“We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it.” — Congressman Louis T. McFadden, 1932, (R -PA)
“This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President [Wilson} signs this bill, the invisible government of the monetary power will be legalized....the worst legislative crime of the ages is perpetrated by this banking and currency bill." -- Charles A. Lindbergh Sr., 1913, (R-MN)
"A great industrial nation is controlled by its system of credit. Our system of credit is concentrated in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the world-- no longer a government of free opinion, no longer a government by conviction and vote of the majority, but a government by the opinion and duress of small groups of dominant men." -- President Woodrow Wilson (D) - in apparent regret of signing the Federal Reserve Act he sponsored in 1913)
I know…a lot of quotes with which to start a column. However, I think they will prove informative to our discussion this month. As some of you may know, I have been working on book to explain, in layman’s terms, what has been done to us all by a very small handful of men. While working on a chapter tentatively called “Meet the cast of this Old Con Game”, I found myself researching the history of JP Morgan Chase Bank. And what I discovered changed my whole impression of history in an afternoon.
First there was the revelation that one branch of the Chase Manhattan Bank lineage was established by Aaron Burr, the third Vice President of the United States. Yes, that’s the same Aaron Burr who ended up shooting Alexander Hamilton in a duel, who was himself another founding father, and a political and banking rival of Burr. In fact, Hamilton was behind the creation of the First Bank of the United States. Our current Federal Reserve is actually our country’s third attempt at a central bank, after the similar financial ruin caused by the first two. But that wasn’t the game changer for me. No, it was the JP Morgan family connection and their history that provided the really startling insights.
JP Morgan, Sr. started his financial career by defrauding the US Government in the early days of the Civil War. In what became know as the “Hall Carbine Affair”, Morgan purchased 5000 defective Hall Carbine rifles from the US government’s armory on Governor’s Island NY, for $3.50 each. This brand of rifle had rightfully been quarantined there owing to its reputation for maiming or killing the operator. Mr. Morgan turned around and resold the same guns back to the US government for $22.50 each, and represented that the safety defect had been corrected. The only problem was they had not been rehabilitated, and the sale back to the government occurred before the purchase was complete[1]. Yes, you read that right! He hadn’t even paid for the rifles at the time he resold them. JP Morgan Sr. died in 1913, after all but engineering two national banking crises in 1895 and 1907, and overseeing the creation of our current Federal Reserve in the same year he died.
However the worst was yet to come. It turns out “Jack” JP M
organ Jr. took up right where his father left off, only to become the greatest war profiteer the world has ever known. After the outbreak of World War 1, Jack lent $12 million to Russia and another $50 million to France in 1915. His firm then became the sole official purchasing agent for England, for all “…cotton, steel, chemicals and food.[2]” Further research seems to corroborate the assertion that the primary reason for our entry into World War I was at Jack Morgan’s behest, and to secure over $500 million in loans to the Allies with which he was personally involved. But it gets even better. At the end of World War I, and no doubt owing to this financing that had extending the war’s duration, he became the sole agent responsible for handling all reparation payments from Germany to the rest of Europe. This not only made JP Morgan the largest bank in all of Europe, but led Jack to form of the Bank of International Settlements (BIS) to handle those payments. Now a few of you may know that the BIS is located in Basil Switzerland, and it is the source of international banking regulations for the entire free world. But what you may not know is that BIS is made up of 58 central banks, and exists without the oversight of any government anywhere. Gee…what could possibly go wrong here?!
Well, the First World War had made Jack so much money, he must have thought another one would be even better. And it was – for him. Long story short, in the midst of the Great Depression, he managed to secure $100 million in loans to none other than Benito Mussolini[3]. Yep – that guy. And he staffed the BIS with people like Hjalmar Schacht[4]. Schacht became Hitler’s first Minister of Economics in 1934. And from 1933-45, the board of directors at the BIS included Emil Puhl and Walter Funk. Puhl was later convicted at the Nuremberg Trails, for his instrumental role in moving Nazi gold during the war. Funk was likewise convicted for war crimes, after his stint working for Hitler as head of the Ministry of Public Enlightenment and Propaganda. Other board members included Hermann Schmitz of IG Farben, the company which manufactured the pesticide Zyklon used in Nazi gas chambers. Though he was sentenced to 4 years for this fine work, after his sentence he promptly went back to work for Deutsche Bank in Berlin. And we can’t forget Baron Kurt von Schroeder. He played a critical role in arranging a meeting that ultimately led to Hitler becoming the Chancellor of Germany. I know right?! What a lovely human being this Jack Morgan was!
So what did we just learn? Well for one thing, allowing any bank to become “too big to fail” is outright dangerous. And secondly, allowing them to draft legislation designed to regulate themselves is a recipe for disaster. Consequently, should we really be surprised that the new Dodd Frank law not only codifies “too big to fail” into law, but seems purposely designed to squelch competition from smaller banks? Before the current financial crisis, I had nearly 400 institutions I could sell loans through to. Now 95 percent of all the loans I make go to the 5 largest TARP recipients. But at least none of this has anything to do with our current involvement in four separate wars…right?
[1] http://en.wikipedia.org/wiki/JP_Morgan
[2] http://en.wikipedia.org/wiki/J._P._Morgan,_Jr.
[3] http://en.wikipedia.org/wiki/J._P._Morgan,_Jr.
[4] http://en.wikipedia.org/wiki/Bank_of_International_Settlements
