by Andrew Gavin Marshall

July-August 2009

from GlobalResearch Website

Part 1
Evolution and Revolution of the Central Banking System
July 21, 2009

Introduction

Humanity is on the verge of entering into the most tumultuous period in our history.

The prospects of a global depression, the likes of which have never been seen before; a truly global war, on a scale never before imagined; and societal collapse, for which nations of the world are building totalitarian police states to control populations; are increasing by the day.

The major global trend forecasters are sounding the alarms on economic depression, war, a return to fascism and a total reorganization of society.

Through crisis, we are seeing the reorganization of the global political economy, and the transformation of capitalism into a totalitarian capitalist world government. Capitalism has never stayed the same through its history; it has always changed and will continue to do so. Its changes are explained and analyzed through political-economic theory, both mainstream theory and critical.

The changes are undertaken over years, decades and centuries. The next phase of capitalism is one in which the world moves to a state-controlled economic system, much like China, of totalitarian capitalism.

The global political economy itself is being reorganized into a world government body, consisting of one center of global power where the socio-political-economic power of the world is centralized in one institution. This is not a conspiracy theory; it is a reality. Nor is this a subject confined to the realm of “internet conspiracy theorists,” but in fact, the concept of world government originates and evolves throughout the history of capitalism and the global political economy. Mainstream and critical political-economic theory has addressed the concept of world government for centuries.

The notion of a world government has such a long history, as the forces driving the world into such a structure intertwine with the history of the modern global political economy itself. The purpose of this report is to examine the history of the global political economy in taking steps toward forming a world government, in both theory and practice.

How did we get here and where are we going?



Why Study Theory?

Within the academic realm of Political Science, specifically the field of Global Political Economy (GPE), it is essential to understand the various theoretical perspectives of political economy so as to understand the actions and directions taken within the global political economy, and how capitalism has been and continues to be reorganized and altered.

Theory provides the foundation upon which actors are understandable and actions are undertaken.

As the political economist Robert Cox once stated,

“Theory is always for someone and for some purpose.”

It is important to understand and analyze the theoretical leanings of those making changes in the global political economy, in order to understand the changes being made, specifically the theoretical foundations of a world government.

As well as this, it is important to examine critical theory in how it interprets both how and why a world government is being constructed.



Mercantilism

The history of political economic theory shows a continued fascination with the concept of constructing such a cosmopolitan or global community. The earliest forms of western Global Political Economy theorists lie in the early mercantilist period, and with the emergence of Liberal theory, following Adam Smith’s Wealth of Nations, mercantilist writers such as Friedrich List and Alexander Hamilton wrote critiques of the underlying Liberal concepts.

List wrote in Political and Cosmopolitical Economy that Smith dispersed with the idea of a “national economy” in which nation’s determined economic conditions, and instead advocated replacing the “national” economy with a “cosmopolitical or world-wide economy.”

List discusses the perspective of Jean-Baptiste Say (J.B. Say), a French liberal economist, saying that Say,

“openly demands that we should imagine the existence of a universal republic in order to comprehend the idea of general free trade.”^[1]

List states that,

“If, as the prevailing school [of political-economic thought] requires, we assume a universal union or confederation of nations as the guarantee for an everlasting peace, the principle of international free trade seems to be perfectly justified,” however, this prevailing thought “assumes the existence of a universal union and a state of perpetual peace, and deduces therefore the great benefits of free trade. In this manner it confounds effects with causes.”

List elaborates in explaining that,

“Among the provinces and states which are already politically united, there exists a state of perpetual peace; from this political union originates their commercial union.”

 

Further, “All examples which history can show are those in which the political union has led the way, and the commercial union has followed. Not a single instance can be adduced in which the latter has taken the lead, and the former has grown up from it.”^[2]

It must be addressed that List is a mercantilist theorist.

This means that he views the realm of the political and economic as an interacting realm in which they are intertwined and merged, however, the political realm remains above the economic, which is subject to the dictates of the political element. Liberal theorists believe that the political and economic realms are separate, and that they should be separated, so that political elements interact separately and without influence over the economic realm, which itself acts independently and separately of the political.

This is the foundation for the ideas of the “free market” and the oft-quoted Adam Smith phrase, “the invisible hand of the free market,” which was only mentioned once in his entire volume of the Wealth of Nations. The ascension of liberal theorists marked a separation in the academic and theoretical studies, in which Political Economy was separated as a field, and saw the emergence of Political Science and Economics as separate studies.

As political economist Robert Cox stated,

“Theory is always for someone and for some purpose.”

The purpose of this separation was to compartmentalize academic thought and separate the realms of politics and economy, so as to better control both – as the banking interests, which dominated both the realms of politics and economics since the late 1600s, continued to view the world in terms of political-economic theory.

It was a strategy of “divide and conquer,” in which theory and academia was divided in order to conquer and control thought on both sides. This separation continues to this day, as even the field of Political Economy is placed underneath and subjective to Political Science, whereas it would make more sense that Political Science and Economics would be under the umbrella of Political Economy. Again, compartmentalize thought and then the control of discussion and debate becomes much easier.

What List was arguing in his essay was a critique of the liberal concept of a cosmopolitical society, in which all nations are united in a world federation. Naturally, this was not the case in that era, it was an incorrect and dubious assumption on the part of liberal theorists. List explained that never before had economic or commercial interdependence and union led to a political union.

List postulated that history showed that political union had to precede an economic union. However, List was writing in the first half of the 19th century, and history has changed the course of events and Political Economic theory.

I would argue that the major banking interests, essentially made up of a dynasty of banking families (the Rothschilds, Warburgs, and later the Morgans and Rockefellers, among many others), decided to chart a different course, in which they would pursue a strategy in which economic union would be incrementally undertaken with the aim of constructing a political union to follow in its footsteps.



Central Banking

Thus, liberal economic theory came to the forefront, championed by the global hegemonic power of the day, Great Britain, which was firmly under the control of the banking dynasties.

In 1694, the Bank of England was formed as a private central bank, which would issue the currency of the nation, lending it to the government and industry at interest, which would be paid back to the Bank of England’s shareholders, made up of these private banking dynasties.^[3] The 16th to the 19th centuries was the period in which both the nation-state and capitalism emerged, soon followed by central banking in the late 1600s.

This is when the origins of what was known as a “world economy” took place. Mercantilist economic theory dominated this period, in which the economy was secondary and submissive to the political structure of nations.

Liberal theorists rose in opposition to this. Adam Smith wrote the Wealth of Nations in 1776, the same year that the American colonies revolted against the British imperial forces in the country, and ultimately gained independence from the British Empire.

Among many of the primary motivating factors for the Revolution were the British military presence in the American colonies, acting above the law; a heavy imposition of colonial taxes, particularly on tea and other imports from foreign nations such as France, in an effort to promote the mercantilist assumptions that the colony should only survive and trade with the metropole (imperial hegemony) – which extracts the resources of the nation in trade for material goods to that nation, creating a dependence upon the colonial power.

Arguably one of the primary motivations for the Revolution was the control of currency by a foreign imperial power, with the ability to control inflation and devaluation, essentially controlling the entire economic conditions of the colony from abroad. The Founding Fathers of the United States understood the necessity of controlling one’s own currency if one was to preserve sovereignty and independence.

Following Britain’s humiliating defeat, which was aided by the French who supported the American revolt, European banking interests suffered a significant blow against their mercantilist expansion.

Capitalism functions in that it constantly needs to expand and consume more. Central banking functions in a very similar, although much more dubious manner, in which it needs to expand its control over industry, nations and people through the expansion of debt, continually needing to bring more individuals, nations and industries under debt bondage.

Debt is the source of all power and wealth for the central banking system – as they do not actually produce any tradable good, such as industry; nor do they provide any necessary service, such as government. Interest on debt is the source of income and authority for the central banking system, and thus, it needs to continually advance credit and expand debt. Thus, the loss of the American colonies as a source of expansionary credit and debt was a massive blow to their entrenched interests.

The European banking interests quickly learned their lesson regarding not falling under the imperial hubris of believing people of a given region or nation could never defeat imperial might and armies. Revolution had become a great threat to the entrenched capitalist, and particularly, banking interests.

Within a decade of the American Revolutionary War, which ended in 1783, another nation was going down the road of revolutionary zeal, in part inspired by the American example. However, this nation was no colony, but rather a mercantilist imperial power, and thus, its loss would be too great a loss to allow. In 1788, the French Monarchy was bankrupt, and as tensions grew between the increasingly desperate people of France and the aristocratic and particularly monarchic establishment, European bankers decided to pre-empt and co-opt the revolution.

In 1788, prominent French bankers refused

“to extend necessary short-term credit to the government,”^[4] and they arranged to have shipments of grain and food to Paris “delayed” which triggered the hunger riots of the Parisians.^[5]

This sparked the Revolution, in which a new ruling class emerged, driven by violent oppression and political and actual terrorism.

However, its violence grew, and with that, so too did discontentment with the Revolutionary Regime, and its stability and sustainability was in question. Thus, the bankers threw their weight behind a general in the Revolutionary Army named Napoleon, whom they entrusted to restore order. Napoleon then gave the bankers his support, and in 1800, created the Bank of France, the privately owned central bank of France, and gave the bankers authority over the Bank.

The bankers owned its shares, and even Napoleon himself bought shares in the bank.^[6]

The bankers thus sought to control commerce and government and restore order to their newly acquired and privately owned and operated empire. However, Napoleon continued with his war policies beyond the patience of the bankers, which had a negative impact upon commercial activities,^[7] and Napoleon himself was interfering in the operations of the Bank of France and even declared that the Bank “belongs more to the Emperor than to the shareholders.”^[8]

With that, the bankers again shifted their influence, and remained through regime change.^[9]

The Rothschilds ascended to the throne of international banking with the Battle of Waterloo. After having established banking houses in London, Paris, Frankfurt, Vienna and Naples, they profited off of all sides in the Napoleonic wars.^[10]

The British patriarch, Nathan Rothschild, was known for being the first with news in London, ahead of even the monarchy and the Parliament, and so everyone watched his moves on the stock market during the Battle of Waterloo. Following the battle, Nathan got the news that the British won over 24 hours before the government itself had news, and he quietly went into the London Stock Exchange and sold everything he had, implying to those watching that the British lost.

A panic selling ensued, in which everyone sold stock, stock prices crumbled, and the market crashed. What resulted was that Rothschild then bought up the near-entire British stock market for pennies on the dollar, as when news arrived of the British victory at Waterloo, Rothschild’s newly acquired stocks soared in value, as did his fortune, and his rise as the pre-eminent economic figure in Britain.^[11]

As Goergetown University History professor, Carroll Quigley wrote in his monumental Tragedy and Hope,

“The merchant bankers of London had already at hand in 1810-1850 the Stock Exchange, the Bank of England, and the London money market,” and that, "In time they brought into their financial network the provincial banking centers, organized as commercial banks and savings banks, as well as insurance companies, to form all of these into a single financial system on an international scale which manipulated the quantity and flow of money so that they were able to influence, if not control, governments on one side and industries on the other.^"[12]

The period from 1815 to 1914 was known as the British Imperial Century, in which they adopted the liberal economic concepts of Adam Smith, and manipulated and distorted them for their own imperial ambitions.

Mercantilism was still strong in practice, but rode under the banner of a liberal economic order, “free markets” and the “invisible hand.”

The “invisible hand” was in fact, connected to a body made up of government and industry, molding the “free market” according to its designs, and the body was controlled by the brain, the central bank, the Bank of England.

Markets were hardly “free” and the hand was visible to those who could see the rest of the body.



The Liberal Revolution

It was during this British imperial century that other nations, such as Germany and the United States, were pursuing mercantilist economic practices in order to protect their own nations from the British free-trade imperialism. It was in this context that mercantilist theorists such as Alexander Hamilton in the United States, and Friedrich List in Germany were writing in criticism of liberal economic theory.

Mercantilism was dominant in political-economic theory until the mid 19th century when the ‘liberal revolution’ manifested, largely in critical opposition to mercantilism.

In liberal economic theory, the economic realm is autonomous and separate from the political realm, and functions according to its own logic. Within this theory, politics and economics, though separate spheres, are still connected, but remain independent of one another. Whereas mercantilists see the state as the primary actor in the global political economy, liberals see the individual (both producer and consumer) as being the major actor.

Mercantilists see the international arena as inherently conflictual, justifying their policies of colonialism and empire building in an international arena in which if one state does not colonize foreign lands and extract resources, another state will, and thus, will deprive the state that does not create an empire of resources and economic growth.

In this sense, mercantilists view the world in terms of a zero-sum gain, in which the progress of one state requires the regression of another. Liberal theorists argue that the international arena, made up of individuals, constitutes a positive-sum gain, in which all individuals act according to self-interest, and in doing so, benefit everyone, and foster cooperation and interdependence.

In this sense, the international arena is not inherently conflictual, but rather a cooperative and interdependent sphere in which order and stability is upheld by international regimes – such as the British liberal imperial order and the gold standard it instituted.

Where mercantilists view history as an amalgamation of conflicts and decisions made by states, liberal theorists view history as the sum of the unintended consequences of actions made by private individuals and activities. This implies almost an inherently natural progression of history – that it is not shaped by powerful forces in any designed or intended way, but is merely a natural response and reaction to the actions of individuals.

This ties into the liberal concept of the natural state of a liberal economic order, bringing in the idea of the “invisible hand of the free market” which will determine economic activities.

Adam Smith’s notion of the “invisible hand” has been used to advance the idea that private individuals who seek personal wealth and gain through self-interest will unintentionally aid the interests of all of society. However, the “invisible hand” was mentioned merely once in Smith’s monumental Wealth of Nations, and was taken out of context.

Smith was discussing how,

“Every individual naturally inclines to employ his capital in the manner in which it is likely to afford the greatest support to domestic industry, and to give revenue and employment to the greatest number of people of his own country.”

In addition to employing,

“his capital in the support of domestic industry,” the private individual would “direct that industry that its produce may be of the greatest value.”

Therefore, the individual,

“neither intends to promote the public interest, nor knows how much he is promoting it.”

Smith explains that:

"By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention."^[13]

Smith had conceptualized the “invisible hand” as the “natural inclination” of an individual to promote domestic interests, yet the phrase has been manipulated to promote the concept of a “self regulating market” in which the less regulation and restrictions there are, the better all society will be, because industry will naturally benefit all people.

The manipulation of this phrase has taken the notion of the “invisible hand” away from the actions of individuals and transferred it to promoting non-regulation of economic activities. That is a far cry from Smith’s contention.

Smith even stated in the Wealth of Nations that,

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.”^[14]

In discussing regulation regarding wages for workers and resolving equity issues between the employers, or “masters” and the labour class of “workers,” Smith explained that,

“Whenever the legislature attempts to regulate the differences between masters and their workmen, its counselors are always the masters. When the regulation, therefore, is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when in favor of the masters.”

 

Further, “When masters combine together in order to reduce the wages of their workmen, they commonly enter into a private bond or agreement, not to give more than a certain wage under a certain penalty. Were the workmen to enter into a contrary combination of the same kind, not to accept a certain wage under a certain penalty [such as a union], the law would punish them very severely; and if it dealt impartially, it would treat the masters in the same manner.”^[15]

These quotes by Adam Smith tend to fly in the face of the common perceptions and usage of Smith’s ideas, proving that liberal economy in practice is a far cry from the intent of its original theorist.

In the 1870s, the notion of a “liberal economic order” was challenged as the major European empires undertook an incredible extension of their imperial presence across the globe, itself a mercantilist practice – the idea of obtaining colonies in order to extract its resources, create a captive market for the imperial nations manufactured goods, and deprive its economic competitors of access to that market.

Between 1878 and 1913, European empires extended their control over much of the world, specifically with the Scramble for Africa, in which all of Africa, save Ethiopia, was colonized by European powers.

This “new imperialism,” as it was known, proliferated throughout Europe following the rapid expansion of banking throughout the continent, and the pre-eminence of international financiers over governments.^[16] The growth of the continent-wide banking networks “fed the growth of colonial empires” as it stimulated a system in which “creating debt that then had to be serviced by the purchase of more infrastructure,” and expansion of territory.^[17]

This led European nations to undertake a massive imperial effort across much of the globe, to find and control foreign markets and expand their capital.



The Emergence of Marxism

In the 19th century, the rise of critical IPE (International/Global Political Economy) theories emerged in opposition to the growing dominance of Liberal IPE.

The most profound of these criticisms arose from Karl Marx. Marxism, as Marx’s critical theory came to be known, put an extensive focus on the relations of classes within society, as the class that owns the means of production is the central and most powerful class, subverting the other classes to a submissive position.

Marxists also view capitalism as being inherently exploitative. Within this theory, the political and economic realms are not seen as separate spheres of action, but are seen as intertwined and internally related. Within this theory, the purpose of the state is not to serve the interests of the broader population that inhabits it, but to secure, maintain and advance the interests of the capitalist class.

Marxist theorists also put emphasis on the nature of war and conflict as being intrinsically related to the expansionary nature of capitalism, which is one of the primary roles of states in advancing the interests of the capitalist ruling class.

Marx defines what he perceives as capitalism: a system which is governed by capital, which is money that has been invested in order to generate more money; production, which is dominant within capitalist society, is designed for sale, not use – in that, it moves beyond subsistence and into what we refer to today as materialism and consumption; labour is commodified, thus people, through their labour, themselves become a tradable commodity; exchange occurs with money; ownership of the means of production is in the hands of the capitalist class; and competition between various capitalist forces is the logic of interaction.

Marx places a large focus on the circuit of capital, in how money transforms into capital.

Money (M), is invested in purchasing a Commodity (C), and then into Labour Power (LP) and the Mean of Production (MP), which make up the Production circuit (P), which produces a new Commodity (C1), which is then sold, creating expanding money (M1), or earned profits.

Capital, thus, is money that is invested into production.

Marx postulates that the inherent exploitative nature of capitalism is most apparent in the Production circuit, specifically with Labour Power.



Diverging From Marx

However, with the exploration and understanding of the central banking system, some of the circuit of capital must be called into question. Central banking functions not on “investment” of capital, but on the expansion and creation of money and debt, which is lent at interest, thus serving as the source of income for the central banking system.

This cannot be called productive capital, for its purpose and intent is not to produce a new commodity, there is no labour power or means of production involved, and new money is not produced from the sale of such a new commodity, but rather profit is extracted from interest on the original money.

This, for the sake of argument, can be called the Circuit of Debt:

M --> L --> I --> M1 --> LID --> DB

M = Money
L = Loan
I = Interest
M1 = New Money
LID = new money Loaned to debtor to pay Interest on Debt
DB = debtor falls into Debt Bondage; owned by creditor

Through the Marxist perspective of exploitation, there is no labour to exploit within the Circuit of Debt, so where does exploitation come into play?

Exploitation comes into the process in that the debt (or loan) issued, is designed to exploit whoever the debtor is, be it an individual, a nation, or a corporation. Within this paradigm, class structure, although playing a significant part of the process of overall exploitation and exercise of power within the capitalist system is not the only, or arguably, even primary target of control and oppression within capitalism, as we know it. The target is the individual, the nation, and industry to the submission of the predatory nature of the central banking system.

The central banking system has, from its inception, acted in ways which monopolize industry (thus negating Adam Smith’s concept of a “free market” and “competition”); militarize nations (financing wars and conquest, imperialism); merging the interests of both the economic and political realms into a holistic ruling class (modeled upon the dual nature of a central bank itself – holding the authority and power of a government body, but representing the interests and submitting to the ownership of private individuals).

Thus, the ruling class itself is a social construct which this tiny elite formed, hardly capable of the numbers to be termed a class, especially since class is most often defined in national terms, whereas this elite is international in nature.

The central bank of a nation finances monopoly industry and imperial states, both of which are created out of debt bondage to the central bank. Both the commercial/industrial elites and political elites merge their interests – the state will pursue imperial policies that have the effect of benefiting industry, while industry will support the building of a strong, powerful state (and provide a cozy job for the political elite upon leaving the public sector).

This makes up the ruling class of a nation, the capitalists, or owners of the means of production, merging with the political rulers of the nation. One does not represent or overpower the other, but rather, both serve the interests and are owned through interest, by a tiny international elite.

One must ask: What would capitalism look like if it were not for the advent of the central banking system?



Accumulation by Dispossession

In discussing Marxist theory, I am not advocating a total support of its theoretical discussion and perspective.

However, it is vital to address, as historically and presently, it has served as a very powerful source of criticism against the capitalist system and its importance cannot be underestimated. Having said that, it is also important to address in that it does, as a theory, identify many accurate and important aspects of how the capitalist system functions. For that reason, many of the critiques have been and are currently prescient and justified.

In Marxist theory, the nature of accumulation plays a very important part, in that it holds a dual character. One is known as accumulation as expanded reproduction, which is concerned with commodity markets and production (the circuit of capital), where money is made through the labour process. The other nature of accumulation is accumulation by dispossession, which is usually framed in terms of relations between capitalist and non-capitalist modes of production.

This is accumulation derived from dispossessing someone of something.

The Atlantic slave trade was an example of accumulation by dispossession, as Africans were dispossessed of their lives and freedom. Colonialism is another example, where resources are extracted, dispossessing the nation of its own resources.

Perhaps it would be helpful to expand upon Marx’s ideas of accumulation by dispossession in regards to the central banking system. Central banking, not falling into the circuit of capital, and thus, accumulation as expanded reproduction, better represents an example of accumulation by dispossession.

Money is given in loans at interest, to which the debtor is never meant to fully repay, and is dispossessed of its freedom and wealth through interest payments and debt bondage. Debt is just another word for slavery, therefore, the central banking system itself, functions through a system of accumulation by dispossession.

However, conventional understanding of accumulation by dispossession describes it as an interaction between capitalist and non-capitalist modes of production, where the capitalist mode will dispossess the non-capitalist mode of production. Central banking, however, is the pinnacle of the capitalist system, and ultimately, the primary source and avenue of its power, so it can hardly be said to be an interaction between capitalist and non-capitalist modes, as it is an interaction between central banks and ALL modes of production which need money – including the entirety of the capitalist system.

Thus, industry/commerce, governments/nations, and individuals/people, are dispossessed of their freedom through debt bondage. This cannot simply be predicated in terms of class warfare or class-centric theory, but rather, an assault against all individuals, individuality, and freedom, in any and all forms. It is within this context that class structures are created, so as to play off one against the other – to compartmentalize people into classes, and thus, better control and manipulate the masses. It is a strategy of dividing and conquering people.

Class, including the upper capitalist class, is constructed in an effort to conform thought within each class, and thus direct collective action of that class accordingly. The freethinking individual is the target in all cases.

Individuality is to be removed from commerce, government, and society as a whole.



The Communist Manifesto

In the Communist Manifesto, published in 1848, Marx proclaims in the opening subtitle that,

“The history of all society hitherto is the history of class struggles.”

However, if class itself is a construct of powerful individuals, albeit throughout human history, can it not be argued instead that the history of all society is the history of the struggle of the individual against collectivity and control?

Class itself is a collective grouping designed to control a mass of people, whether it is upper class or lower class. Individuals are stifled within all classes, and thus, the history of class struggles itself, is a history of the struggle between the free thinking individual and the collective form of control.

Within the Communist Manifesto, Marx (and Engels) outlined an initial program for an “advanced” nation to undertake in order to create a Communist system, with ten major points.

1. Abolition of property in land and application of all rents of land to public purposes

2. A heavy progressive or graduated income tax

3. Abolition of all right of inheritance

4. Confiscation of the property of all emigrants and rebels

5. Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly

6. Centralization of the means of communication and transport in the hands of the state

7. Extension of factories and instruments of production owned by the state – the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan

8. Equal liability of all to labour – Establishment of industrial armies, especially for agriculture

9. Combination of agriculture with manufacturing industries – gradual abolition of the distinction between town and country by a more equable distribution of the population over the country

10. Free education for all children in public schools – Abolition of children’s factory labour in its present form [and] Combination of education with industrial production.^[18]

Of particular importance is number 5, in which a central bank is advocated.

If nations have the ability to create and issue a currency through a Treasury department or even on a more regional or local level, why centralize and monopolize creation of a currency to a central bank?

It should be noted that the recommendation was to have it centralized “in the hands of the state,” however, central banks are today, still widely perceived as being within the purview of governmental authority, while acting and functioning totally outside of it and above it. Imposing a tax on one’s income (2), also seems to promote the commodification of labour, in that instead of industry exploiting one’s labour and extracting a profit from it, that becomes the job of the state. All property would be owned by the state (1), and virtually the entire economy is subject to the control of the state.

Even education, while free, is directed by the state. With the “Confiscation of the property of all emigrants and rebels,” what room is there for dissenting thought in such a society? Dissent would not be encouraged within the “free education” system. In fact, conformity would be enshrined. Is this not a form of “accumulation by dispossession” in which the individual is dispossessed of free thought and action and submitted to the will of and restricted thinking allowed by the state?

Within this paradigm the state accumulates power and authority by dispossessing people of individuality in thought and expression.

The Communist Manifesto ends with the declaration of, “Workers of all countries, Unite!” This, in and of itself, promotes class divisions within society, placing focus on the need for an international mobilization of the global working class to rise up against the capitalist class. Marx outlines that any successful workers’ revolution must be international.^[19]

Thus, this promotes the cosmopolitical notion of an international community, at least in initial terms of a transnational class system. Essentially, Marx argues that as capitalism expands, what we will later term “Globalizes,” so too must the working class of the world “globalize” and “internationalize.” In a sense, this makes Marx, himself, an early globalist theorist, in promoting the concept of an international class uprising against the capitalist class.

Ultimately, would this not simply replace the tyranny of one class for the tyranny of another? Throw out the capitalists and bring in the communists! Substituting one form of oppression for another is hardly a change in the right direction. In both systems, the individual suffers and free thought is stifled.

Though much Marxist criticism is extremely pointed in analyzing the functions and structure of the capitalist system, such theory itself, even though critical, must be critically examined.



Retaking America

The history of the United States from its founding through the 19th century to the early 20th century, was marked by a continual political battle revolving around the creation of a central bank of the United States.

Mercantilists such as Alexander Hamilton, who was the first Treasury Secretary, were in favor of such a bank, and his advice won over George Washington, much to the dismay of Thomas Jefferson, who was a strong opponent to central banking.

However,

“[Alexander] Hamilton, believing that government must ally itself with the richest elements of society to make itself strong, proposed to Congress a series of laws, which it enacted, expressing this philosophy,” and that, “A Bank of the United States was set up as a partnership between the government and certain banking interests,”^[20] which lasted until the charter expired in 1811.

Again, during the tenure of Andrew Jackson (1829-1837), the primary political struggle was with the entrenched financial interests both domestic and from abroad (namely Western Europe), on the issue of creating a central bank of the US.

Andrew Jackson stood in firm opposition to such a bank, saying that,

“the bank threatened the emerging order, hoarding too much economic power in too few hands,” and referred to it as “The Monster.”^[21]

Congress passed the bill allowing for the creation of a Second Bank of the United States, however, Andrew Jackson vetoed the bill, much to the dismay of the banking interests.

It was in the later half of the 1800s that,

“European financiers were in favor of an American Civil War that would return the United States to its colonial status, they admitted privately that they were not necessarily interested in preserving slavery,” as it had become unprofitable.^[22]

The Civil War was not based upon the liberation of slaves, it was, as Howard Zinn described it, a clash “of elites,” with the northern elite wanting,

“economic expansion – free land, free labor, a free market, a high protective tariff for manufacturers, [and] a bank of the United States. [Whereas] The slave interests opposed all that.”^[23]

The Civil War, which lasted from 1861 until 1865, resulted in hundreds of thousands of deaths, during which,

“Congress also set up a national bank, putting the government into partnership with the banking interests, guaranteeing their profits.”^[24]

As Lincoln himself stated:

The money powers prey on the nation in times of peace and conspire against it in times of adversity. The banking powers are more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy. They denounce as public enemies all who question their methods or throw light upon their crimes.

I have two great enemies, the Southern Army in front of me, and the bankers in the rear. Of the two, the one at my rear is my greatest foe. As a most undesirable consequence of the war, corporations have been enthroned, and an era of corruption in high places will follow. The money power will endeavor to prolong its reign by working upon the prejudices of the people until the wealth is aggregated in the hands of a few, and the Republic is destroyed.^[25]

Throughout much of the 1800s and into the 1900s, the United States suffered several economic crises, one of the most significant of which was the Great Depression of 1873.

As Howard Zinn explained:

The crisis was built into a system which was chaotic in its nature, in which only the very rich were secure. It was a system of periodic crises – 1837, 1857, 1873 (and later: 1893, 1907, 1919, 1929) – that wiped out small businesses and brought cold, hunger, and death to working people while the fortunes of the Astors, Vanderbilts, Rockefellers, Morgans, kept growing through war and peace, crisis and recovery. During the 1873 crisis, Carnegie was capturing the steel market, Rockefeller was wiping out his competitors in oil.^[26]

Massive industrial consolidation by a few oligarchic elites was the rule of the day, as J.P. Morgan expanded total control over railroad and banking interests, and John D. Rockefeller took control of the oil market, and expanded into banking.

Zinn explained that,

“The imperial leader of the new oligarchy was the House of Morgan. In its operations it was ably assisted by the First National Bank of New York (directed by George F. Baker) and the National City Bank of New York (presided over by James Stillman, agent of the Rockefeller interests). Among them, these three men and their financial associates occupied 341 directorships in 112 corporations. The total resources of these corporations in 1912 was $22,245,000,000, more than the assessed value of all property in the twenty-two states and territories west of the Mississippi River.”^[27]

These banking interests, particularly those of Morgan, were very much allied with European banking interests.

On the European side, specifically in Britain, the elite were largely involved in the Scramble for Africa at this time. Infamous among them was Cecil Rhodes, who made his fortune in the diamond and gold mining in Africa, as,

“With financial support from Lord Rothschild and Alfred Beit, he was able to monopolize the diamond mines of South Africa as De Beers Consolidated Mines and to build up a great gold mining enterprise as Consolidated Gold Fields.”^[28]

Interestingly,

“Rhodes could not have won his near-monopoly over South African diamond production without the assistance of his friends in the City of London: in particular, the Rothschild bank, at that time the biggest concentration of financial capital in the world.”^[29]

As historian Niall Ferguson explained,

“It is usually assumed that Rhodes owned De Beers, but this was not the case. Nathaniel de Rothschild was a bigger shareholder than Rhodes himself; indeed, by 1899 the Rothschilds’ stake was twice that of Rhodes.”^[30]

Cecil Rhodes was also known for his radical views regarding America, particularly in that he would “talk with total seriousness of ‘the ultimate recovery of the United States of America as an integral part of the British Empire’.”^[31]

Rhodes saw himself not simply as a money maker, but primarily as an “empire builder.” As historian Carroll Quigley explained, in 1891, three British elites met with the intent to create a secret society.

The three men were Cecil Rhodes, William T. Stead, a prominent journalist of the day, and Reginald Baliol Brett, a,

“friend and confidant of Queen Victoria, and later to be the most influential adviser of King Edward VII and King George V.”

Within this secret society,

“real power was to be exercised by the leader, and a ‘Junta of Three.’ The leader was to be Rhodes, and the Junta was to be Stead, Brett, and Alfred Milner.”^[32]

In 1901, Rhodes chose Milner as his successor within the society, of which the purpose was,

“The extension of British rule throughout the world, the perfecting of a system of emigration from the United Kingdom and of colonization by British subjects of all lands wherein the means of livelihood are attainable by energy, labour, and enterprise... [with] the ultimate recovery of the United States of America as an integral part of a British Empire, the consolidation of the whole Empire, the inauguration of a system of Colonial Representation in the Imperial Parliament which may tend to weld together the disjointed members of the Empire, and finally the foundation of so great a power as to hereafter render wars impossible and promote the best interests of humanity.”^[33]

Essentially, it outlined a British-led cosmopolitical world order, one global system of governance under British hegemony. Among key players within this group were the Rothschilds and other banking interests.^[34]

In the early 20th century, European and American banking interests achieved what they had desired for over a century within America, the creation of a privately owned central bank. It was created through collaboration of American and European bankers, primarily the Morgans, Rockefellers, Kuhn, Loebs and Warburgs.^[35]

After the 1907 banking panic in the US, instigated by JP Morgan, pressure was placed upon the American political establishment to create a “stable” banking system.

In 1910, a secret meeting of financiers was held on Jekyll Island, where they planned for the,

“creation of a National Reserve Association with fifteen major regions, controlled by a board of commercial bankers but empowered by the federal government to act like a central bank – creating money and lending reserves to private banks.”^[36]

President Woodrow Wilson followed the plan almost exactly as outlined by the Wall Street financiers, and added to it the creation of a Federal Reserve Board in Washington, which the President would appoint.^[37]

The Federal Reserve, or Fed,

“raised its own revenue, drafted its own operating budget and submitted neither to Congress,” while “the seven governors shared power with the presidents of the twelve Reserve Banks, each serving the private banks in its region,” and “the commercial banks held stock shares in each of the twelve Federal Reserve Banks.”^[38]

The retaking of the United States by international banking interests was achieved with barely a whimper of opposition. Where the British Empire failed in taking the United States militarily, international bankers succeeded covertly through the banking system.

The Federal Reserve also had the effect of cementing an alliance between New York and London bankers.^[39]



Notes

[1] George T. Crane, Abla Amawi, The Theoretical evolution of international political economy. Oxford University Press US, 1997: pages 48-49
[2] George T. Crane, Abla Amawi, The Theoretical evolution of international political economy. Oxford University Press US, 1997: pages 50-51
[3] John Kenneth Galbraith, Money: Whence it Came, Where it Went (Boston: Houghton Mifflin Company, 1975), 31
[4] Donald Kagan, et. al., The Western Heritage. Volume C: Since 1789: Ninth edition: (Pearson Prentice Hall: 2007), 596
[5] Curtis B. Dall, F.D.R. : My Exploited Father-in-Law. (Institute for Historical Review: 1982), 172
[6] Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (New York: Macmillan Company, 1966), 515 Robert Elgie and Helen Thompson, ed., The Politics of Central Banks (New York: Routledge, 1998), 97-98
[7] Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (New York: Macmillan Company, 1966), 516
[8] Robert Elgie and Helen Thompson, ed., The Politics of Central Banks (New York: Routledge, 1998), 98-99
[9] Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (New York: Macmillan Company, 1966), 516
[10] Sylvia Nasar, Masters of the Universe. The New York Times: January 23, 2000: http://query.nytimes.com/gst/fullpage.html?res=9C04E3D6123AF930A15752C0A9669C8B63 BBC News. The Family That Bankrolled Europe. BBC News: July 9, 1999 http://news.bbc.co.uk/1/hi/uk/389053.stm
[11] New Scientist. Waterloo Windfall. New Scientist Magazine: Issue 2091, July 19, 1997 http://www.newscientist.com/article/mg15520913.300-waterloo-windfall.html BBC News. The Making of a Dynasty: The Rothschilds. BBC News: January 28, 1998 http://news.bbc.co.uk/2/hi/uk_news/50997.stm
[12] Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (New York: Macmillan Company, 1966), 51
[13] Adam Smith, The Wealth of Nations. U. of Chicago Edition, 1976: Vol. IV, ch. 2: 477
[14] Adam Smith, An inquiry into the nature and causes of the wealth of nations. Regnery Gateway, 1998: page 152
[15] Adam Smith, An inquiry into the nature and causes of the wealth of nations. Regnery Gateway, 1998: pages 166-167
[16] Patricia Goldstone, Aaronsohn's Maps: The Untold Story of the Man who Might Have Created Peace in the Middle East. (Harcourt Trade, 2007), 29-30
[17] Patricia Goldstone, Aaronsohn's Maps: The Untold Story of the Man who Might Have Created Peace in the Middle East. (Harcourt Trade, 2007), 31
[18] Karl Marx, Friedrich Engels, Philip Gasper (ed.), The Communist manifesto: a road map to history's most important political document. Haymarket Books, 2005: pages 70-71
[19] Karl Marx, Friedrich Engels, Philip Gasper (ed.), The Communist manifesto: a road map to history's most important political document. Haymarket Books, 2005: page 67
[20] Howard Zinn, A People’s History of the United States. Harper Perennial: New York, 2003: page 101
[21] Michael Waldman, My Fellow Americans: The Most Important Speeches of America's Presidents, from George Washington to George W. Bush. Longman Publishing Group: 2004: page 25
[22] Dr. Ellen Brown, Today We're All Irish: Debt Serfdom Comes to America. Global Research: March 15, 2008: http://www.globalresearch.ca/index.php?context=viewArticle&code=BRO20080315&articleId=8349
[23] Howard Zinn, A People’s History of the United States. Harper Perennial: New York, 2003: page 189
[24] Howard Zinn, A People’s History of the United States. Harper Perennial: New York, 2003: page 238
[25] Steve Bachman, Unheralded Warnings from the Founding Fathers to You. Gather: June 19, 2007: http://www.gather.com/viewArticle.jsp?articleId=281474977031677
[26] Howard Zinn, A People’s History of the United States. Harper Perennial: New York, 2003: page 242
[27] Howard Zinn, A People’s History of the United States. Harper Perennial: New York, 2003: page 323
[28] Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (New York: The Macmillan Company, 1966), 130
[29] Niall Ferguson, Empire: The Rise and Demise of the British World Order and the Lessons for Global Power (New York: Basic Books, 2004), 186
[30] Niall Ferguson, Empire: The Rise and Demise of the British World Order and the Lessons for Global Power (New York: Basic Books, 2004), 186-187
[31] Niall Ferguson, Empire: The Rise and Demise of the British World Order and the Lessons for Global Power (New York: Basic Books, 2004), 190
[32] Carroll Quigley, The Anglo-American Establishment. GSG & Associates, 1981: page 3
[33] Carroll Quigley, The Anglo-American Establishment. GSG & Associates, 1981: page 33
[34] Carroll Quigley, The Anglo-American Establishment. GSG & Associates, 1981: page 34
[35] Murray N. Rothbard, Wall Street, Banks, and American Foreign Policy. World Market Perspective: 1984: http://www.lewrockwell.com/rothbard/rothbard66.html
[36] William Greider, Secrets of the Temple: How the Federal Reserve Runs the Country. (New York: Simon and Schuster, 1987), 276
[37] William Greider, Secrets of the Temple: How the Federal Reserve Runs the Country. (New York: Simon and Schuster, 1987), 277
[38] William Greider, Secrets of the Temple: How the Federal Reserve Runs the Country. (New York: Simon and Schuster, 1987), 50
[39] William Engdahl, A Century of War: Anglo-American Oil Politics and the New World Order. (London: Pluto Press, 2004), 51

Part 2

Origins of the American Empire - Revolution, World Wars and World Order
July 28, 2009
 

Russia, Oil and Revolution

By the 1870s, John D. Rockefeller’s Standard Oil Empire had a virtual monopoly over the United States, and even many foreign countries. In 1890, the King of Holland gave his blessing for the creation of an international oil company called Royal Dutch Oil Company, which was mainly founded to refine and sell kerosene from Indonesia, a Dutch colony.

Also in 1890, a British company was founded with the intended purpose of shipping oil, the Shell Transport and Trading Company, and it,

“began transporting Royal Dutch oil from Sumatra to destinations everywhere,” and eventually, “the two companies merged to become Royal Dutch Shell.”^[1]

Russia entered into the Industrial Revolution later than any other large country and empire of its time.

By the 1870s,

“Russia’s oil fields, including those in Baku, were challenging Standard Oil’s supremacy in Europe. Russia’s ascendancy in natural resources disrupted the strategic balance of power in Europe and troubled Britain.”

Britain thus attempted to begin oil explorations in the Middle East, specifically in Persia (Iran), first through Baron Julius de Reuter, the founder of Reuters News Service, who gained exploration rights from the Shah of Iran.^[2] Reuter’s attempt at uncovering vast quantities of oil failed, and a man named William Knox D’Arcy took the lead in Persia.

By the middle of the 19th century,

“the Rothschilds were the richest family in the world, perhaps in all of history. Their five international banking houses comprised one of the first multinational corporations.”

Alfonse de Rothschild was,

“heavily invested in Russian oil at least forty years before William Knox D’Arcy began tying up Persian oil concessions for the British. Russian oil, which in the 1860s was already emerging as the European rival to the American monopoly Standard Oil, was the Baron [Rothschild]’s pet project.”

In the early 1880s,

“almost two hundred Rothschild refineries were at work in Baku,” Russia’s oil rich region.^[3]

By the mid-1880s,

“the Rothschilds were poised to become the chief oil supplier, not only to Europe but to the Far East,” however, “the Baku-Batum railroad was already proving inadequate to transport the volume of oil being produced. Another route was needed, and came in the form of the recently opened Suez Canal, which shortened the journey to the Far East by four thousand miles. Palestine was suddenly of interest to the Rothschilds as it provided access to the Suez.”^[4]

When the Egyptian government was bankrupt in 1874, British Prime Minister Benjamin Disraeli turned to his close friends, the Rothschilds,

“for the colossal cash advance necessary” to buy shares in the Suez Canal Company.^[5]

By this time, the Rothschilds were already principle shareholders in the Bank of France,^[6] and the Bank of England, sitting alongside other notable shareholders such as Baring Brothers, Morgan Grenfell and Lazard Brothers.^[7]

The Rothschilds,

“had long been involved in developing Czarist Russia’s nascent industry and banking system, while that country’s growing network of railroads was largely financed by Rothschild-managed loans.”^[8]

When the Czar died, he was succeeded by his son, Czar Nicholas II, who instituted anti-Semitic pogroms, discriminating against Jews, which had the effect of stimulating a massive emigration of Jews out of Russia and Eastern Europe and into Western Europe.

However, these East European and Russian Jewish émigrés grew up in a newly industrializing nation in which the tyranny of the government and collusion between it and powerful financial and industrial interests left the great majority of people dispossessed and incited more socialist tendencies in thought and action.

The English Rothschilds were very alarmed,

“when the socialist tendencies of the émigrés contributed to a massively disruptive tailors’ strike in the East End of London in 1888. A young Georgian communist who would become known to the world as Joseph Stalin was already organizing laborers to strike at the Rothschild oil interests in Batum.”

The British Rothschilds were very concerned with this wave of Jewish immigrants into Western Europe and Britain, as they were intensely anti-Czarist and progressively socialist, and the Rothschilds were known for their heavy collaboration with the Czarist regimes of Russia. One potential solution considered to the problem of increased socialist-leaning Jewish immigrants in Britain was to institute restrictions on immigration.

However, this would likely backlash, in the sense that it would be viewed as comparable to expulsion. So, Edmond Rothschild began his personal campaign to create a Jewish homeland in Palestine in order to create a release valve for Jewish émigrés to put their political action behind a new cause, and to promote them emigrating to Palestine, and out of Western Europe.^[9]

On top of this, as the pre-eminent Zionist in Britain, his proposal for the creation of a Jewish homeland in Palestine served major economic interests of the Rothschilds and of the British Empire, in that several years prior, Rothschild bought the Suez Canal for the British, and it was the primary transport route for Russian oil.

Palestine, thus, would be a vital landmass as a protectorate for British and Rothschild imperial-economic interests.

The Rothschilds, despite their overtly pro-Zionist and pro-Jewish rhetoric, did not stop their support of the Russian regime and economic activities within anti-Semitic Russia.

In 1895, the Rothschilds, then one of the world’s leading producers and distributors of oil,

“had gone so far as to co-sign an agreement with rival producers – including America’s Standard Oil [of Rockefeller interests] – to divide up world markets. It never took effect, presumably because of the opposition of the Russian government.”

In 1902, the Rothschilds,

“entered into a partnership with Royal Dutch and Shell (soon to become a single global company) to form the Asiatic Petroleum Company for exploiting the fields of Southern Russia.”^[10]

In the early 1900s, the Rothchilds were the primary oil interests in Russia, second in the world only to the Rockefellers. As industrialization was under way, conditions worsened for the great majority of Russian people.

This spurred protests and riots, and a,

“young Stalin himself led the agitation against the Caucasian oil industry in general, [and] the Rothschilds in particular. Mass action by oil workers in Baku [the major oil fields in Russia] in 1903 was the spark that set off the first general strike across the Russian landmass.”

Then with the Russian loss in the Russo-Japanese War of 1904, and further protests, came the Revolution of 1905. In the following years, the Rothschilds sold their Russian oil interests to Royal Dutch Shell, gaining significant shares in the international oil company.^[11]

The specter of political and social instability within Russia was high and did not go without notice from international banking, oil, and industrial interests. Naturally, the international banking houses were keeping a close eye on developments within Russia. The Rothschilds had to lessen their overt involvement with Russia, as they could not maintain such a relationship with the most anti-Jewish nation in the world at the time, while also claiming to be the primary advocates of Jewish aspirations for a homeland.

This is why they sold their Russian oil interests to Royal Dutch Shell, but then gained significant shares in the company itself. So while publicly cutting their ties with Russia, they still held massive interests in its industrial capacity.

Following the Russo-Japanese War, the Rothschilds,

“refused to participate in underwriting a major loan, this at a time when Russia desperately needed funds to stabilize the regime.”^[12]

So, in 1906, John D. Rockefeller stepped in to aid Czarist Russia, and offered $200,000,000, or,

“400,000,000 rubles for a concession for railroads from Tashkend to Tomsk and from Tehita to Polamoshna and a grant of land on both sides of the prospective lines.”^[13]

These international financiers were still clearly intent upon maintaining their interests within Russia.

However, the Russian governments refusal to allow the deal between the Rockefellers and Rothschilds and other major oil monopolies to divide up the world’s oil reserves, may well have spurred discontent among these powerful interests. If Russia refused to allow them to control all the oil and have a right to all oil, did this mean that Russia was planning on building a domestic oil industry?

If this were the case, it could pose a threat to all the entrenched economic and financial interests, particularly those of the Rockefellers and Rothschilds, as Russia’s significant oil reserves and resources would allow it to possibly even surpass the United States in industrialization. Further, Czarist Russia became an increasingly unstable investment environment, controlled by an increasingly unpredictable monarchy.

The 1917 October Revolution,

“inspired workers’ uprisings in the oil fields against low wages and harsh working conditions. In 1919, Azerbaijan took advantage of the political unrest to declare sovereignty over the Baku fields. That same year SONJ [Standard Oil of New Jersey] made an agreement with the Azerbaijani government to purchase undeveloped land for exploration in the Baku region.

 

Amidst the chaos, foreign oil companies rushed into Russia hoping to collect concessions at reduced rates. The Nobel brothers sold much of their operations to SONJ (today ExxonMobil) to build an alliance in 1920.”^[14]

Antony C. Sutton, economist, historian and author, as well as research fellow at Stanford University’s Hoover Institution, wrote in Wall Street And The Bolshevik Revolution, that both fascist and communist systems are,

“based on naked, unfettered political power and individual coercion. Both systems require monopoly control of society. While monopoly control of industries was once the objective of J.P. Morgan and J.D. Rockefeller, by the late nineteenth century the inner sanctums of Wall Street understood that the most efficient way to gain an unchallenged monopoly was to ‘go political’ and make society go to work for the monopolists,” and that, “the totalitarian socialist state is a perfect captive market for monopoly capitalists, if an alliance can be made with the socialist powerbrokers.”^[15]

Thus, the major money powers of the west decided to put their money behind the creation of a totalitarian communist state in Russia, in order to create a captive economy, which they could exploit and remove from competition.

When the Revolution began, Trotsky was in New York, and was immediately granted an American passport by President Wilson, and then given a Russian entry permit and a British transit visa, in order to return to Russia and “carry forward” the revolution.^[16] Trotsky, while traveling, was arrested in Canada, but was released as a result of British intervention.^[17]

Trotsky traveled on board a ship in 1917, leaving New York, along with an interesting cast of fellow passengers, including “other Trotskyite revolutionaries, Wall Street financiers, American Communists, and a man named Charles Crane. Charles Richard Crane, former chairman of the Democratic Party’s finance committee, whose son, Richard Crane, was an assistant to U.S. Secretary of State Robert Lansing, played a significant part in what occurred in Russia.

Former U.S. Ambassador to Germany, William Dodd, said that Crane,

“did much to bring on the [Alexander] Kerensky revolution which gave way to Communism.”

Kerensky was the second Prime Minister in the Russian Provisional Government, which followed the collapse of the Czarist government, and preceded the Bolshevik. Crane also thought that the Kerensky government “is the revolution in its first phase only.”^[18]

The Revolution occurred in the midst of World War I, which broke out in 1914, and had all the major European powers at war. Morgan and Rockefeller interests, organized in Wall Street and centralized in the Federal Reserve Bank of New York, the most powerful of all the regional Federal Reserve Banks, used “the Red Cross Mission as its operational vehicle” in Russia at the time of the Bolshevik Revolution.

The Red Cross Mission in Russia got its endowment from wealthy people such as J.P. Morgan, Mrs. E. H. Harriman, Cleveland H. Dodge, and Mrs. Russell Sage, and “in World War I the Red Cross depended heavily on Wall Street, and specifically the Morgan firm.”

When the American Red Cross set up a mission to Russia,

“William Boyce Thompson, director of the Federal Reserve Bank of New York, had ‘offered to pay the entire expense of the commission’.”^[19]

All expenses were paid for by William Boyce Thompson, who was a major stockholder in Chase National Bank, whose President had Thompson appointed head of the New York Fed.^[20]

The Mission was primarily made up of lawyers, financiers, their assistants, people affiliated with Standard Oil and the Rockefeller’s National City Bank.^[21]

The Mission supported through a loan, the Provisional government of Alexander Kerensky, yet, William B. Thompson of the New York Fed

“made a personal contribution of $1,000,000 to the Bolsheviki for the purpose of spreading their doctrine in Germany and Austria.”

Interestingly, when the Bolsheviks took control,

“The National City Bank branch in Petrograd had been exempted from the Bolshevik nationalization decree – the only foreign or domestic Russian bank to have been so exempted.”^[22]

Ultimately, the Red Cross mission in Russia,

“was in fact a mission of Wall Street financiers to influence and pave the way for control, through either Kerensky or the Bolshevik revolutionaries, of the Russian market and resources.”^[23]

The American International Corporation (AIC), was,

“created in 1915 to develop domestic and foreign enterprises, to extend American activities abroad, and to promote the interests of American and foreign bankers, business and engineering.”

It was created and controlled by Morgan, Stillman and Rockefeller interests, and its directors were affiliated with National City Bank (Rockefeller), the Carnegie Foundation, General Electric, the DuPont family, New York Life Insurance, American Bankers Association and the Federal Reserve Bank of New York.

Members of its board financially supported the Bolsheviks and urged the US State Department to recognize the Bolshevik government.^[24]

In 1920, Russian gold was being siphoned through Sweden, where it was melted down and stamped with the Swedish mint, funneled through the Federal Reserve Bank of New York and into Kuhn, Loeb & Company and Guaranty Trust Company (Morgan), two of the primary banking interests behind the creation of the Federal Reserve System. ^[25]

During the civil war in Russia between the Reds and the Whites, while Wall Street financiers were aiding the Bolsheviks quietly, they also began to finance Aleksandr Kolchak (of the Whites) with millions of dollars, in order to ensure that whoever emerged victorious in the war, Wall Street would win.^[26]

As Antony Sutton wrote,

“Russia, then and now, constituted the greatest potential competitive threat to American industrial and financial supremacy,” and that, “The gigantic Russian market was to be converted into a captive market and a technical colony to be exploited by a few high-powered American financiers and the corporations under their control.”^[27]

Eventually, the Bolsheviks emerged victorious, and Wall Street won.

Under Stalin’s Five-Year Plans in the early 1930s, Soviet industrialization “required Western technology and expertise,” and in a “frequently overlooked contribution” that came “from abroad,” American firms aided in the industrialization of the USSR, including Ford, General Electric and DuPont,^[28] with Standard Oil, General Electric, Austin Co., General Motors, International Harvester, and Caterpillar Tractor trading heavily with the Soviet Union.^[29]

Standard Oil bought “gargantuan quantities of Red Oil,” General Electric received a $100,000,000 contract from the Soviet Union to build,

“the four largest hydroelectric generators in the world,” Austin Co., got a $50,000,000 contract to erect the City of Austingrad, “complete with tractor and automobile factories involving an additional $30,000,000 contract for parts and technical assistance with Ford Motor Corp.”

On top of this,

“Other [Soviet] business friends are General Motors, DuPont de Nemours, International Harvester, John Deere Co., Caterpillar Tractor, Radio Corp. and the U. S. Shipping Board, which sold the Reds a fleet of 25 cargo steamers.”

Banks with close ties to the Russian economy included Chase National, National City Bank and Equitable Trust, all of which are either Rockefeller or Morgan interests.^[30]



World War Restructures World Order

In the midst of World War I, a group of American scholars were tasked with briefing,

“Woodrow Wilson about options for the postwar world once the kaiser and imperial Germany fell to defeat.”

This group was called, “The Inquiry.”

The group advised Wilson mostly through his trusted aide, Col. Edward M. House, who was Wilson’s “unofficial envoy to Europe during the period between the outbreak of World War I in 1914 and the intervention by the United States in 1917,” and was the prime driving force in the Wilson administration behind the establishment of the Federal Reserve System.^[31]

“The Inquiry” laid the foundations for the creation of the Council on Foreign Relations (CFR), the most powerful think tank in the US, and “The scholars of the Inquiry helped draw the borders of post World War I central Europe.”

On May 30, 1919, a group of scholars and diplomats from Britain and the US met at the Hotel Majestic, where they,

“proposed a permanent Anglo-American Institute of International Affairs, with one branch in London, the other in New York.”

When the scholars returned from Paris, they were met with open arms by New York lawyers and financiers, and together they formed the Council on Foreign Relations in 1921.

The “British diplomats returning from Paris had made great headway in founding their Royal Institute of International Affairs.” The Anglo-American Institute envisioned in Paris, with two branches and combined membership was not feasible, so both the British and American branches retained national membership, however, they would cooperate closely with one another.^[32]

They were referred to, and still are, as “Sister Institutes.”^[33]

The Milner Group, the secret society formed by Cecil Rhodes,

“dominated the British delegation to the Peace Conference of 1919; it had a great deal to do with the formation and management of the League of Nations and of the system of mandates; it founded the Royal Institute of International Affairs in 1919 and still controls it.”^[34]

There were other groups founded in many countries representing the same interests of the secret Milner Group, and they came to be known as the Round Table Groups, preeminent among them were the Royal Institute of International Affairs (Chatham House), the Council on Foreign Relations in the United States, and parallel groups were set up in Canada, Australia, New Zealand, South Africa and India.^[35]

World War I had marked a monumental period in history in what can be understood as “transitional imperialism.”

What I mean by this is that historically, periods of imperial decline and transition (that is, the rise or fall of an empire or empires), are often marked by increased international violence and war.

World War I was the result of the culmination of imperial ambitions by various powers. This was the natural result of the wave of “New Imperialism” that swept the industrialized world in the 1870s. In 1879, the German Empire and Austria-Hungary created the Dual Alliance to combat growing Russian influence in the Balkans with the decline of the Ottoman Empire. Italy joined in 1882, making it the Triple Alliance.

In 1892, the Franco-Russia Alliance was made, which was a military alliance between France and the Russian Empire to counteract the German Empire’s supremacy over Europe. In 1904, the Entente Cordiale, a series of agreements between France and Britain, was agreed upon in order to maintain a balance of power in Europe.

In 1907, the Anglo-Russia Entente was formed in an effort to end their long-running Great Game by setting the boundaries of their imperial control over Afghanistan, Persia and Tibet. It also acted as a balance to the growing German Empire’s might and influence in Europe. After the signing of the Anglo-Russian Entente, the Triple Entente was cemented between Britain, Russia and France as a significant counter to the Triple Alliance.

The decline of the Ottoman Empire had been a long and slow process.

The Ottoman Empire dated back to 1299, and lasted until 1923.

“From 1517 until the end of World War I, a period of 400 years, the Ottoman Empire was the ruling power in the central Middle East. Ottoman administrative institutions and practices shaped the peoples of the modern Middle East and left a legacy that endured after the empire’s disappearance.”^[36]

In the late 16th century,

“Ottoman raw materials, normally channeled into internal consumption and industry, were increasingly exchanged for European manufactured products. This trade benefited Ottoman merchants but led to a decline in state revenues and a shortage of raw materials for domestic consumption. As the costs of scarce materials rose, the empire suffered from inflation, and the state was unable to procure sufficient revenues to meet its expenses. Without these revenues, the institutions that supported the Ottoman system, especially the armed forces, were undermined.”

This was largely done through commercial treaties known as Capitulations.

The first Capitulation,

“was negotiated with France in 1536; it allowed French merchants to trade freely in Ottoman ports, to be exempt from Ottoman taxes, and to import and export goods at low tariff rates. In addition, the treaty granted extraterritorial privileges to French merchants by permitting them to come under the legal jurisdiction of the French consul in Istanbul, thus making them subject to French rather than Ottoman-Islamic law. This first treaty was the model for subsequent agreements signed with other European states.”^[37]

The Ottoman state had been sufficiently weakened by the early 20th century, which happened to be the same time period that Europeans, particularly the British, were looking at Middle East oil to fuel their empires.

The major European alliances sought to take advantage of this weakened Ottoman position. In 1909, Austria-Hungary annexed Bosnia-Herzegovina, inciting the anger of the Russia Empire. The First Balkan War was fought between 1912 and 1913, in which Serbia, Montenegro, Greece and Bulgaria fought the Ottoman Empire. The settlement that followed angered Bulgaria, which then began to engage in territorial disputes with Serbia and Romania.

Bulgaria then attacked Greece and Serbia in 1913, followed by Romania and the Ottoman Empire declaring war against Bulgaria, which was the Second Balkan War.

This further destabilized the region, and Austria-Hungary grew wary of the growing influence of Serbia. When Austrian Archduke Franz Ferdinand was assassinated in 1914, Austria delivered an ultimatum to Serbia, where the assassin was from, and then declared war. The Russian Empire mobilized for war the next day, with German mobilization following behind, and France behind it. Germany then declared war on Russia, and World War I was under way.

The end of the Great War saw the disillusion of the Ottoman Empire, breaking up its territory, which was carved up between France and Britain at the Paris Peace Conference. The German Empire and Austro-Hungarian Empires also officially ended as a result of the war, for which Germany was given the sole blame for the war and punished through the Versailles reparations.

The Russian Empire ended with the Bolshevik Revolution, which resulted in Russia pulling out of the war in 1917, the same year the United States entered the war. The Great War turned the United States into a powerful nation in the world, becoming a leading creditor nation with significant international influence. The British and French maintained their empires, though they were in decline. However, they attempted to maintain significant control over the Middle East.

World War I was thus the culmination of a massive build-up of imperial nations seeking expanded influence and markets for their capital.

Entering the War, there were many empires, leaving it, there were two dominant European Empires (France and Britain) and an emerging new force in the world, the United States.



The Great Depression

The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin... Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again...

 

Take this great power away from them, and all great fortunes like mine will disappear, for then this would be a better and happier world to live in.... But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.^[38]
- Sir Josiah Stamp

Director of the Bank of England, 1927

Benjamin Strong, Governor of the Federal Reserve Bank of New York, and Montagu Norman, Governor of the Bank of England, who worked closely together throughout the 1920s, decided to,

“use the financial power of Britain and the United States to force all the major countries of the world to go on the gold standard and to operate it through central banks free from all political control, with all questions of international finance to be settled by agreements by such central banks without interference from governments.”

These men were not working for the governments and nations of whom they purportedly represented, but,

“were the technicians and agents of the dominant investment bankers of their own countries, who had raised them up and were perfectly capable of throwing them down.”^[39]

In the 1920s, the United States experienced a stock market boom, which was a result of the commercial banks providing “funds for the purchase of stock and took the latter as collateral,” creating a massive wave of underwriting and purchasing of securities.

The stock market speculation that followed was the result of the banks,

“borrowing substantially from the Federal Reserve. Thus the Federal Reserve System was helping to finance the great stock market boom.”^[40]

In 1927, a meeting took place in New York City between:

• Montagu Norman of the Bank of England

• Hjalmar Schacht, President of the Reichsbank, the German central bank of the Weimar Republic

• Charles Rist, Deputy Governor of the Bank of France

• Benjamin Strong of the New York Fed

The topic of the meeting was the,

“persistently weak reserve position of the Bank of England. This, the bankers thought, could be helped if the Federal Reserve System would ease interest rates to encourage lending. Holders of gold would then seek the higher returns from keeping their metal in London.”

The Fed obliged.^[41]

The Bank of England had a weak reserve position because of Britain’s position as champion of the gold standard.

Foreign central banks, including the Bank of France, were transferring their exchange holdings into gold, of which the Bank of England did not have enough to supply. So the Fed lowered its discount rate, and began buying securities to equal French gold purchases.

Money in the US, then,

“was going increasingly into stock-market speculation rather than into production of real wealth.”^[42]

In early 1929, the Federal Reserve board of governors “called upon the member banks to reduce their loans on stock-exchange collateral,” and took other actions with the publicly pronounced aim of reducing “the amount of credit available for speculation.”

Yet, it had the reverse effect, as “the available credit went more and more to speculation and decreasingly to productive business.” On September 26, 1929, London was hit with a financial panic, and the Bank of England raised its bank rate, causing British money to leave Wall Street, “and the over inflated market commenced to sag,” leading to a panic by mid-October.^[43]

The longest-serving Federal Reserve Chairman, Alan Greenspan, wrote that the Fed triggered the speculative boom through its pumping excess credit into the economy (sound familiar?), and eventually this resulted in the American and British economies collapsing due to the massive imbalances produced.

Britain then,

“abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's.”^[44]

The Bank for International Settlements
 

In 1929, the Young Committee was formed to create a program for the settlement of German reparations payments that emerged out of the Versailles Treaty, written at the Paris Peace talks in 1919.

The Committee was headed by Owen D. Young, founder of Radio Corporation of America (RCA), as a subsidiary of General Electric.

He was also President and CEO of GE from 1922 until 1939, co-author of the 1924 Dawes Plan, was appointed to the Board of Trustees of the Rockefeller Foundation in 1928, and was also, in 1929, deputy chairman of the New York Federal Reserve Bank. When Young was sent to Europe in 1929 to form the program for German reparations payments he was accompanied by J.P Morgan, Jr.^[45]

What emerged from the Committee was the creation of the Young Plan, which,

“was assertedly a device to occupy Germany with American capital and pledge German real assets for a gigantic mortgage held in the United States.”

Further, the Young Plan,

“increased unemployment more and more,” allowing Hitler to say he would “do away with unemployment,” which, “really was the reason of the enormous success Hitler had in the election.”^[46]

The Plan went into effect in 1930, following the stock market crash. Part of the Plan entailed the creation of an international settlement organization, which was formed in 1930, and known as the Bank for International Settlements (BIS). It was purportedly designed to facilitate and coordinate the reparations payments of Weimar Germany to the Allied powers.

However, its secondary function, which is much more secretive, and much more important, was to act as “a coordinator of the operations of central banks around the world.”

Described as “a bank for central banks,”

the BIS “is a private institution with shareholders but it does operations for public agencies. Such operations are kept strictly confidential so that the public is usually unaware of most of the BIS operations.”^[47]

The BIS was established,

“to remedy the decline of London as the world’s financial center by providing a mechanism by which a world with three chief financial centers in London, New York, and Paris could still operate as one.”^[48]

As Carroll Quigley explained:

[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences.

 

The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.^[49]

The BIS was founded by,

“the central banks of Belgium, France, Germany, Italy, the Netherlands, Japan, and the United Kingdom along with three leading commercial banks from the United States, including J.P. Morgan & Company, First National Bank of New York, and First National Bank of Chicago. Each central bank subscribed to 16,000 shares and the three U.S. banks also subscribed to this same number of shares.”

 

However, “Only central banks have voting power.”^[50]

In a letter dated November 21, 1933, President Franklin Roosevelt told Edward M. House,

“The real truth... is, as you and I know, that a financial element in the larger centers has owned the Government ever since the days of Andrew Jackson - and I am not wholly excepting the administration of W[oodrow]. W[ilson]. The country is going through a repetition of Jackson's fight with the Bank of the United States - only on a far bigger and broader basis.”^[51]

Banking on Hitler

Throughout the 1930s, with the loans provided through the Dawes and Young Plans, Germany was able to create a few dominant industrial cartels, which were all financed by Wall Street bankers and industrialists.^[52]

These cartels provided the basis for and main financial backing of the Nazi regime. Collaboration between the German Nazi industry and American industry and finance continued, specifically with Morgan and Rockefeller interests, as well as Ford and DuPont. The Morgan-Rockefeller international banks and companies associated with them “were intimately related to the growth of Nazi industry.”^[53]

Rockefeller’s Standard Oil Empire “was of critical assistance in helping Nazi Germany prepare for World War II.”^[54]

On top of this, the Rockefeller Foundation was also pivotal in not only funding the racist and elitist eugenics movement in the United States, but played a pivotal part in bringing the eugenics ideology to Nazi Germany, facilitating the beliefs that brought about the Holocaust.^[55]

Hjalmar Schacht, the President of the Reichsbank throughout Weimar Germany, stayed on as President of the German central bank from 1933 until 1939, and was thus a central figure in Nazi Germany, being a major driver being the German plans for reindustrialization, redevelopment and rearmament.

Hitler, in 1934, made Schacht his Minister of Economics.

Central banks across Europe began to purchase Nazi gold, which was smuggled and melted down and re-stamped in Switzerland, (much like was done with Soviet gold). Sweden, Spain, Portugal, Argentina, Turkey, France, Great Britain, Poland, Hungary, and the United States all “traded with the Nazis with gold transferred by the BIS.”

This was done as a collaborative effort among central banks, as,

“the BIS did enter into gold and currency transactions with Nazi Germany through its participation with the Reichsbank.” Schacht wielded his significant influence and “had become instrumental in placing high-ranking Nazi officials and foreign collaborators on the BIS Board of Directors.”^[56]

Empire, War and the Rise of the New Global Hegemon

World War Two also marked a period of massive imperial transition. The build-up of the Third Reich led to Nazi imperialism throughout Europe and North Africa and the Japanese Empire expanded into China.

At the end of the War, the British and French Empires were all but vanished, holding onto remaining colonies in Africa and Asia. The Soviet Union was devastated and Germany, with much of Europe, was in ruins. What emerged from this war that was most significant was the rise of a new empire, the American Empire. America’s intervention into the war and expansion into Europe as a liberating force allowed it to set up bases throughout Europe as well as in Japan on the Pacific.

The Soviet Union, having taken Europe from the East, expanded its influence and dominance across Eastern Europe. Following Churchill’s speech that an “Iron Curtain” had fallen across Europe, the Cold War was underway. Thus, World War II ended the age of many European empires, even of those in decline, and created a bi-polar world, which was divided between the USSR and the USA.

Following World War II, the US, as the only major nation in the world whose industrial base survived the devastation of the war, assumed the position of global hegemony. It began to set up the infrastructure, both national and international, to assume the position of global superpower, exerting its hegemony across the globe.

The crown had been passed from the British Empire to the American Empire. Ultimately, both were and are owned and controlled by the same interests, primarily represented through the central banks and the private banking interests that make up the dominant shareholders.

Before America had even entered the war in late 1941, the Council on Foreign Relations (CFR), the American branch of the round table groups Carroll Quigley discussed as having originated from the secret society of Cecil Rhodes, was planning on America entering the war. The CFR had essentially captured US foreign policy firmly in the grips of the banking elite.

The establishment of the Federal Reserve (1913) ensured that the United States would become indebted to and owned by international banking interests, and thus, act in their interest. The Fed financed the US role in World War I, provided the credit for speculation, which led to the Great Depression, and massive consolidation for the interests that own the Federal Reserve System. It then financed US entry into World War II.

The CFR, established six years after the Federal Reserve was created, worked to promote an internationalist agenda on behalf of the international banking elite. It was to alter America’s conceptualization of its place within the world – from isolationist industrial nation to an engine of empire working for international banking and corporate American interests.

Where the Fed took control of money and debt, the CFR took control of the ideological foundations of such an empire – encompassing the corporate, banking, political, foreign policy, military, media, and academic elite of the nation into a generally cohesive overall world view. By altering one’s ideology to that of promoting such an internationalist agenda, the big money that was behind it would ensure one’s rise through government, industry, academia and media. The other major think tanks and policy institutions in the United States are also represented at the CFR.

They are constitutive of divisions within the elite, however, such divisions are predicated on the basis of how to use American imperial power, where to use it, on what basis to justify it, and other various methodological differences.

The divide amongst elites was never on the questions of: should we use American imperial power, why has America become an Empire, or should there even be an empire? If one takes such considerations to heart and questions these concepts, be it within the foreign policy establishment, intelligence, military, academia, finance, corporate world, or media; chances are, such a person is not a member of the CFR.

The CFR effectively undertook a policy coup d’état over American foreign policy with the Second World War. When war broke out, the Council began a “strictly confidential” project called the War and Peace Studies, in which top CFR members collaborated with the US State Department in determining US policy, and the project was entirely financed by the Rockefeller Foundation.^[57]

The post-War world was already being designed by members of the Council, who would go into government in order to enact these designs.

The policy of “containment” towards the Soviet Union that would define American foreign policy for nearly half a century was envisaged in a 1947 edition of Foreign Affairs, the academic journal of the Council on Foreign Relations. So too were the ideological foundations for the Marshall Plan and NATO envisaged at the Council on Foreign Relations, with members of the Council recruited to enact, implement and lead these institutions.^[58]

The Council also played a role in the establishment and promotion of the United Nations,^[59] which was subsequently built on land bought from John D. Rockefeller, Jr.^[60]



The Rise of the American Empire and Keynesian Political Economy

Within liberal political economy, a prominent individual and British economist, John Maynard Keynes, undertook the process of evolving liberal theory into what later became known as Keynesian economics.

Following in the footsteps of the dominance of the liberal order, in which the economic and political realms were viewed as separate, and necessarily so, Keynes sought to re-imagine the political-economic relationship. His work was largely influenced by the events leading up to and following the Great Depression, which was largely seen as a failure of the liberal economic order.

Keynes wanted to combine state and market forces, not rejecting the liberal notion of the “invisible hand,” however, relegated that to a more distinct area, and imagined a broader role for the state in the economy.

Keynes advocated for the state to act, or invest, when private individuals would not, in an effort to stave off financial or economic crises.

Thus, Keynes would argue, the state strengthens the market. A Marxist theorist would likely point to this as an example of how the state, within a capitalist society, functions as an institutional organ which protects the interests of the capitalist class. Keynes advocated a liberal international order composed of free markets, however he recommended state intervention domestically, particularly to protect jobs and control inflation.

Keynesian political economic theory served in large part as a basis for the creation of the Bretton-Woods System, established in 1944, and his concept of embedded liberalism (promotion of liberal international economy, and state intervention in domestic economy), reigned supreme until the 1970s.

In 1944, representatives of the 44 Allied nations met for the Bretton Woods conference (the United Nations Monetary and Financial Conference) in New Hampshire, in an effort to reorganize and regulate the international financial and monetary order following the war.

The UK was represented by John Maynard Keynes; with the American contingent represented by Harry Dexter White, an American economist and senior US Treasury department official. It was out of this conference that the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD), now part of the World Bank, and the General Agreement on Tariffs and Trade (GATT), now institutionalized in the World Trade Organization (WTO), originated.

They were designed to be the institutionalized economic foundations of exerting American hegemony across the globe; they were, in essence, engines of economic empire.

In 1947, President Harry Truman signed the National Security Act, which,

• created the position of Secretary of Defense overseeing the entire military establishment, and the Joint Chiefs of Staff

• created the CIA modeled on its war time incarnation of the Office of Strategic Services (OSS)

• created the National Security Council, headed by a National Security Adviser, and designed to give the President further advice on foreign affairs issues separate from the State Department.

Essentially, the Act created the basis for the national security state apparatus for empire building.

The founding of the CIA was urged by the War and Peace Studies Project of the Council on Foreign Relations in the early 1940s, and the architects of the CIA, designing the shape and organization of the Agency, as well as its functions; were all Wall Street lawyers, largely made up of members of the Council on Foreign Relations.

The Deputy Directors of the CIA for the first two decades were all “from the same New York legal and financial circles.”^[61]



Notes

[1] Edwin Black, Banking on Baghdad: Inside Iraq’s 7,000-Year History of War, Profit, and Conflict. John Wiley & Sons, Inc.: 2004: page 105
[2] Edwin Black, Banking on Baghdad: Inside Iraq’s 7,000-Year History of War, Profit, and Conflict. John Wiley & Sons, Inc.: 2004: page 107
[3] Patricia Goldstone, Aaronsohn's Maps: The Untold Story of the Man who Might Have Created Peace in the Middle East. Harcourt Trade, 2007: pages 21-22
[4] Patricia Goldstone, Aaronsohn's Maps: The Untold Story of the Man who Might Have Created Peace in the Middle East. Harcourt Trade, 2007: page 22
[5] Niall Ferguson, Empire: The Rise and Demise of the British World Order and the Lessons for Global Power. Perseus, 2002: pages 193-194
[6] Carroll Quigley, Tragedy and Hope: A History of the World in Our Time. The MacMillan Company: 1966: page 56
[7] Carroll Quigley, Tragedy and Hope: A History of the World in Our Time. The MacMillan Company: 1966: pages 499-500
[8] Herbert R. Lottman, Return of the Rothschilds: The Great Banking Dynasty Through Two Turbulent Centuries. I.B. Tauris, 1995: page 81
[9] Patricia Goldstone, Aaronsohn's Maps: The Untold Story of the Man who Might Have Created Peace in the Middle East. Harcourt Trade, 2007: pages 22-23
[10] Herbert R. Lottman, Return of the Rothschilds: The Great Banking Dynasty Through Two Turbulent Centuries. I.B. Tauris, 1995: pages 141-142
[11] Herbert R. Lottman, Return of the Rothschilds: The Great Banking Dynasty Through Two Turbulent Centuries. I.B. Tauris, 1995: pages 143-144
[12] Herbert R. Lottman, Return of the Rothschilds: The Great Banking Dynasty Through Two Turbulent Centuries. I.B. Tauris, 1995: pages 141-142
[13] NYT, Rockefeller To Aid Czar? New York Times: March 6, 1906
[14] Toyin Falola and Ann Genova, The Politics of the Global Oil Industry. Greenwood Publishing Group, 2005: page 215
[15] Antony C. Sutton, Wall Street and the Bolshevik Revolution. Buccaneer Books, New York, 1974: pages 16-17
[16] Antony C. Sutton, Wall Street and the Bolshevik Revolution. Buccaneer Books, New York, 1974: page 25
[17] Antony C. Sutton, Wall Street and the Bolshevik Revolution. Buccaneer Books, New York, 1974: page 34
[18] Antony C. Sutton, Wall Street and the Bolshevik Revolution. Buccaneer Books, New York, 1974: pages 25-26
[19] Antony C. Sutton, Wall Street and the Bolshevik Revolution. Buccaneer Books, New York, 1974: pages 71-73
[20] Antony C. Sutton, Wall Street and the Bolshevik Revolution. Buccaneer Books, New York, 1974: pages 89-90
[21] Antony C. Sutton, Wall Street and the Bolshevik Revolution. Buccaneer Books, New York, 1974: pages 73-77
[22] Antony C. Sutton, Wall Street and the Bolshevik Revolution. Buccaneer Books, New York, 1974: pages 82-83
[23] Antony C. Sutton, Wall Street and the Bolshevik Revolution. Buccaneer Books, New York, 1974: page 87
[24] Antony C. Sutton, Wall Street and the Bolshevik Revolution. Buccaneer Books, New York, 1974: pages 127-135
[25] Antony C. Sutton, Wall Street and the Bolshevik Revolution. Buccaneer Books, New York, 1974: pages 159-161
[26] Antony C. Sutton, Wall Street and the Bolshevik Revolution. Buccaneer Books, New York, 1974: pages 166-167
[27] Antony C. Sutton, Wall Street and the Bolshevik Revolution. Buccaneer Books, New York, 1974: pages 172-173
[28] Michael Kort, The Soviet Colossus: History and Aftermath. M.E. Sharpe, 2001: page 202
[29] Time, Russia & Recognition. Time Magazine: August 18, 1930: http://www.time.com/time/magazine/article/0,9171,789203,00.html
[30] Time, Everybody's Red Business. Time Magazine: June 9, 1930: http://www.time.com/time/magazine/article/0,9171,739474-5,00.html
[31] H.W. Brands, "He Is My Independent Self". The Washington Post: June 11, 2006: http://www.washingtonpost.com/wp-dyn/content/article/2006/06/08/AR2006060801104.html
[32] CFR, Continuing the Inquiry. History of CFR: http://www.cfr.org/about/history/cfr/inquiry.html
[33] Chatham House, CHATHAM HOUSE (The Royal Institute of International Affairs): Background. Chatham House History: http://www.chathamhouse.org.uk/about/history/
[34] Carroll Quigley, The Anglo-American Establishment. GSG & Associates, 1981: page 5
[35] Carroll Quigley, Tragedy and Hope: A History of the World in Our Time. The MacMillan Company: 1966: pages 132-133
[36] William L. Cleaveland, A History of the Modern Middle East (Boulder: Westview Press, 2004), 37-38
[37] William L. Cleaveland, A History of the Modern Middle East (Boulder: Westview Press, 2004), 49-50
[38] Ellen Hodgson Brown, Web of Debt. Third Millennium Press: 2007: Page 2
[39] Carroll Quigley, Tragedy and Hope: A History of the World in Our Time. The MacMillan Company: 1966: pages 326-327
[40] John Kenneth Galbraith, Money: Whence it Came, Where it Went (Boston: Houghton Mifflin Company, 1975), 173
[41] John Kenneth Galbraith, Money: Whence it Came, Where it Went (Boston: Houghton Mifflin Company, 1975), 174-175
[42] Carroll Quigley, Tragedy and Hope: A History of the World in Our Time. The MacMillan Company: 1966: page 342
[43] Carroll Quigley, Tragedy and Hope: A History of the World in Our Time. The MacMillan Company: 1966: page 344
[44] Alan Greenspan, “Gold and Economic Freedom” in Capitalism: The Unknown Ideal. (New York: Signet, 1967), 99-100
[45] Time, HEROES: Man-of-the-Year. Time Magazine: Jan 6, 1930: http://www.time.com/time/magazine/article/0,9171,738364-1,00.html
[46] Antony C. Sutton, Wall Street and the Rise of Hitler. G S G & Associates Pub, 1976: pages 15-16
[47] James Calvin Baker, The Bank for International Settlements: evolution and evaluation. Greenwood Publishing Group, 2002: page 2
[48] Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (New York: Macmillan Company, 1966), 324-325
[49] Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (New York: Macmillan Company, 1966), 324
[50] James Calvin Baker, The Bank for International Settlements: evolution and evaluation. Greenwood Publishing Group, 2002: page 6
[51] Melvin Urofsky and Paul Finkelman, A March of Liberty: A Constitutional History of the United States Volume II From 1877 to the Present 2nd Edition. Oxford University Press, 2002: pp. 674
[52] Antony C. Sutton, Wall Street and the Rise of Hitler. G S G & Associates Pub, 1976: pages 17-19
[53] Antony C. Sutton, Wall Street and the Rise of Hitler. G S G & Associates Pub, 1976: pages 19-20
[54] Antony C. Sutton, Wall Street and the Rise of Hitler. G S G & Associates Pub, 1976: page 51
[55] Edwin Black, Eugenics and the Nazis -- the California connection. The San Francisco Chronicle: November 9, 2003: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/11/09/ING9C2QSKB1.DTL
[56] James Calvin Baker, The Bank for International Settlements: evolution and evaluation. Greenwood Publishing Group, 2002: page 202
[57] CFR, War and Peace. CFR History: http://www.cfr.org/about/history/cfr/war_peace.html
[58] William P. Bundy, The History of Foreign Affairs. The Council on Foreign Relations, 1994: http://www.cfr.org/about/history/foreign_affairs.html
[59] CFR, War and Peace. CFR History: http://www.cfr.org/about/history/cfr/war_peace.html
[60] UN, 1945-1949. Sixty Years: A Pictorial History of the United Nations: http://www.un.org/issues/gallery/history/1940s.htm
[61] Peter Dale Scott, The Road to 9/11: Wealth, Empire, and the Future of America. (Berkeley: University of California Press, 2007), 12

Part 3
Controlling the Global Economy: Bilderberg, the Trilateral Commission and the Federal Reserve
August 3, 2009
 

The Bilderberg Group and the European Union Project

In 1954, the Bilderberg Group was founded in the Netherlands, which was a secretive meeting held once a year, drawing roughly 130 of the political-financial-military-academic-media elites from North America and Western Europe as,

“an informal network of influential people who could consult each other privately and confidentially.”^[1]

Regular participants include the CEOs or Chairman of some of the largest corporations in the world, oil companies such as Royal Dutch Shell, British Petroleum, and Total SA, as well as various European monarchs, international bankers such as David Rockefeller, major politicians, presidents, prime ministers, and central bankers of the world.^[2]

Joseph Retinger, the founder of the Bilderberg Group, was also one of the original architects of the European Common Market and a leading intellectual champion of European integration.

In 1946, he told the Royal Institute of International Affairs (the British counterpart and sister organization of the Council on Foreign Relations), that Europe needed to create a federal union and for European countries to “relinquish part of their sovereignty.”

Retinger was a founder of the European Movement (EM), a lobbying organization dedicated to creating a federal Europe.

Retinger secured financial support for the European Movement from powerful US financial interests such as the Council on Foreign Relations and the Rockefellers.^[3] However, it is hard to distinguish between the CFR and the Rockefellers, as, especially following World War II, the CFR’s main finances came from the Carnegie Corporation, Ford Foundation and most especially, the Rockefeller Foundation.^[4]

The Bilderberg Group acts as a,

“secretive global think-tank,” with an original intent to “to link governments and economies in Europe and North America amid the Cold War.”^[5]

One of the Bilderberg Group’s main goals was unifying Europe into a European Union.

Apart from Retinger, the founder of the Bilderberg Group and the European Movement, another ideological founder of European integration was Jean Monnet, who founded the Action Committee for a United States of Europe, an organization dedicated to promoting European integration, and he was also the major promoter and first president of the European Coal and Steel Community (ECSC), the precursor to the European Common Market.^[6]

Declassified documents (released in 2001) showed that,

“the US intelligence community ran a campaign in the Fifties and Sixties to build momentum for a united Europe. It funded and directed the European federalist movement.”^[7]

The documents revealed that,

“America was working aggressively behind the scenes to push Britain into a European state. One memorandum, dated July 26, 1950, gives instructions for a campaign to promote a fully-fledged European parliament. It is signed by Gen William J Donovan, head of the American wartime Office of Strategic Services, precursor of the CIA.”

 

Further, “Washington's main tool for shaping the European agenda was the American Committee for a United Europe, created in 1948. The chairman was Donovan, ostensibly a private lawyer by then,” and “The vice-chairman was Allen Dulles, the CIA director in the Fifties. The board included Walter Bedell Smith, the CIA's first director, and a roster of ex-OSS figures and officials who moved in and out of the CIA. The documents show that ACUE financed the European Movement, the most important federalist organization in the post-war years.”

 

Interestingly, “The leaders of the European Movement - Retinger, the visionary Robert Schuman and the former Belgian prime minister Paul-Henri Spaak - were all treated as hired hands by their American sponsors. The US role was handled as a covert operation. ACUE's funding came from the Ford and Rockefeller foundations as well as business groups with close ties to the US government.”^[8]

The European Coal and Steel Community was formed in 1951, and signed by France, West Germany, Italy, Belgium, Luxembourg and the Netherlands.

Newly released documents from the 1955 Bilderberg meeting show that a main topic of discussion was “European Unity,” and that,

“The discussion affirmed complete support for the idea of integration and unification from the representatives of all the six nations of the Coal and Steel Community present at the conference.”

 

Further, “A European speaker expressed concern about the need to achieve a common currency, and indicated that in his view this necessarily implied the creation of a central political authority.”

 

Interestingly, “A United States participant confirmed that the United States had not weakened in its enthusiastic support for the idea of integration, although there was considerable diffidence in America as to how this enthusiasm should be manifested. Another United States participant urged his European friends to go ahead with the unification of Europe with less emphasis upon ideological considerations and, above all, to be practical and work fast.”^[9]

Thus, at the 1955 Bilderberg Group meeting, they set as a primary agenda, the creation of a European common market.^[10]

In 1957, two years later, the Treaty of Rome was signed, which created the European Economic Community (EEC), also known as the European Community. Over the decades, various other treaties were signed, and more countries joined the European Community.

In 1992, the Maastricht Treaty was signed, which created the European Union and led to the creation of the Euro. The European Monetary Institute was created in 1994, the European Central Bank was founded in 1998, and the Euro was launched in 1999.

Etienne Davignon, Chairman of the Bilderberg Group and former EU Commissioner, revealed in March of 2009 that the Euro was debated and planned at Bilderberg conferences.^[11] This was an example of regionalism, of integrating an entire region of the world, a whole continent, into a large supranational structure.

This was one of the primary functions of the Bilderberg Group, which would also come to play a major part in other international issues.



Interdependence Theory

The theoretical justifications for integration and regionalism arrived in the 1960s with what is known as “interdependence theory.” One of its primary proponents was a man named Richard N. Cooper.

Two other major proponents of interdependence theory are Robert Keohane and Joseph Nye. Interdependence theory and theorists largely expand upon the notions raised by Keynes.

Richard Cooper wrote that, during the 1960s,

“there has been a strong trend toward economic interdependence among the industrial countries. This growing interdependence makes the successful pursuit of national economic objectives much more difficult.”

 

He also identified that “the objective of greater economic integration involves international agreements which reduce the number of policy instruments available to national authorities for pursuit of their economic objectives.”^[12]

 

Further, “Cooper argues that new policies are needed to address the unprecedented conditions of international interdependence.”^[13]

Cooper also opposed a return to mercantilist pursuits in order for nations to secure economic objectives, arguing that, “economic nationalism invited policy competition that is doomed to fail,” and thus concludes,

“that international policy coordination is virtually the only means to achieve national economic goals in an interdependent world.”^[14]

Keohane and Nye go into further analysis of interdependence, specifically focusing on how interdependence transforms international politics. They tend to frame their concepts in ideological opposition to international relations realists, who view the world, like mercantilists, as inherently anarchic. Keohane and Nye construct what is known as “complex interdependence,” in which they critique realism.

They analyze realism as consisting of two primary facets: that states are the main actors in the international arena, and that military force is central in international power.

They argue that,

“global economic interdependence has cast doubt on these assumptions. Transnational corporations and organizations born of economic integration now vie with states for global influence.”^[15]

Keohane and Nye also discuss the relevance and importance of international regimes in the politics of interdependence, defining regimes as “networks of rules, norms, and procedures that regularize behavior.”

They argue that,

“Regimes are affected by the distribution of power among states, but regimes, in turn, may critically influence the bargaining process among states.”^[16]

Again, this contests the realist and mercantilist notions of the international sphere being one of chaos, as a regime can produce and maintain order within the international arena.

Interdependence theorists tend to argue that interdependence has altered the world order in that it has become based upon cooperation and mutual interests, largely championing the liberal economic notion of a non-chaotic and cooperative international order in which all nations seek and gain a mutual benefit.

Ultimately, it justifies the continued process of global economic integration, while realist and mercantilist theorists, who interdependence theorists contest and debate, justify the use of force in the international arena in terms of describing it as inherently chaotic. In theory, the notions of mercantilism and liberalism are inimical to one another however, they are not mutually exclusive and are, in fact, mutually reinforcing.

Events throughout the 1970s are a clear example of this mutually reinforcing nature of mercantilist behavior on the part of states, and the “interdependence” of the liberal economic order.

As early mercantilist theorist Frederick List wrote in regards to integration and union,

“All examples which history can show are those in which the political union has led the way, and the commercial union has followed. Not a single instance can be adduced in which the latter has taken the lead, and the former has grown up from it.”^[17]

It would appear that the elites have chosen the road less traveled in the 20th century, with the Bilderberg Group pursuing integration and union in Europe by starting with commercial union and having political union follow.

This concept is also evident in the notions of interdependence theory, which focuses on global economic integration as changing the realist/mercantilist notions of a chaotic international order, as states and other actors become more cooperative through such economic ties.



Trilateralism

In the late 1960s, Western European economies (in particular West Germany) and Japan were rapidly developing and expanding.

Their currencies rose against the US dollar, which was pegged to the price of gold as a result of the Bretton Woods System, which, through the IMF, set up an international monetary system based upon the US dollar, which was pegged to gold.

However, with the growth of West Germany and Japan,

“by the late 1960s the system could no longer be expected to perform its previous function as a medium for international exchange, and as a surrogate for gold.”

On top of this, to maintain its vast empire, the US had developed a large balance-of-payments deficit.^[18]

Richard Nixon took decisive, and what many referred to as “protectionist” measures, and in 1971, ended the dollar’s link to gold, which,

“resulted in a devaluation of the dollar as it began to float against other currencies,” and “was meant to restore the competitiveness of the US economy,”^[19] as with devaluation, “U.S.-made goods would cost less to foreigners and foreign-made goods would be less competitive on the U.S. market.”

The second major action taken by Nixon was when he “slapped a ten percent surcharge on most imports into the United States,” which was to benefit U.S. manufacturing firms over foreign ones in competition for the U.S. market.

The result was that less imports from Asia were coming into the US, more US goods were sold in their markets at more competitive prices, forcing Japan and the European Economic Community (EEC) to relax their trade barriers to US products.^[20]

An article in Foreign Affairs, the journal of the Council on Foreign Relations, referred to Nixon’s New Economic Policy as,

“protectionist,” encouraging a “disastrous isolationist trend,”^[21] and that Nixon shattered “the linchpin of the entire international monetary system— on whose smooth functioning the world economy depends.”^[22]

Another article in Foreign Affairs explained that the Atlanticist, or internationalist faction of the US elite were in particular, upset with Nixon’s New Economic Policy, however, they,

“agreed on the diagnosis: the relative balance of economic strengths had so changed that the United States could no longer play the role of economic leader. But they also argued that further American unilateralism would fuel a spiral of defensive reactions that would leave all the Western economies worse off. Their suggested remedy, instead, was much more far-reaching coordination among all the trilateral [North American, European and Japanese] governments.”^[23]

There was a consensus within the American ruling class that the Bretton Woods System was in need of a change, but there were divisions among members in how to go about changing it.

The more powerful (and wealthy) international wing feared how US policies may isolate and alienate Western Europe and Japan, and they advocated that,

“The world economic roles of America must be reconciled with the growth to power of Europe and Japan. There must be fundamental reform of the international monetary system. There must be renewed efforts to reduce world trade barriers. The underlying U.S. balance of payments has deteriorated.”

However, Nixon “went much too far” as he alienated Western Europe and Japan.

In 1970, David Rockefeller became Chairman of the Council on Foreign Relations, while also being Chairman and CEO of Chase Manhattan. In 1970, an academic who joined the Council on Foreign Relations in 1965 wrote a book called Between Two Ages - America's Role in the Technetronic Era.

The author, Zbigniew Brzezinski, called for the formation of “A Community of the Developed Nations,” consisting of Western Europe, the United States and Japan.

Brzezinski wrote about how,

“the traditional sovereignty of nation states is becoming increasingly unglued as transnational forces such as multinational corporations, banks, and international organizations play a larger and larger role in shaping global politics.”

David Rockefeller had taken note of Brzezinski’s writings, and was “getting worried about the deteriorating relations between the U.S., Europe, and Japan,” as a result of Nixon’s economic shocks.

In 1972, David Rockefeller and Brzezinski “presented the idea of a trilateral grouping at the annual Bilderberg meeting.”

In July of 1972, seventeen powerful people met at David Rockefeller’s estate in New York to plan for the creation of the Commission. Also at the meeting was Brzezinski, McGeorge Bundy, the President of the Ford Foundation, (brother of William Bundy, editor of Foreign Affairs) and Bayless Manning, President of the Council on Foreign Relations.^[24]

So, in 1973, the Trilateral Commission was formed to address these issues.

A 1976 article in Foreign Affairs explained that,

“Trilateralism as a linguistic expression—and the Trilateral Commission—arose in the early 1970s from the reaction of the more Atlanticist part of the American foreign policy community to the belligerent and defensive unilateralism that characterized the foreign economic policy of the Nixon Administration.”^[25]

The Commission’s major concerns were to preserve for the “industrialized societies,” in other words, seek mutual gain for the Trilateral nations, and to construct “a common approach to the needs and demands of the poorer nations.”

However, this should be read as, “constructing a common approach to [dealing with] poorer nations.”

As well as this, the Commission would undertake,

“the coordination of defense policies and of policies toward such highly politicized issues as nuclear proliferation, terrorism, and aerial hijacking, and such highly politicized geographic areas as the Middle East or Southern Africa.”^[26]

Interestingly, interdependence theorist Joseph Nye is a member of the Trilateral Commission, as is Richard N. Cooper.^[27] Today, Joseph Nye is a member of the Board of Directors of the Council on Foreign Relations,^[28] and Richard N. Cooper was a Director of the Council on Foreign Relations from 1993-1994.^[29]

The end of the link of the dollar to gold meant that,

“the US was no longer subject to the discipline of having to try to maintain a fixed par value of the dollar against gold or anything else: it could let the dollar move as the US Treasury [and ultimately, the Federal Reserve] wished and pointed towards the removal of gold from international monetary affairs.”

This created a dollar standard, as opposed to a gold standard, which,

“places the direction of the world monetary policy in the hands of a single country,” which was “not acceptable to Western Europe or Japan.”^[30]

Addressing this issue was among the reasoning behind the creation of the Trilateral Commission.



The Oil Crisis

The May 1973 meeting of the Bilderberg Group occurred five months prior to the extensive oil price rises brought about by the Yom Kippur War.

However, according to leaked minutes from the meeting, a 400% increase in the price of oil was discussed, and meeting participants were creating a “plan [on] how to manage the about-to-be-created flood of oil dollars.”^[31]

Oil is no issue foreign to the interests of the Bilderberg Group, as among the 1973 participants were the CEOs of Royal Dutch Shell, British Petroleum (BP), Total S.A., ENI, Exxon, as well as significant banking interests and individuals such as Baron Edmond de Rothschild and David Rockefeller, and the US Secretary of State at the time, Henry Kissinger.^[32]

In 1955, Henry Kissinger, a young scholar at the time, was brought into the Council on Foreign Relations, where he distinguished himself as a prominent Council member and became a protégé to Nelson Rockefeller, one of David Rockefeller’s brothers. In 1969, Kissinger became Richard Nixon’s National Security Adviser.^[33]

This Bilderberg meeting was taking place during a time of great international instability, particularly in the Middle East. Kissinger, as National Security Adviser, was in a power struggle with Secretary of State William Rogers over foreign policy.

Nixon even referred to the continual power struggle between Kissinger as National Security Advisor and Secretary of State William Rogers, saying that,

“Henry's personality problem is just too goddamn difficult for us to deal [with],” and that Kissinger’s “psychopathic about trying to screw [Secretary of State William] Rogers.”

Nixon even said that if Kissinger wins the struggle against Rogers, Kissinger would “be a dictator.” Nixon told his Chief of Staff, Haldeman, that Kissinger feels “he must be present every time I see anybody important.”^[34]

At the time of the Yom Kippur War, Nixon was in the middle of major domestic issues, as the Watergate scandal was breaking, leading to an increase in the power and influence of Kissinger, as,

“The president was deeply preoccupied, and at times incapacitated by self-pity or alcohol.”^[35]

By 1970, Kissinger had Rogers,

“frozen out of policy-making on Southeast Asia,” during the Vietnam War, so Rogers “concentrated on the Middle East.”

Eventually, Nixon had Rogers resign, and then Henry Kissinger took the position as both National Security Advisor and Secretary of State.^[36]

As Kissinger later said in a speech marking the 25th anniversary of the Trilateral Commission,

“In 1973, when I served as Secretary of State, David Rockefeller showed up in my office one day to tell me that he thought I needed a little help,” and that, “David’s function in our society is to recognize great tasks, to overcome the obstacles, to help find and inspire the people to carry them out, and to do it with remarkable delicacy.”

Kissinger finished his speech by saying,

“David, I respect you and admire you for what you have done with the Trilateral Commission. You and your family have represented what goes for an aristocracy in our country—a sense of obligation not only to make it materially possible, but to participate yourself in what you have made possible and to infuse it with the enthusiasm, the innocence, and the faith that I identify with you and, if I may say so, with your family.”^[37]

Kissinger sabotaged Rogers’ peace negotiations with Egyptian President Anwar Sadat, who, at the time, was trying to rally other Arab leaders against Israel. In 1972, King Faisal of Saudi Arabia had “insisted that oil should not be used as a political weapon.”

However,

“in 1973, Faisal announced that he was changing his mind about an oil embargo.”

Faisal held a meeting with western oil executives, warning them. Sadat told Faisal of the plan to attack Israel, and Faisal agreed to help both financially and with the “oil weapon.”

Days later, the Saudi oil minister, Sheik Ahmed Yamani,

“began dropping hints to the oil companies about a cutback in production that would affect the United States.”

Yamani said Henry Kissinger had been “misleading President Nixon about the seriousness of Faisal’s intentions.”^[38]

On October 4, the US National Security Agency (NSA),

“knew beyond a shadow of a doubt that an attack on Israel would take place on the afternoon of October 6.”

However, the Nixon White House,

“ordered the NSA to sit on the information,” until the US warned Israel a few hours before the attack, even though “Nixon’s staff had at least two days’ advance warning that an attack was coming on October 6.”^[39]

Hours before the attack on Israel by Syria and Egypt, the U.S. warned its Israeli counterparts, however,

“the White House insisted that the Israelis do nothing: no preemptive strikes, no firing the first shot. If Israel wanted American support, Kissinger warned, it could not even begin to mobilize until the Arabs invaded.”

Israeli Prime Minister Golda Meir stood Israeli defenses down, citing “Kissinger’s threats as the major reason.”

Interestingly, Kissinger himself was absent from his office on the day of the attack, and he knew days before when it was set to take place, yet, still went to the Waldorf Astoria in New York. Further, he waited three days before convening a U.N. Security Council meeting.^[40] The attack needed to go forward, as directed by the backdoor diplomacy of Kissinger.

With the outbreak of the Yom Kippur War on October 6, 1973, Kissinger “centered control of the crisis in his own hands.” After the Israelis informed the White House that the attack on them had taken place, Kissinger did not consult Nixon or even inform him on anything for three hours, who was at his retreat in Florida.

After talking to Nixon hours later, Kissinger told him that,

“we are on top of it here,” and “the president left matters in Kissinger's hands.”

Alexander Haig, Kissinger’s former second in command in the National Security Council, then Chief of Staff to Nixon, was with the President on that morning. Haig told Kissinger,

“that Nixon was considering returning to Washington, [but] Kissinger discouraged it—part of a recurring pattern to keep Nixon out of the process.”

For three days, it was Kissinger who,

“oversaw the diplomatic exchanges with the Israelis and Soviets about the war. Israeli prime minister Golda Meir's requests for military supplies, which were beginning to run low, came not to Nixon but to Kissinger.”

On October 11, the British Prime Minister called asking to speak to Nixon, to which Kissinger responded,

“Can we tell them no? When I talked to the President he was loaded,” but the British were told, “the prime minister could speak to Kissinger.”^[41]

On October 12, the major American oil companies sent a letter to Nixon suggesting the Arab countries “should receive some price increase,” and Nixon, following Kissinger’s advice, sent arms to Israel, which precipitated the Arab OPEC countries to announce a 70% increase in the price of oil on October 16th, and announce an oil embargo against the US on the 17th.^[42]

The Bilderberg meeting five months prior involved participants planning “how to manage the about-to-be-created flood of oil dollars.” At the meeting, an OPEC Middle East oil revenue rise of over 400% was predicted.

A Bilderberg document from the meeting stated that,

“The task of improving relations between energy importing countries should begin with consultations between Europe, the US and Japan. These three regions, which represented about 60 per cent of world energy consumption, accounted for an even greater proportion of world trade in energy products, as they absorbed 80 per cent of world energy exports.”

The same document also stated that,

“an energy crisis or an increase in energy costs could irremediably jeopardize the economic expansion of developing countries which had no resources of their own,” and the “misuse or inadequate control of the financial resources of the oil producing countries could completely disorganize and undermine the world monetary system.”^[43]

As economist F. William Engdahl noted in his book, A Century of War,

“One enormous consequence of the ensuing 400 per cent rise in OPEC oil prices was that investments of hundreds of millions of dollars by British Petroleum, Royal Dutch Shell [both present at Bilderberg] and other Anglo-American petroleum concerns in the risky North Sea could produce oil at a profit,” as “the profitability of these new North Sea oilfields was not at all secure until after the OPEC price rises.”^[44]

In 2001, the former Saudi representative to OPEC, Sheik Ahmed Yamani, said,

“'I am 100 per cent sure that the Americans were behind the increase in the price of oil. The oil companies were in real trouble at that time, they had borrowed a lot of money and they needed a high oil price to save them.”

When he was sent by King Faisal to the Shah of Iran in 1974, the Shah said that it was Henry Kissinger who wanted a higher price for oil.^[45]

An article in Foreign Policy, the journal published by the Carnegie Endowment for International Peace, concluded from exhaustive research, that,

“Since 1971, the United States has encouraged Middle East oil-producing states to raise the price of oil and keep it up.”

This conclusion was based upon State Department documents, congressional testimony and interviews with former policy-makers.^[46]

At the Eighth Petroleum Congress of the League of Arab States (Arab League) in 1972, James Akins, head of the fuel and energy section of the State Department, gave a speech in which he said that oil prices were,

“expected to go up sharply due to lack of short-term alternatives to Arab oil,” and that this was, “an unavoidable trend.”

A Western observer at the meeting said Akins’ speech was essentially,

“advocating that Arabs raise the price of oil to $5 per barrel.”

The oil industry itself was also becoming more unified in their position. The National Petroleum Council (NPC),

“a government advisory body representing oil industry interests, waited until Nixon was safely re-elected before publishing a voluminous series of studies calling for a doubling of U.S. oil and gas prices.”^[47]

The summer before the Yom Kippur War, in 1973, James Akins was made U.S. Ambassador to Saudi Arabia. He also happened to be a member of the Council on Foreign Relations.^[48]

Saudi Arabian minister for petroleum and representative to OPEC, Sheik Ahmed Yamani, stated in February of 1973, that,

“it is in the interests of the oil companies that prices be raised,” as “their profits are collected from the production stage.”

It was also in the interests of the US, as OPEC will have a massive increase in revenues to be invested, likely in the US, itself.^[49]

The oil companies themselves were also fearful of having their business facilities in OPEC countries nationalized, so they,

“were anxious to engage OPEC countries in the oil business in the United States, in order to give them an interest in maintaining the status quo.”

Weeks before war broke out, the National Security Council, headed by Kissinger, issued a statement saying that military intervention in the event of a war in the Middle East was “ruled out of order.”^[50]

U.S. Ambassador to Saudi Arabia, James Akins, later testified in congress on the fact that when, in 1975, the Saudis went to Iran to try to get the Shah to roll back the price of oil, they were told that Kissinger told the Iranians that, “the United States understood Iran’s desire for higher oil prices.”^[51]

Akins was removed from Saudi Arabia in 1975,

“following policy disputes with Secretary of State Henry Kissinger.”^[52]

The OPEC oil price increases resulted in the,

“removal of some withholding taxes on foreign investment” in the United States, “unchecked arms sales, which cannot be handled without U.S. support personnel, to Iran and Saudi Arabia,” as well as an “attempt to suppress publication of data on volume of OPEC funds on deposit with U.S. banks.”^[53]

Ultimately, the price increases,

“would be of competitive advantage to the United States because the economic damage would be greater to Europe and Japan.”

 

Interestingly, “Programs for sopping up petrodollars have themselves become justifications for the continued flow of U.S. and foreign funds to pay for higher priced oil. In fact, a lobby of investors, businessmen, and exporters [was] growing in the United States to favor giving the OPEC countries their way.”

Outside the United States, it is “widely believed” that the high-priced oil policy was aimed at hurting Europe, Japan, and the developing world.^[54]

There was also,

“input from the oil industry” which went “into the formulation of U.S. international oil policy.”^[55]

In 1974, when a White House official suggested to the Treasury to force OPEC to lower the price of oil, his idea was swept under, and he later stated that,

“It was the banking leaders who swept aside this advice and pressed for a ‘recycling’ program to accommodate to higher oil prices.”

In 1975, a Wall Street investment banker was sent to Saudi Arabia to be the main investment adviser to the Saudi Arabian Monetary Agency (SAMA), and,

“he was to guide the Saudi petrodollar investments to the correct banks, naturally in London and New York.”^[56]

In 1974, another OPEC oil price increase of more than 100 percent was undertaken, following a meeting in Tehran, Iran.

This initiative was undertaken by the Shah of Iran, who just months before was opposed to the earlier price increases.

Sheikh Yamani, the Saudi oil minister, was sent to meet with the Shah of Iran following his surprise decision to raise prices, as Yamani was sent by Saudi King Faisal, who was worried that higher prices would alienate the US, to which the Shah said to Yamani,

“Why are you against the increase in the price of oil? That is what they want? Ask Henry Kissinger - he is the one who wants a higher price.”^[57]

As Peter Gowan stated in The Globalization Gamble,

“the oil price rises were the result of US influence on the oil states and they were arranged in part as an exercise in economic statecraft directed against America’s ‘allies’ in Western Europe and Japan. And another dimension of the Nixon administration’s policy on oil price rises was to give a new role, through them, to the US private banks in international financial relations.”

He explained that the Nixon administration was pursuing a higher oil price policy two years before the Yom Kippur War, and,

“as early as 1972 the Nixon administration planned for the US private banks to recycle the petrodollars when OPEC finally did take US advice and jack up oil prices.”^[58]

Ultimately, the price rises had devastating impacts on Western Europe and Japan, which were quickly growing economies, but which were heavily dependent upon Middle eastern oil. This is an example of how the US, while championing a liberal international economic order, acted in a mercantilist fashion, depriving competitors through improving its own power and influence.

In 1973, David Rockefeller set up the Trilateral Commission to promote coordination and cooperation among Japan, Western Europe, and North America (namely, the US), yet, in the same year, his good friend and close confidante, Henry Kissinger, played a key role in promoting and orchestrating the oil price rises that had a damaging impact upon Japan and Western Europe.

Also it should be noted, David Rockefeller’s Chase Manhattan Bank, of which he was CEO at the time, profited immensely off of the petrodollar recycling system promoted by Henry Kissinger, where the OPEC countries would reinvest their new excess capital into the American economy through London and New York banks.

How does one account for these seemingly diametrically opposed initiatives? Perhaps the oil crisis, having a negative effect on Japan and Western European economies, could have spurred the necessity for cooperation among the trilateral countries, forcing them to come together and coordinate future policies.

It is of vital importance to understand the global conditions in which the price rises and its solutions arose, particularly in relation to the Third World. Africa, since the late 1800s, had been under European colonial control. It was from the 1950s to the 1960s that almost all African countries were granted independence from their European metropoles.

Africa is a very significant case to look at, as it is extremely rich in many resources, from agriculture to oil, minerals, and a huge variety of other resources used all around the world. If African nations were able to develop their own economies, use their own resources, and create their own industries and businesses, they could become self-sufficient at first, and then may become a force of great competition for the established industries and elites around the world.

After all, Europe does not have much to offer in terms of resources, as the continent’s wealth has largely come from plundering the resources of regions like Africa, and in becoming captains of monetary manipulation.

A revitalized, vibrant, economically independent and successful Africa could spell the end of Western financial dominance.

“Between 1960 and 1975 African industry grew at the annual rate of 7.5 per cent. This compared favorably with the 7.2 per cent for Latin America and 7.5 per cent for South-East Asia.”^[59]

In Africa,

“the 1960-73 period witnessed some important first steps in the process of industrialization,” however, “[t]he dramatic decline in rates of industrialization began to show after the first ‘oil crisis’. Between 1973 and 1984, the rate of growth” rapidly declined.^[60]

So, by manipulating the price of oil, you can manipulate the development of the Third World, which was beginning to look as if it could grow into significant competition, as it was experiencing exponential growth. There were two oil shocks in the 1970s; one in 1973 and another in 1979. Following the price rises, there was a need for the developing countries of the world to borrow money to finance development.

The banks that were getting massive amounts of petrodollars deposited into them from the oil producing countries needed to “recycle” the dollars by investing them somewhere, in order to make a profit.

Luckily for the banks,

“[d]eveloping countries were desperate for funds to help them industrialize their economies. In some cases, developing countries were oil consumers and required loans to help pay for rising oil prices. In other cases, a decision had been made to follow a strategy of indebted industrialization.

 

This meant that states borrowed money to invest in industrialization and would pay off the loans from the profits of their new industries. Loans were an attractive option because they did not come with the influence of foreign transnational corporations that accompanied foreign direct investment and most states had few funds of their own to invest.”^[61]

The oil price rises “changed the face of world finance,” as:

“In the new era of costly energy, scores of countries, not all of them in the Third World, were too strapped to pay their imported-oil bills. At the same time, Western banks suddenly received a rush of deposits from oil-producing nations. It seemed only logical, even humane, that the banks should recycle petrodollars.”

This is where the true face of Trilateralism began to show:

“It became an everyday event for one or two lead banks in the U.S. or Western Europe to round up dozens of partners by telephone to put together so-called jumbo syndicates for loans to developing countries. Some bankers were so afraid of missing out that during lunch hours they even empowered their secretaries to promise $5 million or $10 million as part of any billion-dollar loan package for Brazil or Mexico.”

Interestingly, these banks argued,

“that their foreign loans were encouraged by officials at the U.S. Treasury and Federal Reserve Board. They feared that developing countries would become economically and politically unstable if credit was denied. In 1976 Arthur Burns, chairman of the Federal Reserve, began cautioning bankers that they might be lending too much overseas, but he did nothing to curb the loans. For the most part, they ignored the warning. Financiers were confident that countries like Mexico, with its oil reserves, and Brazil, with abundant mineral resources, were good credit risks.”^[62]

According to a report produced by the Federal Reserve, prior to the 1973 oil crisis,

“the private Japanese financial system remained largely isolated from the rest of the world. The system was highly regulated,” and, “various types of banking firms and other financial service firms were legally and administratively confined to a specified range of activities assigned to each.”

 

However, the “OPEC oil shock in 1973 signaled a turning point in the operation of the Japanese financial system.”^[63]

As part of this turning point, the Bank of Japan (the central bank of Japan), relaxed,

“monetary control by lending more generously to the major banks. The result was a growing budget deficit and a rapid rise in inflation.”^[64]

The deregulation of Japanese banking access to foreign markets went hand-in-hand with the deregulation of domestic markets.

It was a two-way street; as Japanese industry and banks gained access to foreign markets, foreign industry and banks gained access to the Japanese market. This led to the growth of Japanese banks internationally, of which today many are among the largest banks in the world.

This was a result of the Trilateral Commission’s efforts. Also evident of the Trilateral partnership was that western banks,

“made loans so that poor countries could purchase goods made in Western Europe and North America.”^[65]

Of great significance was that,

“the new international monetary arrangements gave the United States government far more influence over the international monetary and financial relations of the world than it had enjoyed under the Bretton Woods system. It could freely decide the price of the dollar. And states would become increasingly dependent upon developments in Anglo-American financial markets for managing their international monetary relations.

 

And trends in these financial markets could be shifted by the actions (and words) of the US public authorities, in the Treasury Department and the Federal Reserve Board (the US Central Bank).”^[66]

This new system is referred to as the Dollar-Wall Street Regime (DWSR), as it is dependent upon the US dollar and the key actors on Wall Street.

The Federal Reserve’s response to the initial 1973-74 oil price shock was to keep interest rates low, which led to inflation and a devalued dollar. It’s also what allowed and encouraged banks to lend massive amounts to developing countries, often lending more than their net worth.

However, in 1979, with the second oil shock, the Federal Reserve changed policy, and the true nature of the original oil crisis, petrodollar recycling and loans became apparent.



The Rise of Neo-Liberalism
 

In the early 1970s, the government of Chile was led by a leftist socialist-leaning politician named Salvador Allende, who was considering undertaking a program of nationalization of industries, which would significantly affect US business interests in the country.

David Rockefeller expressed his view on the issue in his book, Memoirs, when he said that actions taken by Chile’s new government,

“severely restricted the operations of foreign corporations,” and he continued, saying, “I was so concerned about the situation that I met with Secretary of State William P. Rogers and National Security Advisor Henry Kissinger.”^[67]

As author Peter Dale Scott analyzed in his book, The Road to 9/11, David Rockefeller played a pivotal role in the events in Chile. After a failed attempt at trying to solve the ‘situation’ by sending David’s brother Nelson Rockefeller, the Governor of New York, down to Latin America, David Rockefeller attempted a larger operation.

David Rockefeller told the story of how his friend Agustin (Doonie) Edwards, the publisher of El Mercurio, had warned David that if Allende won the election, Chile would “become another Cuba, a satellite of the Soviet Union.”

David then put Doonie “in touch with Henry Kissinger.”^[68]

In the same month that Kissinger met with Edwards, the National Security Council (of which Kissinger held the top post) authorized CIA “spoiling operations” to prevent the election of Allende. David Rockefeller had known Doonie Edwards from the Business Group for Latin America (BGLA), which was founded by Rockefeller in 1963, later to be named the Council of the Americas.

Rockefeller founded it initially, in cooperation with the US government, “as cover for [CIA’s] Latin American operations.”

The US Assistant Secretary of State for Latin American Affairs at the time was Charles Meyer, formerly with Rockefeller’s BGLA, who said that he was chosen for his position at the State Department “by David Rockefeller.”

When Allende was elected on September 4, 1970, Doonie Edwards left Chile for the US, where Rockefeller helped him “get established” and the CEO of PepsiCo, Donald Kendall, gave him a job as a Vice President. Ten days later, Donald Kendall met with Richard Nixon, and the next day, Nixon, Kissinger, Kendall and Edwards had breakfast together.

Later that day, Kissinger arranged a meeting between Edwards and CIA director, Richard Helms. Helms met with both Edwards and Kendall, who asked the CIA to intervene.

Later that day, Nixon told Helms and Kissinger to “move against Allende.” ^[69]

However, before Edwards met with the CIA director, Henry Kissinger had met privately with,

“David Rockefeller, chairman of the Chase Manhattan Bank, which had interests in Chile that were more extensive than even Pepsi-Cola’s.” Rockefeller even allowed the CIA to use his bank for “anti-Allende Chilean operations.” ^[70]

After Allende came to power,

“commercial banks, including Chase Manhattan, Chemical, First National City, Manufacturers Hanover, and Morgan Guaranty, cancelled credits to Chile,” and the “World Bank, Inter-American Development Bank, Agency for International Development, and the Export-Import Bank either cut programs in Chile or cancelled credits.”

 

However, “military aid to Chile, which has always been substantial, doubled in the 1970-1974 period as compared to the previous four years.”^[71]

On September 11, 1973, General Augusto Pinochet orchestrated a coup d’état, with the aid and participation of the CIA, against the Allende government of Chile, overthrowing it and installing Pinochet as dictator. The next day, an economic plan for the country was on the desks of “the General Officers of the Armed Forces who performed government duties.”

The plan entailed,

“privatization, deregulation and cuts to social spending,” written up by “U.S.-trained economists.”^[72]

These were the essential concepts in neoliberal thought, which, through the oil crises of the 1970s, would be forced upon the developing world through the World Bank and IMF.

In essence, Chile was the neo-liberal Petri-dish experiment. This was to expand drastically and become the very substance of the international economic order.



Globalization - A Liberal-Mercantilist Economic Order?

 

Neo-Liberals Take the Forefront
In 1971, Jimmy Carter, a somewhat obscure governor from Georgia had started to have meetings with David Rockefeller. They became connected due to Carter’s support from the Atlanta corporate elite, who had extensive ties to the Rockefellers.

So in 1973, when David Rockefeller and Zbigniew Brzezinski were picking people to join the Trilateral Commission, Carter was selected for membership. Carter thus attended every meeting, and even paid for his trip to the 1976 meeting in Japan with his campaign funds, as he was running for president at the time. Brzezinski was Carter’s closest adviser, writing Carter’s major campaign speeches.^[73]

When Jimmy Carter became President, he appointed over two-dozen members of the Trilateral Commission to key positions in his cabinet, among them,

• Zbigniew Brzezinski, who became National Security Adviser

• Samuel P. Huntington, Coordinator of National Security and Deputy to Brzezinski

• Harold Brown, Secretary of Defense

• Warren Christopher, Deputy Secretary of State

• Walter Mondale, Vice President

• Cyrus Vance, Secretary of State

• in 1979, he appointed David Rockefeller’s friend, Paul Volcker, as Chairman of the Federal Reserve Board.^[74]

In 1979, the Iranian Revolution spurred another massive increase in the price of oil. The Western nations, particularly the United States, had put a freeze on Iranian assets,

“effectively restricting the access of Iran to the global oil market, the Iranian assets freeze became a major factor in the huge oil price increases of 1979 and 1981.”^[75]

Added to this, in 1979, British Petroleum cancelled major oil contracts for oil supply, which along with cancellations taken by Royal Dutch Shell, drove the price of oil up higher.^[76]

However, in 1979, the Federal Reserve, now the lynch-pin of the international monetary system, which was awash in petro-dollars (US dollars) as a result of the 1973 oil crisis, decided to take a different action from the one it had taken earlier.

In August of 1979,

“on the advice of David Rockefeller and other influential voices of the Wall Street banking establishment, President Carter appointed Paul A. Volcker, the man who, back in August 1971, had been a key architect of the policy of taking the dollar off the gold standard, to head the Federal Reserve.”^[77]

Volcker got his start as a staff economist at the New York Federal Reserve Bank in the early 50s.

After five years there,

“David Rockefeller’s Chase Bank lured him away.”^[78]

So in 1957, Volcker went to work at Chase, where Rockefeller,

“recruited him as his special assistant on a congressional commission on money and credit in America and for help, later, on an advisory commission to the Treasury Department.”^[79]

In the early 60s, Volcker went to work in the Treasury Department, and returned to Chase in 1965 “as an aide to Rockefeller, this time as vice president dealing with international business.”

With Nixon entering the White House, Volcker got the third highest job in the Treasury Department. This put him at the center of the decision making process behind the dissolution of the Bretton Woods agreement.^[80] In 1973, Volcker became a member of Rockefeller’s Trilateral Commission. In 1975, he got the job as President of the New York Federal Reserve Bank, the most powerful of the 12 branches of the Fed.

In 1979, Carter gave the job of Treasury Secretary to Arthur Miller, who had been Chairman of the Fed. This left an opening at the Fed, which was initially offered by Carter to David Rockefeller, who declined, and then to A.W. Clausen, Chairman of Bank of America, who also declined. Carter repeatedly tried to get Rockefeller to accept, and ultimately Rockefeller recommended Volcker for the job.^[81]

Volcker became Chairman of the Federal Reserve System, and immediately took drastic action to fight inflation by radically increasing interest rates.

The world was taken by shock. This was not a policy that would only be felt in the US with a recession, but was to send shock waves around the world, devastating the Third World debtor nations. This was likely the ultimate aim of the 1970s oil shocks and the 1979 Federal Reserve shock therapy. With the raising of interest rates, the cost of international money also rose.

Thus, the interest rates on international loans made throughout the 1970s rose from 2% in the 1970s to 18% in the 1980s, dramatically increasing the interest charges on loans to developing countries.^[82]

In the developing world, states that had to import oil faced enormous bills to cover their debts, and even oil producing countries, such as Mexico, faced huge problems as they had borrowed heavily in order to industrialize, and then suffered when oil prices fell again as the recession occurring in the developed states reduced demand.

Thus, in 1982, Mexico declared that it could no longer pay its debt, meaning that,

“they could no longer cover the cost of interest payments, much less hope to repay the debt.”

The result was the bursting of the debt bubble.

Banks then halted their loans to Mexico, and

“Before long it was evident that states such as Brazil, Venezuela, Argentina, and many sub-Saharan African countries were in equally difficult financial positions.”^[83]

The IMF and World Bank entered the scene newly refurnished with a whole new outlook and policy program designed just in time for the arrival of the debt crisis.

The IMF,

“negotiated standby loans with debtors offering temporary assistance to states in need. In return for the loans states agreed to undertake structural adjustment programs (SAPs). These programs entailed the liberalization of economies to trade and foreign investment as well as the reduction of state subsidies and bureaucracies to balance national budgets.”^[84]

Thus, the neoliberal project of 1973 in Chile was expanded into the very functioning of the International Financial Institutions (IFIs).

Neoliberalism is,

“a particular organization of capitalism, which has evolved to protect capital(ism) and to reduce the power of labour. This is achieved by means of social, economic and political transformations imposed by internal forces as well as external pressure,” and it entails the “shameless use of foreign aid, debt relief and balance of payments support to promote the neoliberal program, and diplomatic pressure, political unrest and military intervention when necessary.”^[85]

Further,

“neoliberalism is part of a hegemonic project concentrating power and wealth in elite groups around the world, benefiting especially the financial interests within each country, and US capital internationally. Therefore, globalization and imperialism cannot be analysed separately from neoliberalism.”^[86]

Joseph Stiglitz, former Chief Economist of the World Bank, wrote in his book, Globalization and its Discontents,

“In the 1980s, the Bank went beyond just lending for projects (like roads and dams) to providing broad-based support, in the form of structural adjustment loans; but it did this only when the IMF gave its approval – and with that approval came IMF-imposed conditions on the country.”^[87]

As economist Michel Chossudovsky wrote,

“Because countries were indebted, the Bretton Woods institutions were able to oblige them through the so-called ‘conditionalities’ attached to the loan agreements to appropriately redirect their macro-economic policy in accordance with the interests of the official and commercial creditors.”^[88]

The nature of SAPs is such that the conditions imposed upon countries that sign onto these agreements include: lowering budget deficits, devaluing the currency, limiting government borrowing from the central bank, liberalizing foreign trade, reducing public sector wages, price liberalization, deregulation and altering interest rates.^[89]

For reducing budget deficits,

“precise ‘ceilings’ are placed on all categories of expenditure; the state is no longer permitted to mobilize its own resources for the building of public infrastructure, roads, or hospitals, etc.”^[90]

Joseph Stiglitz wrote that,

“the IMF staff monitored progress, not just on the relevant indicators for sound macro-management – inflation, growth, and unemployment – but on intermediate variables, such as the money supply,” and that “In some cases the agreements stipulated what laws the country’s Parliament would have to pass to meet IMF requirements or ‘targets’ – and by when.”^[91]

 

Further, “The conditions went beyond economics into areas that properly belong in the realm of politics,” and that “the way conditionality was imposed made the conditions politically unsustainable; when a new government came into power, they would be abandoned. Such conditions were seen as the intrusion by the new colonial power on the country’s own sovereignty.”^[92]

“The phrase ‘Washington Consensus’ was coined to capture the agreement upon economic policy that was shared between the two major international financial institutions in Washington (IMF and World Bank) and the US government itself. This consensus stipulated that the best path to economic development was through financial and trade liberalization and that international institutions should persuade countries to adopt such measures as quickly as possible.”^[93]

The debt crisis provided the perfect opportunity to quickly impose these conditions upon countries that were not in a position to negotiate and with no time to spare, desperately in need of loans.

Without the debt crisis, such policies may have been subject to greater scrutiny, and with a case-by-case analysis of countries adopting SAPs, the world would become quickly aware of their dangerous implications. The debt crisis was absolutely necessary in implementing the SAPs on an international scale in a short amount of time.

The effect became quite clear, as the result,

“of these policies on the population of developing countries was devastating. The 1980s is known as the ‘lost decade’ of development. Many developing countries’ economies were smaller and poorer in 1990 than in 1980. Over the 1980s and 1990s, debt in many developing countries was so great that governments had few resources to spend on social services and development.”^[94]

With the debt crisis, countries in the developing world were,

“[s]tarved of international finance, [and] states had little choice but to open their economies to foreign investors and trade.”^[95]

The “Third World” was recaptured in the cold grasp of economic colonialism under the auspices of neo-liberal economic theory.


A Return to Statist Theory
Since the 1970s, mercantilist thought had re-emerged in mainstream political-economic theory.

Under various names such as neo-mercantilism, economic nationalism or statism, they hold as vital the centrality of the state in the global political economy. Much “Globalization” literature puts an emphasis on the “decline of the state” in the face of an integrated international economic order, where borders are made illusory.

However, statist theory at least helps us understand that the state is still a vital factor within the global political economy, even in the midst of a neo-liberal economic order.

Within the neo-liberal economic order, it was the powerful western (primarily US and Western European) states that imposed neo-mercantilist or statist policies in order to protect and promote their interests within the global political economy. Some of these methods were revolved around policy tools such as export subsidies, imposed to lower the price of goods, which would make them more attractive to importers, giving that particular nation an advantage over the competition.

For example, the US has enormous agriculture export subsidies, which make US agriculture and grain an easily affordable, attractive and accessible commodity for importing nations. Countries of the global south (the Lesser-Developed Countries, LDCs), subject to neo-liberal policies imposed upon them by the World Bank and IMF were forced to open their economies up to foreign capital.

The World Bank would bring in heavily subsidized US grain to these poor nations under the guise of “food aid,” which would have the affect of destabilizing the nation’s agriculture market, as the heavily subsidized US grains would be cheaper than local produce, putting farmers out of business. Most LDCs are predominantly rural based, so when the farming sector is devastated, so too is the entire nation.

They plunge into economic crisis and even famine.

With the statist approach, theorists examine how the state is still relevant in shaping economic outcomes and still remains a powerful entity in the international arena. One theorist who is prominent within the statist school is Robert Gilpin. Gilpin, a professor at the Woodrow Wilson School of Public and International Affairs at Princeton, is also a member of the Council on Foreign Relations.

In his book, Global Political Economy, Gilpin postulated that multinational corporations were an invention of the United States, and indeed an “American phenomenon” upon which European and Asian states responded by internationalizing their own firms. In this sense, his theory postulated to a return to the competitive nature of mercantilist economic theory, in which one state gains at the expense of another.

He also addresses the nature of the international economy, in that both historically and presently, there was a single state acting as the main enforcer and manager of the global economy. Historically, it was Britain, and presently, it was the United States.

One cannot deny the significance of the state in the global political economy, as it has been, and still remains very relevant. The events of 1973 are exemplary of this, however, more must be examined in order to better understand the situation. Though states are still prominent actors, it is vital to address in whose interest they act.

Mercantilist and statist theorists tend to focus on the concept that states act in their own selfish interest, for the benefit of the state, both politically and economically. However, this is somewhat linear and diversionary, as it does not address the precise structure of the state economy, specifically in terms of its monetary and central banking system.

States, most especially the large hegemonic ones, such as the United States and Great Britain, are controlled by the international central banking system, working through secret agreements at the Bank for International Settlements (BIS), and operating through national central banks (such as the Bank of England and the Federal Reserve).

The state is thus owned by an international banking cartel, and though the state acts in such a way that proves its continual relevance in the global economy, it acts so not in terms of self-interest for the state itself, but for the powerful interests that control that state. The same international banking cartel that controls the United States today previously controlled Great Britain and held it up as the international hegemony.

When the British order faded, and was replaced by the United States, the US ran the global economy. However, the same interests are served. States will be used and discarded at will by the international banking cartel; they are simply tools.

In this sense, interdependence theory, which presumes the decline of the state in international affairs, fails to acknowledge the role of the state in promoting and undertaking the process of interdependence.

The decline of the nation-state is a state-driven process, and is a process that leads to a rise of the continental state and the global state. States, are still very relevant, but both liberal and mercantilist theorists, while helpful in understanding the concepts behind the global economy, lay the theoretical groundwork for a political economic agenda being undertaken by powerful interests.

Like Robert Cox said,

“Theory is always for someone and for some purpose.”
 

Hegemonic-Stability Theory
In his book, Global Political Economy, Gilpin explained that,

“In time, if unchecked, the integration of an economy into the world economy, the intensifying pressures of foreign competition, and the necessity to be efficient in order to survive economically could undermine the independence of a society and force it to adopt new values and forms of social organization. Fear that economic globalization and the integration of national markets are destroying or could destroy the political, economic, and cultural autonomy of national societies has become widespread.”^[96]

However, Gilpin explains that the,

“Creation of effective international regimes and solutions to the compliance problem require both strong international leadership and an effective international governance structure.”

 

Yet, he explains, “Regimes in themselves cannot provide governance structure because they lack the most critical component of governance – the power to enforce compliance. Regimes must rest instead on a political base established through leadership and cooperation.”^[97]

This is where we see the emergence of Hegemonic Stability Theory.

Gilpin explains that,

“The theory of hegemonic stability posits that the leader or hegemony facilitates international cooperation and prevents defection from the rules of the regime through use of side payments (bribes), sanctions, and/or other means, but can seldom, if ever, coerce reluctant states to obey the rules of a liberal international economic order.”

 

As he explained, “The American hegemony did indeed play a crucial role in establishing and managing the world economy following World War II.”^[98]

The roots of Hegemonic Stability Theory (HST) lie within both liberal and statist theory, as it is representative of a crossover theory that cannot be so easily placed in either category.

The main concept champions the liberal notion of the open international economic system, guided by liberal principles of open-markets and free trade, while bringing in the statist concept of a single hegemonic state representing the concentration of political and economic power, as it is the enforcer of the liberal international economy.

The more liberal-leaning theorists of HST argue that a liberal economic order requires a strong, hegemonic state to maintain the smooth functioning of the international economy.

One thing this state must do is maintain the international monetary system, as Britain did under the gold standard and the United States did under the Dollar-Wall Street Regime, following the end of the Bretton-Woods dollar-gold link.


Regime Theory
Regime Theory is another crossover theory between liberal and mercantilist theorists.

Its rise was primarily in reaction to the emergence of Hegemonic Stability Theory, in order to address the concern of a perceived decline in the power of the US. This was due to the rise of new economic powers in the 1970s, and another major purveyor of this theory was Robert Keohane.

They needed to address how the international order could be maintained as the hegemonic power declined. The answer was in the building of international organizations to manage the international regime.

In this sense, Regime Theory has identified an important aspect of the global political economy, in that though states have upheld the international order in the past, never before has there been such an undertaking to institutionalize the authority over the international order through international organizations.

These organizations, such as the World Bank, IMF, UN, and WTO, though still controlled and influenced by states, predominantly the international hegemony, the United States, represent a changing direction of internationalization and transnationalism.

Regime Theorists tend to justify the formation of a more transnational apparatus of power, beyond just a single hegemonic state, into a more internationalized structure of authority.



Notes

[1] CBC, Informal forum or global conspiracy? CBC News Online: June 13, 2006: http://www.cbc.ca/news/background/bilderberg-group/
[2] Holly Sklar, ed., Trilateralism: The Trilateral Commission and Elite Planning for World Management. (South End Press: 1980), 161-171
[3] Holly Sklar, ed., Trilateralism: The Trilateral Commission and Elite Planning for World Management. (South End Press: 1980), 161-162
[4] CFR, The First Transformation. CFR History: http://www.cfr.org/about/history/cfr/first_transformation.html
[5] Glen McGregor, Secretive power brokers meeting coming to Ottawa? Ottawa Citizen: May 24, 2006: http://www.canada.com/topics/news/world/story.html?id=ff614eb8-02cc-41a3-a42d-30642def1421&k=62840
[6] William F. Jasper, Rogues' gallery of EU founders. The New American: July 12, 2004: http://findarticles.com/p/articles/mi_m0JZS/is_14_20/ai_n25093084/pg_1?tag=artBody;col1
[7] Ambrose Evans-Pritchard, Euro-federalists financed by US spy chiefs. The Telegraph: June 19, 2001: http://www.telegraph.co.uk/news/worldnews/europe/1356047/Euro-federalists-financed-by-US-spy-chiefs.html
[8] Ambrose Evans-Pritchard, Euro-federalists financed by US spy chiefs. The Telegraph: June 19, 2001: http://www.telegraph.co.uk/news/worldnews/europe/1356047/Euro-federalists-financed-by-US-spy-chiefs.html
[9] Bilderberg Group, GARMISCH-PARTENKIRCHEN CONFERENCE. The Bilderberg Group: September 23-25, 1955, page 7: http://wikileaks.org/leak/bilderberg-meetings-report-1955.pdf
[10] Who are these Bilderbergers and what do they do? The Sunday Herald: May 30, 1999: http://findarticles.com/p/articles/mi_qn4156/is_19990530/ai_n13939252
[11] Andrew Rettman, 'Jury's out' on future of Europe, EU doyen says. EUobserver: March 16, 2009: http://euobserver.com/9/27778
[12] George T. Crane, Abla Amawi, The Theoretical evolution of international political economy. Oxford University Press US, 1997: page 110
[13] George T. Crane, Abla Amawi, The Theoretical evolution of international political economy. Oxford University Press US, 1997: page 107
[14] George T. Crane, Abla Amawi, The Theoretical evolution of international political economy. Oxford University Press US, 1997: pages 107-108
[15] George T. Crane, Abla Amawi, The Theoretical evolution of international political economy. Oxford University Press US, 1997: page 108
[16] George T. Crane, Abla Amawi, The Theoretical evolution of international political economy. Oxford University Press US, 1997: page 108
[17] George T. Crane, Abla Amawi, The Theoretical evolution of international political economy. Oxford University Press US, 1997: pages 50-51
[18] Holly Sklar, ed., Trilateralism: The Trilateral Commission and Elite Planning for World Management. South End Press: 1980: page 65
[19] Robert O’Brien and Marc Williams, Global Political Economy: Evolution and Dynamics, 2nd ed. Palgrave Macmillan: 2007: page 215
[20] Holly Sklar, ed., Trilateralism: The Trilateral Commission and Elite Planning for World Management. South End Press: 1980: pages 66-67
[21] Holly Sklar, ed., Trilateralism: The Trilateral Commission and Elite Planning for World Management. South End Press: 1980: page 67
[22] C. Fred Bergsten, The New Economics and US Foreign Policy. Foreign Affairs: January, 1972: page 199
[23] Richard H. Ullman, Trilateralism: “Partnership” For What? Foreign Affairs: October, 1976: pages 3-4
[24] Holly Sklar, ed., Trilateralism: The Trilateral Commission and Elite Planning for World Management. South End Press: 1980: pages 76-78
[25] Richard H. Ullman, Trilateralism: “Partnership” For What? Foreign Affairs: October, 1976: page 3
[26] Richard H. Ullman, Trilateralism: “Partnership” For What? Foreign Affairs: October, 1976: page 5
[27] Congressional Research Service, TRILATERAL COMMISSION. The Library of Congress: pages 13-14: http://www.scribd.com/doc/5014337/Trilateral-Commission
[28] CFR, Joseph S. Nye, Jr.. Board of Directors: http://www.cfr.org/bios/1330/joseph_s_nye_jr.html
[29] Annual Report, The Council on Foreign Relations. Historical Roster of Directors and Officers, 2008: page 78
[30] Peter Gowan, The Globalization Gamble: The Dollar-Wall Street Regime and its Consequences. Page 19-20
[31] William Engdahl, A Century of War: Anglo-American Oil Politics and the New World Order. (London: Pluto Press, 2004), 130-132
[32] William Engdahl, A Century of War: Anglo-American Oil Politics and the New World Order. (London: Pluto Press, 2004), 286-287, 134
[33] CFR, “X” Leads the Way. CFR History: http://www.cfr.org/about/history/cfr/x_leads.html
[34] Robert Dallek, The Kissinger Presidency. Vanity Fair: May 2007: http://www.vanityfair.com/politics/features/2007/05/kissinger200705
[35] Ibid.
[36] David Stout, William P. Rogers, Who Served as Nixon's Secretary of State, Is Dead at 87. The New York Times: January 4, 2001: http://query.nytimes.com/gst/fullpage.html?res=9B02E5D6113BF937A35752C0A9679C8B63
[37] TC, Tributes to David Rockefeller, Founder and Honorary Chairman. The Trilateral Commission: December 1, 1998: http://www.trilateral.org/nagp/regmtgs/98/1201tribs.htm
[38] John Loftus and Mark Aarons, The Secret War Against the Jews: How Western Espionage Betrayed the Jewish People. St. Martin’s Griffin: 1994: pages 304-307
[39] John Loftus and Mark Aarons, The Secret War Against the Jews: How Western Espionage Betrayed the Jewish People. St. Martin’s Griffin: 1994: pages 308-310
[40] John Loftus and Mark Aarons, The Secret War Against the Jews: How Western Espionage Betrayed the Jewish People. St. Martin’s Griffin: 1994: pages 310-311
[41] Robert Dallek, The Kissinger Presidency. Vanity Fair: May 2007: http://www.vanityfair.com/politics/features/2007/05/kissinger200705
[42] John Loftus and Mark Aarons, The Secret War Against the Jews: How Western Espionage Betrayed the Jewish People. St. Martin’s Griffin: 1994: pages 312-313
[43] F. William Engdahl, A Century of War: Anglo-American Oil Politics and the New World Order. London: Pluto Press, 2004: pages 130-132
[44] F. William Engdahl, A Century of War: Anglo-American Oil Politics and the New World Order. London: Pluto Press, 2004: pages 136-137
[45] The Observer, Saudi dove in the oil slick. The Guardian: January 14, 2001: http://www.guardian.co.uk/business/2001/jan/14/globalrecession.oilandpetrol
[46] V.H. Oppenheim, Why Oil Prices Go Up (1) The Past: We Pushed Them. Foreign Policy: No. 25, Winter, 1976-1977: page 24
[47] V.H. Oppenheim, Why Oil Prices Go Up (1) The Past: We Pushed Them. Foreign Policy: No. 25, Winter, 1976-1977: pages 31-33
[48] IPC, James Akins. Iran Policy Committee: Scholars and Fellows: http://www.iranpolicy.org/scholarsandfellows.php#1
[49] V.H. Oppenheim, Why Oil Prices Go Up (1) The Past: We Pushed Them. Foreign Policy: No. 25, Winter, 1976-1977: pages 35-36
[50] V.H. Oppenheim, Why Oil Prices Go Up (1) The Past: We Pushed Them. Foreign Policy: No. 25, Winter, 1976-1977: pages 37-38
[51] V.H. Oppenheim, Why Oil Prices Go Up (1) The Past: We Pushed Them. Foreign Policy: No. 25, Winter, 1976-1977: page 44
[52] Time, The Cast of Analysts. Time Magazine: March 12, 1979: http://www.time.com/time/magazine/article/0,9171,948424,00.html
[53] V.H. Oppenheim, Why Oil Prices Go Up (1) The Past: We Pushed Them. Foreign Policy: No. 25, Winter, 1976-1977: page 48
[54] V.H. Oppenheim, Why Oil Prices Go Up (1) The Past: We Pushed Them. Foreign Policy: No. 25, Winter, 1976-1977: pages 50-51
[55] V.H. Oppenheim, Why Oil Prices Go Up (1) The Past: We Pushed Them. Foreign Policy: No. 25, Winter, 1976-1977: page 53
[56] F. William Engdahl, A Century of War: Anglo-American Oil Politics and the New World Order. London: Pluto Press, 2004: page 137
[57] The Observer, Saudi dove in the oil slick. The Guardian: January 14, 2001: http://www.guardian.co.uk/business/2001/jan/14/globalrecession.oilandpetrol
[58] Peter Gowan, The Globalization Gamble: The Dollar-Wall Street Regime and its Consequences: marxsite.com/Gowan_DollarWallstreetRegime.pdf: page 10
[59] Dharam Ghai, ed., The IMF and the South: The Social Impact of Crisis and Adjustment (London: United Nations Research Institute for Social Development, 1991), 81
[60] Dharam Ghai, ed., The IMF and the South: The Social Impact of Crisis and Adjustment (London: United Nations Research Institute for Social Development, 1991), 82
[61] Robert O’Brien and Marc Williams, Global Political Economy: Evolution and Dynamics, 2nd ed. Palgrave Macmillan: 2007: page 223
[62] Gisela Bolte, et. al., Jumbo Loans, Jumbo Risks. Time Magazine: December 3, 1984: http://www.time.com/time/magazine/article/0,9171,923771,00.html
[63] Allen B. Frankel and Paul B. Morgan, A Primer on the Japanese Banking System. Board of Governors of the Federal reserve System, International Finance Discussion Papers: Number 419, December 1991: page 3
[64] A. W. Mullineux, International Banking and Financial Systems: A Comparison. Springer, 1987: page 63
[65] Robert K. Schaeffer, Understanding Globalization: The Social Consequences of Political, Economic, and Environmental Change. Rowman & Littlefield, 2005: page 82
[66] Peter Gowan, The Globalization Gamble: The Dollar-Wall Street Regime and its Consequences: marxsite.com/Gowan_DollarWallstreetRegime.pdf: page 12
[67] David Rockefeller, Memoirs. New York: Random House: 2002: Page 431
[68] Peter Dale Scott, The Road to 9/11: Wealth, Empire, and the Future of America. University of California Press: 2007: page 39-40
[69] Peter Dale Scott, The Road to 9/11: Wealth, Empire, and the Future of America. University of California Press: 2007: page 41
[70] Peter Dale Scott, The Road to 9/11: Wealth, Empire, and the Future of America. University of California Press: 2007: pages 40-41
[71] Daniel Brandt, U.S. Responsibility for the Coup in Chile. Public Information Research: November 28, 1998: http://www.namebase.org/chile.html
[72] Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism. Macmillan: 2007: page 77
[73] Holly Sklar, ed., Trilateralism: The Trilateral Commission and Elite Planning for World Management. South End Press: 1980: pages 201-203
[74] Holly Sklar, ed., Trilateralism: The Trilateral Commission and Elite Planning for World Management. South End Press: 1980: pages 91-92
[75] Peter Dale Scott, The Road to 9/11: Wealth, Empire, and the Future of America. University of California Press: 2007: page 88
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