alright guys John the morgue out here checking in for a chapter or 20 of the creature from Jekyll Island has to be the London connection chapter 20 by G Edward Griffin the rise of house Morgan Morgan's ties with England and the House of Rothschild the connection between the Federal Reserve System and the Bank of England the feds decision to inflate American dollars to assist the ailing British economy the period between the Civil War and the enactment of the Federal Reserve System was one of great economic volatility and no small measure of chaos the national banking acts of 1863 to 1865 established a system of federally chartered banks which were given a significant privileges and powers over the monetary system they were granted a monopoly in the issuance of banknotes and the government agreed to accept those notes for the payment of taxes and duties they were allowed to back this money up to 90% with government bonds instead of gold and they were guaranteed that every bank in the system would have to accept these notes of every other Bank at face value regardless of how shaky their position the net effect was that the banking system of the United States after the Civil War far from being a free and unregulated as some historians have claimed was literally a halfway house to central banking the notion of being able to generate prosperity simply by creating more money has always fascinated politicians and businessmen but at no time in our history was it more in vogue than in the second half of the 19th century the nation had gone mad with the Midas complex a compulsion to turn everything into money through the magic of banking personal checks gradually had become accepted in commerce just as readily as banknotes and the banks obliged their customers by entering into their past books just as many little numbers as they cared to quote unquote borrow as Groseclose observed quote the mana of cheap money became the universal cry and as with the Israelites the easier of the men who was acquired the louder became the complaint the less willing the people to struggle for it the end quote the prevailing philosophy of that time was aptly expressed by a Jay Cooke the famous financier who had marketed the huge civil war loans of the federal government and who now was raising a hundred million bucks for the nurten Northern Pacific Railroad Cooke had published a pamphlet which was aptly summarized by its own title and this is the title quote quote how our national debt may be a national blessing the debt is public wealth political Union protection of industry secure basis for national currency end quote why asked Cooke quote should this grand and glorious country be stunted and dwarfed its activities chilled and its very lifeblood curdled by this miserable hard coined theories the musty theories of a bygone age end quote as it turned out however the chilling and curdling came not from the musty hard corn theories of the past but from the glittering easy-money theories of the present the Northern Pacific went bankrupt and as the mountain of imaginary money invested in it collapsed back into nothing Cook's giant investment firm appeared along with it triggering the panic of 1873 as it went Matthew Joseph writes all about the failure of Jacob the Newsboys hawked throughout the country the largest and most pious bank in the Western world has fallen with the effect of a thunderclap soon allied brokers and national banks and 5000 commercial houses followed it to the abyss of bankruptcy all day long in Wall Street one suspension after another was announced railroads failed leading stocks lost 30 to 40 points or half their value within the hour immeasurable waves of fear altered the movement of greed their exchanges were closed to stampede the greatest crisis in American history was on and still more booms and busts altogether there were four major contractions of the money supplied during this period the so-called panics of 1873 1840 I'm sorry 1873 1884 1893 and 1907 each of them was characterized by inadequate bank reserves and the suspension of specie payment Congress reacted not by requiring an increase in reserves which would have improved the safety margin but by allowing a decrease in June of 1874 legislation was passed which permitted the banks to back their notes entirely with government bonds that of course meant more fiat money for Congress but it also meant that banknotes no longer had any specie backing at all not even 10% this released over 20 million bucks from bank reserves which then could be used as the basis for pyramiding even more checkbook money into the economy it has become accepted mythology that these panics were caused by seasonal demands for farm loans at harvest time to supply those funds the country banks had to draw their own cash reserves which generally were deposited with the larger city banks this thinned out the reserves held in the cities and the whole system became more vulnerable actually that part of the legend is true but apparently no one is expected to ask questions about the rest of the story several of them come to mind why wasn't there panic every autumn instead of just every 11 years or so why didn't all banks country or city maintain adequate reserves to cover their depositor demands and why didn't they do this in all seasons of the year why would merely asking I'm sorry why would merely saying no to some loan applicants cause hundreds of banks to fail the myths of fall apart under the weight of these questions the truth is that if it hadn't been seasonal demand by agriculture the money magician simply would have found another scapegoat they would have been immobile reserves lack of a lacks elasticity in the money supply imbalance of the international payments or some other technocratic smokescreen to cover the real problem which was and always has been fractional reserve banking itself hmm excuse me the bottom line was that in spite of an elaborate scheme to pool the miniscule reserves of country banks into larger regional banks where they could be rushed from town to town like a keg of coins on the old frontier it still didn't work the loaves & Fishes stubbornly refused to multiply morgan prospers when others fail the monetary expansions and contractions of this period were large waves that capsized thousands of investment ships at sea but there was one large vessel that somehow bobbed up and down with the surges quite well and could be seen throughout the storm salvaging the abandoned cargoes of those who were in distress this vessel brought back to port untold riches that once had been the property of others but now belong to the master of the salvage ship in accordance with the rules of the high sea the captain's name was JP Morgan it will be recalled from a previous section that JP Morgan and company was no small player in the world chess match called wolf World War 1 Morgan had been chosen by the French and British governments as the official agent to sell their war bonds in the US when the war began to go badly for them the Morgan interest began to agitate for American entry into the conflict a move which was calculated to save the loans the Morgan firm also was the official US trade agent for Britain in violation of international treaty it handled the purchase of purchase and shipping to England of all war material including the enormous cargo of munitions aboard the Lusitania when she went down the close relationship between the Morgans and Great Britain was accident JP Morgan jr. was the driving force behind the Council on Foreign Relations or the CFR the American branch of a secret society established by Cecil Rhodes for the expansion of the British Empire in truth the Morgans were more British than they were American the reason for this is to be found in the origin of the Morgan dynasty itself it all began with an American merchant from Danvers Massachusetts by the name of George Peabody in 1837 Peabody traveled to England as a bond salesman for the Chesapeake and Ohio Canal hoping to find British investors to replace the missing ranks of Americans who because of a recession at that time showed a little interest in the project he routinely was rejected by the large investment houses of London but eventually his persistence paid off the Stanley Jackson in his biography of Morgan says of Peabody when the panic in the US at last started to subside he called time and again on the big city barons in London to assure them that in Maryland and other states would honor the bonds he also continued banking American securities with his personal funds buying it almost give away levels he later reaped a rich harvest he unloaded most of the Chesapeake and Ohio Canal bonds and won acclaim back home for returning his 60,000 bucks commission to enact Maryland's meager Treasury it was during this trip that Peabody opened an import-export business at 22 old Broad Street in London and began to provide loans and letters of credit to many of his shippers that moved him into the investment business specializing in transactions between Britain and the United States it was a fortunate timing this was the beginning of a period of rapid expansion in the united states accompanied by an insatiable need for investment capital and a plethora of bond issues offering tantalizing rates of return which were substantially higher than comparable offerings in Europe Peabody's firm was an unusual in in an unusual position to exploit this expanding market and his firm grew rapidly Peabody Eden never married and as he advanced in years began to look for someone to carry on to business the qualifications for such a position were difficult first the man had to be an American by birth in order to appear authentic as the representative of American investments right the secondly he had to be a British by instinct and per reference this included being well educated and with good a financial world I'm sorry and with could breeding breeding in order to be accepted by the aristocracy in London's financial world a third he had to have knowledge of anglo-american finance and fourth Peabody well he had to like him slurping sound Junius morgan selected by Peabody when the Boston merchants Junius Morgan met George Peabody at London dinner party in 1850 little did he realized that the elder finances yayyyy took an immediate liking to him and began to discreetly inquire into his background and reputation and again I say slurping sound this began in an extended period of business and social contact that eventually ended in 1854 when Junius moved his family to London and became a full partner in the firm which eventually became known as Peabody Morgan and company sucking sounds in addition to selling bonds in England for American commercial fat I'm sorry a commercial ventures and state governments the partnership also became the chief fiscal agent for the Union government during the Civil War and it was during this period that the firm's great profits pushed it into deep echelons of London's financial law fraternity a in 1864 Peabody finally retired and completely turned the business over to Junius who immediately changed the firm's name to j s Morgan & Company and sucking sounds so journeys the sons John Pierpont attended the English High School in Boston but during much of his youth was enrolled in European schools and became engulfed and British for audition he became he had been born in the United States however and that made him ideally suited to carry on the anglo-american role played so deftly by Peabody and Junius it was inevitable that the boy would be trained in international finance and groomed to step into his father's shoes the first move was to find employment for him in 1857 at New York investment firm of Duncan Sherman owned company seven years later Junius acquired a a competitor or New York firm New York firm and his I'm sorry and set up his son as a partner in Dabney Morgan and company which became the New York branch of the London firm so let me just read that sentence again because wow that's pretty loaded so alright it was inevitable that the boy would be trained in international finance and groomed to step into his father's shoes the first move was to find employment for him in 1857 at the New York investment firm of Duncan Sherman and company seven years later Junius acquired a competitor firm in New York and said his son up as a partner in Dabney Morgan and company which became the New York branch of the London firm in 1871 with the tradition of a third partner Anthony Drexel from Philadelphia the firm became wow this is hard to read because there's a curve in the scan page here people I'm very sorry Anthony Drexel from Philadelphia the firm became Drexel Morgan & Company in 1895 following the death of Drexel there was a final change of name to utter JP Morgan & Company a branch in Paris became known as Morgan harjes and company right Americanizing the New York branch after the unexpected death of Junius in a carriage accident and I'll just go ahead and add air quotes to the accident a few years later it was decided by Pierpont to reshape the image of the London firm to become more apparent ish operation this would allow the New York branch to represent the American side with less suspicion of being essentially the same firm by that time his son JP Morgan Jr known as Jack by his friends and as by looks like an [ __ ] like everyone else had already been brought into the firm as a partner and was to play an important role in the creation of that image biographer John Forbes tells us JP Morgan Jr became a patent in the London house of Jay s Morgan & Co on January 1st in 1898 and a fortnight later with his wife Jesse in the three children he left in New York took up residence in England for the next eight years Morgan was set to London to do two specific things the first was to learn at first how the British carried on a banking business under a central banking system dominated by the Bank of England Morgan senior anticipated the establishment of the Federal Reserve System in the United States and wanted someone who would eventually have authority in the Morgan firms to know how such a system worked the second was quietly to look about the city and select British partners to convert the elder Morgan's privately-owned j/s Morgan & Co into a British concern this eventually was accomplished by the addition of Edward Grenfell a longtime director of the Bank of England as the new a Senior Partner of what became Morgan Grenfell & Company but none of this window dressing altered the reality a that JP Morgan & Company in New York remained more British in orientation than Americana a casual reading of the events of this period would lead to the conclusion that Peabody and Morgan were fierce competitors of the Rothschilds it is true that they often bid against each other for the same business but it is also true that almost every biographer has told how the American newcomers of London were in awe of the great power of the Rothschilds and how they purposely cultivated their friendship a friendship that eventually became so intimate that the Americans were received as the personal houseguests of the Rothschilds the morgan firm often worked closely with the House of Rothschild on large joint ventures but that was and still is common practice among large investment houses in light of subsequent events however it is appropriate to consider the possibility that an arrangement had been worked out in which the Peabody / Morgan firm went one step further and on occasion became a secret Rothschild agent concealed alliance with Rothschild some writers have suggested that the clandestine relationship began almost from the beginning Eustace Mullins for example writes soon after he arrived in London George Peabody was surprised to be summoned to an audience with the a growth Baron Nathan Merrill a Rothschild without mincing words Rothschild revealed to Peabody that much of the London aristocracy openly disliked Rothschild and refused his invitations he apropos that Peabody a man of modest means be Denis established as a lavish host whose entertainments would soon be the talk of London a 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 is celebrating American independence became a extremely popular with the English aristocracy many of whom while drinking a Peabody's wine regaled each other with jokes about Rothschilds crudities and bad manners without realizing that every drop they drank had been paid for by Rothschild himself Moens did not give a reference for the source of this story and one cannot help being skeptical that such details could be proven nevertheless a secret arrangement of this kind is not so absurd as it may sound there is no question that the Rothschilds were quite capable of such clandestine relationships and in fact this is exactly the kind of deception for which they had become famous furthermore there was ample reason for them to do so a strong anti-semitic and anti-rust child sentiment had grown up in Europe and the United States and the family often found it to its advantage to work through agents rather than to deal directly Derek Wilson tells us the name Rothschild was thus a beginning to be heard in places far removed from sophisticated London in Paris but the connection with the great bankers was sometimes tenuous that tenuous connection was precisely the role to be played by August Belmont in the United States and the anti-semitism he found there was undoubtedly the reason he changed his name from Shana Berg to Belmont upon landing in New York in 1837 prior to that the Rothschild agent had been in the firm of JL and si a Joseph and company about as American sounding as one can get it was not long however before the Belmont Rothschild connection became common knowledge and the ploy ceased to be effective any longer in 1848 the family decided to send Alphonse Rothschild to the United States to check on Belmont operations and to evaluate the possibility of replacing him with a dive racked Rothschild of a representative perhaps Alphonse himself after an extended visit he wrote home in a few years from now America will have attracted to itself the greater part of trade with China and then the Indies and will be enthroned between the two oceans the country possesses such elements of prosperity that one would be blind to recognize them I have no hesitation in saying that a Rothschild house and not just an agency should be established in America today we are presented with a fine opportunity later on difficulties will of necessity arise as a result of competition from all sides some historians have expressed amazement over the fact that the recommendation was never acted upon Wilson says quote this was the greatest opportunity the Rothschilds ever lost end quote those with a more skeptical bent are tempted to wonder if the opportunity really was lost or if it was merely taken in a more indirect fashion it is significant that precisely at this time George Peabody was making a name for himself in London and had established a close relationship with Nathan Rothschild it is possible or I'm sorry is it possible that the Peabody firm was given the nod from the Rothschild consortium to represent them in America and is it possible that the plan included allowing Belmont to operate as a known Rothschild agent while using Peabody & Company as an unknown agent thus providing their own competition John moody answers the Rothschilds were content to remain a close ally of Morgan rather than a competitor as far as the American field was concerned Gabrielle Coco says Morgan's activities in 1895 - 1896 in selling us gold bonds in Europe were based on his alliance with the House of Rothschild Serena prances these houses me like a JP Morgan & Company represent here at the great firms and institutions of Europe just as August Belmont and company have a long represented a Rothschild and George wheeler writes a part of the reality of the day was an ugly resurgence of anti-semitism and someone was needed as cover who better than J Pierpont Morgan they solid a Protestant exemplar of capitalism able to trace his family back to pre-revolutionary times rise of the house of Morgan with these considerations is background the meteoric rise of Morgan's star over London and Wall Street can be readily understood it is no longer surprising for example that Peabody & Company was the sole American investment firm to receive a gigantic loan from the bank of england during us panic of 1857 a loan which not only saved it from literally sinking but made it possible to seize and salvage many other figurative ships that were capsized on Wall Street a Peabody had become active in the business of discounting acceptances which is banker language for ensuring commercial loans issued for the purchase of goods this is how it works the seller issues a bill with a stipulation that he must be paid at a future date usually ninety days when the buyer receives the bill his bank writes the word accepted across the face of it and adds a signature of an officer making it a legally binding contract in other words the bank becomes a cosigner on the buyers credit and guarantees the payment even if the buyer should default naturally there is a price for this guarantee the price is stated as a percentage of the total bill and is either added to the amount paid by the buyer or deducted from the amount received by the seller actually there is a fee paid at both ends of the transaction of course a 1 to the sellers bank which received the acceptance and pays out the money and 1 the issuing bank which assumes the liability of guaranteeing the payment the sale is said to be quote unquote discounted by the amount paid to the banks and so it was that Peabody and company had been active in the business of discounting acceptances primarily between sellers and England and buyers in the United States Morgan and the panic of 1857 in the Wall Street panic of 1857 many US buyers were unable to pay their bills and Peabody and Morgan were expect expected to make good on their guarantees and naturally they didn't have the money and the firm was facing certain bankruptcy unless the money could be obtained from somewhere Stanley Jackson provides the details the schlump was a catastrophic for Peabody and comb it certainly found itself committed to acceptances of 2 million euros I'm 2 million pounds heroes don't exist back then and with no hope of discharging even a part of stockpile of depreciating bonds in New York brokers and bankers themselves now desperately short of ready funds the firm was assumed paying out thousands of pounds a day without raising a large temporary loan the partners would be forced to suspend business altogether Ron chernow in the house of Morgan says quote our rumors race through London that George Peabody and company was about to fail a prospect hardly relished by rivals the major [Music] London houses told Morgan they would bail them out but only if P Bonham shot down the bank within a year Jackson continues a narrative a way well that was still narrative here's Jackson the clouds lifted dramatically when the Bank of England announced to loan announced a loan to P Barney as of 800,000 pounds and a very reasonable interest with the promise of further funds up to a million sterling if and when required it was a remarkable vote of confidence as Thomas Hank lean governor of the Bank of England had already rejected similar appeals from various American firms who did not measure up to this standards Peabody & Company recovered almost overnight indeed hoisted it over its turnover above pre slump levels with an almost unlimited access to cash and credit backed by the Bank of England Peabody and Morgan were able to wade hip deep through the depreciated stocks and bonds that were sold to them at sacrifice prices on Wall Street with on within only a few years when a sanity had been restored to American markets the assets of the firm had grown to gigantic proportions this event tells us a great deal about relationships if the Rothschilds truly had been competitors they would have seized upon this opportunity and used their great influence within the Bank of England and their other investment houses in London to squeeze out Peabody not to a system the bearings in particular were already trying to accomplish exactly that the Rothschilds must have believed that a successful Peabody firm ultimately would be in their own interest anti-semitism was profitable in lady in later years Jack Morgan her at Yap he at Junior Honor would assume the role of a staunch anti-semite and this undoubtedly strengthened his hand at dealing with American investors and borrowers who were loath to have anything to do with Jewish bankers that of course included officials in the US Treasury it was particularly helpful during the 1896 rescue of the federal government from a decline in its gold reserves fearing that it would not be able to honor its promise to exchange paper money for gold coins the government was forced to borrow 62 million bucks in gold the health of our oaths child was an obvious source for such a loan but the Treasury wanted to avoid anti-semitic backlash everything fell into place however when Morgan and company became the primary lender when with Rothschild apparently demoted to the role of a mere participant Wheeler writes the the consummate politicians of the Cleveland administration were certainly aware of the dangers inherent in promoting a rescue effort in the United States Treasury that would be financed by those archetypes of international Jewish finance yeas of the Rothschilds during these developments a Pierpont Morgan it took no direct part in the salvage effort up to this point it looked as if the aging finance a would be 58 in two months would be merely one among many in this and whatever subsequent bond arrangements would be necessary it seemed as though he wouldn't move on to I'm sorry curving the page move into old age with little more to around out his obituary than his awkward attempt to profit ear on the sell of rifles at the start of the Civil War his minor sorting of the Union in gold trading towards the close and a bold but largely unsuccessful move in the 1880s to impose an Eastern capitalist ceasefire on the country's warring railroads 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 was not being I'm sorry the first suggestion of his name for a role in retargeting of the reserve originated with the London branch of the House of Rothschild so the apparent anti-semitism of JP Morgan Jr was again extremely profitable during World War one when it was widely publicized that the Kaiser was funded by a German Jewish bankers to deal with the Morgan group therefore as opposed to Kuhn Loeb for example was in some circles almost a point of national patriotism when JP Morgan senior died in 1913 people were shocked to learn that his estate was valued at only 68 million bucks a paltry sum compared to the fortunes held by the Vanderbilts the Astor's and the Rockefellers it was even a more unbelievable that when Jack Morgan died in 1943 and left an estate valued at only 16 million bucks a small amount had been transferred to members of their families prior to their deaths but that did not account for the vast fortunes which they visibly controlled during their lives as surely there had been a bookkeeping a sleight of hand on the other hand it may have been true when Alphonse Rothschild died in Paris in 1905 it was revealed that his estate contained a 60 million bucks in American securities the Rothschilds in Britain undoubtedly held an equally large bloc furthermore and many of these securities were handled through the house of mother again impossibilities are obvious that a major portion of the wealth and power of the morgan firm was and always had been merely the wealth and power of the Rothschilds who had been raised who had raised it up in the beginning and who had sustained it through its entire existence how much of the a Morgan's apparent anti-semitism was real and how much may have been a pragmatic guys is really in the final analysis of importance and we should not give unwarranted emphasis to it here regardless of one's interpretation of the nature of the relationship between the houses of Morgan and Ralph's Rothschild the fact remains that it was a close it was ongoing and it was profitable to both if Morgan truly did Harbor feelings of anti-semitism neither he nor the Rothschilds ever allowed it to get in the way of their business to put the London connection into proper perspective it will be necessary once again to abandon a strict chronological sequence of events and to jump ahead to the year 1924 so let us put our cast of characters on hold for a moment and before allowing them to act out the drama of creating the Federal Reserve System we shall pick up the story line 11 years after that event had already taken place England faces a dilemma at the end of World War 1 Britain faced an economic dilemma she had abandoned the gold standard early in the war in order to remove all limits from the creation of fiat money and the result had been extreme inflation but now she wanted to regain her former position of power and prestige in the world's financial markets and decided that to accomplish this it would be necessary to return to the gold standard hence the phraseology the gold standard and really the gold standard is the gold standard of phraseology so anyway it was decided further to set the exchange value of the pound sterling or the British monetary unit at that time at exactly $4 in 86 cent in US currency which was approximately what it had been before the war began to say that she wanted to return to the gold standard actually is misleading it was not a pure standard in which every unit of money was totally backed by a stated weight of gold rather it was a Wow it was a fractional gold standard in which only a certain fraction of the monetary units were so bad but even that was to be desired over zero backing at all for three reasons first it is created I'm sorry first it created greater consumer confidence in the money system because of the implied promise to redeem all currency in gold even though such promises are always broken when based on fractional reserve secondly it provided an efficient means of settling of financial accounts between nations gold always being as the International medium of choice thirdly it applied some breaking action to the production of fiat money thus providing a certain degree of restraint to inflation and the boom-bust cycle the decision to return to a fractional fractional gold standard therefore while it left much to be desired was still a step in the right direction but there were two serious problems with the plan the first was that the exchange value of gold can never be decided by political decree it will always be determined by the interplay of supply and demand within the marketplace trying to fix the number of dollars which people will be willing to exchange for a pound of sterling was like trying to legislate how many baseball cards a schoolboy will give for a purple agate or maybe a stick of gum I don't know what a purple agate is sorry I don't even know how to say agate purple agate agate no know what it is anyway like a a jewel okay no so the international currency market is like a huge auction if the auctioneer and that buddy about ibbity sets the opening bid too high there will be no takers which is exactly what happened to the pound and I guess they made the British pound not the wait so the other problem was that during the war England had adopted a massive welfare program and a strong network of labor unions the reason this was a problem was that the only way to make the pound acceptable in international trade was to allow its value to drop to a competitive and realistic level and that would have meant not only a drastic reduction in welfare benefits but also a general lowering of prices including the price of labor which is called wages politicians were quite willing to allow prices of commodities to move downward but they didn't really have the courage to take any action which would reduce either welfare benefits or wages to the contrary they continued to bid for votes which with promises of still more socialism and easy credit prices well they continued to rise England and depression with the value of the pound set artificially high in order to sustain prices wages and profit levels the cost of British exports also became high and they ceased to be competitive in world markets with exports and decline the amount of money coming into the country also declined England became a debtor nation or a debt [ __ ] nation which means that her payments to other countries were larger than her income from those other countries as pointed out in Chapter five if if an individual spends more than his income he must either increase his income dip into savings sell off assets create counterfeit or borrow the same is true of nations England had already borrowed to the limit of her credit and was rapidly exhausting her savings in order to contribute purchasing foreign goods I'm sorry in order to continue purchasing foreign goods to sustain the high standard of living to which she had grown accustomed she couldn't counterfeit because payments for these imports had to be settled in gold which meant that as her national savings were spent her gold supply moved out of the country the handwriting was on the wall if this process continued the nation would soon be broke it was a situation incidentally which was amazingly parallel to what was plaguing in the United States since the end of World War two and for mostly the same reasons by March of 1919 England's trade was so depressed that she had no choice but to let the value of the pound quote-unquote float which means to seek its own level in response to supply and demand within a year it had dropped to three dollars and twenty one cents a loss of thirty four percent since the American dollar was the de facto world monetary standard at that time receiving fewer dollars for each pound sterling meant that the pound was valued lower in all the markets of the world the result was that the the price that British furs had to pay for imported goods was becoming higher than the price that she received for the expert of her own goods was becoming lower the British economy was not only badly anemic but it was also experiencing a monetary hangover from the vast inflation of World War one in other words it was undergoing a painful but in the long run healthy recovery and a return to reality such a condition was intolerable to the monetary and political scientists who were determined to find a quick and painless remedy which would allow the binge to continue of course as several emergency therapies were administered the first was to use the financial committee of the League of Nations which England dominated to require all the other European nations to follow similar inflationary monetary policies and they were also required to establish what was called the quote-unquote Gold Exchange standard a scheme whereby all countries based their currency not on gold but on pound sterling in that way she could sorry and that way they could all inflate together without causing a disruptive flow of gold from one to the other and England would act as the regulator and guarantor of the system in other words England used the power of her position within the League of Nations to establish the Bank of England as a master central bank for all the other central banks of Europe it was the prototype for what the Cabal now is doing with the Federal Reserve and the World Bank within the framework of the United States and I would add the United Nations problem of American prosperity Europe was well in hand but that still left the United States to be controlled America had also inflated during the war but not nearly as much she also had a fractional gold standard but the stockpile of gold was still very large and growing as long as America continued to exist as the producer of so many commodities that England needed for import and as long as the value of the dollar continued to be high the anemia of the pound sterling would continue the therapy chosen for this problem was simple perform a monetary transfusion from a healthy patient to the unhealthy one all the London finances had to do was find a large and robust specimen who without asking too many questions would be willing to become the donor the specimen selected of course was Uncle Sam himself it was the prototype of these transfer mechanism previously described which has been the life support keeping alive the moribund communist and socialist countries since world war ii there are several ways the lifeblood of one nation can be transfused to another the most direct method of course is to make outright gift such as the bazaar American ritual called foreign aid another is to make a gift disguised something else such as needs needlessly stationing military bases abroad for the sole purpose of bolstering the foreign economy or granting a loan to a foreign government that below market rates or worse with the full expectation that the loan will never be repaid at all but the third way is the most ingenious of them all to have one nation deliberately inflate its currency at a greater rate than the other nation so that the real purchasing power in terms of international trade moves from the more inflating to the less inflating nation this is a method truly worthy of the monetary our scientists it is so subtle and so sophisticated that not one in a thousand would even think of it much less object to it it was therefore the ideal method chosen in 1925 to benefit England at the expense of America as Professor Rothbard what had professor Rothbart observed in short the American public oh what's Rothbart sound like in short the American public was nominated to suffer the burdens of inflation and subsequent collapse in the crash of 1929 in order to maintained the British government and the British trade union movement in the style to which they insisted on becoming a custom tool at the inception of the Federal Reserve System there had been a brief struggle for power but within a few years the contest was decisively won by the head of the New York Bank Benjamin strong strong it will be recalled previously had been head of Morgan's Bankers Trust Company and was one of the seven participants at the secret meeting on Jekyll Island professor Quigley reminds us that strong borrowed his career to the favor of the more in Bank he became governor of the Federal Reserve Bank of New York as the joint nominee of the Morgan and Kuhn and Loeb & Company strong was the ideal choice for the cartel not the least of his qualifications was his alliance with the financial powers of London when Montague and Norman was made the governor of the Bank of England in 1920 there began a close personal relationship between the two central bankers which lasted until Strong's sudden death in 1928 Norman was considered by many to be eccentric if not mentally unbalanced Quigley says Norman was a strong man whose mental outlook was one of successfully suppressed hysteria or even paranoia he had no use for government and feared democracy both of these seemed to him to be threats to a private banking and thus wall that was proper and precious in human life when he rebuilt the Bank of England he constructed it as a fortress prepared to defend itself against any popular revolt with the sacred gold reserves hidden in deep vaults below the level underground waters which could be released to cover them by pressing the button of the governor's desk for much of his life Norman rushed about the world by fast steamship covering tens of thousands of miles each year often traveling incognito concealed by a black slouch that had and long black cloak under the assumed name of Professor Skinner Norman had a devoted colleague and Benjamin strong in the 1920s they were and that determined to use the financial power Britain in the United States to force all of the major countries of the world to go on the gold standard with an artificial value set for the benefit of England and to operate it through central bank's free from all political control with all question of international finance to be settled by agreement by such central banks without interferes from the government's strong and norman spent many holidays together sometimes in Bar Harbor Maine and sometimes in southern France and they criss crossed the Atlantic on numerous other occasions to consult with each other second sounds on their plan for controlling the world economy Lester Chandler tells us their associations were so frequent and prolonged in their collaboration so close that it is impossible to determine accurately their relative roles in developing some of their ideas and projects they had shared the banks of England provided strong with an office and a private secretary during his visits and the two men kept in close contact with each other through the weekly exchange of private cables and you know they made my private cable all these meetings and communication strict secrecy when there are frequent visits drew inquiries from the press the standard reply was that they were just friends and they were getting together for a recreation and for informal chats by 1926 the heads of the central banks of France and Germany were occasionally included in their meetings which according to Norman's biographer were more secret than it he ever held by the Royal Arc Masons or by any Rosicrucian order end quote secret meeting of 1927 the culmination of these discussions took place at a secret meeting in 1927 in which it was agreed that the financial life blood of the American people would be donated for a massive transfusion to the Great Britain Galbraith sets the scene on July 1st 1927 the anam arrived in New York with two notable passengers and Montague Norman and governor of the Bank of England and that has namahage first head of the German Reichsbank the secrecy covering the visit was extreme and to occur even ostentatious the names of Nina of the great bankers appeared on the passenger list neither having arriving met with the press in New York the two men were joined by Charles wrist the deputy governor the Bank of de France and they went to conference with the Benjamin strong the governor of the Federal Reserve Bank of New York the principal or in any case the ultimately important subject of the discussion was the persistently weak reserve position of the Bank of England this the bankers thought could be helped if the Federal Reserve System would be ease interest rates encourage lending or holders of gold would then seek the higher returns from keeping their metal in London and in time higher prices in the United States would ease the competitive position of the British industry and British labour a Galbraith speaks with soft phrases so as to cushion a harsh reality what he is saying is that the purpose of the meeting was to finalize a plan whereby the governor of the Federal Reserve System was to deliberately create inflation in the United States so that American prices would rise making United States goods less competitive in world markets and causing American gold to move to the Bank of England governor strong needed little convincing and that is precisely why what he and Norman had planned to do all along and in fact he had already begun to implement the plan the purpose of inviting the Germans and the French to the meeting was to enlist their agreement to create inflation in their countries as well shocked and creased would have no part of it and left the meeting early leaving strong and Norman to work out the final details between them strong was more concerned about British fortunes than American fortunes in a letter written in May of 1924 to secretary of the Treasury Andrew Mellon he discussed the necessity of lowering American interests rates as a step toward monetary expansion with the objective of raising American prices relative to those in Great Britain he acknowledged that the goal was to protect England from having to cut back on wages profits and welfare he said quote at the present time it is probably true that the British prices for goods internationally dealt are in a hole roughly in the neighborhood of 10 percent above our prices and one of the preliminaries to the re-establishment of gold payment by Great Britain will be to facilitate a gradual a readjustment of these price levels to before monetary reform is undertaken in other words this means some small events and prices here and possibly some small decline in their prices if the burden of this readjustment must fall more largely upon us than appalled in upon them it will be difficult politically and socially for the British government and the Bank of England to face a price and liquidation in England in face of the fact that trade is poor and they have over a million unemployed people receiving a government aid bringing down the dollar the Mandrake mechanism of the Federal Reserve went into high gear on behalf of the Bank of England in 1924 several years before the historic meeting between strong Norman and wrist there were two great surges of monetary expansion the first came with the monetization of a 492 million dollars in bonds plus almost twice as much in bankers acceptances the second burst of inflation came in the latter half of 1927 immediately following the secret meeting between strong Norman shocks and a wrist it involved the funding of two hundred and twenty five million dollars in government bonds plus two hundred and twenty million dollars in bankers acceptances for a total increase in banker reserves of over four hundred and forty million bucks at the same time the Reid ISKCON rate to member banks the interest rate did they pay to borrow from the Fed was lowered from four to three point five percent making it now easier for those banks to acquire additional quote/unquote reserves out of which they could create even more fiat dollars the amount created on top of that by the commercial banks is about five and a half times the amount created by the Fed which means a total money flood in accents in excess of ten billion dollars ten billion dollars in just six years throughout this period the demand by the system for government bonds and acceptances pushed interest rates down as anticipated people with gold then preferred to send it to London where it could earn a higher yield and America's gold supply began to move abroad furthermore as inflation began to eat its way into the purchasing power of the dollar the prices of american-made goods began to rise in world markets making them less competitive US exports began to decline unemployment began to rise low interest rates and easy credit led to speculation in the securities markets and the system lunged full-speed ahead towards the great crash of 1929 but that part of the story must wait for another chapter because my throat's getting sore and I'm glad they said that because I was about to kill this chapter we'll keep we'll finish it the technician who actually drafted the final version of the Federal Reserve Act was H Parker Willis after the system was crafted he was appointed as first secretary of the Board of Governors by 1929 he had become now disillusioned with the cartel and in an article published in the North American review he wrote in the autumn of 1926 a group of bankers among whom one was with a world famous name were sitting at a table in Washington hotel one of them raised the question whether the low discount rates of the system were not likely to encourage speculation yes replied their conspicuous figure referred to yes they will but that cannot be helped it's the price we must pay for helping Europe there can be little doubt that the banker in question was tapey Morgan or Jack Morgan jr. it was Jack however who was imbued with English tradition from the earliest age whose financial Empire had its roots in London whose family business was saved by the Bank of England who spent six months out of every year it is later life as a resident of England who had openly insisted that his junior partners demonstrate a quote/unquote loyalty to Burton and who had directed Council on Foreign Relations the American branch of a secret society dedicated to the supremacy of British tradition and political power it is only with that background that one can fully appreciate the willingness to sacrifice American interests indeed it is the price we must pay for helping Europe in spite of the growing signs of crisis in the American economy Morgan's protege Benjamin strong was nonetheless pleased with his accomplishment in a letter written in 1929 - Parker Gilbert who was the American agent for reparations he said our policy of the last four years up to this January has been them effective in accomplishing the purpose for which it was designed it has enabled monetary reorganization to be completed in Europe which otherwise would have not been completed would have been impossible it was undertaken with this well-organized hazard that were liable to encounter a big speculation and some expansion of credit now of course was perfectly obvious when we had to undertake it the conditions permitted and the possibility of damage abroad was at a minimum damage abroad what about damage at home it is clear that strong saw little difference between the two he was the forerunner of the internationalists who have operated the Federal Reserve ever since he viewed the United States as but one piece in a complex world financial structure and what was good for the world was good for America and oh yes what was good for England was good for the world the British American Union it is one of the least understood realities of modern history that many of Americans most many of America's most prominent political and financial figures then as now have been willing to sacrifice the best interests of the United States in order to further their goal of creating a one-world government the strategy has remained unchanged since the formation of Cecil Rhodes society and its offspring the table groups it is to merge the english-speaking nations into a single political entity while at the same time creating similar groupings for other geopolitical regions after this is accomplished all of these groupings are to be amalgamated into a global government the so called Parliament of man and guess who's planning to control that government from behind the scenes now this strategy was expressed aptly by Andrew Carnegie in his book triumphant democracy expressing concern that England was in decline as a world power he said a reunion with her American children is the only way sure to prevent continued decline whatever obstructs their reunion I oppose or whatever promotes reunion I failure high failure I judge all political questions from this standpoint the Parliament of man and the Federation of the world have already been held by the poet and these mean a step much further in advance of the proposed reunion of Britain and America I say that as surely as the Sun in the heavens once shone upon Britain and America United soul surely is it one morning to rise shine upon and greet gain the reunited state the British American state summary after the Civil War America experienced a series of expansions and contractions of the money supply leading directly to economic booms and busts this was the result of the creation of fiat money by a banking system which far for being free and competitive was a halfway house to central banking throughout the chaos one banking firm the house of Morgan was able to prosper out of the failure of the others Morgan had close ties with the financial structure and culture of England and was in fact more a British and American events suggest the possibility that Morgan and company was in concealed partnership with the House of Rothschild throughout most of this period Benjamin strong was a Morgan man and was appointed as the first governor of the Federal Reserve Bank of New York which rapidly assumed dominance over the system strong immediately entered into close alliance with Montagu Norman and governor of the Bank of England to save the English economy from depression this was accomplished by deliberately creating inflation in the United States which caused an outflow of gold a loss of foreign markets unemployment speculation in the stock market all of which were factors that propelled America into the crash of 1929 and the Great Depression of the 1930s although not covered in this chapter it must be remembered that these same forces were responsible for American involvement in both world wars to provide the economic and military resources England needed to survive furthermore the key players in this action were men who were part of the network of a secret society established by Cecil Rhodes for the expansion of the British Empire end of chapter xx creature from Jekyll Island by G Edward Griffin this has been John the moral thanks so much for listening see in the next turn you