Businessmen or manufacturers
can either be genuine free
enterprisers or statists; they can either make their way on the
market or seek special government
favors and privileges (rent-seeking).
according to their individual preferences and values. But bankers are
Commercial bankers, engaged as they are in unsound
fractional reserve credit, are, in
the free market, always teetering on
the edge of bankruptcy. Hence they are always reaching for government
aid and bailout.
Investment bankers do much of their business underwriting government
bonds, in the United States and abroad.
Therefore, they have a vested
interest in promoting deficits and in
forcing taxpayers to redeem government debt. Both sets of
then, tend to be tied in with government policy, and try to influence
and control government actions in domestic and foreign affairs.
In the early years of the 19th century, the organized capital
market in the United States was largely confined to government
(then called "stocks"), along with canal companies and banks
themselves. Whatever investment banking existed was therefore
concentrated in government debt. From the Civil War until
there were virtually
no manufacturing corporations; manufacturing and
other businesses were partnerships
had not yet reached the size
where they needed to adopt the corporate form. The only
exception was railroads, the
biggest industry in the U.S. The first
investment banks, therefore, were concentrated in railroad securities
and government bonds.
The first major investment banking house in the United States
was a creature of government privilege.
Jay Cooke, an Ohio-born
business promoter living in Philadelphia, and his brother Henry, editor
of the leading Republican newspaper
in Ohio, were close friends of Ohio
U.S. Senator Salmon P. Chase. When the new Lincoln
over in 1861, the Cookes lobbied hard to secure Chase the appointment
of Secretary of the Treasury. That lobbying, plus the then
of $100,000 that Jay Cooke poured into Chase’s political coffers,
induced Chase to return the favor by granting Cooke, newly set up as an
investment banker, an enormously
lucrative monopoly in underwriting the
entire federal debt.
Cooke and Chase then managed to use the virtual Republican
monopoly in Congress during the war to transform
commercial banking system from a relatively free market to a National
Banking System centralized by the federal government under Wall Street
control. A crucial aspect of that system was that national banks
only expand credit in proportion to the federal bonds they owned –
bonds which they were forced to buy from Jay Cooke.
Jay Cooke & Co. proved enormously influential in the
post-war Republican administrations, which continued their monopoly in
under-writing government bonds. The House of Cooke met its
well-deserved fate by going bankrupt in the Panic of 1874, a failure
helped along by its great rival, the then Philadelphia-based Drexel,
Morgan & Co.
After 1873, Drexel, Morgan and its dominant figure J.P.
Morgan became by far the leading investment firm in the U.S. If Cooke
had been a "Republican" bank, Morgan,
well connected in
both parties, was chiefly influential among the Democrats.
great financial interest powerful in the Democratic Party was the mighty European investment
banking house of the Rothschilds,
agent, August Belmont, was treasurer
the national Democratic
for many years.
The enormous influence of the Morgans on the Democratic
administrations of Grover
Cleveland (1884–88, 1892–96) may be seen by
simply glancing at their leading personnel. Grover Cleveland himself
spent virtually all his life in the Morgan ambit. He grew up in Buffalo
as a railroad lawyer, one of
his major clients being the Morgan-dominated
Central Railroad. In between administrations,
he became a partner of the powerful New York City law firm of Bangs,
Stetson, Tracey, and MacVeagh. This firm, by the late 1880s, had become
the chief legal firm of the House of Morgan, largely because senior
partner Charles B. Tracey was J.P. Morgan's brother-in-law. After
Tracey died in 1887, Francis Lynde
Stetson, an old and close friend of
Cleveland's, became the firm's dominant partner, as well as the personal attorney for J.P.
Morgan. (This is now the Wall
St. firm of
Davis, Polk, and Wardwell.)
Grover Cleveland's cabinets
were honeycombed with Morgan men,
with an occasional bow to other bankers. Considering those officials
most concerned with foreign policy, his first Secretary of State,
Thomas F. Bayard, was a close ally and disciple of August Belmont;
indeed, Belmont's son, Perry, had lived with and worked for Bayard in
Congress as his top aide. The dominant Secretary of State in the second
Cleveland Administration was the powerful Richard Olney, a leading
lawyer for Boston financial interests, who have always been tied in
with the Morgans, and in particular was on the Board of the Morgan-run
Boston and Maine Railroad, and would later help
Morgan organize the
General Electric Company.
The War and Navy departments under Cleveland were equally
banker-dominated. Boston Brahmin
Secretary of War William C. Endicott
had married into the wealthy Peabody
family. Endicott’s wife’s uncle, George Peabody, had
established a banking firm
which included J.P.
Morgan’s father as a senior partner; and a Peabody had been best man at
J.P.’s wedding. Secretary of the Navy
was leading New York City
financier William C. Whitney, a close friend and top political advisor
of Cleveland’s. Whitney was closely
allied with the Morgans in running
the New York Central Railroad.
Secretary of War in the second Cleveland Administration was
an old friend and aide of Cleveland’s, Daniel S. Lamont, previously an
employee and protégé of William C. Whitney. Finally, the
second Secretary of the Navy
was an Alabama Congressman, Hilary A.
Herbert, an attorney for and very close friend of Mayer
founding partner of the New
York mercantile firm of Lehman Brothers,
soon to move heavily into investment banking. Indeed, Mayer’s son,
Herbert, later to be Governor of New
York during the New Deal, was
named after Hilary Herbert.
point of American foreign policy came in the early 1890s, during the
second Cleveland Administration. It was then that the U.S. turned
sharply and permanently from a foreign policy of peace and
non-intervention to an aggressive program of economic and political
At the heart of the new policy were America’s
leading bankers, eager to use the country’s growing economic strength
to subsidize and force-feed export
markets and investment outlets that
they would finance, as well as to guarantee
Third World government
bonds. The major focus of aggressive
expansion in the 1890s was Latin America, and the
principal Enemy to be dislodged was Great Britain, which had dominated
foreign investments in that vast region.
In a notable series of articles in 1894, Bankers'
Magazine set the agenda for the remainder of the decade.
conclusion: if "we could wrest the South American markets from Germany
and England and permanently hold them, this would be indeed a conquest
worth perhaps a heavy sacrifice."
Long-time Morgan associate
Richard Olney heeded the call, as
Secretary of State from 1895 to 1897, setting the U.S. on the road to
Empire. After leaving the State Department, he publicly summarized the
policy he had pursued. The old isolationism heralded by George
Washington's Farewell Address is over, he thundered. The time has now
arrived, Olney declared, when "it behooves us to accept the commanding
position... among the Power of the earth." And, "the
need of our commercial interests," he added, "is
more markets and
larger markets" for American products, especially in Latin
Good as their word, Cleveland and Olney proceeded belligerently to use U.S.
might to push Great Britain out of its
markets and footholds in Latin America. In 1894, the United States Navy
illegally used force to break the blockade of Rio de Janeiro by
British-backed rebellion aiming to restore the Brazilian monarchy. To
insure that the rebellion was broken, the U.S. Navy stationed war-ships
in Rio harbor for several months.
During the same period, the U.S. government faced a complicated situation in
Nicaragua, where it was planning to guarantee
the bonds of the American Maritime
Canal Company, to build a canal
across the country. The new regime of General Zelaya was threatening to
revoke this canal concession; at the same time, an independent
reservation, of Mosquito Indians, protected
for decades by Great
Britain, sat athwart the eastern end of the proposed canal. In a
of deft maneuvers, using
the Navy and landing the Marines, the U.S.
managed to bring Zelaya to heel and to oust the British and take over
the Mosquito territory.
In Santo Domingo (now the Dominican Republic) France was the
recipient of the American big stick. In the Santo Domingo Improvement
Company, in 1893, a consortium of New York bankers purchased the entire
debt of Santo Domingo from a Dutch company, receiving the right to
collect all Dominican customs revenues in payment of the debt.
French became edgy the following year when a French citizen was
murdered in that country, and the French government threatened
force to obtain reparations.
Its target for reparations was the
Dominican customs revenue, at which point the U.S.
sent a warship to
the area to intimidate the French.
the most alarming crisis of this period took place in 1895–96,
the U.S. was at a hair’s breadth from actual war
with Great Britain over a territorial dispute between Venezuela
British Guiana. This boundary dispute had been raging for forty years,
but Venezuela shrewdly attracted American interest by granting
concessions to Americans in gold fields in the disputed area.
Apparently, Cleveland had had enough of the "British
and he moved quickly toward war. His close friend Don Dickinson, head
of the Michigan Democratic Party, delivered a bellicose speech in May
1895 as a surrogate for the President. Wars
are inevitable, Dickinson
declared, for they arise out of commercial competition between nations.
The United States faces the danger of numerous conflicts, and clearly
the enemy was Great Britan. After reviewing the history of the alleged
British threat, Dickinson thundered that "we
need and must have open
markets throughout the world to maintain and increase our prosperity."
In July, Secretary of State Olney sent the British an
insulting and tub-thumping note, declaring that "the United States is
practically sovereign on this continent, and its fiat is law
subjects to which it confines its interposition." President Cleveland,
angry at the British rejection of the note, delivered a virtual war
message to Congress in December, but Britain, newly occupied in
problems with the Boers in South Africa, decided to yield and agree to
a compromise boundary settlement. Insultingly, the Venezuelans received
not a single seat on the agreed-upon arbitration commission.
In effect, the British, occupied elsewhere, had ceded
dominance to the United States in Latin America. It was time
U.S. to find more enemies to challenge.
The next, and greatest, Latin American intervention was of
course in Cuba,
where a Republican Administration entered the war
goaded by its jingo
wing closely allied to the Morgan interests, led by
young Assistant Secretary of the Navy
Theodore Roosevelt and by
his powerful Boston Brahmin mentor, Senator
Henry Cabot Lodge. But
American intervention in Cuba had begun in the Cleveland-Olney regime.
In February 1895, a rebellion for Cuban independence
broke out against Spain. The original U.S. response was to try to end
the threat of revolutionary war to
American property interests by
siding with Spanish rule modified by autonomy to the Cubans to pacify
their desires for independence. Here was the harbinger
of U.S. foreign
policy ever since: to try to maneuver
in Third World countries to
sponsor "third force" or "moderate" interests which do not really
exist. The great proponent of this policy was the millionaire sugar
grower in Cuba, Edwin F. Atkins, a close friend of
Richard Olney, and a partner of J.P.
Morgan and Company.
By the fall of 1895, Olney concluded that Spain could
not win, and that, in view of the "large
and important commerce between
the two countries" and the "large
amounts of American capital" in Cuba,
the U.S. should execute a 180-degree shift and back the rebels, even
unto recognizing Cuban independence. The fact that such
lead to war with Spain did not seem worth noting. The
road to war with Spain had begun, a road that would reach its logical
conclusion three years later.
Ardently backing the pro-war
course was Edwin F. Atkins,
August Belmont, on behalf of
the Rothschild banking
House' of Rothschild, which had been
long-time financiers to Spain,
refused to extend any further credit to Spain, and instead under-wrote
Cuban Revolutionary bond issues, and even assumed full obligation for
the unsubscribed balance.
During the conquest of Cuba in the Spanish-American War, the
United States also took the occasion to expand its power greatly in
Asia, seizing first the port of Manila and then all of the Philippines,
after which it spent several years
crushing the revolutionary forces of
the Philippine independence movement.
An Aggressive Asian Policy
The late 1890s also saw a new turn in the United States'
attitude toward the Far
East. Expanding rapidly into the Pacific in
pursuit of economic and financial gain,
the U.S. government saw that
Russia, Germany, and France had been carving up increasing territorial
and economic concessions in the near corpse of the Chinese imperial
dynasty. Coming late in the imperial game of Asia, and not willing to
risk large-scale expenditure of troops, the U.S., led by Olney and
continued by the Republicans, decided to link up with Great Britain.
The two countries would then use the
Japanese to provide the shock
troops that would roll back Russia and Germany and parcel
benefits to both of her faraway allies, in a division
of spoils known
euphemistically as the "Open Door." With Britain leaving the
to the U.S. in Latin America, the U.S. could afford to link arms in
friendly fashion with Britain in the Far East.
A major impetus toward a more
aggressive policy in Asia was
provided by the lure of railroad
concessions. Lobbying heavily for
railroad concessions was the American
China Development Company,
organized in 1895, and consisting of a consortium of the top
financial interests in the U.S., including James Stillman of the then
Rockefeller-controlled National City Bank; Charles Coster, railroad
expert of J.P. Morgan and Co.; Jacob
Schiff, head of the New York
investment bank of Kuhn, Loeb and Co.; and Edward H. Harriman, railroad magnate. Olney and the
State Department pressed
China hard for
concessions to the ACDC for a Peking-Hankow
Railway and for a railway
across Manchuria, but in both cases the American syndicate was blocked.
Russia pressured China successfully to grant that country the right to
build a Manchurian railway; and a Belgian
syndicate, backed by France
and Russia, won the Peking-Hankow concession from China.
It was time for sterner
measures. The attorney for the ACDC
set up the Committee on American
Interests in China, which soon
transformed itself into the American
Asiatic Association, dedicated to
a more aggressive American policy
on behalf of economic
China. After helping the European powers suppress the
Rebellion in China in 1900, the U.S. also helped push Russian troops
out of Manchuria. Finally, in 1904, President
Theodore Roosevelt egged
Japan on to attack Russia, and Japan succeeded in driving Russia
Manchuria and ending Russia's economic concessions. Roosevelt readily acceded to Japan's
resulting dominance in Korea and Manchuria, hoping
that Japan would also protect American economic interests in the area.
Theodore Roosevelt had been
a Morgan man from the beginning
of his career. His father and uncle were both Wall Street bankers, both
of them closely associated with various Morgan-dominated railroads.
Roosevelt's first cousin and major financial adviser, W. Emlen Roosevelt, was on
the board of several New York banks, including the Astor National Bank,
the president of which was George F. Baker, close
friend and ally of J.P. Morgan and head of Morgan's flagship
bank, the First National Bank of New
York.' At Harvard, furthermore,
young Theodore married Alice Lee, daughter of George Cabot Lee, and
related to the top Boston Brahmin
families. Kinsman Henry Cabot Lodge
soon became T.R.'s long-time political mentor.
Throughout the 19th century, the Republicans had been mainly
a high-tariff, inflationist party, while the Democrats had been the
party of free trade and hard money, i.e., the gold
standard. In 1896,
however, the radical inflationist forces headed by William Jennings
Bryan captured the Democratic presidential nomination, and so the Morgans,
previously dominant in the Democratic Party, sent a message to
the Republican nominee, William McKinley, through Henry Cabot Lodge.
Lodge stated that the Morgan interests would back McKinley provided
that the Republicans would support
the gold standard. The deal
William McKinley reflected the dominance of the Republican
Party by the Rockefeller/Standard Oil
interests. Standard Oil was
originally headquartered at Rockefeller's home in Cleveland, and the
oil magnate had long had a commanding influence in Ohio Republican
politics. In the early 1890s, Marcus
Hanna, industrialist and high school chum of John D. Rockefeller,
banded together with Rockefeller and other financiers to save McKinley from
bankruptcy, and Hanna became McKinley's top political adviser
chairman of the Republican National Committee. As a consolation prize
to the Morgan interests for McKinley's capture of the Republican
nomination, Morgan man Garret A. Hobart, director of various Morgan
companies, including the Liberty
National Bank of New York City, became
The death of Hobart in 1899 left a "Morgan vacancy" in the
Vice-Presidential spot, as McKinley walked into the nomination. McKinley and Hanna were
both hostile to Roosevelt, considering him
"erratic" and a "Madman," but after several Morgan
men turned down the
nomination, and after the intensive lobbying of Morgan partner George
W. Perkins, Teddy
Roosevelt at last received the Vice-Presidential
nomination. It is not surprising that virtually Teddy's first
act after the election
of 1900 was to throw a lavish dinner in honor of J.P. Morgan.
Teddy Roosevelt and the "Lone Nut"
The sudden appearance of one of the "lone nuts" so common in
American political history led to the assassination
of McKinley, and
suddenly Morgan man Theodore Roosevelt was President. John Hay, expansionist Secretary of
State whom Roosevelt inherited from McKinley,
had the good fortune of having his
daughter marry the son of William C.
Whitney of the great Morgan-connected family. TR's next
State and former Secretary of War was his old friend Elihu Root, personal attorney
for J.P. Morgan. Root appointed as his Assistant Secretary a
friend of TR's, Robert Bacon, a
Morgan partner, and in due course Bacon
became TR's Secretary of State. TR's first appointed Secretary of the
Navy was Paul Morton, vice-president
of the Morgan-controlled Atchison,
Topeka and Santa Fe Railroad, and his Assistant Secretary was
L. Satterlee, who had the distinction of being J.P. Morgan's son-in-law.
Theodore Roosevelt's greatest direct boost to the Morgan
interests is little known. It is well-known that Roosevelt engineered a
phony revolution in Columbia in 1903, creating the new state of
the Canal Zone to the United States. What has not been
fully disclosed is who benefited from
the $40 million that the U.S.
government paid, as part of the Panama settlement, to the owners
old bankrupt Panama Canal Company, a French company which had
previously been granted a Colombian concession to dig a Panama canal.
The Panama Canal Company's lobbyist, Morgan-connected New
York attorney William Nelson Cromwell, literally
sat in the White House
directing the "revolution" and organizing the final settlement.
know that, in 1900, the
shares of the old French Panama Canal Company
were purchased by an American financial syndicate, headed by J.P.
Morgan & Co., and put together by Morgan's top attorney,
Lynde Stetson. The syndicate
also included members of the Rockefeller,
Seligman, and Kuhn, Loeb financial groups, as well as Perkins and
The syndicate did well from the Panama revolution, purchasing
the shares at two-thirds of par and selling them, after the revolution,
for double the price. One member of the syndicate was especially
fortunate: Teddy Roosevelt's
brother-in-law, Douglas E. Robinson, a director of Morgan's Astor
National Bank. For William Cromwell
named the fiscal agent of the new Republic of Panama, and Cromwell
promptly put $6 million of the $10 million payoff the U.S. made to the
Panamanian revolutionaries into New York City mortgages via the real
estate firm of the same Douglas E. Robinson.
After the turn of the century, a savage economic and
political war developed between the Morgan interests on the one hand,
and the allied Harriman-Kuhn,
Loeb-Rockefeller interests on the other.
Harriman and Kuhn, Loeb grabbed control of the Union Pacific Railroad
and the two titanic forces battled to a draw for control of the
Northern Pacific. Also, at about the same time, a long-lasting and
world-wide financial and political "oil
war" broke out between Standard
Oil, previously a monopolist in both the crude and export
outside of the U.S., and the burgeoning
British Royal Dutch
And since the Morgans and Rothschilds were longtime allies,
it is certainly sensible to
conclude – though there are no hard
to prove it – that Teddy
Roosevelt launched his savage anti-trust
assault to break Standard Oil as a Morgan contribution to the worldwide
struggle. Furthermore, Mellon-owned Gulf Oil was allied to the
combine, and this might well explain the fact that former
Morgan-and-Mellon lawyer Philander Knox, TR's Attorney-General, was
happy to file the suit against Standard Oil.
Roosevelt's successor, William Howard Taft, being an Ohio
Republican, was allied to the Rockefeller camp, and so he proceeded to
take vengeance on the Morgans by filing anti-trust suits to break up
the two leading Morgan trusts,
International Harvester and United
States Steel. It was now all-out war, and so the Morgans in 1912
deliberately created a new party, the Progressive Party, headed by
former Morgan partner, George W. Perkins. The successful aim of the
Progressive Party was to bring Theodore Roosevelt out of retirement to
run for President, in order to break Taft, and to elect, for the first
time in a generation, a Democratic President. The new party was
liquidated soon after.
Supporters of Roosevelt were studded with financiers in the
Morgan ambit, including Judge Elbert Gary, chairman of the board of
U.S. Steel; Medill McCormick of the International Harvester family, and
Willard Straight, Morgan's partner.
In the same year, Straight and his
heiress wife, Dorothy Whitney,
founded the weekly magazine of opinion, The
New Republic, symbolizing the growing
alliance for war and statism
between the Morgans and various of the more moderate (i.e.,
non-Marxist) progressive and socialist intellectuals.
Morgan, Wilson and War
Morgan-Progressive Party ploy deliberately
insured the election of
Woodrow Wilson as a Democratic President. Wilson
almost the time of running for President, was for several years on the
board of the Morgan-controlled Mutual
Life Insurance Company. He was
also surrounded by Morgan men. His
son-in-law, William Gibbs McAdoo,
who became Wilson's Secretary of the
Treasury, was a failing
businessman in New York City when he was bailed
out and befriended by
J.P. Morgan and his associates. The Morgans then set McAdoo up as
president of New York's Hudson and Manhattan Railroad until his
appointment in the Wilson Administration. McAdoo was to spend the rest
of his financial and political life securely in the
The main sponsor of Wilson's run for the Presidency was
George W. Harvey, head of Morgan-controlled
Harper & Brothers publishers
(Harper-Collins?); other major backers included Wall Street financier and
Morgan associate Thomas Fortune Ryan, and Wilson's college classmate
and Morgan ally, Cyrus H.
McCormick, head of International Harvester.
Another close friend and leading political adviser of Wilson
was New York City banker George
Foster Peabody, son of the
Boston Brahmin and a Morgan banker. A
particularly fascinating figure in Wilson's fateful foreign policy was "Colonel"
Edward Mandell House, of the wealthy House family of Texas,
which was deeply involved in landowning, trade, banking, and railroads.
House himself was head for several years of the Trinity and Brazos
Valley Railway, financed by the House family in collaboration with
Morgan-associated Boston financial interests, particularly of
Colony Trust Company. The mysterious House, though never graced
official government post, is generally acknowledged to have been Wilson's all-powerful
foreign policy adviser and aide for virtually his
entire two terms. (House
became key founder of the Council on Foreign Relations, wrote a
fictional book with the lead character - himself - as "Philip Dru,
Adminstrator" of a world govt., i.e. communism/capitalism. Which
basically he was to some degree.)
By 1914, the Morgan empire
was in increasingly shaky
financial shape. The Morgans had long been committed to
after the turn of the century the highly
subsidized and regulated
railroads entered their permanent decline. The Morgans had also
not been active enough in the new capital market for industrial
securities, which had begun in the 1890s, allowing Kuhn-Loeb to
them in the race for industrial finance. To make matters worse, the
$400 million Morgan-run New
Haven Railroad went bankrupt
At the moment of great financial danger for the Morgans, the
advent of World War I came as a godsend. Long connected to British,
including Rothschild, financial interests, the Morgans leaped
fray, quickly securing the
appointment, for J.P.
Morgan & Co., of fiscal
agent for the warring British and French governments, and monopoly underwriter for
their war bonds in the United States. J.P.
Morgan also became the fiscal
agent for the Bank of England, the powerful (privately-owned) English central
bank. Not only that: the Morgans were
heavily involved in financing
American munitions and other firms exporting war material to Britain
and France. J.P.
Morgan & Co., moreover, became the central
authority organizing and channeling war purchases for the two Allied
The United States had been in a sharp recession during 1913
and 1914; unemployment was high, and many factories were operating at
only 60% of capacity. In November 1914, Andrew Carnegie, closely allied
with the Morgans ever since his Carnegie Steel Corporation had merged
into the formation of United States Steel, wrote to President
lamenting business conditions but happily
expecting a great change for
the better from Allied purchases of U.S. exports.
Sure enough, war material
exports zoomed. Iron and steel
exports quintupled from 1914 to 1917, and the average profit rate of
iron and steel firms rose from 7.4%
to 28.7% from 1915 until 1917. Explosives
the Allies rose over ten-fold during
Overall, from 1915 to 1917, the export department of J.P. Morgan and
Co. negotiated more than $3 billion
of contracts to Britain and France.
By early 1915, Secretary McAdoo was writing to Wilson hailing the "great prosperity"
being brought by war exports to the Allies, and a prominent business
the following year that "War, for
Europe, is meaning devastation and
death; for America a bumper crop of new millionaires and a hectic
hastening of prosperity revival."
Deep in Allied bonds and export of munitions, the Morgans
were doing extraordinarily well; and their great rivals, Kuhn-Loeb,
being pro-German, were necessarily left out of the Allied wartime
bonanza. But there was one hitch: it
became imperative that
the Allies win the
war. It is not surprising, therefore, that from the beginning of
the great conflict, J.P. Morgan and his associates did everything they
possibly could to push the supposedly neutral United States into the
war on the side of England and France. As Morgan himself put
agreed that we should do all that was lawfully in our power to help the
Allies win the war as soon as possible."
Accordingly, Henry P. Davison, Morgan partner, set up the
Aerial Coast Patrol in 1915, to get
the public in the mood to
search the skies for German planes. Bernard M. Baruch, long-time
associate of the extremely wealthy copper magnates, the Guggenheim
family, financed the Businessmen's
Training Camp, at Plattsburgh, New York, designed to push
for universal military training
and preparations for war. Also participating in financing the
camp were Morgan partner
Willard Straight, and former Morgan
Robert Bacon. In addition to J.P.
Morgan himself, a raft of Morgan-affiliated
political leaders whooped it up for immediate
of the U.S. into the war on the side of the Allies: including Henry
Cabot Lodge, Elihu Root, and Theodore Roosevelt.
In addition, the National
Security League was founded in December, 1914, to call for
American entry into the war against Germany. The NSL
against a German invasion of the U.S., once England was
all advocates of
peace and non-intervention, "pro-German,"
"traitors," and "spies." (Deja vu)
The NSL also advocated universal
military training, conscription,
and the U.S. buildup of the
largest navy in
the world. Prominent in the organization of the National
League were Frederic R. Coudert, Wall
Street attorney for the British,
French, and Russian governments; Simon and Daniel Guggenheim; T.
Coleman DuPont, of the munitions family; and a host of prominent
Morgan-oriented financiers; including former Morgan partner Robert
Bacon; Henry Clay Prick of Carnegie
Steel; Judge Gary of U.S. Steel;
George W. Perkins, Morgan partner,
who has been termed "the secretary
of state" for the Morgan interests; former President Theodore
Roosevelt; and J.P. Morgan
A particularly interesting founding associate of NSL was a
man who has dominated American foreign policy during the 20th century: Henry
L. Stimson, Secretary
of War under William H. Taft and Franklin D. Roosevelt, and Secretary
of State under Herbert Hoover. Stimson, a Wall Street lawyer in the
Morgan ambit, was a protégé
of Morgan's personal attorney
Elihu Root, and two of his
cousins were partners in the
Morgan-dominated Wall Street utility stock market and banking firm of
Bonbright & Co.
While the Morgans and other financial interests were beating
the drums for war, even more influential in pushing the only
Wilson into the war were his foreign
policy Svengali, Colonel House, and House's
Hines Page, who was
appointed Ambassador to Great Britain.
Page's salary in this prestigious influential post was handsomely subsidized through Colonel
House by copper magnate Cleveland H. Dodge,
a prominent adviser to Wilson, who benefited greatly from munitions
sales to the Allies.
Colonel House liked to pose
as an abject instrument of
President Wilson's wishes. But before and after U.S. entry into
the war, House
manipulated Wilson, in secret
and traitorous collaboration with
the British, to push the President first into entering the war and then
into following British wishes instead
of setting an independent American course.
Thus, in 1916, House
wrote to his friend Frank L. Polk,
Counselor to the State Department and later counselor to J.P. Morgan,
that "the President must be
guided" not to be independent of British desires. Advising British Prime Minister
Arthur Balfour on how best to handle Wilson, House counselled
Balfour to exaggerate
difficulties in order to get more American aid, and warned him
never to mention a negotiated peace. Furthermore, Balfour leaked to
Colonel House the details of various secret Allied treaties that they
both knew the naïve Wilson would not accept, and they both agreed
to keep the treaties from the President.
Similarly, soon after the U.S. entered the war, the British
sent to the U.S. as personal liaison between the Prime Minister and the
White House the young chief of British military intelligence, Sir
William Wiseman. House and Wiseman quickly entered a close
collaboration, with House coaching the Englishman on the best way of
dealing with the President, such as "tell him only what he
hear," never argue with him, and discover and exploit his weaknesses.
In turn, Britain's
top intelligence agent manipulated House,
constantly showering him with flattery, and established a close
friendship with the Colonel, getting an apartment in the same building
in New York City, and travelling together abroad. Collaborating with
House in his plan to manipulate Wilson into pro-British policies
William Phillips, an Assistant
Secretary of State who had married
Collaborating with House in supplying Wiseman with illegal
information and working with the British agent against Wilson were two
important American officials. One was Walter Lippman, a young socialist
who had been named by Morgan partner Willard Straight as one of the
three editors of his New
Republic, a magazine which, needless to say, led 'the
parade of progressive
socialist intellectuals in favor of entering the war on the side of the
vaulted into important roles in the war effort: assistant
Secretary of War; then secretary
of the secret group of
historians called The
Inquiry, established under Colonel House in late
1917 to plan the peace settlement at
the end of the war. Lippmann later
left The Inquiry
to go overseas for American military
Another important collaborator with Wiseman was businessman
and scholar George Louis Beer, who was in charge of African and Asian
colonial matters for The Inquiry. Wiseman secretly showed British
documents on African colonies to Beer, who in turn leaked Inquiry
reports to British intelligence.
The plans of Colonel House and his biased
young historians of
The Inquiry were put into effect at the peace settlement at
Austria-Hungary, and Russia were cruelly dismembered, thus
insuring that Germany and Russia,
once recovered from the devastation
of the war, would bend their
energies toward getting their territories
back. In that way, conditions
were virtually set for World War II.
Not only that: the Allies
at Versailles took advantage of the
temporary power vacuum in Eastern Europe to create new independent
states that would function
as client states of Britain and France, be part
of the Morgan-Rothschild financial network, and help
and Russia down permanently. It was an impossible task for these
small nations, a task made more difficult by the fact that the young
historians managed to rewrite the map of Europe at Versailles to
the Czechs, and the
Serbs dominant over all the other minority nationalities
forcibly incorporated into the new countries. These subjugated peoples
– the Germans,
Slovaks, Croats, Slovenes, etc – thus became built-in allies for
the revanchist dreams of Germany and Russia.
American entry into World
War I in April 1917 prevented
negotiated peace between the warring powers, and drove the
forward into a peace of unconditional
surrender and dismemberment, a
peace which, as we have seen, set the
stage for World War II. American
entry thus cost countless lives
on both sides, chaos and disruption
throughout central and eastern Europe at war's end, and the consequent
rise of Bolshevism,
fascism, and Nazism to power in Europe. In this way, Woodrow
Wilson's decision to enter
the war may have been the single most fateful action of the 20th
century, causing untold and unending misery and destruction. But Morgan
profits were expanded and assured.
The Fortuitous Fed
The massive U.S. loans to
the Allies, and the subsequent
American entry into the war, could
not have been financed by the relatively hard-money, gold standard
system that existed before 1914. Fortuitously, an institution
was established at the end of 1913 that made the loans and war finance
possible: the Federal
Reserve System. By centralizing reserves, by
providing a government-privileged
lender of last resort to the banks,
the Fed enabled the banking system to
inflate money and credit, finance
loans to the Allies, and float
massive deficits once the U.S. entered
the war. In addition, the seemingly odd Fed policy of creating an
acceptance market out of thin air by standing ready to purchase
acceptance at a subsidized rate, enabled
the Fed to rediscount
acceptance on munitions exports.
The Federal Reserve
was the outgrowth of five years of
planning, amending, and compromising among various politicians
concerned financial groups, led by the major
including the Morgans, the
Rockefellers, and the Kuhn, Loebs, along
with their assorted economists and technicians.
Particularly notable among the Rockefeller interests were Senator Nelson W.
Aldrich (R.-R.I.), father-in-law of John D. Rockefeller, Jr.,
and Frank A. Vanderlip, vice president of Rockefeller's National City
Bank of New York. From the Kuhn, Loebs came the prominent Paul Moritz Warburg,
of the German
investment banking firm of M.M. Warburg and Company. Warburg
emigrated to the United States in 1902 to become a senior partner at
Kuhn, Loeb & Co., after which he spent most of his time agitating for a central
bank in the United States.
Also igniting the drive for a Federal Reserve System was Jacob H. Schiff,
powerful head of Kuhn,
whom Warburg was related
by marriage. Seconding and sponsoring Warburg in academia was
the prominent Columbia University economist Edwin R.A. Seligman, of the
investment banking family of J. & W. Seligman and Company; Seligman was the brother
of Warburg's brother-in-law.
The Morgans were prominently represented in the planning and
agitation for a Central Bank by Henry P. Davison, Morgan partner;
Charles D. Norton, president of Morgan's
First National Bank of New
York; A. Barton Hepburn, head of Morgan's Chase National Bank; and
Victor Morawetz, attorney and banker
in the Morgan ranks and chairman
of the executive committee of the Morgan-controlled Atchison, Topeka,
and Santa Fe Railroad.
While the establishment
of the Federal Reserve System in late 1913 was the result of a coalition of Morgan,
Rockefeller, and Kuhn, Loeb interests, there is no question
which financial group controlled the personnel and the policies of the
Fed once it was established. (While influential in framing policies of
the Fed, Federal Reserve Board member Warburg was disqualified from
leadership because of his pro-German views.) The first Federal Reserve
Board, appointed by President
Wilson in 1914, included Warburg (later a backer of Nazis for profit);
Rockefeller man, Frederic
A. Delano, uncle of Franklin D. Roosevelt, and president of the Rockefeller-controlled
Wabash Railway; and an Alabama banker, who had both
Overshadowing these three were three definite Morgan men,
and a university economist, Professor Adolph C. Miller of Berkeley,
whose wife's family had Morgan
connections. The three definite Morgan
men were Secretary of the Treasury
McAdoo; Comptroller of the
John Skelton Williams, a Virginia
banker and long-time McAdoo
Morgan railroads; and Assistant
Secretary of the Treasury Charles S.
Hamlin, a Boston attorney who
had married into a wealthy
long connected with the Morgan-dominated
York Central Railroad.
But more important than the composition of the Federal
Reserve Board was the man who became the first Governor of the
New York Federal Reserve Bank and who single-handedly dominated
Fed policy from its inception until his death in 1928. This man was Benjamin Strong,
who had spent virtually his entire business and
personal life in the circle of top associates of J.P. Morgan. A
secretary of several trust companies (banks doing trust business) in
New York City, Strong became neighbor and close friend of three top
Morgan partners, Henry P. Davison, Dwight Morrow, and Thomas W. Lamont. Davison,
in particular, became his mentor, and brought him into Morgan's Bankers
Trust company, where he soon succeeded Lamont as vice-president, and
then finally became president. When Strong was offered the post of
Governor of the New York Fed, it was Davison who persuaded him to take
Strong was an enthusiast for American entry into the war, and
it was his mentor Davison who had engineered the coup of getting Morgan named as sole
underwriter and purchasing agent for Britain and France. Strong
worked quickly to formalize collaboration with the Bank of England,
collaboration which would continue in force throughout the 1920s. The
Federal Reserve Bank of New York
became foreign agent for the Bank of England, and vice versa.
The main collaboration throughout the 1920s, much of it kept
secret from the Federal Reserve Board in Washington, was between Strong and the man who soon became
Governor of the Bank of
Collet Norman. Norman and Strong were not only fast friends, but had important investment
banking ties, Norman's uncle having been a partner
of the great English banking firm of Baring
Brothers, and his
grandfather a partner in the international banking house of Brown Shipley & Co., the
London branch of the Wall Street banking firm of Brown Brothers
Brown Brothers, Harriman, funded Nazis and Soviets). Before coming
to the Bank of England, Norman himself had worked at the Wall Street
office of Brown Brothers, and then returned to London to become
partner of Brown Shipley.
The major fruit of the
Norman-Strong collaboration was Strong's
to inflate money and credit in the U.S. throughout the 1920s, in
order to keep England
from losing gold to the U.S. from its inflationary policies.
Britain's predicament came from its
insistence on going back to the
gold standard after the war at the highly overvalued pre-war par for
the pound, and then insisting
on inflating rather than deflating to
make its exports competitively priced in the world market. Hence, Britain needed to induce
other countries, particularly the U.S., to inflate
along with it. The
Strong-Norman-Morgan connection did the job, setting the stage for the
great financial collapse of 1929–1931.
As World War I drew to a close, influential Britons and
Americans decided that intimate post-war collaboration between the two
countries required more than just
close cooperation between the central
banks. Also needed were permanent
organizations to promote joint
Anglo-American policies to
dominate the postwar world.
The Round Table
In England, Cecil Rhodes
had launched a secret society in
1891 with the aim of maintaining
and expanding the British Empire to re-incorporate the United States.
After the turn of the 20th century, the direction, organization, and
expansion of the society fell to Rhodes's friend and executor, Alfred
Lord Milner. The Milner
Group dominated domestic planning in Britain during World War I,
and particularly the planning for post-war foreign and colonial policy.
The Milner Group staffed the British delegation of experts to
Versailles. To promote the
intellectual agitation for such a policy,
the Milners had also set up the Round Table Groups
in England and abroad in 1910.
The first American
to be asked to join the Round Table was George Louis Beer,
who came to its attention when his
books attacked the American Revolution and
praised the British Empire of the 18th century. Such loyalty could
not go unrewarded, and so Beer became a member of the Group about 1912
and became the American correspondent of Round Table magazine.
We have seen Beer's pro-British role
as colonial expert for The
Inquiry. He was also the chief U.S. expert on colonial affairs
Versailles, and afterward the Milner Group made Beer head of the Mandate
the League of Nations.
During the war, Beer, Anglophile Yale historian George Burton
Adams, and powerful Columbia University historian James T. Shotwell, an
important leader of The
Inquiry and head of the National
Historical Services, which emitted deceptive
propaganda for the war
effort, formed a secret
society to promote Anglo-American
collaboration. Finally, led by Beer for the United States and
of the Round Table group in England, Lionel Curtis, the British and
U.S. historical staffs at Versailles took the occasion to found
permanent organization to agitate for an informally, if not formally,
reconstituted Anglo-American Empire.
The new group, the Institute of
International Affairs, was formed at a meeting at the Majestic
Hotel in Paris on May 30, 1919. A six-man organizing committee was
formed, three Milnerites from Britain, and three Americans: Shotwell; Harvard historian
Archibald C. Coolidge, head of the Eastern European desk of the Inquiry, and
member of the Morgan-oriented Boston financial family; and James Brown
Scott, Morgan lawyer who was to write a biography of Robert Bacon.
The British branch, the Royal Institute of
International Affairs, set up a committee to supervise writing a
history of the Versailles Peace Conference; the committee was
financed by a gift from Thomas
W. Lamont, Morgan partner.
The American branch of the new group took a while to get
going. Finally, the still inactive American Institute of
International Affairs merged with a defunct outfit, begun in
1918, of New York businessmen concerned with the postwar world, and
organized as a dinner club to
listen to foreign visitors. This organization, the Council on
had as its honorary chairman Morgan lawyer Elihu Root, while Alexander Hemphill, chairman of Morgan's
Guaranty Trust Company, was chairman of its
finance committee. In August 1921, the two organizations merged into
the new Council on
Foreign Relations, Inc., a high-powered organization embracing bankers,
While varied financial interests were represented in the new
organization, the CFR was Morgan-dominated, from top to bottom.
Honorary president was Elihu Root. President was John W. Davis,
Wilson's Solicitor-General, and now chief counsel for J.P. Morgan &
Co. Davis was to become Democratic Presidential candidate in 1924.
Secretary-Treasurer of the new CFR was Harvard economic historian Edwin
F. Gay, director of planning and statistics for the Shipping Board
during the war, and now editor of the New York Evening Post, owned
by his mentor, Morgan partner, Thomas W. Lamont.
It was Gay who had the idea of founding Foreign Affairs, the
CFR's quarterly journal, and who suggested both his Harvard colleague
Archibald Coolidge as the first editor, and the New York Post reporter
Hamilton Fish Armstrong as assistant editor and executive director of
the CFR. Other prominent officials in the new CFR were: Frank L. Polk, former
Under-Secretary of State and now lawyer for J.P. Morgan & Co; Paul
M. Warburg of
Kuhn, Loeb; Otto H. Kahn
of Kuhn, Loeb; former Under-Secretary of State under
Wilson, Norman H. Davis, a banking associate of the Morgans; and as
vice-president, Paul D. Cravath, senior partner of the
Street law firm
of Cravath, Swaine, and Moore.
After World War II, the Council
Relations became dominated by the Rockefeller rather than by the Morgan
interests, a shift of power reflecting a general alteration in
financial power in the world at large. After World War II, the rise of
oil to prominence brought the Morgans and Rockefellers – once intense
rivals – into an Eastern Establishment of which the Rockefellers were
the senior, and the Morgans the junior, partners.
Rockefeller, Morgan, and War
the 1930s, the
Rockefellers pushed hard for war against Japan, which they saw
as competing with them
vigorously for oil and rubber
resources in Southeast
and as endangering the Rockefellers'
cherished dreams of a mass
"China market" for
petroleum products. On the other hand, the Rockefellers took a
non-interventionist position in Europe, where they had close financial
ties with German
firms such as I.G. Farben and Co., and very few close relations
with Britain and France. The Morgans, in contrast, as
usual deeply committed to their
financial ties with Britain and France,
early for war
with Germany, while their interest in the Far East had become
minimal. Indeed, U.S. Ambassador to Japan, Joseph C. Grew, former
Morgan partner, was one of the few officials in the Roosevelt
Administration genuinely interested in peace with Japan.
World War II might therefore be considered, from one point of
view, as a
coalition war: the
Morgans got their war in Europe, the Rockefellers theirs in
Asia. Such disgruntled Morgan men as Lewis W. Douglas and Dean
G. Acheson (a protégé of Henry Stimson), who had left the
early Roosevelt Administration in disgust at its soft money policies and
economic nationalism, came happily roaring back
into government service with the advent of World War II. Nelson
for his part, became head of Latin
American activities during World War
II, and thereby acquired his taste for government service.
After World War II, the united Rockefeller-MorganKuhn, Loeb
Eastern Establishment was not allowed to enjoy its financial and
political supremacy unchallenged for long. "Cowboy" Sun Belt firms, maverick oil men
men from Texas, Florida, and southern California, began to
challenge the Eastern Establishment "Yankees" for political power.
While both groups favor the Cold War, the Cowboys are more
nationalistic, more hawkish, and less inclined to worry about
what our European
allies are thinking. They are also much less inclined to bail
out the now Rockefeller-controlled Chase Manhattan Bank
and other Wall Street banks that loaned
Third World and Communist countries and expect
the U.S. taxpayer – through outright taxes or the printing of U.S.
dollars – to pick up the tab.
It should be clear that the name of the political party in
power is far less important than the particular
regime's financial and
banking connections. The foreign policy power for so long
Nelson Rockefeller's personal foreign affairs adviser, Henry A. Kissinger,
discovery of the extraordinarily powerful Rockefeller–Chase Manhattan
Bank elder statesman John J.
McCloy, is testimony to the importance of financial power. As is
the successful lobbying
by Kissinger and Chase Manhattan's head, David Rockefeller, to
Carter to allow the ailing Shah
of Iran into the U.S. – thus precipitating the humiliating hostage
in nuance, it is clear that Ronald Reagan's originally
proclaimed challenge to Rockefeller-Morgan power in the Council
of Foreign Relations and to the Rockefeller-created Trilateral
Commission has fizzled, and that the "permanent
government" continues to rule regardless of the party nominally in power.
As a result, the
"bipartisan foreign policy" consensus imposed by the
Establishment since World War II seems to remain safely in place.
David Rockefeller, chairman of the board of his family's
Chase Manhattan Bank from 1970 until recently, established
the Trilateral Commission in 1973 with the financial backing of the CFR
and the Rockefeller Foundation. Joseph Kraft, syndicated
Washington columnist who himself has the distinction of being both a
CFR member and a Trilateralist, has accurately
described the CFR as a "school for statesmen,"
"comes close to being an organ of what C. Wright Mills has called the Power
group of men, similar in interest and outlook,
shaping events from invulnerable positions behind the scenes."
of the Trilateral Commission
was to internationalize policy
formation, the commission consisting of a small group of
multinational corporate leaders, politicians, and foreign policy
experts from the U.S., Western Europe, and Japan, who meet to
coordinate economic and foreign policy among their respective nations.
Perhaps the most powerful
single figure in foreign policy
since World War II, a beloved adviser to all Presidents, is the
octogenarian John J. McCloy.
During World War II, McCloy virtually ran the
War Department as Assistant to aging Secretary Stimson; it was
McCloy who presided over the decision to round up all
Japanese-Americans and place them in concentration camps in
II, and he is virtually the only American left who still justifies that
Before and during the war, McCloy, a disciple of Morgan
lawyer Stimson, moved in the Morgan orbit; his brother-in-law, John S.
Zinsser, was on the board of directors of J.P. Morgan & Co. during
the 1940s. But, reflecting the postwar power shift from Morgan to
Rockefeller, McCloy moved quickly into the Rockefeller ambit. He became
a partner of the Wall Street corporate law firm of Milbank, Tweed, Hope,
Hadley & McCloy, which had long served the Rockefeller family and
the Chase Bank as legal counsel.
From there he moved to become Chairman of the Board of
the Chase Manhattan Bank, a director of the
Rockefeller Foundation, and of Rockefeller Center,
Inc., and finally, from 1953 until 1970, chairman of the board of the Council
on Foreign Relations. During the Truman Administration, McCloy
served as President
of the World Bank and then U.S.
High Commissioner for Germany. He was also a special
adviser to President John F. Kennedy on Disarmament, and
chairman of Kennedy's Coordinating Committee on the Cuban
Crisis. It was McCloy
who "discovered" Professor Henry A. Kissinger for the
Rockefeller forces. It is no wonder that John K. Galbraith and Richard
Rovere have dubbed McCloy "Mr. Establishment."
A glance at foreign policy leaders since World War II will
reveal the domination of the
banker elite. Truman's first Secretary of Defense was James V. Forrestal, former president
of the investment banking firm of Dillon, Read & Co.,
closely allied to the Rockefeller financial group. Forrestal had also
been a board member of the Chase
Securities Corporation, an affiliate of the Chase National Bank.
Another Truman Defense Secretary was Robert A. Lovett, a partner
of the powerful New York investment banking house of Brown Brothers Harriman. At
the same time that he was Secretary
of Defense, Lovett continued to be
a trustee of the Rockefeller
Foundation. Secretary of the
Thomas K. Finletter was a top Wall
Street corporate lawyer and member
of the board of the CFR while
serving in the cabinet. Ambassador
to Soviet Russia, Ambassador to Great Britain, and Secretary of Commerce
in the Truman Administration was the powerful multi-millionaire
W. Averell Harriman, an often underrated but dominant force
within the Democratic Party since the days of FDR. Harriman was a
partner of Brown Brothers Harriman.
was Harriman who earlier worked with
George Herbert Walker and set up Walker's son-in-law Prescott Bush to
run his money-laundering campaign to finance Nazi Germany.
Harriman's liaisson Dulles later headed the CIA.)
Also Ambassador to Great Britain under Truman was Lewis W. Douglas, brother-in-law of John J.
McCloy, a trustee of the Rockefeller Foundation, and a board
member of the Council on Foreign Relations. Following Douglas as
Ambassador to the Court of St. James was Walter S. Gifford, chairman of
the board of AT&T, and member of the board of trustees of the
Rockefeller Foundation for almost two decades. Ambassador to NATO under
Truman was William H. Draper, Jr.,
vice-president of Dillon, Read &Co.
Also influential in helping
the Truman Administration organize the Cold War was director of
the policy planning staff of the State Department, Paul H. Nitze. Nitze, whose wife was
a member of the Pratt family,
associated with the Rockefeller family since the origins of Standard
Oil, had been vice-president
of Dillon, Read & Co.
When Truman entered the Korean War, he created an Office of Defense Mobilization to
run the domestic economy during the war. The first director was Charles E. ("Electric Charlie") Wilson,
president of the Morgan-controlled
General Electric Company, who also served as board member of the
Morgans' Guaranty Trust
Company. His two most influential assistants were Sidney J. Weinberg, ubiquitous senior partner
in the Wall Street investment banking firm of Goldman
& Co., and former General Lucius
D. Clay, chairman of the board of Continental Can Co., and a
director of the Lehman
Succeeding McCloy as
President of the
World Bank, and continuing in that post throughout the two terms
of Dwight Eisenhower, was Eugene
Black. Black had served for fourteen years as vice-president of
the Chase National Bank,
and was persuaded to take the World Bank post by the bank's chairman of
the board, Winthrop W. Aldrich,
brother-in-law of John D.
The Eisenhower Administration proved to be a field day for the Rockefeller interests.
While president of Columbia University, Eisenhower was invited to high-level
dinners where he met and was groomed for President by
top leaders from the Rockefeller and Morgan ambits, including the
chairman of the board of Rockefeller's Standard Oil of New Jersey, the
presidents of six other big oil companies, including Standard of California and SoconyVacuum,
and the executive vice-president of J.P. Morgan & Co.
One dinner was hosted by Clarence Dillon, the
multi-millionaire retired founder of Dillon, Read & Co., where the
guests included Russell B. Leffingwell, chairman of the board of both
J.P. Morgan & Co. and the CFR (before McCloy); John M. Schiff, a
senior partner of the investment banking house of Kuhn,
Loeb & Co.; the financier Jeremiah Milbank, a director of
the Chase Manhattan Bank; and John D.
Even earlier, during 1949, Eisenhower had been introduced
through a special study group to key
figures in the CFR. The study group devised a plan to create a new
organization called the American Assembly – in essence an expanded CFR study group – whose
main function was reputedly to build up Eisenhower's prospects for the
Presidency. A leader of the "Citizens
for Eisenhower" committee, who later became Ike's Ambassador to
Great Britain, was the multi-millionaire John
Hay Whitney, scion of several wealthy families, whose granduncle, Oliver H. Payne, had
been one of the associates of John D.
Rockefeller, Sr. in founding
the Standard Oil Company. Whitney was head of his own investment
concern, J.H. Whitney & Co.,
and later became publisher of the New York Herald Tribune.
Running foreign policy during the Eisenhower Administration
was the Dulles
family, led by Secretary
of State John Foster Dulles, who had also concluded the U.S.
peace treaty with Japan under Harry Truman. Dulles had for three decades been a
senior partner of the top Wall Street corporate law firm of Sullivan & Cromwell (Enron's
law firm), whose most
important client was Rockefeller's Standard Oil Company of
New Jersey. Dulles had been for fifteen
years a member of the board of the Rockefeller Foundation, and
before assuming the post of Secretary of State was chairman of the
board of that institution. Most important is the littleknown fact that Dulles's wife was Janet
Pomeroy Avery, a first
cousin of John D. Rockefeller, Jr. (The
Dulles Bros were important intermediaries between New York and the Nazi party,
before Hitler's rise to power, during
the war while troops were dying, and after Germany lost the war they
assisted Nazis to get themselves and their money out of Germany.)
Heading the super-secret Central Intelligence Agency during
the Eisenhower years was Dulles's brother, Allen Welsh Dulles,
also a partner in Sullivan &
Cromwell. Allen Dulles had long been a trustee of the CFR and had served as
its president from 1947 to 1951. Their sister, Eleanor Lansing Dulles, was
head of the Berlin desk of the
State Department during that decade.
Under-Secretary of State, and the man who succeeded John
Foster Dulles in the spring 1959, was former Massachusetts Governor
Christian A. Herter. Herter's wife, like Nitze's, was a member of the Pratt family. Indeed, his wife's
uncle, Herbert L. Pratt, had been for many years president or chairman of the board of
Standard Oil Company of New York. One of Mrs. Herter's cousins,
Richardson Pratt, had served as assistant treasurer of Standard Oil of
New Jersey up to 1945. Furthermore, one of Herter's own uncles, a
physician, had been for many years treasurer of the Rockefeller Institute for Medical
Institute studied Eugenics, and was a source of inspiration for
Germany's racial policies.)
Herter was succeeded as Under-Secretary of State by
Eisenhower's Ambassador to France, C.
Douglas Dillon, son of Clarence,
and himself Chairman of the Board of Dillon,
Read & Co. Dillon was soon to become a trustee of the Rockefeller Foundation.
Perhaps to provide some balance for his banker-business
coalition, Eisenhower appointed as Secretary of Defense three men in
the Morgan rather than the Rockefeller ambit. Charles B. ("Engine Charlie") Wilson
was president of General Motors,
member of the board of J.P. Morgan
& Co. Wilson's successor, Neil H. McElroy, was president of Proctor & Gamble Co. His board
chairman, R.R. Deupree, was also a director of J.P. Morgan & Co. The third
Secretary of Defense, who had been Under-Secretary and Secretary of the
Navy under Eisenhower, was Thomas S. Gates,
Jr. (probably related to current Secy of
Defense replacing Rumsfeld in 2006), who had been a partner of the Morgan-connected Philadelphia investment
banking firm of Drexel & Co. When Gates stepped down as
Defense Secretary, he became president of the newly formed flagship
commercial bank for the Morgan interests, the Morgan Guaranty Trust Co.
Serving as Secretary of the Navy and then Deputy Secretary of
Defense (and later Secretary of the Treasury) under Eisenhower was
Texas businessman Robert B. Anderson. After leaving the Defense
Department, Anderson became a board member of the Rockefeller-controlled American Overseas
Investing Co., and, before becoming Secretary of the Treasury,
he borrowed $84,000 from Nelson A. Rockefeller to buy stock in Nelson's International Basic Economy
Head of the important Atomic Energy
Commission during the Eisenhower years was Lewis L. Strauss. For two
decades, Strauss had been a partner in the investment banking firm of Kuhn, Loeb & Co. In 1950,
Strauss had become financial adviser to the Rockefeller family, soon
also becoming a board member of Rockefeller Center, Inc.
A powerful force in deciding foreign policy was the National Security
Council, which included on it the Duller brothers, Strauss, and Wilson.
Particularly important is the post of national security adviser to the
President. Eisenhower's first national security adviser was Robert
Cutler, president of the Old Colony Trust Co., the largest trust
operation outside New York City. The Old Colony was a trust affiliate
of the First National Bank of Boston.
After two years in the top national security post, Cutler
returned to Boston to become chairman of the board of Old Colony Trust,
returning after a while to the national security slot for two more
years. In between, Eisenhower had two successive national security
advisers. The first was Dillon Anderson, a Houston corporate attorney,
who did work for several oil companies. Particularly significant was
Anderson's position as chairman of the board of a small but fascinating
Connecticut firm called Electro-Mechanical
Research, Inc. Electro-Mechanical was closely associated with
certain Rockefeller financiers; thus, one of its directors was Godfrey Rockefeller, a limited
partner in the investment banking
firm of Clark, Dodge & Co.
After more than a year, Anderson resigned from his national
security post and was replaced by William H. Jackson, a partner of the
investment firm of J. H.
Whitney & Co. Before assuming his powerful position, Dillon
Anderson had been one of several men serving as special hush-hush consultants to the
National Security Council. Another special adviser was Eugene
Holman, president of Rockefeller's Standard Oil Company of New Jersey.
We may mention two important foreign policy actions of the
Eisenhower Administration which seem to reflect the striking influence of
personnel directly tied to bankers and financial interests. In
1951, the regime of Mohammed
Mossadegh in Iran decided to nationalize the British-owned oil
holdings of the Anglo-Iranian Oil company. It took no time for the
newly established Eisenhower Administration to intervene heavily in
this situation. CIA
director and former Standard Oil lawyer Allen W. Dulles flew to
Switzerland to organize the covert overthrow of the Mossadegh regime,
the throwing of
Mossadegh into prison, and the restoration of the Shah to the
throne of Iran.
After lengthy behind-the-scenes negotiations, the oil industry was put back into action as
purchasers and refiners of Iranian oil. But this time the
picture was significantly different. Instead of the British getting all
of the oil pie, their share was reduced to 40 percent of the new oil
consortium, with five top U.S. oil
companies (Standard Oil of New Jersey, Socony-Vacuum – formerly
Standard Oil of N.Y. and now Mobil – Standard Oil of California, Gulf,
and Texaco) getting another 40 percent.
It was later disclosed that Secretary of State Dulles placed a sharp upper limit on any
participation in the consortium by smaller independent oil companies in
the United States. In addition to the rewards to the
Rockefeller interests, the CIA's man-on-the-spot directing the
Roosevelt, received his due by quickly becoming a vice-president of Mellon's Gulf Oil Corp.
The Guatemalan Coup
Fresh from its CIA triumph in Iran, the Eisenhower
Administration next turned its attention to Guatemala,
where the left-liberal
regime of Jacob Arbenz Guzman had nationalized 234,000 acres of uncultivated land owned by
the nation's largest landholder, the American-owned United Fruit
Company, which imported about 60 percent of all bananas coming into the
Arbenz also announced his intention of seizing another 173,000 acres of idle United
Fruit land along the Caribbean coast. In late 1953, Eisenhower gave the CIA the assignment of organizing
a counter-revolution in Guatemala. With the actual operation
directed by former Wall Street
corporate lawyer Frank Wisner of the CIA, the agency launched a
successful invasion of Guatemala, led by exiled Army Colonel Castilo
Armas, which soon overthrew the Arbenz regime and replaced it with a military junta.
land program for peasants was abolished, and most of its
expropriated property was returned to the United Fruit Company.
Allen W. Dulles had
financial connections with United Fruit and with various sugar
companies which had also suffered land expropriation from the Arbenz
regime. For several years, while a partner at Sullivan & Cromwell, he had been
a board member of the Rockefeller-controlled
J. Henry Schroder Banking Corporation. Members of the board of
Schroder during 1953 included Delano Andrews,
Sullivan & Cromwell partner who had taken Dulles's seat on the
board; George A. Braga, president of the Manati Sugar Company; Charles W.
Gibson, vice-president of the Rockefeller-affiliated
Air Reduction Company; and Avery Rockefeller, president of the closely linked banking house of Schroder,
Rockefeller, & Co. Members of the board of Manati Sugar, in
the meanwhile, included Alfred
Jaretski, Jr., another Sullivan & Cromwell partner; Gerald
F. Beal, president of J. Henry
Schroder and chairman of the board of the International Railways of Central America;
and Henry E. Worcester, a recently retired
of executive of United Fruit.
furthermore, was a controlling shareholder in International Railways,
while, as in the case of Beal, the board chairmanship of the railway
had long been held by a high official of Schroder. The close ties
between United Fruit, Schroder, and International Railways may also be
seen by the fact that, in 1959, the board chairman of the railway became
James McGovern, general counsel for United Fruit. International Railway, in fact, carried
most of United Fruit's produce from the interior to the port in Guatemala. In addition, Dulles's close associate and fellow trustee
of the Council of Foreign Relations in this period, and former
treasurer of the CFR, was Whitney H.
Shepardson, formerly vice-president of International Railways.
Not only that: Robert Cutler, national security adviser to
the President at the time of the coup against Arbenz, had himself very
close ties to United Fruit. Cutler's boss at Old Colony Trust, chairman of the
board T. Jefferson Coolidge,
was also, and more importantly, board chairman at United Fruit. Indeed,
many members of the board of United Fruit, a Boston-based company, were
also on the board of Old Colony or its mother company, the First National Bank of Boston.
Furthermore, during the period of planning the Guatemalan
coup, and up till a few months before its success in 1954, the Assistant
Secretary of State for Inter-American Affairs was John Moors Cabot,
a well-known anti-Arbenz hawk.
brother Thomas D., was an executive of United Fruit and a member of the
board of the First National Bank of
Council on Foreign Relations played an important role in the Guatemalan
invasion. It began in the fall of 1952, when Spruille Braden, a
former Assistant Secretary of State for Inter-American Affairs and then
consultant for United Fruit, led a CFR study group on Political Unrest in Latin America.
Discussion leader at the first meeting of the CFR-Braden group was John McClintock, an executive of United Fruit. Former leading
New Dealer and Assistant Secretary of State Adolf A. Berle, Jr.,
a participant in the study group, recorded in his diary that the U.S. should welcome an overthrow of the
Arbenz government, and noted that, "I am arranging to see Nelson Rockefeller
(himself Assistant Secretary of State for Inter-American Affairs during
World War II) who knows the situation and can work a little with
In the actual Guatemalan operation, President Eisenhower himself was a CFR
member, as were Allen
Dulles, John M. Cabot and Frank Wisner, the man in charge of the coup
and the CIA's deputy director for plans. Of the twelve people in
the U.S. government identified as being involved at the top level in
the Guatemalan affair, eight were CFR
members or would be within a few years. These included, in
addition to the above, Henry F. Holland, who succeeded Cabot in the
assistant secretary of state slot in 1954; Under-Secretary of State Walter Bedell
Smith, a former director of the CIA; and Ambassador
to the UN Henry Cabot Lodge.
Paving the way for the coup was
a public report, issued in December 1953 by the Committee
on International Policy of the National Planning Association on the
Guatemalan situation. Head of the Committee was Frank Altschul,
secretary and vice-president of the
CFR and a partner of the international banking house of Lazard
Freres, as well as a director of the
Chase National Bank and president of the General American Investor Corp., a
firm largely controlled by Lehman
Brothers. The Altschul report, signed by twenty-two committee
members of whom fifteen were CFR members, warned that "Communist
infiltration in Guatemala" was a threat
to the security of the Western Hemisphere and hinted that
drastic action would probably be necessary to deal with this menace.
Of those involved in the drastic action, Secretary of State
John Foster Dulles, while at Sullivan & Cromwell, had once
represented United Fruit in negotiating a contract with Guatemala.
Under-Secretary of State Walter Bedell Smith, after leaving the
government, became director of United
Fruit, as did Robert D. Hill, who participated in the Guatemala operation as
Ambassador to Costa Rica. Furthermore, future president
of Guatemala, Miguel Ydigoras Fuentes, noted that his own
cooperation in the coup against Arbenz was obtained by Walter Turnbull, a former executive at United Fruit,
who came to him along with two CIA
JFK and the
When John F. Kennedy assumed the office of President, the
first person he turned to for foreign policy advice was Robert A. Lovett,
partner of Brown Brothers, Harriman, even though Lovett had backed Richard Nixon. Kennedy asked Lovett to take his pick
of any of three top jobs in the
Cabinet – State, Defense, and Treasury – but the ill and aging
Lovett demurred. It was at Lovett's urging, however, that Kennedy chose
as Secretary of State Dean Rusk, president of the Rockefeller
Foundation, a post he had acquired because of the strong backing
Foster Dulles. Under-Secretary of State was Chester Bowles, a trustee of the Rockefeller
Foundation; Bowles was soon replaced by corporate lawyer George
Bail, who was later to become a senior managing partner at Lehman Brothers.
For Secretary of Defense
Kennedy chose Robert S. McNamara, President of Ford Motor Company.
One influential force in the McNamara appointment was the backing of Sidney J. Weinberg, partner
of the investment banking firm of Goldman,
& Co., and powerful
fund-raiser for the Democratic Party. Weinberg was a member of
the board of Ford Motor Company.
Perhaps even more important was the intimate Ford connection with the
investment banking house of Lehman
Brothers, which had long carried great weight in the party; at
that time, five high-ranking Ford
executives sat on the board
of the One William Street Fund, a mutual fund recently established by Lehman Brothers.
Secretary of the Air Force was Eugene Zuckert, chairman of
the board of the small Pittsburgh firm, the Nuclear Science and Engineering Corp.,
controlled by the powerful Lehman
Brothers. Before going to this firm, Zuckert had been a member
of the Atomic Energy Commission;
former AEC Commissioner Gordon Dean, who had preceded Zuckert as chairman of the board of Nuclear Science
and Engineering, was also a
partner of Lehman Brothers.
General counsel of the Defense Department,
and soon to become Secretary of the
Army, was Wall Street
corporate lawyer Cyrus Vance, later to become Secretary of State under Carter. Vance's law firm – Simpson, Thacher & Bartlett –
represented Lehman Brothers
and Manufacturers Hanover Trust Co. Moreover, Vance had married into
New York's wealthy W & J Sloane
family; his father-in-law, John Sloane, had served as a director of the United States Trust Co.
Secretary of the Treasury in the Kennedy Cabinet was C. Douglas Dillon, of Dillon, Read and the
Rockefeller Foundation. Dillon saw no problem in serving for
eight years as Ambassador to France and as a State Department official
during the Eisenhower Era, and then segueing
to the Democratic Kennedy Cabinet. Like Lovett, he too was
chosen even though he had
been a big contributor to the Nixon effort
In the powerful post of National Security Adviser,
Kennedy selected Harvard Dean McGeorge
Bundy, who had been part of a high-powered foreign policy team
advising Thomas B. Dewey in the 1948 campaign, a virtually all-Rockefeller dominated team
headed by John Foster Dulles and including Dulles's brother Allen, C.
Douglas Dillon, and Christian Herter. After that, Bundy worked for the
Council on Foreign Relations.
McGeorge Bundy had
been born into the wealthy Boston Brahmin Lowell family, his mother
having been a Lowell. His father Harvey H. Bundy, was a partner in
Boston's top law firm of Choate, Hall & Stewart, a high official of the Foreign Bondholders
Protective Council, and a director of the Merchants National
Bank of Boston. McGeorge's
brother, William, a high CIA official,
was married to the daughter of former Secretary of State Dean Acheson,
and his sister Katherine married into the socially prominent Auchinchloss
family, the family of Jacqueline
The strong Rockefeller influence on Kennedy foreign policy is
best seen in the fact that the new
President continued Allen
W. Dulles as head of the CIA.
at the urging of Dulles that Kennedy decided to go ahead with the CIA's
previously planned and disastrous Bay of Pigs invasion of Cuba.
Fidel Castro's regime had recently nationalized a large number of
American-owned sugar companies in Cuba. It might be noted that
Dulles's old law firm of Sullivan & Cromwell served as general counsel for two of these
large sugar companies, the Francisco Sugar Co. and the Manati
Sugar Co., and that one of the board members of these firms was Gerald
F. Beal, president of the
Rockefeller-oriented J. Henry Schroder Bank, of which Dulles had
once been a director.
Not only that. John L. Loeb
of the Loeb, Rhoades investment bank,
whose wife was a member of the Lehman
banking family, owned a large block of stock in the nationalized Compania Azucarera Atlantica
del Golfo, a big sugar
plantation in Cuba, while one of the directors of the latter
company was Harold F. Linder,
vice-chairman of the General American
Investors Company, dominated by Lehman Brothers and Lazard Freres investment bankers.
Linder was appointed head of the Export-Import
Bank by President Kennedy.
After the Bay
of Pigs fiasco, Dulles
was replaced as head of the CIA by West Coast industrialist John A. McCone, who also had
the capacity to serve the administrations of either party with equal
ease. Under-Secretary of the Air Force
under Truman and head of the Atomic
Energy Commission under Eisenhower, McCone was president of the Bechtel-McCone Corporation, and represents the first major incursion
of the international Bechtel construction interests into American
politics. McCone was also a board member of the California Bank of Los Angeles, and
of the Rockefeller-dominated
Standard Oil Company of California.
The CIA was
also heavily involved about this time in the short-lived Katanga secession movement in the
Congo. One of the largest of the American companies in Katanga,
and a major backer of the secession movement, was the Anglo-American
Corporation of South Africa, one of whose partners was mining
magnate Charles W.
Engelhard's investment banker was Dillon, Read, the family firm
of Kennedy's Secretary of the
Treasury, C. Douglas Dillon.
We have seen that Mr.
Establishment, the Rockefeller-oriented John J. McCloy, served
as Kennedy's special adviser on disarmament. When the U.S. Arms Control and
Disarmament Agency was created in the fall of 1961, its first
head was William C. Foster,
former Under-Secretary of State and
Defense under Truman. In between, Foster had served as a high
official of the Olin Mathieson Chemical Corp., and then board chairman
of the Rockefeller-dominated
United Nuclear Corp. Foster
was also a director of the CFR.
Kennedy continued Rockefeller's Eugene Black as head of the
powerful World Bank.
When Black reached retirement age in 1962, he was replaced by George D. Woods, chairman of
the board of the prominent investment bank, First Boston Corporation.
Woods had many connections with the Rockefeller interests, including
being a director of the Chase
International Investment Corp., of the Rockefeller Foundation,
and of other Rockefeller-dominated concerns.
Two important foreign policy actions of the Kennedy
Administration were the Cuban Missile
Crisis and the escalation of
the war in Vietnam.
Kennedy was advised during the Cuban missile crisis by an ad hoc group
called the Ex Comm, which
included, along with his official major foreign policy advisers, Robert A. Lovett
and John J. McCloy. In the Vietnam War, Kennedy brought in as Ambassador to South Vietnam the Boston
Brahmin and Morgan-oriented Henry Cabot Lodge, who had been
Eisenhower's Ambassador to the United Nations and who had run for
Vice-President on the Nixon
ticket in 1960. Virtually the last foreign policy act of John F.
Kennedy was to give the green light to Lodge and the CIA to oust, and
murder, South Vietnamese President Ngo Dinh Diem. (There
is strong evidence that the CIA was involved with the Kennedy
assassination, because virtually no one else could have done it and
changed stories in the media as well, but it's clear that Oswald did
not work alone, as he had some role in both the FBI and CIA.)
LBJ and the Power
Lyndon Johnson's foreign
policy was dominated by his escalation of the Vietnam conflict into a
full-scale (if undeclared) war, and of the increasing splits
over the war among the financial power elite. Johnson retained the hawkish Rusk, McNamara, McCone, and Lodge in their posts. As newly
minted Vietnam doves were ousted from foreign policy positions,
they were replaced by hawks. Thus, William
Bundy became Assistant
Secretary of State for Far Eastern Affairs, at the same time
becoming a director of the CFR.
On the other hand, the increasingly
critical W. Averell Harriman was ousted from his post of
Under-Secretary of State.
Cyrus Vance continued
as Johnson's Secretary of the Army;
when he rose to Deputy Secretary of
Defense, he was replaced by Vance's
old friend and roommate at Yale, Stanley R. Resor. Resor was a partner in the major Wall Street law firm
of Debevoise, Plimpton, Lyons, & Gates, and was the brother-in-law
of economist and banker Gabriel Hauge,
president of the Manufacturers
Hanover Trust, and treasurer of the CFR.
Resor had married into the Pillsbury
flour family of Minneapolis, which had long been connected with
the holding company, the
Northwest BanCorporation. After Vance retired as Deputy Secretary of
Defense to return to law practice, he was replaced by Johnson's
hard-line Secretary of the Navy Paul Nitze, former partner of Dillon, Read, whose wife was a
member of the Rockefeller-connected Pratt family.
One important meeting at which it was decided to escalate the Vietnam War was
held in July 1965. The meeting consisted of Johnson, his designated
foreign policy and military officials, and three key unofficial
advisers: Clark M. Clifford, the chairman of
the President's Foreign Intelligence
Advisory Board, and an attorney for the duPonts and the Morgan-dominated General
Electric Co.; Arthur H.
Dean, a partner in Rockefeller-oriented Sullivan & Cromwell and a
director of the CFR; and the ubiquitous John J. McCloy.
Shortly after the meeting, a
distinguished national committee of power elite figures was
formed to back President Johnson's aggressive
policies in Vietnam. (they're
all gonna fall like dominoes) Chairman of the committee was
Arthur H. Dean; other members were Dean
Acheson; Eugene Black, who, after retiring as head of the World
Bank, returned to be a director of
Chase Manhattan; Gabriel Hauge
of Manufacturers' Trust and the CFR; David Rockefeller, president of the Chase Manhattan Bank and a vice-president
of the CFR; and two board
members of AT&T, William B. Murphy and James R. Killian, Jr.
Indeed, of the 46 members of this
pro-Vietnam War committee, 19 were prominent businessmen, bankers or
corporate lawyers. Later, when Johnson
needed to raise
supply more funds for the war effort, he selected thirteen
businessmen to head the lobbying effort.
A fascinating aspect of the Johnson Administration was the heavy influence of men connected with the
powerful Democratic investment banking house of Lehman Brothers.
Johnson's first Under-Secretary of State, George Ball, who left because
of increasing disillusionment with
the Vietnam War, would later become a key partner of Lehman Brothers.
Johnson's most influential unofficial adviser was long-time and
personal legal and financial adviser, Edwin L. Weisl, a New York
attorney who was a senior law partner
to Cyrus Vance at Simpson, Thacher & Bartlett. Not only was
this law firm the general counsel to
Lehman Brothers, but Weisl himself was dubbed by Fortune magazine
as "Lehman's eighteenth partner."
Weisl had great influence at Lehman and occasionally sat in on
partners' meetings. He was also reputed to be the closest friend of
senior partner Robert Lehman, and sat on the board of the Lehman-controlled One William
Another very close and influential Johnson adviser, and a consistent
hard-liner on Vietnam, was his old friend Abe Fortas, a Washington
lawyer and veteran New Dealer.
During the Johnson years, Fortas served as director, vice-president,
and general counsel for the Texas-based Greatamerica Corp., a giant holding company controlling several
insurance companies, Braniff
Airways, and two banks, including the First Western Bank and
Trust Co. of California.
During the same period, Fortas was also a director and vice-president of the large
Federated Department Stores. Both Federated and
Greatamerica had close ties
with Lehman Brothers. Fred Lazarus, Jr., a top official of
Federated, sat on the board of the Lehman-controlled One William Street
Fund, along with Edwin Weisl. And the only two non-Texans on the board
of Greatamerica Corp. were William H. Osborn, Jr., of Lehman Brothers,
and Gustave L. Levy, a partner in the closely allied Wall Street
investment bank of Goldman, Sachs
& Co. Goldman, Sachs was the senior banking adviser for the Murchison Texas oil interests, a
group with whom Lyndon Johnson was personally allied.
Finally, after Henry
Cabot Lodge retired as the hawkish Ambassador to South Vietnam
in 1967, he was replaced by Ellsworth
Bunker. Bunker, who had been president
of the National Sugar
Refining Company, served as ambassador to various countries in
the Eisenhower Administration, and then Ambassador to the Organization of American
States under Johnson. Bunker
was connected to John L. Loeb, the Lehman kinsman who headed the
investment banking firm of Carl M.
Loeb, Rhoades & Co. Loeb placed Bunker on the board of Curtis Publishing Co., after he
obtained control of that firm for Loeb, Rhoades. Loeb also installed Bunker's son, John, as president of Curtis.
Furthermore, Ellsworth Bunker's
younger brother, Arthur, had served as director of the Lehman Corporation, and of
Lehman's One William Street Fund until his death in 1964.
While Bunker had served Johnson as Ambassador to the OAS, he continued to sit on the board of
the National Sugar Refining Company.
In late 1965, Bunker played a crucial role in Johnson's massive U.S. invasion of the
Dominican Republic, an intervention into a Dominican civil war to prevent a victory by
left-wing forces who would presumably pose a dire threat to
American sugar companies in the republic. As President Johnson's
emissary to the Dominican Republic just after the invasion, Bunker
played a decisive role in installing the conservative Hector Garcia-Godoy as
Increasingly, however, the power
elite became divided over the morass of the Vietnam War. Under
the blows of the Tet offensive in
January 1968, Robert McNamara
had become increasingly dovish
and was replaced as Secretary
of Defense by hard-liner
Clark Clifford, with McNamara
moving gracefully to take charge of the World
Bank. But, on investigating the situation, Clifford too
became critical of the war, and Johnson called a crucial two-day
meeting on March 22, 1968, of his highly influential Senior Informal Advisory Group on Vietnam,
known as the "Wise Men," made
up of all his key advisors on foreign affairs.
Johnson was stunned to find that only
Abe Fortas and General Maxwell Taylor continued in the hard-line
position. Arthur Dean, Cabot
Lodge, John J. McCloy, and former General Omar Bradley took a confused
middle-of-the-road position, while all the other elite figures
such as Dean
Acheson, George Ball, McGeorge Bundy, C. Douglas Dillon, and Cyrus
Vance had swung around to a firm opposition to the war.
As David Halberstam put it in his The
Best and the Brightest, these power elite leaders "let him (Johnson) know that the Establishment – yes, Wall Street – had
turned on the war... It was hurting
the economy, dividing the country, turning the youth against the
country's best traditions." LBJ knew when he was licked.
Only a few days afterward, Johnson announced that he was not going to
run for re-election and he ordered what would be the beginnings of U.S. disengagement from
The foreign-policy aims of the Nixon Administration had a
decided Rockefeller stamp. Secretary
of State William P. Rogers was a Wall Street lawyer who had long
been active in the liberal Dewey-Rockefeller
wing of the New York Republican Party. Indeed, Thomas E. Dewey was the main backer
of Rogers for the State Department post.
entire political career was beholden to the Rockefeller interests,
as was dramatically shown one election year when, in an incident that
received unaccustomed publicity, Winthrop
W. Aldrich, Rockefeller kinsman who was president of the Chase National Bank,
Governor Dewey into his Wall Street offices and commanded him to run
for re-election. The governor, who had previously announced his
retirement into private practice, meekly
obeyed. Furthermore, Roger's law partner, John A. Wells, had
long been one of Nelson Rockefeller's top political aides and had
served as Nelson's campaign manager for President in 1964.
Second-tier posts in the Nixon
State Department went to financial elite figures. Thus, the
following men were successively Under
Secretaries of State (after 1972, Deputy Secretaries) in the
Nixon White House: Elliot L.
Richardson, partner of a Boston Brahmin corporate law firm and a
director of the New
England Trust Co., and a man whose uncle, Henry L. Shattuck, had long
been a director of the New England
Merchants National Bank and of the Mutual Life Insurance Co. of New
John N. Irwin II, partner
of a Wall St. law firm (Patterson, Belknap & Webb) long associated
with the Rockefeller interests, and
was a sister of the Watson brothers family of IBM. (Thomas
A. Watson was also a big Hitler supporter in his time, selling or
computers to the Nazis to keep track of prisoners and Jews.)
Kenneth Rush, president of Union Carbide Corp., and a
director of the Bankers Trust
Co. of New York. Robert S. Ingersoll, chairman of the board of Borg-Warner Corp. and a
director of the First National
Bank of Chicago.
Also, the Deputy
Under-Secretary of State for Economic Affairs under Nixon was Nathaniel Samuels, a partner in the
investment banking house of Kuhn,
Loeb & Co., and a director of the Rockefeller-controlled International Basic
Henry A. Kissinger
But of course the dominant foreign policy figure in both the
Nixon and Ford Administrations was not William Rogers but Henry A. Kissinger, who was named
national security adviser and soon became virtually the sole force in
foreign policy, officially replacing Rogers as Secretary of
State in 1973.
was virtually "Mr. Rockefeller." As a Harvard
political scientist, Kissinger had been discovered by John J.
McCloy, and made director
of a CFR group to study the Soviet threat in the nuclear age. He
was soon made director of a special
foreign policy studies project of the Rockefeller Brothers Fund,
and from there became for more than a decade Nelson Rockefeller's chief
personal foreign policy adviser.
Only three days before accepting the Nixon Administration
post, Rockefeller gave
Kissinger $50,000 to ease the fiscal burdens of his official post.
Nixon and Kissinger
re-escalated the Vietnam War by secretly bombing and then invading
Cambodia in 1969 and 1970; they could be sure of compliance from Ellsworth Bunker,
whom Nixon retained as Ambassador to
South Vietnam until the end of the war.
Apart from the Vietnam War, the Nixon Administration's major
foreign policy venture was the CIA-led overthrow
of the Marxist Allende regime in Chile. U.S.
firms controlled about 80 percent of Chile's copper production,
and copper was by far Chile's major export. In the 1970 election, the CIA funnelled $1
million into Chile in an unsuccessful attempt to defeat the obviously
very popular Allende. The new Allende regime then proceeded to
nationalize large U.S.-owned firms, including Anaconda and Kennecott Copper and
the Chile Telephone Co., a large utility which was a subsidiary of ITT
(International Telephone and Telegraph Co.).
Under the advice of Henry Kissinger and of ITT, the CIA funneled $8 million into Chile over
the next three years, in an ultimately successful effort to overthrow
the Allende regime. Particularly helpful in this effort was John A. McCone, the West Coast
industrialist whom Johnson had
continued in charge of the CIA. Now a board member of ITT, McCone
continued in constant contact by being named a consultant
to the CIA on the Chilean question. President Nixon continued Johnson holdover Richard Helms as
head of the CIA, and Helm's outlook may have been influenced by the
fact that his grandfather, Gates W. McGarrah, had been the head of the Mechanics and Metals National Bank
of New York, director of Bankers Trust, and chairman of the board of
the powerful Federal Reserve Bank of New York.
Of the $8 million poured into Chile by the CIA, over $1.5 million was allocated to Chile’s
largest opposition newspaper, El Mercurio, published by
wealthy businessman Augustin Edwards. Edwards was also, not
coincidentally, vice president of
Pepsico, a company headed by
President Nixon’s close friend Donald M. Kendall. The
transaction was arranged at a quiet
breakfast meeting in Washington, set up by Kendall, and including Edwards and Henry
Kissinger. After the successful
overthrow of Allende by a military junta in September 1973, the
man who became the first Minister of Economy, Development, and
Reconstruction was Fernando
Leniz, a high official of El Mercurio who
also served on the board
of the Chilean subsidiary of the Rockefeller-controlled International
Basic Economy Corporation.
Richard Nixon also established, for the first time, diplomatic relations with Communist China.
was urged to take this step by a
committee of prominent businessmen and financiers interested in
promoting trade with and investments in China. The group
included Kendall; Gabriel Hauge, chairman of Manufacturers Hanover Trust
Co.; Donald Burnham, head of Westinghouse;
and David Rockefeller,
chairman of the Chase Manhattan Bank.
The first envoy to China was the veteran elite figure and
diplomat, David K.E. Bruce, who had
married a Mellon, and who had served in high diplomatic posts in
every Administration since that of Harry Truman. After Bruce became
Ambassador to NATO, he was replaced by George
H.W. Bush, a Texas oil man who had served briefly as Ambassador to the United Nations. More
important than Bush’s Texas oil connections was the fact that his
Bush, was a partner at Brown Brothers, Harriman.
In July 1973 a development occurred which was to have a
critical impact on U.S. foreign – and domestic – policy. David Rockefeller formed the Trilateral
Commission, as a more elite and
exclusive organization than the CFR, and containing statesmen, businessmen, and intellectuals
from Western Europe and Japan.
Commission not only studied and formulated policy, but began to place
its people in top governmental posts. North American secretary
and coordinator for the Trilaterals was George S. Franklin, Jr., who
had been for many years executive
director of the CFR. Franklin had been David
Rockefeller's roommate in
college and had married Helena Edgell, a cousin of
Rockefeller. Henry Kissinger was
of course a key member of the
Trilaterals, and its staff director was Columbia University political
Brzezinski, who was also a recently selected director of
President Ford continued Kissinger as his Secretary of State
and top foreign policy director. Kissinger's leading aide during the
Ford years was Robert S.
Ingersoll, Trilateralist from Borg-Warner Corp. and the First National Bank of
Chicago. In 1974, Ingersoll was replaced as Deputy Secretary of State
by Charles W. Robinson, a businessman and Trilateralist.
Ambassador to Great Britain – and then moved to several other
posts – was Elliot Richardson,
now a Trilateralist and a director of the CFR. George
Bush, Trilateralist, was retained as Ambassador to China,
and then became director of the CIA.
is written evidence that Bush had secretly been with the CIA since he
directed the Bay of Pigs and other terrorist operations against Cuba.)
He was replaced as Ambassador by Thomas S. Gates, Jr., head of the
Morgans' flagship bank, Morgan
Guaranty Trust Co. Meanwhile, Robert
McNamara continued to head the World Bank. Becoming head of the Export-Import Bank in 1975 was
Stephen M. DuBrul, Jr., who had had the distinction of being a partner of both Lehman Brothers and Lazard
Earl Carter and his administration were virtually
complete creatures of the Trilateral Commission. In the
early 1970s, the financial
elite was looking for a likely liberal Southern governor
who might be installed in the White House. They were considering Reubin
Askew and Terry Sanford, but they settled on the obscure Georgia governor, Jimmy Carter.
They were aided in their decision by the fact that Jimmy came highly recommended.
In the first place, it must be realized that "Atlanta" has for
decades meant Coca-Cola, the great multi-billion dollar
corporation which has long stood at the center of Atlanta’s
politico-economic power elite. Jimmy
Carter’s long-time attorney, close personal friend, and political
mentor was Charles Kirbo, senior partner at Atlanta’s top
corporate law firm of King & Spalding.
& Spalding had long been the general counsel to Coca-Cola, and also to the mighty financial
firm, the Trust Co. of Georgia, long known in Atlanta as "the Coca-Cola bank." The long-time
head and major owner of Coca-Cola was the octogenarian Robert W.
Woodruff, who had long been highly influential in Georgia politics.
With Kirbo at his elbow, Jimmy Carter soon
gained the whole-hearted political backing of the Coca-Cola interests.
Financial contributors to Carter’s race in the 1971
Democratic primary for governor were: John Paul Austin, powerful
chairman of the board of Coca-Cola; and three vice-presidents of Coke,
including Joseph W. Jones, the personal assistant to Robert Woodruff. If
Pepsi was a Republican firm, Coke had long been prominent in the
Democratic Party; thus, James A. Farley, long-time head of the Democratic National Committee, was
for thirty-five years head of the Coca-Cola
In 1971, Carter was
introduced to David Rockefeller by the latter's friend J. Paul Austin,
who was to become a founding member of the Trilateral Commission.
Austin was long connected with the Morgan
interests, and served as a director
of the Morgan Guaranty Trust Co., and of Morgan's General Electric Co. Other
early political backers of Jimmy Carter were the Gambrell brothers, David and E.
Smyth, of a family which was a major stockholder in Rockefeller-controlled Eastern Air Lines. The Gambrell
law firm, indeed, served as the general counsel for Eastern.
They, too, aided in forming the Carter-Rockefeller
During the same period, Carter was also introduced to the
Donovan, editor-in-chief of Time magazine,
who was also to be a founding Trilateral. Rockefeller and Donovan liked
what they saw, and Carter was also recommended to the Trilaterals by
the Atlanta Committee of the Council on
Jimmy Carter was invited to become a member of the Trilateral
Commission shortly after it was formed, and he agreed enthusiastically. Why
did the Trilaterals appoint an obscure Georgia governor with admittedly
no knowledge of foreign affairs? Ostensibly because they
wanted to hear the views of a Southern governor. Far more
likely, they were grooming him for
the Presidency and wanted to instruct him in
trilateralism. Carter took instruction well, and he wrote later
of the many
happy hours he spent sitting at the feet of Trilateral executive
director and international relations expert Zbigniew Brzezinski.
What the unknown Carter needed more than even money for his
1975–1976 campaign for President was extensive and favorable media
exposure. He received it from the Trilateral-influenced
Establishment media, led by Time's
Hedley Donovan and
Trilateral syndicated columnists Joseph Kraft and Carl Rowan.
Major New York Carter backers, who served on the Wall Street
Committee for Carter or hosted gatherings on his behalf,
included Roger C. Altman, partner of Lehman Brothers,
the chairman of which, Peter G. Peterson, was a Trilateral member; banker
John Bowles; C. Douglas Dillon, of Dillon, Read, who also served
as a member of the international advisory board of the Chase Manhattan Bank; and Cyrus Vance, a
Trilateral founder and vice-chairman of the CFR.
Furthermore, of the six national finance directors of Jimmy
Carter's costly pre-convention race for the Presidential nomination, three were high officials at Lehman Brothers,
one was a vice-president of Paine,
Webber, another was a vice-president
of Kidder, Peabody, and a sixth was the venerable John L. Loeb, senior partner of Loeb,
Rhodes, & Co., and a Lehman
by marriage. Other prominent business fund-raisers for Carter's
election campaign included Walter
Rothschild, who had married a
member of the Warburg family of Kuhn, Loeb & Co., and Felix Rohatyn, a partner of Lazard Freres.
Administration proved to be Trilateral through and through,
especially in foreign affairs. Trilateral members holding high posts in
the Carter Administration included:
James Earl Carter;
Walter, ("Fritz") Mondale;
Security Adviser, Zbigniew Brzezinski;
of State Cyrus Vance, who was now chairman of the board of the
Rockefeller Foundation. Vance's law firm of Simpson, Thacher &
Bartlett had long served as general counsel for Lehman Brothers and
Manufacturers Hanover Trust Co. Vance himself served up to 1977 as a
director of IBM, the New York Times Co., and Lehman's One William
Street Fund. It perhaps also helped Vance's cause that Simpson, Thacher
& Bartlett was the New York general counsel for Coca-Cola Co.
Secretary of State, Warren Christopher. This Los Angeles corporate
lawyer had no diplomatic experience whatever for this high post, but
his law firm of O'Melveny and Myers was a prominent one, and he acted
as the Los Angeles attorney for IBM. More important was the fact that
Christopher was the only Trilateral Commission member from the Western
half of the United States.
of State for Economic Affairs, Richard Cooper. This Yale professor was
also on the board of the Rockefeller-controlled J. Henry Schroder
of State for Security Assistance, Science, and Technology, Lucy Wilson
Benson. Mrs. Benson had been a longtime president of the League of
Women Votes and highly active in Common Cause; she was also a
board member of the Lehman-oriented Federated Department Stores.
Secretary of State for East Asian and Pacific Affairs, Richard
at Large, Henry D. Owen, of the Brookings institution and the CFR.
at Large for the Law of the Sea Treaty, Elliot Richardson.
at Large for Non-Proliferation Matters (nuclear weapons negotiations),
Gerald C. Smith, head of the U.S. delegation at the SALT talks under
Nixon, Washington attorney at Wilmer, Cutler & Pickering,
and North American Chairman of the Trilateral Commission.
to the United Nations Andrew Young.
Disarmament Negotiator, Paul C. Warnke, senior partner of Clark
Clifford's influential Washington law firm.
Secretary of the Treasury for International Affairs, C. Fred Bergsten,
of the Brookings Institution, consultant to the Rockefeller Foundation,
and a member of the editorial board of the CFR's prestigious quarterly
journal, Foreign Affairs.
to Communist China, Leonard Woodcock,
formerly head of the United Automobile Workers. It is
interesting to note that it was under
the Carter-Woodcock aegis that, one week after the first
establishment of formal ambassadorial relations with Communist China, China signed an agreement with
Coca-Cola giving it exclusive cola sales in that country.
of Defense, Harold Brown. This physicist was president of the California Institute of
Technology – the only Trilateral college president – and also served
on the board of IBM and of Schroders,
Ltd., the Rockefeller-controlled British parent company of J. Henry
Schroder Bank of New York.
to the Director of the CIA, Harvard
Professor Robert R. Bowie.
of the Treasury, W. Michael
Blumenthal, head of Bendix Corp., a director of the CFR, and a
trustee of the Rockefeller Foundation.
- Chairman of the Federal
Reserve Board, Paul A. Volcker. Volcker
was named chairman by President Carter at the suggestion of David
Small wonder, since Volcker had been
an executive at the Chase Manhattan
Bank, and was a director of the CFR and a trustee of the
finally, White House Advisor on Domestic and Foreign Policy, Hedley
Donovan, formerly editor-in-chief of Time magazine.
One of the first important Carter foreign policy actions was
the negotiation of the Panama Canal treaty, giving the Canal to Panama,
and settling the controversy in such a way that U.S. taxpayers paid
millions of dollars to the Panama government so they could repay their
very heavy loans to a number of Wall Street banks.
One co-negotiator of the treaty was Ellsworth Bunker, who bad been
engaged in fruitless negotiations since 1974. The treaty was not
concluded until Carter added as co-negotiator the Trilateralist Sol
Linowitz, a senior Washington partner of the Wall Street
corporate law firm of Coudert Brothers, and a board member of Pan-Am
Airways, the Marine Midland
Bank of New York, and Time,
The Marine Midland Bank itself held part of two bank
consortium loans to Panama. Furthermore, no fewer than 32 Trilaterals were
on the boards of the 31 banks participating
in a $115 million 10-year Eurodollar
Panama loan issued in 1972; and 15 Trilaterals were on the boards
of fourteen banks participating
in the $20 million Panama promissory
note issued in the same year.
Another crucial foreign policy action of the Carter regime
was the President's reluctant decision to admit the Shah of Iran into the U.S., a
decision that led directly to the Iran hostage crisis and the freezing of Iranian assets in the U.S.
Carter was pressured into this move by the persistent lobbying of David Rockefeller and Henry
Kissinger, who might
well have realized that a hostage crisis would ensue. As a
was prevented from pursuing its threat of taking its massive deposits
out of Chase Manhattan Bank, which would have caused Chase a great deal of financial
difficulty. In politics, one hand washes the other.
Kissinger, by the way, was scarcely put back in the shadows
when he left government office in 1977. He quickly became a director of the
CFR, a member of the executive
committee of the Trilateral Commission, and chairman of the International Advisory Board of the Chase
While Ronald Reagan's early
campaigning included attacks on the Trilateral Commission, the Trilateralists have by now
been assured that the Reagan
Administration is in safe hands.
The signal was Reagan's choice
of Trilateralist George Bush, who had also become a director of the First International Bank of
London and Houston, as Vice-President of the United States, and
post-convention reconciliation visit to Washington and to the home of
Reagan's most influential White House aides, like James
A. Baker, had been top campaigners for Bush for President in
1980. The most influential corporate firm in the Reagan Administration
is the California-based Bechtel
vice-president and general counsel Caspar
Weinberger, a Trilateralist, is Secretary of Defense, and
fellow top Bechtel executive George Shultz, former board member of Borg-Warner Corp,
General American Transportation Corp., and Stein, Roe & Farnham
Balanced Fund, is Secretary of State.
Arthur F. Burns, former Chairman of the Fed, is ambassador to West Germany, Paul Volcker has been reappointed
as head of the Fed, and Henry Kissinger is at least
partially back as head of a Presidential Commission to study the
question of Central America.
It is hard to see how the Trilateralists can lose in the
1984 elections. On the Republican ticket they have George
Bush, the heir apparent to Ronald Reagan; and in the Democratic
race the two front-runners, Walter
Mondale and John Glenn, are both Trilateralists, as is Alan Cranston of
as a long shot, John Anderson of the
"National Unity Party" is also a Trilateral member. To paraphrase a
famous statement by White House aide Jack Valenti about Lyndon Johnson,
the Trilateralists and the financial power elite
can sleep well at night regardless of
who wins in 1984.
N. Rothbard (1926–1995) was the author of Man,
Economy, and State, Conceived
in Liberty, What
Has Government Done to Our Money, For a New Liberty,
Case Against the Fed, and many other books and articles. He was also the editor – with Lew
Rockwell – of The
Afterword By Justin Raimondo
Murray Rothbard's 1984 analysis of modern American history as
a great power struggle between economic elites, between the House of
Morgan and the Rockefeller interests, culminates in the following
conclusion: "the financial power elite can sleep well at night
regardless of who wins in 1984." By the time you get there, the conclusion seems understated indeed,
for what we have here is a sweeping and compressed history of 20th
century politics from a power elite point of view. It represents a
small and highly specialized sample of Rothbard's vast historical
knowledge coming together with a lifetime devoted to methodological
individualism in the social sciences. It appeared first in 1984, in the
thick of the Reagan years, in a small financial publication called World
Market Perspective. It was printed for a larger audience by the
Center for Libertarian Studies in 1995, and appears in 2005 online for
the first time.
and Right are constantly referring to abstract "forces" when
they examine and attempt to explain historical patterns. Applying the
principle of methodological individualism – which attributes all human
action to individual actors
– and the economic principles of the Austrian
School, Rothbard formulated a trenchant overview of the American elite
and the history of the modern era.
Rothbard's analysis flows, first, from the basic principles
of Austrian economics, particularly the Misesian analysis of banking
and the origin of the business cycle. This issue is also discussed and
elaborated on in one of his last books, The
Case Against the Fed (Mises Institute, 1995). Here,
the author relates the history of how the Federal Reserve System came
to be foisted on the unsuspecting American people by a high-powered alliance of banking
interests. Rothbard's economic analysis is clear, concise, and
wide-ranging, covering the nature of money, the genesis of government
paper money, the inherent instability (and essential fraudulence) of
fractional reserve banking, and the true causes of the business cycle.
As Rothbard explains in his economic writings, the key is in
understanding that money is a commodity, like any other, and thus
subject to the laws of the market. A government-granted monopoly in
this, the very lifeblood of the economic system, is a recipe for
inflation, a debased currency – and the creation of a permanent
plutocracy whose power is virtually unlimited.
In the present essay, as in The Case Against the Fed, it
is in the section on the history of the movement to establish the
Federal Reserve System that the Rothbardian power elite analysis comes
into full and fascinating play. What is striking about this piece is
the plethora of details.
Rothbard's argument is so jam-packed with facts detailing the social, economic, and familial connections of
the burgeoning Money Power,
that we need to step back and look at it in the light of Rothbardian
theory, specifically Rothbard's theory of class analysis.
Rothbard eagerly reclaimed the concept of
class analysis from the Marxists, who expropriated it from the French theorists
of laissez-faire. Marx
authored a plagiarized, distorted, and vulgarized version of the theory
based on the Ricardian labor
theory of value. Given this premise,
he came up with a class analysis pitting workers against owners.
One of Rothbard's many great contributions to the cause of
liberty was to restore
the original theory, which pitted the people against the State.
In the Rothbardian theory of class
government, including its clients and enforcers, exploits and enslaves
the productive classes through taxation, regulation, and perpetual war.
Government is an incubus, a parasite, incapable of producing
anything in its own right, and instead feeds
off the vital energies and productive ability of the producers.
This is the first step of a fully-developed libertarian class
analysis. Unfortunately, this is where the thought processes of all too
many alleged libertarians come to a grinding halt. It is enough, for
them, to know the State is the Enemy, as if it were an irreducible
As William Pitt put it in 1770, "There is something behind the throne
greater than the king himself." Blind to the real forces at work
on account of their methodological error, Left-libertarians are content to live in a
world of science fiction and utopian schemes, in which they
threat to the powers that be, and are thus tolerated
and at times even encouraged.
failure to take the analytical process one step further is, in
many cases, a failure of nerve. For it is clear, given libertarian
theory and the economic insights of the Austrian School, where the next
step leads. No empirical evidence is necessary, at this point (although
that will come later, and in spades); the truth can be deduced from
pure theory, specifically the Austrian theory of the nature of money
and banking, and the Misesian analysis of the origin of the business
This deduction was brilliantly and colorfully made in the
first issue of The Journal of Libertarian Studies (Winter
1977), by two students of Rothbard, Walter E. Grinder and John Hagel
III, in "Toward
a Theory of State Capitalism: Ultimate Decision-Making and Class
While a pure free market
would necessarily prevent the development of a banking monopoly,
"however, the market system does
concentrate entrepreneurial activity and decision-making within the
capital market because of the considerable
benefits which are rendered by a certain degree of specialization."
This "specialized capital
market, by the very nature of its integrative role within the market
system, will emerge as a strategic locus of ultimate decision-making."
Given that some individuals will choose the political means over the economic, some of these great fortunes will utilize
their tremendous resources to cartelize
the market and insulate themselves against risk. The temptation for
bankers in particular to wield the power of the State to their benefit is
very great because it permits banks
to inflate their asset base systematically. The creation of
assets made possible by these measures to a great extent frees the
banking institutions from the constraints imposed by the passive form
of ultimate decision-making exercised by their depositors. It thereby
considerably strengthens the ultimate decision-making authority held by
banks vis-à-vis their depositors. The inflationary trends resulting from the
creation of assets tend to increase
the ratio of external financing to internal financing in large
corporations and, as a consequence, the ultimate
decision-making power of banking institutions increase over the
activities of industrial corporations.
The Austrian insight focuses on the key
role played by the central banks in generating the distortion of market
signals that leads to periodic
booms and busts, the dreaded
business cycle which is always blamed on the inherent
contradictions of unfettered capitalism.
But in fact this capitalism
is anything but unfettered. (Try starting your own private
last thing American bankers want is an unfettered banking system.
Rothbard not only traces the original market distortion that gives rise
to the business cycle, but also identifies the source (and chief beneficiaries) of this
distortion. It was Mises who pointed out that government
intervention in the economy invariably leads to yet more intervention
in order to "fix" the havoc wreaked – and there is a certain
logic in the fact that it was the original
culprits who decided to "fix" the distortions and disruptions caused by
their policies with further assaults on the market mechanism. As
Grinder and Hagel put it:
In the U.S., this
intervention initially involved sporadic measures, both at the federal
and state level, which generated inflationary
distortion in the monetary supply and cyclical disruptions of economic
activity. The disruptions
which accompanied the business cycle were a major factor in the transformation of the dominant ideology in
the U.S. from a general adherence to laissez-faire doctrines to
of political capitalism which viewed the state as a necessary
instrument for the rationalization and stabilization of an inherently
unstable economic order.
Enemies of Capitalism
This explains the strange historical fact, recounted at
length and in detail by Rothbard, that the biggest
capitalists have been the deadliest enemies of true capitalism.
For virtually all of the alleged social
"reforms" of the past fifty years were pushed not only by
"idealistic" Leftists, but by the very corporate
combines caricatured as the top-hatted, pot-bellied "economic
royalists" of Wall Street.
The neoconservative Right
depicts the battle against Big Government as a two-sided Manichean
struggle between the forces of light (that is, of capitalism) and the
remnants of largely discredited Leftist elites. But Rothbard's
historical analysis reveals a much richer, more complex pattern:
instead of being two-sided, the
struggle for liberty pits at least three sides, each against the other.
For the capitalists,
as John T. Flynn, Albert Jay Nock, and Frank Chodorov all pointed out, were never for capitalism. As Nock
It is one of the few
amusing things in our rather stodgy world that those
who today are behaving most tremendously about collectivism and the Red
menace are the very ones who have cajoled, bribed, flattered and
bedeviled the State into taking each and every one of the successive
steps that lead straight to collectivism. ["Impostor Terms," Atlantic
Monthly, February 1936.]
The New Deal economic
policy was, as Rothbard demonstrated, prefigured by
Herbert Hoover, champion of big business, and foreshadowed in the
reforms of the Progressive era. As the revisionist economic
historians, such as Gabriel Kolko, have shown, those who
regulated the great industries in
the name of progressive "reform" were recruited
from the very cartels and trusts they were created to tame.
And of course the monopolists
didn't mind being tamed, so long as their competitors were tamed (if
not eliminated). Every giant leap forward of economic
planning and centralization – central
banking, the welfare state, "civil rights," and affirmative action
– was supported
if not initiated by the biggest and most politically powerful business
interests in the country.
House of Morgan, the Rockefellers, and the Kuhn-Loebs must take their
place alongside the First, Second, and Third Internationals as the
historic enemies of liberty.
corporations, and their economic satellites, in alliance with
governments and the big banks, are in the process of extending their
influence on a global scale: they dream of a world central bank, global planning, and an international welfare state, with American troops policing the world to
guarantee their profit margins.
After the long battle to create a central bank in the U.S.,
priests of high finance finally seized and consolidated
control of domestic economic policy. It only remained for them
their dominance internationally, and for this purpose they
created the Council
on Foreign Relations, and, later, the Trilateral
These two groups have been seized upon by the new populist
Right as the virtual embodiments of the Power Elite, and rightly
is only by reading Rothbard, however, that this insight is placed in
its proper historical perspective. For the fact of the matter is that,
as Rothbard shows, the
Trilateralist network is merely the latest incarnation of a trend
deeply rooted in modern American history. Long before the
founding of the CFR or the Trilateral Commission, there was a power
elite in this country; that elite will likely endure long after those
organizations are gone or transmuted
into something else. Rothbard's
unmasking of the historical and economic roots of this trend is vital
in understanding that this
not a "conspiracy" centered in the CFR and the Trilateralist groups, as
such, but an ideological trend traditionally centered in the Northeast,
among the upper classes, and deeply rooted in American history.
I put the word "conspiracy" in quotes because it has become
the favorite swearword of the
Respectable Right and the "extremist"-baiting
If it is conspiracy-mongering to
human beings engage in purposeful activity to achieve their economic,
political, and personal goals, then rational men and women must
necessarily plead guilty. The alternative is to
assert that human
action is purposeless, random, and inexplicable. History, in
is a series of discontinuous accidents.
Yet it would be inaccurate to call the Rothbardian world view
a "conspiracy theory." To
say that the House of Morgan was engaged in a
"conspiracy" to drag the U.S. into World War I, when indeed it openly
every stratagem, every lever both economic and
political, to push us into "the war to end all wars," seems woefully
inadequate. This was not some
secret cabal meeting in a soundproof
corporate boardroom, but a "conspiracy"
of ideas openly and
vociferously expressed. (On this point, please note and
Rothbard's analysis of the founding of The
New Republic as the
literary flagship of "the growing alliance for war and statism" between
the Morgan interests and liberal intellectuals – and isn't it funny how
some things never change?)
attributes virtually all social problems to a single monolithic agency.
Radical feminism, which attributes all the evil in the world to the
existence of men, is a classic conspiracy theory; the paranoid views of
the ex-Communists in the conservative movement, who were obsessed with
destroying their ex-comrades, was another.
But the complexity and subtlety of the Rothbardian analysis,
backed up by the sheer mass of rich historical detail, sets Rothbard on
an altogether different and higher plane. Here there is no single agency,
omnipotent central committee that issues directives, but a multiplicity
of interest groups and factions whose goals are generally congruent.
In this milieu, there are familial, social, and economic
connections, as well as ideological complicity, and none is better than
Rothbard at ferreting out and unraveling these biographical details.
Taken together, the author's small and studied brushstrokes paint
a portrait of a ruling class
whose ruthlessness is surpassed only by its brazen
disloyalty to the
It is a portrait that remains unchanged, in its essentials,
to this day. Wall
Street, Banks, and American Foreign Policy was written and
published in 1984, during the Reagan years.
Reagan started out by denouncing the power elite and
specifically the CFR and the Trilateralists, but wound up with that
epitome of the Establishment, Skull-&-Bonesman
George Bush as his
vice president and successor.
Bush is a longtime CFR director, and Trilateralist; most of
his major cabinet officers, including his chairman of the joint chiefs,
Colin Powell, were CFR members. The Clinton administration is similarly
afflicted, from the President (CFR/Trilateral) on down through
Shalala (CFR & Trilateral)
and George Stephanopoulos (CFR),
with the CFR honeycombed (as
usual) throughout the State
Department. In addition to
Secretary of State Warren Christopher,
other CFR members in the
cabinet include Laura Tyson, chairman of the Council of Economic
advisors, Treasury Secretary Robert
Rubin; Interior Secretary Bruce
Babbitt, HUD honcho Henry
Cisneros; and Alice Rivlin, OMB
The other side of the aisle is equally co-opted at the
leadership level, as vividly dramatized by Gingrich's
the power and majesty of Henry Kissinger. One naturally expects cowardice from politicians,
but the indictment also includes what
passes for the intellectual leaders
of the Republican free-market
There is a certain
mentality that, no matter how convincing
the evidence, would never even consider the argument put forward in Wall Street, Banks, and
American Foreign Policy. This attitude stems
from a particular kind of cowardice.
It is a fear, first of all, of not
being listened to, a dread of
consigning oneself to the role of
Cassandra, the ancient Greek prophetess who was granted the power
foresight by the gods, with but a single limitation: that none would
ever heed her warnings. It is far easier, and so much more
to play the role of court historian.
This is a role the author of this scintillating pamphlet
never could have played, even if he had tried. For the truth (or, at
least, the search for it) is so much more interesting than the official
histories and the conventional wisdom of the moment. The sheer pleasure
Rothbard took in unearthing the truth,
in carrying out his vocation as
a true scholar, is evident not only on every page of the present work
but throughout his 28 books and thousands of articles and speeches.
Rothbard was not afraid of sharing Cassandra's fate because,
in the first place, truth is a value
in its own right, and ought to be
upheld for its own sake. Second, the truth has a way of eventually
getting out, in spite of the most strenuous efforts to suppress