CHAPTER 8. World War One: Secrets of the Federal Reserve by Eustace Mullins from archive.org

CHAPTER EIGHT

World War One

"Money is the worst of all contraband. "--William Jennings Bryan

It is now apparent that there might have been no World War without the
Federal Reserve System. A strange sequence of events, none of which were
accidental, had occurred. Without Theodore Roosevelt's "Bull Moose"
candidacy, the popular President Taft would have been reelected, and
Woodrow Wilson would have returned to obscurity.* If Wilson had not been
elected, we might have had no Federal Reserve Act, and World War One
could have been avoided. The European nations had been led to maintain
large standing armies as the policy of the central banks which dictated their
governmental decisions. In April, 1887, the Quarterly Journal of Economics
had pointed out:

"A detailed revue of the public debts of Europe shows interest and sinking
fund payments of

$5,343 million annually (five and one-third billion). M. Neymarck's
conclusion is much like Mr.

Atkinson's. The finances of Europe are so involved that the governments
may ask whether war,

with all its terrible chances, is not preferable to the maintenance of such a
precarious and costly


peace. If the military preparations of Europe do not end in war, they may
well end in the

bankruptcy of the States. Or, if such follies lead neither to war nor to ruin,
then they assuredly

point to industrial and economic revolution."

From 1887 to 1914, this precarious system of heavily armed but bankrupt
European nations endured, while the United States continued to be a debtor
nation, borrowing money from abroad, but making few international loans,
because we did not have a central bank or "mobilization of credit". The
system of national loans developed by the Rothschilds served to finance
European struggles during the nineteenth century, because they were spread
out over Rothschild branches in several countries. By 1900, it was obvious
that the European countries could not afford a major war. They had large
standing armies, universal military service, and modern weapons, but their
economies could not support the enormous expenditures. The Federal
Reserve System began operations in



101



*NOTE: P.34. "House revealed to me in a confidential moment, 'Wilson was
elected by Teddy Roosevelt.'" The Strangest Friendship in History,
Woodrow Wilson and Col. House, George Sylvester Viereck, Liveright, N.Y.
1932

1914, forcing the American people to lend the Allies twenty-five billion

dollars which was not repaid, although considerable interest was paid to New

York bankers. The American people were driven to make war on the

German people, with whom we had no conceivable political or economic

quarrel. Moreover, the United States comprised the largest nation in the

world composed of Germans; almost half of its citizens were of German

descent, and by a narrow margin, German had been voted down as the

national language.* The German Ambassador to Turkey, baron Wangeheim

asked the American Ambassador to Turkey, Henry Morgenthau, why the

United States intended to make war in Germany. "We Americans," replied

Morgenthau, speaking for the group of Harlem real estate operators of which

he was the head, "are going to war for a moral principle." J.P. Morgan

received the proceeds of the First Liberty Loan to pay off $400,000,000 which

he advanced to Great Britain at the outset of the war. To cover this loan,

$68,000,000 in notes had been issued under the provisions of the Aldrich-

Vreeland Act for issuing notes against securities, the only time this provision

was employed. The notes were retired as soon as the Federal Reserve Banks

began operation, and replaced by Federal Reserve Notes.

During 1915 and 1916, Wilson kept faith with the bankers who had
purchased the White House for him, by continuing to make loans to the
Allies. His Secretary of State, William Jennings Bryan, protested constantly,
stating that "Money is the worst of all contraband." By 1917, the Morgans
and Kuhn, Loeb Company had floated a billion and a half dollars in loans to
the Allies. The bankers also financed a host of "peace" organizations which
worked to get us involved in the World War. The Commission for Relief in
Belgium manufactured atrocity stories against the Germans, while a
Carnegie organization, The League to Enforce Peace, agitated in Washington
for our entry into war. This later became the Carnegie Endowment for
International Peace, which during the 1940s was headed by Alger Hiss. One
writer* claimed that he had never seen any "peace movement" which did not
end in war.

The U.S. Ambassador to Britain, Walter Hines Page, complained that he
could not afford the position, and was given twenty-five thousand dollars a
year spending money by Cleveland H. Dodge, president of the National City
Bank. H.L. Mencken openly accused Page in 1916 of being a British agent,
which was unfair. Page was merely a bankers' agent.



102
On March 5, 1917, Page sent a confidential letter to Wilson. "I think that the
pressure of this approaching crisis has gone beyond the ability of the Morgan
Financial Agency for the British and French Govern-



* 1787 Constitutional Convention



* NOTE: Emmett Tyrell, Jr., Richmond Times Dispatch, Feb. 15, 1983
"Every peace movement of this century has been followed by war."

ments . . . The greatest help we could give the Allies would be a credit. Unless
we go to war with Germany, our Government, of course, cannot make such a

direct grant of credit."

The Rothschilds were wary of Germany's ability to continue in the war,
despite the financial chaos caused by their agents, the Warburgs, who were
financing the Kaiser, and Paul Warburg's brother, Max, who, as head of the
German Secret Service, authorized Lenin's train to pass through the lines
and execute the Bolshevik Revolution in Russia. According to Under
Secretary of the Navy, Franklin D. Roosevelt, America's heavy industry had
been preparing for war for a year. Both the Army and Navy Departments
had been purchasing war supplies in large amounts since early in 1916.
Cordell Hull remarks in his Memoirs:

"The conflict forced the further development of the income-tax principle.
Aiming, as it did, at the

one great untaxed source of revenue, the income-tax law had been enacted in
the nick of time to

meet the demands of the war. And the conflict also assisted the putting into
effect of the Federal

Reserve System, likewise in the nick of time."70

One may ask, in the nick of time for whom? Certainly not for the American
people, who had no need for "mobilization of credit" for a European war, or
to enact an income tax to finance a war. Hull's statement affords a rare
glimpse into the machinations of our "public servants".

The Notes of the Journal of Political Economy, October, 1917, state:

"The effect of the war upon the business of the Federal Reserve Banks has
required an immense

development of the staffs of these banks, with a corresponding increase in
expenses. Without, of



103
course, being able to anticipate so early and extensive a demand for their services
in this

connection, the framers of the Federal Reserve Act had provided that the
Federal Reserve Banks

should act as fiscal agents of the Government."

The bankers had been waiting since 1887 for the United States to enact a
central bank plan so that they could finance a European war among the
nations whom they had already bankrupted with armament and "defense"
programs. The most demanding function of the central bank mechanism is
war finance.

On October 13, 1917, Woodrow Wilson made a major address, stating:

"It is manifestly imperative that there should be a complete mobilization of
the banking reserves

of the United States. The burden and the privilege (of the Allied loans) must
be shared by every

banking institution in the country. I believe that cooperation on the part of
the banks is a patriotic

duty at this time, and that membership in the Federal Reserve
System is a distinct and

significant evidence of patriotism."



70 Cordell Hull, Memoirs, Macmillan, New York, 1948, v. 1, page 76

E.W. Kemmerer writes that "As fiscal agents of the Government, the federal

reserve banks rendered the nations services of incalculable value after our

entrance into the war. They aided greatly in the conservation of our gold

resources, in the regulation of our foreign exchanges, and in the

centralization of our financial energies. One shudders when he thinks what

might have happened if the war had found us with our former decentralized

and antiquated banking system."

Mr. Kemmerer's shudders ignore the fact that if we had kept "our
antiquated banking system" we would not have been able to finance the
World War or to enter as a participant ourselves.

Woodrow Wilson himself did not believe in his crusade to save the world for
democracy. He later wrote that "The World War was a matter of economic
rivalry."



104
On being questioned by Senator McCumber about the circumstances of our
entry into the war, Wilson was asked, "Do you think if Germany had
committed no act of war or no act of injustice against our citizens that we
would have gotten into this war?"

"I do think so," Wilson replied.

"You think we would have gotten in anyway?" pursued McCumber.

"I do," said Wilson.

In Wilson's War Message in 1917, he included an incredible tribute to the
Communists in Russia who were busily slaughtering the middle class in that
unfortunate country.

"Assurance has been added to our hope for the future peace of the world by
the wonderful and

heartening things that have been happening in the last few weeks in Russia.
Here is a fit partner

for a League of Honor."71

Wilson's paean to a bloodthirsty regime which has since murdered sixty-six
million of its inhabitants in the most barbarous manner exposes his true
sympathies and his true backers, the bankers who had financed the blood
purge in Russia. When the Communist Revolution seemed in doubt, Wilson
sent his personal emissary, Elihu Root, to Russia with one hundred million
dollars from his Special Emergency War Fund to save the toppling Bolshevik
regime.

The documentation of Kuhn, Loeb Company's involvement in the
establishment of Communism in Russia is much too extensive to be quoted
here, but we include one brief mention, typical of the literature on this
subject. In his book, Czarism and the Revolution, Gen. Arsene de Goulevitch
writes,



71 Public Papers of Woodrow Wilson, Dodd & Baker, v.5, p. 12-13

"Mr. Bakmetiev, the late Russian Imperial Ambassador to the United States,
tells us that the

Bolsheviks, after victory, transferred 600 million roubles in gold between the
years 1918-1922 to

Kuhn, Loeb Company."



105
After our entry into World War I, Woodrow Wilson turned the government of
the United States over to a triumvirate of his campaign backers, Paul
Warburg, Bernard Baruch and Eugene Meyer. Baruch was appointed head
of the War Industries Board, with life and death powers over every factory in
the United States. Eugene Meyer was appointed head of the War Finance
Corporation, in charge of the loan program which financed the war. Paul
Warburg was in control of the nation's banking system*.

Knowing that the overwhelming sentiment of the American people during
1915 and 1916 had been anti-British and pro-German, our British allies
viewed with some trepidation the prominence of Paul Warburg and Kuhn,
Loeb Company in the prosecution of the war. They were uneasy about his
high position in the Administration because his brother, Max Warburg, was
at that time serving as head of the German Secret Service. On December 12,
1918, the United States Naval Secret Service Report on Mr. Warburg was as
follows:

"WARBURG, PAUL: New York City. German, naturalized citizen, 1911.
was decorated by the

Kaiser in 1912, was vice chairman of the Federal Reserve Board. Handled
large sums furnished

by Germany for Lenin and Trotsky. Has a brother who is leader of the
espionage system of

Germany."

Strangely enough, this report, which must have been compiled much earlier,
while we were at war with Germany, is not dated until December 12, 1918.
AFTER the Armistice had been signed. Also, it does not contain the
information that Paul Warburg resigned from the Federal Reserve Board in
May, 1918, which indicates that it was compiled before May, 1918, when Paul
Warburg would theoretically have been open to a charge of treason because
of his brother's control of Germany's Secret Service.

Paul Warburg's brother Felix in New York was a director of the Prussian
Life Insurance Company of Berlin, and presumably would not have liked to
see too many of his policyholders killed in the war. On September 26, 1920,
The New York Times mentioned in its obituary of Jacob Schiff in reference
to Kuhn, Loeb and Company, "During the world War certain of its members
were in constant contact with the Government in an advisory capacity. It
shared in the conferences which were held regarding the organization and
formation of the Federal Reserve System."



106
* NOTE: New York Times, August 10, 1918; "Mr. (Paul) Warburg was the
author of the plan organizing the War Finance Corporation."

The 1920 Schiff obituary revealed for the first time that Jacob Schiff, like the

Warburgs, also had two brothers in Germany during World War I, Philip

and Ludwig Schiff, of Frankfurt-on-Main, who also were active as bankers to

the German Government! This was not a circumstance to be taken lightly, as

on neither side of the Atlantic were the said bankers obscure individuals who

had no influence in the conduct of the war. On the contrary, the Kuhn, Loeb

partners held the highest governmental posts in the United States during

World War I, while in Germany, Max and Fritz Warburg, and Philip and

Ludwig Schiff, moved in the highest councils of government. From Memoirs

of Max Warburg, "The Kaiser thumbed the table violently and shouted,

'Must you always be right?' but then listened carefully to Max's view on

financial matters."72

In June, 1918, Paul Warburg wrote a private note to Woodrow Wilson, "I
have two brothers in Germany who are bankers. They naturally now serve
their country to their utmost ability, as I serve mine."73

Neither Wilson nor Warburg viewed the situation as one of concern, and
Paul Warburg served out his term on the Federal Reserve Board of
Governors, while World War I continued to rage.

The background of Kuhn, Loeb & Company had been exposed in "Truth
Magazine", edited by George Conroy:

"Mr. Schiff is head of the great private banking house of Kuhn, Loeb & Co.
which represents the

Rothschild interest on this side of the Atlantic. He has been described as a
financial strategist and

has been for years the financial minister to the great impersonal power
known as Standard Oil.

He was hand-in-glove with the Harrimans, the Goulds and the Rockefellers,
in all their railroad

enterprises and has become the dominant power in the railroad and financial
world in America.

Louis Brandeis, because of his great ability as a lawyer and for other reasons
which will appear

later, was selected by Schiff as the instrument through which Schiff hoped to
achieve his



107
ambition in New England. His job was to carry on an agitation which would
undermine public

confidence in the New Haven system and cause a decrease in the price of its
securities, thus

forcing them on the market for the wreckers to buy."74

We mention Setoffs lawyer, Brandeis, here because the first available
appointment on the Supreme Court of the United States which Woodrow
Wilson was allowed to fill was given to the Kuhn, Loeb lawyer, Brandeis.

Not only was the U.S. Food Administration managed by Hoover's director,
Lewis Lichtenstein Strauss, who married into the Kuhn Loeb Company by
marrying Alice Hanauer, daughter of partner Jerome



72 Max Warburg, Memoirs of Max Warburg, Berlin, 1936

73 David Farrar, The Warburgs, Michael Joseph, Ltd., London, 1974

74 "Truth Magazine", George Conroy, editor, Boston, issue of December 16,
1912

Hanauer, but in the most critical field, military intelligence, Sir William

Wiseman, chief of the British Secret Service, was a partner of Kuhn, Loeb &

Company. He worked most closely with Wilson's alter ego, Col. House.

"Between House and Wiseman there were soon to be few political secrets,

and from their mutual comprehension resulted in large measure our close

cooperation with the British."75

One example of House's cooperation with Wiseman was a confidential
agreement which House negotiated pledging the United States to enter into
World War I on the side of the Allies. Ten months before the election which
returned Wilson to the White House in 1916 'because he kept us out of war',
Col. House negotiated a secret agreement with England and France on behalf
of Wilson which pledged the United States to intervene on behalf of the
Allies. On March 9, 1916, Wilson formally sanctioned the undertaking.76

Nothing could more forcefully illustrate the duplicity of Woodrow Wilson's
nature than his nationwide campaign on the slogan, "He kept us out of war",
when he had pledged ten months earlier to involve us in the war on the side
of England and France. This explains why he was regarded with such
contempt by those who learned the facts of his career. H.L. Mencken wrote
that Wilson was "the perfect model of the Christian cad", and that we ought
"to dig up his bones and make dice of them."



108
According to The New York Times, Paul Warburg's letter of resignation stated
that some objection had been made because he had a brother in the Swiss
Secret Service. The New York Times has never corrected this blatant
falsehood, perhaps because Kuhn, Loeb Company owned a controlling
interest in its stock. Max Warburg was not Swiss, and although he had
probably come into contact with the Swiss Secret Service during his term of
office as head of the German Secret Service, no responsible editor at The
New York Times could have been unaware of the fact that Max Warburg
was German, and that his family banking house was in Hamburg, and that
he held a number of high positions in the German Government. He
represented Germany at the Versailles Peace Conference, and remained
peacefully in Germany until 1939, during a period when persons of his
religion were being persecuted. To avoid injury during the approaching war,
when bombs would rain on Germany, Max Warburg was allowed to sail to
New York, his funds intact.

At the outset of World War I, Kuhn, Loeb Company had figured in the
transfer of German shipping interests to other control. Sir Cecil



75 Edward M. House, The Intimate Papers of Col. House, edited by Charles
Seymour, Vol. II, p. 399. Houghton, Mifflin Co.

76 George Sylvester Viereck, The Strangest Friendship in History, Woodrow
Wilson and Col. House, p. 106

Spring-Rice, British Ambassador to the United States, in a letter to Lord

Grey wrote:

"Another matter is the question of the transfer of the flag to the Hamburg
Amerika ships. The

company is practically a German Government affair. The ships are used for
Government

purposes, the Emperor himself is a large shareholder, and so is the great
banking house of Kuhn,

Loeb Company. A member of that house (Warburg) has been appointed to a
very responsible

position in New York, although only just naturalized. He is concerned in
business with the

Secretary of the Treasury, who is the President's son-in-law. It is he who is
negotiating on behalf

of the Hamburg Amerika Shipping Company. "77



109
On November 13, 1914, in a letter to Sir Valentine Chirol, Spring-Rice wrote, (p.
241, v. 2)

"I was told today that The New York Times has been practically acquired by
Kuhn, Loeb and

Schiff, special protege of the (German) Emperor. Warburg, nearly related to
Kuhn Loeb and

Schiff is a brother of the well known Warburg of Hamburg, the associate of
Ballin (Hamburg)

Amerika line), is a member of the Federal Reserve Board or rather THE
member. He practically

controls the financial policy of the Administration, and Paish & Blackett
(England) had mainly

to negotiate with him. Of course, it was exactly like negotiating with
Germany. Everything that

was said was German property."

Col. Garrison wrote in Roosevelt, Wilson and the Federal Reserve Law, that
"Through the banking House of the Kuhn Loeb Company, a powerful
weapon would have been placed in the hands of the German Kaiser over the
destiny of American business and American citizens."78

Garrison was referring to the Hamburg Amerika affair.

It seemed strange that Woodrow Wilson felt it necessary to place the nation
in the hands of three men whose personal history was one of ruthless
speculation and the quest for personal gain, or that during war with
Germany, he found as persons of supreme trust a German immigrant
naturalized in 1911, the son of an immigrant from Poland, and the son of an
immigrant from France. Bernard Baruch first attracted attention on Wall
Street in 1890 while working for A.A. Housman & Co.

In 1896 he merged the six principal tobacco companies of the United States
into the Consolidated Tobacco Company, forcing James Duke and the
American Tobacco Trust to enter into this combination. The second great
trust set up by Baruch brought the copper industry into the hands



77 Letters and Friendships of Sir Cecil Spring-Rice, p. 219-220

78 Col. Elisha Garrison, Roosevelt, Wilson and the Federal Reserve Law,
Christopher Publishing House, Boston, 1931, p. 260



110

of the Guggenheim family, who have controlled it ever since. Baruch worked

with Edward H. Harriman, who was SchifPs front man in controlling

America's railway system for the Rothschild family. Baruch and Harriman

also combined their talents to gain control over the New York City transit

system, which has been in perilous financial condition ever since.

In 1901, Baruch formed the firm of Baruch Brothers, bankers, with his
brother Herman, in New York In 1917, when Baruch was appointed
Chairman of the War Industries Board, the name was changed to Hentz
Brothers.

Testifying before the Nye Committee on September 13, 1937, Bernard
Baruch stated that "All wars are economic in their origin." So much for
religious and political disagreements, which had been specially touted as the
cause of wars.*

A profile in the "New Yorker" magazine reported that Baruch made a profit
of seven hundred fifty thousand dollars in one day during World War I, after
a phony peace rumor was planted in Washington. In "Who's Who", Baruch
mentions that he was a member of the Commission which handled all
purchasing for the Allies during World War I. In fact, Baruch WAS the
Commission. He spent the American taxpayer's money at the rate often
billion dollars a year, and was also the dominant member of the Munitions
Price-Fixing Committee. He set the prices at which the Government bought
war materials. It would be naive to presume that the orders did not go to
firms in which he and his associates had more than a polite interest.

dictator over American manufacturers.* At the Nye Committee hearings in
1935, Baruch testified,

"President Wilson gave me a letter authorizing me to take over any industry
or plant. There was

Judge Gary, President of United States Steel, whom we were having trouble
with, and when I

showed him that letter, he said, 'I guess we will have to fix this up', and he
did fix it up."

Some members of Congress were curious about Baruch's qualifications to
exercise life and death powers over American industry in time of war. He
was not a manufacturer, and had never been in a factory. When he was
called before a Congressional Committee, Bernard Baruch stated that his
profession was "Speculator". A Wall Street gambler had been made Czar of
American Industry.



Ill

* NOTE: Baruch also stated in this testimony, "I carried through the war three
major investments, Alaska Juneau Gold Mining Company (with partner
Eugene Meyer), Texas Gulf Sulphur, and Atolia Mining Company
(tungsten)." Rep. Mason, Illinois, told the House on February 21, 1921 that
Baruch made more than $50 million in copper during the war.

* Baruch chose as Assistant Chairman of the War Industries Board a fellow
Wall Street speculator, Clarence Dillon (Lapowitz). See biographies.

@insert Facsimile of New York Times article

Facsimile of an article which appeared in The New York Times dated
September 23, 1914. Listed are major stockholders of the five New York City
banks which purchased 40% of the 203, 053 shares of the Federal Reserve
Bank of New York when the System was organized in 1914. They thus
obtained control of that Federal Reserve Bank and have held it ever since. As
of Tuesday, July 26, 1983, the top five surviving New York City banks have
increased their ownership of the Federal Reserve Bank of New York to 53%
of the shares.

@insert CHART I@CHART I cont.CHART I

Chart I reveals the linear connection between the Rothschilds and the Bank

of England, and the London banking houses which ultimately control the

Federal Reserve Banks through their stockholdings of bank stock and their

subsidiary firms in New York. The two principal Rothschild representatives

in New York, J.P. Morgan Co., and Kuhn, Loeb & Co. were the firms which

set up the Jekyll Island Conference at which the Federal Reserve Act was

drafted, who directed the subsequent successful campaign to have the plan

enacted into law by Congress, and who purchased the controlling amounts of

stock in the Federal Reserve Bank of New York in 1914. These firms had

their principal officers appointed to the Federal Reserve Board of Governors

and the Federal Advisory Council in 1914.

In 1914 a few families (blood or business related) owning controlling stock in
existing banks (such as in New York City) caused those banks to purchase
controlling shares in the Federal Reserve regional banks.

Examination of the charts and text in the House Banking Committee Staff
Report of August, 1976 and the current stockholders list of the 12 regional
Federal Reserve Banks shows this same family control.



Baruch's erstwhile partner, Eugene Meyer, (Alaska-Juneau Gold Mining
Co.), later claimed that Baruch was a nitwit, and that Meyer, with his family
banking connections (Lazard Freres), had guided Baruch's investment



112
career. These claims appeared in the fiftieth anniversary edition of The
Washington Post, editorial page, June 4, 1983, with a parting shot from
Meyer's editor, Al Friendly, that "Every journalist in Washington, Meyer
included, knew that Bernard M. Baruch was a self-aggrandizing phony."

The third member of the Triumvirate, Eugene Meyer, was son of the partner
in the international banking house of Lazard Freres, of Paris and New York.
In My Own Story Baruch explains how Meyer became head of the War
Finance Corporation. "At the outset of World War One," he says, "I sought
out Eugene Meyer, Jr. . . . who was a man of the highest integrity with a keen
desire to be of public service."79

The nation has suffered greatly from persons who desired to be of public
service, because their desires often went considerably beyond their passion
for office. In fact, Meyer and Baruch had operated an Alaska venture,
Alaska-Juneau Gold Mining Company in 1915, and had worked together on
other financial schemes. Meyer's family house of Lazard Freres specialized
in international gold movements.



79 Bernard Baruch, My Own Story, Henry-Holt Company, New York, 1957,
p. 194

Eugene Meyer's stewardship of the War Finance Corporation comprises one

of the most amazing financial operations ever partially recorded in this

country. We say "partially recorded", because subsequent Congressional

investigations revealed that each night, the books were being altered before

being brought in for the next day's investigation. Louis McFadden,
Chairman of the House Banking and Currency Committee, figured in two

investigations of Meyer, in 1925, and again in 1930, when Meyer was

proposed as Governor of the Federal Reserve Board. The Select Committee

to Investigate the Destruction of Government Bonds, submitted, on March 2,

1925, "Preparation and Destruction of Government Bonds~68th Congress,

2d Session, Report No. 1635:

p.2. "Duplicate bonds amounting to 2314 pairs and duplicate coupons
amounting to 4698 pairs

ranging in denominations from $50 to $10,000 have been redeemed to July 1,
1924. Some of

these duplications have resulted from error and some from fraud."

These investigations may explain why, at the end of World War One, Eugene
Meyer was able to buy control of Allied Chemical and Dye Corporation, and
later on, the nation's most influential newspaper, The Washington Post. The



113
duplication of bonds, "one for the government, one for me" in denominations to
the amount of $10,000 each, resulted in a tidy sum.

p. 6 of these Hearings. "These transactions of the Treasury prior to June 20,
1920 (including

settlements for purchases and sales), executed by the War Finance
Corporation (Eugene Meyer,

managing director), were largely directed by the managing director of the
War Finance

Corporation, and settlements with the Treasury were made
principally by him with the Assistant Secretary of the
Treasury, and the books show that the basis of the price paid
by the Government

for over $1,894 millions worth of bonds ($1,894,000,000.00),
which the Treasury purchased

through the War Finance Corporation was not the market
price and was not the cost of the bond

plus interest, and the elements entering into the settlement are
not disclosed by the correspondence. The managing director of
the War Finance Corporation stated that he and an

Assistant Secretary of the Treasury (Jerome J. Hanauer,
partner of Kuhn, Loeb Co. whose daughter married Lewis L.
Strauss) agreed to the price, and it was simply an arbitrary
figure set by an Assistant Secretary of the Treasury as to the
bonds so purchased by the War Finance Corporation. During
the period of these transactions and up until quite a recent date
the managing director of the War Finance Corporation,
Eugene Meyer, Jr., in his private capacity maintained an office
at No. 14 Wall Street, New York City, and through the War
Finance Corporation sold about $70 millions in bonds to the
Government, and also bought through the War Finance
Corporation about $10 millions in bonds, and approved the
bills for most, if not all, of these bonds in his official capacity as
managing director of the War Finance Corporation. When
these transactions, just referred to, were disclosed to the
committee in open hearing, the managing director

CHART II

This chart shows the interlocking banking directorates which were revealed
by the backgrounds of the officials selected to be the original members of the



114
Federal Advisory Council in 1914. The principals were the same bankers who
had been present or represented at the Jekyll Island Conference in 1910, and

during the campaign to have the Federal Reserve Act enacted into law by

Congress in 1913. These officials represented the largest stockholdings in the

New York banks which bought the controlling stock in the Federal Reserve

Bank of New York, and also were the principal correspondent banks of the

banks in other Federal Reserve districts who, in turn, selected their officials

to represent them on the Federal Advisory Council.



appeared before the committee and stated the fact that commissions were
paid on these

transactions, they were in turn paid over to the brokers, selected by the
managing director, who

executed the orders issued by his brokerage house, and immediately after
this disclosure to the

committee, the managing director employed Ernst and Ernst, certified public
accountants, to

audit the books of the War Finance Corporation, who did, upon completion
of the examination of

these books, report to the committee that all moneys received by the
brokerage house of the

managing director had been accounted for. While simultaneously with the
examination being

made by the committee, the certified public accountants, heretofore referred
to, were nightly

carrying on their examination, it was discovered by your committee that
alterations and changes

were being made in the books of record covering these transactions, and
when the same was

called to the attention of the treasurer of the War Finance Corporation, he
admitted to the

committee that changes were being made. To what extent these books have
been altered during



115
the process the committee have not been able to determine. After June, 1921,
about $10 billions

worth of securities were destroyed."

It was Eugene Meyer's Washington Post, (under the direction of his
daughter, Katherine Graham) which was later to drive a President of the
United States from the White House on the grounds that he had knowledge
of a burglary. What are we to think of the revelations of duplications of
hundreds of millions of dollars worth of bonds during

@insert CHART III

CHART III

The J. Henry Schroder Banking Company chart encompasses the entire
history of the twentieth century, embracing as it does the program (Belgian

Relief Commission) which provisioned Germany from 1915-1918 and

dissuaded Germany from seeking peace in 1916; financing Hitler in 1933 so

as to make a Second World War possible; backing the Presidential campaign

of Herbert Hoover; and even at the present time, having two of its major

executives of its subsidiary firm, Bechtel Corporation serving as Secretary of

Defense and Secretary of State in the Reagan Administration.

The head of the Bank of England since 1973, Sir Gordon Richardson,
Governor of the Bank of England (controlled by the House of Rothschild),
was chairman of J. Henry Schroder, New York, and Schroder Banking
Corporation, New York, as well as Lloyd's Bank of London, and Rolls
Royce. He maintains a residence on Sutton Place in New York City, and as
head of "The London Connection", can be said to be the single most
influential banker in the world.



Meyer's directorship of the War Finance Corporation, the alteration of the
books during a Congressional investigation, and the fact that Meyer came
out of this situation with many millions of dollars with which he proceeded to
buy Allied Chemical Corporation, The Washington Post, and other
properties? Incidentally, Lazard Brothers, Meyer's family banking house,
personally manages the fortunes of many of our political luminaries,
including the Kennedy family fortune.

Besides these men, Warburg, Baruch, and Meyer, a host of J.P. Morgan Co.,
and Kuhn, Loeb Co., partners, employees, and satellites came to Washington
after 1917 to administer the fate of the American people.



116
The Liberty Loans, which sold bonds to our citizens, were nominally in the
jurisdiction of the United States Treasury, under the leadership of Wilson's
Secretary of the Treasury, William G. McAdoo, whom Kuhn, Loeb Co. had
placed in charge of the Hudson-Manhattan Railway Co. in 1902. Paul
Warburg had most of the Kuhn Loeb Co. firm with him in Washington
during the War. Jerome Hanauer, partner in Kuhn, Loeb Co., was Assistant
Secretary of the Treasury in charge of Liberty Loans. The two Under-
secretaries of the Treasury during the War were S. Parker Gilbert and
Roscoe C. Leffingwell. Both Gilbert and Leffingwell came to the Treasury
from the law firm of Cravath and Henderson, and returned

@insert CHART IV

CHART IV

The Peabody-Morgan chart shows the London Connection of these

prominent banking firms, which have been headquartered in London since

their inception. The Peabody fortune set up an Educational Fund in 1865,

which was later absorbed by John D. Rockefeller into the General
Educational Board in 1905, which, in turn, was absorbed by the Rockefeller

Foundation in 1960.



to that firm when they had fulfilled their mission for Kuhn, Loeb Co. in the
Treasury. Cravath and Henderson were the lawyers for Kuhn Loeb Co.
Gilbert and Leffingwell subsequently received partnerships in J.P. Morgan
Co.

Kuhn, Loeb Company, the nation's largest owners of railroad properties in
this country and in Mexico, protected their interests during the First World
War by having Woodrow Wilson set up a United States Railroad
Administration. The Director-General was William McAdoo, Comptroller of
the Currency. Warburg replaced this set up in 1918 with a tighter
organization which he called the Federal Transportation Council. The
purpose of both of these organizations was to prevent strikes against Kuhn,
Loeb Company during the War, in case the railroad workers should try to
get in wages some of the millions of dollars in wartime profits which Kuhn,
Loeb received from the United States Government.

Among the important bankers present in Washington during the War was
Herbert Lehman, of the rapidly rising firm of Lehman Brothers, Bankers,
New York, Lehman was promptly put on the General Staff of the Army, and
given the rank of Colonel.

The Lehmans had had prior experience in "taking the profits out of war", a
double entendre and one of Baruch's favorite phrases. In Men Who Rule



117
America, Arthur D. Howden Smith writes of the Lehmans during the Civil War,
"They were often agents, fixers for both sides, intermediaries for confidential
communications and handlers of the many illicit transactions in cotton and
drugs for the Confederacy, purveyors of information for the North. The
Lehmans, with Mayer in Montgomery, the first capital of the Confederacy,
Henry in New Orleans, and Emanuel in New York were ideally situated to
take advantage of every opportunity for profit which appeared. They seem to
have missed few chances."80



80 Arthur D. Howden Smith, Men Who Rule America, Bobbs Merrill, N.Y.
1935, p. 112

CHART V

The David Rockefeller chart shows the link between the Federal Reserve

Bank of New York, Standard Oil of Indiana, General Motors, and Allied

Chemical Corporation (Eugene Meyer family) and Equitable Life (J.P.

Morgan).



Other appointments during the First World War were as follows:

J.W. Mcintosh, director of the Armour meat-packing trust, who was made
chief of Subsistence for the United States Army in 1918. He later became
Comptroller of the Currency during Coolidge's Administration, and ex-
officio member of the Federal Reserve Board. During the Harding
Administration, he did his bit as Director of Finance for the United States
Shipping Board when the Board sold ships to the Dollar Lines for a
hundredth of their cost and then let the Dollar Line default on its payments.
After leaving public service, J.W. Mcintosh became a partner in J.W.
Wollman Co., New York Stockbrokers.

W.P.G. Harding, Governor of the Federal Reserve Board, was also managing
director of the War Finance Corporation under Eugene Meyer.

George R. James, member of the Federal Reserve Board in 1923-24, had
been Chief of the Cotton Section of the War Industries Board.

Henry P. Davison, senior partner in J.P. Morgan Co., was appointed head of
the American Red Cross in 1917 in order to get control of the three hundred
and seventy million dollars cash which was collected from the American
people in donations.



118
Ronald Ransom, banker from Atlanta, and Governor of the Federal Reserve
Board under Roosevelt in 1938-39, had been the Director in Charge of
Personnel for Foreign Service for the American Red Cross in 1918.

John Skelton Williams, Comptroller of the Currency, was appointed
National Treasurer of the American Red Cross.

President Woodrow Wilson, the great liberal who signed the Federal Reserve
Act and declared war against Germany, had an odd career for a man who is
now enshrined as a defender of the common people. His chief supporter in
both his campaigns for the Presidency was Cleveland H. Dodge, of Kuhn
Loeb, who controlled National City Bank of New York. Dodge was also
President of the Winchester Arms Company and Remington Arms
Company. He was very close to President Wilson

CHART VI

This chart shows the interlocks between the Federal Reserve Bank of New
York, J. Henry Schroder Banking Corp., J. Henry Schroder Trust Co.,
Rockefeller Center, Inc., Equitable Life Assurance Society (J.P. Morgan),
and the Federal Reserve Bank of Boston.



throughout the great democrat's political career. Wilson lifted the embargo
on shipment of arms to Mexico on February 12, 1914, so that Dodge could
ship a million dollars worth of arms and ammunition to Carranza and
promote the Mexican Revolution. Kuhn, Loeb Co. which owned the Mexican
National Railways System, had become dissatisfied with the administration
of Huerta and had him kicked out.

When the British naval auxiliary Lusitania was sunk in 1915, it was loaded
with ammunition from Dodge's factories. Dodge became Chairman of the
"Survivors of Victims of the Lusitania Fund", which did so much to arouse
the public against Germany. Dodge also was notorious for using professional
gangsters against strikers in his plants, yet the liberal Wilson does not appear
to have ever been disturbed by this.

Another clue to Wilson's peculiar brand of liberalism is to be found in
Chaplin's book Wobbly, which relates how Wilson scrawled the word
"REFUSED" across the appeal for clemency sent him by the aging and ailing
Eugene Debs, who had been sent to Atlanta Prison for "speaking and writing
against war". The charge on which Debs was convicted was "spoken and
written denunciation of war". This was treason to the Wilson dictatorship,
and Debs was imprisoned. As head of the Socialist Party, Debs ran for the
Presidency from Atlanta Prison, the only man ever to do so, and polled more
than a million votes. It was ironic that Debs' leadership of the Socialist Party,



119
which at that time represented the desires of many Americans for an honest
government, should fall into the sickly hands of Norman Thomas, a former
student and admirer of Woodrow Wilson at Princeton University. Under
Thomas' leadership, the Socialist Party no longer stood for anything, and
suffered a steady decline in influence and prestige.

Wilson continued to be deeply involved in the Bolshevik Revolution, as were
House and Wiseman. Vol. 3, p. 421 of House Intimate Papers records a cable
from Sir William Wiseman to House from London, May 1, 1918, suggesting
allied intervention at the invitation of the Bolsheviki

@insert CHART VII

CHART VII

This chart shows the interlocks of the Federal Reserve Bank of New York

with Citibank, Guaranty Bank and Trust Co. (J.P. Morgan), J.P. Morgan

Co., Morgan Guaranty Trust Co., Alex Brown & Sons (Brown Brothers

Harriman), Kuhn Loeb & Co., Los Angeles and Salt Lake RR (controlled by

Kuhn Loeb Co.), and Westinghouse (controlled by Kuhn Loeb Co.).



to help organize the Bolshevik forces. Lt. Col. Norman Thwaites, in his
memoirs, Velvet and Vinegar says,

"Often during the years 1917-20 when delicate decisions had to be made, I
consulted with Mr.

(Otto) Kahn, whose calm judgment and almost uncanny foresight as to
political and economic

tendencies proved most helpful. Another remarkable man with whom I have
been closely

associated is Sir William Wiseman who was advisor on American affairs to
the British delegation

at the Peace Conference, and liaison officer between the American and
British government

during the war. He was rather more the Col. House of this country in his
relations with Downing

Street. "81

In the summer of 1917, Woodrow Wilson named Col. House to head the
American War Mission to the Interallied War Conference, the first



120
American mission to a European council in history. House was criticized for
naming his son-in-law, Gordon Auchincloss, as his assistant on this mission.
Paul Cravath, the lawyer for Kuhn, Loeb Company, was third in charge of
the American War Mission. Sir William Wiseman guided the American War
Mission in its conferences. In The Strangest Friendship in History, Viereck
writes,

"After America entered the War, Wiseman, according to Northcliffe, was the
only man who had

access at all times to the Colonel and to the White House. Wiseman rented an
apartment in the

house where the Colonel lived. David Lawrence referred to the
Fifty-Third Street house (New York City) jestingly as the
American No. 10 Downing St. . . . Col. House had a special
code used only with Sir William Wiseman. Col. House was
Bush, the Morgans were Haslam, and Trotsky was Keble."82

Thus these two "unofficial" advisors to the British and American
governments had a code solely for each other, which no one else could
understand. Even stranger was the fact that the international Communist



81 Lt. Col. Norman Thwaites, Velvet and Vinegar, Grayson Co., London,
1932

82 George Sylvester Viereck, The Strangest Friendship in History, Woodrow
Wilson and Col. House, Liveright, N.Y. 1932, p. 172

@insert CHART VIII

CHART VIII

This chart shows the link between the Federal Reserve Bank of New York,

Brown Brothers Harriman, Sun Life Assurance Co. (N.M. Rothschild and

Sons), and the Rockefeller Foundation.



espionage apparatus for many years used Col. House's book, Philip Dru,
Administrator, as their official code book. Francois Coty writes,

"Gorodin, Lenin's agent in China, was alleged to have with him a copy of the
book published by



121
Col. House, Philip Dru, Administrator and a code expert who lived in China told
this writer that

the purpose of having constant access to this book by Gorodin was to use it
for coding and

decoding messages."83

After the Armistice, Woodrow Wilson assembled the American Delegation to
the Peace Conference, and embarked for Paris. It was, on the whole, a most
congenial group, consisting of the bankers who had always guided Wilson's
policies. He was accompanied by Bernard Baruch, Thomas W. Lamont of
J.P. Morgan Co., Albert Strauss of J & W Seligman bankers, who had been
chosen by Wilson to replace Paul Warburg on the Federal Reserve Board of
Governors, J.P. Morgan, and Morgan lawyers Frank Polk and John W.
Davis. Accompanying them were Walter Lippmann, Felix Frankfurter,
Justice Brandeis, and other interested parties. Mason's biography of
Brandeis states that "In Paris in June of 1919, Brandeis met with such
friends as Paul Warburg, Col. House, Lord Balfour, Louis Marshall, and
Baron Edmond de Rothschild."

Indeed, Baron Edmond de Rothschild served as the genial host to the leading
members of the American Delegation, and even turned over his Paris
mansion to them, although the lesser members had to rough it at the elegant
Hotel Crillon with Col. House and his personal staff of 201 servants.

Baruch later testified before the Graham Committee of the Senate Foreign
Relations Committee, "I was economic advisor with the peace mission.
GRAHAM: Did you frequently advise the President while there? BARUCH:
Whenever he asked my advice I gave it. I had something to do with the
reparations clauses. I was the American Commissioner in charge of what
they called the Economic Section. I was a



83 Francois Coty, Tearing Away the Veil, Paris, 1940

@insert CHART IX

CHART IX

This chart shows the interlocks between the Federal Reserve Bank of New

York and J.P. Morgan Co., Morgan Guaranty Trust Co., and the Rothschild

affiliates of Royal Bank of Canada, Sun Life Assurance Co. of Canada, Sun

Alliance, and London Assurance Group.



122
member of the Supreme Economic Council in charge of raw metals. GRAHAM:
Did you sit in the council with the gentlemen who were negotiating the
treaty? BARUCH: Yes, sir, some of the time. GRAHAM: All except the
meetings that were participated in by the Five? (The Five being the leaders of
the five allied nations). BARUCH: And frequently those also."

Paul Warburg accompanied Wilson on the American Commission to
Negotiate Peace as his chief financial advisor. He was pleasantly surprised to
find at the head of the German delegation his brother, Max Warburg, who
brought along Carl Melchior, also of M.M. Warburg Company, William
Georg von Strauss, Franz Urbig, and Mathias Erzberger.

Thomas W. Lamont states in his privately printed memoirs, Across World
Frontiers, "The German delegation included two German bankers of the
Warburg firm whom I happened to know slightly and with whom I was glad
to talk informally, for they seemed to be striving earnestly to offer some
reparations composition that might be acceptable to the Allies."84 Lamont
was also pleased to see Sir William Wiseman, chief advisor to the British
delegation.

The bankers at the conference convinced Wilson that they needed an
international government to facilitate their international monetary
operations. Vol. IV, p. 52, Intimate Papers of Col. House quotes a message
from Sir William Wiseman to Lord Reading, August 16, 1918, "The
President has two main principles in view; there must be a League of Nations
and it must be virile."

Wilson, who seems to have lived in a world of fantasy, was shocked when
American citizens booed him during his campaign to have them sign over
their hard won independence to what appeared to many to be an
international dictatorship. He promptly went into a depression, and retired
to his bedroom. His wife immediately shut the White House doors against
Col. House, and from September 25, 1919 to April 13, 1920, she



84 Thomas W. Lamont, Across World Frontiers, (Privately printed) 1950, p.
138

ruled the United States with the aid of an intimate friend, her "military
aide", Col. Rixey Smith. As everyone was shut out of their deliberations, no
one ever knew which of the pair functioned as the President, and which was

the Vice President.

The admirers of Woodrow Wilson were led for decades by Bernard Baruch,
who stated that Woodrow Wilson was the greatest man he ever knew.
Wilson's appointments to the Federal Reserve Board, and that body's
responsibility for financing the First World War, as well as Wilson's handing



123
over the United States to the immigrant triumvirate during the War, made him
appear to be the most important single effector of ruin in American history.

It is no wonder that after his abortive trip to Europe, where he was hissed
and jeered in the streets by the French people, and snickered at in the halls of
Versailles by Orlando and Clemenceau, Woodrow Wilson returned home to
take to his bed. The sight of the destruction and death in Europe, for which
he was directly responsible, was perhaps more of a shock than he could bear.
The Italian Minister Pentaleoni expressed the feelings of the European
peoples when he wrote that:

"Woodrow Wilson is a type of Pecksniff who was now disappeared amid
universal execration."

It is America's misfortune that our subsidized press and educational system
have been devoted to enshrining a man who colluded in causing so much
death and sorrow throughout the world.

The financial cartel suffered only minor setbacks in those crucial years. On
February 12, 1917, The New York Times reported that "The five members of
the Federal Reserve Board were impeached on the floor of the House by Rep.
Charles A. Lindbergh, Republican member of the House Banking and
Currency Committee. According to Mr. Lindbergh, 'the conspiracy began
in' 1906 when the late J.P. Morgan, Paul M. Warburg, a present member of
the Federal Reserve Board, the National City Bank and other banking firms
'conspired' to obtain currency legislation in the interest of big business and
the appointment of a special board to administer such a law, in order to
create industrial slaves of the masses, the aforesaid conspirators did conspire
and are now conspiring to have the Federal Reserve Board administered so
as to enable the conspirators to coordinate all kinds of big business and to
keep themselves in control of big business in order to amalgamate all the
trusts into one great trust in restraint and control of trade and commerce."
The impeachment resolution was not acted on by the House.

The New York Times reported on August 10, 1918, "Mr. Warburg's term
having expired, he voluntarily retired from the Federal Reserve Board."
Thus the previous intimation that Mr. Warburg left the Federal Reserve
Board because he had a brother in the Secret Service of a foreign

country, namely, Germany, with whom we were at war, was not the cause of

his retirement. In any case, he did not leave the Federal Reserve

Administration, as he immediately took over J.P. Morgan's seat on the

Federal Advisory Council, from which post he continued to administer the

Federal Reserve System for the next ten years.



124

CHAPTER NINE

The Agricultural Depression