G. Edward Griffin
The Korean War was a war of containment of Stalin, who showed no signs of acquiescing to Committee of 300 demands that he obey its orders. [...] Given the fact that the United States placed Mao Tse Tung in power in China, and Castro in power in Cuba, the North Korean leadership expected no American opposition to their "walk across the border." But the order went out from the Committee of 300 to "contain, but not defeat the North Koreans, because they are backed by Stalin." An end-run around the Constitution enabled Truman to plunge an unprepared America into a major war, by using the excuse that he was authorized by the United Nations to take such action.
Kennedy had been a life-long socialist and internationalist. He had attended the Fabian London School of Economics; participated in the destruction of the American money supply; and engineered the transfer of American wealth to foreign nations. There is little reason to believe that he had suddenly "seen the light" [in destroying the Fed] and was reversing his life-long beliefs and commitments.
First, the concept that the Fed is privately owned is legal fiction. [...] The stock cannot be sold or traded. Stockholders have none of the usual elements of control that come with ownership and, in fact, they are subservient to the central board. The seven members of the Board of Governors are appointed by the President and confirmed by the Senate. It is true that the Fed is independent of direct political control, but it must never be forgotten that it was created by Congress and it can be extinguished by Congress. In truth, the Federal Reserve is neither an arm of government nor is it private. It is a hybrid.
We do not want to merely abolish the Fed and turn over its operation to the Treasury. That is a popular proposal among those who know there is a problem but who have not studied the history of central banking.
The third printout is dated 1904 and is a report issued by the General Education Board, one of the first foundations established by John D. Rockefeller, Sr.. The purpose of the foundation was to use the power of money, not to raise the level of education in America, as widely believed at the time, but to influence the direction of that education. Specifically, it was to promote the ideology of collectivism and internationalism. The object was to use the classroom to teach attitudes that encourage people to be passive and submissive to their rulers. The goal was - and is - to create citizens who are educated enough for productive work under supervision but not enough to question authority or seek to rise above their class. True education was to be restricted to the sons and daughters of the elite. For the rest, it would be better to produce skilled workers with no particular aspirations other than to enjoy life.
Another twenty years have slipped by, and we now find ourselves in The New World Order. No one around us is sure exactly when it began. In fact, there was no official starting date, no announcement in the media, no ceremony with blaring of trumpets. Sometime during the past ten or fifteen years, it became obvious that it just was, and everyone accepted it as the natural evolution of political trends and necessities. Now, a whole generation is in place that has no memory of another way of life. Many of the older folks have all but forgotten the details of their previous existence. And, of course, many of them have been eliminated. Schools and textbooks speak of the bygone era as one of unbridled competition, selfishness, and injustice. Previously commonplace possessions such as automobiles and private homes and three pairs of shoes are hardly mentioned, and when they are, they are derided as wasteful artifacts of a decadent society that, fortunately, has ceased to exist.
The origin of many of the stratagems in this plan can be traced to a government-sponsored think-tank study released in 1966 called the Report From Iron Mountain. The purpose of the study was to analyze methods by which a government can perpetuate itself in power--ways to control it's citizens and prevent them from rebelling. The conclusion of the report was that, in the past, war has been the only reliable means to achieve that goal. Under world government, however, war technically would be impossible. So the main purpose of the study was to explore other methods for controlling populations and keeping them loyal to their leaders. It was concluded that a suitable substitute for war would require a new enemy which posed a frightful threat to survival. Neither the threat nor the enemy had to be real. They merely had to be believable.
Several surrogates for war were considered, but the only one holding real promise was the environmental-pollution model. This was viewed as the most likely to succeed because (1) it could be related to observable conditions such as smog and water pollution-- in other words, it would be based partly on fact and, therefore, believable--and (2) predictions could be made showing end-of-earth scenarios just as horrible as atomic warfare. Accuracy in these predictions would not be important. Their purpose would be to frighten, not inform.
While the followers of the current environmental movement are preoccupied with visions of planetary doom, the leaders have an entirely different agenda. It is world government.
The environmental movement was created by the CFR. It is a substitute for war that they hope will become the emotional and psychological foundation for world government.
More important, however, is the question of why end-of-world scenarios based on phony scientific studies - or not studies at all - are uncritically publicized by the CFR-controlled media; or why radical environmental groups advocating socialist doctrine and anti-business programs are lavishly funded by CFR-dominated foundations, banks, and corporations, the very groups that would appear to have the most to lose. The Report from Iron Mountain answers those questions.
As the Report pointed out, truth is not important in these matters, It's what people can be made to believe that counts.
The first consideration in finding a suitable threat to serve as a global enemy was that it did not have to be real. A real one would be better, of course, but an invented one would work just as well, provided the masses could be convinced it was real. [...]
Poverty was examined as a potential global enemy but rejected as not fearful enough. Most of the world was already in poverty. Only those who had never experienced poverty would see it as a global threat. For the rest, it was simply a fact of everyday life. [...]
An invasion by aliens from outer space was given serious consideration. The report said that experiments along those lines already may have been tried. Public reaction, however, was not sufficiently predictable, because the threat was not "credible."
The final candidate for a useful global threat was pollution of the environment. This was viewed as the most likely to succeed because it could be related to observable conditions such as smog and water pollution– in other words, it would be based partly on fact and, therefore, be credible. Predictions could be made showing end-of-earth scenarios just as horrible as atomic warfare. Accuracy in these predictions would not be important. Their purpose would be to frighten, not to inform. It might even be necessary to deliberately poison the environment to make the predictions more convincing and to focus the public mind on fighting a new enemy, more fearful than any invader from another nation – or even from outer space. The masses would more willingly accept a falling standard of living, tax increases, and bureaucratic intervention in their lives as simply "the price we must pay to save Mother Earth."
The report [Report From Iron Mountain] considered way in which the public could be preoccupied with non-important activities so that it would not have time to participate in political debate or resistance. Recreation, trivial game shows, pornography, and situation comedies could play an important role, but blood games were considered to be the most promising of all the options. Blood games are competitive events between individuals or teams that are sufficiently violent in nature to enable the spectators to vicariously work off their frustrations. [...] In this fashion, their anger at "society" is defused and focused, instead, on the opposing team. The emperors of Rome devised the Circuses and gladiator contests and public executions by wild beasts for precisely that purpose.
The major conclusion of the report [Report From Iron Mountain] was that, in the past, war has been the only reliable means to achieve that goal. It contends that only during times of war or the threat of war are the masses compliant enough to carry the yoke of government without complaint. Fear of conquest and pillage by an enemy can make almost any burden seem acceptable by comparison. War can be used to arouse human passion and patriotic feelings of loyalty to the nation's leaders. No amount of sacrifice in the name of victory will be rejected. Resistance is viewed as treason. But, in times of peace, people become resentful of high taxes, shortages, and bureaucratic intervention. When they become disrespectful of their leaders, they become dangerous. No government has long survived without enemies and armed conflict. War, therefore, has been an indispensable condition for "stabilizing society."
When once-proud and independent Americans are standing in soup lines, they will be ready to accept the carefully arranged "rescue" by the world bank.
The Korean War was the first time American soldiers fought under UN authority.
The New World Order cannot become a functional reality so long as the United States remains able to go it alone. America is viewed as a potential bull in the china shop. Right now, it is safely under control, but the world planners are worried it might break loose in the future. If the American people were to awaken to the realities of world politics and regain control over their government, they still would have the military and economic power to break away. Among the world planners, therefore, it has become the prime directive to weaken the United States both militarily and economically.
But The New World Order that is now incubating at the United Nations is an entirely different creature. Its members represent just about every dictator and warlord in the world. Its philosophy is built upon the socialist doctrine that all good flows from the state. Those who do not conform must be bent to the government's will or be eliminated. It cannot oppose totalitarianism for the simple reason that it is totalitarianism.
In 1999, the average personal savings rate finally became a negative one percent, which means that the facade of prosperity is now being paid for with borrowed money.
High taxes, unrealistic rules for safety devices in the work place, so-called fair-employment practices, and mandatory health insurance are rapidly destroying what is left of America's private industry. [...] Federal taxes, including Social-Security, now take more than 40% of our private incomes. State, county, and local taxes are on top of that. Inflation feeds on what is left. We spend half of each year working for the government.
When people purchase government bonds, there is less money available for investment in private industry. It is well known that government credit "crowds out" private credit. The result is that the productive side of the nation is handicapped by unfair competition for investment capital.
The bad news is that the government obtains every cent of the money it pays to us by confiscating it from us in the first place. [...] The government takes $1,000 from us in taxes and inflation and gives us back $350. The so-called "benefit" to the public is but a giant scam.
It may come as a surprise to learn that the Federal Reserve holds but a small portion of the national debt, only about 9%. Agencies of the federal government have 28% (this constitutes an IOU for money taken from various "reserve" funds, such as Social Security, and spent for other purposes). Foreign investors own approximately 43% (2002 figures), and private-sector investors in the U.S. hold the balance.
The biggest doomsday mechanism of all, however, is the Federal Reserve System. It will be recalled that every cent of our money supply - including coins, currency, and checkbook money - came into being for the purpose of being lent to someone. All of those dollars will disappear when the loans are paid back. They will exist only so long as the debt behind them exists.
The programs that do involve contractual obligations - such as Social Security and Medicare - could be turned over to private firms which would not only operate them more efficiently but also would pay out higher benefits. Congress, however, does not dare to touch any of these entitlements for fear of losing votes.
When it is possible for people to vote on issues involving the transfer of wealth to themselves from others, the ballot box becomes a weapon with which the majority plunders the minority. That is the point of no return, the point where the doomsday mechanism begins to accelerate until the system self-destructs. The plundered grow weary of carrying the load and eventually join the plunderers. The productive base of the economy diminishes further and further until only the state remains.
There are more people working for government than for all manufacturing companies in the private sector. There are more bank regulators than bankers, more farm-bureau workers than farmers, more welfare administrators than recipients. There are more citizens receiving government checks than there are paying income taxes.
Without interest on the national debt, we would save enough to cut our personal income taxes by a third and we could reduce corporate taxes as well.
On average, over $5,000 is extracted from your family each year, not to provide government services or even to pay off previous debt. Nothing is produced by it, not even roads or government buildings. No welfare or medical benefits come out of it. No salaries are paid by it. The nation's standard of living is not raised by it. It does nothing except pay interest.
By 2006, gross interest payments on the national debt were running $406 billion per year. That consumed about 17% of all federal revenue. It now represents the government's largest single expense; greater than defense; larger than the combined cost of the departments of Agriculture, Education, Energy, Housing and Urban Development, Interior, Justice, Labor, State, Transportation, and Veterans' Affairs.
It took 198 years for the government to borrow the first trillion dollars. Then, in just twelve years - mostly under the Reagan Administration - it borrowed another three trillion. [...] By 2007, it had risen to $59.1 trillion when all government liabilities are included.
Congress had been assured that the Federal Reserve Act would decentralize banking power away from Wall Street. However, within a few years of its inception, the System was controlled by the New York Reserve Bank under the leadership of Benjamin Strong whose name was synonymous with the Wall Street money trust.
The crash, as devastating as it was to the speculators, had little effect on the average American. Unemployment didn't become rampant until the depression years which came later and were caused by continued government restraint of the free market. [...] The stage was now set for recovery and sound economic growth, as always had happened in the past.
It did not happen this time. The monetary and political scientists who had created the problem now were in full charge of the rescue. They saw the crash as a golden opportunity to justify even more controls than before. Herbert Hoover launched a multitude of government programs to bolster wage rates, prevent prices from dropping, prop up failing firms, stimulate construction, guarantee home loans, protect the depositors, rescue the banks, subside the farmers, and provide public works. FDR was swept into office by promising even more of the same under the slogan of a New Deal. [...]
In 1931, fresh money was pumped into the economy to restart the cycle, but this time the rocket would not lift off. The dead weight of new bureaucracies and government regulations and subsidies and taxes and welfare benefits and deficit spending and tinkering with prices had kept it on the launching pad. [...] Taxes and regulatory agencies forced companies out of business. Those that remained had to curtail production. Unemployment began to spread. By every economic measure, the economy was no better or worse in 1939 than it was in 1930 when the rescue began. It wasn't until the outbreak of World War II, and the tooling up for war production that followed, that the depression was finally brought to an end.
The securities market reached its high point on September 19 . Then, it began to slide. [...] For five more weeks, the public bought heavily on the way down. [...]
On Tuesday, October 29, the exchanges were crushed by an avalanche of selling. At times there were no buyers at all. By the end of the trading session, over sixteen million shares had been dumped, in most cases at any price that was offered. Within a single day, millions of investors were wiped out. Within a few weeks of further decline, $3 billion of wealth had disappeared. Within twelve months, $40 billion had vanished. People who had counted their paper profits and thought they were rich suddenly found themselves to be very poor.
[...] The insiders who had moved their investments into cash and gold were the buyers. [...] Those who had the cash picked them [solid companies] up for a small fraction of their true worth. Giant holding companies were formed for that task, such as Marine Midland Corporation, the Lehman Corporation, and the Equity Corporation. J.P. Morgan set up the food trust called Standard Brands. Like the shark swallowing the mackerel, the big speculators devoured the small.
It is not unreasonable to surmise that the central bankers had come to the conclusion that the bubble - not only in America, but in Europe - was probably going to rupture very soon. Rather than fight it, as they had in the past, it was time to stand back and let it happen, clear out the speculators, and return the markets to reality. [...] Immediately after the meetings, the monetary scientists began to issue warnings to their colleagues in the financial fraternity to get out of the market. [...]
John D. Rockefeller, J.P. Morgan, Joseph P. Kennedy, Bernard Baruch, Henry Morganthau, Douglas Dillon - the biographies of all the Wall Street giants at that time boast that these men were "wise" enough to get out of the stock market just before the Crash. And it is true. Virtually all of the inner club was rescued. There is no record of any member of the interlocking directorate between the Federal Reserve, the major New York banks, and their prime customers having been caught by surprise. Wisdom, apparently, was greatly affected by whose list one was on.
The commercial banks were the middlemen in this giddy game. By the end of the decade, they were functioning more like speculators than banks. Instead of serving as dependable clearing houses for money, they also had become players in the market. Loans to commercial enterprises for the production of goods and services - which normally are the backbone of sound banking practice - were losing ground to loans for speculating in the stock market and in urban real estate.
During the final phase of America's credit expansion of the 1920s, the rise in prices on the stock market was entirely speculative. Buyers did not care if their stocks were overpriced compared to the dividends they paid. [...] Speculators acquired stock merely to hold for a while and then sell at a profit. [...] it was common for investors to purchase their stocks on margin. That means the buyer puts up a small amount of money as a deposit (the margin) and borrows the rest from his stockbroker - who gets it from the bank, which gets it from the Fed. [...] From August of 1921 to September of 1929, the Dow-Jones industrial stock-price average went from 63.9 to 381.17, a rise of 597%. Credit was abundant, loans were cheap, profits were big.
In banker language, the expansion of credit means the banks have "excess reserves" (bookkeeping entries) which can be multiplied by nine and earn interest for them - if only someone would be kind enough to borrow. It is money waiting to be created.
In any event, by the end of the war [World War I], Congress had awakened to the fact that it could use the Federal Reserve System to obtain revenue without taxes. From that point forward, deficit spending became institutionalized.
Bonds purchased by the public do not increase the money supply whereas those purchased by banks do.
Much of the war debt was absorbed by the [American] public which responded to patriotic instincts and purchased war bonds. [...] These small-denomination bonds did not expand the money supply and did not cause inflation, because the money came from savings. It already existed. However, many people who thought it was their patriotic duty to support the war effort went to their banks and borrowed money so they could buy bonds.
He [Paul Warburg] was a director of American I.G. Chemical Corp. and Agfa Ansco, Inc., firms that were controlled by I.G. Farben, the infamous German cartel that, only a few years later, would sponsor the rise to power of Adolph Hitler. He was also a director of the CFR. [...] Warburg was the founder and Chairman of the International Acceptance Bank of New York, the wor'd largest acceptance bank. He was also a director of several smaller "competitors," including the prestigious Westinghouse Acceptance Bank. [...] Warburg was the acceptance market in America.
After the war [World War I] was over, the transfusion of American dollars continued as part of a plan to pull England out of depression. The methods chosen for that transfer were artificially low interest rates and a deliberate inflation of the American money supply. That was calculated to weaken the value of the dollar relative to the English pound and cause gold reserves to move from America to England.
Seventy per cent of the cost of World War I was paid by inflation rather than taxes, a process that was orchestrated by the Federal Reserve System. [...] Up until World War I, annual federal expenses had been running about $750 million. By the end of the war, it was running $18 and-a-half billion, an increase of 2,466%. Approximately 70% of the cost of war had been financed by debt.
The United States entry into World War I provided the impetus for increasing the power of the Fed. [...] Voters ask fewer questions when their nation is at war.
From the outset, the national board and the regional branches were dominated by the New York branch. [Benjamin] Strong ruled as an autocrat, determining Fed policy often without even consulting with the Federal Reserve Board in Washington.
Since then , the Act has been amended 195 times, expanding the power and scope of the System to the point where, today, it would be almost unrecognizable to the Congressmen and Senators who voted for it.
The Federal Reserve Act was released from the joint House and Senate conference committee on December 22, 1913, just as Congress was preoccupied with departure for the Christmas recess and in no mood for debate. It quickly passed by a vote of 282 to 60 in the House and 43 to 23 in the Senate. The President signed it into law the next day.
As the Federal Reserve Act moved closer to its birth in the form of the Glass-Owen Bill (Owen was the co-sponsor in the Senate), both Aldrich and Vanderlip threw themselves into a great public display of opposition.
The outcome of the election was exactly as the strategists had anticipated. Wilson won with only forty-two per cent of the popular vote, which means, of course, that fifty-eight per cent had been cast against him. Had Roosevelt not entered the race, most of his votes undoubtedly would have gone to Taft, and Wilson would have become a footnote. As Colonel House confided to another George Viereck years later, "Wilson was elected by Teddy Roosevelt."
The major contributions to any candidate's campaign fund are made by men who have axes to grind - and the campaign chest is the grindstone.... The fact is that there is a serious danger of this country [United States] becoming a pluto-democracy; that is, a sham republic with the real men, who speak through their money, and whose influence, even today, radiates to every corner of the United States.
The ultimate breach occurred when Taft refused to support the Aldrich Plan. He objected, not because it would create a central bank which would impose government control over the economy, but because it would not offer enough government control. [...] He did not object to the ancient partnership between monetary and political scientists, he merely wanted a greater share for the political side.
The first draft of the Federal Reserve Act was called the Aldrich Bill and was co-sponsored by Congressman Vreeland, but it was not the work of either of these politicians. It was the brainchild of banker Paul Warburg and was actually written by bankers Frank Vanderlip and Benjamin Strong.
Warburg, being the master psychologist he was, wanted it to be called the National Reserve Bill or the Federal Reserve Bill, something which would conjure up the dual images of government and reserves, both of which were calculated to be subconsciously appealing. Aldrich, on the other hand, acting out of personal ego, insisted that his name be attached to the bill. Warburg pointed out that the Aldrich name was associated in the minds of the public with Wall Street interests, and that would be an unnecessary obstacle to achieving their goal. [...] But, in the end, the politician's ego won out over the banker's logic. Warburg, of course, was right.
Woodrow Wilson was yet another academic who was brought into the national spotlight as a result of his views on banking reform. [...] Wilson’s name had been put in to the nomination for President at the Democratic national convention due largely to the influence of Col. Edward Mandell House. But that was 1912. Ten years prior to that, he was relatively unknown. In 1902 he had been elected as the president of Princeton University, a position he could not have held without the concurrence of the University's benefactors among Wall Street bankers. He was particularly close with Andrew Carnegie and had become a trustee of the Carnegie Foundation.
The dissimilarities [between the Fed and previous central banks in the United States] were in those provisions which gave the Creature more privilege and power than the older central bank. The most important of these was the right to create the official money of the United States. For the first time in our history, the paper notes of a banking institution became legal tender, not only for public debts, but for private ones as well. Henceforth, anyone refusing to accept these notes would be sent to prison. The words "The United States of America" were to appear on the face of every not along with the great seal of the United States Treasury. And, of course, the signature of the Treasurer himself would be printed in a conspicuous location. All of this was designed to convince the public that the new institution was surely an agency of the government itself.
To convince Congress and the public that the establishment of a banking cartel was, somehow, a measure to protect the public, the Jekyll Island strategists laid down the following plan of action:
- Do not call it a cartel nor even a central bank.
- Make it look like a government agency.
- Establish regional branches to create the appearance of decentralization, not dominated by Wall Street banks.
- Begin with a conservative structure including many sound banking principles knowing that the provisions can be quietly altered or removed in subsequent years.
- Use the anger caused by recent panics and bank failures to create popular demand for monetary reform.
- Offer the Jekyll Island plan as though it were in response to that need.
- Employ university professors to give the plan the appearance of academic approval.
- Speak out against the plan to convince the public that wall Street bankers do not want it.
The challenge no longer was how to overcome one's adversaries, but how to keep new ones from entering the field. When John D. used his enormous profits from Standard Oil to take control of the Chase National Bank, and his brother, William, bought the National City Bank of New York, Wall Street had yet one more gladiator in the financial arena. Morgan found that he had no choice except to allow the Rockefellers into the club but, now that they were in, they all agreed that the influx of competitors had to be stopped.
By 1913, the year in which the Federal Reserve Act was passed, those numbers had swelled to seventy-one per cent non-national banks holding fifty-seven per cent of the nation's deposits. Something had to be done to stop this movement. [...] What the bankers wanted - and what many businessmen wanted also - was a more "flexible" or "elastic" money supply which would allow them to create enough of it at any point in time so as to be able to drive interest rates downward at will. That would make loans to businessmen so attractive they would have little choice but to return to the bankers' stable.
[Benjamin] Strong immediately entered into a close alliance with Montagu Norman, Governor of the Bank of England, to save the English economy from depression. This was accomplished by deliberately creating inflation in the U.S. which caused an outflow of gold, a loss of foreign markets, unemployment, and speculation in the stock market, all of which were factors that propelled America into the crash of 1929 and the great depression of the 30s.
It is one of the least understood realities of modern history that many of America's most prominent political and financial figures - then as now - have been willing to sacrifice the best interests of the United States in order to further their goal of creating a one-world government.
The culmination of these discussions took place at a secret meeting in 1927 at which it was agreed that the financial lifeblood of the American people would be donated for a massive transfusion to Great Britain. [...] the purpose of the meeting was to finalize a plan whereby the Governor of the Federal Reserve System was to deliberately create inflation in the U.S. so that American prices would rise, making U.S. goods less competitive in world markets and causing American gold to move to the Bank of England. [...] The purpose of inviting the Germans and the French to the meeting was to enlist their agreement to create inflation in their countries as well. Schacht and Rist would have no part of it and left the meeting early, leaving Strong and Norman to work out the final details between them.
They [Committee of the League of Nations - which England dominated] were also required to establish what was called the "gold exchange standard," a scheme whereby all countries based their currency, not on gold, but on the pound sterling. In that way, they could all inflate together without causing a disruptive flow of gold from one to the other, and England would act as the regulator and guarantor of the system. In other words, England used the power of her position within the League of Nations to establish the Bank of England as a master central bank for all the other central banks of Europe. It was the prototype for what the Cabal now is doing with [the] Federal Reserve and the World Bank within the framework of the United Nations.
If Morgan truly did harbor feelings of anti-Semitism, neither he nor the Rothschilds ever allowed them to get in the way of their business.
When Alphonse Rothschild died in Paris in 1905, it was revealed that his estate contained $60 million [~$1.4 billion adjusted for inflation] in American securities.
To deal with the Morgan group, therefore, as opposed to Kuhn Loeb, for example, was in some circles almost a point of national patriotism [as Morgan was not a Jewish banker].
In later years, Jack Morgan (J.P., Jr.) would assume the role of a staunch anti-Semite, and this undoubtedly strengthened his hand at dealing with American investors and borrowers who were loath to have anything to do with Jewish bankers.
With an almost unlimited access to cash and credit backed by the Bank of England, Peabody and Morgan were able to wade hip deep through the depreciated stocks and bonds [from the Panic of 1857] that were sold to them at sacrifice prices on Wall Street. Within only a few years, when sanity had been restored to American markets, the assets of the firm had grown to gigantic proportions. [...] If the Rothschilds truly had been competitors, they would have seized upon this opportunity and used their great influence within the Bank of England and the other investment houses in London to squeeze out Peabody, not to assist him. [...] The Rothschilds must have believed that a successful Peabody firm ultimately would be in their own best interest.
It is no longer surprising, for example, that Peabody & Company was the sole American investment firm to receive a gigantic loan from the Bank of England during the U.S. panic of 1857, a loan which not only saved it from sinking, but made it possible to seize and salvage many other ships that were then capsized on Wall Street.
John Moody answers: "The Rothschilds were content to remain a close ally of Morgan rather than a competitor as far as the American field was concerned."
Gabriel Kolko says: "Morgan's activities in 1895-1896 in selling U.S. gold bonds in Europe were based on his alliance with the House of Rothschild."
Sereno Pratt says: "These houses may, like J.P. Morgan & Company ... represent here the great firms and institutions of Europe, just as August Belmont & Company have long represented the Rothschilds."
And George Wheeler writes: "Part of the reality of the day was an ugly resurgence of anti-Semitism.... Someone was needed as a cover. Who better than J. Pierpont Morgan, a solid, Protestant exemplar of capitalism able to trace his family back to pre-Revolutionary times."
That tenuous connection was precisely the role to be played by August Belmont in the United States, and the anti-Semitism he found there was undoubtedly the reason he changed his name from Schoenberg to Belmont upon landing in New York in 1837. [...] It was not long, however, before the Belmont-Rothschild connection became common knowledge, and the ploy ceased to be effective.
A strong anti-Semitic and anti-Rothschild sentiment had grown up in Europe and the United States, and the family often found it to its advantage to work through agents rather than to deal directly.
[...] in 1854 [...] Junius [Morgan] moved his family to London and became a full partner in the firm which, eventually, became known as Peabody, Morgan & Company. [...] In 1864, Peabody finally retired and completely turned the business over to Junius who immediately changed the firm's name to J.S. Morgan and Company.
In truth, the Morgans were more British than American.
Alan Greenspan was an eloquent spokesman for the gold standard and a critic of the System's subservience tot he banking cartel. That was in 1966. After he became a director of J.P. Morgan & Company and was appointed Chairman of the Federal Reserve in 1987, he became silent on these issues and did nothing to anger the Creature he now served. Like [William Jennings] Bryan, even the best of men can be corrupted by the rewards of politics.
The Civil War was started over economic issues, not slavery. The War was not popular in the North until the issue of slavery was added at a later time to turn it into a moral crusade.
Nicholas Biddle was head of the Second Bank of the United States. With many Congressmen and Senators financially beholden to him, he wielded great political power. He deliberately created a banking panic and a depression for the purpose of frightening the voters and blaming Jackson's anti-bank policy. Biddle declared: "All other banks and all the merchants may break, but the Bank of the United States shall not break." In the end, he lost the contest. The Bank's charter expired in 1836.
President Andrew Jackson put his political career on the line in 1832 by vetoing renewal of the charter for the Second Bank of the United States. He called the Bank a monster and declared: "I am ready with the screws to draw every tooth and then the stumps." Voters approved and re-elected him by a large margin.
In the North, neither greenbacks, taxes, nor war bonds were enough to finance the war. So a national banking system was created to convert government bonds into fiat money, and the people lost over half of their monetary assets to the hidden tax of inflation. In the South, printing presses accomplished the same effect, and the monetary loss was total.
In 1863 the group [Knights of the Golden Circle] was reorganized as the Order of American Knights and, again the following year, as the Order of the Sons of Liberty. Its membership then was estimated between 200,000 and 300,00. After the [Civil] war, it went further underground and remnants eventually emerged as the Ku Klux Klan.
The Order of the Knights of the Golden Circle was a secret organization dedicated to revolution and conquest. Two of its better known members were Jesse James and John Wilkes Booth. [...] It had close ties with a secret society in France called The Seasons, which itself was a branch of the Illuminati.
In reviewing Lincoln’s role throughout this painful chapter of history, it is impossible not to feel ambivalence. On the one hand, he declared war without Congress, suspended the writ of habeas corpus, and issued the Emancipation Proclamation, not as an administrative executive carrying out the wishes of Congress, but as the Commander-in-Chief of the armed forces. Furthermore, the Proclamation was not issued out of humanitarian motives, as popular history portrays, but as a maneuver to generate popular support for the war. By participating in the issuance of the greenbacks, he violated one of the most clearly written and important sections of the Constitution. And by failing to veto the National Bank Act, he acquiesced in the delivery of the American people back into the hands of the international Cabal [of bankers/financiers], an act which was similar in many ways to the forcible return of captured runaway slaves.
On the positive side, there is no question of Lincoln’s patriotism. His concern was in preserving the Union, not the Constitution, and his refusal to let the European powers split America into a cluster of warring nation-states was certainly wise. Lincoln believed that he had to violate part of the Constitution in order to save the whole. But there is no reason to believe that the only way to save the Union was to scrap the Constitution. In fact, if the Constitution had been meticulously observed from the very beginning, the Southern minority could never have been legally plundered by the Northern majority and there would have been no movement for secession in the first place. And, even if there had been, a strict reading of the Constitution at that point could have led the way to an honorable and peaceful settlement of differences. The result would have been, not only the preservation of the Union without war, but Americans would be enjoying far less government intervention in their daily lives today.
Lincoln was privately apprehensive about the [National] Bank Act [of 1863], but loyalty to his Party and the need to maintain unity in time of war compelled him to withhold his veto. His personal view, however, was unequivocal. In a letter to William Elkins the following year he said:
The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy. I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations have been enthroned, and era of corruption will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people, until the wealth is aggregated in a few hands, and the republic destroyed.
It would appear that Lincoln objected to having the government pay interest to the banks for money they create out of nothing when the government can create money out of nothing just as easily and not pay interest on it. If one ignores the fact that both of these schemes are forbidden by the Constitution and is willing to tolerate the plunder-by-inflation that is the consequence of both, then there is an appealing logic to the argument. The politicians continue to have their fiat money, but at least the banks are denied a free ride.
The pragmatic mood in Washington was that a constitution is nice to have in times of peace, but an unaffordable luxury in war. Salmon P. Chase, for example, as Secretary of the Treasury, strongly endorsed the greenbacks which were issued under his direction. They were, in his words, an "indispensable necessity." Eight years later, as Chief Justice of the Supreme Court, he declared that they were unconstitutional. Had he changed his mind? Not at all. When he endorsed them, the nation was at war. When he declared them unconstitutional, it was at peace.
In 1862, Congress authorized the Treasury to print $150 million worth of bills of credit and put them into circulation as money to pay for its expenses. [...] By the end of the war, a total of $432 million in greenbacks had been issued.
In the North, the sale of government bonds was the one measure for raising funds that seemed to work. Even that, however, with the lure of compounded interest to be paid in gold at a future date, failed to raise more than about half the needed amount. So the Union faced a real dilemma. The only options remaining were (1) terminate the war or (2) print fiat money. For Lincoln and the Republicans who controlled Congress, the choice was never seriously in doubt.
American banks may have been unable to supply adequate loans, but the Rothschild consortium in Britain was both able and willing. It was during this time that the Rothschilds were consolidating their new industrial holdings in the United States through their agent, August Belmont. Derek Wilson tells us: "They owned or had major shareholdings in Central American ironworks, North American canal construction companies, and a multiplicity of other concerns. They became the major importers of bullion from the newly discovered goldfields."
The nation's first experiment with the income tax was tried at this time; another violation of the Constitution.
During the fiscal year ending in 1861, expenses of the federal government had been $67 million. After the first year of armed conflict they were $475 million and, by 1865, had risen to one billion, three-hundred million dollars. On the income side of the ledger, taxes covered only about eleven per cent of that figure. By the end of the war, the deficit had risen to $2.61 billion. That money had to come from somewhere.
The shooting of a thousand civilians [in New York City] by soldiers of their own government is a tragedy of mammoth proportions and it tells much about the desperate state of the Union at that time. To control the insurrection, Lincoln ignored the Constitution once again by suspending the right of habeas corpus, which made it possible for the government to imprison critics without formal charges and without trial. Thus under the banner of opposing slavery, American citizens in the North, not only were killed on the streets of their own cities, they were put into military combat against their will and thrown into prison without due process of law. In other words, free men were enslaved so that slaves could be made free. Even if the pretended crusade had been genuine, it was a bad exchange.
Historically, men are willing to take up arms to defend their families, their homes, and their country when threatened by a hostile foe. But the only way to get them to fight in a war in which they have no perceived personal interest is either to pay them large bonuses and bounties or to force them to do so by conscription. It is not surprising, therefore, that both methods were employed to keep the Union army int he field. Furthermore, although the Constitution specifies that only Congress can declare war and raise an army, Lincoln did so entirely on his own authority. [...] By 1864, there were many areas [in the North] where a man could receive more than $1,000 - equivalent to over $50,000 today - just for joining the army. [...] In 1862 it [the Confederacy] passed a conscription law which placed exclusive control over every male citizen between the ages of eighteen and thirty-five into the hands of the Confederate President.
Converting the war into an antislavery crusade was a brilliant move on Lincoln's part, and it resulted in a surge of voluntary recruits into the Union army. But this did not last. Northerners may have disapproved of slavery in the South but, once the bloodletting began in earnest, their willingness to die for that conviction began to wane. [...] Lincoln faced the embarrassing reality that he soon would have no army to carry on the crusade.
To get people to fight, it was decided to convert the war into an anti-slavery crusade. The Emancipation Proclamation was primarily a move on the part of Lincoln to fan the dying embers of support for the "Rich-man's war and the poor-man's fight," as it was commonly called in the North. Furthermore, it was not an amendment to the Constitution nor even an act of Congress. It was issued, totally without constitutional authority, as the solitary order of Lincoln himself, acting as Commander-in-Chief of the armed forces.
Tsar Alexander II - who, incidentally, had never allowed a central bank to be established in Russia - notified Lincoln that he stood ready to militarily align with the North. [...] Knowing that war was being considered by his enemies, Tsar Alexander decided to play a chess game of his own. [...] The fact that neither France nor England at that time wanted to risk becoming involved in an open war with the United States and Russia led them to be extremely cautious with overt military aid to the South. [...] Without the inhibiting effect of the presence of the Russian fleet, the course of the war could have been significantly different.
The European powers had been anxious to see the United States become embroiled in a civil war and eventually break into two smaller and weaker nations. That would pave the way for their further colonization of Latin American without fear of the Americans being able to enforce the Monroe Doctrine.
The economic chaos and conflict of this period was a major cause of the Civil War. Lincoln made it clear during his public speeches that slavery was not the issue. The basic problem was that North and South were dependent on each other for trade. The industrialized North sold its products to the South which sold its cotton to the North. The South also had a similar trade with Europe, and that was an annoyance tot he North. Europe was selling many products at lower prices, and the North was losing market share. Northern politicians passed protectionist legislation putting import duties on industrial products. This all but stopped the importation of European goods and forced the South to buy from the North at higher prices. Europe retaliated by curtailing the purchase of American cotton. That hurt the South even more. It was a classic case of legalized plunder, and the South wanted out.
Meanwhile, there were powerful forces in Europe that wanted to see America embroiled in civil war. If she could be split into two hostile countries, there would be less obstacle to European expansion on the North American continent. France was eager to capture Mexico and graft it onto a new empire which would include many of the Southern states as well. England, on the other hand, had military forces poised along the Canadian border ready for action. Political agitators, funded and organized from Europe, were active on both sides of the Mason-Dixon line. The issue of slavery was but a ploy. America had become the target in a ruthless game of world economics and politics.
Within months after the first clash of arms between North and South, France had landed troops in Mexico. By 1864, the Mexicans were subdued, and the French monarch installed Ferdinand Maximilian as the puppet emperor. The Confederacy found a natural ally in Maximilian, and it was anticipated by both groups that, after the successful execution of the War, they would combine into a new nation - dominated by the financial power of Rothschild, of course. At the same time, England moved eleven-thousand troops into Canada, positioned them menacingly along the Union's northern flank, and placed the British fleet onto war-time alert. The European powers were closing in for a checkmate.
But his words were mostly political rhetoric. Lincoln was a Republican, and he was totally dependent on the Northern industrialists who controlled the Party.
Many Southern Plantation owners were working towards the day when they could convert their investment to more profitable industrial production as had been done in the North, and others felt that freemen who were paid wages would be more efficient than slaves who had no incentive to work. For the present, however, they were stuck with the system they inherited. They felt that a complete and sudden abolition of slavery with no transition period would destroy their economy and leave many of the former slaves to starve - all of which actually happened in due course.
If Lincoln's primary goal in the War was not the abolition of slavery but simply to preserve the Union, the question arises: Why did the Union need preserving? Or, more pointedly, why did the Southern states want to secede?
[...] but he [Lincoln] also knew the slavery was gradually being swept away all over the world - with the possible exception of Africa itself - and he believed that it would soon disappear in America simply by allowing the natural forces of enlightenment to work their way through the political system. He feared - and rightly so - that to demand immediate and total reform, not only would destroy the Union, it would lead to massive bloodshed and more human suffering than was endured even under slavery itself.
[...] it is generally accepted that the Civil War was fought over the issue of slavery. That, at best, is a half-truth. Slavery was an issue, but the primary force for war was a clash between the economic interests of the North and the South. Even the issue of slavery itself was based on economics.
There is no time in American history in which there was more economic conflict between segments of the population than there was prior to the Civil War.
This, of course, is a classic example of the failure of liberal economics. When evaluating a policy, it focuses only on one beneficial consequence for one group of people and ignores the multitude of harmful effects which befall all other groups. Yes, if we established new business, the fractional-reserve system looks pretty good. But, if we add in to the equation all the financial losses to all of the people who were victimized by the system - what Galbraith calls "an involuntary contribution" and what Greider lightly dismisses as "froth" - then the product is zero at best and, in terms of morality, is deeply in the negative. [...] Had these destructive convulsions been absent, as most of them would have been under a less chaotic system, there likely would have been fewer business starts, but a greater number would have finished, and it is entirely possible that the West would have been won even faster than it was.
As the name of Andrew Jackson faded into history, so did the dream of honest banking.
The government had encouraged widespread banking fraud during the War of 1812 as an expedient for paying its bills, and this had left the nation in monetary chaos. At the end of the war, instead of allowing the fraudulent banks to fall and letting the free market heal the damage, Congress decided to protect the banks, to organize the fraud, and to perpetuate the losses. It did this by creating the nation's third central bank called the Second Bank of the United States.
One cannot blame Jackson for accepting the support of these groups in his effort to slay the dragon. In politics, it often is necessary to make temporary alliances with one's opponents to achieve occasional common objectives. [...] He led the nation away from the new concept of diffused powers, carefully worked out by the founding fathers, back towards the Old-World tradition of concentration and monarchy. By strongly challenging the right of the States to secede from the Union, he set into motion a concept that, not only would lead to civil war, but which would put an end forever to the ability of the states to check the expanding power of the federal government. [...] he changed the perception of the role of President from public servant to national leader. [...] One of the sad facts of history is that good causes often are the occasion for establishing bad precedents. Jackson's fight against the Bank of the United States was one of those events.
The Bank's charter expired in 1836 and it was restructured as a state bank by the Commonwealth of Pennsylvania. After a spree of speculation in cotton, lavish advances to the Bank’s officers, and the suspension of payment in specie, Biddle was arrested and charged with fraud. Although not convicted, he was still undergoing civil litigation when he died. Within five years, the establishment was forced to close its doors forever, and America's third experience with central banking came to a close.
The Bank was still alive but had been mortally wounded. By this time , Jackson had completely paid off the national debt incurred by the War of 1812 and had even run up a surplus. In fact, he ordered the Treasury to give back to the states more than $35 million [...] It is not surprising, therefore, that on January 30, 1835, an assassination attempt was made against him. [...] It was the first such attempt to made against the life of a President of the United States. The would-be assassin was Richard Lawrence who either was truly insane or who pretended to be insane to escape harsh punishment. At any rate, Lawrence was found not guilty due to insanity. Later, he boasted to friends that he had been in touch with powerful people in Europe who had promised to protect him from punishment should he be caught.
When the investigating committee arrived at the Bank’s doors in Philadelphia armed with a subpoena to examine the books, Biddle flatly refused. Nor would he allow inspection of correspondence with Congressmen relating to their personal loans and advances. And he steadfastly refused to testify before the committee back in Washington. For lesser mortals, such action would have resulted in citations of contempt of Congress and would have carried stiff fines or imprisonment. But not for Nicholas Biddle.
The turning point [for the removal of the Bank] came when Governor George Wolf of Pennsylvania, the Bank's home state, came out publicly with a strong denunciation of both the Bank and Biddle.
His [Biddle] plan [in response to Jackson] was to rapidly contract the nation's money supply and create another panic-depression similar tot he one the Bank had created thirteen years earlier. This then could be blamed on Jackson's withdrawal of federal deposits, and the resulting backlash surely would cause Congress to override the President's veto. [...] Biddle, therefore, decided to use the American people as sacrificial pawns in the giant chess match for the Bank's survival. [...] Business had been expanding as a result of the Bank's prior easy credit and now was dependent on it. [...] As the pressure continued to build in Congress, it began to look as though Biddle's plan would work. In the public eye, it was Jackson who was solely responsible for the nation's woes. It was his arrogant removal of Secretary Duane; it was his foolish insistence on removing the deposits; it was his obstinate opposition to Congress.
Soon after the election, he [Jackson] ordered Secretary of the Treasury, William Duane, to place all new deposits of the federal government into various state banks around the country and to pay current expenses out of the funds still held by the Bank of the United States until that account was drained to zero. Without the use of federal money, surely the monster would perish.
Jackson had awakened the indignation of the American people. When the November ballots were cast, he received a mammoth vote of confidence. He received fifty-five per cent of the popular vote [...] and eighty per cent of the vote in the Electoral College. But the war still was not over. Jackson won the election, but the Bank had four more years to operate, and it intended to use those years to sway public sentiment back to its support. The biggest battles were yet to come.
Following the Rothschild Formula, Biddle had been careful to reward compliant politicians with success in the business world. Few of them were willing to bite the hand that fed them. Even the great Senator, Daniel Webster, found himself kneeling at Biddle's throne.
[...] he pointed out that the stock of the Bank [Second Bank of the United States] was owned only by the richest citizens of this country [...] but it is even worse when the people receiving those benefits are not even citizens at all but are, in fact foreigners. Jackson said:
It is not our own citizens only who are to receive the bounty of our Government. More than eight millions of the stock of this bank are held by foreigners. By this act the American Republic proposes virtually to make them a present of some millions of dollars.... It appears that more than a fourth part of the stock is held by foreigners and the residue is held by a few hundred of our own citizens, chiefly the richest class.
Jackson decided to place his entire political career on the line for this one issue [ending the Second Bank of the United States] and, with perhaps the most passionate message ever delivered to Congress by any President, before or since, he vetoed the measure [the early renewal of the bank charter].
By this time [Jackson's Presidency], the Bank [Second Bank of the United States] had come under the direction of Nicholas Biddle who was a formidable adversary to Jackson [...] He was the archetype of the new Easter Establishment: wealthy, arrogant, ruthless, and brilliant. [...] Biddle requested Congress to grant an early renewal of the charter as a means of softening Jackson's campaign against it. The bill was backed by the Republicans led by Senator Henry Clay and was passed into law on July 3 , just before the election campaigns began in earnest.
During the 1820s, popular sentiment shifted back tot he laissez-faire and sound-money principles espoused by the Jeffersonian Republicans. But since the Republican Party had by then abandoned those principles, a new coalition was formed, headed by Martin Van Buren and Andrew Jackson, to resurrect them. It was called the Democratic Party, and one of its agenda items was to abolish the [Second] Bank of the United States. After Jackson was elected to the Presidency in 1828, he wasted no time in attempting to build Congressional support for that goal.
It is widely believed that panics, boom-bust cycles, and depressions are caused by unbridled competition between banks; thus the need for government regulation. The truth is just the opposite. These disruptions in the free market are the result of government prevention of competition by the granting of monopolistic power to a central bank. In the absence of a monopoly, individual banks may operate in a fraudulent manner only to a limited extent and for a short period of time. Inevitably, they will be exposed by their more honest competitors and will be forced out of business.
[...] the consequence of the loose monetary policy of the Second Bank of the United States was that America was introduced to her first experience with what now is called the "boom-bust" cycle.
It is certainly no exaggeration to say that the Second Bank of the United States was rooted as deeply in Britain as it was in America.
In every respect the new bank [Second Bank of the United States] was a carbon copy of the old [...] The charter required the Bank to raise a minimum of $7 million in specie, but even in its second year of operation, its specie never rose above $2.5 million.
The War of 1812 was not popular among the American public, and funding would have been impossible through taxes alone. The government chose to fund the war by encouraging wildcat banks to purchase its war-debt bonds and convert them into bank notes which the government then used to purchase war material. Within two years, the nation's money supply had tripled, and so had prices. Once again, the monetary and political scientists had succeeded in fleecing the American public of approximately 66% of all the money they held during that period. And that was on top of the 42% fleecing they got a few years earlier by the Bank of the United States.
One must conclude that the pro-banking interests in the United States actually wanted the conflict [War of 1812] because of the profits that could be realized from it.
When the smoke of the battle lifted, the bill for charter renewal had been defeated by one vote in the House and one vote, cast by Vice-President George Clinton to break the tie, in the Senate. And so, on January 24, 1811, the Bank of the United States closed its doors.
Furthermore, it is apparent that the bank's directors were imbued with a certain amount of enlightened self interest in that they actually wanted to keep the creation of new money with some kind of control. They could profit from the central-bank mechanism only so long as the economy as a whole was productive enough to support it. They did not want to kill the goose that laid the golden egg.
The blunt reality is that the Rothschild banking dynasty in Europe was the dominant force, both financially and politically, in the formation of the Bank of the United States.
The total capitalization was specified at $10 million, which means that $8 million as to come from private stockholders. [...] the bank began operations on around $675,000 in hard cash.
After a year of intense debate, Hamilton's views prevailed and, in 1791, Congress granted a twenty-year charter to the Bank of the United States. It was modelled closely after the Bank of England, which means it was almost an exact replica of the previous Bank of North America. [...] these notes were not forced on the people as legal tender for private debts and contracts, but they were legal tender at face value for all debts to the government in the form of taxes and duties, which made them attractive for use as common money.
Hamilton's proposal [for the First Bank of the United States] was strongly opposed by Thomas Jefferson, then Secretary of State [...] it was one of the central issues that led to the creation of our first political parties. The Federalists gathered around the ideas of Hamilton. The anti-Federalists, later called the Republicans, were attracted to the ideas of Jefferson.
Jefferson pointed out that the Constitution did not grant to Congress the power to create a bank or anything similar. [...] Furthermore, he said, even if the Constitution had granted such power, it would be an extremely unwise thing to do, because allowing banks to create money could only lead to national ruin.
What is surprising is the fact that Hamilton had been a staunch supporter of a sound currency during the Constitutional Convention. This is hard to reconcile [that he later submitted the proposal for the First Bank of the United States], and one must suspect that, even the most well intentioned of men can become corrupted by the temptations of wealth and power. [...] It would appear that the only other explanation is that these men were fickle in their views and did not really understand the implications of their acts. In view of their brilliance in all other matters, however, it is difficult to muster enthusiasm for that interpretation.
Congress was denied the power to print money, but it was not denied the power to borrow it. [...] That being the case, the monetary and political scientists decided to end run the Constitution. Their plan was to establish a bank, to give that bank the power to create money, to lend most of that money to the government, and then to make sure the IOUs are accepted as money by the public. Congress, therefore, would not be emitting bills of credit. The bank would do that.
Thus the First Bank of the United States was conceived.
The proposal was submitted to Congress in 1790 by Alexander Hamilton who, at that time, was Secretary of the Treasury. Hamilton, incidentally, was a former aide to Robert Morris, founder of the Bank of North America, so in that sense his role in this matter is not surprising.
It is hard to reconcile the fact that the same men who adopted the brilliant monetary restraints of the Constitution a few years later would have allowed the Bank of North America to exist. It must be remembered, however, that the war was still in progress when the charter was issued, and even the wisest of statesmen are often obliged to follow expediency in such times. One also must conclude that, while the founding fathers were wise on the nature of fiat money created by the government's printing press, they had not yet had extensive experience with the same mechanism hidden behind the obscurities of fractional-reserve banking.
In any even, the Bank was not to have its charter renewed by Congress and it did not survive beyond the end of the war.
The Bank was organized by Robert Morris [...] He had carefully studied the secret science of money and, by 1781, was widely considered to be the financial wizard of Congress. [...] The Bank of North America was modeled after he Bank of England. [...] unlike the central banks of today, the Bank of North America was not given the power to directly issue the nation's money.
It is a surprising fact that the United States had its first central bank even before the Constitution was drafted. It was chartered by the Continental Congress in the Spring of 1781 and opened its doors the following year. There were great expectations at that time that the province of Canada would soon join the rebel colonies to form a union extending across the entire North American continent. In anticipation of that, the new financial institution was called the Bank of North America.
Louis Hacker describes the period [1790s - 1800s] as one "of unexampled business expansion, one of the greatest, in fact, the United States has had.... The exports of the country mounted from $19 millions in 1791 to $93 millions in 1801." Furthermore, the federal deficit, which amounted to twenty-eight per cent of expenditures in 1792, dropped to twenty-one per cent in 1795. By 1802, the deficit had disappeared altogether and had been replaced by a surplus that was almost as large as the government's total spending.
Under free coinage, any citizen may take raw silver or gold to the mint and, for a nominal fee, have it converted into coins for personal use. [...] Free coinage was to become an important part of the American success story, and it lasted until the Gold Reserve Act of 1934 which, not only terminated it, but even made it illegal for citizens to possess gold.
The Coinage Act of 1792 accordingly set the relative value of gold-to-silver at fifteen-to-one. It then authorized the federal government to mint coins called Eagles, and it specified that their value was ten dollars. [...] What Congress did do was authorize the minting of a gold coin and arbitrarily fix the value of the gold in that coin at fifteen times the value of the dollar. [...] Oh yes, another thing. It set the death penalty for anyone who debases the nation's coinage; a law which, if enforced today, would wipe out the House of Representatives, the Senate, the managerial level of the Treasury Department, and the Presidency as well.
The Tenth Amendment states: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved tot he States respectively, or to the people." [...] if any power to issue fiat money legally exists at all, it is reserved for the people. In other words, individuals and private institutions, such as banks, have the right to issue IOUs and hope that the public will use them as money, but government, at any level, is clearly prohibited by the Constitution from doing so.
George Mason from Virginia told the delegates he had a "mortal hatred to paper money." Previously he had written to George Washington: "They may pass a law to issue paper money, but twenty laws will not make the people receive it. Paper money is founded upon fraud and knavery."
Then, as now, those who suffered the most from fiat money were those who held the most trust in government. In 1777 these were mostly the Whigs, for it was they who patriotically held paper money and, as a result, lost their livelihoods and their life savings. The Tories, on the other hand, mistrusting both government and its paper money, passed the bills as quickly as possible in trade for real assets, especially gold. Consequently, as a group, they weathered the storm fairly well. But they often were derided by their less prudent neighbors as "Torie speculators," "hoarders," and even "traitors."
All of this was painfully fresh in the memories of the delegates to the Constitutional Convention and, as the opening session convened in Philadelphia in 1787, there were angry mobs in the streets threatening the legislators. Looting was rampant. Businesses were bankrupt. Drunkenness and lawlessness were everywhere to be seen. The fruit of fiat money had ripened, and the delegates did not enjoy its taste.
It was natural that people struggled to find ways to escape the destruction of their savings, and the two most obvious methods were (1) to regularly adjust prices upward as the value of the money went downward or (2) exchange their goods and services only for gold coins. In response, the colonial legislatures and the Continental Congress did what governments always do to prevent it. They resorted to wage and price controls and to legal-tender laws with harsh penalties for non-compliance. Under one such law, those who refused to accept worthless money were even described as traitors. It declared:
If any person shall hereafter be so lost to all virtue and regard for his Country as to refuse to accept its notes, such person shall be deemed an enemy of his Country.
What was prohibited was to "emit bills of credit" which, according to the speeches and writings of those who drafted the document, meant the printing of paper IOUs which were intended to be circulated as money - in other words, the printing of fiat money not backed by gold or silver. [...] The crux of the problem is that, while the Constitution clearly prohibits the states from issuing fiat money, it does not specifically prevent the federal government from doing so. [...] they [the founding fathers] were adamant that it should never be tolerated again in America - at either the state or federal level.
There are few historians who would challenge the fact that the funding of World War I, World War II, the Korean War, and the Vietnam War was accomplished by the Mandrake Mechanism through the Federal Reserve System. An overview of all wars since the establishment of the Bank of England in 1694 suggests that most of them would have been greatly reduced in severity, or perhaps not even fought at all, without fiat money. It is the ability of governments to acquire money without direct taxation that makes modern warfare possible, and a central bank has become the preferred method of accomplishing that. [...] there can be no debate over the fact that fiat money in time of peace has no such justification. [...] Therefore, it is not an exaggeration to say that the Federal Reserve System encourages war.
The latest act in this play is the buildup of North Korea. Its nuclear capabilities come from China and Russia, both of which receive U.S. trade, investments, and technology. While President Bush was saying that North Korea was part of the "Axis of Evil" his administration was sending it so-called humanitarian shipments of food, which the regime used to strengthen its control.
Iran is one of the best enemies money can buy.
The big pill to swallow is that, for many years, Hussein was an asset to the global planners in the West, and they did everything possible to keep him in power. It was only when he refused to allow U.S. companies to dominate Iraqi oil production that he was seriously targeted. Prior to that, he was untouchable precisely because he was widely perceived as a perfect, despicable enemy.
Iran, Iraq, Syria, Algeria, the PLO, the Muslim Brotherhood, and similar anti-American groupings have all received weapons, funding, and clandestine support from the U.S. government. In the Gulf War, every effort was made to insure that Hussein's regime was contained but not destroyed (shades of the Korean and Vietnam wars). His military infrastructure and most of his weapons were spared.
Politicians are fond of talking about the necessity of preserving world peace, and trade, we are told, is one of the best ways to do it. The implication is that this is a time of peace. In truth, we live in one of the most war-torn eras the world has ever seen. No continent today, except Antarctica, is free from war.
In the beginning, the Council on Foreign Relations was dominated by J.P. Morgan. It is still controlled by international financiers. The Morgan group gradually has been replaced by the Rockefeller consortium, and the roll call of participating businesses now reads like the Fortune 500. The operation no longer pretends to be a Red Cross mission; it now masquerades under the cover of "East-West Trade."
How is China expected to pay for all this "trade"? Very Simple. By 1996, China had become the largest single recipient of guaranteed loans and subsidies from the World Bank.
In February of 1996, the Clinton Administration made a $1 billion loan of US taxpayers' money to Russia's state-controlled Aeroflot company so it could more effectively compete with American companies such as Boeing in the building of jumbo jets. By the end of that year, the former Soviet Bloc countries had received transfusions from the World Bank of over $3 billion. By mid 2000, it was clear that Russian officials had laundered an additional $7 billion from IMF loans through the Bank of New York. Yet, new "loans" continue to flow.
Before the Bolshevik coup d'etat, Russia was one of the most productive agricultural nations in the world. The great wheat fields in Ukraine justly earned her the title of the Bread Basket of Europe. But when the people's utopia arrived, agriculture came to a standstill, and famine stalked the land. Even after Stalin, when the regime is said to have adopted more humane and productive policies, Russia never produced enough food for itself. A nation that cannot feed its citizens cannot develop its industry and it certainly cannot build a potent military force. It is not surprising, therefore, that for decades, the United States has annually "sold" tens of millions of tons of wheat - and other food stuffs - to Russia.
The hard fact is that American taxpayers unknowingly have been making monthly bank payments on behalf of Communist, socialist, and so-called Third-World countries for many years.
During World War II, under the Lend-Lease program, the United States sent to the Soviets more than $11 billion in aid, including 14,000 aircraft, nearly half a million tanks and other military vehicles, more than 400 combat ships, and even half of the entire U.S. supply of uranium which then was critically needed for the development of the atomic bomb.
During the Allied bombing raids over Germany, the factories and administrative buildings of I.G. Farben were spared.
Much of the capital for the expansion of I.G. Farben came from Wall Street, primarily Rockefeller's National City Bank; Dillon Read & Company, also a Rockefeller firm; Morgan's Equitable Trust Company; Harris Forbes & Company; and even the predominantly Jewish firm of Kuhn Loeb & Company.
From the beginning of Hitler's rise to power, German industry was heavily financed by American and British bankers. Most of the largest U.S. Corporations were knowingly invested in war industries. I.G. Farben was the largest of the industrial cartels and was a primary source of political funding for Hitler. It was Farben that staffed and directed Hitler's intelligence section and ran the Nazi slave labor camps as a supplemental source of manpower for Germany's factories. Farben even hired the New York public relations firm of Ivy Lee, who was John D. Rockefeller's PR specialist, to help improve Hitler's public image in America. Lee, incidentally, had also been used to help sell the Soviet regime to the American public in the late 1920s.
U.S., British, and German wolves soon found a bonanza of profit in selling to the new Soviet regime. Standard Oil and General Electric supplied $37 million worth of machinery from 1921 to 1925, and that was just the beginning. Junkers Aircraft in Germany literally created Soviet air power.
It was about this time  that the Wilson Administration sent 700,000 tons of food to the Soviet Union which, not only saved the regime from certain collapse, but gave Lenin the power to consolidate his control over all of Russia.
In payment for these contracts and to return the "loans" of the financiers, the Bolsheviks all but drained their country of its gold - which included the Tsarist government's sizable reserve - and shipped it primarily to American and British banks. [...]The arrival of these shipments was coordinated by Jacob Schiff's Kuhn, Loeb & Company and deposited by Morgan's Guaranty Trust.
In 1922, the Soviets formed their first international bank. It was not owned and run by the state as would be dictated by Communist theory, but was put together by a syndicate of private bankers. These included, not only former Tsarists bankers, but representatives of German, Swedish, and American banks. Most of the foreign capital came from England, including the British government itself. The man appointed as Director of the Foreign Division of the new bank was Max May, Vice President of Morgan's Guaranty Trust Company in New York.
After the October Revolution, all the banks in Russia were taken over and "nationalized" by the Bolsheviks - except one: the Petrograd branch of Rockefeller's National City Bank.
Contrary to the Marxian myth, they [Communists] have never represented the people. They simply have the guns.
The facts are that there were two revolutions in Russia that year, not one. The first, called the February Revolution, resulted in the establishment of a provisional socialist government under the leadership of Aleksandr Kerensky. [...]
The second revolution, called the October Revolution, was the one through which the Bolsheviks came to power. It was, in fact, no revolution at all. It was a coup d'etat. The Bolsheviks simply took advantage of the confusion and indecisiveness that existed among the various groups that comprised the new government and caught them by surprise with a lightening strike of force.
[...] The fact is that Lenin and Trotsky were not sent to Russia to overthrow the anti-Semitic Tsar. Their assignment from Wall Street was to overthrow the revolution.
The CFR, which was initially dominated by the Morgan group and later by the Rockefellers, is the most powerful group in America today. It is even more powerful than the federal government, because almost all of the key positions in government are held by its members. In other words, it is the United States Government.
The Bolshevik Revolution was not a spontaneous uprising of the masses. It was planned, financed and orchestrated by outsiders. Some of the financing came from Germany which hoped that internal problems would force Russia out of the war against her. But most of the money and leadership came from financiers in England and the United States. It was a perfect example of the Rothschild Formula in action.
Lockhart reported to the British group while Robins reported to the American group, but both were clearly working for identical objectives and doing the work of the unseen hand. The Bolsheviks were well aware of the power these men represented, and there was no door closed to them. [...] Such was the raw power over the leaders of Communism that was concealed behind the innocent facade of the American Red Cross Mission.
Even inside Russia itself, the Round Table was spreading its bets. In addition to the funding, previously mentioned, which was given to the Bolsheviks and to their opponents, The Mensheviks, Morgan also financed the military forces of Admiral Kolchak who was fighting against the Bolsheviks in Siberia. Not surprisingly, Kolchak also received funding from a consortium of British financiers, including Alfred Milner.
At the same time that Morgan was funding pro-Bolshevik groups, he founded what was probably the most virulent anti-Bolshevik organization ever to exist in America. It was called United Americans and it set about to frighten everyone into believing that a Red mob was at that very moment poised to capture New York City.
And so, as a result of careful engineering by Round Table members on both sides - one making outrageous demands and the other responding to those demands in pretended indignation - the war finally began with a British invasion in October of 1899. After 2 1/2 years of fierce fighting, the Boers were forced to surrender, and Milner administered the former republic as a militarily occupied territory. Round Table members, known to the public as "Milner's Kindergarten," were placed into all key government posts, and the gold fields were finally secured.
In 1895, Rhodes set in motion a plan to overthrow Kruger's government by organizing an uprising among the British inhabitants in Johannesburg. [...] The uprising fizzled and ended in Jameson's arrest and public disgrace.
But Rhodes was determined to have the Transvaal, and began immediately to prepare a second, more patient ploy. Through Rhodes' influence, Lord Alfred Milner was appointed as the British High Commissioner of South Africa. In London, Lord Esher - another member of the secret society - became the chief political adviser to King Edward and was in daily contact with him throughout this period. That took care of the British side of this contest.
[...] it was the discovery of gold in the Whitewater area of the Transvaal that provided the motive for war.
But the tactic of funding both sides in a political contest by then had been refined by members of the Round Table into a fine art. A stunning example of this occurred in South Africa during the outset of [the] Boer War in 1899.
Round Table members were once again working both sides of the conflict [Russian Revolution] to weaken and topple a target government. Tsar Nicholas had every reason to believe that, since the British were Russia's allies in the war against Germany, British officials would be the last persons on Earth to conspire against him. Yet, the British Ambassador himself represented the hidden group which was financing the regime's downfall.
The Round Table agents from America did not have the advantage of using the diplomatic service as a cover and, therefore, had to be considerable more ingenious. They came, not as diplomats or even as interested businessmen, but disguised as Red Cross officials on a humanitarian mission. [...] They simply had overpowered the American Red Cross organization with large contributions and, in effect, purchased a franchise to operate in its name.
It is through this front group, called the Council on Foreign Relations, and its influence over the media, tax-exempt foundations, universities, and government agencies that the international financiers have been able to dominate the domestic and foreign policies of the United States ever since.
After the death of Cecil Rhodes, the inner core of his secret society fell under the control of Lord Alfred Milner, Governor-General and High Commissioner of South Africa. As director of a number of public banks and as corporate precursor of England's Midland Bank, he became one of the greatest political and financial powers in the world. Miler recruited into his secret society a group of young men chiefly from Oxford and Toynbee Hall [...]
At the center, there is always a tiny group in complete control, with one man as the undisputed leader. Next is a circle of secondary leadership that, for the most part, is unaware of an inner core. They are led to believe that they are the inner-most ring.
In time, as these conspiracies are built from the center out, they form additional rings of organization. Those in the outer echelons usually are idealists with an honest desire to improve the world. They never suspect an inner control for other purposes, and only those few who demonstrate a ruthless capacity for higher leadership are ever allowed to see it.
Lenin taught that the masses could not be trusted to handle their own affairs and that a special group of disciplined intellectuals must assume this role for them.
Dr. Quigley was a professor of history at Georgetown University where President Clinton had been one of his students. [...] But Dr. Quigley was no mere academic. He also had been closely associated with many of the family dynasties of the super-rich. He was, but his own boast, an insider with a front row view of the world's money power structure.
Lord Alfred Milner was a key figure in organizing a secret society which, at the time of these events [Russian Revolution], was about sixteen years old. It was dedicated to nothing less than the quiet domination of the world. The conquest of Russia was seen as but the first phase of that plan.
What emerges from this sampling of events is a clear pattern of strong support for Bolshevism coming from the highest financial and political power centers in the United States; from men who, supposedly, were "capitalists" and who, according to conventional wisdom, should have been the mortal enemies of socialism and communism.
Trotsky could not have gone even as far as Halifax without having been granted an American passport, and this was accomplished by the personal intervention of President Wilson. Professor Antony Sutton says:
President Woodrow Wilson was the fairy godmother who provided Trotsky with a passport to return to Russia to "carry forward" the revolution.... At the same time careful State Department bureaucrats, concerned about such revolutionaries entering Russia, were unilaterally attempting to tighten up passport procedures.
The head of the British Secret Service in America at the time [Russian Revolution] was Sir William Wiseman who, as fate would have it, occupied the apartment directly above the apartment of Edward Mandell House and who had become fast friends with him. House advised Wiseman that President Wilson had wished to have Trotsky released, Wiseman advised his government, and the British Admiralty issued orders on April 21st that Trotsky was to be sent on his way.
In New York, on the night before his departure, Trotsky had given a speech in which he said: "I am going back to Russia to overthrow the provisional government and stop the war with Germany." Trotsky, therefore, represented a real threat to England's war effort. He was arrested as a German agent and taken as a prisoner of war.
On March 23, 1917, a mass meeting was held at Carnegie Hall to celebrate the abdication of Nicholas II, which meant the overthrow of Tsarist rule in Russia. Thousands of socialists, Marxists, nihilists, and anarchists attended to cheer the event.
In January of 1916, Trotsky was expelled from France and came to the United States. It has been claimed that his expenses were paid by Jacob Schiff.
Russian-speaking revolutionaries were trained in New York and sent to distribute the pamphlets among the prisoners and to indoctrinate them into rebellion against their own government.
The German Embassy attempted to place ads in 50 newspapers warning that the Lusitania was a target of war, but the U.S. government prevented them from being printed except for this one which was run in the Des Moines Register.
But the greatest source of funding came, as it always does in wartime, not from direct taxes, but from the hidden tax called inflation. Between 1915 and 1920, the money supply doubled from $20.6 billion to $39.8 billion. Conversely, during World War I, the purchasing power of the currency fell by almost 50%. That means Americans unknowingly paid to the government approximately one-half of every dollar that existed. And that was in addition to their taxes.
The banking cartel was able [in World War I], through the operation of the Federal Reserve System, to create the money to give to England and France so they, in turn, could pay back the American banks - exactly as was to be done again in World War II and again in the Big Bailout of the 1980s and the '90s.
Congress could not resist the combined pressure of the press and the President. On April 16, 1917, the United States officially declared war on the Axis powers. Eight days later, Congress dutifully passed the War Loan Act which extended $1 billion in credit to the Allies. The first advanced of $200 million went to the British the next day and was immediately applied as payment on the debt to Morgan. A few days later, $100 million went to France for the same purpose. [...] By the time the war was over, the Treasury had lent a total of $9,466,000,000 including $2,170,000,000 given after the Armistice.
The controversy over the ships cargo was finally resolved in 2008 when drivers moved inside the Lusitania's hull and found millions of rounds of military ammunition. Sam Greenhill, writing for Mail Online, reported:
[...] Germans had been right all along in claiming the ship was carrying war materials and was a legitimate military target.... The diving team estimates that around four million round of U.S.-manufactured Remington .303 bullets lie in the Lusitania's hold at a depth of 300 ft.
Quickly after the explosion of the impact, there was a second and much larger explosion that literally blew the side off of cargo hold number two and started the great ship immediately toward the bottom. And what a hold it must have been. The Lusitania, one of the largest ships ever built, sank in less than eighteen minutes.
The German navy was goaded into a position of shoot-first and ask questions later and, under those conditions, it was inevitable that American lives would be lost.
She [the Lusitania] left New York harbor on May 1, 1915, and was sunk by a German submarine off the coast of Ireland six days later. Of the 1,195 persons who lost their lives, 195 were Americans. It was this event, more than any other, that provided the advocates of war with a convincing platform for their views, and it became the turning point where Americans reluctantly began to accept, if not the necessity of war, at least its inevitability.
The Lusitania and the Mauretania were built by Cunard and became major competitors of the Morgan cartel. It is an interesting footnote of history, therefore, that, from the Morgan perspective, the Lusitania was quite dispensable.
It is not surprising, therefore, that a large part of the nation's press, particularly in the East, began to editorially denounce Germany [...] In spite of this massive sales campaign, the American people still were not buying. [...] Clearly, what was needed was something both drastic and dramatic to change public opinion.
Writing in 1937, Lundberg says: "More advertising is controlled by the J.P. Morgan junta than by any single financial group, a factor which immediately gives the banking house the respectful attention of all alert independent publishers."
On the surface it is a paradox that Wilson, who had always been a pacifist, should now enter into a secret agreement with foreign powers to involve the United States in a war which should could easily avoid. The key that unlocks this mystery is the fact that Wilson also was an internationalist. One of the strongest bonds between House and himself was their common dream of a world government.
The basic terms of the agreement were that the United States government would offer to negotiate a peaceful settlement between Germany and the Allies and would then put forth a specific proposal for the terms of that settlement. If either side refused to accept the proposal, then the United States would come into the war as an ally of the other side. The catch was that the terms of the proposal were carefully drafted so that Germany could not possibly accept them. Thus, to the world, it would look as though Germany was at fault and the United States was humanitarian.
Since sources of new capital had dried up, the only way to keep the war going, he [Ferdinand Lundberg] said, was to make direct grants from the U.S. Treasury. But, since this would be a violation of neutrality treaties, the United States would have to abandon its neutrality and enter the war. [...]
The Morgan group had floated one-and-a-half billion dollars in loans to Britain and France. With the fortunes of war turning against them, investors were facing the threat of a total loss. As Ferdinand Lundberg observed: "The declaration of war by the United States, in addition to extricating the wealthiest American families from a dangerous situation, also opened new vistas of profits."
The exigencies of war in Europe required England and France to go heavily into debt. When their respective central banks and local merchant banks could no longer meet that need, the beleaguered governments turned to the Americans and selected the House of Morgan - acting as partners of the Rothschilds - to act as sales agent for their bonds.
Wars, great and small, have always been a plague to Europe, but it was not until they were easy to finance through central banking and fiat money that they became virtually perpetual.
The "balance-of-power" question is particularly intriguing. Most history texts present the concept as though it were some kind of natural, social phenomenon which, somehow, has worked to the benefit of mankind. The implication is that it's just wonderful how, after all those European wars, no nation was strong enough to completely dominate the others. When the United States emerged from World War II with exactly such power, it was widely deplored, and massive political /financial mechanisms such as foreign aid and disarmament were set in motion to restore the balance.
Let us imagine a man who is totally pragmatic. He is smarter and more cunning than most men and, in fact, holds them in thinly disguised contempt. He may respect the talents of a few, but has little concern over the condition of mankind. He has observed that kings and politicians are always fighting over something or other and has concluded that wars are inevitable. He also has learned that wars can be profitable, not only by lending or creating the money to finance them, but from government favoritism in the granting of commercial subsidies or monopolies. He is not capable of such a primitive feeling as patriotism, so he is free to participate in the funding of any side in any conflict, limited only by factors of self interest. [...]
To involve a country in war or the threat of war, it will be necessary for it to have enemies with credible military might. If such enemies already exist, all the better. If they exist but lack military strength, it will be necessary to provide them the money to build their war machine. If an enemy does not exist at all, then it will be necessary to create one by financing the rise of a hostile regime. [...] While we must always proclaim the virtues of peace, the unspoken objective is perpetual war.
They were not necessarily evil in a moral sense. What preoccupied their minds were not questions of right or wrong but of profit and loss. This analytical indifference to human suffering was aptly described by one Rothschild when he said: "When the streets of Paris are running with blood, I buy." They may have held citizenship in the country of their residence, but patriotism was beyond their comprehension. They were also very bright, if not cunning, and these combined traits made them the role model of the cool pragmatists who dominate the political and financial world of today.
It was expected, therefore, that Nathan in London would be the first to know the name of the victor after the cannon smoke had cleared from the battlefield. [...] In the early hours of June 20, the exhausted messenger was pounding on Nathan's door, a full twenty-four hours before Wellington's own courier, Major Henry Percy, arrived. [...]
All eyes were upon him as he slumped dejectedly, staring at the floor. Then, he raised his gaze and, with pained expression, began to sell. The whisper went through the crowded room, "Nathan is selling?" "Nathan is selling!" "Wellington must have lost." "Our government bonds will never be repaid." "Sell them now. Sell. Sell!"
Prices tumbled, and Nathan sold again. Prices plummeted, and still Nathan sold. Finally, prices collapsed altogether and, in one quick move, Nathan reversed his call and purchased the entire market in government bonds. In a matter of just a few hours, he had acquired the dominant holding of England's entire debt at but a tiny fraction of its worth.
It was well known that the Rothschilds had developed a private courier service that was used, not only to transport gold and other tangible cargo, but to rapidly move information that could be useful in making investment decisions.
It must not be concluded from this that Napoleon was a paragon of virtue or a champion of honest money. His objection to the bankers was that their monetary power was able to threaten the sovereignty of his own political power. He allowed them a free hand while they served the purpose of the state. Then, when the need for military financing subsided, he would condemn them for making "unholy profits" and simply take it from them in the name of the people. If the bankers protested, they were sent to prison.
And so the battle lines were drawn. Napoleon had to be destroyed at all costs. To make this possible, the Bank of England created vast new amounts of fiat money to "lend" to the government so it could finance an overpowering army.
[...] the mere sight of the red shield on a leather pouch, a carriage, or a ship's flag was sufficient to insure that the messenger or his cargo could pass through check points in either direction. [...] This government protection was one of those indirect benefits that generated commercial profits far in excess of the interest received on the underlying government loans. [...] for more than two centuries, the House of Rothschild profited handsomely from wars and economic collapses, the very occasions on which others sustained the greatest losses.
By remaining behind the scenes, they were able to avoid the brunt of public anger which was directed, instead, at the political figures which they largely controlled.
They [the Rothschilds] were the personal bankers of many of the crowned heads of Europe. They made large investments, through agents, in markets as distant as the United States, India, Cuba, and Australia.
The German words for red shield are roth schild, so he [Mayer Amschel Bauer] changed his name from Bauer to Rothschild and added five gold arrows held in the talons of the eagle to represent his five sons.
Lord Mersey was put in charge of an official inquiry into the sinking of the Lusitania. It was not an investigation but a coverup. He was instructed by the Admiralty to place the entire blame on the Captain of the ship. Mersey obeyed his orders but refused payment for his services and declined to accept further judicial assignments. In later years, he said the affair "was a damn dirty business."
Winston Churchill was the First Lord of the Admiralty in World War I. As the Lusitania, entered into an area where a German U-Boat was known to be operating, he called off the destroyer escort that had been assigned to protect her. He calculated that the destruction of a British ship with U.S. passengers aboard would inflame American passions against Germany and help create a political climate for coming into the war.
Edward Mandell House was the man who secured Woodrow Wilson's nomination for President and who, thereafter, became the hidden power at the White House. He negotiated a secret agreement to draw the U.S. into World War I at the very time Wilson was campaigning on the promise to keep America out of war. On behalf of Wall Street, House lobbied Congress to pass the Federal Reserve Act.
Harry Dexter White and John Maynard Keynes were the theoreticians who guided the 1944 Bretton Woods Monetary Conference at which the IMF/World Bank was created. White was a member of the Communist Party. Keynes was a member of the Fabian Society. They shared the same goal of international socialism. The IMF/World Bank has furthered that goal ever since.
Jacob Schiff was head of the New York investment firm, Kuhn, Loeb & Co. He was one of the principal backers of the Bolshevik revolution and personally financed Trotsky's trip from New York to Russia. He was a major contributor to Woodrow Wilson's presidential campaign and an advocate for passage of the Federal Reserve Act.
John D. Rockefeller made his initial fortune in oil but soon gravitated into banking and finance. His entry into the field was not welcomed by Morgan, and they became fierce competitors. Eventually, they decided to minimize their competition by entering into joint ventures. In the end, they worked together to create a national banking cartel called the Federal Reserve System.
J.P. Morgan, Sr was brought into banking by his father, Junius Morgan, in England. The Morgans were friendly competitors with the Rothschilds and became socially close to them. Morgan's London-based firm was saved from financial ruin in 1857 by the Bank of England over which the Rothschilds held great influence. Thereafter, Morgan appears to have served as a Rothschild financial agent and went to great length to appear totally American.
August Belmont came to New York in 1837 as the financial agent of the Rothschilds. He funneled vast amounts of capital into American investments, often without anyone knowing whose money he was spending. The purpose of concealment was to blunt the growing anti-Rothschild resentment that was then prevalent in Europe as well as America. When his affiliation became commonly known his usefulness came to an end and he was replaced by J.P. Morgan.
Cecil Rhodes made one of the world's greatest fortunes of the 19th century. Financed by Nathan Rothschild and the Bank of England, he established a monopoly over the diamond output of South Africa and most of the gold as well. He formed a secret society which included many of the top leaders of British government. Their elitist goal was nothing less than world domination and the establishment of a modern feudalist society controlled by themselves through the world's central banks. In America, the Council on Foreign Relations (CFR) was an outgrowth of that group.
Under the present System, therefore, our leaders cannot allow a serious reduction in either the national or consumer debt.
Why, then, does the federal government bother with taxes at all? Why not just operate on monetized debt? The answer is twofold. First, if it did, people would begin to wonder about the source of the money, and that might cause them to wake up to the reality that inflation is a tax. Thus, open taxes at some level serve to perpetuate public ignorance, which is essential to the success of the scheme. The second reason is that taxes, particularly progressive taxes, are weapons by which elitist social planners can wage war on the middle class.
It is a sobering thought that the federal government now could operate – even at its current level of spending – without levying any taxes whatsoever. All it has to do is create the required money through the Federal Reserve System by monetizing its own bonds. In fact, most of the money it now spends is obtained in that way.
When the Fed creates fiat American dollars to give foreign governments in exchange for their worthless bonds, the money path is slightly longer and more twisted, but the effect is similar to the purchase of U.S. Treasury Bonds.
The banking cartel holds a monopoly in the manufacture of money. Consequently, money is created only when IOUs are “monetized” by the Fed or by commercial banks. When private individuals, corporations, or institutions purchase government bonds, they must use money they have previously earned and saved. In other words, no new money is created, because they are using funds that are already in existence. Therefore, the sale of government bonds to the banking system is inflationary, but when sold to the private sector, it is not. That is the primary reason the United States avoided massive inflation during the 1980s when the federal government was going into debt at a greater rate than ever before in its history. By keeping interest rates high, these bonds became attractive to private investors, including those in other countries.15 Very little new money was created, because most of the bonds were purchased with American dollars already in existence. This, of course, was a temporary fix at best. Today, those bonds are continually maturing and are being replaced by still more bonds to include the original debt plus accumulated interest. Eventually this process must come to an end and, when it does, the Fed will have no choice but to literally buy back all the debt of the ’80s — that is, to replace all of the formerly invested private money with newly manufactured fiat money — plus a great deal more to cover the interest. Then we will understand the meaning of inflation.
The previous figures are based on a “reserve” ratio of 10% (a money-expansion ratio of 10-to-1). It must be remembered, however, that this is purely arbitrary. Since the money is fiat with no previous-metal backing, there is no real limitation except what the politicians and money managers decide is expedient for the moment. Altering this ratio is the third way in which the Federal Reserve can influence the nation’s supply of money. The numbers, therefore, must be considered as transient. At any time there is a “need” for more money, the ratio can be increased to 20-to-1 or 50-to-1, or the pretense of a reserve can be dropped altogether. There is virtually no limit to the amount of fiat money that can be manufactured under the present system..
The Discount Window is merely bankers' language for the loan window. When banks run short of money, the Federal Reserve stands ready as the "bankers' bank" to lend it. [...] their operating margin is extremely thin. [...] Since the banks are required to keep reserves of only about ten per cent, they actually can lend up to nine dollars for each dollar borrowed.
[...] in other words, the bank borrows a million and can almost doubt it in one year. That's leverage! But don't forget the source of that leverage: the manufacture of another $9 million which is added to the nation's money supply.
There are three general ways in which the Federal Reserve creates fiat money out of debt. One is by making loans to the member banks through what is called the Discount Window. The second is by purchasing Treasury bonds and other certificates of debt through what is called the Open Market Committee. The third is by changing the so-called reserve ratio that member banks are required to hold. Each method is merely a different path to the same objective: taking IOUs and converting them into spendable money.
The entire function of this machine is to convert debt into money. It's just that simple. First, the Fed takes all the government bonds which the public does not buy and writes a check to Congress in exchange for them. [...] The money created for the bonds is spent by the government, whereas the money created on top of those bonds is the source of all the bank loans made to the nation's businesses and individuals.
The assumption is that, the more we borrow, the more we have to borrow, and that debt based on fiat money is a never-ending spiral leading inexorably to more and more debt.
This is a partial truth. It is true that there is not enough money created to include the interest, but it is a fallacy that the only way to pay it back is to borrow still more. The assumption fails to take into account the exchange value of labor. [...]
The loop through which it travels can be large or small, but the fact remains all interest is paid eventually by human effort. [...] It is a form of modern serfdom in which the great mass of society works as indentured servants to a ruling class of financial nobility.
[...] every dollar that exists today, either in the form of currency, checkbook money, or even credit card money - in other words, our entire money supply - exists only because it was borrowed by someone; perhaps not you, but someone. That means all the American dollars in the entire world are earning daily and compounding interest for the banks which created them.
Let us consider the purchase of a $100,000 home in which $30,000 represents the cost of the land, architect's fee, sales commissions, building permits, and that sort of thing and $70,000 is the cost of labor and building materials. If the home buyer puts up $30,000 as a down payment, then $70,000 must be borrowed. If the loan is issued at 11% over a 30-year period, the amount of interest paid will be $167,806. That means the amount paid to those who loan the money is about 2 1/2 times greater than paid to those who provide all the labor and all the materials. It is true that this figure represents the time-value of that money over thirty years and easily could be justified on the basis that a lender deserves to be compensated for surrendering the use of his capital for half a lifetime. But that assumes the lender actually had something to surrender, that he had earned the capital, saved it, and then loaned it for construction of someone else's house. What are we to think, however, about a lender who did nothing to earn the money, had not saved it, and, in fact, simply created it out of thin air? What is the time-value of nothing?
The dictionary, therefore, needs a new definition. Usury: The charging of any interest on a loan of fiat money.
When banks place credit into your checking account, they are merely pretending to lend you money.
After all, what's wrong with a little debt, prudently used and intelligently managed? The answer is nothing, provided the debt is based on an honest transaction. There is plenty wrong with it if it is based upon fraud.
It is difficult for Americans to come to grips with the fact that their total money-supply is backed by nothing but debt, and it is even more mind boggling to visualize that, if everyone paid back all that was borrowed, there would be no money left in existence. That's right, there would not be one penny in circulation - all coins and all paper currency would be returned to bank vaults - and there would be not one dollar in any one's checking account. In short, all money would disappear.
The first fact that needs to be considered is that our money today has no gold or silver behind it whatsoever. The fraction is not 54% nor 15%. It is 0%. It has travelled the path of all previous fractional money in history and already has degenerated into pure fiat money. The fact that most of it is in the form of checkbook balances rather than paper currency is a mere technicality; and the fact that bankers speak about "reserve ratios" is eye wash. The so-called reserves to which they refer are, in face, Treasury bonds and other certificates of debt. Our money is pure fiat through and through.
In truth, money is not created until the instant it is borrowed. It is the act of borrowing which causes it to spring into existence. And, incidentally, it is the act of paying off the debt that causes it to vanish.
The Bank of England was formed in 1694 to institutionalize fractional-reserve banking. As the world's first central bank, it introduced the concept of a partnership between bankers and politicians.
[...] the central-bank mechanism was so attractive to the political and monetary scientists that it became the model for all of Europe. The Bank of Prussia became the Reichsbank. Napoleon established the Banque de France.
In Europe and America, the banks have always operated with the assumption that their partners in government will come to their aid when they get into trouble.
Then, the inevitable happened: There was a run on the bank, and the Bank of England could not produce the coin.
[...] The Cabal is a partnership, and each of the two groups is committed to protect each other, not out of loyalty, but out of mutual self interest. They know that, if one falls, so does the other. It is not surprising, therefore, that, when there was a run on the Bank of England, Parliament intervened. In May of 1696, just two years after the Bank was formed, a law was passed authorizing it to "suspend payment in specie." By force of law, the Bank was now exempted from having to honor its contract to return the gold.
The Bank [Bank of England] pretended to make a loan but what it really did was to manufacture the money for government's use. If the government had done this directly, the fiat nature of the currency would have been immediately recognized, and it probably would not have been accepted at full face value in payment for the expenses of war. By creating money through the banking system, however, the process became mystifying to the general public. The newly created bills and notes were indistinguishable from those previously backed by coin, and the public was none the wiser.
The reality of central banks, therefore - and we must not forget that the Federal Reserve System is such a creature - is that, under the guise of purchasing government bonds, they act as hidden money machines which can be activated any time the politicians want. This is a godsend to the political scientists who no longer must depend on taxes or the good credit of their treasury to raise money. It is even easier than printing and, because the process is not understood by the public, it is politically safe.
When money is created out of nothing, the true interest rate is not 8% or 9% or even 22%, it is infinity.
[...] the Cabal [political scientists and monetary scientists] met in Mercer's Chapel in London and hammered out a seven-point plan which would serve their mutual purposes:
- The government would grant a charter to the monetary scientists to form a bank;
- The bank would be given a monopoly to issue banknotes which would circulate as England's paper currency;
- The bank would create money out of nothing with only a fraction of its total currency backed by coin;
- The monetary scientists then would lend the government all the money it needed;
- The money created for government loans would be backed primarily by government I.O.U.s;
- Although this money was to be created out of nothing and would cost nothing to create, the government would pay "interest" on it at a rate of 8%;
- Government I.O.U.s would also be considered as "reserves" for creating additional loan money for private commerce. These loans also would earn interest. Thus, the monetary scientists would collect double interest on the same nothing.
In 1707, the recently created Bank of England was given the responsibility of managing this currency, but the bank found more profit in the circulation of its own banknotes, which were in the form of fractional money and which provided for the collection of interest, not the payment of it. Consequently, the government bills gradually passed out of use and were replaced by banknotes which, by the middle of the eighteenth century, became England's only paper money.
It was the city-state of Venice, however, which is considered the cradle of banking as we know it today.
Generally, the public is unaware of this fact and believes that fractional money can be redeemed in full at any time. When the truth is discovered, as periodically happens, there are runs on the bank, and only the first few depositors in line can be paid.
No bank can stay in business for very long with a zero reserve. The only way to make people accept such a worthless currency is by government force. That's what legal-tender laws are all about. The transition from fraction-reserve money to fiat money, therefore, requires the participation of government through a mechanism which is called a central bank.
[...] we can now look back on fractional money and recognize that it really is a transitional form between receipt money and fiat money. [...] When the fraction finally reaches zero, then it has made the complete transition and becomes pure fiat. Furthermore, there is no example in history when men, once they had accepted the concept of fractional money, didn't reduce the fraction lower and lower until, eventually, it became zero.
When the banks abandoned this practice and began to issue receipts to borrowers, they became magicians. Some have said they created money out of nothing, but that is not quite true. What they did was even more amazing. They created money out of debt.
The general public was led to believe that, if they approved of putting these supposedly idle funds to work, they would be helping the economy and earning a little profit besides. It was an appealing proposal, and the idea caught on like wildfire.
First of all, sharing the interest income with the owners of the deposits was not part of the original concept. That only became general practice many years later after the depositors became outraged and needed to be reassured that these loans were in their interest as well. In the beginning, they didn't even know that their coins were being lent out. They naively thought that the goldsmiths were lending their own money.
In addition to the goldsmiths who stored coins, there was another class of merchants, called "scriveners," who lent coins. The goldsmiths reasoned that they, too, could act as scriveners, but do so with other people's money. [...] They had learned from experience that very few of their depositors ever wanted to removed their coins at the same time. [...] It seemed perfectly safe to lend up to eighty or even eighty-five per cent of their coins. And so the warehousemen began to act as loan brokers on behalf of their depositors, and the concept of banking, as we know it today, was born.
A nation that resorts to the use of fiat money has doomed itself to economic hardship and political disunity.
[...] when the state delegates assembled to draft the Constitution, the effects of fiat money were so fresh in their minds they decided to put an end to it once and for all.
Fiat money is the means by which governments obtain instant purchasing power without taxation.
It is estimated that, in just five years from 1775 to the end of 1779, the total money supply expanded by 5000%. By contrast, the amount raised in taxes over the five-year period was inconsequential, amounting to only a few million dollars.
Wars are seldom funded out of the existing treasury, nor are they even done so out of increased taxes. If governments were to levy taxes on their citizens fully adequate to finance the conflict, the amount would be so great that many of even its most ardent supporters would lose enthusiasm. By artificially increasing the money supply, however, the real cost is hidden from view.
Benjamin Franklin was an ardent proponent of fiat money during those years and used his great influence to sell the idea to the public.
Thus, when governments issue fiat money, they always declare it to be legal tender under pain of fine or imprisonment. The only way a government can exchange its worthless paper money for tangible goods and services is to give its citizens no choice.
LESSON: Whenever a government sets out to manipulate the money supply, regardless of the intelligence or good intentions of those who attempt to direct the process, the result is inflation, economic chaos, and political upheaval. By contrast, whenever government is limited in its monetary power to only the maintenance of honest weights and measures of precious metals, the result is price stability, economic prosperity, and political tranquility. Therefore,
LAW: For a nation to enjoy economic prosperity and political tranquility, the monetary power of its politicians must be limited solely to the maintenance of honest weights and measures of precious metals.
The experience of the Romans was quite different [than the Byzantines]. Basically a militaristic people, they had little patience for the niceties of monetary restraint. Especially in the later Empire, debasement of the coinage became a deliberate state policy. Every imaginable means for plundering the people was devised. In addition to taxation, coins were clipped, reduced, diluted, and plated. Favored groups were given franchises for state-endorsed monopolies, the origin of our present-day corporation. And amidst constantly rising prices in terms of constantly expanding money, speculation and dishonesty became rampant.
It is an amazing fact of history that the Byzantine Empire flourished as the center of world commerce for eight-hundred years without falling into bankruptcy nor, for that matter, even into deb. Not once during this period did it devalue its money.
Long-term price stability is possible only when the money supply is based upon the gold (or silver) supply without government interference.
The human effort required to extract one ounce of gold from the earth will always be approximately equal to the amount of human effort required to provide the goods and services for which it is freely exchanged.
Let us now suppose that the miners, in their quest for a better standard of living, work extra hours and produce more gold this year than previously [...] Now things are no longer in balance. [...] The result of this expansion of the money supply over and above the supply of available goods is the same as in our game of Monopoly. The quoted prices of the suits go up because the relative value of the gold has gone down.
[...] When the miners see that they are no better off than before in spite of the extra work, and especially when they see the tailors making a greater profit for no increase in labor, some of them decide to put down their picks and turn to the trade of tailoring. [...] When this happens, the annual production of gold goes down while the production of suits goes up, and an equilibrium is reached once again in which suits and gold are traded as before.
[...] maintaining stable prices is the easiest thing in the world. All we have to do is stop tinkering with the money supply and let the free market do its job. Prices become automatically stable under a commodity money system, and this is particularly true under a gold standard.
Let us illustrate the point by imagining that we are playing a game of Monopoly. Each person has been given a starting supply of play money with which to transact business. It doesn't take long before we all start to feel the shortage of cash. If we just had more money, we could really wheel and deal. Let us suppose further that someone discovers another game box of Monopoly sitting in the closet, and proposes that the currency from that be added to the game under progress. By general agreement, the little bills are distributed equally among the players. What would happen?
The money supply has now been doubled. We all have twice as much money as we did a moment before. But would we be any better off? There is no corresponding increase in the quantity of property, so everyone would bid up the prices of existing pieces until they became twice as expensive. In other words, the law of supply and demand would rapidly seek exactly the same equilibrium as existed with the more limited money supply. When the quantity of money expands without a corresponding increase in goods, the effect is a reduction in the purchasing power of each monetary unit. In other words, nothing really changes except that the quoted price of everything goes up. But that is merely the quoted price, the price as expressed in terms of the monetary unit. In truth, the real price, in terms of its relationship to all other prices, remains the same. It's merely that the relative value of the money supply has gone down. This, of course, is the classic mechanism of inflation. Prices do not go up. The value of the money goes down.
If Santa Claus were to visit everyone on Earth next Christmas and leave in our stockings an amount of money exactly equal to the amount we already had, there is no doubt that many would rejoice over the sudden increase in wealth. By New Year's Day, however, prices would have doubled for everything, and the net result on the world's standard of living would be exactly zero.
The reason so many people fall for the appealing argument that the economy needs a larger money supply is that they zero in only on the need to increase their supply. If they paused for a moment to reflect on the consequences of the total supply increasing, the nonsense of the proposal becomes immediately apparent.
Murray Rothbard, professor of economics at the University Of Nevada, Las Vegas says:
We come to the startling truth that it doesn't matter what the supply of money is. Any supply will do as well as any other supply. The free market will simply adjust by changing the purchasing power, or effectiveness of its gold unit. There is no need whatever for any planned increase in the money supply to rise to offset any condition, or to follow any artificial criteria. More money does not supply more capital, is not more productive, does not permit "economic growth."
The deeper reality, however, is that the supply is not even important. Remember that the primary function of money is to measure the value of the items for which it is exchanged. In this sense, it serves as a yardstick or ruler of value. It really makes no difference if we measure the length of our rug in inches, feet, yards or meters. [...] no matter what measurement we use, the reality of what we are measuring does not change. Our rug does not become larger just because we have increased the quantity of measurement units by painting additional markers onto our rulers.
If the supply of gold in relation to the supply of available goods is so small that a one ounce coin would be too valuable for minor transactions, people simply would use half-ounce coins or tenth-ounce coins. The amount of gold in the world does not affect its ability to serve as money, it only affects the quantity that will be used to measure any given transaction.
Even today, in a world where money can no longer be defined, the common man instinctively knows that gold will do just fine until something better comes along. [...] As for quantity, there seems to be just the right amount to keep its value high enough for useful coinage. [...] It is sought for both industry and ornament, thus assuring its intrinsic value under all conditions.
The ability to precisely assay metals in both purity and weight makes them ideally suited for this function [money]. Experts may haggle over the precise quality of a gemstone, but an ingot of metal is either 99% pure or it isn't, and it either weighs 100 ounces or it doesn't. One's opinion has little to do with it.
The primary reason metals became widely used as commodity money is that they meet all the requirements for convenient trading. In addition to being of intrinsic value for user other than money, they are not perishable, which is more than one can say for cows; by melting and reforming they can be divided into smaller unites and conveniently used for purchases of minor items, which is not possible with diamonds, for example; and, because they are not in great abundance, small quantities carry high value, which means they are more portable than such items as timber, for example.
In the natural evolution of every society, there always have been one or two items which became more commonly used in barter than all others. [...] Eventually, they were traded, not for themselves, but because they represented a storehouse of value which could be exchanged at a later time for something else. At that point, they ceased being barter and became true money.
Money is anything which is accepted as a medium of exchange and it may be classified into the following forms:
- Commodity money
- Receipt money
- Fiat money
- Fractional money
The reason the Federal Reserve appears to be a complicated subject is because most discussions start somewhere in the middle.
The recent inclusion of Red China and the former Soviet bloc on the list of IMF/World Bank recipient countries signals the final phase of the game. Now that Latin America and Africa have been "purchased" into the New World Order, this is the final frontier. In a relatively short time span, China, Russia, and the Eastern European countries have now become the biggest borrowers and already, they are in arrears on their payments. This is where the action will lie in the months ahead.
Does it not seem strange that Communism fell without a struggle? Is it not curious that the system which was born out of class conflict and revolution and which maintained itself by force and violence for almost a century just went away on its own? Communism was not overthrown by people rising up with clubs and pitchforks to throw off their yoke of tyranny. There was no revolution or counterrevolution, no long period of fragmentation, no bloody surges between opposing forces. Poof! It just happened. True, there was blood in the streets in those areas where opposing groups vied for power, but that was after Communism had departed, not before. Such an event had never occurred in history. Until then, it had been contrary to the way governments act; contrary to the very nature of power which never surrenders without a life-and-death struggle.
When did Communism depart? We are not quite sure. All we know is that one day we opened our newspapers and it was accomplished.
The only reason they appeared to embrace it [communism] for so many years was that they had no choice. As long as the Soviets held control of the weapons and the means of communication, the people had to accept their fate.
But at the tip of the pyramid of state power, it is a different story. The top Communist leaders have never been as hostile to their counterparts in the West as the rhetoric suggests. They are quite friendly to the world's leading financiers and have worked closely with them when it suits their purposes.
Red China joined the IMF/World Bank in 1980 and immediately began to receive billions of dollars in loans, although it was well known that she was devoting a huge portion of her resources to military development. By 1987, China was the IMF's second largest borrower, next to India, and the transfusions have grown at a steady pace every since.
The Bank has asserted that loans will encourage economic reforms in favor of the private sector. Yet, none of the money has gone to the private sector. All of it is funneled into the government bureaucracy which, in turn, wages war against the free market.
The IMF bailed out Argentina again for $40 billion in 2001 and another $8 billion in 2002. [...] Suffice it to say that the identical game has been played with teams from Bolivia, Peru, Venezuela, Costa Rica, Morocco, the Philippines, the Dominican Republic, and almost every other less-developed country in the world.
By 1982, almost every Third-World government was running behind in payments. Mexico led the way by announcing it could not send any more money that year on its $85 billion debt. Federal Reserve Governor Henry Wallich rushed to Switzerland to negotiate an IMF loan of $4.5 billion through the Bank of International Settlements. The central banks of Europe and Japan provided $1.85 billion (about 40%); the rest came from the Federal Reserve.
The Panama bailout was a unique play. In no other country did we have an income-producing property to give away, so from that point forward the bailout would have to be done with mere money. To pave the way for that, Congress passed the Monetary Control Act of 1980, which authorized the Federal Reserve to "monetize foreign debt." [...] Until then, it was permitted to make money only for the American government. Now, it was able to do it for any government. Since then it has been functioning as a central bank for the entire world.
The first major score in the game had been made under the Carter Administration when Panama fell in arrears on the payment of its loans. A consortium of banks including Chase Manhattan, First National of Chicago, and Citibank brought pressure to bear on Washington to give the Canal to the Panamanian government so it could use the revenue to pay interest on its loans. Although there was massive opposition to this move among the American people, the Senate yielded to insider pressure and passed the give-away treaty. The Panamanian government inherited $120 million in annual revenue, and the interest payments to the banks were restored.
The TLC was created by David Rockfeller to coordinate the building of The New World Order in accordance with the Gardner strategy: "An end run around national sovereignty, eroding it piece by piece." The objective is to draw the United States, Mexico, Canada, Japan, and Western Europe into political and economic union. Under slogans such as free trade and environmental protection, each nation is to surrender its sovereignty "piece by piece" until a full-blown regional government emerges from the process.
The brain trust for implementing the Fabian plan in America is called the Council on Foreign Relations (CFR). We shall look at it closely in future chapters, but it is important to know at this point that almost all of America's leadership has come from this small group. That includes our presidents and their advisers, cabinet members, ambassadors, board members of the Federal Reserve System, directors of the largest banks and investment houses, presidents of universities, and heads of metropolitan newspapers, news services, and TV networks. It is not an exaggeration to describe this group as the hidden government of the United States.
One of the early American advocates of socialism on a global scale - including the draining of wealth away from the "rich" United States - was John F. Kennedy. He undoubtedly learned the concept while attending the Fabian London School of Economics in 1935-36 just prior to his father's appointment as Ambassador to England.
The essence of socialism is redistribution of the wealth. The goal is equality, and that means taking from the rich and giving to the poor. At least that's the theory. Unfortunately, the poor are never benefited by this maneuver. They either do not get the money in the first place - too much is siphoned off by the bureaucracies which administer the programs - or, if they do get any of it,they don't know what to do with it. They merely spend it until it is gone, and then no one has any money - except, of course, those who administer the government programs. Nevertheless, politicians know that promises to redistribute the wealth are popular among two groups: the voters who naively believe it will help the poor, and the socialist managers who see it as job security. Supported by these two voting blocs, election to office is assured.
The underdeveloped nations, on the other hand, are not being raised up. What is happening to them is that their political leaders are becoming addicted to the IMF cash flow and will be unable to break the habit. These countries are being conquered by money instead of arms.
The hidden reality behind so-called development loans is that America and other industrialized nations are being subverted by that process. That is not an accident; it is the essence of the plan. A strong nation is not likely to surrender its sovereignty. Americans would not agree to turn over their monetary system, their military, or their courts to a world body made up of governments which have been despotic to their own people, especially since most of those regimes have already revealed anti-American hostility. But if Americans can be brought tot he point where they are suffering from a collapse of their economy and from a breakdown in civil order, things will be different. When they stand in bread lines and face anarchy in their streets, they will be more willing to give up sovereignty in return for "assistance" from the World Bank and the UN "peacekeeping" forces. This will become even more acceptable if a structured demise of Communism can be arranged ahead of time to make it appear that the world's major political systems have converged into the common denominator of "social democracy."
Here, finally, are the rules:
1. Commercial banks in the industrialized nations, backed by their respective central banks, create money out of nothing and lend it to the governments of underdeveloped nations. They know that these are risky loans, so they charge an interest rate that is high enough to compensate. It is more than what they expect to receive in the long run.
2. When the underdeveloped nations cannot pay the interest on their loans, the IMF and World Bank enter the game as both players and referees. Using additional money created out of nothing by the central banks of their member nations, they advance "development" loans to the governments which now have enough to pay the interest on the original loans with enough left over for their own political purposes.
3. The recipient country quickly exhausts the new supply of money, and the play returns to point number two. This time, however, the new loans are guaranteed by the World Bank and the central banks of the industrialized nations. Now that the risk of default is removed, the commercial banks agree to reduce the interest to the point anticipated at the beginning. The debtor governments resume payments.
4. The final play is - well, in this version of the game there appears to be no final play, because the plan is to keep the game going forever. To make that possible, certain things must happen that are very final, indeed. They include the conversion of the IMF into a world central bank as Keynes had planned, which then issues an international fiat money. Once that "Bank of Issue" is in place, the IMF can collect unlimited resources from the citizens of the world through the hidden tax called inflation. The money stream then can be sustained indefinitely - with or without the approval of the separate nations - because they will no longer have money of their own.
Capital for the IMF and the World Bank comes from the industrialized nations, with the United States putting up the most. Currencies, such as the dollar, yen, mark, and franc, are augmented by many times that amount in the form of "credits." These are merely promises by the member governments to get the money from their taxpayers if the Bank gets into trouble with its loans.
The IMF gradually is evolving into a central bank fo the world with the World Bank as its lending arm. It has become the engine for transfer of wealth to underdeveloped countries. This has lowered the economic level of the donating countries but it has not raised the level of the recipients. The money has simply disappeared down the drain of political corruption and waste.
The IMF and the World Bank were created at a meeting of global financiers and politicians held at Bretton Woods, New Hampshire, in 1944. Their announced goals were to facilitate international trade and to stabilize the exchange rates of national currencies. The unannounced goals were quite different. They were the elimination of the gold-exchange standard as the basis of currency valuation and the establishment of world socialism.
The method by which gold was to be eliminated in international trade was to replace it with a world currency which the IMF, acting as the world central bank, would create out of nothing. The method by which world socialism was to be established was to use the World Bank to transfer money – disguised as loans- to the governments of underdeveloped countries and to do so in such a way as to insure the demise of free enterprise. The money was to be delivered from the hands of politicians and bureaucrats into the hands of other politicians and bureaucrats. When the money comes from government, goes to government, and is administered by government, the result will be expansion of government.
Before receiving loans from the World Bank, Tanzania was not wealthy, but it fed its own people, and it had economic growth. After receiving more than 3 billion dollars in loans, it nationalized a the nation's farms and industries and converted every business into a government agency. [...] Food was the main export in 1966. Under socialism, food had to be imported - paid for by foreign aid and more loans from the World Bank. The country is hopelessly in debt with no way to repay.
Argentina once had one of the highest standards of living in Latin America. But then it became the recipient of massive loans from the World Bank as well as commercial banks in the United States. Since the money was given to politicians, it was used to build the only system politicians know how to build: socialism. [...] By 1989, inflation was running at an average of 5,000% and, in the summer of that year, topped at 1,000,000%! [...] People were rioting in the streets for food, and the government was blaming greedy shop owners for raising prices.
Brazil is run by the military, and the state controls the economy. [...] By 1990, inflation was running at 5,000%. [...] A new crime was invented called "hedging against inflation," and people were arrested for charging the free-market price for their goods and for using dollars or gold as money.
The experience in Mexico was a carbon copy of that in Brazil, except that the amount of money was larger. [...] The government increased the minimum wage causing more businesses to fail and more unemployment. That led to more welfare and unemployment benefits. [...] In 1995, Mexico's bank loans were once again on the brink of default, and, once again, U.S. taxpayers were thrown into the breach by Congress to cover more than $30 billion at risk. [...]
Thus the saga continues. After pouring billions of dollars into underdeveloped countries around the globe, no development has taken place. In fact, we have seen just the opposite. Most countries are worse off than before the Saviors of the World got to them.
While Nigeria and Argentina are drowning in debt, billions from the World Bank have gone into building lavish new capital cities to house government agencies and the ruling elite.
While the top leaders and theoreticians at the IMF and World Bank dream of world socialism, the middle managers and political rulers have more immediate goals in mind. The bureaucracy enjoys a plush life administering the process, and the politicians on the receiving end obtain wealth and power. Ideology is not their concern. Socialism, capitalism, fascism, it makes no difference to them as long as the money flows.
Nowhere is this pattern more blatant than in Africa. Julius Nyerere, the dictator of Tanzania, is notorious for his "villagization" program in which the army has driven the peasants from their land, burned their huts, and loaded them like cattle into trucks for relocation into government villages. The purpose is to eliminate opposition by bringing everyone into compounds where they can be watched and controlled. Meanwhile the economy staggers, farms have gone to weed, and hunger is commonplace. Yet Tanzania has received more aid per capita from the World Bank than any other nation.
In Uganda, government security forces have engaged in mass detentions, torture, and killing of prisoners. The same is true under the terrorist government in Zimbabwe. Yet, both regimes continue to be the recipients of millions of dollars in World Bank funding.
The IMF / World Bank is the protege of the Federal Reserve. It would not exist without the flow of American dollars and the benevolence of American leadership. The Fed has become an accomplice in the support of totalitarian regimes throughout the world.
The greater part of the answer, however, is that all socialist regimes have the potential for genocide, and the Bank is committed to socialism.
People who have been taught that it is government's role to provide for their welfare, their health care, their food and housing, their jobs and retirement - such people will not be happy when they hear that these "rights" are being threatened.
Thus, the World Bank becomes yet one more conduit from the pockets of taxpayers to the assets of commercial banks which have made risky loans to Third-World countries.
[...] the World Bank is able to go into the commercial loan markets and borrow larger sums at extremely low interest rates. After all, the loans are backed by the most powerful governments in the world which have promised to force their taxpayers to make the payments if the Bank should get into trouble. It then takes these funds and relends them to the underdeveloped countries at slightly higher rates, making a profit on the arbitrage.
The unseen aspect of this operation is that the money it processes is money which, otherwise, would have been available for investment in the private sector or as loans to consumers. It siphons off much-needed development capital for private industry, prevents new jobs from being created, causes interest rates to rise, and retards the economy at large.
Whereas the International Monetary Fund is evolving into a world central bank which eventually will issue a world currency based on nothing, its sister organization, the World Bank, has become its lending agency. Acting as Savior of the World, it seeks to aid the underdeveloped nations, to feed the hungry, and to bring a better life to all mankind. In pursuit of these humanitarian goals, it provides loans to governments at favorable terms, usually at rates below market, for terms as long as fifty years, and often with no payments due until after ten years.
The counterfeit options is available only if a country happens to be in the unique position of having its currency accepted as the medium of international trade, as has been the case for the United States. In that event, it is possible to create money out of nothing, and other nations have no choice but to accept it. Thus, for years, the United States has been able to spend more money than it earned in trade by having the Federal Reserve create whatever it needed.
[...] The result is that America has continued to finance its trade deficit with fiat money - counterfeit, if you will - a feat which no other nation in the world could hope to accomplish.
[...] In truth, America is not hurt by a trade deficit at all. In fact, we are the benefactors while or trading partners are the victims. We get the cars and TV sets while they get the funny money. We get the hardware. They get the paperware.
[...] But when the day arrives - as it certainly must - when the dollar tumbles and foreigners no longer want it, the free ride will be over. When that happens, hundreds of billions of dollars that are now resting in foreign countries will quickly come back to our shores as people everywhere in the world attempt to convert them into yet more real estate, factories, and tangible products, and to do so as quickly as possible before they become even more worthless. As this flood of dollars bids up prices, we will finally experience the inflation that should have been caused in years past but which was postponed because foreigners were kind enough to take the dollars out of our economy in exchange for their products.
The chickens will come home to roost. But, when they do, it will not be because of the trade deficit. It will be because we were able to finance the trade deficit with fiat money created by the Federal Reserve. If it were not for that, the trade deficit could not have happened.
But there are virtually no governments in the world today that have any savings.
If the IMF were to function as a true world central bank with unlimited issue, the dollar had to be broken away from its gold backing as a first step toward replacing it completely with a bancor, an SDR or something else equally free from restraint.
On August 15, 1971, President Nixon signed an executive order declaring that the United States would no longer redeem its paper dollars for gold. So ended the first phase of the IMF's metamorphosis. It was not yet a true central bank, because it could not create its own world currency. It had to depend on the central banks of its member nations to provide cash and so-called credits; but since these banks, themselves, could create as much money as they wished, from now on, there would be no limit.
[...] So, when the dollar broke loose from gold and there was no longer a ready standard for measuring currency values, the IMF merely changed its goal and continued to expand its operation. The new goals was to "overcome trade deficits."
The International Monetary Fund appears to be a part of the United Nations, much as the Federal Reserve System appears to be a part of the United Sates government, but it is entirely independent. It is funded on a quota basis by its member nations, almost two hundred in number. The greatest share of capital, however, comes from the more highly industrialized nations such as Great Britain, Japan, France, and Germany. The United States contributes the most, at about twenty per cent of the total. In reality, that twenty per cent represents about twice as much as the number indicates, because most of the other nations contribute worthless currencies which no one wants. The world prefers dollars.
One of the routine operations at the IMF is to exchange worthless currencies for dollars so the weaker countries can pay their international bills. [...] It is a kind of international FDIC [...]
The Fabians originally were an elite group of intellectuals who formed a semi-secret society for the purpose of bringing socialism to the world. Whereas Communists wanted to establish socialism quickly through violence and revolution, the Fabians preferred to do it slowly through propaganda and legislation. The word socialism was not to be used. Instead, they would speak of benefits for the people such as welfare, medical care, higher wages, and better working conditions. In this way, they planned to accomplish their objective without bloodshed and even without serious opposition. They scorned the Communists, not because they disliked their goals, but because they disagreed with their methods. To emphasize the importance of gradualism, they adopted the turtle as the symbol of their movement. The three most prominent leaders in the early days were Sidney and Beatrice Webb and George Bernard Shaw. A stained-glass window from the Beatrice Webb House in Surrey, England is especially enlightening.
Two international agencies were created at that meeting[Bretton Woods]: the International Monetary Fund and its sister organization, the International Bank for Reconstruction and Development - commonly called the World Bank.
The announced purposes of these organizations were admirable. The World Bank was to make loans to war-torn and underdeveloped nations so they could build stronger economies. The International Monetary Fund (IMF) was to promote monetary cooperation between nations by maintaining fixed exchange rates between their currencies. But the method by which these goals were to be achieved was less admirable. It was to terminate the use of gold as the basis of international currency exchange and replace it with a politically manipulated paper standard. In other words, it was to allow governments to escape the discipline of gold so they could create money out of nothing without paying the penalty of having their currencies drop in value on world markets.
Through a complex tangle of bank loans, subsidies, and grants, the Federal Reserve is becoming the "lender of last resort" for virtually the entire planet.
The savings-and-loan industry, is really a cartel within a cartel. It could not function without Congress standing by to push unlimited amounts of money into it. And Congress could not do that without the banking cartel called the Federal Reserve System standing by as the "lender of last resort" to create money out of nothing for Congress to borrow. [...]
The thrifts [S&Ls] have become the illegitimate half-breed children of the Creature. [...]
If America is to survive as a free nation, her citizens must become far more politically educated than they are at present. As a people, we must learn not to reach for every political carrot dangled in front of us. As desirable as it may be for everyone to afford a home, we must understand that government programs pretending to make that possible actually wreak havoc with our system and bring about just the opposite of what they promise.
[...] savings-and-loan associations, banks, and other federally regulated institutions are heavy contributors to the election campaigns of those who write the regulatory laws.
Earlier in his [FDR] political career he had been the paragon of free enterprise and individualism. He spoke out against big government and for the free market, but in mid life he reset his sail to catch the shifting political wind. He went down in history as a pioneer of socialism in America.
While the extreme and violent aspects of Communism generally were rejected, the more genteel theories of socialism became popular among the educated elite. It was they who would naturally become the leaders in an American socialist system.
The scam could never work unless the Fed was able to create money out of nothing and pump it into the banks along with "credit" and "liquidity" guarantees. Which means, if the loans go sour, the money is eventually extracted from the American people through the hidden tax called inflation. That's the meaning of the phrase "lender of last resort."
In the final stage of this process, therefore, the FDIC itself runs out of money and turns, first to the Treasury, then to Congress for help. [...] Congress, already deeply in debt, has no money either. It doesn't dare openly raise taxes for the shortfall, so it applies for an additional loan by offering still more Treasury bonds for sale. The public picks up a portion of these I.O.U.s, and the Federal Reserve buys the rest. If there is a monetary crisis at hand and the size of the loan is great, the Fed will pick up the entire issue.
But the Fed has no money either. So it responds by creating out of nothing an amount of brand new money equal tot he I.O.U.s and, through the magic of central banking, the FDIC is finally funded. [...] From there it [the new money] floods through the economy diluting the value of all money and causing prices to rise.
The FDIC will never have enough money to cover its potential liability for the entire banking system. If that amount were in existence, it could be held by the banks themselves, and an insurance fund would not even be necessary. Instead, the FDIC operates on the same assumption as the banks: that only a small percentage will ever need money at the same time. [...] Typically, the FDIC holds about $1.20 for every $100 of covered deposits. At the time of this writing [~1995], however, that figure had slipped to only 70 cents and was still dropping. [...] The failure of just one or two large banks in the system could completely wipe out the entire fund.
The FDIC "protection" is not insurance in any sense of the word. It is merely part of a political scheme to bail out the most influential members of the banking cartel when they get into financial difficulty.
One of the standard variations of the Final Maneuver is for the government, not always to directly provide the finds, but to provide the credit for the funds. That means to guarantee future payments should the borrower again default. Once Congress agrees to this, the government becomes a co-signer to the loan, and the inevitable losses are finally lifted from the ledger of the bank and placed onto the backs of the American taxpayer.
Money now begins to move into the banks through a complex system of federal agencies, international agencies, foreign aid, and direct subsidies. All of these mechanisms extract payments from the American people and channel them to the deadbent borrowers who then send them to the banks to service their loans. Very little of this money actually comes from taxes. Almost all of it is generated by the Federal Reserve System. When this newly created money returns to the banks, it quickly moves out again into the economy where it mingles with and dilutes the value of the money already there. The result is the appearance of rising prices but which, in reality, is a lowering of the value of the dollar.
The American people have no idea they are paying the bill. They know that someone is stealing their hub caps, but they think it is the greedy businessman who raises prices or the selfish laborer who demands higher wages or the unworthy farmer who demands too much for his crop or the wealthy foreigner who bids up our prices. They do not realize that these groups also are victimized by a monetary system which is constantly being eroded in value by and through the Federal Reserve System.
The president of the lending bank and the finance officer of the defaulting corporation or government will join together and approach Congress. They will explain that the borrower has exhausted his ability to service the loan and, without assistance from the federal government, there will be dire consequences for the American people. Not only will there be unemployment and hardship at home, there will be massive disruptions in the world markets. And, since we are now so dependent on those markets, our exports will drop, foreign capital will dry up, and we will suffer greatly. What is needed, they will say, is for Congress to allow him to continue to pay interest on the loan and to initiate new spending programs which will be so profitable he will soon be able to pay everyone back.
Rescheduling usually means a combination of a lower interest rate and a longer period for repayment. The effect is primarily cosmetic. It reduces the monthly payment but extends the period further into the future. This makes the current burden to the borrower a little easier to carry, but it also makes repyament of the capital even more unlikely. It postpones the day of reckoning but, in the meantime, you guessed it: The loan remains as an asset, and the interest payments continue.
It is important to remember that banks do not really want to have their loans repaid, except as evidence of the dependability of the borrower. They make a profit from interest on the loan, not repayment of the loan. If a loan is paid off, the bank merely has to find another borrower, and that can be an expensive nuisance. It is much better to have the existing borrower pay only the interest and never make payments on the loan itself. That process is called rolling over the debt. One of the reasons banks prefer to lend to governments is that they do not expect those loans ever to be repaid.
The end result of this policy is that the banks have little motive to be cautious and are protected against the effect of their own folly. The larger the loan, the better it is, because it will produce the greatest amount of profit with the least amount of effort. A single loan to a third-world country netting hundreds of millions of dollars in annual interest is just as easy to process - if not easier - than a loan for $50,000 to a local merchant on the shopping mall. If the interest is paid, it's gravy time. If the loan defaults, the federal government will "protect the public" and, through various mechanisms described shortly, will make sure that the banks continue to receive their interest.
When a borrower cannot repay and there are no assets which can be taken to compensate, the bank must write off that loan as a loss. However, since most of the money originally was created out of nothing and cost the bank nothing except bookkeeping overhead, there is little of tangible value that is actually lost. It is primarily a bookkeeping entry.
Since its [The Fed] inception, it has presided over the crashes of 1921 and 1929; the Great Depression of '29 to '39; recessions in '53, '57, '69, '75, and '81; a stock market "Black Monday" in '87; and a 100% inflation which has destroyed 90% of the dollar's purchasing power.
He [Paul Warburg] had come to the United States only nine years prior to the Jekyll Island meeting. Soon after arrival, however, and with funding provided mostly by the Rothschild group, he and his brother Felix had been able to buy partnerships in the New York investment banking firm of Kuhn, Loeb & Company, while continuing as partners in Warburg of Hamburg. Within twenty years, Paul would become one of the wealthiest men in America with an unchallenged domination over the country's railroad system.
Here, then, were the main challenges that faced that tiny but powerful group assembled on Jekyll Island:
- How to stop the growing influence of small, rival banks and to insure that control over the nation's financial resources would remain in the hands of those present;
- How to make the money supply more elastic in order to reverse the trend of private capital formation and to recapture the industrial loan market;
- How to pool the meager reserves of the nation's banks into one large reserve so that all banks will be motivated to follow the same loan-to-deposit ratios. This would protect at least some of them from currency drains and bank runs;
- Should this lead eventually to the collapse of the whole banking system, then how to shift the losses from the owners of the banks to the taxpayers.
- How to convince Congress that the scheme was a measure to protect the public.
If all banks could be forced to issue loans in the same ratio to their reserves as other banks did, then, regardless of how small that ratio was, the amount of checks to be cleared between them would balance in the long run. No major currency drains would ever occur. The entire banking industry might collapse under such a system, but not individual banks - at least not those that were part of the cartel. All would walk the same distance from the edge, regardless of how close it was. Under such uniformity, no individual bank could be blamed for failure to meet its obligations. The blame could be shifted, instead, tot he "economy" or "government policy" or "interest rates" or "trade deficits" or the "exchange value of the dollar" or even the "capitalist system" itself.
Here were representatives of the world's leading banking consortia: Morgan, Rockefeller, Rothschild, Warburg, and Kuhn-Loeb. They were often competitors, and there is little doubt that there was considerable distrust between them and skillful maneuvering for favored position in any agreement. But they were driven together by one overriding desire to fight their common enemy. The enemy was competition.
The purpose of this meeting on Jekyll Island was not to hunt dicks. Simply stated, it was to come to an agreement on the structure and operation of a banking cartel. The goal of the cartel, as is true with all of them, was to maximize profits by minimizing competition between members, to make it difficult for new competitors to enter the field, and to utilize the police power of government to enforce the cartel agreement. In more specific terms, the purpose and, indeed, the actual outcome of this meeting was to create the blueprint for the Federal Reserve System.