The Federal Advisory Council
In steamrolling the Federal Reserve Act through the House of
Representatives, Congressman Carter Glass declared on September 30,
1913 on the floor of the House that the interests of the public
would be protected by an advisory council of bankers.
"There can be
nothing sinister about its transactions. Meeting with it at least
four times a year will be a bankers’ advisory council representing
every regional reserve district in the system. How could we have
exercised greater caution in safeguarding the public interest?"
Carter Glass neither then nor later gave any substantiation for his
belief that a group of bankers would protect the interests of the
public, nor is there any evidence in the history of the United
States that any group of bankers has ever done so. In fact, the
Federal Advisory Council proved to be the "administrative process"
which Paul Warburg had inserted into the Federal Reserve Act to
provide just the type of remote but unseen control over the System
which he desired.
When he was asked by financial reporter C.W.
Barron, just after the Federal Reserve Act was enacted into law by
Congress, whether he approved of the bill as it was finally passed,
"Well, it hasn’t got quite everything we want, but
the lack can be adjusted later by administrative processes."
council proved to be the ideal vehicle for Warburg’s purposes, as it
has functioned for seventy years in almost complete anonymity, its
members and their business associations, unnoticed by the public.
Senator Robert Owen, chairman of the Senate Banking and Currency
Committee, had said, as quoted in The New York Times, August 3, 1913
before passage of the act:
"The Federal Reserve Act will furnish the bank and industrial and
commercial interests with the discount of qualified commercial paper
and thus stabilize our commercial and industrial life. The Federal
Reserve banks are not intended as money making banks, but to serve a
great national purpose of accommodating commerce and businessmen and
banks, safeguard a fixed market for manufactured goods, for
agricultural products and for labor.
There is no reason why the banks should be in control of the Federal
Reserve system. Stability will make our commerce expand healthfully
in every direction."
Senator Owen’s optimism was doomed by the domination of the Jekyll
Island promoters over the initial composition of the Federal Reserve
Not only did the Morgan-Kuhn, Loeb alliance purchase the
dominant control of stock in the Federal Reserve Bank of New York,
with almost half of the shares owned by the five New York banks
under their control,
but they also persuaded President Woodrow Wilson to appoint
one of the Jekyll Island group, Paul Warburg, to the
Board of Governors.
Each of the twelve Federal Reserve Banks was to elect a member of
the Federal Advisory Council, which would meet with the Federal
Reserve Board of Governors four times a year in Washington, in order
to "advise" the Board on future monetary policy.
This seemed to
assure absolute democracy, as each of the twelve "advisors",
representing a different region of the United States, would be
expected to speak up for the economic interests of his area, and
each of the twelve members would have an equal vote. The theory may
have been admirable in its concept, but the hard facts of economic
life resulted in a quite different picture.
The president of a small
bank in St. Louis or Cincinnati, sitting in conference with Paul
Warburg and J.P. Morgan to "advise" them on monetary policy, would
be unlikely to contradict two of the most powerful international
financiers in the world, as a scribbled note from either one of them
would be sufficient to plunge his little bank into bankruptcy. In
fact, the small banks of the twelve Federal Reserve districts
existed only as satellites of the big New York financial interests,
and were completely at their mercy.
Martin Mayer, in
points out that,
"J.P. Morgan maintained correspondent relationships
with many small banks all over the country."
30 Martin Mayer, The Bankers, Weybright and Talley, New York,
1974, p. 207
The big New York
banks did not confine themselves to multi-million dollar deals with
other great financial interests, but carried on many smaller and
more routine dealings with their "correspondent" banks across the
Apparently secure in their belief that their activities would never
be exposed to the public, the Morgan-Kuhn, Loeb interests boldly
selected the members of the Federal Advisory Council from their
correspondent banks and from banks in which they owned stock. No one
in the financial community seemed to notice, as nothing was said
about it during seventy years of the Federal Reserve System’s
To avoid any suspicion that New York interests might control the
Federal Advisory Council, its first president, elected in 1914 by
the other members, was J.B. Morgan, president of the First National
Chicago. Rand McNally Bankers Directory for 1914 lists the principal
correspondents of the large banks. The principal correspondent bank
of the Baker-Morgan controlled First National Bank of New York is
listed as the First National Bank of Chicago.
correspondent listed by the First National Bank of Chicago is the
Bank of Manhattan in New York, controlled by Jacob Schiff and
Warburg of Kuhn, Loeb Company. James P. Morgan also was listed as a
director of Equitable Life Insurance Company, also controlled by
Morgan. However, the relationship between First National Bank of
Chicago and these New York banks was even closer than these listings
On page 701 of
The Growth of Chicago Banks by F. Cyril James, we
find mention of
"the First National Bank of Chicago’s profitable
connection with the Morgan interests. A goodwill ambassador was
hastily sent to New York to invite George F. Baker to become a
director of the First National Bank of Chicago."
(J.B. Forgan to
Ream, January 7, 1903.)
31 F. Cyril James, The Growth of Chicago Banks, Harper, New
In effect, Baker and Morgan had personally
chosen the first president of the Federal Advisory Council.
James P. Morgan (1852-1924) also shows the obligatory "London
Connection" in the operation of the Federal Reserve System. Born in
St. Andrew’s, Scotland, he began his banking career there with the
Royal Bank of Scotland, a correspondent of the Bank of England. He
came to Canada for the Bank of British North America, worked for the
Bank of Nova Scotia, which sent him to Chicago in the 1880’s, and by
1900 he had become president of the First National Bank of Chicago.
He served for six years as president of the Federal Advisory
Council, and when he left the council, he was replaced by Frank O.
Wetmore, who had also replaced him as president of the First
National Bank of Chicago when Morgan was named chairman of the
Representing the New York Federal Reserve district on the first
Federal Advisory Council was J.P. Morgan. He was named chairman of
the Executive Committee. Thus, Paul Warburg and J.P. Morgan sat in
conference at the meetings of the Federal Reserve Board during the
first four years of its operation, surrounded by the other Governors
and members of the council, who could hardly have been unaware that
their futures would be guided by these two powerful bankers.
Another member of the Federal Advisory Council in 1914 was Levi L.
Rue, representing the Philadelphia district. Rue was president of
the Philadelphia National Bank. Rand McNally Bankers Directory of
1914 listed as principal correspondent of the First National Bank of
the Philadelphia National Bank. First National Bank of Chicago also
listed Philadelphia National Bank as its principal correspondent in
Philadelphia. The other members of the Federal Advisory Council
included Daniel S. Wing, president of the First National Bank of
Boston, W.S. Rowe, president of the First National Bank of
Cincinnati, and C.T. Jaffray, president of the First National Bank
of Minneapolis. These were all correspondent banks of the New York
"big five" banks who controlled the money market in the United
Jaffray had an even closer connection with the Baker-Morgan
interests. In 1908, to reinvest the large annual dividends from
their First National Bank of New York stock, Baker and Morgan set up
a holding company, First Security Corporation, which bought 500
shares of the First National Bank of Minneapolis. Thus Jaffray was
little more than a wage-earning employee of Baker and Morgan,
although he had been "selected" by stockholders of the Federal
Reserve Bank of Minneapolis to represent their interests.
Security Corporation also owned:
50,000 shares of Chase National
5400 shares of National Bank of Commerce
2500 shares of
928 shares of Liberty National Bank, the bank of
which Henry P. Davison had been president when he was tapped to join
the J.P. Morgan firm
shares of New York Trust, Atlantic Trust
and Brooklyn Trust
First Security concentrated on bank stocks which
rapidly appreciated in value, and paid handsome annual dividends. In
1927, it earned five million dollars, but paid the shareholders
eight million, taking the rest from its surplus.
Another member of the initial Federal Advisory Council was E.F.
Swinney, president of the First National Bank of Kansas City. He was
also a director of Southern Railway, and lists himself in Who’s Who
as "independent in politics".
Archibald Kains represented the San Francisco district on the
Federal Advisory Council, although he maintained his office in New
York, as president of the American Foreign Banking Corporation.
After serving as a Governor of the Federal Reserve Board from
1914-1918, Paul Warburg did not request another term. However, he
was not ready to sever his connection with the Federal Reserve
System which he had done so much to set up and put into operation.
J.P. Morgan obligingly gave up his seat on the Federal Advisory
Council, and for the next ten years, Paul Warburg continued to
represent the Federal Reserve district of New York on the Council.
He was vice president of the council 1922-25, and president 1926-27.
Thus Warburg remained the dominant presence at Federal Reserve Board
meetings throughout the 1920s, when the European central banks were
planning the great contraction of credit which precipitated the
Crash of 1929 and the Great Depression.
Although most of the Federal Advisory Council’s "advice" to the
Board of Governors has never been reported, on rare instances a few
glimpses into its deliberations were afforded by brief items in The
New York Times.
On November 21, 1916, The Times reported that the
Federal Advisory Council had met in Washington for its quarterly
"There was talk about absorbing Europe’s extension of credit to
South America and other countries. Federal Reserve officials said
that to maintain a position as one of the world’s bankers the United
States must expect to be called upon to render a good deal of the
service performed largely by England in the past, in extending short
term credits necessary in the production and transportation of goods
of all kinds in the world’s trade, and that acceptances in foreign
trade require lower discounts and the freest and most reliable gold
(The First World War was at its zenith in 1916.)
In addition to his service on the Board of Governors and the Federal
Advisory Council, Paul Warburg continued to address bankers’ groups
about the monetary policies they were expected to follow.
22, 1915, he addressed the Twin City Bankers Club, St. Paul,
Minnesota during which speech he stated,
"It is to your interest to see the Federal Reserve banks as strong
as they possibly can be. It staggers the imagination to think what
the future may have in store for the development of American
banking. With Europe’s foremost powers limited to their own field,
with the United States turned into a creditor nation for all the
world, the boundaries of the field that lies open for us are
determined only by our power of safe expansion. The scope of our
banking future will ultimately be limited by the amount of gold that
we can muster as the foundation of our banking and credit
The composition of the Federal Reserve Board of Governors and the
Federal Reserve Advisory Council, from its initial membership to the
present day, shows links to the Jekyll Island conference and the
London banking community which offers incontrovertible evidence,
acceptable in any court of law, that there was a plan to gain
control of the money and credit of the people of the United States,
and to use it for the profit of the architects. Old Jekyll Island
Frank Vanderlip, president of the National City Bank,
which bought a large portion of the shares of the Federal Reserve
Bank of New York in 1914
Paul Warburg of Kuhn, Loeb Company
P. Davison, J.P. Morgan’s right-hand man, and director of the First
National Bank of New York and the National Bank of Commerce, which
took a large portion of Federal Reserve Bank of New York stock
Benjamin Strong, also known as a
who served as Governor of the Federal Reserve Bank of New York
during the 1920’s.*
* "The Federal Advisory Council has great influence with the Federal
Reserve Board. Conspicuously upon that council is J.P. Morgan, the
leading member of J.P. Morgan Company and son of the late J.P.
Morgan. Every one of the twelve members of the Advisory Council, as
you well know, was educated in the same atmosphere. The Federal
Reserve Act is not only a special privilege act but privileged
persons have been placed in control and are its advisors in its
administration. The Federal Reserve Board and the Federal Advisory
Council administer the Federal Reserve System as its head authority,
and no one of the lesser officials, even if they wished, would dare
to cross swords with them."
(FROM: "Why Is Your Country At War?" by Charles Lindbergh, published
in 1917). The above paragraph explains why Woodrow Wilson ordered
government agents to seize and destroy the printing plates and
copies of this book in the spring of 1918.
The selection of the regional members of the Federal Advisory
Council from the list of bankers who worked most closely with the
"big five" banks of New York, and who were their principal
correspondent banks, proves that the much-touted "regional
safeguarding of the public interest" by Carter Glass and other
Washington proponents of the Federal Reserve Act was from its very
inception a deliberate deception.
The fact that for seventy years
this council was able to meet with the Federal Reserve Board of
Governors and to "advise" the Governors on decisions of monetary
policy which affected the daily lives of every person in the United
States, without the public being aware of their existence,
demonstrates that the planners of the central bank operation knew
exactly how to achieve their objectives through "administrative
processes" of which the public would remain ignorant.
The claim that
the "advice" of the council members is not binding on the Governors
or that it carries no weight is to claim that four times a year,
twelve of the most influential bankers in the United States take
time from their work to travel to Washington to meet with the
Federal Reserve Board merely to drink coffee and exchange
pleasantries. It is a claim which anyone familiar with the workings
of the business community will find impossible to take seriously. In
1914, it was a four-day trip each way for bankers from the Far West
to come to Washington for a council meeting with the Federal Reserve
These men had extensive business interests which demanded
their time. J.P. Morgan was a director of sixty-three corporations
which held annual meetings, and
could hardly be expected to travel to Washington to attend meetings
of the Federal Reserve Board if his advice was to be considered of
J.P. Morgan connection has remained predominant on the
Federal Advisory Council. For the past several years, the
prestigious Federal Reserve District No. 2, the New York District,
has been represented on the Federal Advisory Council by Lewis
Preston. Preston is Chairman of J.P. Morgan Company and also
Chairman and Chief Executive Officer of Morgan Guaranty Trust, New
York. An heir to the Baldwin fortune (a company controlled by
Morgan), Preston married the heiress to the Pulitzer newspaper
fortune. On February 26, 1929, The New York Times noted that a
merger had been effected between National Bank of Commerce and
Guaranty Trust, making them the largest bank in the United States,
with a capital of two billion dollars. The merger was negotiated by
Myron C. Taylor, president of U.S. Steel, a Morgan firm. The banks
occupied adjoining buildings on Wall Street, and, as The New York
Times noted, "The Guaranty Trust Company long has been known as one
of ‘the Morgan group’ of banks." The National Bank of Commerce has
also been identified with Morgan interests.
The House of Rothschild
The success of the Federal Reserve Conspiracy will raise many
questions in the minds of readers who are unfamiliar with the
history of the United States and finance capital. How could the
Kuhn, Loeb-Morgan alliance, powerful though it might be, believe
that it would be capable, first, of devising a plan which would
bring the entire money and credit of the people of the United States
into their hands, and second, of getting such a plan enacted into
The capability of devising and enacting the "National Reserve Plan",
as the immediate result of the Jekyll Island expedition was called,
was easily within the powers of the Kuhn, Loeb-Morgan alliance,
according to the following from McClure’s Magazine, August 1911,
"The Seven Men" by John Moody:
"Seven men in Wall Street now
control a great share of the
fundamental industry and resources of the United States. Three of
the seven men, J.P. Morgan, James J. Hill, and George F.
of the First National Bank of New York belong to the so-called
Morgan group; four of them, John D. and William
Rockefeller, James Stillman, head of the National City Bank, and
Schiff of the private banking firm of Kuhn, Loeb Company, to the
so-called Standard Oil City Bank group... the central machine of
capital extends its control over the United States... The process is
not only economically logical; it is now practically automatic."32
32 John Moody, "The Seven Men", McClure’s Magazine, August, 1911, p.
Thus we see that the 1910 plot to seize control of the money and
credit of the people of the United States was planned by men who
already controlled most of the country’s resources. It seemed to
John Moody "practically automatic" that they should continue with
What John Moody did not know, or did not tell his readers, was that
the most powerful men in the United States were themselves
answerable to another power, a foreign power, and a power which had
been steadfastly seeking to extend its control over the young
republic of the United States since its very inception. This power
was the financial power of England, centered in the
London Branch of
the House of Rothschild. The fact was that in 1910, the United
States was for all practical purposes being ruled
from England, and so it is today.
The ten largest bank holding
companies in the United States are firmly in the hands of certain
banking houses, all of which have branches in London. They are
Brown Brothers Harriman
Warburg, Kuhn Loeb
All of them maintain close relationships with the
House of Rothschild, principally through the Rothschild control of
international money markets through its manipulation of the price of
gold. Each day, the world price of gold is set in the London office
of N.M. Rothschild and Company.
Although these firms are ostensibly American firms, which merely
maintain branches in London, the fact is that these banking houses
actually take their direction from London. Their history is a
fascinating one, and unknown to the American public, originating as
it did in the international traffic in gold, slaves, diamonds, and
other contraband. There are no moral considerations in any business
decision made by these firms. They are interested solely in money
Tourists today gape at the magnificent mansions of the very rich in
Newport, Rhode Island, without realizing that not only do these
"cottages" stand as a memorial to the baronial desires of our
Victorian millionaires, but that their erection in Newport
represented a nostalgic memorialization of the great American
fortunes, which had their beginnings in Newport when it was the
capital of the slave trade.
The slave trade for centuries had its headquarters in Venice, until
Seventeenth Century Britain, the new master of the seas, used its
control of the oceans to gain a monopoly. As the American colonies
were settled, its fiercely independent people, most of whom did not
want slaves, found to their surprise that slaves were being sent to
our ports in great numbers.
For many years, Newport was the capital of this unsavory trade.
William Ellery, the Collector of the Port of Newport, said in 1791:
"...an Ethiopian cld as soon change his skin as a
Newport merchant cld be induced to change so lucrative a trade.... for the slow
profits of any manufactory."
John Quincy Adams remarked in his Diary, page 459,
"Newport’s former prosperity was chiefly owing to its extensive
employment in the African slave trade."
The pre-eminence of J.P. Morgan and the Brown firm in American
finance can be dated to the development of Baltimore as the
nineteenth century capital of the slave trade. Both of these firms
originated in Baltimore, opened branches in London, came under the
aegis of the House of Rothschild, and returned to the United States
to open branches in New York and to become the dominant power, not
only in finance, but also in government.
In recent years, key posts
such as Secretary of Defense have been held by Robert Lovett,
partner of Brown Brothers Harriman, and Thomas S. Gates, partner of
Drexel and Company, a J.P. Morgan subsidiary firm. The present Vice President,
George Bush, is the son of
Prescott Bush, a partner of Brown Brothers Harriman, for many years
the senator from Connecticut, and the financial organizer of
Columbia Broadcasting System of which he also was a director for
To understand why these firms operate as they do, it is necessary to
give a brief history of their origins. Few Americans know that
Morgan Company began as George Peabody and Company.
(1795-1869) (image left), born at South Denvers, Massachusetts, began business in
Georgetown, D.C. in 1814 as Peabody, Riggs and Company, dealing in
wholesale dry goods, and in operating the Georgetown Slave Market.
In 1815, to be closer to their source of supply, they moved to
Baltimore, where they operated as Peabody and Riggs, from 1815 to
Peabody found himself increasingly involved with business
originating from London, and in 1835, he established the firm of
George Peabody and Company in London. He had excellent entree in
London business through another Baltimore firm established in
Liverpool, the Brown Brothers. Alexander Brown came to Baltimore in
1801, and established what is now known as the oldest banking house
in the United States, still operating as Brown Brothers Harriman of
New York; Brown, Shipley and Company of England; and Alex Brown and
Son of Baltimore.
The behind the scenes power wielded by this firm
is indicated by the fact that Sir Montagu Norman, Governor of the
Bank of England for many years, was a partner of Brown, Shipley and
Company.* Considered the single most influential banker in the
world, Sir Montagu Norman was organizer of "informal talks" between
heads of central banks in 1927, which led directly to the Great Stockmarket Crash of 1929.
* "There is an informal understanding that a director of Brown,
Shipley should be on the Board of the Bank of England, and Norman
was elected to it in 1907." Montagu Norman, Current Biography, 1940.
Soon after he arrived in London, George Peabody was surprised to be
summoned to an audience with the gruff Baron Nathan Mayer
Rothschild. Without mincing words, Rothschild revealed to
that much of the London aristocracy openly disliked Rothschild and
refused his invitations. He proposed that Peabody, a man of modest
means, be established as a lavish host whose entertainments would
soon be the talk of London.
Rothschild would, of course, pay all the
bills. Peabody accepted the offer, and soon became known as the most
popular host in London. His annual Fourth of July dinner,
celebrating American Independence, became extremely popular with the
English aristocracy, many of whom, while drinking Peabody’s wine,
regaled each other with jokes about Rothschild’s crudities and bad
manners, without realizing that every drop they drank had been paid
for by Rothschild.
It is hardly surprising that the most popular host in London would
also become a very successful businessman, particularly with the
House of Rothschild supporting him behind the scenes. Peabody often
operated with a capital of 500,000 pounds on hand, and became very
astute in his buying and selling on both sides of the Atlantic. His
American agent was the Boston firm of Beebe, Morgan and Company,
headed by Junius S. Morgan, father of John Pierpont Morgan.
who never married, had no one to succeed him, and he was very
favorably impressed by the tall, handsome Junius Morgan. He
persuaded Morgan to join him in London as a partner in George
Peabody and Company in 1854. In 1860, John Pierpont Morgan had been
taken on as an apprentice by the firm of Duncan, Sherman in New
York. He was not very attentive to business, and in 1864, Morgan’s
father was outraged when Duncan, Sherman refused to make his son a
He promptly extended an arrangement whereby one of the
chief employees of Duncan, Sherman, Charles H. Dabney, was persuaded
to join John Pierpont Morgan in a new firm, Dabney, Morgan and
Company. Bankers Magazine, December, 1864, noted that Peabody had
withdrawn his account from Duncan, Sherman, and that other firms
were expected to do so. The Peabody account, of course, went to
Dabney, Morgan Company.
John Pierpont Morgan was born in 1837, during the first money panic
in the United States. Significantly, it had been caused by the House
of Rothschild, with whom Morgan was later to become associated.
In 1836, President Andrew Jackson (image right), infuriated by the tactics of the
bankers who were attempting to persuade him to renew the charter of
the Second Bank of the United States, said,
"You are a den of
vipers. I intend to rout you out and by the Eternal God I will rout
you out. If the people only understood the rank injustice of our
money and banking system, there would be a revolution before
Although Nicholas Biddle was President of the Bank of the United
States, it was well known that Baron James de Rothschild of Paris
was the principal investor in this central bank. Although Jackson
had vetoed the renewal of the charter of the Bank of the United
States, he probably was unaware that a few months earlier, in 1835,
the House of Rothschild had cemented a relationship with the United
States Government by superseding the firm of Baring as financial
agent of the Department of State on January 1, 1835.
Henry Clews, the famous banker, in his book,
Twenty-eight Years in
Wall Street 33, states that the Panic of 1837 was engineered because
the charter of the Second Bank of the United States had run out in
1836. Not only did President Jackson promptly withdraw government
from the Second Bank of the United States, but he deposited these
funds, $10 million, in state banks. The immediate result, Clews
tells us, is that the country began to enjoy great prosperity.
sudden flow of cash caused an immediate expansion of the national
economy, and the government paid off the entire national debt,
leaving a surplus of $50 million in the Treasury.
33 Henry Clews, Twenty-eight Years in Wall Street, Irving Company,
New York, 1888, page 157
The European financiers had the answer to this situation. Clews
"The Panic of 1837 was aggravated by the
England when it in one day threw out all the paper connected with
the United States."
The Bank of England, of course, was synonymous with the name of
Baron Nathan Mayer Rothschild. Why did the Bank of England in one
day "throw out" all paper connected with the United States, that is,
refuse to accept or discount any securities, bonds or other
financial paper based in the United States?
The purpose of this
action was to create an immediate financial panic in the United
States, cause a complete contraction of credit, halt further issues
of stocks and bonds, and ruin those seeking to turn United States
securities into cash. In this atmosphere of financial panic, John
Pierpont Morgan came into the world. His grandfather, Joseph Morgan,
was a well to do farmer who owned 106 acres in Hartford,
Connecticut. He later opened the City Hotel, and the Exchange Coffee
Shop, and in 1819, was one of the founders of the Aetna Insurance
George Peabody found that he had chosen well in selecting Junius S.
Morgan as his successor. Morgan agreed to continue the sub rosa
relationship with N.M. Rothschild Company, and soon expanded the
firm’s activities by shipping large quantities of railroad iron to
the United States. It was Peabody iron which was the foundation for
much of American railroad tracks from 1860 to 1890. In 1864, content
to retire and leave his firm in the hands of Morgan, Peabody allowed
the name to be changed to Junius S. Morgan Company. The Morgan firm
then and since has always been directed from London. John Pierpont
Morgan spent much of his time at his magnificent London mansion,
One of the high water marks of the successful Rothschild-Peabody
Morgan business venture was the Panic of 1857. It had been twenty
years since the Panic of 1837: its lessons had been forgotten by
hordes of eager investors who were anxious to invest the profits of
a developing America. It was time to fleece them again. The stock
market operates like a wave washing up on the beach. It sweeps with
it many minuscule creatures who derive all of their life support
from the oxygen and water of the wave.
They coast along at the crest
of the "Tide of Prosperity". Suddenly the wave, having reached the
high water mark on the beach, recedes, leaving all of the creatures
gasping on the sand. Another wave may come in time to
save them, but in all likelihood it will not come as far, and some
of the sea creatures are doomed. In the same manner, waves of
prosperity, fed by newly created money, through an artificial
contraction of credit, recedes, leaving those it had borne high to
gasp and die without hope of salvation.
Corsair, the Life of J.P. Morgan, 34 tells us that the Panic of 1857
was caused by the collapse of the grain market and by the sudden
collapse of Ohio Life and Trust, for a loss of five million dollars.
With this collapse nine hundred other American companies failed.
Significantly, one not only survived, but prospered from the crash.
In Corsair, we learn that the Bank of England lent George Peabody
and Company five million pounds during the panic of 1857.
Morgan the Magnificent
35 says that the Bank of England advanced
Peabody one million pounds, an enormous sum at that time, and the
equivalent of one hundred million dollars today, to save the firm.
However, no other firm received such beneficence during this Panic.
The reason is revealed by Matthew Josephson, in
The Robber Barons.
He says on page 60:
"For such qualities of conservatism and purity,
George Peabody and
Company, the old tree out of which the House of Morgan grew, was
famous. In the panic of 1857, when depreciated securities had been
thrown on the market by distressed investors in America, Peabody and
the elder Morgan, being in possession of cash, had purchased such
bonds as possessed real value freely, and then resold them at a
large advance when sanity was restored." 36
34 Corsair, The Life of Morgan
35 John K. Winkler, Morgan the Magnificent, Vanguard, N.Y. 1930
36 Matthew Josephson, The Robber Barons, Harcourt Brace, N.Y. 1934
Thus, from a number of biographies of Morgan, the story can be
pieced together. After the panic had been engineered, one firm came
into the market with one million pounds in cash, purchased
securities from distressed investors at panic prices, and later
resold them at an enormous profit. That firm was the Morgan firm,
and behind it was the clever maneuvering of Baron Nathan Mayer
The association remained secret from the most
knowledgeable financial minds in London and New York, although
Morgan occasionally appeared as the financial agent in a Rothschild
operation. As the Morgan firm grew rapidly during the late
nineteenth century, until it dominated the finances of the nation,
many observers were puzzled that the Rothschilds seemed so little
interested in profiting by investing in the rapidly advancing
John Moody notes, in
The Masters of Capital, page
"The Rothschilds were content to remain a close ally of
Morgan... as far as the American field was concerned.’ 37
37 John Moody, The Masters of Capital
more profitable than valor.
The reason that the European Rothschilds preferred to operate
anonymously in the United States behind the facade of J.P. Morgan
and Company is explained by George Wheeler, in
Pierpont Morgan and
Friends, the Anatomy of a Myth, page 17:
"But there were steps being taken even now to bring him out of the
financial backwaters--and they were not being taken by Pierpont
Morgan himself. The first suggestion of his name for a role in the
recharging of the reserve originated with the London branch of the
House of Rothschild, Belmont’s employers." 38
Wheeler goes on to explain that a considerable anti-Rothschild
movement had developed in Europe and the United States which focused
on the banking activities of the Rothschild family. Even though they
had a registered agent in the United States, August Schoenberg, who
had changed his name to Belmont when he came to the United States as
the representative of the Rothschilds in 1837, it was extremely
advantageous to them to have an American representative who was not
known as a Rothschild agent.
Although the London house of Junius S. Morgan and Company continued
to be the dominant branch of the Morgan enterprises, with the death
of the senior Morgan in 1890 in a carriage accident on the Riviera,
John Pierpont Morgan became the head of the firm. After operating as
the American representative of the London firm from 1864-1871 as Dabney Morgan Company,
Morgan took on a new partner in 1871, Anthony
Drexel of Philadelphia and operated as Drexel Morgan and Company
until 1895. Drexel died in that year, and Morgan changed the name of
the American branch to J.P. Morgan and Company.
LaRouche 39 tells us that on February 5, 1891, a secret association
known as the
Round Table Group was formed in London by Cecil Rhodes,
his banker, Lord Rothschild, the Rothschild in-law, Lord Rosebery,
and Lord Curzon. He states that in the United States the Round Table
was represented by the Morgan group. Dr. Carrol Quigley refers to
this group as "The British-American Secret Society" in
Hope, stating that
"The chief backbone of this organization grew up
along the already existing financial cooperation running from the
Morgan Bank in New York to a group of international financiers in
London led by Lazard Brothers (in 1901)."
38 George Wheeler, Pierpont Morgan and Friends, the Anatomy of a
Myth, Prentice Hall, N.J. 1973
39 Lyndon H. LaRouche, Jr.,
Dope, Inc., The New Benjamin Franklin
House Publishing Company, N.Y. 1978
40 Dr. Carrol Quigley, Tragedy and Hope, Macmillan Co., N.Y.
William Guy Carr, in
Pawns In The Game states that,
"In 1899, J.P.
Morgan and Drexel went to England to attend the International
Convention. When they returned, J.P. Morgan had been appointed head
representative of the Rothschild interests in the United States.
the result of the London Conference,
J.P. Morgan and Company of New
Drexel and Company of Philadelphia
Grenfell and Company of
Morgan Harjes Cie of Paris
M.M. Warburg Company of
Germany and America
the House of Rothschild,
Apparently unaware of the Peabody connection with the Rothschilds
and the fact that the Morgans had always been affiliated with the
House of Rothschild, Carr supposed that he had uncovered this
relationship as of 1899, when in fact it went back to 1835.*
41 William Guy Carr, Pawns In The Game, privately printed, 1956, pg.
* July 30, 1930 McFadden Basis of Control of Economic Conditions.
This control of the world business structure and of human happiness
and progress by a small group is a matter of the most intense public
interest. In analyzing it, we must begin with the internal group
which centers itself around J.P. Morgan Company. Never before had
there been such a powerful centralized control over finance,
industrial production, credit and wages as is at this time vested in
the Morgan group... The Morgan control of the Federal Reserve System
is exercised through control of the management of the Federal
Reserve Bank of New York.
After World War I, the Round Table became known as the
Foreign Relations in the United States, and the
Royal Institute of
International Affairs in London. The leading government officials of
both England and the United States were chosen from its members. In
the 1960s, as growing attention centered on the surreptitious
governmental activities of the Council on Foreign Relations,
subsidiary groups, known as the
Trilateral Commission and
the Bilderbergers, representing the identical financial interests, began
operations, with the more important officials, such as Robert Roosa,
being members of all three groups.
George F. Peabody History of the Great American Fortunes, Gustavus
Myers, Mod. Lib. 537, notes that J.P. Morgan’s father, Junius S.
Morgan, had become a partner of George Peabody in the banking
"When the Civil War came on, George Peabody and Company
were appointed the financial representatives in England of the U.S.
Government.... with this appointment their wealth suddenly began to
pile up; where hitherto they had amassed the riches by stages not
remarkably rapid, they now added many millions within a very few
According to writers of the day, the methods of George
Peabody & Company were not only unreasonable but double treason, in
that, while in the act of giving inside aid to the enemy, George
Peabody & Company were the potentiaries of the U.S. Government and
were being well paid to advance its interests.
"For all who know anything on the subject know very
well that Peabody and his partners gave us no faith and no help in
our struggle for national existence. They participated to the
fullest in the common English distrust of our cause and our success,
and talked and acted for the South rather than for our nation. No
individuals contributed so much to flooding our money markets and
weakening financial confidence in our nationality than George
Peabody & Company, and none made more money by the operation. All
the money that Mr. Peabody is giving away so lavishly among our
institutions of learning was gained by the speculations of his house
in our misfortunes."
Also, New York Times, Oct. 31, 1866:
Reconstruction Carpetbaggers Money Fund. Lightning over the Treasury
Building, John Elson, Meador Publishing Co., Boston 41, pg. 53,
Bank of England with its subsidiary banks in America (under the
domination of J.P. Morgan) the Bank of France, and the
Germany, composed an interlocking and cooperative banking system,
the main objective of which was the exploitation of the people."
William Guy Carr, in Pawns In The Game, 42 the initial
meeting of these ex officio planners took place in Mayer Amschel
Bauer’s Goldsmith Shop in Frankfurt in 1773.
name of "Rothschild" or Red Shield, from the red shield which he
hung over his door to advertise his business (the red shield today
is the official coat of arms of the City of Frankfurt),
42 William Guy Carr, Pawns In The Game, privately printed, 1956
"was only thirty years of age when he invited twelve other wealthy
and influential men to meet him in Frankfurt. His purpose was to
convince them that if they agreed to pool their resources they could
then finance and control the World Revolutionary Movement and use it
as their Manual of Action to win ultimate control of the wealth,
natural resources, and manpower of the entire world. This agreement
reached, Mayer unfolded his revolutionary plan. The project would be
backed by all the power that could be purchased with their pooled
By clever manipulation of their combined wealth it would
be possible to create such adverse economic conditions that the
masses would be reduced to a state bordering on starvation by
unemployment... Their paid propagandists would arouse feelings of
hatred and revenge against the ruling classes by exposing all real
and alleged cases of extravagance, licentious conduct, injustice,
oppression, and persecution.
They would also invent infamies to
bring into disrepute others who might, if left alone, interfere with
their overall plans... Rothschild turned to a manuscript and
proceeded to read a carefully prepared plan of action.
1. He argued
that LAW was FORCE only in disguise. He reasoned it was logical to
conclude ‘By the laws of nature right lies in force.’
freedom is an idea, not a fact. In order to usurp political power
all that was necessary was to preach ‘Liberalism’ so that the
electorate, for the sake of an idea, would yield some of their power
and prerogatives which the plotters could then gather into their own
3. The speaker asserted that the
Power of Gold had usurped
the power of Liberal rulers.... He pointed out that it was
immaterial to the success of his plan whether the established
governments were destroyed by external or internal foes because the
victor had to of necessity ask the aid of ‘Capital’ which ‘Is
entirely in our hands’.
4. He argued that the use of any and all
means to reach their final goal was justified on the grounds that
the ruler who governed by the moral code was not a skilled
politician because he left himself vulnerable and in an unstable
5. He asserted that ‘Our right lies in force. The word
RIGHT is an abstract thought and proves nothing. I find a new
RIGHT... to attack by the Right of the Strong, to reconstruct all
existing institutions, and to become the sovereign Lord of all those
who left to us the Rights to their powers by laying them down to us
in their liberalism.'
6. The power of our resources must remain
invisible until the very moment when it has gained such
strength that no cunning or force can undermine it. He went on to
outline twenty-five points.
Number 8 dealt with the use of alcoholic
liquors, drugs, moral corruption, and all vice to systematically
corrupt youth of all nations.
9. They had the right to seize
property by any means, and without hesitation, if by doing so they
secured submission and sovereignty.
10. We were the first to put the
slogans Liberty, Equality, and Fraternity into the mouths of the
masses, which set up a new aristocracy. The qualification for this
aristocracy is WEALTH which is dependent on us.
11. Wars should be
directed so that the nations engaged on both sides should be further
in our debt.
12. Candidates for public office should be
obedient to our commands, so that they may readily be used.
Propaganda -- their combined wealth would control all outlets of
14. Panics and financial depressions would
ultimately result in World Government, a
new order of one world
The Rothschild family has played a crucial role in international
finance for two centuries, as Frederick Morton, in
"For the last one hundred and fifty years the history of the House
of Rothschild has been to an amazing extent the backstage history of
Western Europe."38 (Preface)...
Because of their success in making
loans not to individuals, but to nations, they reaped huge profits,
although as Morton writes, p. 36, "Someone once said that the wealth
of Rothschild consists of the bankruptcy of nations."
E.C. Knuth writes, in
The Empire of the City,
"The fact that the House of Rothschild made its money in the great crashes of history
and the great wars of history, the very periods when others lost
their money, is beyond question."44
The Great Soviet Encyclopaedia, states,
"The clearest example of a
personal linkup (international directorates) on a Western European
scale is the Rothschild family. The London and Paris branches of the
Rothschilds are bound not just by family ties but also by personal
link-ups in jointly controlled companies."45
further described these companies as international monopolies.
The sire of the family, Mayer Amschel Rothschild, established a
small business as a coin dealer in Frankfurt in 1743. Although
previously known as Bauer *, he advertised his profession by putting
up a sign depicting an eagle on a red shield, an adaptation of the
coat of arms of the City of Frankfurt, to which he added five golden
arrows extending from the talons, signifying his five sons.
of this sign, he took the name "Rothschild" or "Red Shield". When the
Elector of Hesse earned
a fortune by renting Hessian mercenaries to the British to put down
the rebellion in the American colonies, Rothschild was entrusted
with this money to invest. He made an excellent profit both for
himself and the Elector, and attracted other accounts. In 1785 he
moved to a larger house, 148 Judengasse, a five story house known as
"The Green Shield" which he shared with the Schiff family.
43 Frederick Morton, The Rothschilds, Fawcett Publishing Company,
44 E.C. Knuth, Empire of the City, p. 71
45 Great Soviet Encyclopaedia, Edition 3, 1973, Macmillan, London,
Vol. 14, pg. 691
* "The original name of Rothschild was Bauer." p. 397, Henry Clews,
Twenty-eight years in Wall Street.
The five sons established branches in the principal cities of
Europe, the most successful being James in Paris and Nathan Mayer in
London. Ignatius Balla in The Romance of the Rothschilds
46 tells us
how the London Rothschild established his fortune. He went to
Waterloo, where the fate of Europe hung in the balance, saw that
Napoleon was losing the battle, and rushed back to Brussels.
At Ostend, he tried to hire a boat to England, but because of a raging
storm, no one was willing to go out. Rothschild offered 500 francs,
then 700, and finally 1,000 francs for a boat. One sailor said, "I
will take you for 2000 francs; then at least my widow will have
something if we are drowned." Despite the storm, they crossed the
The next morning, Rothschild was at his usual post in the London
Exchange. Everyone noticed how pale and exhausted he looked.
Suddenly, he started selling, dumping large quantities of
securities. Panic immediately swept the Exchange. Rothschild is
selling; he knows we have lost the Battle of Waterloo. Rothschild
and all of his known agents continued to throw securities onto the
"Nothing could arrest the disaster. At the same
time he was quietly buying up all securities by means of secret
agents whom no one knew. In a single day, he had gained nearly a
million sterling, giving rise to the saying, ‘The Allies won the
Battle of Waterloo, but it was really Rothschild who won.’"
The Profits of War, Richard Lewinsohn says,
profits from the Napoleonic Wars financed their later stock
speculations. Under Metternich, Austria after long hesitation,
finally agreed to accept financial direction from the House of
46 Ignatius Balla, The Romance of the Rothschilds, Everleigh Nash,
* The New York Times, April 1, 1915 reported that in 1914, Baron
Nathan Mayer de Rothschild went to court to suppress Ignatius Balla’s book on the grounds that the Waterloo story about his
grandfather was untrue and libelous. The court ruled that the story
was true, dismissed Rothschild’s suit, and ordered him to pay all
costs. The New York Times noted in this story that "The total
Rothschild wealth has been estimated at $2 billion." A previous
story in The New York Times (May 27, 1905) noted that Baron Alphonse
de Rothschild, head of the French house of Rothschild, possessed $60
million in American securities in his fortune, although the Rothschilds reputedly were not active in the American field. This
explains why their agent, J.P. Morgan, had only $19 million in
securities in his estate when he died in 1913, and securities
handled by Morgan were actually owned by his employer, Rothschild."
47 Richard Lewinsohn, The Profits of War, E.P. Dutton, 1937
After the success of his Waterloo exploit, Nathan Mayer Rothschild gained control of the Bank of England through his near monopoly of
"Consols" and other shares. Several "central" banks, or banks which
had the power to issue currency, had been started in Europe: The
Bank of Sweden, in 1656, which began to issue notes in 1661, the
earliest being the Bank of Amsterdam, which financed
Cromwell’s seizure of power in England in 1649, ostensibly because
of religious differences. Cromwell died in 1657 and the throne of
England was re-established when Charles II was crowned in 1660.
died in 1685. In 1689, the same group of bankers regained power in
England by putting King William of Orange on the throne. He soon
repaid his backers by ordering the British Treasury to borrow
1,250,000 pounds from these bankers. He also issued them a Royal
Charter for the Bank of England, which permitted them to consolidate
the National debt (which had just been created by this loan) and to
secure payments of interest and principal by direct taxation of the
The Charter forbade private goldsmiths to store gold and to
issue receipts, which gave the stockholders of the Bank of England a
money monopoly. The goldsmiths also were required to store their
gold in the Bank of England vaults. Not only had their privilege of
issuing circulating medium been taken away by government decree, but
their fortunes were now turned over to those who had supplanted
In his "Cantos", 46; 27, Ezra Pound refers to the unique privileges
which William Paterson advertised in his prospectus for the
of the Bank of England:
Hath benefit of interest on all the moneys which it, the bank,
creates out of nothing."
The "nothing" which is referred to, of course, is the bookkeeping
operation of the bank, which "creates" money by entering a notation
that it has "lent" you one thousand dollars, money which did not
exist until the bank made the entry.
By 1698, the British Treasury owed 16 million pounds sterling to the
Bank of England. By 1815, principally due to the compounding of
interest, the debt had risen to 885 million pounds sterling. Some of
this increase was due to the wars which had flourished during that
period, including the Napoleonic Wars and the wars which England had
fought to retain its American Colony.
* NOTE: In the United States, after the stockholders of the Federal
Reserve System had consolidated their power in 1934, our government
also issued orders that private citizens could not store or hold
William Paterson (1658-1719) himself benefited little from "the
moneys which the bank creates out of nothing", as he withdrew, after
a policy disagreement, from the Bank of England a year after it was
founded. A later William Paterson became one of the framers of the
United States Constitution, while the name lingers on, like the
pernicious central bank itself.
Paterson had found himself unable to work with the Bank of England’s
stockholders. Many of them remained anonymous, but an early
description of the Bank of England stated it was,
"A society of about
1330 persons, including the King and Queen of England, who had
10,000 pounds of stock, the Duke of Leeds, Duke of Devonshire, Earl
of Pembroke, and the Earl of Bradford."
Because of his success in his speculations, Baron Nathan Mayer de
Rothschild, as he now called himself, reigned as the supreme
financial power in London. He arrogantly exclaimed, during a party
in his mansion,
"I care not what puppet is placed upon the
England to rule the Empire on which the sun never sets. The man that
controls Britain’s money supply controls the British Empire, and I
control the British money supply."
His brother James in Paris had also achieved dominance in French
Baron Edmond de Rothschild, David Druck writes,
"(James) Rothschild’s wealth had reached the 600 million mark. Only
one man in France possessed more. That was the King, whose wealth
was 800 million. The aggregate wealth of all the bankers in France
was 150 million less than that of James Rothschild. This naturally
gave him untold powers, even to the extent of unseating governments
whenever he chose to do so. It is well known, for example, that he
overthrew the Cabinet of Prime Minister Thiers."48
The expansion of Germany under Bismarck was accompanied by his
dependence on Samuel Bleichroder, Court Bankers of the Prussian
Emperor, who had been known as an agent of the Rothschilds since
The later Chancellor of Germany, Dr. von Bethmann Hollweg, was
the son of Moritz Bethmann of Frankfurt, who had intermarried with
the Rothschilds. Emperor Wilhelm I also relied heavily on
Bischoffsheim, Goldschmidt, and Sir Ernest Cassel of Frankfurt, who
emigrated to England and became personal banker to the Prince of
Wales, later Edward VII. Cassel’s daughter married Lord Mountbatten,
giving the family a direct relationship to the present British
Josephson 49 states that
Philip Mountbatten was related through the Cassels to the
Meyer Rothschilds of Frankfurt. Thus, the English
royal House of Windsor has a direct family relationship to the
Rothschilds. In 1901, when Queen Victoria’s son, Edward, became
Edward VII, he re-established the Rothschild ties.
48 David Druck, Baron Edmond de Rothschild, (Privately printed),
49 E.M. Josephson, The Strange Death of Franklin D. Roosevelt, pg.
39, Chedney Press, N.Y. 1948
Paul Emden in
Behind The Throne says,
"Edward’s preparation for his
métier was quite different from that
of his mother, hence he ‘ruled’ less than she did. Gratefully, he
retained around him men who had been with him in the age of the
building of the Baghdad Railway... there were added to the advisory
staff Leopold and Alfred de Rothschild, various members of the
Sassoon family, and above all his private financial advisor
Ernest Cassel." 50
The enormous fortune which Cassel made in a relatively short time
gave him an immense power which he never misused. He amalgamated the
firm of Vickers Sons with the Naval Construction Company and the
Maxim-Nordenfeldt Guns and Ammunition Company, a fusion from which
there arose the worldwide firm of Vickers Sons and Maxim. On an
entirely different capacity from Cassel were businessmen like the
Rothschilds. The firm was run on democratic principles, and the
various partners all had to be members of the family. With great
hospitality and in a princely manner they led the lives of grand
seigneurs, and it was natural that Edward VII should find them
Thanks to their international family relationships and
still more extended business connections, they knew the whole world,
were well informed about everybody, and had reliable knowledge of
matters which did not appear on the surface. This combination of
finance and politics had been a trademark of the Rothschilds from
the very beginning. The
House of Rothschild always knew more than
could be found in the papers and even more than could be read in the
reports which arrived at the Foreign Office. In other countries also
the relations of the Rothschilds extended behind the throne. Not
until numerous diplomatic publications appeared in the years after
the war did a wider public learn how strongly Alfred de Rothschild’s
hand affected the politics of Central Europe during the twenty years
before the war (World War I)."
With the control of the money came the control of the news media.
Kent Cooper, head of the Associated Press, writes in his
"International bankers under the
House of Rothschild acquired an
interest in the three leading European agencies." 51
Thus the Rothschilds bought control of Reuters International News
Agency, based in London, Havas of France, and
Wolf in Germany, which
controlled the dissemination of all news in Europe.
50 Paul Emden, Behind The Throne, Hoddard Stoughton, London, 1934
51 Kent Cooper, Barriers Down, pg. 21
52, John Gunther wrote in 1936 that any French prime
minister, at the end of 1935, was a creature of the financial
oligarchy, and that this financial oligarchy was dominated by twelve
regents, of whom six were bankers, and were headed by
The iron grip of the "London Connection" on the media was exposed in
a recent book by Ben J. Bagdikian
The Media Monopoly, described as
"A startling report on the 50 corporations that control what America
sees, hears, reads".53
Bagdikian, who edited the nation’s most
influential magazine the Saturday Evening Post until the monopoly
suddenly closed it down, reveals the interlocking directorates among
the fifty corporations which control the news, but fails to trace
them back to the five London banking houses which control them. He
mentions that CBS interlocks with the Washington Post,
Chemical, Wells Fargo Bank, and others, but does not tell the reader
that Brown Brothers Harriman controls CBS, or that the
family (Lazard Freres) controls Allied Chemical and the
Post, and Kuhn Loeb Co. the Wells Fargo Bank. He shows the
Times interlocked with Morgan Guaranty Trust,
First Boston Corporation and others, but does not show how the
He does not mention the Federal Reserve System
in his entire book, which is conspicuous by its absence.
Bagdikian documents that the media monopoly is steadily closing down
more newspapers and magazines. Washington D.C., with one paper,
Post, is unique among world capitols. London has eleven daily
newspapers, Paris fourteen, Rome eighteen, Tokyo seventeen, and
Moscow nine. He cites a study from the 1982 World Press Encyclopaedia that the United States is at the bottom of industrial
nations in the number of daily newspapers sold per 1,000 population.
Sweden leads the list with 572, the United States is at the bottom
There is universal distrust of the media by Americans,
because of their notorious monopoly and bias. The media unanimously
urge higher taxes on working people, more government spending, a
welfare state with totalitarian powers, close relations with Russia,
and a rabid denunciation of anyone who opposes Communism. This is
the program of "the London Connection." It flaunts a maniacal
racism, and has as its motto the dictum of its high priestess, Susan Sontag, that "The white race is the cancer of history."
should be against cancer. The media monopoly deals with its
opponents in one of two ways; either frontal assault of libel which
the average person cannot afford to litigate, or an iron curtain of
silence, the standard treatment for any work which exposes its
52 John Gunther, Inside Europe, 1936
53 Ben H. Bagdikian, The Media Monopoly, Beacon Press, Boston 1983
Although the Rothschild plan does not match any single political or
economic movement since it was enunciated in 1773, vital parts of it
can be discerned in all political revolution since that date. LaRouche 54 points out that the
Round Tables sponsored Fabian
Socialism in England, while backing the Nazi regime through a Round
Table member in Germany, Dr. Hjalmar Schacht, and that they used the
Nazi Government throughout World War II through Round Table member Admiral Canaris, while Allen Dulles ran a collaborating intelligence
operation in Switzerland for the Allies.
54 Lyndon H. LaRouche, Jr.,
Dope, Inc., New Benjamin Franklin House
Publishing Co., New York, 1978
to Secrets of The Federal Reserve
The London Connection
"So you see, my dear Coningsby, that the world is governed by very
different personages from what is imagined by those who are not
behind the scenes." 55
--Disraeli, Prime Minister of England during
Queen Victoria’s reign.
In 1775, the colonists of America declared their independence from
Great Britain, and subsequently won their freedom by the American
Revolution. Although they achieved political freedom, financial
independence proved to be a more difficult matter. In 1791,
Alexander Hamilton, at the behest of European bankers, formed the
first Bank of the United States, a central bank with much the same
powers as the Bank of England. The foreign influences behind this
bank, more than a century later, were able to get the Federal
Reserve Act through Congress, giving them at last the central bank
of issue for our economy.
Although the Federal Reserve Bank was
neither Federal, being owned by private stockholders,
nor a Reserve,
because it was intended to create money, instead of to
hold it in
reserve, it did achieve enormous financial power, so much so that it
has gradually superseded the popular elected government of the
United States. Through the Federal Reserve System, American
independence was stealthily but invincibly absorbed back into the
British sphere of influence. Thus the London Connection became the
arbiter of policy of the United States.
Because of England’s loss of her colonial empire after the Second
World War, it seemed that her influence as a world political power
was waning. Essentially, this was true.
The England of 1980 is not
the England of 1880. She no longer rules the waves; she is a second
rate, perhaps third rate, military power, but paradoxically, as her
political and military power waned, her financial power grew. In
Capital City we find,
"On almost any measure you care to take,
London is the world’s leading financial centre . . . In the 1960s
London dominance increased . . ." 56
55 Coningsby, by Disraeli, Longmans Co., London, 1881, p. 252
56 McRae and Cairncross, Capital City, Eyre Methuen, London, 1963,
A partial explanation of this fact is given:
"Daniel Davison, head of London’s Morgan Grenfell, said, ‘The
American banks have brought the necessary money, customers, capital
and skills which have established London in its present preeminence... only the American banks have a lender of last resort. The
Federal Reserve Board of the United States can, and does,
dollars when necessary. Without the Americans, the big dollar deals
cannot be put together.
Without them, London would not be credible as an international
financial centre.’" 57
Thus London is the world’s financial center, because it can command
enormous sums of capital, created at its command by the Federal
Reserve Board of the United States. But how is this possible? We
have already established that the monetary policies of the United
States, the interest rates, the volume and value of money, and sales
of bonds, are decided, not by the figurehead of the Federal Reserve
Board of Governors, but by the Federal Reserve Bank of New York. The
pretended decentralization of the Federal Reserve System and its
twelve, equally autonomous "regional" banks, is and has been a
deception since the Federal Reserve Act became law in 1913.
United States monetary policy stems solely from the Federal Reserve
Bank of New York is yet another fallacy. That the Federal Reserve
Bank of New York is itself autonomous, and free to set monetary
policy for the entire United States without any outside interference
is especially untrue.
We might believe in this autonomy if we did not know that
majority stock of the Federal Reserve Bank of New York was purchased
by three New York City banks:
An examination of the
principal stockholders in these banks, in 1914, and today, reveals a
direct London Connection.
In 1812, the National City Bank began business as the City Bank, in
the same room in which the defunct Bank of the United States, whose
charter had expired, had been doing business. It represented many of
the same stockholders, who were now functioning under a legitimate
American charter. During the early 1800s, the most famous name
associated with City Bank was Moses Taylor (1806-1882). Taylor’s
father had been a confidential agent employed in buying property for
the Astor interests while concealing the fact that Astor was the
Through this tactic, Astor succeeded in buying many
farms, and also a great deal of potentially valuable real estate in
Manhattan. Although Astor’s capital was reputed to come from his fur
trading, a number of sources indicate that he also represented
foreign interests. LaRouche 58 states that
Astor, in exchange for
providing intelligence to the British during the years before and
after the Revolutionary War, and for inciting Indians to attack
and kill American settlers along the frontier, received a handsome
reward. He was not paid cash, but was given a percentage of the
British opium trade with China. It was the income from this
lucrative concession which provided the basis for the Astor fortune.
57 Ibid, p. 225
58 Lyndon H. LaRouche, Dope, Inc., New Benjamin Franklin House
Publishing Co., N.Y. 1978
With his father’s connection with the Astors, young Moses Taylor had
no difficulty in finding a place as apprentice in a banking house at
the age of 15. Like so many others in these pages, he found his
greatest opportunities when many other Americans were going bankrupt
during an abrupt contraction of credit. During the Panic of 1837,
when more than half the business firms in New York failed, he
doubled his fortune.
In 1855, he became president of City Bank.
During the Panic of 1857, the City Bank profited by the failure of
many of its competitors. Like George Peabody and Junius Morgan,
Taylor seemed to have an ample supply of cash for buying up
distressed stocks. He purchased nearly all the stock of Delaware
Lackawanna Railroad for $5 a share. Seven years later, it was
selling for $240 a share. Moses Taylor was now worth fifty million
In August, 1861, Taylor was named Chairman of the Loan Committee to
finance the Union Government in the Civil War. The Committee shocked
Lincoln by offering the government $5,000,000 at 12% to finance the
war. Lincoln refused and financed the war by issuing the famous
"Greenbacks" through the U.S. Treasury, which were backed by gold.
Taylor continued to increase his fortune throughout the war, and in
his later years, the youthful James Stillman became his protégé. In
1882, when Moses Taylor died, he left seventy million dollars. * His
son-in-law, Percy Pyne, succeeded him as president of City Bank,
which had now become National City Bank. Pyne was paralyzed, and was
barely able to function at the bank. For nine years, the bank
stagnated, nearly all its capital being the estate of Moses Taylor.
William Rockefeller, brother of
John D. Rockefeller, had bought into
the bank, and was anxious to see it progress.
He persuaded Pyne to
step aside in 1891 in favor of James Stillman, and soon the National
City Bank became the principal repository of the Rockefeller oil
income. William Rockefeller’s son, William, married Elsie,
James Stillman’s daughter, Isabel. Like so many others in New York
banking, James Stillman also had a British connection.
His father, Don Carlos Stillman, had come to Brownsville, Texas, as a British
agent and blockade runner during the Civil War. Through his banking
connections in New York, Don Carlos had been able to find a place
his son as apprentice in a banking house. In 1914, when National
City Bank purchased almost ten per cent of the shares of the newly
organized Federal Reserve Bank of New York, two of Moses Taylor’s
grandsons, Moses Taylor Pyne and Percy Pyne, owned 15,000 shares of
National City stock.
Moses Taylor’s son, H.A.C. Taylor, owned 7699
shares of National City Bank. The bank’s attorney, John W. Sterling,
of the firm of Shearman and Sterling, also owned 6000 shares of
National City Bank. However, James Stillman owned 47,498 shares, or
almost twenty percent of the bank’s total shares of 250,000. [See
* The New York Times noted on May 24, 1882 that Moses Taylor was
chairman of the Loan Committee of the Associated Banks of New York
City in 1861. Two hundred million dollars worth of securities were
entrusted to him. It is probably due to him more than any other one
man that the government in 1861 found itself with the means to
prosecute the war.
The second largest purchaser of Federal Reserve Bank of New York
shares in 1914, First National Bank, was generally known as "the
Morgan Bank", because of the Morgan representation on the board,
although the bank’s founder George F. Baker held 20,000 shares, and
his son G.F. Baker, Jr., had 5,000 shares for twenty-five percent of
the bank’s total stock of 100,000 shares.
George F. Baker Sr.’s
daughter married George F. St. George of London. The St. Georges
later settled in the United States, where their daughter, Katherine
St. George, became a prominent Congresswoman for a number of years.
Dr. E.M. Josephson wrote of her, "Mrs. St. George, a first cousin of
FDR and New Dealer, said, ‘Democracy is a failure’." 59
George Baker, Jr.’s daughter, Edith Brevoort Baker, married Jacob Schiff’s
grandson, John M. Schiff, in 1934. John M. Schiff is now honorary
chairman of Lehman Brothers Kuhn Loeb Company.
59 E.M. Josephson, The Strange Death of Franklin D. Roosevelt,
Chedney Press, N.Y. 1948
The third large purchase of Federal Reserve Bank of New York stock
in 1914 was the National Bank of Commerce which issued 250,000
shares. J.P. Morgan, through his controlling interest in Equitable
Life, which held 24,700 shares and Mutual Life, which held 17,294
shares of National Bank of Commerce, also held another 10,000 shares
of National Bank of Commerce through J.P. Morgan and Company (7800
shares), J.P. Morgan, Jr. (1100 shares), and Morgan partner H.P.
Davison (1100 shares). Paul Warburg, a Governor of the Federal
Reserve Board of Governors, also held 3000 shares of National Bank
His partner, Jacob Schiff had 1,000 shares of National
Bank of Commerce. This bank was clearly controlled by Morgan, who
was really a subsidiary of Junius S. Morgan Company in London and
the N.M. Rothschild Company of London, and Kuhn, Loeb Company, which
was also known as a principal agent of the Rothschilds.
The financier Thomas Fortune Ryan also held 5100 shares of National
Bank of Commerce stock in 1914. His son, John Barry Ryan, married
Otto Kahn’s daughter, Kahn was a partner of Warburg and Schiff in
Kuhn, Loeb Company, Ryan’s granddaughter, Virginia Fortune Ryan,
married Lord Airlie, the present head of J. Henry Schroder Banking
Corporation in London and New York.
Another director of National Bank of Commerce in 1914, A.D. Juillard, was president of A.D. Juillard Company, a trustee of New
York Life, and Guaranty Trust, all of which were controlled by J.P.
Morgan. Juillard also had a British connection, being a director of
the North British and Mercantile Insurance Company. Juillard owned
2000 shares of National Bank of Commerce stock, and was also a
director of Chemical Bank.
The Robber Barons, by Matthew Josephson, Josephson tells us that
Morgan dominated New York Life, Equitable Life and Mutual Life by
1900, which had one billion dollars in assets, and which had fifty
million dollars a year to invest. He says,
"In this campaign of secret alliances he (Morgan) acquired direct
control of the National Bank of
Commerce; then a part ownership in the First National Bank, allying
himself to the very strong
and conservative financier, George F. Baker, who headed it; then by
means of stock ownership
and interlocking directorates he linked to the first named banks
other leading banks, the Hanover,
the Liberty, and Chase." 60
60 Matthew Josephson, The Robber Barons, p. 409
Mary W. Harriman, widow of E.H. Harriman, also owned 5,000 shares of
National Bank of Commerce in 1914. E.H. Harriman’s railroad empire
had been entirely financed by Jacob Schiff of Kuhn, Loeb Company.
Levi P. Morton also owned 1500 shares of National Bank of Commerce
stock in 1914. He had been the twenty-second vice-president of the
United States, was an ex-Minister from the U.S. to France, and
president of L.P. Morton Company, New York, Morton-Rose and Company
and Morton Chaplin of London. He was a director of Equitable Life
Insurance Company, Home Insurance Company, Guaranty Trust, and
The astounding idea that the Federal Reserve System of the United
States is actually operated from London will probably be rejected at
first hearing by most Americans. However, Minsky has become famous
for his theory of the "dominant frame".
He states that in any
particular situation, there is a "dominant frame" to which
everything in that situation is related and through which it can be
interpreted. The "dominant frame" in the monetary policy decisions
of the Federal Reserve System is that these decisions are made by
those who stand to benefit most from them.
At first glance, this
would seem to be the principal stockholders of the Federal Reserve
Bank of New York. However, we have seen that these stockholders all
have a "London Connection". The "London Connection" becomes more
obvious as the dominant power when we find in The
Capital City 61 that only seventeen firms are allowed to operate as
merchant bankers in the City of London, England’s financial
district. All of them must be approved by the Bank of England. In
fact, most of the Governors of the Bank of England come from the
partners of these seventeen firms.
Clarke ranks the seventeen in
order of their capitalization.
Number 2 is the Schroder Bank.
6 is Morgan Grenfell, the London branch of the House of Morgan and
actually its dominant branch.
Lazard Brothers is Number 8.
Rothschild is Number 9.
Brown Shipley Company, the London branch of
Brown Brothers Harriman, is Number 14.
These five merchant banking
firms of London actually control the New York banks which own the
controlling interest in the Federal Reserve Bank of New York.
61 McRae and Cairncross, Capital City, Eyre Methuen, London, 1963
The control over Federal Reserve System decisions is also founded in
another unique situation. Each day, representatives of four other
London banking firms meet in the offices of N.M. Rothschild Company
in London to fix the price of gold for that day. The other four
bankers are from
Despite the huge tide of
paper pyramided currency and notes which are now flooding the world,
at some point, every credit extension must return to be based, in
however minuscule a fashion, on some deposit of gold in some bank
somewhere in the world. Because of this factor, the London merchant
bankers, with their power to set the price of gold each day, become
the final arbiters of the volume of money and the price of money in
those countries which must bow to their power. Not the least of
these is the United States.
No official of the Federal Reserve Bank
of New York, or of the Federal Reserve Board of Governors, can
command the power over the money of the world which is held by these
London merchant bankers. Great Britain, while waning in political
and military power, today exercises the greatest financial power.
is for this reason that London is the present financial center of