State of Mankind

A New Way Of Thinking

II. International Bankers

CHAPTER II

The Power Structure—International Bankers

 

                “I believe that banking institutions are more dangerous to our liberties than standing armies.  If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.  The issue power should be taken from the banks and restored to the people, to whom it properly belongs.”   –Thomas Jefferson

                So why would Quigley want the parties to be basically the same?  Why should the American people not be able to make real change to the agenda?  Why do many of our current politicians and our Founding Fathers seem to be on opposite sides of issues?  Have we simply moved past the Constitution, without officially voting it out?  Quigley’s book reveals a progressive power structure that may have more to do with it than one would initially think.  He says:

                “The merchant bankers of London had already at hand in 1810-1850 the Stock Exchange, the Bank of England, and the London money market when the needs of advancing industrialism called all of these into the industrial world which they had hitherto ignored.  In time they brought into their financial network the provincial banking centers, organized as commercial banks and savings banks, as well as insurance companies, to form all of these into a single financial system on an international scale which manipulated the quantity and flow of money so that they were able to influence, if not control, governments on one side and industries on the other” (Page 51).

                “The names of some of these banking families are familiar to all of us and should be more so.  They include Baring, Lazard, Erlanger, Warburg, Schroder, Seligman, the Speyers, Mirabaud, Mallet, Fould, and above all Rothschild and Morgan.  Even after these banking families became fully involved in domestic industry by the emergence of financial capitalism, they remained different from ordinary bankers in distinctive ways:  (1) they were cosmopolitan and international; (2) they were close to governments and were particularly concerned with questions of government debts, including foreign government debts, even in area which seemed, at first glance, poor risks, like Egypt, Persia, Ottoman Turkey, Imperial China and Latin America; (3) their interests were almost exclusively in bonds and very rarely in goods, since they admired “liquidity” and regarded commitments in commodities or even real estate as the first step toward bankruptcy; (4) they were, accordingly, fanatical devotees of deflation (which they called “sound” money from its close associations with high interest rates and a high value of money) and of the gold standard, which, in their eyes, symbolized and ensured these values; and (5) they were almost equally devoted to secrecy and the secret use of financial influence in political life.  These bankers came to be called “international bankers” and, more particularly, were known as “merchant bankers” in England, “private bankers” in France, and “investment bankers” in the United States”(Page 52).

Left to right:  J. P. Morgan, David Rockefeller, Mayer Amschel Rothschild

                It is worth focusing on a couple of these points.  Number (2) talks about the relationship between the international bankers and government debts.  Their power comes from holding government debt.  Today the Federal Reserve holds over $5 trillion of U. S. debt.  China is second with less than $2 trillion.  On Nov. 3, 2010 the federal reserve announced it will ‘monetize’ another $600 billion dollars of U. S. debt.  That means ‘create’ $600 billion out of nothing to buy bonds.  The Federal Reserve is a private entity which can make something out of nothing, at a cost of inflation to all of us.  I think this helps explain the change of their minds on point (4).  Quigley says they were “fanatical devotees of deflation”.  When you make money from interest and savings (bonds) he is exactly right.  Deflation serves your cause.  It would seem that the bankers discovered that the power to print money, buy bonds with monopoly money, and reap the interest as well as invest where this money is going into the economy, was even more profitable.  It would also stand to reason that since they gain their power from government debt, they probably have more potential power now than at many times in the past, as government debt is at its highest levels.  The Federal Reserve had its greatest profit ever in 2009, due to the financial stimulus and money printing.  The private entities that form the Federal Reserve are entitled to their share of this profit.  (They are paid as an expense, while net profits go to the U. S. Treasury).  It isn’t worth going deeply into the banking industry, as that would require volumes.  Many people have studied it and written many good materials that are suggested for study (I would recommend beginning with Harvard Professor Niall Ferguson’s book The Ascent of Money).  It is also difficult to say a lot with exactness because of (5), their devotion to secrecy.  To this day the Federal Reserve has avoided an audit.

                Quigley goes on:

                “In most countries the central bank was surrounded closely by the almost invisible private investment banking firms.  These, like the planet Mercury, could hardly be seen in the dazzle emitted by the central bank which they, in fact, often dominated.  Yet a close observer could hardly fail to notice the close private associations between these private, international bankers and the central bank itself” (Pages 55-56).

                Quigley explains the basic concept of these bankers (powers of financial capitalism) again:

                “…the powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.  This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences.  The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations” (Page 324).

                Quigley also talks about the bankers losing some power as financial capitalism turned into monopoly capitalism in the 1930s.  Note, however, who picked up any lost power:

                “On the whole, in the period up to 1931, bankers, especially the Money Power controlled by the international investment bankers, were able to dominate both business and government.  They could dominate business, especially in activities and in areas where industry could not finance its own needs for capital, because investment bankers had the ability to supply or refuse to supply such capital.  Thus, Rothschild interests came to dominate many of the railroads of Europe, while Morgan dominated at least 26,000 miles of American railroads.  Such bankers went further than this.  In return for flotations of securities of industry, they took seats on the board of directors of industrial firms, as they had already done on commercial banks, savings banks, insurance firms, and finance companies. From these lesser institutions they funneled capital to enterprises which yielded control and away from those who resisted.  These firms were controlled through interlocking directorships, holding companies and lesser banks.  They engineered amalgamations and generally reduced competition, until by the early twentieth century many activities were so monopolized that they could raise their noncompetitive prices above costs to obtain sufficient profits to become self-financing and were thus able to eliminate the control of bankers (Pages 60-61).

                Notice that is was the bankers (the more aggressive of them, such as Morgan, Rothschild, Rockefeller, etc.) that took over companies and were able to eliminate control of the bankers.  So, according to Quigley, financial capitalism gave way to monopoly capitalism, and the power went from banking to industry, but the people on top were largely the same.  Keep this in mind, as it may help understand the shift from gold standard and deflation to money printing and inflation.

                “This conflict of interests between bankers and industrialists has resulted in most European countries in the subordination of the former either to the latter or to the government (after 1931).  This subordination was accomplished by the adoption of “unorthodox financial policies”—that is, financial policies not in accordance with the short-run interests of bankers.  This shift by which bankers were made subordinate reflected a fundamental development in modern economic history—a development which can be described as the growth from financial capitalism to monopoly capitalism” (Page 62).

                There is much more to be said, but it would get into long and speculative arguments.  Suffice to say that Quigley explains that Morgan was more of a banker and Rockefeller was more of an industrialist, but the two generally worked together.  Remember those names.  It is important to provide an example of their workings.  The best examples of this are the election of Woodrow Wilson and the start of the Federal Reserve.   Quigley writes:

                “During this same period, there appeared a new movement for economic and political reform known as Progressivism.  The Progressive movement resulted from a combination of forces, some new and some old.  Its foundation rested on the remains of agrarian and labor discontent which had struggled so vainly before 1897.  There was also, as a kind of afterthought on the part of successful business leaders, a weakening of acquisitive selfishness and a revival of the older sense of social obligation and idealism.  To some extent this feeling was mixed with a realization that the position and privileges of the very wealthy could be preserved better with superficial concessions and increased opportunity for the discontented to blow off steam than from any policy of obstructionism on the part of the rich. …But the great opportunity for the Progressive forces arose from a split within Big Business between the older forces of financial capitalism led by Morgan and the newer forces of monopoly capitalism organized around the Rockefeller bloc.  As a consequence, the Republican Party was split between the followers of Theodore Roosevelt and those of William Howard Taft, so that the combined forces of the liberal East and the agrarian West were able to capture the Presidency under Woodrow Wilson in 1912.

 Woodrow Wilson

                “Wilson roused a good deal of popular enthusiasm with his talk of “New Freedom” and the rights of the underdog… Wilson was by no means radical  (after all, he had been accepting money for his personal income from rich industrialists like Cleveland Dodge and Cyrus Hall McCormick during his professorship at Princeton, and this kind of thing by no means ceased when he entered politics in 1910)” (Pages 75-76).

                These are some packed comments by Quigley.  In the Progressive movement, the ‘very wealthy’ decided they could best protect their interests by hi-jacking the labor movement and giving superficial concessions.  The ‘split’ of the big money which he refers to, and this taking over of the labor movement are worth deeper examination, as Quigley tells of them, but without much detail.  He does make it clear that Wilson was backed by big money.  Skousen, once again, in The Naked Capitalist, finds the basic facts to be true, but adds a lot of perspective to this:

                “It was decided that the Republican Party was too closely connected with Wall Street and the only hope of getting a central bank adopted would be to get the Democrats in power and have a new bill introduced which would be promoted into popular acceptance by claiming that it was a measure designed to strip Wall Street of its power.  The Wall Street cadre thereupon set forth to achieve this in the presidential election of 1912.

                “At first this looked virtually impossible, because President William Howard Taft (a republican who had opposed the Aldrich Bill) was very popular and seemed a sure-fire bet for re-election.  The picture changed when the former President Teddy Roosevelt decided to run on the Progressive Party ticket against Taft.  The Democrats then nominated Woodrow Wilson, making it a three-way race.  Suddenly the central bank promoters saw the opportunity they needed.

                “Two Morgan agents, Frank Munsey and George Perkins moved in behind Teddy Roosevelt with money and manpower from Wall Street.

                “Meanwhile, Wall Street was ALSO backing Wilson.  Clear back in 1906, George Harvey, president of the Morgan-controlled ‘Harper’s Weekly’, had suggested Wilson for President.  Then the Rockefellers took up the fund-raising for Wilson together with other Wall Street backers of the Democratic Party.  Ferdinand Lundberg says:

                 “The financial genius behind Woodrow Wilson was Cleveland H. Dodge of the [Rockefeller] National City Bank.  …Sitting with Dodge as co-directors of the National City Bank at the time were the younger Rockefeller, J. Ogden Armour, and James Stillman.  In short, except for George F. Baker, everyone whom the Pujo Committee (in Congress) had termed rulers of the ‘Money Trust’ was in this bank” (America’s 60 Families, the Vanguard Press, New York, 1938, pp. 109-113).

                “Additional supporters of Wilson who belonged to the dynastic banking families included Jacob Schiff, Bernard Baruch, Henry Morgenthau, Thomas Fortune Ryan, and the publisher of the New York Times, Adolph Ochs.

                “Even Morgan’s men who managed Teddy Roosevelt’s campaign had money behind Wilson.  The idea was to give Roosevelt enough support to divide Taft’s Republican vote and give Wilson enough support to beat them both.  This strategy worked, and Wilson was elected” (Pages 18-19).

                Skousen goes on to explain the Federal Reserve Act:

                “To see that the newly elected President would have the right advisors, Wilson’s financial backers surrounded him with their own agents.  The most important was “Colonel” Edward Mandell House [quoted already in this writing], the British-educated son of a financier who represented certain British financial interests in the Southern States.  House gradually emerged as the virtual president during the Wilson administration.  Two of his pet projects, the central bank and the graduated income tax, were both successfully adopted through the amazing capacity of House to pull wires behind the scenes” (Page 20).

                “Professor Charles Seymour who edited ‘The Intimate Papers of Colonel House, assures us that House was the “unseen guardian angel” of the Federal Reserve Act.  There was constant contact between House and Paul Warburg.  The biographer for House assures us further that “The Schiffs, the Warburgs, the Kahns, the Rockefellers, and the Morgans had faith in House. …” (Page 21).

                “Thus the stage was set.  It was December 22, 1913, that the Federal Reserve Act passed the House of Representatives by a vote of 298 to 60 and the Senate passed it by a majority of 43 to 25” (Page 21).

                So we see from both Quigley and Skousen that the Wall Street interests had embraced Progressivism (to protect their own interests for the most part), and used secretive and dishonest methods to get their agenda passed.  Edward Mandell House was central in all of this, as well as being a Wall Street insider.  “Colonel” House as well as the Rockefellers and the Morgans (and Walter Lippman) were also connected in another group of elitists.  We will look at this group next.

6 ResponsesLeave one →

  1. Troy B.

     /  February 17, 2011

    Ok, so one thing is clear: I need to learn a lot more about the Federal Reserve and banking in general. A couple of questions though to help clarify. You said that they are planning on monetizing another $600 billion. Exactly what does that mean, in other words, how do they ‘monetize’ this amount?

    1) Do they just print up $600 billion and then use that money to buy the government debt?
    2) If so, why does the government allow it when it seems so obviously fraudulent?

    From what I understand the Fed prints up $600 billion and ‘buys’ debt. The government has to pay this money back with interest. This money would appear to be mine through taxes. In the mean time, with this massive influx of cash, inflation results. Am I close to understanding? Thanks.

    Reply
    • Brinton

       /  February 17, 2011

      Basically yes. They ‘print’ (it’s electronic these days, so a few keystrokes do the trick) $600 billion and buy government debt. They allow it because (like any ponzi scheme nearing its end) they fear that trying to sell this debt on the market would drive interest rates way up (causing us to be even more in debt) and the snowball effect would sink the ship. In the short term, the cash influx can drive down interest rates and increase spending, thus stimulating the economy. As this money circulates, inflation is usually the result. They claim this is good when we are fighting a deflationary market. It is allowed for these reasons and because it is legal. This is why Jefferson was so critical of Banks. A good, quick read from Bill Fleckenstein of MSN Money for a little background is:
      http://money.msn.com/investing/bernankes-latest-folly-will-cost-us-fleckenstein.aspx

      Reply
    • An investment bank is a bsnesius that helps companies go public, by creating shares and selling them. They help companies create debt (bonds) and sell it. They also help companies merge or buy one another (M A).Because they need millions of dollars of IT infrastructure and have a giant rolodex filled with very rich people and investment companies (i.e. pension funds) it only makes sense for the investment bank to also buy and sell used stocks and bonds in the secondary market.A BOUTIQUE investment bank doesn’t offer all of these services. For example, Merrill Lynch can get you any stock you want, manage your investment dollars for you AND take your company public. Lazard will only manage money for you and take your company public.Lazard doesn’t offer clearing and prime brokerage either. Explanations of those services would take several more rounds of Q A.

      Reply
    • Obama’s fat cat language may be a rfleection of his administration’s concern over Main Street America’s growing anger and unrest that’s being expressed in rallies, town meetings and streets across America. The increasing ferment of the public writ large is not reported just in specialized blogs but has lately been showing up even on national broadcast media, such as the PBS Newshour (which until Dec 4 was known as The Newshour with Jim Lehrer ). This kind of trouble could escalate into trouble with a capital-T for those who rule. Maybe the democracy part of the U.S. republic is kicking in more and more to put some balance on the powers of the plutocracy represented by the military-industrial-corporate complex. Although the phrase is getting worn, it’s nevertheless worth repeating with a parenthetical modifier that we live in (very) interesting times.

      Reply
  2. Troy B.

     /  February 18, 2011

    Well just because something is legal, doesn’t make it moral. Legality and morality are often opposed to one another. Anyway, thanks for the quick response and the link. I am checking more into it. Forgive me if my first few days on here are to familiarize myself with your site and get a feel for the lay of the land.

    Reply
    • The Obama super tax’ will not work:Under the massive cnisilodation of the financial industry, most small community banks are either shutting down or being bought by the ALREADY FAILED BIG BANKS, like JP Morgan.So what will happen is that the FDIC will regulate against free checking’ even if you maintain a balance over $1000.00.Those fees will be mixed in with the larger pool of taxpayer bail out money and poured into the pockets of Goldman Sucks and JP Morgan.The net result is that again the average working Joe will pay for these bail outs.The super tax’ will also justify continuing the bail outs.CALL CONGRESS AND SAY: NO MORE BAIL OUTS PUT GOLDMAN SUCKS AND JP MORGAN INTO RECEIVERSHIP!NOW IMMEDIATELY WITHOUT DELAY!!!!!!

      Reply

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