

CHAPTER FOUR - 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, Warburg replied, "Well, it hasn’t got quite everything we want, but the lack can be adjusted later by administrative processes." The 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 System. 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, First National Bank

National City Bank

National Bank of Commerce

Chase National Bank

Hanover National Bank, but they also persuaded President Woodrow Wilson to appoint one of the Jekyll Island group , Paul Warburg, to the Federal Reserve 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 The Bankers , points out that, "J.P. Morgan maintained correspondent relationships with many small banks all over the country." 30 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 United States.



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 operation.



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 Bank of 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. The principal correspondent listed by the First National Bank of Chicago is the Bank of Manhattan in New York, controlled by Jacob Schiff and Paul 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 indicate.



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." 31 (J.B. Forgan to Ream, January 7, 1903.) 31 F. Cyril James, The Growth of Chicago Banks, Harper, New York, 1938 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 board.



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 New York, 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 States.



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. First Security Corporation also owned: 50,000 shares of Chase National Bank

5400 shares of National Bank of Commerce

2500 shares of Bankers Trust

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 conference. "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 markets." (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. On October 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 structure." 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 hands were, 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

Henry 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 Morgan lieutenant, 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 Board. 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 no importance.**



** The 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.



Go Back





CHAPTER FIVE - 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 law?



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. Baker, head 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 Jacob H. 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. 418 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 their operations.



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 J.P. Morgan Company

Brown Brothers Harriman

Warburg, Kuhn Loeb

J. Henry Schroder 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 and power.



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 many years.



To understand why these firms operate as they do, it is necessary to give a brief history of their origins. Few Americans know that J.P. Morgan Company began as George Peabody and Company. George Peabody (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 1835. 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 Peabody, 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. Peabody, 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 partner. 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 morning." 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 funds 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. This 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 further states, "The Panic of 1837 was aggravated by the Bank of 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 Company.



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, Prince’s Gate.



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. Winkler, in 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 Rothschild. 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 American economy. John Moody notes, in The Masters of Capital , page 27, "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 Secrecy was 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 Tragedy and 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)." 40 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 Bankers Convention. When they returned, J.P. Morgan had been appointed head representative of the Rothschild interests in the United States. As the result of the London Conference, J.P. Morgan and Company of New York

Drexel and Company of Philadelphia

Grenfell and Company of London

Morgan Harjes Cie of Paris

M.M. Warburg Company of Germany and America

the House of Rothschild, were all affiliated." 41 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. 60



* 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 Council on 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 business. "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 years." 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. "Springfield Republic", 1866: "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, "The Bank of England with its subsidiary banks in America (under the domination of J.P. Morgan) the Bank of France, and the Reichsbank of Germany, composed an interlocking and cooperative banking system, the main objective of which was the exploitation of the people." According to 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. Bauer, who adopted the 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), (right image) 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 resources. 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.’ 2. Political 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 hands. 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 position. 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 servile and obedient to our commands, so that they may readily be used. 13. Propaganda -- their combined wealth would control all outlets of public information. 14. Panics and financial depressions would ultimately result in World Government, a new order of one world government ." The Rothschild family has played a crucial role in international finance for two centuries, as Frederick Morton, in The Rothschilds writes: "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 ." 43 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 The encyclopaedia 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. Because 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, N.Y., 1961

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 Channel.



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 market. Balla says, "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.’" * In The Profits of War , Richard Lewinsohn says, "Rothschild’s war 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 Rothschild." 47 46 Ignatius Balla, The Romance of the Rothschilds, Everleigh Nash, London, 1913



* 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 Oliver 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. He 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 people. 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 them.*



In his "Cantos", 46; 27, Ezra Pound refers to the unique privileges which William Paterson advertised in his prospectus for the Charter of the Bank of England: "Said Paterson



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 gold.



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 throne of 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 finance. In 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 1828. 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 Crown.



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 King Edward VII, he re-established the Rothschild ties. 48 David Druck, Baron Edmond de Rothschild, (Privately printed), N.Y. 1850

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 Sir 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 congenial. 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 autobiography, Barriers Down , "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



In Inside Europe 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 Baron Edmond de Rothschild.



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, Allied Chemical, Wells Fargo Bank, and others, but does not tell the reader that Brown Brothers Harriman controls CBS, or that the Eugene Meyer family (Lazard Freres) controls Allied Chemical and the Washington Post, and Kuhn Loeb Co. the Wells Fargo Bank. He shows the New York Times interlocked with Morgan Guaranty Trust, American Express, First Boston Corporation and others, but does not show how the banking interlocks. 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, The 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 with 287. 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." Everyone 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 clandestine activities.



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



Go Back to Secrets of The Federal Reserve Go Back to Rothschild





CHAPTER SIX - 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, p. 1

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, create 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. That 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 the majority stock of the Federal Reserve Bank of New York was purchased by three New York City banks: First National Bank

National City Bank

National Bank of Commerce 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 purchaser. 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 dollars.



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 for 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 Chart I]



* 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 of Commerce. 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.



In 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 Newport Trust.



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.

Number 6 is Morgan Grenfell, the London branch of the House of Morgan and actually its dominant branch.

Lazard Brothers is Number 8.

N.M. 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 Samuel Montagu Company, which ranks Number 5 on the list of seventeen London merchant banking firms

Sharps Pixley

Johnson Matheson

Mocatta and Goldsmid 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. It is for this reason that London is the present financial center of the world.



Go Back

