MENACE OF THE MONEY-POWER
An Analysis of World Government by Finance
By A. K. Chesterton
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THE
MONEY-POWER
An Analysis of World Government by Finance
BY
A. K. CHESTERTON
JUNE, 1946
YEOMAN PRESS 5, CHRISTMAS STEPS - BRISTOL, 1 -
PREFACE
THE final deductions in this treatise, and in particular the relating of the Final Act of Bretton Woods to the financial policy which led to the foundation and perversion of the U.S. Federal Reserve Board, are the author's own, for which he must not fasten any responsibility upon his authorities. Those readers, however, who wish to check the facts from which the deductions are made may be recommended to the following works: "All These Things" and "The Truths About The Slump," by A. N. Field; "The Bankers' Conspiracy" and "A Fraudulent Standard," by Arthur Kitson; "Analysis of Usury" and "The Modern Idolatory," by Jeffrey Mark; "The Mystical Body of Christ and the Reorganisation of Society," by Father Denis Fahey; "The Money Illusion," by Professor Irving Fisher; "The Two Nations" and "The Breakdown of Money," by Christopher Hollis; "Post-War Monetary Stabilisation," by Professor Gustav Cassel; "America Conquers Britain," by Ludwell Denny; "The Brief for the Prosecution," by Major C. H. Douglas; and the volume is of Hansard covering the debate on the Loan Agreement. Another book, "The Economics of Human Happiness," by W. Collin Brooks, although it draws none of the conclusions here set down, and indeed draws some which are at variance with them, is nevertheless well worth reading because of the wonderful lucidity with which its author deals with perversions of the monetary system
THE MENACE OF THE MONEY-POWER
MONEY can only be understood in terms of power. In the hands of the creative capitalist it is power over goods. In the hands of the creative capitalist it is power over the means to produce goods. In the hands of the finance-capitalist, or money-lender, it is not only power over producers and consumers, but power as well over nations and their governments.
The technique of money-lending on its simplest level is to make an advance against security, draw interest, and at an agreed date receive back the capital sum—other things being equal, a perfectly honest transaction. If the more ambitious money-lenders kept to this even routine, however, they would be a very long time attaining power. What they desire, therefore, is that the money they lend shall either be repaid to them when its buying power has been greatly enhanced, or that it shall not be repaid at all, thus enabling them to foreclose on their mortgages and become possessed of their victim's capital assets. These two motifs have long determined the course of economic history, explaining slump and boom, and enabling a small band of international lenders and manipulators to become the virtual masters of the world. The method was explained, with almost incredible candour, in an article which appeared in The U.S.A. Bankers' Magazine* on August 26th, 1934:
"Bonds and mortgages must be foreclosed as rapidly as possible. When through a process of the law the common people lose their homes they will become more docile and more easily governed through the strong arm of government applied by a central power of wealth under the control of leading financiers. This truth is well known among our principal men now engaged in forming an imperialism of capital to govern the world. By dividing voters by the political party system we can get them to expend their energies in fighting over questions of no importance. Thus by discreet action we can secure for ourselves what has been so well planned."
* Doubt has since been cast on the authenticity of this quotation, but that it is in any case an authentic explanation of the aims and methods employed admits of no doubt.
Before investigating how this amiable programme has been, and is being, fulfilled, one popular fallacy should at once be exploded—the fallacy that this "imperialism of capital" has been set up in the teeth of Left-Wing opposition. The contrary is true. Revolution throughout has been the friend and ally of finance-capitalism. Whether or not the French Revolution increased the sum of human liberty, equality and fraternity offers a subject for debate, but there can scarcely be any debate about its one concrete fact, which was the sweeping away of the Monarchial State and the founding in place thereof of the Bankers' State. The Revolution of 1848 brought precious little happiness to ordinary human beings, but out of it arose the central banking system of Germany, which reached its apotheosis under the Weimar Republic, when financiers achieved more absolute power than they had ever before enjoyed. The Russian Revolution, which furnishes a complete picture of the interrelation between international capitalism and socialism, will be considered later. Some account must first be given of the way finance works.
If a group of men in any country wishes to secure financial control over that country's destinies, the most obvious initial step is to gain control of the issue of currency. This involves two cardinal principles—a single, controllable currency basis, such as gold, and a monopoly of the right to circulate notes and otherwise issue credit on that foundation. The banking history of the United States shows how the manipulators went to work to attain these objectives. Their weapon in every case was a deliberately engineered Stock Exchange panic, bringing ruin upon thousands of honest producers. In 1890 there was in America a monetary stringency, to counteract which the Government three years later introduced the Sherman Silver Purchase Act, providing the means, by Government purchases of silver, of preventing currency contraction. The financiers moved swiftly into battle. This threat to gold, their chosen medium, could not be tolerated. The American Banking Association circulated to members instructions to sabotage the Government's plan:—
"Silver, silver certificates and treasury notes must be retired," ran its fiat, "and national bank notes upon a gold basis made the only money. This will require the authorisation of 500 millions to 1,000 millions of new bonds as the basis of circulation. You will at once retire one-third of your circulation and call in one half of your loans. Be careful to make a monetary stringency among your patrons, especially among influential business men. Advocate an extra session of Congress to repeal the purchasing clause of the Sherman Law." *
* Fifty years later this circular was declared to be a forgery, but nobody challenged it when Mr. Chas. A. Lindberg brought it to the notice of the House of Representatives in 1913. In any case, it describes precisely what did happen.
Even at that time finance enjoyed a measure of international power, for India was brought in to help the campaign, which she did by stopping the minting of silver. This, in conjunction with the panic deliberately induced by the New York bankers, caused the closing-down of silver mines, the shutting of factories, the crashing of banks, widespread ruin—and, of course, the repeal of the offending Act. Gold henceforward was to be the sole basis of currency, as the bankers had planned.
While crashes of this diabolical kind had often, as here, a political motive, it is to be noted that those at the heart of the conspiracy invariably managed to turn the chaos to their own immense financial advantage. One direct result of the 1893 panic was the transference of the Union Pacific Railroad into the hands of Jacob Schiff, head of the banking firm of Kuhn, Loeb and Company—today the monarchs of international finance. A few years later, moreover, Schiff managed to bring the mighty Great Northern Pacific Railway crashing to the ground, and from the ensuing panic his firm emerged as the complete masters of American railway finance: through Northern Securities Company it controlled £264,200,000 worth of stock and became an acknowledged member of the Money Trust which dominated the entire field of American Capitalism.
Jacob Schiff was now to be joined in Kuhn, Loeb and Company by Paul Warburg, scion of one of the great German banking families, and together they moved forward to the attainment of the second objective—control of all currency through a central banking system. In 1907 there was another great crisis when the Knickerbocker Trust failed, not because of any general panic action by the ordinary investor, but because manipulators of the millionaire class wilfully created a run on the banks. From this debacle they emerged incomparably more powerful, having bought up the stock of the ruined victims, which they held to re-sell at par. At the same time the Steel Trust was able to complete its absolute monopoly. It may or may not have been a coincidence that Solomon Loeb, of Kuhn, Loeb and Company, was a member of Knickerbocker Trust. At any rate, the attainment of a central banking system was brought very much nearer to fulfilment—that consummation so devoutly wished by Kuhn, Loeb and Company.
Appalled at the ducks and drakes which were being played with the money-system, many genuine idealists in the United States chief among them Woodrow Wilson and William Jennings Bryan, that doughty foe of the Money-Power—determined upon large-scale reforms to create order in place of the prevailing brigandage. And it so happened that there was a gentleman at hand only too happy to help them. His name was Mr. Paul Warburg! What did they want? To secure stability in the price level? Why, Mr. Warburg had the precise specific up his sleeve—a Federal Reserve System which would hold reserves centrally and despatch supplies of credit at once to any necessitous bank in the system that might call for them. His plan, in most essentials, was the one adopted, and on December 20th, 1913, Mr. Carter Glass, sincerely denouncing the old laissez-faire order, secured the passage through the House of Representatives of the Federal Reserve Act, the vital clause of which, when the Bill was introduced, was a provision for the fixing of the discount rate to promote stability in the price level. How ironical was it, therefore, that when the Bill emerged these words "to promote stability in the price level" were surreptitiously dropped! At subsequent investigations officials of the Federal Reserve Board even denied that such had ever been its function. Two years later, Sir Cecil Spring-Rice, our Ambassador to the United States, placed on record the fact that the group of financiers associated with Kuhn, Loeb and Company had become supreme in America, and that Paul Warburg was the Federal Reserve Board! William Jennings Bryan lived long enough to stand aghast at the horrified thought of what his name, in all innocence, had helped to bring into being, but no such shame cast a shadow on the happiness of Warburg and his friends, who now had exclusive power of note issue to the reserve banks, as well as power to fix the discount rate, which meant, of course, power to determine the amount of money in existence. They had conquered America: they were now ready to conquer the world.
It has been suggested that revolution is a good friend to the finance-capitalists, but they have an even better friend—war. War makes them the dictators of mankind. How lucky for them that, the year following the setting up of the Federal Reserve Board, a war should duly have arrived to complete their happiness! War has several advantages. It places the nations engaged therein in urgent need of credits, which the financiers can bestow on their own terms. It unsettles things, making it easier to change the masters of a people. And in this particular war it seemed likely that many kings would lose their thrones—a pleasurable thought for those who opposed to the Monarchial State the larger beatitude of the Bankers' State. In particular, and for motives which need not be investigated in this strictly non-racial treatise, the Kuhn, Loeb bankers had their eye on one monarch whose head above all others they wished to see rolled in the sand—the head of the Czar of all the Russias. That is one reason why, in 1914, they were so ardently pro-German and so hostile to Britain. The Bolshevik Revolution of 1917 changed all that. Simple people imagine that the Russian Revolution was a protest against just such a system of wicked
financial manipulation as I have described. What would be their surprise if they knew that the Bolsheviks were directly subsidized by—can they guess?—Messrs. Schiff, Paul Warburg, Max Warburg and the entire Kuhn, Loeb and Company outfit! The first war objective, therefore, was gained when Imperial Russia fell. There was no longer the same reason for hating Britain, especially as Britain had done that which arouses love in the hearts of all true money-lenders—got hopelessly and inextricably into their debt. The late Lord Reading negotiated with the United States a loan of £1,000,000,000 which that optimistic gentleman promised that we should repay on demand—and in gold! Thereafter there was no need for the Schiffs and the Warburgs to worry about Britain: we were safely in the bag. And if the war ended with the defeat of Germany and Austria—well, that would be at least two more crowned heads out of the way of a bankers' world state. America duly entered the war on our side!
as the rulers of us all." Nothing could be less equivocal than that. What cannot be denied is that in 1928 the Federal Reserve Board was feverishly expanding credit to create a boom, and next year as feverishly restricting credit to create a slump.
This time, however, the Federal Reserve Board group had overreached itself. Although the result of the world-wide crashes had been to strengthen the power of the big combines everywhere, and greatly to increase bank holdings of industrial stock, the slump nevertheless went too far; much further than it was intended to go. Two signal events proclaimed this fact. First, Great Britain, in a desperate attempt to extricate herself, was forced off gold (as were thirty-four other nations!) and obliged to insulate her economy within a sterling area and a system of Imperial Preference. Repeated attempts have been made by the dollar-manipulators to crash the sterling area: only now are they about to succeed. To this mild but not incompetent British insurrection was added a much more terrifying phenomenon. Out of a Germany devastated by the Money-Power arose—Adolf Hitler. Hitler's revolt was not mild. It challenged the entire concept of international lending and established as the basis of trade the mutual exchange of goods, without recourse to the usurers. There had been pioneers before Hitler. Kemal Ataturk had carried through the reconstruction of Turkey without borrowing a penny from abroad. Mussolini had safeguarded Italian currency against foreign speculators and striven as far as possible to build up for his people a self-contained economy. He was to have successors in Spain and Portugal. After the emergence of Hitler, however, it became clear that the international financial system was in mortal danger and that only by another war could it ever regain control over its vast empire—the empire built and maintained by debt. As it happened, Hitler was only too happy to oblige, and war came. War would have come in any case. As Joseph Stalin has put on record: "It would be incorrect to think that the war arose accidentally or as the result of the fault of some of the statesmen. Although those faults did exist, the war arose in reality as the inevitable result of the development of the world economic and political forces on the basis of monopoly capitalism."
The master-financiers of America, and their associates elsewhere, breathed again: now they would be able, not only to retrieve all the ground they had lost, but, by careful planning, to ensure that such rebellions never again occurred, or—if they did occur—that they should be put down by international armed force. As in 1913, they had grafted their wicked designs upon President Wilson's idealism to secure their precious central banking system, so in 1919 they had done precisely the same thing to secure that "hope of all the ages," the League of Nations. One of the first actions of the League was to recommend all member states to return to the gold-standard, which leaves little room for doubt, even if no other evidence were available, that it was from the beginning the kept creature of the Money-Power. Geneva, however, was a sad disappointment to its promoters. When the opportunity came to coerce the rebel nations, "not a ship, not a gun," was available for the job. Next time the chosen instrument should have "teeth" to enforce the Wall Street writ. This was decided long before the war came to an end—at Dumbarton Oaks. The war was to fulfil
everything else that had been expected of it. The first rebel to be brought to heel was Great Britain, whose foreign assets were taken over by New York almost en bloc, and who was for the most part forbidden to export, so that her foreign markets might be captured by the United States. Thereafter, as we shall see presently, much more ambitious plans were prepared to ensure her complete subjection to Wall Street. The last rebel to be vanquished—for in this sense Japan did not come within the rebel class—was Germany. Germany's fate does not need to be described: the one consoling feature of her plight is that she brought it upon herself by virtue of her warrior-dream, which the masters of the world were able so relentlessly to use against her for her own destruction. Britain restored to the comity of international finance, all rebels on the other side shattered, an international organisation, with "teeth," formed to keep the Money-Lenders' Peace—these be rich gains for Wall Street, but they are not the only gains.
We have seen how Paul Warburg managed to foist his idea of a central banking system on Woodrow Wilson and other sincere reformers. He represented it as a device for securing stability in the price level, but as soon as it was set up he used it to maintain instability of prices, a condition essential for the practise of large-scale usury. Within two years, as our Ambassador in Washington reported, he and his friends had become the financial masters of America. If it were possible to go further, and establish the same device on an international scale, would it not enable the world's strongest national reserve banking system to control its activities, so that the controllers of the national system could become the financial masters of the whole world?
The successors of Schiff and Warburg on the Federal Reserve Board evidently asked themselves this question and answered with an emphatic "Yes." While the Second World War had still a long way to go to its determined end, "experts" suddenly began, both here and in America, to prepare plans for a "sound" monetary policy after it was over. Then came a gathering at a sylvan spot called Bretton Woods. By this time the reader will scarcely require to be told that its avowed object was to secure stability in the price level! There was one other similarity to the campaign for the passing of the Federal Reserve Act. This Act was preceded by the Aldrich Bill, a more extreme measure which failed to get through the House of Representatives. So was the Final Act of Bretton Woods preceded by the more drastic White Plan. It would almost seem in each case that the extreme measure was put first, to make the succeeding compromise seem the more gracious. However that might be, the Final Act of Bretton Woods was duly presented to the nations for approval. Lord Keynes arrived back in
this country to commend it with great eagerness. It would, he assured us, secure stability of prices. The mechanism which it proposed to set up would conduct funds lying idle to irrigate the currency of any necessitous area which might need them. In precisely this kind of language did Woodrow Wilson commend the Federal Reserve Board system. We know now that the Federal Reserve system, instead of doing what Wilson had intended, often deliberately withheld credit where it was needed in order to create a panic. We know, too, that it enabled the strongest group within its complex of interests to gain control of its policy and of the economic policies of the American nation. Few things are more astonishing in economic history than the apparent failure of the late Lord Keynes to lay the moral to his heart.
The first objective of Bretton Woods is, of course, the linking of all currencies to gold. When sterling is fixed in terms of gold it will not be allowed to fluctuate above one per cent. There will be an obligation to buy and sell gold at a fixed buying and selling price. Member nations, moreover, will be obliged to include gold, in a given ratio, in their quotas to the International Monetary Fund, as well as in their contributions to the International Bank—the lodging of security against loans that have still to be advanced! The New York bankers have thus won on a world-scale the battle which they won on a national scale in 1893: Henceforward gold is to be the measure of things. And they control the gold!
Potentially even more catastrophic is the provision that nations will be unable, without the express consent of the Lords of Gold, to devalue their currencies above ten per cent. The seriousness of this enactment can only be understood by recalling that when, in 1931, it was vital for Britain to sever the link which bound her to the evil New York system, she found it necessary to devalue up to 27 per cent. Wall Street is determined that such a thing shall not be allowed to happen again. Should Britain or any other hard-pressed country attempt an unauthorized devaluation the international bankers will possess means of securing immediate redress. What means? The answer takes one's breath away by virtue of its truly monumental impudence. Power has been vested in gentlemen of the kidney of the late Paul Warburg to declare the defaulter an outlaw among nations. They can order member States not to trade with her, and so starve her people into submission. If Britain were to default, her own Dominions, on pain of dire penalties, would be required to employ economic sanctions against her: similarly if a Dominion defaulted the Mother Country would be called upon—as Truth forcefully pointed out—to "repay the blood-loyalty and sacrifices of two wars by declaring an
economic war on that Dominion." Could anything be more intolerable?
Some may draw comfort from the fact that Britain will be represented among the official controllers of the International Monetary Fund. Every one of the appointments of senior officials to the Federal Reserve Board was made by President Wilson, but that fact did not prevent it becoming the chosen weapon of Kuhn, Loeb and Company and their affiliated interests. So will it be with the new Fund. No power at present on earth (not even Dr. Dalton!) will be able to stop it carrying out the policy of the same group, again through the instrumentality of the Federal Reserve Board's overwhelming financial leverage. By passing the Bretton Woods Bill, which it did without debate and in a hurried two hours, the British Labour majority made Great Britian a party to the creation of a World Bankers' State, armed with powers beyond anything hitherto enjoyed by men. Simultaneously it made Britain a party to her own ultimate destruction.
ruin the entire money-lending racket. What will become permanent will be the stranglehold of the money-lenders over mankind.
Red Russia was the child of Wall Street finance, and even today
she is not averse to borrowing from her parents, a well-known method of keeping affections sweet and fresh in that family relationship. Now, however, it has become exceedingly clear that such loans will be used for a purpose different from any thought possible before the war—the strengthening of Russia as an Imperialism which may rival and overthrow the Dollar Imperialism of the Federal Reserve Board. This does not mean that the quarrel is necessarily a permanent one: the tremendous anti-Russian "build-up" in America during the fortnight before Mr. Churchill's Fulton speech, for instance, may have been caused by some purely local dispute—such as the division of the spoils in Manchuria—and a permanent settlement may well see the two Imperialisms again at work breaking up and devouring the British Empire.
The quandary in which Britain finds herself is one of the utmost difficulty and menace. Any attempt to steer her own course by building up an Empire economy on a sane monetary basis would meet with immense opposition abroad, and be freely sabotaged at home by Fifth Columnists—both those serving Moscow and the others on the Right who seek to shelter behind the illusory ægis of America. There is, moreover, very little recognition in this country of the facts behind the conventional Press and B.B.C. facade. Some men have fought bravely against Bretton Woods, it is true—at their head Messrs. Robert Boothby, Christopher Hollis, Norman Smith, Richard Stokes and Michael Foot in the House of Commons, Lord Beaverbrook and the Duke of Bedford in the House of Lords—but as yet the picture of world affairs in their totality has been revealed to only a small fraction of the British people, and there is no doubt whatever that the ignorance of the rest has been deliberately fostered by the staging of political sham-fights for their distraction.
Unless enlightenment comes within the next few months Britain as a Great Power will cease to exist, and "sole sovereign sway and masterdom" over all British lands will pass into the keeping of a small group of master-usurers who know the value of everything in the world—providing it can be measured in terms of gold!
— May and June, 1946 —
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