Schiff was an experienced European banker whose career straddled both continents, with contacts in New York, London, Hamburg and Frankfurt. Edward Cassel was his long-standing friend and was appointed Kuhn, Loeb’s agent in London. Schiff even dined with King Edward on the strength of Cassel’s close friendship with the king.28 Jacob Schiff married Solomon Loeb’s daughter and, backed by Rothschild gold, quickly gained overall control of the Kuhn, Loeb Bank.29
Schiff returned to Germany and recruited two of his nephews, Paul and Felix Warburg, from the M.M. Warburg bank in Hamburg. Both married into the Kuhn, Loeb firm and became important players in the lucrative securities market that underpinned the railroad bonanza. Like J.P. Morgan, Barings and Kuhn, Loeb, the M.M. Warburg Bank owed its survival and ultimate success to Rothschild money. It had faced bankruptcy but was rescued by a vast injection of funds from Credit-Anstalt, a Rothschild bank in Vienna.30 These inter-related European banking families understood the nature and politics of the time. The balance of financial power rested in the City in London, but the real opportunities increasingly lay in the United States. That Jacob Schiff and Paul and Felix Warburg were German was of no relevance to their growing allegiance to America. International financiers do not limit themselves to any national boundary. Theirs is a global market.
Schiff and the Warburgs became naturalised Americans. Shedding their German citizenship was only part of a strategy that accommodated the position of these rich immigrants in New York society, though they did not entirely abandon Europe. Paul Warburg maintained his partnership in M.M. Warburg, which, following the Rothschild rescue, became a major bank in Germany’s booming economy. The eldest Warburg brother, Max, another who had served part of his apprenticeship with Rothschild in London,31 controlled their European base. He was the natural representative for Kuhn, Loeb in Germany, and kept in touch with his brother Paul on a daily basis.32 Insider knowledge always played a key role in the pursuit of profit, and what this generation of bankers who were closely linked to the Rothschilds knew was that war in Europe was not far off.
The strategic alliances with the House of Rothschild and J.P. Morgan played an important part in determining Warburg’s meteoric rise in American banking. Of even greater strategic importance was Jacob Schiff’s relationship with J.D. Rockefeller. Schiff became the financial strategist for Rockefeller’s Standard Oil, which was then refining about 90 per cent of all crude oil in the United States. Rockefeller, who helped to fund the Secret Elite’s New York Round Table, was an unscrupulous thug, ruthless in his determination to trample opposition and throttle competition. He used monopolistic control in oil by creating a ‘Trust’ that squeezed rivals until they were shorn of sufficient profit to continue trading. He indulged in secret deals to undercut his competitors and expanded his control of the oil business across the entire American continent.33
Rockefeller’s labour relations belonged to an age of brutality. Strikes were mercilessly crushed and workers denied basic rights. His worst excess came in 1913 during a miners’ strike at Ludlow, where his private agents evicted families, brought in deputies in armoured cars and sprayed machine-gun fire on striking miners. Tents in which the evicted workers and their families were sheltering were deliberately set on fire, and two women and eleven children were roasted alive. Undeterred, Rockefeller extolled the ‘energetic, fair and firm way’ that his mining company had conducted itself.34 Such desperate inhumanity in the pursuit of profit contrasted with the public image Rockefeller presented of Christian benevolence and cultural philanthropy.
On the surface, there were periods of blistering competition between the investment and banking houses, the steel companies, the railroad builders and the two international goliaths of oil, Rockefeller and Rothschilds, but by the turn of the century the surviving conglomerates adopted a more subtle relationship, which avoided real competition. A decade earlier, Baron Alphonse de Rothschild had accepted Rockefeller’s invitation to meet in New York behind the closed doors of Standard Oil’s headquarters on Broadway. John D. Archbold,35 Standard Oil’s chief negotiator, reported that they had quickly reached a tentative agreement and thought it desirable on both sides that the matter be kept confidential.36 Clearly both understood the advantage of monopolistic collusion. It was a trend that they developed to their own advantage. Much of the assumed rivalry between major stakeholders in banking, industry and commerce was a convenient facade, though they would have the world believe otherwise.
Consider, please, this ‘convenient facade’. Official Rothschild biographers would have us believe that Rothschild interest in America was limited and that the American Civil War led to ‘a permanent decline in the Rothschilds’ transatlantic influence’.37 All our evidence points in the opposite direction. Their associates, agents and front companies permeated American finance and industry. Their influence was literally everywhere. J.P. Morgan, the acknowledged chieftain of the Anglo-American financial establishment, was the main conduit for British capital and a personal friend of the Rothschilds.38 Jacob Schiff of Kuhn, Loeb, another close friend of the Rothschild family, worked hand-in-glove with Rockefeller in oil, railroad and banking enterprises. In December 1912, Truth magazine stated:
Mr Schiff is head of the great private banking house of Kuhn, Loeb & Co, which represents the Rothschild interests on this side of the Atlantic. He has been described as a financial strategist and has been for years the financial minister of the great impersonal power known as Standard Oil.39
If the article was written to shock Wall Street, it failed abysmally. What it demonstrated was that Jacob Schiff, the Pilgrim, was both a Rothschild agent and a trusted associate of J.D. Rockefeller, the Pilgrim. Morgan, Schiff and Rockefeller, the three leading players on Wall Street, had settled into a cosy cartel, behind which the House of Rothschild remained hidden but retained immense influence and power. Control of capital and credit was increasingly concentrated in the hands of fewer and fewer men until the rival banking groups ceased to operate in genuine competition.40
US politicians readily succumbed to the money-power influence. The Rothschilds’ first agent in the United States, August Belmont, served as the chairman of the Democratic Party National Committee from 1860 to 1872.41 The Morgan bank had an enormous influence on President Grover Cleveland, who spent most of his life inside the Morgan empire. Virtually all of his senior appointments were Morgan men, with an occasional place at the table for other bankers. His first secretary of state, Thomas F. Bayard, was a close ally and disciple of August Belmont. The dominant secretary of state in the second Cleveland administration was a leading lawyer for banking interests and was on the board of a Morgan-run company.42 Men close to Rothschild had the Democratic Party sewn up.
Rockefeller and his empire also treated the federal government with barely disguised contempt. His aforementioned chief executive John D. Archbold procured the services of elected representatives by including them on the company payroll. One senator from Ohio was paid $44,000 in a six-month period, while another from Pennsylvania received $42,500.43 Archbold was called to testify before a committee investigating the dubious contributions that Standard Oil had given to Republican campaign funds. He claimed that President Theodore Roosevelt was aware of the $125,000 contribution made previously by the Standard Oil Company to the Republican Party. Roosevelt was adamant that he had ordered his campaign team to reject such donations. Whatever the truth, the government of the United States, irrespective of which party was in power, was in the grip of the big banks close to Rothschild, Rockefeller and the Secret Elite.
The Morgan–Rockefeller–Kuhn, Loeb axis on Wall Street planned to consolidate their grip on America by setting up a central bank that, like those in Europe, would be owned and controlled not by government but by banks. Their banks. The problem facing the money power was that banks and bankers were not popular with the ordinary citizen in the United States, and there was widespread public antipathy towards a central bank. The Secret Elite’s solution was to deliberate
ly create a banking crisis that would frighten the populace into accepting banking reforms. Shortly after a five-month spell in England in 1907, J.P. Morgan found the perfect opportunity. A rogue speculator, Augustus Heinze, owner of the Knickerbocker Bank, had been surreptitiously using depositors’ money in an attempt to corner the stock of the United Copper Company. Its value had been pumped up to $62 per share but two days later closed at $15 per share. Heinze lost a fortune and the Knickerbocker Bank immediately faced problems over its solvency.44 When the National Bank of Commerce, part of Morgan’s financial empire,45 publicly refused to accept Knickerbocker cheques, rumours spread rapidly. Morgan’s decision scared other institutions from offering financial support46 and next morning, 22 October, the Knickerbocker depositors were so desperate they withdrew $8 million during a three-hour run.47 Depositors at other banks across America panicked, attempted to withdraw their savings, and the anticipated domino effect kicked in.
Having caused the crash, Morgan took personal charge of reversing it, though he was neither elected nor appointed to the task.48 In so doing, he assumed the mantle of saviour of the American banking system. With the government’s approval, Morgan browbeat bankers and Trust company presidents into contributing to the rescue package.49 Rothschild hailed Morgan as ‘a man of wonderful resources. His latest action fills one with admiration and respect for him.’50 It was a vote of approval from the boss of bosses to one of his trusted lieutenants.
The panic of 1907 ran like a true Rothschild scam, orchestrated by Morgan to ‘prove’ the absolute necessity of a central bank. Something had to be done. The Senate was warned: ‘we may not always have Pierpont Morgan with us to meet a banking crisis’.51 Thereafter, the establishment of a central bank was presented as the solution to avert future financial crises.52
In 1915, a Committee of the House of Representatives, chaired by Congressman Arsène Pujo, presented a report on the banking business and demonstrated that Morgan placemen held multiple directorships in interrelated banks, insurance companies and giant business corporations. Pujo demonstrated that the banking system was run like an exclusive private club,53 and that the New York Stock Exchange dealt in dishonest, unwholesome speculation.54 In the recent panic, malpractice by the major banks had made the situation much worse and resulted in banking collapses which they used to their own advantage.55 The abuse of ordinary stockholders,56 the unhealthy increase in the control of money centred on New York,57 and the multiple affiliations inside major banking houses like J.P. Morgan, the First National Bank of New York, National City Bank and Kuhn, Loeb & Company, made appalling reading. Big business in the US lay in the hands of just a few men who controlled the banks. Pujo’s evidence proved that 5 banking firms held 341 directorships in 112 corporations valued at over $22 billion.
Pujo dissected the rampant abuses of financial power, and his final report revealed corporate banking abuse at a pandemic level.58 The report was, however, not what it seemed. Like many other commissions before and after, it shied away from penetrating questions on the crucial matter of foreign investment houses and their massive influence over US banking and industry. The name Rothschild remained unspoken. Amongst the few politicians who railed against the corruption in American banking, Congressman Lindbergh and Senator La Follette stood tall. They never ceased to demand that the system be thoroughly cleansed and repeatedly called for an investigation with teeth. Tellingly, they were denied access to the Pujo Committee. The only witnesses allowed to testify were the bankers themselves.59
The entire object of the run on the banks was to frighten the public into believing that urgent reform of the banking system was necessary to protect their savings and that Wall Street should be brought under control.60 The public, who had objected to a central bank for many years, had to be made to believe that banking reform was precisely what was needed. No one appeared to appreciate that the biggest advocates of banking reform were the bankers themselves. Their standing in the community assumed toxic proportions in terms of the popular reaction, but they used that to pursue their near impossible dream of a US central bank. The lie was repeated over and over again that only a central bank could bring banks and bankers to public account. The case they put forward argued that the government would regulate and control banking in the interests of the people, but nothing could have been further from the truth. This was a colossal fraud perpetrated by the money power. As Professor Quigley explained, these bankers sought ‘nothing less than to create a world system of monetary control in private hands, able to dominate the political system of each country and thus the economy of the world as a whole’. 61 That could only happen if the United States had a central bank like those in England and France.
Contrary to widespread belief, the Bank of England was not a public institution but was operated and controlled by bankers such as the Rothschilds and brooked no semblance of political interference. In France, there was a more complex system of seniority and stability, where a number of traditional banking families were considered part of an elite Haute Banque that in turn controlled the Bank of France.62 Two dominant private French banking firms, Rothschild and Mirabaud, were more powerful than all the others put together.63 In Germany, the Reichsbank was a private institution with the power to print money but was much more directly under the control of the government than either the Bank of England or the Bank of France.64 The money power in New York wanted the same control that the bankers in England and France enjoyed: namely, freedom from government interference, the right to print money, control of rates of interest and to stay safely anonymous behind an executive appointed by themselves.
This is why Paul Warburg was on hand. The German banker had been chosen by the money power to drive forward their ambitious plan for a US central bank. Though Jacob Schiff brought him to New York to help him run the Kuhn, Loeb bank, Warburg still committed six months of each year to his family bank in Hamburg. Following the 1907 panic, Paul was presented as the guru of central banking who ‘just happened’ to be in New York, and ‘just happened’ to decide to file for American citizenship. He was a ‘reluctant warrior’ who appeared just in time to sweep into battle for the noble cause of a central bank.65 The fable would have us believe that the New York Times ‘just happened’ to ask Paul (who could hardly write in English) to pen an article about banking reform. He dusted off an essay he ‘just happened’ to have written when he arrived in America and it was duly published on 12 November 1907 under the headline ‘Defects and Needs of our Banking System’.66 He followed that up with a short piece in the New York Times Annual Financial Review entitled ‘Plan for a Modified Central Bank’. Warburg argued that nothing short of a central bank would solve the currency problem. He expanded upon these initial thoughts with the publication of ‘A United Reserve Bank of the United States’ and was duly dispatched across America on a promotional tour, lecturing on the values of a central bank. Congressmen and senators were bombarded with advice. Pamphlets and articles were penned in favour of a banking system that would mystically put control ‘back in the hands of the people’ and break the grip of the money trust.67 And thus the lie was spread.
Senator Nelson Aldrich of Rhode Island was chosen by the Secret Elite to be the voice of ‘sound economics’ in the Senate. A wealthy businessman and father-in-law of John D. Rockefeller Jr, Aldrich was known as ‘Morgan’s floor broker in the Senate’.68 Shameless in his excesses, he used public office to feather his own very large nest. Public service was to him little more than a cash cow. He built a 99-roomed chateau and sailed a 200-foot yacht.69 Over a two-year period, Paul Warburg and J.P. Morgan worked steadily on their corrupt senator to turn him into an ‘expert’ on banking systems. Congress appointed a National Monetary Commission in 1908 with Aldrich as chairman, to review US banking. Its members toured Europe, supposedly collecting data on various banking systems. Aldrich’s final report, however, was not the product of any European study tour but of a collective conspiracy.
In November 1910, five bank
ers representing Morgan, Rockefeller and Kuhn, Loeb interests met in total secrecy with Senator Aldrich and the assistant secretary to the US Treasury on Jekyll Island, an exclusive resort off the coast of Georgia. Of the seven conspirators, five – Senator Aldrich, Henry Davison, Benjamin Strong, Frank Vanderlip and Paul Warburg –were members of the Pilgrims.70 Their objective was to formulate a central banking bill that would be presented to Congress as if it were the brainchild of Aldrich’s Monetary Commission. In a scenario more reminiscent of a B-movie plot than the confused reality of the super-wealthy, the group travelled from New Jersey to Georgia in Senator Aldrich’s private railway carriage with blinds drawn, using aliases and purporting to be on a duck-shooting trip.71 Regular servants were sent away and temporary replacements hired lest anyone was recognised. Their paranoia stemmed from the justified fear that should any journalist see them all together, the whole conspiracy would be blown apart.72 For nine days, they thrashed out the details of a central banking system that the Secret Elite wanted put in place. The title ‘Central Bank’ had to be avoided in order to deceive the American people, so they decided to misname it the ‘Federal Reserve System’, though it would be neither federal nor a reserve.
The proposed ‘System’ was to be owned entirely by private banks, though its name implied that it was a government institution. Individuals from the American banking dynasties, including Morgan, Warburg, Schiff and Rockefeller, would hold the shares. It was to be a central bank of issue that would have a monopoly of all the money and credit of the people of the United States. It would control the interest rate and the volume of money in circulation. The Federal Reserve System constructed on Jekyll Island had powers that King Midas could never have contemplated. The objective was to establish a franchise to create money out of nothing for the purpose of lending, get the taxpayer to pick up any losses and convince Congress that the aim was to protect the public.73
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