Morgan—acting as partners of the Rothschilds—to act as sales agent
for their bonds. Most of the money raised in this fashion was quickly returned to the United States to acquire war-sensitive materials,
and Morgan was selected as the U.S. purchase agent for those
as well. A commission was paid on all transactions in both directions:
once when the money was borrowed and again when it was
spent. Furthermore, many of the companies receiving production
contracts were either owned outright by Morgan holding companies
or were securely within his orbit of bank control. Under such an
arrangement, it will not be surprising to learn, as we shall in a
moment, that Morgan was not overly anxious to see hostilities come
to a close. Even the most honorable of men can be corrupted by the
temptation of such gigantic flows of cash. Writing in the year 1919, just a few months after the end of the war, John Moody says:
Not only did England and France pay for their supplies with money furnished by Wall Street, but they made their purchases through the same medium.... Inevitably the house of Morgan was selected for this important task. Thus the war had given Wall Street an entirely new role. Hitherto it has been exclusively the headquarters of finance; now it became the greatest industrial mart the world had ever known. In addition to selling stocks and bonds, financing railroads, and performing the other tasks of a great banking center, Wall Street began to deal in shells, cannon, submarines, blankets, clothing, shoes, canned meats, wheat, and the thousands of other articles needed for the prosecution of a great war. 1
1. John Moody, The Masters of Capital (New Haven: Yale University Press, 1919), pp. 164-165 .
The money began to flow in January of 1915 when the House of Morgan signed a contract with the British Army Council and the Admiralty. The first purchase, curiously, was for horses, and the amount tendered was $12 million. But that was but the first drop of rain before the deluge. Total purchases would eventually climb to an astronomical $3 billion. The firm became the largest consumer on earth, spending up to $10 million per day. Morgan offices at 23 Wall Street were mobbed by brokers and manufacturers seeking to cut a deal. The bank had to post guards at every door and at the partners' homes as well. Each month, Morgan presided over purchases which were equal to the gross national product of the entire world just one generation before.
Throughout all this, Morgan vigorously claimed to be a pacifist. "Nobody could hate war more than I do," he told the Senate Munitions Committee. But such professions of righteousness were difficult to accept. Lewinsohn comments:
The 500 million dollar loan contracted in autumn 1915 brought to the group of bankers, at whose head Morgan was, a net profit of 9 million dollars.... Again, in 1917, the French government paid to Morgan's and other banks a commission of 1,500,000 dollars, and a further million in 1918.
Besides the issue of loans there was another source of profit: the purchase and sale of American stock which the Allies surrendered so that they could buy munitions in the States. It is estimated that in the course of the war some 2000 million [two billion] dollars passed in this way through Morgan's hands. Even if the commission was very small, transactions of such dimensions would give him an influence on the stock market which would carry very real advantages....
His hatred against war did not prevent him, citizen of a neutral country, from furnishing belligerent powers with 4,400,000 rifles for a matter of $194,000,000.... The profits were such as to compensate to some degree his hatred of warfare. According to his own account, he received, as agent of the English and French governments , a commission of 1% on orders totalling $3,000,000,000. That is, he received some $30,000,000.... Besides these two chief principals, Morgan, however, also acted for Russia (for whom he did business amounting to $412,000,000) and for Italy and Canada (figures for his business with the last two not having been published)....
J.P. Morgan, and some of his partners in the bank, were at the time shareholders in companies that were ... concerns which made substantial profits from the orders he placed with them. .. It is really astonishing that a central buying organization should have been confided to one who was buyer and seller at the same time.1
1. Lewinsohn, pp. 103-4,222-24.
GERMANY'S U-BOATS
ALMOST WON THE WAR
But there were dark clouds gathering above Wall Street as the
war began to go badly for the Allies. With the passage of time and
the condensing of history, it is easy to forget that Germany and the
Central Powers almost won the war prior to U.S. entry. Employing
a small fleet of newly developed submarines, Germany was well on
her way to cutting off England and her allies from all outside help.
It was an amazing feat and it changed forever the concept of naval
warfare. Germany had a total of twenty-one U-boats, but, because they constantly had to be repaired and serviced, the maximum
number at sea was only seven at any one time. Yet, between 1914
and 1918, German submarines had sunk over 5,700 surface ships.
Three-hundred thousand tons of Allied shipping were sent to the
bottom every week. One out of every four steamers leaving the
British Isles never returned. In later years, British Foreign Secretary,
Arthur Balfour, wrote: "At that time, it certainly looked as though
we were going to lose the war."1 Robert Ferrell, in his Woodrow
Wilson and World War I, concluded: "The Allies approached the
brink of disaster, with no recourse other than to ask Germany for
terms."2 William McAdoo, who was Secretary of the Treasury at the
time, says in his memoirs: 1. Balfour MSS, FO/800/208, British Foreign Office records, Public Record Office, London, as cited by Robert H. Ferrell, Woodrow Wilson and World War I (New York: Harper & Row, 1985), p. 35.
2. Ferrell, p. 12.
Across the sea came the dismay of the British—a dismay that carried a deepening note of disaster. There was a fear, and a well-grounded one, that England might be starved into abject surrender.... On April 27,1917, Ambassador Walter H. Page reported confidentially to the President that the food in the British Isles was not more than enough to feed the civil population for six weeks or two months.3
3. William G. McAdoo, Crowded Years (New York: Houghton Mifflin, 1931; rpt. New York: Kennikat Press, 1971), p. 392.
Under these circumstances, it became impossible for Morgan to find new buyers for the Allied war bonds, neither for fresh funding nor to replenish the old bonds which were coming due and facing default. This was serious on several counts. If bond sales came to a halt, there would be no money to continue purchasing war materials. Commissions would be lost at both ends. Furthermore if the previously sold bonds were to go into default, as they certainly would if Britain and France were forced to accept peace on Germany's terms, the investors would sustain gigantic losses. Something had to be done. But what? Robert Ferrell hints at the answer:
In the mid thirties a Senate committee headed by Gerald P. Nye of North Dakota investigated the pre-1917 munitions trade and raised a possibility that the Wilson administration went to war because American bankers needed to protect their Allied loans.4
4. Ferrell, p. 88.
As previously mentioned by William McAdoo, the American ambassador to England at that time was Walter Hines Page, a trustee of Rockefeller's social-engineering foundation called the General Education Board. It was learned by the Nye committee that, in addition to his government salary, which he complained was not high enough, Page also received an allowance of $25,000 a year (an enormous amount in 1917) from Cleveland Dodge, president of Rockefeller's National City Bank. On March 15, 1917, Ambassador Page sent a telegram to the State Department outlining the financial crisis in England. Since sources of new capital had dried up, the only way to keep the war going, he said, was to make direct grants from the U.S. Treasury. But, since this would be a violation of neutrality treaties, the United States would have to abandon its neutrality and enter the war. He said:
I think that the pressure of this approaching crisis has gone beyond the ability of the Morgan Financial Agency for the British and French Governments.... The greatest help we could give the Allies would be such a credit.... Unless we go to war with Germany, our Government, of course, cannot make such a direct grant of credit.1
1. Quoted by Ferdinand Lundberg, America's Sixty Families (New York: Vanguard Press, 1937), p. 141. Also see Link et al., eds., The Papers of Woodrow Wilson, Vol. 41 (1983), pp. 336-37, cited by Ferrell, p. 90.
2. Lundberg, pp. 141-42.
COLONEL HOUSE
It is widely acknowledged that Colonel House was the man who selected Wilson as a presidential candidate and who secured his nomination.1 He became Wilson's constant companion, and the President admitted publicly that he depended on him greatly for instruction and guidance. Many of Wilson's important appointive posts in government were hand selected by House.2 He and Wilson even went so far as to develop a private code so they could communicate freely over the telephone. The President himself had written: "Mr. House is my second personality. He is my independent self. His thoughts and mine are one."3
1. The Columbia Encyclopedia (Third Edition, 1962, p. 2334) says the Democratic Party nomination went to Wilson when William Jennings Bryan switched his support to him "prompted by Edward M. House." For details, see Martin, p. 155.
2. Charles Seymour, The Intimate Papers of Colonel House (New York: Houghton Mifflin Co., 1926), Vol. 1, pp. 114-15.
3. Seymour, Vol. I, p. 114.
George Viereck, an admiring biographer of House, tells us:
House had the Texas delegation in his pocket.... Always moving quietly in the background, he made and unmade several governors of Texas.... House selected Wilson because he regarded him as the best available candidate....
For seven long years Colonel House was Woodrow Wilson's other self. For six long years he shared with him all but the title of the Chief Magistracy of the Republic. For six years two rooms were al his disposal in the North Wing of the White House.... It was House who made the slate for the Cabinet, formulated the first policies of the Administration and practically directed the foreign affairs of the United States. We had, indeed, two Presidents for one!... Super-ambassador, he talked to emperors and kings as an equal He was the spiritual generalissimo of the Administration. He was the pilot who guided the ship.4
4. George Sylvester Viereck, The Strangest Friendship in History: Woodrow Wilson and Colonel House (New York: Liveright Publishers, 1932), pp. 4,18-19,33,35.
A SECRET AGREEMENT TO
GET THE U.S. INTO WAR
As the presidential election neared for Wilson's second term,
Colonel House entered into a series of confidential talks with Sir William Wiseman, who was attached to the British embassy in
Washington and who acted as a secret intermediary between House
and the British Foreign Office. Charles Seymour writes: "Between
House and Wiseman there were soon to be few political secrets."1
This was upsetting to the Secretary of State, William Jennings
Bryan. Mrs. Bryan, as co-author of her husband's memoirs, writes: 1. Seymour, Vol. 11, p. 399.
2. William Jennings Bryan and Mary Baird Bryan, The Memoirs of William Jennings Bryan (New York: Kennikat Press, 1925), Vol. 11, pp. 404-5.
While Secretary Bryan was bearing the heavy responsibility of the Department of State, there arose the curious conditions surrounding Mr. E.M. House's unofficial connection with the President and his voyages abroad on affairs of State, which were not communicated to Secretary Bryan.... The President was unofficially dealing with foreign governments.2
What was the purpose of those dealings? It was nothing less than to work out the means whereby the United States could be brought into the war. Viereck explains:
Ten months before the election which returned Wilson to the White House in 1916 "because he kept us out of war," Colonel 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, Woodrow Wilson formally sanctioned the undertaking. If an inkling of the conversations between Colonel House and the leaders of England and France had reached the American people before the election, it might have caused incalculable revulsions of public opinion....
From this conversation and various conferences with Sir Edward Grey grew the Secret Treaty, made without the knowledge and consent of the United States Senate, by which Woodrow Wilson and House chained the United States to the chariot of the Entente.... After the War the text of the agreement leaked out. Grey was the first to tattle. Page discussed it at length. Colonel House tells its history. C. Hartley Grattan discusses it at length in his book, Why We Fought. But for some incomprehensible reason the enormous significance of the revelation never penetrated the consciousness of the American people.3
3. Viereck, pp. 106-08. This matter, along with the complete text of Sir Grey's memorandum, is discussed in The Memoirs of William Jennings Bryan Vol. 11, pp.
The basic terms of the agreement were that the United States government would offer to negotiate a peaceful settlement between Germany and the Allies and would then put forth a specific proposal for the terms of that settlement. If either side refused to accept the proposal, then the United States would come into the war as an ally of the other side. The catch was that the terms of the proposal were carefully drafted so that Germany could not possibly accept them. Thus, to the world, it would look as though Germany was at fault and the United States was humanitarian. As Ambassador Page observed in a memorandum dated February 9,1916:
House arrived from Berlin-Havre-Paris full of the idea of American intervention. First his plan was that he and I and a group of the British Cabinet (Grey, Asquith, Lloyd George, Reading, etc.) should at once work out a minimum programme of peace—the least that the Allies would accept, which, he assumed, would be unacceptable to the Germans; and that the President would take this programme and present it to both sides; the side that declined would be responsible for continuing the war.... Of course, the fatal moral weakness of the foregoing scheme is that we should plunge into the War, not on the merits of the cause, but by a carefully sprung trick 1
1. Quoted by Viereck, pp. 112-13.
On the surface it is a paradox that Wilson, who had always been a pacifist, should now enter into a secret agreement with foreign powers to involve the United States in a war which she could easily avoid. The key that unlocks this mystery is the fact that Wilson also was an internationalist. One of the strongest bonds between House and himself was their common dream of a world government. They both recognized that the American people would never accept such a concept unless there were extenuating circumstances. They reasoned that a long and bloody war was probably the only event that could condition the American mind to accept the loss of national sovereignty, especially if it were packaged with the promise of putting an end to all wars in the future. Wilson knew, also, that, if the United States came into the war early enough to make a real difference on the battlefield and if large amounts of American dollars could be loaned to the Allied powers, he would be in a position after the war to dictate the terms of peace. He wrote to Colonel House: "England and France have not the same views with regard to peace as we have by any means. When the war is over, we can force them to our way of thinking, because by that time they will among other things be financially in our hands."1 And so Wilson tolerated the agony of mixed emotions as he plotted for war as a necessary evil to bring about what he perceived as the ultimate good of world government.
1- Quoted by Ferrell, p. 88.
2- Ferrell, p. 12.
With the arrival of 1917, the President was planting hints of both war and world government in almost every public utterance. In a typical statement made in March of that year, he said: "The tragic events of the thirty months of vital turmoil through which we have just passed have made us citizens of the world. There can be no turning back. Our own fortunes as a nation are involved, whether we would have it so or not."2 [Wilson is the original POS who would sell us out to the globalists,who in reality is really England and demon child Rothschild DC]
It was about this same time that Wilson called together the Democratic leaders of Congress to a special breakfast meeting at the White House. He told them that, in spite of public sentiment, there were many sound reasons for the country to enter the war and he asked them to help him sell this plan to Congress and the voters. Harry Elmer Barnes tells us:
These men were opposed to war and, hence, rejected his proposals somewhat heatedly. Wilson knew that it was a poor time to split the party just before an election, so he dropped the matter at once and, with Col. House, mapped out a pacifist platform for the coming campaign. Governor Martin Glynn of New York and Senator Ollie James of Kentucky were sent to the St. Louis convention to make keynote speeches, which were based on the slogan: "He kept us out of war!"... Before he had been inaugurated a second time, the Germans played directly into his hands by announcing the resumption of submarine warfare.... It was fortunate for Britain and the bankers that the German's made this timely blunder, as Great Britain had overdrawn her American credit by some $450,000,000 and the bankers were having trouble in floating more large private loans. It was necessary now to pass on the burden of financing the Entente to the Federal Treasury. 3
3. Harry Elmer Barnes, In Quest of Truth and Justice: De-Bunking the War Guilt Myth (Chicago: National Historical Society, 1928; rpt. New York: Arno Press & The New York Times, 1972), p. 104. For an additional account of this meeting, see Viereck, pp.
SELLING WAR TO
THE AMERICAN PEOPLE
Through secret agreements and trickery, America had been
committed to war, but the political and monetary scientists realized
that something still had to be done to change public sentiment. How
could that be accomplished? Wall Street control over important segments of the media was considerable. George Wheeler tells us: "Around this time the Morgan firm was choosing the top executives for the old and troubled Harper & Brothers publishing house.... In the newspaper field, Pierpont Morgan at this period was in effective control of the New York Sun,... the Boston News Bureau, Barron's magazine, and the Wall Street Journal"1
1. George Wheeler, Pierpont Morgan and Friends: The Anatomy of a Myth (Englewood Cliffs, New Jersey: Prentice Hall, 1973), pp. 283-84.
On February 9,1917, Representative Callaway from Texas took the floor of Congress and provided further insight. He said:
In March, 1915, the J.P. Morgan interests, the steel, shipbuilding, and powder interests, and their subsidiary organizations, got together 12 men high up in the newspaper world and employed them to select the most influential newspapers in the United States and sufficient number of them to control generally the policy of the daily press.. They found it was only necessary to purchase the control of 25 of the greatest papers.... An agreement was reached; the policy of the papers was bought, to be paid for by the month; an editor was furnished for each paper to properly supervise and edit information regarding the questions of preparedness, militarism, financial policies, and other things of national and international nature considered vital to the interests of the purchasers 2
2. Congressional Record, Vol. 54, Feb. 9,1917, p. 2947
Charles S. Mellen of the New Haven Railroad testified before Congress that his Morgan-owned railroad had more than one thousand New England newspapers on the payroll, costing about $400,000 annually. The railroad also held almost a half-million dollars in bonds issued by the Boston Herald. 3 This web of control was multiplied by hundreds of additional companies which also were controlled by Morgan and other investment-banking houses.
3. Lundberg, p. 257.
In addition, the Morgan trust exercised media control by its power of advertising. Writing in 1937, Lundberg says: "More advertising is controlled by the J.P. Morgan junta than by any single financial group, a factor which immediately gives the banking house the respectful attention of all alert independent publishers." 1
1. Lundberg, p. 252.
2. Ibid , pp. 97,249.
So far as can be learned, the Rockefellers have given up their old policy of owning newspapers and magazines outright, relying now upon the publications of all camps to serve their best interests in return for the vast volume of petroleum and allied advertising under Rockefeller control. After the J.P. Morgan bloc, the Rockefellers have the most advertising of any group to dispose of. And when advertising alone is not sufficient to insure the fealty of a newspaper, the Rockefeller companies have been known to make direct payments in return for a friendly editorial attitude.3
3. Ibid., p. 247. 246
But it was not enough. In spite of this massive sales campaign, the American people still were not buying. Polls conducted at the time showed popular sentiment continuing to run ten-to-one in favor of staying out of Europe's war. Clearly, what was needed was something both drastic and dramatic to change public opinion.
MORGAN CONTROL OVER SHIPPING
Banking was not the only business in which Morgan had a
strong financial interest. Using his control over the nation's railroads
as financial leverage, he had created an international shipping
trust which included Germany's two largest lines plus one of the
two in England, the White Star Lines. Morgan had attempted in
1902 to take over the remaining British line, the Cunard Company
but was blocked by the British Admiralty which wanted to keep
Cunard out of foreign control so her ships could be pressed into
military service, if necessary, in time of war. The Lusitania and the
Mauretania were built by Cunard and became major competitors of
the Morgan cartel. It is an interesting footnote of history, therefore,
that, from the Morgan perspective, the Lusitania was quite dispensable.
Ron Chernow explains: Pierpont assembled a plan for an American-owned shipping trust that would transpose his "community of interest " principle—cooperation among competitors in a given industry—to a global plane. He created ... the world's largest fleet under private ownership.... An important architect of the shipping trust was Albert Ballin, whose Hamburg-Amerika Steamship Line, with hundreds of vessels, was the world's largest shipping company.... Pierpont had to contend with a single holdout, Britain's Cunard Line.... After the Boer War, the Morgan combine and Cunard exhausted each other in debilitating rate wars."1
As stated previously, Morgan had been retained as the official trade agent for Britain. He handled the purchasing of all war materials in the United States and coordinated their shipping as well. Following in the footsteps of the Rothschilds of centuries past, he quickly learned the profitable skills of war-time smuggling. Colin Simpson, author of The Lusitania, describes the operation:
Throughout the period of America's neutrality, British servicemen in civilian clothes worked at Morgan's. This great banking combine rapidly established such a labyrinthine network of false shippers, bank accounts and all the paraphernalia of smuggling that, although they fooled the Germans, there were also some very serious occasions when they flummoxed the Admiralty and Cunard, not to speak of the unfortunate passengers on the liners which carried the contraband.2
1. Chernow, pp. 100-01.
2. Colin Simpson, The Lusitania (Boston: Little, Brown & Co., 1972), p. 50.
THE LUSITANIA
The Lusitania was a British passenger liner that sailed regularly
between Liverpool and New York. She was owned by the Cunard
Company, which, as previously mentioned, was the only major ship
line which was a competitor of the Morgan cartel. She left New York
harbor on May 1, 1915, and was sunk by a German submarine off
the coast of Ireland six days later. Of the 1,195 persons who lost their
lives, 195 were Americans. It was this event, more than any other,
that provided the advocates of war with a convincing platform for
their views, and it became the turning point where Americans reluctantly
began to accept, if not the necessity of war, at least its inevitability. The fact that the Lusitania was a passenger ship is misleading. Although she was built as a luxury liner, her construction specifications were drawn up by the British Admiralty so that she could be converted, if necessary, into a ship of war. Everything from the horsepower of her engines and the shape of her hull to the placement of ammunition storage areas were, in fact, military designs. She was built specifically to carry twelve six-inch guns. The construction costs for these features were paid for by the British government. Even in times of peace, it was required that her crew include officers and seamen from the Royal Navy Reserve.
In May of 1913, she was brought back into dry dock and outfitted with extra armor, revolving gun rings on her decks, and shell racks in the hold for ammunition. Handling elevators to lift the shells to the guns were also installed. Twelve high-explosive cannons were delivered to the dry dock. All this is a matter of public record at the National Maritime Museum in Greenwich, England, but whether the guns were actually installed at that time is still hotly debated. There is no evidence that they were. In any event, on September 17, the Lusitania returned to sea ready for the rigors of war, and she was entered into the Admiralty fleet register, not as a passenger liner, but an armed auxiliary cruiser] From then on, she was listed in Jane's Fighting Ships as an auxiliary cruiser and in the British publication, The Naval Annual, as an armed merchant man.1
1- Simpson, pp. 17-28, 70.
Part of the dry dock modification as to remove all the passenger accommodations in the lower deck to make room for more military cargo. Thus, the Lusitania became one of the most important carriers of war materials—including munitions—from the United States to England. On March 8, 1915, after several close calls with German submarines, the captain of the Lusitania turned in his resignation. He was willing to face the U-boats, he said, but he was no longer willing "to carry the responsibility of mixing passengers with munitions or contraband." 1
CHURCHILL SETS A TRAP
From England's point of view, the handwriting on the wall was
clear. Unless the United States could be brought into the war as her
ally, she soon would have to sue for peace. The challenge was how
to push Americans off their position of stubborn neutrality. How
that was accomplished is one of the more controversial aspects of
the war. It is inconceivable to many that English leaders might have
deliberately plotted the destruction of one of their own vessels with
American citizens aboard as a means of drawing the United States
into the war as an ally. Surely, any such idea is merely German
propaganda. Robert Ballard, writing in National Geographic, says:
"Within days of the sinking, German sympathizers in New York
came up with a conspiracy theory. The British Admiralty, they said,
had deliberately exposed Lusitania to harm, hoping she would be
attacked and thus draw the U.S. into the war." 2Let's take a closer look at this conspiracy theory. Winston Churchill, who was First Lord of the Admiralty at that time, said:
There are many kinds of maneuvers in war... . There are maneuvers in time, in diplomacy, in mechanics, in psychology; all of which are removed from the battlefield, but react often decisively upon it.... The maneuver which brings an ally into the field is as serviceable as that which wins a great battle. The maneuver which gains an important strategic point may be less valuable than that which placates or overawes a dangerous neutral.3
1. Simpson, p. 87.
2. "Riddle of the Lusitania," by Robert Ballard, National Geographic, April, 1994, p. 74.
3. Winston Churchill, The World Crisis (New York: Scribner's Sons, 1949), p. 300. This appears on p. 464 of the Barnes & Noble 1993 reprint.
Why would the British want to do such a stupid thing that would cost the lives of thousands of their own seamen? The answer is that it was not an act of stupidity. It was cold blooded strategy. Churchill boasted:
The first British countermove, made on my responsibility,... was to deter the Germans from surface attack. The submerged U-boat had to rely increasingly on underwater attack and thus ran the greater risk of mistaking neutral for British ships and of drowning neutral crews and thus embroiling Germany with other Great Powers.1
To increase the likelihood of accidentally sinking a ship from a neutral "Great Power," Churchill ordered British ships to remove their names from their hulls and, when in port, to fly the flag of a neutral power, preferably that of the United States. As further provocation, the British navy was ordered to treat captured U-boat crew members not as prisoners of war but as felons. "Survivors," wrote Churchill, "should be taken prisoner or shot—whichever is the most convenient."2 Other orders, which now are an embarrassing part of official navy archives, were even more ruthless: "In all actions, white flags should be fired upon with promptitude." 3
The trap was carefully laid. The German navy was goaded into a position of shoot-first and ask questions later and, under those conditions, it was inevitable that American lives would be lost.
A FLOATING MUNITIONS DEPOT
After many years of investigation, it is now possible to identify
the cargo that was loaded aboard the Lusitania on her last voyage. It
included 600 tons of pyroxyline (commonly called gun cotton),4 six-million rounds of ammunition, 1,248 cases of shrapnel shells (which may not have included explosive charges), plus an unknown quantity of munitions that completely filled the holds on the lowest deck and the trunkways and passageways of F deck. In addition, there were many tons of "cheese," "lard," "furs" and other items which were shown later to be falsely labelled. What they were is not now known, but it is certain they were at least contraband if not outright weapons of war. They were all consigned through the J.P. Morgan Company. But none of this was suspected by the public, least of all those hapless Americans who unknowingly booked a passage to death for themselves and their families as human decoys in a global game of high finance and low politics. 1.Churchill, pp. 274-75.
2. Taken from the Diaries of Admiral Sir Hubert Richmond, Feb. 27,1915, National Maritime Museum, Greenwich, as quoted by Simpson, p. 37.
3. P.R.O., ADM/116/1359, Dec. 23,1914, quoted by Simpson, p. 37.
4. Gun cotton explodes with three-times the force of gunpowder in a confined space and can be ignited at a much lower flash point. See Eissler, Manuel, Modern High Explosives (New York: John Wiley & Sons, 1914), pp. 110,112,372.
The German embassy in Washington was well aware of the nature of the cargo being loaded aboard the Lusitania and filed a formal complaint to the United States government, because almost all of it was in direct violation of international neutrality treaties. The response was a flat denial of any knowledge of such cargo. Seeing that the Wilson Administration was tacitly approving the shipment, the German embassy made one final effort to avert disaster. It placed an ad in fifty East Coast newspapers, including those in New York City, warning Americans not to take passage on the Lusitania. The ad was prepaid and requested to be placed on the paper's travel page a full week before the sailing date. It read as follows:
NOTICE!
TRAVELERS intending to embark on the Atlantic voyage
are reminded that a state of war exists between Germany
and her allies and Great Britain and her allies; that the zone
of war includes the waters adjacent to the British Isles; that,
in accordance with formal notice given by the Imperial
German Government, vessels flying the flag of Great
Britain, or of any of her allies, are liable to destruction in
those waters and that travelers sailing in the war zone on
ships of Great Britain or her allies do so at their own risk.
IMPERIAL GERMAN EMBASSY
Washington, D.C., April 22,1915
Although the ad was in the hands of newspapers in time for the requested deadline, the State Department intervened and, raising the specter of possible libel suits, frightened the publishers into not printing it without prior clearance from State Department attorneys. Of the fifty newspapers, only the Des Moines Register carried the ad on the requested date. What happened next is described by Simpson:
George Viereck [who was the editor of a German-owned newspaper at that time and who had placed the ads on behalf of the embassy ] spent April 26 asking the State Department why his advertisement had not been published. Eventually he managed to obtain an interview with [Secretary of State, William Jennings] Bryan and pointed out to him that on all but one of her wartime voyages the Lusitania ha d carried munitions. He produced copies of her supplementary manifests, which were open to public inspection at the collector's office. More important, he informed Bryan, no fewer than six million rounds of ammunition were due to be shipped on the Lusitania the following Friday and could be seen at that moment being loaded on pier 54. Bryan picked up the telephone and cleared the publication of the advertisement. He promised Viereck that he would endeavor to persuade the President publicly to warn Americans not to travel. No such warning was issued by the President, but there can be no doubt that President Wilson was told of the character of the cargo destined for the Lusitania. He did nothing, but was to concede on the day he was told of her sinking that his foreknowledge had given him many sleepless hours. 1
1. Simpson, p. 97.
It is probably true that Wilson was a pacifist at heart, but it is equally certain that he was not entirely the master of his own destiny. He was a transplanted college professor from the ivy-covered walls of Princeton, an internationalist at heart who dreamed of helping to create a world government and to usher in a millennium of peace. But he found himself surrounded by and dependent upon men of strong wills, astute political aptitudes, and powerful financial resources. Against these forces, he was all but powerless to act on his own, and there is good reason to believe that he inwardly suffered over many of the events in which he was compelled to participate. We shall leave it to others to moralize about a man who, by his deliberate refusal to warn his countrymen of their mortal peril, sends 195 of them to their watery graves. We may wonder, also, about how such a man can commit the ultimate hypocrisy of condemning the Germans for this act and then doing everything possible to prevent the American public from learning the truth. It would be surprising if the extent of his private remorse was not greater than merely a few sleepless hours.
THE FINAL VOYAGE
But we are getting slightly ahead of the story. While Morgan
and Wilson were setting the deadly stage on the American side of
the Atlantic, Churchill was playing his part on the European side.
When the Lusitania left New York Harbor on May 1, her orders were
to rendezvous with a British destroyer, the Juno, just off the coast of
Ireland so she would have naval protection as she entered hostile
waters. When the Lusitania reached the rendezvous point, however,
she was alone, and the captain assumed they had missed each other
in the fog. In truth, the Juno had been called out of the area at the last
minute and ordered to return to Queenstown. And this was done
with the full knowledge that the Lusitania was on a direct course
into an area where a German submarine was known to be operating.
To make matters worse, the Lusitania had been ordered to cut
back on the use of coal, not because of shortages, but because it
would be less expensive. Slow targets, of course, are much easier to
hit. Yet, she was required to shut down one of her four boilers and,
consequently, was now entering submarine-infested waters at only
75% of her potential speed. As the Lusitania drew closer to hostile waters, almost everyone knew she was in grave danger. Newspapers in London were alive with the story of German warnings and recent sinkings. In the map room of the British Admiralty, Churchill watched the play unfold and coldly called the shots. Small disks marked the places where two ships had been torpedoed the day before. A circle indicated the area within which the U-boat must still be operating. A larger disk represented the Lusitania travelling at nineteen knots directly into the circle. Yet, nothing was done to help her. Admiral Coke at Queenstown was given perfunctory instructions to protect her as best he could, but he had no means to do so and, in fact, no one even bothered to notify the captain of the Lusitania that the rendezvous with the Juno had been canceled.
One of the officers present in the high-command map room on that fateful day was Commander Joseph Kenworthy, who previously had been called upon by Churchill to submit a paper on what would be the political results of an ocean liner being sunk with American passengers aboard. He left the room in disgust at the cynicism of his superiors. In 1927, in his book, The Freedom of the Seas, he wrote without further comment: "The Lusitania was sent at considerably reduced speed into an area where a U-boat was known to be waiting and with her escorts withdrawn." Further comment is not needed. 1
Colonel House was in England at that time and, on the day of the sinking, was scheduled to have an audience with King George V. He was accompanied by Sir Edward Grey and, on the way, Sir Grey asked him: "What will America do if the Germans sink an ocean liner with American passengers on board?" As recorded in House's diaries, he replied: "I told him if this were done, a flame of indignation would sweep America, which would in itself probably carry us into the war."2 Once at Buckingham Palace, King George also brought up the subject and was even more specific about the possible target. He asked, "Suppose they should sink the Lusitania with American passengers on board...."
A MIGHTY EXPLOSION,
A WATERY GRAVE
Four hours after this conversation, the black smoke of the
Lusitania was spotted on the horizon through the periscope of the
German submarine, U-20. The ship came directly toward the
U-boat, allowing it to full-throttle out of her path and swing around
for a ninety-degree shot at her bow as she passed only 750 yards
away. The torpedo struck nine feet below the water line on the starboard
side slightly forward of the bridge. A second torpedo was
readied but not needed. Quickly after the explosion of the impact,
there was a second and much larger explosion that literally blew the
side off of cargo hold number two and started the great ship immediately
toward the bottom. And what a hole it must have been. The
Lusitania, one of the largest ships ever built, sank in less than eighteen
minutes! 1. Joseph M. Kenworthy and George Young, The Freedom of the Seas (New York: Ayer Company, 1929), p. 211.
2. Seymour, Vol I, p. 432
Survivors among the crew who were working in the boiler rooms during the attack have attested that the boilers did not blow at that time. Simpson tells us:
The G torpedo had failed to blow in the inner bulkhead of No 1 boiler room, but just further forward something blew out most of the bottom of the bow of the ship. It may have been the Bethlehem Company's 3-inch shells, the six million rounds of rifle ammunition or the highly dubious contents of the bales of furs or the small forty-pound boxes of cheese. Divers who have been down to the wreck unanimously testify that the bow was blasted by a massive internal explosion, and large pieces of the bow plating, buckled from the inside, are to be found some distance from the hull.1
When a search team from the Woods Hole Oceanographic Institute surveyed the wreckage in the summer of 1993, they reported: "When our cameras swept across the hold, we got a big surprise. There was no hole.... We found no evidence that U-20's torpedo had detonated an explosion, undermining one theory of why the liner sank." 2
It is difficult to share the team's surprise. Photographs show that the wreck is resting on its starboard (right) side. Since that is where the torpedo struck, it is logical that the hole would not be visible. It would be on the side buried in the ocean floor. The team reported that they were able to inspect only part of the hull's underside. That is because most of it—plus the entire starboard side—is buried in the muck. Since the torpedo struck only nine feet below the waterline, the hole would not logically be anywhere near the bottom of the hull but at a point midway between the main deck and the bottom. In other words, it would be at the midpoint of the side that is now facing down. Failure to see the hole does not undermine the theory of internal explosion. It is exactly what one would expect.
In any event, it should be obvious that the Lusitania would not have gone to the bottom in eighteen minutes without a hole somewhere. Even the search team had to acknowledge that fact indirectly when it addressed the question of what might have caused the second explosion. In an obvious effort to avoid giving support to a "conspiracy theory," the report concluded that the explosion probably was caused, not by munitions, but by coal dust.
1. Simpson, p. 157.
2. Ballard, "Riddle of the Lusitania," pp. 74, 76
In the final analysis, it makes little difference whether the explosion was caused by munitions or coal dust. The fact that it could have been caused by munitions is sufficient for the case.
A HURRIED COVER-UP
An official inquiry, under the direction of Lord Mersey, was
held to determine the facts of the sinking and to place the blame. It
was a rigged affair from the beginning. All evidence and testimony
was carefully pre-screened to make sure that nothing was admitted
into the record which would reveal duplicity on the part of British
or American officials. Among the papers submitted to Lord Mersey
prior to the hearings was one from Captain Richard Webb, one of
the men chosen by the navy to assist in the cover up. It read: "I am
directed by the board of Admiralty to inform you that it is considered
politically expedient that Captain Turner, the master of the
Lusitania, be most prominently blamed for the disaster."1 [Pond Scum on boths sides of the Atlantic,just as bad as the lie to start the 'war on terror' D.C]The final report was a most interesting document. Anyone reading it without knowledge of the facts would conclude that Captain William Turner was to blame for the disaster. Even so, Mersey attempted to soften the blow. He wrote: "...blame ought not to be imputed to the captain.... His omission to follow the advice in all respects cannot fairly be attributed either to negligence or incompetence." And then he added a final paragraph which, on the surface, appears to be a condemnation of the Germans but which, if read with understanding of the background, was an indictment of Churchill, Wilson, House and Morgan. He wrote:
The whole blame for the cruel destruction of life in this catastrophe must rest solely with those who plotted and with those who committed the crime.2
Did Lord Mersey know that there could be a dual meaning to his Words? Perhaps not, but, two days after delivering his judgment, he wrote to Prime Minister Asquith and turned down his fee for services. He added: "I must request that henceforth I be excused from administering His Majesty's Justice." In later years, his only comment on the event was: "The Lusitania case was a damn dirty business."3
1.The Papers of Lord Mersey, Bignor Park, Sussex, as quoted by Simpson, p. 190.
2. Simpson, p. 241.
3. Ibid., p. 241.
THE CRY FOR WAR The purposes of the Cabal would have been better served had an American ship been sunk by the Germans, but a British ship with 195 Americans drowned was sufficient to do the job. The players wasted no time in whipping up public sentiment. Wilson sent a note of outraged indignation to the Imperial German Government, and this was widely quoted in the press.
By that time, Bryan had become completely disillusioned by the duplicity of his own government. On May 9, he sent a dour note to Wilson:
Germany has a right to prevent contraband going to the Allies and a ship carrying contraband should not rely upon passengers to protect her from attack-it would be like putting women and children in front of an army.
This did not deter Wilson from his commitment. The first note was followed by an even stronger one with threatening overtones which was intensely discussed at the Cabinet meeting on the first of June. McAdoo, who was present at the meeting, says:
I remember that Bryan had little to say at this meeting; he sat throughout the proceedings with his eyes half closed most of the time. After the meeting he told the President, as I learned later, that he could not sign the note.... Bryan went on to say that he thought his usefulness as Secretary of State was over, and he proposed to resign 2
At the request of Wilson, McAdoo was dispatched to the Bryan's home to persuade the Secretary to change his mind, lest his resignation be taken as a sign of disunity within the President's Cabinet.Bryan agreed to think it over one more day but, the following morning, his decision remained firm. In his memoirs, annotated by his wife, Mrs. Bryan reveals that her husband could not sleep that night He was so restless I suggested that he read a little till he should become drowsy. He had in his handbag a copy of an old book printed in 1829 and called 'A Wreath of Appreciation of Andrew Jackson. He found it very interesting."3 [At least there was one person in Wilson's entourage who had principles,what a disgusting coward Wilson was DC]
1 . Bryan, Vol II, pp. 398-9.
2. McAdoo, p. 333.
3. Bryan, Vol. II, p. 424
What irony. In chapter seventeen we shall review the total war waged by President Jackson against the Bank of the United States, the predecessor of the Federal Reserve System, and we shall be reminded that it was Jackson who prophesied:
Is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country?... [Is there not] cause to tremble for the purity of our elections in peace and for the independence of our country in war?... Controlling our currency, receiving our public monies, and holding thousands of our citizens independence, it would be more formidable and dangerous than a naval and military power of the enemy.1
One can only wonder what thoughts went through Bryan's mind as he recalled Jackson's warning and applied it to the artificially created war hysteria that, at that very moment, was being generated by the financial powers on Wall Street and at the newly created Federal Reserve.
From England, Colonel House sent a telegram to President Wilson which he, in turn, read to his Cabinet. It became the genesis of thousands of newspaper editorials across the land. He said piously:
America has come to the parting of the ways, when she must determine whether she stands for civilized or uncivilized warfare. We can no longer remain neutral spectators. Our action in this crisis will determine the part we will play when peace is made, and how far we may influence a settlement for the lasting good of humanity. We are being weighed in the balance, and our position amongst nations is being assessed by mankind.2 [Lying POS DC]
In another telegram two days later, House reveals himself as the master psycho-politician playing on Wilson's ego like a violinist stroking the strings of a Stradivarius. He wrote:
If, unhappily, it is necessary to go to war, I hope you will give the world an exhibition of American efficiency that will be a lesson for a century or more. It is generally believed throughout Europe that we are so unprepared and that it would take so long to put our resources into action, that our entering would make but little difference.
In the event of war, we should accelerate the manufacture of munitions to such an extent that we could supply not only ourselves but the Allies, and so quickly that the world would be astounded.3
1 Herman E. Krooss, ed., Documentary History of Banking and Currency in the Unites States (New York: Chelsea House, 1983), Vol. Ill, pp. 26-27.
2- Seymour, p. 434.
3. Ibid., p. 435.
Congress could not resist the combined pressure of the press and the President. On April 16, 1917, the United States officially declared war on the Axis powers. Eight days later, Congress dutifully passed the War Loan Act which extended $1 billion in credit to the Allies. The first advance of $200 million went to the British the next day and was immediately applied as payment on the debt to Morgan. A few days later, $100 million went to France for the same purpose. But the drain continued. Within three months the British had run up their overdraft with Morgan to $400 million dollars, and the firm presented it to the government for payment. The Treasury, however, was unable to put its hands on that amount of money without jeopardizing its own spendable funds and, at first, refused to pay. The problem was quickly solved, however, through a maneuver described at some length in chapter ten. The Federal Reserve System under Benjamin Strong simply created the needed money through the Mandrake Mechanism. "The Wilson Administration found itself in an extremely awkward position, having to bail out J.P. Morgan," wrote Ferrell, but Benjamin Strong "offered to help [Treasury-Secretary] McAdoo out of the difficulty. Over the following months in 1917-18 the Treasury quietly paid Morgan piecemeal for the overdraft." By the time the war was over, the Treasury had loaned a total of $9,466,000,000 including $2,170,000,000 given after the Armistice. 1
That was the cash flow they had long awaited. In addition to saving the Morgan loans, even larger profits were to be made from war production. The government had been secretly preparing for war for six months prior to the actual declaration. According to Franklin D. Roosevelt, then Assistant Secretary of the Navy, the Navy Department began extensive purchasing of war supplies in the Fall of 1916.2 Ferdinand Lundberg adds this perspective:
1. Ferrell, p. 89,90.
2. Clarence W. Barron, They Told Barron; Notes of Clarence Walker Barron, edited by Arthur Pound and Samuel Taylor Moore (New York: Harper and Brothers,1930 )P 51
As head of the War Industries Board, Baruch spent government funds at the rate of $10,000,000,000 annually.... Baruch packed the War Industries Board and its committees with past and future Wall Street manipulators, industrialists, financiers, and their agents ... who fixed prices on a cost-plus basis and, as subsequent investigations revealed, saw to it that costs were grossly padded so as to yield hidden profits....
The American soldiers fighting in the trenches , the people working at home,the entire nation under arms, were fighting, not only to subdue Germany, but to subdue themselves. That there is nothing metaphysical about this interpretation becomes clear when we observe that the total wartime expenditure of the United States government from April 6, 1917, to October 31, 1919, when the last contingent of troops returned from Europe, was $35,413,000,000. Net corporation profits for the period January 1,1916, to July, 1921, when wartime industrial activity was finally liquidated, were $38,000,000,000 , or approximately the amount of the war expenditures. More than two-thirds of these corporation profits were taken by precisely those enterprises which the Pujo Committee had found to be under the control of the "Money Trust." 1
The banking cartel was able, through the operation of the Federal Reserve System, to create the money to give to England and France so they, in turn, could pay back the American banks— exactly as was to be done again in World War II and again in the Big Bailout of the 1980s and '90s. It is true that, in 1917, the recently enacted income tax was useful for raising a sizable amount of revenue to conduct the war and also, as Beardsley Ruml pointed out a few years later, to take purchasing power away from the middle class. But the greatest source of funding came, as it always does in wartime, not from direct taxes, but from the hidden tax called inflation. Between 1915 and 1920, the money supply doubled from $20.6 billion to $39.8 billion.2 Conversely, during World War I, the purchasing power of the currency fell by almost 50%. That means Americans unknowingly paid to the government approximately one-half of every dollar that existed. And that was in addition to their taxes. This massive infusion of money was the product of the Mandrake Mechanism and cost nothing to create. Yet, the banks were able to collect interest on it all. The ancient partnership between the political and monetary scientists had performed its mission well.
1. Lundberg, pp. 134,144-45.
2. "Deposits and Currency—Adjusted Deposits of AH Banks and Currency Outside Banks, 1892-1941," Banking and Monetary Statistics, 1914-1942 (Washington, D.C.: Board of Governors of the Federal Reserve System, 1976), p. 34. between the political and monetary scientists had performed its mission well.
SUMMARY
To finance the early stages of World War I, England and France
had borrowed heavily from investors in America and had selected
the House of Morgan as sales agent for their bonds. Morgan also
acted as their U.S. purchasing agent for war materials, thus profiting
from both ends of the cash flow: once when the money was borrowed
and again when it was spent. Further profits were derived
from production contracts placed with companies within the
Morgan orbit. But the war began to go badly for the Allies when
Germany's submarines took virtual control of the Atlantic shipping
lanes. As England and France moved closer to defeat or a negotiated
peace on Germany's terms, it became increasingly difficult to sell
their bonds. No bonds meant no purchases, and the Morgan cash
flow was threatened. Furthermore, if the previously sold bonds
should go into default, as they certainly would in the wake of
defeat, the Morgan consortium would suffer gigantic losses. The only way to save the British Empire, to restore the value of the bonds, and to sustain the Morgan cash flow was for the United States government to provide the money. But, since neutral nations were prohibited from doing that by treaty, America would have to be brought into the war. A secret agreement to that effect was made between British officials and Colonel House, with the concurrence of the President. From that point forward, Wilson began to pressure Congress for a declaration of war. This was done at the very time he was campaigning for reelection on the slogan "He kept us out of war." Meanwhile, Morgan purchased control over major segments of the news media and engineered a nation-wide editorial blitz against Germany, calling for war as an act of American patriotism.
Morgan had created an international shipping cartel, including Germany's merchant fleet, which maintained a near monopoly on the high seas. Only the British Cunard Lines remained aloof. The Lusitania was owned by Cunard and operated in competition with Morgan's cartel. The Lusitania was built to military specifications and was registered with the British Admiralty as an armed auxiliary cruiser. She carried passengers as a cover to conceal her real mission, which was to bring contraband war materials from the United States. This fact was known to Wilson and others in his administration, but they did nothing to stop it.
When the German embassy tried to publish a warning to American passengers, the State Department intervened and prevented newspapers from printing it When the Lusitania left New York harbor on her final voyage, she was virtually a floating ammunition depot. The British knew that to draw the United States into the war would mean the difference between defeat and victory and anything that could accomplish that was proper even the coldly calculated sacrifice of one of her great ships with Englishmen aboard.
But the trick was to have Americans on board also in order to create the proper emotional climate in the United States. As the Lusitania moved into hostile waters, where a German U-boat was known to be operating, First Lord of the Admiralty, Winston Churchill ordered her destroyer protection to abandon her. This, plus the fact that she had been ordered to travel at reduced speed, made her an easy target. After the impact of one well placed torpedo, a mighty second explosion from within ripped her apart, and the ship that many believed could not be sunk, gurgled to the bottom in less than 18 minutes.
The deed had been done, and it set in motion great waves of revulsion against the Germans. These waves eventually flooded through Washington and swept the United States into war. Within days of the decoration, Congress voted $1 billion in credit for England and France. $200 million was sent to England immediately and was applied to the Morgan account. The vast quantity of money needed to finance the war was created by the Federal Reserve System, which means it was collected from Americans through that hidden tax called inflation. Within just five years, fully one-half of all they had saved.
The infinitely higher cost in American blood was added to the bill. Thus it was that the separate motives of such diverse personalities as Winston Churchill, J.P. Morgan, Colonel House, and Woodrow Wilson all found common cause in bringing America into World War I. Churchill maneuvered for military advantage, Morgan sought the profits of war, House schemed for power, and Wilson dreamed of a chance to dominate a post war League of Nations.
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