SECRETS OF THE FEDERAL RESERVE

The London Connection

By Eustace Mullins Dedicated to two of the finest scholars of the twentieth century EOR E ST!M"SO# and E$RA "O%#D who &enerously &a'e of their 'ast (nowled&e to a youn& writer to &uide hi) in a field which he could not ha'e )ana&ed alone* AC+#O,LED EME#TS ! wish to than( )y for)er fellow )e)-ers of the staff of the Li-rary of Con&ress whose 'ery (ind assistance. coo/eration and su&&estions )ade the early 'ersions of this -oo( /ossi-le* ! also wish to than( the staffs of the #ew-erry Li-rary. Chica&o. the #ew 0or( City "u-lic Li-rary. the Alder)an Li-rary of the %ni'ersity of Vir&inia. and the McCor)ic( Li-rary of ,ashin&ton and Lee %ni'ersity. Le1in&ton. Vir&inia. for their in'alua-le assistance in the co)/letion of thirty years of further research for this definiti'e wor( on the Federal Reser'e Syste)*

A-out the Author

Eustace Mullins is a 'eteran of the %nited States Air Force. with thirty2ei&ht )onths of acti'e ser'ice durin& ,orld ,ar !!* A nati'e Vir&inian. he was educated at ,ashin&ton and Lee %ni'ersity. #ew 0or( %ni'ersity. Ohio %ni'ersity. the %ni'ersity of #orth Da(ota. the Escuelas des Bellas Artes. San Mi&uel de Allende. Me1ico. and the !nstitute of Conte)/orary Arts. ,ashin&ton. D*C* The ori&inal -oo(. /u-lished under the title Mullins On The Federal Reserve, was co))issioned -y the /oet E3ra "ound in 4567* E3ra "ound was a /olitical /risoner for thirteen and a half years at St* Eli3a-eth8s Hos/ital. ,ashin&ton. D*C* 9a Federal institution for the insane:* His release was acco)/lished lar&ely throu&h the efforts of Mr* Mullins* The research at the Li-rary of Con&ress was directed and re'iewed daily -y eor&e Sti)/son. founder of the #ational "ress Clu- in ,ashin&ton. who) The New York Times on Se/te)-er ;7. 45<; called. =A hi&hly re&arded reference source in the ca/itol* o'ern)ent officials. Con&ress)en. and re/orters went to hi) for infor)ation on any su->ect*=

"u-lished in 45<; -y +as/er and Horton. #ew 0or(. the ori&inal -oo( was the first nationally2circulated re'elation of the secret )eetin&s of the international -an(ers at ?e(yll !sland. eor&ia. 45@A2454@. at which /lace the draft of the Federal Reser'e Act of 454B was written* Durin& the inter'enin& years. the author continued to &ather new and )ore startlin& infor)ation a-out the -ac(&rounds of the /eo/le who direct the Federal Reser'e /olicies* #ew infor)ation &athered o'er the years fro) hundreds of news/a/ers. /eriodicals. and -oo(s &i'e corro-oratin& insi&ht into the connections of the international -an(in& houses*C ,hile researchin& this )aterial. Eustace Mullins was on the staff of the Li-rary of Con&ress* Mullins later was a consultant on hi&hway finance for the A)erican "etroleu) !nstitute. consultant on hotel de'elo/)ent for !nstitutions Ma&a3ine. and editorial director for the Chica&o Motor Clu-8s four /u-lications* DDDDDDDDDDDDDDDDDDDDDDDDDD
C The London Acce/tance Council is li)ited to se'enteen international -an(in& houses authori3ed -y the Ban( of En&land to handle forei&n e1chan&e*

ABO%T THE COVER The co'er re/roduces the outline of the ea&le fro) the red shield. the coat of ar)s of the city of Fran(furt. er)any. ada/ted -y Mayer A)schel Bauer 94A662474;: who chan&ed his na)e fro) Bauer to Rothschild 9=Red Shield=:* Rothschild added fi'e &olden arrows held in the ea&le8s talons. si&nifyin& his fi'e sons who o/erated the fi'e -an(in& houses of the international House of RothschildE Fran(furt. London. "aris. Vienna. and #a/les*

Ta-le of Contents
Cha/ter One Jekyll Island 4 Cha/ter Two The Aldrich Plan 4@ Cha/ter Three The Federal Reserve Act 4F Cha/ter Four The Federal Advisory ouncil 6@ Cha/ter Fi'e The !ouse o" Rothschild 6A Cha/ter Si1 The #ondon onnection FB Cha/ter Se'en The !itler onnection F5 Cha/ter Ei&ht $orld $ar One 7; Cha/ter #ine The A%ricultural &e'ression 446

Cha/ter Ten The Money reators 445 Cha/ter Ele'en #ord Monta%u Norman 4B4 Cha/ter Twel'e The (reat &e'ression 46B Cha/ter Thirteen The )*+,-s 4<4 Cha/ter Fourteen on%ressional ./'ose 4A4 Addendu) 4A5 A//endi1 ! 474 Bio&ra/hies 47F Bi-lio&ra/hy 45B !nde1 45A @The above facsimile is reproduced from page 60 of "HISTORICAL !"I##I#"S $ $ $ $ TH! %!&!RAL R!S!R'!"( published b) *he %ederal Reserve a+, of os*o+ i+ i*s seve+*h pri+*i+g( -./0$

%ore1ord
I+ -.2.( 1hile I 1as visi*i+g !3ra 4ou+d 1ho 1as a poli*ical priso+er a* S*$ !li3abe*h5s Hospi*al( 6ashi+g*o+( &$C$ 7a %ederal i+s*i*u*io+ for *he i+sa+e8( &r$ 4ou+d as,ed me if I had ever heard of *he %ederal Reserve S)s*em$ I replied *ha* I had +o*( as of *he age of 09$ He *he+ sho1ed me a *e+ dollar bill mar,ed "%ederal Reserve #o*e" a+d as,ed me if I 1ould do some research a* *he Librar) of Co+gress o+ *he %ederal Reserve S)s*em 1hich had issued *his bill$ 4ou+d 1as u+able *o go *o *he Librar) himself( as he 1as bei+g held 1i*hou* *rial as a poli*ical priso+er b) *he :+i*ed S*a*es gover+me+*$ Af*er he 1as de+ied broadcas*i+g *ime i+ *he :$S$( &r$ 4ou+d broadcas* from I*al) i+ a+ effor* *o persuade people of *he :+i*ed S*a*es +o* *o e+*er 6orld 6ar II$ %ra+,li+ &$ Roosevel* had perso+all) ordered 4ou+d5s i+dic*me+*( spurred b) *he dema+ds of his *hree perso+al assis*a+*s( Harr) &e;*er 6hi*e( Lauchli+ Currie( a+d Alger Hiss( all of 1hom 1ere subse<ue+*l) ide+*ified as bei+g co++ec*ed 1i*h Commu+is* espio+age$ I had +o i+*eres* i+ mo+e) or ba+,i+g as a sub=ec*( because I 1as 1or,i+g o+ a +ovel$ 4ou+d offered *o suppleme+* m) i+come b) *e+ dollars a 1ee, for a fe1 1ee,s$ >) i+i*ial research revealed evide+ce of a+ i+*er+a*io+al ba+,i+g group 1hich had secre*l) pla++ed *he 1ri*i+g of *he %ederal Reserve Ac* a+d Co+gress5 e+ac*me+* of *he pla+ i+*o la1$ These fi+di+gs co+firmed 1ha* 4ou+d had lo+g suspec*ed$ He said( "?ou mus* 1or, o+ i* as a de*ec*ive s*or)$" I 1as for*u+a*e i+ havi+g m) research a* *he Librar) of Co+gress direc*ed b) a promi+e+* scholar( "eorge S*impso+( fou+der of *he #a*io+al

4ress Club( 1ho 1as described b) The #e1 ?or, Times of Sep*ember 0/( -.90@ " eloved b) 6ashi+g*o+ +e1spaperme+ as Aour 1al,i+g Librar) of Co+gress5( >r$ S*impso+ 1as a highl) regarded refere+ce source i+ *he Capi*ol$ "over+me+* officials( Co+gressme+ a+d repor*ers 1e+* *o him for i+forma*io+ o+ a+) sub=ec*$" I did research four hours each da) a* *he Librar) of Co+gress( a+d 1e+* *o S*$ !li3abe*h5s Hospi*al i+ *he af*er+oo+$ 4ou+d a+d I 1e+* over *he previous da)5s +o*es$ I *he+ had di++er 1i*h "eorge S*impso+ a* Scholl5s Cafe*eria 1hile he 1e+* over m) ma*erial( a+d I *he+ 1e+* bac, *o m) room *o *)pe up *he correc*ed +o*es$ o*h S*impso+ a+d 4ou+d made ma+) sugges*io+s i+ guidi+g me i+ a field i+ 1hich I had +o previous e;perie+ce$ 6he+ 4ou+d5s resources ra+ lo1( I applied *o *he "ugge+heim %ou+da*io+( Hu+*i+g*o+ Har*ford %ou+da*io+( a+d o*her fou+da*io+s *o comple*e m) research o+ *he %ederal Reserve$ !ve+ *hough m) fou+da*io+ applica*io+s 1ere spo+sored b) *he *hree leadi+g poe*s of America( !3ra 4ou+d( !$!$ Cummi+gs( a+d !li3abe*h ishop( all of *he fou+da*io+s refused *o spo+sor *his research$ I *he+ 1ro*e up m) fi+di+gs *o da*e( a+d i+ -.90 bega+ effor*s *o mar,e* *his ma+uscrip* i+ #e1 ?or,$ !igh*ee+ publishers *ur+ed i* do1+ 1i*hou* comme+*( bu* *he +i+e*ee+*h( &evi+ "arri*)( preside+* of &evi+ Adair 4ublishi+g Compa+)( gave me some frie+dl) advice i+ his office$ "I li,e )our boo,( bu* 1e ca+5* pri+* i*(" he *old me$ "#ei*her ca+ a+)bod) else i+ #e1 ?or,$ 6h) do+5* )ou bri+g i+ a prospec*us for )our +ovel( a+d I *hi+, 1e ca+ give )ou a+ adva+ce$ ?ou ma) as 1ell forge* abou* ge**i+g *he %ederal Reserve boo, published$ I doub* if i* could ever be pri+*ed$" This 1as devas*a*i+g +e1s( comi+g af*er *1o )ears of i+*e+sive 1or,$ I repor*ed bac, *o 4ou+d( a+d 1e *ried *o fi+d a publisher i+ o*her par*s of *he cou+*r)$ Af*er *1o )ears of frui*less submissio+s( *he boo, 1as published i+ a small edi*io+ i+ -.90 b) *1o of 4ou+d5s disciples( Boh+ Casper a+d &avid Hor*o+( usi+g *heir priva*e fu+ds( u+der *he *i*le >ulli+s o+ *he %ederal Reserve$ I+ -.92( a seco+d edi*io+( 1i*h u+au*hori3ed al*era*io+s( 1as published i+ #e1 Berse)( as The %ederal Reserve Co+spirac)$ I+ -.99( "uido Roeder brough* ou* a "erma+ edi*io+ i+ Oberammergau( "erma+)$ The boo, 1as sei3ed a+d *he e+*ire edi*io+ of -0(000 copies bur+ed b) gover+me+* age+*s led b) &r$ O**o Boh+$ The bur+i+g of *he boo, 1as upheld April 0-( -.6- b) =udge Israel Ca*3 of *he avaria+ Supreme Cour*$ The :$S$ "over+me+* refused *o i+*erve+e( because :$S$ High Commissio+er *o "erma+)( Bames $ Co+a+* 7preside+* of Harvard :+iversi*) -.DD *o -.9D8( had approved *he i+i*ial boo, bur+i+g order$ This is *he o+l) boo, 1hich has bee+ bur+ed i+ "erma+) si+ce 6orld 6ar II$ I+ -.6/ a pira*ed edi*io+ of *his boo, appeared i+ Califor+ia$ o*h *he % I a+d *he :$S$ 4os*al i+spec*ors refused *o ac*( despi*e +umerous complai+*s from me duri+g *he +e;* decade$ I+ -./0 a +e1 "erma+ edi*io+ appeared$ ecause *he :$S$ "over+me+* appare+*l) +o lo+ger dic*a*ed *he

i+*er+al affairs of "erma+)( *he ide+*ical boo, 1hich had bee+ bur+ed i+ -.99 +o1 circula*es i+ "erma+) 1i*hou* i+*erfere+ce$ I had collabora*ed o+ several boo,s 1i*h >r$ H$L$ Hu+* a+d he sugges*ed *ha* I should co+*i+ue m) lo+gEdela)ed research o+ *he %ederal Reserve a+d bri+g ou* a more defi+i*ive versio+ of *his boo,$ I had =us* sig+ed a co+*rac* *o 1ri*e *he au*hori3ed biograph) of !3ra 4ou+d( a+d *he %ederal Reserve boo, had *o be pos*po+ed$ >r$ Hu+* passed a1a) before I could ge* bac, *o m) research( a+d o+ce agai+ I faced *he problem of fi+a+ci+g research for *he boo,$ >) origi+al boo, had *raced a+d +amed *he shado1) figures i+ *he :+i*ed S*a*es 1ho pla++ed *he %ederal Reserve Ac*$ I +o1 discovered *ha* *he me+ 1hom I e;posed i+ -.90 as *he shado1) figures behi+d *he opera*io+ of *he %ederal Reserve S)s*em 1ere *hemselves shado1s( *he America+ fro+*s for *he u+,+o1+ figures 1ho became ,+o1+ as *he "Lo+do+ Co++ec*io+$" I fou+d *ha* +o*1i*hs*a+di+g our successes i+ *he 6ars of I+depe+de+ce of -/-0 agai+s* !+gla+d( 1e remai+ed a+ eco+omic a+d fi+a+cial colo+) of "rea* ri*ai+$ %or *he firs* *ime( 1e loca*ed *he origi+al s*oc,holders of *he %ederal Reserve a+,s a+d *raced *heir pare+* compa+ies *o *he Lo+do+ Co++ec*io+$ This research is subs*a+*ia*ed b) ci*a*io+s a+d docume+*a*io+ from hu+dreds of +e1spapers( periodicals a+d boo,s a+d char*s sho1i+g blood( marriage( a+d busi+ess rela*io+ships$ >ore *ha+ a *housa+d issues of The #e1 ?or, Times o+ microfilm have bee+ chec,ed +o* o+l) for origi+al i+forma*io+( bu* verifica*io+ of s*a*eme+*s from o*her sources$ I* is a *ruism of *he 1ri*i+g professio+ *ha* a 1ri*er has o+l) o+e boo, 1i*hi+ him$ This seems applicable i+ m) case( because I am +o1 i+ *he fif*h decade of co+*i+uous 1ri*i+g o+ a si+gle sub=ec*( *he i+side s*or) of *he %ederal Reserve S)s*em$ This boo, 1as from i*s i+cep*io+ commissio+ed a+d guided b) !3ra 4ou+d$ %our of his pro*FgFs have previousl) bee+ a1arded *he #obel 4ri3e for Li*era*ure( 6illiam u*ler ?ea*s for his la*er poe*r)( Bames Bo)ce for ":l)sses"( !r+es* Hemi+g1a) for "The Su+ Also Rises"( a+d T$S$ !llio* for "The 6as*e La+d"$ 4ou+d pla)ed a ma=or role i+ *he i+spira*io+ a+d i+ *he edi*i+g of *hese 1or,sEE1hich leads us *o believe *ha* *his prese+* 1or,( also i+spired b) 4ou+d( represe+*s a+ o+goi+g li*erar) *radi*io+$ Al*hough *his boo, i+ i*s i+cep*io+ 1as e;pec*ed *o be a *or*uous 1or, o+ eco+omic a+d mo+e*ar) *ech+i<ues( i* soo+ developed i+*o a s*or) of such u+iversal a+d drama*ic appeal *ha* from *he ou*se*( !3ra 4ou+d urged me *o 1ri*e i* as a de*ec*ive s*or)( a ge+re 1hich 1as i+ve+*ed b) m) fello1 'irgi+ia+( !dgar Alla+ 4oe$ I believe *ha* *he co+*i+uous circula*io+ of *his boo, duri+g *he pas* for*) )ears has +o* o+l) e;o+era*ed !3ra 4ou+d for his much co+dem+ed poli*ical a+d mo+e*ar) s*a*eme+*s( bu* also *ha* i* has bee+( a+d 1ill co+*i+ue *o be( *he ul*ima*e 1eapo+ agai+s* *he po1erful co+spira*ors 1ho compelled him *o serve *hir*ee+ a+d a half )ears 1i*hou*

*rial( as a poli*ical priso+er held i+ a+ i+sa+e as)lum a la C" $ His earlies* vi+dica*io+ came 1he+ *he gover+me+* age+*s 1ho represe+*ed *he co+spira*ors refused *o allo1 him *o *es*if) i+ his o1+ defe+seG *he seco+d vi+dica*io+ came i+ -.9/ 1he+ *hese same age+*s dropped all charges agai+s* him( a+d he 1al,ed ou* of S*$ !li3abe*h5s Hospi*al( a free ma+ o+ce more$ His *hird a+d fi+al vi+dica*io+ is *his 1or,( 1hich docume+*s ever) aspec* of his e;posure of *he ru*hless i+*er+a*io+al fi+a+ciers *o 1hom !3ra 4ou+d became bu* o+e more vic*im( doomed *o serve )ears as *he >a+ i+ *he Iro+ >as,( because he had dared *o aler* his fello1EAmerica+s *o *heir fur*ive ac*s of *reaso+ agai+s* all people of *he :+i*ed S*a*es$ I+ m) lec*ures *hroughou* *his +a*io+( a+d i+ m) appeara+ces o+ ma+) radio a+d *elevisio+ programs( I have sou+ded *he *o;i+ *ha* *he %ederal Reserve S)s*em is +o* %ederalG i* has +o reservesG a+d i* is +o* a s)s*em a* all( bu* ra*her( a crimi+al s)+dica*e$ %rom #ovember( -.-0( 1he+ *he co+spira*ors me* o+ Be,)ll Isla+d( "eorgia( *o *he prese+* *ime( *he machi+a*io+s of *he %ederal Reserve ba+,ers have bee+ shrouded i+ secrec)$ Toda)( *ha* secrec) has cos* *he America+ people a *hree *rillio+ dollar deb*( 1i*h a++ual i+*eres* pa)me+*s *o *hese ba+,ers amou+*i+g *o some *hree hu+dred billio+ dollars per )ear( sums 1hich s*agger *he imagi+a*io+( a+d 1hich i+ *hemselves are ul*ima*el) u+pa)able$ Officials of *he %ederal Reserve S)s*em rou*i+el) issue remo+s*ra+ces *o *he public( much as *he Hi+du fa,ir pipes a+ i+sis*e+* *u+e *o *he da3ed cobra 1hich s1a)s i*s head before him( +o* *o resolve *he si*ua*io+( bu* *o preve+* i* from s*ri,i+g him$ Such 1as *he soo*hi+g le**er 1ri**e+ b) &o+ald B$ 6i++( Assis*a+* *o *he oard of "over+ors i+ respo+se *o a+ i+<uir) b) a Co+gressma+( *he Ho+orable #orma+ &$ Shum1a)( o+ >arch -0( -./D$ >r$ 6i++ s*a*es *ha* "The %ederal Reserve S)s*em 1as es*ablished b) a+ ac* of Co+gress i+ -.-D a+d is +o* a Apriva*e corpora*io+5$" O+ *he +e;* page( >r$ 6i++ co+*i+ues( "The s*oc, of *he %ederal Reserve a+,s is held e+*irel) b) commercial ba+,s *ha* are members of *he %ederal Reserve S)s*em$" He offers +o e;pla+a*io+ as *o 1h) *he gover+me+* has +ever o1+ed a si+gle share of s*oc, i+ a+) %ederal Reserve a+,( or 1h) *he %ederal Reserve S)s*em is +o* a "priva*e corpora*io+" 1he+ all of i*s s*oc, is o1+ed b) "priva*e corpora*io+s"$ America+ his*or) i+ *he *1e+*ie*h ce+*ur) has recorded *he ama3i+g achieveme+*s of *he %ederal Reserve ba+,ers$ %irs*( *he ou*brea, of 6orld 6ar I( 1hich 1as made possible b) *he fu+ds available from *he +e1 ce+*ral ba+, of *he :+i*ed S*a*es$ Seco+d( *he Agricul*ural &epressio+ of -.00$ Third( *he lac, %rida) Crash o+ 6all S*ree* of Oc*ober( -.0. a+d *he e+sui+g "rea* &epressio+$ %our*h( 6orld 6ar II$ %if*h( *he co+versio+ of *he asse*s of *he :+i*ed S*a*es a+d i*s ci*i3e+s from real proper*) *o paper asse*s from -.29 *o *he prese+*( *ra+sformi+g a vic*orious America a+d foremos* 1orld po1er i+ -.29 *o *he 1orld5s larges* deb*or +a*io+ i+ -..0$ Toda)( *his +a*io+ lies i+ eco+omic rui+s( devas*a*ed a+d des*i*u*e( i+ much *he same dire s*rai*s i+ 1hich "erma+) a+d Bapa+ fou+d *hemselves i+ -.29$ 6ill America+s ac* *o rebuild our +a*io+( as "erma+) a+d Bapa+ have do+e 1he+

*he) faced *he ide+*ical co+di*io+s 1hich 1e +o1 faceEEor 1ill 1e co+*i+ue *o be e+slaved b) *he ab)lo+ia+ deb* mo+e) s)s*em 1hich 1as se* up b) *he %ederal Reserve Ac* i+ -.-D *o comple*e our *o*al des*ruc*io+H This is *he o+l) <ues*io+ 1hich 1e have *o a+s1er( a+d 1e do +o* have much *ime lef* *o a+s1er i*$ ecause of *he dep*h a+d *he impor*a+ce of *he i+forma*io+ 1hich I had developed a* *he Librar) of Co+gress u+der *he *u*elage of !3ra 4ou+d( *his 1or, became *he happ) hu+*i+g grou+d for ma+) o*her 1ouldEbe his*oria+s( 1ho 1ere u+able *o research *his ma*erial for *hemselves$ Over *he pas* four decades( I have become accus*omed *o seei+g *his ma*erial appear i+ ma+) o*her boo,s( i+variabl) a**ribu*ed *o o*her 1ri*ers( 1i*h m) +ame +ever me+*io+ed$ To add i+sul* *o i+=ur)( +o* o+l) m) ma*erial( bu* eve+ m) *i*le has bee+ appropria*ed( i+ a massive( if ob*use( 1or, called "Secre*s of *he TempleEE*he %ederal Reserve"$ This heavil) adver*ised boo, received revie1s ra+gi+g from i+credulous *o hilarious$ %orbes >aga3i+e advised i*s readers *o read *heir revie1 a+d save *heir mo+e)( poi+*i+g ou* *ha* "a reader 1ill discover +o secre*s" a+d *ha* "This is o+e of *hose boo,s 1hose fa+fares far e;ceed *heir meri*$" This 1as +o* accide+*al( as *his overblo1+ 1hi*e1ash of *he %ederal Reserve ba+,ers 1as published b) *he mos* famous +o+boo, publisher i+ *he 1orld$ Af*er m) i+i*ial shoc, a* discoveri+g *ha* *he mos* i+flue+*ial li*erar) perso+ali*) of *he *1e+*ie*h ce+*ur)( !3ra 4ou+d( 1as impriso+ed i+ "*he Hellhole" i+ 6ashi+g*o+( I immedia*el) 1ro*e for assis*a+ce *o a 6all S*ree* fi+a+cier a* 1hose es*a*e I had fre<ue+*l) bee+ a gues*$ I remi+ded him *ha* as a pa*ro+ of *he ar*s( he could +o* afford *o allo1 4ou+d *o remai+ i+ such i+huma+ cap*ivi*)$ His repl) shoc,ed me eve+ more$ He 1ro*e bac, *ha* ")our frie+d ca+ 1ell s*a) 1here he is$" I* 1as some )ears before I 1as able *o u+ders*a+d *ha*( for *his i+ves*me+* ba+,er a+d his colleagues( !3ra 4ou+d 1ould al1a)s be "*he e+em)"$ ! u s * a c e > u l l i + s

B a c , s o + H o l e ( 6 ) o m i + g . . -

I+*roduc*io+
Here are *he simple fac*s of *he grea* be*ra)al$ 6ilso+ a+d House ,+e1 *ha* *he) 1ere doi+g some*hi+g mome+*ous$ O+e ca++o* fa*hom me+5s mo*ives a+d *his pair probabl) believed i+ 1ha* *he) 1ere up *o$ 6ha* *he) did +o* believe i+ 1as represe+*a*ive gover+me+*$ The) believed i+ gover+me+* b) a+ u+co+*rolled oligarch) 1hose ac*s 1ould o+l) become appare+* af*er a+ i+*erval so lo+g *ha* *he elec*ora*e 1ould be forever i+capable of doi+g a+)*hi+g efficie+* *o remed) depreda*io+s$ ! I R A 4 O :

# & 7 S * $ ! l i 3 a b e * h 5 s H o s p i * a l ( 6 a s h i + g * o + ( & $ C $

. 9 0 8 7A:THOR5S #OT!@ &r$ 4ou+d 1ro*e *his i+*roduc*io+ for *he earlies* versio+ of *his boo,( published b) Casper a+d Hor*o+( #e1 ?or,( -.90$ ecause he 1as bei+g held as a poli*ical priso+er 1i*hou* *rial b) *he %ederal "over+me+*( he could +o* afford *o allo1 his +ame *o appear o+ *he boo, because of addi*io+al reprisals agai+s* him$ #ei*her could he allo1 *he boo, *o be dedica*ed *o him( al*hough he had commissio+ed i*s 1ri*i+g$ The au*hor is gra*ified *o be able *o remed) *hese +ecessar) omissio+s( *hir*)E *hree )ears af*er *he eve+*s$8

B!%%!RSO#5S O4I#IO# O# TH! CO#STIT:TIO#ALIT? O% TH! A#C

%ebruar) -9( -J.7The 6ri*i+gs of Thomas Befferso+( ed$ b) H$ !$ ergh( 'ol$ III( p$ -29 ff$8 The bill for es*ablishi+g a +a*io+al ba+,( i+ -J.-( u+der*a,es( amo+g o*her *hi+gs(EE -$ To form *he subscribers i+*o a corpora*io+$ 0$ To e+able *hem( i+ *heir corpora*e capaci*ies( *o receive gra+*s of la+dsG a+d( so far( is agai+s* *he la1s of mor*mai+$ D$ To ma,e alie+ subscribers capable of holdi+g la+dsG a+d so far is agai+s* *he la1s of alie+age$ 2$ To *ra+smi* *hese la+ds( o+ *he dea*h of a proprie*or( *o a cer*ai+ li+e of successorsG a+d so far( cha+ges *he course of desce+*s$ 9$ To pu* *he la+ds ou* of *he reach of forfei*ure( or eschea*G a+d so far( is agai+s* *he la1s of forfei*ure a+d eschea*$ 6$ To *ra+smi* perso+al cha**els *o successors( i+ a cer*ai+ li+eG a+d so far( is agai+s* *he la1s of dis*ribu*io+$ J$ To give *hem *he sole a+d e;clusive righ* of ba+,i+g( u+der *he +a*io+al au*hori*)G a+d( so far( is agai+s* *he la1s of mo+opol)$ /$ To commu+ica*e *o *hem a po1er *o ma,e la1s( paramou+* *o *he la1s of *he s*a*esG for so *he) mus* be co+s*rued( *o pro*ec* *he i+s*i*u*io+ from *he co+*rol of *he s*a*e legisla*uresG a+d so probabl) *he) 1ill be co+s*rued$

I co+sider *he fou+da*io+ of *he Co+s*i*u*io+ as laid o+ *his grou+dEE*ha* all po1ers +o* delega*ed *o *he :+i*ed S*a*es( b) *he Co+s*i*u*io+( +or prohibi*ed b) i* *o *he s*a*es( are reserved *o *he s*a*es( or *o *he people 7-0*h ame+d$8$ To *a,e a si+gle s*ep be)o+d *he bou+daries *hus speciall) dra1+ arou+d *he po1ers of Co+gress( is *o *a,e possessio+ of a bou+dless field of po1er( +o lo+ger suscep*ible of a+) defi+i*io+$ The i+corpora*io+ of a ba+,( a+d *he po1ers assumed b) *his bill( have +o*( i+ m) opi+io+( bee+ delega*ed *o *he :+i*ed S*a*es b) *he Co+s*i*u*io+$

CHA4T!R O#!

Be,)ll Isla+d
"The ma**er of a u+iform discou+* ra*e 1as discussed a+d se**led a* Be,)ll Isla+d$"EE4aul >$ 6arburgO+ *he +igh* of #ovember 00( -.-0( a group of +e1spaper repor*ers s*ood disco+sola*el) i+ *he rail1a) s*a*io+ a* Hobo,e+( #e1 Berse)$ The) had =us* 1a*ched a delega*io+ of *he +a*io+5s leadi+g fi+a+ciers leave *he s*a*io+ o+ a secre* missio+$ I* 1ould be )ears before *he) discovered 1ha* *ha* missio+ 1as( a+d eve+ *he+ *he) 1ould +o* u+ders*a+d *ha* *he his*or) of *he :+i*ed S*a*es u+der1e+* a dras*ic cha+ge af*er *ha* +igh* i+ Hobo,e+$ The delega*io+ had lef* i+ a sealed rail1a) car( 1i*h bli+ds dra1+( for a+ u+disclosed des*i+a*io+$ The) 1ere led b) Se+a*or #elso+ Aldrich( head of *he #a*io+al >o+e*ar) Commissio+$ 4reside+* Theodore Roosevel* had sig+ed i+*o la1 *he bill crea*i+g *he #a*io+al >o+e*ar) Commissio+ i+ -.0/( af*er *he *ragic 4a+ic of -.0J had resul*ed i+ a public ou*cr) *ha* *he +a*io+5s mo+e*ar) s)s*em be s*abili3ed$ Aldrich had led *he members of *he Commissio+ o+ a *1oE)ear *our of !urope( spe+di+g some *hree hu+dred *housa+d dollars of public mo+e)$ He had +o* )e* made a repor* o+ *he resul*s of *his *rip( +or had he offered a+) pla+ for ba+,i+g reform$ Accompa+)i+g Se+a*or Aldrich a* *he Hobo,e+ s*a*io+ 1ere his priva*e secre*ar)( Shel*o+G A$ 4ia** A+dre1( Assis*a+* Secre*ar) of *he Treasur)( a+d Special Assis*a+* of *he #a*io+al >o+e*ar) Commissio+G %ra+, 'a+derlip( preside+* of *he #a*io+al Ci*) a+, of #e1 ?or,( He+r) 4$ &aviso+( se+ior par*+er of B$4$ >orga+ Compa+)( a+d ge+erall) regarded as >orga+5s perso+al emissar)G a+d Charles &$ #or*o+( preside+* of *he >orga+E domi+a*ed %irs* #a*io+al a+, of #e1 ?or,$ Boi+i+g *he group =us* before *he *rai+ lef* *he s*a*io+ 1ere e+=ami+ S*ro+g( also ,+o1+ as a lieu*e+a+* of B$4$ >orga+G a+d 4aul 6arburg( a rece+* immigra+* from "erma+) 1ho had =oi+ed *he ba+,i+g house of Cuh+( Loeb KKKKKKKKKKKKKKKKKKKKKKKKKK

- 4rof$ #a*ha+iel 6righ* S*ephe+so+( 4aul 6arburg5s >emora+dum( #elso+ Aldrich A Leader i+ America+ 4oli*ics( Scrib+ers( #$?$ -.D0 a+d Compa+)( #e1 ?or, as a par*+er ear+i+g five hu+dred *housa+d dollars a )ear$ Si; )ears la*er( a fi+a+cial 1ri*er +amed er*ie Charles %orbes 71ho la*er fou+ded *he %orbes >aga3i+eG *he prese+* edi*or( >alcom %orbes( is his so+8( 1ro*e@ "4ic*ure a par*) of *he +a*io+5s grea*es* ba+,ers s*eali+g ou* of #e1 ?or, o+ a priva*e railroad car u+der cover of dar,+ess( s*eal*hil) hiei+g hu+dred of miles Sou*h( embar,i+g o+ a m)s*erious lau+ch( s+ea,i+g o+*o a+ isla+d deser*ed b) all bu* a fe1 serva+*s( livi+g *here a full 1ee, u+der such rigid secrec) *ha* *he +ames of +o* o+e of *hem 1as o+ce me+*io+ed les* *he serva+*s lear+ *he ide+*i*) a+d disclose *o *he 1orld *his s*ra+ges*( mos* secre* e;pedi*io+ i+ *he his*or) of America+ fi+a+ce$ I am +o* roma+ci+gG I am givi+g *o *he 1orld( for *he firs* *ime( *he real s*or) of ho1 *he famous Aldrich curre+c) repor*( *he fou+da*io+ of our +e1 curre+c) s)s*em( 1as 1ri**e+ $ $ $ $ The u*mos* secrec) 1as e+=oi+ed upo+ all$ The public mus* +o* glea+ a hi+* of 1ha* 1as *o be do+e$ Se+a*or Aldrich +o*ified each o+e *o go <uie*l) i+*o a priva*e car of 1hich *he railroad had received orders *o dra1 up o+ a+ u+fre<ue+*ed pla*form$ Off *he par*) se*$ #e1 ?or,5s ubi<ui*ous repor*ers had bee+ foiled $ $ $ #elso+ 7Aldrich8 had co+fided *o He+r)( %ra+,( 4aul a+d 4ia** *ha* he 1as *o ,eep *hem loc,ed up a* Be,)ll Isla+d( ou* of *he res* of *he 1orld( u+*il *he) had evolved a+d compiled a scie+*ific curre+c) s)s*em for *he :+i*ed S*a*es( *he real

bir*h of *he prese+* %ederal Reserve S)s*em( *he pla+ do+e o+ Be,)ll Isla+d i+ *he co+fere+ce 1i*h 4aul( %ra+, a+d He+r) $ $ $ $ 6arburg is *he li+, *ha* bi+ds *he Aldrich s)s*em a+d *he prese+* s)s*em *oge*her$ He more *ha+ a+) o+e ma+ has made *he s)s*em possible as a 1or,i+g reali*)$"0 The official biograph) of Se+a*or #elso+ Aldrich s*a*es@ "I+ *he au*um+ of -.-0( si; me+ 1e+* ou* *o shoo* duc,s( Aldrich( his secre*ar) Shel*o+( A+dre1s( &aviso+( 'a+derlip a+d 6arburg$ Repor*ers 1ere 1ai*i+g a* *he ru+s1ic, 7"eorgia8 s*a*io+$ >r$ &aviso+ 1e+* ou* a+d *al,ed *o *hem$ The repor*ers dispersed a+d *he secre* of *he s*ra+ge =our+e) 1as +o* divulged$ >r$ Aldrich as,ed him ho1 he had ma+aged i* a+d he did +o* volu+*eer *he i+forma*io+$"D &aviso+ had a+ e;celle+* repu*a*io+ as *he perso+ 1ho could co+cilia*e 1arri+g fac*io+s( a role he had performed for B$4$ >orga+ duri+g *he se**li+g of *he >o+e) 4a+ic of -.0J$ A+o*her >orga+ par*+er( T$6$ Lamo+*( sa)s@ "He+r) 4$ &aviso+ served as arbi*ra*or of *he Be,)ll Isla+d e;pedi*io+$"2 KKKKKKKKKKKKKKKKKKKKKKKKKK 0 "C:RR!#T O4I#IO#"( &ecember( -.-6( p$ D/0$ D #a*ha+iel 6righ* S*ephe+so+( #elso+ 6$ Aldrich( A Leader i+ America+ 4oli*ics( Scrib+ers( #$?$ -.D0( Chap$ LLI' "Be,)ll Isla+d" 2 T$6$ Lamo+*( He+r) 4$ &aviso+( Harper( -.DD 0 %rom *hese refere+ces( i* is possible *o piece *oge*her *he s*or)$ Aldrich5s priva*e car( 1hich had lef* Hobo,e+ s*a*io+ 1i*h i*s shades dra1+( had *a,e+ *he fi+a+ciers *o Be,)ll Isla+d( "eorgia$ Some )ears earlier( a ver) e;clusive group of millio+aires( led b) B$4$ >orga+( had purchased *he isla+d as a 1i+*er re*rea*$ The) called *hemselves *he Be,)ll Isla+d Hu+* Club( a+d( a* firs*( *he isla+d 1as used o+l) for hu+*i+g e;pedi*io+s( u+*il *he millio+aires reali3ed *ha* i*s pleasa+* clima*e offered a 1arm re*rea* from *he rigors of 1i+*ers i+ #e1 ?or,( a+d bega+ *o build sple+did ma+sio+s( 1hich *he) called "co**ages"( for *heir families5 1i+*er vaca*io+s$ The club buildi+g i*self( bei+g <ui*e isola*ed( 1as some*imes i+ dema+d for s*ag par*ies a+d o*her pursui*s u+rela*ed *o hu+*i+g$ O+ such occasio+s( *he club members 1ho 1ere +o* i+vi*ed *o *hese specific ou*i+gs 1ere as,ed +o* *o appear *here for a cer*ai+ +umber of da)s$ efore #elso+ Aldrich5s par*) had lef* #e1

?or,( *he club5s members had bee+ +o*ified *ha* *he club 1ould be occupied for *he +e;* *1o 1ee,s$ The Be,)ll Isla+d Club 1as chose+ as *he place *o draf* *he pla+ for co+*rol of *he mo+e) a+d credi* of *he people of *he :+i*ed S*a*es( +o* o+l) because of i*s isola*io+( bu* also because i* 1as *he priva*e preserve of *he people 1ho 1ere draf*i+g *he pla+$ The #e1 ?or, Times la*er +o*ed( o+ >a) D( -.D-( i+ comme+*i+g o+ *he dea*h of "eorge %$ a,er( o+e of B$4$ >orga+5s closes* associa*es( *ha* "Be,)ll Isla+d Club has los* o+e of i*s mos* dis*i+guished members$ O+eEsi;*h of *he *o*al 1eal*h of *he 1orld 1as represe+*ed b) *he members of *he Be,)ll Isla+d Club$" >embership 1as b) i+heri*a+ce o+l)$ The Aldrich group had +o i+*eres* i+ hu+*i+g$ Be,)ll Isla+d 1as chose+ for *he si*e of *he prepara*io+ of *he ce+*ral ba+, because i* offered comple*e privac)( a+d because *here 1as +o* a =our+alis* 1i*hi+ fif*) miles$ Such 1as *he +eed for secrec) *ha* *he members of *he par*) agreed( before arrivi+g a* Be,)ll Isla+d( *ha* +o las* +ames 1ould be used a* a+) *ime duri+g *heir *1o 1ee, s*a)$ The group la*er referred *o *hemselves as *he %irs* #ame Club( as *he las* +ames of 6arburg( S*ro+g( 'a+derlip a+d *he o*hers 1ere prohibi*ed duri+g *heir s*a)$ The cus*omar) a**e+da+*s had bee+ give+ *1o 1ee, vaca*io+s from *he club( a+d +e1 serva+*s brough* i+ from *he mai+la+d for *his occasio+ 1ho did +o* ,+o1 *he +ames of a+) of *hose prese+*$ !ve+ if *he) had bee+ i+*erroga*ed af*er *he Aldrich par*) 1e+* bac, *o #e1 ?or,( *he) could +o* have give+ *he +ames$ This arra+geme+* proved *o be so sa*isfac*or) *ha* *he members( limi*ed *o *hose 1ho had ac*uall) bee+ prese+* a* Be,)ll Isla+d( la*er had a +umber of i+formal ge*E *oge*hers i+ #e1 ?or,$ 6h) all *his secrec)H 6h) *his *housa+d mile *rip i+ a closed rail1a) car *o a remo*e hu+*i+g clubH Os*e+sibl)( i* 1as *o carr) ou* a program of public service( *o prepare ba+,i+g reform 1hich 1ould be a boo+ *o *he people of *he :+i*ed S*a*es( 1hich had bee+ ordered b) *he #a*io+al D >o+e*ar) Commissio+$ The par*icipa+*s 1ere +o s*ra+gers *o public be+efac*io+s$ :suall)( *heir +ames 1ere i+scribed o+ brass pla<ues( or o+ *he e;*eriors of buildi+gs 1hich *he) had do+a*ed$ This 1as +o* *he procedure 1hich *he) follo1ed a* Be,)ll Isla+d$ #o brass pla<ue 1as ever erec*ed *o mar, *he selfless ac*io+s of *hose 1ho me* a* *heir priva*e hu+* club i+ -.-0 *o improve *he lo* of ever) ci*i3e+ of *he :+i*ed S*a*es$ I+ fac*( +o be+efac*io+ *oo, place a* Be,)ll Isla+d$ The Aldrich group =our+e)ed *here i+ priva*e *o 1ri*e *he ba+,i+g a+d curre+c) legisla*io+ 1hich *he #a*io+al >o+e*ar) Commissio+ had bee+ ordered *o prepare i+ public$ A* s*a,e 1as *he fu*ure co+*rol of *he mo+e) a+d credi* of *he :+i*ed S*a*es$ If a+) ge+ui+e mo+e*ar) reform had bee+ prepared a+d prese+*ed *o Co+gress( i* 1ould have e+ded *he po1er of *he eli*is* o+e 1orld mo+e)

crea*ors$ Be,)ll Isla+d e+sured *ha* a ce+*ral ba+, 1ould be es*ablished i+ *he :+i*ed S*a*es 1hich 1ould give *hese ba+,ers ever)*hi+g *he) had al1a)s 1a+*ed$ As *he mos* *ech+icall) proficie+* of *hose prese+*( 4aul 6arburg 1as charged 1i*h doi+g mos* of *he draf*i+g of *he pla+$ His 1or, 1ould *he+ be discussed a+d go+e over b) *he res* of *he group$ Se+a*or #elso+ Aldrich 1as *here *o see *ha* *he comple*ed pla+ 1ould come ou* i+ a form 1hich he could ge* passed b) Co+gress( a+d *he o*her ba+,ers 1ere *here *o i+clude 1ha*ever de*ails 1ould be +eeded *o be cer*ai+ *ha* *he) go* ever)*hi+g *he) 1a+*ed( i+ a fi+ished draf* composed duri+g a o+e*ime s*a)$ Af*er *he) re*ur+ed *o #e1 ?or,( *here could be +o seco+d ge* *oge*her *o re1or, *heir pla+$ The) could +o* hope *o ob*ai+ such secrec) for *heir 1or, o+ a seco+d =our+e)$ The Be,)ll Isla+d group remai+ed a* *he club for +i+e da)s( 1or,i+g furiousl) *o comple*e *heir *as,$ &espi*e *he commo+ i+*eres*s of *hose prese+*( *he 1or, did +o* proceed 1i*hou* fric*io+$ Se+a*or Aldrich( al1a)s a domi+eeri+g perso+( co+sidered himself *he chose+ leader of *he group( a+d could +o* help orderi+g ever)o+e else abou*$ Aldrich also fel* some1ha* ou* of place as *he o+l) member 1ho 1as +o* a professio+al ba+,er$ He had had subs*a+*ial ba+,i+g i+*eres*s *hroughou* his career( bu* o+l) as a perso+ 1ho profi*ed from his o1+ership of ba+, s*oc,$ He ,+e1 li**le abou* *he *ech+ical aspec*s of fi+a+cial opera*io+s$ His opposi*e +umber( 4aul 6arburg( believed *ha* ever) <ues*io+ raised b) *he group dema+ded( +o* merel) a+ a+s1er( bu* a lec*ure$ He rarel) los* a+ oppor*u+i*) *o give *he members a lo+g discourse desig+ed *o impress *hem 1i*h *he e;*e+* of his ,+o1ledge of ba+,i+g$ This 1as rese+*ed b) *he o*hers( a+d of*e+ dre1 barbed remar,s from Aldrich$ The +a*ural diplomac) of He+r) 4$ &aviso+ proved *o be *he ca*al)s* 1hich ,ep* *hem a* *heir 1or,$ 6arburg5s *hic, alie+ acce+* gra*ed o+ *hem( a+d co+s*a+*l) remi+ded *hem *ha* *he) had *o accep* his prese+ce if a ce+*ral ba+, pla+ 1as *o be devised 1hich 1ould guara+*ee *hem *heir fu*ure proE 2 fi*s$ 6arburg made li**le effor* *o smoo*h over *heir pre=udices( a+d co+*es*ed *hem o+ ever) possible occasio+ o+ *ech+ical ba+,i+g <ues*io+s( 1hich he co+sidered his priva*e preserve$ "I+ all co+spiracies *here mus* be grea* secrec)$"9 The "mo+e*ar) reform" pla+ prepared a* Be,)ll Isla+d 1as *o be prese+*ed *o Co+gress as *he comple*ed 1or, of *he #a*io+al >o+e*ar) Commissio+$ I* 1as impera*ive *ha* *he real au*hors of *he bill remai+ hidde+$ So grea* 1as popular rese+*me+* agai+s* ba+,ers si+ce *he 4a+ic of -.0J *ha* +o Co+gressma+ 1ould dare *o vo*e for a bill beari+g *he 6all S*ree* *ai+*( +o ma**er 1ho had co+*ribu*ed *o his campaig+ e;pe+ses$ The Be,)ll Isla+d

pla+ 1as a ce+*ral ba+, pla+( a+d i+ *his cou+*r) *here 1as a lo+g *radi*io+ of s*ruggle agai+s* i+flic*i+g a ce+*ral ba+, o+ *he America+ people$ I* had begu+ 1i*h Thomas Befferso+5s figh* agai+s* Ale;a+der Hamil*o+5s scheme for *he %irs* a+, of *he :+i*ed S*a*es( bac,ed b) Bames Ro*hschild$ I* had co+*i+ued 1i*h 4reside+* A+dre1 Bac,so+5s successful 1ar agai+s* Ale;a+der Hamil*o+5s scheme for *he Seco+d a+, of *he :+i*ed S*a*es( i+ 1hich #icholas iddle 1as ac*i+g as *he age+* for Bames Ro*hschild of 4aris$ The resul* of *ha* s*ruggle 1as *he crea*io+ of *he I+depe+de+* SubETreasur) S)s*em( 1hich supposedl) had served *o ,eep *he fu+ds of *he :+i*ed S*a*es ou* of *he ha+ds of *he fi+a+ciers$ A s*ud) of *he pa+ics of -/JD( -/.D( a+d -.0J i+dica*es *ha* *hese pa+ics 1ere *he resul* of *he i+*er+a*io+al ba+,ers5 opera*io+s i+ Lo+do+$ The public 1as dema+di+g i+ -.0/ *ha* Co+gress e+ac* legisla*io+ *o preve+* *he recurre+ce of ar*ificiall) i+duced mo+e) pa+ics$ Such mo+e*ar) reform +o1 seemed i+evi*able$ I* 1as *o head off a+d co+*rol such reform *ha* *he #a*io+al >o+e*ar) Commissio+ had bee+ se* up 1i*h #elso+ Aldrich a* i*s head( si+ce he 1as ma=ori*) leader of *he Se+a*e$ The mai+ problem( as 4aul 6arburg i+formed his colleagues( 1as *o avoid *he +ame "Ce+*ral a+,"$ %or *ha* reaso+( he had decided upo+ *he desig+a*io+ of "%ederal Reserve S)s*em"$ This 1ould deceive *he people i+*o *hi+,i+g i* 1as +o* a ce+*ral ba+,$ Ho1ever( *he Be,)ll Isla+d pla+ 1ould be a ce+*ral ba+, pla+( fulfilli+g *he mai+ fu+c*io+s of a ce+*ral ba+,G i* 1ould be o1+ed b) priva*e i+dividuals 1ho 1ould profi* from o1+ership of shares$ As a ba+, of issue( i* 1ould co+*rol *he +a*io+5s mo+e) a+d credi*$ I+ *he chap*er o+ Be,)ll Isla+d i+ his biograph) of Aldrich( S*ephe+so+ 1ri*es of *he co+fere+ce@ "Ho1 1as *he Reserve a+, *o be co+*rolledH I* mus* be co+*rolled b) Co+gress$ The gover+me+* 1as *o be represe+*ed i+ *he board of direc*ors( i* 1as *o have full ,+o1ledge of all *he a+,5s( affairs( bu* a ma=ori*) KKKKKKKKKKKKKKKKKKKKKKKKKK 9 Clare+do+( His*$ Reb$ -62J 9 of *he direc*ors 1ere *o be chose+( direc*l) or i+direc*l)( b) *he ba+,s of *he associa*io+$"6 Thus *he proposed %ederal Reserve a+, 1as *o be "co+*rolled b) Co+gress" a+d a+s1erable *o *he gover+me+*( bu* *he ma=ori*) of *he direc*ors 1ere *o be chose+( "direc*l) or i+direc*l)" b) *he ba+,s of *he associa*io+$ I+ *he fi+al refi+eme+* of 6arburg5s pla+( *he %ederal Reserve

oard of "over+ors 1ould be appoi+*ed b) *he 4reside+* of *he :+i*ed S*a*es( bu* *he real 1or, of *he oard 1ould be co+*rolled b) a %ederal Advisor) Cou+cil( mee*i+g 1i*h *he "over+ors$ The Cou+cil 1ould be chose+ b) *he direc*ors of *he *1elve %ederal Reserve a+,s( a+d 1ould remai+ u+,+o1+ *o *he public$ The +e;* co+sidera*io+ 1as *o co+ceal *he fac* *ha* *he proposed "%ederal Reserve S)s*em" 1ould be domi+a*ed b) *he mas*ers of *he #e1 ?or, mo+e) mar,e*$ The Co+gressme+ from *he Sou*h a+d *he 6es* could +o* survive if *he) vo*ed for a 6all S*ree* pla+$ %armers a+d small busi+essme+ i+ *hose areas had suffered mos* from *he mo+e) pa+ics$ There had bee+ grea* popular rese+*me+* agai+s* *he !as*er+ ba+,ers( 1hich duri+g *he +i+e*ee+*h ce+*ur) became a poli*ical moveme+* ,+o1+ as "populism"$ The priva*e papers of #icholas iddle( +o* released u+*il more *ha+ a ce+*ur) af*er his dea*h( sho1 *ha* <ui*e earl) o+ *he !as*er+ ba+,ers 1ere full) a1are of *he 1idespread public opposi*io+ *o *hem$ 4aul 6arburg adva+ced a* Be,)ll Isla+d *he primar) decep*io+ 1hich 1ould preve+* *he ci*i3e+s from recog+i3i+g *ha* his pla+ se* up a ce+*ral ba+,$ This 1as *he regio+al reserve s)s*em$ He proposed a s)s*em of four 7la*er *1elve8 bra+ch reserve ba+,s loca*ed i+ differe+* sec*io+s of *he cou+*r)$ %e1 people ou*side *he ba+,i+g 1orld 1ould reali3e *ha* *he e;is*i+g co+ce+*ra*io+ of *he +a*io+5s mo+e) a+d credi* s*ruc*ure i+ #e1 ?or, made *he proposal of a regio+al reserve s)s*em a delusio+$ A+o*her proposal adva+ced b) 4aul 6arburg a* Be,)ll Isla+d 1as *he ma++er of selec*io+ of admi+is*ra*ors for *he proposed regio+al reserve s)s*em$ Se+a*or #elso+ Aldrich had i+sis*ed *ha* *he officials should be appoi+*ive( +o* elec*ed( a+d *ha* Co+gress should have +o role i+ *heir selec*io+$ His Capi*ol Hill e;perie+ce had *augh* him *ha* co+gressio+al opi+io+ 1ould of*e+ be i+imical *o *he 6all S*ree* i+*eres*s( as Co+gressme+ from *he 6es* a+d Sou*h migh* 1ish *o demo+s*ra*e *o *heir co+s*i*ue+*s *ha* *he) 1ere pro*ec*i+g *hem agai+s* *he !as*er+ ba+,ers$ 6arburg respo+ded *ha* *he admi+is*ra*ors of *he proposed ce+*ral ba+,s should be sub=ec* *o e;ecu*ive approval b) *he 4reside+*$ This pa*e+* removal of *he s)s*em from Co+gressio+al co+*rol mea+* *ha* *he KKKKKKKKKKKKKKKKKKKKKKKKKK 6 #a*ha+iel 6righ* S*ephe+so+( #elso+ 6$ Aldrich( A Leader i+ America+ 4oli*ics( Scrib+ers( #$?$ -.D0( Chap$ LLI' "Be,)ll Isla+d" p$ DJ. 6 %ederal Reserve proposal 1as u+co+s*i*u*io+al from i*s i+cep*io+( because *he %ederal Reserve S)s*em 1as *o be a ba+, of issue$ Ar*icle -( Sec$ /( 4ar$ 9 of *he Co+s*i*u*io+ e;pressl) charges Co+gress 1i*h "*he po1er *o coi+ mo+e) a+d regula*e *he value *hereof$"$ 6arburg5s pla+ 1ould deprive

Co+gress of i*s sovereig+*)( a+d *he s)s*ems of chec,s a+d bala+ces of po1er se* up b) Thomas Befferso+ i+ *he Co+s*i*u*io+ 1ould +o1 be des*ro)ed$ Admi+is*ra*ors of *he proposed s)s*em 1ould co+*rol *he +a*io+5s mo+e) a+d credi*( a+d 1ould *hemselves be approved b) *he e;ecu*ive depar*me+* of *he gover+me+*$ The =udicial depar*me+* 7*he Supreme Cour*( e*c$8 1as alread) vir*uall) co+*rolled b) *he e;ecu*ive depar*me+* *hrough preside+*ial appoi+*me+* *o *he be+ch$ 4aul 6arburg la*er 1ro*e a massive e;posi*io+ of his pla+( The %ederal Reserve S)s*em( I*s Origi+ a+d "ro1*hJ of some -J90 pages( bu* *he +ame "Be,)ll Isla+d" appears +o1here i+ *his *e;*$ He does s*a*e 7'ol$ -( p$ 9/8@ " u* *he+ *he co+fere+ce closed( af*er a 1ee, of ear+es* delibera*io+( *he rough draf* of 1ha* la*er became *he Aldrich ill had bee+ agreed upo+( a+d a pla+ had bee+ ou*li+ed 1hich provided for a A#a*io+al Reserve Associa*io+(5 mea+i+g a ce+*ral reserve orga+i3a*io+ 1i*h a+ elas*ic +o*e issue based o+ gold a+d commercial paper$" O+ page 60( 6arburg 1ri*es( "The resul*s of *he co+fere+ce 1ere e+*irel) co+fide+*ial$ !ve+ *he fac* *here had bee+ a mee*i+g 1as +o* permi**ed *o become public$" He adds i+ a foo*+o*e( "Though eigh*ee+ MsicN )ears have si+ce go+e b)( I do +o* feel free *o give a descrip*io+ of *his mos* i+*eres*i+g co+fere+ce co+cer+i+g 1hich Se+a*or Aldrich pledged all par*icipa+*s *o secrec)$" $C$ %orbes5 revela*io+/ of *he secre* e;pedi*io+ *o Be,)ll Isla+d( had had surprisi+gl) li**le impac*$ I* did +o* appear i+ pri+* u+*il *1o )ears af*er *he %ederal Reserve Ac* had bee+ passed b) Co+gress( he+ce i* 1as +ever read duri+g *he period 1he+ i* could have had a+ effec*( *ha* KKKKKKKKKKKKKKKKKKKKKKKKKK J 4aul 6arburg( The %ederal Reserve S)s*em( I*s Origi+ a+d "ro1*h( 'olume I( p$ 9/( >acmilla+( #e1 ?or,( -.D0 / C:RR!#T O4I#IO#( &ecember( -.-6( p$ D/0 J is( duri+g *he Co+gressio+al deba*e o+ *he bill$ %orbes5 s*or) 1as also dismissed( b) *hose "i+ *he ,+o1(" as prepos*erous( a+d a mere i+ve+*io+$ S*ephe+so+ me+*io+s *his o+ page 2/2 of his boo, abou* Aldrich$. "This curious episode of Be,)ll Isla+d has bee+ ge+erall) regarded as a m)*h$ $C$ %orbes go* some i+forma*io+ from o+e of *he repor*ers$ I* *old i+ vague ou*li+e *he Be,)ll Isla+d s*or)( bu*

made +o impressio+ a+d 1as ge+erall) regarded as a mere )ar+$" The coverup of *he Be,)ll Isla+d co+fere+ce proceeded alo+g *1o li+es( bo*h of 1hich 1ere successful$ The firs*( as S*ephe+so+ me+*io+s( 1as *o dismiss *he e+*ire s*or) as a roma+*ic co+coc*io+ 1hich +ever ac*uall) *oo, place$ Al*hough *here 1ere brief refere+ces *o Be,)ll Isla+d i+ la*er boo,s co+cer+i+g *he %ederal Reserve S)s*em( *hese also a**rac*ed li**le public a**e+*io+$ As 1e have +o*ed( 6arburg5s massive a+d supposedl) defi+i*e 1or, o+ *he %ederal Reserve S)s*em does +o* me+*io+ Be,)ll Isla+d a* all( al*hough he does admi* *ha* a co+fere+ce *oo, place$ I+ +o+e of his volumi+ous speeches or 1ri*i+gs do *he 1ords "Be,)ll Isla+d" appear( 1i*h a si+gle +o*able e;cep*io+$ He agreed *o 4rofessor S*ephe+so+5s re<ues* *ha* he prepare a brief s*a*eme+* for *he Aldrich biograph)$ This appears o+ page 2/9 as par* of "The 6arburg >emora+dum"$ I+ *his e;cerp*( 6arburg 1ri*es( "The ma**er of a u+iform discou+* ra*e 1as discussed a+d se**led a* Be,)ll Isla+d$" A+o*her member of *he "%irs* #ame Club" 1as less re*ice+*$ %ra+, 'a+derlip la*er published a fe1 brief refere+ces *o *he co+fere+ce$ I+ *he Sa*urda) !ve+i+g 4os*( %ebruar) .( -.D9( p$ 09( 'a+derlip 1ro*e@ "&espi*e m) vie1s abou* *he value *o socie*) of grea*er publici*) for *he affairs of corpora*io+s( *here 1as a+ occasio+ +ear *he close of -.-0( 1he+ I 1as as secre*ive( i+deed( as fur*ive( as a+) co+spira*or$ $ $ $ Si+ce i* 1ould have bee+ fa*al *o Se+a*or Aldrich5s pla+ *o have i* ,+o1+ *ha* he 1as calli+g o+ a+)bod) from 6all S*ree* *o help him i+ prepari+g his bill( precau*io+s 1ere *a,e+ *ha* 1ould have deligh*ed *he hear* of Bames S*illma+ 7a colorful a+d secre*ive ba+,er 1ho 1as 4reside+* of *he #a*io+al Ci*) a+, duri+g *he Spa+ishEAmerica+ 6ar( a+d 1ho 1as *hough* *o have bee+ i+volved i+ ge**i+g us i+*o *ha* 1ar8 $ $ $ I do +o* feel i* is a+) e;aggera*io+ *o spea, of our secre* e;pedi*io+ *o Be,)ll Isla+d as *he occasio+ of *he ac*ual co+cep*io+ of 1ha* eve+*uall) became *he %ederal Reserve S)s*em$" I+ a Travel fea*ure i+ The 6ashi+g*o+ 4os*( >arch 0J( -./D( "%ollo1 The Rich *o Be,)ll Isla+d"( Ro) Hoopes 1ri*es@ "I+ -.-0( 1he+ Aldrich a+d four fi+a+cial e;per*s 1a+*ed a place *o mee* i+ secre* *o reform *he cou+*r)5s ba+,i+g s)s*em( *he) fa,ed a hu+*i+g *rip *o Be,)ll a+d for -0 da)s holed up i+ *he

Clubhouse( 1here *he) made pla+s for 1ha* eve+*uall) 1ould become *he %ederal Reserve a+,$" KKKKKKKKKKKKKKKKKKKKKKKKKK . #a*ha+iel 6righ* S*ephe+so+( #elso+ 6$ Aldrich( A Leader i+ America+ 4oli*ics( Scrib+ers( #$?$ -.D0( Chap$ LLI' "Be,)ll Isla+d" p$ DJ. / 'a+derlip la*er 1ro*e i+ his au*obiograph)( %rom %armbo) *o %i+a+cier@-0 "Our secre* e;pedi*io+ *o Be,)ll Isla+d 1as *he occasio+ of *he ac*ual co+cep*io+ of 1ha* eve+*uall) became *he %ederal Reserve S)s*em$ The esse+*ial poi+*s of *he Aldrich 4la+ 1ere all co+*ai+ed i+ *he %ederal Reserve Ac* as i* 1as passed$" 4rofessor !$R$A$ Seligma+( a member of *he i+*er+a*io+al ba+,i+g famil) of B$ O 6$ Seligma+( a+d head of *he &epar*me+* of !co+omics a* Columbia :+iversi*)( 1ro*e i+ a+ essa) published b) *he Academ) of 4oli*ical Scie+ce( 4roceedi+gs( v$ 2( #o$ 2( p$ D/JE.0@ "I* is ,+o1+ *o a ver) fe1 ho1 grea* is *he i+deb*ed+ess of *he :+i*ed S*a*es *o >r$ 6arburg$ %or i* ma) be said 1i*hou* fear of co+*radic*io+ *ha* i+ i*s fu+dame+*al fea*ures *he %ederal Reserve Ac* is *he 1or, of >r$ 6arburg more *ha+ a+) o*her ma+ i+ *he cou+*r)$ The e;is*e+ce of a %ederal Reserve oard crea*es( i+ ever)*hi+g bu* i+ +ame( a real ce+*ral ba+,$ I+ *he *1o fu+dame+*als of comma+d of reserves a+d of a discou+* polic)( *he %ederal Reserve Ac* has fra+,l) accep*ed *he pri+ciple of *he Aldrich ill( a+d *hese pri+ciples( as has bee+ s*a*ed( 1ere *he crea*io+ of >r$ 6arburg a+d >r$ 6arburg alo+e$ I* mus* +o* be forgo**e+ *ha* >r$ 6arburg had a prac*ical ob=ec* i+ vie1$ I+ formula*i+g his pla+s a+d i+ adva+ci+g i+ *hem sligh*l) var)i+g sugges*io+s from *ime *o *ime( i* 1as i+cumbe+* o+ him *o remember *ha* *he educa*io+ of *he

cou+*r) mus* be gradual a+d *ha* a large par* of *he *as, 1as *o brea, do1+ pre=udices a+d remove suspicio+$ His pla+s *herefore co+*ai+ed all sor*s of elabora*e sugges*io+s desig+ed *o guard *he public agai+s* fa+cied da+gers a+d *o persuade *he cou+*r) *ha* *he ge+eral scheme 1as a* all prac*icable$ I* 1as *he hope of >r$ 6arburg *ha* 1i*h *he lapse of *ime i* migh* be possible *o elimi+a*e from *he la1 a fe1 clauses 1hich 1ere i+ser*ed largel) a* his sugges*io+ for educa*io+al purposes$" #o1 *ha* *he public deb* of *he :+i*ed S*a*es has passed a *rillio+ dollars( 1e ma) i+deed admi* "ho1 grea* is *he i+deb*ed+ess of *he :+i*ed S*a*es *o >r$ 6arburg$" A* *he *ime he 1ro*e *he %ederal Reserve Ac*( *he public deb* 1as almos* +o+e;is*e+*$ 4rofessor Seligma+ poi+*s ou* 6arburg5s remar,able prescie+ce *ha* *he real *as, of *he members of *he Be,)ll Isla+d co+fere+ce 1as *o prepare a ba+,i+g pla+ 1hich 1ould graduall) "educa*e *he cou+*r)" a+d "brea, do1+ pre=udices a+d remove suspicio+"$ The campaig+ *o e+ac* *he pla+ i+*o la1 succeeded i+ doi+g =us* *ha*$ KKKKKKKKKKKKKKKKKKKKKKKKKK -0 %ra+, 'a+derlip( %rom %armbo) *o %i+a+cier .

CHA4T!R T6O

The Aldrich 4la+

"%i+a+ce a+d *he *ariff are reserved b) #elso+ Aldrich as falli+g 1i*hi+ his sole purvie1 a+d =urisdic*io+$ >r$ Aldrich is e+deavori+g *o devise( *hrough *he #a*io+al >o+e*ar) Commissio+( a ba+,i+g a+d curre+c) la1$ A grea* ma+) hu+dred *housa+d perso+s are firml) of *he opi+io+ *ha* >r$ Aldrich sums up i+ his perso+ali*) *he grea*es* a+d mos* si+is*er me+ace *o *he popular 1elfare of *he :+i*ed S*a*es$ !r+es* #e1ma+ rece+*l) said( A6ha* *he Sou*h visi*s o+ *he #egro i+ a poli*ical 1a)( Aldrich 1ould me*e ou* *o *he mudsills of *he #or*h( if he could devise a safe a+d prac*ical 1a) *o accomplish i*$5"EEHarper5s 6ee,l)( >a) J( -.-0$" The par*icipa+*s i+ *he Be,)ll Isla+d co+fere+ce re*ur+ed *o #e1 ?or, *o direc* a +a*io+1ide propaga+da campaig+ i+ favor of *he "Aldrich 4la+"$ Three of *he leadi+g u+iversi*ies( 4ri+ce*o+( Harvard( a+d *he :+iversi*) of Chicago( 1ere used as *he rall)i+g poi+*s for *his propaga+da( a+d +a*io+al ba+,s had *o co+*ribu*e *o a fu+d of five millio+ dollars *o persuade *he

America+ public *ha* *his ce+*ral ba+, pla+ should be e+ac*ed i+*o la1 b) Co+gress$ 6oodro1 6ilso+( gover+or of #e1 Berse) a+d former preside+* of 4ri+ce*o+ :+iversi*)( 1as e+lis*ed as a spo,esma+ for *he Aldrich 4la+$ &uri+g *he 4a+ic of -.0J( 6ilso+ had declared( "All *his *rouble could be aver*ed if 1e appoi+*ed a commi**ee of si; or seve+ publicEspiri*ed me+ li,e B$4$ >orga+ *o ha+dle *he affairs of our cou+*r)$" I+ his biograph) of #elso+ Aldrich i+ -.D0( S*ephe+so+ sa)s@ "A pamphle* 1as issued Ba+uar) -6( -.--( ASugges*ed 4la+ for >o+e*ar) Legisla*io+5( b) Ho+$ #elso+ Aldrich( based o+ Be,)ll Isla+d co+clusio+s$" S*ephe+so+ sa)s o+ page D//( "A+ orga+i3a*io+ for fi+a+cial progress has bee+ formed$ >r$ 6arburg i+*roduced a resolu*io+ au*hori3i+g *he es*ablishme+* of *he Ci*i3e+s5 League( la*er *he #a*io+al Ci*i3e+s League $ $ $ 4rofessor Laughli+ of *he :+iversi*) of Chicago 1as give+ charge of *he League5s propaga+da$"-I* is +o*able *ha* S*ephe+so+ charac*eri3es *he 1or, of *he #a*io+al Ci*i3e+s League as "propaga+da"( i+ li+e 1i*h Seligma+5s e;posi*io+ of KKKKKKKKKKKKKKKKKKKKKKKKKK -- #a*ha+iel 6righ* S*ephe+so+( #elso+ 6$ Aldrich( A Leader i+ America+ 4oli*ics( Scrib+ers( #$?$ -.D0 -0 6arburg5s 1or, as "*he educa*io+ of *he cou+*r)" a+d "*o brea, do1+ pre=udices"$ >uch of *he five millio+ dollars of *he ba+,ers slush fu+d 1as spe+* u+der *he auspices of *he #a*io+al Ci*i3e+s5 League( 1hich 1as made up of college professors$ The *1o mos* *ireless propaga+dis*s for *he Aldrich 4la+ 1ere 4rofessor O$>$ Sprague of Harvard( a+d B$ Laure+ce Laughli+ of *he :+iversi*) of Chicago$ Co+gressma+ Charles A$ Li+dbergh( Sr$( +o*es@ "B$ Laure+ce Laughli+( Chairma+ of *he !;ecu*ive Commi**ee of *he #a*io+al Ci*i3e+s5 League si+ce i*s orga+i3a*io+( has re*ur+ed *o his posi*io+ as professor of poli*ical eco+omics i+ *he :+iversi*) of Chicago$ I+ Bu+e( -.--( 4rofessor Laughli+ 1as give+ a )ear5s leave from *he u+iversi*)( *ha* he migh* give all of his *ime *o *he campaig+ of educa*io+ u+der*a,e+ b) *he League $ $ $ He has 1or,ed i+defa*igabl)( a+d i* is largel) due *o his effor*s a+d his persis*e+ce *ha* *he campaig+ e+*ers *he fi+al s*age 1i*h fla**eri+g prospec*s of a successful ou*come $ $ $ The reader ,+o1s *ha* *he :+iversi*)

of Chicago is a+ i+s*i*u*io+ e+do1ed b) Boh+ &$ Roc,efeller( 1i*h +earl) fif*) millio+ dollars$"-0 I+ his biograph) of #elso+ Aldrich( S*ephe+so+ reveals *ha* *he Ci*i3e+s5 League 1as also a Be,)ll Isla+d produc*$ I+ chap*er 02 1e fi+d *ha*@ The Aldrich 4la+ 1as represe+*ed *o Co+gress as *he resul* of *hree )ears of 1or,( s*ud) a+d *ravel b) members of *he #a*io+al >o+e*ar) Commissio+( 1i*h e;pe+di*ures of more *ha+ *hree hu+dred *housa+d dollars$P Tes*if)i+g before *he Commi**ee o+ Rules( &ecember -9( -.--( af*er *he Aldrich pla+ had bee+ i+*roduced i+ Co+gress( Co+gressma+ Li+dbergh s*a*ed( "Our fi+a+cial s)s*em is a false o+e a+d a huge burde+ o+ *he people $ $ $ I have alleged *ha* *here is a >o+e) Trus*$ The Aldrich pla+ is a scheme plai+l) i+ *he i+*eres* of *he Trus* $ $ $ 6h) does *he >o+e) Trus* press so hard for *he Aldrich 4la+ +o1( before *he people ,+o1 1ha* *he mo+e) *rus* has bee+ doi+gH" Li+dbergh co+*i+ued his speech( "The Aldrich 4la+ is *he 6all S*ree* 4la+$ I* is a broad challe+ge *o *he "over+me+* b) *he champio+ of *he >o+e) Trus*$ I* mea+s a+o*her pa+ic( if +ecessar)( *o i+*imida*e *he people$ Aldrich( paid b) *he "over+me+* *o represe+* *he people( proposes a pla+ for *he *rus*s i+s*ead$ I* 1as b) a ver) clever move *ha* *he #a*io+al >o+e*ar) Commissio+ 1as crea*ed$ I+ -.0J +a*ure respo+ded mos* beau*ifull) a+d gave *his cou+*r) *he mos* bou+*iful crop i* had ever had$ O*her i+dus*ries 1ere bus) *oo( a+d from a +a*ural s*a+dpoi+* all *he co+di*io+s 1ere righ* for a mos* KKKKKKKKKKKKKKKKKKKKKKKKKK -0 Charles A$ Li+dbergh( Sr$( a+,i+g( Curre+c) a+d *he >o+e) Trus*( -.-D( p$ -DP I+ -.--( *he Aldrich 4la+ became par* of *he official pla*form of *he Republica+ 4ar*)$ -prosperous )ear$ I+s*ead( a pa+ic e+*ailed e+ormous losses upo+ us$ 6all S*ree* ,+e1 *he America+ people 1ere dema+di+g a remed) agai+s* *he recurre+ce of such a ridiculousl) u++a*ural co+di*io+$ >os* Se+a*ors a+d Represe+*a*ives fell i+*o *he 6all S*ree* *rap a+d passed *he Aldrich 'reela+d !merge+c) Curre+c) ill$ u* *he real purpose 1as *o ge* a mo+e*ar) commissio+ 1hich 1ould frame a proposi*io+ for ame+dme+*s *o our curre+c) a+d ba+,i+g la1s 1hich 1ould sui* *he >o+e) Trus*$ The i+*eres*s are +o1 bus) ever)1here educa*i+g *he people i+ favor of *he Aldrich 4la+$ I* is repor*ed *ha* a large sum of mo+e) has bee+ raised for

*his purpose$ 6all S*ree* specula*io+ brough* o+ *he 4a+ic of -.0J$ The deposi*ors5 fu+ds 1ere loa+ed *o gamblers a+d a+)bod) *he >o+e) Trus* 1a+*ed *o favour$ The+ 1he+ *he deposi*ors 1a+*ed *heir mo+e)( *he ba+,s did +o* have i*$ Tha* made *he pa+ic$" !d1ard 'reela+d( coEau*hor of *he bill( 1ro*e i+ *he Augus* 09( -.-0 I+depe+de+* 71hich 1as o1+ed b) Aldrich8( ":+der *he proposed mo+e*ar) pla+ of Se+a*or Aldrich( mo+opolies 1ill disappear( because *he) 1ill +o* be able *o ma,e more *ha+ four perce+* i+*eres* a+d mo+opolies ca++o* co+*i+ue a* such a lo1 ra*e$ Also( *his 1ill mar, *he disappeara+ce of *he "over+me+* from *he ba+,i+g busi+ess$" 'reela+d5s fa+*as*ic claims 1ere *)pical of *he propaga+da flood u+leashed *o pass *he Aldrich 4la+$ >o+opolies 1ould disappear( *he "over+me+* 1ould disappear from *he ba+,i+g busi+ess$ 4ie i+ *he s,)$ #a*io+ >aga3i+e( Ba+uar) -.( -.--( +o*ed( "The +ame of Ce+*ral a+, is carefull) avoided( bu* *he A%ederal Reserve Associa*io+5( *he +ame give+ *o *he proposed ce+*ral orga+i3a*io+( is e+do1ed 1i*h *he usual po1ers a+d respo+sibili*ies of a !uropea+ Ce+*ral a+,$" Af*er *he #a*io+al >o+e*ar) Commissio+ had re*ur+ed from !urope( i* held +o official mee*i+gs for +earl) *1o )ears$ #o records or mi+u*es 1ere ever prese+*ed sho1i+g 1ho had au*hored *he Aldrich 4la+$ Si+ce *he) held +o official mee*i+gs( *he members of *he commissio+ could hardl) claim *he 4la+ as *heir o1+$ The sole *a+gible resul* of *he Commissio+5s *hree hu+dred *housa+d dollar e;pe+di*ure 1as a librar) of *hir*) massive volumes o+ !uropea+ ba+,i+g$ T)pical of *hese 1or,s is a *housa+d page his*or) of *he Reichsba+,( *he ce+*ral ba+, 1hich co+*rolled mo+e) a+d credi* i+ "erma+)( a+d 1hose pri+cipal s*oc,holders( 1ere *he Ro*hschilds a+d 4aul 6arburg5s famil) ba+,i+g house of >$>$ 6arburg Compa+)$ The Commissio+5s records sho1 *ha* i* +ever fu+c*io+ed as a delibera*ive bod)$ I+deed( i*s o+l) "mee*i+g" 1as *he secre* co+fere+ce held a* Be,)ll Isla+d( a+d *his co+fere+ce is +o* me+*io+ed i+ a+) publica*io+ of *he Commissio+$ Se+a*or Cummi+s passed a resolu*io+ i+ Co+gress orderi+g *he Commissio+ *o repor* o+ Ba+uar) /( -.-0( a+d sho1 some co+s*ruc*ive resul*s of i*s *hree )ears5 1or,$ I+ *he face of *his challe+ge( *he #a*io+al >o+e*ar) Commissio+ ceased *o e;is*$ -0 6i*h *heir five millio+ dollars as a 1ar ches*( *he Aldrich 4la+ propaga+dis*s 1aged a +oEholds barred 1ar agai+s* *heir opposi*io+$ A+dre1 %rame *es*ified before *he House a+,i+g a+d Curre+c) Commi**ee of *he America+ a+,ers Associa*io+$ He represe+*ed a group of 6es*er+ ba+,ers 1ho opposed *he Aldrich 4la+@

CHAIR>A# CART!R "LASS@ "6h) did+5* *he 6es*er+ ba+,ers ma,e *hemselves heard 1he+ *he America+ a+,ers Associa*io+ gave i*s u+<ualified a+d( 1e are assured( u+a+imous approval of *he scheme proposed b) *he #a*io+al >o+e*ar) Commissio+H" A#&R!6 %RA>!@ "I5m glad )ou called m) a**e+*io+ *o *ha*$ 6he+ *ha* mo+e*ar) bill 1as give+ *o *he cou+*r)( i* 1as bu* a fe1 da)s previous *o *he mee*i+g of *he America+ a+,ers Associa*io+ i+ #e1 Orlea+s i+ -.--$ There 1as +o* o+e ba+,er i+ a hu+dred 1ho had read *ha* bill$ 6e had *1elve addresses i+ favor of i*$ "e+eral Hamb) of Aus*i+( Te;as( 1ro*e a le**er *o 4reside+* 6a**s as,i+g for a heari+g agai+s* *he bill$ He did +o* ge* a ver) cour*eous a+s1er$ I refused *o vo*e o+ i*( a+d a grea* ma+) o*her ba+,ers did li,e1ise$" >R$ :LCL!?@ "&o )ou mea+ *ha* +o member of *he Associa*io+ could be heard i+ opposi*io+ *o *he billH" A#&R!6 %RA>!@ "The) *hro**led all argume+*$" >R$ CI#&R!&@ " u* *he repor* 1as give+ ou* *ha* i* 1as prac*icall) u+a+imous$" A#&R!6 %RA>!@ "The bill had alread) bee+ prepared b) Se+a*or Aldrich a+d prese+*ed *o *he e;ecu*ive cou+cil of *he America+ a+,ers Associa*io+ i+ >a)( -.--$ As a member of *ha* cou+cil( I received a cop) *he da) before *he) ac*ed upo+ i*$ 6he+ *he bill came i+ a* #e1 Orlea+s( *he ba+,ers of *he :+i*ed S*a*es had +o* read i*$" >R$ CI#&R!&@ "&id *he presidi+g officer simpl) rule ou* *hose 1ho 1a+*ed *o discuss i* +ega*ivel)H" A#&R!6 %RA>!@ "The) 1ould +o* allo1 a+)o+e o+ *he program 1ho 1as +o* i+ favor of *he bill$" CHAIR>A# "LASS@ "6ha* sig+ifica+ce has *he fac* *ha* a* *he +e;* a++ual mee*i+g of *he America+ a+,ers Associa*io+ held a* &e*roi* i+ -.-0( *he Associa*io+ did +o* rei*era*e i*s e+dorseme+* of *he pla+ of *he #a*io+al >o+e*ar) Commissio+( ,+o1+ as *he Aldrich schemeH" A#&R!6 %RA>!@ "I* did +o* rei*era*e *he e+dorseme+* for *he simple fac* *ha* *he bac,ers of *he Aldrich 4la+ ,+e1 *ha* *he Associa*io+ 1ould +o* e+dorse i*$ 6e 1ere read) for *hem( bu* *he) did +o* bri+g i* up$" -D A+dre1 %rame e;posed *he collusio+ 1hich i+ -.-- procured a+ e+dorseme+* of *he Aldrich 4la+ from *he America+ a+,ers Associa*io+ bu* 1hich i+ -.-0 did +o* eve+ dare *o repea* i*s e+dorseme+*( for fear of a+ ho+es* a+d ope+ discussio+ of *he meri*s of *he pla+$

Chairma+ "lass *he+ called as 1i*+ess o+e of *he *e+ mos* po1erful ba+,ers i+ *he :+i*ed S*a*es( "eorge lume+*hal( par*+er of *he i+*er+a*io+al ba+,i+g house of La3ard %reres a+d bro*herEi+Ela1 of !uge+e >e)er( Br$ Car*er "lass effusivel) 1elcomed lume+*hal( s*a*i+g *ha* "Se+a*or O5"orma+ of #e1 ?or, 1as ,i+d e+ough *o sugges* )our +ame *o us$" A )ear la*er( O5"orma+ preve+*ed a Se+a*e Commi**ee from as,i+g his mas*er( 4aul 6arburg( a+) embarrassi+g <ues*io+s before approvi+g his +omi+a*io+ as *he firs* "over+or of *he %ederal Reserve oard$ "eorge lume+*hal s*a*ed( "Si+ce -/.D m) firm of La3ard %reres has bee+ foremos* i+ impor*a*io+s a+d e;por*a*io+s of gold a+d has *hereb) come i+*o co+*ac* 1i*h ever)bod) 1ho had a+)*hi+g *o do 1i*h i*$" Co+gressma+ Ta)lor as,ed( "Have )ou a s*a*eme+* *here as *o *he par* )ou have had i+ *he impor*a*io+ of gold i+*o *he :+i*ed S*a*esH" Ta)lor as,ed *his because *he 4a+ic of -/.D is ,+o1+ *o eco+omis*s as a classic e;ample of a mo+e) pa+ic caused b) gold moveme+*s$ "#o(" replied "eorge lume+*hal( "I have +o*hi+g a* all o+ *ha*( because i* is +o* beari+g o+ *he <ues*io+$" A ba+,er from 4hiladelphia( Leslie Sha1( disse+*ed 1i*h o*her 1i*+esses a* *hese heari+gs( cri*ici3i+g *he much vau+*ed "dece+*rali3a*io+" of *he S)s*em$ He said( ":+der *he Aldrich 4la+ *he ba+,ers are *o have local associa*io+s a+d dis*ric* associa*io+s( a+d 1he+ )ou have a local orga+i3a*io+( *he ce+*ered co+*rol is assured$ Suppose 1e have a local associa*io+ i+ I+dia+apolisG ca+ )ou +o* +ame *he *hree me+ 1ho 1ill domi+a*e *ha* associa*io+H A+d *he+ ca+ )ou +o* +ame *he o+e ma+ ever)1here else$ 6he+ )ou have hoo,ed *he ba+,s *oge*her( *he) ca+ have *he bigges* i+flue+ce of a+)*hi+g i+ *his cou+*r)( 1i*h *he e;cep*io+ of *he +e1spapers$" To promo*e *he &emocra*ic curre+c) bill( Car*er "lass made public *he sorr) record of *he Republica+ effor*s of Se+a*or Aldrich5s #a*io+al >o+e*ar) Commissio+$ His House Repor* i+ -.-D said( "Se+a*or >ac'eagh fi;es *he cos* of *he #a*io+al >o+e*ar) Commissio+ *o >a) -0( -.-- a* Q00J(-D0$ The) have si+ce spe+* a+o*her hu+dred *housa+d dollars of *he *a;pa)er5s mo+e)$ The 1or, do+e a* such cos* ca++o* be ig+ored( bu*( havi+g e;ami+ed *he e;*e+sive li*era*ure published b) *he Commissio+( *he a+,i+g a+d Curre+c) Commi**ee fi+ds li**le *ha* bears upo+ *he prese+* s*a*e of *he credi* mar,e* of *he :+i*ed S*a*es$ 6e ob=ec* *o *he Aldrich ill o+ *he follo1i+g poi+*s@ -2 I*s e+*ire lac, of ade<ua*e gover+me+* or public co+*rol of *he ba+,i+g mecha+ism i* se*s up$

I*s *e+de+c) *o *hro1 vo*i+g co+*rol i+*o *he ha+ds of *he large ba+,s of *he s)s*em$ The e;*reme da+ger of i+fla*io+ of curre+c) i+here+* i+ *he s)s*em$ The i+si+ceri*) of *he bo+dEfu+di+g pla+ provided for b) *he measure( *here bei+g a barefaced pre*e+se *ha* *his s)s*em 1as *o cos* *he gover+me+* +o*hi+g$ The da+gerous mo+opolis*ic aspec*s of *he bill$ Our Commi**ee a* *he ou*se* of i*s 1or, 1as me* b) a 1ellEdefi+ed se+*ime+* i+ favor of a ce+*ral ba+, 1hich 1as *he ma+ifes* ou*gro1*h of *he 1or, *ha* had bee+ do+e b) *he #a*io+al >o+e*ar) Commissio+$" "lass5s de+u+cia*io+ of *he Aldrich ill as a ce+*ral ba+, pla+ ig+ored *he fac* *ha* his o1+ %ederal Reserve Ac* 1ould fulfill all *he fu+c*io+s of a ce+*ral ba+,$ I*s s*oc, 1ould be o1+ed b) priva*e s*oc,holders 1ho could use *he credi* of *he "over+me+* for *heir o1+ profi*G i* 1ould have co+*rol of *he +a*io+5s mo+e) a+d credi* resourcesG a+d i* 1ould be a ba+, of issue 1hich 1ould fi+a+ce *he gover+me+* b) "mobili3i+g" credi* i+ *ime of 1ar$ I+ "The Ra*io+ale of Ce+*ral a+,i+g(" 'era C$ Smi*h 7Commi**ee for >o+e*ar) Research a+d !duca*io+( Bu+e( -./-8 1ri*es( "The primar) defi+i*io+ of a ce+*ral ba+, is a ba+,i+g s)s*em i+ 1hich a si+gle ba+, has ei*her a comple*e or residuar) mo+opol) i+ *he +o*e issue$ A ce+*ral ba+, is +o* a +a*ural produc* of ba+,i+g developme+*$ I* is imposed from ou*side or comes i+*o bei+g as *he resul* of "over+me+* favors$" Thus a ce+*ral ba+, a**ai+s i*s comma+di+g posi*io+ from i*s gover+me+* gra+*ed mo+opol) of *he +o*e issue$ This is *he ,e) *o i*s po1er$ Also( *he ac* of es*ablishi+g a ce+*ral ba+, has a direc* i+fla*io+ar) impac* because of *he frac*io+al reserve s)s*em( 1hich allo1s *he crea*io+ of boo,Ee+*r) loa+s a+d *hereb)( mo+e)( a +umber of *imes *he ac*ual "mo+e)" 1hich *he ba+, has i+ i*s deposi*s or reserves$ The Aldrich 4la+ +ever came *o a vo*e i+ Co+gress( because *he Republica+s los* co+*rol of *he House i+ -.-0( a+d subse<ue+*l) los* *he Se+a*e a+d *he 4reside+c) i+ -.-0$ -9

CHA4T!R THR!!

The %ederal Reserve Ac*

"Our fi+a+cial s)s*em is a false o+e a+d a huge burde+ o+ *he people $ $ $ This Ac* es*ablishes *he mos* giga+*ic *rus* o+ ear*h$"EECo+gressma+ Charles Augus*us Li+dbergh( Sr$ The speeches of Se+a*or La%olle**e a+d Co+gressma+ Li+dbergh became rall)i+g poi+*s of opposi*io+ *o *he Aldrich 4la+ i+ -.-0$ The) also aroused popular feeli+g agai+s* *he >o+e) Trus*$ Co+gressma+ Li+dbergh said( o+ &ecember -9( -.--( "The gover+me+* prosecu*es o*her *rus*s( bu* suppor*s *he mo+e) *rus*$ I have bee+ 1ai*i+g pa*ie+*l) for several )ears for a+ oppor*u+i*) *o e;pose *he false mo+e) s*a+dard( a+d *o sho1 *ha* *he grea*es* of all favori*ism is *ha* e;*e+ded b) *he gover+me+* *o *he mo+e) *rus*$" Se+a*or La%olle**e publicl) charged *ha* a mo+e) *rus* of fif*) me+ co+*rolled *he :+i*ed S*a*es$ "eorge %$ a,er( par*+er of B$4$ >orga+( o+ bei+g <ueried b) repor*ers as *o *he *ru*h of *he charge( replied *ha* i* 1as absolu*el) i+ error$ He said *ha* he ,+e1 from perso+al ,+o1ledge *ha* +o* more *ha+ eigh* me+ ra+ *his cou+*r)$ The #a*io+ >aga3i+e replied edi*oriall) *o Se+a*or La%olle**e *ha* "If *here is a >o+e) Trus*( i* 1ill +o* be prac*ical *o es*ablish *ha* i* e;ercises i*s i+flue+ce ei*her for good or for bad$" Se+a*or La%olle**e remar,s i+ his memoirs *ha* his speech agai+s* *he >o+e) Trus* la*er cos* him *he 4reside+c) of *he :+i*ed S*a*es( =us* as 6oodro1 6ilso+5s earl) suppor* of *he Aldrich 4la+ had brough* him i+*o co+sidera*io+ for *ha* office$ Co+gress fi+all) made a ges*ure *o appease popular feeli+g b) appoi+*i+g a commi**ee *o i+ves*iga*e *he co+*rol of mo+e) a+d credi* i+ *he :+i*ed S*a*es$ This 1as *he 4u=o Commi**ee ( a subcommi**ee of *he House a+,i+g a+d Curre+c) Commi**ee( 1hich co+duc*ed *he famous ">o+e) Trus*" heari+gs i+ -.-0( u+der *he leadership of Co+gressma+ Arse+e 4u=o of Louisia+a( 1ho 1as regarded as a spo,esma+ for *he oil i+*eres*s$ These heari+gs 1ere delibera*el) dragged o+ for five mo+*hs( a+d resul*ed i+ si;E*housa+d pages of pri+*ed *es*imo+) i+ four volumes$ >o+*h af*er mo+*h( *he ba+,ers made *he *rai+ *rip from #e1 ?or, *o 6ashi+g*o+( *es*ified before *he Commi**ee a+d re*ur+ed *o #e1 ?or,$ The heari+gs 1ere e;*remel) dull( a+d +o s*ar*li+g i+forma*io+ *ur+ed up a* *hese sessio+s$ The ba+,ers solem+l) admi**ed *ha* *he) -6 1ere i+deed ba+,ers( i+sis*ed *ha* *he) al1a)s opera*ed i+ *he public i+*eres*( a+d claimed *ha* *he) 1ere a+ima*ed o+l) b) *he highes* ideals of public service( li,e *he Co+gressme+ before 1hom *he) 1ere *es*if)i+g$ The parado;ical +a*ure of *he 4u=o >o+e) Trus* Heari+gs ma) be**er be u+ders*ood if 1e e;ami+e *he ma+ 1ho si+gleEha+dedl) carried o+ *hese

heari+gs( Samuel :+*erm)er$ He 1as o+e of *he pri+cipal co+*ribu*ors *o 6oodro1 6ilso+5s 4reside+*ial campaig+ fu+d( a+d 1as o+e of *he 1eal*hies* corpora*io+ la1)ers i+ #e1 ?or,$ He s*a*es i+ his au*obiograph) i+ "6ho5s 6ho" of -.06 *ha* he o+ce received a QJJ9(000 fee for a si+gle legal *ra+sac*io+( *he successful merger of *he :*ah Copper Compa+) a+d *he os*o+ Co+solida*ed a+d #evada Compa+)( a firm 1i*h a mar,e* value of o+e hu+dred millio+ dollars$ He refused *o as, ei*her Se+a*or La%olle**e or Co+gressma+ Li+dbergh *o *es*if) i+ *he i+ves*iga*io+ 1hich *he) alo+e had forced Co+gress *o hold$ As Special Cou+sel for *he 4u=o Commi**ee( :+*erm)er ra+ *he heari+gs as a o+eEma+ opera*io+$ The Co+gressio+al members( i+cludi+g i*s chairma+( Co+gressma+ Arse+e 4u=o( seemed *o have bee+ s*ruc, dumb from *he comme+ceme+* of *he heari+gs *o *heir co+clusio+$ O+e of *hese sile+* serva+*s of *he public 1as Co+gressma+ Bames )r+es( of Sou*h Caroli+a( represe+*i+g er+ard aruch5s home dis*ric*( 1ho la*er achieved fame as " aruch5s ma+"( a+d 1as placed b) aruch i+ charge of *he Office of 6ar >obili3a*io+ duri+g *he Seco+d 6orld 6ar$ Al*hough he 1as a specialis* i+ such ma**ers( :+*erm)er did +o* as, a+) of *he ba+,ers abou* *he s)s*em of i+*erloc,i+g direc*ora*es *hrough 1hich *he) co+*rolled i+dus*r)$ He did +o* go i+*o i+*er+a*io+al gold moveme+*s( 1hich 1ere ,+o1+ as a fac*or i+ mo+e) pa+ics( or *he i+*er+a*io+al rela*io+ships be*1ee+ America+ ba+,ers a+d !uropea+ ba+,ers$ The i+*er+a*io+al ba+,i+g houses of !uge+e >e)er( La3ard %reres( B$ O 6$ Seligma+( Lade+burg Thalma++( Spe)er ro*hers( >$ >$ 6arburg( a+d *he Ro*hschild ro*hers did +o* arouse Samuel :+*erm)er5s curiosi*)( al*hough i* 1as 1ell ,+o1+ i+ *he #e1 ?or, fi+a+cial 1orld *ha* all of *hese famil) ba+,i+g houses ei*her had bra+ches or co+*rolled subsidiar) houses i+ 6all S*ree*$ 6he+ Bacob Schiff appeared before *he 4u=o Commi**ee( >r$ :+*erm)er5s adroi* <ues*io+i+g allo1ed >r$ Schiff *o *al, for ma+) mi+u*es 1i*hou* reveali+g a+) i+forma*io+ abou* *he opera*io+s of *he ba+,i+g house of Cuh+ Loeb Compa+)( of 1hich he 1as se+ior par*+er( a+d 1hich Se+a*or Rober* L$ O1e+ had ide+*ified as *he represe+*a*ive of *he !uropea+ Ro*hschilds i+ *he :+i*ed S*a*es$ The agi+g B$4$ >orga+( 1ho had o+l) a fe1 more mo+*hs *o live( appeared before *he Commi**ee *o =us*if) his decades of i+*er+a*io+al fi+a+cial deals$ He s*a*ed for >r$ :+*erm)er5s edifica*io+ *ha* ">o+e) is a commodi*)$" This 1as a favori*e plo) of *he mo+e) crea*ors( as *he) 1ished *o ma,e *he public believe *ha* *he crea*io+ of mo+e) 1as a +a*ural occurE -J re+ce a,i+ *o *he gro1i+g of a field of cor+( al*hough i* 1as ac*uall) a bou+*) co+ferred upo+ *he ba+,ers b) gover+me+*s over 1hich *he) had gai+ed co+*rol$

B$4$ >orga+ also *old *he 4u=o Commi**ee *ha*( i+ ma,i+g a loa+( he seriousl) co+sidered o+l) o+e fac*or( a ma+5s charac*erG eve+ *he ma+5s abili*) *o repa) *he loa+( or his colla*eral( 1ere of li**le impor*a+ce$ This as*o+ishi+g observa*io+ s*ar*led eve+ *he blasF members of *he Commi**ee$ The farce of *he 4u=o Commi**ee e+ded 1i*hou* a si+gle 1ellE,+o1+ oppo+e+* of *he mo+e) crea*ors bei+g allo1ed *o appear or *es*if)$ As far as Samuel :+*erm)er 1as co+cer+ed( Se+a*or La%olle**e a+d Co+gressma+ Charles Augus*us Li+dbergh had +ever e;is*ed$ #ever*heless( *hese Co+gressme+ had ma+aged *o co+vi+ce *he people of *he :+i*ed S*a*es *ha* *he #e1 ?or, ba+,ers did have a mo+opol) o+ *he +a*io+5s mo+e) a+d credi*$ A* *he close of *he heari+gs( *he ba+,ers a+d *heir subsidi3ed +e1spapers claimed *ha* *he o+l) 1a) *o brea, *his mo+opol) 1as *o e+ac* *he ba+,i+g a+d curre+c) legisla*io+ +o1 bei+g proposed *o Co+gress( a bill 1hich 1ould be passed a )ear la*er as *he %ederal Reserve Ac*$ The press seriousl) dema+ded *ha* *he #e1 ?or, ba+,i+g mo+opol) be bro,e+ b) *ur+i+g over *he admi+is*ra*io+ of *he +e1 ba+,i+g s)s*em *o *he mos* ,+o1ledgeable ba+,er of *hem all( 4aul 6arburg$ The 4reside+*ial campaig+ of -.-0 records o+e of *he more i+*eres*i+g poli*ical upse*s i+ America+ his*or)$ The i+cumbe+*( 6illiam Ho1ard Taf*( 1as a popular preside+*( a+d *he Republica+s( i+ a period of ge+eral prosperi*)( 1ere firml) i+ co+*rol of *he gover+me+* *hrough a Republica+ ma=ori*) i+ bo*h houses$ The &emocra*ic challe+ger( 6oodro1 6ilso+( "over+or of #e1 Berse)( had +o +a*io+al recog+i*io+( a+d 1as a s*iff( aus*ere ma+ 1ho e;ci*ed li**le public suppor*$ o*h par*ies i+cluded a mo+e*ar) reform bill i+ *heir pla*forms@ The Republica+s 1ere commi**ed *o *he Aldrich 4la+( 1hich had bee+ de+ou+ced as a 6all S*ree* pla+( a+d *he &emocra*s had *he %ederal Reserve Ac*$ #ei*her par*) bo*hered *o i+form *he public *ha* *he bills 1ere almos* ide+*ical e;cep* for *he +ames$ I+ re*rospec*( i* seems obvious *ha* *he mo+e) crea*ors decided *o dump Taf* a+d go 1i*h 6ilso+$ Ho1 do 1e ,+o1 *hisH Taf* seemed cer*ai+ of reelec*io+( a+d 6ilso+ 1ould re*ur+ *o obscuri*)$ Sudde+l)( Theodore Roosevel* "*hre1 his ha* i+*o *he ri+g$" He a++ou+ced *ha* he 1as ru++i+g as a *hird par*) ca+dida*e( *he " ull >oose"$ His ca+didac) 1ould have bee+ ludicrous had i* +o* bee+ for *he fac* *ha* he 1as e;cep*io+all) 1ellEfi+a+ced$ >oreover( he 1as give+ u+limi*ed press coverage( more *ha+ Taf* a+d 6ilso+ combi+ed$ As a Republica+ e;Epreside+*( i* 1as obvious *ha* Roosevel* 1ould cu* deepl) i+*o Taf*5s vo*e$ This proved *he case( a+d 6ilso+ 1o+ *he elec*io+$ To *his da)( +o o+e ca+ sa) 1ha* Theodore Roosevel*5s program 1as( or 1h) he 1ould sabo*age his o1+ par*)$ Si+ce *he ba+,ers 1ere fi+a+ci+g all *hree ca+diE -/ da*es( *he) 1ould 1i+ regardless of *he ou*come$ La*er Co+gressio+al *es*imo+) sho1ed *ha* i+ *he firm of Cuh+ Loeb Compa+)( %eli; 6arburg 1as suppor*i+g Taf*( 4aul 6arburg a+d Bacob Schiff 1ere suppor*i+g

6ilso+( a+d O**o Cah+ 1as suppor*i+g Roosevel*$ The resul* 1as *ha* a &emocra*ic Co+gress a+d a &emocra*ic 4reside+* 1ere elec*ed i+ -.-0 *o ge* *he ce+*ral ba+, legisla*io+ passed$ I* seems probable *ha* *he ide+*ifica*io+ of *he Aldrich 4la+ as a 6all S*ree* opera*io+ predic*ed *ha* i* 1ould have a difficul* passage *hrough Co+gress( as *he &emocra*s 1ould solidl) oppose i*( 1hereas a successful &emocra*ic ca+dida*e( suppor*ed b) a &emocra*ic Co+gress( 1ould be able *o pass *he ce+*ral ba+, pla+$ Taf* 1as *hro1+ overboard because *he ba+,ers doub*ed he could deliver o+ *he Aldrich 4la+( a+d Roosevel* 1as *he i+s*rume+* of his demise$ PThe fi+al elec*oral vo*e i+ -.-0
1as 6ilso+ E 20.G Roosevel* E -6JG a+d Taf* E -9$

To fur*her co+fuse *he America+ people a+d bli+d *hem *o *he real purpose of *he proposed %ederal Reserve Ac*( *he archi*ec*s of *he Aldrich 4la+( po1erful #elso+ Aldrich( al*hough +o lo+ger a se+a*or( a+d %ra+, 'a+derlip( preside+* of *he #a*io+al Ci*) a+,( se* up a hue a+d cr) agai+s* *he bill$ The) gave i+*ervie1s 1he+ever *he) could fi+d a+ audie+ce de+ou+ci+g *he proposed %ederal Reserve Ac* as i+imical *o ba+,i+g a+d *o good gover+me+*$ The bugaboo of i+fla*io+ 1as raised because of *he Ac*5s provisio+s for pri+*i+g %ederal Reserve +o*es$ The #a*io+( o+ Oc*ober 0D( -.-D( poi+*ed ou*( ">r$ Aldrich himself raised a hue a+d cr) over *he issue of gover+me+* "fia* mo+e)"( *ha* is( mo+e) issued 1i*hou* gold or bullio+ bac, of i*( al*hough a bill *o do precisel) *ha* had bee+ passed i+ -.0/ 1i*h his o1+ +ame as au*hor( a+d he ,+e1 besides( *ha* *he Agover+me+*5 had +o*hi+g *o do 1i*h i*( *ha* *he %ederal Reserve oard 1ould have full charge of *he issui+g of such mo+e)s$" %ra+, 'a+derlip5s claims 1ere so bi3arre *ha* Se+a*or Rober* L$ O1e+( chairma+ of *he +e1l) formed Se+a*e a+,i+g a+d Curre+c) Commi**ee( 1hich had bee+ formed o+ >arch -/( -.-D( accused him of ope+l) carr)i+g o+ a campaig+ of misreprese+*a*io+ abou* *he bill$ The i+*eres*s of *he public( so Car*er "lass claimed i+ a speech o+ Sep*ember -0( -.-D *o Co+gress( 1ould be pro*ec*ed b) a+ advisor) cou+cil of ba+,ers$ "There ca+ be +o*hi+g si+is*er abou* i*s *ra+sac*io+s$ >ee*i+g 1i*h i* a* leas* four *imes a )ear 1ill be a ba+,ers5 advisor) cou+cil represe+*i+g ever) regio+al reserve dis*ric* i+ *he s)s*em$ Ho1 could 1e have e;ercised grea*er cau*io+ i+ safeguardi+g *he public i+*eres*sH" "lass claimed *ha* *he proposed %ederal Advisor) Cou+cil 1ould force *he %ederal Reserve oard of "over+ors *o ac* i+ *he bes* i+*eres* of *he people$ Se+a*or Roo* raised *he problem of i+fla*io+( claimi+g *ha* u+der *he %ederal Reserve Ac*( +o*e circula*io+ 1ould al1a)s e;pa+d i+defi+i*el)( causi+g grea* i+fla*io+$ Ho1ever( *he la*er his*or) of *he %ederal Reserve -. S)s*em sho1ed *ha* i* +o* o+l) caused i+fla*io+( bu* *ha* *he issue of +o*es could also be res*ric*ed( causi+g defla*io+( as occurred from -.0. *o -.D.$

O+e of *he cri*ics of *he proposed "dece+*rali3ed" s)s*em 1as a la1)er from Clevela+d( Ohio( Alfred Cro3ier@ Cro3ier 1as called *o *es*if) for *he Se+a*e Commi**ee because he had 1ri**e+ a provoca*ive boo, i+ -.-0( :$S$ >o+e) vs$ Corpora*io+ Curre+c)$P He a**ac,ed *he AldrichE'reela+d Ac* of -.0/ as a 6all S*ree* i+s*rume+*( a+d he poi+*ed ou* *ha* 1he+ our gover+me+* had *o issue mo+e) based o+ priva*el) o1+ed securi*ies( 1e 1ere +o lo+ger a free +a*io+$ Cro3ier *es*ified before *he Se+a*e Commi**ee *ha*( "I* should prohibi* *he gra+*i+g or calli+g i+ of loa+s for *he purpose of i+flue+ci+g <uo*a*io+ prices of securi*ies a+d *he co+*rac*i+g of loa+s or i+creasi+g i+*eres* ra*es i+ co+cer* b) *he ba+,s *o i+flue+ce public opi+io+ or *he ac*io+ of a+) legisla*ive bod)$ 6i*hi+ rece+* mo+*hs( 6illiam >cAdoo( Secre*ar) of *he Treasur) of *he :+i*ed S*a*es 1as repor*ed i+ *he ope+ press as chargi+g specificall) *ha* *here 1as a co+spirac) amo+g cer*ai+ of *he large ba+,i+g i+*eres*s *o pu* a co+*rac*io+ upo+ *he curre+c) a+d *o raise i+*eres* ra*es for *he sa,e of ma,i+g *he public force Co+gress i+*o passi+g curre+c) legisla*io+ desired b) *hose i+*eres*s$ The soEcalled admi+is*ra*io+ curre+c) bill gra+*s =us* 1ha* 6all S*ree* a+d *he big ba+,s for *1e+*)Efive )ears have bee+ s*rivi+g for( *ha* is( 4RI'AT! I#ST!A& O% 4: LIC CO#TROL O% C:RR!#C?$ I* does *his as comple*el) as *he Aldrich ill$ o*h measures rob *he gover+me+* a+d *he people of all effec*ive co+*rol over *he public5s mo+e)( a+d ves* i+ *he ba+,s e;clusivel) *he da+gerous po1er *o ma,e mo+e) amo+g *he people scarce or ple+*)$ The Aldrich ill pu*s *his po1er i+ o+e ce+*ral ba+,$ The Admi+is*ra*io+ ill pu*s i* i+ *1elve regio+al ce+*ral ba+,s( all o1+ed e;clusivel) b) *he ide+*ical priva*e i+*eres*s *ha* 1ould

have o1+ed a+d opera*ed *he Aldrich a+,$ 4reside+* "arfield shor*l) before his assassi+a*io+ declared *ha* 1hoever co+*rols *he suppl) of curre+c) 1ould co+*rol *he busi+ess a+d ac*ivi*ies of *he people$ Thomas Befferso+ 1ar+ed us a hu+dred )ears ago *ha* a priva*e ce+*ral ba+, issui+g *he public curre+c) 1as a grea*er me+ace *o *he liber*ies of *he people *ha+ a s*a+di+g arm)$" I* is i+*eres*i+g *o +o*e ho1 ma+) assassi+a*io+s of 4reside+*s of *he :+i*ed S*a*es follo1 *heir co+cer+ 1i*h *he issui+g of public curre+c)G Li+col+ 1i*h his "ree+bac,( +o+Ei+*eres*Ebeari+g +o*es( a+d "arfield( ma,i+g a pro+ou+ceme+* o+ curre+c) problems =us* before he 1as assassi+a*ed$ 6e +o1 begi+ *o u+ders*a+d 1h) such a le+g*h) campaig+ of pla++ed decep*io+ 1as +ecessar)( from *he secre* co+fere+ce a* Be,)ll Isla+d *o *he ide+*ical "reform" pla+s proposed b) *he &emocra*ic a+d KKKKKKKKKKKKKKKKKKKKKKKKKK P Cro3ier5s boo, e;posed *he fi+a+ciers pla+ *o subs*i*u*e "corpora*io+ curre+c)" for *he la1ful mo+e) of *he :$S$ as guara+*eed b) Ar*icle I( Sec$ / 4ara$ 9( of *he Co+s*i*u*io+$ 00 Republica+ par*ies u+der differe+* +ames$ The ba+,ers could +o* 1res* co+*rol of *he issua+ce of mo+e) from *he ci*i3e+s of *he :+i*ed S*a*es( *o 1hom i* had bee+ desig+a*ed *hrough i*s Co+gress b) *he Co+s*i*u*io+( u+*il *he Co+gress gra+*ed *hem *heir mo+opol) for a ce+*ral ba+,$ Therefore( much of *he i+flue+ce e;er*ed *o ge* *he %ederal Reserve Ac* passed 1as do+e behi+d *he sce+es( pri+cipall) b) *1o shado1)( +o+Eelec*ed perso+s@ The "erma+ immigra+*( 4aul 6arburg( a+d Colo+el !d1ard >a+dell House of Te;as$ 4aul 6arburg made a+ appeara+ce before *he House a+,i+g a+d Curre+c) Commi**ee i+ -.-D( i+ 1hich he briefl) s*a*ed his bac,grou+d@ "I am a member of *he ba+,i+g house of Cuh+( Loeb Compa+)$ I came over *o *his cou+*r) i+ -.00( havi+g bee+ bor+ a+d educa*ed i+ *he ba+,i+g busi+ess i+ Hamburg( "erma+)( a+d s*udied ba+,i+g i+ Lo+do+ a+d 4aris( a+d have go+e all arou+d *he 1orld$ I+ *he 4a+ic of -.0J( *he firs* sugges*io+ I made 1as ALe* us ge* a +a*io+al cleari+g house$5 The Aldrich 4la+ co+*ai+s some *hi+gs 1hich are simpl) fu+dame+*al rules of ba+,i+g$ ?our aim i+ *his pla+ 7*he O1e+E"lass bill8 mus* be *he sameEEce+*rali3i+g of reserves( mobili3i+g commercial credi*( a+d ge**i+g a+ elas*ic +o*e issue$"

6arburg5s phrase( "mobili3a*io+ of credi*" 1as a+ impor*a+* o+e( because *he %irs* 6orld 6ar 1as due *o begi+ shor*l)( a+d *he firs* *as, of *he %ederal Reserve S)s*em 1ould be *o fi+a+ce *he 6orld 6ar$ The !uropea+ +a*io+s 1ere alread) ba+,rup*( because *he) had mai+*ai+ed large s*a+di+g armies for almos* fif*) )ears( a si*ua*io+ crea*ed b) *heir o1+ ce+*ral ba+,s( a+d *herefore *he) could +o* fi+a+ce a 1ar$ A ce+*ral ba+, al1a)s imposes a *reme+dous burde+ o+ *he +a*io+ for "rearmame+*" a+d "defe+se"( i+ order *o crea*e i+e;*i+guishable deb*( simul*a+eousl) crea*i+g a mili*ar) dic*a*orship a+d e+slavi+g *he people *o pa) *he "i+*eres*" o+ *he deb* 1hich *he ba+,ers have ar*ificiall) crea*ed$ I+ *he Se+a*e deba*e o+ *he %ederal Reserve Ac*( Se+a*or S*o+e said o+ &ecember -0( -.-D( "The grea* ba+,s for )ears have sough* *o have a+d co+*rol age+*s i+ *he Treasur) *o serve *heir purposes$ Le* me <uo*e from *his 6orld ar*icle( ABus* as soo+ as >r$ >cAdoo came *o 6ashi+g*o+( a 1oma+ 1hom *he #a*io+al Ci*) a+, had i+s*alled i+ *he Treasur) &epar*me+* *o ge* adva+ce i+forma*io+ o+ *he co+di*io+ of ba+,s( a+d o*her ma**ers of i+*eres* *o *he big 6all S*ree* group( 1as removed$ Immedia*el) *he Secre*ar) a+d *he Assis*a+* Secre*ar)( Boh+ S,el*o+ 6illiams( 1ere cri*ici3ed severel) b) *he age+*s of *he 6all S*ree* group$5" "I m)self have ,+o1+ more *ha+ o+e occasio+ 1he+ ba+,ers refused credi* *o me+ 1ho opposed *heir poli*ical vie1s a+d purposes$ 6he+ Se+a*or Aldrich a+d o*hers 1ere goi+g arou+d *he cou+*r) e;ploi*i+g *his scheme( *he big ba+,s of #e1 ?or, a+d Chicago 1ere e+gaged i+ 0raisi+g a mu+ifice+* fu+d *o bols*er up *he Aldrich propaga+da$ I have bee+ *old b) ba+,ers of m) o1+ s*a*e *ha* co+*ribu*io+s *o *his e;ploi*a*io+ fu+d had bee+ dema+ded of *hem a+d *ha* *he) had co+*ribu*ed because *he) 1ere afraid of bei+g blac,lis*ed or bo)co**ed$ There are

ba+,ers of *his cou+*r) 1ho are e+emies of *he public 1elfare$ I+ *he pas*( a fe1 grea* ba+,s have follo1ed policies a+d pro=ec*s *ha* have paral)3ed *he i+dus*rial e+ergies of *he cou+*r) *o perpe*ua*e *heir *reme+dous po1er over *he fi+a+cial a+d busi+ess i+dus*ries of America$" Car*er "lass s*a*es i+ his au*obiograph) *ha* he 1as summo+ed b) 6oodro1 6ilso+ *o *he 6hi*e House( a+d *ha* 6ilso+ *old him he i+*e+ded *o ma,e *he reserve +o*es obliga*io+s of *he :+i*ed S*a*es$ "lass sa)s( "I 1as for a+ i+s*a+* speechless$ I remo+s*ra*ed$ There is +o* a+) gover+me+* obliga*io+ here( >r$ 4reside+*$ 6ilso+ said he had had *o compromise o+ *his poi+* i+ order *o save *he bill$" The *erm "compromise" o+ *his poi+* came direc*l) from 4aul 6arburg$ Col$ !lisha !l) "arriso+( i+ Roosevel*(P 6ilso+ a+d *he %ederal Reserve La1 1ro*e( "I+ -.--( La1re+ce Abbo*( >r$ Roosevel*5s priva*e officer a* AThe Ou*loo,5 ha+ded me a cop) of *he soEcalled Aldrich 4la+ for curre+c) reform$ I said( I could +o* believe *ha* >r$ 6arburg 1as *he au*hor$ This pla+ is +o*hi+g more *ha+ *he AldrichE'reela+d legisla*io+ 1hich provided for curre+c) issue agai+s* securi*ies$ 6arburg ,+o1s *ha* as 1ell as I do$ I am goi+g *o see him a* o+ce a+d as, him abou* i*$ All righ*( *he *ru*h$ ?es( I 1ro*e i*( he said$ 6h)H I as,ed$ I* 1as a compromise( a+s1ered 6arburg$"-D "arriso+ sa)s *ha* 6arburg 1ro*e him o+ %ebruar) /( -.-0$ "I have +o doub* *ha* a* *he e+d of a *horough discussio+( ei*her )ou 1ill see i* m) 1a) or I 1ill see i* )oursEEbu* I hope )ou 1ill see i* mi+e$" This 1as a+o*her famous 6arburg sa)i+g 1he+ he secre*l) lobbied Co+gressme+ *o suppor* his i+*eres*( *he veiled *hrea* *ha* *he) should "see i* his 1a)"$ Those 1ho did +o* fou+d large sums co+*ribu*ed *o *heir oppo+e+*s a* *he +e;* elec*io+s( a+d usuall) 1e+* do1+ i+ defea*$ Col$ "arriso+( a+ age+* of ro1+ ro*hers ba+,ers( la*er ro1+ ro*hers Harrima+( had e+*ree ever)1here i+ *he fi+a+cial commu+i*)$ He 1ri*es of

Col$ House( "Col$ House agreed e+*irel) 1i*h *he earl) 1ri*i+g of >r$ 6arburg$" 4age DDJ( he <uo*es Col$ House@ "I am also sugges*i+g *ha* *he Ce+*ral oard be i+creased from four members *o five a+d *heir *erms le+g*he+ed from eigh* *o *e+ )ears$ This 1ould give s*abili*) a+d 1ould *a,e a1a) *he po1er of a 4reside+* *o cha+ge *he perso++el of *he board duri+g a si+gle *erm of office$" KKKKKKKKKKKKKKKKKKKKKKKKKK P Theodore Roosevel* -D !lisha !l) "arriso+( Roosevel*( 6ilso+ a+d *he %ederal Reserve La1( Chris*opher 4ublica*io+s( os*o+( -.D00 House5s phrase( "*a,e a1a) *he po1er of a 4reside+*" is sig+ifica+*( because la*er 4reside+*s fou+d *hemselves helpless *o cha+ge *he direc*io+ of *he gover+me+* because *he) did +o* have *he po1er *o cha+ge *he composi*io+ of *he %ederal Reserve oard *o a**ai+ a ma=ori*) o+ i* duri+g *ha* 4reside+*5s *erm of office$ "arriso+ also 1ro*e i+ *his boo,( "4aul 6arburg is *he ma+ 1ho go* *he %ederal Reserve Ac* *oge*her af*er *he Aldrich 4la+ aroused such +a*io+1ide rese+*me+* a+d opposi*io+$ The mas*ermi+d of bo*h pla+s 1as aro+ Alfred Ro*hschild of Lo+do+$" Colo+el !d1ard >a+dell HouseP 1as referred *o b) Rabbi S*ephe+ 6ise i+ his au*obiograph)( Challe+gi+g ?ears as "*he u+official Secre*ar) of S*a*e"$ House +o*ed *ha* he a+d 6ilso+ ,+e1 *ha* i+ passi+g *he %ederal Reserve Ac*( *he) had crea*ed a+ i+s*rume+* more po1erful *ha+ *he Supreme Cour*$ The %ederal Reserve oard of "over+ors ac*uall) comprised a Supreme Cour* of %i+a+ce( a+d *here 1as +o appeal from a+) of *heir ruli+gs$ I+ -.--( prior *o 6ilso+5s *a,i+g office as 4reside+*( House had re*ur+ed *o his home i+ Te;as a+d comple*ed a boo, called 4hilip &ru( Admi+is*ra*or$ Os*e+sibl) a +ovel( i* 1as ac*uall) a de*ailed pla+ for *he fu*ure gover+me+* of *he :+i*ed S*a*es( "1hich 1ould es*ablish Socialism as dreamed b) Carl >ar;"( accordi+g *o House$ This "+ovel" predic*ed *he e+ac*me+* of *he gradua*ed i+come *a;( e;cess profi*s *a;( u+emplo)me+* i+sura+ce( social securi*)( a+d a fle;ible curre+c) s)s*em$ I+ shor*( i* 1as *he bluepri+* 1hich 1as la*er follo1ed b) *he 6oodro1 6ilso+ a+d %ra+,li+ &$ Roosevel*

admi+is*ra*io+s$ I* 1as published "a+o+)mousl)" b) $ 6$ Huebsch of #e1 ?or,( a+d 1idel) circula*ed amo+g gover+me+* officials( 1ho 1ere lef* i+ +o doub* as *o i*s au*horship$ "eorge S)lves*er 'ierec,PP( 1ho ,+e1 House for )ears( la*er 1ro*e a+ accou+* of *he 6ilso+EHouse rela*io+ship( The S*ra+ges* %rie+dship i+ His*or)$-2 I+ -.99( 6es*broo, 4egler( *he Hears* colum+is* from -.D0 *o -.96( heard of *he 4hilip &ru boo, a+d called 'ierec, *o as, if he had a cop)$ 'ierec, se+* 4egler his cop) of *he boo,( a+d 4egler 1ro*e a colum+ abou* i*( s*a*i+g@ "O+e of *he i+s*i*u*io+s ou*li+ed i+ 4hilip &ru is *he %ederal Reserve S)s*em$ The Schiffs( *he 6arburgs( *he Cah+s( *he Roc,efellers a+d >orga+s pu* *heir fai*h i+ House$ The Schiff( 6arburg( Roc,efeller a+d >orga+ i+*eres*s 1ere perso+all) represe+*ed i+ *he m)s*erious co+fere+ce a* Be,)ll Isla+d$ %ra+,fur*er la+ded o+ *he Harvard la1 facul*)( *ha+,s *o a fi+a+cial co+*ribu*io+ *o Harvard b) %eli; 6arburg a+d 4aul KKKKKKKKKKKKKKKKKKKKKKKKKK P See House +o*e i+ " iographies" PP See 'ierec, +o*e i+ " iographies" -2 "eorge S)lves*er 'ierec,( The S*ra+ges* %rie+dship i+ His*or)( 6oodro1 6ilso+ a+d Col$ House( Liverigh*( #e1 ?or,( -.D0 0D 6arburg( a+d so 1e go* Alger a+d &o+ald Hiss( Lee 4ressma+( Harr) &e;*er 6hi*e a+d ma+) o*her pro*FgFs of Li**le 6ee+ie$"P House5s ope+l) Socialis*ic vie1s 1ere for*hrigh*l) e;pressed i+ 4hilip &ru( Admi+is*ra*orG o+ pages 9JE9/( House 1ro*e@ "I+ a direc* a+d forceful ma++er( he poi+*ed ou* *ha* our civili3a*io+ 1as fu+dame+*all) 1ro+g( i+asmuch( amo+g o*her *hi+gs( as i* res*ric*ed efficie+c)G *ha* if socie*) 1ere properl) orga+i3ed( *here 1ould be +o+e 1ho 1ere +o* sufficie+*l) clo*hed a+d fed$ The resul*( *ha* *he la1s( habi*s

a+d e*hical *rai+i+g i+ vogue 1ere ali,e respo+sible for *he i+e<uali*ies i+ oppor*u+i*) a+d *he co+se<ue+* 1ide differe+ce be*1ee+ *he fe1 a+d *he ma+)G *ha* *he resul*s of such co+di*io+s 1as *o re+der i+efficie+* a large par* of *he popula*io+( *he perce+*age differi+g i+ each cou+*r) i+ *he ra*io *ha* educa*io+ a+d e+ligh*e+me+* a+d u+selfish la1s bore *o ig+ora+ce( bigo*r) a+d selfish la1s$"-9 I+ his boo,( House 7&ru8 e+visio+s himself becomi+g a dic*a*or a+d forci+g o+ *he people his radical vie1s( page -2/@ "The) recog+i3ed *he fac* *ha* &ru domi+a*ed *he si*ua*io+ a+d *ha* a mas*er mi+d had a* las* rise+ i+ *he Republic$" He +o1 assumes *he *i*le of "e+eral$ ""e+eral &ru a++ou+ced his purpose of assumi+g *he po1ers of a dic*a*or $ $ $ *he) 1ere assured *ha* he 1as free from a+) perso+al ambi*io+ $ $ $ he proclaimed himself AAdmi+is*ra*or of *he Republic$5"P This pe+sive dreamer 1ho imagi+ed himself a dic*a*or ac*uall) ma+aged *o place himself i+ *he posi*io+ of *he co+fide+*ial advisor *o *he 4reside+* of *he :+i*ed S*a*es( a+d *he+ *o have ma+) of his desires e+ac*ed i+*o la1R O+ page 00J( he lis*s some of *he la1s he 1ishes *o e+ac* as dic*a*or$ Amo+g *hem are a+ old age pe+sio+ la1( laborers i+sura+ce compe+sa*io+( coopera*ive mar,e*s( a federal reserve ba+,i+g s)s*em( coopera*ive loa+s( +a*io+al emplo)me+* bureaus( a+d o*her "social legisla*io+"( some of 1hich 1as e+ac*ed duri+g 6ilso+5s admi+is*ra*io+( a+d o*hers duri+g *he %ra+,li+ &$ Roosevel*5s admi+is*ra*io+$ The la**er 1as ac*uall) a co+*i+ua*io+ of *he 6ilso+ Admi+is*ra*io+( KKKKKKKKKKKKKKKKKKKKKKKKKK P The prese+* 1ri*er 1as 1i*h 'ierec, i+ his sui*e a* *he Ho*el elleclaire 1he+ 4egler called a+d as,ed for *he boo,$ 'ierec, se+* i* over b) his secre*ar)$ He gri++ed a+d said 4egler seemed ver) e;ci*ed$ "He ough* *o ge* a good colum+ ou* of *ha*(" 'ierec, *old me$ I+deed 4egler did ge* a good colum+ ou* of i*$ :+for*u+a*el) for him( he had go+e *oo far i+ me+*io+i+g *he 6arburgs$ As lo+g as he co+fi+ed his a**ac,s *o La "ra+d ouche 7!lea+or Roosevel*8( a+d her spouse( he had bee+ permi**ed *o co+*i+ue( bu* +o1 *ha* he had e;posed *he 6arburg co++ec*io+ 1i*h *he Commu+is* sp) ri+g i+ 6ashi+g*o+( his colum+ 1as immedia*el) dropped b) *he big ci*) dailies( a+d 4egler5s lo+g ru+ 1as over$ -9 Col$ !d1ard >$ House( 4hilip &ru( Admi+is*ra*or( $ 6$ Heubsch( #e1 ?or,( -.-0$ P This <uo*a*io+ from 4hilip &ru( Admi+is*ra*or( 1ri**e+ b) Col$ House i+ -.-0( is i+cluded here *o sho1 his *o*ali*aria+ >ar;is* philosoph)$ House 1as

*o become for / )ears 1i*h 6ilso+( *he 4reside+*5s closes* advisor$ La*er he co+*i+ued his i+flue+ce i+ *he %ra+,li+ &$ Roosevel* admi+is*ra*io+$ %rom his home i+ >ag+olia( >ass$( House advised %&R *hrough fre<ue+* *rips of %eli; %ra+,fur*er *o *he 6hi*e House$ %ra+,fur*er 1as la*er appoi+*ed *o *he Supreme Cour* b) %$&$R$ 02 1i*h ma+) of *he same perso++el( a+d 1i*h House guidi+g *he admi+is*ra*io+ from behi+d *he sce+es$ Li,e mos* of *he behi+dE*heEsce+es opera*ors i+ *his boo,( Col$ !d1ard >a+dell House had *he obliga*or) "Lo+do+ co++ec*io+"$ Origi+all) a &u*ch famil)( "Huis"( his a+ces*ors had lived i+ !+gla+d for *hree hu+dred )ears( af*er 1hich his fa*her se**led i+ Te;as( 1here he made a for*u+e i+ bloc,adeE ru++i+g duri+g *he Civil 6ar( shippi+g co**o+ a+d o*her co+*raba+d *o his ri*ish co++ec*io+s( i+cludi+g *he Ro*hschilds( a+d bri+gi+g bac, supplies for *he beleaguered Te;a+s$ The se+ior House( +o* *rus*i+g *he vola*ile Te;as si*ua*io+( prude+*l) deposi*ed all his profi*s from his bloc,adeEru++i+g i+ gold 1i*h ari+g ba+,i+g house i+ Lo+do+P$ A* *he close of *he Civil 6ar( he 1as o+e of *he 1eal*hies* me+ i+ Te;as$ He +amed his so+ ">a+dell" af*er o+e of his mercha+* associa*es$ Accordi+g *o Ar*hur Ho1de+ Smi*h( 1he+ House5s fa*her died i+ -//0( his es*a*e 1as dis*ribu*ed amo+g his so+s as follo1s@ Thomas 6illiam go* *he ba+,i+g busi+essG Boh+( *he sugar pla+*a*io+G a+d !d1ard >$ *he co**o+ pla+*a*io+s( 1hich brough* him a+ i+come of Q00(000 a )ear$-6 A* *he age of *1elve( *he )ou+g !d1ard >a+dell House had brai+ fever( a+d 1as la*er fur*her crippled b) su+s*ro,e$ He 1as a semiEi+valid( a+d his ailme+*s gave him a+ odd Orie+*al appeara+ce$ He +ever e+*ered a+) professio+( bu* used his fa*her5s mo+e) *o become *he ,i+gma,er of Te;as poli*ics( successivel) elec*i+g five gover+ors from -/.D *o -.--$ I+ -.-- he bega+ *o suppor* 6ilso+ for preside+*( a+d *hre1 *he crucial Te;as delega*io+ *o him 1hich e+sured his +omi+a*io+$ House me* 6ilso+ for *he firs* *ime a* *he Ho*el "o*ham( >a) D-( -.-0$ I+ The S*ra+ges* %rie+dship I+ His*or)( 6oodro1 6ilso+ a+d Col$ House( b) "eorge S)lves*er 'ierec,( 'ierec, 1ri*es@ "6ha*(" I as,ed House( "ceme+*ed )our frie+dshipH" "The ide+*i*) of our *emperame+*s a+d our public policies(" a+s1ered House$ "6ha* 1as )our purpose a+d hisH" "To *ra+sla*e i+*o legisla*io+ cer*ai+ liberal a+d progressive ideas$"-J House *old 'ierec, *ha* 1he+ he 1e+* *o 6ilso+ a* *he 6hi*e

KKKKKKKKKKKKKKKKKKKKKKKKKK P &ope( I+c$( ide+*ifies ari+gs as follo1s@ " ari+g ro*hers( *he premier mercha+* ba+, of *he opium *rade from -J/D *o *he prese+* da)( also mai+*ai+ed close co+*ac* 1i*h *he os*o+ families $ $ $ The group5s leadi+g ba+,er became( a* *he close of *he -.*h ce+*ur)( *he House of >orga+EE1hich also *oo, i*s cu* i+ !as*er+
opium *raffic $ $ $ >orga+5s %ar !as*er+ opera*io+s 1ere *he officiall) co+duc*ed ri*ish opium *raffic $ $ $ >orga+5s case deserves special scru*i+) from America+ police a+d regula*or) age+cies( for *he i+*ima*e associa*io+s of >orga+ "uara+*) Trus* 1i*h *he ide+*ified leadership of *he ri*ish dope ba+,s$" -6 Ar*hur Ho1de+ Smi*h( The Real Col$ House( &ora+ Compa+)( #e1 ?or,( -.-/ -J "eorge S)lves*er 'ierec,( The S*ra+ges* %rie+dship i+ His*or)( 6oodro1 6ilso+ a+d Col$ House( Liverigh*( #e1 ?or,( -.D0 09 House( he ha+ded him QD9(000$ This 1as e;ceeded o+l) b) *he Q90(000 1hich er+ard aruch had give+ 6ilso+$ The successful e+ac*me+* of House5s programs did +o* escape *he +o*ice of o*her 6ilso+ associa*es$ I+ 'ol$ -( page -9J of The I+*ima*e 4apers of Col$ House( House +o*es( "Cabi+e* members li,e >r$ La+e a+d >r$ r)a+ comme+*ed upo+ *he i+flue+ce of &ru 1i*h *he 4reside+*$ AAll *ha* *he boo, has said should be(5 1ro*e La+e( Acomes abou*$ The 4reside+* comes *o A4hilip &ru5 i+ *he e+d$5"-/ House recorded some of his effor*s o+ behalf of *he %ederal Reserve Ac* i+ The I+*ima*e 4apers of Col$ House( "&ecember -.( -.-0$ I *al,ed 1i*h 4aul 6arburg over *he pho+e co+cer+i+g curre+c) reform$ I *old of m) *rip *o 6ashi+g*o+ a+d 1ha* I had do+e *here *o ge* i* i+ 1or,i+g order$ I *old him *ha* *he Se+a*e a+d *he Co+gressme+ seemed a+;ious *o do 1ha* he desired( a+d *ha* 4reside+*E elec* 6ilso+ *hough* s*raigh* co+cer+i+g *he issue$"-. Thus 1e have 6arburg5s age+* i+ 6ashi+g*o+( Col$ House( assuri+g him *ha* *he Se+a*e a+d Co+gressme+ 1ill do 1ha* he desires( a+d *ha* *he 4reside+*Eelec* "*hough* s*raigh* co+cer+i+g *he issue$" I+ *his co+*e;*( represe+*a*ive gover+me+* seems *o have ceased *o e;is*$ House co+*i+ues i+ his "4apers"@ ">arch -D( -.-D$ 6arburg a+d I had a+ i+*ima*e discussio+ co+cer+i+g curre+c) reform$ >arch 0J( -.-D$ >r$ B$4$ >orga+( Br$ a+d >r$ &e++) of his firm came promp*l) a* five$ >cAdoo came abou* *e+ mi+u*es af*er1ard$ >orga+ had a curre+c) pla+ alread) pri+*ed$ I sugges*ed he have i* *)pe1ri**e+( so i* 1ould +o* seem *oo prearra+ged( a+d se+d i* *o 6ilso+ a+d m)self *oda)$ Bul) 0D( -.-D$ I *ried *o sho1 >a)or Sui+c) 7of os*o+8 *he foll) of *he !as*er+ ba+,ers *a,i+g a+ a+*ago+is*ic a**i*ude *o1ards *he Curre+c) ill$ I e;plai+ed *o >a=or He+r) Higgi+so+P 1i*h 1ha* care *he bill had bee+ framed$ Bus* before he arrived( I had fi+ished a revie1 b) 4rofessor Sprague of Harvard of 4aul 6arburg5s cri*icism of *he "lassEO1e+ ill( a+d 1ill *ra+smi* i* *o 6ashi+g*o+ *omorro1$ !ver) ba+,er ,+o1+ *o 6arburg( 1ho ,+o1s *he sub=ec* prac*icall)( has bee+ called up abou* *he ma,i+g of *he bill$

Oc*ober -D( -.-D$ 4aul 6arburg 1as m) firs* caller *oda)$ He came *o discuss *he curre+c) measure$ There are ma+) fea*ures of *he O1e+E"lass ill *ha* he does +o* approve$ I promised *o pu* him i+ *ouch 1i*h >cAdoo a+d Se+a*or O1e+ so *ha* he migh* discuss i* 1i*h *hem$ #ovember -J( -.-D$ 4aul 6arburg *elepho+ed abou* his *rip *o 6ashi+g*o+$ La*er( he a+d >r$ Bacob Schiff came over for a fe1 mi+u*es$ KKKKKKKKKKKKKKKKKKKKKKKKKK -/ Col$ !d1ard >a+dell House( The I+*ima*e 4apers of Col$ House( edi*ed b) Charles Se)mour( Hough*o+ >iffli+ Co$( -.06E0/( 'ol$ -( p$ -9J -. Ibid$ 'ol$ -( p$ -6D P The mos* promi+e+* ba+,er i+ os*o+$ 06 6arburg did mos* of *he *al,i+g$ He had a +e1 sugges*io+ i+ regard *o groupi+g *he regular reserve ba+,s so as *o ge* *he u+i*s 1elded *oge*her a+d i+ easier *ouch 1i*h *he %ederal Reserve oard$" "eorge S)lves*er 'ierec, i+ The S*ra+ges* %rie+dship i+ His*or)( 6oodro1 6ilso+ a+d Col$ House 1ro*e@ "The Schiffs( *he 6arburgs( *he Cah+s( *he Roc,efellers( *he >orga+s pu* *heir fai*h i+ House$ 6he+ *he %ederal Reserve legisla*io+ a* las* assumed defi+i*e shape( House 1as *he i+*ermediar) be*1ee+ *he 6hi*e House a+d *he fi+a+ciers$"00 O+ page 29( 'ierec, +o*es( "Col$ House loo,s upo+ *he reform of *he mo+e*ar) s)s*em as *he cro1+i+g i+*er+al achieveme+* of *he 6ilso+ Admi+is*ra*io+$"0The "lass ill 7*he House versio+ of *he fi+al %ederal Reserve Ac*8 had passed *he House o+ Sep*ember -/( -.-D b) 0/J *o /9$ O+ &ecember -.( -.-D( *he Se+a*e passed *heir versio+ b) a vo*e of 92ED2$ >ore *ha+ for*) impor*a+* differe+ces i+ *he House a+d Se+a*e versio+s remai+ed *o be se**led( a+d *he oppo+e+*s of *he bill i+ bo*h houses of Co+gress 1ere led *o believe *ha* ma+) 1ee,s 1ould )e* elapse before *he Co+fere+ce bill 1ould be read) for co+sidera*io+$ The Co+gressme+ prepared *o leave 6ashi+g*o+ for *he a++ual Chris*mas recess( assured *ha* *he Co+fere+ce bill 1ould +o* be brough* up u+*il *he follo1i+g )ear$ #o1 *he mo+e) crea*ors prepared a+d e;ecu*ed *he mos* brillia+* s*ro,e of *heir pla+$ I+ a si+gle da)( *he) iro+ed ou* all for*) of *he dispu*ed passages i+ *he bill a+d <uic,l) brough* i* *o a vo*e$ O+ >o+da)( &ecember 00( -.-D( *he bill 1as passed b) *he House 0/0E60 a+d *he Se+a*e 2DE0D$ O+ &ecember 0-( -.-D( The #e1 ?or, Times comme+*ed edi*oriall) o+ *he ac*( "#e1 ?or, 1ill be o+ a firmer basis of fi+a+cial gro1*h( a+d 1e shall soo+ see her *he mo+e) ce+*re of *he 1orld$" The #e1 ?or, Times repor*ed o+ *he fro+* page( >o+da)( &ecember 00( -.-D i+ headli+es@ >O#!? ILL >A? ! LA6 TO&A?EECO#%!R!!S HA& A&B:ST!& #!ARL? ALL &I%%!R!#C!S AT -@D0 THIS >OR#I#"EE#O &!4OSIT ":ARA#T!!SEES!#AT! ?I!L&S O# THIS 4OI#T :T 4:TS THRO:"H >A#? OTH!R CHA#"!S "6i*h almos* u+precede+*ed speed( *he co+fere+ce *o ad=us* *he House a+d Se+a*e differe+ces o+ *he Curre+c) ill prac*icall) comple*ed i*s labours earl) *his mor+i+g$ O+ Sa*urda) *he Co+ferees did li**le more *ha+ dispose of *he prelimi+aries( leavi+g for*) esse+*ial differe+ces *o be *hrashed ou* Su+da)$ $ $ $ #o o*her legisla*io+ of impor*a+ce 1ill be *a,e+ up i+ ei*her House of Co+gress *his 1ee,$ >embers of bo*h houses are alread) prepari+g *o leave 6ashi+g*o+$" KKKKKKKKKKKKKKKKKKKKKKKKKK 00 "eorge S)lves*er 'ierec,( The S*ra+ges* %rie+dship I+ His*or)( 6oodro1 6ilso+ a+d Col$ House( Liverigh*( #e1 ?or,( -.D0

0- Ibid$ 0J ":+precede+*ed speed"( sa)s The #e1 ?or, Times$ O+e sees *he fi+e ha+d of 4aul 6arburg i+ *his fi+al s*ra*eg)$ Some of *he bill5s mos* vocal cri*ics had alread) lef* 6ashi+g*o+$ I* 1as a lo+gEs*a+di+g poli*ical cour*es) *ha* impor*a+* legisla*io+ 1ould +o* be ac*ed upo+ duri+g *he 1ee, before Chris*mas( bu* *his *radi*io+ 1as rudel) sha**ered i+ order *o perpe*ra*e *he %ederal Reserve Ac* o+ *he America+ people$ The Times buried a brief <uo*e from Co+gressma+ Li+dbergh *ha* "*he bill 1ould es*ablish *he mos* giga+*ic *rus* o+ ear*h(" a+d <uo*ed Represe+*a*ive "uer+se) of >ai+e( a Republica+ o+ *he House a+,i+g a+d Curre+c) Commi**ee( *ha* "This is a+ i+fla*io+ bill( *he o+l) <ues*io+ bei+g *he e;*e+* of *he i+fla*io+$" Co+gressma+ Li+dbergh said o+ *ha* his*oric da)( *o *he House@ "This Ac* es*ablishes *he mos* giga+*ic *rus* o+ ear*h$ 6he+ *he 4reside+* sig+s *his bill( *he i+visible gover+me+* b) *he >o+e*ar) 4o1er 1ill be legali3ed$ The people ma) +o* ,+o1 i* immedia*el)( bu* *he da) of rec,o+i+g is o+l) a fe1 )ears removed$ The *rus*s 1ill soo+ reali3e *ha* *he) have go+e *oo far eve+ for *heir o1+ good$ The people mus* ma,e a declara*io+ of i+depe+de+ce *o relieve *hemselves from *he >o+e*ar) 4o1er$ This *he) 1ill be able *o do b) *a,i+g co+*rol of Co+gress$ 6all S*ree*ers could +o* chea* us if )ou Se+a*ors a+d Represe+*a*ives did +o* ma,e a humbug of Co+gress$ $ $ $ If 1e had a people5s Co+gress( *here 1ould be s*abili*)$ The grea*es* crime of Co+gress is i*s curre+c) s)s*em$ The 1ors* legisla*ive crime of *he ages is perpe*ra*ed b) *his ba+,i+g bill$ The caucus a+d *he par*) bosses have agai+ opera*ed a+d preve+*ed *he people from ge**i+g *he be+efi* of *heir o1+ gover+me+*$" The &ecember 0D( -.-D #e1 ?or, Times edi*oriall) comme+*ed( i+ co+*ras* *o Co+gressma+ Li+dbergh5s cri*icism of *he bill( "The a+,i+g a+d Curre+c) ill became be**er a+d sou+der ever) *ime i* 1as se+* from o+e e+d of *he Capi*ol *o *he o*her$ Co+gress 1or,ed u+der public supervisio+ i+ ma,i+g *he bill$" ) "public supervisio+"( The Times appare+*l) mea+* 4aul 6arburg( 1ho for several da)s had mai+*ai+ed a small office i+ *he Capi*ol buildi+g( 1here he direc*ed *he successful preEChris*mas campaig+ *o pass *he bill( a+d 1here Se+a*ors a+d Co+gressme+ came hourl) a* his biddi+g *o carr) ou* his s*ra*eg)$ The "u+precede+*ed speed" 1i*h 1hich *he %ederal Reserve Ac* had bee+ passed b) Co+gress duri+g 1ha* became ,+o1+ as "*he Chris*mas massacre" had o+e u+foresee+ aspec*$ 6oodro1 6ilso+ 1as *a,e+ u+a1are( as he( li,e ma+) o*hers( had bee+ assured *he bill 1ould +o* come up for a vo*e u+*il af*er Chris*mas$ #o1 he refused *o sig+ i*( because he ob=ec*ed *o *he provisio+s for *he selec*io+ of Class $ &irec*ors$ 6illiam L$ 6hi*e rela*es i+ his biograph) of er+ard aruch *ha* aruch( a pri+cipal co+*ribu*or *o 6ilso+5s campaig+ fu+d( 1as s*u++ed 1he+ he 1as i+formed *ha* 6ilso+ refused *o sig+ *he bill$ He hurried 0/

*o *he 6hi*e House a+d assured 6ilso+ *ha* *his 1as a mi+or ma**er( 1hich could be fi;ed up la*er *hrough "admi+is*ra*ive processes"$ The impor*a+* *hi+g 1as *o ge* *he %ederal Reserve Ac* sig+ed i+*o la1 a* o+ce$ 6i*h *his reassura+ce( 6ilso+ sig+ed *he %ederal Reserve Ac* o+ &ecember 0D( -.-D$ His*or) proved *ha* o+ *ha* da)( *he Co+s*i*u*io+ ceased *o be *he gover+i+g cove+a+* of *he America+ people( a+d our liber*ies 1ere ha+ded over *o a small group of i+*er+a*io+al ba+,ers$ The &ecember 02( -.-D #e1 ?or, Times carried a fro+* page headli+e "6ILSO# SI"#S TH! C:RR!#C? ILLR" elo1 i*( also i+ capi*al le**ers( 1ere *1o fur*her headli+es( "4ROS4!RIT? TO ! %R!!" a+d "6ILL H!L4 !'!R? CLASS"$ 6ho could ob=ec* *o a+) la1 1hich provided be+efi*s *o ever)o+eH The Times described *he fes*ive a*mosphere 1hile 6ilso+5s famil) a+d gover+me+* officials 1a*ched him sig+ *he bill$ "The Chris*mas spiri* pervaded *he ga*heri+g(" e;ul*ed The Times$ I+ his biograph) of Car*er "lass( Ri;e) Smi*h s*a*es *ha* *hose prese+* a* *he sig+i+g of *he bill i+cluded 'ice 4reside+* >arshall( Secre*ar) r)a+( Car*er "lass( Se+a*or O1e+( Secre*ar) >cAdoo( Spea,er Champ Clar,( a+d o*her Treasur) officials$ #o+e of *he real 1ri*ers of *he bill( *he draf*ees of Be,)ll Isla+d( 1ere prese+*$ The) had prude+*l) abse+*ed *hemselves from *he sce+e of *heir vic*or)$ Ri;e) Smi*h also 1ro*e( "I* 1as as *hough Chris*mas had come *1o da)s earl)$" O+ &ecember 02( -.-D( Bacob Schiff 1ro*e *o Col$ House( ">) dear Col$ House$ I 1a+* *o sa) a 1ord *o )ou for *he sile+*( bu* +o doub* effec*ive 1or, )ou have do+e i+ *he i+*eres* of curre+c) legisla*io+ a+d *o co+gra*ula*e )ou *ha* *he measure has fi+all) bee+ e+ac*ed i+*o la1$ I am 1i*h good 1ishes( fai*hfull) )ours( BACO SCHI%%$" Represe+*a*ive >oore of Ca+sas( i+ comme+*i+g o+ *he passage of *he Ac*( said *o *he House of Represe+*a*ives@ "The 4reside+* of *he :+i*ed S*a*es +o1 becomes *he absolu*e dic*a*or of all *he fi+a+ces of *he cou+*r)$ He appoi+*s a co+*rolli+g board of seve+ me+( all of 1hom belo+g *o his poli*ical par*)( eve+ *hough i* is a mi+ori*)$ The Secre*ar) of *he Treasur) is *o rule supreme 1he+ever *here is a differe+ce of opi+io+ be*1ee+ himself a+d *he %ederal Reserve oard$ A#&( o+l) o+e member of *he oard is *o pass ou* of office 1hile *he 4reside+* is i+ office$" The *e+ )ear *erms of office of *he members of *he oard 1ere le+g*he+ed b) *he a+,i+g Ac* of -.D9 *o four*ee+ )ears( 1hich mea+* *ha* *hese direc*ors of *he +a*io+5s fi+a+ces( al*hough +o* elec*ed b) *he people( held office lo+ger *ha+ *hree preside+*s$ 6hile Col$ House( Bacob Schiff a+d 4aul 6arburg bas,ed i+ *he glo1 of a =ob 1ell do+e( *he o*her ac*ors i+ *his drama 1ere sub=ec* *o la*er af*er*hough*s$ 6oodro1 6ilso+ 1ro*e i+ -.-6( #a*io+al !co+om) a+d *he a+,i+g S)s*em( Se+$ &oc$ #o$ D( #o$ 00D( J6*h Co+gress( -s* sessio+( -.D.@ "Our s)s*em of credi* is co+ce+*ra*ed 7i+ *he %ederal Reserve 0. S)s*em8$ The gro1*h of *he +a*io+( *herefore( a+d all our ac*ivi*ies( are i+ *he ha+ds of a fe1 me+$" 6he+ he 1as as,ed b) Clare+ce 6$ arro+ 1he*her he approved of *he bill as i* 1as fi+all) passed$ 6arburg remar,ed( "6ell( i* has+5* go* <ui*e ever)*hi+g 1e 1a+*( bu* *he lac, ca+ be ad=us*ed la*er b) admi+is*ra*ive processes$" 6oodro1 6ilso+ a+d Car*er "lass are give+ credi* for *he Ac* b) mos* co+*emporar) his*oria+s( bu* of all *hose co+cer+ed( 6ilso+ had leas* *o do 1i*h Co+gressio+al ac*io+ o+ *he bill$ "eorge Creel( a ve*era+ 6ashi+g*o+ correspo+de+*( 1ro*e i+ Harper5s 6ee,l)( Bu+e 06( -.-9@

"As far as *he &emocra*ic 4ar*) 1as co+cer+ed( 6oodro1 6ilso+ 1as 1i*hou* i+flue+ce( save for *he pa*ro+age he possessed$ I* 1as r)a+ 1ho 1hipped Co+gress i+*o li+e o+ *he *ariff bill( o+ *he 4a+ama Ca+al *olls repeal( a+d o+ *he curre+c) bill$" >r$ r)a+ la*er 1ro*e( "Tha* is *he o+e *hi+g i+ m) public career *ha* I regre*EEm) 1or, *o secure *he e+ac*me+* of *he %ederal Reserve La1$" O+ &ecember 09( -.-D( The #a*io+ poi+*ed ou* *ha* "The #e1 ?or, S*oc, >ar,e* bega+ *o rise s*eadil) upo+ +e1s *ha* *he Se+a*e 1as read) *o pass *he %ederal Reserve Ac*$" This belies *he claim *ha* *he %ederal Reserve Ac* 1as a mo+e*ar) reform bill$ The #e1 ?or, S*oc, !;cha+ge is ge+erall) co+sidered a+ accura*e barome*er of *he *rue mea+i+g of a+) fi+a+cial legisla*io+ passed i+ 6ashi+g*o+$ Se+a*or Aldrich also decided *ha* he +o lo+ger had misgivi+gs abou* *he %ederal Reserve Ac*$ I+ a maga3i+e 1hich he o1+ed( a+d 1hich he called The I+depe+de+*( he 1ro*e i+ Bul)( -.-2@ " efore *he passage of *his Ac*( *he #e1 ?or, ba+,ers could o+l) domi+a*e *he reserves of #e1 ?or,$ #o1 1e are able *o domi+a*e *he ba+, reserves of *he e+*ire cou+*r)$" H$6$ Louc,s de+ou+ced *he %ederal Reserve Ac* i+ The "rea* Co+spirac) of *he House of >orga+( "I+ *he %ederal Reserve La1( *he) have 1res*ed from *he people a+d secured for *hemselves *he co+s*i*u*io+al po1er *o issue mo+e) a+d regula*e *he value *hereof$" O+ page D-( Louc,s 1ri*es( "The House of >orga+ is +o1 i+ supreme co+*rol of our i+dus*r)( commerce a+d poli*ical affairs$ The) are i+ comple*e co+*rol of *he polic) ma,i+g of *he &emocra*ic( Republica+ a+d 4rogressive par*ies$ The prese+* e;*raordi+ar) propaga+da for Aprepared+ess5 is pla++ed more for home coercio+ *ha+ for defe+se agai+s* foreig+ aggressio+$"00 The sig+i+g of *he %ederal Reserve Ac* b) 6oodro1 6ilso+ represe+*ed *he culmi+a*io+ of )ears of collusio+ 1i*h his i+*ima*e frie+d( Col$ House( a+d 4aul 6arburg$ O+e of *he me+ 1i*h 1hom House became ac<uai+*ed i+ *he 6ilso+ Admi+is*ra*io+ 1as %ra+,li+ &$ KKKKKKKKKKKKKKKKKKKKKKKKKK 00 H$6$ Louc,s( The "rea* Co+spirac) of *he House of >orga+( 4riva*el) pri+*ed( -.-6 D0 Roosevel*( Assis*a+* Secre*ar) of #av)$ As soo+ as he ob*ai+ed *he &emocra*ic +omi+a*io+ for 4reside+*( i+ -.D0( %ra+,li+ &$ Roosevel* made a "pilgrimage" *o Col$ House5s home a* >ag+olia( >ass$ Roosevel*( af*er *he Republica+ hia*us of *he -.00s( filled i+ *he goals of 4hilip &ru( Admi+is*ra*or(0D 1hich 6ilso+ had +o* bee+ able *o carr) ou*$ The la*e Roosevel* achieveme+*s i+cluded *he e+ac*me+* of *he social securi*) program( e;cess profi*s *a;( a+d *he e;pa+sio+ of *he gradua*ed i+come *a; *o .0T of ear+ed i+come$ House5s biographer( Charles Se)mour( 1ro*e@ "He 1as 1earied b) *he de*ails of par*) poli*ics a+d appoi+*me+*s$ !ve+ *he share he had *a,e+ i+ co+s*ruc*ive domes*ic legisla*io+ 7*he

%ederal Reserve Ac*( *ariff revisio+( a+d *he I+come Ta; ame+dme+*8 did +o* sa*isf) him$ %rom *he begi++i+g of -.-2 he gave more a+d more of his *ime *o 1ha* he regarded as *he highes* form of poli*ics a+d *ha* for 1hich he 1as par*icularl) sui*edEEi+*er+a*io+al affairs$"02 I+ -.D/( shor*l) before he died( House *old Charles Se)mour( "&uri+g *he las* fif*ee+ )ears I have bee+ close *o *he ce+*er of *hi+gs( al*hough fe1 people suspec* i*$ #o impor*a+* foreig+er has come *o *he :+i*ed S*a*es 1i*hou* *al,i+g *o me$ I 1as close *o *he moveme+* *ha* +omi+a*ed Roosevel*$ He has give+ me a free ha+d i+ advisi+g him$ All *he Ambassadors have repor*ed *o me fre<ue+*l)$" A compara*ive pri+* of *he %ederal Reserve Ac* of -.-D as passed b) *he House of Represe+*a*ives a+d ame+ded b) *he Se+a*e sho1s *he follo1i+g s*ri,i+g cha+ge@ The Se+a*e s*ruc, ou*( "To suspe+d *he officials of %ederal Reserve ba+,s for cause( s*a*ed i+ 1ri*i+g 1i*h oppor*u+i*) of heari+g( re<uire *he removal of said official for i+compe*e+c)( derelic*io+ of du*)( fraud or decei*( such removal *o be sub=ec* *o approval b) *he 4reside+* of *he :+i*ed S*a*es$" This 1as cha+ged b) *he Se+a*e *o read "To suspe+d or remove a+) officer or direc*or of a+) %ederal Reserve a+,( *he cause of such removal *o be for*h1i*h commu+ica*ed i+ 1ri*i+g b) *he %ederal Reserve oard *o *he removed officer or direc*or a+d *o said ba+,$" This comple*el) al*ered *he co+di*io+s u+der 1hich a+ officer or direc*or migh* be removed$ 6e +o lo+ger ,+o1 1ha* *he co+di*io+s for removal are( or *he cause$ Appare+*l) i+compe*e+c)( derelic*io+ of du*)( fraud or decei* do +o* ma**er *o *he %ederal Reserve oard$ Also( *he removed officer does +o* have *he oppor*u+i*) of appeal *o *he 4reside+*$ I+ a+s1er *o 1ri**e+ i+<uir)( *he Assis*a+* Secre*ar) of *he %ederal Reserve oard replied *ha* o+l) o+e officer has bee+ removed "for cause" i+ *he *hir*)Esi; )ears( *he +ame a+d de*ails of *his ma**er bei+g a "priva*e co+cer+" be*1ee+ *he i+dividual( *he Reserve a+, co+cer+ed( a+d *he %ederal Reserve oard$ KKKKKKKKKKKKKKKKKKKKKKKKKK 0D !$>$ House( 4hilip &ru( Admi+is*ra*or( $ 6$ Heubsch( #$?$( -.-0 02 Col$ !$>$ House( The I+*ima*e 4apers of Col$ House( 2 v$ -.06E-.0/( Hough*o+ >iffli+ Co$ DThe %ederal Reserve S)s*em bega+ i*s opera*io+s i+ -.-2 1i*h *he ac*ivi*) of *he Orga+i3a*io+ Commi**ee( appoi+*ed b) 6oodro1 6ilso+( a+d composed of Secre*ar) of *he Treasur) 6illiam >cAdoo( 1ho 1as his so+Ei+Ela1( Secre*ar) of Agricul*ure Hous*o+ a+d Comp*roller of *he Curre+c) Boh+ S,el*o+ 6illiams$ O+ Ba+uar) 6( -.-2$ B$4$ >orga+ me* 1i*h *he Orga+i3i+g Commi**ee i+ #e1 ?or,$ He i+formed *hem *ha* *here should +o* be more *ha+ seve+ regio+al dis*ric*s i+ *he +e1 s)s*em$ This commi**ee 1as *o selec* *he loca*io+s of *he "dece+*rali3ed" reserve ba+,s$ The) 1ere empo1ered *o selec* from eigh* *o *1elve reserve ba+,s( al*hough B$4$ >orga+ had *es*ified he *hough* *ha* +o* more *ha+ four should be selec*ed$ >uch poli*ic,i+g 1e+* i+*o *he selec*io+ of *hese si*es( as *he *1elve ci*ies *hus favored 1ould become e+ormousl) impor*a+* as ce+*ers of fi+a+ce$ #e1 ?or,( of course( 1as a forego+e co+clusio+$ Richmo+d 1as *he +e;* selec*io+( as a pa)off *o Car*er "lass a+d 6oodro1 6ilso+( *he *1o 'irgi+ia+s 1ho had bee+ give+ poli*ical credi* for *he %ederal Reserve Ac*$ The o*her selec*io+s of *he Commi**ee 1ere os*o+( 4hiladelphia( Clevela+d( Chicago( S*$ Louis( A*la+*a( &allas( >i++eapolis( Ca+sas Ci*)( a+d Sa+ %ra+cisco$ All of *hese ci*ies la*er developed impor*a+* "fi+a+cial dis*ric*s" as *he resul* of *his selec*io+$ These local ba**les( ho1ever( paled i+ vie1 of *he comple*e domi+a+ce of *he %ederal Reserve ba+, of #e1 ?or, i+ *he s)s*em$ %erdi+a+d Lu+dberg poi+*ed ou*( i+ America5s Si;*) %amilies( *ha*( "I+ prac*ice( *he %ederal Reserve a+, of #e1 ?or, became *he

fou+*ai+head of *he s)s*em of *1elve regio+al ba+,s( for #e1 ?or, 1as *he mo+e) mar,e* of *he +a*io+$ The o*her eleve+ ba+,s 1ere so ma+) e;pe+sive mausoleums erec*ed *o salve *he local pride a+d <uell *he Bac,so+ia+ fears of *he hi+*erla+d$ e+=ami+ S*ro+g( preside+* of *he a+,ers Trus* 7B$4$ >orga+8 1as selec*ed as *he firs* "over+or of *he #e1 ?or, %ederal Reserve a+,$ Adep* i+ high fi+a+ce( S*ro+g for ma+) )ears ma+ipula*ed *he cou+*r)5s mo+e*ar) s)s*em a* *he discre*io+ of direc*ors represe+*i+g *he leadi+g #e1 ?or, ba+,s$ :+der S*ro+g( *he Reserve S)s*em 1as brough* i+*o i+*erloc,i+g rela*io+s 1i*h *he a+, of !+gla+d a+d *he a+, of %ra+ce$ e+=ami+ S*ro+g held his posi*io+ as "over+or of *he %ederal Reserve a+, of #e1 ?or, u+*il his sudde+ dea*h i+ -.0/( duri+g a Co+gressio+al i+ves*iga*io+ of *he secre* mee*i+gs be*1ee+ Reserve "over+ors a+d D0 heads of !uropea+ ce+*ral ba+,s 1hich brough* o+ *he "rea* &epressio+ of -.0.ED-$"09 S*ro+g had married *he daugh*er of *he 4reside+* of a+,ers Trus*( 1hich brough* him i+*o *he li+e of successio+ i+ *he d)+as*ic i+*rigues 1hich pla) such a+ impor*a+* role i+ *he 1orld of high fi+a+ce$ He also had bee+ a member of *he origi+al Be,)ll Isla+d group( *he %irs* #ame Club( a+d 1as *hus <ualified for *he highes* posi*io+ i+ *he %ederal Reserve S)s*em( as *he "over+or of *he %ederal Reserve a+, of #e1 ?or, 1hich domi+a*ed *he e+*ire s)s*em$ 4aul 6arburg also is me+*io+ed i+ B$ Laure+ce Laughli+5s defi+i*ive volume( The %ederal Reserve Ac*( I*s Origi+s a+d 4urposes( ">r$ 4aul 6arburg of Cuh+( Loeb Compa+) offered i+ >arch( -.-0 a fairl) 1ell *hough* ou* pla+ *o be ,+o1+ as *he :+i*ed Reserve a+, of *he :+i*ed S*a*es$ This 1as published i+ The #e1 ?or, Times of >arch 02( -.-0$ The group i+*eres*ed i+ *he purposes of *he #a*io+al >o+e*ar) Commissio+ me* secre*l) a* Be,)ll Isla+d for abou* *1o 1ee,s i+ &ecember( -.-0( a+d co+ce+*ra*ed o+ *he prepara*io+ of a bill *o be prese+*ed *o Co+gress b) *he #a*io+al >o+e*ar) Commissio+$ The me+ 1ho 1ere prese+* a* Be,)ll Isla+d 1ere Se+a*or Aldrich( H$ 4$ &aviso+ of B$4$ >orga+ Compa+)( 4aul 6arburg of Cuh+( Loeb Compa+)( %ra+, 'a+derlip of *he #a*io+al Ci*) a+,( a+d Charles &$ #or*o+ of *he %irs* #a*io+al a+,$ #o doub* *he ables* ba+,i+g mi+d i+ *he group 1as *ha* of >r$ 6arburg( 1ho had had a !uropea+ ba+,i+g *rai+i+g$ Se+a*or Aldrich had +o special *rai+i+g i+ ba+,i+g$"06 A me+*io+ of 4aul 6arburg( 1ri**e+ b) Harold Celloch( a+d *i*led( "6arburg *he Revolu*io+is*" appeared i+ *he Ce+*ur) >aga3i+e( >a)( -.-9$ Celloch 1ri*es@ "He imposed his ideas o+ a +a*io+ of a hu+dred millio+ people $ $ $ 6i*hou* >r$ 6arburg *here 1ould have bee+ +o %ederal Reserve Ac*$ The ba+,i+g house of 6arburg a+d 6arburg i+ Hamburg has al1a)s bee+ s*ric*l) a famil) busi+ess$ #o+e bu* a 6arburg has bee+ eligible for i*( bu* all 6arburgs have bee+ bor+ i+*o i*$ I+ -/.9 he married *he daugh*er of *he la*e Solomo+ Loeb of Cuh+ Loeb Compa+)$ He became a member of Cuh+ Loeb Compa+) i+ -.00$ >r$

6arburg5s salar) from his priva*e busi+ess has bee+ appro;ima*el) a half millio+ a )ear$ >r$ 6arburg5s mo*ives had bee+ purel) *hose of pa*rio*ic selfEsacrifice$" The *rue purposes of *he %ederal Reserve Ac* soo+ bega+ *o disillusio+ ma+) 1ho had a* firs* believed i+ i*s claims$ 6$ H$ Alle+ 1ro*e i+ >ood)5s >aga3i+e( -.-6( "The purpose of *he %ederal Reserve Ac* 1as *o preve+* co+ce+*ra*io+ of mo+e) i+ *he #e1 ?or, ba+,s b) ma,i+g i* profi*able for cou+*r) ba+,ers *o use *heir fu+ds a* home( bu* *he moveme+* of curre+c) sho1s KKKKKKKKKKKKKKKKKKKKKKKKKK 09 %erdi+a+d Lu+dberg( America5s Si;*) %amilies( -.DJ 06 B$ Laure+ce Laughli+( The %ederal Reserve Ac*( I*5s Origi+s a+d 4urposes DD *ha* *he #e1 ?or, ba+,s gai+ed from *he i+*erior i+ ever) mo+*h e;cep* &ecember( -.-9( si+ce *he Ac* 1e+* i+*o effec*$ The s*abili3a*io+ of ra*es has *a,e+ place i+ #e1 ?or, alo+e$ I+ o*her par*s( high ra*es co+*i+ue$ The Ac*( 1hich 1as *o deprive 6all S*ree* of i*s fu+ds for specula*io+( has reall) give+ *he bulls a+d *he bears such a suppl) as *he) have +ever had before$ The *ru*h is *ha* far from havi+g clogged *he cha++el *o 6all S*ree*( as >r$ "lass so co+fide+*l) boas*ed( i* ac*uall) 1ide+ed *he old cha++els a+d ope+ed up *1o +e1 o+es$ The firs* of *hese leads direc*l) *o 6ashi+g*o+ a+d gives 6all S*ree* a s*ri+g o+ all *he surplus cash i+ *he :+i*ed S*a*es Treasur)$ esides( i+ *he po1er *o issue ba+,E+o*e curre+c)( i* fur+ishes a+ i+e;haus*ible suppl) of credi* mo+e)G *he seco+d cha++el leads *o *he grea* ce+*ral ba+,s of !urope( 1hereb)( *hrough *he sale of accep*a+ces( vir*uall) guara+*eed b) *he :+i*ed S*a*es "over+me+*( 6all S*ree* is gra+*ed immu+i*) from foreig+ dema+ds for gold 1hich have precipi*a*ed ever) grea* crisis i+ our his*or)$" %or ma+) )ears( *here has bee+ co+siderable m)s*er) abou* 1ho ac*uall) o1+s *he s*oc, of *he %ederal Reserve a+,s$ Co+gressma+ 6righ* 4a*ma+( leadi+g cri*ic of *he S)s*em( *ried *o fi+d ou* 1ho *he s*oc,holders 1ere$ The s*oc, i+ *he origi+al *1elve regio+al %ederal Reserve a+,s 1as purchased b) +a*io+al ba+,s i+ *hose *1elve regio+s$ ecause *he %ederal Reserve a+, of #e1 ?or, 1as *o se* *he i+*eres* ra*es a+d direc* ope+ mar,e* opera*io+s( *hus co+*rolli+g *he dail) suppl) a+d price of mo+e) *hroughou* *he :+i*ed S*a*es( i* is *he s*oc,holders of *ha* ba+, 1ho are *he real direc*ors of *he e+*ire s)s*em$ %or *he firs* *ime( i* ca+ be revealed 1ho *hose s*oc,holders are$ This 1ri*er has *he origi+al orga+i3a*io+ cer*ifica*es of *he *1elve %ederal Reserve a+,s( givi+g *he o1+ership of shares b) *he +a*io+al ba+,s i+ each dis*ric*$ The %ederal Reserve a+, of #e1 ?or, issued 00D(09D shares( a+d( as filed 1i*h *he Comp*roller of *he Curre+c) >a) -.( -.-2( *he large #e1 ?or, Ci*) ba+,s *oo, more *ha+ half of *he ou*s*a+di+g

shares$ The Roc,efeller Cuh+( LoebEco+*rolled #a*io+al Ci*) a+, *oo, *he larges* +umber of shares of a+) ba+,( D0(000 shares$ B$4$ >orga+5s %irs* #a*io+al a+, *oo, -9(000 shares$ 6he+ *hese *1o ba+,s merged i+ -.99( *he) o1+ed i+ o+e bloc, almos* o+e four*h of *he shares i+ *he %ederal Reserve a+, of #e1 ?or,( 1hich co+*rolled *he e+*ire s)s*em( a+d *hus *he) could +ame 4aul 'olc,er or a+)o+e else *he) chose *o be Chairma+ of *he %ederal Reserve oard of "over+ors$ Chase #a*io+al a+, *oo, 6(000 shares$ The >ari+e #a*io+ a+, of uffalo( la*er ,+o1+ as >ari+e >idla+d( *oo, 6(000 shares$ This ba+, 1as o1+ed b) *he Schoell,opf famil)( 1hich co+*rolled #iagara 4o1er Compa+) a+d o*her large i+*eres*s$ #a*io+al a+, of Commerce of #e1 ?or, Ci*) *oo, 0-(000 shares$ The shareholders of *hese ba+,s 1hich o1+ *he s*oc, of *he %ederal Reserve a+, of #e1 ?or, are *he people 1ho have co+*rolled our poli*ical a+d eco+omic des*i+ies si+ce -.-2$ The) are *he Ro*hschilds( of !urope( La3ard %reres 7!uge+e >e)er8( Cuh+ Loeb Compa+)( 6arburg Compa+)( Lehma+ ro*hers( D2 "oldma+ Sachs( *he Roc,efeller famil)( a+d *he B$4$ >orga+ i+*eres*s$ These i+*eres*s have merged a+d co+solida*ed i+ rece+* )ears( so *ha* *he co+*rol is much more co+ce+*ra*ed$ #a*io+al a+, of Commerce is +o1 >orga+ "uara+*) Trus* Compa+)$ Lehma+ ro*hers has merged 1i*h Cuh+( Loeb Compa+)( %irs* #a*io+al a+, has merged 1i*h *he #a*io+al Ci*) a+,( a+d i+ *he o*her eleve+ %ederal Reserve &is*ric*s( *hese same shareholders i+direc*l) o1+ or co+*rol shares i+ *hose ba+,s( 1i*h *he o*her shares o1+ed b) *he leadi+g families i+ *hose areas 1ho o1+ or co+*rol *he pri+cipal i+dus*ries i+ *hese regio+s$P The "local" families se* up regio+al cou+cils( o+ orders from #e1 ?or,( of such groups as *he Cou+cil o+ %oreig+ Rela*io+s( The Trila*eral Commissio+( a+d o*her i+s*rume+*s of co+*rol devised b) *heir mas*ers$ The) fi+a+ce a+d co+*rol poli*ical developme+*s i+ *heir area( +ame ca+dida*es( a+d are seldom successfull) opposed i+ *heir pla+s$ 6i*h *he se**i+g up of *he *1elve "fi+a+cial dis*ric*s" *hrough *he %ederal Reserve a+,s( *he *radi*io+al divisio+ of *he :+i*ed S*a*es i+*o *he for*)Eeigh* s*a*es 1as over*hro1+( a+d 1e e+*ered *he era of "regio+alism"( or *1elve regio+s 1hich had +o rela*io+ *o *he *radi*io+al s*a*e bou+daries$ These developme+*s follo1i+g *he passi+g of *he %ederal Reserve Ac* proved ever) o+e of *he allega*io+s Thomas Befferso+ had made agai+s* a ce+*ral ba+, i+ -J.-@ *ha* *he subscribers *o *he %ederal Reserve a+, s*oc, had formed a corpora*io+( 1hose s*oc, could be a+d 1as held b) alie+sG *ha* *his s*oc, 1ould be *ra+smi**ed *o a cer*ai+ li+e of successorsG *ha* i* 1ould be placed be)o+d forfei*ure a+d eschea*G *ha* *he) 1ould receive a mo+opol) of ba+,i+g( 1hich 1as agai+s* *he la1s of mo+opol)G a+d *ha* *he) +o1 had *he po1er *o ma,e la1s( paramou+* *o *he la1s of *he s*a*es$ #o s*a*e legisla*ure ca+ cou+*erma+d a+) of *he la1s laid do1+ b) *he %ederal Reserve oard of "over+ors for *he be+efi* of *heir priva*e s*oc,holders$ This board issues la1s as *o 1ha* *he i+*eres* ra*e shall be( 1ha* *he <ua+*i*) of mo+e) shall be a+d 1ha* *he price of mo+e) shall be$ All of *hese po1ers abroga*e *he po1ers of *he s*a*e legisla*ures a+d *heir respo+sibili*) *o *he ci*i3e+s of *hose s*a*es$ The #e1 ?or, Times s*a*ed *ha* *he %ederal Reserve a+,s 1ould be read) for busi+ess o+ Augus* -( -.-2( bu* *he) ac*uall) bega+ opera*io+s o+ #ovember -6( -.-2$ A* *ha* *ime( *heir *o*al asse*s 1ere lis*ed a* Q-2D(000(000( from *he sale of shares i+ *he %ederal Reserve a+,s *o s*oc,holders of *he +a*io+al ba+,s 1hich subscribed *o i*$ The ac*ual par* of *his Q-2D(000(000 1hich 1as paid i+ for *hese shares remai+s shrouded i+ m)s*er)$ Some his*oria+s believe *ha* *he shareholders o+l) paid abou* half of *he amou+* i+ cashG o*hers believe KKKKKKKKKKKKKKKKKKKKKKKKKK P See char*s ' *hrough IL D9

*ha* *he) paid i+ +o cash a* all( bu* merel) se+* i+ chec,s 1hich *he) dre1 o+ *he +a*io+al ba+,s 1hich *he) o1+ed$ This seems mos* li,el)( *ha* from *he ver) ou*se*( *he %ederal Reserve opera*io+s 1ere "paper issued agai+s* paper"( *ha* boo,,eepi+g e+*ries comprised *he o+l) values 1hich cha+ged ha+ds$ The me+ 1hom 4reside+* 6oodro1 6ilso+ chose *o ma,e up *he firs* %ederal Reserve oard of "over+ors 1ere me+ dra1+ from *he ba+,i+g group$ He had bee+ +omi+a*ed for *he 4reside+c) b) *he &emocra*ic 4ar*)( 1hich had claimed *o represe+* *he "commo+ ma+" agai+s* *he "ves*ed i+*eres*s"$ Accordi+g *o 6ilso+ himself( he 1as allo1ed *o choose o+l) o+e ma+ for *he %ederal Reserve oard$ The o*hers 1ere chose+ b) *he #e1 ?or, ba+,ers$ 6ilso+5s choice 1as Thomas &$ Bo+es( a *rus*ee of 4ri+ce*o+ a+d direc*or of I+*er+a*io+al Harves*er a+d o*her corpora*io+s$ The o*her members 1ere Adolph C$ >iller( eco+omis* from Roc,efeller5s :+iversi*) of Chicago a+d >orga+5s Harvard :+iversi*)( a+d also servi+g as Assis*a+* Secre*ar) of *he I+*eriorG Charles S$ Hamli+( 1ho had served previousl) as a+ Assis*a+* Secre*ar) *o *he Treasur) for eigh* )earsG %$A$ &ela+o( a Roosevel* rela*ive( a+d railroad opera*or 1ho *oo, over a +umber of railroads for Cuh+( Loeb Compa+)( 6$4$"$ Hardi+g( 4reside+* of *he %irs* #a*io+al a+, of A*la+*aG a+d 4aul 6arburg of Cuh+( Loeb Compa+)$ Accordi+g *o The I+*ima*e 4apers of Col$ House( 6arburg 1as appoi+*ed because "The 4reside+* accep*ed 7House5s8 sugges*io+ of 4aul 6arburg of #e1 ?or, because of his i+*eres* a+d e;perie+ce i+ curre+c) problems u+der bo*h Republica+ a+d &emocra*ic Admi+is*ra*io+s$"0J Li,e 6arburg( &ela+o had also bee+ bor+ ou*side *he co+*i+e+*al limi*s of *he :+i*ed S*a*es( al*hough he 1as a+ America+ ci*i3e+$ &ela+o5s fa*her( 6arre+ &ela+o( accordi+g *o &r$ Bosephso+ a+d o*her au*hori*ies( 1as ac*ive i+ Ho+g Co+g i+ *he Chi+ese opium *rade( a+d %rederic, &ela+o 1as bor+ i+ Ho+g Co+g i+ -/6D$ I+ The >o+e) 4o1er of !urope( 4aul !mde+ 1ri*es *ha* "The 6arburgs reached *heir ou*s*a+di+g emi+e+ce duri+g *he las* *1e+*) )ears of *he pas* ce+*ur)( simul*a+eousl) 1i*h *he gro1*h of Cuh+( Loeb Compa+) i+ #e1 ?or,( 1i*h 1hom *he) s*ood i+ a perso+al u+io+ a+d famil) rela*io+ship$ 4aul 6arburg 1i*h mag+ifice+* success carried *hrough i+ -.-D *he reorga+i3a*io+ of *he America+ ba+,i+g s)s*em( a* 1hich he had 1i*h Se+a*or Aldrich bee+ 1or,i+g si+ce -.--( a+d *hus mos* *horoughl) co+solida*ed *he curre+c) a+d fi+a+ces of *he :+i*ed S*a*es$"0/ KKKKKKKKKKKKKKKKKKKKKKKKKK 0J Charles Se)mour( The I+*ima*e 4apers of Col$ House( 2 v$ -.06E-.0/( Hough*o+ >iffli+ Co$ 0/ 4aul !mde+( The >o+e) 4o1er of !urope i+ *he -.*h a+d 00*h Ce+*ur)( S$ Lo1( >ars*o+ Co$( Lo+do+( -.DJ D6 The #e1 ?or, TimesP had +o*ed o+ >a) 6( -.-2 *ha* 4aul 6arburg had "re*ired" from Cuh+( Loeb Compa+) i+ order *o serve o+ *he %ederal Reserve oard( al*hough he had +o* resig+ed his direc*orships of America+ Sure*) Compa+)( al*imore a+d Ohio Railroad( #a*io+al Rail1a)s of >e;ico( 6ells %argo( or 6es*i+ghouse !lec*ric Corpora*io+( bu* 1ould co+*i+ue *o serve o+ *hese boards of direc*ors$ "6ho5s 6ho" lis*ed him as holdi+g *hese direc*orships a+d i+ addi*io+( America+ I$"$ Chemical Compa+) 7bra+ch of I$"$ %arbe+8( Agfa A+sco Corpora*io+( 6es*i+ghouse Accep*a+ce Compa+)( 6arburg Compa+) of Ams*erdam( chairma+ of *he oard of I+*er+a*io+al Accep*a+ce a+,( a+d +umerous o*her ba+,s( rail1a)s a+d corpora*io+s$ "Cuh+ Loeb O Co$ 1i*h 6arburg have four vo*es or *he ma=ori*) of *he %ederal Reserve oard$"0. &espi*e his re*ireme+* from Cuh+( Loeb Compa+) i+ >a) of -.-2 *o serve o+ *he %ederal Reserve oard of "over+ors( 6arburg 1as as,ed *o appear before a Se+a*e Subcommi**ee i+ Bu+e of -.-2 a+d a+s1er some <ues*io+s abou* his behi+dE*heEsce+es role i+ ge**i+g *he %ederal Reserve Ac* *hrough Co+gress$ This migh* have mea+* some <ues*io+s abou* *he secre* co+fere+ce i+ Be,)ll Isla+d( a+d 6arburg refused *o appear$ O+ Bul) J( -.-2 he 1ro*e a le**er *o "$>$ Hi*chcoc,( Chairma+ of *he Se+a*e a+,i+g a+d Curre+c) Commi**ee( s*a*i+g *ha* i* migh* impair his useful+ess o+ *he oard if he 1ere re<uired *o a+s1er a+) <ues*io+s( a+d *ha* he 1ould *herefore 1i*hdra1 his +ame$ I* seemed *ha* 6arburg 1as prepared *o bluff *he Se+a*e Commi**ee i+*o co+firmi+g him 1i*hou* a+) <ues*io+s as,ed$ O+ Bul) -0( -.-2( The #e1 ?or, Times defe+ded 6arburg o+ *he edi*orial page a+d de+ou+ced *he "Se+a*orial I+<uisi*io+"$ Si+ce 6arburg had +o* )e* bee+ as,ed a+) <ues*io+s( *he *erm "I+<uisi*io+" seemed remar,abl)

i+appropria*e( +or 1as *here a+) real da+ger *ha* *he Se+a*ors 1ere prepari+g *o use i+s*rume+*s of *or*ure o+ >r$ 6arburg$ The imbroglio 1as resolved 1he+ *he Se+a*e Commi**ee( i+ ab=ec* surre+der( agreed *ha* >r$ 6arburg 1ould be give+ a lis* of <ues*io+s i+ adva+ce of his appeara+ce so *ha* he could go over *hem( a+d *ha* he could be e;cused from a+s1eri+g a+) <ues*io+s 1hich migh* *e+d *o impair his service o+ *he oard of "over+ors$ The #a*io+ repor*ed o+ Bul) 0D( -.-2 *ha* ">r$ 6arburg fi+all) had a co+fere+ce 1i*h Se+a*or O5"orma+ a+d agreed *o mee* *he members of *he Se+a*e Subcommi**ee i+formall)( 1i*h a vie1 *o comi+g *o a+ u+ders*a+di+g( a+d *o givi+g *hem a+) reaso+able i+forma*io+ *he) migh* desire$ The opi+io+ i+ 6ashi+g*o+ is *ha* >r$ 6arburg5s co+firma*io+ is assured$" The #a*io+ KKKKKKKKKKKKKKKKKKKKKKKKKK P The #e1 ?or, Times April D0( -.-2( repor*ed *ha* *he -0 dis*ric*s had subscrip*io+s of QJ2(J20(/00 a+d *ha* *he subscribi+g ba+,s 1ould pa) o+eEhalf of *his sum i+ si; mo+*hs$ 0. Clare+ce 6$ arro+( >ore The) Told arro+( Ar+o 4ress( #e1 ?or, Times( -.JD( Bu+e -0( -.-2$ p$ 002 DJ 1as correc*$ >r$ 6arburg 1as co+firmed( *he 1a) havi+g bee+ smoo*hed b) his "fi;er"( Se+a*or O5"orma+ of #e1 ?or,( more familiarl) ,+o1+ as "*he Se+a*or from 6all S*ree*"$ Se+a*or Rober* L$ O1e+ had previousl) charged *ha* 6arburg 1as *he America+ represe+*a*ive of *he Ro*hschild famil)( bu* <ues*io+i+g him abou* *his 1ould i+deed have smac,ed of *he mediaeval "I+<uisi*io+"( a+d his fello1 Se+a*ors 1ere *oo civili3ed *o i+dulge i+ such barbari*)P$ &uri+g *he Se+a*e Heari+gs o+ 4aul 6arburg before *he Se+a*e a+,i+g a+d Curre+c) Commi**ee( Augus* -( -.-2( Se+a*or ris*o1 as,ed( "Ho1 ma+) of *hese par*+ers 7of Cuh+( Loeb Compa+)8 are America+ ci*i3e+sH" 6AR :R"@ "The) are all America+ ci*i3e+s e;cep* >r$ Cah+$ He is a ri*ish sub=ec*$" RISTO6@ "He 1as a* o+e *ime a ca+dida*e for 4arliame+*( 1as he +o*H" 6AR :R"@ "There 1as *al, abou* i*( i* had bee+ sugges*ed a+d he had i* i+ his mi+d$" 4aul 6arburg also s*a*ed *o *he Commi**ee( "I 1e+* *o !+gla+d( 1here I s*a)ed for *1o )ears( firs* i+ *he ba+,i+g a+d discou+* firm of Samuel >o+*ague O Compa+)$ Af*er *ha* I 1e+* *o %ra+ce( 1here I s*a)ed i+ a %re+ch ba+,$" CHAIR>A#@ "6ha* %re+ch ba+, 1as *ha*H" 6AR :R"@ "I* is *he Russia+ ba+, for foreig+ *rade 1hich has a+ age+c) i+ 4aris$" RISTO6@ "I u+ders*a+d )ou *o sa) *ha* )ou 1ere a Republica+( bu* 1he+ >r$ Theodore Roosevel* came arou+d( )ou *he+ became a s)mpa*hi3er 1i*h >r$ 6ilso+ a+d suppor*ed himH" 6AR :R"@ "?es$" RISTO6@ "6hile )our bro*her 7%eli; 6arburg8 1as suppor*i+g Taf*H" 6AR :R"@ "?es$" Thus *hree par*+ers of Cuh+( Loeb Compa+) 1ere suppor*i+g *hree differe+* ca+dida*es for 4reside+* of *he :+i*ed S*a*es$ 4aul 6arburg 1as suppor*i+g 6ilso+( %eli; 6arburg 1as suppor*i+g Taf*( a+d O**o Cah+ 1as suppor*i+g Theodore Roosevel*$ 4aul 6arburg e;plai+ed *his curious si*ua*io+ b) *elli+g *he Commi**ee *ha* *he) had +o i+flue+ce over each o*her5s poli*ical beliefs( "as fi+a+ce a+d poli*ics do+5* mi;$" Sues*io+s abou* 6arburg5s appoi+*me+* va+ished i+ a hue a+d cr) 1i*h 6ilso+5s sole appoi+*me+* *o *he oard of "over+ors( Thomas $ Bo+es$ Repor*ers had discovered *ha* Bo+es( a* *he *ime of his appoi+*me+*( 1as u+der i+dic*me+* b) *he A**or+e) "e+eral of *he :+i*ed S*a*es$ 6ilso+ leaped *o *he defe+se of his choice( *elli+g repor*ers *ha* "The ma=ori*) of *he me+ co++ec*ed 1i*h 1ha* 1e have come *o call Abig busi+ess5 are ho+es*( i+corrup*ible a+d pa*rio*ic$" &espi*e 6ilso+5s pro*es*a*io+s( *he Se+a*e a+,i+g a+d Curre+c) Commi**ee scheduled KKKKKKKKKKKKKKKKKKKKKKKKKK P 6arburg 1as co+firmed Augus* /( -.-2( D/E--( a+d pri+cipall) opposed b) Se+$ ris*o1 of Ca+sas( 1ho 1as de+ou+ced b) The #e1 ?or, Times as a "radical Republica+"( a+d 1hose e;celle+* librar) of rare boo,s o+ ba+,i+g 1ere ac<uired b) *he prese+* 1ri*er i+ -./D for research o+ *his 1or,$

D/ heari+gs o+ *he fi*+ess of Thomas &$ Bo+es *o be a member of *he oard of "over+ors$ 6ilso+ *he+ 1ro*e a le**er *o Se+a*or Rober* L$ O1e+( Chairma+ of *ha* Commi**ee@ 6hi*e House Bu+e -/( -.-2 &ear Se+a*or O1e+@ >r$ Bo+es has al1a)s s*ood for *he righ*s of *he people agai+s* *he righ*s of privilege$ His co++ec*io+ 1i*h *he Harves*er Compa+) 1as a public service( +o* a priva*e i+*eres*$ He is *he o+e ma+ of *he 1hole +umber 1ho 1as i+ a peculiar se+se m) perso+al choice$ Si+cerel)( 6oodro1 6ilso+ 6oodro1 6ilso+ said( "There is +o reaso+ *o believe *ha* *he u+favorable repor* represe+*s *he a**i*ude of *he Se+a*e i*self$" Af*er several 1ee,s( Thomas &$ Bo+es 1i*hdre1 his +ame( a+d *he cou+*r) had *o do 1i*hou* his services$ The o*her members of *he firs* oard of "over+ors 1ere Secre*ar) of *he Treasur)( 6illiam >cAdoo( 6ilso+5s so+Ei+Ela1( a+d 4reside+* of *he Hudso+E>a+ha**a+ Railroad( a Cuh+( Loeb Compa+) co+*rolled e+*erprise( a+d Comp*roller of *he Curre+c) Boh+ S,el*o+ 6illiams$ 6he+ *he %ederal Reserve a+,s 1ere ope+ed for busi+ess o+ #ovember -6( -.-2( 4aul 6arburg said( "This da*e ma) be co+sidered as *he %our*h of Bul) i+ *he eco+omic his*or) of *he :+i*ed S*a*es$" D.

CHA4T!R %O:R

The %ederal Advisor) Cou+cil

I+ s*eamrolli+g *he %ederal Reserve Ac* *hrough *he House of Represe+*a*ives( Co+gressma+ Car*er "lass declared o+ Sep*ember D0( -.-D o+ *he floor of *he House *ha* *he i+*eres*s of *he public 1ould be pro*ec*ed b) a+ advisor) cou+cil of ba+,ers$ "There ca+ be +o*hi+g si+is*er abou* i*s *ra+sac*io+s$ >ee*i+g 1i*h i* a* leas* four *imes a )ear 1ill be a ba+,ers5 advisor) cou+cil represe+*i+g ever) regio+al reserve dis*ric* i+ *he s)s*em$ Ho1 could 1e have e;ercised grea*er cau*io+ i+ safeguardi+g *he public i+*eres*H Car*er "lass +ei*her *he+ +or la*er gave a+) subs*a+*ia*io+ for his belief *ha* a group of ba+,ers 1ould pro*ec* *he i+*eres*s of *he public( +or is *here a+) evide+ce i+ *he his*or) of *he :+i*ed S*a*es *ha* a+) group of ba+,ers has ever do+e so$ I+ fac*( *he %ederal Advisor) Cou+cil proved *o be *he "admi+is*ra*ive process" 1hich 4aul 6arburg had i+ser*ed i+*o *he %ederal Reserve Ac* *o provide =us* *he *)pe of remo*e bu* u+see+ co+*rol over *he S)s*em 1hich he desired$ 6he+ he 1as as,ed b) fi+a+cial repor*er C$6$ arro+( =us* af*er *he %ederal Reserve Ac* 1as e+ac*ed i+*o la1 b) Co+gress( 1he*her he approved of *he bill as i* 1as fi+all) passed(

6arburg replied( "6ell( i* has+5* go* <ui*e ever)*hi+g 1e 1a+*( bu* *he lac, ca+ be ad=us*ed la*er b) admi+is*ra*ive processes$" The cou+cil proved *o be *he ideal vehicle for 6arburg5s purposes( as i* has fu+c*io+ed for seve+*) )ears i+ almos* comple*e a+o+)mi*)( i*s members a+d *heir busi+ess associa*io+s( u++o*iced b) *he public$ Se+a*or Rober* O1e+( chairma+ of *he Se+a*e a+,i+g a+d Curre+c) Commi**ee( had said( as <uo*ed i+ The #e1 ?or, Times( Augus* D( -.-D before passage of *he ac*@ "The %ederal Reserve Ac* 1ill fur+ish *he ba+, a+d i+dus*rial a+d commercial i+*eres*s 1i*h *he discou+* of <ualified commercial paper a+d *hus s*abili3e our commercial a+d i+dus*rial life$ The %ederal Reserve ba+,s are +o* i+*e+ded as mo+e) ma,i+g ba+,s( bu* *o serve a grea* +a*io+al purpose of accommoda*i+g commerce a+d busi+essme+ a+d ba+,s( safeguard a fi;ed mar,e* for ma+ufac*ured goods( for agricul*ural produc*s a+d for labor$ There is +o reaso+ 1h) *he ba+,s should be i+ co+*rol of *he %ederal Reserve s)s*em$ S*abili*) 1ill ma,e our commerce e;pa+d heal*hfull) i+ ever) direc*io+$" 20 Se+a*or O1e+5s op*imism 1as doomed b) *he domi+a*io+ of *he Be,)ll Isla+d promo*ers over *he i+i*ial composi*io+ of *he %ederal Reserve S)s*em$ #o* o+l) did *he >orga+ECuh+( Loeb allia+ce purchase *he domi+a+* co+*rol of s*oc, i+ *he %ederal Reserve a+, of #e1 ?or,( 1i*h almos* half of *he shares o1+ed b) *he five #e1 ?or, ba+,s u+der *heir co+*rol( %irs* #a*io+al a+,( #a*io+al Ci*) a+,( #a*io+al a+, of Commerce( Chase #a*io+al a+, a+d Ha+over #a*io+al a+,( bu* *he) also persuaded 4reside+* 6oodro1 6ilso+ *o appoi+* o+e of *he Be,)ll Isla+d group( 4aul 6arburg( *o *he %ederal Reserve oard of "over+ors$ !ach of *he *1elve %ederal Reserve a+,s 1as *o elec* a member of *he %ederal Advisor) Cou+cil( 1hich 1ould mee* 1i*h *he %ederal Reserve oard of "over+ors four *imes a )ear i+ 6ashi+g*o+( i+ order *o "advise" *he oard o+ fu*ure mo+e*ar) polic)$ This seemed *o assure absolu*e democrac)( as each of *he *1elve "advisors"( represe+*i+g a differe+* regio+ of *he :+i*ed S*a*es( 1ould be e;pec*ed *o spea, up for *he eco+omic i+*eres*s of his area( a+d each of *he *1elve members 1ould have a+ e<ual vo*e$ The *heor) ma) have bee+ admirable i+ i*s co+cep*( bu* *he hard fac*s of eco+omic life resul*ed i+ a <ui*e differe+* pic*ure$ The preside+* of a small ba+, i+ S*$ Louis or Ci+ci++a*i( si**i+g i+ co+fere+ce 1i*h 4aul 6arburg a+d B$4$ >orga+ *o "advise" *hem o+ mo+e*ar) polic)( 1ould be u+li,el) *o co+*radic* *1o of *he mos* po1erful i+*er+a*io+al fi+a+ciers i+ *he 1orld( as a scribbled +o*e from ei*her o+e of *hem 1ould be sufficie+* *o plu+ge his li**le ba+, i+*o ba+,rup*c)$ I+ fac*( *he small ba+,s of *he *1elve %ederal Reserve dis*ric*s e;is*ed o+l) as sa*elli*es of *he big #e1 ?or, fi+a+cial i+*eres*s( a+d 1ere comple*el) a* *heir merc)$ >ar*i+ >a)er( i+ The a+,ers( poi+*s ou* *ha* "B$4$ >orga+ mai+*ai+ed correspo+de+* rela*io+ships 1i*h ma+) small ba+,s all over *he cou+*r)$"D0 The big #e1 ?or, ba+,s did +o* co+fi+e *hemselves *o mul*iEmillio+ dollar deals 1i*h o*her grea* fi+a+cial i+*eres*s( bu* carried o+ ma+) smaller a+d more rou*i+e deali+gs 1i*h *heir "correspo+de+*" ba+,s across *he :+i*ed S*a*es$ Appare+*l) secure i+ *heir belief *ha* *heir ac*ivi*ies 1ould +ever be e;posed *o *he public( *he >orga+ECuh+( Loeb i+*eres*s boldl) selec*ed *he members of *he %ederal Advisor) Cou+cil from *heir correspo+de+* ba+,s a+d from ba+,s i+ 1hich *he) o1+ed s*oc,$ #o o+e i+ *he fi+a+cial commu+i*) seemed *o +o*ice( as +o*hi+g 1as said abou* i* duri+g seve+*) )ears of *he %ederal Reserve S)s*em5s opera*io+$ To avoid a+) suspicio+ *ha* #e1 ?or, i+*eres*s migh* co+*rol *he %ederal Advisor) Cou+cil( i*s firs* preside+*( elec*ed i+ -.-2 b) *he o*her members( 1as B$ $ %orga+( preside+* of *he %irs* #a*io+al a+, of

KKKKKKKKKKKKKKKKKKKKKKKKKK D0 >ar*i+ >a)er( The a+,ers( 6e)brigh* a+d Talle)( #e1 ?or,( -.J2( p$ 00J$ 2Chicago$ Ra+d >c#all) a+,ers &irec*or) for -.-2 lis*s *he pri+cipal correspo+de+*s of *he large ba+,s$ The pri+cipal correspo+de+* ba+, of *he a,erE>orga+ co+*rolled %irs* #a*io+al a+, of #e1 ?or, is lis*ed as *he %irs* #a*io+al a+, of Chicago$ The pri+cipal correspo+de+* lis*ed b) *he %irs* #a*io+al a+, of Chicago is *he a+, of >a+ha**a+ i+ #e1 ?or,( co+*rolled b) Bacob Schiff a+d 4aul 6arburg of Cuh+( Loeb Compa+)$ Bames $ %orga+ also 1as lis*ed as a direc*or of !<ui*able Life I+sura+ce Compa+)( also co+*rolled b) >orga+$ Ho1ever( *he rela*io+ship be*1ee+ %irs* #a*io+al a+, of Chicago a+d *hese #e1 ?or, ba+,s 1as eve+ closer *ha+ *hese lis*i+gs i+dica*e$ O+ page J0- of The "ro1*h of Chicago a+,s b) %$ C)ril Bames( 1e fi+d me+*io+ of "*he %irs* #a*io+al a+, of Chicago5s profi*able co++ec*io+ 1i*h *he >orga+ i+*eres*s$ A good1ill ambassador 1as has*il) se+* *o #e1 ?or, *o i+vi*e "eorge %$ a,er *o become a direc*or of *he %irs* #a*io+al a+, of Chicago$"D- 7B$ $ %orga+ *o Ream( Ba+uar) J( -.0D$8 I+ effec*( a,er a+d >orga+ had perso+all) chose+ *he firs* preside+* of *he %ederal Advisor) Cou+cil$ Bames $ %orga+ 7-/90E-.028 also sho1s *he obliga*or) "Lo+do+ Co++ec*io+" i+ *he opera*io+ of *he %ederal Reserve S)s*em$ or+ i+ S*$ A+dre15s( Sco*la+d( he bega+ his ba+,i+g career *here 1i*h *he Ro)al a+, of Sco*la+d( a correspo+de+* of *he a+, of !+gla+d$ He came *o Ca+ada for *he a+, of ri*ish #or*h America( 1or,ed for *he a+, of #ova Sco*ia( 1hich se+* him *o Chicago i+ *he -//05s( a+d b) -.00 he had become preside+* of *he %irs* #a*io+al a+, of Chicago$ He served for si; )ears as preside+* of *he %ederal Advisor) Cou+cil( a+d 1he+ he lef* *he cou+cil( he 1as replaced b) %ra+, O$ 6e*more( 1ho had also replaced him as preside+* of *he %irs* #a*io+al a+, of Chicago 1he+ %orga+ 1as +amed chairma+ of *he board$ Represe+*i+g *he #e1 ?or, %ederal Reserve dis*ric* o+ *he firs* %ederal Advisor) Cou+cil 1as B$4$ >orga+$ He 1as +amed chairma+ of *he !;ecu*ive Commi**ee$ Thus( 4aul 6arburg a+d B$4$ >orga+ sa* i+ co+fere+ce a* *he mee*i+gs of *he %ederal Reserve oard duri+g *he firs* four )ears of i*s opera*io+( surrou+ded b) *he o*her "over+ors a+d members of *he cou+cil( 1ho could hardl) have bee+ u+a1are *ha* *heir fu*ures 1ould be guided b) *hese *1o po1erful ba+,ers$ A+o*her member of *he %ederal Advisor) Cou+cil i+ -.-2 1as Levi L$ Rue( represe+*i+g *he 4hiladelphia dis*ric*$ Rue 1as preside+* of *he 4hiladelphia #a*io+al a+,$ Ra+d >c#all) a+,ers &irec*or) of -.-2 lis*ed as pri+cipal correspo+de+* of *he %irs* #a*io+al a+, of #e1 ?or,( KKKKKKKKKKKKKKKKKKKKKKKKKK D- %$ C)ril Bames( The "ro1*h of Chicago a+,s( Harper( #e1 ?or,( -.D/$ 20 *he 4hiladelphia #a*io+al a+,$ %irs* #a*io+al a+, of Chicago also lis*ed 4hiladelphia #a*io+al a+, as i*s pri+cipal correspo+de+* i+ 4hiladelphia$ The o*her members of *he %ederal Advisor) Cou+cil i+cluded &a+iel S$ 6i+g( preside+* of *he %irs* #a*io+al a+, of os*o+( 6$S$ Ro1e( preside+* of *he %irs* #a*io+al a+, of Ci+ci++a*i( a+d C$T$ Baffra)( preside+* of *he %irs* #a*io+al a+, of >i++eapolis$ These 1ere all correspo+de+* ba+,s of *he #e1 ?or, "big five" ba+,s 1ho co+*rolled *he mo+e) mar,e* i+ *he :+i*ed S*a*es$ Baffra) had a+ eve+ closer co++ec*io+ 1i*h *he a,erE>orga+ i+*eres*s$ I+ -.0/( *o rei+ves* *he large a++ual divide+ds from *heir %irs* #a*io+al a+, of #e1 ?or, s*oc,( a,er a+d >orga+ se* up a holdi+g compa+)( %irs* Securi*) Corpora*io+( 1hich bough* 900 shares of *he %irs* #a*io+al a+, of >i++eapolis$ Thus Baffra) 1as li**le more *ha+ a 1ageEear+i+g emplo)ee of a,er a+d >orga+( al*hough he had bee+ "selec*ed" b) s*oc,holders of *he %ederal Reserve a+, of >i++eapolis *o represe+* *heir i+*eres*s$ %irs*

Securi*) Corpora*io+ also o1+ed 90(000 shares of Chase #a*io+al a+,( 9200 shares of #a*io+al a+, of Commerce( 0900 shares of a+,ers Trus*( .0/ shares of Liber*) #a*io+al a+,( *he ba+, of 1hich He+r) 4$ &aviso+ had bee+ preside+* 1he+ he 1as *apped *o =oi+ *he B$4$ >orga+ firm( a+d shares of #e1 ?or, Trus*( A*la+*ic Trus* a+d roo,l)+ Trus*$ %irs* Securi*) co+ce+*ra*ed o+ ba+, s*oc,s 1hich rapidl) apprecia*ed i+ value( a+d paid ha+dsome a++ual divide+ds$ I+ -.0J( i* ear+ed five millio+ dollars( bu* paid *he shareholders eigh* millio+( *a,i+g *he res* from i*s surplus$ A+o*her member of *he i+i*ial %ederal Advisor) Cou+cil 1as !$%$ S1i++e)( preside+* of *he %irs* #a*io+al a+, of Ca+sas Ci*)$ He 1as also a direc*or of Sou*her+ Rail1a)( a+d lis*s himself i+ 6ho5s 6ho as "i+depe+de+* i+ poli*ics"$ Archibald Cai+s represe+*ed *he Sa+ %ra+cisco dis*ric* o+ *he %ederal Advisor) Cou+cil( al*hough he mai+*ai+ed his office i+ #e1 ?or,( as preside+* of *he America+ %oreig+ a+,i+g Corpora*io+$ Af*er servi+g as a "over+or of *he %ederal Reserve oard from -.-2E-.-/( 4aul 6arburg did +o* re<ues* a+o*her *erm$ Ho1ever( he 1as +o* read) *o sever his co++ec*io+ 1i*h *he %ederal Reserve S)s*em 1hich he had do+e so much *o se* up a+d pu* i+*o opera*io+$ B$4$ >orga+ obligi+gl) gave up his sea* o+ *he %ederal Advisor) Cou+cil( a+d for *he +e;* *e+ )ears( 4aul 6arburg co+*i+ued *o represe+* *he %ederal Reserve dis*ric* of #e1 ?or, o+ *he Cou+cil$ He 1as vice preside+* of *he cou+cil -.00E09( a+d preside+* -.06E 0J$ Thus 6arburg remai+ed *he domi+a+* prese+ce a* %ederal Reserve oard mee*i+gs *hroughou* *he -.00s( 1he+ *he !uropea+ ce+*ral ba+,s 1ere pla++i+g *he grea* co+*rac*io+ of credi* 1hich precipi*a*ed *he Crash of -.0. a+d *he "rea* &epressio+$ 2D Al*hough mos* of *he %ederal Advisor) Cou+cil5s "advice" *o *he oard of "over+ors has +ever bee+ repor*ed( o+ rare i+s*a+ces a fe1 glimpses i+*o i*s delibera*io+s 1ere afforded b) brief i*ems i+ The #e1 ?or, Times$ O+ #ovember 0-( -.-6( The Times repor*ed *ha* *he %ederal Advisor) Cou+cil had me* i+ 6ashi+g*o+ for i*s <uar*erl) co+fere+ce$ "There 1as *al, abou* absorbi+g !urope5s e;*e+sio+ of credi* *o Sou*h America a+d o*her cou+*ries$ %ederal Reserve officials said *ha* *o mai+*ai+ a posi*io+ as o+e of *he 1orld5s ba+,ers *he :+i*ed S*a*es mus* e;pec* *o be called upo+ *o re+der a good deal of *he service performed largel) b) !+gla+d i+ *he pas*( i+ e;*e+di+g shor* *erm credi*s +ecessar) i+ *he produc*io+ a+d *ra+spor*a*io+ of goods of all ,i+ds i+ *he 1orld5s *rade( a+d *ha* accep*a+ces i+ foreig+ *rade re<uire lo1er discou+*s a+d *he frees* a+d mos* reliable gold mar,e*s$" 7The %irs* 6orld 6ar 1as a* i*s 3e+i*h i+ -.-6$8 I+ addi*io+ *o his service o+ *he oard of "over+ors a+d *he %ederal Advisor) Cou+cil( 4aul 6arburg co+*i+ued *o address ba+,ers5 groups abou* *he mo+e*ar) policies *he) 1ere e;pec*ed *o follo1$ O+ Oc*ober 00( -.-9( he addressed *he T1i+ Ci*) a+,ers Club( S*$ 4aul( >i++eso*a duri+g 1hich speech he s*a*ed( "I* is *o )our i+*eres* *o see *he %ederal Reserve ba+,s as s*ro+g as *he) possibl) ca+ be$ I* s*aggers *he imagi+a*io+ *o *hi+, 1ha* *he fu*ure ma) have i+ s*ore for *he developme+* of America+ ba+,i+g$ 6i*h !urope5s foremos* po1ers limi*ed *o *heir o1+ field( 1i*h *he :+i*ed S*a*es *ur+ed i+*o a credi*or +a*io+ for all *he 1orld( *he bou+daries of *he field *ha* lies ope+ for

us are de*ermi+ed o+l) b) our po1er of safe e;pa+sio+$ The scope of our ba+,i+g fu*ure 1ill ul*ima*el) be limi*ed b) *he amou+* of gold *ha* 1e ca+ mus*er as *he fou+da*io+ of our ba+,i+g a+d credi* s*ruc*ure$" The composi*io+ of *he %ederal Reserve oard of "over+ors a+d *he %ederal Reserve Advisor) Cou+cil( from i*s i+i*ial membership *o *he prese+* da)( sho1s li+,s *o *he Be,)ll Isla+d co+fere+ce a+d *he Lo+do+ ba+,i+g commu+i*) 1hich offers i+co+*rover*ible evide+ce( accep*able i+ a+) cour* of la1( *ha* *here 1as a pla+ *o gai+ co+*rol of *he mo+e) a+d credi* of *he people of *he :+i*ed S*a*es( a+d *o use i* for *he profi* of *he archi*ec*s$ Old Be,)ll Isla+d ha+ds 1ere %ra+, 'a+derlip( preside+* of *he #a*io+al Ci*) a+,( 1hich bough* a large por*io+ of *he shares of *he %ederal Reserve a+, of #e1 ?or, i+ -.-2G 4aul 6arburg of Cuh+( Loeb Compa+)G He+r) 4$ &aviso+( B$4$ >orga+5s righ*ha+d ma+( a+d direc*or of *he %irs* #a*io+al a+, of #e1 ?or, a+d *he #a*io+al a+, of Commerce( 1hich *oo, a large por*io+ of %ederal Reserve a+, of #e1 ?or, s*oc,G a+d e+=ami+ S*ro+g( also ,+o1+ as a >orga+ lieu*e+a+*( 22 1ho served as "over+or of *he %ederal Reserve a+, of #e1 ?or, duri+g *he -.005s$P The selec*io+ of *he regio+al members of *he %ederal Advisor) Cou+cil from *he lis* of ba+,ers 1ho 1or,ed mos* closel) 1i*h *he "big five" ba+,s of #e1 ?or,( a+d 1ho 1ere *heir pri+cipal correspo+de+* ba+,s( proves *ha* *he muchE*ou*ed "regio+al safeguardi+g of *he public i+*eres*" b) Car*er "lass a+d o*her 6ashi+g*o+ propo+e+*s of *he %ederal Reserve Ac* 1as from i*s ver) i+cep*io+ a delibera*e decep*io+$ The fac* *ha* for seve+*) )ears *his cou+cil 1as able *o mee* 1i*h *he %ederal Reserve oard of "over+ors a+d *o "advise" *he "over+ors o+ decisio+s of mo+e*ar) polic) 1hich affec*ed *he dail) lives of ever) perso+ i+ *he :+i*ed S*a*es( 1i*hou* *he public bei+g a1are of *heir e;is*e+ce( demo+s*ra*es *ha* *he pla++ers of *he ce+*ral ba+, opera*io+ ,+e1 e;ac*l) ho1 *o achieve *heir ob=ec*ives *hrough "admi+is*ra*ive processes" of 1hich *he public 1ould remai+ ig+ora+*$ The claim *ha* *he "advice" of *he cou+cil members is +o* bi+di+g o+ *he "over+ors or *ha* i* carries +o 1eigh* is *o claim *ha* four *imes a )ear( *1elve of *he mos* i+flue+*ial ba+,ers i+ *he :+i*ed S*a*es *a,e *ime from *heir 1or, *o *ravel *o 6ashi+g*o+ *o mee* 1i*h *he %ederal Reserve oard merel) *o dri+, coffee a+d e;cha+ge pleasa+*ries$ I* is a claim 1hich a+)o+e familiar 1i*h *he 1or,i+gs of *he busi+ess commu+i*) 1ill fi+d impossible *o *a,e seriousl)$ I+ -.-2( i* 1as a fourEda) *rip each 1a) for ba+,ers from *he %ar 6es* *o come *o 6ashi+g*o+ for a cou+cil mee*i+g 1i*h *he %ederal Reserve oard$ These me+ had e;*e+sive busi+ess i+*eres*s 1hich dema+ded *heir *ime$ B$4$ >orga+ 1as a direc*or of si;*)E*hree corpora*io+s 1hich held a++ual mee*i+gs( a+d KKKKKKKKKKKKKKKKKKKKKKKKKK P "The %ederal Advisor) Cou+cil has grea* i+flue+ce 1i*h *he %ederal Reserve oard$ Co+spicuousl) upo+ *ha* cou+cil is B$4$ >orga+( *he leadi+g member of B$4$ >orga+ Compa+) a+d so+ of *he la*e B$4$ >orga+$ !ver) o+e of *he *1elve members of *he Advisor) Cou+cil( as )ou 1ell ,+o1( 1as educa*ed i+ *he same a*mosphere$ The %ederal Reserve Ac* is +o* o+l) a special privilege ac* bu* privileged perso+s have bee+ placed i+ co+*rol a+d are i*s advisors i+ i*s admi+is*ra*io+$ The %ederal Reserve oard a+d *he %ederal Advisor) Cou+cil admi+is*er *he %ederal Reserve S)s*em as i*s head au*hori*)( a+d +o o+e of *he lesser officials( eve+ if *he) 1ished( 1ould dare *o cross s1ords 1i*h *hem$" 7%RO>@ "6h) Is ?our Cou+*r) A* 6arH" b) Charles Li+dbergh( published i+ -.-J8$ The above paragraph e;plai+s 1h) 6oodro1 6ilso+ ordered gover+me+* age+*s *o sei3e a+d des*ro) *he pri+*i+g pla*es a+d copies of *his boo, i+ *he spri+g of -.-/$ 29 could hardl) be e;pec*ed *o *ravel *o 6ashi+g*o+ *o a**e+d mee*i+gs of *he %ederal Reserve oard if his advice 1as *o be co+sidered of +o impor*a+ce$PP

KKKKKKKKKKKKKKKKKKKKKKKKKK PP The B$4$ >orga+ co++ec*io+ has remai+ed predomi+a+* o+ *he %ederal Advisor) Cou+cil$ %or *he pas* several )ears( *he pres*igious %ederal Reserve &is*ric* #o$ 0( *he #e1 ?or, &is*ric*( has bee+ represe+*ed o+ *he %ederal Advisor) Cou+cil b) Le1is 4res*o+$ 4res*o+ is Chairma+ of B$4$ >orga+ Compa+) a+d also Chairma+ a+d Chief !;ecu*ive Officer of >orga+ "uara+*) Trus*( #e1 ?or,$ A+ heir *o *he ald1i+ for*u+e 7a compa+) co+*rolled b) >orga+8( 4res*o+ married *he heiress *o *he 4uli*3er +e1spaper for*u+e$ O+ %ebruar) 06( -.0.( The #e1 ?or, Times +o*ed *ha* a merger had bee+ effec*ed be*1ee+ #a*io+al a+, of Commerce a+d "uara+*) Trus*( ma,i+g *hem *he larges* ba+, i+ *he :+i*ed S*a*es( 1i*h a capi*al of *1o billio+ dollars$ The merger 1as +ego*ia*ed b) >)ro+ C$ Ta)lor( preside+* of :$S$ S*eel( a >orga+ firm$ The ba+,s occupied ad=oi+i+g buildi+gs o+ 6all S*ree*( a+d( as The #e1 ?or, Times +o*ed( "The "uara+*) Trus* Compa+) lo+g has bee+ ,+o1+ as o+e of A*he >orga+ group5 of ba+,s$" The #a*io+al a+, of Commerce has also bee+ ide+*ified 1i*h >orga+ i+*eres*s$ 26

CHA4T!R %I'!

The House of Ro*hschild

The success of *he %ederal Reserve Co+spirac) 1ill raise ma+) <ues*io+s i+ *he mi+ds of readers 1ho are u+familiar 1i*h *he his*or) of *he :+i*ed S*a*es a+d fi+a+ce capi*al$ Ho1 could *he Cuh+( LoebE>orga+ allia+ce( po1erful *hough i* migh* be( believe *ha* i* 1ould be capable( firs*( of devisi+g a pla+ 1hich 1ould bri+g *he e+*ire mo+e) a+d credi* of *he people of *he :+i*ed S*a*es i+*o *heir ha+ds( a+d seco+d( of ge**i+g such a pla+ e+ac*ed i+*o la1H The capabili*) of devisi+g a+d e+ac*i+g *he "#a*io+al Reserve 4la+"( as *he immedia*e resul* of *he Be,)ll Isla+d e;pedi*io+ 1as called( 1as easil) 1i*hi+ *he po1ers of *he Cuh+( LoebE>orga+ allia+ce( accordi+g *o *he follo1i+g from >cClure5s >aga3i+e( Augus* -.--( "The Seve+ >e+" b) Boh+ >ood)@ "Seve+ me+ i+ 6all S*ree* +o1 co+*rol a grea* share of *he fu+dame+*al i+dus*r) a+d resources of *he :+i*ed S*a*es$ Three of *he seve+ me+( B$4$ >orga+( Bames B$ Hill( a+d "eorge %$ a,er( head of *he %irs* #a*io+al a+, of #e1 ?or, belo+g *o *he soEcalled >orga+ groupG four of *hem( Boh+ &$ a+d 6illiam Roc,efeller( Bames S*illma+( head of *he #a*io+al Ci*) a+,( a+d Bacob H$ Schiff of *he priva*e ba+,i+g firm of Cuh+( Loeb Compa+)( *o *he soEcalled S*a+dard Oil Ci*) a+, group$$$ *he ce+*ral machi+e of capi*al e;*e+ds i*s co+*rol over *he :+i*ed S*a*es$$$ The process is +o* o+l) eco+omicall) logicalG i* is +o1 prac*icall) au*oma*ic$"D0 Thus 1e see *ha* *he -.-0 plo* *o sei3e co+*rol of *he mo+e) a+d credi* of *he people of *he :+i*ed S*a*es 1as pla++ed b) me+ 1ho alread) co+*rolled mos* of *he cou+*r)5s resources$ I* seemed *o Boh+ >ood) "prac*icall) au*oma*ic" *ha* *he) should co+*i+ue 1i*h *heir opera*io+s$ 6ha* Boh+ >ood) did +o* ,+o1( or did +o* *ell his readers( 1as *ha* *he mos* po1erful me+ i+ *he :+i*ed S*a*es 1ere *hemselves a+s1erable *o a+o*her po1er( a foreig+ po1er( a+d a po1er 1hich had bee+ s*eadfas*l) see,i+g *o e;*e+d i*s co+*rol over *he )ou+g republic of *he :+i*ed S*a*es si+ce i*s ver) i+cep*io+$ This po1er 1as *he fi+a+cial po1er of !+gla+d( ce+*ered i+ *he Lo+do+ ra+ch of *he House of Ro*hschild$ The fac* 1as *ha* i+ -.-0( *he :+i*ed S*a*es 1as for all prac*ical purposes bei+g ruled

KKKKKKKKKKKKKKKKKKKKKKKKKK D0 Boh+ >ood)( "The Seve+ >e+"( >cClure5s >aga3i+e( Augus*( -.--( p$ 2-/ 2J from !+gla+d( a+d so i* is *oda)$ The *e+ larges* ba+, holdi+g compa+ies i+ *he :+i*ed S*a*es are firml) i+ *he ha+ds of cer*ai+ ba+,i+g houses( all of 1hich have bra+ches i+ Lo+do+$ The) are B$4$ >orga+ Compa+)( ro1+ ro*hers Harrima+( 6arburg( Cuh+ Loeb a+d B$ He+r) Schroder$ All of *hem mai+*ai+ close rela*io+ships 1i*h *he House of Ro*hschild( pri+cipall) *hrough *he Ro*hschild co+*rol of i+*er+a*io+al mo+e) mar,e*s *hrough i*s ma+ipula*io+ of *he price of gold$ !ach da)( *he 1orld price of gold is se* i+ *he Lo+do+ office of #$>$ Ro*hschild a+d Compa+)$ Al*hough *hese firms are os*e+sibl) America+ firms( 1hich merel) mai+*ai+ bra+ches i+ Lo+do+( *he fac* is *ha* *hese ba+,i+g houses ac*uall) *a,e *heir direc*io+ from Lo+do+$ Their his*or) is a fasci+a*i+g o+e( a+d u+,+o1+ *o *he America+ public( origi+a*i+g as i* did i+ *he i+*er+a*io+al *raffic i+ gold( slaves( diamo+ds( a+d o*her co+*raba+d$ There are +o moral co+sidera*io+s i+ a+) busi+ess decisio+ made b) *hese firms$ The) are i+*eres*ed solel) i+ mo+e) a+d po1er$ Touris*s *oda) gape a* *he mag+ifice+* ma+sio+s of *he ver) rich i+ #e1por*( Rhode Isla+d( 1i*hou* reali3i+g *ha* +o* o+l) do *hese "co**ages" s*a+d as a memorial *o *he baro+ial desires of our 'ic*oria+ millio+aires( bu* *ha* *heir erec*io+ i+ #e1por* represe+*ed a +os*algic memoriali3a*io+ of *he grea* America+ for*u+es( 1hich had *heir begi++i+gs i+ #e1por* 1he+ i* 1as *he capi*al of *he slave *rade$ The slave *rade for ce+*uries had i*s head<uar*ers i+ 'e+ice( u+*il Seve+*ee+*h Ce+*ur) ri*ai+( *he +e1 mas*er of *he seas( used i*s co+*rol of *he ocea+s *o gai+ a mo+opol)$ As *he America+ colo+ies 1ere se**led( i*s fiercel) i+depe+de+* people( mos* of 1hom did +o* 1a+* slaves( fou+d *o *heir surprise *ha* slaves 1ere bei+g se+* *o our por*s i+ grea* +umbers$ %or ma+) )ears( #e1por* 1as *he capi*al of *his u+savor) *rade$ 6illiam !ller)( *he Collec*or of *he 4or* of #e1por*( said i+ -J.-@ "$$$a+ !*hiopia+ cld as soo+ cha+ge his s,i+ as a #e1por* mercha+* cld be i+duced *o cha+ge so lucra*ive a *rade$$$$ for *he slo1 profi*s of a+) ma+ufac*or)$" Boh+ Sui+c) Adams remar,ed i+ his &iar)( page 29.( "#e1por*5s former prosperi*) 1as chiefl) o1i+g *o i*s e;*e+sive emplo)me+* i+ *he Africa+ slave *rade$" The preEemi+e+ce of B$4$ >orga+ a+d *he ro1+ firm i+ America+ fi+a+ce ca+ be da*ed *o *he developme+* of al*imore as *he +i+e*ee+*h ce+*ur) capi*al of *he slave *rade$ o*h of *hese firms origi+a*ed i+ al*imore( ope+ed bra+ches i+ Lo+do+( came u+der *he aegis of *he House of Ro*hschild( a+d re*ur+ed *o *he :+i*ed S*a*es *o ope+ bra+ches i+ #e1 ?or, a+d *o become *he domi+a+* po1er( +o* o+l) i+ fi+a+ce( bu* also i+ gover+me+*$ I+ rece+* )ears( ,e) pos*s such as Secre*ar) of &efe+se have bee+ held b) Rober* Love**( par*+er of ro1+ ro*hers Harrima+( a+d Thomas S$ "a*es( par*+er of &re;el a+d Compa+)( a B$4$ >orga+ subE 2/ sidiar) firm$ The prese+* 'ice 4reside+*( "eorge ush( is *he so+ of 4resco** ush( a par*+er of ro1+ ro*hers Harrima+( for ma+) )ears *he se+a*or from Co++ec*icu*( a+d *he fi+a+cial orga+i3er of Columbia roadcas*i+g S)s*em of 1hich he also 1as a direc*or for ma+) )ears$ To u+ders*a+d 1h) *hese firms opera*e as *he) do( i* is +ecessar) *o give a brief his*or) of *heir origi+s$ %e1 America+s ,+o1 *ha* B$4$ >orga+ Compa+) bega+ as "eorge 4eabod) a+d Compa+)$ "eorge 4eabod) 7-J.9E-/6.8( bor+ a* Sou*h &a+vers( >assachuse**s( bega+ busi+ess i+ "eorge*o1+( &$C$ i+ -/-2 as 4eabod)( Riggs a+d Compa+)( deali+g i+ 1holesale dr) goods( a+d i+

opera*i+g *he "eorge*o1+ Slave >ar,e*$ I+ -/-9( *o be closer *o *heir source of suppl)( *he) moved *o al*imore( 1here *he) opera*ed as 4eabod) a+d Riggs( from -/-9 *o -/D9$ 4eabod) fou+d himself i+creasi+gl) i+volved 1i*h busi+ess origi+a*i+g from Lo+do+( a+d i+ -/D9( he es*ablished *he firm of "eorge 4eabod) a+d Compa+) i+ Lo+do+$ He had e;celle+* e+*ree i+ Lo+do+ busi+ess *hrough a+o*her al*imore firm es*ablished i+ Liverpool( *he ro1+ ro*hers$ Ale;a+der ro1+ came *o al*imore i+ -/0-( a+d es*ablished 1ha* is +o1 ,+o1+ as *he oldes* ba+,i+g house i+ *he :+i*ed S*a*es( s*ill opera*i+g as ro1+ ro*hers Harrima+ of #e1 ?or,G ro1+( Shiple) a+d Compa+) of !+gla+dG a+d Ale; ro1+ a+d So+ of al*imore$ The behi+d *he sce+es po1er 1ielded b) *his firm is i+dica*ed b) *he fac* *ha* Sir >o+*agu #orma+( "over+or of *he a+, of !+gla+d for ma+) )ears( 1as a par*+er of ro1+( Shiple) a+d Compa+)$P Co+sidered *he si+gle mos* i+flue+*ial ba+,er i+ *he 1orld( Sir >o+*agu #orma+ 1as orga+i3er of "i+formal *al,s" be*1ee+ heads of ce+*ral ba+,s i+ -.0J( 1hich led direc*l) *o *he "rea* S*oc,mar,e* Crash of -.0.$ Soo+ af*er he arrived i+ Lo+do+( "eorge 4eabod) 1as surprised *o be summo+ed *o a+ audie+ce 1i*h *he gruff aro+ #a*ha+ >a)er Ro*hschild$ 6i*hou* mi+ci+g 1ords( Ro*hschild revealed *o 4eabod)( *ha* much of *he Lo+do+ aris*ocrac) ope+l) disli,ed Ro*hschild a+d refused his i+vi*a*io+s$ He proposed *ha* 4eabod)( a ma+ of modes* mea+s( be es*ablished as a lavish hos* 1hose e+*er*ai+me+*s 1ould soo+ be *he *al, of Lo+do+$ Ro*hschild 1ould( of course( pa) all *he bills$ 4eabod) accep*ed *he offer( a+d soo+ became ,+o1+ as *he mos* popular hos* i+ Lo+do+$ His a++ual %our*h of Bul) di++er( celebra*i+g America+ I+depe+de+ce( became e;*remel) popular 1i*h *he !+glish aris*ocrac)( ma+) of 1hom( 1hile dri+,i+g 4eabod)5s 1i+e( regaled each o*her 1i*h =o,es abou* Ro*hschild5s crudi*ies a+d bad ma++ers( 1i*hou* reali3i+g *ha* ever) drop *he) dra+, had bee+ paid for b) Ro*hschild$ KKKKKKKKKKKKKKKKKKKKKKKKKK P "There is a+ i+formal u+ders*a+di+g *ha* a direc*or of ro1+( Shiple) should be o+ *he oard of *he a+, of !+gla+d( a+d #orma+ 1as elec*ed *o i* i+ -.0J$" >o+*agu #orma+( Curre+* iograph)( -.20$ 2. I* is hardl) surprisi+g *ha* *he mos* popular hos* i+ Lo+do+ 1ould also become a ver) successful busi+essma+( par*icularl) 1i*h *he House of Ro*hschild suppor*i+g him behi+d *he sce+es$ 4eabod) of*e+ opera*ed 1i*h a capi*al of 900(000 pou+ds o+ ha+d( a+d became ver) as*u*e i+ his bu)i+g a+d selli+g o+ bo*h sides of *he A*la+*ic$ His America+ age+* 1as *he os*o+ firm of eebe( >orga+ a+d Compa+)( headed b) Bu+ius S$ >orga+( fa*her of Boh+ 4ierpo+* >orga+$ 4eabod)( 1ho +ever married( had +o o+e *o succeed him( a+d he 1as ver) favorabl) impressed b) *he *all( ha+dsome Bu+ius >orga+$ He persuaded >orga+ *o =oi+ him i+ Lo+do+ as a par*+er i+ "eorge 4eabod) a+d Compa+) i+ -/92$ I+ -/60( Boh+ 4ierpo+* >orga+ had bee+ *a,e+ o+ as a+ appre+*ice b) *he firm of &u+ca+( Sherma+ i+ #e1 ?or,$ He 1as +o* ver) a**e+*ive *o busi+ess( a+d i+ -/62( >orga+5s fa*her 1as ou*raged 1he+ &u+ca+( Sherma+ refused *o ma,e his so+ a par*+er$ He promp*l) e;*e+ded a+ arra+geme+* 1hereb) o+e of *he chief emplo)ees of &u+ca+( Sherma+( Charles H$ &ab+e)( 1as persuaded *o =oi+ Boh+ 4ierpo+* >orga+ i+ a +e1 firm( &ab+e)( >orga+ a+d Compa+)$ a+,ers >aga3i+e( &ecember( -/62( +o*ed *ha* 4eabod) had 1i*hdra1+ his accou+* from &u+ca+( Sherma+( a+d *ha* o*her firms 1ere e;pec*ed *o do so$ The 4eabod) accou+*( of course( 1e+* *o &ab+e)( >orga+ Compa+)$ Boh+ 4ierpo+* >orga+ 1as bor+ i+ -/DJ( duri+g *he firs* mo+e) pa+ic i+ *he :+i*ed S*a*es$ Sig+ifica+*l)( i* had bee+ caused b) *he House of Ro*hschild( 1i*h 1hom >orga+ 1as la*er *o become associa*ed$ I+ -/D6( 4reside+* A+dre1 Bac,so+( i+furia*ed b) *he *ac*ics of *he ba+,ers 1ho 1ere a**emp*i+g *o persuade him *o re+e1 *he char*er of *he Seco+d a+, of *he :+i*ed S*a*es( said( "?ou are a de+ of vipers$ I i+*e+d *o rou* )ou ou* a+d b) *he !*er+al "od I 1ill rou* )ou ou*$ If *he people o+l) u+ders*ood *he ra+, i+=us*ice of our mo+e) a+d ba+,i+g s)s*em( *here 1ould be a revolu*io+ before mor+i+g$" Al*hough #icholas iddle 1as 4reside+* of *he a+, of *he :+i*ed S*a*es( i* 1as 1ell ,+o1+ *ha* aro+ Bames de Ro*hschild of 4aris 1as *he pri+cipal i+ves*or i+ *his ce+*ral ba+,$ Al*hough Bac,so+ had ve*oed *he re+e1al of *he char*er of *he a+, of *he :+i*ed S*a*es( he probabl) 1as u+a1are *ha* a fe1 mo+*hs earlier( i+ -/D9( *he House of Ro*hschild had ceme+*ed a rela*io+ship 1i*h *he :+i*ed S*a*es "over+me+* b) supersedi+g *he firm of ari+g as fi+a+cial age+* of *he &epar*me+* of S*a*e o+ Ba+uar) -( -/D9$

He+r) Cle1s( *he famous ba+,er( i+ his boo,( T1e+*)Eeigh* ?ears i+ 6all S*ree*DD( s*a*es *ha* *he 4a+ic of -/DJ 1as e+gi+eered because *he char*er of *he Seco+d a+, of *he :+i*ed S*a*es had ru+ ou* i+ -/D6$ #o* o+l) did 4reside+* Bac,so+ promp*l) 1i*hdra1 gover+me+* fu+ds KKKKKKKKKKKKKKKKKKKKKKKKKK DD He+r) Cle1s( T1e+*)Eeigh* ?ears i+ 6all S*ree*( Irvi+g Compa+)( #e1 ?or,( -///( page -9J 90 from *he Seco+d a+, of *he :+i*ed S*a*es( bu* he deposi*ed *hese fu+ds( Q-0 millio+( i+ s*a*e ba+,s$ The immedia*e resul*( Cle1s *ells us( is *ha* *he cou+*r) bega+ *o e+=o) grea* prosperi*)$ This sudde+ flo1 of cash caused a+ immedia*e e;pa+sio+ of *he +a*io+al eco+om)( a+d *he gover+me+* paid off *he e+*ire +a*io+al deb*( leavi+g a surplus of Q90 millio+ i+ *he Treasur)$ The !uropea+ fi+a+ciers had *he a+s1er *o *his si*ua*io+$ Cle1s fur*her s*a*es( "The 4a+ic of -/DJ 1as aggrava*ed b) *he a+, of !+gla+d 1he+ i* i+ o+e da) *hre1 ou* all *he paper co++ec*ed 1i*h *he :+i*ed S*a*es$" The a+, of !+gla+d( of course( 1as s)+o+)mous 1i*h *he +ame of aro+ #a*ha+ >a)er Ro*hschild$ 6h) did *he a+, of !+gla+d i+ o+e da) "*hro1 ou*" all paper co++ec*ed 1i*h *he :+i*ed S*a*es( *ha* is( refuse *o accep* or discou+* a+) securi*ies( bo+ds or o*her fi+a+cial paper based i+ *he :+i*ed S*a*esH The purpose of *his ac*io+ 1as *o crea*e a+ immedia*e fi+a+cial pa+ic i+ *he :+i*ed S*a*es( cause a comple*e co+*rac*io+ of credi*( hal* fur*her issues of s*oc,s a+d bo+ds( a+d rui+ *hose see,i+g *o *ur+ :+i*ed S*a*es securi*ies i+*o cash$ I+ *his a*mosphere of fi+a+cial pa+ic( Boh+ 4ierpo+* >orga+ came i+*o *he 1orld$ His gra+dmo*her( Boseph >orga+( 1as a 1ell *o do farmer 1ho o1+ed -06 acres i+ Har*ford( Co++ec*icu*$ He la*er ope+ed *he Ci*) Ho*el( a+d *he !;cha+ge Coffee Shop( a+d i+ -/-.( 1as o+e of *he fou+ders of *he Ae*+a I+sura+ce Compa+)$ "eorge 4eabod) fou+d *ha* he had chose+ 1ell i+ selec*i+g Bu+ius S$ >orga+ as his successor$ >orga+ agreed *o co+*i+ue *he sub rosa rela*io+ship 1i*h #$>$ Ro*hschild Compa+)( a+d soo+ e;pa+ded *he firm5s ac*ivi*ies b) shippi+g large <ua+*i*ies of railroad iro+ *o *he :+i*ed S*a*es$ I* 1as 4eabod) iro+ 1hich 1as *he fou+da*io+ for much of America+ railroad *rac,s from -/60 *o -/.0$ I+ -/62( co+*e+* *o re*ire a+d leave his firm i+ *he ha+ds of >orga+( 4eabod) allo1ed *he +ame *o be cha+ged *o Bu+ius S$ >orga+ Compa+)$ The >orga+ firm *he+ a+d si+ce has al1a)s bee+ direc*ed from Lo+do+$ Boh+ 4ierpo+* >orga+ spe+* much of his *ime a* his mag+ifice+* Lo+do+ ma+sio+( 4ri+ce5s "a*e$ O+e of *he high 1a*er mar,s of *he successful Ro*hschildE4eabod) >orga+ busi+ess ve+*ure 1as *he 4a+ic of -/9J$ I* had bee+ *1e+*) )ears si+ce *he 4a+ic of -/DJ@ i*s lesso+s had bee+ forgo**e+ b) hordes of eager i+ves*ors 1ho 1ere a+;ious *o i+ves* *he profi*s of a developi+g America$ I* 1as *ime *o fleece *hem agai+$ The s*oc, mar,e* opera*es li,e a 1ave 1ashi+g up o+ *he beach$ I* s1eeps 1i*h i* ma+) mi+uscule crea*ures 1ho derive all of *heir life suppor* from *he o;)ge+ a+d 1a*er of *he 1ave$ The) coas* alo+g a* *he cres* of *he "Tide of 4rosperi*)"$ Sudde+l) *he 1ave( havi+g reached *he high 1a*er mar, o+ *he beach( recedes( leavi+g all of *he crea*ures gaspi+g o+ *he sa+d$ A+o*her 1ave ma) come i+ *ime *o 9save *hem( bu* i+ all li,elihood i* 1ill +o* come as far( a+d some of *he sea crea*ures are doomed$ I+ *he same ma++er( 1aves of prosperi*)( fed b) +e1l) crea*ed mo+e)( *hrough a+ ar*ificial co+*rac*io+ of credi*( recedes( leavi+g *hose i* had bor+e high *o gasp a+d die 1i*hou* hope of salva*io+$ Corsair( *he Life of B$4$ >orga+(D2 *ells us *ha* *he 4a+ic of -/9J 1as caused b) *he collapse of *he grai+ mar,e* a+d b) *he sudde+ collapse of Ohio Life a+d Trus*( for a loss of five millio+ dollars$ 6i*h *his collapse +i+e hu+dred o*her America+ compa+ies failed$ Sig+ifica+*l)( o+e +o* o+l) survived( bu* prospered from *he crash$ I+ Corsair( 1e lear+ *ha* *he a+, of !+gla+d le+* "eorge 4eabod) a+d Compa+) five millio+ pou+ds duri+g *he pa+ic of -/9J$ 6i+,ler( i+ >orga+ *he >ag+ifice+*D9 sa)s *ha* *he a+, of

!+gla+d adva+ced 4eabod) o+e millio+ pou+ds( a+ e+ormous sum a* *ha* *ime( a+d *he e<uivale+* of o+e hu+dred millio+ dollars *oda)( *o save *he firm$ Ho1ever( +o o*her firm received such be+efice+ce duri+g *his 4a+ic$ The reaso+ is revealed b) >a**he1 Bosephso+( i+ The Robber aro+s$ He sa)s o+ page 60@ "%or such <uali*ies of co+serva*ism a+d puri*)( "eorge 4eabod) a+d Compa+)( *he old *ree ou* of 1hich *he House of >orga+ gre1( 1as famous$ I+ *he pa+ic of -/9J( 1he+ deprecia*ed securi*ies had bee+ *hro1+ o+ *he mar,e* b) dis*ressed i+ves*ors i+ America( 4eabod) a+d *he elder >orga+( bei+g i+ possessio+ of cash( had purchased such bo+ds as possessed real value freel)( a+d *he+ resold *hem a* a large adva+ce 1he+ sa+i*) 1as res*ored$"D6 Thus( from a +umber of biographies of >orga+( *he s*or) ca+ be pieced *oge*her$ Af*er *he pa+ic had bee+ e+gi+eered( o+e firm came i+*o *he mar,e* 1i*h o+e millio+ pou+ds i+ cash( purchased securi*ies from dis*ressed i+ves*ors a* pa+ic prices( a+d la*er resold *hem a* a+ e+ormous profi*$ Tha* firm 1as *he >orga+ firm( a+d behi+d i* 1as *he clever ma+euveri+g of aro+ #a*ha+ >a)er Ro*hschild$ The associa*io+ remai+ed secre* from *he mos* ,+o1ledgeable fi+a+cial mi+ds i+ Lo+do+ a+d #e1 ?or,( al*hough >orga+ occasio+all) appeared as *he fi+a+cial age+* i+ a Ro*hschild opera*io+$ As *he >orga+ firm gre1 rapidl) duri+g *he la*e +i+e*ee+*h ce+*ur)( u+*il i* domi+a*ed *he fi+a+ces of *he +a*io+( ma+) observers 1ere pu33led *ha* *he Ro*hschilds seemed so li**le i+*eres*ed i+ profi*i+g b) i+ves*i+g i+ *he rapidl) adva+ci+g America+ eco+om)$ Boh+ >ood) +o*es( i+ The >as*ers of Capi*al( page 0J( "The Ro*hschilds 1ere co+*e+* *o remai+ a close all) of >orga+$$$ as far as *he America+ field 1as co+cer+ed$5DJ Secrec) 1as more profi*able *ha+ valor$ KKKKKKKKKKKKKKKKKKKKKKKKKK D2 Corsair( The Life of >orga+ D9 Boh+ C$ 6i+,ler( >orga+ *he >ag+ifice+*( 'a+guard( #$?$ -.D0 D6 >a**he1 Bosephso+( The Robber aro+s( Harcour* race( #$?$ -.D2 DJ Boh+ >ood)( The >as*ers of Capi*al 90 The reaso+ *ha* *he !uropea+ Ro*hschilds preferred *o opera*e a+o+)mousl) i+ *he :+i*ed S*a*es behi+d *he facade of B$4$ >orga+ a+d Compa+) is e;plai+ed b) "eorge 6heeler( i+ 4ierpo+* >orga+ a+d %rie+ds( *he A+a*om) of a >)*h( page -J@ " u* *here 1ere s*eps bei+g *a,e+ eve+ +o1 *o bri+g him ou* of *he fi+a+cial bac,1a*ersEEa+d *he) 1ere +o* bei+g *a,e+ b) 4ierpo+* >orga+ himself$ The firs* sugges*io+ of his +ame for a role i+ *he rechargi+g of *he reserve origi+a*ed 1i*h *he Lo+do+ bra+ch of *he House of Ro*hschild( elmo+*5s emplo)ers$"D/ 6heeler goes o+ *o e;plai+ *ha* a co+siderable a+*iERo*hschild moveme+* had developed i+ !urope a+d *he :+i*ed S*a*es 1hich focused o+ *he ba+,i+g ac*ivi*ies of *he Ro*hschild famil)$ !ve+ *hough *he) had a regis*ered age+* i+ *he :+i*ed S*a*es( Augus* Schoe+berg( 1ho had cha+ged his +ame *o elmo+* 1he+ he came *o *he :+i*ed S*a*es as *he represe+*a*ive of *he Ro*hschilds i+ -/DJ( i* 1as e;*remel) adva+*ageous *o *hem *o have a+ America+ represe+*a*ive 1ho 1as +o* ,+o1+ as a Ro*hschild age+*$

Al*hough *he Lo+do+ house of Bu+ius S$ >orga+ a+d Compa+) co+*i+ued *o be *he domi+a+* bra+ch of *he >orga+ e+*erprises( 1i*h *he dea*h of *he se+ior >orga+ i+ -/.0 i+ a carriage accide+* o+ *he Riviera( Boh+ 4ierpo+* >orga+ became *he head of *he firm$ Af*er opera*i+g as *he America+ represe+*a*ive of *he Lo+do+ firm from -/62E-/J- as &ab+e) >orga+ Compa+)( >orga+ *oo, o+ a +e1 par*+er i+ -/J-( A+*ho+) &re;el of 4hiladelphia a+d opera*ed as &re;el >orga+ a+d Compa+) u+*il -/.9$ &re;el died i+ *ha* )ear( a+d >orga+ cha+ged *he +ame of *he America+ bra+ch *o B$4$ >orga+ a+d Compa+)$ LaRoucheD. *ells us *ha* o+ %ebruar) 9( -/.-( a secre* associa*io+ ,+o1+ as *he Rou+d Table "roup 1as formed i+ Lo+do+ b) Cecil Rhodes( his ba+,er( Lord Ro*hschild( *he Ro*hschild i+Ela1( Lord Roseber)( a+d Lord Cur3o+$ He s*a*es *ha* i+ *he :+i*ed S*a*es *he Rou+d Table 1as represe+*ed b) *he >orga+ group$ &r$ Carrol Suigle) refers *o *his group as "The ri*ishEAmerica+ Secre* Socie*)" i+ Traged) a+d Hope( s*a*i+g *ha* "The chief bac,bo+e of *his orga+i3a*io+ gre1 up alo+g *he alread) e;is*i+g fi+a+cial coopera*io+ ru++i+g from *he >orga+ a+, i+ #e1 ?or, *o a group of i+*er+a*io+al fi+a+ciers i+ Lo+do+ led b) La3ard ro*hers 7i+ -.0-8$"20 6illiam "u) Carr( i+ 4a1+s I+ The "ame s*a*es *ha*( "I+ -/..( B$4$ >orga+ a+d &re;el 1e+* *o !+gla+d *o a**e+d *he I+*er+a*io+al a+,ers KKKKKKKKKKKKKKKKKKKKKKKKKK D/ "eorge 6heeler( 4ierpo+* >orga+ a+d %rie+ds( *he A+a*om) of a >)*h( 4re+*ice Hall( #$B$ -.JD D. L)+do+ H$ LaRouche( Br$( &ope( I+c$( The #e1 e+=ami+ %ra+,li+ House 4ublishi+g Compa+)( #$?$ -.J/ 20 &r$ Carrol Suigle)( Traged) a+d Hope( >acmilla+ Co$( #$?$ 9D Co+ve+*io+$ 6he+ *he) re*ur+ed( B$4$ >orga+ had bee+ appoi+*ed head represe+*a*ive of *he Ro*hschild i+*eres*s i+ *he :+i*ed S*a*es$ As *he resul* of *he Lo+do+ Co+fere+ce( B$4$ >orga+ a+d Compa+) of #e1 ?or,( &re;el a+d Compa+) of 4hiladelphia( "re+fell a+d Compa+) of Lo+do+( a+d >orga+ Har=es Cie of 4aris( >$>$ 6arburg Compa+) of "erma+) a+d America( a+d *he House of Ro*hschild 1ere all affilia*ed$"2Appare+*l) u+a1are of *he 4eabod) co++ec*io+ 1i*h *he Ro*hschilds a+d *he fac* *ha* *he >orga+s had al1a)s bee+ affilia*ed 1i*h *he House of Ro*hschild( Carr supposed *ha* he had u+covered *his rela*io+ship as of -/..( 1he+ i+ fac* i* 1e+* bac, *o -/D9$P Af*er 6orld 6ar I( *he Rou+d Table became ,+o1+ as *he Cou+cil o+ %oreig+ Rela*io+s i+ *he :+i*ed S*a*es( a+d *he Ro)al I+s*i*u*e of I+*er+a*io+al Affairs i+ Lo+do+$ The leadi+g gover+me+* officials of bo*h !+gla+d a+d *he :+i*ed S*a*es 1ere chose+ from i*s members$ I+ *he -.60s( as gro1i+g a**e+*io+ ce+*ered o+ *he surrep*i*ious gover+me+*al ac*ivi*ies of *he Cou+cil o+ %oreig+ Rela*io+s( subsidiar) groups( ,+o1+ as *he Trila*eral Commissio+ a+d *he ilderbergers( represe+*i+g *he ide+*ical fi+a+cial i+*eres*s( bega+ opera*io+s( 1i*h *he more impor*a+* officials( such as Rober* Roosa( bei+g members of all *hree groups$ KKKKKKKKKKKKKKKKKKKKKKKKKK 2- 6illiam "u) Carr( 4a1+s I+ The "ame( priva*el) pri+*ed( -.96( pg$ 60 P Bul) D0( -.D0 >c%adde+ asis of Co+*rol of !co+omic Co+di*io+s$ This co+*rol of *he 1orld busi+ess s*ruc*ure a+d of huma+ happi+ess a+d progress b) a small group is a ma**er of *he mos* i+*e+se public i+*eres*$ I+ a+al)3i+g i*( 1e mus* begi+ 1i*h *he i+*er+al group 1hich ce+*ers i*self arou+d B$4$ >orga+ Compa+)$ #ever before had *here bee+ such a po1erful ce+*rali3ed co+*rol over fi+a+ce( i+dus*rial produc*io+( credi* a+d 1ages as is a* *his *ime ves*ed i+ *he >orga+ group$$$ The >orga+ co+*rol of *he %ederal Reserve S)s*em is e;ercised *hrough co+*rol of *he ma+ageme+* of *he %ederal Reserve a+, of #e1 ?or,$

"eorge %$ 4eabod) His*or) of *he "rea* America+ %or*u+es( "us*avus >)ers( >od$ Lib$ 9DJ( +o*es *ha* B$4$ >orga+5s fa*her( Bu+ius S$ >orga+( had become a par*+er of "eorge 4eabod) i+ *he ba+,i+g busi+ess$ "6he+ *he Civil 6ar came o+( "eorge 4eabod) a+d Compa+) 1ere appoi+*ed *he fi+a+cial represe+*a*ives i+ !+gla+d of *he :$S$ "over+me+*$$$$ 1i*h *his appoi+*me+* *heir 1eal*h sudde+l) bega+ *o pile upG 1here hi*her*o *he) had amassed *he riches b) s*ages +o* remar,abl) rapid( *he) +o1 added ma+) millio+s 1i*hi+ a ver) fe1 )ears$" Accordi+g *o 1ri*ers of *he da)( *he me*hods of "eorge 4eabod) O Compa+) 1ere +o* o+l) u+reaso+able bu* double *reaso+( i+ *ha*( 1hile i+ *he ac* of givi+g i+side aid *o *he e+em)( "eorge 4eabod) O Compa+) 1ere *he po*e+*iaries of *he :$S$ "over+me+* a+d 1ere bei+g 1ell paid *o adva+ce i*s i+*eres*s$ "Spri+gfield Republic"( -/66@ "%or all 1ho ,+o1 a+)*hi+g o+ *he sub=ec* ,+o1 ver) 1ell *ha* 4eabod) a+d his par*+ers gave us +o fai*h a+d +o help i+ our s*ruggle for +a*io+al e;is*e+ce$ The) par*icipa*ed *o *he fulles* i+ *he commo+ !+glish dis*rus* of our cause a+d our success( a+d *al,ed a+d ac*ed for *he Sou*h ra*her *ha+ for our +a*io+$ #o i+dividuals co+*ribu*ed so much *o floodi+g our mo+e) mar,e*s a+d 1ea,e+i+g fi+a+cial co+fide+ce i+ our +a*io+ali*) *ha+ "eorge 4eabod) O Compa+)( a+d +o+e made more mo+e) b) *he opera*io+$ All *he mo+e) *ha* >r$ 4eabod) is givi+g a1a) so lavishl) amo+g our i+s*i*u*io+s of lear+i+g 1as gai+ed b) *he specula*io+s of his house i+ our misfor*u+es$" Also( #e1 ?or, Times( Oc*$ D-( -/66@ Reco+s*ruc*io+ Carpe*baggers >o+e) %u+d$ Ligh*+i+g over *he Treasur) uildi+g( Boh+ !lso+( >eador 4ublishi+g Co$( os*o+ 2-( pg$ 9D( "The a+, of !+gla+d 1i*h i*s subsidiar) ba+,s i+ America 7u+der *he domi+a*io+ of B$4$ >orga+8 *he a+, of %ra+ce( a+d *he Reichsba+, of "erma+)( composed a+ i+*erloc,i+g a+d coopera*ive ba+,i+g s)s*em( *he mai+ ob=ec*ive of 1hich 1as *he e;ploi*a*io+ of *he people$" 92 Accordi+g *o 6illiam "u) Carr( i+ 4a1+s I+ The "ame(20 *he i+i*ial mee*i+g of *hese e; officio pla++ers *oo, place i+ >a)er Amschel auer5s "oldsmi*h Shop i+ %ra+,fur* i+ -JJD$ auer( 1ho adop*ed *he +ame of "Ro*hschild" or Red Shield( from *he red shield 1hich he hu+g over his door *o adver*ise his busi+ess 7*he red shield *oda) is *he official coa* of arms of *he Ci*) of %ra+,fur*8( 7See Cover8 "1as o+l) *hir*) )ears of age 1he+ he i+vi*ed *1elve o*her 1eal*h) a+d i+flue+*ial me+ *o mee* him i+ %ra+,fur*$ His purpose 1as *o co+vi+ce *hem *ha* if *he) agreed *o pool *heir resources *he) could *he+ fi+a+ce a+d co+*rol *he 6orld Revolu*io+ar) >oveme+* a+d use i* as *heir >a+ual of Ac*io+ *o 1i+ ul*ima*e co+*rol of *he 1eal*h( +a*ural resources( a+d ma+po1er of *he e+*ire 1orld$ This agreeme+* reached( >a)er u+folded his revolu*io+ar) pla+$ The pro=ec* 1ould be bac,ed b) all *he po1er *ha* could be purchased 1i*h *heir pooled resources$ ) clever ma+ipula*io+ of *heir combi+ed 1eal*h i* 1ould be possible *o crea*e such adverse eco+omic co+di*io+s *ha* *he masses 1ould be reduced *o a s*a*e borderi+g o+ s*arva*io+ b) u+emplo)me+*$$$ Their paid propaga+dis*s 1ould arouse feeli+gs of ha*red a+d reve+ge agai+s* *he ruli+g classes b) e;posi+g all real a+d alleged cases of e;*ravaga+ce( lice+*ious co+duc*( i+=us*ice( oppressio+( a+d persecu*io+$ The) 1ould also i+ve+* i+famies *o bri+g i+*o disrepu*e o*hers 1ho migh*( if lef* alo+e( i+*erfere 1i*h *heir overall pla+s$$$ Ro*hschild *ur+ed *o a ma+uscrip* a+d proceeded *o read a carefull) prepared pla+ of ac*io+$ -$ He argued *ha* LA6 1as %ORC! o+l) i+ disguise$ He reaso+ed i* 1as logical *o co+clude A ) *he la1s of +a*ure righ* lies i+ force$5 0$ 4oli*ical freedom is a+ idea( +o* a fac*$ I+ order *o usurp poli*ical po1er all *ha* 1as +ecessar) 1as *o preach ALiberalism5 so *ha* *he elec*ora*e( for *he sa,e of a+ idea( 1ould )ield some of *heir po1er a+d preroga*ives 1hich *he plo**ers could *he+ ga*her i+*o *heir o1+ ha+ds$ D$ The spea,er asser*ed *ha* *he 4o1er of "old had usurped *he po1er of Liberal rulers$$$$ He poi+*ed ou* *ha* i* 1as imma*erial *o *he success of his pla+ 1he*her *he es*ablished gover+me+*s 1ere des*ro)ed b) e;*er+al or i+*er+al foes because *he vic*or had *o of +ecessi*) as, *he aid of ACapi*al5 1hich AIs e+*irel) i+ our ha+ds5$ 2$ He argued *ha* *he use of a+) a+d all mea+s *o reach *heir fi+al goal 1as =us*ified o+ *he grou+ds *ha* *he ruler 1ho gover+ed b) *he moral code 1as +o* a s,illed poli*icia+ because he lef* himself vul+erable a+d i+ a+ u+s*able posi*io+$ 9$ He asser*ed *ha* AOur righ* lies i+ force$ The 1ord RI"HT is a+ abs*rac* *hough* a+d proves +o*hi+g$ I fi+d a +e1 RI"HT$$$ *o a**ac, b) *he Righ* of *he S*ro+g( *o reco+s*ruc* all e;is*i+g i+s*i*u*io+s( a+d *o become *he sovereig+ Lord of all *hose 1ho lef* *o us *he Righ*s *o *heir po1ers b) la)i+g *hem do1+ *o us i+ *heir liberalism$ 6$ The po1er of our resources mus* remai+ i+visible u+*il *he ver) mome+* 1he+ i* has gai+ed such KKKKKKKKKKKKKKKKKKKKKKKKKK 20 6illiam "u) Carr( 4a1+s I+ The "ame( priva*el) pri+*ed( -.96

99 s*re+g*h *ha* +o cu++i+g or force ca+ u+dermi+e i*$ He 1e+* o+ *o ou*li+e *1e+*)Efive poi+*s$ #umber / deal* 1i*h *he use of alcoholic li<uors( drugs( moral corrup*io+( a+d all vice *o s)s*ema*icall) corrup* )ou*h of all +a*io+s$ .$ The) had *he righ* *o sei3e proper*) b) a+) mea+s( a+d 1i*hou* hesi*a*io+( if b) doi+g so *he) secured submissio+ a+d sovereig+*)$ -0$ 6e 1ere *he firs* *o pu* *he sloga+s Liber*)( !<uali*)( a+d %ra*er+i*) i+*o *he mou*hs of *he masses( 1hich se* up a +e1 aris*ocrac)$ The <ualifica*io+ for *his aris*ocrac) is 6!ALTH 1hich is depe+de+* o+ us$ --$ 6ars should be direc*ed so *ha* *he +a*io+s e+gaged o+ bo*h sides should be fur*her i+ our deb*$ -0$ Ca+dida*es for public office should be servile a+d obedie+* *o our comma+ds( so *ha* *he) ma) readil) be used$ -D$ 4ropaga+daEE*heir combi+ed 1eal*h 1ould co+*rol all ou*le*s of public i+forma*io+$ -2$ 4a+ics a+d fi+a+cial depressio+s 1ould ul*ima*el) resul* i+ 6orld "over+me+*( a +e1 order of o+e 1orld gover+me+*$" The Ro*hschild famil) has pla)ed a crucial role i+ i+*er+a*io+al fi+a+ce for *1o ce+*uries( as %rederic, >or*o+( i+ The Ro*hschilds 1ri*es@ "%or *he las* o+e hu+dred a+d fif*) )ears *he his*or) of *he House of Ro*hschild has bee+ *o a+ ama3i+g e;*e+* *he bac,s*age his*or) of 6es*er+ !urope$"D/ 74reface8$$$ ecause of *heir success i+ ma,i+g loa+s +o* *o i+dividuals( bu* *o +a*io+s( *he) reaped huge profi*s( al*hough as >or*o+ 1ri*es( p$ D6( "Someo+e o+ce said *ha* *he 1eal*h of Ro*hschild co+sis*s of *he ba+,rup*c) of +a*io+s$"2D !$C$ C+u*h 1ri*es( i+ The !mpire of *he Ci*)( "The fac* *ha* *he House of Ro*hschild made i*s mo+e) i+ *he grea* crashes of his*or) a+d *he grea* 1ars of his*or)( *he ver) periods 1he+ o*hers los* *heir mo+e)( is be)o+d <ues*io+$"22 The "rea* Sovie* !+c)clopaedia( s*a*es( "The cleares* e;ample of a perso+al li+,up 7i+*er+a*io+al direc*ora*es8 o+ a 6es*er+ !uropea+ scale is *he Ro*hschild famil)$ The Lo+do+ a+d 4aris bra+ches of *he Ro*hschilds are bou+d +o* =us* b) famil) *ies bu* also b) perso+al li+,Eups i+ =oi+*l) co+*rolled compa+ies$"29 The e+c)clopaedia fur*her described *hese compa+ies as i+*er+a*io+al mo+opolies$ The sire of *he famil)( >a)er Amschel Ro*hschild( es*ablished a small busi+ess as a coi+ dealer i+ %ra+,fur* i+ -J2D$ Al*hough previousl) ,+o1+ as auerP( he adver*ised his professio+ b) pu**i+g up a sig+ depic*i+g a+ eagle o+ a red shield( a+ adap*a*io+ of *he coa* of arms of *he Ci*) of %ra+,fur*( *o 1hich he added five golde+ arro1s e;*e+di+g from *he *alo+s( sig+if)i+g his five so+s$ ecause of *his sig+( he *oo, *he KKKKKKKKKKKKKKKKKKKKKKKKKK 2D %rederic, >or*o+( The Ro*hschilds( %a1ce** 4ublishi+g Compa+)( #$?$( -.622 !$C$ C+u*h( !mpire of *he Ci*)( p$ J29 "rea* Sovie* !+c)clopaedia( !di*io+ D( -.JD( >acmilla+( Lo+do+( 'ol$ -2( pg$ 6.P "The origi+al +ame of Ro*hschild 1as auer$" p$ D.J( He+r) Cle1s( T1e+*)Eeigh* )ears i+ 6all S*ree*$ 96 +ame ARo*hschild" or "Red Shield"$ 6he+ *he !lec*or of Hesse ear+ed a for*u+e b) re+*i+g Hessia+ merce+aries *o *he ri*ish *o pu* do1+ *he rebellio+ i+ *he America+ colo+ies( Ro*hschild 1as e+*rus*ed 1i*h *his mo+e) *o i+ves*$ He made a+ e;celle+* profi* bo*h for himself a+d *he !lec*or( a+d a**rac*ed o*her accou+*s$ I+ -J/9 he moved *o a larger house( -2/ Bude+gasse( a five s*or) house ,+o1+ as "The "ree+ Shield" 1hich he shared 1i*h *he Schiff famil)$ The five so+s es*ablished bra+ches i+ *he pri+cipal ci*ies of !urope( *he mos* successful bei+g Bames i+ 4aris a+d #a*ha+ >a)er i+ Lo+do+$ Ig+a*ius alla i+ The Roma+ce of *he Ro*hschilds26 *ells us ho1 *he Lo+do+ Ro*hschild es*ablished his for*u+e$ He 1e+* *o

6a*erloo( 1here *he fa*e of !urope hu+g i+ *he bala+ce( sa1 *ha* #apoleo+ 1as losi+g *he ba**le( a+d rushed bac, *o russels$ A* Os*e+d( he *ried *o hire a boa* *o !+gla+d( bu* because of a ragi+g s*orm( +o o+e 1as 1illi+g *o go ou*$ Ro*hschild offered 900 fra+cs( *he+ J00( a+d fi+all) -(000 fra+cs for a boa*$ O+e sailor said( "I 1ill *a,e )ou for 0000 fra+csG *he+ a* leas* m) 1ido1 1ill have some*hi+g if 1e are dro1+ed$" &espi*e *he s*orm( *he) crossed *he Cha++el$ The +e;* mor+i+g( Ro*hschild 1as a* his usual pos* i+ *he Lo+do+ !;cha+ge$ !ver)o+e +o*iced ho1 pale a+d e;haus*ed he loo,ed$ Sudde+l)( he s*ar*ed selli+g( dumpi+g large <ua+*i*ies of securi*ies$ 4a+ic immedia*el) s1ep* *he !;cha+ge$ Ro*hschild is selli+gG he ,+o1s 1e have los* *he a**le of 6a*erloo$ Ro*hschild a+d all of his ,+o1+ age+*s co+*i+ued *o *hro1 securi*ies o+*o *he mar,e*$ alla sa)s( "#o*hi+g could arres* *he disas*er$ A* *he same *ime he 1as <uie*l) bu)i+g up all securi*ies b) mea+s of secre* age+*s 1hom +o o+e ,+e1$ I+ a si+gle da)( he had gai+ed +earl) a millio+ s*erli+g( givi+g rise *o *he sa)i+g( AThe Allies 1o+ *he a**le of 6a*erloo( bu* i* 1as reall) Ro*hschild 1ho 1o+$5"P I+ The 4rofi*s of 6ar( Richard Le1i+soh+ sa)s( "Ro*hschild5s 1ar profi*s from *he #apoleo+ic 6ars fi+a+ced *heir la*er s*oc, specula*io+s$ :+der >e**er+ich( Aus*ria af*er lo+g hesi*a*io+( fi+all) agreed *o accep* fi+a+cial direc*io+ from *he House of Ro*hschild$"2J KKKKKKKKKKKKKKKKKKKKKKKKKK 26 Ig+a*ius alla( The Roma+ce of *he Ro*hschilds( !verleigh #ash( Lo+do+( -.-D P The #e1 ?or, Times( April -( -.-9 repor*ed *ha* i+ -.-2( aro+ #a*ha+ >a)er de Ro*hschild 1e+* *o cour* *o suppress Ig+a*ius alla5s boo, o+ *he grou+ds *ha* *he 6a*erloo s*or) abou* his gra+dfa*her 1as u+*rue a+d libelous$ The cour* ruled *ha* *he s*or) 1as *rue( dismissed Ro*hschild5s sui*( a+d ordered him *o pa) all cos*s$ The #e1 ?or, Times +o*ed i+ *his s*or) *ha* "The *o*al Ro*hschild 1eal*h has bee+ es*ima*ed a* Q0 billio+$" A previous s*or) i+ The #e1 ?or, Times 7>a) 0J( -.098 +o*ed *ha* aro+ Alpho+se de Ro*hschild( head of *he %re+ch house of Ro*hschild( possessed Q60 millio+ i+ America+ securi*ies i+ his for*u+e( al*hough *he Ro*hschilds repu*edl) 1ere +o* ac*ive i+ *he America+ field$ This e;plai+s 1h) *heir age+*( B$4$ >orga+( had o+l) Q-. millio+ i+ securi*ies i+ his es*a*e 1he+ he died i+ -.-D( a+d securi*ies ha+dled b) >orga+ 1ere ac*uall) o1+ed b) his emplo)er( Ro*hschild$" 2J Richard Le1i+soh+( The 4rofi*s of 6ar( !$4$ &u**o+( -.DJ 9J Af*er *he success of his 6a*erloo e;ploi*( #a*ha+ >a)er Ro*hschild gai+ed co+*rol of *he a+, of !+gla+d *hrough his +ear mo+opol) of "Co+sols" a+d o*her shares$ Several "ce+*ral" ba+,s( or ba+,s 1hich had *he po1er *o issue curre+c)( had bee+ s*ar*ed i+ !urope@ The a+, of S1ede+( i+ -696( 1hich bega+ *o issue +o*es i+ -66-( *he earlies* bei+g *he a+, of Ams*erdam( 1hich fi+a+ced Oliver Crom1ell5s sei3ure of po1er i+ !+gla+d i+ -62.( os*e+sibl) because of religious differe+ces$ Crom1ell died i+ -69J a+d *he *hro+e of !+gla+d 1as reEes*ablished 1he+ Charles II 1as cro1+ed i+ -660$ He died i+ -6/9$ I+ -6/.( *he same group of ba+,ers regai+ed po1er i+ !+gla+d b) pu**i+g Ci+g 6illiam of Ora+ge o+ *he *hro+e$ He soo+ repaid his bac,ers b) orderi+g *he ri*ish Treasur) *o borro1 -(090(000 pou+ds from *hese ba+,ers$ He also issued *hem a Ro)al Char*er for *he a+, of !+gla+d( 1hich permi**ed *hem *o co+solida*e *he #a*io+al deb* 71hich had =us* bee+ crea*ed b) *his loa+8 a+d *o secure pa)me+*s of i+*eres* a+d pri+cipal b) direc* *a;a*io+ of *he people$ The Char*er forbade priva*e goldsmi*hs *o s*ore gold a+d *o issue receip*s( 1hich gave *he s*oc,holders of *he a+, of !+gla+d a mo+e) mo+opol)$ The goldsmi*hs also 1ere re<uired *o s*ore *heir gold i+ *he a+, of !+gla+d vaul*s$ #o* o+l) had *heir privilege of issui+g circula*i+g medium bee+ *a,e+ a1a) b) gover+me+* decree( bu* *heir for*u+es 1ere +o1 *ur+ed over *o *hose 1ho had suppla+*ed *hem$P I+ his "Ca+*os"( 26G 0J( !3ra 4ou+d refers *o *he u+i<ue privileges 1hich 6illiam 4a*erso+ adver*ised i+ his prospec*us for *he Char*er of *he a+, of !+gla+d@ "Said 4a*erso+

Ha*h be+efi* of i+*eres* o+ all *he mo+e)s 1hich i*( *he ba+,( crea*es ou* of +o*hi+g$" The "+o*hi+g" 1hich is referred *o( of course( is *he boo,,eepi+g opera*io+ of *he ba+,( 1hich "crea*es" mo+e) b) e+*eri+g a +o*a*io+ *ha* i* has "le+*" )ou o+e *housa+d dollars( mo+e) 1hich did +o* e;is* u+*il *he ba+, made *he e+*r)$ ) -6./( *he ri*ish Treasur) o1ed -6 millio+ pou+ds s*erli+g *o *he a+, of !+gla+d$ ) -/-9( pri+cipall) due *o *he compou+di+g of i+*eres*( *he deb* had rise+ *o //9 millio+ pou+ds s*erli+g$ Some of *his i+crease 1as due *o *he 1ars 1hich had flourished duri+g *ha* period( i+cludi+g *he #apoleo+ic 6ars a+d *he 1ars 1hich !+gla+d had fough* *o re*ai+ i*s America+ Colo+)$ KKKKKKKKKKKKKKKKKKKKKKKKKK P #OT!@ I+ *he :+i*ed S*a*es( af*er *he s*oc,holders of *he %ederal Reserve S)s*em had co+solida*ed *heir po1er i+ -.D2( our gover+me+* also issued orders *ha* priva*e ci*i3e+s could +o* s*ore or hold gold$ 9/ 6illiam 4a*erso+ 7-69/E-J-.8 himself be+efi*ed li**le from "*he mo+e)s 1hich *he ba+, crea*es ou* of +o*hi+g"( as he 1i*hdre1( af*er a polic) disagreeme+*( from *he a+, of !+gla+d a )ear af*er i* 1as fou+ded$ A la*er 6illiam 4a*erso+ became o+e of *he framers of *he :+i*ed S*a*es Co+s*i*u*io+( 1hile *he +ame li+gers o+( li,e *he per+icious ce+*ral ba+, i*self$ 4a*erso+ had fou+d himself u+able *o 1or, 1i*h *he a+, of !+gla+d5s s*oc,holders$ >a+) of *hem remai+ed a+o+)mous( bu* a+ earl) descrip*io+ of *he a+, of !+gla+d s*a*ed i* 1as "A socie*) of abou* -DD0 perso+s( i+cludi+g *he Ci+g a+d Suee+ of !+gla+d( 1ho had -0(000 pou+ds of s*oc,( *he &u,e of Leeds( &u,e of &evo+shire( !arl of 4embro,e( a+d *he !arl of radford$" ecause of his success i+ his specula*io+s( aro+ #a*ha+ >a)er de Ro*hschild( as he +o1 called himself( reig+ed as *he supreme fi+a+cial po1er i+ Lo+do+$ He arroga+*l) e;claimed( duri+g a par*) i+ his ma+sio+( "I care +o* 1ha* puppe* is placed upo+ *he *hro+e of !+gla+d *o rule *he !mpire o+ 1hich *he su+ +ever se*s$ The ma+ *ha* co+*rols ri*ai+5s mo+e) suppl) co+*rols *he ri*ish !mpire( a+d I co+*rol *he ri*ish mo+e) suppl)$" His bro*her Bames i+ 4aris had also achieved domi+a+ce i+ %re+ch fi+a+ce$ I+ aro+ !dmo+d de Ro*hschild( &avid &ruc, 1ri*es( "7Bames8 Ro*hschild5s 1eal*h had reached *he 600 millio+ mar,$ O+l) o+e ma+ i+ %ra+ce possessed more$ Tha* 1as *he Ci+g( 1hose 1eal*h 1as /00 millio+$ The aggrega*e 1eal*h of all *he ba+,ers i+ %ra+ce 1as -90 millio+ less *ha+ *ha* of Bames Ro*hschild$ This +a*urall) gave him u+*old po1ers( eve+ *o *he e;*e+* of u+sea*i+g gover+me+*s 1he+ever he chose *o do so$ I* is 1ell ,+o1+( for e;ample( *ha* he over*hre1 *he Cabi+e* of 4rime >i+is*er Thiers$"2/ The e;pa+sio+ of "erma+) u+der ismarc, 1as accompa+ied b) his depe+de+ce o+ Samuel leichroder( Cour* a+,ers of *he 4russia+ !mperor( 1ho had bee+ ,+o1+ as a+ age+* of *he Ro*hschilds si+ce -/0/$ The la*er Cha+cellor of "erma+)( &r$ vo+ e*hma++ Holl1eg( 1as *he so+ of >ori*3 e*hma++ of %ra+,fur*( 1ho had i+*ermarried 1i*h *he Ro*hschilds$ !mperor 6ilhelm I also relied heavil) o+ ischoffsheim( "oldschmid*( a+d Sir !r+es* Cassel of %ra+,fur*( 1ho emigra*ed *o !+gla+d a+d became perso+al ba+,er *o *he 4ri+ce of 6ales( la*er !d1ard 'II$ Cassel5s daugh*er married Lord >ou+*ba**e+( givi+g *he famil) a direc* rela*io+ship *o *he prese+* ri*ish Cro1+$ KKKKKKKKKKKKKKKKKKKKKKKKKK 2/ &avid &ruc,( aro+ !dmo+d de Ro*hschild( 74riva*el) pri+*ed8( #$?$ -/90 2. !$>$ Bosephso+( The S*ra+ge &ea*h of %ra+,li+ &$ Roosevel*( pg$ D.( Ched+e) 4ress( #$?$ -.2/ 9.

Bosephso+2. s*a*es *ha* 4hilip >ou+*ba**e+ 1as rela*ed *hrough *he Cassels *o *he >e)er Ro*hschilds of %ra+,fur*$ Thus( *he !+glish ro)al House of 6i+dsor has a direc* famil) rela*io+ship *o *he Ro*hschilds$ I+ -.0-( 1he+ Suee+ 'ic*oria5s so+( !d1ard( became Ci+g !d1ard 'II( he reEes*ablished *he Ro*hschild *ies$ 4aul !mde+ i+ ehi+d The Thro+e sa)s( "!d1ard5s prepara*io+ for his me*ier 1as <ui*e differe+* from *ha* of his mo*her( he+ce he Aruled5 less *ha+ she did$ "ra*efull)( he re*ai+ed arou+d him me+ 1ho had bee+ 1i*h him i+ *he age of *he buildi+g of *he aghdad Rail1a)$$$*here 1ere added *o *he advisor) s*aff Leopold a+d Alfred de Ro*hschild( various members of *he Sassoo+ famil)( a+d above all his priva*e fi+a+cial advisor Sir !r+es* Cassel$"90 The e+ormous for*u+e 1hich Cassel made i+ a rela*ivel) shor* *ime gave him a+ imme+se po1er 1hich he +ever misused$ He amalgama*ed *he firm of 'ic,ers So+s 1i*h *he #aval Co+s*ruc*io+ Compa+) a+d *he >a;imE#orde+feld* "u+s a+d Ammu+i*io+ Compa+)( a fusio+ from 1hich *here arose *he 1orld1ide firm of 'ic,ers So+s a+d >a;im$ O+ a+ e+*irel) differe+* capaci*) from Cassel 1ere busi+essme+ li,e *he Ro*hschilds$ The firm 1as ru+ o+ democra*ic pri+ciples( a+d *he various par*+ers all had *o be members of *he famil)$ 6i*h grea* hospi*ali*) a+d i+ a pri+cel) ma++er *he) led *he lives of gra+d seig+eurs( a+d i* 1as +a*ural *ha* !d1ard 'II should fi+d *hem co+ge+ial$ Tha+,s *o *heir i+*er+a*io+al famil) rela*io+ships a+d s*ill more e;*e+ded busi+ess co++ec*io+s( *he) ,+e1 *he 1hole 1orld( 1ere 1ell i+formed abou* ever)bod)( a+d had reliable ,+o1ledge of ma**ers 1hich did +o* appear o+ *he surface$ This combi+a*io+ of fi+a+ce a+d poli*ics had bee+ a *rademar, of *he Ro*hschilds from *he ver) begi++i+g$ The House of Ro*hschild al1a)s ,+e1 more *ha+ could be fou+d i+ *he papers a+d eve+ more *ha+ could be read i+ *he repor*s 1hich arrived a* *he %oreig+ Office$ I+ o*her cou+*ries also *he rela*io+s of *he Ro*hschilds e;*e+ded behi+d *he *hro+e$ #o* u+*il +umerous diploma*ic publica*io+s appeared i+ *he )ears af*er *he 1ar did a 1ider public lear+ ho1 s*ro+gl) Alfred de Ro*hschild5s ha+d affec*ed *he poli*ics of Ce+*ral !urope duri+g *he *1e+*) )ears before *he 1ar 76orld 6ar I8$" 6i*h *he co+*rol of *he mo+e) came *he co+*rol of *he +e1s media$ Ce+* Cooper( head of *he Associa*ed 4ress( 1ri*es i+ his au*obiograph)( arriers &o1+( "I+*er+a*io+al ba+,ers u+der *he House of Ro*hschild ac<uired a+ i+*eres* i+ *he *hree leadi+g !uropea+ age+cies$"9Thus *he Ro*hschilds bough* co+*rol of Reu*ers I+*er+a*io+al #e1s Age+c)( based i+ Lo+do+( Havas of %ra+ce( a+d 6olf i+ "erma+)( 1hich co+*rolled *he dissemi+a*io+ of all +e1s i+ !urope$

KKKKKKKKKKKKKKKKKKKKKKKKKK
90 4aul !mde+( ehi+d The Thro+e( Hoddard S*ough*o+( Lo+do+( -.D2 9- Ce+* Cooper( arriers &o1+( pg$ 060 I+ I+side !urope90( Boh+ "u+*her 1ro*e i+ -.D6 *ha* a+) %re+ch prime mi+is*er( a* *he e+d of -.D9( 1as a crea*ure of *he fi+a+cial oligarch)( a+d *ha* *his fi+a+cial oligarch) 1as domi+a*ed b) *1elve rege+*s( of 1hom si; 1ere ba+,ers( a+d 1ere headed b) aro+ !dmo+d de Ro*hschild$

The iro+ grip of *he "Lo+do+ Co++ec*io+" o+ *he media 1as e;posed i+ a rece+* boo, b) e+ B$ agdi,ia+ The >edia >o+opol)( described as "A s*ar*li+g repor* o+ *he 90 corpora*io+s *ha* co+*rol 1ha* America sees( hears( reads"$9D agdi,ia+( 1ho edi*ed *he +a*io+5s mos* i+flue+*ial maga3i+e *he Sa*urda) !ve+i+g 4os* u+*il *he mo+opol) sudde+l) closed i* do1+( reveals *he i+*erloc,i+g direc*ora*es amo+g *he fif*) corpora*io+s 1hich co+*rol *he +e1s( bu* fails *o *race *hem bac, *o *he five Lo+do+ ba+,i+g houses 1hich co+*rol *hem$ He me+*io+s *ha* C S i+*erloc,s 1i*h *he 6ashi+g*o+ 4os*( Allied Chemical( 6ells %argo a+,( a+d o*hers( bu* does +o* *ell *he reader *ha* ro1+ ro*hers Harrima+ co+*rols C S( or *ha* *he !uge+e >e)er famil) 7La3ard %reres8 co+*rols Allied Chemical a+d *he 6ashi+g*o+ 4os*( a+d Cuh+ Loeb Co$ *he 6ells %argo a+,$ He sho1s *he #e1 ?or, Times i+*erloc,ed 1i*h >orga+ "uara+*) Trus*( America+ !;press( %irs* os*o+ Corpora*io+ a+d o*hers( bu* does +o* sho1 ho1 *he ba+,i+g i+*erloc,s$ He does +o* me+*io+ *he %ederal Reserve S)s*em i+ his e+*ire boo,( 1hich is co+spicuous b) i*s abse+ce$ agdi,ia+ docume+*s *ha* *he media mo+opol) is s*eadil) closi+g do1+ more +e1spapers a+d maga3i+es$ 6ashi+g*o+ &$C$( 1i*h o+e paper( The 4os*( is u+i<ue amo+g 1orld capi*ols$ Lo+do+ has eleve+ dail) +e1spapers( 4aris four*ee+( Rome eigh*ee+( To,)o seve+*ee+( a+d >osco1 +i+e$ He ci*es a s*ud) from *he -./0 6orld 4ress !+c)clopaedia *ha* *he :+i*ed S*a*es is a* *he bo**om of i+dus*rial +a*io+s i+ *he +umber of dail) +e1spapers sold per -(000 popula*io+$ S1ede+ leads *he lis* 1i*h 9J0( *he :+i*ed S*a*es is a* *he bo**om 1i*h 0/J$ There is u+iversal dis*rus* of *he media b) America+s( because of *heir +o*orious mo+opol) a+d bias$ The media u+a+imousl) urge higher *a;es o+ 1or,i+g people( more gover+me+* spe+di+g( a 1elfare s*a*e 1i*h *o*ali*aria+ po1ers( close rela*io+s 1i*h Russia( a+d a rabid de+u+cia*io+ of a+)o+e 1ho opposes Commu+ism$ This is *he program of "*he Lo+do+ Co++ec*io+$" I* flau+*s a ma+iacal racism( a+d has as i*s mo**o *he dic*um of i*s high pries*ess( Susa+ So+*ag( *ha* "The 1hi*e race is *he ca+cer of his*or)$" !ver)o+e should be agai+s* ca+cer$ The media mo+opol) deals 1i*h i*s oppo+e+*s i+ o+e of *1o 1a)sG ei*her fro+*al assaul* of libel 1hich *he average perso+ ca++o* afford *o li*iga*e( or a+ iro+ cur*ai+ of sile+ce( *he s*a+dard *rea*me+* for a+) 1or, 1hich e;poses i*s cla+des*i+e ac*ivi*ies$ KKKKKKKKKKKKKKKKKKKKKKKKKK 90 Boh+ "u+*her( I+side !urope( -.D6 9D e+ H$ agdi,ia+( The >edia >o+opol)( eaco+ 4ress( os*o+ -./D 6Al*hough *he Ro*hschild pla+ does +o* ma*ch a+) si+gle poli*ical or eco+omic moveme+* si+ce i* 1as e+u+cia*ed i+ -JJD( vi*al par*s of i* ca+ be discer+ed i+ all poli*ical revolu*io+ si+ce *ha* da*e$ LaRouche92 poi+*s ou* *ha* *he Rou+d Tables spo+sored %abia+ Socialism i+ !+gla+d( 1hile bac,i+g *he #a3i regime *hrough a Rou+d Table member i+ "erma+)( &r$ H=almar Schach*( a+d *ha* *he) used *he #a3i "over+me+* *hroughou* 6orld 6ar II *hrough Rou+d Table member Admiral Ca+aris( 1hile Alle+ &ulles ra+ a collabora*i+g i+*ellige+ce opera*io+ i+ S1i*3erla+d for *he Allies$ KKKKKKKKKKKKKKKKKKKKKKKKKK 92 L)+do+ H$ LaRouche( Br$( &ope( I+c$( #e1 e+=ami+ %ra+,li+ House 4ublishi+g Co$( #e1 ?or,( -.J/ 60

CHA4T!R SIL

The Lo+do+ Co++ec*io+

"So )ou see( m) dear Co+i+gsb)( *ha* *he 1orld is gover+ed b) ver) differe+* perso+ages from 1ha* is imagi+ed b) *hose 1ho are +o* behi+d *he sce+es$"99EE&israeli( 4rime >i+is*er of !+gla+d duri+g Suee+ 'ic*oria5s reig+$ I+ -JJ9( *he colo+is*s of America declared *heir i+depe+de+ce from "rea* ri*ai+( a+d subse<ue+*l) 1o+ *heir freedom b) *he America+ Revolu*io+$ Al*hough *he) achieved poli*ical freedom( fi+a+cial i+depe+de+ce proved *o be a more difficul* ma**er$ I+ -J.-( Ale;a+der Hamil*o+( a* *he behes* of !uropea+ ba+,ers( formed *he firs* a+, of *he :+i*ed S*a*es( a ce+*ral ba+, 1i*h much *he same po1ers as *he a+, of !+gla+d$ The foreig+ i+flue+ces behi+d *his ba+,( more *ha+ a ce+*ur) la*er( 1ere able *o ge* *he %ederal Reserve Ac* *hrough Co+gress( givi+g *hem a* las* *he ce+*ral ba+, of issue for our eco+om)$ Al*hough *he %ederal Reserve a+, 1as +ei*her %ederal( bei+g o1+ed b) priva*e s*oc,holders( +or a Reserve( because i* 1as i+*e+ded *o crea*e mo+e)( i+s*ead of *o hold i* i+ reserve( i* did achieve e+ormous fi+a+cial po1er( so much so *ha* i* has graduall) superseded *he popular elec*ed gover+me+* of *he :+i*ed S*a*es$ Through *he %ederal Reserve S)s*em( America+ i+depe+de+ce 1as s*eal*hil) bu* i+vi+cibl) absorbed bac, i+*o *he ri*ish sphere of i+flue+ce$ Thus *he Lo+do+ Co++ec*io+ became *he arbi*er of polic) of *he :+i*ed S*a*es$ ecause of !+gla+d5s loss of her colo+ial empire af*er *he Seco+d 6orld 6ar( i* seemed *ha* her i+flue+ce as a 1orld poli*ical po1er 1as 1a+i+g$ !sse+*iall)( *his 1as *rue$ The !+gla+d of -./0 is +o* *he !+gla+d of -//0$ She +o lo+ger rules *he 1avesG she is a seco+d ra*e( perhaps *hird ra*e( mili*ar) po1er( bu* parado;icall)( as her poli*ical a+d mili*ar) po1er 1a+ed( her fi+a+cial po1er gre1$ I+ Capi*al Ci*) 1e fi+d( "O+ almos* a+) measure )ou care *o *a,e( Lo+do+ is *he 1orld5s leadi+g fi+a+cial ce+*re $ $ $ I+ *he -.60s Lo+do+ domi+a+ce i+creased $ $ $"96 A par*ial e;pla+a*io+ of *his fac* is give+@ "&a+iel &aviso+( head of Lo+do+5s >orga+ "re+fell( said( AThe America+ ba+,s have brough* *he +ecessar) mo+e)( cus*omers( capi*al KKKKKKKKKKKKKKKKKKKKKKKKKK 99 Co+i+gsb)( b) &israeli( Lo+gma+s Co$( Lo+do+( -//-( p$ 090 96 >cRae a+d Cair+cross( Capi*al Ci*)( !)re >e*hue+( Lo+do+( -.6D( p$ 6D a+d s,ills 1hich have es*ablished Lo+do+ i+ i*s prese+* preemi+e+ce $ $ $ $ o+l) *he America+ ba+,s have a le+der of las* resor*$ The %ederal Reserve oard of *he :+i*ed S*a*es ca+( a+d does( crea*e dollars 1he+ +ecessar)$ 6i*hou* *he America+s( *he big dollar deals ca++o* be pu* *oge*her$ 6i*hou* *hem( Lo+do+ 1ould +o* be credible as a+ i+*er+a*io+al fi+a+cial ce+*re$5"9J Thus Lo+do+ is *he 1orld5s fi+a+cial ce+*er( because i* ca+ comma+d e+ormous sums of capi*al( crea*ed a* i*s comma+d b) *he %ederal Reserve oard of *he :+i*ed S*a*es$ u* ho1 is *his possibleH 6e have alread) es*ablished *ha* *he mo+e*ar) policies of *he :+i*ed S*a*es( *he i+*eres* ra*es( *he volume a+d value of mo+e)( a+d sales of bo+ds( are decided( +o* b) *he figurehead of *he %ederal Reserve oard of "over+ors( bu* b) *he %ederal Reserve a+, of #e1 ?or,$ The pre*e+ded dece+*rali3a*io+ of *he %ederal Reserve S)s*em a+d i*s *1elve( e<uall) au*o+omous "regio+al" ba+,s( is a+d has bee+ a decep*io+ si+ce *he %ederal Reserve Ac* became la1 i+ -.-D$ Tha* :+i*ed S*a*es mo+e*ar) polic) s*ems solel) from *he %ederal Reserve a+, of #e1 ?or, is )e* a+o*her fallac)$ Tha* *he %ederal Reserve a+, of #e1 ?or, is i*self au*o+omous( a+d free *o se* mo+e*ar) polic) for *he e+*ire :+i*ed S*a*es 1i*hou* a+) ou*side i+*erfere+ce is especiall) u+*rue$

6e migh* believe i+ *his au*o+om) if 1e did +o* ,+o1 *ha* *he ma=ori*) s*oc, of *he %ederal Reserve a+, of #e1 ?or, 1as purchased b) *hree #e1 ?or, Ci*) ba+,s@ %irs* #a*io+al a+,( #a*io+al Ci*) a+,( a+d *he #a*io+al a+, of Commerce$ A+ e;ami+a*io+ of *he pri+cipal s*oc,holders i+ *hese ba+,s( i+ -.-2( a+d *oda)( reveals a direc* Lo+do+ co++ec*io+$ I+ -/-0( *he #a*io+al Ci*) a+, bega+ busi+ess as *he Ci*) a+,( i+ *he same room i+ 1hich *he defu+c* a+, of *he :+i*ed S*a*es( 1hose char*er had e;pired( had bee+ doi+g busi+ess$ I* represe+*ed ma+) of *he same s*oc,holders( 1ho 1ere +o1 fu+c*io+i+g u+der a legi*ima*e America+ char*er$ &uri+g *he earl) -/00s( *he mos* famous +ame associa*ed 1i*h Ci*) a+, 1as >oses Ta)lor 7-/06E -//08$ Ta)lor5s fa*her had bee+ a co+fide+*ial age+* emplo)ed i+ bu)i+g proper*) for *he As*or i+*eres*s 1hile co+ceali+g *he fac* *ha* As*or 1as *he purchaser$ Through *his *ac*ic( As*or succeeded i+ bu)i+g ma+) farms( a+d also a grea* deal of po*e+*iall) valuable real es*a*e i+ >a+ha**a+$ Al*hough As*or5s capi*al 1as repu*ed *o come from his fur *radi+g( a +umber of sources i+dica*e *ha* he also represe+*ed foreig+ i+*eres*s$ LaRouche9/ s*a*es *ha* As*or( i+ e;cha+ge for providi+g i+*ellige+ce *o *he ri*ish duri+g *he )ears before a+d af*er *he Revolu*io+ar) 6ar( a+d for i+ci*i+g I+dia+s *o a**ac, KKKKKKKKKKKKKKKKKKKKKKKKKK 9J Ibid( p$ 009 9/ L)+do+ H$ LaRouche( &ope( I+c$( #e1 e+=ami+ %ra+,li+ House 4ublishi+g Co$( #$?$ -.J/ 62 a+d ,ill America+ se**lers alo+g *he fro+*ier( received a ha+dsome re1ard$ He 1as +o* paid cash( bu* 1as give+ a perce+*age of *he ri*ish opium *rade 1i*h Chi+a$ I* 1as *he i+come from *his lucra*ive co+cessio+ 1hich provided *he basis for *he As*or for*u+e$ 6i*h his fa*her5s co++ec*io+ 1i*h *he As*ors( )ou+g >oses Ta)lor had +o difficul*) i+ fi+di+g a place as appre+*ice i+ a ba+,i+g house a* *he age of -9$ Li,e so ma+) o*hers i+ *hese pages( he fou+d his grea*es* oppor*u+i*ies 1he+ ma+) o*her America+s 1ere goi+g ba+,rup* duri+g a+ abrup* co+*rac*io+ of credi*$ &uri+g *he 4a+ic of -/DJ( 1he+ more *ha+ half *he busi+ess firms i+ #e1 ?or, failed( he doubled his for*u+e$ I+ -/99( he became preside+* of Ci*) a+,$ &uri+g *he 4a+ic of -/9J( *he Ci*) a+, profi*ed b) *he failure of ma+) of i*s compe*i*ors$ Li,e "eorge 4eabod) a+d Bu+ius >orga+( Ta)lor seemed *o have a+ ample suppl) of cash for bu)i+g up dis*ressed s*oc,s$ He purchased +earl) all *he s*oc, of &ela1are Lac,a1a++a Railroad for Q9 a share$ Seve+ )ears la*er( i* 1as selli+g for Q020 a share$ >oses Ta)lor 1as +o1 1or*h fif*) millio+ dollars$ I+ Augus*( -/6-( Ta)lor 1as +amed Chairma+ of *he Loa+ Commi**ee *o fi+a+ce *he :+io+ "over+me+* i+ *he Civil 6ar$ The Commi**ee shoc,ed Li+col+ b) offeri+g *he gover+me+* Q9(000(000 a* -0T *o fi+a+ce *he 1ar$ Li+col+ refused a+d fi+a+ced *he 1ar b) issui+g *he famous ""ree+bac,s" *hrough *he :$S$ Treasur)( 1hich 1ere bac,ed b) gold$ Ta)lor co+*i+ued *o i+crease his for*u+e *hroughou* *he 1ar( a+d i+ his la*er )ears( *he )ou*hful Bames S*illma+ became his pro*FgF$ I+ -//0( 1he+ >oses Ta)lor died( he lef* seve+*) millio+ dollars$P His so+Ei+Ela1( 4erc) 4)+e( succeeded him as preside+* of Ci*) a+,( 1hich had +o1 become #a*io+al Ci*) a+,$ 4)+e 1as paral)3ed( a+d 1as barel) able *o fu+c*io+ a* *he ba+,$ %or +i+e )ears( *he ba+, s*ag+a*ed( +earl) all i*s capi*al bei+g *he es*a*e of >oses Ta)lor$ 6illiam Roc,efeller( bro*her of Boh+ &$ Roc,efeller( had bough* i+*o *he ba+,( a+d 1as a+;ious *o see i* progress$ He persuaded 4)+e *o s*ep aside i+ -/.- i+ favor of Bames S*illma+( a+d soo+ *he #a*io+al Ci*) a+, became *he pri+cipal reposi*or) of *he Roc,efeller oil i+come$ 6illiam Roc,efeller5s so+( 6illiam( married !lsie( Bames S*illma+5s daugh*er( Isabel$ Li,e so ma+) o*hers i+ #e1 ?or, ba+,i+g( Bames S*illma+ also had a ri*ish co++ec*io+$ His fa*her( &o+ Carlos S*illma+( had come *o ro1+sville( Te;as( as a ri*ish age+* a+d bloc,ade ru++er duri+g *he Civil 6ar$ Through his ba+,i+g co++ec*io+s i+ #e1 ?or,( &o+ Carlos had bee+ able *o fi+d a place for KKKKKKKKKKKKKKKKKKKKKKKKKK

P The #e1 ?or, Times +o*ed o+ >a) 02( -//0 *ha* >oses Ta)lor 1as chairma+ of *he Loa+ Commi**ee of *he Associa*ed a+,s of #e1 ?or, Ci*) i+ -/6-$ T1o hu+dred millio+ dollars 1or*h of securi*ies 1ere e+*rus*ed *o him$ I* is probabl) due *o him more *ha+ a+) o*her o+e ma+ *ha* *he gover+me+* i+ -/6- fou+d i*self 1i*h *he mea+s *o prosecu*e *he 1ar$ 69 his so+ as appre+*ice i+ a ba+,i+g house$ I+ -.-2( 1he+ #a*io+al Ci*) a+, purchased almos* *e+ per ce+* of *he shares of *he +e1l) orga+i3ed %ederal Reserve a+, of #e1 ?or,( *1o of >oses Ta)lor5s gra+dso+s( >oses Ta)lor 4)+e a+d 4erc) 4)+e( o1+ed -9(000 shares of #a*io+al Ci*) s*oc,$ >oses Ta)lor5s so+( H$A$C$ Ta)lor( o1+ed J6.. shares of #a*io+al Ci*) a+,$ The ba+,5s a**or+e)( Boh+ 6$ S*erli+g( of *he firm of Shearma+ a+d S*erli+g( also o1+ed 6000 shares of #a*io+al Ci*) a+,$ Ho1ever( Bames S*illma+ o1+ed 2J(2./ shares( or almos* *1e+*) perce+* of *he ba+,5s *o*al shares of 090(000$ MSee Char* IN The seco+d larges* purchaser of %ederal Reserve a+, of #e1 ?or, shares i+ -.-2( %irs* #a*io+al a+,( 1as ge+erall) ,+o1+ as "*he >orga+ a+,"( because of *he >orga+ represe+*a*io+ o+ *he board( al*hough *he ba+,5s fou+der "eorge %$ a,er held 00(000 shares( a+d his so+ "$%$ a,er( Br$( had 9(000 shares for *1e+*)Efive perce+* of *he ba+,5s *o*al s*oc, of -00(000 shares$ "eorge %$ a,er Sr$5s daugh*er married "eorge %$ S*$ "eorge of Lo+do+$ The S*$ "eorges la*er se**led i+ *he :+i*ed S*a*es( 1here *heir daugh*er( Ca*heri+e S*$ "eorge( became a promi+e+* Co+gress1oma+ for a +umber of )ears$ &r$ !$>$ Bosephso+ 1ro*e of her( ">rs$ S*$ "eorge( a firs* cousi+ of %&R a+d #e1 &ealer( said( A&emocrac) is a failure5$" "eorge a,er( Br$5s daugh*er( !di*h revoor* a,er( married Bacob Schiff5s gra+dso+( Boh+ >$ Schiff( i+ -.D2$ Boh+ >$ Schiff is +o1 ho+orar) chairma+ of Lehma+ ro*hers Cuh+ Loeb Compa+)$ The *hird large purchase of %ederal Reserve a+, of #e1 ?or, s*oc, i+ -.-2 1as *he #a*io+al a+, of Commerce 1hich issued 090(000 shares$ B$4$ >orga+( *hrough his co+*rolli+g i+*eres* i+ !<ui*able Life( 1hich held 02(J00 shares a+d >u*ual Life( 1hich held -J(0.2 shares of #a*io+al a+, of Commerce( also held a+o*her -0(000 shares of #a*io+al a+, of Commerce *hrough B$4$ >orga+ a+d Compa+) 7J/00 shares8( B$4$ >orga+( Br$ 7--00 shares8( a+d >orga+ par*+er H$4$ &aviso+ 7--00 shares8$ 4aul 6arburg( a "over+or of *he %ederal Reserve oard of "over+ors( also held D000 shares of #a*io+al a+, of Commerce$ His par*+er( Bacob Schiff had -(000 shares of #a*io+al a+, of Commerce$ This ba+, 1as clearl) co+*rolled b) >orga+( 1ho 1as reall) a subsidiar) of Bu+ius S$ >orga+ Compa+) i+ Lo+do+ a+d *he #$>$ Ro*hschild Compa+) of Lo+do+( a+d Cuh+( Loeb Compa+)( 1hich 1as also ,+o1+ as a pri+cipal age+* of *he Ro*hschilds$ The fi+a+cier Thomas %or*u+e R)a+ also held 9-00 shares of #a*io+al a+, of Commerce s*oc, i+ -.-2$ His so+( Boh+ arr) R)a+( married O**o Cah+5s daugh*er( Cah+ 1as a par*+er of 6arburg a+d Schiff i+ Cuh+( Loeb Compa+)( R)a+5s gra+ddaugh*er( 'irgi+ia %or*u+e R)a+( KKKKKKKKKKKKKKKKKKKKKKKKKK 9. !$>$ Bosephso+( The S*ra+ge &ea*h of %ra+,li+ &$ Roosevel*( Ched+e) 4ress( #$?$ -.2/ 66 married Lord Airlie( *he prese+* head of B$ He+r) Schroder a+,i+g Corpora*io+ i+ Lo+do+ a+d #e1 ?or,$ A+o*her direc*or of #a*io+al a+, of Commerce i+ -.-2( A$&$ Buillard( 1as preside+* of A$&$ Buillard Compa+)( a *rus*ee of #e1 ?or, Life( a+d "uara+*) Trus*( all of 1hich 1ere co+*rolled b) B$4$ >orga+$ Buillard also had a ri*ish co++ec*io+( bei+g a direc*or of *he #or*h ri*ish a+d >erca+*ile I+sura+ce Compa+)$ Buillard o1+ed 0000 shares of #a*io+al a+, of Commerce s*oc,( a+d 1as also a direc*or of Chemical a+,$ I+ The Robber aro+s( b) >a**he1 Bosephso+( Bosephso+ *ells us *ha* >orga+ domi+a*ed #e1 ?or, Life( !<ui*able Life a+d >u*ual Life b) -.00( 1hich had o+e billio+ dollars i+ asse*s( a+d 1hich had fif*) millio+ dollars a )ear *o i+ves*$ He sa)s(

"I+ *his campaig+ of secre* allia+ces he 7>orga+8 ac<uired direc* co+*rol of *he #a*io+al a+, of CommerceG *he+ a par* o1+ership i+ *he %irs* #a*io+al a+,( all)i+g himself *o *he ver) s*ro+g a+d co+serva*ive fi+a+cier( "eorge %$ a,er( 1ho headed i*G *he+ b) mea+s of s*oc, o1+ership a+d i+*erloc,i+g direc*ora*es he li+,ed *o *he firs* +amed ba+,s o*her leadi+g ba+,s( *he Ha+over( *he Liber*)( a+d Chase$"60 >ar) 6$ Harrima+( 1ido1 of !$H$ Harrima+( also o1+ed 9(000 shares of #a*io+al a+, of Commerce i+ -.-2$ !$H$ Harrima+5s railroad empire had bee+ e+*irel) fi+a+ced b) Bacob Schiff of Cuh+( Loeb Compa+)$ Levi 4$ >or*o+ also o1+ed -900 shares of #a*io+al a+, of Commerce s*oc, i+ -.-2$ He had bee+ *he *1e+*)Eseco+d viceEpreside+* of *he :+i*ed S*a*es( 1as a+ e;E>i+is*er from *he :$S$ *o %ra+ce( a+d preside+* of L$4$ >or*o+ Compa+)( #e1 ?or,( >or*o+ERose a+d Compa+) a+d >or*o+ Chapli+ of Lo+do+$ He 1as a direc*or of !<ui*able Life I+sura+ce Compa+)( Home I+sura+ce Compa+)( "uara+*) Trus*( a+d #e1por* Trus*$ The as*ou+di+g idea *ha* *he %ederal Reserve S)s*em of *he :+i*ed S*a*es is ac*uall) opera*ed from Lo+do+ 1ill probabl) be re=ec*ed a* firs* heari+g b) mos* America+s$ Ho1ever( >i+s,) has become famous for his *heor) of *he "domi+a+* frame"$ He s*a*es *ha* i+ a+) par*icular si*ua*io+( *here is a "domi+a+* frame" *o 1hich ever)*hi+g i+ *ha* si*ua*io+ is rela*ed a+d *hrough 1hich i* ca+ be i+*erpre*ed$ The "domi+a+* frame" i+ *he mo+e*ar) polic) decisio+s of *he %ederal Reserve S)s*em is *ha* *hese decisio+s are made b) *hose 1ho s*a+d *o be+efi* mos* from *hem$ A* firs* gla+ce( *his 1ould seem *o be *he pri+cipal s*oc,holders of *he %ederal Reserve a+, of #e1 ?or,$ Ho1ever( 1e have see+ *ha* *hese s*oc,holders all have a "Lo+do+ Co++ec*io+"$ The "Lo+do+ Co++ec*io+" becomes more obvious as *he domi+a+* po1er 1he+ 1e fi+d i+ The KKKKKKKKKKKKKKKKKKKKKKKKKK 60 >a**he1 Bosephso+( The Robber aro+s( p$ 20. 6J Capi*al Ci*)6- *ha* o+l) seve+*ee+ firms are allo1ed *o opera*e as mercha+* ba+,ers i+ *he Ci*) of Lo+do+( !+gla+d5s fi+a+cial dis*ric*$ All of *hem mus* be approved b) *he a+, of !+gla+d$ I+ fac*( mos* of *he "over+ors of *he a+, of !+gla+d come from *he par*+ers of *hese seve+*ee+ firms$ Clar,e ra+,s *he seve+*ee+ i+ order of *heir capi*ali3a*io+$ #umber 0 is *he Schroder a+,$ #umber 6 is >orga+ "re+fell( *he Lo+do+ bra+ch of *he House of >orga+ a+d ac*uall) i*s domi+a+* bra+ch$ La3ard ro*hers is #umber /$ #$>$ Ro*hschild is #umber .$ ro1+ Shiple) Compa+)( *he Lo+do+ bra+ch of ro1+ ro*hers Harrima+( is #umber -2$ These five mercha+* ba+,i+g firms of Lo+do+ ac*uall) co+*rol *he #e1 ?or, ba+,s 1hich o1+ *he co+*rolli+g i+*eres* i+ *he %ederal Reserve a+, of #e1 ?or,$ The co+*rol over %ederal Reserve S)s*em decisio+s is also fou+ded i+ a+o*her u+i<ue si*ua*io+$ !ach da)( represe+*a*ives of four o*her Lo+do+ ba+,i+g firms mee* i+ *he offices of #$>$ Ro*hschild Compa+) i+ Lo+do+ *o fi; *he price of gold for *ha* da)$ The o*her four ba+,ers are from Samuel >o+*agu Compa+)( 1hich ra+,s #umber 9 o+ *he lis* of seve+*ee+ Lo+do+ mercha+* ba+,i+g firms( Sharps 4i;le)( Boh+so+ >a*heso+( a+d >oca**a a+d "oldsmid$ &espi*e *he huge *ide of paper p)ramided curre+c) a+d +o*es 1hich are +o1 floodi+g *he 1orld( a* some poi+*( ever) credi* e;*e+sio+ mus* re*ur+ *o be based( i+ ho1ever mi+uscule a fashio+( o+ some deposi* of gold i+ some ba+, some1here i+ *he 1orld$ ecause of *his fac*or( *he Lo+do+ mercha+* ba+,ers( 1i*h *heir po1er *o se* *he price of gold each da)( become *he fi+al arbi*ers of *he volume of mo+e) a+d *he price of mo+e) i+ *hose cou+*ries 1hich mus* bo1 *o *heir po1er$ #o* *he leas* of *hese is *he :+i*ed S*a*es$ #o official of *he %ederal Reserve a+, of #e1 ?or,( or of *he %ederal Reserve oard of "over+ors( ca+ comma+d *he po1er over *he mo+e) of *he 1orld 1hich is held b) *hese Lo+do+ mercha+* ba+,ers$ "rea* ri*ai+( 1hile 1a+i+g i+ poli*ical a+d mili*ar) po1er( *oda) e;ercises *he grea*es* fi+a+cial po1er$ I* is for *his reaso+ *ha* Lo+do+ is *he prese+* fi+a+cial ce+*er of *he 1orld$

KKKKKKKKKKKKKKKKKKKKKKKKKK 6- >cRae a+d Cair+cross( Capi*al Ci*)( !)re >e*hue+( Lo+do+( -.6D 6/

CHA4T!R S!'!#

The Hi*ler Co++ec*io+

B$ He+r) Schroder a+,i+g Compa+) is lis*ed as #umber 0 i+ capi*ali3a*io+ i+ Capi*al Ci*)60 o+ *he lis* of *he seve+*ee+ mercha+* ba+,ers 1ho ma,e up *he e;clusive Accep*i+g Houses Commi**ee i+ Lo+do+$ Al*hough i* is almos* u+,+o1+ i+ *he :+i*ed S*a*es( i* has pla)ed a large par* i+ our his*or)$ Li,e *he o*hers o+ *his lis*( i* had firs* *o be approved b) *he a+, of !+gla+d$ A+d( li,e *he 6arburg famil)( *he vo+ Schroders bega+ *heir ba+,i+g opera*io+s i+ Hamburg( "erma+)$ A* *he *ur+ of *he ce+*ur)( i+ -.00( aro+ ru+o vo+ Schroder es*ablished *he Lo+do+ bra+ch of *he firm$ He 1as soo+ =oi+ed b) %ra+, C)ril Tiar,s( i+ -.00$ Tiar,s married !mma %ra+3is,a of Hamburg( a+d 1as a direc*or of *he a+, of !+gla+d from -.-0 *o -.29$ &uri+g 6orld 6ar I( B$ He+r) Schroder a+,i+g Compa+) pla)ed a+ impor*a+* role behi+d *he sce+es$ #o his*oria+ has a reaso+able e;pla+a*io+ of ho1 6orld 6ar I s*ar*ed$ Archdu,e %erdi+a+d 1as assassi+a*ed a* Sara=evo b) "avril 4ri+ceps( Aus*ria dema+ded a+ apolog) from Serbia( a+d Serbia se+* *he +o*e of apolog)$ &espi*e *his( Aus*ria declared 1ar( a+d soo+ *he o*her +a*io+s of !urope =oi+ed *he fra)$ O+ce *he 1ar had go**e+ s*ar*ed( i* 1as fou+d *ha* i* 1as+5* eas) *o ,eep i* goi+g$ The pri+cipal problem 1as *ha* "erma+) 1as despera*el) shor* of food a+d coal( a+d 1i*hou* "erma+)( *he 1ar could +o* go o+$ Boh+ Hamill i+ The S*ra+ge Career of >r$ Hoover6D e;plai+s ho1 *he problem 1as solved$P He <uo*es from #ordeu*sche Allgemei+e Iei*u+g( >arch 2( -.-9( "Bus*ice( ho1ever( dema+ds *ha* publici*) should be give+ *o *he preemi+e+* par* *a,e+ b) *he "erma+ au*hori*ies i+ elgium i+ *he solu*io+ of *his problem$ The i+i*ia*ive came from *hem a+d i* 1as o+l) due *o *heir co+*i+uous rela*io+s 1i*h *he America+ Relief Commi**ee *ha* *he provisio+i+g <ues*io+ 1as solved$" Hamill poi+*s ou* "Tha* is 1ha* *he elgia+ Relief Commi**ee 1as orga+i3ed forEE*o ,eep "erma+) i+ food$" The elgia+ Relief Commissio+ 1as orga+i3ed b) !mile %ra+c<ui( direc*or of a large elgia+ ba+,( Socie*e "e+erale( a+d a Lo+do+ mi+i+g KKKKKKKKKKKKKKKKKKKKKKKKKK 60 >cRae a+d Cair+cross( Capi*al Ci*)( !)re >e*hue+( Lo+do+( -.6D 6D Boh+ Hamill( The S*ra+ge Career of >r$ Hoover( 6illiam %aro( #e1 ?or,( -.DP Copies of Hamill5s boo, 1ere s)s*ema*icall) loca*ed a+d des*ro)ed b) gover+me+* age+*s( because i* 1as published o+ *he eve of 4reside+* Hoover5s reEelec*io+ campaig+$ 6. promo*er( a+ America+ +amed Herber* Hoover( 1ho had bee+ associa*ed 1i*h %ra+c<ui i+ a +umber of sca+dals 1hich had become celebra*ed cour* cases( +o*abl) *he Caipi+g Coal Compa+) sca+dal i+ Chi+a( said *o have se* off *he o;er Rebellio+( 1hich had as i*s goal *he e;pulsio+ of all foreig+ busi+essme+ from Chi+a$ Hoover had bee+ barred from deali+g o+ *he Lo+do+ S*oc, !;cha+ge because of o+e =udgeme+* agai+s* him( a+d his associa*e( S*a+le) Ro1e( had bee+ se+* *o priso+ for *e+ )ears$ 6i*h *his bac,grou+d( Hoover 1as called a+ ideal choice for a career i+ huma+i*aria+ 1or,$

Al*hough his +ame is u+,+o1+ i+ *he :+i*ed S*a*es( !mile %ra+c<ui 1as *he guidi+g spiri* behi+d Herber* Hoover5s rise *o for*u+e$ Hamill 7o+ page -968 ide+*ifies %ra+c<ui as *he direc*or of ma+) a*roci*ies commi**ed agai+s* +a*ives i+ *he Co+go$ "%or ever) car*ridge *he) spe+*( *he) had *o bri+g i+ a ma+5s ha+d"$ %ra+c<ui5s frigh*ful record ma) have bee+ *he source for *he charge la*er leveled agai+s* "erma+ soldiers i+ elgium( *ha* *he) chopped off *he ha+ds of 1ome+ a+d childre+( a claim 1hich proved *o be grou+dless$ Hamill also sa)s *ha* %ra+c<ui "*ric,ed *he America+s ou* of *he Ha+,o1ECa+*o+ railroad co+cessio+ i+ Chi+a i+ -.0-( a+d a* *he same *ime had As*ood b)5 i+ case Hoover +eeded a+) fur*her help i+ *he A*a,i+g5 of *he Caipi+g coal mi+es$ This is *he huma+i*aria+ 1ho had sole charge of *he dis*ribu*io+ of *he elgia+ Arelief5 duri+g *he 6orld 6ar( for 1hich Hoover did *he bu)i+g a+d shippi+g$ %ra+c<ui 1as a direc*or 1i*h Hoover( i+ *he Chi+ese !+gi+eeri+g a+d >i+i+g Compa+) 7*he Caipi+g mi+es8( *hrough 1hich Hoover *ra+spor*ed 000(000 Chi+ese slave 1or,ers *o *he Co+go *o 1or, %ra+c<ui5s copper mi+es$" Hamill sa)s o+ page D-- *ha* "%ra+c<ui ope+ed *he offices of *he elgia+ Relief i+ his ba+,( Socie*e "e+erale( as a o+eEma+ sho1( 1i*h a le**er of permissio+ from *he "erma+ "over+or "e+eral vo+ der "ol*3 da*ed Oc*ober -6( -.-2$ The #e1 ?or, Herald Tribu+e of %ebruar) -/( -.D0( <uo*ed b) Co+gressma+ Louis >c%adde+ i+ *he House o+ %ebruar) 06( -.D0( said( "O+e of elgium5s *1o direc*ors o+ *he a+, for I+*er+a*io+al Se**leme+*s 1ill be !mile %ra+c<ui of *he Socie*e "e+erale( a member of bo*h *he ?ou+g a+d &a1es 4la+ Commi**ees$ The board of direc*ors of *he i+*er+a*io+al ba+, 1ill have +o more colorful charac*er *ha+ !mile %ra+c<ui( former >i+is*er of %i+a+ce( ve*era+ of *he Co+go a+d Chi+a $ $ $ he is ra*ed as *he riches* ma+ i+ elgium( a+d amo+g *he *1elve riches* me+ i+ !urope$" &espi*e his promi+e+ce( The #e1 ?or, Times I+de; me+*io+s %ra+c<ui o+l) a fe1 *imes duri+g *1o decades before his dea*h$ O+ Oc*ober D( -.D-( The #e1 ?or, Times <uo*ed Le 4euple of russels *ha* %ra+c<ui 1ould visi* *he :+i*ed S*a*es$ "As a frie+d of 4reside+* Hoover( >o+sieur %ra+c<ui 1ill +o* fail *o pa) a visi* *o *he 4reside+*$" J0 O+ Oc*ober D0( -.D-( The #e1 ?or, Times repor*ed *his visi* 1i*h *he headli+e( "HooverE%ra+c<ui Tal, 1as :+official"$ "I* 1as s*a*ed *ha* >r$ %ra+c<ui spe+* Tuesda) +igh* as a perso+al gues* of *he 4reside+*( a+d *ha* *he) *al,ed of 1orld fi+a+cial problems i+ ge+eral( s*ric*l) u+official$ >r$ %ra+c<ui 1as a+ associa*e of 4reside+* Hoover duri+g *he la**ers mi+is*ra*io+s i+ elgium duri+g *he 1ar$ Their visi* had +o official sig+ifica+ce$ >r$ %ra+c<ui is a priva*e ci*i3e+ a+d +o* e+gaged i+ a+) official missio+$" #o refere+ce is made *o *he HooverE%ra+c<ui busi+ess associa*io+s 1hich 1ere *he sub=ec* of huge la1sui*s i+ Lo+do+$ The %ra+c<ui visi* probabl) i+volved Hoover5s >ora*orium o+ "erma+ 6ar &eb*s( 1hich s*u++ed *he fi+a+cial 1orld$ O+ &ecember -9( -.D-( Chairma+ >c%adde+ i+formed *he House of a dispa*ch i+ *he 4ublic Ledger of 4hiladelphia( Oc*ober 02( -.D-( ""!R>A# R!'!ALS HOO'!R5S S!CR!T$ The America+ 4reside+* 1as i+ i+*ima*e +ego*ia*io+s 1i*h *he "erma+ gover+me+* regardi+g a )ear5s deb* holida) as earl) as &ecember( -.D0$" >c%adde+ co+*i+ued( " ehi+d *he Hoover a++ou+ceme+* *here 1ere ma+) mo+*hs of hurried a+d fur*ive prepara*io+s bo*h i+ "erma+) a+d i+ 6all S*ree* offices of "erma+ ba+,ers$ "erma+)( li,e a spo+ge( had *o be sa*ura*ed 1i*h America+ mo+e)$ >r$ Hoover himself had *o be elec*ed( because *his scheme bega+ before he became 4reside+*$ If *he "erma+ i+*er+a*io+al ba+,ers of 6all S*ree*EE*ha* is Cuh+ Loeb Compa+)( B$ O 6$ Seligma+( 4aul 6arburg( B$ He+r) SchroderEEa+d *heir sa*elli*es had +o* had *his =ob 1ai*i+g *o be do+e( Herber* Hoover 1ould +ever have bee+ elec*ed 4reside+* of *he :+i*ed S*a*es$ The elec*io+ of >r$ Hoover *o *he 4reside+c) 1as *hrough *he i+flue+ce of *he 6arburg ro*hers( direc*ors of *he grea* ba+, of Cuh+ Loeb Compa+)( 1ho carried *he cos* of his elec*io+$ I+ e;cha+ge for *his collabora*io+ >r$ Hoover promised *o impose *he mora*orium of "erma+ deb*s$ Hoover sough* *o e;emp* Creuger5s loa+ *o "erma+) of Q-09 millio+ from *he opera*io+ of *he Hoover >ora*orium$ The +a*ure of Creuger5s s1i+dle 1as ,+o1+ here i+ Ba+uar) 1he+ he visi*ed his frie+d( >r$ Hoover( i+ *he 6hi*e House$" #o* o+l) did Hoover e+*er*ai+ %ra+c<ui i+ *he 6hi*e House( bu* also Ivar Creuger( *he mos* famous s1i+dler of *he *1e+*ie*h ce+*ur)$

6he+ %ra+c<ui died o+ #ovember -D( -.D9( The #e1 ?or, Times memoriali3ed him as "*he copper ,i+g of *he Co+go $ $ $ >r$ %ra+c<ui( las* )ear havi+g gai+ed dic*a*orial po1ers over *he belga( mai+*ai+ed i* o+ *he gold s*a+dard duri+g a crisis$ I+ -/.- he led a+ e;pedi*io+ i+*o *he Co+go a+d gai+ed i* for Ci+g Leopold$ A ma+ of grea* 1eal*h( ra*ed amo+g *he *1elve riches* me+ i+ !urope( he secured e+ormous copper deposi*s$ He 1as >i+is*er of S*a*e i+ -.06 a+d >i+is*er of %i+a+ce i+ -.D2$ I* 1as his pride *ha* he +ever accep*ed a ce+*ime of remu+era*io+ for his services *o *he gover+me+*$ 6hile co+sul ge+eral a* Sha+ghai( he secured valuable co+cessio+s( +o*abl) *he Caipi+g coal mi+es a+d *he Jrail1a) co+cessio+ for *he Tie+*si+ Railroad$ He 1as gover+or of *he Socie*e "e+erale de elgi<ue( Llo)d Ro)al elge( a+d rege+* of La a+<ue #a*io+ale de elgi<ue$" The Times does +o* me+*io+ %ra+c<ui5s busi+ess par*+erships 1i*h Hoover$ Li,e %ra+c<ui( Hoover also refused remu+era*io+ for "gover+me+* service"( a+d as Secre*ar) of Commerce a+d as 4reside+* of *he :+i*ed S*a*es( he *ur+ed his salar) bac, *o *he gover+me+*$ O+ &ecember -D( -.D0( Chairma+ >c%adde+ i+*roduced a resolu*io+ of impeachme+* agai+s* 4reside+* Hoover for high crimes a+d misdemea+ors( 1hich covers ma+) pages( i+cludi+g viola*io+ of co+*rac*s( u+la1ful dissipa*io+ of *he fi+a+cial resources of *he :+i*ed S*a*es( a+d his appoi+*me+* of !uge+e >e)er *o *he %ederal Reserve oard$ The resolu*io+ 1as *abled a+d +ever ac*ed upo+ b) *he House$ I+ cri*ici3i+g Hoover5s >ora*orium of "erma+ 6ar &eb*s( >c%adde+ had referred *o Hoover5s ""erma+" bac,ers$ Al*hough all of *he pri+cipals of "*he Lo+do+ Co++ec*io+" did origi+a*e i+ "erma+)( mos* of *hem i+ %ra+,fur*( a* *he *ime *he) spo+sored Hoover5s ca+didac) for *he 4reside+c) of *he :+i*ed S*a*es( *he) 1ere opera*i+g from Lo+do+( as Hoover himself had do+e for mos* of his career$ Also( *he Hoover >ora*orium 1as +o* i+*e+ded *o "help" "erma+)( as Hoover had +ever bee+ "proE"erma+"$ The >ora*orium o+ "erma+)5s 1ar deb*s 1as +ecessar) so *ha* "erma+) 1ould have fu+ds for rearmi+g$ I+ -.D-( *he *rul) for1ardEloo,i+g diploma*s 1ere a+*icipa*i+g *he Seco+d 6orld 6ar( a+d *here could be +o 1ar 1i*hou* a+ "aggressor"$ Hoover had also carried ou* a +umber of mi+i+g promo*io+s i+ various par*s of *he 1orld as a secre* age+* for *he Ro*hschilds( a+d had bee+ re1arded 1i*h a direc*orship i+ o+e of *he pri+cipal Ro*hschild e+*erprises( *he Rio Ti+*o >i+es i+ Spai+ a+d olivia$ %ra+c<ui a+d Hoover *hre1 *hemselves i+*o *he seemi+gl) impossible *as, of provisio+i+g "erma+) duri+g *he %irs* 6orld 6ar$ Their success 1as +o*ed i+ #ordeu*sche Allgemei+e Iei*u+g( >arch -D( -.-9( 1hich +o*ed *ha* large <ua+*i*ies of food 1ere +o1 arrivi+g from elgium b) rail$ Schmoller5s ?earboo, for Legisla*io+( Admi+is*ra*io+ a+d 4oli*ical !co+om) for -.-6( sho1s *ha* o+e billio+ pou+ds of mea*( o+e a+d a half billio+ pou+ds of po*a*oes( o+e a+d a half billio+ pou+ds of bread( a+d o+e hu+dred *1e+*)Eo+e millio+s pou+ds of bu**er had bee+ shipped from elgium *o "erma+) i+ *ha* )ear$ A pa*rio*ic ri*ish 1oma+ 1ho had opera*ed a small hospi*al i+ elgium for several )ears( !di*h Cavell( 1ro*e *o *he #ursi+g >irror i+ Lo+do+( April -9( -.-9( complai+i+g *ha* *he " elgia+ Relief" supplies 1ere bei+g shipped *o "erma+) *o feed *he "erma+ arm)$ The "erma+s co+sidered >iss Cavell *o be of +o impor*a+ce( a+d paid +o a**e+*io+ *o her( bu* *he ri*ish I+*ellige+ce Service i+ Lo+do+ 1as appalled b) >iss Cavell5s discover)( a+d dema+ded *ha* *he "erma+s arres* her as a sp)$ J0 Sir 6illiam 6isema+( head of ri*ish I+*ellige+ce( a+d par*+er of Cuh+ Loeb Compa+)( feared *ha* *he co+*i+ua+ce of *he 1ar 1as a* s*a,e( a+d secre*l) +o*ified *he "erma+s *ha* >iss Cavell mus* be e;ecu*ed$ The "erma+s reluc*a+*l) arres*ed her a+d charged her 1i*h aidi+g priso+ers of 1ar *o escape$ The usual pe+al*) for *his offe+se 1as *hree mo+*hs impriso+me+*( bu* *he "erma+s bo1ed *o Sir 6illiam 6isema+5s dema+ds( a+d sho* !di*h Cavell( *hus crea*i+g o+e of *he pri+cipal mar*)rs of *he %irs* 6orld 6ar$

6i*h !di*h Cavell ou* of *he 1a)( *he " elgia+ Relief" opera*io+ co+*i+ued( al*hough i+ -.-6( "erma+ emissaries agai+ approached Lo+do+ officials 1i*h *he i+forma*io+ *ha* *he) did +o* believe "erma+) could co+*i+ue mili*ar) opera*io+s( +o* o+l) because of food shor*ages( bu* because of fi+a+cial problems$ >ore "emerge+c) relief" 1as se+*( a+d "erma+) co+*i+ued i+ *he 1ar u+*il #ovember( -.-/$ T1o of Hoover5s pri+cipal assis*a+*s 1ere a former lumber shippi+g cler, from *he 6es* Coas*( 4re+*iss "ra)( a+d Bulius H$ ar+es( a grai+ salesma+ from &ulu*h$ o*h me+ became par*+ers i+ B$ He+r) Schroder a+,i+g Corpora*io+ i+ #e1 ?or, af*er *he 1ar( a+d amassed large for*u+es( pri+cipall) i+ grai+ a+d sugar$ 6i*h *he e+*r) of *he :+i*ed S*a*es i+*o *he 1ar( ar+es a+d "ra) 1ere give+ impor*a+* pos*s i+ *he +e1l) crea*ed :$S$ %ood Admi+is*ra*io+( 1hich also 1as placed u+der Herber* Hoover5s direc*io+$ ar+es became 4reside+* of *he "rai+ Corpora*io+ of *he :$S$ %ood Admi+is*ra*io+ from -.-J *o -.-/( a+d "ra) 1as chief of >ari+e Tra+spor*a*io+$ A+o*her B$ He+r) Schroder par*+er( "$ A$ Iabris,ie( 1as +amed head of *he :$S$ Sugar !<uali3a*io+ oard$ Thus *he Lo+do+ Co++ec*io+ co+*rolled all food i+ *he :+i*ed S*a*es *hrough i*s grai+ a+d sugar "C3ars" duri+g *he %irs* 6orld 6ar$ &espi*e ma+) complai+*s of corrup*io+ a+d sca+dal i+ *he :$S$ %ood Admi+is*ra*io+( +o o+e 1as ever i+dic*ed$ Af*er *he 1ar( *he par*+ers of B$ He+r) Schroder Compa+) fou+d *ha* *he) +o1 o1+ed mos* of Cuba5s sugar i+dus*r)$ O+e par*+er( >$!$ Rio+da( 1as preside+* of Cuba Ca+e Corpora*io+( a+d direc*or of >a+a*i Sugar Compa+)( America+ ri*ish a+d Co+*i+e+*al Corpora*io+( a+d o*her firms$ aro+ ru+o vo+ Schroder( se+ior par*+er of *he firm( 1as a direc*or of #or*h ri*ish a+d >erca+*ile I+sura+ce Compa+)$ His fa*her( aro+ Rudolph vo+ Schroder of Hamburg( 1as a direc*or of Sao 4aulo Coffee L*d$( o+e of *he larges* ra3ilia+ coffee compa+ies( 1i*h %$C$ Tiar,s( also of *he Schroder firm$P KKKKKKKKKKKKKKKKKKKKKKKKKK P The #e1 ?or, Times +o*ed o+ Oc*ober --( -.0D@ "%ra+, C$ Tiar,s( "over+or of *he a+, of !+gla+d( 1ill spe+d *1o 1ee,s here *o se* up *he ope+i+g of *he ba+,i+g house bra+ch of B$ He+r) Schroder of Lo+do+$" JD Af*er *he 1ar( Iabris,ie( 1ho had bee+ sugar C3ar of *he :+i*ed S*a*es b) presidi+g over *he :$S$ Sugar !<uali3a*io+ oard( became *he preside+* of several of *he larges* ba,i+g corpora*io+s i+ *he :+i*ed S*a*es@ !mpire iscui*( Sou*her+ a,i+g Corpora*io+( Columbia a,i+g( a+d o*her firms$ As his pri+cipal assis*a+* i+ *he :$S$ %ood Admi+is*ra*io+( Hoover chose Le1is Lich*e+s*ei+ S*rauss( 1ho 1as soo+ *o become a par*+er i+ Cuh+ Loeb Compa+)( marr)i+g *he daugh*er of Berome Ha+auer of Cuh+ Loeb$ Throughou* his dis*i+guished huma+i*aria+ service 1i*h *he elgia+ Relief Commissio+( *he :$S$ %ood Admi+is*ra*io+( a+d( af*er *he 1ar( *he America+ Relief Admi+is*ra*io+( Hoover5s closes* associa*e 1as o+e !dgar Ric,ard( bor+ i+ 4o+*gibaud( %ra+ce$ I+ 6ho5s 6ho( he s*a*es *ha* he 1as "6orld 6ar admi+is*ra*ive assis*a+* *o Herber* Hoover i+ all 1ar a+d pos*E1ar orga+i3a*io+s i+cludi+g *he Commissio+ %or Relief i+ elgium$ He also served o+ *he :$S$ %ood Admi+is*ra*io+ from -.-2E-.02$" He remai+ed o+e of Hoover5s closes* frie+ds( a+d usuall) *he Ric,ards a+d Hoovers *oo, *heir vaca*io+s *oge*her$ Af*er Hoover became Secre*ar) of Commerce u+der Coolidge( Hamill *ells us *ha* Hoover a1arded his frie+d *he Ha3el*i+e Radio pa*e+*s( 1hich paid him o+e millio+ dollars a )ear i+ ro)al*ies$ I+ -.0/( "*he Lo+do+ Co++ec*io+" decided *o ru+ Herber* Hoover for preside+* of *he :+i*ed S*a*es$ There 1as o+l) o+e problemG al*hough Herber* Hoover had bee+ bor+ i+ *he :+i*ed S*a*es( a+d 1as *hus eligible for *he office of *he preside+c)( accordi+g *o *he Co+s*i*u*io+( he had +ever had a busi+ess address or a home address i+ *he :+i*ed S*a*es( as he had go+e abroad =us* af*er comple*i+g college a* S*a+ford$ The resul* 1as *ha* duri+g his campaig+ for *he preside+c)( Herber* Hoover lis*ed as his America+ address Sui*e 0000( 20 road1a)( #e1 ?or,( 1hich 1as *he office of !dgar Ric,ard$ Sui*e 0000 1as also shared b) *he grai+ *)coo+ a+d par*+er of B$ He+r) Schroder a+,i+g Corpora*io+( Bulius H$ ar+es$ Af*er Herber* Hoover 1as elec*ed preside+* of *he :+i*ed S*a*es( he i+sis*ed o+ appoi+*i+g o+e of *he old Lo+do+ cro1d( !uge+e >e)er( as "over+or of *he %ederal Reserve oard$ >e)er5s fa*her had bee+ o+e of *he par*+ers of La3ard %reres of 4aris( a+d La3ard ro*hers of Lo+do+$ >e)er( 1i*h aruch( had bee+ o+e of *he mos* po1erful me+ i+ *he :+i*ed S*a*es duri+g 6orld 6ar I( a

member of *he famous Triumvira*e 1hich e;ercised u+e<ualled po1erG >e)er as Chairma+ of *he 6ar %i+a+ce Corpora*io+( er+ard aruch as Chairma+ of *he 6ar I+dus*ries oard( a+d 4aul 6arburg as "over+or of *he %ederal Reserve S)s*em$ A lo+g*ime cri*ic of !uge+e >e)er( Chairma+ Louis >c%adde+ of *he House a+,i+g a+d Curre+c) Commi**ee( 1as <uo*ed i+ The #e1 ?or, Times( &ecember -J( -.D0( as havi+g made a speech o+ *he floor of *he House a**ac,i+g Hoover5s appoi+*me+* of >e)er( a+d chargi+g *ha* "He J2 represe+*s *he Ro*hschild i+*eres* a+d is liaiso+ officer be*1ee+ *he %re+ch "over+me+* a+d B$4$ >orga+$" O+ &ecember -/( The Times repor*ed *ha* "Herber* Hoover is deepl) co+cer+ed" a+d *ha* >c%adde+5s speech 1as "a+ u+for*u+a*e occurre+ce$" O+ &ecember 00( The Times comme+*ed o+ *he edi*orial page( u+der *he headli+e( ">c%adde+ Agai+"( "The speech ough* *o i+sure *he Se+a*e ra*ifica*io+ of >r$ >e)er as head of *he %ederal Reserve$ The speech 1as i+cohere+*( as >r$ >c%adde+5s speeches usuall) are$" As The Times predic*ed( >e)er 1as dul) approved b) *he Se+a*e$ #o* co+*e+* 1i*h havi+g a frie+d i+ *he 6hi*e House( B$ He+r) Schroder Corpora*io+ 1as soo+ embar,ed o+ fur*her i+*er+a*io+al adve+*ures( +o*hi+g less *ha+ a pla+ *o se* up 6orld 6ar II$ This 1as *o be do+e b) providi+g( a* a crucial =u+c*ure( *he fi+a+ci+g for Adolf Hi*ler5s assump*io+ of po1er i+ "erma+)$ Al*hough a+) +umber of mag+a*es have bee+ give+ credi* for *he fi+a+ci+g of Hi*ler( i+cludi+g %ri*3 Th)sse+( He+r) %ord( a+d B$4$ >orga+( *he)( as 1ell as o*hers( did provide millio+s of dollars for his poli*ical campaig+s duri+g *he -.00s( =us* as *he) did for o*hers 1ho also had a cha+ce of 1i++i+g( bu* 1ho disappeared a+d 1ere +ever heard from agai+$ I+ &ecember of -.D0( i* seemed i+evi*able *o ma+) observers of *he "erma+ sce+e *ha* Hi*ler 1as also read) for a *obogga+ slide i+*o oblivio+$ &espi*e *he fac* *ha* he had do+e 1ell i+ +a*io+al campaig+s( he had spe+* all *he mo+e) from his usual sources a+d +o1 faced heav) deb*s$ I+ his boo, Aggressio+( O**o Lehma++ERussbeld* *ells us *ha* "Hi*ler 1as i+vi*ed *o a mee*i+g a* *he Schroder a+, i+ erli+ o+ Ba+uar) 2( -.DD$ The leadi+g i+dus*rialis*s a+d ba+,ers of "erma+) *ided Hi*ler over his fi+a+cial difficul*ies a+d e+abled him *o mee* *he e+ormous deb* he had i+curred i+ co++ec*io+ 1i*h *he mai+*e+a+ce of his priva*e arm)$ I+ re*ur+( he promised *o brea, *he po1er of *he *rade u+io+s$ O+ >a) 0( -.DD( he fulfilled his promise$"62 4rese+* a* *he Ba+uar) 2( -.DD mee*i+g 1ere *he &ulles bro*hers( Boh+ %os*er &ulles a+d Alle+ 6$ &ulles of *he #e1 ?or, la1 firm( Sulliva+ a+d Crom1ell( 1hich represe+*ed *he Schroder a+,$ The &ulles bro*hers of*e+ *ur+ed up a* impor*a+* mee*i+gs$ The) had represe+*ed *he :+i*ed S*a*es a* *he 4aris 4eace Co+fere+ce 7-.-.8G Boh+ %os*er &ulles 1ould die i+ har+ess as !ise+ho1er5s Secre*ar) of S*a*e( 1hile Alle+ &ulles headed *he Ce+*ral I+*ellige+ce Age+c) for ma+) )ears$ Their apologis*s have seldom a**emp*ed *o defe+d *he &ulles bro*hers appeara+ce a* *he mee*i+g 1hich i+s*alled Hi*ler as *he Cha+cellor of "erma+)( preferri+g *o pre*e+d *ha* i* +ever happe+ed$ Obli<uel)( o+e biographer Leo+ard >osle)( b)passes i* i+ &ulles 1he+ he s*a*es( KKKKKKKKKKKKKKKKKKKKKKKKKK 62 O**o Lehma++ERussbeld*( Aggressio+( Hu*chi+so+ O Co$( L*d$( Lo+do+( -.D2( p$ 22 J9 " o*h bro*hers had spe+* large amou+*s of *ime i+ "erma+)( 1here Sulliva+ a+d Crom1ell had co+siderable i+*eres* duri+g *he earl) -.D05s( havi+g represe+*ed several provi+cial gover+me+*s( some large i+dus*rial combi+es( a +umber of big America+ compa+ies 1i*h i+*eres*s i+ *he Reich( a+d some rich i+dividuals$"69

Alle+ &ulles la*er became a direc*or of B$ He+r) Schroder Compa+)$ #ei*her he +or B$ He+r) Schroder 1ere *o be suspec*ed of bei+g proE#a3i or proEHi*lerG *he i+escapable fac* 1as *ha* if Hi*ler did +o* become Cha+cellor of "erma+)( *here 1as li**le li,elihood of ge**i+g a Seco+d 6orld 6ar goi+g( *he 1ar 1hich 1ould double *heir profi*s$P The "rea* Sovie* !+c)clopaedia s*a*es "The ba+,i+g house Schroder ros$ 7i* 1as Hi*ler5s ba+,er8 1as es*ablished i+ -/26G i*s par*+ers *oda) are *he baro+s vo+ Schroeder( rela*ed *o bra+ches i+ *he :+i*ed S*a*es a+d !+gla+d$"66PP The fi+a+cial edi*or of "The &ail) Herald" of Lo+do+ 1ro*e o+ Sep*$ D0( -.DD of ">r$ #orma+5s decisio+ *o give *he #a3is *he bac,i+g of *he a+, 7of !+gla+d$8" Boh+ Hargrave( i+ his biograph) of >o+*agu #orma+ sa)s( "I* is <ui*e cer*ai+ *ha* #orma+ did all he could *o assis* Hi*lerism *o gai+ a+d mai+*ai+ poli*ical po1er( opera*i+g o+ *he fi+a+cial pla+e from his s*ro+ghold i+ Thread+eedle S*ree*$" Mi$e$ a+, of !+gla+d$EE!d$N aro+ 6ilhelm de Ropp( a =our+alis* 1hose closes* frie+d 1as >a=or %$6$ 6i+*erbo*ham( chief of Air I+*ellige+ce of *he ri*ish Secre* Service( brough* *he #a3i philosopher( Alfred Rose+berg( *o Lo+do+ a+d i+*roduced him *o Lord Hailsham( Secre*ar) for 6ar( "eoffre) &a1so+( edi*or of The Times( a+d #orma+( "over+or of *he a+, of !+gla+d$ Af*er *al,i+g 1i*h #orma+( Rose+berg me* 1i*h *he represe+*a*ive of *he Schroder a+, of Lo+do+$ The ma+agi+g direc*or of *he Schroder a+,( %$C$ Tiar,s( 1as also a direc*or of *he a+, of !+gla+d$ Hargrave sa)s 7p$ 0-J8( "!arl) i+ -.D2 a selec* group of Ci*) fi+a+ciers ga*hered i+ #orma+5s room behi+d *he 1i+do1less 1alls( Sir Rober* Ci+dersle)( par*+er of La3ard ro*hers( Charles Hambro( %$C$ Tiar,s( Sir Bosiah S*amp( 7also a direc*or of *he a+, of !+gla+d8$ "over+or #orma+ spo,e of *he poli*ical si*ua*io+ i+ !urope$ A +e1 po1er had es*ablished i*self( a grea* As*abili3i+g KKKKKKKKKKKKKKKKKKKKKKKKKK 69 Leo+ard >osle)( &ulles( &ial 4ublishi+g Co$( #e1 ?or, -.J/( p$ // P !3ra 4ou+d( i+ a+ April -/( -.2D broadcas* over Radio Rome s*a*ed( "$ $ $a+d me+ i+ America( +o* co+*e+* 1i*h *his 1ar are alread) aimi+g a* *he +e;* o+e$ The *ime *o ob=ec* is +o1$" 66 The "rea* Sovie* !+c)clopaedia( >acmilla+( Lo+do+( -.JD( v$0( p$ 600 PP The #e1 ?or, Times +o*ed o+ Oc*ober --( -.22@ "Se+a*or Claude 4epper cri*ici3ed Boh+ %os*er &ulles( "ov$ &e1e)5s foreig+ rela*io+s advisor for his co++ec*io+ 1i*h *he la1 firm of Sulliva+ a+d Crom1ell a+d havi+g aided Hi*ler fi+a+ciall) i+ -.DD$ 4epper described *he Ba+uar) 2( -.DD mee*i+g of %ra+3 vo+ 4ape+ a+d Hi*ler i+ aro+ Schroder5s home i+ Colog+e( a+d from *ha* *ime o+ *he #a3is 1ere able *o co+*i+ue *heir march *o po1er$" J6 force5( +amel)( #a3i "erma+)$ #orma+ advised his coE1or,ers *o i+clude Hi*ler i+ *heir pla+s for fi+a+ci+g !urope$ There 1as +o opposi*io+$"

I+ 6all S*ree* a+d *he Rise of Hi*ler( A+*o+) C$ Su**o+ 1ri*es "The #a3i aro+ Cur* vo+ Schroeder ac*ed as *he co+dui* for I$T$T$ mo+e) fu++eled *o Hei+rich Himmler5s S$S$ orga+i3a*io+ i+ -.22( 1hile 6orld 6ar II 1as i+ progress( a+d *he :+i*ed S*a*es 1as a* 1ar 1i*h "erma+)$"6J Cur* vo+ Schroeder( bor+ i+ -//.( 1as par*+er i+ *he Colog+e a+,haus( B$H$ S*ei+ O Co$( 1hich had bee+ fou+ded i+ -J//$ Af*er *he #a3is gai+ed po1er i+ -.DD( Schroeder 1as appoi+*ed *he "erma+ represe+*a*ive a* *he a+, of I+*er+a*io+al Se**leme+*s$ The Cilgore Commi**ee i+ -.20 s*a*ed *ha* Schroeder5s i+flue+ce 1i*h *he Hi*ler Admi+is*ra*io+ 1as so grea* *ha* he had 4ierre Laval appoi+*ed head of *he %re+ch "over+me+* duri+g *he #a3i Occupa*io+$ The Cilgore Commi**ee lis*ed more *ha+ a do3e+ impor*a+* *i*les held b) Cur* vo+ Schroeder i+ *he -.205s( i+cludi+g 4reside+* of &eu*sche Reichsbah+( Reich oard of !co+omic Affairs( SS Se+ior "roup Leader( Cou+cil of Reich 4os* Office( &eu*sche Reichsba+, a+d o*her leadi+g ba+,s a+d i+dus*rial groups$ Schroeder served o+ *he board of all I+*er+a*io+al Telepho+e a+d Telegraph subsidiaries i+ "erma+)$ I+ -.D/( *he Lo+do+ Schroder a+, became *he "erma+ fi+a+cial age+* i+ "rea* ri*ai+$ The #e1 ?or, bra+ch of Schroder had bee+ merged i+ -.D6 1i*h *he Roc,efellers( as Schroder( Roc,efeller( I+c$ a* 2/ 6all S*ree*$ Carl*o+ 4$ %uller of Schroder 1as preside+* of *his firm( a+d Aver) Roc,efeller 1as viceEpreside+*$ He had bee+ a behi+d *he sce+es par*+er of B$ He+r) Schroder for )ears( a+d had se* up *he co+s*ruc*io+ firm of ech*el Corpora*io+( 1hose emplo)ees 7o+ leave8 +o1 pla) a leadi+g role i+ *he Reaga+ Admi+is*ra*io+( as Secre*ar) of &efe+se a+d Secre*ar) of S*a*e$ Ladislas %arago( i+ The "ame of *he %o;es(6/ repor*ed *ha* aro+ 6illiam de Ropp( a double age+*( had pe+e*ra*ed *he highes* echelo+s i+ preE6orld 6ar II da)s( a+d Hi*ler relied upo+ de Ropp as his co+fide+*ial co+sul*a+* abou* ri*ish affairs$ I* 1as de Ropp5s advice 1hich Hi*ler follo1ed 1he+ he refused *o i+vade !+gla+d$ 'ic*or 4erlo 1ri*es( i+ The !mpire of High %i+a+ce@ "The Hi*ler gover+me+* made *he Lo+do+ Schroder a+, *heir fi+a+cial age+* i+ ri*ai+ a+d America$ Hi*ler5s perso+al ba+,i+g accou+* 1as 1i*h B$>$ S*ei+ a+,haus( *he "erma+ subsidiar) of *he Schroder a+,$ %$C$ Tiar,s of *he ri*ish B$ He+r) Schroder Compa+) KKKKKKKKKKKKKKKKKKKKKKKKKK 6J A+*o+) C$ Su**o+( 6ALL STR!!T A#& TH! RIS! O% HITL!R( J6 4ress( Seal each( Califor+ia( -.J6( p$ J. 6/ Ladislas %arago( The "ame of *he %o;es( -.JD JJ 1as a member of *he A+gloE"erma+ %ello1ship 1i*h *1o o*her par*+ers as members( a+d a corpora*e membership$"6. The s*or) goes much fur*her *ha+ 4erlo suspec*s$ B$ He+r) Schroder 6AS *he A+gloE"erma+ %ello1ship( *he !+glish e<uivale+* of *he America %irs* moveme+*( a+d also a**rac*i+g pa*rio*s 1ho did +o* 1ish *o see *heir +a*io+ i+volved i+ a +eedless 1ar 1i*h "erma+)$ &uri+g *he -.D05s( u+*il *he ou*brea, of 6orld 6ar II( *he Schroders poured mo+e) i+*o *he A+gloE"erma+ %ello1ship( 1i*h *he resul* *ha* Hi*ler 1as co+vi+ced he had a large proE"erma+ fif*h colum+ i+ !+gla+d composed of ma+) promi+e+* poli*icia+s a+d fi+a+ciers$ The *1o diverge+* poli*ical groups i+ *he -.D05s i+ !+gla+d 1ere *he 6ar 4ar*)( led b) 6i+s*o+ Churchill( 1ho furiousl) dema+ded *ha* !+gla+d go *o 1ar agai+s* "erma+)( a+d *he Appeaseme+* 4ar*)( led b) #eville Chamberlai+$ Af*er >u+ich( Hi*ler believed *he Chamberlai+ group *o be *he domi+a+* par*) i+ !+gla+d( a+d Churchill a mi+or rabbleErouser$ ecause of his o1+ fi+a+cial bac,ers( *he Schroders( 1ere spo+sori+g *he Appeaseme+* 4ar*)( Hi*ler believed *here 1ould be +o 1ar$ He did +o* suspec* *ha* *he bac,ers of *he Appeaseme+* 4ar*)( +o1 *ha* Chamberlai+ had served his purpose i+ dupi+g Hi*ler( 1ould cas*

Chamberlai+ aside a+d ma,e Churchill *he 4rime >i+is*er$ I* 1as +o* o+l) Chamberlai+( bu* also Hi*ler( 1ho came a1a) from >u+ich believi+g *ha* i* 1ould be "4eace i+ our *ime$" The success of *he Schroders i+ dupi+g Hi*ler i+*o *his belief e;plai+s several of *he mos* pu33li+g <ues*io+s of 6orld 6ar II$ 6h) did Hi*ler allo1 *he ri*ish Arm) *o decamp from &u+,ir, a+d re*ur+ home( 1he+ he could have 1iped *hem ou*H Agai+s* *he fra+*ic advice of his ge+erals( 1ho 1ished *o deliver *he coup de grace *o *he !+glish Arm)( Hi*ler held bac, because he did +o* 1ish *o alie+a*e his supposed vas* follo1i+g i+ !+gla+d$ %or *he same reaso+( he refused *o i+vade !+gla+d duri+g a period 1he+ he had mili*ar) superiori*)( believi+g *ha* i* 1ould +o* be +ecessar)( as *he A+gloE"erma+ %ello1ship group 1as read) *o ma,e peace 1i*h him$ The Rudolf Hess fligh* *o !+gla+d 1as a+ a**emp* *o co+firm *ha* *he Schroder group 1as read) *o ma,e peace a+d form a commo+ bo+d agai+s* *he Sovie*s$ Rudolf Hess co+*i+ues *o la+guish i+ priso+ *oda)( ma+) )ears af*er *he 1ar( because he 1ould( if released( KKKKKKKKKKKKKKKKKKKKKKKKKK 6. 'ic*or 4erlo( The !mpire of High %i+a+ce( I+*er+a*io+al 4ublishers( -.9J( p$ -JJ J/ *es*if) *ha* he had go+e *o !+gla+d *o co+*ac* *he members of *he A+gloE"erma+ %ello1ship( *ha* is( *he Schroder group( abou* e+di+g *he 1ar$P If a+)o+e supposes *his is all a+cie+* his*or)( 1i*h +o applica*io+ *o *he prese+* poli*ical sce+e( 1e i+*roduce *he +ame of Boh+ Lo1er) Simpso+ of Sacrame+*o( Califor+ia$ Al*hough he appears for *he firs* *ime i+ 6ho5s 6ho i+ America for -.90( >r$ Simpso+ s*a*es *ha* he served u+der Herber* Hoover o+ *he Commissio+ for Relief i+ elgium from -.-9 *o -.-JG :$S$ %ood Admi+is*ra*io+( -.-J *o -.-/( America+ Relief Commissio+( -.-.( a+d 1i*h 4$#$ "ra) Compa+)( 'ie++a( -.-. *o -.0-$ "ra) 1as *he Chief of >ari*ime Tra+spor*a*io+ for *he :$S$ %ood Admi+is*ra*io+( 1hich e+abled him *o se* up his o1+ shippi+g compa+) af*er *he 1ar$ Li,e o*her Hoover huma+i*aria+s( Simpso+ also =oi+ed *he B$ He+r) Schroder a+,i+g Compa+) 7Adolf Hi*ler5s perso+al ba+,ers8 a+d *he B$ He+r) Schroder Trus* Compa+)$ He also became a par*+er of SchroderERoc,efeller Compa+) 1he+ *ha* i+ves*me+* *rus* bac,ed a co+s*ruc*io+ compa+) 1hich became *he 1orld5s larges*( *he firm of ech*el I+corpora*ed$ Simpso+ 1as chairma+ of *he fi+a+ce commi**ee of ech*el Compa+)( ech*el I+*er+a*io+al( a+d Ca+adia+ ech*el$ Simpso+ s*a*es he 1as co+sul*a+* *o *he ech*elE >cCo+e i+*eres*s i+ 1ar produc*io+ duri+g 6orld 6ar II$ He served o+ *he Allied Co+*rol Commissio+ i+ I*al) -.2DE22$ He married >argare* >a+dell( of *he mercha+* famil) for 1hom Col$ !d1ard >a+dell House 1as +amed( a+d he bac,ed a Califor+ia perso+ali*)( firs* for "over+or( *he+ for 4reside+*$ As a resul*( Simpso+ a+d B$ He+r) Schroder Compa+) +o1 have servi+g *hem as Secre*ar) of &efe+se( former ech*el emplo)ee Caspar 6ei+berger$ As Secre*ar) of S*a*e *he) have servi+g *hem "eorge 4ra** Schul*3( also a ech*el emplo)ee( 1ho happe+s *o be a S*a+dard Oil heir( reaffirmi+g *he SchroderERoc,efeller compa+) *ies$ Thus *he "co+serva*ive" Reaga+ Admi+is*ra*io+ has a Secre*ar) of &efe+se from Schroder Compa+)( a Secre*ar) of S*a*e from SchroderE Roc,efeller( a+d a vice preside+* 1hose fa*her 1as se+ior par*+er of ro1+ ro*hers Harrima+$ KKKKKKKKKKKKKKKKKKKKKKKKKK P The follo1i+g accou+*s are from The #e1 ?or, Times@ Oc*ober 0-( -.29( "A broadcas* over *he Lu;embourg radio said *o+igh* *ha* aro+ Cur* vo+ Schroder( former ba+,er 1ho helped fi+a+ce *he rise of *he #a3i par*)( had bee+ recog+i3ed i+ a+ America+ priso+ camp a+d arres*ed$" #ovember -( -.29( " ri*ish Arm) Head<uar*ers@ aro+ Cur* vo+ Schroder( 99 )ear old ba+,er a+d frie+d of Hei+rich Himmler is bei+g held i+ &usseldorf pe+di+g decisio+ o+ his i+dic*me+* as a 1ar crimi+al( *he >ili*ar) "over+me+* official a++ou+ceme+* said *oda)$" %ebruar) 0.( -.2/( "A+ immedia*e i+ves*iga*io+ 1as dema+ded )es*erda) b) *he Socie*) for *he 4reve+*io+ of 6orld 6ar III as *o 1h) *he "erma+ #a3i ba+,er( Cur* vo+ Schroder( 1as +o* *ried as a 1ar crimi+al b) a+ allied mili*ar) *ribu+al$ #o*i+g *ha* vo+ Schroder 1as se+*e+ced las* #ovember *o *hree mo+*hs impriso+me+* a+d fi+ed -900 Reichsmar,s b) a "erma+ de+a3ifica*io+ cour* i+ ielefeld( i+ *he ri*ish Io+e( C$ >o+*ei*h "ilpi+( secre*ar) for *he socie*) said *he

<ues*io+ should be as,ed 1h) vo+ Schroder 1as allo1ed *o escape allied =us*ice( a+d 1h) our o1+ officials have +o* dema+ded *ha* vo+ Schroder be *ried b) a+ Allied mili*ar) *ribu+al$ A'o+ Schroder is as guil*) as Hi*ler or "oeri+g$5" J. The Heri*age %ou+da*io+ has also bee+ a+ impor*a+* fac*or i+ *he polic)Ema,i+g of *he Reaga+ Admi+is*ra*io+$ #o1 1e fi+d *ha* *he Heri*age %ou+da*io+ is par* of *he Tavis*oc, I+s*i*u*e +e*1or,( direc*ed b) ri*ish I+*ellige+ce$ The fi+a+cial decisio+s are s*ill made a* *he a+, of !+gla+d( a+d 1ho is head of *he a+, of !+gla+dH Sir "ordo+ Richardso+( chairma+ of B$ He+r) Schroder Co$ of Lo+do+ a+d #e1 ?or, from -.60 *o -.J0( 1he+ he became "over+or of *he a+, of !+gla+d$ The "Lo+do+ Co++ec*io+" has +ever bee+ more firml) i+ *he saddle of *he :+i*ed S*a*es "over+me+*$ O+ Bul) D( -./D( The #e1 ?or, Times a++ou+ced *ha* "ordo+ Richardso+( "over+or of *he a+, of !+gla+d for *he pas* *e+ )ears( had bee+ replaced b) Rober* LeighE4ember*o+( Chairma+ of *he #a*io+al 6es*mi+s*er a+,$ The lis* of direc*ors of #a*io+al 6es*mi+s*er a+, reads li,e a 6ho5s 6ho of *he ri*ish ruli+g class$ The) i+clude *he Chairma+( Lord Alde+ham( 1ho is also Chairma+ of A+*o+) "ibbs O So+( mercha+* ba+,ers( o+e of *he seve+*ee+ privileged firms char*ered b) *he a+, of !+gla+dG Sir 6al*er arrie( Chairma+ of *he ri*ish roadcas*i+g S)s*emG %$!$ Harmer( "over+or of *he Lo+do+ School of !co+omics( *he *rai+i+g school for *he i+*er+a*io+al ba+,ers( a+d chairma+ of #e1 Ieala+d Shippi+g Compa+)G Sir !$C$ >ieville( priva*e secre*ar) *o *he Ci+g of !+gla+d -.DJE29G >ar<uess of Salisbur)( Lord Cecil( Lord 4riv) Seal 7*he Cecils have bee+ co+sidered o+e of !+gla+d5s *hree ruli+g families si+ce *he >iddle Ages8G Lord Lea*hers( aro+ of 4urflee*( >i+is*er of 6ar Tra+spor* -.2-E29( chairma+ of 6illiam Cor) group of compa+iesG Sir 6$H$ Coa*es a+d 6$B$ 6orbo)s of Imperial Chemical I+dus*ries 7*he !+glish &u4o+*8G !arl of &udle)( chairma+ ri*ish Iro+ O S*eel( Sir 6$ e+*o+ Bo+es( chairma+ :+i*ed S*eel a+d ma+) o*her s*eel compa+iesG Sir "$!$ Schus*er( a+, of #e1 Ieala+dG !as* I+dia Coal Compa+)G A$ d5A$ 6illis( Asha+*i "oldfields a+d ma+) ba+,s( *ea compa+ies a+d o*her firmsG '$6$ ?or,e( chairma+ of >e;ica+ Rail1a)s L*d$ Richardso+( former chairma+ of Schroders 1i*h a #e1 ?or, subsidiar) holdi+g %ederal Reserve a+, of #e1 ?or, s*oc,( 1as replaced b) *he chairma+ of #a*io+al 6es*mi+s*er( 1i*h a subsidiar) i+ #e1 ?or, holdi+g %ederal Reserve a+, of #e1 ?or, s*oc,$ Rober* Leigh 4ember*o+( a direc*or of !<ui*able Life Assura+ce Socie*) 7B$4$ >orga+8( married *he daugh*er of *he >archio+ess of !;e*er( 7*he Cecil urghle) famil)8$ Thereb)( *he co+*rol of *he Lo+do+ Co++ec*io+ remai+s co+s*a+*l) i+ effec*$ The lis* of *he prese+* direc*ors of B$ He+r) Schroder a+, a+d Trus* sho1s *he co+*i+ui+g i+*er+a*io+al i+flue+ce si+ce *he %irs* 6orld 6ar$ "eorge A$ raga is also direc*or of C3ar+i,o1ERio+da Compa+)( viceEpreside+* of %ra+cisco Sugar Compa+)( preside+* of >a+a*i Sugar Compa+)( a+d viceEpreside+* of #e1 Tui+icui Sugar Compa+)$ His rela*ive( /0 Rio+da $ raga( is preside+* of %ra+cisco Sugar Compa+) a+d viceEpreside+* of >a+a*i Sugar Compa+)$ The Schroder co+*rol of sugar goes bac, *o *he :$S$ %ood Admi+is*ra*io+ u+der Herber* Hoover a+d Le1is L$ S*rauss of Cuh+( Loeb( Compa+) duri+g 6orld 6ar I$ Schroder5s a**or+e)s are *he firm of Sulliva+ a+d Crom1ell$ Boh+ %os*er &ulles of *his firm 1as prese+* duri+g *he his*oric agreeme+* *o fi+a+ce Hi*ler( a+d 1as la*er Secre*ar) of S*a*e i+ *he !ise+ho1er admi+is*ra*io+$ Alfred Bare*3,i( Br$( of Sulliva+ a+d Crom1ell is also a direc*or of >a+a*i Sugar Compa+) a+d %ra+cisco Sugar Compa+)$ A+o*her direc*or of B$ He+r) Schroder is #orris &arrell( Br$( bor+ i+ erli+( "erma+)( par*+er of Sulliva+ a+d Crom1ell( a+d a direc*or of Schroder Trus* Compa+)$ a)less >a++i+g( par*+er of *he 6all S*ree* la1 firm of 4aul( 6eiss( Rif,i+d a+d 6har*o+( is also a direc*or of B$ He+r) Schroder$ He 1as preside+* of *he Cou+cil o+ %oreig+ Rela*io+s from -.J-E-.JJ( a+d is edi*or i+ chief of *he ?ale La1 Revie1$ 4aul H$ #i*3e( *he promi+e+* "disarmame+* +ego*ia*or" for *he :+i*ed S*a*es gover+me+*( is a direc*or of Schroder5s I+c$ He married 4h)llis 4ra**( of *he S*a+dard Oil for*u+e( 1hose fa*her gave *he 4ra** famil) ma+sio+ as *he buildi+g 1hich houses *he Cou+cil o+ %oreig+ Rela*io+s$

/-

CHA4T!R !I"HT

6orld 6ar O+e

">o+e) is *he 1ors* of all co+*raba+d$"EE6illiam Be++i+gs r)a+ I* is +o1 appare+* *ha* *here migh* have bee+ +o 6orld 6ar 1i*hou* *he %ederal Reserve S)s*em$ A s*ra+ge se<ue+ce of eve+*s( +o+e of 1hich 1ere accide+*al( had occurred$ 6i*hou* Theodore Roosevel*5s " ull >oose" ca+didac)( *he popular 4reside+* Taf* 1ould have bee+ reelec*ed( a+d 6oodro1 6ilso+ 1ould have re*ur+ed *o obscuri*)$P If 6ilso+ had +o* bee+ elec*ed( 1e migh* have had +o %ederal Reserve Ac*( a+d 6orld 6ar O+e could have bee+ avoided$ The !uropea+ +a*io+s had bee+ led *o mai+*ai+ large s*a+di+g armies as *he polic) of *he ce+*ral ba+,s 1hich dic*a*ed *heir gover+me+*al decisio+s$ I+ April( -//J( *he Suar*erl) Bour+al of !co+omics had poi+*ed ou*@ "A de*ailed revue of *he public deb*s of !urope sho1s i+*eres* a+d si+,i+g fu+d pa)me+*s of Q9(D2D millio+ a++uall) 7five a+d o+eE*hird billio+8$ >$ #e)marc,5s co+clusio+ is much li,e >r$ A*,i+so+5s$ The fi+a+ces of !urope are so i+volved *ha* *he gover+me+*s ma) as, 1he*her 1ar( 1i*h all i*s *errible cha+ces( is +o* preferable *o *he mai+*e+a+ce of such a precarious a+d cos*l) peace$ If *he mili*ar) prepara*io+s of !urope do +o* e+d i+ 1ar( *he) ma) 1ell e+d i+ *he ba+,rup*c) of *he S*a*es$ Or( if such follies lead +ei*her *o 1ar +or *o rui+( *he+ *he) assuredl) poi+* *o i+dus*rial a+d eco+omic revolu*io+$" %rom -//J *o -.-2( *his precarious s)s*em of heavil) armed bu* ba+,rup* !uropea+ +a*io+s e+dured( 1hile *he :+i*ed S*a*es co+*i+ued *o be a deb*or +a*io+( borro1i+g mo+e) from abroad( bu* ma,i+g fe1 i+*er+a*io+al loa+s( because 1e did +o* have a ce+*ral ba+, or "mobili3a*io+ of credi*"$ The s)s*em of +a*io+al loa+s developed b) *he Ro*hschilds served *o fi+a+ce !uropea+ s*ruggles duri+g *he +i+e*ee+*h ce+*ur)( because *he) 1ere spread ou* over Ro*hschild bra+ches i+ several cou+*ries$ ) -.00( i* 1as obvious *ha* *he !uropea+ cou+*ries could +o* afford a ma=or 1ar$ The) had large s*a+di+g armies( u+iversal mili*ar) service( a+d moder+ 1eapo+s( bu* *heir eco+omies could +o* suppor* *he e+ormous e;pe+di*ures$ The %ederal Reserve S)s*em bega+ opera*io+s i+ KKKKKKKKKKKKKKKKKKKKKKKKKK P#OT!@ 4$D2$ "House revealed *o me i+ a co+fide+*ial mome+*( A6ilso+ 1as elec*ed b) Tedd) Roosevel*$5" The S*ra+ges* %rie+dship i+ His*or)( 6oodro1 6ilso+ a+d Col$ House( "eorge S)lves*er 'ierec,( Liverigh*( #$?$ -.D0 /0 -.-2( forci+g *he America+ people *o le+d *he Allies *1e+*)Efive billio+ dollars 1hich 1as +o* repaid( al*hough co+siderable i+*eres* 1as paid *o #e1 ?or, ba+,ers$ The America+ people 1ere drive+ *o ma,e 1ar o+ *he "erma+ people( 1i*h 1hom 1e had +o co+ceivable poli*ical or eco+omic <uarrel$ >oreover( *he :+i*ed S*a*es comprised *he larges* +a*io+ i+ *he 1orld composed of "erma+sG almos* half of i*s ci*i3e+s 1ere of "erma+ desce+*( a+d b) a +arro1 margi+( "erma+ had bee+ vo*ed do1+ as *he +a*io+al

la+guage$P The "erma+ Ambassador *o Tur,e)( baro+ 6a+geheim as,ed *he America+ Ambassador *o Tur,e)( He+r) >orge+*hau( 1h) *he :+i*ed S*a*es i+*e+ded *o ma,e 1ar i+ "erma+)$ "6e America+s(" replied >orge+*hau( spea,i+g for *he group of Harlem real es*a*e opera*ors of 1hich he 1as *he head( "are goi+g *o 1ar for a moral pri+ciple$" B$4$ >orga+ received *he proceeds of *he %irs* Liber*) Loa+ *o pa) off Q200(000(000 1hich he adva+ced *o "rea* ri*ai+ a* *he ou*se* of *he 1ar$ To cover *his loa+( Q6/(000(000 i+ +o*es had bee+ issued u+der *he provisio+s of *he AldrichE'reela+d Ac* for issui+g +o*es agai+s* securi*ies( *he o+l) *ime *his provisio+ 1as emplo)ed$ The +o*es 1ere re*ired as soo+ as *he %ederal Reserve a+,s bega+ opera*io+( a+d replaced b) %ederal Reserve #o*es$ &uri+g -.-9 a+d -.-6( 6ilso+ ,ep* fai*h 1i*h *he ba+,ers 1ho had purchased *he 6hi*e House for him( b) co+*i+ui+g *o ma,e loa+s *o *he Allies$ His Secre*ar) of S*a*e( 6illiam Be++i+gs r)a+( pro*es*ed co+s*a+*l)( s*a*i+g *ha* ">o+e) is *he 1ors* of all co+*raba+d$" ) -.-J( *he >orga+s a+d Cuh+( Loeb Compa+) had floa*ed a billio+ a+d a half dollars i+ loa+s *o *he Allies$ The ba+,ers also fi+a+ced a hos* of "peace" orga+i3a*io+s 1hich 1or,ed *o ge* us i+volved i+ *he 6orld 6ar$ The Commissio+ for Relief i+ elgium ma+ufac*ured a*roci*) s*ories agai+s* *he "erma+s( 1hile a Car+egie orga+i3a*io+( The League *o !+force 4eace( agi*a*ed i+ 6ashi+g*o+ for our e+*r) i+*o 1ar$ This la*er became *he Car+egie !+do1me+* for I+*er+a*io+al 4eace( 1hich duri+g *he -.20s 1as headed b) Alger Hiss$ O+e 1ri*erP claimed *ha* he had +ever see+ a+) "peace moveme+*" 1hich did +o* e+d i+ 1ar$ The :$S$ Ambassador *o ri*ai+( 6al*er Hi+es 4age( complai+ed *ha* he could +o* afford *he posi*io+( a+d 1as give+ *1e+*)Efive *housa+d dollars a )ear spe+di+g mo+e) b) Clevela+d H$ &odge( preside+* of *he #a*io+al Ci*) a+,$ H$L$ >e+c,e+ ope+l) accused 4age i+ -.-6 of bei+g a ri*ish age+*( 1hich 1as u+fair$ 4age 1as merel) a ba+,ers5 age+*$ O+ >arch 9( -.-J( 4age se+* a co+fide+*ial le**er *o 6ilso+$ "I *hi+, *ha* *he pressure of *his approachi+g crisis has go+e be)o+d *he abili*) of *he >orga+ %i+a+cial Age+c) for *he ri*ish a+d %re+ch "over+E KKKKKKKKKKKKKKKKKKKKKKKKKK P -J/J Co+s*i*u*io+al Co+ve+*io+ P #OT!@ !mme** T)rell( Br$( Richmo+d Times &ispa*ch( %eb$ -9( -./D "!ver) peace moveme+* of *his ce+*ur) has bee+ follo1ed b) 1ar$" /D me+*s $ $ $ The grea*es* help 1e could give *he Allies 1ould be a credi*$ :+less 1e go *o 1ar 1i*h "erma+)( our "over+me+*( of course( ca++o* ma,e such a direc* gra+* of credi*$" The Ro*hschilds 1ere 1ar) of "erma+)5s abili*) *o co+*i+ue i+ *he 1ar( despi*e *he fi+a+cial chaos caused b) *heir age+*s( *he 6arburgs( 1ho 1ere fi+a+ci+g *he Caiser( a+d 4aul 6arburg5s bro*her( >a;( 1ho( as head of *he "erma+ Secre* Service( au*hori3ed Le+i+5s *rai+ *o pass *hrough *he li+es a+d e;ecu*e *he olshevi, Revolu*io+ i+ Russia$ Accordi+g *o :+der Secre*ar) of *he #av)( %ra+,li+ &$ Roosevel*( America5s heav) i+dus*r) had bee+ prepari+g for 1ar for a )ear$ o*h *he Arm) a+d #av) &epar*me+*s had bee+ purchasi+g 1ar supplies i+ large amou+*s si+ce earl) i+ -.-6$ Cordell Hull remar,s i+ his >emoirs@ "The co+flic* forced *he fur*her developme+* of *he i+comeE*a; pri+ciple$ Aimi+g( as i* did( a* *he o+e grea* u+*a;ed source of reve+ue( *he i+comeE*a; la1 had bee+ e+ac*ed i+ *he +ic, of *ime *o mee* *he dema+ds of *he 1ar$ A+d *he co+flic* also assis*ed *he pu**i+g i+*o effec* of *he %ederal Reserve S)s*em( li,e1ise i+ *he +ic, of *ime$"J0

O+e ma) as,( i+ *he +ic, of *ime for 1homH Cer*ai+l) +o* for *he America+ people( 1ho had +o +eed for "mobili3a*io+ of credi*" for a !uropea+ 1ar( or *o e+ac* a+ i+come *a; *o fi+a+ce a 1ar$ Hull5s s*a*eme+* affords a rare glimpse i+*o *he machi+a*io+s of our "public serva+*s"$ The #o*es of *he Bour+al of 4oli*ical !co+om)( Oc*ober( -.-J( s*a*e@ "The effec* of *he 1ar upo+ *he busi+ess of *he %ederal Reserve a+,s has re<uired a+ imme+se developme+* of *he s*affs of *hese ba+,s( 1i*h a correspo+di+g i+crease i+ e;pe+ses$ 6i*hou*( of course( bei+g able *o a+*icipa*e so earl) a+d e;*e+sive a dema+d for *heir services i+ *his co++ec*io+( *he framers of *he %ederal Reserve Ac* had provided *ha* *he %ederal Reserve a+,s should ac* as fiscal age+*s of *he "over+me+*$" The ba+,ers had bee+ 1ai*i+g si+ce -//J for *he :+i*ed S*a*es *o e+ac* a ce+*ral ba+, pla+ so *ha* *he) could fi+a+ce a !uropea+ 1ar amo+g *he +a*io+s 1hom *he) had alread) ba+,rup*ed 1i*h armame+* a+d "defe+se" programs$ The mos* dema+di+g fu+c*io+ of *he ce+*ral ba+, mecha+ism is 1ar fi+a+ce$ O+ Oc*ober -D( -.-J( 6oodro1 6ilso+ made a ma=or address( s*a*i+g@ "I* is ma+ifes*l) impera*ive *ha* *here should be a comple*e mobili3a*io+ of *he ba+,i+g reserves of *he :+i*ed S*a*es$ The burde+ a+d *he privilege 7of *he Allied loa+s8 mus* be shared b) ever) ba+,i+g i+s*i*u*io+ i+ *he cou+*r)$ I believe *ha* coopera*io+ o+ *he par* of *he ba+,s is a pa*rio*ic du*) a* *his *ime( a+d *ha* membership i+ *he %ederal Reserve S)s*em is a dis*i+c* a+d sig+ifica+* evide+ce of pa*rio*ism$" KKKKKKKKKKKKKKKKKKKKKKKKKK J0 Cordell Hull( >emoirs( >acmilla+( #e1 ?or,( -.2/( v$ -( page J6 /2 !$6$ Cemmerer 1ri*es *ha* "As fiscal age+*s of *he "over+me+*( *he federal reserve ba+,s re+dered *he +a*io+s services of i+calculable value af*er our e+*ra+ce i+*o *he 1ar$ The) aided grea*l) i+ *he co+serva*io+ of our gold resources( i+ *he regula*io+ of our foreig+ e;cha+ges( a+d i+ *he ce+*rali3a*io+ of our fi+a+cial e+ergies$ O+e shudders 1he+ he *hi+,s 1ha* migh* have happe+ed if *he 1ar had fou+d us 1i*h our former dece+*rali3ed a+d a+*i<ua*ed ba+,i+g s)s*em$" >r$ Cemmerer5s shudders ig+ore *he fac* *ha* if 1e had ,ep* "our a+*i<ua*ed ba+,i+g s)s*em" 1e 1ould +o* have bee+ able *o fi+a+ce *he 6orld 6ar or *o e+*er as a par*icipa+* ourselves$ 6oodro1 6ilso+ himself did +o* believe i+ his crusade *o save *he 1orld for democrac)$ He la*er 1ro*e *ha* "The 6orld 6ar 1as a ma**er of eco+omic rivalr)$" O+ bei+g <ues*io+ed b) Se+a*or >cCumber abou* *he circums*a+ces of our e+*r) i+*o *he 1ar( 6ilso+ 1as as,ed( "&o )ou *hi+, if "erma+) had commi**ed +o ac* of 1ar or +o ac* of i+=us*ice agai+s* our ci*i3e+s *ha* 1e 1ould have go**e+ i+*o *his 1arH"

"I do *hi+, so(" 6ilso+ replied$ "?ou *hi+, 1e 1ould have go**e+ i+ a+)1a)H" pursued >cCumber$ "I do(" said 6ilso+$ I+ 6ilso+5s 6ar >essage i+ -.-J( he i+cluded a+ i+credible *ribu*e *o *he Commu+is*s i+ Russia 1ho 1ere busil) slaugh*eri+g *he middle class i+ *ha* u+for*u+a*e cou+*r)$ "Assura+ce has bee+ added *o our hope for *he fu*ure peace of *he 1orld b) *he 1o+derful a+d hear*e+i+g *hi+gs *ha* have bee+ happe+i+g i+ *he las* fe1 1ee,s i+ Russia$ Here is a fi* par*+er for a League of Ho+or$"J6ilso+5s paea+ *o a blood*hirs*) regime 1hich has si+ce murdered si;*)Esi; millio+ of i*s i+habi*a+*s i+ *he mos* barbarous ma++er e;poses his *rue s)mpa*hies a+d his *rue bac,ers( *he ba+,ers 1ho had fi+a+ced *he blood purge i+ Russia$ 6he+ *he Commu+is* Revolu*io+ seemed i+ doub*( 6ilso+ se+* his perso+al emissar)( !lihu Roo*( *o Russia 1i*h o+e hu+dred millio+ dollars from his Special !merge+c) 6ar %u+d *o save *he *oppli+g olshevi, regime$ The docume+*a*io+ of Cuh+( Loeb Compa+)5s i+volveme+* i+ *he es*ablishme+* of Commu+ism i+ Russia is much *oo e;*e+sive *o be <uo*ed here( bu* 1e i+clude o+e brief me+*io+( *)pical of *he li*era*ure o+ *his sub=ec*$ I+ his boo,( C3arism a+d *he Revolu*io+( "e+$ Arse+e de "oulevi*ch 1ri*es( KKKKKKKKKKKKKKKKKKKKKKKKKK J- 4ublic 4apers of 6oodro1 6ilso+( &odd O a,er( v$9( p$ -0E-D /9 ">r$ a,me*iev( *he la*e Russia+ Imperial Ambassador *o *he :+i*ed S*a*es( *ells us *ha* *he olshevi,s( af*er vic*or)( *ra+sferred 600 millio+ roubles i+ gold be*1ee+ *he )ears -.-/E-.00 *o Cuh+( Loeb Compa+)$" Af*er our e+*r) i+*o 6orld 6ar I( 6oodro1 6ilso+ *ur+ed *he gover+me+* of *he :+i*ed S*a*es over *o a *riumvira*e of his campaig+ bac,ers( 4aul 6arburg( er+ard aruch a+d !uge+e >e)er$ aruch 1as appoi+*ed head of *he 6ar I+dus*ries oard( 1i*h life a+d dea*h po1ers over ever) fac*or) i+ *he :+i*ed S*a*es$ !uge+e >e)er 1as appoi+*ed head of *he 6ar %i+a+ce Corpora*io+( i+ charge of *he loa+ program 1hich fi+a+ced *he 1ar$ 4aul 6arburg 1as i+ co+*rol of *he +a*io+5s ba+,i+g s)s*emP$ C+o1i+g *ha* *he over1helmi+g se+*ime+* of *he America+ people duri+g -.-9 a+d -.-6 had bee+ a+*iE ri*ish a+d proE"erma+( our ri*ish allies vie1ed 1i*h some *repida*io+ *he promi+e+ce of 4aul 6arburg a+d Cuh+( Loeb Compa+) i+ *he prosecu*io+ of *he 1ar$ The) 1ere u+eas) abou* his high posi*io+ i+ *he Admi+is*ra*io+ because his bro*her( >a; 6arburg( 1as a* *ha* *ime servi+g as head of *he "erma+ Secre* Service$ O+ &ecember -0( -.-/( *he :+i*ed S*a*es #aval Secre* Service Repor* o+ >r$ 6arburg 1as as follo1s@ "6AR :R"( 4A:L@ #e1 ?or, Ci*)$ "erma+( +a*urali3ed ci*i3e+( -.--$ 1as decora*ed b) *he Caiser i+ -.-0( 1as vice chairma+ of *he %ederal Reserve oard$ Ha+dled large sums fur+ished b) "erma+) for Le+i+ a+d Tro*s,)$ Has a bro*her 1ho is leader of *he espio+age s)s*em of

"erma+)$" S*ra+gel) e+ough( *his repor*( 1hich mus* have bee+ compiled much earlier( 1hile 1e 1ere a* 1ar 1i*h "erma+)( is +o* da*ed u+*il &ecember -0( -.-/$ A%T!R *he Armis*ice had bee+ sig+ed$ Also( i* does +o* co+*ai+ *he i+forma*io+ *ha* 4aul 6arburg resig+ed from *he %ederal Reserve oard i+ >a)( -.-/( 1hich i+dica*es *ha* i* 1as compiled before >a)( -.-/( 1he+ 4aul 6arburg 1ould *heore*icall) have bee+ ope+ *o a charge of *reaso+ because of his bro*her5s co+*rol of "erma+)5s Secre* Service$ 4aul 6arburg5s bro*her %eli; i+ #e1 ?or, 1as a direc*or of *he 4russia+ Life I+sura+ce Compa+) of erli+( a+d presumabl) 1ould +o* have li,ed *o see *oo ma+) of his polic)holders ,illed i+ *he 1ar$ O+ Sep*ember 06( -.00( The #e1 ?or, Times me+*io+ed i+ i*s obi*uar) of Bacob Schiff i+ refere+ce *o Cuh+( Loeb a+d Compa+)( "&uri+g *he 1orld 6ar cer*ai+ of i*s members 1ere i+ co+s*a+* co+*ac* 1i*h *he "over+me+* i+ a+ advisor) capaci*)$ I* shared i+ *he co+fere+ces 1hich 1ere held regardi+g *he orga+i3a*io+ a+d forma*io+ of *he %ederal Reserve S)s*em$" KKKKKKKKKKKKKKKKKKKKKKKKKK P #OT!@ #e1 ?or, Times( Augus* -0( -.-/G ">r$ 74aul8 6arburg 1as *he au*hor of *he pla+ orga+i3i+g *he 6ar %i+a+ce Corpora*io+$" /6 The -.00 Schiff obi*uar) revealed for *he firs* *ime *ha* Bacob Schiff( li,e *he 6arburgs( also had *1o bro*hers i+ "erma+) duri+g 6orld 6ar I( 4hilip a+d Lud1ig Schiff( of %ra+,fur*Eo+E>ai+( 1ho also 1ere ac*ive as ba+,ers *o *he "erma+ "over+me+*R This 1as +o* a circums*a+ce *o be *a,e+ ligh*l)( as o+ +ei*her side of *he A*la+*ic 1ere *he said ba+,ers obscure i+dividuals 1ho had +o i+flue+ce i+ *he co+duc* of *he 1ar$ O+ *he co+*rar)( *he Cuh+( Loeb par*+ers held *he highes* gover+me+*al pos*s i+ *he :+i*ed S*a*es duri+g 6orld 6ar I( 1hile i+ "erma+)( >a; a+d %ri*3 6arburg( a+d 4hilip a+d Lud1ig Schiff( moved i+ *he highes* cou+cils of gover+me+*$ %rom >emoirs of >a; 6arburg( "The Caiser *humbed *he *able viole+*l) a+d shou*ed( A>us* )ou al1a)s be righ*H5 bu* *he+ lis*e+ed carefull) *o >a;5s vie1 o+ fi+a+cial ma**ers$"J0 I+ Bu+e( -.-/( 4aul 6arburg 1ro*e a priva*e +o*e *o 6oodro1 6ilso+( "I have *1o bro*hers i+ "erma+) 1ho are ba+,ers$ The) +a*urall) +o1 serve *heir cou+*r) *o *heir u*mos* abili*)( as I serve mi+e$"JD #ei*her 6ilso+ +or 6arburg vie1ed *he si*ua*io+ as o+e of co+cer+( a+d 4aul 6arburg served ou* his *erm o+ *he %ederal Reserve oard of "over+ors( 1hile 6orld 6ar I co+*i+ued *o rage$ The bac,grou+d of Cuh+( Loeb O Compa+) had bee+ e;posed i+ "Tru*h >aga3i+e"( edi*ed b) "eorge Co+ro)@ ">r$ Schiff is head of *he grea* priva*e ba+,i+g house of Cuh+( Loeb O Co$ 1hich represe+*s *he Ro*hschild i+*eres* o+ *his side of *he A*la+*ic$ He has bee+ described as a fi+a+cial s*ra*egis* a+d has bee+ for )ears *he fi+a+cial mi+is*er *o *he grea* imperso+al po1er ,+o1+ as S*a+dard Oil$ He 1as ha+dEi+Eglove 1i*h *he Harrima+s( *he "oulds a+d *he Roc,efellers( i+ all *heir railroad e+*erprises a+d has become *he domi+a+* po1er i+ *he railroad a+d fi+a+cial 1orld i+ America$ Louis ra+deis( because of his grea* abili*) as a la1)er a+d for o*her reaso+s 1hich 1ill appear la*er( 1as selec*ed b) Schiff as *he i+s*rume+* *hrough 1hich Schiff hoped *o achieve his ambi*io+ i+ #e1 !+gla+d$ His =ob 1as *o carr) o+ a+ agi*a*io+ 1hich 1ould u+dermi+e public

co+fide+ce i+ *he #e1 Have+ s)s*em a+d cause a decrease i+ *he price of i*s securi*ies( *hus forci+g *hem o+ *he mar,e* for *he 1rec,ers *o bu)$"J2 6e me+*io+ Schiff5s la1)er( ra+deis( here because *he firs* available appoi+*me+* o+ *he Supreme Cour* of *he :+i*ed S*a*es 1hich 6oodro1 6ilso+ 1as allo1ed *o fill 1as give+ *o *he Cuh+( Loeb la1)er( ra+deis$ #o* o+l) 1as *he :$S$ %ood Admi+is*ra*io+ ma+aged b) Hoover5s direc*or( Le1is Lich*e+s*ei+ S*rauss( 1ho married i+*o *he Cuh+ Loeb Compa+) b) marr)i+g Alice Ha+auer( daugh*er of par*+er Berome KKKKKKKKKKKKKKKKKKKKKKKKKK J0 >a; 6arburg( >emoirs of >a; 6arburg( erli+( -.D6 JD &avid %arrar( The 6arburgs( >ichael Boseph( L*d$( Lo+do+( -.J2 J2 "Tru*h >aga3i+e"( "eorge Co+ro)( edi*or( os*o+( issue of &ecember -6( -.-0 /J Ha+auer( bu* i+ *he mos* cri*ical field( mili*ar) i+*ellige+ce( Sir 6illiam 6isema+( chief of *he ri*ish Secre* Service( 1as a par*+er of Cuh+( Loeb O Compa+)$ He 1or,ed mos* closel) 1i*h 6ilso+5s al*er ego( Col$ House$ " e*1ee+ House a+d 6isema+ *here 1ere soo+ *o be fe1 poli*ical secre*s( a+d from *heir mu*ual comprehe+sio+ resul*ed i+ large measure our close coopera*io+ 1i*h *he ri*ish$"J9 O+e e;ample of House5s coopera*io+ 1i*h 6isema+ 1as a co+fide+*ial agreeme+* 1hich House +ego*ia*ed pledgi+g *he :+i*ed S*a*es *o e+*er i+*o 6orld 6ar I o+ *he side of *he Allies$ Te+ mo+*hs before *he elec*io+ 1hich re*ur+ed 6ilso+ *o *he 6hi*e House i+ -.-6 Abecause he ,ep* us ou* of 1ar5( Col$ House +ego*ia*ed a secre* agreeme+* 1i*h !+gla+d a+d %ra+ce o+ behalf of 6ilso+ 1hich pledged *he :+i*ed S*a*es *o i+*erve+e o+ behalf of *he Allies$ O+ >arch .( -.-6( 6ilso+ formall) sa+c*io+ed *he u+der*a,i+g$J6 #o*hi+g could more forcefull) illus*ra*e *he duplici*) of 6oodro1 6ilso+5s +a*ure *ha+ his +a*io+1ide campaig+ o+ *he sloga+( "He ,ep* us ou* of 1ar"( 1he+ he had pledged *e+ mo+*hs earlier *o i+volve us i+ *he 1ar o+ *he side of !+gla+d a+d %ra+ce$ This e;plai+s 1h) he 1as regarded 1i*h such co+*emp* b) *hose 1ho lear+ed *he fac*s of his career$ H$L$ >e+c,e+ 1ro*e *ha* 6ilso+ 1as "*he perfec* model of *he Chris*ia+ cad"( a+d *ha* 1e ough* "*o dig up his bo+es a+d ma,e dice of *hem$" Accordi+g *o The #e1 ?or, Times( 4aul 6arburg5s le**er of resig+a*io+ s*a*ed *ha* some ob=ec*io+ had bee+ made because he had a bro*her i+ *he S1iss Secre* Service$ The #e1 ?or, Times has +ever correc*ed *his bla*a+* falsehood( perhaps because Cuh+( Loeb Compa+) o1+ed a co+*rolli+g i+*eres* i+ i*s s*oc,$ >a; 6arburg 1as +o* S1iss( a+d al*hough he had probabl) come i+*o co+*ac* 1i*h *he S1iss Secre* Service duri+g his *erm of office as head of *he "erma+ Secre* Service( +o respo+sible edi*or a* The #e1 ?or, Times could have bee+ u+a1are of *he fac* *ha* >a; 6arburg 1as "erma+( a+d *ha* his famil) ba+,i+g house 1as i+ Hamburg( a+d *ha* he held a +umber of high posi*io+s i+ *he "erma+ "over+me+*$ He represe+*ed "erma+) a* *he 'ersailles 4eace Co+fere+ce( a+d remai+ed peacefull) i+ "erma+) u+*il -.D.( duri+g a period 1he+ perso+s of his religio+ 1ere bei+g persecu*ed$ To avoid i+=ur) duri+g *he approachi+g 1ar( 1he+ bombs 1ould rai+ o+ "erma+)( >a; 6arburg 1as allo1ed *o sail *o #e1 ?or,( his fu+ds i+*ac*$ A* *he ou*se* of 6orld 6ar I( Cuh+( Loeb Compa+) had figured i+ *he *ra+sfer of "erma+ shippi+g i+*eres*s *o o*her co+*rol$ Sir Cecil KKKKKKKKKKKKKKKKKKKKKKKKKK J9 !d1ard >$ House( The I+*ima*e 4apers of Col$ House( edi*ed b) Charles Se)mour( 'ol$ II( p$ D..$ Hough*o+( >iffli+ Co$

J6 "eorge S)lves*er 'ierec,( The S*ra+ges* %rie+dship i+ His*or)( 6oodro1 6ilso+ a+d Col$ House( p$ -06 // Spri+gERice( ri*ish Ambassador *o *he :+i*ed S*a*es( i+ a le**er *o Lord "re) 1ro*e@ "A+o*her ma**er is *he <ues*io+ of *he *ra+sfer of *he flag *o *he Hamburg Ameri,a ships$ The compa+) is prac*icall) a "erma+ "over+me+* affair$ The ships are used for "over+me+* purposes( *he !mperor himself is a large shareholder( a+d so is *he grea* ba+,i+g house of Cuh+( Loeb Compa+)$ A member of *ha* house 76arburg8 has bee+ appoi+*ed *o a ver) respo+sible posi*io+ i+ #e1 ?or,( al*hough o+l) =us* +a*urali3ed$ He is co+cer+ed i+ busi+ess 1i*h *he Secre*ar) of *he Treasur)( 1ho is *he 4reside+*5s so+Ei+Ela1$ I* is he 1ho is +ego*ia*i+g o+ behalf of *he Hamburg Ameri,a Shippi+g Compa+)$"JJ O+ #ovember -D( -.-2( i+ a le**er *o Sir 'ale+*i+e Chirol( Spri+gERice 1ro*e( 7p$ 02-( v$ 08 "I 1as *old *oda) *ha* The #e1 ?or, Times has bee+ prac*icall) ac<uired b) Cuh+( Loeb a+d Schiff( special pro*FgF of *he 7"erma+8 !mperor$ 6arburg( +earl) rela*ed *o Cuh+ Loeb a+d Schiff is a bro*her of *he 1ell ,+o1+ 6arburg of Hamburg( *he associa*e of alli+ 7Hamburg8 Ameri,a li+e8( is a member of *he %ederal Reserve oard or ra*her TH! member$ He prac*icall) co+*rols *he fi+a+cial polic) of *he Admi+is*ra*io+( a+d 4aish O lac,e** 7!+gla+d8 had mai+l) *o +ego*ia*e 1i*h him$ Of course( i* 1as e;ac*l) li,e +ego*ia*i+g 1i*h "erma+)$ !ver)*hi+g *ha* 1as said 1as "erma+ proper*)$" Col$ "arriso+ 1ro*e i+ Roosevel*( 6ilso+ a+d *he %ederal Reserve La1( *ha* "Through *he ba+,i+g House of *he Cuh+ Loeb Compa+)( a po1erful 1eapo+ 1ould have bee+ placed i+ *he ha+ds of *he "erma+ Caiser over *he des*i+) of America+ busi+ess a+d America+ ci*i3e+s$"J/ "arriso+ 1as referri+g *o *he Hamburg Ameri,a affair$ I* seemed s*ra+ge *ha* 6oodro1 6ilso+ fel* i* +ecessar) *o place *he +a*io+ i+ *he ha+ds of *hree me+ 1hose perso+al his*or) 1as o+e of ru*hless specula*io+ a+d *he <ues* for perso+al gai+( or *ha* duri+g 1ar 1i*h "erma+)( he fou+d as perso+s of supreme *rus* a "erma+ immigra+* +a*urali3ed i+ -.--( *he so+ of a+ immigra+* from 4ola+d( a+d *he so+ of a+ immigra+* from %ra+ce$ er+ard aruch firs* a**rac*ed a**e+*io+ o+ 6all S*ree* i+ -/.0 1hile 1or,i+g for A$A$ Housma+ O Co$ I+ -/.6 he merged *he si; pri+cipal *obacco compa+ies of *he :+i*ed S*a*es i+*o *he Co+solida*ed Tobacco Compa+)( forci+g Bames &u,e a+d *he America+ Tobacco Trus* *o e+*er i+*o *his combi+a*io+$ The seco+d grea* *rus* se* up b) aruch brough* *he copper i+dus*r) i+*o *he ha+ds KKKKKKKKKKKKKKKKKKKKKKKKKK

JJ Le**ers a+d %rie+dships of Sir Cecil Spri+gERice( p$ 0-.E000 J/ Col$ !lisha "arriso+( Roosevel*( 6ilso+ a+d *he %ederal Reserve La1( Chris*opher 4ublishi+g House( os*o+( -.D-( p$ 060 /. of *he "ugge+heim famil)( 1ho have co+*rolled i* ever si+ce$ aruch 1or,ed 1i*h !d1ard H$ Harrima+( 1ho 1as Schiff5s fro+* ma+ i+ co+*rolli+g America5s rail1a) s)s*em for *he Ro*hschild famil)$ aruch a+d Harrima+ also combi+ed *heir *ale+*s *o gai+ co+*rol over *he #e1 ?or, Ci*) *ra+si* s)s*em( 1hich has bee+ i+ perilous fi+a+cial co+di*io+ ever si+ce$ I+ -.0-( aruch formed *he firm of aruch ro*hers( ba+,ers( 1i*h his bro*her Herma+( i+ #e1 ?or,$ I+ -.-J( 1he+ aruch 1as appoi+*ed Chairma+ of *he 6ar I+dus*ries oard( *he +ame 1as cha+ged *o He+*3 ro*hers$ Tes*if)i+g before *he #)e Commi**ee o+ Sep*ember -D( -.DJ( er+ard aruch s*a*ed *ha* "All 1ars are eco+omic i+ *heir origi+$" So much for religious a+d poli*ical disagreeme+*s( 1hich had bee+ speciall) *ou*ed as *he cause of 1ars$P A profile i+ *he "#e1 ?or,er" maga3i+e repor*ed *ha* aruch made a profi* of seve+ hu+dred fif*) *housa+d dollars i+ o+e da) duri+g 6orld 6ar I( af*er a pho+) peace rumor 1as pla+*ed i+ 6ashi+g*o+$ I+ "6ho5s 6ho"( aruch me+*io+s *ha* he 1as a member of *he Commissio+ 1hich ha+dled all purchasi+g for *he Allies duri+g 6orld 6ar I$ I+ fac*( aruch 6AS *he Commissio+$ He spe+* *he America+ *a;pa)er5s mo+e) a* *he ra*e of *e+ billio+ dollars a )ear( a+d 1as also *he domi+a+* member of *he >u+i*io+s 4riceE%i;i+g Commi**ee$ He se* *he prices a* 1hich *he "over+me+* bough* 1ar ma*erials$ I* 1ould be +aive *o presume *ha* *he orders did +o* go *o firms i+ 1hich he a+d his associa*es had more *ha+ a poli*e i+*eres*$ dic*a*or over America+ ma+ufac*urers$P A* *he #)e Commi**ee heari+gs i+ -.D9( aruch *es*ified( "4reside+* 6ilso+ gave me a le**er au*hori3i+g me *o *a,e over a+) i+dus*r) or pla+*$ There 1as Budge "ar)( 4reside+* of :+i*ed S*a*es S*eel( 1hom 1e 1ere havi+g *rouble 1i*h( a+d 1he+ I sho1ed him *ha* le**er( he said( AI guess 1e 1ill have *o fi; *his up5( a+d he did fi; i* up$" Some members of Co+gress 1ere curious abou* aruch5s <ualifica*io+s *o e;ercise life a+d dea*h po1ers over America+ i+dus*r) i+ *ime of 1ar$ He 1as +o* a ma+ufac*urer( a+d had +ever bee+ i+ a fac*or)$ 6he+ he 1as called before a Co+gressio+al Commi**ee( er+ard aruch s*a*ed *ha* his professio+ 1as "Specula*or"$ A 6all S*ree* gambler had bee+ made C3ar of America+ I+dus*r)$ KKKKKKKKKKKKKKKKKKKKKKKKKK P #OT!@ aruch also s*a*ed i+ *his *es*imo+)( "I carried *hrough *he 1ar *hree ma=or i+ves*me+*s( Alas,a Bu+eau "old >i+i+g Compa+) 71i*h par*+er !uge+e >e)er8( Te;as "ulf Sulphur( a+d A*olia >i+i+g Compa+) 7*u+gs*e+8$" Rep$ >aso+( Illi+ois( *old *he House o+ %ebruar) 0-( -.0- *ha* aruch made more *ha+ Q90 millio+ i+ copper duri+g *he 1ar$ P aruch chose as Assis*a+* Chairma+ of *he 6ar I+dus*ries oard a fello1 6all S*ree* specula*or( Clare+ce &illo+ 7Lapo1i*38$ See biographies$ .0 @i+ser* %acsimile of #e1 ?or, Times ar*icle %acsimile of a+ ar*icle 1hich appeared i+ The #e1 ?or, Times da*ed Sep*ember 0D( -.-2$ Lis*ed are ma=or s*oc,holders of *he five #e1 ?or, Ci*) ba+,s 1hich purchased 20T of *he 00D( 09D shares of *he %ederal Reserve a+, of #e1 ?or, 1he+ *he S)s*em 1as orga+i3ed i+ -.-2$ The) *hus ob*ai+ed co+*rol of *ha* %ederal Reserve a+, a+d have held i* ever si+ce$ As of Tuesda)( Bul) 06( -./D(

*he *op five survivi+g #e1 ?or, Ci*) ba+,s have i+creased *heir o1+ership of *he %ederal Reserve a+, of #e1 ?or, *o 9DT of *he shares$ .@i+ser* CHART I .0 @CHART I co+*$ .D CHART I Char* I reveals *he li+ear co++ec*io+ be*1ee+ *he Ro*hschilds a+d *he a+, of !+gla+d( a+d *he Lo+do+ ba+,i+g houses 1hich ul*ima*el) co+*rol *he %ederal Reserve a+,s *hrough *heir s*oc,holdi+gs of ba+, s*oc, a+d *heir subsidiar) firms i+ #e1 ?or,$ The *1o pri+cipal Ro*hschild represe+*a*ives i+ #e1 ?or,( B$4$ >orga+ Co$( a+d Cuh+( Loeb O Co$ 1ere *he firms 1hich se* up *he Be,)ll Isla+d Co+fere+ce a* 1hich *he %ederal Reserve Ac* 1as draf*ed( 1ho direc*ed *he subse<ue+* successful campaig+ *o have *he pla+ e+ac*ed i+*o la1 b) Co+gress( a+d 1ho purchased *he co+*rolli+g amou+*s of s*oc, i+ *he %ederal Reserve a+, of #e1 ?or, i+ -.-2$ These firms had *heir pri+cipal officers appoi+*ed *o *he %ederal Reserve oard of "over+ors a+d *he %ederal Advisor) Cou+cil i+ -.-2$ I+ -.-2 a fe1 families 7blood or busi+ess rela*ed8 o1+i+g co+*rolli+g s*oc, i+ e;is*i+g ba+,s 7such as i+ #e1 ?or, Ci*)8 caused *hose ba+,s *o purchase co+*rolli+g shares i+ *he %ederal Reserve regio+al ba+,s$ !;ami+a*io+ of *he char*s a+d *e;* i+ *he House a+,i+g Commi**ee S*aff Repor* of Augus*( -.J6 a+d *he curre+* s*oc,holders lis* of *he -0 regio+al %ederal Reserve a+,s sho1s *his same famil) co+*rol$ KKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKK aruch5s ers*1hile par*+er( !uge+e >e)er( 7Alas,aEBu+eau "old >i+i+g Co$8( la*er claimed *ha* aruch 1as a +i*1i*( a+d *ha* >e)er( 1i*h his famil) ba+,i+g co++ec*io+s 7La3ard %reres8( had guided aruch5s i+ves*me+* career$ These claims appeared i+ *he fif*ie*h a++iversar) edi*io+ of The 6ashi+g*o+ 4os*( edi*orial page( Bu+e 2( -./D( 1i*h a par*i+g sho* from >e)er5s edi*or( Al %rie+dl)( *ha* "!ver) =our+alis* i+ 6ashi+g*o+( >e)er i+cluded( ,+e1 *ha* er+ard >$ aruch 1as a selfEaggra+di3i+g pho+)$" The *hird member of *he Triumvira*e( !uge+e >e)er( 1as so+ of *he par*+er i+ *he i+*er+a*io+al ba+,i+g house of La3ard %reres( of 4aris a+d #e1 ?or,$ I+ >) O1+ S*or) aruch e;plai+s ho1 >e)er became head of *he 6ar %i+a+ce Corpora*io+$ "A* *he ou*se* of 6orld 6ar O+e(" he sa)s( "I sough* ou* !uge+e >e)er( Br$ $ $ $ 1ho 1as a ma+ of *he highes* i+*egri*) 1i*h a ,ee+ desire *o be of public service$"J. The +a*io+ has suffered grea*l) from perso+s 1ho desired *o be of public service( because *heir desires of*e+ 1e+* co+siderabl) be)o+d *heir passio+ for office$ I+ fac*( >e)er a+d aruch had opera*ed a+ Alas,a ve+*ure( Alas,aEBu+eau "old >i+i+g Compa+) i+ -.-9( a+d had 1or,ed *oge*her o+ o*her fi+a+cial schemes$ >e)er5s famil) house of La3ard %reres speciali3ed i+ i+*er+a*io+al gold moveme+*s$ KKKKKKKKKKKKKKKKKKKKKKKKKK J. er+ard aruch( >) O1+ S*or)( He+r)EHol* Compa+)( #e1 ?or,( -.9J( p$ -.2 .2

!uge+e >e)er5s s*e1ardship of *he 6ar %i+a+ce Corpora*io+ comprises o+e of *he mos* ama3i+g fi+a+cial opera*io+s ever par*iall) recorded i+ *his cou+*r)$ 6e sa) "par*iall) recorded"( because subse<ue+* Co+gressio+al i+ves*iga*io+s revealed *ha* each +igh*( *he boo,s 1ere bei+g al*ered before bei+g brough* i+ for *he +e;* da)5s i+ves*iga*io+$ Louis >c%adde+( Chairma+ of *he House a+,i+g a+d Curre+c) Commi**ee( figured i+ *1o i+ves*iga*io+s of >e)er( i+ -.09( a+d agai+ i+ -.D0( 1he+ >e)er 1as proposed as "over+or of *he %ederal Reserve oard$ The Selec* Commi**ee *o I+ves*iga*e *he &es*ruc*io+ of "over+me+* o+ds( submi**ed( o+ >arch 0( -.09( "4repara*io+ a+d &es*ruc*io+ of "over+me+* o+dsEE6/*h Co+gress( 0d Sessio+( Repor* #o$ -6D9@ p$0$ "&uplica*e bo+ds amou+*i+g *o 0D-2 pairs a+d duplica*e coupo+s amou+*i+g *o 26./ pairs ra+gi+g i+ de+omi+a*io+s from Q90 *o Q-0(000 have bee+ redeemed *o Bul) -( -.02$ Some of *hese duplica*io+s have resul*ed from error a+d some from fraud$" These i+ves*iga*io+s ma) e;plai+ 1h)( a* *he e+d of 6orld 6ar O+e( !uge+e >e)er 1as able *o bu) co+*rol of Allied Chemical a+d &)e Corpora*io+( a+d la*er o+( *he +a*io+5s mos* i+flue+*ial +e1spaper( The 6ashi+g*o+ 4os*$ The duplica*io+ of bo+ds( "o+e for *he gover+me+*( o+e for me" i+ de+omi+a*io+s *o *he amou+* of Q-0(000 each( resul*ed i+ a *id) sum$ p$ 6 of *hese Heari+gs$ "These *ra+sac*io+s of *he Treasur) prior *o Bu+e 00( -.00 7i+cludi+g se**leme+*s for purchases a+d sales8( e;ecu*ed b) *he 6ar %i+a+ce Corpora*io+ 7!uge+e >e)er( ma+agi+g direc*or8( 1ere largel) direc*ed b) *he ma+agi+g direc*or of *he 6ar %i+a+ce Corpora*io+( a+d se**leme+*s 1i*h *he Treasur) 1ere made pri+cipall) b) him 1i*h *he Assis*a+* Secre*ar) of *he Treasur)( a+d *he boo,s sho1 *ha* *he basis of *he price paid b) *he "over+me+* for over Q-(/.2 millio+s 1or*h of bo+ds 7Q-(/.2(000(000$008( 1hich *he Treasur) purchased *hrough *he 6ar %i+a+ce Corpora*io+ 1as +o* *he mar,e* price a+d 1as +o* *he cos* of *he bo+d plus i+*eres*( a+d *he eleme+*s e+*eri+g i+*o *he se**leme+* are +o* disclosed b) *he correspo+de+ce$ The ma+agi+g direc*or of *he 6ar %i+a+ce Corpora*io+ s*a*ed *ha* he a+d a+ Assis*a+* Secre*ar) of *he Treasur) 7Berome B$ Ha+auer( par*+er of Cuh+( Loeb Co$ 1hose daugh*er married Le1is L$ S*rauss8 agreed *o *he price( a+d i* 1as simpl) a+ arbi*rar) figure se* b) a+ Assis*a+* Secre*ar) of *he Treasur) as *o *he bo+ds so purchased b) *he 6ar %i+a+ce Corpora*io+$ &uri+g *he period of *hese *ra+sac*io+s a+d up u+*il <ui*e a rece+* da*e *he ma+agi+g direc*or of *he 6ar %i+a+ce Corpora*io+( !uge+e >e)er( Br$( i+ his priva*e capaci*) mai+*ai+ed a+ office a* #o$ -2 6all S*ree*( #e1 ?or, Ci*)( a+d *hrough *he 6ar %i+a+ce Corpora*io+ sold abou* QJ0 millio+s i+ bo+ds *o *he "over+me+*( a+d also bough* *hrough *he 6ar %i+a+ce Corpora*io+ abou* Q-0 millio+s i+ bo+ds( a+d approved *he bills for mos*( if +o* all( of *hese bo+ds i+ his official capaci*) as ma+agi+g direc*or of *he 6ar %i+a+ce Corpora*io+$ 6he+ *hese *ra+sac*io+s( =us* referred *o( 1ere disclosed *o *he commi**ee i+ ope+ heari+g( *he ma+agi+g direc*or .9

5F

CHART !!
This chart shows the interlocking banking directorates which were revealed by the backgrounds of the officials selected to be the original members of the Federal Advisory Council in 1914. The principals were the same bankers who had been present or represented at the ekyll !sland Conference in 191"# and during the campaign to have the Federal $eserve Act enacted into law by Congress in 191%. These officials represented the largest stock holdings in the &ew 'ork banks which bought the controlling stock in the Federal $eserve (ank of

&ew 'ork# and also were the principal correspondent banks of the banks in other Federal $eserve districts who# in turn# selected their officials to represent them on the Federal Advisory Council. KKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKK appeared before *he commi**ee a+d s*a*ed *he fac* *ha* commissio+s 1ere paid o+ *hese *ra+sac*io+s( *he) 1ere i+ *ur+ paid over *o *he bro,ers( selec*ed b) *he ma+agi+g direc*or( 1ho e;ecu*ed *he orders issued b) his bro,erage house( a+d immedia*el) af*er *his disclosure *o *he commi**ee( *he ma+agi+g direc*or emplo)ed !r+s* a+d !r+s*( cer*ified public accou+*a+*s( *o audi* *he boo,s of *he 6ar %i+a+ce Corpora*io+( 1ho did( upo+ comple*io+ of *he e;ami+a*io+ of *hese boo,s( repor* *o *he commi**ee *ha* all mo+e)s received b) *he bro,erage house of *he ma+agi+g direc*or had bee+ accou+*ed for$ 6hile simul*a+eousl) 1i*h *he e;ami+a*io+ bei+g made b) *he commi**ee( *he cer*ified public accou+*a+*s( here*ofore referred *o( 1ere +igh*l) carr)i+g o+ *heir e;ami+a*io+( i* 1as discovered b) )our commi**ee *ha* al*era*io+s a+d cha+ges 1ere bei+g made i+ *he boo,s of record coveri+g *hese *ra+sac*io+s( a+d 1he+ *he same 1as called *o *he a**e+*io+ of *he *reasurer of *he 6ar %i+a+ce Corpora*io+( he admi**ed *o *he commi**ee *ha* cha+ges 1ere bei+g made$ To 1ha* e;*e+* *hese boo,s have bee+ al*ered duri+g *he process *he commi**ee have +o* bee+ able *o de*ermi+e$ Af*er Bu+e( -.0-( abou* Q-0 billio+s 1or*h of securi*ies 1ere des*ro)ed$" I* 1as !uge+e >e)er5s )ashington *ost# 7u+der *he direc*io+ of his daugh*er( Ca*heri+e "raham8 1hich 1as la*er *o drive a 4reside+* of *he :+i*ed S*a*es from *he 6hi*e House o+ *he grou+ds *ha* he had ,+o1ledge of a burglar)$ 6ha* are 1e *o *hi+, of *he revela*io+s of duplica*io+s of hu+dreds of millio+s of dollars 1or*h of bo+ds duri+g .J @i+ser* CHART III ./ CHART III The . +enry ,chroder (anking Company chart encompasses the entire history of the twentieth century# embracing as it does the program -(elgian $elief Commission. which provisioned /ermany from 191011912 and dissuaded /ermany from seeking peace in 19134 financing +itler in 19%% so as to make a ,econd )orld )ar possible4 backing the *residential campaign of +erbert +oover4 and even at the present time# having two of its ma5or e6ecutives of its subsidiary firm# (echtel Corporation serving as ,ecretary of 7efense and ,ecretary of ,tate in the $eagan Administration. The head of the (ank of 8ngland since 199%# ,ir /ordon $ichardson# /overnor of the (ank of 8ngland -controlled by the +ouse of $othschild.# was chairman of . +enry ,chroder# &ew 'ork# and ,chroder (anking Corporation# &ew 'ork# as well as :loyd;s (ank of

:ondon# and $olls $oyce. +e maintains a residence on ,utton *lace in &ew 'ork City# and as head of <The :ondon Connection<# can be said to be the single most influential banker in the world. KKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKK >e)er5s direc*orship of *he 6ar %i+a+ce Corpora*io+( *he al*era*io+ of *he boo,s duri+g a Co+gressio+al i+ves*iga*io+( a+d *he fac* *ha* >e)er came ou* of *his si*ua*io+ 1i*h ma+) millio+s of dollars 1i*h 1hich he proceeded *o bu) Allied Chemical Corpora*io+( The )ashington *ost# a+d o*her proper*iesH I+cide+*all)( La3ard ro*hers( >e)er5s famil) ba+,i+g house( perso+all) ma+ages *he for*u+es of ma+) of our poli*ical lumi+aries( i+cludi+g *he Ce++ed) famil) for*u+e$ esides *hese me+( 6arburg( aruch( a+d >e)er( a hos* of B$4$ >orga+ Co$( a+d Cuh+( Loeb Co$( par*+ers( emplo)ees( a+d sa*elli*es came *o 6ashi+g*o+ af*er -.-J *o admi+is*er *he fa*e of *he America+ people$ The Liber*) Loa+s( 1hich sold bo+ds *o our ci*i3e+s( 1ere +omi+all) i+ *he =urisdic*io+ of *he :+i*ed S*a*es Treasur)( u+der *he leadership of 6ilso+5s Secre*ar) of *he Treasur)( 6illiam "$ >cAdoo( 1hom Cuh+( Loeb Co$ had placed i+ charge of *he Hudso+E >a+ha**a+ Rail1a) Co$ i+ -.00$ 4aul 6arburg had mos* of *he Cuh+ Loeb Co$ firm 1i*h him i+ 6ashi+g*o+ duri+g *he 6ar$ Berome Ha+auer( par*+er i+ Cuh+( Loeb Co$( 1as Assis*a+* Secre*ar) of *he Treasur) i+ charge of Liber*) Loa+s$ The *1o :+derE secre*aries of *he Treasur) duri+g *he 6ar 1ere S$ 4ar,er "ilber* a+d Roscoe C$ Leffi+g1ell$ o*h "ilber* a+d Leffi+g1ell came *o *he Treasur) from *he la1 firm of Crava*h a+d He+derso+( a+d re*ur+ed .. @i+ser* CHART I' -00

CHART I'
The *eabody1=organ chart shows the :ondon Connection of these prominent banking firms# which have been head>uartered in :ondon since their inception. The *eabody fortune set up an 8ducational Fund in 1230# which was later absorbed by ohn 7. $ockefeller into the /eneral 8ducational (oard in 19"0# which# in turn# was absorbed by the $ockefeller Foundation in 193". KKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKK *o *ha* firm 1he+ *he) had fulfilled *heir missio+ for Cuh+( Loeb Co$ i+ *he Treasur)$ Crava*h a+d He+derso+ 1ere *he la1)ers for Cuh+ Loeb Co$ "ilber* a+d Leffi+g1ell subse<ue+*l) received par*+erships i+ B$4$ >orga+ Co$ Cuh+( Loeb Compa+)( *he +a*io+5s larges* o1+ers of railroad proper*ies i+ *his cou+*r) a+d i+ >e;ico( pro*ec*ed *heir i+*eres*s duri+g *he %irs* 6orld 6ar b) havi+g 6oodro1 6ilso+ se* up a :+i*ed S*a*es Railroad Admi+is*ra*io+$ The &irec*orE"e+eral 1as 6illiam >cAdoo( Comp*roller of *he Curre+c)$ 6arburg replaced *his se* up i+ -.-/ 1i*h a *igh*er orga+i3a*io+ 1hich he called *he %ederal Tra+spor*a*io+ Cou+cil$ The purpose of bo*h of *hese orga+i3a*io+s 1as *o preve+* s*ri,es agai+s* Cuh+( Loeb Compa+) duri+g *he 6ar( i+ case *he railroad 1or,ers should *r) *o ge* i+ 1ages some of *he millio+s of dollars i+ 1ar*ime profi*s 1hich Cuh+( Loeb received from *he :+i*ed S*a*es "over+me+*$ Amo+g *he impor*a+* ba+,ers prese+* i+ 6ashi+g*o+ duri+g *he 6ar 1as Herber* Lehma+( of *he rapidl) risi+g firm of Lehma+ ro*hers( a+,ers( #e1 ?or,( Lehma+ 1as promp*l) pu* o+ *he "e+eral S*aff of *he Arm)( a+d give+ *he ra+, of Colo+el$ The Lehma+s had had prior e;perie+ce i+ "*a,i+g *he profi*s ou* of 1ar"( a double e+*e+dre a+d o+e of aruch5s favori*e phrases$ I+ =en )ho $ule America# Ar*hur &$ Ho1de+ Smi*h 1ri*es of *he Lehma+s duri+g *he Civil 6ar( "The) 1ere of*e+ age+*s( fi;ers for bo*h sides( i+*ermediaries for co+fide+*ial commu+ica*io+s a+d ha+dlers of *he ma+) illici* *ra+sac*io+s i+ co**o+ a+d drugs for *he

Co+federac)( purve)ors of i+forma*io+ for *he #or*h$ The Lehma+s( 1i*h >a)er i+ >o+*gomer)( *he firs* capi*al of *he Co+federac)( He+r) i+ #e1 Orlea+s( a+d !ma+uel i+ #e1 ?or, 1ere ideall) si*ua*ed *o *a,e adva+*age of ever) oppor*u+i*) for profi* 1hich appeared$ The) seem *o have missed fe1 cha+ces$"/0 KKKKKKKKKKKKKKKKKKKKKKKKKK /0 Ar*hur &$ Ho1de+ Smi*h( =en )ho $ule America# obbs >errill( #$?$ -.D9( p$ --0 -0-

-00

CHART V
The &avid Roc,efeller char* sho1s *he li+, be*1ee+ *he %ederal Reserve a+, of #e1 ?or,( S*a+dard Oil of I+dia+a( "e+eral >o*ors( a+d Allied Chemical Corpora*io+ 7!uge+e >e)er famil)8 a+d !<ui*able Life 7B$4$ >orga+8$ KKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKK O*her appoi+*me+*s duri+g *he %irs* 6orld 6ar 1ere as follo1s@ B$6$ >cI+*osh( direc*or of *he Armour mea*Epac,i+g *rus*( 1ho 1as made chief of Subsis*e+ce for *he :+i*ed S*a*es Arm) i+ -.-/$ He la*er became Comp*roller of *he Curre+c) duri+g Coolidge5s Admi+is*ra*io+( a+d e;Eofficio member of *he %ederal Reserve oard$ &uri+g *he Hardi+g Admi+is*ra*io+( he did his bi* as &irec*or of %i+a+ce for *he :+i*ed S*a*es Shippi+g oard 1he+ *he oard sold ships *o *he &ollar Li+es for a hu+dred*h of *heir cos* a+d *he+ le* *he &ollar Li+e defaul* o+ i*s pa)me+*s$ Af*er leavi+g public service( B$6$ >cI+*osh became a par*+er i+ B$6$ 6ollma+ Co$( #e1 ?or, S*oc,bro,ers$ 6$4$"$ Hardi+g( "over+or of *he %ederal Reserve oard( 1as also ma+agi+g direc*or of *he 6ar %i+a+ce Corpora*io+ u+der !uge+e >e)er$

"eorge R$ Bames( member of *he %ederal Reserve oard i+ -.0DE02( had bee+ Chief of *he Co**o+ Sec*io+ of *he 6ar I+dus*ries oard$ He+r) 4$ &aviso+( se+ior par*+er i+ B$4$ >orga+ Co$( 1as appoi+*ed head of *he America+ Red Cross i+ -.-J i+ order *o ge* co+*rol of *he *hree hu+dred a+d seve+*) millio+ dollars cash 1hich 1as collec*ed from *he America+ people i+ do+a*io+s$ Ro+ald Ra+som( ba+,er from A*la+*a( a+d "over+or of *he %ederal Reserve oard u+der Roosevel* i+ -.D/ED.( had bee+ *he &irec*or i+ Charge of 4erso++el for %oreig+ Service for *he America+ Red Cross i+ -.-/$ Boh+ S,el*o+ 6illiams( Comp*roller of *he Curre+c)( 1as appoi+*ed #a*io+al Treasurer of *he America+ Red Cross$ 4reside+* 6oodro1 6ilso+( *he grea* liberal 1ho sig+ed *he %ederal Reserve Ac* a+d declared 1ar agai+s* "erma+)( had a+ odd career for a ma+ 1ho is +o1 e+shri+ed as a defe+der of *he commo+ people$ His chief suppor*er i+ bo*h his campaig+s for *he 4reside+c) 1as Clevela+d H$ &odge( of Cuh+ Loeb( 1ho co+*rolled #a*io+al Ci*) a+, of #e1 ?or,$ &odge 1as also 4reside+* of *he 6i+ches*er Arms Compa+) a+d Remi+g*o+ Arms Compa+)$ He 1as ver) close *o 4reside+* 6ilso+ -0D

-02

CHART 'I
This char* sho1s *he i+*erloc,s be*1ee+ *he %ederal Reserve a+, of #e1 ?or,( B$ He+r) Schroder a+,i+g Corp$( B$ He+r) Schroder Trus* Co$( Roc,efeller Ce+*er( I+c$( !<ui*able Life Assura+ce Socie*) 7B$4$ >orga+8( a+d *he %ederal Reserve a+, of os*o+$

KKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKK *hroughou* *he grea* democra*5s poli*ical career$ 6ilso+ lif*ed *he embargo o+ shipme+* of arms *o >e;ico o+ %ebruar) -0( -.-2( so *ha* &odge could ship a millio+ dollars 1or*h of arms a+d ammu+i*io+ *o Carra+3a a+d promo*e *he >e;ica+ Revolu*io+$ Cuh+( Loeb Co$ 1hich o1+ed *he >e;ica+ #a*io+al Rail1a)s S)s*em( had become dissa*isfied 1i*h *he admi+is*ra*io+ of Huer*a a+d had him ,ic,ed ou*$ 6he+ *he ri*ish +aval au;iliar) Lusi*a+ia 1as su+, i+ -.-9( i* 1as loaded 1i*h ammu+i*io+ from &odge5s fac*ories$ &odge became Chairma+ of *he "Survivors of 'ic*ims of *he Lusi*a+ia %u+d"( 1hich did so much *o arouse *he public agai+s* "erma+)$ &odge also 1as +o*orious for usi+g professio+al ga+gs*ers agai+s* s*ri,ers i+ his pla+*s( )e* *he liberal 6ilso+ does +o* appear *o have ever bee+ dis*urbed b) *his$ A+o*her clue *o 6ilso+5s peculiar bra+d of liberalism is *o be fou+d i+ Chapli+5s boo, 6obbl)( 1hich rela*es ho1 6ilso+ scra1led *he 1ord "R!%:S!&" across *he appeal for cleme+c) se+* him b) *he agi+g a+d aili+g !uge+e &ebs( 1ho had bee+ se+* *o A*la+*a 4riso+ for "spea,i+g a+d 1ri*i+g agai+s* 1ar"$ The charge o+ 1hich &ebs 1as co+vic*ed 1as "spo,e+ a+d 1ri**e+ de+u+cia*io+ of 1ar"$ This 1as *reaso+ *o *he 6ilso+ dic*a*orship( a+d &ebs 1as impriso+ed$ As head of *he Socialis* 4ar*)( &ebs ra+ for *he 4reside+c) from A*la+*a 4riso+( *he o+l) ma+ ever *o do so( a+d polled more *ha+ a millio+ vo*es$ I* 1as iro+ic *ha* &ebs5 leadership of *he Socialis* 4ar*)( 1hich a* *ha* *ime represe+*ed *he desires of ma+) America+s for a+ ho+es* gover+me+*( should fall i+*o *he sic,l) ha+ds of #orma+ Thomas( a former s*ude+* a+d admirer of 6oodro1 6ilso+ a* 4ri+ce*o+ :+iversi*)$ :+der Thomas5 leadership( *he Socialis* 4ar*) +o lo+ger s*ood for a+)*hi+g( a+d suffered a s*ead) decli+e i+ i+flue+ce a+d pres*ige$ 6ilso+ co+*i+ued *o be deepl) i+volved i+ *he olshevi, Revolu*io+( as 1ere House a+d 6isema+$ 'ol$ D( p$ 20- of House I+*ima*e 4apers records a cable from Sir 6illiam 6isema+ *o House from Lo+do+( >a) -( -.-/( sugges*i+g allied i+*erve+*io+ a* *he i+vi*a*io+ of *he olshevi,i -09 @i+ser* CHART 'II -06 CHART 'II This char* sho1s *he i+*erloc,s of *he %ederal Reserve a+, of #e1 ?or, 1i*h Ci*iba+,( "uara+*) a+, a+d Trus* Co$ 7B$4$ >orga+8( B$4$ >orga+ Co$( >orga+ "uara+*) Trus* Co$( Ale; ro1+ O So+s 7 ro1+ ro*hers Harrima+8( Cuh+ Loeb O Co$( Los A+geles a+d Sal* La,e RR 7co+*rolled b) Cuh+ Loeb Co$8( a+d 6es*i+ghouse 7co+*rolled b) Cuh+ Loeb Co$8$ KKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKK *o help orga+i3e *he olshevi, forces$ L*$ Col$ #orma+ Th1ai*es( i+ his memoirs( 'elve* a+d 'i+egar sa)s( "Of*e+ duri+g *he )ears -.-JE00 1he+ delica*e decisio+s had *o be made( I co+sul*ed 1i*h >r$ 7O**o8 Cah+( 1hose calm =udgme+* a+d almos* u+ca++) foresigh* as *o poli*ical a+d eco+omic *e+de+cies proved mos* helpful$ A+o*her remar,able ma+ 1i*h 1hom I have bee+ closel) associa*ed is Sir 6illiam 6isema+ 1ho 1as advisor o+ America+ affairs *o *he ri*ish delega*io+ a* *he 4eace Co+fere+ce( a+d liaiso+ officer be*1ee+ *he America+ a+d ri*ish gover+me+*

duri+g *he 1ar$ He 1as ra*her more *he Col$ House of *his cou+*r) i+ his rela*io+s 1i*h &o1+i+g S*ree*$"/I+ *he summer of -.-J( 6oodro1 6ilso+ +amed Col$ House *o head *he America+ 6ar >issio+ *o *he I+*erallied 6ar Co+fere+ce( *he firs* America+ missio+ *o a !uropea+ cou+cil i+ his*or)$ House 1as cri*ici3ed for +ami+g his so+Ei+Ela1( "ordo+ Auchi+closs( as his assis*a+* o+ *his missio+$ 4aul Crava*h( *he la1)er for Cuh+( Loeb Compa+)( 1as *hird i+ charge of *he America+ 6ar >issio+$ Sir 6illiam 6isema+ guided *he America+ 6ar >issio+ i+ i*s co+fere+ces$ I+ The S*ra+ges* %rie+dship i+ His*or)( 'ierec, 1ri*es( "Af*er America e+*ered *he 6ar( 6isema+( accordi+g *o #or*hcliffe( 1as *he o+l) ma+ 1ho had access a* all *imes *o *he Colo+el a+d *o *he 6hi*e House$ 6isema+ re+*ed a+ apar*me+* i+ *he house 1here *he Colo+el lived$ &avid La1re+ce referred *o *he %if*)EThird S*ree* house 7#e1 ?or, Ci*)8 =es*i+gl) as *he America+ #o$ -0 &o1+i+g S*$ $ $ $ Col$ House had a special code used o+l) 1i*h Sir 6illiam 6isema+$ Col$ House 1as ush( *he >orga+s 1ere Haslam( a+d Tro*s,) 1as Ceble$"/0 Thus *hese *1o "u+official" advisors *o *he ri*ish a+d America+ gover+me+*s had a code solel) for each o*her( 1hich +o o+e else could u+ders*a+d$ !ve+ s*ra+ger 1as *he fac* *ha* *he i+*er+a*io+al Commu+is* KKKKKKKKKKKKKKKKKKKKKKKKKK /- L*$ Col$ #orma+ Th1ai*es( 'elve* a+d 'i+egar( "ra)so+ Co$( Lo+do+( -.D0 /0 "eorge S)lves*er 'ierec,( The S*ra+ges* %rie+dship i+ His*or)( 6oodro1 6ilso+ a+d Col$ House( Liverigh*( #$?$ -.D0( p$ -J0 -0J @i+ser* CHART 'III -0/ CHART 'III This char* sho1s *he li+, be*1ee+ *he %ederal Reserve a+, of #e1 ?or,( ro1+ ro*hers Harrima+( Su+ Life Assura+ce Co$ 7#$>$ Ro*hschild a+d So+s8( a+d *he Roc,efeller %ou+da*io+$ KKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKK espio+age appara*us for ma+) )ears used Col$ House5s boo,( 4hilip &ru( Admi+is*ra*or( as *heir official code boo,$ %ra+cois Co*) 1ri*es( ""orodi+( Le+i+5s age+* i+ Chi+a( 1as alleged *o have 1i*h him a cop) of *he boo, published b) Col$ House( 4hilip &ru( Admi+is*ra*or a+d a code e;per* 1ho lived i+ Chi+a *old *his 1ri*er *ha* *he purpose of havi+g co+s*a+* access *o *his boo, b) "orodi+ 1as *o use i* for codi+g a+d decodi+g messages$"/D Af*er *he Armis*ice( 6oodro1 6ilso+ assembled *he America+ &elega*io+ *o *he 4eace Co+fere+ce( a+d embar,ed for 4aris$ I* 1as( o+ *he 1hole( a mos* co+ge+ial group( co+sis*i+g of *he ba+,ers 1ho had al1a)s guided 6ilso+5s policies$ He 1as accompa+ied b)

er+ard aruch( Thomas 6$ Lamo+* of B$4$ >orga+ Co$( Alber* S*rauss of B O 6 Seligma+ ba+,ers( 1ho had bee+ chose+ b) 6ilso+ *o replace 4aul 6arburg o+ *he %ederal Reserve oard of "over+ors( B$4$ >orga+( a+d >orga+ la1)ers %ra+, 4ol, a+d Boh+ 6$ &avis$ Accompa+)i+g *hem 1ere 6al*er Lippma++( %eli; %ra+,fur*er( Bus*ice ra+deis( a+d o*her i+*eres*ed par*ies$ >aso+5s biograph) of ra+deis s*a*es *ha* "I+ 4aris i+ Bu+e of -.-.( ra+deis me* 1i*h such frie+ds as 4aul 6arburg( Col$ House( Lord alfour( Louis >arshall( a+d aro+ !dmo+d de Ro*hschild$" I+deed( aro+ !dmo+d de Ro*hschild served as *he ge+ial hos* *o *he leadi+g members of *he America+ &elega*io+( a+d eve+ *ur+ed over his 4aris ma+sio+ *o *hem( al*hough *he lesser members had *o rough i* a* *he elega+* Ho*el Crillo+ 1i*h Col$ House a+d his perso+al s*aff of 00- serva+*s$ aruch la*er *es*ified before *he "raham Commi**ee of *he Se+a*e %oreig+ Rela*io+s Commi**ee( "I 1as eco+omic advisor 1i*h *he peace missio+$ "RAHA>@ &id )ou fre<ue+*l) advise *he 4reside+* 1hile *hereH AR:CH@ 6he+ever he as,ed m) advice I gave i*$ I had some*hi+g *o do 1i*h *he repara*io+s clauses$ I 1as *he America+ Commissio+er i+ charge of 1ha* *he) called *he !co+omic Sec*io+$ I 1as a KKKKKKKKKKKKKKKKKKKKKKKKKK /D %ra+cois Co*)( Teari+g A1a) *he 'eil( 4aris( -.20 -0. @i+ser* CHART IL --0 CHART IL This char* sho1s *he i+*erloc,s be*1ee+ *he %ederal Reserve a+, of #e1 ?or, a+d B$4$ >orga+ Co$( >orga+ "uara+*) Trus* Co$( a+d *he Ro*hschild affilia*es of Ro)al a+, of Ca+ada( Su+ Life Assura+ce Co$ of Ca+ada( Su+ Allia+ce( a+d Lo+do+ Assura+ce "roup$ KKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKK member of *he Supreme !co+omic Cou+cil i+ charge of ra1 me*als$ "RAHA>@ &id )ou si* i+ *he cou+cil 1i*h *he ge+*leme+ 1ho 1ere +ego*ia*i+g *he *rea*)H AR:CH@ ?es( sir( some of *he *ime$ "RAHA>@ All e;cep* *he mee*i+gs *ha* 1ere par*icipa*ed i+ b) *he %iveH 7The %ive bei+g *he leaders of *he five allied +a*io+s8$ AR:CH@ A+d fre<ue+*l) *hose also$" 4aul 6arburg accompa+ied 6ilso+ o+ *he America+ Commissio+ *o #ego*ia*e 4eace as his chief fi+a+cial advisor$ He 1as pleasa+*l) surprised *o fi+d a* *he head of *he "erma+ delega*io+ his bro*her( >a; 6arburg( 1ho brough* alo+g Carl >elchior( also of >$>$ 6arburg Compa+)( 6illiam "eorg vo+ S*rauss( %ra+3 :rbig( a+d >a*hias !r3berger$ Thomas 6$ Lamo+* s*a*es i+ his priva*el) pri+*ed memoirs( Across 6orld %ro+*iers( "The "erma+ delega*io+ i+cluded *1o "erma+ ba+,ers of *he 6arburg firm 1hom I happe+ed *o ,+o1 sligh*l) a+d 1i*h 1hom I 1as glad *o *al, i+formall)( for *he) seemed *o be s*rivi+g ear+es*l) *o offer some repara*io+s composi*io+ *ha* migh* be accep*able *o *he Allies$"/2 Lamo+* 1as also pleased *o see Sir 6illiam 6isema+( chief advisor *o *he ri*ish delega*io+$ The ba+,ers a* *he co+fere+ce co+vi+ced 6ilso+ *ha* *he) +eeded a+ i+*er+a*io+al gover+me+* *o facili*a*e *heir i+*er+a*io+al mo+e*ar) opera*io+s$ 'ol$ I'( p$ 90( I+*ima*e 4apers of Col$ House <uo*es a message from Sir 6illiam 6isema+ *o Lord Readi+g( Augus* -6( -.-/( "The 4reside+* has *1o mai+ pri+ciples i+ vie1G *here mus* be a League of #a*io+s a+d i* mus* be virile$"

6ilso+( 1ho seems *o have lived i+ a 1orld of fa+*as)( 1as shoc,ed 1he+ America+ ci*i3e+s booed him duri+g his campaig+ *o have *hem sig+ over *heir hard 1o+ i+depe+de+ce *o 1ha* appeared *o ma+) *o be a+ i+*er+a*io+al dic*a*orship$ He promp*l) 1e+* i+*o a depressio+( a+d re*ired *o his bedroom$ His 1ife immedia*el) shu* *he 6hi*e House doors agai+s* Col$ House( a+d from Sep*ember 09( -.-. *o April -D( -.00( she KKKKKKKKKKKKKKKKKKKKKKKKKK /2 Thomas 6$ Lamo+*( Across 6orld %ro+*iers( 74riva*el) pri+*ed8 -.90( p$ -D/ --ruled *he :+i*ed S*a*es 1i*h *he aid of a+ i+*ima*e frie+d( her "mili*ar) aide"( Col$ Ri;e) Smi*h$ As ever)o+e 1as shu* ou* of *heir delibera*io+s( +o o+e ever ,+e1 1hich of *he pair fu+c*io+ed as *he 4reside+*( a+d 1hich 1as *he 'ice 4reside+*$ The admirers of 6oodro1 6ilso+ 1ere led for decades b) er+ard aruch( 1ho s*a*ed *ha* 6oodro1 6ilso+ 1as *he grea*es* ma+ he ever ,+e1$ 6ilso+5s appoi+*me+*s *o *he %ederal Reserve oard( a+d *ha* bod)5s respo+sibili*) for fi+a+ci+g *he %irs* 6orld 6ar( as 1ell as 6ilso+5s ha+di+g over *he :+i*ed S*a*es *o *he immigra+* *riumvira*e duri+g *he 6ar( made him appear *o be *he mos* impor*a+* si+gle effec*or of rui+ i+ America+ his*or)$ I* is +o 1o+der *ha* af*er his abor*ive *rip *o !urope( 1here he 1as hissed a+d =eered i+ *he s*ree*s b) *he %re+ch people( a+d s+ic,ered a* i+ *he halls of 'ersailles b) Orla+do a+d Cleme+ceau( 6oodro1 6ilso+ re*ur+ed home *o *a,e *o his bed$ The sigh* of *he des*ruc*io+ a+d dea*h i+ !urope( for 1hich he 1as direc*l) respo+sible( 1as perhaps more of a shoc, *ha+ he could bear$ The I*alia+ >i+is*er 4e+*aleo+i e;pressed *he feeli+gs of *he !uropea+ peoples 1he+ he 1ro*e *ha*@ "6oodro1 6ilso+ is a *)pe of 4ec,s+iff 1ho 1as +o1 disappeared amid u+iversal e;ecra*io+$" I* is America5s misfor*u+e *ha* our subsidi3ed press a+d educa*io+al s)s*em have bee+ devo*ed *o e+shri+i+g a ma+ 1ho colluded i+ causi+g so much dea*h a+d sorro1 *hroughou* *he 1orld$ The fi+a+cial car*el suffered o+l) mi+or se*bac,s i+ *hose crucial )ears$ O+ %ebruar) -0( -.-J( The #e1 ?or, Times repor*ed *ha* "The five members of *he %ederal Reserve oard 1ere impeached o+ *he floor of *he House b) Rep$ Charles A$ Li+dbergh( Republica+ member of *he House a+,i+g a+d Curre+c) Commi**ee$ Accordi+g *o >r$ Li+dbergh( A*he co+spirac) bega+ i+5 -.06 1he+ *he la*e B$4$ >orga+( 4aul >$ 6arburg( a prese+* member of *he %ederal Reserve oard( *he #a*io+al Ci*) a+, a+d o*her ba+,i+g firms Aco+spired5 *o ob*ai+ curre+c) legisla*io+ i+ *he i+*eres* of big busi+ess a+d *he appoi+*me+* of a special board *o admi+is*er such a la1( i+ order *o crea*e i+dus*rial slaves of *he masses( *he aforesaid co+spira*ors did co+spire a+d are +o1 co+spiri+g *o have *he %ederal Reserve oard admi+is*ered so as *o e+able *he co+spira*ors *o coordi+a*e all ,i+ds of big busi+ess a+d *o ,eep *hemselves i+ co+*rol of big busi+ess i+ order *o amalgama*e all *he *rus*s i+*o o+e grea* *rus* i+ res*rai+* a+d co+*rol of *rade a+d commerce$" The impeachme+* resolu*io+ 1as +o* ac*ed o+ b) *he House$ The #e1 ?or, Times repor*ed o+ Augus* -0( -.-/( ">r$ 6arburg5s *erm havi+g e;pired( he volu+*aril) re*ired from *he %ederal Reserve oard$" Thus *he previous i+*ima*io+ *ha* >r$ 6arburg lef* *he %ederal Reserve oard because he had a bro*her i+ *he Secre* Service of a foreig+ --0 cou+*r)( +amel)( "erma+)( 1i*h 1hom 1e 1ere a* 1ar( 1as +o* *he cause of his re*ireme+*$ I+ a+) case( he did +o* leave *he %ederal Reserve Admi+is*ra*io+( as he immedia*el) *oo, over B$4$ >orga+5s sea* o+ *he %ederal Advisor) Cou+cil( from 1hich pos* he co+*i+ued *o admi+is*er *he %ederal Reserve S)s*em for *he +e;* *e+ )ears$ --D

CHA4T!R #I#!

The Agricul*ural &epressio+

6he+ 4aul 6arburg resig+ed from *he %ederal Reserve oard of "over+ors i+ -.-/( his place 1as *a,e+ b) Alber* S*rauss( par*+er i+ *he i+*er+a*io+al ba+,i+g house of B O 6 Seligma+$ This ba+,i+g house had large i+*eres*s i+ Cuba a+d Sou*h America( a+d pla)ed a promi+e+* par* i+ fi+a+ci+g *he ma+) revolu*io+s i+ *hose cou+*ries$ I*s mos* +o*orious publici*) came duri+g *he Se+a*e %i+a+ce Commi**ee5s i+ves*iga*io+ i+ -.DD( 1he+ i* 1as brough* ou* *ha* B O 6 Seligma+ had give+ a Q2-9(000 bribe *o Bua+ Leguia( so+ of *he 4reside+* of 4eru( i+ order *o ge* *ha* +a*io+ *o accep* a loa+$ A par*ial lis* of Alber* S*rauss5 direc*orships( accordi+g *o "6ho5s 6ho"( sho1s *ha* he 1as@ Chairma+ of *he oard of *he Cuba Ca+e Sugar Corpora*io+G direc*or( roo,l)+ >a+ha**a+ Tra+si* Co$( Co+e) Isla+d roo,l)+ RR( #e1 ?or, Rapid Tra+si*( 4ierceE Arro1( Cuba Tobacco Corpora*io+( a+d *he !as*er+ Cuba Sugar Corpora*io+$ "over+or &ela+o resig+ed i+ Augus*( -.-/( *o be commissio+ed a Colo+el i+ *he Arm)$ The 1ar e+ded o+ #ovember --( -.-/$ 6illiam >cAdoo 1as replaced i+ -.-/ b) Car*er "lass as Secre*ar) of *he Treasur)$ o*h S*rauss a+d "lass 1ere prese+* duri+g *he secre* mee*i+g of *he %ederal Reserve oard o+ >a) -/( -.00( 1he+ *he Agricul*ural &epressio+ of -.00E0- 1as made possible$ O+e of *he mai+ lies abou* *he %ederal Reserve Ac* 1he+ i* 1as bei+g ball)hooed i+ -.-D 1as i*s promise *o *a,e care of *he farmer$ Ac*uall)( i* has +ever *a,e+ care of a+)bod) bu* a fe1 big ba+,ers$ 4rof$ O$>$6$ Sprague( Harvard eco+omis*( 1ri*i+g i+ *he Suar*erl) Bour+al of !co+omics of %ebruar)( -.-2( said@ "The primar) purpose of *he %ederal Reserve Ac* is *o ma,e sure *ha* *here 1ill al1a)s be a+ available suppl) of mo+e) a+d credi* i+ *his cou+*r) *o mee* u+usual ba+,i+g re<uireme+*s$" There is +o*hi+g i+ *ha* 1ordi+g *o help *he farmer$ The %irs* 6orld 6ar had i+*roduced i+*o *his cou+*r) a ge+eral prosperi*)( as revealed b) *he s*oc,s of heav) i+dus*r) o+ *he #e1 ?or, !;cha+ge i+ -.-JE-.-/( b) *he i+crease i+ *he amou+* of mo+e) circula*ed( a+d b) *he e+ormous ba+, cleari+gs duri+g *he 1hole of -.-/$ I* 1as *he assig+ed du*) of *he %ederal Reserve S)s*em *o ge* bac, *he vas* amou+* --2 of mo+e) a+d credi* 1hich had escaped *heir co+*rol duri+g *his *ime of prosperi*)$ This 1as do+e b) *he Agricul*ural &epressio+ of -.00E0-$ The opera*io+s of *he %ederal Reserve Ope+ >ar,e* Commi**ee i+ -.-JE-/( 1hile 4aul 6arburg 1as s*ill Chairma+( sho1 a *reme+dous i+crease i+ purchases of ba+,ers5 a+d *rade accep*a+ces$ There 1as also a grea* i+crease i+ *he purchase of :+i*ed S*a*es "over+me+* securi*ies( u+der *he leadership of *he able !uge+e >e)er( Br$ A large par* of *he s*oc, mar,e* specula*io+ i+ -.-.( a* *he e+d of *he 6ar 1he+ *he mar,e* 1as ver) u+se**led( 1as fi+a+ced 1i*h fu+ds borro1ed from %ederal Reserve a+,s 1i*h "over+me+* securi*ies as colla*eral$ Thus *he %ederal Reserve S)s*em se* up *he &epressio+( firs* b) causi+g i+fla*io+( a+d *he+ raisi+g *he discou+* ra*e a+d ma,i+g mo+e) dear$ I+ -.-2( %ederal Reserve a+, ra*es had dropped from si; perce+* *o four perce+*( had go+e *o a fur*her lo1 of *hree perce+* i+ -.-6( a+d had s*a)ed a* *ha* level u+*il -.00$ The reaso+ for *he lo1 i+*eres* ra*e 1as *he +ecessi*) for floa*i+g *he billio+ dollar Liber*) Loa+s$ A* *he begi++i+g of each Liber*) Loa+ &rive( *he %ederal Reserve oard pu* a hu+dred millio+ dollars i+*o *he #e1

?or, mo+e) mar,e* *hrough i*s ope+ mar,e* opera*io+s( i+ order *o provide a cash impe*us for *he drive$ The mos* impor*a+* role of *he Liber*) o+ds 1as *o soa, up *he i+crease i+ circula*io+ of *he medium of e;cha+ge 7i+*eger of accou+*8 brough* abou* b) *he large amou+* of curre+c) a+d credi* pu* ou* duri+g *he 1ar$ Laborers 1ere paid high 1ages( a+d farmers received *he highes* prices for *heir produce *he) had ever ,+o1+$ These *1o groups accumula*ed millio+s of dollars i+ cash 1hich *he) did +o* pu* i+*o Liber*) o+ds$ Tha* mo+e) 1as effec*ivel) ou* of *he ha+ds of *he 6all S*ree* group 1hich co+*rolled *he mo+e) a+d credi* of *he :+i*ed S*a*es$ The) 1a+*ed i* bac,( a+d *ha* is 1h) 1e had *he Agricul*ural &epressio+ of -.00E0-$ >uch of *he mo+e) 1as deposi*ed i+ small cou+*r) ba+,s i+ *he >iddle 6es* a+d 6es* 1hich had refused *o have a+) par* of *he %ederal Reserve S)s*em( *he farmers a+d ra+chers of *hose regio+s seei+g +o good reaso+ 1h) *he) should give a group of i+*er+a*io+al fi+a+ciers co+*rol of *heir mo+e)$ The mai+ =ob of *he %ederal Reserve S)s*em 1as *o brea, *hese small cou+*r) ba+,s a+d ge* bac, *he mo+e) 1hich had bee+ paid ou* *o *he farmers duri+g *he 1ar( i+ effec*( rui+ *hem( a+d *his i* proceeded *o do$ %irs* of all( a %ederal %arm Loa+ oard 1as se* up 1hich e+couraged *he farmers *o i+ves* *heir accrued mo+e) i+ la+d o+ lo+g *erm loa+s( 1hich *he farmers 1ere eager *o do$ The+ i+fla*io+ 1as allo1ed *o *a,e i*s course i+ *his cou+*r) a+d i+ !urope i+ -.-. a+d -.00$ The purpose of *he i+fla*io+ i+ !urope 1as *o ca+cel ou* a large por*io+ of *he 1ar deb*s o1ed b) *he Allies *o *he America+ people( a+d i*s purpose i+ *his cou+*r) 1as *o dra1 i+ *he e;cess mo+e)s 1hich had bee+ dis*ribu*ed *o --9 *he 1or,i+g people i+ *he form of higher 1ages a+d bo+uses for produc*io+$ As prices 1e+* higher a+d higher( *he mo+e) 1hich *he 1or,ers had accumula*ed became 1or*h less a+d less( i+flic*i+g upo+ *hem a+ u+fair drai+( 1hile *he proper*ied classes 1ere e+riched b) *he i+fla*io+ because of *he e+ormous i+crease i+ *he value of la+d a+d ma+ufac*ured goods$ The 1or,ers 1ere *hus effec*ivel) impoverished( bu* *he farmers( 1ho 1ere as a class more *hrif*)( a+d 1ho 1ere more selfEsufficie+*( had *o be ha+dled more harshl)$ "$6$ #orris( i+ "Collier5s >aga3i+e" of >arch 00( -.00( said@ "Rumor has i* *ha* *1o members of *he %ederal Reserve oard had a plai+ *al, 1i*h some #e1 ?or, ba+,ers a+d fi+a+ciers i+ &ecember( -.-.$ Immedia*el) af*er1ards( *here 1as a +o*able decli+e i+ *ra+sac*io+s o+ *he s*oc, mar,e* a+d a cessa*io+ of compa+) promo*io+s$ I* is u+ders*ood *ha* ac*io+ i+ *he same ge+eral direc*io+ has alread) bee+ *a,e+ i+ o*her sec*io+s of *he cou+*r)( as evide+ce of *he abuse of *he %ederal Reserve S)s*em *o promo*e specula*io+ i+ la+d a+d commodi*ies appeared$" Se+a*or Rober* L$ O1e+( Chairma+ of *he Se+a*e a+,i+g a+d Curre+c) Commi**ee( *es*ified a* *he Se+a*e Silver Heari+gs i+ -.D. *ha*@ "I+ *he earl) par* of -.00( *he farmers 1ere e;ceedi+gl) prosperous$ The) 1ere pa)i+g off *he mor*gages a+d bu)i+g a lo* of +e1 la+d( a* *he i+s*a+ce of *he "over+me+*EEhad borro1ed mo+e) *o do i*EEa+d *he+ *he) 1ere ba+,rup*ed b) a sudde+ co+*rac*io+ of credi* a+d curre+c) 1hich *oo, place i+ -.00$ 6ha* *oo, place i+ -.00 1as =us* *he reverse of 1ha* should have bee+ *a,i+g place$ I+s*ead of li<uida*i+g *he e;cess of credi*s crea*ed b) *he 1ar *hrough a period of )ears( *he %ederal Reserve oard me* i+ a mee*i+g 1hich 1as +o* disclosed *o *he public$ The) me* o+ *he

-/*h of >a)( -.00( a+d i* 1as a secre* mee*i+g$ The) spe+* all da) co+ferri+gG *he mi+u*es made si;*) pri+*ed pages( a+d *he) appear i+ Se+a*e &ocume+* D-0 of %ebruar) -.( -.0D$ The Class A &irec*ors( *he %ederal Reserve Advisor) Cou+cil( 1ere prese+*( bu* *he Class &irec*ors( 1ho

represe+*ed busi+ess( commerce( a+d agricul*ure( 1ere +o* prese+*$ The Class C &irec*ors( represe+*i+g *he people of *he :+i*ed S*a*es( 1ere +o* prese+* a+d 1ere +o* i+vi*ed *o be prese+*$ O+l) *he big ba+,ers 1ere *here( a+d *heir 1or, of *ha* da) resul*ed i+ a co+*rac*io+ of credi* 1hich had *he effec* *he +e;* )ear of reduci+g *he +a*io+al i+come fif*ee+ billio+ dollars( *hro1i+g millio+s of people ou* of emplo)me+*( a+d reduci+g *he value of la+ds a+d ra+ches b) *1e+*) billio+ dollars$" Car*er "lass( member of *he oard i+ -.00 as Secre*ar) of *he Treasur)( 1ro*e i+ his au*obiograph)( Adve+*ure i+ Co+s*ruc*ive %i+a+ce published i+ -.0/G "Repor*ers 1ere +o* prese+*( of course( as *he) should +o* have bee+ a+d as *he) +ever are a* a+) ba+, board mee*i+g i+ *he 1orld$"/9 KKKKKKKKKKKKKKKKKKKKKKKKKK /9 Car*er "lass( Adve+*ure i+ Co+s*ruc*ive %i+a+ce( &oubleda)( #$?$ -.0/ --6 I* 1as Car*er "lass 1ho had complai+ed *ha*( if a sugges*ed ame+dme+* b) Se+a*or La%olle**e 1ere passed( o+ *he %ederal Reserve Ac* of -.-D( *o *he effec* *ha* +o member of *he %ederal Reserve oard should be a+ official or direc*or or s*oc,holder of a+) ba+,( *rus* compa+)( or i+sura+ce compa+)( 1e 1ould e+d up b) havi+g mecha+ics a+d farm laborers o+ *he oard$ Cer*ai+l) mecha+ics a+d farm laborers could have caused +o more damage *o *he cou+*r) *ha+ did "lass( S*rauss( a+d 6arburg a* *he secre* mee*i+g of *he %ederal Reserve oard$ Se+a*or roo,har* of Io1a *es*ified *ha* a* *ha* secre* mee*i+g 4aul 6arburg( also 4reside+* of *he %ederal Advisor) Cou+cil( had a resolu*io+ passed *o se+d a commi**ee of five *o *he I+*ers*a*e Commerce Commissio+ a+d as, for a+ i+crease i+ railroad ra*es$ As head of Cuh+( Loeb Co$ 1hich o1+ed mos* of *he rail1a) mileage i+ *he :+i*ed S*a*es( he 1as alread) missi+g *he huge profi*s 1hich *he :+i*ed S*a*es "over+me+* had paid duri+g *he 1ar( a+d he 1a+*ed *o i+flic* +e1 price raises o+ *he America+ people$ Se+a*or roo,har* also *es*ified *ha*@ "I 1e+* i+*o >)ro+ T$ Herric,5s office i+ 4aris( a+d *old him *ha* I came *here *o s*ud) coopera*ive ba+,i+g$ He said *o me( Aas )ou go over *he cou+*ries of !urope( )ou 1ill fi+d *ha* *he :+i*ed S*a*es is *he o+l) civili3ed cou+*r) i+ *he 1orld *ha* b) la1 is prohibi*i+g i*s people from orga+i3i+g a coopera*ive s)s*em$5 I 1e+* up *o #e1 ?or, a+d *al,ed *o abou* *1o hu+dred people$ Af*er *al,i+g coopera*io+ a+d s*a+di+g arou+d 1ai*i+g for m) *rai+EEI did +o* specificall) me+*io+ coopera*ive ba+,i+g( i* 1as coopera*io+ i+ ge+eralEEa ma+ called me off *o o+e side a+d said( AI *hi+, 4aul 6arburg is *he grea*es* fi+a+cier 1e have ever produced$ He believes a lo* more of )our coopera*ive ideas *ha+ )ou *hi+, he does( a+d if )ou 1a+* *o co+sul* a+)bod) abou* *he busi+ess of coopera*io+( he is *he ma+

*o co+sul*( because he believes i+ )ou( a+d )ou ca+ rel) o+ him$5 A fe1 mi+u*es la*er I 1as s*eered up agai+s* >r$ 6arburg himself( a+d he said *o me( A?ou are absolu*el) righ* abou* *his coopera*ive idea$ I 1a+* *o le* )ou ,+o1 *ha* *he big ba+,ers are 1i*h )ou$ I 1a+* *o le* )ou ,+o1 *ha* +o1( so *ha* )ou 1ill +o* s*ar* a+)*hi+g o+ coopera*ive ba+,i+g a+d *ur+ *hem agai+s* )ou$5 I said( A>r$ 6arburg( I have alread) prepared a+d *omorro1 I am goi+g *o offer a+ ame+dme+* *o *he La+* ill au*hori3i+g *he es*ablishme+* of coopera*ive +a*io+al ba+,s$5 Tha* 1as *he i+*ermedia*e credi* ac* 1hich 1as *he+ pe+di+g *o au*hori3e *he es*ablishme+* of coopera*ive +a*io+al ba+,s$ Tha* 1as *he e;*e+* of m) co+versa*io+ 1i*h >r$ 6arburg( a+d 1e have +o* had a+) si+ce$" >r$ 6i+go *es*ified *ha* i+ April( >a)( Bu+e a+d Bul) of -.00( *he ma+ufac*urers a+d mercha+*s 1ere allo1ed a ver) large i+crease i+ credi*s$ This 1as *o *ide *hem *hrough *he co+*rac*io+ of credi* 1hich 1as i+*e+ded *o rui+ *he America+ farmers( 1ho( duri+g *his period( 1ere de+ied all credi*$ --J A* *he Se+a*e Heari+gs i+ -.0D( !uge+e >e)er( Br$ pu* his fi+ger o+ a primar) reaso+ for *he %ederal Reserve oard5s ac*io+ i+ raisi+g *he i+*eres* ra*e *o JT o+ agricul*ural a+d lives*oc, paper@ "I believe(" he said( "*ha* a grea* deal of *rouble 1ould have bee+ avoided if a larger +umber of *he eligible +o+Emember ba+,s had bee+ members of *he %ederal Reserve S)s*em$" >e)er 1as correc* i+ poi+*i+g *his ou*$ The purpose of *he oard5s ac*io+ 1as *o brea, *hose s*a*e a+d =oi+* la+d s*oc, ba+,s 1hich had s*eadfas*l) refused *o surre+der *heir freedom *o *he ba+,er5s dic*a*orship se* up b) *he S)s*em$ Cemmerer i+ *he A C of *he %ederal Reserve S)s*em had 1ri**e+ i+ -.-. *ha*@ "The *e+de+c) 1ill be *o1ard u+ifica*io+ a+d simplici*) 1hich 1ill be brough* abou* b) *he s*a*e i+s*i*u*io+s( i+ i+creasi+g +umbers( becomi+g s*oc,holders a+d deposi*ors i+ *he reserve ba+,s$" Ho1ever( *he s*a*e ba+,s had +o* respo+ded$ The Se+a*e Heari+gs of -.0D i+ves*iga*i+g *he causes of *he Agricul*ural &epressio+ of -.00E0- had bee+ dema+ded b) *he America+ people$ The comple*e record of *he secre* mee*i+g of *he %ederal Reserve oard o+ >a) -/( -.00 had bee+ pri+*ed i+ *he ">a+ufac*urers5 Record" of al*imore( >ar)la+d( a maga3i+e devo*ed *o *he i+*eres*s of small Sou*her+ ma+ufac*urers$ e+=ami+ S*ro+g( "over+or of *he %ederal Reserve a+, of #e1 ?or,( a+d close frie+d of >o+*agu #orma+( *he "over+or of *he a+, of !+gla+d( claimed a* *hese Heari+gs@ "The %ederal Reserve S)s*em has do+e more for *he farmer *ha+ he has )e* begu+ *o reali3e$" !mma+uel "olde+1eiser( &irec*or of Research for *he oard of "over+ors( claimed *ha* *he discou+* ra*e 1as raised purel) as a+ a+*iEi+fla*io+ar) measure( bu* he failed *o e;plai+ 1h) i* 1as a raise aimed solel) a* farmers a+d 1or,ers( 1hile a* *he same *ime *he S)s*em pro*ec*ed *he ma+ufac*urers a+d mercha+*s b) assuri+g *hem i+creased credi*s$

The fi+al s*a*eme+* o+ *he %ederal Reserve oard5s causi+g *he Agricul*ural &epressio+ of -.00E0- 1as made b) 6illiam Be++i+gs r)a+$ I+ "Hears*5s >aga3i+e" of #ovember( -.0D( he 1ro*e@ "The %ederal Reserve a+, *ha* should have bee+ *he farmer5s grea*es* pro*ec*io+ has become his grea*es* foe$ The defla*io+ of *he farmer 1as a crime delibera*el) commi**ed$" --/ CHA4T!R T!#

The >o+e) Crea*ors

The edi*orial page of The #e1 ?or, Times( Ba+uar) -/( -.00( carried a+ i+*eres*i+g comme+* o+ *he %ederal Reserve S)s*em$ The u+ide+*ified 1ri*er( perhaps 4aul 6arburg( s*a*ed( "The %ederal Reserve is a fou+* of credi*( +o* of capi*al$" This is o+e of *he mos* reveali+g s*a*eme+*s ever made abou* *he %ederal Reserve S)s*em$ I* sa)s *ha* *he %ederal Reserve S)s*em 1ill +ever add a+)*hi+g *o our capi*al s*ruc*ure( or *o *he forma*io+ of capi*al( because i* is orga+i3ed *o produce credi*( *o crea*e mo+e) for credi* mo+e) a+d specula*io+s( i+s*ead of providi+g capi*al fu+ds for *he improveme+* of commerce a+d i+dus*r)$ Simpl) s*a*ed( capi*ali3a*io+ 1ould mea+ *he providi+g of +o*es bac,ed b) a precious me*al or o*her commodi*)$ Reserve +o*es are u+bac,ed paper loa+ed a* i+*eres*$ O+ Bul) 09( -.0-( Se+a*or O1e+ s*a*ed o+ *he edi*orial page of The #e1 ?or, Times( The %ederal Reserve oard is *he mos* giga+*ic fi+a+cial po1er i+ all *he 1orld$ I+s*ead of usi+g *his grea* po1er as *he %ederal Reserve Ac* i+*e+ded *ha* i* should( *he board$$$$delega*ed *his po1er *o *he ba+,s( *hre1 *he 1eigh* of i*s i+flue+ce *o1ard *he suppor* of *he polic) of "erma+ i+fla*io+$" The se+a*or 1hose +ame 1as o+ *he Ac* sa1 *ha* i* 1as +o* performi+g as promised$ Af*er *he Agricul*ural &epressio+ of -.00E0-( *he %ederal Reserve oard of "over+ors se**led do1+ *o eigh* )ears of providi+g rapid credi* e;pa+sio+ of *he #e1 ?or, ba+,ers( a polic) 1hich culmi+a*ed i+ *he "rea* &epressio+ of -.0.ED- a+d helped paral)3e *he eco+omic s*ruc*ure of *he 1orld$ 4aul 6arburg had resig+ed i+ >a)( -.-/( af*er *he mo+e*ar) s)s*em of *he :+i*ed S*a*es had bee+ cha+ged from a bo+dEsecured curre+c) *o a curre+c) based upo+ commercial paper a+d *he shares of *he %ederal Reserve a+,s$ 6arburg re*ur+ed *o his five hu+dred *housa+d dollar a )ear =ob 1i*h Cuh+( Loeb Compa+)( bu* he co+*i+ued *o de*ermi+e *he polic) of *he %ederal Reserve S)s*em( as 4reside+* of *he %ederal Advisor) Cou+cil a+d as Chairma+ of *he !;ecu*ive Commi**ee of *he America+ Accep*a+ce Cou+cil$ %rom -.0- *o -.0.( 4aul 6arburg orga+i3ed *hree of *he grea*es* *rus*s i+ *he :+i*ed S*a*es( *he I+*er+a*io+al Accep*a+ce a+,( larges* accep*a+ce ba+, i+ *he 1orld( Agfa A+sco %ilm Corpora*io+( 1i*h head<uar*ers i+ elgium( a+d I$"$ %arbe+ Corpora*io+ 1hose America+ --. bra+ch 6arburg se* up as I$"$ Chemical Corpora*io+$ The 6es*i+ghouse Corpora*io+ is also o+e of his crea*io+s$ I+ *he earl) -.00s( *he %ederal Reserve S)s*em pla)ed *he decisive role i+ *he reEe+*r) of Russia i+*o *he i+*er+a*io+al fi+a+ce s*ruc*ure$ 6i+*hrop a+d S*imso+ co+*i+ued *o be *he correspo+de+*s be*1ee+ Russia+ a+d America+ ba+,ers( a+d He+r) L$ S*imso+ ha+dled *he +ego*ia*io+s co+cludi+g i+ our recog+i*io+ of *he Sovie* af*er Roosevel*5s elec*io+ i+ -.D0$ This 1as a+ a+*iEclima;( because 1e had lo+g before resumed e;cha+ge rela*io+s 1i*h Russia+ fi+a+ciers$ The %ederal Reserve S)s*em bega+ purchasi+g Russia+ gold i+ -.00( a+d Russia+ curre+c) 1as accep*ed o+ *he !;cha+ges$ Accordi+g *o Colo+el !l) "arriso+( i+ his au*obiograph)( a+d accordi+g *o *he :+i*ed S*a*es #aval Secre* Service Repor* o+ 4aul

6arburg( *he Russia+ Revolu*io+ had bee+ fi+a+ced b) *he Ro*hschilds a+d 6arburgs( 1i*h a member of *he 6arburg famil) carr)i+g *he ac*ual fu+ds used b) Le+i+ a+d Tro*s,) i+ S*oc,holm i+ -.-/$ A+ ar*icle i+ *he !+glish mo+*hl) "%or*+igh*l)"( Bul)( -.00( sa)s@ "&uri+g *he pas* )ear( prac*icall) ever) si+gle capi*alis*ic i+s*i*u*io+ has bee+ res*ored$ This is *rue of *he S*a*e a+,( priva*e ba+,i+g( *he S*oc, !;cha+ge( *he righ* *o possess mo+e) *o u+limi*ed amou+*( *he righ* of i+heri*a+ce( *he bill of e;cha+ge s)s*em( a+d o*her i+s*i*u*io+s a+d prac*ices i+volved i+ *he co+duc* of priva*e i+dus*r) a+d *rade$ A grea* par* of *he former +a*io+ali3ed i+dus*ries are +o1 fou+d i+ semiEi+depe+de+* *rus*s$" The orga+i3a*io+ of po1erful *rus*s i+ Russia u+der *he guise of Commu+ism made possible *he receip* of large amou+*s of fi+a+cial a+d *ech+ical help from *he :+i*ed S*a*es$ The Russia+ aris*ocrac) had bee+ 1iped ou* because i* 1as *oo i+efficie+* *o ma+age a moder+ i+dus*rial s*a*e$ The i+*er+a*io+al fi+a+ciers provided fu+ds for Le+i+ a+d Tro*s,) *o over*hro1 *he C3aris* regime a+d ,eep Russia i+ *he %irs* 6orld 6ar$ 4e*er &ruc,er( spo,esma+ for *he oligarch) i+ America( declared i+ a+ ar*icle i+ *he Sa*urda) !ve+i+g 4os* i+ -.2/( *ha*@ "R:SSIA IS TH! I&!AL O% TH! >A#A"!& !CO#O>? TO6AR&S 6HICH 6! AR! >O'I#"$" I+ Russia( *he issua+ce of sufficie+* curre+c) *o ha+dle *he +eeds of *heir eco+om) occurred o+l) af*er a gover+me+* had bee+ pu* i+ po1er 1hich had absolu*e co+*rol of *he people$ &uri+g *he -.00s( Russia issued large <ua+*i*ies of soEcalled "i+fla*io+ mo+e)"( a ma+aged curre+c)$ The same "%or*+igh*l)" ar*icle 7of Bul)( -.008 observed *ha*@ "As eco+omic pressure produced *he Aas*ro+omical dime+sio+s s)s*em5 of curre+c)G i* ca+ +ever des*ro) i*$ Ta,e+ alo+e( *he s)s*em is selfEco+*ai+ed( logicall) perfec*ed( eve+ i+*ellige+*$ A+d i* ca+ perish o+l) *hrough *he collapse or des*ruc*io+ of *he poli*ical edifice 1hich i* decora*es$" -00 "%or*+igh*l)" also remar,ed( i+ -.0.( *ha*@ "Si+ce -.0-( *he dail) life of *he Sovie* ci*i3e+ is +o differe+* from *ha* of *he America+ ci*i3e+( a+d *he Sovie* s)s*em of gover+me+* is more eco+omical$" Admiral Colcha,( leader of *he 6hi*e Russia+ armies( 1as suppor*ed b) *he i+*er+a*io+al ba+,ers( 1ho se+* ri*ish a+d America+ *roops *o Siberia i+ order *o have a pre*e;* for pri+*i+g Colcha, rubles$ A* o+e *ime i+ -.00( *he ba+,ers 1ere ma+ipula*i+g o+ *he Lo+do+ !;cha+ge *he old C3aris* rubles( Cere+s,) rubles a+d Colcha, rubles( *he values of all *hree fluc*ua*i+g accordi+g *o *he moveme+*s of *he Allied *roops aidi+g Colcha,$ Colcha, also 1as i+ possessio+ of co+siderable amou+*s of gold 1hich had bee+ sei3ed b) his armies$ Af*er his defea*( a *rai+load of *his gold disappeared i+ Siberia$ A* *he Se+a*e Heari+gs i+ -.0- o+ *he %ederal Reserve S)s*em( i* 1as brough* ou* *ha* *he S)s*em had bee+ receivi+g *his gold$ Co+gressma+ &u+bar <ues*io+ed "over+or 6$4$"$ Hardi+g of *he %ederal Reserve oard as follo1s@ &:# AR@ "I+ o*her 1ords( Russia is se+di+g a grea* deal of gold *o *he !uropea+ cou+*ries( 1hich i+ *ur+ se+d i* *o usH"

HAR&I#"@ "This is do+e *o pa) for *he s*uff bough* i+ *his cou+*r) a+d *o crea*e dollar e;cha+ge$" &:# AR@ "A* *he same *ime( *ha* gold came from Russia *hrough !uropeH" HAR&I#"@ "Some of i* is *hough* *o be Colcha, gold( comi+g *hrough Siberia( bu* i* is +o+e of *he %ederal Reserve a+,s5 busi+ess$ The Secre*ar) of *he Treasur) has issued i+s*ruc*io+s *o *he assa) office +o* *o *a,e a+) gold 1hich does +o* bear *he mi+* mar, of a frie+dl) +a*io+$" Bus* 1ha* "over+or Hardi+g mea+* b) "a frie+dl) +a*io+" is +o* clear$ I+ -.0-( 1e 1ere +o* a* 1ar 1i*h a+) cou+*r)( bu* Co+gress 1as alread) begi++i+g *o <ues*io+ *he i+*er+a*io+al gold deali+gs of *he %ederal Reserve S)s*em$ "over+or Hardi+g could ver) 1ell shrug his shoulders a+d sa) *ha* i* 1as +o+e of *he %ederal Reserve a+,s5 busi+ess 1here *he gold came from$ "old ,+o1s +o +a*io+ali*) or race$ The :+i*ed S*a*es b) la1 had ceased *o be i+*eres*ed i+ 1here i*s gold came from i+ -.06( 1he+ Secre*ar) of *he Treasur) Sha1 made arra+geme+*s 1i*h several of *he larger #e1 ?or, ba+,s 7o+es i+ 1hich he had i+*eres*s8 *o purchase gold 1i*h adva+ces of cash from *he :+i*ed S*a*es Treasur)( 1hich 1ould *he+ purchase *he gold from *hese ba+,s$ The Treasur) could claim *ha* i* did +o* ,+o1 1here i*s gold came from si+ce *heir office o+l) regis*ers *he ba+, from 1hich i* made *he purchase$ Si+ce -.06( *he Treasur) has +o* ,+o1+ from 1hich of *he i+*er+a*io+al gold mercha+*s i* 1as bu)i+g i*s gold$ The i+*er+a*io+al gold deali+gs of *he %ederal Reserve S)s*em( a+d i*s ac*ive suppor* i+ helpi+g *he League of #a*io+s *o force all *he +a*io+s -0of !urope a+d Sou*h America bac, o+ *he gold s*a+dard for *he be+efi* of i+*er+a*io+al gold mercha+*s li,e !uge+e >e)er( Br$ a+d Alber* S*rauss( is bes* demo+s*ra*ed b) a classic i+cide+*( *he s*erli+g credi* of -.09$ B$!$ &arli+g 1ro*e( i+ *he !+glish periodical( "Spec*a*or"( o+ Ba+uar) -0( -.09 *ha*@ "Obviousl)( i* is of *he firs* impor*a+ce *o *he :+i*ed S*a*es *o i+duce !+gla+d *o resume *he gold s*a+dard as earl) as possible$ A+ America+ co+*rolled "old S*a+dard( 1hich mus* i+evi*abl) resul* i+ *he :+i*ed S*a*es becomi+g *he 1orld5s supreme fi+a+cial po1er( ma,es !+gla+d a *ribu*ar) a+d sa*elli*e( a+d #e1 ?or, *he 1orld5s fi+a+cial ce+*re$" >r$ &arli+g fails *o poi+* ou* *ha* *he America+ people have as li**le *o do 1i*h *his as *he ri*ish people( a+d *ha* resump*io+ of *he gold s*a+dard b) ri*ai+ 1ould be+efi* o+l) *ha* small group of i+*er+a*io+al gold mercha+*s 1ho o1+ *he 1orld5s gold$ #o 1o+der *ha* " a+,er5s >aga3i+e" gleefull) remar,ed i+ Bul)( -.09 *ha*@ "The ou*s*a+di+g eve+* of *he pas* half )ear i+ *he ba+,i+g 1orld 1as *he res*ora*io+ of *he gold s*a+dard$" The %irs* 6orld 6ar cha+ged *he s*a*us of *he :+i*ed S*a*es from *ha* of a deb*or +a*io+ *o *he posi*io+ of *he 1orld5s grea*es* credi*or +a*io+( a *i*le formerl) occupied b) !+gla+d$ Si+ce deb* is mo+e)( accordi+g *o *he "over+or >arri+er !ccles of *he %ederal Reserve oard( *his also made us *he riches* +a*io+ of *he 1orld$ The 1ar also caused *he removal of *he head<uar*ers of *he 1orld5s accep*a+ce mar,e* from Lo+do+ *o #e1 ?or,( a+d 4aul 6arburg became *he mos* po1erful *rade accep*a+ce ba+,er i+ *he 1orld$ The mai+s*a) of *he i+*er+a*io+al fi+a+ciers( ho1ever( remai+ed *he same$ The gold s*a+dard 1as s*ill *he basis of foreig+ e;cha+ge( a+d *he small group of i+*er+a*io+als 1ho o1+ed *he gold co+*rolled *he mo+e*ar) s)s*em of *he 6es*er+ +a*io+s$ 4rofessor "us*av Cassel 1ro*e i+ -.0/@

"The America+ dollar( +o* *he gold s*a+dard( is *he 1orld5s mo+e*ar) s*a+dard$ The America+ %ederal Reserve oard has *he po1er *o de*ermi+e *he purchasi+g po1er of *he dollar b) ma,i+g cha+ges i+ *he ra*e of discou+*( a+d *hus co+*rols *he mo+e*ar) s*a+dard of *he 1orld$" If *his 1ere *rue( *he members of *he %ederal Reserve oard 1ould be *he mos* po1erful fi+a+ciers i+ *he 1orld$ Occasio+all) *heir membership i+cludes such i+flue+*ial me+ as 4aul 6arburg or !uge+e >e)er( Br$( bu* usuall) *he) are a rubberEs*amp commi**ee for *he %ederal Advisor) Cou+cil a+d *he Lo+do+ ba+,ers$ I+ >a)( -.09( *he ri*ish 4arliame+* passed *he "old S*a+dard Ac*( pu**i+g "rea* ri*ai+ bac, o+ *he gold s*a+dard$ The %ederal Reserve S)s*em5s ma=or role i+ *his eve+* came ou* o+ >arch -6( -.06( 1he+ "eorge Sea)( "over+or of *he %ederal Reserve a+, of Richmo+d( *es*ified before *he House a+,i+g a+d Curre+c) Commi**ee *ha*@ -00 "A verbal u+ders*a+di+g co+firmed b) correspo+de+ce( e;*e+ded "rea* ri*ai+ a *1o hu+dred millio+ dollar gold loa+ or credi*$ All +ego*ia*io+s 1ere co+duc*ed be*1ee+ e+=ami+ S*ro+g( "over+or of *he %ederal Reserve a+, of #e1 ?or, a+d >r$ >o+*agu #orma+( "over+or of *he a+, of !+gla+d$ The purpose of *his loa+ 1as *o help !+gla+d ge* bac, o+ *he gold s*a+dard( a+d *he loa+ 1as *o be me* b) i+ves*me+* of %ederal Reserve fu+ds i+ bills of e;cha+ge a+d foreig+ securi*ies$" The %ederal Reserve ulle*i+ of Bu+e( -.09( s*a*ed *ha*@ ":+der i*s arra+geme+* 1i*h *he a+, of !+gla+d *he %ederal Reserve a+, of #e1 ?or, u+der*a,es *o sell gold o+ credi* *o *he a+, of !+gla+d from *ime *o *ime duri+g *he +e;* *1o )ears( bu* +o* *o e;ceed Q000(000(000 ou*s*a+di+g a* a+) o+e *ime$" A *1o hu+dred millio+ dollar gold credi* had bee+ arra+ged b) a verbal u+ders*a+di+g be*1ee+ *he i+*er+a*io+al ba+,ers( e+=ami+ S*ro+g a+d >o+*agu #orma+$ I* 1as appare+* b) *his *ime *ha* *he %ederal Reserve S)s*em had o*her i+*eres*s a* hear* *ha+ *he fi+a+cial +eeds of America+ busi+ess a+d i+dus*r)$ "rea* ri*ai+5s re*ur+ *o *he gold s*a+dard 1as fur*her facili*a*ed b) a+ addi*io+al gold loa+ of a hu+dred millio+ dollars from B$4$ >orga+ Compa+)$ 6i+s*o+ Churchill( ri*ish Cha+cellor of *he !;che<uer( complai+ed la*er *ha* *he cos* *o *he ri*ish gover+me+* of *his loa+ 1as Q-(-09(000 *he firs* )ear( *his sum represe+*i+g *he profi* *o B$4$ >orga+ Compa+) i+ *ha* *ime$ The ma**er of cha+gi+g *he discou+* ra*e( for i+s*a+ce( has +ever bee+ sa*isfac*oril) e;plai+ed$ I+<uir) a* *he %ederal Reserve oard i+ 6ashi+g*o+ elici*ed *he repl) *ha* "*he co+di*io+ of *he mo+e) mar,e* is *he prime co+sidera*io+ behi+d cha+ges i+ *he ra*e$" Si+ce *he mo+e) mar,e* is i+ #e1 ?or,( i* *a,es +o imagi+a*io+ *o deduce *ha* #e1 ?or, ba+,ers ma) be i+*eres*ed i+ cha+ges of *he ra*e a+d of*e+ a**emp* *o i+flue+ce i*$ #orma+ Lombard( i+ *he periodical "6orld5s 6or," 1ri*es *ha*@ "I+ *heir co+sidera*io+ a+d disposal of proposed cha+ges of polic)( *he %ederal Reserve oard

should follo1 *he procedure a+d e*hics observed b) our cour* of la1$ Sugges*io+s *ha* *here should be a cha+ge of ra*e or *ha* *he Reserve a+,s should bu) or sell securi*ies ma) come from a+)o+e a+d 1i*h +o formali*) or 1ri**e+ argume+*$ The sugges*io+ ma) be made *o a "over+or or &irec*or of *he %ederal Reserve S)s*em over *he *elepho+e or a* his club over *he lu+cheo+ *able( or i* ma) be made i+ *he course of a casual call o+ a member of *he %ederal Reserve oard$ The i+*eres*s of *he o+e proposi+g *he cha+ge +eed +o* be revealed( a+d his +ame a+d a+) sugges*io+s he ma,es are usuall) ,ep* secre*$ If i* co+cer+s *he ma**er of ope+ mar,e* opera*io+s( *he public has +o i+,li+g of *he decisio+ u+*il *he regular 1ee,l) s*a*eme+* appears( sho1i+g cha+ges i+ *he holdi+gs of *he %ederal Reserve a+,s$ >ea+1hile( *here is +o public discussio+( *here is +o s*a*eme+* of *he reaso+s for *he decisio+( or of *he +ames of *hose opposi+g or favori+g i*$" -0D The cha+ces of *he average ci*i3e+ mee*i+g a "over+or of *he %ederal Reserve S)s*em a* his club are also sligh*$ The House Heari+gs o+ S*abili3a*io+ of *he 4urchasi+g 4o1er of *he &ollar i+ -.0/ proved co+clusivel) *ha* *he %ederal Reserve oard 1or,ed i+ close coopera*io+ 1i*h *he heads of !uropea+ ce+*ral ba+,s( a+d *ha* *he &epressio+ of -.0.ED- 1as pla++ed a* a secre* lu+cheo+ of *he %ederal Reserve oard a+d *hose heads of !uropea+ ce+*ral ba+,s i+ -.0J$ The oard has +ever bee+ made respo+sible *o *he public for i*s decisio+s or ac*io+s$ The co+s*i*u*io+al chec,s a+d bala+ces seem +o* *o opera*e i+ fi+a+ce$ The *rue allegia+ce of *he members of *he %ederal Reserve oard has al1a)s bee+ *o *he ce+*ral ba+,ers$ The *hree fea*ures of *he ce+*ral ba+,( i*s o1+ership b) priva*e s*oc,holders 1ho receive re+* a+d profi* for *heir use of *he +a*io+5s credi*( absolu*e co+*rol of *he +a*io+5s fi+a+cial resources( a+d mobili3a*io+ of *he +a*io+5s credi* *o fi+a+ce foreig+ers( all 1ere demo+s*ra*ed b) *he %ederal Reserve S)s*em duri+g *he firs* fif*ee+ )ears of i*s opera*io+s$ %ur*her demo+s*ra*io+ of *he i+*er+a*io+al purposes of *he %ederal Reserve Ac* of -.-D is provided b) *he "!dge Ame+dme+*" of &ecember 02( -.-.( 1hich au*hori3es *he orga+i3a*io+ of corpora*io+s e;pressl) for "e+gagi+g i+ i+*er+a*io+al foreig+ ba+,i+g a+d o*her i+*er+a*io+al or foreig+ fi+a+cial opera*io+s( i+cludi+g *he deali+g i+ gold or bullio+( a+d *he holdi+g of s*oc, i+ foreig+ corpora*io+s$" I+ comme+*i+g o+ *his ame+dme+*( !$6$ Cemmerer( eco+omis* from 4ri+ce*o+ :+iversi*)( remar,ed *ha*@ "The federal reserve s)s*em is provi+g *o be a grea* i+flue+ce i+ *he i+*er+a*io+ali3i+g of America+ *rade a+d America+ fi+a+ce$" The fac* *ha* *his i+*er+a*io+ali3i+g of America+ *rade a+d America+ fi+a+ce has bee+ a direc* cause for i+volvi+g us i+ *1o 1orld 1ars does +o* dis*urb >r$ Cemmerer$ There is ple+*) of evide+ce *o sho1 ho1 4aul 6arburg used *he %ederal Reserve S)s*em as *he i+s*rume+* for ge**i+g *rade accep*a+ce adop*ed o+ a 1ide scale b) America+ busi+essme+$ The use of *rade accep*a+ces( 71hich are *he curre+c) of i+*er+a*io+al *rade8 b) ba+,ers a+d corpora*io+s i+ *he :+i*ed S*a*es prior *o -.-9 1as prac*icall) u+,+o1+$ The rise of *he %ederal Reserve S)s*em e;ac*l) parallels *he i+crease i+ *he use of accep*a+ces i+ *his cou+*r)( +or is *his a coi+cide+ce$ The me+ 1ho 1a+*ed *he %ederal Reserve S)s*em 1ere *he me+ 1ho se* up accep*a+ce ba+,s a+d profi*ed b) *he use of accep*a+ces$

As earl) as -.-0( *he #a*io+al >o+e*ar) Commissio+ bega+ *o issue pamphle*s a+d o*her propaga+da urgi+g ba+,ers a+d busi+essme+ i+ *his cou+*r) *o adop* *rade accep*a+ces i+ *heir *ra+sac*io+s$ %or *hree -02 )ears *he Commissio+ carried o+ *his campaig+( a+d *he Aldrich 4la+ i+cluded a broad provisio+ au*hori3i+g *he i+*roduc*io+ a+d use of ba+,ers5 accep*a+ces i+*o *he America+ s)s*em of commercial paper$ The %ederal Reserve Ac* of -.-D as passed b) Co+gress did +o* specificall) au*hori3e *he use of accep*a+ces( bu* *he %ederal Reserve oard i+ -.-9 a+d -.-6 defi+ed "*rade accep*a+ce"( fur*her defi+ed b) Regula*io+ A Series of -.00( a+d fur*her defi+ed b) Series -.02$ O+e of *he firs* official ac*s of *he oard of "over+ors i+ -.-2 1as *o gra+* accep*a+ces a prefere+*iall) lo1 ra*e of discou+* a* %ederal Reserve a+,s$ Si+ce accep*a+ces 1ere +o* bei+g used i+ *his cou+*r) a* *ha* *ime( +o e;pla+a*io+ of busi+ess e;ige+c) could be adva+ced for *his ac*io+$ I* 1as appare+* *ha* someo+e i+ po1er o+ *he oard of "over+ors 1a+*ed *he adop*a+ce of accep*a+ces$ The #a*io+al a+, Ac* of -/62( 1hich 1as *he de*ermi+i+g fi+a+cial au*hori*) of *he :+i*ed S*a*es u+*il #ovember( -.-2( did +o* permi* ba+,s *o le+d *heir credi*$ Co+se<ue+*l)( *he po1er of ba+,s *o crea*e mo+e) 1as grea*l) limi*ed$ 6e did +o* have a ba+, of issue( *ha* is( a ce+*ral ba+,( 1hich could crea*e mo+e)$ To ge* a ce+*ral ba+,( *he ba+,ers caused mo+e) pa+ic af*er mo+e) pa+ic o+ *he busi+ess people of *he :+i*ed S*a*es( b) shippi+g gold ou* of *he cou+*r)( crea*i+g a mo+e) shor*age( a+d *he+ impor*i+g i* bac,$ Af*er 1e go* our ce+*ral ba+,( *he %ederal Reserve S)s*em( *here 1as +o lo+ger a+) +eed for a mo+e) pa+ic( because *he ba+,s could crea*e mo+e)$ Ho1ever( *he pa+ic as a+ i+s*rume+* of po1er over *he busi+ess a+d fi+a+cial commu+i*) 1as used agai+ o+ *1o impor*a+* occasio+s( i+ -.00( causi+g *he Agricul*ural &epressio+( because s*a*e ba+,s a+d *rus* compa+ies had refused *o =oi+ *he %ederal Reserve S)s*em( a+d i+ -.0.( causi+g *he "rea* &epressio+( 1hich ce+*rali3ed +earl) all po1er i+ *his cou+*r) i+ *he ha+ds of a fe1 grea* *rus*s$ A *rade accep*a+ce is a draf* dra1+ b) *he seller of goods o+ *he purchaser( a+d accep*ed b) *he purchaser( 1i*h a *ime of e;pira*io+ s*amped upo+ i*$ The use of *rade accep*a+ces i+ *he 1holesale mar,e* supplies shor*E*erm( assured credi* *o carr) goods i+ process of produc*io+( s*orage( *ra+si*( a+d mar,e*i+g$ I* facili*a*es domes*ic a+d foreig+ commerce$ Seemi+gl)( *he+( *he ba+,ers 1ho 1ished *o replace *he ope+Eboo, accou+* s)s*em 1i*h *he *rade accep*a+ce s)s*em 1ere progressive me+ 1ho 1ished *o help America+ impor*Ee;por* *rade$ >uch propaga+da 1as issued *o *ha* effec*( bu* *his 1as +o* reall) *he s*or)$ The ope+Eboo, s)s*em( here*ofore used e+*irel) b) America+ busi+ess people( allo1ed a discou+* for cash$ The accep*a+ce s)s*em discourages *he use of cash( b) allo1i+g a discou+* for credi*$ The ope+Eboo, s)s*em also allo1ed much easier *erms of pa)me+*( 1i*h liberal e;*e+sio+s o+ *he deb*$ The accep*a+ce does +o* allo1 *his( si+ce i* is -09 a shor*E*erm credi* 1i*h *he *imeEda*e s*amped upo+ i*$ I* is ou* of *he seller5s ha+ds( a+d i+ *he ha+ds of a ba+,( usuall) a+ accep*a+ce ba+,( 1hich does +o* allo1 a+) e;*e+sio+ of *ime$ Thus( *he adop*io+ of accep*a+ces b) America+ busi+essme+ duri+g *he -.005s grea*l) facili*a*ed *he domi+a*io+ a+d s1allo1i+g up of small busi+ess i+*o huge *rus*s( 1hich accelera*ed *he crash of -.0.$ Trade accep*a+ces had bee+ used *o some e;*e+* i+ *he :+i*ed S*a*es before *he Civil 6ar$ &uri+g *ha* 1ar( e;ige+cies of *rade had des*ro)ed *he accep*a+ce as a credi* medium( a+d i* had +o* come bac, i+*o favor i+ *his cou+*r)( our people preferri+g *he simplici*) a+d ge+erosi*) of *he ope+Eboo, s)s*em$ Ope+Eboo, accou+*s are a si+gleE+ame commercial paper( beari+g o+l) *he +ame of *he deb*or$ Accep*a+ces are *1oE+ame paper( beari+g *he +ame of *he deb*or a+d *he credi*or$ Thus *he) became commodi*ies *o be bough* a+d sold b) ba+,s$ To *he credi*or( u+der *he ope+Eboo, s)s*em( *he deb* is a liabili*)$ To *he accep*a+ce ba+, holdi+g a+ accep*a+ce( *he deb* is a+ asse*$ The me+ 1ho se* up accep*a+ce ba+,s i+ *his cou+*r)( u+der *he leadership of 4aul 6arburg( secured co+*rol of *he billio+s of dollars of credi* e;is*i+g as ope+ accou+*s o+ *he boo,s of America+ busi+essme+$

"over+or >arri+er !ccles of *he %ederal Reserve oard s*a*ed before *he House a+,i+g a+d Curre+c) Commi**ee *ha*@ "&eb* is *he basis for *he crea*io+ of mo+e)$" Large holders of *rade accep*a+ces go* *he use of billio+s of dollars 1or*h of credi*Emo+e)( besides *he ra*e of i+*eres* charged upo+ *he accep*a+ce i*self$ I* is obvious 1h) 4aul 6arburg should have devo*ed so much *ime( mo+e)( a+d e+erg) *o ge**i+g accep*a+ces adop*ed b) *his cou+*r)5s ba+,i+g machi+er)$ O+ Sep*ember 2( -.-2( *he #a*io+al Ci*) a+, accep*ed *he firs* *imeEdraf* dra1+ o+ a +a*io+al ba+, u+der provisio+s of *he %ederal Reserve Ac* of -.-D$ This 1as *he begi++i+g of *he e+d of *he ope+Eboo, accou+* s)s*em as a+ impor*a+* fac*or i+ 1holesale *rade$ everl) Harris( viceEpreside+* of *he #a*io+al Ci*) a+, of #e1 ?or,( issued a pamphle* i+ -.-9 s*a*i+g *ha*@ ">ercha+*s usi+g *he ope+ accou+* s)s*em are usurpi+g *he fu+c*io+s of ba+,ers$" I+ The #e1 ?or, Times o+ Bu+e -2( -.00( 4aul 6arburg( Chairma+ of *he America+ Accep*a+ce Cou+cil( said@ ":+less *he %ederal Reserve oard pu*s i*self hear* a+d soul behi+d *he u+*rammeled developme+* of accep*a+ces as a prime i+ves*me+* for ba+,s of *he %ederal Reserve a+,s *he fu*ure safe a+d sou+d developme+* of *he s)s*em 1ill be =eopardi3ed$" This 1as a s*a*eme+* of *he purpose of 6arburg a+d his bu+ch 1ho 1a+*ed "mo+e*ar) reform" i+ *his cou+*r)$ The) 1ere ou* *o ge* co+*rol -06 of all credi* i+ *he :+i*ed S*a*es( a+d *he) go* i*( b) mea+s of *he %ederal Reserve S)s*em( *he accep*a+ce s)s*em( a+d *he lac, of co+cer+ b) *he ci*i3e+s$ The %irs* 6orld 6ar 1as a boo+ *o *he i+*roduc*io+ of *rade accep*a+ces( a+d *he volume =umped *o four hu+dred millio+ dollars i+ -.-J( gro1i+g *hrough *he -.00s *o more *ha+ a billio+ dollars a )ear( 1hich culmi+a*ed i+ a high pea, =us* before *he "rea* &epressio+ of -.0.ED-$ The %ederal Reserve a+, of #e1 ?or,5s char*s sho1 *ha* i*s use of accep*a+ces reached a pea, i+ #ovember( -.0.( *he mo+*h of *he s*oc, mar,e* crash( a+d decli+ed sharpl) *hereaf*er$ The accep*a+ce people b) *he+ had go**e+ 1ha* *he) 1a+*ed( 1hich 1as co+*rol of America+ busi+ess a+d i+dus*r)$ "%or*u+e >aga3i+e" i+ %ebruar) of -.90 poi+*ed ou* *ha*@ "'olume of accep*a+ces decli+ed from Q-(JD0 millio+ i+ -.0. *o Q00. millio+ i+ -.20( because of *he co+ce+*ra*io+ of accep*a+ce ba+,i+g i+ a fe1 ha+ds( a+d *he Treasur)5s lo1Ei+*eres* polic)( 1hich made direc* loa+s cheaper *ha+ accep*a+ce$ There has bee+ a sligh* up*ur+ si+ce *he 1ar( bu* i* is of*e+ cheaper for large compa+ies *o fi+a+ce impor*s from *heir o1+ coffers$" I+ o*her 1ords( *he "large compa+ies" more accura*el)( *he grea* *rus*s( +o1 have co+*rol of credi* a+d have +o* +eeded accep*a+ces$ esides *he barrage of propaga+da issued b) *he %ederal Reserve S)s*em i*self( *he #a*io+al Associa*io+ of Credi* >e+( *he America+ a+,ers5 Associa*io+( a+d o*her fra*er+al orga+i3a*io+s of *he #e1 ?or, ba+,ers devo*ed much *ime a+d mo+e) *o dis*ribu*i+g accep*a+ce propaga+da$ !ve+ *heir flood of lec*ures a+d pamphle*s proved i+sufficie+*( a+d i+ -.-. 4aul 6arburg orga+i3ed *he America+ Accep*a+ce Cou+cil( 1hich 1as devo*ed e+*irel) *o accep*a+ce propaga+da$

The firs* co+ve+*io+ held b) *his associa*io+ a* &e*roi*( >ichiga+( o+ Bu+e .( -.-.( coi+cided 1i*h *he a++ual co+ve+*io+ of *he #a*io+al Associa*io+ of Credi* >e+( held *here o+ *ha* da*e( so *ha* "i+*eres*ed observers migh* 1i*h facili*) par*icipa*e i+ *he lec*ures a+d mee*i+gs of bo*h groups(" accordi+g *o a pamphle* issued b) *he America+ Accep*a+ce Cou+cil$ 4aul 6arburg 1as elec*ed 4reside+* of *his orga+i3a*io+( a+d la*er became chairma+ of *he !;ecu*ive Commi**ee of *he America+ Accep*a+ce Cou+cil( a posi*io+ 1hich he held u+*il his dea*h i+ -.D0$ The Cou+cil published lis*s of corpora*io+s usi+g *rade accep*a+ces( all of *hem busi+esses i+ 1hich Cuh+( Loeb Co$ or i*s affilia*es held co+*rol$ Lec*ures give+ before *he Cou+cil or b) members of *he Cou+cil 1ere a**rac*ivel) bou+d a+d dis*ribu*ed free b) *he #a*io+al Ci*) a+, of #e1 ?or, *o *he cou+*r)5s busi+essme+$ Louis T$ >c%adde+( Chairma+ of *he House a+,i+g a+d Curre+c) Commi**ee( charged i+ -.00 *ha* *he America+ Accep*a+ce Cou+cil 1as -0J e;ercisi+g u+due i+flue+ce o+ *he %ederal Reserve oard a+d called for a Co+gressio+al i+ves*iga*io+( bu* Co+gress 1as +o* i+*eres*ed$ A* *he seco+d a++ual co+ve+*io+ of *he America+ Accep*a+ce Cou+cil( held i+ #e1 ?or, o+ &ecember 0( -.00( 4reside+* 4aul 6arburg s*a*ed@ "I* is a grea* sa*isfac*io+ *o repor* *ha* duri+g *he )ear u+der revie1 i* 1as possible for *he America+ Accep*a+ce Cou+cil *o fur*her develop a+d s*re+g*he+ i*s rela*io+s 1i*h *he %ederal Reserve oard$" &uri+g *he -.00s 4aul 6arburg( 1ho had resig+ed from *he %ederal Reserve oard af*er holdi+g a posi*io+ as "over+or for a )ear i+ 1ar*ime( co+*i+ued *o e;ercise direc* perso+al i+flue+ce o+ *he %ederal Reserve oard b) mee*i+g 1i*h *he oard as 4reside+* of *he %ederal Advisor) Cou+cil a+d as 4reside+* of *he America+ Accep*a+ce Cou+cil$ He 1as( from i*s orga+i3a*io+ i+ -.00 u+*il his dea*h i+ -.D0( Chairma+ of *he oard of *he I+*er+a*io+al Accep*a+ce a+, of #e1 ?or,( *he larges* accep*a+ce ba+, i+ *he 1orld$ His bro*her( %eli; >$ 6arburg( also a par*+er i+ Cuh+( Loeb Co$( 1as direc*or of *he I+*er+a*io+al Accep*a+ce a+, a+d 4aul5s so+( Bames 4aul 6arburg( 1as 'iceE4reside+*$ 4aul 6arburg 1as also a direc*or o+ o*her impor*a+* accep*a+ce ba+,s i+ *his cou+*r)( such as 6es*i+ghouse Accep*a+ce a+,( 1hich 1ere orga+i3ed i+ *he :+i*ed S*a*es immedia*el) af*er *he 6orld 6ar( 1he+ *he head<uar*ers of *he i+*er+a*io+al accep*a+ce mar,e* 1as moved from Lo+do+ *o #e1 ?or,( a+d 4aul 6arburg became *he mos* po1erful accep*a+ce ba+,er i+ *he 1orld$ 4aul 6arburg became a+ eve+ more lege+dar) figure b) his memoriali3a*io+ as "&add) 6arbuc,s" i+ *he comic s*rip( "Li**le Orpha+ A++ie"$ The s*rip celebra*ed a homeless 1aif a+d her dog 1ho are adop*ed b) "*he riches* ma+ i+ *he 1orld"( &add) 6arbuc,s( a *a,eoff o+ "6arburg"( 1ho has almos* magical po1ers a+d ca+ accomplish a+)*hi+g b) *he po1er of his limi*less 1eal*h$ Those i+ *he ,+o1 s+ic,ered 1he+ "A++ie"( *he musical comed) versio+ of *his s*or)( had a highl) successful ru+ of several )ears o+ road1a)( because *he vas* ma=ori*) of *he audie+ce had +o idea *ha* *his 1as merel) a+o*her 6arburg opera*io+$ I* 1as *he *ra+sfere+ce of *he accep*a+ce mar,e* from !+gla+d *o *his cou+*r) 1hich gave rise *o Thomas Lamo+*5s ecs*a*ic speech before *he Academ) of 4oli*ical Scie+ce i+ -.-J *ha*@ "The dollar( +o* *he pou+d( is +o1 *he basis for i+*er+a*io+al e;cha+ge$" America+s 1ere proud *o hear *ha*( bu* *he) did +o* reali3e a* 1ha* a price$

'isible proof of *he u+due i+flue+ce of *he America+ Accep*a+ce Cou+cil o+ *he %ederal Reserve oard( abou* 1hich Co+gressma+ >c%adde+ complai+ed( is *he char* sho1i+g *he ra*eEpa**er+ of *he -0/ %ederal Reserve a+, of #e1 ?or, duri+g *he -.00s$ The a+,5s official discou+* ra*e follo1s e;ac*l) for +i+e )ears *he +i+e*)Eda) ba+,ers5 accep*a+ce ra*e( a+d *he %ederal Reserve a+, of #e1 ?or, se*s *he discou+* ra*e for *he res* of *he Reserve a+,s$ Throughou* *he -.00s *he oard of "over+ors re*ai+ed *1o of i*s firs* members( C$S$ Hamli+ a+d Adolph C$ >iller$ These me+ fou+d *hemselves careers as arbi*ers of *he +a*io+5s mo+e*ar) polic)$ Hamli+ 1as o+ *he oard from -.-2 u+*il -.D6( 1he+ he 1as appoi+*ed Special Cou+sel *o *he oard( 1hile >iller served from -.-2 u+*il -.D-$ These *1o me+ 1ere allo1ed *o s*a) o+ *he oard so ma+) )ears because *he) 1ere bo*h emi+e+*l) respec*able me+ 1ho gave *he oard a cer*ai+ pres*ige i+ *he e)es of *he public$ &uri+g *hese )ears o+e impor*a+* ba+,er af*er a+o*her came o+ *he oard( served for a1hile( a+d 1e+* o+ *o be**er *hi+gs$ #ei*her >iller +or Hamli+ ever ob=ec*ed *o a+)*hi+g *ha* *he #e1 ?or, ba+,ers 1a+*ed$ The) cha+ged *he discou+* ra*e a+d *he) performed ope+ mar,e* opera*io+ 1i*h "over+me+* securi*ies 1he+ever 6all S*ree* 1a+*ed *hem *o$ ehi+d *hem 1as *he figure of 4aul 6arburg( 1ho e;ercised a co+*i+uous a+d domi+a+* i+flue+ce as 4reside+* of *he %ederal Advisor) Cou+cil( o+ 1hich he had such me+ of commo+ i+*eres*s 1i*h himself as 6i+*hrop Aldrich a+d B$4$ >orga+$ 6arburg 1as +ever *oo occupied 1i*h his du*ies of orga+i3i+g *he big i+*er+a*io+al *rus*s *o supervise *he +a*io+5s fi+a+cial s*ruc*ures$ His i+flue+ce from -.00( 1he+ he arrived i+ *his cou+*r) as immigra+* from "erma+)( u+*il -.D0( *he )ear of his dea*h( 1as depe+de+* o+ his !uropea+ allia+ce 1i*h *he ba+,i+g car*el$ 6arburg5s so+( Bames 4aul 6arburg( co+*i+ued *o e;ercise such i+flue+ce( bei+g appoi+*ed %ra+,li+ &$ Roosevel*5s &irec*or of *he udge* 1he+ *ha* grea* ma+ assumed office i+ -.DD( a+d se**i+g up *he Office of 6ar I+forma*io+( our official propaga+da age+c) duri+g *he Seco+d 6orld 6ar$ I+ The %igh* for %i+a+cial Supremac)( 4aul !i+3ig( edi*orial 1ri*er for *he Lo+do+ !co+omis*( 1ro*e *ha*@ "Almos* immedia*el) af*er 6orld 6ar I a close coopera*io+ 1as es*ablished be*1ee+ *he a+, of !+gla+d a+d *he %ederal Reserve au*hori*ies( a+d more especiall) 1i*h *he %ederal Reserve a+, of #e1 ?or,$P This coopera*io+ 1as largel) due *o *he cordial rela*io+s e;is*i+g be*1ee+ >r$ >o+*agu #orma+ of *he a+, of !+gla+d a+d >r$ e+=ami+ S*ro+g( "over+or of *he %ederal Reserve a+, of #e1 ?or, u+*il -.0/$ O+ several occasio+s *he discou+* ra*e polic) of *he %ederal Reserve a+, of #e1 ?or, 1as guided b) a desire *o help *he a+, of !+gla+d$ KKKKKKKKKKKKKKKKKKKKKKKKKK P 6illiam o)ce Thompso+ 76all S*ree* opera*or8 comme+*ed *o Clare+ce arro+( #ov$ 0J( -.00( "6h) should *he %ederal Reserve a+, have priva*e 1ires all over *he cou+*r) a+d *al, dail) b) cable 1i*h *he a+, of !+gla+dH" p$ D0J "The) Told arro+"$ -0. There has bee+ close coopera*io+ i+ *he fi;i+g of discou+* ra*es be*1ee+ Lo+do+ a+d #e1 ?or,$"/6 KKKKKKKKKKKKKKKKKKKKKKKKKK /6 4aul !i+3ig( The %igh* %or %i+a+cial Supremac)( >acmilla+( -.D-

-D0

CHA4T!R !L!'!#

Lord >o+*agu #orma+

The collabora*io+ be*1ee+ e+=ami+ S*ro+g a+d Lord >o+*agu #orma+ is o+e of *he grea*es* secre*s of *he *1e+*ie*h ce+*ur)$ e+=ami+ S*ro+g married *he daugh*er of *he preside+* of a+,ers Trus* i+ #e1 ?or,( a+d subse<ue+*l) succeeded *o i*s preside+c)$ Carroll Suigle)( i+ Traged) a+d Hope sa)s@ "S*ro+g became "over+or of *he %ederal Reserve a+, of #e1 ?or, as *he =oi+* +omi+ee of >orga+ a+d of Cuh+( Loeb Compa+) i+ -.-2$"/J Lord >o+*agu #orma+ is *he o+l) ma+ i+ his*or) 1ho had bo*h his ma*er+al gra+dfa*her a+d his pa*er+al gra+dfa*her serve as "over+ors of *he a+, of !+gla+d$ His fa*her 1as 1i*h ro1+( Shiple) Compa+)( *he Lo+do+ ra+ch of ro1+ ro*hers 7+o1 ro1+ ro*hers Harrima+8$ >o+*agu #orma+ 7-/J-E-.908 came *o #e1 ?or, *o 1or, for ro1+ ro*hers i+ -/.2( 1here he 1as befrie+ded b) *he &ela+o famil)( a+d b) Bames >ar,oe( of ro1+ ro*hers$ He re*ur+ed *o !+gla+d( a+d i+ -.0J 1as +amed *o *he Cour* of *he a+, of !+gla+d$ I+ -.-0( he had a +ervous brea,do1+( a+d 1e+* *o S1i*3erla+d *o be *rea*ed b) Bu+g( as 1as fashio+able amo+g *he po1erful group 1hich he represe+*ed$P Lord >o+*agu #orma+ 1as "over+or of *he a+, of !+gla+d from -.-6 *o -.22$ &uri+g *his period( he par*icipa*ed i+ *he ce+*ral ba+, co+fere+ces 1hich se* up *he Crash of -.0. a+d a 1orld1ide depressio+$ I+ The 4oli*ics of >o+e) b) ria+ Boh+so+( he 1ri*es( "S*ro+g a+d #orma+( i+*ima*e frie+ds( spe+* *heir holida)s *oge*her a* ar Harbour a+d i+ *he Sou*h of %ra+ce$" Boh+so+ sa)s( "#orma+ *herefore became S*ro+g5s al*er ego$ $ $ $ "S*ro+g5s eas) mo+e) policies o+ *he #e1 ?or, mo+e) mar,e* from -.09E0/ 1ere *he fulfillme+* of his agreeme+* 1i*h #orma+ *o ,eep #e1 ?or, i+*eres* ra*es belo1 *hose of Lo+do+$ %or *he sa,e of i+*er+a*io+al coopera*io+( S*ro+g 1i*hheld *he s*ead)i+g ha+d of high i+*eres* ra*es from #e1 ?or, u+*il i* 1as *oo la*e$ !as) mo+e) i+ #e1 KKKKKKKKKKKKKKKKKKKKKKKKKK /J Carroll Suigle)( Traged) a+d Hope( >acmilla+( #e1 ?or,( p$ D06 P 6he+ people of *his class are s*ric,e+ b) guil* feeli+gs 1hile plo**i+g 1orld 1ars a+d eco+omic depressio+s 1hich 1ill bri+g miser)( sufferi+g a+d dea*h *o millio+s of *he 1orld5s i+habi*a+*s( *he) some*imes have <ualms$ These <ualms are =eered a* b) *heir peers as "a failure of +erve"$ Af*er a bou* 1i*h *heir ps)chia*ris*s( *he) re*ur+ *o *heir 1or, 1i*h re+e1ed gus*o( 1i*h +o fur*her digressio+s of pi*) for "*he li**le people" 1ho are *o be *heir vic*ims$ -D?or, had e+couraged *he surgi+g America+ boom of *he la*e -.00s( 1i*h i*s fa+*as*ic heigh*s of specula*io+$"// e+=ami+ S*ro+g died sudde+l) i+ -.0/$ The #e1 ?or, Times obi*uar)( Oc*$ -J( -.0/( describes *he co+fere+ce be*1ee+ *he direc*ors of *he *hree grea* ce+*ral ba+,s i+ !urope i+ Bul)( -.0J( ">r$ #orma+( a+, of !+gla+d( S*ro+g of *he #e1 ?or, %ederal Reserve a+,( a+d &r$ H=almar Schach* of *he Reichsba+,( *heir mee*i+g referred *o a* *he *ime as a mee*i+g of A*he 1orld5s mos* e;clusive club5$ #o public repor*s 1ere ever made of *he foreig+ co+fere+ces( 1hich 1ere 1holl) i+formal( bu* 1hich covered ma+) impor*a+* <ues*io+s of gold moveme+*s( *he s*abili*) of 1orld *rade( a+d 1orld eco+om)$" The mee*i+gs a* 1hich *he fu*ure of *he 1orld5s eco+om) are decided are al1a)s repor*ed as bei+g "1holl) i+formal"( off *he record( +o repor*s made *o *he public( a+d o+ *he rare occasio+s 1he+ ou*raged Co+gressme+ summo+ *hese m)s*er) figures *o *es*if) abou* *heir ac*ivi*ies *he) merel) *race *he ou*li+e of s*eps *a,e+( a+d develop +o i+forma*io+ abou* 1ha* 1as reall) said or decided$

A* *he Se+a*e Heari+gs o+ *he %ederal Reserve S)s*em i+ -.D-( H$ 4ar,er 6illis( o+e of *he au*hors a+d %irs* Secre*ar) of *he %ederal Reserve oard from -.-2 u+*il -.00( poi+*edl) as,ed "over+or "eorge Harriso+( S*ro+g5s successor as "over+or of *he %ederal Reserve a+, of #e1 ?or,@ "6ha* is *he rela*io+ship be*1ee+ *he %ederal Reserve a+, of #e1 ?or, a+d *he mo+e) commi**ee of *he S*oc, !;cha+geH" "There is +o rela*io+ship(" "over+or Harriso+ replied$ "There is +o assis*a+ce or coopera*io+ i+ fi;i+g *he ra*e i+ a+) 1a)H"( as,ed 6illis$ "#o(" said "over+or Harriso+( "al*hough o+ various occasio+s *he) advise us of *he s*a*e of *he mo+e) si*ua*io+( a+d 1ha* *he) *hi+, *he ra*e ough* *o be$" This 1as a+ absolu*e co+*radic*io+ of his s*a*eme+* *ha* "There is +o rela*io+ship"$ The %ederal Reserve a+, of #e1 ?or, 1hich se* *he discou+* ra*e for *he o*her Reserve a+,s( ac*uall) mai+*ai+ed a close liaiso+ 1i*h *he mo+e) commi**ee of *he S*oc, !;cha+ge$ The House S*abili3a*io+ Heari+gs of -.0/ proved co+clusivel) *ha* *he "over+ors of *he %ederal Reserve S)s*em had bee+ holdi+g co+fere+ces 1i*h heads of *he big !uropea+ ce+*ral ba+,s$ !ve+ had *he Co+gressme+ ,+o1+ *he de*ails of *he plo* 1hich 1as *o culmi+a*e i+ *he "rea* &epressio+ of -.0.ED-( *here 1ould have bee+ +o*hi+g *he) could have do+e *o s*op i*$ The i+*er+a*io+al ba+,ers 1ho co+*rolled gold moveme+*s could i+flic* *heir 1ill o+ a+) cou+*r)( a+d *he :+i*ed S*a*es 1as as helpless as a+) o*her$ #o*es from *hese House Heari+gs follo1@ KKKKKKKKKKKKKKKKKKKKKKKKKK // ria+ Boh+so+( The 4oli*ics of >o+e)( >c"ra1 Hill( #e1 ?or,( -.J0( p$ 6D$ -D0 >R$ !!&?@ "I +o*ice o+ )our char* *ha* *he li+es 1hich produce *he mos* viole+* fluc*ua*io+s are fou+d u+der A>o+e) Ra*es i+ #e1 ?or,$5 As *he ra*es of mo+e) rise a+d fall i+ *he big ci*ies *he loa+s *ha* are made o+ i+ves*me+*s seem *o *a,e adva+*age of *hem( a* prese+*( a <ui*e viole+* cha+ge( 1hile i+dus*r) i+ ge+eral does +o* seem *o avail i*self of *hese viole+* cha+ges( a+d *ha* li+e is fairl) eve+( *here bei+g +o grea* rises or decli+es$ "O'!R#OR A&OL4H >ILL!R@ This 1as all more or less i+ *he i+*eres*s of *he i+*er+a*io+al si*ua*io+$ The) sold gold credi*s i+ #e1 ?or, for s*erli+g bala+ces i+ Lo+do+$ R!4R!S!#TATI'! STRO#"@ 7#o rela*io+ *o e+=ami+8@ Has *he %ederal Reserve oard *he po1er *o a**rac* gold *o *his cou+*r)H !$A$ "OL&!#6!IS!R( research direc*or for *he oard@ The %ederal Reserve oard could a**rac* gold *o *his cou+*r) b) ma,i+g mo+e) ra*es higher$ "O'!R#OR A&OL4H >ILL!R@ I *hi+, 1e are ver) close *o *he poi+* 1here a+) fur*her solici*ude o+ our par* for *he mo+e*ar) co+cer+s of !urope ca+ be al*ered$ The %ederal Reserve oard las* summer( -.0J( se* ou* b) a polic) of ope+ mar,e* purchases( follo1ed i+ course b) reduc*io+ o+ *he discou+* ra*e a* *he Reserve a+,s( *o ease *he credi* si*ua*io+ a+d *o cheape+ *he cos* of

mo+e)$ The official reaso+s for *ha* depar*ure i+ credi* polic) 1ere *ha* i* 1ould help *o s*abili3e i+*er+a*io+al e;cha+ge a+d s*imula*e *he e;por*a*io+ of gold$ CHAIR>A# >C%A&&!#@ 6ill )ou *ell us briefl) ho1 *ha* ma**er 1as brough* *o *he %ederal Reserve oard a+d 1ha* 1ere *he i+flue+ces *ha* 1e+* i+*o *he fi+al de*ermi+a*io+H "O'!R#OR A&OL4H >ILL!R@ ?ou are as,i+g a <ues*io+ impossible for me *o a+s1er$ CHAIR>A# >C%A&&!#@ 4erhaps I ca+ clarif) i*EE1here did *he sugges*io+ come from *ha* caused *his decisio+ of *he cha+ge of ra*es las* summerH "O'!R#OR A&OL4H >ILL!R@ The *hree larges* ce+*ral ba+,s i+ !urope had se+* represe+*a*ives *o *his cou+*r)$ There 1ere *he "over+or of *he a+, of !+gla+d( >r$ H=almar Schach*( a+d 4rofessor Ris*( &epu*) "over+or of *he a+, of %ra+ce$ These ge+*leme+ 1ere i+ co+fere+ce 1i*h officials of *he %ederal Reserve a+, of #e1 ?or,$ Af*er a 1ee, or *1o( *he) appeared i+ 6ashi+g*o+ for *he be**er par* of a da)$ The) came do1+ *he eve+i+g of o+e da) a+d 1ere *he gues*s of *he "over+ors of *he %ederal Reserve oard *he follo1i+g da)( a+d lef* *ha* af*er+oo+ for #e1 ?or,$ CHAIR>A# >C%A&&!#@ 6ere *he members of *he oard prese+* a* *his lu+cheo+H -DD "O'!R#OR A&OL4H >ILL!R@ Oh( )es( i* 1as give+ b) *he "over+ors of *he oard for *he purpose of bri+gi+g all of us *oge*her$ CHAIR>A# >C%A&&!#@ 6as i* a social affair( or 1ere ma**ers of impor*a+ce discussedH "O'!R#OR >ILL!R@ I 1ould sa) i* 1as mai+l) a social affair$ 4erso+all)( I had a lo+g co+versa*io+ 1i*h &r$ Schach* alo+e before *he lu+cheo+( a+d also o+e of co+siderable le+g*h 1i*h 4rofessor Ris*$ Af*er *he lu+cheo+ I bega+ a co+versa*io+ 1i*h >r$ #orma+( 1hich 1as =oi+ed i+ b) "over+or S*ro+g of #e1 ?or,$ CHAIR>A# >C%A&&!#@ 6as *ha* a formal mee*i+g of *he oardH "O'!R#OR A&OL4H >ILL!R@ #o$ CHAIR>A# >C%A&&!#@ I* 1as =us* a+ i+formal discussio+ of *he ma**ers *he) had bee+ discussi+g i+ #e1 ?or,H "O'!R#OR >ILL!R@ I assume so$ I* 1as mai+l) a social occasio+$ 6ha* I said 1as mai+l) i+ *he +a*ure of ge+erali*ies$ The heads of *hese ce+*ral ba+,s also spo,e i+ ge+erali*ies$ >R$ CI#"@ 6ha* did *he) 1a+*H "O'!R#OR >ILL!R@ The) 1ere ver) ca+did i+ a+s1ers *o <ues*io+s$ I 1a+*ed *o have a *al, 1i*h >r$ #orma+( a+d 1e bo*h s*a)ed behi+d af*er lu+cheo+( a+d 1ere =oi+ed b) *he o*her foreig+ represe+*a*ives a+d *he officials of *he #e1 ?or, Reserve a+,$ These ge+*leme+ 1ere all pre**) co+cer+ed 1i*h *he 1a) *he gold s*a+dard 1as 1or,i+g$ The) 1ere *herefore desirous of seei+g a+ eas) mo+e) mar,e* i+ #e1 ?or, a+d lo1er ra*es( 1hich 1ould de*er gold from movi+g from !urope *o *his cou+*r)$ Tha* 1ould be ver) much i+ *he i+*eres* of *he i+*er+a*io+al mo+e) si*ua*io+ 1hich *he+ e;is*ed$ >R$ !!&?@ 6as *here some u+ders*a+di+g arrived a* be*1ee+ *he represe+*a*ives of *hese foreig+ ba+,s a+d *he %ederal Reserve oard or *he #e1 ?or, %ederal Reserve a+,H "O'!R#OR >ILL!R@ ?es$

>R$ !!&?@ I* 1as +o* repor*ed formall)H "O'!R#OR >ILL!R@ #o$ La*er( *here came a mee*i+g of *he Ope+E>ar,e* 4olic) Commi**ee( *he i+ves*me+* polic) commi**ee of *he %ederal Reserve S)s*em( b) 1hich a+d *o 1hich cer*ai+ recomme+da*io+s 1ere made$ >) recollec*io+ is *ha* abou* eigh*) millio+ dollars 1or*h of securi*ies 1ere purchased i+ Augus* co+sis*e+* 1i*h *his pla+$ CHAIR>A# >C%A&&!#@ 6as *here a+) co+fere+ce be*1ee+ *he members of *he Ope+ >ar,e* Commi**ee a+d *hose ba+,ers from abroadH "O'!R#OR >ILL!R@ The) ma) have me* *hem as i+dividuals( bu* +o* as a commi**ee$ -D2 >R$ CI#"@ Ho1 does *he Ope+E>ar,e* Commi**ee ge* i*s ideasH "O'!R#OR >ILL!R@ The) si* arou+d a+d *al, abou* i*$ I do +o* ,+o1 1hose idea *his 1as$ I* 1as dis*i+c*l) a *ime i+ 1hich *here 1as a coopera*ive spiri* a* 1or,$ CHAIR>A# >C%A&&!#@ ?ou have ou*li+ed here +ego*ia*io+s of ver) grea* impor*a+ce$ "O'!R#OR >ILL!R@ I should ra*her sa) co+versa*io+s$ CHAIR>A# >C%A&&!#@ Some*hi+g of a ver) defi+i*e charac*er *oo, placeH "O'!R#OR >ILL!R@ ?es$ CHAIR>A# >C%A&&!#@ A cha+ge of polic) o+ *he par* of our 1hole fi+a+cial s)s*em 1hich has resul*ed i+ o+e of *he mos* u+usual si*ua*io+s *ha* has ever co+fro+*ed *his cou+*r) fi+a+ciall) 7*he s*oc, mar,e* specula*io+ boom of -.0JE-.0.8$ I* seems *o me *ha* a ma**er of *ha* impor*a+ce should have bee+ made a ma**er of record i+ 6ashi+g*o+$ "O'!R#OR >ILL!R@ I agree 1i*h )ou$ R!4R!S!#TATI'! STRO#"@ 6ould i* +o* have bee+ a good *hi+g if *here had bee+ a direc*io+ *ha* *hose po1ers give+ *o *he %ederal Reserve S)s*em should be used for *he co+*i+ued s*abili3a*io+ of *he purchasi+g po1er of *he America+ dollar ra*her *ha+ be i+flue+ced b) *he i+*eres*s of !uropeH "O'!R#OR >ILL!R@ I *a,e e;cep*io+ *o *ha* *erm "i+flue+ce"$ esides( *here is +o such *hi+g as s*abili3i+g *he America+ dollar 1i*hou* s*abili3i+g ever) o*her gold curre+c)$ The) are *ied *oge*her b) *he gold s*a+dard$ O*her emi+e+* me+ 1ho come here are ver) adroi* i+ ,+o1i+g ho1 *o approach *he fol, 1ho ma,e up *he perso++el of *he %ederal Reserve oard$ >R$ ST!A"ALL@ The visi* of *hese foreig+ ba+,ers resul*ed i+ mo+e) bei+g cheaper i+ #e1 ?or,H "O'!R#OR >ILL!R@ ?es( e;ac*l)$ CHAIR>A# >C%A&&!#@ I 1ould li,e *o pu* i+ *he record all 1ho a**e+ded *ha* lu+cheo+ i+ 6ashi+g*o+$ "O'!R#OR >ILL!R@ I+ addi*io+ *o *he +ames I have give+ )ou( *here 1as also prese+* o+e of *he )ou+ger me+ from *he a+, of %ra+ce$ I *hi+, all members of *he %ederal Reserve oard 1ere *here$ :+der Secre*ar) of *he Treasur) Ogde+ >ills 1as *here( a+d *he Assis*a+* Secre*ar) of *he Treasur)( >r$ Schu+ema+( also( *1o or *hree me+ from *he S*a*e &epar*me+* a+d >r$ 6arre+ of *he %oreig+ &epar*me+* of *he %ederal Reserve a+, of #e1 ?or,$ Oh )es( "over+or S*ro+g 1as prese+*$ -D9

CHAIR>A# >C%A&&!#@ This co+fere+ce( of course( 1i*h all of *hese foreig+ ba+,ers did +o* =us* happe+$ The promi+e+* ba+,ers from "erma+)( %ra+ce( a+d !+gla+d came here a* 1hose sugges*io+H "O'!R#OR >ILL!R@ A si*ua*io+ had bee+ crea*ed *ha* 1as dis*i+c*l) embarrassi+g *o Lo+do+ b) reaso+ of *he impe+di+g 1i*hdra1al of a cer*ai+ amou+* of gold 1hich had bee+ recovered b) %ra+ce a+d *ha* had origi+all) bee+ shipped a+d deposi*ed i+ *he a+, of !+gla+d b) *he %re+ch "over+me+* as a 1ar credi*$ There 1as ge**i+g *o be some *e+sio+ of mi+d i+ !urope because %ra+ce 1as begi++i+g *o pu* her house i+ order for a re*ur+ *o *he gold s*a+dard$ This si*ua*io+ 1as o+e 1hich called for some modera*i+g i+flue+ce$ >R$ CI#"@ 6ho 1as *he movi+g spiri* 1ho go* *hose people *oge*herH "O'!R#OR >ILL!R@ Tha* is a de*ail 1i*h 1hich I am +o* familiar$ R!4R!S!#TATI'! STRO#"@ 6ould i* +o* be fair *o sa) *ha* *he fello1s 1ho 1a+*ed *he gold 1ere *he o+es 1ho i+s*iga*ed *he mee*i+gH "O'!R#OR >ILL!R@ The) came over here$ R!4R!S!#TATI'! STRO#"@ The fac* is *ha* *he) came over here( *he) had a mee*i+g( *he) ba+<ue*ed( *he) *al,ed( *he) go* *he %ederal Reserve oard *o lo1er *he discou+* ra*e( a+d *o ma,e *he purchases i+ *he ope+ mar,e*( a+d *he) go* *he gold$ >R$ ST!A"ALL@ Is i* *rue *ha* ac*io+ s*abili3ed *he !uropea+ curre+cies a+d upse* oursH "O'!R#OR >ILL!R@ ?es( *ha* 1as 1ha* i* 1as i+*e+ded *o do$ CHAIR>A# >C%A&&!#@ Le* me call )our a**e+*io+ *o *he rece+* co+fere+ce i+ 4aris a* 1hich >r$ "olde+1eiser( direc*or of research for *he %ederal Reserve oard( a+d &r$ urgess( assis*a+* %ederal Reserve Age+* of *he %ederal Reserve a+, of #e1 ?or,( 1ere i+ co+sul*a*io+ 1i*h *he represe+*a*ives of *he o*her ce+*ral ba+,s$ 6ho called *he co+fere+ceH "O'!R#OR >ILL!R@ >) recollec*io+ is *ha* i* 1as called b) *he a+, of %ra+ce$ "O'!R#OR ?O:#"@ #o( i* 1as *he League of #a*io+s 1ho called *hem *oge*her$" The secre* mee*i+g be*1ee+ *he "over+ors of *he %ederal Reserve oard a+d *he heads of *he !uropea+ ce+*ral ba+,s 1as +o* called *o s*abili3e a+)*hi+g$ I* 1as held *o discuss *he bes* 1a) of ge**i+g *he gold held i+ *he :+i*ed S*a*es b) *he S)s*em bac, *o !urope *o force *he +a*io+s of *ha* co+*i+e+* bac, o+ *he gold s*a+dard$ The League of #a*io+s had +o* )e* succeeded i+ doi+g *ha*( *he ob=ec*ive for 1hich *ha* bod) 1as se* up i+ *he firs* place( because *he Se+a*e of *he :+i*ed S*a*es -D6 had refused *o le* 6oodro1 6ilso+ be*ra) us *o a+ i+*er+a*io+al mo+e*ar) au*hori*)$ I* *oo, *he Seco+d 6orld 6ar a+d %ra+,li+ &$ Roosevel* *o do *ha*$ >ea+1hile( !urope had *o have our gold a+d *he %ederal Reserve S)s*em gave i* *o *hem( five hu+dred millio+ dollars 1or*h$ The moveme+* of *ha* gold ou* of *he :+i*ed S*a*es caused *he defla*io+ of *he s*oc, boom( *he e+d of *he busi+ess prosperi*) of *he -.00s a+d *he "rea* &epressio+ of -.0.ED-( *he 1ors* calami*) 1hich has ever befalle+ *his +a*io+$ I* is e+*irel) logical *o sa) *ha* *he America+ people suffered *ha* depressio+ as a pu+ishme+* for +o* =oi+i+g *he League of #a*io+s$ The ba+,ers ,+e1 1ha* 1ould happe+ 1he+ *ha* five hu+dred millio+ dollars 1or*h of gold 1as se+* *o !urope$ The) 1a+*ed *he &epressio+ because i* pu* *he busi+ess a+d fi+a+ce of *he :+i*ed S*a*es i+ *heir ha+ds$ The Heari+gs co+*i+ue@

>R$ !!&?@ ">r$ !bersole of *he Treasur) &epar*me+* co+cluded his remar,s a* *he di++er 1e a**e+ded las* +igh* b) sa)i+g *ha* *he %ederal Reserve S)s*em did +o* 1a+* s*abili3a*io+ a+d *he America+ busi+essma+ did +o* 1a+* i*$ The) 1a+* *hese fluc*ua*io+s i+ prices( +o* o+l) i+ securi*ies bu* i+ commodi*ies( i+ *rade ge+erall)( because *hose 1ho are +o1 i+ co+*rol are ma,i+g *heir profi*s ou* of *ha* ver) i+s*abili*)$ If co+*rol of *hese people does +o* come i+ a legi*ima*e 1a)( *here ma) be a+ a**emp* *o produce i* b) ge+eral upheavals such as have charac*eri3ed socie*) i+ da)s go+e b)$ Revolu*io+s have bee+ promo*ed b) dissa*isfac*io+ 1i*h e;is*i+g co+di*io+s( *he co+*rol bei+g i+ *he ha+ds of *he fe1( a+d *he ma+) pa)i+g *he bills$ CHAIR>A# >C%A&&!#@ I have here a le**er from a member of *he %ederal Reserve oard 1ho 1as summo+ed *o appear here$ I 1ould li,e *o have i* pu* i+ *he record$ I* is from "over+or Cu++i+gham@ &ear >r$ Chairma+@ %or *he pas* several 1ee,s I have bee+ co+fi+ed *o m) home o+ accou+* of ill+ess a+d am +o1 prepari+g *o spe+d a fe1 1ee,s a1a) from 6ashi+g*o+ for *he purpose of has*e+i+g co+valesce+ce$ !d1ard H$ Cu++i+gham This is i+ a+s1er *o a+ i+vi*a*io+ e;*e+ded him *o appear before our Commi**ee$ I also have a le**er from "eorge Harriso+( &epu*) "over+or of *he %ederal Reserve a+, of #e1 ?or,$ >) dear >r$ Co+gressma+@ "over+or S*ro+g sailed for !urope las* 1ee,$ He had +o* bee+ a* all 1ell si+ce *he firs* of *he )ear( a+d( 1hile he did appear before )our Commi**ee las* >arch( i* 1as o+l) shor*l) af*er *ha* *ha* he suffered a ver) severe a**ac, of shi+gles( 1hich has sorel) rac,ed his +erves$ "eorge L$ Harriso+( >a) -.( -.0/ I also desire *o place i+ *he record a s*a*eme+* i+ *he #e1 ?or, Bour+al of Commerce( da*ed >a) 00( -.0/( from 6ashi+g*o+@ AI* is s*a*ed i+ 1ellEi+formed circles here *ha* *he chief *opic bei+g *a,e+ up b) "over+or S*ro+g of *he %ederal Reserve a+, of #e1 ?or, o+ his prese+* visi* *o 4aris is *he arra+geme+* of s*abili3a*io+ credi*s for %ra+ce( Ruma+ia( a+d ?ugoslavia$ A seco+d vi*al <ues*io+ >r$ S*ro+g 1ill *a,e up is *he amou+* of gold %ra+ce is *o dra1 from *his cou+*r)$5" %ur*her <ues*io+i+g b) Chairma+ >c%adde+ abou* *he s*ra+ge ill+ess of e+=ami+ S*ro+g brough* for*h *he follo1i+g *es*imo+) from "over+or Charles S$ Hamli+ of *he %ederal Reserve oard o+ >a) 0Drd( -.0/@ "All I ,+o1 is *ha* "over+or S*ro+g has bee+ ver) ill( a+d he has go+e over *o !urope primaril)( I u+ders*a+d( as a ma**er of heal*h$ Of course( he ,+o1s 1ell *he various offices of *he !uropea+ ce+*ral ba+,s a+d u+doub*edl) 1ill call o+ *hem$" "over+or e+=ami+ S*ro+g died a fe1 1ee,s af*er his re*ur+ from !urope( 1i*hou* appeari+g before *he Commi**ee$

The purpose of *hese heari+gs before *he House Commi**ee o+ a+,i+g a+d Curre+c) i+ -.0/ 1as *o i+ves*iga*e *he +ecessi*) for passi+g *he S*ro+g bill( prese+*ed b) Represe+*a*ive S*ro+g 7+o rela*io+ *o e+=ami+( *he i+*er+a*io+al ba+,er8( 1hich 1ould have provided *ha* *he %ederal Reserve S)s*em be empo1ered *o ac* *o s*abili3e *he purchasi+g po1er of *he dollar$ This had bee+ o+e of *he promises made b) Car*er "lass a+d 6oodro1 6ilso+ 1he+ *he) prese+*ed *he %ederal Reserve Ac* before Co+gress i+ -.-0( a+d such a provisio+ had ac*uall) bee+ pu* i+ *he Ac* b) Se+a*or Rober* L$ O1e+( bu* Car*er "lass5 House Commi**ee o+ a+,i+g a+d Curre+c) had s*ruc, i* ou*$ The *raders a+d specula*ors did +o* 1a+* *he dollar *o become s*able( because *he) 1ould +o lo+ger be able *o ma,e a profi*$ The ci*i3e+s of *his cou+*r) had bee+ led *o gamble o+ *he s*oc, mar,e* i+ *he -.00s because *he *raders had crea*ed a +a*io+1ide co+di*io+ of i+s*abili*)$ The S*ro+g ill of -.0/ 1as defea*ed i+ Co+gress$ The fi+a+cial si*ua*io+ i+ *he :+i*ed S*a*es duri+g *he -.00s 1as charac*eri3ed b) a+ i+fla*io+ of specula*ive values o+l)$ I* 1as a *raderEmade si*ua*io+$ 4rices of commodi*ies remai+ed lo1( despi*e *he overEprici+g of securi*ies o+ *he e;cha+ge$ The purchasers did +o* e;pec* *heir securi*ies *o pa) divide+ds$ The idea 1as *o hold *hem a1hile a+d sell *hem a* a profi*$ I* had *o s*op some1here( as 4aul 6arburg remar,ed i+ >arch( -.0.$ 6all S*ree* did +o* le* i* s*op u+*il *he people had pu* *heir savi+gs i+*o *hese overEpriced securi*ies$ 6e had *he spec*acle of *he 4reside+* of *he :+i*ed S*a*es( Calvi+ Coolidge( ac*i+g as a shill for *he s*oc, mar,e* opera*ors 1he+ he recomme+ded *o *he America+ people *ha* *he) co+*i+ue bu)i+g o+ *he -D/ mar,e*( i+ -.0J$ There had bee+ u+easi+ess abou* *he i+fla*ed co+di*io+ of *he mar,e*( a+d *he ba+,ers sho1ed *heir po1er b) ge**i+g *he 4reside+* of *he :+i*ed S*a*es( *he Secre*ar) of *he Treasur)( a+d *he Chairma+ of *he oard of "over+ors of *he %ederal Reserve S)s*em *o issue s*a*eme+*s *ha* bro,ers5 loa+s 1ere +o* *oo high( a+d *ha* *he co+di*io+ of *he s*oc, mar,e* 1as sou+d$ Irvi+g %isher 1ar+ed us i+ -.0J *ha* *he burde+ of s*abili3i+g prices all over *he 1orld 1ould soo+ fall o+ *he :+i*ed S*a*es$ O+e of *he resul*s of *he Seco+d 6orld 6ar 1as *he es*ablishme+* of a+ I+*er+a*io+al >o+e*ar) %u+d *o do =us* *ha*$ 4rofessor "us*av Cassel remar,ed i+ *he same )ear *ha*@ "The do1+1ard moveme+* of prices has +o* bee+ a spo+*a+eous resul* of forces be)o+d our co+*rol$ I* is *he resul* of a polic) delibera*el) framed *o bri+g do1+ prices a+d give a higher value *o *he mo+e*ar) u+i*$" The &emocra*ic 4ar*)( af*er passi+g *he %ederal Reserve Ac* a+d leadi+g us i+*o *he %irs* 6orld 6ar( assumed *he role of a+ opposi*io+ par*) duri+g *he -.00s$ The) 1ere o+ *he ou*side of *he poli*ical fe+ce( a+d 1ere suppor*ed duri+g *hose lea+ )ears b) liberal ha+dou*s from er+ard aruch( accordi+g *o his biograph)$ Ho1 far ou*side of i* *he) 1ere a+d ho1 li**le cha+ce *he) had i+ -.0/( is sho1+ b) a pla+, i+ *he official &emocra*ic 4ar*) pla*form adop*ed a* Hous*o+ o+ Bu+e 0/( -.0/@ "The admi+is*ra*io+ of *he %ederal Reserve S)s*em for *he adva+*age of *he s*oc,Emar,e* specula*ors should cease$ I* mus* be admi+is*ered for *he be+efi* of farmers( 1ageEear+ers( mercha+*s( ma+ufac*urers( a+d o*hers e+gaged i+ co+s*ruc*ive busi+ess$" This idealism i+sured defea* for i*s pro*ago+is*( Al Smi*h( 1ho 1as +omi+a*ed b) %ra+,li+ &$ Roosevel*$ The campaig+ agai+s* Al Smi*h also 1as mar,ed b) appeals *o religious i+*olera+ce( because he 1as a Ca*holic$ The ba+,ers s*irred up a+*iECa*holic se+*ime+* all over *he cou+*r) *o achieve *he elec*io+ of *heir 6orld 6ar I pro*FgF( Herber* Hoover$

I+s*ead of bei+g used *o promo*e *he fi+a+cial s*abili*) of *he cou+*r)( as had bee+ promised b) 6oodro1 6ilso+ 1he+ *he Ac* 1as passed( fi+a+cial i+s*abili*) has bee+ s*eadil) promo*ed b) *he %ederal Reserve oard$ A+ official memora+dum issued b) *he oard o+ >arch -D( -.D.( s*a*ed *ha*@ "The oard of "over+ors of *he %ederal Reserve S)s*em opposes a+) bill 1hich proposes a s*able price level$" 4oli*icall)( *he %ederal Reserve oard 1as used *o adva+ce *he elec*io+ of *he ba+,ers5 ca+dida*es duri+g *he -.00s$ The "Li*erar) &iges*" o+ Augus* 2( -.0/( said( o+ *he occasio+ of *he %ederal Reserve oard raisi+g *he ra*e *o five perce+* i+ a 4reside+*ial )ear@ -D. "This reverses *he poli*icall) desirable cheap mo+e) polic) of -.0J( a+d gives smoo*h co+di*io+s o+ *he s*oc, mar,e*$ I* 1as a**ac,ed b) *he 4eoples5 Lobb) of 6ashi+g*o+( &$C$ 1hich said *ha* AThis i+crease a* a *ime 1he+ farmers +eeded cheap mo+e) *o fi+a+ce *he harves*i+g of *heir crops 1as a direc* blo1 a* *he farmers( 1ho had begu+ *o ge* bac, o+ *heir fee* af*er *he Agricul*ural &epressio+ of -.00E0-$ "The #e1 ?or, 6orld" said o+ *ha* occasio+@ "Cri*icism of %ederal Reserve oard polic) b) ma+) i+ves*ors is +o* based o+ i*s a**emp* *o defla*e *he s*oc, mar,e*( bu* o+ *he charge *ha* *he oard i*self( b) las* )ear5s polic)( is comple*el) respo+sible for such s*oc, mar,e* i+fla*io+ as e;is*s$" A dam+i+g surve) of *he %ederal Reserve S)s*em5s firs* fif*ee+ )ears appears i+ *he "#or*h America+ Revie1" of >a)( -.0.( b) H$ 4ar,er 6illis( professio+al eco+omis* 1ho 1as o+e of *he au*hors of *he Ac* a+d %irs* Secre*ar) of *he oard from -.-2 u+*il -.00$ He e;presses comple*e disillusio+me+*$ ">) firs* *al, 1i*h 4reside+*Eelec* 6ilso+ 1as i+ -.-0$ Our co+versa*io+ rela*ed e+*irel) *o ba+,i+g reform$ I as,ed 1he*her he fel* co+fide+* 1e could secure *he admi+is*ra*io+ of a sui*able la1 a+d ho1 1e should ge* i* applied a+d e+forced$ He a+s1ered@ A6e mus* rel) o+ America+ busi+ess idealism$5 He sough* for some*hi+g 1hich could be *rus*ed *o afford oppor*u+i*) *o America+ Idealism$ I* did serve *o fi+a+ce *he 6orld 6ar a+d *o revise America+ ba+,i+g prac*ices$ The eleme+* of idealism *ha* *he 4reside+* prescribed a+d believed 1e could ge* o+ *he pri+ciple of +oblesse oblige from America+ ba+,ers a+d busi+essme+ 1as +o* *here$ Si+ce *he i+augura*io+ of *he %ederal Reserve Ac* 1e have suffered o+e of *he mos* serious fi+a+cial depressio+s a+d revolu*io+s ever ,+o1+ i+ our his*or)( *ha* of -.00E0-$ 6e have see+

our agricul*ure pass *hrough a lo+g period of sufferi+g a+d eve+ of revolu*io+( duri+g 1hich o+e millio+ farmers lef* *heir farms( due *o difficul*ies 1i*h *he price of la+d a+d *he odd s*a*us of credi* co+di*io+s$ 6e have suffered *he mos* e;*e+sive era of ba+, failures ever ,+o1+ i+ *his cou+*r)$ %or*)Efive hu+dred ba+,s have closed *heir doors si+ce *he Reserve S)s*em bega+ fu+c*io+i+g$ I+ some 6es*er+ *o1+s *here have bee+ *imes 1he+ all ba+,s i+ *ha* commu+i*) failed( a+d give+ ba+,s have failed over a+d over agai+$ There has bee+ li**le differe+ce i+ liabili*) *o failure be*1ee+ members a+d +o+Emembers of *he %ederal Reserve S)s*em$ "6ilso+5s choice of *he firs* members of *he %ederal Reserve oard 1as +o* especiall) happ)$ The) represe+*ed a composi*e group chose+ for *he e;press purpose of placa*i+g *his( *ha*( or *he o*her big i+*eres*$ I* 1as +o* s*ra+ge *ha* appoi+*ees used *heir places *o pa) deb*s$ 6he+ *he oard 1as co+sideri+g a resolu*io+ *o *he effec* *ha* fu*ure members of *he reserve s)s*em should be appoi+*ed solel) o+ meri*( because of *he demo+s*ra*ed i+compe*e+ce of some of *heir +umber$ Comp*roller Boh+ S,el*o+ 6illiams moved *o s*ri,e ou* *he 1ord Asolel)5 a+d i+ *his he 1as sus*ai+ed b) *he oard$ The i+clusio+ of cer*ai+ eleme+*s 76arburg( -20 S*rauss( e*c$8 i+ *he oard gave a+ oppor*u+i*) for ca*eri+g *o special i+*eres*s *ha* 1as *o prove disas*rous la*er o+$ "4reside+* 6ilso+ erred( as he of*e+ erred( i+ supposi+g *ha* *he holdi+g of a+ impor*a+* office 1ould *ra+sform a+ i+cumbe+* a+d revivif) his pa*rio*ism$ The Reserve oard reached *he lo1 ebb of *he 6ilso+ period 1i*h *he appoi+*me+* of a member 1ho 1as chose+ for his abili*) *o ge* delega*es for a &emocra*ic ca+dida*e for *he 4reside+c)$ Ho1ever( *his level 1as +o* *he dregs reached u+der 4reside+* Hardi+g$ He appoi+*ed a+ old cro+)( &$R$ Crissi+ger( as "over+or of *he oard( a+d +amed several o*her superEserviceable poli*icia+s *o o*her places$ efore his dea*h he had do+e his u*mos* *o debauch *he 1hole u+der*a,i+g$ The S)s*em has go+e s*eadil) do1+hill ever si+ce$ "Reserve a+,s had hardl) assumed *heir firs* form 1he+ i* became appare+* *ha* local ba+,ers had sough* *o use *hem as a mea+s of *a,i+g care of Afavori*e so+s5( *ha* is( perso+s 1ho had b)

commo+ co+se+* become a ,i+d of ge+eral charge upo+ *he ba+,i+g commu+i*)( or i+efficie+*s of various ,i+ds$ 6he+ reserve direc*ors 1ere *o be chose+( *he cou+*r) ba+,ers of*e+ refused *o vo*e( or( 1he+ *he) vo*ed( cas* *heir ballo*s as direc*ed b) ci*) correspo+de+*s$ I+ *hese circums*a+ces popular or democra*ic co+*rol of reserve ba+,s 1as ou* of *he <ues*io+$ Reaso+able efficie+c) migh* have bee+ secured if ho+es* me+( recog+i3i+g *heir public du*)( had assumed po1er$ If such me+ e;is*ed( *he) did +o* ge* o+ *he %ederal Reserve oard$ I+ o+e reserve ba+, *oda) *he chief ma+ageme+* is i+ *he ha+ds of a ma+ 1ho +ever did a da)5s ac*ual ba+,i+g i+ his life( 1hile i+ a+o*her reserve i+s*i*u*io+ bo*h "over+or a+d Chairma+ are *he former heads of +o1 defu+c* ba+,s$ The) +a*urall) have a high failure record i+ *heir dis*ric*$ I+ a ma=ori*) of dis*ric*s *he s*a+dard of performa+ce as =udged b) good ba+,i+g s*a+dards is disgracefull) lo1 amo+g reserve e;ecu*ive officials$ The polic) of *he %ederal Reserve a+, of 4hiladelphia is ,+o1+ i+ *he S)s*em as *he A%rie+ds a+d Rela*ives a+,s$5 "I* 1as 1hile ma,i+g 1ar profi*s i+ co+siderable amou+*s *ha* someo+e co+ceived *he idea of usi+g *he profi*s *o provide *hemselves 1i*h phe+ome+all) cos*l) buildi+gs$ Toda) *he Reserve a+,s mus* ,eep a full billio+ dollars of *heir mo+e) co+s*a+*l) a* 1or, merel) *o pa) *heir o1+ e;pe+ses i+ +ormal *imes$ "The bes* illus*ra*io+ of 1ha* *he S)s*em has do+e a+d +o* do+e is offered b) *he e;perie+ce 1hich *he cou+*r) 1as havi+g 1i*h specula*io+( i+ >a)( -.0.$ Three )ears prior *o *ha*( *he prese+* bull mar,e* 1as =us* ge**i+g u+der 1a)$ I+ *he au*um+ of -.06 a group of ba+,ers( amo+g *hem o+e of 1orld famous +ame( 1ere si**i+g a* a *able i+ a 6ashi+g*o+ ho*el$ O+e of *hem raised *he <ues*io+ 1he*her *he lo1 discou+* ra*es of *he S)s*em 1ere +o* li,el) *o e+courage specula*io+$ "A?es5( replied *he famous ba+,er( A*he) 1ill( bu* *ha* ca++o* be helped$ I* is *he price 1e mus* pa) for helpi+g !urope$5 "I* ma) 1ell be <ues*io+ed 1he*her *he e+courageme+* of specula*io+ b) *he oard has bee+ *he price paid for helpi+g !urope or 1he*her -2i* is *he price paid *o i+duce a cer*ai+ class of fi+a+ciers *o help !urope( bu* i+ ei*her case !uropea+ co+di*io+s should +o* have had a+)*hi+g *o do 1i*h *he oard5s discou+* polic)$ The

fac* of *he ma**er is *ha* *he %ederal Reserve a+,s do +o* come i+*o co+*ac* 1i*h *he commu+i*)$ "The Asmall ma+5 from >ai+e *o Te;as has graduall) bee+ led *o i+ves* his savi+gs i+ *he s*oc, mar,e*( 1i*h *he resul* *ha* *he risi+g *ide of specula*io+( *ra+sac*ed a* a higher a+d higher ra*e of speed( has s1ep* over *he legi*ima*e busi+ess of *he cou+*r)$ "I+ >arch( -.0/( Ro) A$ ?ou+g( "over+or of *he oard( 1as called before a Se+a*e commi**ee$ A&o )ou *hi+, *he bro,ers5 loa+s are *oo highH"( he 1as as,ed$ "AI am +o* prepared *o sa) 1he*her bro,ers5 loa+s are *oo high or *oo lo1(5 he replied( Abu* I am sure *he) are safel) a+d co+serva*ivel) made$5 "Secre*ar) of *he Treasur) >ello+ i+ a formal s*a*eme+* assured *he cou+*r) *ha* *he) 1ere +o* *oo high( a+d Coolidge( usi+g ma*erial supplied him b) *he %ederal Reserve oard( made a plai+ s*a*eme+* *o *he cou+*r) *ha* *he) 1ere +o* *oo high$ The %ederal Reserve oard( charged 1i*h *he du*) of pro*ec*i+g *he i+*eres*s of *he average ma+( *hus did i*s u*mos* *o assure *he average ma+ *ha* he should feel +o alarm abou* his savi+gs$ ?e* *he %ederal Reserve oard issued o+ %ebruar) 0( -.0.( a le**er addressed *o *he Reserve a+, &irec*ors cau*io+i+g *hem agai+s* grave da+ger of fur*her specula*io+$ "6ha* could be e;pec*ed from a group of me+ such as composed *he oard( a se* of me+ 1ho 1ere solel) i+*eres*ed i+ s*a+di+g from u+der 1he+ *here 1as a+) da+ger of fric*io+( displa)i+g a bovi+e a+d ca+i+e appe*i*e for credi* a+d praise( 1hile eager o+l) *o As*a+d i+5 1i*h *he Abig me+5 1hom *he) ,+o1 as *he mas*ers of America+ fi+a+ce a+d ba+,i+gH" H$ 4ar,er 6illis omi**ed a+) refere+ce *o Lord >o+*ague #orma+ a+d *he machi+a*io+s of *he a+, of !+gla+d 1hich 1ere abou* *o resul* i+ *he Crash of -.0. a+d *he "rea* &epressio+$ -20

CHA4T!R T6!L'!

The "rea* &epressio+

R$"$ Ha1*re)( *he !+glish eco+omis*( said( i+ *he >arch( -.06 America+ !co+omic Revie1@ "6he+ e;*er+al i+ves*me+* ou*s*rips *he suppl) of ge+eral savi+gs *he i+ves*me+* mar,e* mus* carr) *he e;cess 1i*h mo+e) borro1ed from *he ba+,s$ A remed) is co+*rol of credi* b) a rise i+ ba+, ra*e$"

The %ederal Reserve oard applied *his co+*rol of credi*( bu* +o* i+ -.06( +or as a remedial measure$ I* 1as +o* applied u+*il -.0.( a+d *he+ *he ra*e 1as raised as a pu+i*ive measure( *o free3e ou* ever)bod) bu* *he big *rus*s$ 4rofessor Cassel( i+ *he Suar*erl) Bour+al of !co+omics( Augus* -.0/( 1ro*e *ha*@ "The fac* *ha* a ce+*ral ba+, fails *o raise i*s ba+, ra*e i+ accorda+ce 1i*h *he ac*ual si*ua*io+ of *he capi*al mar,e* ver) much i+creases *he s*re+g*h of *he c)clical moveme+* of *rade( 1i*h all i*s per+icious effec*s o+ social eco+om)$ A ra*io+al regula*io+ of *he ba+, ra*e lies i+ our ha+ds( a+d ma) be accomplished o+l) if 1e perceive i*s impor*a+ce a+d decide *o go i+ for such a polic)$ 6i*h a ba+, ra*e regula*ed o+ *hese li+es *he co+di*io+s for *he developme+* of *rade c)cles 1ould be radicall) al*ered( a+d i+deed( our familiar *rade c)cles 1ould be a *hi+g of *he pas*$" This is *he mos* au*hori*a*ive premise )e* made rela*i+g *ha* our busi+ess depressio+s are ar*ificiall) precipi*a*ed$ The occurre+ce of *he 4a+ic of -.0J( *he Agricul*ural &epressio+ of -.00( a+d *he "rea* &epressio+ of -.0.( all *hree i+ good crop )ears a+d i+ periods of +a*io+al prosperi*)( sugges*s *ha* premise is +o* guess1or,$ Lord >a)+ard Ce)+es poi+*ed ou* *ha* mos* *heories of *he busi+ess c)cle failed *o rela*e *heir a+al)sis ade<ua*el) *o *he mo+e) mecha+ism$ A+) surve) or s*ud) of a depressio+ 1hich failed *o lis* such fac*ors as gold moveme+*s a+d pressures o+ foreig+ e;cha+ge 1ould be 1or*hless( )e* America+ eco+omis*s have al1a)s dodged *his issue$ The League of #a*io+s had achieved i*s goal of ge**i+g *he +a*io+s of !urope bac, o+ *he gold s*a+dard b) -.0/( bu* *hreeEfour*hs of *he 1orld5s gold 1as i+ %ra+ce a+d *he :+i*ed S*a*es$ The problem 1as ho1 *o ge* *ha* gold *o cou+*ries 1hich +eeded i* as a basis for mo+e) a+d credi*$ The a+s1er 1as ac*io+ b) *he %ederal Reserve S)s*em$ -2D %ollo1i+g *he secre* mee*i+g of *he %ederal Reserve oard a+d *he heads of *he foreig+ ce+*ral ba+,s i+ -.0J( *he %ederal Reserve a+,s i+ a fe1 mo+*hs doubled *heir holdi+gs of "over+me+* securi*ies a+d accep*a+ces( 1hich resul*ed i+ *he e;por*a*io+ of five hu+dred millio+ dollars i+ gold i+ *ha* )ear$ The S)s*em5s mar,e* ac*ivi*ies forced *he ra*es of call mo+e) do1+ o+ *he S*oc, !;cha+ge( a+d forced gold ou* of *he cou+*r)$ %oreig+ers also *oo, *his oppor*u+i*) *o purchase heavil) i+ "over+me+* securi*ies because of *he lo1 call mo+e) ra*e$ "The agreeme+* be*1ee+ *he a+, of !+gla+d a+d *he 6ashi+g*o+ %ederal Reserve au*hori*ies ma+) mo+*hs ago 1as *ha* 1e 1ould force *he e;por* of J09 millio+ of gold b) reduci+g *he ba+, ra*es here( *hus helpi+g *he s*abili3a*io+ of %ra+ce a+d !urope a+d pu**i+g %ra+ce o+ a gold basis$"/. 7April 00( -.0/8 O+ %ebruar) 6( -.0.( >r$ >o+*agu #orma+( "over+or of *he a+, of !+gla+d( came *o 6ashi+g*o+ a+d had a co+fere+ce 1i*h A+dre1 >ello+( Secre*ar) of *he Treasur)$ Immedia*el) af*er *ha* m)s*erious visi*( *he %ederal Reserve oard abrup*l) cha+ged i*s polic) a+d pursued a high discou+* ra*e polic)( aba+do+i+g *he cheap mo+e) polic) 1hich i* had i+augura*ed i+ -.0J af*er >r$ #orma+5s o*her visi*$ The s*oc, mar,e* crash a+d *he defla*io+ of *he America+ people5s fi+a+cial s*ruc*ure 1as scheduled *o *a,e place i+ >arch$ To ge* *he ball rolli+g( 4aul 6arburg gave *he official 1ar+i+g *o *he *raders *o ge* ou* of *he mar,e*$ I+ his a++ual repor* *o *he s*oc,holders of his I+*er+a*io+al Accep*a+ce a+,( i+ >arch( -.0.( >r$ 6arburg said@

"If *he orgies of u+res*rai+ed specula*io+ are permi**ed *o spread( *he ul*ima*e collapse is cer*ai+ +o* o+l) *o affec* *he specula*ors *hemselves( bu* *o bri+g abou* a ge+eral depressio+ i+volvi+g *he e+*ire cou+*r)$" &uri+g *hree )ears of "u+res*rai+ed specula*io+"( >r$ 6arburg had +o* see+ fi* *o ma,e a+) remar,s abou* *he co+di*io+ of *he S*oc, !;cha+ge$ A frie+dl) orga+( The #e1 ?or, Times( +o* o+l) gave *he repor* *1o colum+s o+ i*s edi*orial page( bu* edi*oriall) comme+*ed o+ *he 1isdom a+d profu+di*) of >r$ 6arburg5s observa*io+s$ >r$ 6arburg5s co+cer+ 1as ge+ui+e( for *he s*oc, mar,e* bubble had go+e much far*her *ha+ i* had bee+ i+*e+ded *o go( a+d *he ba+,ers feared *he co+se<ue+ces if *he people reali3ed 1ha* 1as goi+g o+$ 6he+ *his repor* i+ The #e1 ?or, Times s*ar*ed a sudde+ 1ave of selli+g o+ *he !;cha+ge( *he ba+,ers gre1 pa+ic,)( a+d i* 1as decided *o ease *he mar,e* some1ha*$ Accordi+gl)( 6arburg5s #a*io+al Ci*) a+, rushed *1e+*)Efive millio+ dollars i+ cash *o *he call mo+e) mar,e*( a+d pos*po+ed *he da) of *he crash$ The revela*io+ of *he %ederal Reserve oard5s fi+al decisio+ *o *rigger *he Crash of -.0. appears( ama3i+gl) e+ough( i+ The #e1 ?or, Times$ O+ April 00( -.0.( *he Times headli+ed( "%ederal Advisor) Cou+cil >)s*er) KKKKKKKKKKKKKKKKKKKKKKKKKK /. Clare+ce 6$ arro+( The) Told arro+( Harpers( #e1 ?or,( -.D0( p$ D9D -22 >ee*i+g i+ 6ashi+g*o+$ Resolu*io+s 1ere adop*ed b) *he cou+cil a+d *ra+smi**ed *o *he board( bu* *heir purpose 1as closel) guarded$ A+ a*mosphere of deep m)s*er) 1as *hro1+ abou* *he proceedi+gs bo*h b) *he board a+d *he cou+cil$ !ver) effor* 1as made *o guard *he proceedi+gs of *his e;*raordi+ar) sessio+$ !vasive replies 1ere give+ *o +e1spaper correspo+de+*s$" O+l) *he i++ermos* cou+cil of "The Lo+do+ Co++ec*io+" ,+e1 *ha* i* had bee+ decided a* *his "m)s*er) mee*i+g" *o bri+g do1+ *he cur*ai+ o+ *he grea*es* specula*ive boom i+ America+ his*or)$ Those i+ *he ,+o1 bega+ *o sell off all specula*ive s*oc,s a+d pu* *heir mo+e) i+ gover+me+* bo+ds$ Those 1ho 1ere +o* priv) *o *his secre* i+forma*io+( a+d *he) i+cluded some of *he 1eal*hies* me+ i+ America( co+*i+ued *o hold *heir specula*ive s*oc,s a+d los* ever)*hi+g *he) had$ I+ %&R( >) !;ploi*ed %a*herEi+ELa1( Col$ Cur*is $ &all( 1ho 1as a bro,er o+ 6all S*ree* a* *ha* *ime( 1ri*es of *he Crash( "Ac*uall) i* 1as *he calcula*ed Asheari+g5 of *he public b) *he 6orld >o+e)E4o1ers( *riggered b) *he pla++ed sudde+ shor*age of *he suppl) of call mo+e) i+ *he #e1 ?or, mo+e) mar,e*$".0 Over+igh*( *he %ederal Reserve S)s*em had raised *he call ra*e *o *1e+*) perce+*$ :+able *o mee* *his ra*e( *he specula*ors5 o+l) al*er+a*ive 1as *o =ump ou* of 1i+do1s$ The #e1 ?or, %ederal Reserve a+, ra*e( 1hich dic*a*ed *he +a*io+al i+*eres* ra*e( 1e+* *o si; perce+* o+ #ovember -( -.0.$ Af*er *he i+ves*ors had bee+ ba+,rup*ed( i* dropped *o o+e a+d o+eEhalf perce+* o+ >a) /( -.D-$ Co+gressma+ 6righ* 4a*ma+ i+ "A 4rimer O+ >o+e)"( sa)s *ha* *he mo+e) suppl) decreased b) eigh* billio+ dollars from -.0. *o -.DD( causi+g --(6D0 ba+,s of *he *o*al of 06(20- i+ *he :+i*ed S*a*es *o go ba+,rup* a+d close *heir doors$ The %ederal Reserve oard had alread) 1ar+ed *he s*oc,holders of *he %ederal Reserve a+,s *o ge* ou* of *he >ar,e*( o+ %ebruar) 6( -.0.( bu* i* had +o* bo*hered *o sa) a+)*hi+g *o *he res* of *he people$ #obod) ,+e1 1ha* 1as goi+g o+ e;cep* *he 6all S*ree* ba+,ers 1ho 1ere ru++i+g *he sho1$ "old moveme+*s 1ere comple*el) u+reliable$ The Suar*erl) Bour+al of !co+omics +o*ed *ha*@ "The <ues*io+ has bee+ raised( +o* o+l) i+ *his cou+*r)( bu* i+ several !uropea+ cou+*ries( as *o 1he*her cus*oms s*a*is*ics record 1i*h accurac) *he moveme+*s of precious me*als( a+d( 1he+ i+ves*iga*io+ has bee+ made( co+fide+ce i+ such

figures has bee+ 1ea,e+ed ra*her *ha+ s*re+g*he+ed$ A+) moveme+* be*1ee+ %ra+ce a+d !+gla+d( for i+s*a+ce( should be recorded i+ each cou+*r)( bu* such compariso+ sho1s a+ average )earl) discrepa+c) of fif*) millio+ fra+cs for %ra+ce a+d eigh*)Efive millio+ fra+cs for !+gla+d$ These e+ormous discrepa+cies are +o* accou+*ed for$" The Righ* Ho+orable Regi+ald >cCe++a s*a*ed *ha*@ KKKKKKKKKKKKKKKKKKKKKKKKKK .0 Col$ Cur*is $ &all( %$&$R$( >) !;ploi*ed %a*herEi+ELa1( Liber*) Lobb)( 6ash$( &$C$ -.J0 -29 "S*ud) of *he rela*io+s be*1ee+ cha+ges i+ gold s*oc, a+d moveme+* i+ price levels sho1s 1ha* should be ver) obvious( bu* is b) +o mea+s recog+i3ed( *ha* *he gold s*a+dard is i+ +o se+se au*oma*ic i+ opera*io+$ The gold s*a+dard ca+ be( a+d is( usefull) ma+aged a+d co+*rolled for *he be+efi* of a small group of i+*er+a*io+al *raders$" I+ Augus* -.0.( *he %ederal Reserve oard raised *he ra*e *o si; perce+*$ The a+, of !+gla+d i+ *he +e;* mo+*h raised i*s ra*e from five a+d o+eEhalf perce+* *o si; a+d o+eEhalf perce+*$ &r$ %rida) i+ *he Sep*ember( -.0.( issue of Revie1 of Revie1s( could fi+d +o reaso+ for *he oard5s ac*io+@ "The %ederal Reserve s*a*eme+* for Augus* J( -.0.( sho1s *ha* sig+s of i+ade<uac) for au*um+ re<uireme+*s do +o* e;is*$ "old resources are co+siderabl) more *ha+ *he previous )ear( a+d gold co+*i+ues *o move i+( *o *he fi+a+cial embarrassme+* of "erma+) a+d !+gla+d$ The reaso+s for *he oard5s ac*io+ mus* be sough* else1here$ The public has bee+ give+ o+l) *he hi+* *ha* AThis problem has prese+*ed difficul*ies because of cer*ai+ peculiar co+di*io+s5$ !ver) reaso+ 1hich "over+or ?ou+g adva+ced for lo1eri+g *he ba+, ra*e las* )ear e;is*s +o1$ I+creasi+g *he ra*e mea+s *ha* +o* o+l) is *here da+ger of dra1i+g gold from abroad( bu* impor*s of *he )ello1 me*al have bee+ i+ progress for *he las* four mo+*hs$ To do a+)*hi+g *o acce+*ua*e *his is *o *a,e *he respo+sibili*) for bri+gi+g o+ a 1orldE1ide credi* defla*io+$" Thus 1e fi+d *ha* +o* o+l) 1as *he %ederal Reserve S)s*em respo+sible for *he %irs* 6orld 6ar( 1hich i* made possible b) e+abli+g *he :+i*ed S*a*es *o fi+a+ce *he Allies( bu* i*s policies brough* o+ *he 1orldE1ide depressio+ of -.0.ED-$ "over+or Adolph C$ >iller s*a*ed a* *he Se+a*e I+ves*iga*io+ of *he %ederal Reserve oard i+ -.D- *ha*@ "If 1e had had +o %ederal Reserve S)s*em( I do +o* *hi+, 1e 1ould have had as bad a specula*ive

si*ua*io+ as 1e had( *o begi+ 1i*h$" Car*er "lass replied( "?ou have made i* clear *ha* *he %ederal Reserve oard provided a *errific credi* e;pa+sio+ b) *hese ope+ mar,e* *ra+sac*io+s$" !mma+uel "olde+1eiser said( "I+ -.0/E0. *he %ederal oard 1as e+gaged i+ a+ a**emp* *o res*rai+ *he rapid i+crease i+ securi*) loa+s a+d i+ s*oc, mar,e* specula*io+$ The co+*i+ui*) of *his polic) of res*rai+*( ho1ever( 1as i+*errup*ed b) reduc*io+ i+ bill ra*es i+ *he au*um+ of -.0/ a+d *he summer of -.0.$" o*h B$4$ >orga+ a+d Cuh+( Loeb Co$ had "preferred lis*s" of me+ *o 1hom *he) se+* adva+ce a++ou+ceme+*s of profi*able s*oc,s$ The me+ o+ *hese preferred lis*s 1ere allo1ed *o purchase *hese s*oc,s a* cos*( *ha* is( a+)1here from 0 *o -9 poi+*s a share less *ha+ *he) 1ere sold *o *he public$ The me+ o+ *hese lis*s 1ere fello1 ba+,ers( promi+e+* i+dus*rialis*s( po1erful ci*) poli*icia+s( +a*io+al Commi**eeme+ of *he Republica+ a+d &emocra*ic 4ar*ies( a+d rulers of foreig+ cou+*ries$ The me+ o+ *hese lis*s 1ere +o*ified of *he comi+g crash( a+d sold all bu* soEcalled gil*Eedged s*oc,s( "e+eral >o*ors( &upo+*( e*c$ The prices o+ *hese s*oc,s also sa+, *o record lo1s( bu* *he) came up soo+ af*er1ards$ Ho1 *he big ba+,ers opera*ed i+ -26 -.0. is revealed b) a #e1s1ee, s*or) o+ >a) D0( -.D6( 1he+ a Roosevel* appoi+*ee( Ralph 6$ >orriso+( resig+ed from *he %ederal Reserve oard@ "The co+se+sus of opi+io+ is *ha* *he %ederal Reserve oard has los* a+ able ma+$ He sold his Te;as u*ili*ies s*oc, *o I+sull for *e+ millio+ dollars( a+d i+ -.0. called a mee*i+g a+d ordered his ba+,s *o close ou* all securi*) loa+s b) Sep*ember -$ As a resul*( *he) rode *hrough *he depressio+ 1i*h fl)i+g colors$" 4redic*abl) e+ough( all of *he big ba+,ers rode *hrough *he depressio+ "1i*h fl)i+g colors$" The people 1ho suffered 1ere *he 1or,ers a+d farmers 1ho had i+ves*ed *heir mo+e) i+ ge*Erich s*oc,s( af*er *he 4reside+* of *he :+i*ed S*a*es( Calvi+ Coolidge( a+d *he Secre*ar) of *he Treasur)( A+dre1 >ello+( had persuaded *hem *o do i*$ There had bee+ some 1ar+i+gs of *he approachi+g crash i+ !+gla+d( 1hich America+ +e1spapers +ever sa1$ The Lo+do+ S*a*is* o+ >a) 09( -.0. said@ "The ba+,i+g au*hori*ies i+ *he :+i*ed S*a*es appare+*l) 1a+* a busi+ess pa+ic *o curb specula*io+$" The Lo+do+ !co+omis* o+ >a) --( -.0.( said@ "The eve+*s of *he pas* )ear have see+ *he begi++i+gs of a +e1 *ech+i<ue( 1hich( if mai+*ai+ed a+d developed( ma) succeed i+ Ara*io+i+g *he specula*or 1i*hou* i+=uri+g *he *rader$5" "over+or Charles S$ Hamli+ <uo*ed *his s*a*eme+* a* *he Se+a*e heari+gs i+ -.D- a+d said( i+ corrobora*io+ of i*@ "Tha* 1as *he feeli+g of cer*ai+ members of *he oard( *o remove %ederal Reserve credi* from *he specula*or 1i*hou* i+=uri+g *he *rader$"

"over+or Hamli+ did +o* bo*her *o poi+* ou* *ha* *he "specula*ors" he 1as ou* *o brea, 1ere *he schoolE*eachers a+d small *o1+ mercha+*s 1ho had pu* *heir savi+gs i+*o *he s*oc, mar,e*( or *ha* *he "*raders" he 1as *r)i+g *o pro*ec* 1ere *he big 6all S*ree* opera*ors( er+ard aruch a+d 4aul 6arburg$ 6he+ *he %ederal Reserve a+, of #e1 ?or, raised i*s ra*e *o si; perce+* o+ Augus* .( -.0.( mar,e* co+di*io+s bega+ 1hich culmi+a*ed i+ *reme+dous selli+g orders from Oc*ober 02 i+*o #ovember( 1hich 1iped ou* a hu+dred a+d si;*) billio+ dollars 1or*h of securi*) values$ Tha* 1as a hu+dred a+d si;*) billio+s 1hich *he America+ ci*i3e+s had o+e mo+*h a+d did +o* have *he +e;*$ Some idea of *he calami*) ma) be had if 1e remember *ha* our e+ormous ou*la) of mo+e) a+d goods i+ *he Seco+d 6orld 6ar amou+*ed *o +o* much more *ha+ *1o hu+dred billio+s of dollars( a+d a grea* deal of *ha* remai+ed as +ego*iable securi*ies i+ *he +a*io+al deb*$ The s*oc, mar,e* crash is *he grea*es* misfor*u+e 1hich *he :+i*ed S*a*es has ever suffered$ The Academ) of 4oli*ical Scie+ce of Columbia :+iversi*) i+ i*s a++ual mee*i+g i+ Ba+uar)( -.D0( held a pos*Emor*em o+ *he Crash of -.0.$ 'iceE -2J 4reside+* 4aul 6arburg 1as *o have presided( a+d &irec*or Ogde+ >ills 1as *o have pla)ed a+ impor*a+* par* i+ *he discussio+$ Ho1ever( *hese *1o ge+*leme+ did +o* sho1 up$ 4rofessor Oliver >$6$ Sprague of Harvard :+iversi*) remar,ed of *he crash@ "6e have here a beau*iful labora*or) case of *he s*oc, mar,e*5s droppi+g appare+*l) from i*s o1+ 1eigh*$" I* 1as poi+*ed ou* *ha* *here 1as +o e;haus*io+ of credi*( as i+ -/.D( +or a+) curre+c) fami+e( as i+ *he 4a+ic of -.0J( 1he+ cleari+gE house cer*ifica*es 1ere resor*ed *o( +or a collapse of commodi*) prices( as i+ -.00$ 6ha* *he+( had caused *he crashH The people had purchased s*oc,s a* high prices a+d e;pec*ed *he prices *o co+*i+ue *o rise$ The prices had *o come do1+( a+d *he) did$ I* 1as obvious *o *he eco+omis*s a+d ba+,ers ga*hered over *heir bra+d) a+d cigars a* *he Ho*el As*or *ha* *he people 1ere a* faul*$ Cer*ai+l) *he people had made a mis*a,e i+ bu)i+g overEpriced securi*ies( bu* *he) had bee+ *al,ed i+*o i* b) ever) leadi+g ci*i3e+ from *he 4reside+* of *he :+i*ed S*a*es o+ do1+$ !ver) maga3i+e of +a*io+al circula*io+( ever) big +e1spaper( a+d ever) promi+e+* ba+,er( eco+omis*( a+d poli*icia+( had =oi+ed i+ *he big co+fide+ce game of urgi+g people *o bu) *hose overEpriced securi*ies$ 6he+ *he %ederal Reserve a+, of #e1 ?or, raised i*s ra*e *o si; perce+*( i+ Augus* -.0.( people bega+ *o ge* ou* of *he mar,e*( a+d i* *ur+ed i+*o a pa+ic 1hich drove *he prices of securi*ies do1+ far belo1 *heir +a*ural levels$ As i+ previous pa+ics( *his e+abled bo*h 6all S*ree* a+d foreig+ opera*ors i+ *he ,+o1 *o pic, up "blueEchip" a+d gil*Eedged" securi*ies for a frac*io+ of *heir real value$ The Crash of -.0. also sa1 *he forma*io+ of gia+* holdi+g compa+ies 1hich pic,ed up *hese cheap bo+ds a+d securi*ies( such as *he >ari+e >idla+d Corpora*io+( *he Lehma+ Corpora*io+( a+d *he !<ui*) Corpora*io+$ I+ -.0. B$4$ >orga+ Compa+) orga+i3ed *he gia+* food *rus*( S*a+dard ra+ds$ There 1as a+ u+e<ualed oppor*u+i*) for *rus* opera*ors *o e+large a+d co+solida*e *heir holdi+gs$ !mma+uel "olde+1eiser( direc*or of research for *he %ederal Reserve S)s*em( said( i+ -.2J@ "I* is clear i+ re*rospec* *ha* *he oard should have ig+ored *he specula*ive e;pa+sio+ a+d allo1ed i* *o collapse of i*s o1+ 1eigh*$" This admissio+ of error eigh*ee+ )ears af*er *he eve+* 1as small comfor* *o *he people 1ho los* *heir savi+gs i+ *he Crash$ The 6all S*ree* Crash of -.0. 1as *he begi++i+g of a 1orldE1ide credi* defla*io+ 1hich las*ed *hrough -.D0( a+d from 1hich *he 6es*er+ democracies did +o* recover u+*il *he) bega+ *o rearm for *he Seco+d 6orld 6ar$ &uri+g *his depressio+( *he *rus* opera*ors achieved fur*her co+*rol b) *heir bac,i+g of *hree i+*er+a*io+al s1i+dlers( The 'a+ S1eri+ge+ bro*hers( Samuel I+sull( a+d Ivar Creuger$ These me+ p)ramided billio+s of dollars 1or*h of securi*ies *o fa+*as*ic heigh*s$ The ba+,ers 1ho promo*ed

-2/ *hem a+d floa*ed *heir s*oc, issue could have s*opped *hem a* a+) *ime( b) calli+g loa+s of less *ha+ a millio+ dollars( bu* *he) le* *hese me+ go o+ u+*il *he) had i+corpora*ed ma+) i+dus*rial a+d fi+a+cial proper*ies i+*o holdi+g compa+ies( 1hich *he ba+,s *he+ *oo, over for +o*hi+g$ I+sull piled up public u*ili*) holdi+gs *hroughou* *he >iddle 6es*( 1hich *he ba+,s go* for a frac*io+ of *heir 1or*h$ Ivar Creuger 1as bac,ed b) Lee Higgi+so+ Compa+)( supposedl) o+e of *he +a*io+5s mos* repu*able ba+,i+g houses$ The Sa*urda) !ve+i+g 4os* called him "more *ha+ a fi+a+cial *i*a+"( a+d *he !+glish revie1 %or*+igh*l) said( i+ a+ ar*icle 1ri**e+ &ecember -.D-( u+der *he *i*le( "A Chap*er i+ Co+s*ruc*ive %i+a+ce"@ "I* is as a fi+a+cial irriga*or *ha* Creuger has become of such vi*al impor*a+ce *o !urope$"P "%i+a+cial irriga*or" 1e ma) remember( 1as *he *i*le bes*o1ed upo+ Bacob Schiff b) #e1s1ee, >aga3i+e( 1he+ i* described ho1 Schiff had bough* up America+ railroads 1i*h Ro*hschild5s mo+e)$ The #e1 Republic remar,ed o+ Ba+uar) 09*h( -.DD( 1he+ i* comme+*ed o+ *he fac* *ha* Lee Higgi+so+ Compa+) had ha+dled Creuger a+d Toll Securi*ies o+ *he America+ mar,e*@ "ThreeE<uar*ers of a billio+ dollars 1as made a1a) 1i*h$ 6ho 1as able *o dic*a*e *o *he %re+ch police *o ,eep secre* *he +e1s of *his e;*remel) impor*a+* suicide for some hours( duri+g 1hich somebod) sold Creuger securi*ies i+ large amou+*s( *hus ge**i+g ou* of *he mar,e* before *he debacleH" The %ederal Reserve oard could have chec,ed *he e+ormous credi* e;pa+sio+ of I+sull a+d Creuger b) i+ves*iga*i+g *he securi*) o+ 1hich *heir loa+s 1ere bei+g made( bu* *he "over+ors +ever made a+) e;ami+a*io+ of *he ac*ivi*ies of *hese me+$ The moder+ ba+, 1i*h *he credi* facili*ies i* affords( gives a+ oppor*u+i*) 1hich had +o* previousl) e;is*ed for such opera*ors as Creuger *o ma,e a+ appeara+ce of abu+da+* capi*al b) *he aid of borro1ed capi*al$ This e+ables *he specula*or *o bu) securi*ies 1i*h securi*ies$ The o+l) limi* *o *he amou+* he ca+ cor+er is *he amou+* *o 1hich *he ba+,s 1ill bac, him( a+d( if a specula*or is bei+g promo*ed b) a repu*able ba+,i+g house( as Creuger 1as promo*ed b) Lee Higgi+so+ Compa+)( *he o+l) 1a) he could be s*opped 1ould be b) a+ i+ves*iga*io+ of his ac*ual fi+a+cial resources( 1hich i+ Creuger5s case 1ould have proved *o be +il$ The leader of *he America+ people duri+g *he Crash of -.0. a+d *he subse<ue+* depressio+ 1as Herber* Hoover$ Af*er *he firs* brea, of *he KKKKKKKKKKKKKKKKKKKKKKKKKK P #OT!@ Ivar Creuger( 1e ma) recall( 1as occasio+all) *he perso+al gues* of his old frie+d( 4reside+* Herber* Hoover( a* *he 6hi*e House$ Hoover seems *o have mai+*ai+ed a cordial rela*io+ship 1i*h ma+) of *he mos* promi+e+* s1i+dlers of *he *1e+*ie*h ce+*ur)( i+cludi+g his par*+er( !mile %ra+c<ui$ The receivership of *he billio+ dollar Creuger %raud 1as ha+dled b) Samuel :+*erme)er( former cou+sel for 4u=o Commi**ee heari+gs$ -2. mar,e* 7*he five billio+ dollars i+ securi*) values 1hich disappeared o+ Oc*ober 02( -.0.8 4reside+* Hoover said@ "The fu+dame+*al busi+ess of *he cou+*r)( *ha* is( produc*io+ a+d dis*ribu*io+ of commodi*ies( is o+ a sou+d a+d prosperous basis$"

His Secre*ar) of *he Treasur)( A+dre1 >ello+( s*a*ed o+ &ecember 09( -.0.( *ha*@ "The "over+me+*5s busi+ess is i+ sou+d co+di*io+$" His o1+ busi+ess( *he Alumi+um Compa+) of America( appare+*l) 1as +o* doi+g so 1ell( for he had reduced *he 1ages of all emplo)ees b) *e+ perce+*$ The #e1 ?or, Times repor*ed o+ April J( -.D-( ">o+*agu #orma+( "over+or of *he a+, of !+gla+d( co+ferred 1i*h *he %ederal Reserve oard here *oda)$ >ello+( >e)er( a+d "eorge L$ Harriso+( "over+or of *he %ederal Reserve a+, of #e1 ?or,( 1ere prese+*$" The Lo+do+ Co++ec*io+ had se+* #orma+ over *his *ime *o e+sure *ha* *he "rea* &epressio+ 1as proceedi+g accordi+g *o schedule$ Co+gressma+ Louis >c%adde+ had complai+ed( as repor*ed i+ The #e1 ?or, Times( Bul) 2( -.D0( "Commodi*) prices are bei+g reduced *o -.-D levels$ 6ages are bei+g reduced b) *he labor surplus of four millio+ u+emplo)ed$ The >orga+ co+*rol of *he %ederal Reserve S)s*em is e;ercised *hrough co+*rol of *he %ederal Reserve a+, of #e1 ?or,( *he mediocre represe+*a*io+ a+d ac<uiesce+ce of *he %ederal Reserve oard i+ 6ashi+g*o+$" As *he depressio+ deepe+ed( *he *rus*5s loc, o+ *he America+ eco+om) s*re+g*he+ed( bu* +o fi+ger 1as poi+*ed a* *he par*ies 1ho 1ere co+*rolli+g *he s)s*em$ -90

CHA4T!R THIRT!!#

The -.D05s
I+ -.D0 Herber* Hoover appoi+*ed *o *he %ederal Reserve oard a+ old frie+d from 6orld 6ar I da)s( !uge+e >e)er( Br$( 1ho had a lo+g record of public service da*i+g from -.-9( 1he+ he 1e+* i+*o par*+ership 1i*h er+ard aruch i+ *he Alas,aEBu+eau "old >i+i+g Compa+)$ >e)er had bee+ a Special Advisor *o *he 6ar I+dus*ries oard o+ #o+E%errous >e*als 7gold( silver( e*c$8G Special Assis*a+* *o *he Secre*ar) of 6ar o+ aircraf* produc*io+G i+ -.-J he 1as appoi+*ed *o *he #a*io+al Commi**ee o+ 6ar Savi+gs( a+d 1as made Chairma+ of *he 6ar %i+a+ce Corpora*io+ from -.-/E-.06$ He *he+ 1as appoi+*ed chairma+ of *he %ederal %arm Loa+ oard from -.0JE0.$ Hoover pu* him o+ *he %ederal Reserve oard i+ -.D0( a+d %ra+,li+ &$ Roosevel* crea*ed *he Reco+s*ruc*io+ a+, for Reco+s*ruc*io+ a+d &evelopme+* i+ -.26$ >e)er mus* have bee+ a ma+ of e;cep*io+al abili*) *o hold so ma+) impor*a+* pos*s$ Ho1ever( *here 1ere some Se+a*ors 1ho did +o* believe he should hold a+) "over+me+* office( because of his famil) bac,grou+d as a+ i+*er+a*io+al gold dealer a+d his m)s*erious opera*io+s i+ billio+s of dollars of "over+me+* securi*ies i+ *he %irs* 6orld 6ar$ Co+se<ue+*l)( *he Se+a*e held Heari+gs *o de*ermi+e 1he*her >e)er ough* *o be o+ *he %ederal Reserve oard$ A* *hese Heari+gs( Represe+*a*ive Louis T$ >c%adde+( Chairma+ of *he House a+,i+g a+d Curre+c) Commi**ee( said@ "!uge+e >e)er( Br$ has had his o1+ cro1d 1i*h him i+ *he gover+me+* si+ce he s*ar*ed i+ -.-J$ His 6ar %i+a+ce Corpora*io+ perso++el *oo, over *he %ederal %arm Loa+ S)s*em( a+d almos* immedia*el) af*er1ards( *he Ca+sas Ci*) Boi+ S*oc, La+d a+, a+d *he Ohio Boi+* S*oc, La+d a+, failed$" R!4R!S!#TATI'! RAI#!?@ >r$ >e)er( 1he+ he +omi+all) resig+ed as head of *he %ederal %arm Loa+ oard( did +o* reall) cease his ac*ivi*ies *here$ He lef* behi+d him a+ able bod) of 1rec,ers$ The) are co+*i+ui+g his policies a+d co+sul*i+g 1i*h him$ efore his appoi+*me+*( he 1as fre<ue+*l) i+ co+sul*a*io+ 1i*h Assis*a+* Secre*ar) of *he Treasur) &e1e)$ Bus* before his

appoi+*me+*( *he Chicago Boi+* La+d S*oc, a+,( *he &allas Boi+* S*oc, La+d a+,( *he Ca+sas Ci*) Boi+* La+d S*oc, a+,( a+d *he &es >oi+es La+d a+, 1ere all fu+c*io+i+g$ Their bo+ds -91ere selli+g a* par$ The *he+ farm commissio+er had a+ u+ders*a+di+g 1i*h Secre*ar) &e1e) *ha* +o*hi+g 1ould be do+e 1i*hou* *he co+se+* a+d approval of *he %ederal %arm Loa+ oard$ A fe1 da)s af*er1ards( :+i*ed S*a*es >arshals( 1i*h pis*ols s*rapped a* *heir sides( a+d some*imes 1i*h dra1+ pis*ols( e+*ered *hese five ba+,s a+d dema+ded *ha* *he ba+,s be *ur+ed over *o *hem$ 6ord 1e+* ou* all over *he :+i*ed S*a*es( *hrough *he +e1spapers( as *o 1ha* had happe+ed( a+d *hese ba+,s 1ere rui+ed$ This led *o *he breach 1i*h *he old %ederal %arm Loa+ oard( a+d *o *he resig+a*io+ of *hree of i*s members( a+d *he appoi+*me+* of >r$ >e)er *o be head of *ha* oard$ S!#ATOR CAR!?@ 6ho au*hori3ed *he marshals *o *a,e over *he ba+,sH R!4$ RAI#!?@ Assis*a+* Secre*ar) of *he Treasur) &e1e)$ Tha* s*ar*ed *he rui+ of all *hese rural ba+,s( a+d *he "ia++i+is bough* *hem up i+ grea* +umbers$" 6orld5s 6or, of %ebruar) -.D-( said@ "6he+ *he 6orld 6ar bega+ for us i+ -.-J( >r$ !uge+e >e)er( Br$ 1as amo+g *he firs* *o be called *o 6ashi+g*o+$ I+ April( -.-/( 4reside+* 6ilso+ +amed him &irec*or of *he 6ar %i+a+ce Corpora*io+$ This corpora*io+ loa+ed ou* J00 millio+ dollars *o ba+,i+g a+d fi+a+cial i+s*i*u*io+s$" The Se+a*e Heari+gs o+ !uge+e >e)er( Br$ co+*i+ued@ R!4R!S!#TATI'! >C%A&&!#@ "La3ard %reres( *he i+*er+a*io+al ba+,i+g house of #e1 ?or, a+d 4aris( 1as a >e)er famil) ba+,i+g house$ I* fre<ue+*l) figures i+ impor*s a+d e;por*s of gold( a+d o+e of *he impor*a+* fu+c*io+s of *he %ederal Reserve S)s*em has *o do 1i*h gold moveme+*s i+ *he mai+*e+a+ce of i*s o1+ opera*io+s$ I+ loo,i+g over *he mi+u*es of *he heari+g 1e had las* Thursda)( Se+a*or %le*cher had as,ed >r$ >e)er( AHave )ou a+) co++ec*io+s 1i*h i+*er+a*io+al ba+,i+gH5 >r$ >e)er had a+s1ered( A>eH #o* perso+all)$5 This las* <ues*io+ a+d a+s1er do +o* appear i+ *he s*e+ographic *ra+scrip*$ Se+a*or %le*cher remembers as,i+g *he <ues*io+ a+d *he a+s1er$ I* is a+ odd omissio+$ S!#ATOR ROOCHART@ I u+ders*a+d *ha* >r$ >e)er loo,ed i* over for correc*io+s$ R!4R!S!#TATI'! >C%A&&!#@ >r$ >e)er is a bro*herEi+Ela1 of "eorge lume+*hal( a member of *he firm of B$4$ >orga+ Compa+)( 1hich represe+*s *he Ro*hschild i+*eres*s$ He also is a liaiso+ officer be*1ee+ *he %re+ch "over+me+* a+d B$4$ >orga+$ !dmu+d 4la**( 1ho had eigh* )ears *o go o+ a *erm of *e+ )ears as "over+or of *he %ederal Reserve oard( resig+ed *o ma,e room for >r$ >e)er$ 4la** 1as give+ a 'iceE4reside+c) of >ari+e >idla+d Corpora*io+ b) >e)er5s bro*herEi+Ela1 Alfred A$ Coo,$ !uge+e >e)er( Br$ as head of *he 6ar %i+a+ce Corpora*io+( e+gaged i+ *he placi+g of *1o billio+ dollars i+ "over+me+* -90 securi*ies( placed ma+) of *hose orders firs* 1i*h *he ba+,i+g house +o1 loca*ed a* -2 6all S*ree* i+ *he +ame of !uge+e >e)er( Br$ >r$ >e)er is +o1 a large s*oc,holder i+ *he Allied Chemical Corpora*io+$ I call )our a**e+*io+ *o House Repor* #o$ -6D9( 6/*h Co+gress( 0+d Sessio+( 1hich reveals *ha* a* leas* *1e+*)Efour millio+ dollars i+ bo+ds 1ere duplica*ed$ Te+ billio+ dollars 1or*h of bo+ds surrep*i*iousl) des*ro)ed$ Our commi**ee o+ a+,i+g a+d Curre+c) fou+d *he records of *he 6ar %i+a+ce Corpora*io+ u+der

!uge+e >e)er( Br$ e;*remel) faul*)$ 6hile *he boo,s 1ere bei+g brough* before our commi**ee b) *he people 1ho 1ere cus*odia+s of *hem a+d *a,e+ bac, *o *he Treasur) a* +igh*( *he commi**ee discovered *ha* al*era*io+s 1ere bei+g made i+ *he perma+e+* records$" The record of public service did +o* preve+* !uge+e >e)er( Br$ from co+*i+ui+g *o serve *he America+ people o+ *he %ederal Reserve oard( as Chairma+ of *he Reco+s*ruc*io+ %i+a+ce Corpora*io+( a+d as head of *he I+*er+a*io+al a+,$ 4reside+* Ra+d( of *he >ari+e >idla+d Corpora*io+( <ues*io+ed abou* his sudde+ desire for *he services of !dmu+d 4la**( said@ "6e pa) >r$ 4la** Q00(000 a )ear( a+d 1e *oo, his secre*ar) over( of course$" This mea+* a+o*her five *housa+d a )ear$ Se+a*or roo,har* sho1ed *ha* !uge+e >e)er( Br$ admi+is*ered *he %ederal %arm Loa+ oard agai+s* *he i+*eres*s of *he America+ farmer( sa)i+g@ ">r$ >e)er +ever loa+ed more *ha+ -/0 millio+ dollars of *he capi*al s*oc, of 900 millio+ dollars of *he farm loa+ board( so *ha* i+ aidi+g *he farmers he 1as +o* eve+ able *o use half of *he capi*al$" >R$ >!?!R@ Se+a*or Ce+)o+ 1ro*e me a le**er 1hich sho1ed *ha* I coopera*ed 1i*h grea* adva+*age *o *he people of Io1a$ S!#ATOR ROOCHART@ "?ou 1e+* ou* a+d *oo, *he opposi*e side from *he 6all S*ree* cro1d$ The) al1a)s se+d somebod) ou* *o do *ha*$ I have +o* )e* discovered i+ )our s*a*eme+*s much i+*eres* i+ ma,i+g loa+s *o *he farmers a* large( or a+) real effor* *o help *heir co+di*io+$ I+ )our *1o )ears as head of *he %ederal %arm Loa+ oard )ou made ver) fe1 loa+s compared *o )our capi*al$ ?ou loa+ed o+l) o+eEeigh*h of *he dema+d( accordi+g *o )our o1+ s*a*eme+*$" &espi*e *he dam+i+g evide+ce u+covered a* *hese Se+a*e Heari+gs( !uge+e >e)er( Br$ remai+ed o+ *he %ederal Reserve oard$ &uri+g *his *ragic period( chairma+ Louis >c%adde+ of *he House a+,i+g a+d Curre+c) Commi**ee co+*i+ued his lo+e crusade agai+s* *he "Lo+do+ Co++ec*io+" 1hich had 1rec,ed *he +a*io+$ O+ Bu+e -0( -.D0( >c%adde+ addressed *he House of Represe+*a*ives@ "Some people *hi+, *he %ederal Reserve ba+,s are :+i*ed S*a*es "over+me+* i+s*i*u*io+s$ The) are +o* gover+me+* i+s*i*u*io+s$ The) are priva*e credi* mo+opolies 1hich pre) upo+ *he people of *he :+i*ed -9D S*a*es for *he be+efi* of *hemselves a+d *heir foreig+ cus*omers$ The %ederal Reserve ba+,s are *he age+*s of *he foreig+ ce+*ral ba+,s$ He+r) %ord has said( AThe o+e aim of *hese fi+a+ciers is 1orld co+*rol b) *he crea*io+ of i+e;*i+guishable deb*s$5 The *ru*h is *he %ederal Reserve oard has usurped *he "over+me+* of *he :+i*ed S*a*es b) *he arroga+* credi* mo+opol) 1hich opera*es *he %ederal Reserve oard a+d *he %ederal Reserve a+,s$" O+ Ba+uar) -D( -.D0( >c%adde+ had i+*roduced a resolu*io+ i+dic*i+g *he %ederal Reserve oard of "over+ors for "Crimi+al Co+spirac)"@

"6hereas I charge *hem( =oi+*l) a+d severall)( 1i*h *he crime of havi+g *reaso+abl) co+spired a+d ac*ed agai+s* *he peace a+d securi*) of *he :+i*ed S*a*es a+d havi+g *reaso+abl) co+spired *o des*ro) co+s*i*u*io+al gover+me+* i+ *he :+i*ed S*a*es$ Resolved( *ha* *he Commi**ee o+ *he Budiciar) is au*hori3ed a+d direc*ed as a 1hole or b) subcommi**ee *o i+ves*iga*e *he official co+duc* of *he %ederal Reserve oard a+d age+*s *o de*ermi+e 1he*her( i+ *he opi+io+ of *he said commi**ee( *he) have bee+ guil*) of a+) high crime or misdemea+our 1hich i+ *he co+*empla*io+ of *he Co+s*i*u*io+ re<uires *he i+*erposi*io+ of *he Co+s*i*u*io+al po1ers of *he House$" #o ac*io+ 1as *a,e+ o+ *his Resolu*io+$ >c%adde+ came bac, o+ &ecember -D( -.D0 1i*h a mo*io+ *o impeach 4reside+* Herber* Hoover$ O+l) five Co+gressme+ s*ood 1i*h him o+ *his( a+d *he resolu*io+ failed$ The Republica+ ma=ori*) leader of *he House remar,ed( "Louis T$ >c%adde+ is +o1 poli*icall) dead$" O+ >a) 0D( -.DD( >c%adde+ i+*roduced House Resolu*io+ #o$ -9/( Ar*icles of Impeachme+* agai+s* *he Secre*ar) of *he Treasur)( *1o Assis*a+* Secre*aries of *he Treasur)( *he %ederal Reserve oard of "over+ors( a+d officers a+d direc*ors of *he %ederal Reserve a+,s for *heir guil* a+d collusio+ i+ causi+g *he "rea* &epressio+$ "I charge *hem 1i*h havi+g u+la1full) *a,e+ over /0 billio+ dollars from *he :+i*ed S*a*es "over+me+* i+ *he )ear -.0/( *he said u+la1ful *a,i+g co+sis*i+g of *he u+la1ful recrea*io+ of claims agai+s* *he :+i*ed S*a*es Treasur) *o *he e;*e+* of over /0 billio+ dollars i+ *he )ear -.0/( a+d i+ each )ear subse<ue+*( a+d b) havi+g robbed *he :+i*ed S*a*es "over+me+* a+d *he people of *he :+i*ed S*a*es b) *heir *hef* a+d sale of *he gold reserve of *he :+i*ed S*a*es$" The Resolu*io+ +ever reached *he floor$ A 1hisperi+g campaig+ *ha* >c%adde+ 1as i+sa+e s1ep* 6ashi+g*o+( a+d i+ *he +e;* Co+gressio+al elec*io+s( he 1as over1helmi+gl) defea*ed b) *housa+ds of dollars poured i+*o his home dis*ric* of Ca+*o+( 4e++s)lva+ia$ I+ -.D0( *he America+ people elec*ed %ra+,li+ &$ Roosevel* 4reside+* of *he :+i*ed S*a*es$ This 1as hailed as *he freei+g of *he America+ people from *he evil i+flue+ce 1hich had brough* o+ *he "rea* &epresE -92 sio+( *he e+di+g of 6all S*ree* domi+a*io+( a+d *he disappeara+ce of *he ba+,er from 6ashi+g*o+$ Roosevel* o1ed his poli*ical career *o a for*ui*ous circums*a+ce$ As Assis*a+* Secre*ar) of *he #av) duri+g 6orld 6ar I( because of old school *ies( he had i+*erve+ed *o preve+* prosecu*io+ of a large ri+g of homose;uals i+ *he #av) 1hich i+cluded several "ro*o+ a+d Harvard chums$ This brough* him *o *he favorable apprecia*io+ of a 1eal*h) i+*er+a*io+al homose;ual se* 1hich *ravelled bac, a+d for*h be*1ee+ #e1 ?or, a+d 4aris( a+d 1hich 1as presided over b) essie >arbur)( of a ver) old a+d promi+e+* #e1 ?or, famil)$ essie5s "1ife"( 1ho lived 1i*h her for a +umber of )ears( 1as !lsie de 6olfe( la*er Lad) >e+dl i+ a "mariage de co+ve+a+ce"( *he arbi*er of *he i+*er+a*io+al se*$ The) recrui*ed B$4$ >orga+5s )ou+ges* daugh*er( A++e >orga+( i+*o *heir circle( a+d used her for*u+e *o res*ore *he 'illa Tria+o+ i+ 4aris( 1hich became *heir head<uar*ers$ &uri+g 6orld 6ar I( i* 1as used as a hospi*al$ essie >arbur) e;pec*ed *o be a1arded *he Legio+ of Ho+or b) *he %re+ch "over+me+* as a re1ard( bu* B$4$ >orga+( Br$( 1ho despised her for corrup*i+g his )ou+ges* sis*er( re<ues*ed *he %re+ch "over+me+* *o 1i*hhold *he a1ard( 1hich *he) did$ Smar*i+g from *his rebuff( essie >arbur) *hre1 herself i+*o poli*ics( a+d became a po1er i+ *he &emocra*ic #a*io+al 4ar*)$ She had also recrui*ed !lea+or Roosevel* i+*o her circle( a+d( duri+g a visi* *o H)de 4ar,( !lea+or co+fided *ha* she 1as despera*e *o fi+d some*hi+g for "poor %ra+,li+" *o do( as he 1as co+fi+ed *o a 1heelchair( a+d 1as ver) depressed$

"I ,+o1 1ha* 1e5ll do(" e;claimed essie( "6e5ll ru+ him for "over+or of #e1 ?or,R" ecause of her po1er( she succeeded i+ *his goal( a+d Roosevel* la*er became 4reside+*$ O+e of *he me+ Roosevel* brough* do1+ from #e1 ?or, 1i*h him as a Special Advisor *o *he Treasur) 1as !arl ailie of B O 6 Seligma+ Compa+)( 1ho had become +o*orious as *he ma+ 1ho ha+ded *he Q2-9(000 bribe *o Bua+ Leguia( so+ of *he 4reside+* of 4eru( i+ order *o ge* *he 4reside+* *o accep* a loa+ from B O 6 Seligma+ Compa+)$ There 1as a grea* deal of cri*icism of *his appoi+*me+*( a+d >r$ Roosevel*( i+ ,eepi+g 1i*h his +e1 role as defe+der of *he people( se+* !arl ailie bac, *o @bri+gi+g i+ #e1 ?or,$ %ra+,li+ &$ Roosevel* himself 1as a+ i+*er+a*io+al ba+,er of ill repu*e( havi+g floa*ed large issues of foreig+ bo+ds i+ *his cou+*r) i+ *he -.00s$ These bo+ds defaul*ed( a+d our ci*i3e+s los* millio+s of dollars( bu* *he) s*ill 1a+*ed >r$ Roosevel* as 4reside+*$ The #e1 ?or, &irec*or) of &irec*ors lis*s >r$ Roosevel* as 4reside+* a+d &irec*or of :+i*ed !uropea+ I+ves*ors( L*d$( i+ -.0D a+d -.02( 1hich floa*ed ma+) millio+s of "erma+ mar,s i+ *his cou+*r)( all of 1hich defaul*ed$ 4oor5s &irec*or) of &irec*ors lis*s him as a direc*or of The I+*er+a*io+al "erma+ic Trus* Compa+) i+ -.0/$ %ra+,li+ &$ Roosevel* 1as also a+ advisor *o *he -99 %ederal I+*er+a*io+al a+,i+g Corpora*io+( a+ A+gloEAmerica+ ou*fi* deali+g i+ foreig+ securi*ies i+ *he :+i*ed S*a*es$ Roosevel*5s la1 firm of Roosevel* a+d O5Co++or duri+g *he -.00s represe+*ed ma+) i+*er+a*io+al corpora*io+s$ His la1 par*+er( asil O5Co++or( 1as a direc*or i+ *he follo1i+g corpora*io+s@ Cuba+EAmerica+ >a+ga+ese Corpora*io+( 'e+e3uelaE>e;ica+ Oil Corpora*io+( 6es* I+dies Sugar Corpora*io+( America+ Reserve I+sura+ce Corpora*io+( 6arm Spri+gs %ou+da*io+$ He 1as direc*or i+ o*her corpora*io+s( a+d la*er head of *he America+ Red Cross$ 6he+ %ra+,li+ &$ Roosevel* *oo, office as 4reside+* of *he :+i*ed S*a*es( he appoi+*ed as &irec*or of *he udge* Bames 4aul 6arburg( so+ of 4aul 6arburg( a+d 'ice 4reside+* of *he I+*er+a*io+al Accep*a+ce a+, a+d o*her corpora*io+s$ Roosevel* appoi+*ed as Secre*ar) of *he Treasur) 6$H$ 6oodi+( o+e of *he bigges* i+dus*rialis*s i+ *he cou+*r)( &irec*or of *he America+ Car %ou+dr) Compa+) a+d +umerous o*her locomo*ive 1or,s( Remi+g*o+ Arms( The Cuba Compa+)( Co+solida*ed Cuba Railroads( a+d o*her big corpora*io+s$ 6oodi+ 1as la*er replaced b) He+r) >orge+*hau( Br$( so+ of *he Harlem real es*a*e opera*or 1ho had helped pu* 6oodro1 6ilso+ i+ *he 6hi*e House$ 6i*h such a cre1 as *his( Roosevel*5s promises of radical social cha+ges sho1ed li**le li,elihood of fulfillme+*$ O+e of *he firs* *hi+gs he did 1as *o declare a ba+,ers5 mora*orium( *o help *he ba+,ers ge* *heir records i+ order$ 6orld5s 6or, sa)s@ "Co+gress has lef* Charles "$ &a1es a+d !uge+e >e)er( Br$ free *o appraise( b) *heir o1+ me*hods( *he securi*) 1hich prospec*ive borro1ers of *he *1o billio+ dollar capi*al ma) offer$" Roosevel* also se* up *he Securi*ies !;cha+ge Commissio+( *o see *o i* *ha* +o +e1 faces go* i+*o *he 6all S*ree* ga+g( 1hich caused *he follo1i+g collo<u) i+ Co+gress@ R!4R!S!#TATI'! 6OLCOTT@ A* heari+gs before *his commi**ee i+ -.DD( *he eco+omis*s sho1ed us char*s 1hich proved be)o+d all doub* *ha* *he dollar value commodi*ies follo1ed *he price level of gold$ I* did +o*( did i*H L!O# H!#&!RSO#@ #o$

R!4R!S!#TATI'! "I%%OR&@ 6as+5* Boe Ce++ed) pu* i+ Mas Chairma+ of *he Securi*ies !;cha+ge Commi**eeN b) 4reside+* Roosevel* because he 1as s)mpa*he*ic 1i*h big busi+essH L!O# H!#&!RSO#@ I *hi+, so$ 4aul !i+3ig poi+*ed ou* i+ -.D9 *ha*@ -96 "4reside+* Roosevel* 1as *he firs* *o declare himself ope+l) i+ favor of a mo+e*ar) polic) aimi+g a* a delibera*el) e+gi+eered rise i+ prices$ I+ a +ega*ive se+se his polic) 1as successful$ e*1ee+ -.DD a+d -.D9 he succeeded i+ reduci+g priva*e i+deb*ed+ess( bu* *his 1as do+e a* *he cos* of i+creasi+g public i+deb*ed+ess$" I+ o*her 1ords( he eased *he burde+ of deb*s off of *he rich o+*o *he poor( si+ce *he rich are fe1 a+d *he poor ma+)$ Se+a*or Rober* L$ O1e+( *es*if)i+g before *he House Commi**ee o+ a+,i+g a+d Curre+c) i+ -.D/( said@ "I 1ro*e i+*o *he bill 1hich 1as i+*roduced b) me i+ *he Se+a*e o+ Bu+e 06( -.-D( a provisio+ *ha* *he po1ers of *he S)s*em should be emplo)ed *o promo*e a s*able price level( 1hich mea+* a dollar of s*able purchasi+g( deb*Epa)i+g po1er$ I* 1as s*ric,e+ ou*$ The po1erful mo+e) i+*eres*s go* co+*rol of *he %ederal Reserve oard *hrough >r$ 4aul 6arburg( >r$ Alber* S*rauss( a+d >r$ Adolph C$ >iller a+d *he) 1ere able *o have *ha* secre* mee*i+g of >a) -/( -.00( a+d bri+g abou* a co+*rac*io+ of credi* so viole+* i* *hre1 five millio+ people ou* of emplo)me+*$ I+ -.00 *ha* Reserve oard delibera*el) caused *he 4a+ic of -.0-$ The same people( u+res*rai+ed i+ *he s*oc, mar,e*( e;pa+di+g credi* *o a grea* e;cess be*1ee+ -.06 a+d -.0.( raised *he price of s*oc,s *o a fa+*as*ic poi+* 1here *he) could +o* possibl) ear+ divide+ds( a+d 1he+ *he people reali3ed *his( *he) *ried *o ge* ou*( resul*i+g i+ *he Crash of Oc*ober 02( -.0.$" Se+a*or O1e+ did +o* go i+*o *he <ues*io+ of 1he*her *he %ederal Reserve oard could be held respo+sible *o *he public$ Ac*uall)( *he) ca++o*$ The) are public officials 1ho are appoi+*ed b) *he 4reside+*( bu* *heir salaries are paid b) *he priva*e s*oc,holders of *he %ederal Reserve a+,s$ "over+or 6$4$"$ Hardi+g of *he %ederal Reserve oard *es*ified i+ -.0- *ha*@ "The %ederal Reserve a+, is a+ i+s*i*u*io+ o1+ed b) *he s*oc,holdi+g member ba+,s$ The "over+me+* has +o* a dollar5s 1or*h of s*oc, i+ i*$" Ho1ever( *he "over+me+* does give *he %ederal Reserve S)s*em *he use of i*s billio+s of dollars of credi*( a+d *his gives *he %ederal Reserve i*s charac*eris*ic of a ce+*ral ba+,( *he po1er *o issue curre+c) o+ *he "over+me+*5s credi*$ 6e do +o* have %ederal

"over+me+* +o*es or gold cer*ifica*es as curre+c)$ 6e have %ederal Reserve a+, +o*es( issued b) *he %ederal Reserve a+,s( a+d ever) dollar *he) pri+* is a dollar i+ *heir poc,e*$ 6$ Ra+dolph urgess( of *he %ederal Reserve a+, of #e1 ?or,( s*a*ed before *he Academ) of 4oli*ical Scie+ce i+ -.D0 *ha*@ "I+ i*s ma=or pri+ciples of opera*io+ *he %ederal Reserve S)s*em is +o differe+* from o*her ba+,s of issue( such as *he a+, of !+gla+d( *he a+, of %ra+ce( or *he Reichsba+,$" -9J All of *hese ce+*ral ba+,s have *he po1er of issui+g curre+c) i+ *heir respec*ive cou+*ries$ Thus( *he people do +o* o1+ *heir o1+ mo+e) i+ !urope( +or do *he) o1+ i* here$ I* is priva*el) pri+*ed for priva*e profi*$ The people have +o sovereig+*) over *heir mo+e)( a+d i* has developed *ha* *he) have +o sovereig+*) over o*her ma=or poli*ical issues such as foreig+ polic)$ As a ce+*ral ba+, of issue( *he %ederal Reserve S)s*em has behi+d i* all *he e+ormous 1eal*h of *he America+ people$ 6he+ i* bega+ opera*io+s i+ -.-D( i* crea*ed a serious *hrea* *o *he ce+*ral ba+,s of *he impoverished cou+*ries of !urope$ ecause i* represe+*ed *his grea* 1eal*h( i* a**rac*ed far more gold *ha+ 1as desirable i+ *he -.00s( a+d i* 1as appare+* *ha* soo+ all of *he 1orld5s gold 1ould be piled up i+ *his cou+*r)$ This 1ould ma,e *he gold s*a+dard a =o,e i+ !urope( because *he) 1ould have +o gold over *here *o bac, *heir issue of mo+e) a+d credi*$ I* 1as *he %ederal Reserve5s avo1ed aim i+ -.0J( af*er *he secre* mee*i+g 1i*h *he heads of *he foreig+ ce+*ral ba+,s( *o ge* large <ua+*i*ies of *ha* gold se+* bac, *o !urope( a+d i*s me*hods of doi+g so( *he lo1 i+*eres* ra*e a+d heav) purchases of "over+me+* securi*ies( 1hich crea*ed vas* sums of +e1 mo+e)( i+*e+sified *he s*oc, mar,e* specula*io+ a+d made *he s*oc, mar,e* crash a+d resul*a+* depressio+ a +a*io+al disas*er$ Si+ce *he %ederal Reserve S)s*em 1as guil*) of causi+g *his disas*er( 1e migh* suppose *ha* *he) 1ould have *ried *o allevia*e i*$ Ho1ever( *hrough *he dar, )ears of -.D- a+d -.D0( *he "over+ors of *he %ederal Reserve oard sa1 *he pligh* of *he America+ people 1orse+i+g a+d did +o*hi+g *o help *hem$ This 1as more crimi+al *ha+ *he origi+al plo**i+g of *he &epressio+$ A+)o+e 1ho lived *hrough *hose )ears i+ *his cou+*r) remembers *he 1idespread u+emplo)me+*( *he miser)( a+d *he hu+ger of our people$ A* a+) *ime duri+g *hose )ears *he %ederal Reserve oard could have ac*ed *o relieve *his si*ua*io+$ The problem 1as *o ge* some mo+e) bac, i+*o circula*io+$ So much of *he mo+e) +ormall) used *o pa) re+* a+d food bills had bee+ suc,ed i+*o 6all S*ree* *ha* *here 1as +o mo+e) *o carr) o+ *he busi+ess of livi+g$ I+ ma+) areas( people pri+*ed *heir o1+ mo+e) o+ 1ood a+d paper for use i+ *heir commu+i*ies( a+d *his mo+e) 1as good( si+ce i* represe+*ed obliga*io+s *o each o*her 1hich people fulfilled$ The %ederal Reserve S)s*em 1as a ce+*ral ba+, of issue$ I* had *he po1er *o( a+d did( 1he+ i* sui*ed i*s o1+ers( issue millio+s of dollars of mo+e)$ 6h) did i* +o* do so i+ -.D- a+d -.D0H The 6all S*ree* ba+,ers 1ere *hrough 1i*h >r$ Herber* Hoover( a+d *he) 1a+*ed %ra+,li+ &$ Roosevel* *o come i+ o+ a 1ave of glor) as *he saviour of *he +a*io+$ Therefore( *he America+ people had *o s*arve a+d suffer u+*il >arch of -.DD( 1he+ *he 6hi*e C+igh* came ridi+g i+ 1i*h his cre1 of 6all S*ree* -9/ bribers a+d pu* some mo+e) i+*o circula*io+$ Tha* 1as all *here 1as *o i*$ As soo+ as >r$ Roosevel* *oo, office( *he %ederal Reserve bega+ *o bu) "over+me+* securi*ies a* *he ra*e of *e+ millio+ dollars a 1ee, for *e+ 1ee,s( a+d crea*ed a hu+dred millio+ dollars i+ +e1 mo+e)( 1hich allevia*ed *he cri*ical fami+e of mo+e) a+d credi*( a+d *he fac*ories s*ar*ed hiri+g people agai+$ &uri+g *he Roosevel* Admi+is*ra*io+( The %ederal Reserve oard( i+sofar as *he public 1as co+cer+ed( 1as >arri+er !ccles( a+ emula*or a+d admirer of "*he Chief"$ !ccles 1as a :*ah ba+,er( 4reside+* of *he %irs* Securi*ies Corpora*io+( a famil) i+ves*me+* *rus* co+sis*i+g of a +umber of ba+,s 1hich !ccles had pic,ed up cheap duri+g *he Agricul*ural &epressio+ of -.00E0-$ !ccles also

1as a direc*or of such corpora*io+s as 4e* >il, Compa+)( >ou+*ai+ S*a*es Impleme+* Compa+)( a+d Amalgama*ed Sugar$ As a big ba+,er( !ccles fi**ed i+ 1ell 1i*h *he group of po1erful me+ 1ho 1ere opera*i+g Roosevel*$ There 1as some discussio+ i+ Co+gress as *o 1he*her !ccles ough* *o be o+ *he %ederal Reserve oard a* *he same *ime he had all of *hese ba+,s i+ :*ah( bu* he *es*ified *ha* he had ver) li**le *o do 1i*h *he %irs* Securi*ies Corpora*io+ besides bei+g 4reside+* of i*( a+d so he 1as co+firmed as Chairma+ of *he oard$ !uge+e >e)er( Br$ +o1 resig+ed from *he oard *o spe+d more of his *ime le+di+g *he *1o billio+ dollar capi*al of *he Reco+s*ruc*io+ %i+a+ce Corpora*io+( a+d de*ermi+i+g *he value of colla*eral b) his o1+ me*hods$ The a+,i+g Ac* of -.D9( 1hich grea*l) i+creased Roosevel*5s po1er over *he +a*io+5s fi+a+ces( 1as a+ i+*egral par* of *he legisla*io+ b) 1hich he proposed *o e;*e+d his reig+ i+ *he :+i*ed S*a*es$ I* 1as +o* opposed b) *he people as 1as *he #a*io+al Recover) Ac*( because i* 1as +o* so +a,ed a+ i+fri+geme+* of *heir liber*ies$ I* 1as( ho1ever( a+ impor*a+* measure$ %irs* of all( i* e;*e+ded *he *erms of office of *he %ederal Reserve oard of "over+ors *o four*ee+ )ears( or( *hree a+d a half *imes *he le+g*h of a 4reside+*ial *erm$ This mea+* *ha* a 4reside+* assumi+g office 1ho migh* be hos*ile *o *he oard could +o* appoi+* a ma=ori*) *o i* 1ho 1ould be favorable *o him$ Thus( a mo+e*ar) polic) i+augura*ed before a 4reside+* came i+*o *he 6hi*e House 1ould go o+ regardless of his 1ishes$ The a+,i+g Ac* of -.D9 also repealed *he clause of *he "lassES*eagall a+,i+g Ac* of -.DD( 1hich had provided *ha* a ba+,i+g house could +o* be o+ *he S*oc, !;cha+ge a+d also be i+volved i+ i+ves*me+* ba+,i+g$ This clause 1as a good o+e( si+ce i* preve+*ed a ba+,i+g house from le+di+g mo+e) *o a corpora*io+ 1hich i* o1+ed$ S*ill i* is *o be remembered *ha* *his clause covered up some o*her provisio+s i+ *ha* Ac*( such as *he crea*io+ of *he %ederal &eposi* I+sura+ce Corpora*io+( providi+g i+sura+ce mo+e) *o *he amou+* of -90 millio+ dollars( *o -9. guara+*ee fif*ee+ billio+ dollars 1or*h of deposi*s$ This i+creased *he po1er of *he big ba+,ers over small ba+,s a+d gave *hem a+o*her e;cuse *o i+ves*iga*e *hem$ The a+,i+g Ac* of -.DD also legisla*ed *ha* all ear+i+gs of *he %ederal Reserve a+,s mus* b) la1 go *o *he ba+,s *hemselves$ A* las* *he provisio+ i+ *he Ac* *ha* *he "over+me+* share i+ *he profi*s 1as go**e+ rid of$ I* had +ever bee+ observed( a+d *he i+crease i+ *he asse*s of *he %ederal Reserve a+,s from -2D millio+ dollars i+ -.-D *o 29 billio+ dollars i+ -.2. 1e+* e+*irel) *o *he priva*e s*oc,holders of *he ba+,s$ Thus( *he o+e co+s*ruc*ive provisio+ of *he a+,i+g Ac* of -.DD 1as repealed i+ -.D9( a+d also *he %ederal Reserve a+,s 1ere +o1 permi**ed *o loa+ direc*l) *o i+dus*r)( compe*i+g 1i*h *he member ba+,s( 1ho could +o* hope *o ma*ch *heir capaci*) i+ arra+gi+g large loa+s$ 6he+ *he provisio+ *ha* ba+,s could +o* be i+volved i+ i+ves*me+* ba+,i+g a+d opera*e o+ *he S*oc, !;cha+ge 1as repealed i+ -.D9( Car*er "lass( origi+a*or of *ha* provisio+( 1as as,ed b) repor*ers@ "&oes *ha* mea+ *ha* B$4$ >orga+ ca+ go bac, i+*o i+ves*me+* ba+,i+gH" "6ell( 1h) +o*H" replied Se+a*or "lass$ "There has bee+ a+ ou*cr) all over *he cou+*r) *ha* *he ba+,s 1ill +o* ma,e loa+s$ #o1 *he >orga+s ca+ go bac, *o u+der1ri*i+g$" ecause *ha* provisio+ 1as u+favorable *o *hem( *he ba+,ers had simpl) clamped do1+ o+ ma,i+g loa+s u+*il i* 1as repealed$ #e1s1ee, of >arch -2( -.D6( +o*ed *ha*@ "The %ederal Reserve oard fired +i+e chairme+ of Reserve a+,s( e;plai+i+g *ha* Ai* i+*e+ded *o ma,e *he chairma+ships of *he Reserve a+,s largel) a par*E*ime =ob o+ a+ ho+orar) basis$5"

This 1as a+o*her i+s*a+ce of *he ce+*rali3a*io+ of co+*rol i+ *he %ederal Reserve S)s*em$ The regio+al dis*ric* s)s*em had +ever bee+ a+ impor*a+* fac*or i+ *he admi+is*ra*io+ of mo+e*ar) polic)( a+d *he oard 1as +o* cu**i+g do1+ o+ i*s officials ou*side of 6ashi+g*o+$ The Chairma+ of *he Se+a*e Commi**ee o+ a+,i+g a+d Curre+c) had as,ed( duri+g *he "old Reserve Heari+gs of -.D2@ "Is i* +o* *rue( "over+or ?ou+g( *ha* *he Secre*ar) of *he Treasur) for *he pas* *1elve )ears has domi+a*ed *he polic) of *he %ederal Reserve a+,s a+d *he %ederal Reserve oard 1i*h respec* *o *he purchase of :+i*ed S*a*es bo+dsH" "over+or ?ou+g had de+ied *his( bu* i* had alread) bee+ brough* ou* *ha* o+ bo*h of his hurried *rips *o *his cou+*r) i+ -.0J a+d -.0. *o dic*a*e %ederal Reserve polic)( "over+or >o+*agu #orma+ of *he a+, of !+gla+d had go+e direc*l) *o A+dre1 >ello+( Secre*ar) of *he Treasur)( *o ge* him *o purchase "over+me+* securi*ies o+ *he ope+ mar,e* a+d s*ar* *he moveme+* of gold ou* of *his cou+*r) bac, *o !urope$ -60 The "old Reserve Heari+gs had also brough* i+ o*her people 1ho had more *ha+ a passi+g i+*eres* i+ *he opera*io+s of *he %ederal Reserve S)s*em$ Bames 4aul 6arburg( =us* bac, from *he Lo+do+ !co+omic Co+fere+ce 1i*h 4rofessor O$>$6$ Sprague a+d He+r) L$ S*imso+( came i+ *o declare *ha* he *hough* 1e ough* *o moder+i3e *he gold s*a+dard$ %ra+, 'a+derlip sugges*ed *ha* 1e do a1a) 1i*h *he %ederal Reserve oard a+d se* up a %ederal >o+e*ar) Au*hori*)$ This 1ould have made +o differe+ce *o *he #e1 ?or, ba+,ers( 1ho 1ould have selec*ed *he perso++el a+)1a)$ A+d Se+a*or Rober* L$ O1e+( lo+g*ime cri*ic of *he s)s*em( made *he follo1i+g s*a*eme+*@ "The people did +o* ,+o1 *he %ederal Reserve a+,s 1ere orga+i3ed for profi*Ema,i+g$ The) 1ere i+*e+ded *o s*abili3e *he credi* a+d curre+c) suppl) of *he cou+*r)$ Tha* e+d has +o* bee+ accomplished$ I+deed( *here has bee+ *he mos* remar,able varia*io+ i+ *he purchasi+g po1er of mo+e) si+ce *he S)s*em 1e+* i+*o effec*$ The %ederal Reserve me+ are chose+ b) *he big ba+,s( *hrough discree* li**le campaig+s( a+d *he) +a*urall) follo1 *he ideals 1hich are por*ra)ed *o *hem as *he sou+des* from a fi+a+cial poi+* of vie1$" e+=ami+ A+derso+( eco+omis* for *he Chase #a*io+al a+, of #e1 ?or,( said@ "A* *he mome+*( -.D2( 1e have .00 millio+ dollars e;cess reserves$ I+ -.02( 1i*h i+creased reserves of D00 millio+( )ou go* some *hree or four billio+ i+ ba+, e;pa+sio+ of credi* ver) <uic,l)$ Tha* e;*ra mo+e) 1as pu* ou* b) *he %ederal Reserve a+,s i+ -.02 *hrough bu)i+g gover+me+* securi*ies a+d 1as *he cause of *he rapid e;pa+sio+ of ba+, credi*$ The ba+,s co+*i+ued *o ge* e;cess reserves because more gold came i+( a+d because( 1he+ever *here 1as a slac,e+i+g( *he %ederal Reserve people 1ould pu* ou* some more$ The) held bac, a bi* i+ -.06$ Thi+gs firmed up a bi* *ha* )ear$ A+d *he+ i+ -.0J *he) pu* ou* less *ha+ D00 millio+ addi*io+al

reserves( se* *he 1ild s*oc, mar,e* goi+g( a+d *ha* led us righ* i+*o *he smash of -.0.$" &r$ A+derso+ also s*a*ed *ha*@ "The mo+e) of *he %ederal Reserve a+,s is mo+e) *he) crea*ed$ 6he+ *he) bu) "over+me+* securi*ies *he) crea*e reserves$ The) pa) for *he "over+me+* securi*ies b) givi+g chec,s o+ *hemselves( a+d *hose chec,s come *o *he commercial ba+,s a+d are b) *hem deposi*ed i+ *he %ederal Reserve a+,s( a+d *he+ mo+e) e;is*s 1hich did +o* e;is* before$" S!#ATOR :LCL!?@ I* does +o* i+crease *he circula*i+g medium a* allH A#&!RSO#@ #o$ This is a+ e;pla+a*io+ of *he ma++er i+ 1hich *he %ederal Reserve a+,s i+creased *heir asse*s from -2D millio+ dollars *o 29 billio+ dollars i+ *hir*)Efive )ears$ The) did +o* produce a+)*hi+g( *he) 1ere +o+Eproduc*ive e+*erprises( a+d )e* *he) had *his e+ormous profi*( merel) b) crea*i+g mo+e)( .9 perce+* of i* i+ *he form of credi*( 1hich did +o* add -6*o *he circula*i+g medium$ I* 1as +o* dis*ribu*ed amo+g *he people i+ *he form of 1ages( +or did i* i+crease *he bu)i+g po1er of *he farmers a+d 1or,ers$ I* 1as credi*Emo+e) crea*ed b) ba+,ers for *he use a+d profi* of ba+,ers( 1ho i+creased *heir 1eal*h b) more *ha+ for*) billio+ dollars i+ a fe1 )ears because *he) had ob*ai+ed co+*rol of *he "over+me+*5s credi* i+ -.-D b) passi+g *he %ederal Reserve Ac*$ >arri+er !ccles also had much *o sa) abou* *he crea*io+ of mo+e)$ He co+sidered himself a+ eco+omis*( a+d had bee+ brough* i+*o *he "over+me+* service b) S*uar* Chase a+d Re;ford "u) Tug1ell( *1o of Roosevel*5s earl) brai+E*rus*ers$ !ccles 1as *he o+l) o+e of *he Roosevel* cro1d 1ho s*a)ed i+ office *hroughou* his admi+is*ra*io+$ efore *he House a+,i+g a+d Curre+c) Commi**ee o+ Bu+e 02( -.2-( "over+or !ccles said@ ">o+e) is crea*ed ou* of *he righ* *o issue credi*Emo+e)$" Tur+i+g over *he "over+me+*5s credi* *o priva*e ba+,ers i+ -.-D gave *hem u+limi*ed oppor*u+i*ies *o crea*e mo+e)$ The %ederal Reserve S)s*em could also des*ro) mo+e) i+ large <ua+*i*ies *hrough ope+ mar,e* opera*io+s$ !ccles said( a* *he Silver Heari+gs of -.D.@ "6he+ )ou sell bo+ds o+ *he ope+ mar,e*( )ou e;*i+guish reserves$" !;*i+guishi+g reserves mea+s 1ipi+g ou* a basis for mo+e) a+d credi* issue( or( *igh*e+i+g up o+ mo+e) a+d credi*( a co+di*io+ 1hich is usuall) eve+ more favorable *o ba+,ers *ha+ *he crea*io+ of mo+e)$ Calli+g i+ or des*ro)i+g mo+e) gives *he ba+,er immedia*e a+d u+limi*ed co+*rol of *he fi+a+cial si*ua*io+( si+ce he is *he o+l) o+e 1i*h mo+e) a+d *he o+l) o+e 1i*h *he po1er *o issue mo+e) i+ a *ime of mo+e) shor*age$ The mo+e) pa+ics of -/JD( -/.D( -.00E0-( a+d -.0.ED-( 1ere charac*eri3ed b) a dra1i+g i+ of *he circula*i+g medium$ I+ eco+omical *erms( *his does +o* sou+d li,e such a *errible *hi+g( bu* 1he+ i* mea+s *ha* people do +o* have mo+e) *o pa) *heir re+* or bu) food( a+d 1he+ i* mea+s *ha* a+ emplo)er has *o la) off *hreeEfour*hs of his help because he ca++o* borro1 *he mo+e) *o pa) *hem( *he e+ormous guil* of *he ba+,ers a+d *he lo+g record of sufferi+g a+d miser) for 1hich *he) are respo+sible 1ould sugges* *ha* +o pu+ishme+* migh* be *oo severe for *heir crimes agai+s* *heir fello1me+$ O+ Sep*ember D0( -.20( "over+or !ccles said@

"If *here 1ere +o deb*s i+ our mo+e) s)s*em( *here 1ould be +o mo+e)$" This is a+ accura*e s*a*eme+* abou* our mo+e) s)s*em$ I+s*ead of mo+e) bei+g crea*ed b) *he produc*io+ of *he people( *he a++ual i+crease i+ goods a+d services( i* is crea*ed b) *he ba+,ers ou* of *he deb*s of *he people$ ecause i* is i+ade<ua*e( i* is sub=ec* *o grea* fluc*ua*io+s a+d is basicall) u+s*able$ These fluc*ua*io+s are also a source of grea* profi*$ %or *ha* reaso+( *he %ederal Reserve oard has co+sis*e+*l) opposed a+) -60 legisla*io+ 1hich a**emp*s *o s*abili3e *he mo+e*ar) s)s*em$ I*s posi*io+ has bee+ se* for*h defi+i*ivel) i+ Chairma+ !ccles5 le**er *o Se+a*or 6ag+er o+ >arch .( -.D.( a+d *he >emora+dum issued b) *he oard o+ >arch -D( -.D.$ Chairma+ !ccles 1ro*e *ha*@ "$ $ $ )ou are advised *ha* *he oard of "over+ors of *he %ederal Reserve S)s*em does +o* favor *he e+ac*me+* of Se+a*e ill #o$ D-( a bill *o ame+d *he %ederal Reserve Ac*( or a+) o*her legisla*io+ of *his ge+eral charac*er$" The >emora+dum of *he oard s*a*ed( i+ i*s ">emora+dum o+ 4roposals *o mai+*ai+ prices a* fi;ed levels"@ "The oard of "over+ors opposes a+) bill 1hich proposes a s*able price level( o+ *he grou+ds *ha* prices do +o* depe+d primaril) o+ *he price or cos* of mo+e)G *ha* *he oard5s co+*rol over mo+e) ca++o* be made comple*eG a+d *ha* s*ead) average prices( eve+ if ob*ai+able b) official ac*io+( 1ould +o* i+sure las*i+g prosperi*)$" ?e* 6illiam >cChes+e) >ar*i+( *he Chairma+ of *he oard of "over+ors i+ -.90( said before *he Subcommi**ee o+ &eb* Co+*rol( *he 4a*ma+ Commi**ee( o+ >arch -0( -.90 *ha* "O+e of *he fu+dame+*al purposes of *he %ederal Reserve Ac* is *o pro*ec* *he value of *he dollar$" Se+a*or %la+ders <ues*io+ed him@ "Is *ha* specificall) s*a*ed i+ *he origi+al legisla*io+ se**i+g up *he %ederal Reserve S)s*emH" "#o(" replied >r$ >ar*i+( "bu* i* is i+here+* i+ *he e+*ire legisla*ive his*or) a+d i+ *he surrou+di+g circums*a+ces$" Se+a*or Rober* L$ O1e+ has *old us ho1 i* 1as *a,e+ ou* of *he origi+al legisla*io+ agai+s* his 1ill( a+d *ha* *he oard of "over+ors has opposed such legisla*io+$ Appare+*l) >r$ >ar*i+ does +o* ,+o1 *his$ S*ead) average prices( i+deed( are impossible so lo+g as 1e have *he specula*ors o+ *he s*oc, e;cha+ge drivi+g prices up a+d do1+ i+ order *o reap profi*s for *hemselves$ &espi*e "over+or !ccles5 i+sis*e+ce *ha* s*ead) average prices 1ould +o* i+sure las*i+g prosperi*)( *he) could do much *o bri+g abou* *his co+di*io+$ A ma+ o+ a )earl) 1age of Q0(900 is +o* more prosperous if *he price of bread i+creases five ce+*s a loaf duri+g *he )ear$ I+ -.D9( !ccles said before *he House Commi**ee o+ a+,i+g a+d Curre+c)@ "The "over+me+* co+*rols *he gold reserve( *ha* is( *he po1er *o issue mo+e) a+d credi*( *hus largel) regula*i+g *he price s*ruc*ure$"

This is a+ almos* direc* co+*radic*io+ of !ccles5 s*a*eme+* i+ -.D. *ha* prices do +o* depe+d( primaril)( o+ *he price or cos* of mo+e)$ I+ -.D9( "over+or !ccles s*a*ed before *he House Commi**ee@ "The %ederal Reserve oard has *he po1er of ope+ mar,e* opera*io+s$ Ope+Emar,e* opera*io+s are *he mos* impor*a+* si+gle i+s*rume+* of -6D co+*rol over *he volume a+d cos* of credi* i+ *his cou+*r)$ 6he+ I sa) "credi*" i+ *his co++ec*io+( I mea+ mo+e)( because b) far *he larges* par* of mo+e) i+ use b) *he people of *his cou+*r) is i+ *he form of ba+, credi* or ba+, deposi*s$ 6he+ *he %ederal Reserve a+,s bu) bills or securi*ies i+ *he ope+ mar,e*( *he) i+crease *he volume of *he people5s mo+e) a+d lo1er i*s cos*G a+d 1he+ *he) sell i+ *he ope+ mar,e* *he) decrease *he volume of mo+e) a+d i+crease i*s cos*$ Au*hori*) over *hese opera*io+s( 1hich affec* *he 1elfare of *he 1hole people( mus* be i+ves*ed i+ a bod) represe+*i+g *he +a*io+al i+*eres*$" "over+or !ccles *es*imo+) e;poses *he hear* of *he mo+e) machi+e 1hich 4aul 6arburg revealed *o his i+credulous fello1 ba+,ers a* Be,)ll Isla+d i+ -.-0$ >os* America+s comme+* *ha* *he) ca++o* u+ders*a+d ho1 *he %ederal Reserve S)s*em opera*es$ I* remai+s be)o+d u+ders*a+di+g( +o* because i* is comple;( bu* because i* is so simple$ If a co+fide+ce ma+ comes up *o )ou a+d offers *o demo+s*ra*e his marvelous mo+e) machi+e( )ou 1a*ch 1hile he pu*s i+ a bla+, piece of paper( a+d cra+,s ou* a Q-00 bill$ Tha* is *he %ederal Reserve S)s*em$ ?ou *he+ offer *o bu) *his marvelous mo+e) machi+e( bu* )ou ca++o*$ I* is o1+ed b) *he priva*e s*oc,holders of *he %ederal Reserve a+,s( 1hose ide+*i*ies ca+ be *raced par*iall)( bu* +o* comple*el)( *o "*he Lo+do+ Co++ec*io+$" A* *he House a+,i+g a+d Curre+c) Commi**ee Heari+gs o+ Bu+e 6( -.60( Co+gressma+ 6righ* 4a*ma+( Chairma+( <ues*io+ed Carl !$ Alle+( 4reside+* of *he %ederal Reserve a+, of Chicago$ 7p$ 28$ 4AT>A#@ "#o1 >r$ Alle+( 1he+ *he %ederal Reserve Ope+ >ar,e* Commi**ee bu)s a millio+ dollar bo+d )ou crea*e *he mo+e) o+ *he credi* of *he #a*io+ *o pa) for *ha* bo+d( do+5* )ouH ALL!#@ Tha* is correc*$ 4AT>A#@ A+d *he credi* of *he #a*io+ is represe+*ed b) %ederal Reserve #o*es i+ *ha* case( is+5* i*H If *he ba+,s 1a+* *he ac*ual mo+e)( )ou give %ederal Reserve +o*es i+ pa)me+*( do+5* )ouH ALL!#@ Tha* could be do+e( bu* +obod) 1a+*s *he %ederal Reserve +o*es$ 4AT>A#@ #obod) 1a+*s *hem( because *he ba+,s 1ould ra*her have *he credi* as reserves$" This is *he mos* i+credible par* of *he %ederal Reserve opera*io+ a+d o+e 1hich is difficul* for a+)o+e *o u+ders*a+d$ Ho1 ca+ a+) America+ ci*i3e+ grasp *he co+cep* *ha* *here are people i+ *his cou+*r) 1ho have *he po1er *o ma,e a+ e+*r) i+ a ledger *ha* *he gover+me+* of *he :+i*ed S*a*es +o1 o1es *hem o+e billio+ dollars( a+d *o collec* *he pri+cipal a+d i+*eres* o+ *his "loa+"H Co+gressma+ 6righ* 4a*ma+ *ells us i+ "The 4rimer of >o+e)"( p$ D/ of goi+g i+*o a %ederal Reserve a+, a+d as,i+g *o see *heir bo+ds o+ 1hich *he America+ people are pa)i+g i+*eres*$ Af*er bei+g sho1+ *he bo+ds( he as,ed *o see *heir cash( bu* *he) o+l) had some ledgers a+d bla+, chec,s$ 4a*ma+ sa)s( "The cash( i+ *ru*h( does +o* e;is* a+d has +ever e;is*ed$ 6ha* 1e call Acash reserves5 are simpl) boo,,eepi+g credi*s e+*ered upo+ ledgers -62

of *he %ederal Reserve a+,s$ The credi*s are crea*ed b) *he %ederal Reserve a+,s a+d *he+ passed alo+g *hrough *he ba+,i+g s)s*em$" 4e*er L$ er+s*ei+( i+ A 4rimer O+ >o+e)( a+,i+g a+d "old sa)s@ "The *ric, i+ *he %ederal Reserve +o*es is *ha* *he %ederal reserve ba+,s lose +o cash 1he+ *he) pa) ou* *his curre+c) *o *he member ba+,s$ %ederal Reserve +o*es are +o* redeemable i+ a+)*hi+g e;cep* 1ha* *he "over+me+* calls Alegal *e+der5EE*ha* is( mo+e) *ha* a credi*or mus* be 1illi+g *o accep* from a deb*or i+ pa)me+* of sums o1ed him$ u* si+ce all %ederal Reserve +o*es are *hemselves declared b) la1 *o be legal mo+e)( *he) are reall) redeemable o+l) i+ *hemselves $ $ $ *he) are a+ irredeemable obliga*io+ issued b) *he %ederal Reserve a+,s$".As Co+gressma+ 4a*ma+ pu*s i*( "The dollar represe+*s a o+e dollar deb* *o *he %ederal Reserve S)s*em$ The %ederal Reserve a+,s crea*e mo+e) ou* of *hi+ air *o bu) "over+me+* bo+ds from *he :+i*ed S*a*es Treasur)( le+di+g mo+e) i+*o circula*io+ a* i+*eres*( b) boo,,eepi+g e+*ries of chec,boo, credi* *o *he :+i*ed S*a*es Treasur)$ The Treasur) 1ri*es up a+ i+*eres* beari+g bo+d for o+e billio+ dollars$ The %ederal Reserve gives *he Treasur) a o+e billio+ dollar credi* for *he bo+d( a+d has crea*ed ou* of +o*hi+g a o+e billio+ dollar deb* 1hich *he America+ people are obliga*ed *o pa) 1i*h i+*eres*$" 7>o+e) %ac*s( House a+,i+g a+d Curre+c) Commi**ee( -.62( p$ .8 4a*ma+ co+*i+ues( "6here does *he %ederal Reserve s)s*em ge* *he mo+e) 1i*h 1hich *o crea*e a+, ReservesH A+s1er$ I* does+5* ge* *he mo+e)( i* crea*es i*$ 6he+ *he %ederal Reserve 1ri*es a chec,( i* is crea*i+g mo+e)$ The %ederal Reserve is a *o*al mo+e)ma,i+g machi+e$ I* ca+ issue mo+e) or chec,s$" I+ -.9-( *he %ederal Reserve a+, of #e1 ?or, published a pamphle*( "A &a)5s 6or, a* *he %ederal Reserve a+, of #e1 ?or,$" O+ page 00( 1e fi+d *ha*@ "There is s*ill a+o*her a+d more impor*a+* eleme+* of public i+*eres* i+ *he opera*io+ of ba+,s besides *he safe,eepi+g of mo+e)G ba+,s ca+ Acrea*e5 mo+e)$ O+e of *he mos* impor*a+* fac*ors *o remember i+ *his co++ec*io+ is *ha* *he suppl) of mo+e) affec*s *he ge+eral level of pricesEE*he cos* of livi+g$ The Cos* of Livi+g I+de; a+d mo+e) suppl) are parallel$" The decisio+s of *he %ederal Reserve oard( or ra*her( *he decisio+s 1hich *he) are *old *o ma,e b) "par*ies u+,+o1+"( affec* *he dail) lives of ever) America+ b) *he effec* of *hese decisio+s o+ prices$ Raisi+g *he i+*eres* ra*e( or causi+g mo+e) *o became "dearer" ac*s *o limi* *he amou+* of mo+e) available i+ *he mar,e*( as does *he raisi+g of reserve KKKKKKKKKKKKKKKKKKKKKKKKKK

.- 4e*er L$ er+s*ei+( A 4rimer O+ >o+e)( a+,i+g a+d "old( 'i+*age oo,s( #e1 ?or,( -.69( p$ -02 -69 re<uireme+*s b) *he %ederal Reserve S)s*em$ Selli+g bo+ds b) *he Ope+ >ar,e* Commi**ee also e;*i+guishes a+d lo1ers *he mo+e) suppl)$ u)i+g gover+me+* securi*ies o+ *he ope+ mar,e* "crea*es" more mo+e)( as does lo1eri+g *he i+*eres* ra*e a+d ma,i+g mo+e) "cheaper"$ I* is a;ioma*ic *ha* a+ i+crease i+ *he mo+e) suppl) bri+gs prosperi*)( a+d *ha* a decrease i+ *he mo+e) suppl) bri+gs o+ a depressio+$ &rama*ic i+creases i+ *he mo+e) 1hich ou*s*rip *he suppl) of goods bri+gs o+ i+fla*io+( "*oo much mo+e) chasi+g *oo fe1 goods"$ A more eso*eric aspec* of *he mo+e*ar) s)s*em is "veloci*) of circula*io+"( 1hich sou+ds much more *ech+ical *ha+ i* is$ This is *he speed a* 1hich mo+e) cha+ges ha+dsG if i* is gold buried i+ *he peasa+*5s garde+( *ha* is a slo1 veloci*) of circula*io+( caused b) a lac, of co+fide+ce i+ *he eco+om) or *he +a*io+$ 'er) rapid veloci*) of circula*io+( such as *he s*oc, mar,e* boom of *he la*e -.00s( mea+s <uic, *ur+over( spe+di+g a+d i+ves*me+* of mo+e)( a+d i*s s*ems from co+fide+ce( or overco+fide+ce( i+ *he eco+om)$ 6i*h a high veloci*) of circula*io+( a smaller mo+e) suppl) circula*es amo+g as ma+) people a+d goods as a larger mo+e) suppl) 1ould circula*e 1i*h a slo1er veloci*) of circula*io+$ 6e me+*io+ *his because *he veloci*) of circula*io+( or co+fide+ce i+ *he eco+om)( also is grea*l) affec*ed b) *he %ederal Reserve ac*io+s$ >il*o+ %riedma+ comme+*s i+ #e1s1ee,( >a) 0( -./D( "The %ederal Reserve5s ma=or fu+c*io+ is *o de*ermi+e *he mo+e) suppl)$ I* has *he po1er *o i+crease or decrease *he mo+e) suppl) a* a+) ra*e i* chooses$" This is a+ e+ormous po1er( because i+creasi+g *he mo+e) suppl) ca+ cause *he reEelec*io+ of a+ admi+is*ra*io+( 1hile decreasi+g i* ca+ cause a+ admi+is*ra*io+ *o be defea*ed$ %riedma+ goes o+ *o cri*ici3e *he %ederal Reserve( "Ho1 is i* *ha* a+ i+s*i*u*io+ 1hich has so poor a record of performa+ce +ever*heless has so high a public repu*a*io+ a+d eve+ comma+ds a co+siderable measure of credibili*) for i*s forecas*sH" All ope+ mar,e* *ra+sac*io+s( 1hich affec* *he mo+e) suppl)( are co+duc*ed for a si+gle S)s*em accou+* b) *he %ederal Reserve a+, of #e1 ?or, o+ *he behalf of all *he %ederal Reserve a+,s( a+d supervised b) a+ officer of *he %ederal Reserve a+, of #e1 ?or,$ The co+fere+ces a* 1hich decisio+s are made *o bu) or sell securi*ies b) *he Ope+ >ar,e* Commi**ee remai+ closed *o *he public( a+d *he delibera*io+s also remai+ a m)s*er)$ O+ >a) /( -.0/( The #e1 ?or, Times repor*ed *ha* Adolph C$ >iller( "over+or of *he %ederal Reserve oard( *es*if)i+g before *he House a+,i+g a+d Curre+c) Commi**ee( s*a*ed *ha* ope+ mar,e* purchases a+d rediscou+* ra*es 1ere es*ablished *hrough "co+versa*io+s"$ A* *ha* *ime( *he purchases o+ *he ope+ mar,e* amou+*ed *o seve+*) or eigh*) millio+ dollars a da)( a+d 1ould be *e+ *imes *ha* *oda)$ These are vas* sums *o be ma+ipula*ed o+ *he basis of mere "co+versa*io+s"( bu* *ha* is as much i+forma*io+ as 1e ca+ ob*ai+$ -66 ecause of *hese m)s*erious *ra+sac*io+s 1hich affec* *he life( liber*) a+d happi+ess of ever) America+ ci*i3e+( *here have bee+ +umerous proposals such as Se+a*e &ocume+* #o$ 0D( prese+*ed b) >r$ Loga+ o+ Ba+uar) 02( -.D.( *ha* "The "over+me+* should crea*e( issue a+d circula*e all *he curre+c) a+d credi* +eeded *o sa*isf) *he spe+di+g po1er of *he "over+me+* a+d *he bu)i+g po1er of *he co+sumers$ The privilege of crea*i+g a+d issui+g mo+e) is +o* o+l) *he supreme preroga*ive of "over+me+*( bu* i* is *he "over+me+*5s grea*es* crea*ive oppor*u+i*)$" O+ >arch 0-( -.60( Co+gressma+ 6righ* 4a*ma+ used a simple illus*ra*io+ i+ *he Co+gressio+al Record of ho1 ba+,s "crea*e mo+e)"$ "If I deposi* Q-00 1i*h m) ba+, a+d *he reserve re<uireme+*s imposed b) *he %ederal Reserve a+, are 00T *he+ *he ba+, ca+ ma,e a loa+ *o Boh+ &oe of up *o Q/0$ 6here does *he Q/0 come fromH I* does +o* come ou* of m) deposi* of Q-00G o+ *he co+*rar)( *he ba+, simpl) credi*s Boh+ &oe5s accou+* 1i*h Q/0$ The ba+, ca+ ac<uire "over+me+* obliga*io+s b) *he same procedure( b) simpl) crea*i+g

deposi*s *o *he credi* of *he gover+me+*$ >o+e) crea*i+g is a po1er of *he commercial ba+,s $ $ $ Si+ce -.-J *he %ederal Reserve has give+ *he priva*e ba+,s for*)Esi; billio+ dollars of reserves$" Ho1 *his is do+e is bes* revealed b) "over+or !ccles a* Heari+gs before *he House Commi**ee o+ a+,i+g a+d Curre+c) o+ Bu+e 02( -.2-@ !CCL!S@ "The ba+,i+g s)s*em as a 1hole crea*es a+d e;*i+guishes *he deposi*s as *he) ma,e loa+s a+d i+ves*me+*s( 1he*her *he) bu) "over+me+* o+ds or 1he*her *he) bu) u*ili*) bo+ds or 1he*her *he) ma,e %armer5s loa+s$ >R$ 4AT>A#@ I am *horoughl) i+ accord 1i*h 1ha* )ou sa)( "over+or( bu* *he fac* remai+s *ha* *he) crea*ed *he mo+e)( did *he) +o*H !CCL!S@ 6ell( *he ba+,s crea*e mo+e) 1he+ *he) ma,e loa+s a+d i+ves*me+*s$" O+ Sep*ember D0( -.2-( before *he same Commi**ee( "over+or !ccles 1as as,ed b) Represe+*a*ive 4a*ma+@ "Ho1 did )ou ge* *he mo+e) *o bu) *hose *1o billio+ dollars 1or*h of "over+me+* securi*ies i+ -.DDH !CCL!S@ 6e crea*ed i*$ >R$ 4AT>A#@ Ou* of 1ha*H !CCL!S@ Ou* of *he righ* *o issue credi* mo+e)$ >R$ 4AT>A#@ A+d *here is +o*hi+g behi+d i*( is *here( e;cep* our "over+me+*5s credi*H !CCL!S@ Tha* is 1ha* our mo+e) s)s*em is$ If *here 1ere +o deb*s i+ our mo+e) s)s*em( *here 1ould+5* be a+) mo+e)$" O+ Bu+e -J( -.20( "over+or !ccles 1as i+*erroga*ed b) >r$ &e1e)$ !CCL!S@ "I mea+ *he %ederal Reserve( 1he+ i* carries ou* a+ ope+ mar,e* opera*io+( *ha* is( if i* purchases "over+me+* securi*ies i+ *he -6J ope+ mar,e*( i* pu*s +e1 mo+e) i+*o *he ha+ds of *he ba+,s 1hich crea*es idle deposi*s$ &!6!?@ There are +o e;cess reserves *o use for *his purposeH !CCL!S@ 6he+ever *he %ederal Reserve S)s*em bu)s "over+me+* securi*ies i+ *he ope+ mar,e*( or bu)s *hem direc* from *he Treasur)( ei*her o+e( *ha* is 1ha* i* does$ &!6!?@ 6ha* are )ou goi+g *o use *o bu) *hem 1i*hH ?ou are goi+g *o crea*e credi*H

!CCL!S@ Tha* is all 1e have ever do+e$ Tha* is *he 1a) *he %ederal Reserve S)s*em opera*es$ The %ederal Reserve S)s*em crea*es mo+e)$ I* is a ba+, of issue$" A* *he House Heari+g of -.2J( >r$ Colbur+ as,ed >r$ !ccles@ "6ha* do )ou mea+ b) mo+e*i3a*io+ of *he public deb*H !CCL!S@ I mea+ *he ba+, crea*i+g mo+e) b) *he purchase of "over+me+* securi*ies$ All is crea*ed b) deb*EEei*her priva*e or public deb*$ %L!TCH!R@ Chairma+ !ccles( 1he+ do )ou *hi+, *here is a possibili*) of re*ur+i+g *o a free a+d ope+ mar,e*( i+s*ead of *his pegged a+d ar*ificiall) co+*rolled fi+a+cial mar,e* 1e +o1 haveH !CCL!S@ #ever$ #o* i+ )our life*ime or mi+e$" Co+gressma+ Berr) 'oorhis is <uo*ed i+ ?.,. &ews# Augus* D-( -.9.( as <ues*io+i+g Secre*ar) of Treasur) A+derso+( "&o )ou mea+ *ha* a+,s( i+ bu)i+g "over+me+* securi*ies( do +o* le+d ou* *heir cus*omers5 deposi*sH Tha* *he) crea*e *he mo+e) *he) use *o bu) *he securi*iesH A#&!RSO#@ Tha* is correc*$ a+,s are differe+* from o*her le+di+g i+s*i*u*io+s$ 6he+ a savi+gs associa*io+( a+ i+sura+ce compa+)( or a credi* u+io+ ma,es a loa+( i* le+ds *he ver) dollar *ha* i*s cus*omers have previousl) paid i+$ u* 1he+ a ba+, ma,es a loa+( i* simpl) adds *o *he borro1er5s deposi* accou+* i+ *he ba+, b) *he amou+* of *he loa+$ The mo+e) is +o* *a,e+ from a+)o+e$ I* is +e1 mo+e)( recrea*ed b) *he ba+,( for *he use of *he borro1er$" S*ra+gel) e+ough( *here has +ever bee+ a cour* *rial o+ *he legali*) or Co+s*i*u*io+ali*) of *he %ederal Reserve Ac*$ Al*hough i* is o+ much *he same sha,) grou+ds as *he #a*io+al Recover) Ac*( or #RA( 1hich 1as challe+ged i+ Schech*er 4oul*r) v$ :+i*ed S*a*es of America( 0. :$S$ 2.9( 99 :S /DJ$/20 7-.D98( *he #RA 1as ruled u+co+s*i*u*io+al b) *he Supreme Cour* o+ *he grou+ds *ha* "Co+gress ma) +o* abdica*e or *ra+sfer *o o*hers i*s legi*ima*e fu+c*io+s$ Co+gress ca++o* Co+s*i*u*io+all) delega*e i*s legisla*ive au*hori*) *o *rade or i+dus*rial associa*io+s or groups so as *o empo1er *hem *o ma,e la1s$" Ar*icle -( Sec$ / of *he Co+s*i*u*io+ provides *ha* "The Co+gress shall have po1er *o borro1 mo+e) o+ *he credi* of *he :+i*ed S*a*es $ $ $ a+d *o coi+ >o+e)( regula*e *he value *hereof( a+d of foreig+ Coi+( a+d fi; *he S*a+dard of 6eigh*s a+d >easures$" Accordi+g *o *he #RA deciE -6/ sio+( Co+gress ca++o* delega*e *his po1er *o *he %ederal Reserve S)s*em( +or ca+ i* delega*e i*s legisla*ive au*hori*) *o *he %ederal Reserve S)s*em *o allo1 *he S)s*em *o fi; *he ra*e of ba+, reserves( *he rediscou+* ra*e( or *he volume of mo+e)$ All of *hese are "legisla*ed" b) *he %ederal Reserve oard( mee*i+g i+ legisla*ive sessio+s *o de*ermi+e *hese ma**ers a+d *o issue "la1s" or regula*io+s fi;i+g *hem$ The Seco+d 6orld 6ar gave *he big ba+,ers 1ho o1+ed *he %ederal Reserve S)s*em a cha+ce *o u+load o+ *he cou+*r) billio+s of dollars pri+*ed earl) i+ -.D0( i+ *he bigges* cou+*erfei*i+g opera*io+ i+ his*or)( all legali3ed b) Roosevel*5s gover+me+*( of course$ He+r) Ha3li** 1ri*es i+ *he Ba+uar) 2( -.2D issue of &ewsweek =aga@ineA "The mo+e) *ha* bega+ *o appear i+ circula*io+ a 1ee, ago( &ecember 0-( -.20( 1as reall) pri+*i+g press mo+e) i+ *he fulles* se+se of *he *erm( *ha* is( mo+e) 1hich has no collateral of any kind behind it. The %ederal Reserve s*a*eme+* *ha* AThe oard of "over+ors( af*er co+sul*a*io+ 1i*h *he Treasur) &epar*me+*( has au*hori3ed %ederal Reserve a+,s *o u*ili3e a* *his *ime *he e;is*i+g s*oc,s of curre+c)

pri+*ed i+ *he earl) *hir*ies( ,+o1+ as A%ederal Reserve a+,+o*es5$ 6e repea*( *hese +o*es have absolu*el) +o colla*eral of a+) ,i+d behi+d *hem$" "over+or !ccles also *es*ified *o some o*her i+*eres*i+g ma**ers of *he %ederal Reserve a+d 1ar fi+a+ce a* *he Se+a*e Heari+gs o+ *he Office of 4rice Admi+is*ra*io+ i+ -.22@ "The curre+c) i+ circula*io+ 1as i+creased from seve+ billio+ dollars i+ four )ears *o *1e+*)Eo+e a+d a half billio+$ 6e are losi+g some co+siderable amou+*s of gold duri+g *he 1ar period$ As our e;por*s have go+e ou*( largel) o+ a le+dElease basis( 1e have *a,e+ impor*s o+ 1hich 1e have give+ dollar bala+ces$ These cou+*ries are +o1 dra1i+g off *hese dollar bala+ces i+ *he form of gold$ >R$ S>ITH@ "over+or !ccles( 1ha* is *he ob=ec*ive *ha* *he foreig+ gover+me+*s are af*er i+ *his pro=ec*ed program 1hereb) 1e 1ould co+*ribu*e gold *o a+ i+*er+a*io+al fu+dH "O'!R#OR !CCL!S@ I 1ould li,e *o discuss O4A( a+d leave *he s*abili3a*io+ fu+d for a *ime 1he+ I am prepared *o go i+*o i*$ >R$ S>ITH@ Bus* a mi+u*e$ I feel *ha* *his fu+d is ver) per*i+e+* *o 1ha* 1e are *al,i+g abou* *oda)$ >R$ %OR&@ I believe *ha* *he s*abili3a*io+ fu+d is e+*irel) off *he @O4A a+d co+se<ue+*l) 1e ough* *o s*ic, *o *he busi+ess a* ha+d$" The Co+gressme+ +ever did ge* *o discuss *he S*abili3a*io+ %u+d( a+o*her se*up 1hereb) 1e 1ould give *he impoverished cou+*ries of !urope bac, *he gold 1hich had bee+ se+* over here$ I+ -.29( He+r) Ha3li**( comme+*i+g i+ &ewsweek of Ba+uar) 00( o+ Roosevel*5s a++ual budge* message *o Co+gress( <uo*ed Roosevel* as sa)i+g@ "I shall la*er recomme+d legisla*io+ reduci+g *he prese+* high gold reserve re<uireme+*s of *he %ederal Reserve a+,s$" -6. Ha3li** poi+*ed ou* *ha* *he reserve re<uireme+* 1as +o* high( i* 1as =us* 1ha* i* had bee+ for *he pas* *hir*) )ears$ Roosevel*5s purpose 1as *o free more gold from *he %ederal Reserve S)s*em a+d ma,e i* available for *he S*abili3a*io+ %u+d( la*er called *he I+*er+a*io+al >o+e*ar) %u+d( par* of *he 6orld a+, for Reco+s*ruc*io+ a+d &evelopme+*( *he e<uivale+* of *he League %i+a+ce Commi**ee 1hich 1ould have s1allo1ed *he fi+a+cial sovereig+*) of *he :+i*ed S*a*es if *he Se+a*e had le* us =oi+ i*$ -J0

CHA4T!R %O:RT!!#

Co+gressio+al !;posF
">r$ 'olc,er5s poli*ics is some*hi+g of a+ e+igma$"EE&ew 'ork Times Si+ce -.DD 1he+ !uge+e >e)er resig+ed from *he %ederal Reserve oard of "over+ors( +o member of *he i+*er+a*io+al ba+,i+g families has perso+all) served o+ *he oard of "over+ors$ The) have chose+ *o 1or, from behi+d *he sce+es *hrough carefull) selec*ed preside+*s of *he %ederal Reserve a+, of #e1 ?or, a+d o*her emplo)ees$ The prese+* chairma+ of *he %ederal Reserve oard of "over+ors is 4aul 'olc,er$ His appoi+*me+* 1as gree*ed b) o+e 1ellE,+o1+ eco+omis* 1i*h *he follo1i+g predic*io+( "'olc,er5s selec*io+ has bee+ b) far *he 1ors*$ Car*er has pu* &racula i+ charge of *he blood ba+,$ To us( i* mea+s a crash a+d depressio+ i+ *he /0s is more cer*ai+ *ha+ ever$" Col$ !$C$ Har1ood5s $esearch $eport# Augus* 6( -.J.( gave much *he same vie1$ "4aul 'olc,er is from *he same mold as *he u+sou+d mo+e) me+ 1ho have misguided *he mo+e*ar) ac*io+s of *his +a*io+ for *he pas* five decades$ The ou*come probabl) 1ill be e<uall) disas*rous for *he dollar a+d *he :$S$ eco+om)$" &espi*e *hese gloom) vie1s( *he repor* from The &ew 'ork Times o+ *he selec*io+ of 'olc,er 1as posi*ivel) ecs*a*ic$ O+ Bul) 06( -.J.( The Times comme+*ed *ha* 'olc,er lear+ed "*he busi+ess" from Rober* Roosa( +o1 par*+er of ro1+ ro*hers Harrima+( a+d *ha* 'olc,er had bee+ par* of *he Roosa rai+ Trus* a* *he %ederal Reserve a+, of #e1 ?or,( a+d( la*er( a* *he Treasur) i+ *he Ce++ed) admi+is*ra*io+$ "&avid Roc,efeller( *he chairma+ of Chase( a+d >r$ Roosa 1ere s*ro+g i+flue+ces i+ *he >r$ Car*er decisio+ *o +ame >r$ 'olc,er for *he Reserve oard chairma+ship$" The &ew 'ork Times did +o* poi+* ou* *ha* &avid Roc,efeller a+d Rober* Roosa had previousl) chose+ >r$ Car*er( a member of *he Trila*eral Commissio+( as *he preside+*ial ca+dida*e of *he &emocra*ic 4ar*)( or *ha* >r$ Car*er 1ould hardl) refuse *o appoi+* *heir choice of 4aul 'olc,er as *he +e1 Chairma+ of *he %ederal Reserve oard$ #or is i* s*rai+i+g *he poi+* *o be remi+ded *ha* *his ma++er of selec*io+ of *he Chairma+ of *he oard of "over+ors is direc*l) i+ *he li+e of ro)al preroga*ive goi+g bac, *o "eorge 4eabod)5s i+i*ial agreeme+* 1i*h #$>$ Ro*hschild( *o *he Be,)ll Isla+d mee*i+g( a+d *o *he e+ac*me+* of *he %ederal Reserve Ac*$ -JThe Times +o*ed *ha* "'olc,er5s choice 1as approved b) !uropea+ ba+,s i+ o++( %ra+,fur* a+d Iurich$" 6illiam Simo+( former Secre*ar) of Treasur)( 1as <uo*ed as sa)i+g "a marvelous choice$" The Times fur*her +o*ed *ha* *he &o1 mar,e* rose o+ 'olc,er5s +omi+a*io+( regis*eri+g *he bes* gai+s i+ *hree 1ee,s for a rise of .$JD poi+*s( a+d *ha* *he dollar rose sharpl) o+ foreig+ e;cha+ge@ a* home a+d abroad$ 6ho 1as 'olc,er( *ha* his appoi+*me+* could have such a+ effec* o+ *he s*oc, mar,e* a+d *he value of *he dollar i+ foreig+ e;cha+geH He represe+*ed *he mos* po1erful house of "*he Lo+do+ Co++ec*io+(" ro1+ ro*hers Harrima+( a+d *he Lo+do+ houses 1hich direc*ed *he Roc,efeller empire$ O+ Bul) 0.( -.J.( The Times had said of 'olc,er( "#e1 >a+ 6ill Char* His O1+ Course"$ 'olc,er5s bac,grou+d sho1s *ha* *his 1as +o+se+se$ His course has al1a)s bee+ char*ed for him b) his mas*ers i+ Lo+do+$ He a**e+ded 4ri+ce*o+( ob*ai+ed a+ >$A$ a* Harvard( a+d 1e+* *o *he Lo+do+ School of !co+omics -.9-E90( *he ba+,er5s gradua*e school$ He *he+ came *o *he %ederal Reserve a+, of #e1 ?or, as a+ eco+omis* from -.90E9J( eco+omis* a* Chase >a+ha**a+ a+,( -.9JE6-( 1i*h Treasur) &epar*me+* -.6-E69( as depu*) u+der secre*ar) for mo+e*ar) affairs( -.6DE69( a+d u+der secre*ar) for mo+e*ar) affairs( -.6.EJ2$ He *he+ became 4reside+* of *he %ederal Reserve a+, of #e1 ?or, from -.J9EJ.( 1he+ Car*er( a* *he behes* of Rober* Roosa a+d &avid Roc,efeller( appoi+*ed him Chairma+ of *he %ederal Reserve oard of "over+ors$ He 1as succeeded as 4reside+* of %ederal Reserve a+, of #e1 ?or, b) A+*ho+) Solomo+( a Harvard 4h$&$ 1ho 1as 1i*h *he O4A -.2-E20 a+d 1i*h *he gover+me+* fi+a+cial missio+ *o Ira+ -.20E26$ He opera*ed a ca++ed food compa+) i+ >e;ico from -.9-E6-( 1as

preside+* of I+*er+a*io+al I+ves*me+* Corp$ for ?ugoslavia -.6.EJ0 7a commu+is* cou+*r)8( u+der secre*ar) for mo+e*ar) affairs a* Treasur) -.JJE/0$ I+ shor*( Solomo+5s bac,grou+d 1as much *he same as 4aul 'olc,er5s$ The &ew 'ork Times s*a*ed o+ &ecember 0( -./-( "%or )ears *he %ederal Reserve 1as *he seco+d or *hird mos* secre* i+s*i*u*io+ i+ *o1+$ The Su+shi+e Ac* of -.J6 pe+e*ra*ed *he cur*ai+ a *rifle$ The board +o1 holds a public mee*i+g o+ce a 1ee, o+ 6ed+esda) a* -0 a$m$( bu* +o* *o discuss >o+e*ar) polic)( 1hich is s*ill regarded as *op secre* a+d +o* *o be discussed i+ public$" The Times me+*io+ed *ha* 1he+ Ope+ >ar,e* Commi**ee mee*i+gs are held( Solomo+ a+d 'olc,er si* *oge*her a* *he head of *he *able a+d rela) *he i+s*ruc*io+s 1hich *he) have received from abroad$ ehi+d 'olc,er a+d Solomo+ s*a+ds Rober* Roosa( Secre*ar) of *he Treasur) i+ Car*er5s shado1 cabi+e*( a+d represe+*i+g ro1+ ro*hers Harrima+( *he Trila*eral Commissio+( *he Cou+cil o+ %oreig+ Rela*io+s( *he ilderbergers( a+d *he Ro)al !co+omic I+s*i*u*e$ He is a *rus*ee of *he -J0 Roc,efeller %ou+da*io+P( a+d a direc*or of Te;aco a+d America+ !;press compa+ies$ &r$ >ar*i+ Larso+ poi+*s ou* *ha* "The i+*er+a*io+al co+sor*ium of fi+a+ciers ,+o1+ as *he ilderbergers( 1ho mee* a++uall) i+ profou+d secrec) *o de*ermi+e *he des*i+) of *he 1es*er+ 1orld( is a crea*ure of *he Roc,efellerERo*hschild allia+ce( a+d *ha* i* held i*s *hird mee*i+g o+ S*$ Simo+s Isla+d( o+l) a shor* dis*a+ce from Be,)ll Isla+d$" Larso+ also s*a*es *ha* "The Roc,efeller i+*eres*s 1or, i+ close allia+ce 1i*h *he Ro*hschilds a+d o*her ce+*ral ba+,s$"PP O+ Bu+e -/( -./D( 4reside+* Ro+ald Reaga+ e+ded mo+*hs of specula*io+ b) a++ou+ci+g *ha* he 1as reappoi+*i+g 4aul 'olc,er as Chairma+ of *he %ederal Reserve oard of "over+ors for a+o*her four )ear *erm( al*hough 'olc,er5s *erm 1as +o* up u+*il Augus* 6( -./D$ Reaga+5s reappoi+*me+* of a Car*er appoi+*ee pu33led some poli*ical observers( bu* appare+*l) he had succumbed *o co+siderable pressure( as i+dica*ed b) a lead edi*orial i+ The )ashington *ost# Bu+e -0( -./D( "There is +o o+e 1ho ma*ches >r$ 'olc,er i+ bo*h poli*ical s*a+di+g a+d grasp of *he i+*rica*e +e*1or,s *ha* ma,e up *he 1orld5s fi+a+cial s)s*em$" The a+o+)mous 1ri*er gave +o docume+*a*io+ for his eleva*io+ of 'olc,er *o *he s*a+di+g of *he 1orld5s grea*es* fi+a+cier( a+d as for his poli*ical s*a+di+g( The &ew 'ork Times comme+*ed o+ Bu+e -.( -./D( ">r$ 'olc,er5s poli*ics is some*hi+g of a+ e+igma$" His "+o+Epoli*ical" s*a+ce co+forms 1i*h *he 6ashi+g*o+ *radi*io+ of "*he poli*ical i+depe+de+ce of *he %ed" 1hich has bee+ mai+*ai+ed for ma+) )ears$ Ho1ever( *he problem of i*s depe+de+ce o+ "*he Lo+do+ co++ec*io+" has +ever bee+ discussed i+ 6ashi+g*o+$ I+ reali*)( 'olc,er is more of a poli*icia+ *ha+ a+ eco+omis*$ Af*er a**e+di+g *he Lo+do+ School of !co+omics( a+d fi+di+g ou* 1ho issues *he orders of *he i+*er+a*io+al fi+a+cial commu+i*)( 'olc,er has ever si+ce pla)ed *he game$ #o* o+ce has he failed *o carr) ou* *he orders of *he "Lo+do+ Co++ec*io+"$ Ca+ i* reall) be possible *ha* "The Lo+do+ Co++ec*io+" e;is*s( a+d *ha* me+ li,e 'olc,er a+d Solomo+ receive *heir i+s*ruc*io+s( i+ ho1ever devious or i+direc* a ma++er( from foreig+ ba+,ersH Le* us loo, a* *he evide+ce( circums*a+*ial( *o be sure( bu* circums*a+*ial evide+ce of *he <uali*) 1hich has of*e+ se+* me+ *o *he pe+i*e+*iar) or *o *he elec*ric chair$ Boh+ >ood) poi+*ed ou* i+ -.-- *ha* seve+ me+ of *he >orga+ group( allied 1i*h *he S*a+dard OilECuh+( Loeb group( ruled *he :+i*ed S*a*es$ 6here do *hese groups s*a+d i+ *he fi+a+cial pic*ure *oda)H ?.,. &ews published o+ April --( -./D( a lis* of *he larges* ba+, holdi+g compa+ies i+ *he :+i*ed S*a*es b) asse*s as of &ecember D-( -./0$ #umber - is Ci*icorp( #e1 ?or,( 1i*h asse*s of Q-D0 billio+$ This is a,er a+d KKKKKKKKKKKKKKKKKKKKKKKKKK P See Char* ' PP See Char* I

-JD >orga+5s %irs* #a*io+al a+, of #e1 ?or,( merged 1i*h #a*io+al Ci*) a+, i+ -.99( *1o of *he larges* purchasers of %ederal Reserve a+, of #e1 ?or, s*oc, i+ -.-2$ #umber D( is Chase >a+ha**a+( #e1 ?or,( 1i*h asse*s of Q/0$. billio+$ This is Chase a+d a+, of >a+ha**a+ merged( *he Roc,efeller a+d Cuh+ Loeb group( also purchasers of %ederal Reserve a+, of #e1 ?or, s*oc, i+ -.-2$ #umber 2 is >a+ufac*urers Ha+over of #e1 ?or, Q62 billio+( also purchaser of %ederal Reserve a+, of #e1 ?or, s*oc, i+ -.-2$ #umber 9 is B$4$ >orga+ Compa+) of #e1 ?or,( Q9/$6 billio+ i+ asse*s a+d holder of co+siderable %ederal Reserve a+, s*oc,$ #umber 6 is Chemical a+, of #e1 ?or,( Q2/$D billio+ also purchaser of %ederal Reserve s*oc, i+ -.-2$ A+d #umber --( %irs* Chicago Corpora*io+( *he %irs* #a*io+al a+, of Chicago 1hich 1as pri+cipal correspo+de+* of *he >orga+E a,er ba+, i+ #e1 ?or,( a+d 1hich fur+ished *he firs* *1o preside+*s of *he %ederal Advisor) Cou+cil$ The direc* li+e 1hich leads from *he par*icipa+*s i+ *he Be,)ll Isla+d Co+fere+ce of -.-0 *o *he prese+* da) is illus*ra*ed b) a passage from "A 4rimer o+ >o+e)"( Commi**ee o+ a+,i+g a+d Curre+c)( :$S$ House of Represe+*a*ives( //*h Co+gress( 0d sessio+( Augus* 9( -.62( p$ J9@ "The prac*ical effec* of re<uiri+g all purchases *o be made *hrough *he ope+ mar,e* is *o *a,e mo+e) from *he *a;pa)er a+d give i* *o *he dealers$ I* forces *he "over+me+* *o pa) a *oll for borro1i+g mo+e)$ There are si; Aba+,5 dealers@ %irs* #a*io+al Ci*) a+, of #e1 ?or,G Chemical Crop$ !;cha+ge a+,( #e1 ?or,( >orga+ "uara+*) Trus* Co$( #e1 ?or,( a+,ers Trus* of #e1 ?or,( %irs* #a*io+al a+, of Chicago( a+d Co+*i+e+*al Illi+ois a+, of Chicago$" Thus *he ba+,s 1hich receive a "*oll" o+ all mo+e) borro1ed b) *he "over+me+* of *he :+i*ed S*a*es are *he same ba+,s 1hich pla++ed *he %ederal Reserve Ac* of -.-D$ There is ample evide+ce demo+s*ra*i+g *he prese+* preemi+e+ce of *he same ba+,s 1hich se* up *he %ederal Reserve S)s*em i+ -.-2$ %or i+s*a+ce( 6arre+ roo,es 1ri*es o+ *he edi*orial page of The )ashington *ost# Bu+e 6( -./D@ "Ci*icorp 7#a*io+al Ci*) a+, a+d %irs* #a*io+al a+, of #e1 ?or,( merged i+ -.998 =us* recorded a+ -/$6T re*ur+ o+ e<ui*)( B$4$ >orga+( -JT( Chemical a+, a+d a+,ers Trus*( +earl) -6T( a+ e;cep*io+al ra*e of re*ur+$" These are *he ba+,s 1hich bough* *he firs* issue of %ederal Reserve a+, s*oc, i+ -.-2( a+d 1hich o1+ed *he co+*rolli+g i+*eres* i+ *he %ederal Reserve a+, of #e1 ?or,( 1hich se*s *he i+*eres* ra*e a+d is *he ba+, for all ope+ mar,e* opera*io+s$ These ba+,s also profi* s*eadil) from *he o*her1ise i+e;plicable fluc*ua*io+s i+ mo+e*ar) gro1*h a+d i+*eres* ra*es$ roo,es fur*her comme+*s o+ "ac*ual mo+e*ar) gro1*h ra*es al*er+a*el) g)ra*i+g from 0 *o -JT i+ successive si; mo+*h periods for *hree recessio+E 1rac,ed )ears$ The *1o measures of mo+e) gro1*h mos* admired b) >il*o+ %riedma+ >0 a+d >D( -J2 have ac*uall) sho1+ li**le cha+ge o+ a )ear *o )ear basis i+ *he -.J0E/0 period$" Thus 1e have mo+e) gro1*h ra*es g)ra*i+g from 0 *o -JT bu* +o ac*ual )ear *o )ear cha+ges( 1hich raises *he <ues*io+ of 1h) 1e ca++o* have s*abili*) of mo+e*ar) gro1*h *hroughou* *he )ear$ The a+s1er is *ha* *he big profi*s are made b) *hese g)ra*io+s( a+d *he +e;* <ues*io+ is( 1ho se*s i+ mo*io+ *hese g)ra*io+sH The a+s1er is "*he Lo+do+ Co++ec*io+"$ To dra1 a**e+*io+ from *he co+*i+ued co+*rol of *he ba+,ers a+d *heir heirs( 1ho ob*ai+ed *he gover+me+* mo+opol) of *he +a*io+5s mo+e) a+d credi* i+ -.-D( *he paid propaga+dis*s of *he co+*rolled media mo+opol) a+d academia are co+s*a+*l) *ro**i+g for*h +e1

a+d more e;o*ic *heories of eco+omics$ Thus Bames ur+ham( o+e of *he #a*io+al Revie1 propaga+dis*s( 1o+ fame 1i*h a ridiculous *heor) of "*he ma+agers"$ He pos*ula*ed *ha* *he old arbi*ers of 1eal*h( *he B$4$ >orga+s( *he 6arburgs a+d *he Ro*hschilds had( b) -.90( disappeared from *he sce+e( bei+g replaced b) a +e1 class of "ma+agers"$ This *heor)( 1hich had +o fou+da*io+ i+ fac*( served *o obscure *he fac* *ha* *he same people s*ill co+*rolled *he mo+e*ar) s)s*em of *he 1orld$ The "ma+agers" 1ere =us* *ha*( e;ecu*ives li,e 'olc,er 1ho 1ere fro+* me+( paid emplo)ees 1ho 1ould co+*i+ue *o receive *heir pa)chec,s o+l) as lo+g as *he) carried ou* *heir emplo)ers5 i+s*ruc*io+s$ ur+ham remai+s a 1ellEpaid propaga+dis* a* *he &ational $eview# 1hich ma+) promi+e+* leaders( i+cludi+g 4reside+* Reaga+( believe *o be a "co+serva*ive" publica*io+$ %rom -.-2 *o -./0( a period i+ 1hich ma+) *housa+ds of America+ ba+,s 1e+* ba+,rup*( *he origi+al purchasers of %ederal Reserve a+, s*oc, have +o* o+l) survived bu* *he) have co+solida*ed *heir po1er$ A+d 1ha* of "*he Lo+do+ Co++ec*io+"H &oes i* s*ill e;is*( a+d is i* s*ill dic*a*i+g *he eco+omic des*i+) of *he :+i*ed S*a*esH The )ashington *ost# >a) -.( -./D( carried a s*or) da*eli+ed #airobi( Ce+)a( +o*i+g *he mee*i+g of *he Africa+ &evelopme+* a+,$ "The ri*ish mercha+* ba+,( >orga+ "re+fell a+d a s)+dica*e of *he :+i*ed S*a*es( Cuh+ Loeb( Lehma+ ro*hers I+*er+a*io+al( *he %re+ch La3ard %reres a+d ri*ai+5s 6arburg are discree*l) ac*i+g as fi+a+cial advisors *o abou* *e+ deb*Eplagued Africa+ s*a*es$" There are *he same +ames 1e e+cou+*ered i+ -.-2( s*ill ma+agi+g *he fi+a+ces of *he 1orld( 1i*h profi*s for *hemselves bu* 1i*h disas*rous resul*s for ever)o+e else$ 4erhaps 1e ca+ loo, for relief *o *he prese+* Admi+is*ra*io+ of 4reside+* Reaga+$ :+for*u+a*el)( before reachi+g him 1e have *o ru+ *he gamu* of *he lo+g lis* of his pri+cipal s*aff( composed of me+ from B$ He+r) Schroder( ro1+ ro*hers Harrima+( a+d o*her leadi+g compo+e+*s of "The Lo+do+ Co++ec*io+"$ Lope3 4or*illo( 4reside+* of >e;ico( i+ addressi+g *he >e;ica+ #a*io+al Co+gress of >e;ico i+ Sep*ember( -./0( called *he 1orld credi* boom of *he pas* decade a fi+a+cial pes*ile+ce a,i+ *o *he lac, &ea*h 1hich s1ep* -J9 !urope i+ *he four*ee+*h ce+*ur)$ "As i+ mediaeval *imes( i* fla**e+s cou+*r) af*er cou+*r)$ I* is *ra+smi**ed b) ra*s a+d i* )ields u+emplo)me+* a+d miser)( i+dus*rial ba+,rup*c) a+d e+richme+* b) specula*io+$ The remed) prescribed b) fai*h healers is forced i+ac*ivi*) a+d deprivi+g *he pa*ie+* of food$" Forbes =aga@ine s*a*ed Oc*ober --( -./0( "The 1orld gasps for li<uidi*)( +o* because *he suppl) of mo+e) has co+*rac*ed bu* because *oo much of i* +o1 goes *o pa) off old deb*s ra*her *ha+ fu+d +e1 produc*ive i+ves*me+*s$" The polic) of high i+*eres* ra*es a+d *igh* mo+e) has bee+ disas*rous for *he :+i*ed S*a*es$ I+ earl) -./D( a sligh* easi+g of mo+e) a+d credi* promises some relief( bu* as lo+g as *he %ederal Reserve s)s*em a+d i*s u+see+ ma+ipula*ors co+*i+ue *heir co+*rol of *he mo+e) suppl)( 1e ca+ e;pec* more problems$ The &ation o+ &ecember --( -./0( i+ comme+*i+g o+ eco+omic problems( s*a*ed( "The blame for all *his lies a* *he door of *he %ederal Reserve S)s*em 1or,i+g as usual o+ behalf of *he i+*er+a*io+al ba+,i+g s)s*em$" The evide+ce of ho1 *he %ederal Reserve S)s*em 1or,s o+ behalf of *he i+*er+a*io+al ba+,i+g s)s*em is graphicall) illus*ra*ed b) a series of char*s dra1+ up b) *he s*aff of *he Commi**ee o+ a+,i+g( Curre+c) a+d Housi+g of *he House of Represe+*a*ives( .2*h Co+gress( 0d sessio+( Augus*( -.J6( "%!&!RAL R!S!R'! &IR!CTORS@ A ST:&? O% COR4ORAT! A#& A#CI#" I#%L:!#C!"$P 6e prese+* as our Char* ' page 2. of *his s*ud)( sho1i+g *he i+*erloc,i+g direc*ora*es of &avid Roc,efeller$ As our Char* 'I 1e reproduce page 99 of *his s*ud)( sho1i+g *he i+*erloc,i+g direc*ora*es of %ra+, R$ >illi,e+( o+e of *he Class C &irec*orsPP of *he %ederal Reserve a+, of #e1 ?or,$ I+ *his char* are all *he mai+ perso+ages i+ our s*or) of *he Be,)ll Isla+d co+fere+ce@ Ci*iba+,( B$4$ >orga+ a+d Compa+)( Cuh+ Loeb a+d Compa+)( a+d ma+) rela*ed firms$ As Char* 'II 1e reproduce page 9D of *his s*ud)( sho1i+g *he i+*erloc,i+g direc*ora*es of a+o*her Class C &irec*or of *he %ederal Reserve a+, of #e1 ?or,( Ala+ 4ifer$ As 4reside+* of *he Car+egie Corpora*io+ of #e1 ?or,( he i+*erloc,s 1i*h B$ He+r) Schroder Trus* Compa+)( B$ He+r) Schroder a+,i+g Corpora*io+( Roc,efeller Ce+*er( I+c$( %ederal Reserve a+, of os*o+( !<ui*able Life Assura+ce Socie*) 7B$4$ >orga+8( a+d o*hers$ Thus a+ Augus*( -.J6 s*ud) from *he House Commi**ee o+ a+,i+g( Curre+c) a+d Housi+g( bri+gs before us all of our mai+ cas* of perso+ages( fu+c*io+i+g *oda) =us* as *he) did i+ -.-2$

KKKKKKKKKKKKKKKKKKKKKKKKKK P &ue *o space limi*a*io+s( o+l) five of *he seve+*)Efive char*s i+ *he s*ud)( all of 1hich sho1 *he co++ec*io+s be*1ee+ promi+e+*( po1erful i+dividuals 1i*h co+*rol i+ *he %ederal Reserve S)s*em have bee+ selec*ed *o illus*ra*e *he co++ec*io+s be*1ee+ officers a+d direc*ors of *he *1elve %ederal Reserve a+,s i+ -.J6 a+d *he firms lis*ed i+ *his boo,$ PP "The *hree Class C &irec*ors are appoi+*ed b) *he oard of "over+ors as represe+*a*ives of *he public i+*eres* as a 1hole$" p$ D2( Co+gressio+al S*ud)( -.J6$ -J6 This -00 page Co+gressio+al s*ud) de*ails public polic) fu+c*io+s of *he %ederal Reserve &is*ric* a+,s( ho1 direc*ors are selec*ed( 1ho is selec*ed( *he public rela*io+s lobb)i+g fac*or( ba+, domi+a*io+ a+d ba+, e;ami+a*io+( a+d corpora*e i+*erloc,s 1i*h Reserve ba+,s$ Char*s 1ere used *o illus*ra*e Class A( Class ( a+d Class C direc*orships of each dis*ric* ba+,$ %or each bra+ch ba+, a char* 1as desig+ed givi+g i+forma*io+ regardi+g ba+, appoi+*ed direc*ors a+d *hose appoi+*ed b) *he oard of "over+ors of *he %ederal Reserve S)s*em$ I+ his %ore1ord *o *he s*ud)( Chairma+ He+r) S$ Reuss( 7&E6is8 1ro*e@ "This Commi**ee has observed for ma+) )ears *he i+flue+ce of priva*e i+*eres*s over *he esse+*iall) public respo+sibili*ies of *he %ederal Reserve S)s*em$ As *he s*ud) ma,es clear( i* is difficul* *o imagi+e a more +arro1l) based board of direc*ors for a public age+c) *ha+ has bee+ ga*hered *oge*her for *he *1elve ba+,s of *he %ederal Reserve S)s*em$ O+l) *1o segme+*s of America+ socie*)EEba+,i+g a+d big busi+essEEhave a+) subs*a+*ial represe+*a*io+ o+ *he boards( a+d of*e+ eve+ *hese become merged *hrough i+*erloc,i+g direc*ora*es $ $ $ $ Small farmers are abse+*$ Small busi+ess is barel) visible$ #o 1ome+ appear o+ *he dis*ric* boards a+d o+l) si; amo+g *he bra+ches$ S)s*em1ideEEi+cludi+g dis*ric* a+d bra+ch boardsEEo+l) *hir*ee+ members from mi+ori*) groups appear$ The s*ud) raises a subs*a+*ial <ues*io+ abou* *he %ederal Reserve5s of*Erepea*ed claim of "i+depe+de+ce"$ O+e migh* as,( i+depe+de+* from 1ha*H Surel) +o* ba+,i+g or big busi+ess( if 1e are *o =udge from *he massive i+*erloc,s revealed b) *his a+al)sis of *he dis*ric* boards$ The big busi+ess a+d ba+,i+g domi+a+ce of *he %ederal Reserve S)s*em ci*ed i+ *his repor* ca+ be *raced( i+ par*( *o *he origi+al %ederal Reserve Ac*( 1hich gave member commercial ba+,s *he righ* *o selec* *1oE*hirds of *he direc*ors of each dis*ric* ba+,$ u* *he oard of "over+ors i+ 6ashi+g*o+ mus* share *he respo+sibili*) for *his imbala+ce$ The) appoi+* *he soEcalled "public" members of *he boards of each dis*ric* ba+,( appoi+*me+*s 1hich have largel) reflec*ed *he same

+arro1 i+*eres*s of *he ba+,Eelec*ed members $ $ $ $ :+*il 1e have basic reforms( *he %ederal Reserve S)s*em 1ill be ha+dicapped i+ carr)i+g ou* i*s public respo+sibili*ies as a+ eco+omic s*abili3a*io+ a+d ba+, regula*or) age+c)$ The S)s*em5s ma+da*e is *oo esse+*ial *o *he +a*io+5s 1elfare *o leave so much of *he machi+er) u+der *he co+*rol of +arro1 priva*e i+*eres*s$ Co+ce+*ra*io+ of eco+omic a+d fi+a+cial po1er i+ *he :+i*ed S*a*es has go+e *oo far$" I+ a sec*io+ of *he *e;* e+*i*led "The Club S)s*em"( *he Commi**ee +o*ed@ "This Aclub5 approach leads *he %ederal Reserve *o co+sis*e+*l) dip i+*o *he same poolsEE*he same compa+ies( *he same u+iversi*ies( *he same ba+, holdi+g compa+iesEE*o fill direc*orships$" This Co+gressio+al s*ud) co+cludes as follo1s@ -JJ ">a+) of *he compa+ies o+ *hese *ables( as me+*io+ed earlier( have mul*iple i+*erloc,s *o *he %ederal Reserve S)s*em$ %irs* a+, S)s*emsG Sou*heas* a+,i+g Corpora*io+G %edera*ed &epar*me+* S*oresG 6es*i+ghouse !lec*ric Corpora*io+G 4roc*or a+d "ambleG AlcoaG Ho+e)1ell( I+c$G Ce++eco** CopperG O1e+sECor+i+g %iberglassG all have *1o or more direc*or *ies *o dis*ric* or bra+ch ba+,s$ I+ Summar)( *he %ederal Reserve direc*ors are appare+*l) represe+*a*ives of a small eli*e group 1hich domi+a*es much of *he eco+omic life of *his +a*io+$" !#& O% CO#"R!SSIO#AL R!4ORT$ -J/

A&&!#&:>
As of --@09 Tuesda)( Bul) 06( -./D( *he lis* of member ba+,s holdi+g %ederal Reserve a+, of #e1 ?or, s*oc, i+cludes *1e+*)Eseve+ #e1 ?or, Ci*) ba+,s$ Lis*ed belo1 are *he +umber of shares held b) *e+ of *hese ba+,s( amou+*i+g *o 66T of *he *o*al ou*s*a+di+g +umber of shares( +amel) J(009(J00@
Shares a+,ers Trus* Compa+) a+, of #e1 ?or, Chase >a+ha**a+ a+, Chemical a+, Ci*iba+, !uropea+ America+ a+, O Trus* B$ He+r) Schroder a+, O Trus* >a+ufac*urers Ha+over >orga+ "uara+*) Trus* #a*io+al a+, of #or*h America 2D/(/D-2-(2/0 -(0--(/60 922(.60 -(0.0(/-D -0J(/00 DJ(2.D 90.(/90 699(22D -09(600 4erce+* 7 6T8 7 0T8 7-2T8 7 /T8 7-9T8 7 0T8 7 $9T8 7 JT8 7 .T8 7 0T8

The *reme+dous +umber of shares held *oda) as agai+s* *he origi+al purchases i+ -.-2 is brough* abou* b) Sec*io+ 9 of *he origi+al %ederal Reserve Ac* 1hich called for a member ba+, *o bu) a+d hold s*oc, i+ *he dis*ric* %ederal Reserve a+, e<ual *o 6T of i*s capi*al a+d surplus$ Curre+*l)( shares held b) five of *he above +amed ba+,s comprise 9DT of *he *o*al %ederal Reserve a+, of #e1 ?or, s*oc,$ A+ e;ami+a*io+ of *he ma=or s*oc,holders of *he #e1 ?or, Ci*) ba+,s sho1s clearl) *ha* a fe1 families( rela*ed b) blood marriage( or

busi+ess i+*eres*s( s*ill co+*rol *he #e1 ?or, Ci*) ba+,s 1hich( i+ *ur+( hold *he co+*rolli+g s*oc, of *he %ederal Reserve a+, of #e1 ?or,$ I* is +o*able *ha* *hree of *he ba+,s holdi+g %ederal Reserve a+, of #e1 ?or, s*oc,( i+ *he amou+* of 0J0(/.D shares( are subsidiaries of foreig+ ba+,s$ B$ He+r) Schroder a+, a+d Trus* is lis*ed b) ,tandard and *oors as a subsidiar) of Schroders L*d$ of Lo+do+$ The #a*io+al a+, of #or*h America is a subsidiar) of *he #a*io+al 6es*mi+s*er a+,( o+e of Lo+do+5s " ig %ive"$ !uropea+ America+ a+, is a subsidiar) of *he !uropea+ America+ a+,( ahamas( LT&$ I* is i+*eres*i+g *o +o*e *ha* *he direc*ors of *he !uropea+ America+ a+, O Trus* i+clude >il*o+ %$ Rose+*hal( preside+* a+d Chief Opera*i+g Officer of *he i+*er+a*io+al gold compa+)( -J. !+gelhard >i+erals a+d ChemicalG Hamil*o+ %$ 4o**er( a par*+er i+ Sulliva+ a+d Crom1ell 7B$ He+r) Schroder a+, O Trus* a**or+e)s8G !d1ard H$ Tuc,( par*+er of Shearma+ a+d S*erli+g 7Ci*iba+,5s a**or+e)s8G %$H$ :lrich a+d Ha+s Lieb,u*sch( ma+agi+g direc*ors of *he gia+* >idla+d a+, of Lo+do+( o+e of *he " ig %ive"G a+d Roger Alloo( 4aulE!mma+uel Ba+sse+( a+d >aurice Laure of *he Socie*e "e+erale de a+<ue 7 russels( elgium8$ MSee Char* IIIN This i+forma*io+( derived from *he la*es* issue of *he *abula*io+ available from *he oard of "over+ors( %ederal Reserve S)s*em( is ci*ed as curre+* evide+ce 1hich i+dica*es *ha* *he co+*rolli+g s*oc, i+ *he %ederal Reserve a+, of #e1 ?or,( 1hich se*s *he ra*e a+d scale of opera*io+s for *he e+*ire %ederal Reserve S)s*em is heavil) i+flue+ced b) ba+,s direc*l) co+*rolled b) "The Lo+do+ Co++ec*io+"( *ha* is( *he Ro*hschildEco+*rolled a+, of !+gla+d$ MSee Char* IN -/0

A44!#&IL I
!$C$ C+u*h( i+ The 8mpire of the City# priv$ pri+*ed( -.26( p$ 0J( refers *o "*he a+, of !+gla+d( *he full par*+er of *he America+ Admi+is*ra*io+ i+ *he co+duc* of *he fi+a+cial affairs of all *he 1orld" a+d ci*es *he 8ncyclopaedia Americana# -.2D edi*io+$ arro+ ci*es Lord S1a)*hli+g( 7April /( -.0D8( "Lord S1a)*hli+g said( A!;cha+ge ca+ o+l) be ru+ from Lo+do+$ This is *he ce+*er i+ !;cha+ge$5" 7They Told (arron# b) Clare+ce 6$ arro+( fou+der of aro+5s 6ee,l)( Harpers( #e1 ?or,( -.D0( p$ 0J$8 !;cha+ge( i+ *he i+*er+a*io+al fi+a+cial 1orld( mea+s *he *ra+sac*io+s i+ mo+e) or securi*ies( or simpl)( *he "e;cha+ge" of *he values of *hese securi*ies$ I* is +ecessar) *ha* *his "e;cha+ge" *a,e place 1here *he values ca+ be es*ablished( a+d *his place is *he "Ci*)" i+ Lo+do+$ Lo+do+ 1as es*ablished as *he primar) ce+*er of e;cha+ge because of *he "Co+sols" of *he a+, of !+gla+d( bo+ds 1hich could +ever be redeemed( bu* 1hich paid a s*able ra*e of re*ur+$ He+r) Cle1s 1ri*es( i+ The )all ,treet Biew# Silver urde** Co$ -.00( p$ 099( "The Co+solida*ed Ac* of -J9J co+solida*ed *he deb*s of *he +a*io+ of !+gla+d a* DT( 1hich 1ere ,ep* i+ a+ accou+* a* *he a+, of !+gla+d a+d is *he grea* bul1ar, of i*s deposi*s$" ) os*e+*a*iousl) "dumpi+g" "Co+sols" o+ *he Lo+do+ !;cha+ge af*er *he a**le of 6a*erloo( i+ a pre*e+ded pa+ic( #a*ha+ >e)er Ro*hschild *he+ secre*l) bough* up *he Co+sols sold i+ *he pa+ic b) o*her holders a* a lo1 ra*e( a+d became *he larges* holder of Co+sols( a+d *hus 1o+ co+*rol of *he a+, of !+gla+d i+ -/-9$ -0T &ivide+ds Al*hough a Labor gover+me+* +a*io+ali3ed *he a+, of !+gla+d i+ -.26( The /reat ,oviet 8ncyclopaedia poi+*s ou* 7vol$ I( p$ 2.0c8 *ha* *he a+, of !+gla+d co+*i+ues *o pa) -0T divide+ds per a++um( =us* as i* had do+e prior *o *he +a*io+ali3a*io+$ The ""over+or" is appoi+*ed b) *he gover+me+*( i+ a si*ua*io+ similar *o *ha* i+ *he :+i*ed S*a*es( 1here *he "over+ors of *he %ederal

Reserve S)s*em are appoi+*ed b) *he 4reside+*$ Ho1ever( as is poi+*ed ou* i+ *he 8ncyclopaedia Americana v$ -D( p$ 0J0( "I+ prac*ice( *he gover+ors of *he a+, of !+gla+d have +o* hesi*a*ed *o cri*ici3e a+d bri+g pressure o+ *he gover+me+* i+ public$" a+, Ra*e The i+*eres* ra*e se* b) *he a+, of !+gla+d is ,+o1+ as "*he a+, ra*e"( a+d i* is a co+*rolli+g fac*or i+ i+*eres* ra*es *hroughou* *he 1orld( -/al*hough ra*es i+ o*her cou+*ries ma) be higher or lo1er *ha+ *his " a+, ra*e"$ The a+, of !+gla+d ma+ages *he gover+me+* deb*( a+d is called upo+ *o arbi*ra*e i+ poli*ical affairs$ I* served as *he i+*ermediar) 1i*h *he Ira+ revolu*io+aries i+ +ego*ia*i+g for *he re*ur+ of *he America+ hos*agesEEa rece+* e;ample$ 6e should +o* be surprised *ha* *he prese+* "over+or of *he a+, of !+gla+d( Sir "ordo+ Richardso+ is a promi+e+* i+*er+a*io+al fi+a+cial figure( 1ho appears else1here i+ *hese pages because of his co++ec*io+ 1i*h *he B$ He+r) Schroder @6agg i+ Lo+do+ from -.60 *o -.J0( 1he+ he became "over+or of *he a+, of !+gla+d$ He 1as also direc*or of B$ He+r) Schroder Co$( #e1 ?or,( a+d Schroder a+,i+g Corp$( #e1 ?or,$ He also serves as direc*or of Rolls Ro)ce a+d Llo)d5s a+,$ Al*hough he resides i+ Lo+do+( he mai+*ai+s a home i+ #e1 ?or,( a+d is lis*ed i+ *he curre+* >a+ha**a+ direc*or) simpl) as ""$ Richardso+( 29 Su**o+ 4lace S$"( al*hough a prior lis*i+g sho1ed him a* 2 Su**o+ 4lace$ Su**o+ 4lace 1as developed as a fashio+able address for *he i+*er+a*io+al se* b) essie >arbur)( 1hom 1e earlier ci*ed for her co++ec*io+ 1i*h *he >orga+ famil) a+d *he Roosevel*s$ The prese+* direc*ors of *he a+, of !+gla+d 7-./08 i+clude Leopold de Ro*hschild of #$>$ Ro*hschild O So+s( Sir Rober* Clar,( chairma+ of Hill Samuel a+,( *he mos* i+flue+*ial ba+, af*er Ro*hschilds( Boh+ Cla)( of Hambros a+,( a+d &avid Schole)( of 6arburg a+,( a+d =oi+* chairma+ of S$C$ 6arburg Co$ A+*ho+) Sampso+ 1ri*es( i+ "The Cha+gi+g A+a*om) of ri*ai+"( Ra+dom House( #e1 ?or,( -./0( p$ 0J.( "The more cosmopoli*a+ ba+,s 1i*h foreig+ e;per*s a+d direc*ors( such as 6arburgs( >o+*agus( Ro*hschilds a+d Clei+1or*s( had also discovered a huge +e1 source of profi*s i+ *he mar,e* for !urodollars 1hich bega+ i+ *he la*e fif*ies a+d mul*iplied *hrough *he 60s $ $ $ ri*ish ba+,ers *hemselves co+*rolled rela*ivel) small fu+ds( bu* *he) ,+e1 ho1 *o ma,e mo+e) ou* of o*her people5s mo+e)$" The !urodollar mar,e*( a +e1 developme+* i+ "crea*ed mo+e)" is mo+opoli3ed b) *he above firms$ !urodollar !mpire "Toda)( *oge*her 1i*h allies o+ *he isla+d of >a+ha**a+ 7 ri*ai+5s mos* impor*a+* piece of real es*a*e8( *he ri*ish !mpire co+*rols *he e+*ire Q-$9 *rillio+ !urodollar fi+a+cial mar,e*( a+o*her QD00EQ900 billio+ i+ *he Ca)ma+ Isla+ds( ahamas( a+d Q90EQ-00 billio+ i+ *he Ho+gECo+g Si+gapore "AsiaEdollar mar,e*"$ $ $ $ Co+sider *he Q-$9 *rillio+ !urodollar mar,e* a+ "ou*la1" mar,e* i+ *he :$S$ dollars over 1hich *his +a*io+ has +o co+*rol$ Here co+*rol a+d profi*s are over1helmi+gl) i+ *he ha+ds of Lo+do+ ba+,s( 1ho se* *he *erms of le+di+g a+d *he i+*eres* ra*e o+ *his mass of America+ dollars i+ rela*io+ *o *he Lo+do+ I+*erba+, orro1i+g -/0 Ra*e 7LI OR8 $ $ $ :$S$ ba+,s li,e Ci*iba+, 7#e1 ?or, Ci*)8( o+ 1hose board of direc*ors si*s *he po1erful ri*ish fi+a+cier( Lord Aldi+g*o+( collabora*e ope+l) i+ *his mar,e*$ A* *he same *ime( ri*ish ba+,s i+cludi+g *he ,+o1+ ce+*ral ba+, for *he 1orld5s drug *rade( *he Ho+g,o+g a+d Sha+ghai a+,( pour i+*o America *o devour :$S$ ba+,s$ I+ -.J/ *he Ho+gsha+g 7!d$EEHo+g,o+g a+d Sha+ghai a+,8 *oo, over #e1 ?or,5s >ari+e >idla+d a+,( *he s*a*e5s --*h larges* commercial ba+,$ $ $ The ri*ish also co+*rol *he crea*io+ of America+ dollars$ 6hile %ederal Reserve oard Chairma+ 4aul 'olc,er *igh*e+s credi* agai+s* *he domes*ic eco+om)( ri*ishEco+*rolled ba+,s i+ *he Ca)ma+ Isla+ds 7such as *he !uropea+ America+ a+,EE!d$8 a ri*ish possessio+ 000 miles off %lorida( a+d i+ *he ermudas a+d a do3e+ o*her "free ba+,i+g" compu*er *ermi+als crea*e hu+dreds of billio+s of America+

dollars$ Ho1 is *his do+eH There are +o reserve ra*ios or o*her res*ric*io+s o+ *he crea*io+ of dollarEde+omi+a*ed credi*s i+ *he !mpire5s "free e+*erprise" ba+,i+g$ A Q- millio+ bo+a fide credi* comi+g from *he :+i*ed S*a*es ca+ be *ur+ed i+*o Q00 *o Q-00 millio+ i+ dollarEde+omi+a*ed credi*s as i* passes *hrough *he ri*ish s)s*em 1i*hou* reserve ra*ios$"P #o* o+l) *he fi+a+cial po1er( bu* also *he legal po1er( has remai+ed sea*ed i+ ri*ai+$ The )ashington *ost comme+*ed o+ Bu+e -/( -./D *ha* af*er *he America+ Revolu*io+( all *he old la1s remai+ed i+ effec* i+ *he +e1 :+i*ed S*a*es@ Some of *hese la1s of "!+glish commo+ la1" da*ed bac, *o -0J/( lo+g before America 1as discovered$ This e+ormous fi+a+cial po1er of "*he Ci*)" is revealed i+ ma+) areas$ &ea+ Acheso+ s*a*es( i+ "4rese+* a* *he Crea*io+"( -.6.( 6$6$ #or*o+( #e1 ?or,( p$ JJ.( "6e s*a)ed a* *he embass) reside+ce( *he old B$4$ >orga+ ma+sio+( -2 4ri+ce5s "a*e( faci+g H)de 4ar,$" Ho1 ma+) America+s are a1are *ha* *he :$S$ !mbass) reside+ce i+ Lo+do+ is *he B$4$ >orga+ home( or *ha* &ea+ Acheso+( a former >orga+ emplo)ee( described himself as Secre*ar) of S*a*e o+ p$ 909( ">) o1+ a**i*ude had lo+g bee+( a+d 1as ,+o1+ *o have bee+( proE ri*ish$" #o o+e comme+*ed o+ a+ America+ Secre*ar) of S*a*e5s ope+ bias i+ favor of !+gla+d$ The %ederal Reserve "crea*ed" mo+e) is +o* used o+l) for fi+a+cial ma**ersG *his mo+e) is also used *o mai+*ai+ *he ba+,ers5 co+*rol of ever) aspec* of poli*ical( eco+omic a+d social life$ I* is used *o ba+,roll *he e+ormous e;pe+di*ures of poli*ical ca+dida*es( *he s1olle+ budge*s of u+iversi*ies( *he huge ou*la)s re<uired *o s*ar* +e1spapers or maga3i+es( a+d a vas* arra) of fou+da*io+s( "*hi+,E *a+,s" a+d o*her i+s*rume+*s of mi+d co+*rol$ 4s)chological 6arfare %e1 America+s ,+o1 *ha* almos* ever) developme+* i+ ps)cholog) i+ *he :+i*ed S*a*es i+ *he pas* si;*)Efive )ears has bee+ direc*ed b) *he ureau of 4s)chological 6arfare of *he ri*ish Arm)$ A shor* *ime ago( KKKKKKKKKKKKKKKKKKKKKKKKKK P +arpers =aga@ine# %eb$ -./0 -/D *he prese+* 1ri*er lear+ed a +e1 +ame( The Tavis*oc, I+s*i*u*e of Lo+do+( also ,+o1+ as *he Tavis*oc, I+s*i*u*e of Huma+ Rela*io+s$ "Huma+ rela*io+s" covers ever) aspec* of huma+ behavior( a+d i* is *he modes* goal of *he Tavis*oc, I+s*i*u*e *o ob*ai+ a+d e;ercise co+*rol over ever) aspec* of huma+ behavior of America+ ci*i3e+s$ ecause of *he i+*e+sive ar*iller) barrages of 6orld 6ar I( ma+) soldiers 1ere perma+e+*l) impaired b) shell shoc,$ I+ -.0-( *he >ar<uees of Tavis*oc,( --*h &u,e of edford( gave a buildi+g *o a group 1hich pla++ed *o co+duc* rehabili*a*io+ programs for shell shoc,ed ri*ish soldiers$ The group *oo, *he +ame of "Tavis*oc, I+s*i*u*e" af*er i*s be+efac*or$ The "e+eral S*aff of *he ri*ish Arm) decided i* 1as crucial *ha* *he) de*ermi+e *he brea,i+g poi+* of *he soldier u+der comba* co+di*io+s$ The Tavis*oc, I+s*i*u*e 1as *a,e+ over b) Sir Boh+ Ra1li+gs Reese( head of *he ri*ish Arm) 4s)chological 6arfare ureau$ A cadre of highl) *rai+ed specialis*s i+ ps)chological 1arfare 1as buil* up i+ *o*al secrec)$ I+ fif*) )ears( *he +ame "Tavis*oc, I+s*i*u*e5 appears o+l) *1ice i+ *he I+de; of *he &ew 'ork Times# )e* *his group( accordi+g *o LaRouche a+d o*her au*hori*ies( orga+i3ed a+d *rai+ed *he e+*ire s*affs of *he Office of S*ra*egic Services 7OSS8( *he S*ra*egic ombi+g Surve)( Supreme Head<uar*ers of *he Allied !;pedi*io+ar) %orces( a+d o*her ,e) America+ mili*ar) groups duri+g 6orld 6ar II$ &uri+g 6orld 6ar II( *he Tavis*oc, I+s*i*u*e combi+ed 1i*h *he medical scie+ces divisio+ of *he Roc,efeller %ou+da*io+ for eso*eric e;perime+*s 1i*h mi+dEal*eri+g drugs$ The prese+* drug cul*ure of *he :+i*ed S*a*es is *raced i+ i*s e+*ire*) *o *his I+s*i*u*e( 1hich supervised *he Ce+*ral I+*ellige+ce Age+c)5s *rai+i+g programs$ The "LS& cou+*er cul*ure" origi+a*ed 1he+ Sa+do3 A$"$( a S1iss pharmaceu*ical house o1+ed b) S$"$ 6arburg O Co$( developed a +e1 drug from l)sergic acid( called LS&$ Bames 4aul 6arburg 7so+ of 4aul 6arburg 1ho had 1ri**e+ *he %ederal Reserve Ac* i+ -.-08( fi+a+ced a subsidiar) of *he Tavis*oc, I+s*i*u*e i+ *he :+i*ed S*a*es called *he I+s*i*u*e for 4olic) S*udies( 1hose direc*or( >arcus Ras,i+( 1as appoi+*ed *o *he #a*io+al Securi*) Cou+cil$ Bames 4aul 6arburg se* up a CIA program *o e;perime+* 1i*h LS&

o+ CIA age+*s( some of 1hom la*er commi**ed suicide$ This program( >CE:l*ra( supervised b) &r$ "o**lieb( resul*ed i+ huge la1sui*s agai+s* *he :+i*ed S*a*es "over+me+* b) *he families of *he vic*ims$ The I+s*i*u*e for 4olic) S*udies se* up a campus subsidiar)( S*ude+*s for &emocra*ic Socie*) 7S&S8( devo*ed *o drugs a+d revolu*io+$ Ra*her *ha+ fi+a+ce S&S himself( 6arburg used CIA fu+ds( some *1e+*) millio+ dollars( *o promo*e *he campus rio*s of *he -.60s$ The !+glish Tavis*oc, I+s*i*u*e has +o* res*ric*ed i*s ac*ivi*ies *o lef*E1i+g groups( bu* has also direc*ed *he programs of such supposedl) "co+serva*ive" America+ *hi+, *a+,s as *he Herber* Hoover I+s*i*u*e a* S*a+ford :+iversi*)( Heri*age %ou+da*io+( 6har*o+( Hudso+( >assachuse**s I+s*i*u*e of Tech+olog)( a+d Ra+d$ The "se+si*ivi*) *rai+E -/2 i+g" a+d "se;ual e+cou+*er" programs of *he mos* radical Califor+ia groups such as !sale+ I+s*i*u*e a+d i*s ma+) imi*a*ors 1ere all developed a+d impleme+*ed b) Tavis*oc, I+s*i*u*e ps)chologis*s$ O+e of *he rare i*ems co+cer+i+g *he Tavis*oc, I+s*i*u*e appears i+ (usiness )eek# Oc*$ 06( -.6D( 1i*h a pho*ograph of i*s buildi+g i+ *he mos* e;pe+sive medical offices area of Lo+do+$ The s*or) me+*io+s "*he %reudia+ bias" of *he I+s*i*u*e( a+d comme+*s *ha* i* is ampl) fi+a+ced b) ri*ish blueEchip corpora*io+s( i+cludi+g :+ilever( ri*ish 4e*roleum( a+d ald1i+ S*eel$ Accordi+g *o (usiness )eek# *he ps)chological *es*i+g programs a+d group rela*io+s *rai+i+g programs of *he I+s*i*u*e 1ere impleme+*ed i+ *he :+i*ed S*a*es b) *he :+iversi*) of >ichiga+ a+d *he :+iversi*) of Califor+ia( 1hich are ho*beds of radicalism a+d *he drug +e*1or,$ I* 1as *he >ar<uees of Tavis*oc,( -0*h &u,e of edford( 1hom Rudolf Hess fle1 *o !+gla+d *o co+*ac* abou* e+di+g 6orld 6ar II$ Tavis*oc, 1as said *o be 1or*h Q20 millio+ i+ -.20$ I+ -.29( his 1ife commi**ed suicide b) *a,i+g a+ overdose of pills$ -/9 -/6

IO"RA4HI!S
#!LSO# AL&RICH 7-/2-E-.-98 Se+a*or from Rhode Isla+dG head of #a*io+al >o+e*ar) Commissio+G his daugh*er Abb) Aldrich married Boh+ &$ Roc,efeller( Br$G he became *he gra+dfa*her of his +amesa,e$ #elso+ Aldrich Roc,efeller( as 1ell as *he prese+* &avid Roc,efeller a+d Laure+ce Roc,efeller$ 6ILLIA> B!##I#"S R?A# 7-/60E-.098 6oodro1 6ilso+5s Secre*ar) of S*a*e( *hree *imes losi+g preside+*ial ca+dida*e of *he &emocra*ic 4ar*)( i+ -/.6( -.00( a+d -.0/( a+d head of *he &emocra*ic 4ar*)$ AL%R!& O6!# CROII!R 7-/6DE-.D.8 A promi+e+* a**or+e) i+ "ra+d Rapids( Ci+ci++a*i( a+d #e1 ?or,( Cro3ier 1ro*e eigh* boo,s o+ legal a+d mo+e*ar) problems( focussi+g o+ his opposi*io+ *o *he suppla+*i+g of Co+s*i*u*io+al mo+e) b) *he corpora*io+ curre+c) pri+*ed b) priva*e firms for *heir profi*$ CLAR!#C! &ILLO# 7-//0E-.J.8

or+ i+ Sa+ A+*o+io( Te;as( so+ of Samuel &illo+ a+d er*ha Lapo1i*3$ Harvard( -.09$ >arried A++e &ouglass of >il1au,ee$ His so+( C$ &ouglas &illo+ 7la*er Secre*ar) of *he Treasur)( -.6-E698 1as bor+ i+ "e+eva( S1i*3erla+d i+ -.0. 1hile *he) 1ere abroad$ &illo+ me* 6illiam A$ Read( fou+der of *he 6all S*ree* bo+d bro,er 6illiam A$ Read a+d Compa+)( *hrough i+*roduc*io+ b) Harvard classma*e 6illiam A$ 4hillips i+ -.-0 a+d &illo+ =oi+ed Read5s Chicago office i+ *ha* )ear$ He moved *o #e1 ?or, i+ -.-2$ Read died i+ -.-6( a+d &illo+ bough* a ma=ori*) i+*eres* i+ *he firm$ &uri+g 6orld 6ar -( er+ard aruch( chairma+ of *he 6ar I+dus*ries oard( 7,+o1+ as *he C3ar of America+ i+dus*r)8 as,ed &illo+ *o be assis*a+* chairma+ of *he 6ar I+dus*ries oard$ I+ -.00( 6illiam A$ Read O Compa+) +ame 1as cha+ged *o &illo+( Read O Compa+)$ &illo+ 1as direc*or of America+ %oreig+ Securi*ies Corpora*io+( 1hich he had se* up i+ -.-9 *o fi+a+ce *he %re+ch "over+me+*5s purchases of mu+i*io+s i+ *he :+i*ed S*a*es$ His righ*ha+d ma+ a* &illo+ Read( Bames %orres*al( became Secre*ar) of *he #av)( la*er Secre*ar) of &efe+se( a+d died u+der m)s*erious circums*a+ces a* a %ederal hospi*al$ I+ -.9J( %or*u+e >aga3i+e lis*ed &illo+ as o+e of *he riches* me+ i+ *he :+i*ed S*a*es( 1i*h a for*u+e *he+ es*ima*ed *o be from Q-90 *o Q000 millio+$ ALA# "R!!#S4A# 7-.06E 8 Appoi+*ed b) 4reside+* Reaga+ *o succeed 4aul 'olc,er as Chairma+ of *he oard of "over+ors of *he %ederal Reserve S)s*em i+ -./J$ "ree+spa+ had succeeded Herber* S*ei+ as chairma+ of *he 4reside+*5s Cou+cil of !co+omic -/J Advisors i+ -.J2$ He 1as *he pro*FgF of former chairma+ of *he oard of "over+ors( Ar*hur ur+s of Aus*ria 7 er+s*ei+8$ ur+s 1as a mo+e*aris* represe+*i+g *he Ro*hschild5s 'ie++ese School of !co+omics( 1hich ma+ifes*ed i*s i+flue+ce i+ !+gla+d *hrough *he Ro)al Colo+ial Socie*)( a fro+* for Ro*hschilds a+d o*her !+glish ba+,ers 1ho s*ashed *heir profi*s from *he 1orld drug *rade i+ *he Ho+g Co+g Sha+ghai a+,$ The s*aff eco+omis* for *he Ro)al Colo+ial Socie*) 1as Alfred >arshall( i+ve+*or of *he mo+e*aris* *heor)( 1ho( as head of *he O;ford "roup( became *he pa*ro+ of 6esle) Clair >i*chell( 1ho fou+ded *he #a*io+al ureau of !co+omic Research for *he Roc,efellers i+ *he :+i*ed S*a*es$ >i*chell( i+ *ur+( became *he pa*ro+ of Ar*hur ur+s a+d >il*o+ %riedma+( 1hose *heories are +o1 *he po1er *ech+i<ues of "ree+spa+ a* *he %ederal Reserve oard$ "ree+spa+ is also *he pro*FgF of A)+ Ra+d( a 1eirdo 1ho i+*erposed her se;ual affairs 1i*h gu**ural comma+ds *o be selfish$ Ra+d 1as also *he pa*ro+ of CIA propaga+dis* 6illiam uc,ele) a+d *he #a*io+al Revie1$ "ree+spa+ 1as direc*or of ma=or 6all S*ree* firms such as B$4$ >orga+ Co$( >orga+ "uara+*) Trus* 7*he America+ ba+, for *he Sovie*s af*er *he olshevi, Revolu*io+ of -.-J8( roo,i+gs I+s*i*u*io+( o1er) Savi+gs a+,( *he &re)fus %u+d( "e+eral %oods( a+d Time( I+c$ "ree+spa+5s mos* impressive achieveme+* 1as as chairma+ of *he #a*io+al Commissio+ o+ Social Securi*) from -./-E-./D$ He =uggled figures *o co+vi+ce *he public *ha* Social Securi*) 1as ba+,rup*( 1he+ i+ fac* i* had a+ e+ormous surplus$ These figures 1ere *he+ used *o fas*e+ o+*o America+ 1or,ers a huge i+crease i+ Social Securi*) 1i*hholdi+g *a;( 1hich i+vo,ed &avid Ricardo5s eco+omic dic*um of *he iro+ la1 of 1ages( *ha* 1or,ers could o+l) be paid a subsis*e+ce 1age( a+d a+) fu+ds be)o+d *ha* mus* be e;*or*ed from *hem forcibl) b) *a; i+creases$ As a par*+er of B$4$ >orga+ Co$ si+ce -.JJ( "ree+spa+ represe+*ed *he u+bro,e+ li+e of co+*rol of *he %ederal Reserve S)s*em b) *he firms represe+*ed a* *he secre* mee*i+g o+ Be,)ll Isla+d i+ -.-0( 1here He+r) 4$ &aviso+( righ*ha+d ma+ of B$4$ >orga+( 1as a ,e) figure i+ *he draf*i+g of *he %ederal Reserve Ac*$ 6i*hi+ da)s of *a,i+g over as chairma+ of *he %ederal Reserve oard( "ree+spa+ immedia*el) raised *he i+*eres* ra*e o+ Sep*$ 2( -./J( *he firs* such i+crease i+ *hree )ears of ge+eral prosperi*)( a+d precipi*a*ed *he s*oc, mar,e* crash of Oc*$( -./J( lac, >o+da)( 1he+ *he &o1 Bo+es average plu+ged 90/ poi+*s$ :+der "ree+spa+5s direc*io+( *he %ederal Reserve oard has s*eadil) +udged *he :+i*ed S*a*es deeper a+d deeper i+*o recessio+( 1i*hou* a 1ord of cri*icism from *he complaisa+* members of Co+gress$ COLO#!L !&6AR& >A#&!LL HO:S! 7-/9/E-.D/8 So+ of a Ro*hschild age+* i+ Te;as$ Succeeded i+ elec*i+g five co+secu*ive gover+ors of Te;asG became 6oodro1 6ilso+5s advisor i+ -.-0$ Coopera*ed 1i*h 4aul 6arburg *o ge* *he %ederal Reserve Ac* passed b) Co+gress i+ -.-D$ RO !RT >ARIO# LA%OLL!TT! 7-/99E-.098

Served i+ Se+a*e from 6isco+si+ -.09E09$ Led agraria+ reformers i+ opposi+g !as*er+ ba+,ers a+d *heir pla+s for *he %ederal Reserve Ac*$ Ra+ for 4reside+* i+ -.02 o+ 4rogressiveESocialis* *ic,e*$ -// CHARL!S A:":ST:S LI#& !R"H( SR$ 7-/60E-.028 Co+gressma+ from >i++eso*a 7-.0JE-.-J8 1ho led *he figh* agai+s* e+ac*me+* of *he %ederal Reserve Ac* i+ -.-D$ He served u+*il -.-J 1he+ he resig+ed *o ru+ for gover+or of >i++eso*a$ He ra+ a good campaig+ despi*e adverse +e1spaper a**ac,s led b) The #e1 ?or, Times$ His campaig+ 1as adversel) affec*ed 1he+ %ederal age+*s bur+ed his boo,s( i+cludi+g 6h) Is ?our Cou+*r) A* 6arH a+d *he papers a+d co+*e+*s of his home office i+ Li**le %alls( >i++eso*a$ LO:IS T$ >c%A&&!# 7-/J6E-.D68 Co+gressma+ a+d Chairma+ of *he House a+,i+g a+d Curre+c) Commi**ee( -.0JEDDG courageousl) opposed *he ma+ipula*ors of *he %ederal Reserve S)s*em i+ *he -.005s a+d *he -.D05s$ I+*roduced bills *o impeach %ederal Reserve oard of "over+ors a+d allied officials$ Af*er *hree a**emp*s o+ his life( he died m)s*eriousl)$ BOH# 4I!R4O#T >OR"A# 7-/DJE-.-D8 Co+sidered *he domi+a+* America+ fi+a+cier a* *he *ur+ of *he ce+*ur)$ 6ho5s 6ho i+ -.-0 s*a*ed he "co+*rols over 90(000 miles of railroads i+ *he :+i*ed S*a*es$" Orga+i3ed :+i*ed S*a*es S*eel Corpora*io+$ ecame represe+*a*ive of House of Ro*hschild *hrough his fa*her( Bu+ius S$ >orga+( 1ho had become Lo+do+ par*+er of "eorge 4eabod) O Compa+)( la*er Bu+ius S$ >orga+ Compa+)( a Ro*hschild age+*$ Boh+ 4ierpo+* >orga+( Br$ succeeded his fa*her as head of *he >orga+ empire$ &A'I& >:LLI#S 7-.26E 8 Appoi+*ed "over+or of *he %ederal Reserve oard >a) 0-( -..0( &avid >ulli+s5 *erm ru+s *o Ba+$ D-( -..6$ He 1as rece+*l) +omi+a*ed *o serve as 'ice Chairma+ of *he %ederal Reserve oard( a+d served as Assis*a+* Secre*ar) of *he Treasur) for &omes*ic %i+a+ce -.//E.0( receivi+g *he depar*me+*5s highes* a1ard( *he Ale;a+der Hamil*o+ A1ard( for his service i+ such programs as s)+*he*ic fuels( federal fi+a+ce( %arm Credi* Assis*a+ce oard( a+d au*hor of *he 4reside+*5s 4la+ for rescui+g *he savi+gs a+d loa+ i+s*i*u*io+s$ He is a dis*a+* cousi+ of *he au*hor( desce+ded from Boh+ >ulli+s( *he firs* recorded se**ler i+ *he 1es*er+ area of 'irgi+ia( hero of *he ba**le of Ci+g5s >ou+*ai+( a+d recipie+* of a 000 acre gra+* of la+d for his service i+ *he America+ Revolu*io+$ 6RI"HT 4AT>A# 7-/.DE-.J68 Co+gressma+ a+d Chairma+ of *he House a+,i+g a+d Curre+c) Commi**ee -.6DEJ2$ Led *he figh* i+ Co+gress *o s*op *he ma+ipula*ors of *he %ederal Reserve S)s*em from -.DJ *o his dea*h i+ -.J6$ CO#"R!SS>A# ARS!#! 4:BO Served i+ Co+gress -.0DE-.-D$ &emocra* from Louisia+a$ Chairma+ of House a+,i+g a+d Curre+c) Commi**ee$ Chairma+ of "4u=o Heari+gs" Subcommi**ee( -.-0$ -/. SIR "OR&O# RICHAR&SO# 7-.-9E 8 Head of *he a+, of !+gla+d si+ce -.JD$ Chairma+ B$ He+r) Schroder 6agg( Lo+do+( -.60EJ0G direc*or of B$ He+r) Schroder a+,i+g Corpora*io+( #e1 ?or,G Schroder a+,i+g Corpora*io+( #e1 ?or,G Llo)d5s a+,( Lo+do+G Rolls Ro)ce$

BACO SCHI%% 7-/2JE-.008 or+ i+ Ro*hschild house i+ %ra+,fur*( "erma+)$ !migra*ed *o :+i*ed S*a*es( married Therese Loeb( daugh*er of Solomo+ Loeb( fou+der of Cuh+( Loeb a+d Co$ Schiff became se+ior par*+er of Cuh+( Loeb a+d Co$( a+d as represe+*a*ive of Ro*hschild i+*eres*s gai+ed co+*rol of mos* of rail1a) mileage i+ :+i*ed S*a*es$ ARO# C:RT 'O# SCHRO&!R 7-//.E 8 Adolph Hi*ler5s perso+al ba+,er( adva+ced fu+ds for Hi*ler5s accessio+ *o po1er i+ "erma+) i+ -.DDG "erma+ represe+*a*ive of *he Lo+do+ a+d #e1 ?or, bra+ches of B$ He+r) Schroder a+,i+g Corpora*io+G SS Se+ior "roup LeaderG direc*or of all "erma+ subsidiaries of I$T$TG Himmler5s Circle of %rie+dsG advisor *o board of direc*ors( &eu*sche Reichsba+, 7"erma+ ce+*ral ba+,8$ A#THO#? >ORTO# SOLO>O# 7-.-.E 8 !duca*ed a* Harvard( eco+omis* Office of 4rice Admi+is*ra*io+( -.2-E20G fi+a+cial missio+ *o Ira+( -.20E26G Age+c) for i+*er+a*io+al &evelopme+* Sou*h America( -.69E6.G preside+* i+*er+a*io+al I+ves*me+* Corpora*io+ for ?ugoslavia -.6.EJ0G advisor *o Chairma+( 6a)s a+d >ea+s Commi**ee( House of Represe+*a*ives( -.J0EJDG :+dersecre*ar) >o+e*ar) Affairs( :$S$ Treasur)( -.JJE/0G preside+* %ederal Reserve a+, of #e1 ?or,( -./0E SA>:!L :#T!R>?!R 7-/9/E-.208 A par*+er of *he la1 firm of "ugge+heimer a+d :+*erm)er of #e1 ?or,( 1ho co+duc*ed *he "4u=o Heari+gs" of *he House a+,i+g a+d Curre+c) Commi**ee i+ -.-0$ Cou+sel for Rogers a+d Roc,efeller i+ ma+) large sui*s agai+s* %$ Augus*us Hei+3e( Thomas 6 La1so+ a+d o*hers$ !ar+ed a si+gle fee of QJJ9(000 for ha+dli+g merger of :*ah Copper Compa+)$ Repor*ed i+ The #e1 ?or, Times >a) 06( -.02 as urgi+g immedia*e recog+i*io+ of Sovie* Russia a* Car+egie Hall mee*i+g$ :+*erm)er5s pres*ige a+d po1er is illus*ra*ed b) *he fac* *ha* *his fro+* page obi*uar) i+ The #e1 ?or, Times covered si; colum+s$ His lis*i+g i+ 6ho5s 6ho 1as *he lo+ges* for *hir*ee+ )ears$ %RA#C 'A#&!RLI4 7-/62E-.DJ8 Assis*a+* Secre*ar) of Treasur) -/.JE-.0-G 1o+ pres*ige for fi+a+ci+g Spa+ish America+ 6ar b) floa*i+g Q000(000(000 i+ bo+ds duri+g his i+cumbe+c) for 1ha* is ,+o1+ as "#a*io+al Ci*) a+,5s 6ar" 4reside+* of #a*io+al Ci*) a+, -.0.E-.$ O+e of *he origi+al Be,)ll Isla+d group 1ho 1ro*e %ederal Reserve Ac* i+ #ovember( -.-0$ #o me+*io+ of *his impor*a+* fac* is made i+ e;*e+sive obi*uar) i+ The #e1 ?or, Times( Bu+e D0( -.DJ$ -.0 "!OR"! S?L'!ST!R 'I!R!CC 7-//2E-.608 Au*hor of *he defi+i*ive s*ud) The S*ra+ges* %rie+dship i+ His*or)( 6oodro1 6ilso+ a+d Col$ House( Liverigh*( -.D0$ A leadi+g poe* of *he earl) -.005s( revie1ed o+ *he fro+* page of The #e1 ?or, Times oo, Revie1( a+d ,+o1+ as *he leadi+g "erma+EAmerica+ ci*i3e+ of *he :+i*ed S*a*es$ 4A:L 'OLCC!R 7-.0JE 8 Chairma+ of *he %ederal Reserve oard of "over+ors si+ce -.J.( appoi+*ed b) 4reside+* Car*er( reappoi+*ed b) 4reside+* Reaga+ for a+o*her four )ear *erm begi++i+g Augus* 6( -./D$ !duca*ed a* 4ri+ce*o+( Harvard a+d Lo+do+ School of !co+omicsG emplo)ed b) %ederal Reserve a+, of #e1 ?or,( -.90E9JG Chase >a+ha**a+ a+,( -.9JE6-G Treasur) &epar*me+*( -.6-EJ2G preside+* %ederal Reserve a+, of #e1 ?or,( -.J9EJ.$ 4A:L 6AR :R" 7-/6/E-.D08

Co+ceded *o be *he ac*ual au*hor of our ce+*ral ba+, pla+( *he %ederal Reserve S)s*em( b) ,+o1ledgeable au*hori*ies$ !migra*ed *o *he :+i*ed S*a*es from "erma+) -.02G par*+er( Cuh+ Loeb a+d Compa+) ba+,ers( #e1 ?or,G +a*urali3ed -.--$ >ember of *he origi+al %ederal Reserve oard of "over+ors( -.-2E-.-/G preside+* %ederal Advisor) Cou+cil( -.-/E-.0/$ ro*her of >a; 6arburg( 1ho 1as head of "erma+ Secre* Service duri+g 6orld 6ar I a+d 1ho represe+*ed "erma+) a* *he 4eace Co+fere+ce( -.-/E-.-.( 1hile 4aul 1as chairma+ of *he %ederal Reserve S)s*em$ SIR 6ILLIA> 6IS!>A# 7-//9E-.608 4ar*+er of Cuh+( Loeb a+d Compa+)G head of ri*ish Secre* Service duri+g 6orld 6ar I$ 6or,ed closel) 1i*h Col$ House domi+a*i+g *he :+i*ed S*a*es a+d !+gla+d$ -.bla+, -.0

I LIO"RA4H?
#e1spapers@ #e1 ?or, Times -/9/E-./D 6ashi+g*o+ 4os* -.DDE-./D 4eriodicals@ arro+5s 6ee,l) -.0-E-./D usi+ess 6ee, -.0.E-./D %orbes >aga3i+e -.-JE-./D %or*u+e -.D0E-./D Harper5s -/90E-./D #a*io+al Revie1 -.99E-./D #e1s1ee, -.DDE-./D The #a*io+ -/69E-./D The #e1 Republic -.-2E-./D Time -.0DE-./D oo,s@ Curre+* iograph) -.20E-./D H$6$ 6ilso+ Co$( #$?$

&ic*io+ar) of #a*io+al iograph)( Scrib+ers( #$?$ -.D2E-.69 &irec*or) of &irec*ors( Lo+do+ -/.6E-./D &irec*or) of &irec*ors I+ The Ci*) of #e1 ?or, -/./E-.-/ The Co+cise &ic*io+ar) of #a*io+al iograph)( -.0DE-.J.( O;ford :+iversi*) 4ress Co+gressio+al Record -.-0E-./D I+*er+a*io+al I+de; *o 4eriodicals -.00E-.69( H$6$ 6ilso+ Co$( #$?$ 4oole5s I+de; *o 4eriodical Li*era*ure -/00E-.06( 6m$ T 4oole( Chicago Readers "uide *o 4eriodicals -.00E-./D Ra+d >c#all)5s a+,ers "uide -.02E-.0/ >ood)5s a+,i+g a+d %i+a+ce -.0/E-.6/ 6ho5s 6ho i+ America -/.0E-./D( A$#$ >ar<uis Co$ 6ho5s 6ho( "rea* ri*ai+ -.0-E-./D 6ho 6as 6ho I+ America -60JE-.06( A$#$ >ar<uis Co$ 6ho5s 6ho i+ *he 6orld -.J0E-./D( A$#$ >ar<uis Co$ 6ho5s 6ho i+ %i+a+ce a+d I+dus*r) -.D6E-.6.( A$#$ >ar<uis Co$ -.D S*a+dard a+d 4oor5s Regis*er of &irec*ors -.0/E-./D Se+a*e Commi**ee Heari+gs o+ %ederal Reserve Ac*( -.-D House Commi**ee Heari+gs o+ %ederal Reserve Ac*( -.-D House Commi**ee Heari+gs o+ *he >o+e) Trus* 74u=o Commi**ee8 -.-D House I+ves*iga*io+ of %ederal Reserve S)s*em( -.0/ Se+a*e I+ves*iga*io+ of %i*+ess of !uge+e >e)er *o be a "over+or of *he %ederal Reserve oard( -.D0 Se+a*e Heari+gs o+ Thomas $ >cCabe *o be a "over+or of *he %ederal Reserve S)s*em( -.2/ House Commi**ee Heari+gs o+ !;*e+sio+ of 4ublic &eb*( -.29

%ederal Reserve &irec*ors@ A S*ud) of Corpora*e a+d a+,i+g I+flue+ce$ S*aff Repor*( Commi**ee o+ a+,i+g( Curre+c) a+d Housi+g( House of Represe+*a*ives( .2*h Co+gress( 0d Sessio+( Augus*( -.J6$ The %ederal Reserve S)s*em( 4urposes a+d %u+c*io+s( oard of "over+ors( -.6D A His*or) of >o+e*ar) Crimes( Ale;a+der &el >ar( *he &el >ar Socie*)( -/.. %ia* >o+e) I+fla*io+ i+ %ra+ce( A+dre1 &ic,so+ 6hi*e( %ou+da*io+ for !co+omic !duca*io+( #$?$ -.9. The 6ar o+ "old( A+*o+) C$ Su**o+( J6 4ress( Califor+ia( -.JJ 6all S*ree* a+d *he Rise of Hi*ler( A+*o+) C$ Su**o+( J6 4ress( Califor+ia( -.J6 Collec*ed Speeches of Louis T >c%adde+( Co+gressio+al Record The Tru*h Abou* Roc,efeller( !$>$ Bosephso+( Ched+e) 4ress( #$?$ -.62 The S*ra+ge &ea*h of %ra+,li+ &$ Roosevel*( !$>$ Bosephso+( Ched+e) 4ress( #$?$ -.2/ ehi+d *he Thro+e( 4aul !mde+( Hoddard S*ough*o+( Lo+do+( -.D2 The >o+e) 4o1er of !urope( 4aul !mde+( Hoddard S*ough*o+( Lo+do+ The Robber aro+s( >a*he1 Bosephso+( Harcour* race( #$?$ -.D2 The Ro*hschilds( %rederic >or*o+( Cur*is 4ublishi+g Co$( -.6The >ag+ifice+* Ro*hschilds( Cecil Ro*h( Rober* Hale Co$( -.D. 4a1+s I+ The "ame( 6illiam "u) Carr( 7priva*el) pri+*ed8( -.96 Teari+g A1a) *he 'eils( %ra+cois Co*)( 4aris( -.20 6ri*ers o+ !+glish >o+e*ar) His*or)( -606E-JD0( Lo+do+( -/.6 The %ederal Reserve S)s*em Af*er %if*) ?ears( Commi**ee o+ a+,i+g a+d Curre+c)( Ba+$( %eb$ -.62 The a+,ers5 Co+spirac)( Ar*hur Ci*so+( -.DD La1s Of The :+i*ed S*a*es Rela*i+g *o Curre+c)( %i+a+ce a+d a+,i+g %rom -J/. *o -/.-( Charles %$ &u+bar( "i++ O Co$( os*o+( -/.D >o+e*ar) 4olic) of 4le+*) I+s*ead of Scarci*)( Commi**ee o+ a+,i+g a+d

Curre+c)( -.DJE-.D/ The S*ra+ges* %rie+dship I+ His*or)( 6oodro1 6ilso+ a+d Col$ House( "eorge S)lves*er 'ierec,( Liverigh*( #$?$ -.D0 %ederal Reserve 4olic) >a,i+g( "$L$ ach( C+apf( #$?$ -.90 Rulers of America( A S*ud) of %i+a+ce Capi*al( A++a Roc,es*er( I+*er+a*io+al 4ublishers( #$?$ -.D6 -.2 a+,i+g i+ *he :+i*ed S*a*es efore *he Civil 6ar( #a*io+al >o+e*ar) Commissio+( -.-#a*io+al a+,i+g S)s*em( #a*io+al >o+e*ar) Commissio+( -.-The %ederal Reserve S)s*em( 4aul 6arburg( >acmilla+( #$?$ -.D0 Roosevel*( 6ilso+ a+d *he %ederal Reserve La1( Col$ !lisha "arriso+( Chris*opher 4ublishi+g House( os*o+( -.D>e+ 6ho Ru+ America( Ar*hur &$ Ho1de+ Smi*h( obbs >errill( #$?$( -.D9 %i+a+cial "ia+*s of America( "eorge ! Redmo+d( S*ra*ford( os*o+( -.00 The "rea* Sovie* !+c)clopaedia( >acmilla+( Lo+do+( -.JD !+c)clopaedia ri*a++ica( -.J. !+c)clopaedia America+a( -./0 &ope( I+c$( "oldma+( S*ei+berg e* a*( #e1 e+=ami+ %ra+,li+ House 4ublishi+g Compa+)( #$?$ -.J/ a+,i+g a+d Curre+c) a+d *he >o+e) Trus*( Charles A$ Li+dbergh( Sr$ -.-D The S*ra+ge Career of >r$ Hoover :+der T1o %lags( Boh+ Hamill( 6illiam %aro( #$?$ -.DThe %ederal Reserve S)s*em( H$ 4ar,er 6illis( Ro+ald Co$( -.0D A$ $C$ of *he %ederal Reserve S)s*em( !$6$ Cemmerer( 4ri+ce*o+ :+iv$( -.-. Adve+*ures i+ Co+s*ruc*ive %i+a+ce( Car*er "lass( &oubleda)( #$?$ -.0J a+,i+g Reform i+ *he :+i*ed S*a*es( 4aul 6arburg( Columbia :+iv$( -.-2

:$S$ >o+e) vs$ Corpora*io+ Curre+c)( Alfred Cro3ier( Clevela+d( -.-0 4hilip &ru( Admi+is*ra*or( !$>$ House( $6$ Huebsch( #$?$ -.-0 The I+*ima*e 4apers of Col$ House( edi*ed b) Charles Se)mour( 2 v$ -.06E-.0/( Hough*o+ >iffli+ Co$ The "rea* Co+spirac) of *he House of >orga+( H$6$ Louc,s( -.-6 Capi*al Ci*)( >cRae a+d Cair+cross( !)re >e*hue+( Lo+do+( -.6D Aggressio+( O**o Lehma++ERussbeld*( Hu*chi+so+( Lo+do+( -.D2 The !mpire of High %i+a+ce( 'ic*or 4erlo( I+*er+a*io+al 4ub$( -.9J >emoirs of >a; 6arburg( erli+( -.D6 Le**ers a+d %rie+dships of Sir Cecil Spri+gERice Traged) a+d Hope( Carroll Suigle)( >acmilla+( #$?$ The 4oli*ics of >o+e)( ria+ Boh+so+( >c"ra1 Hill( #$?$ -.J0 A 4rimer o+ >o+e)( House a+,i+g a+d Curre+c) Commi**ee( -.62 4ierpo+* >orga+ a+d %rie+ds( The A+a*om) of A >)*h( "eorge 6heeler( 4re+*ice Hall( #$B$( -.JD 4ierpo+* >orga+( Herber* Sa**erleee( >acmilla+( #$?$( -.20 >orga+ *he >ag+ifice+*( Boh+ C$ 6i+,ler( 'a+guard( #$?$( -.D0 6ilso+( Ar*hur Li+, 79 vol$8 4ri+ce*o+ :+iversi*) 4ress( 4ri+ce*o+( #$B$ His*orical egi++i+gU The %ederal Reserve( Roger T Boh+so+( %ederal Reserve a+, of os*o+( -.JJ 7J pri+*i+gs( -.JJE-./0( *o*ali+g .0(000 copies$8 MI* is +o*e1or*h) *ha* *his 62 page boo,le* ma,es +o me+*io+ of Be,)ll Isla+d( 4aul 6arburg5s au*horship( or source of promo*io+ fu+ds 1hich resul*ed i+ e+ac*me+* of *he %ederal Reserve Ac* o+ &ecember 0D( -.-D$N The %ederal Reserve a+d Our >a+ipula*ed &ollar( >ar*i+ A$ Larso+( &evi+ Adair Co$( Old "ree+1ich( Co++$( -.J9 -.9 Chai+ a+,i+g( S*oc,holder a+d Loa+ Li+,s of 000 Larges* >ember a+,s(

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Richardso+( Sir "ordo+EE/0 Ric,ard( !dgarEEJ2 Rio+da( >$!$EEJD Roc,efeller( 2( 9( -0( --( -0( -D( -2( -9( DD( -02( -09 #a*io+al Recover) Ac*EE-9.( -6/ #a*io+al Reserve 4la+EEJ #e1 ?or, TimesEE0J( 0/( 0.( DD( D9( DJ( 20( 22( 6-( J-( J2( J9( /0( --0( --.( -06( -22( -66( -J- #orma+( Lord >o+*aguEE2.( J6( JJ( -0D( -0.( -D-( -D0( -DD( -20( -90 #or*e+( Charles &$EE-( DD O O5"orma+( Se+a*orEE-2( D/ O1e+( Rober* L$EE -J( -.( 0.( D/( D.( 20( 2-( --6( --.( -D/( -9J( -6- O1e+E"lass illEE0- 4 4age( 6al*er Hi+esEE/D 4a+ic of -/DJEE9( 90( 9-( 69 4a+ic of -/9JEE9-( 90( 69 4a+ic of -.0JEE-( 0( 9( -0( -0( 0- 4a*erso+( 6illiamEE9/( 9. 4a*ma+( 6righ*EED2( -62( -69( -6J 4eabod)( "eorgeEE2.( 90( 9-( 90( 92( 69( -J- 4eabod)( Riggs O Co$EE2. 4egler( 6es*broo,EE0D 4ember*o+( Rober* LeighEE/0 4ou+d( !3raEE9/ 4ressma+( LeeEE02 4ri+ceps( "avrelEE 6. 4u=o( Arse+eEE-6 4u=o Commi**eeEE-6( -J( -/( -2. 4)+e( >oses Ta)lorEE66 4)+e( 4erc)EE69( 66 S Suigle)( &r$ CarrolEE9D( -D- R Reaga+( Ro+aldEEJJ( J.( /0( -JD( -J9 Reichsba+,EE-0( -D0 Rhodes( CecilEE9D &avidEE-J-( -J0( -J6 Roc,efeller( Boh+ &$EE2J( 69 Roc,efeller( 6illiamEE2J( 69 Roc,efeller( 6illiam( Br$EE69 Roosa( Rober*EE92( -J-( -J0 Roosevel*( %ra+,li+ &ela+oEE0D( 02( D0( D-( /2( -0.( -DJ( -D.( -29( -9-( -99( -96( -9/( -9.( -60( -6.( -J0 Roosevel*( TheodoreEE-( -/( -.( 00( D/( /0 Rosebur)( LordEE9D Ro*hschild( aro+ AlfredEE0D( 60 Ro*hschild( House ofEE-J( 2J( 2/( 90( 90( 9D( 92( 60 Ro*hschild( BamesEE 9( 90( 9J( 9.( 6-( 66( -0. Ro*hschild( LeopoldEE60 Ro*hschild( >a)er AmschelEE99( 96 Ro*hschild( #$>$EE2/( 2.( 9-( 9D( 9J( 9/( 9.( 6/( -J- Rou+d TableEE9D( 92( 60 Ro1e( 6$S$EE2D( J0 Rue( Levi L$EE20 R)a+( Boh+ arr)EE66 R)a+( Thomas %or*u+eEE66 R)a+( 'irgi+ia %or*u+eEE66 S Schiff( BacobEE-J( -.( 06( 0.( 20( 2J( 66( 6J( /6( /J( .0( -2. Schiff( Boh+EE66 Schiff( Lud1igEE/J Schiff( 4hilipEE/J Schoell,opf %amil)EED2 Schole)( &avidEE-/0 Schroder( aro+ ru+o 'o+EE6.( J6 Schroder( aro+ Rudolph 'o+EEJ6 Schroder( B$ He+r) Co$EE2/( 6J( 6/( 6.( J-( JD( J2( J9( J6( JJ( J/( J.( /0( /-( -J9( -J6( -J.( -/0 Schul*3( "eorgeEEJ. Seligma+( !$R$A$EE. Seligma+( B$ O 6$EE.( -J( J-( -0.( --2( -99

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'ic,ers So+s O >a;imEE60 'ierec,( "eorgeEE0D( 09( 0J 'olc,er( 4aulEED2( -J-( -J0( -JD( -/D 'reela+d( !d1ardEE-0 6 6ar %i+a+ce Corpora*io+EE02( /6( .2( .9( .J( ..( -9-( -9D 6ar I+dus*ries oardEEJ2( /6( .0( -9- 6arburg( %eli;EED/( /6( /J( -0/( -0. 6arburg( Bames 4aulEE-0/( -0.( -96( -6- 6arburg( >$>$ Compa+)EE-0( -J( D2( 92 6arburg( >a;EE/2( /6( /J( //( --- 6arburg( 4aul >ori*3EE-( 0( D( 2( 9( 6( J( /( .( -0( -2( -.( 0-( 00( 0D( 02( 06( 0/( 0.( D0( DD( D2( D6( DJ( D/( 20( 2-( 20( 2D( 22( 2/( 66( J-( J2( /2( /6( /J( //( /.( ..( ---( --0( --9( --J( --.( -00( -00( -06( -0J( -0/( -D/( -22( -2/( -96( -9J( -62 6ei+berger( CasparEEJ. 6e*more( %ra+, O$EE20 6hi*e( Harr) &e;*erEE 02 6illiams( Boh+ S,el*o+EE0-( D0( D.( -0-( -0D( -20 6illis( H$ 4ar,erEE-D0( -20( -20 6ilso+( 6oodro1EE-0( -J( -/( -.( 00( 0D( 02( 09( 06( 0/( 0.( D0( D0( D6( D/( D.( 2-( /0( /D( /2( /9( /6( /J( //( /.( .0( ..( -0-( -0D( -09( -0J( -0.( ---( --0( --J( -DJ( -D.( -20( -2-( -96 6i+g( &a+iel S$EE2D 6isema+( Sir 6illiamEEJD( //( -09( -0J( --- I Iabris,ie( "$A$EEJD( J2

Se)mour( CharlesEED- Sha1( LeslieEE-2 Shel*o+EE-( 0 Simpso+( Boh+ Lo1er)EEJ/ Smi*h( Ri;e)EE0.( --0 So+*ag( Susa+EE6- Sprague( O$>$6$EE--( --2( -6- Spri+gERice( Sir CecilEE/. S*$ "eorge( "eorge %$EE66 S*$ "eorge( Ca*heri+eEE66 S*erli+g( Boh+ 6$EE 66 S*illma+( &o+ CarlosEE69 S*illma+( BamesEE/( 2J( 69( 66 S*imso+( He+r) L$EE-6S*o+e( Se+a*orEE0- S*rauss( Alber*EE--0( --2( -00( -20( -2-( -9J S*ro+g( e+=ami+EE-( D( D0( DD( 22( --/( -0D( -0.( -D-( -D0( -DD( -DJ( -D/ Sugar !<uali3a*io+ oardEEJ2 S1i++e)( !$%$EE2D T Taf*( 6illiam Ho1ardEE-/( -.( D/( /0 Ta)lor( Co+gressma+EE-2 Ta)lor( H$A$C$EE66 Ta)lor( >osesEE62( 69( 66 Tavis*oc, I+s*i*u*eEE/0( -/2( -/9 Thalmma+( Lade+burgEE-J Tiar,s( %ra+, C)rilEE6.( JD( J6( JJ Tie+*si+ RailroadEEJ0 Tobacco Trus*EE/. Trila*eral Commissio+EED9( 92( -J0 Tug1ell( Re;ford "u)EE-60 : :+*erme)er( SamuelEE-J( -/ :$S$ %ood Admi+is*ra*io+EEJD( J2( J/( /J ' 'a+derlip( %ra+,EE-( 0( D( /( .( -.( DD( 22( -6-

00bla+, 000

Sues*io+s a+d A+s1ers

6hile lec*uri+g i+ ma+) cou+*ries( a+d appeari+g o+ radio a+d *elevisio+ programs as a gues*( *he au*hor is fre<ue+*l) as,ed <ues*io+s abou* *he %ederal Reserve S)s*em$ The mos* fre<ue+*l) as,ed <ues*io+s a+d *he a+s1ers are as follo1s@ S@ 6ha* is *he %ederal Reserve S)s*emH

A@ The %ederal Reserve S)s*em is +o* %ederalG i* has +o reservesG a+d i* is +o* a s)s*em( bu* ra*her( a crimi+al s)+dica*e$ I* is *he produc* of crimi+al s)+dicalis* ac*ivi*) of a+ i+*er+a*io+al co+sor*ium of d)+as*ic families comprisi+g 1ha* *he au*hor *erms "The 6orld Order" 7see "TH! 6ORL& OR&!R" a+d "TH! C:RS! O% CA#AA#"( bo*h b) !us*ace >ulli+s8$ The %ederal Reserve s)s*em is a ce+*ral ba+, opera*i+g i+ *he :+i*ed S*a*es$ Al*hough *he s*ude+* 1ill fi+d +o such defi+i*io+ of a ce+*ral ba+, i+ *he *e;*boo,s of a+) u+iversi*)( *he au*hor has defi+ed a ce+*ral ba+, as follo1s@ I* is *he domi+a+* fi+a+cial po1er of *he cou+*r) 1hich harbors i*$ I* is e+*irel) priva*eEo1+ed( al*hough i* see,s *o give *he appeara+ce of a gover+me+*al i+s*i*u*io+$ I* has *he righ* *o pri+* a+d issue mo+e)( *he *radi*io+al preroga*ive of mo+archs$ I* is se* up *o provide fi+a+ci+g for 1ars$ I* fu+c*io+s as a mo+e) mo+opol) havi+g *o*al po1er over all *he mo+e) a+d credi* of *he people$ S@ 6he+ Co+gress passed *he %ederal Reserve Ac* o+ &ecember 0D( -.-D( did *he Co+gressme+ ,+o1 *ha* *he) 1ere crea*i+g a ce+*ral ba+,H A@ The members of *he 6Drd Co+gress had +o ,+o1ledge of a ce+*ral ba+, or of i*s mo+opolis*ic opera*io+s$ >a+) of *hose 1ho vo*ed for *he bill 1ere dupedG o*hers 1ere bribedG o*hers 1ere i+*imida*ed$ The preface *o *he %ederal Reserve Ac* reads "A+ Ac* *o provide for *he es*ablishme+* of %ederal reserve ba+,s( *o fur+ish a+ elas*ic curre+c)( *o afford mea+s of rediscou+*i+g commercial papers( *o es*ablish a more effec*ive supervisio+ of ba+,i+g i+ *he :+i*ed S*a*es( a+d for o*her purposes$" The u+specified "o*her purposes" 1ere *o give i+*er+a*io+al co+spira*ors a mo+opol) of all *he mo+e) a+d credi* of *he people of *he :+i*ed S*a*esG *o fi+a+ce 6orld 6ar I *hrough *his +e1 ce+*ral ba+,( *o place America+ 1or,ers a* *he merc) of *he %ederal Reserve s)s*em5s collec*io+ age+c)( *he I+*er+al Reve+ue Service( a+d *o allo1 *he mo+opolis*s *o sei3e *he asse*s of *heir compe*i*ors a+d pu* *hem ou* of busi+ess$ S@ Is *he %ederal Reserve s)s*em a gover+me+* age+c)H A@ !ve+ *he prese+* chairma+ of *he House a+,i+g Commi**ee claims *ha* *he %ederal Reserve is a gover+me+* age+c)( a+d *ha* i* is +o* priva*el) o1+ed$ The fac* is *ha* *he gover+me+* has +ever o1+ed a si+gle share of %ederal Reserve a+, s*oc,$ This charade s*ems from *he fac* *ha* *he 4reside+* of *he :+i*ed S*a*es appoi+*s *he "over+ors of *he %ederal Reserve oard( 1ho are *he+ co+firmed b) *he Se+a*e$ The secre* au*hor of *he Ac*( ba+,er 4aul 6arburg( a represe+*a*ive of *he Ro*hschild ba+,( coi+ed *he +ame "%ederal" from *hi+ air for *he Ac*( 1hich he 1ro*e *o achieve *1o of his pe* aspira*io+s( a+ "elas*ic curre+c)"( read 7rubber chec,8( a+d *o facili*a*e *radi+g i+ accep*a+ces( i+*er+a*io+al *rade credi*s$ 6arburg 1as fou+der a+d preside+* of *he I+*er+a*io+al Accep*a+ce Corpora*io+( a+d made billio+s i+ profi*s b) *radi+g i+ *his commercial paper$ Sec$ J of *he %ederal Reserve Ac* provides "%ederal reserve ba+,s( i+cludi+g *he capi*al a+d surplus *herei+( a+d i+come derived *herefrom( shall be e;emp* from %ederal( s*a*e a+d local *a;a*io+( e;cep* *a;es o+ real es*a*e$" "over+me+* buildi+gs do +o* pa) real es*a*e *a;$ S@ Are our dollar bills( 1hich carr) *he label "%ederal Reserve +o*es" gover+me+* mo+e)H A@ %ederal Reserve +o*es are ac*uall) promissor) +o*es( promises *o pa)( ra*her *ha+ 1ha* 1e *radi*io+all) co+sider mo+e)$ The) are i+*eres* beari+g +o*es issued agai+s* i+*eres* beari+g gover+me+* bo+ds( paper issued 1i*h +o*hi+g bu* paper bac,i+g( 1hich is ,+o1+ as fia* mo+e)( because i* has o+l) *he fia* of *he issuer *o guara+*ee *hese +o*es$ The %ederal Reserve Ac* au*hori3es *he issua+ce of *hese +o*es "for *he purposes of ma,i+g adva+ces *o %ederal reserve ba+,s$$$ The said +o*es shall be obliga*io+s of *he :+i*ed S*a*es$ The) shall be redeemed i+ gold o+ dema+d a* *he Treasur) &epar*me+* of *he :+i*ed S*a*es i+ *he &is*ric* of Columbia$" Touris*s visi*i+g *he ureau of 4ri+*i+g a+d !+gravi+g o+ *he >all i+ 6ashi+g*o+( &$C$ vie1 *he pri+*i+g of %ederal Reserve +o*es a* *his gover+me+*al age+c) o+ co+*rac* from *he %ederal Reserve S)s*em for *he +omi+al sum of $00060 each i+ u+i*s of -(000( a* *he same price regardless of *he de+omi+a*io+$ These +o*es( pri+*ed for a priva*e ba+,( *he+ become liabili*ies a+d obliga*io+s of *he :+i*ed S*a*es gover+me+* a+d are added *o our prese+* Q2 *rillio+ deb*$ The gover+me+* had +o deb* 1he+ *he %ederal Reserve Ac* 1as passed i+ -.-D$ S@ 6ho o1+s *he s*oc, of *he %ederal Reserve a+,sH

A@ The d)+as*ic families of *he ruli+g 6orld Order( i+*er+a*io+alis*s 1ho are lo)al *o +o race( religio+( or +a*io+$ The) are families such as *he Ro*hschilds( *he 6arburgs( *he Schiffs( *he Roc,efellers( *he Harrima+s( *he >orga+s a+d o*hers ,+o1+ as *he eli*e( or "*he big rich"$ S@ Ca+ I bu) *his s*oc,H A@ #o$ The %ederal Reserve Ac* s*ipula*es *ha* *he s*oc, of *he %ederal Reserve a+,s ca++o* be bough* or sold o+ a+) s*oc, e;cha+ge$ I* is passed o+ b) i+heri*a+ce as *he for*u+e of *he "big rich"$ Almos* half of *he o1+ers of %ederal Reserve a+, s*oc, are +o* America+s$ S@ Is *he I+*er+al Reve+ue Service a gover+me+*al age+c)H A@ Al*hough lis*ed as par* of *he Treasur) &epar*me+*( *he IRS is ac*uall) a priva*e collec*io+ age+c) for *he %ederal Reserve S)s*em$ I* origi+a*ed as *he lac, Ha+d i+ mediaeval I*al)( collec*ors of deb* b) force a+d e;*or*io+ for *he ruli+g I*alia+ mob families$ All perso+al i+come *a;es collec*ed b) *he IRS are re<uired b) la1 *o be deposi*ed i+ *he +eares* %ederal Reserve a+,( u+der Sec$ -9 of *he %ederal Reserve Ac*( "The mo+e)s held i+ *he ge+eral fu+d of *he Treasur) ma) be $$$$deposi*ed i+ %ederal reserve ba+,s( 1hich ba+,s( 1he+ re<uired b) *he Secre*ar) of *he Treasur)( shall ac* as fiscal age+*s of *he :+i*ed S*a*es$" S@ &oes *he %ederal Reserve oard co+*rol *he dail) price a+d <ua+*i*) of mo+e)H A@ The %ederal Reserve oard of "over+ors( mee*i+g i+ priva*e as *he %ederal Ope+ >ar,e* Commi**ee 1i*h preside+*s of *he %ederal Reserve a+,s( co+*rols all eco+omic ac*ivi*) *hroughou* *he :+i*ed S*a*es b) issui+g orders *o bu) gover+me+* bo+ds o+ *he ope+ mar,e*( crea*i+g mo+e) ou* of +o*hi+g a+d causi+g i+fla*io+ar) pressure( or( co+versel)( b) selli+g gover+me+* bo+ds o+ *he ope+ mar,e* a+d e;*i+guishi+g deb*( crea*i+g defla*io+ar) pressure a+d causi+g *he s*oc, mar,e* *o drop$ S@ Ca+ Co+gress abolish *he %ederal Reserve S)s*emH A@ The las* provisio+ of *he %ederal Reserve Ac* of -.-D( Sec$ D0( s*a*es( "The righ* *o ame+d( al*er or repeal *his Ac* is e;pressl) reserved$" This la+guage mea+s *ha* Co+gress ca+ a* a+) *ime move *o abolish *he %ederal Reserve S)s*em( or bu) bac, *he s*oc, a+d ma,e i* par* of *he Treasur) &epar*me+*( or *o al*ar *he S)s*em as i* sees fi*$ I* has +ever do+e so$ S@ Are *here ma+) cri*ics of *he %ederal Reserve beside )ourselfH A@ 6he+ I bega+ m) researches i+ -.2/( *he %ed 1as o+l) *hir*)Efour )ears old$ I* 1as +ever me+*io+ed i+ *he press$ Toda) *he %ed is discussed ope+l) i+ *he +e1s sec*io+ a+d *he fi+a+cial pages$ There are bills i+ co+gress *o have *he %ed audi*ed b) *he "over+me+* Accou+*i+g Office$ ecause of m) e;pose( i* is +o lo+ger a sacred co1( al*hough *he ig Three ca+dida*es for 4reside+* i+ -..0( ush( Cli+*o+ a+d 4ero*( =oi+ed i+ a u+a+imous chorus duri+g *he deba*es *ha* *he) 1ere pledged +o* *o *ouch *he %ed$ S@ Have )ou suffered a+) perso+al co+se<ue+ces because of )our e;pose of *he %edH A@ I 1as fired from *he s*aff of *he Librar) of Co+gress af*er I published *his e;pose i+ -.90( *he o+l) perso+ ever discharged from *he s*aff for poli*ical reaso+s$ 6he+ I sued( *he cour* refused *o hear *he case$ The e+*ire "erma+ edi*io+ of *his boo, 1as bur+ed i+ -.99( *he o+l) boo, bur+ed i+ !urope si+ce *he Seco+d 6orld 6ar$ I have e+dured co+*i+uous harassme+* b) gover+me+* age+cies( as de*ailed i+ m) boo,s "A 6RIT %OR >ART?RS" a+d ">? LI%! I# CHRIST"$ >) famil) also suffered harassme+*$ 6he+ I spo,e rece+*l) i+ 6emble) Are+a i+ Lo+do+( *he press de+ou+ced me as "a si+is*er lu+a*ic"$ S@ &oes *he press al1a)s suppor* *he %edH A@ There have bee+ some e+couragi+g defec*io+s i+ rece+* mo+*hs$ A fro+* page s*or) i+ *he 6all S*ree* Bour+al( %eb$ /( -..D( s*a*ed( "The curre+* %ed s*ruc*ure is difficul* *o =us*if) i+ a democrac)$ I*5s a+ oddl) u+democra*ic i+s*i*u*io+$ I*s orga+i3a*io+ is so da*ed

*ha* *here is o+l) o+e Reserve ba+, 1es* of *he Roc,ies( a+d *1o i+ >issouri$$$Havi+g a ce+*ral ba+, 1i*h a mo+opol) over *he issua+ce of *he curre+c) i+ a democra*ic socie*) is a ver) difficul* bala+ci+g ac*$"

Co+gressma+ >c%adde+ o+ *he %ederal Reserve Corpora*io+ Remar,s i+ Co+gress( -.D2 A# ASTO:#&I#" !L4OS:R! h**p@VVhome$hi1aa)$+e*VTJ!becraf*Vmcfadde+$h*ml

The a+,rup*c) of *he :+i*ed S*a*es h**p@VV111$apf+$+e*V&ocE-00Kba+,rup*c)$h*m

The %ed( The %ed( The %ed h**p@VV111$goldEeagle$comVedi*orialsK0-Vse++hol3020D0-$h*ml The &eclara*io+ of I+depe+de+ce h**p@VV111$apf+$orgVapf+Vdeclara*io+$h*m The %ederal Reserve E 6ha* Is I*H 6ho Is I*H h**p@VV111$*heEoilEpa*ch$comVarchiveVfederalEreserve$h*ml The Comi+g a**le 7The oo,8 h**p@VV111$apf+$orgVapf+Vcomi+gba**le$h*m The :+i*ed #a*io+s pla+s *o CO#%ISCAT! )our profi* a+d EEE$ h**p@VV111$apf+$orgVapf+Vu+i*edK+a*io+s$h*m The 929 4eople Respo+sible %or All of AmericaWs 6oes h**p@VV111$apf+$orgVapf+V1oes$h*m
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