The Truth About the Slump-A N Field-1932-221pgs-POL

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THE TRUTH ABOUTTHE SLUMPWhat the News Never Tells

By A. N . FIELD

Published by A . N . F I E L D , O k i w i B a y , C r o i x e l l e s ;

P .O . B o x 1 5 4 , Nelson, New Zealand

1932 .

ALL. RIGHTS RESERVED



"Democracy h a s no more persistent or

insidious foe than th e money power, to which

it may say, as Dante said when he reached in

his journey throu gh Hell the dw elling of the

God of Riches, `Here w e found W ealt h, th egreat enemy . ' That enemy is formidableb ec a u s e h e w o rk s s ecr e t l y , b y p e r s u a s i o n o r

deceit, rath er tha n by force, and so takes men

u n a w a r e s . He is a danger to good government

e v e r y w h e r e .

"The truth se ems to be that de mocracy has

only one marked advan tage over other govern-

ments in defending itself against t he sub marine

warfare which wealth can wage, viz . , P u b l i c i t y

and the force of Public Opinion . So long

as Ministers can be interrogated in anasse mbly, so long as the press is free to call

a t t e nt i on t o a l l eged scand a l s a nd r equir e

explana t i ons from pe r s ons s u s pecte d o f animproper use of money or an impropersubmission to its influences, so long will the

people be at lea st warned of the dangers that

threaten them . I f t h e y r e f u s e t o t a k e t h e

warning they are already untrue to the duties

that freedom prescribes . "

-The late Lord Bryce in"Modern Democracies" (1921) .



F i r s t P r i n t i n g : March, 1 9 3 1 .

Second P r i n t i n g : J u n e , 1 9 3 1 .

T h i r d P r i n t i n g : O c t ob e r , 1 9 3 1 .

Fourth Printing : May, 1932 .

F i f t h P r i n t i n g : O c t ob e r , 1 9 3 2 .

F u r t h e r c o p i e s o f t h i s b o o k m a y

be obtained from A . N . Field,

Box 154 , Nelson .

P r i c e , 4 / - p o s t f r e e .

AUTHOR'S NOTE .

S i n c e t h i s b o o k w a s wr i t t en a t t h e b e g i n n i n g o f 1 9 3 1

many momentous changes have occurred . I t h a s n o t

b e e n p r a c t i c a b l e t o r e v i s e t h e t e x t t h r o u g h o u t , b u t a p o s t -

s c r i p t h a s n o w b e e n a d d e d t o t h e b o o k b r i n g i n g i t u p t o

d a t e .

-A. N . F .

O c t o be r , 1 9 3 2 .



Chapter page9

1 1

16

22

2 0

3 . 3

45

5 8

VIII-The S trange Story of the F ederal Reserve

74

93

1 1 l

1 2 8

139

1 5 4

164

176

185

1 9 5

Appendix-( 1 ) B r i t i s h v . Continental Freemasonry

(II) "The Alien Menace" - - - -

(III) Who's Who : Persons Mentioned in

i

i

i i ih i s Book - - -- . - . --

(IV) "Honour or Doll ars" - - . - . i x

Board- _-

IX-Britain is Drawn into the Toils -- --

X-The Strangle-hold Increases - -

3E I--Heor y Ford Retr acts

. - . _ -

XII--3he Myst ery of the Protocols - - _ -

XIII-The Position Today -- - - - - - -

XIV-Self-help the Only Wa y Out . . . . -- - -

XV-The Ba sis of Security-- -- _ . - -XVaodRemedies -- - . - -

XVII-Postcript .- - - - - - - . -

Introduction- - -

I- S ome F a c t s A b o u t M o n e y - - - - - -

II-One Commodity Cont rols All - - - -

III-Some Tricks of the Trade - . . -- - -

IV-Wher e We A rc Ruled From . . - -- ._

V -T h e M e n a t t h e T o p -- _ -- --

VI-The German Sid e of the Sto ry -- --

V I I - Ho w R u s s i a w a s S m a s h e d U p -- --



INTRODUCTION.

T h i s book t e l l s the story of who caused the s l ump

and how they caused it, and it directs attention to two

simple steps th at can be taken to save our farmers and

traders .

No greater mistake can be made than t o suppose th at

t h e p r e s e n t s l um p i n c omm od i t y p r ic e s i s d u e t o b l i n d

economic forces . The depression from which we nowsuffer is due to a n artificially induced variation in the

purchasing power of money . In these pages will be found

ample evid ence in support of this stat ement . The quarte r

from which the tr ouble is coming is indicated, a nd the

amazing manner in wh ich the machinery for monetary

control of the world was es tablis hed is traced out . Thestory of the slump is essentially a s tory of men and their

motives . Some of those motives, s uch as declarations of

hostility to the Brit ish Empire, and action inimical to it,

are matters of open public record : others are a matter of

speculation .

The facts set out rest upon unimpeachable authority,

and the sources are given throughout . A n y r e a d e r w h o

has access to a large lib rary can ver ify them all for

himself, and by a little research would doubtless uncover

much additi onal matter sup plementing and confirming

what the present author has assembled .

N e v e r t h e l e s s , o n e m a y s e a r ch i n v a i n t h r o u g h t h e

newspaper pr ess, thr ough the utterances of public men,through practically the whol e current lit eratur e of today,

for any reference to these central, pivotal facts governing

t h e w h o l e w o r l d p r i c e l e v e l and the financial and

economic situation tod ay . Why this silence?

The answer is that the most potent forces in the world

t o d a y a r e f o rc e s t h a t d o n o t w o rk i n t h e o p e n . Theycould not work in the open : f o r if t h e y d i d m ankin d

would not for one instant tolerat e their continuance . I t

is essential for the success of their plans th at the people

of the world shou ld be unawar e of the chains that have

b e e n m a d e t o e nm e s h t h e m .

A small number of persons in different countries h ave

s h o w n b y t h e i r u t t e r a nc e s t h a t t h e y a r e w e l l a w a r e of

what i s taking place--or, rat her, ha s been taking place-

for the chain of events e xtend s back over a l ong period

of time .



Three-quarters of a century ago Disraeli told Britain's

H o u s e of C omm o n s t h a t " t h e w o r l d i s g o v e r n e d b y v e r y

d iffer e n t p e r s o n s f rom w h a t i s im ag in e d b y t h o s e w h o

are not behind th e scenes . "

In a recent int erview , General Ludendorff, chief of

the German General Staff through the war, de clared that

the world today is rule d by "secret supra-national

powers," "the same diabolically clever wire-pullers tha t

brought about the las t cataclysm . "

I n t h e L o n d o n " N a t i o n a l R e v i e w " s ix y e a r s a g o M r .

A r t h u r K i t s o n w r o t e a b o u t " O u r I n v i s i b l e R ul e r s ," a n d

in other articles has e xpounded this same theme .

In giving evidence before a United States Congres-

s i o n a l c o mmi t t e e i n 1 9 2 6 , M r . W e s t e r n S t a r r , h e a d o f

t h e Un i t e d S t a t e s F a r m e r - L a b o u r P a r t y , d e c l a r e d t h a t

unles s a certain group of men, whom he referre d to as

"these old men of the sea," had the ir power curbed the

world would b e plunged into another war, compared wit h

which the last war woul d be "like a Fourth o f Julypicnic . ' '

More cryptically, but none the less significantly, Sip

Josiah Stamp, one of Brita in's foremost bus iness met

a n d e co n o m i s t s , h a s exp r e s s e d t h e o p i n i o n - r e ma r k a b i c

as coming from a dir ector of the B ank of England-that

money, after having brought civilisat ion to its pres ent

level, may well "actually destroy society . " When ther e a d e r h a s d i g e s t e d t h e f a ct s h e r e i n a s s e m b l e d t h i s

statement may fall less i ncredibly on his ear .

It is impossible to maintain our country in a state of

security un less w e face the facts and conform to realit y .

Our national peril is that we ar e ignoring all the vital

facts of the situation . Our enemies are none the less rea l

b e c a u s e t h e i r w a y s a r e h i d d e n w a y s . B u t t h e y a r e a

thousand times more insidious . W h a t t h e w a r f a i l e d t o

do they seek, to accomplish, and their ambition is to

shatter in bankruptcy and r uin the once-splendid fabric

of the British Empire . A. N . FIELDOkiw i Ba y ,

Croixelles .

February, 1931 .



CHAPTER 1 .

SOME FACTS ABOUT MONEY .

Before we can get v e r y f a r into t h i s matter of the

price slump it is necessar y to bear in mind a few simplefacts about money . C o n t r a r y t o g e n e r a l b e l i e f t h e

essential facts about money are really quite si mple and

c ap a b l e of b e i ng u n d e r s t o o d b y a n y p e r s o n of o r d i n a r y

intel ligence .

The chief thing to remember about money is tha t the

more there is of it the less it is worth, and the less there

is of it the more it is worth .

That is to say, if everybody woke up tomorrowmorning and found himself or herself in possess ion of

t w i c e a s m u ch m o n e y a s h e o r s h e h a d t h e d a y b e f or e ,

w ha t w ou ld b e t he po si ti on ? Jo n e s a nd B r o w n, w e w i l l

suppose had planne d to go to an auction sale to buy a

h o u s e. Both a re keen to get it, and each finding himself

in possess ion of twice as much money as he had the day

before lets his bidd ing run higher . Multiply this all over

t h e count r y , not onl y w i t h h ou s e pr ope r t y b u t w i t h

everything else, and the net result will be that the price

o f e v e r y t h i n g w i l l - a ft e r a t i m e -b e j u s t a b o u t d o u b l e

w h a t i t w a s b e fo r e t h e m o n e y w a s d o u b l e d . That wasthe situation we had just after the war when the price

of e v e r y t h i ng w e n t sk y- h igh .

We will now suppose that the situation is reversed,

a n d t h a t w e a l l w a k e u p o n e f i n e m o r n i n g -a s m a n y o f

us have d one-to find ourselve s in possessi on of half as

much money as we had the day before . N a t u r a l l y w e

have to make that little go a long way . Jones and B rown

probably b oth decide that the y can get along as they are

and that buyi ng that house must stand over . Everybodyelse is of the same mind . Gradua lly, after a time, the

price of everyt hing will drop to somewhere abou t half of

w h a t i t w a s b ef o r e t h e m o n e y s u p p l y w a s . c u t o f f .

F o r t u n a t e l y t h e s e c h a ng e s d o n o t h a p p e n o v e r n ig h t

- o r v e r y r a r e l y d o - b u t t h e y d o h a p p e n r a p i d l y e n o u g h



12 THE TRUTH ABOUT THE SLUMPt o c a u s e e n o r m o u s d i s l o c a t i o n of h um an affai r s . Fo r

instance by the early part of 1920 a British pound would

buy only a bout 40 per cent . of what it would buy before

t h e w a r . A few months later it would buy tw o-thirds of

w h a t i t b o u g h t b e fo r e t h e w a r , a n i nc r e a s e i n t h e

purchasing power of money of 65 per c ent . i n one hit .

Moreover, in our illustration we have supposed that

w h e n t h e s u p p l y of mo n e y w a s d o u b l e d o r h a l v e d e v e r y-

b o d y f o u n d h i m s e l f a n d h e r s e l f p o s s e s s e d o f t w i ce a smuch or half as much as the case might * b e . Thedisastrous thing about these increases or decreases in the

quantity of money is just tha t they are not s hared ou t

evenly . S om e p e o p l e g e t mo r e t h a n t h e i r s h a r e a n d

others get less . W h e n m o n e y i s p l e n t i f u l e v e r y o n e w h o

has thi ngs for sale can put up h is prices with out more

a d o . B u t p e o p l e w h o h a v e t o d e p e n d o n m o n e y p a y me n t ,

the a mount of which is fixed by contract or custo m, find

themselves very bad ly off . They get the same moneyincome as be fore, but as the price of everyt hing is up

they are in a bad way, and maybe what was a comfortable

income before becomes quit e insu fficient to li ve on . In

the end everything adjusts itself, the old contracts run

out and are renewed on a new basis, and fees and other

charges fixed by custom are ra ised . Before this is done

a gre a t many pe opl e w i l l pr ob a b l y h a v e b e e n r u i n e d

through no fault of their own a nd thrown into poverty

and destitution .

B o t h t h e s e p r oc e s s e s -ncrease ( i n f l a t i o n ) a n d

decrease (deflati on) of the currency-are great publi c

e v i l s. Of the two deflation is b y far the worst . In an

inflationary period the active people who are produ cing

things benefit and . the inactive and unproductive people,

such as the drawers of interest, are injured . In a period

of deflati on, such as we ar e now experie ncing, it is th e

other way round, and the active producers suffer, while

the people who liv e on interest receive more than their

share .

F o r i n s t a nc e, l e t u s s u p p o s e t h a t F a rm e r Ro b i n s o n

had bou ght a farm five ye ars ago, and ha d figured i t out

t h a t of h i s gros s i ncome one-th i r d would pay hismortgage interest b ill, one-third would keep him and his

fam i l y , a n d t h e o t h e r t h i r d h e w o u l d h a v e f r e e t o p u t

back into t he farm . Very well, we wi ll next suppose-it

does not ne ed much suppos ing-that Farmer Robi nso n's



SOME FACTS ABOUT MONEY 1 3

i n c o m e f r o m h i s f a r m h a s f a l l e n 5 0 p e r c e n t . b y r e a s o n o f

t h e d e c l i n e i n t h e p r i c e s f o r h i s p r o d u c e . F o r e v e r y £ 1 0 0

t h a t f o r m e r l y c a m e i n o n l y £ 5 0 w i l l n o w c o m e i n . But

h i s m o r t g a g e i n t e r e s t b i l l w i l l s t i l l r e m a i n a t t h e o l d

f i g u r e a n d o u t o f e v e r y £ 5 0 h e r e c e i v e s h e w i l l h a v e t o s e t

a s i d e £ 3 3 6 s . 8 d . f o r h i s m o r t g a g e i n t e r e s t . T h i s w i l l

l e a v e h i m w i t h £ 1 6 1 3 s . 4 d . t o c a r r y o n w i t h i n p l a c e o f

t h e £ 6 6 1 3 s . 4 d . f r e e i n c o m e f o r k e e p i n g h i m s e l f a n d

i m p r o v i n g h i s f a r m t h a t h e r e c k o n e d o n f i v e y e a r s b e f o r e .

I n o t h e r w o r d s a n i n t e r e s t c h a r g e t h a t f o r m e r l y t o o k

o n e - t h i r d o f t h e f a r m p r o d u c e t o s a ti s f y i t n o w r e q u i r e s

t w o - t h i r d s o f t h e s h r u n k e n i n c o m e .

T a k e n b y a n d l a r g e t h a t i s w h a t t h e f a r m e r s o f N e w

Z e a l a n d a r e u p a g a i n s t t o d a y . The a mount of money

t h e y a r e r e c e i v i n g f o r t h e i r p r o d u c e h a s s h r u n k t o a b o u t

h a l f w h a t i t w a s , a n d a n a l t o g e t h e r d i s p r o p o r t i o n a t e s h a r e

o f t h a t r e d u c e d i n c o m e i s s w a l l o w e d up i n mortgage

c h a r g e s . I f t h e f a r m e r c a n n o t m e e t t h o s e c h a r g e s h i s

e q u i t y i n h i s f a r m v a n i s h e s , a n d w h e t h e r h e r e m a i n s o n

h i s f a r m o r g o e s o f f i t d e p e n d s o n w h e t h e r h i s m o r t g a g e e

t h i n k s i t m o r e p r o f i t a b l e t o t ur n h i m o f f n o w o r l e a v e

t h a t o v e r t i l l l a t e r w h e n t h e p l a c e c a n b e s o l d u p t o b e t t e r

a d v a n t a g e . I f h e r e m a i n s o n i t i s o n l y b e c a u s e h e i s

w i l l i n g t o w o r k f o r l e s s t h a n w a g e s .

T h a t t h e f a r m e r ' s e q u i t y i n h i s h o l d i n g s h o u l d b e t h e

f i r s t t h i n g t o v a n i s h w h e n a p e r i o d o f d e p r e s s i o n a r r i v e s

i s a m o r a l l y v i c i o u s t h i n g , a n d w h o l l y o p p o s e d t o t h e

n a t i o n a l i n t e r e s t . I t i s d u e t o t h e f a c t t h a t w e l i v e u n d e r

l a w s t h a t h a v e b e e n m a d e a t t h e b e h e s t o f m o n e y - l e n d e r s

i n t h e i n t e r e s t s o f m o n e y - l e n d e r s .

The next point we have to consider is how t hese

c h a n g e s i n t h e p u r c h a s i n g p o w e r o f m o n e y a r e b r o u g h t

a b o u t . T h e y a r e p a r t o f t h e p r i c e t h e w o r l d i s o b l i g e d

t o p a y f o r t h a t d i s a s t r o u s m o d e r n i n v e n t i o n , t h e G o l d

S t a n d a r d . I n c o u n t r i e s t h a t a r e p r o p e r l y o n t h e g o l d

s t a n d a r d e v e r y p e r s o n w h o h a s a m o n e y c l a i m o n a n o t h e r

can demand payment in gold coin . I n a g o l d s t a n d a r d

c o u n t r y a n y o n e c a n t a k e g o l d b u l l i o n t o t h e m i n t a n d

have it stamped into coin on paying a small fee .

A l t o g e t h e r t h e r e i s a b o u t 2 , 0 0 0 m i l l i o n p o u n d s ' w o r t h

o f m o n e t a r y g o l d i n t h e w o r l d . P r a c t i c a l l y t h e w h o l e

o f t h i s , o r , a t a n y r a t e , b y f a r t h e g r e a t e r p a r t o f t h i s g o l d

i s p r i v a t e p r o p e r t y . A t t h e e n d o f 1 9 2 9 t h e g o l d h o l d i n g

i n B r i t a i n w a s a b o u t 1 5 0 m i l l i o n s . A t t h e s a m e d a t e t h e



14 THE TRUTH ABOUT THE SLUMPBritish National Debt, payable in gold, totalled about

7,500 millions . That is to say , the Briti sh Government

alone owe s three a nd thre e-quarte r times as much gold

as there is in the whole world , and fifty times as much

as was held in Britain . A n d t h i s d e b t i s b u t a d r o p i n

the bucket of the total d ebts payable in gold .

In -face of these figures t he gold sta ndard se ems an

incredible thing. It has been described, and not u njustly,

as a fraudulent standard . It works only so lon g as no

more than a tiny fraction of the people who are enti tled

to be paid in gold actually d emand gold . A s s o o n a s a n y

n u m b e r o f t h e m d e ma n d g o l d t h e o n l y t h i n g t h e b a n k s

can do is to shut their doors and sus pend payment . Thew h o l e t h i ng i s a s h am a n d a f r a u d f rom t o p t o b o t t om

and has be en the cause of more misery and w retchedness

t h a n p r o b a b l y a n y o t h e r h u m a n i n v e n t i o n .

As th e amount of gold is e ntire ly ins ufficient for

monetary purposes a vast sup erstru cture of paper money

has been bui lt up, all bas ed on this 2,000 millions of gold .

First of all the re is a limited a mount of paper money

prope r in th e form of Gover nment or ba nk notes . O n t o p

of this the re is that ot her and immensely more important

form of paper money, the priva te cheque, in which the

g r e a t b u l k o f p a y me n t s a r e n o w a d a y s ma d e .

In gold standard countries the t otal volume of notes

in circulation a nd the total a mount of cheques t hat may

b e w r i t t e n a r e a l l r e gu l a t e d b y t h e go l d h e l d b y t h e

banks . The ratio of notes to gold is almost universall y

fixed b y la w . Banking policy usua lly fixes the ratio of

cheques to th e cash holdin gs . I n B r i t a i n a n d A m e r i ca

this cheque or credit currency usuall y stands t o cash in

the ratio about 7 to 1, but the figure is very var iable .

This cheque or credit money is an elas tic thing . Thebanks create it whene ver the y make an adva nce on over-

d r a f t . W h e n b a n k a d v a n c e s a r e i n c r e a s e d t h e qu a n t i t y

o f m o n e y t h u s i n c r e a s e s . To express ou rselves more

p r e c i s e l y w e s h o u l d s a y t h e p u r c h a s i n g p ow e r o f t h ecommunity . i n c r e a s e s . If t h e r e i s n o c o r r e s p o n d i ng

increase in the quantity of things purchasable this means

t h a t t h e g e n e r a l p r i c e l e v e l g o e s u p , a n d w h a t i s

described as an increase in the cost of living takes place .

O n t h e o t h e r h a n d , w h e n a b a nk ca l l s u p a n a d v a nc e

it reduces purchasing power and decreases th e quantit y



SOME FACTS ABOUT MONEY 1 5

of money . If the banks make a general move in this

d i r e c t i o n t h e p u r c h a s i n g p o w e r o f t h e c o m m u n i t y s h r i n k s

a n d t h e g e n e r a l p r i c e l e v e l f a l l s .

I n s p e a k i n g o f p r i c e s a n d t h e p r i c e l ev e l t h e r e f e r e n c e

i s , o f c o u r s e , t o p r i c e s a s a w h o l e , n o t t h e p r i c e s o f

i n d i v i d u a l c om m o d i t i e s . A s P r o f e s s o r I r v i n g F i s h e r h a s

p o i n t e d o u t i n h i s " M o n e y I l l u s i on , " t h e r e a r e t w o k i n d s

o f m o v e m e n t i n p r i c e s . T h e p r i c e o f e v e r y i n d i v i d u a l

marketable thing keeps bobbing up and down like the

waves of the sea according to demand and s upply and

c o s t o f p r o d u c t i o n . Less no ticeable, b ut much more

i m p o r t a n t , t h e w h o l e l e v e l o f p r i c e s r i s e s a n d f a l l s l i k e

t h e t i d e s o f t h e o c e a n . I t i s o n l y s i n c e t h e i n v e n t i o n o f

i n d e x n u m b e r s t h a t i t h a s b e e n p o s s i b l e t o m e a s u r e t h i s

l a t t e r m o v e m e n t . I t i s b y f a r t h e m o s t i m p o r t a n t m o v e -

ment . E v e r y G o v e r n m e n t i n t h e w o r l d n o w c o m p i l e s i t s

o f f i c i a l p r i c e i n d e x e s . In New Zealand our Government

S t a t i s t i c i a n c o m p i l e s s e v e r a l . T h e s e i n d e x e s a r e c o m p i l e d

f r o m s c o r e s , o r u s u a l ly a h u n d r e d o r t w o , d i f f e r e n t p r i c e s ,

a n d s h o w t h e m o v e m e n t o f p r i c e s a s a w h o l e.

When money is ba sed on a commodity -and not a

part icularly useful commodit y-such as g o l d , c h a n g e s

in the va lue of gold can only e x p r e s s t h e m s e l v e s b y

c h a n g e s i n a l l o t h e r v a l u e s i n r e l a t i o n t o g o l d . Wheng o l d i n c r e a s e s i n v a l u e , a l i t t l e g o l d w i l l b u y m o r e , a n d

t h e o n l y w a y g o l d c a n b u y m o r e i s b y t h e p r i c e s o f o t h e r

t h i n g s f a l l i n g w h e n e x p r e s s e d i n t e r m s o f g o l d m o n e y .

W h e n g o l d d e c l i n e s i n v a l u e , i t t a k e s m o r e g o l d t o b u y

the same amount as b efore, and in a gold standard

c o u n t r y t h e o n l y w a y t h i s d e c l i n e i n t h e v a l u e o f g o l d

c a n f i n d e x p r e s s i o n i s b y a r i se in t h e p r i c e o f t h i n g s .

We have now re ached a point at which s e v e r a l

i m p o r t a n t f a c t s h a v e b e c o m e c l e a r . We have noted that

there is in the world only a b o u t 2 , 0 0 0 m i l l i o n s o f

monetary gold, and on top of this, like a n i n v e r t e d

p y r a m i d , i s e r e c t ed a n i m m e n s e s u p e r s t r u c t u r e o f c r e d i t

a n d t r a d e . I f t h o s e w h o o w n t h i s g o l d w i t h d r a w i t f r o m

t h e b a n k s a n d l o c k i t a w a y , t h e b a n k s t o e s c a p e b a n k -

r u p t c y , m u s t c u r t a i l t h e i r l o a n s , w h i c h t h e y p r o m p t l y d o

by cutting down overdrafts . This, as we have seen,

r e d u c e s t h e p u b l i c ' s p u r c h a s i n g p o w e r , a n d w i t h r e d u c e d

p u r c h a s i n g p o w e r p r i c e s m u s t f a l l , a n d a n e r a o f trade

d e p r e s s i o n s e t i t s ,



1 6

CHAPTER II .

ONE COMMODITY CONTROLS ALL .

That money is more unstable in value than goods is

a t h i n g t h a t f e w p e o p l e r e a l i se f o r t h e s i m p l e r e a s o n t h a t

the only way a change in the value of money can find

e x p r e s s i o n i s b y a c h a n g e i n t h e p r i c e s o f g o o d s .

T h e B r i t i s h p o u n d i s f i x e d b y l a w a s b e i n g 1 1 3 g r a i n s

o f s t a n d a r d g o l d . Except tha t eggs are cumbersome to

c a r r y a b o u t i t m i g h t j u s t a s w e l l h a v e b e e n d e c r e e d b y

law that a pound sterling was to consist of 113 eggs .

Thereafter the pri ce of eggs would al ways be nin e and

f i v e - t w e l f t h d o z e n t o t h e p o u n d . Everybody would say,

"How stab le in price eggs are : e v e r y t h i n g e l s e g o e s u p

and down in price, but lo, behold, you always get 113

e g g s f o r a p o u n d n o t e . "

A l i t t l e r e f l e c t i o n w i l l s h o w u s t h a t a s a p o u n d h a d

been decreed to be 113 eggs, eggs could never be any

o t h e r p r i c e t h a n 1 1 3 t o t h e p o u n d . N e v e r t h e l e s s i f t h e

fowls stopped laying and eggs became scarce this fact

would not prevent the owners of eggs asking more for

them . B u t i f t h e y g a v e o n l y o n e e g g f o r a n a r t i c l e f o r

w h i c h b e f o r e t h e p r i c e h a d b e e n t w o e g g s , t h e r e s u l t w o u l d

b e t h a t e x p r e s s e d i n t e r m s o f o u r e g g p o u n d t h e p r i c e o f

t h a t a r t i c l e w a s r e d u c e d b y h a l f . That is exactly what

happens when gold is cornered up and becomes scarce .

T h e p r i c e o f e v e r y t h i n g f a l l s w h e n e x p r e s s e d i n t e r m s o f

g o l d , t h a t i s i n t e r m s o f m o n e y .

To control the price level, therefore, all that is

n e c es s a ry i s t o co n t r ol g o ld . I f y o u c a n c o n t r o l g o l d y o u

can make a general fall in prices by locking the gold

away, and you can make a general rise in prices by

l e t t in g t h e g o l d o u t a g a i n . I n c i d e n t a l l y , i f y o u h a d t h i s

power y ou could make much money by buying when

t h i n g s w e r e c h e a p a n d t h e n s e l l i n g a g a i n w h e n t h e y w e r e

dear . If instead of money you de sired powe r you could

b u y u p t h e i n d u s t r i e s , a n d a l l t h i n g s w h e r e b y m e n l i v e ,

d u r i n g t h e p e r i o d s o f d e p r e s s i o n w h i c h y o u w o u l d c r e a t e ;

and during the periods of prosperity which you would

c r e a t e y o u w o u l d b e a b l e - f r o m t h e p r o f i t s m a d e b y t h e s e

industries you had already bought-to buy up more

industrie s in the next period of depression you wo uld



ONE COMMODITY CONTROLS ALL 1 7

c r e a t e . T h i s p r o c e s s y o u c o u l d r e p e a t u n t i l y o u f i n a l l y

came to own everything that you considered worth

owning . , I n t h e e n d y o u w o u l d p r a c t i c a l l y o w n t h e e a r t h ,

a n d t h o u g h b u t a p r i v a t e i n d i v i d u a l o w n i n g s h a r e s i n t h i s

a n d t h a t y o u w o u l d b e m o r e p o w e r f u l t h a n a n y g o v e r n -

m e n t i n t h e w o r l d .

T h a t t h e m a i n c a u s e o f p e r i o d s o f d e p r e s s i o n i s n o t

s u n s p o t s , a s s o m e p e o p l e h a v e f a n c i e d - o r o v e r - p r o d u c -

t i o n o r u n d e r c o n s u m p t i o n , a s o t h e r s h o l d - b u t i s d u e t o

c h a n g e s i n t h e v a l u e o f m o n e y i s a v i e w n o w w i d e l y h e l d .

F o r i n s t a n c e , l e t u s c o n s i d e r t h e r e p o r t o f t h e C o m m i t t e e

o n S t a b i l i s a t i o n o f A g r i c u l t u r a l P r i c e s s e t u p b y t h e

B r i t i s h G o v e r n m e n t a n d w h o s e f i n d i n g s w e r e p u b l i s h e d

i n 1 9 2 5 . That Committee sa id

" H i s t o r i c a l l y i t i s t h e f l u c t u a t i o n s i n a g r i c u l t u r a l

p r i c e s a s a w h o l e w h i c h h a v e b e e n o f t h e g r e a t e s t i m -

portance and have had th e most far-reaching conse-

q u e n c e s . T h e e x p l a n a t i o n o f s u c h g e n e r a l v a r i a t i on s i i i

p r i c e s i s p r o p e r l y a t t r i b u t e d t o m o n e t a r y c a u s e s - t h a t i s

t o s a y , t h e c h a n g e s i n t h e t o t a l a v a i l a b l e m e a n s o f p a y -

m e n t i n a c o m m u n i t y t o t h e t o t a l q u a n t i t y o f g o o d a n d

s e r v i c e s t o b e m a r k e t e d . "

I n t h e c o u r s e o f i t s r e p o r t t h e C o m m i t t e e w e n t i n t o

t h e m a t t e r a t l e n g t h . It said

" T h e h i s t o r y o f a g r i c u l t u r e s i n c e t h e N a p o l e o n i c w a r s ,

disregarding minor booms and depressions, may be

r o u g h l y d i v i d e d i n t o f i v e p e r i o d s o f a l t er n a t i n g d e p r e s s i o n

and p r o s p e r i t y , n a m e l y , 1 8 2 0 - 5 0 , 1 8 5 0 - 7 4 , 1 8 7 4 - 9 6 .

1 8 9 6 - 1 9 2 0 a n d 1 9 2 0 - 2 4 . A s t u d y o f t h e s e p e r i o d s c a n

l e a v e l i t t l e d o u b t a s t o t h e d i s a s t r o u s c o n s e q u e n c e s t o

a g r i c u l t u r e o f t h e v a r i a t i o n i n t h e p u r c h a s i n g p o w e r o f

money .

"In the past hundred years the three severe and

p r o t r a c t e d d e p r e s s i o n s- t h e f i r s t f o l l o w i n g t h e

N a p o l e o n i c w a r s , t h e s e c o n d a f t e r 1 8 7 3 , a n d t h e t h i r d

f o l l o w i n g t h e E u r o p e a n w a r , h a v e i n e a c h c a s e b e e n d u e

t o f a l l i n g p r i c e s . W e d o n o t p r o p o s e t o g i v e a d e t a i l e d

a n a l y s i s o f t h e s e p e r i o d s o f a g r i c u l t u r a l h i s t o r y . It is

sufficient to mention that in each case there w as a

p r o f o u n d d i s t u r b a n c e o f m o n e t a r y c o n d i t i o n s . I n 1 8 1 9

a n A c t o f P a r l i a m e n t r e s t o r i n g t h e g o l d s t a n d a r d b r o u g h t

a b o u t a d r a s t i c r e s t r i c t i o n o f t h e m o n e t a r y c i r c u l a t i o n , a s

a r e s u l t o f w h i c h t h e p r i c e s o f a l l c o m m o d i t i e s , i n c l u d i n g

t h e p r o d u c t s o f a g r i c u l t u r e , d e c l i n e d v e r y r a p i d l y . I n



1 8 THE TRUTH ABOUT THE SLUMP1874 th e adopti on of a gold currency by many countries

of the world caused a shortage of gold, with t he resul t

that prices fell in all gold standard countries . In 1920 a

policy of securing a gradual return from a paper to a gold

c u r r e nc y w a s p u t i n t o f o rce w i t h a s i m i l a r r e s u l t o n

prices . We need not describe in detail how these events

worked out in th e case of agriculture . T h e d e p r e s s i o n

of 1920-23 has been dealt wi th elsewhere , and we attach

to this report a memorandum setting out more fully the

c o n n ect i o n b e t w e e n mo n e t a r y e v e n t s a n d t h e c o n d i t i o n

of agriculture between 1874 and 1896 . A l l w e w i s h t o d o

here is t o call attention to the fact that in each of these

periods the de pression of agriculture was brought about

by a general fall in prices, and that th ese price move-

ments had their origin primarily in monetary causes .

"In the crisis which followed the Napoleonic wars, and

in that after 1874, agriculture was reduced in manydistricts to a pitiable condition . In both cases much

agricultural land was abandoned or greatly deteriorated,

a n d t h e h a r d s h i p s ca u s e d t o t h e r u r a l p o p u l a t i o n c a nhard ly be exaggerat ed . If in the case of 1920-23 the

losses and sufferings were less se vere in spite of the very

rapid fall in prices, it is because the crisis was preceded

by a period of very rapid ly rising prices during which

large profits were made by th e farmers . The majorityw e r e t h u s e n a b l e d t o s u r v i v e t h e s e v e r e s l u m p w h i c h

succeeded it .

"It is, however, only necessary to study th e history

of agriculture during the ninetee nth century to see the

demoralization and other ill effects of a depress ion that

did not cease w ith th e end of a period of falli ng prices .

The alte rations in t he character of farming, the d eteriora-

tion of large tracts of land, and the de moralization of the

working population, have l eft their marks on the industry

l o n g a ft e r t h e c a u s e s w h i c h b r o u gh t t h e m a b o u t h a v e

ceased to operat e . In short, the history of the nineteenth

century seems to show, in a manner which is beyond

dispute, that var iations in the purchasing power of mone y

have b een responsible for greater misfortune to agricul-

ture tha n has arise n from any other single cause . "

T h a t i s a c l e a r a n d em p h a t ic e n o ugh s t a t em en t b y a

B r i t i s h Go v e r n m e n t C o m mi t t e e . Equally emphatic is the

vie w of the Rt . Hon . Regina ld McKenna, formerly

Chancellor o f the Exchequer in B rita in, and now chair -




man of the Midland Bank . I n h i s a n n u a l a d d r e s s t o t h e

s h a r e h o l d e r s o f t h a t i n s t i t u t i o n i n 1 9 2 6 , Mr. McKennae x p r e s s e d t h e o p i n i o n , f r e q u e n t l y r e p e a t e d b y h i m , t h a t

a l m o s t t h e w h o l e o f B r i t a i n ' s p o s t - w a r t r a d e d e p r e s s i o n

and unemployment has been du e to mistaken monetary

p o l i c y . I n h i s 1 9 2 6 address Mr. McKenna said

" I s t h e r e t h e n a n y o t h e r c o n t r i b u t o r y c a u s e o f t h i s

l o n g c o n t i n u e d t r a d e d e p r e s s i o n ? I s t h e r e

i n d e e d , a n y e x p l a n a t i o n a t a l l , o r i s i t a h a p h a z a r d a f f a i r

nobody can understand and which we need not trouble

t o i n v e s t i g a t e ? T h e r e i s i n t r u t h n o m y s t e r y i n t h e

m a t t e r , a n d i n d e a l i n g w i t h a n y c o u n t r y b u t o u r o w n w e

s h o u l d n o t h a v e t h e s l i g h t e s t d i f f i c u l t y i n f o r m i n g a r i g h t

judgment . When we ourselves are not immediately

c o n c e r n e d w e r e c o g n i s e a t o n c e t h e i n f l u e n c e u p o n t r a d e

o f m o n e t a r y c o n d i t i o n s a n d p o l i c y . . I t i s o n l y w h e n

w e t u r n f r o m f o r e i g n c o u n t r i e s a n d c o m e t o c o n s i d e r o u r

o w n c a s e t h a t w e m e e t a c e r t a i n r e l u c t a n c e t o d i s c u s s t h e

e f f e c t o f m o n e t a r y p o l i c y u p o n t r a d e a n d e m p l o y m e n t .

T h a t s u c h i n f l u e n c e e x i s t s i s n o t c a t e g o r i c a l l y d e n i e d , b u t

t h e s u b j e c t i s t o o o f t e n t r e a t e d a s o n e b e s t l e f t a l o n e , l e s t

w e b e l e d t o u n o r t h o d o x c o n c l u s i o n s . "

T h i s l a s t r e m a r k o f M r . M c K e n n a' s m a k es i t i n t er e st -

i n g h e r e t o i n t e r p o l a t e t h e f o l l o w i n g f r o m a n a r t i c l e b y

M r . A r t h u r K i t s o n p u b l i s h e d i n t h e " N a t i o n a l R e v i e w "

f o r M a r c h , 1 9 2 5 :

"Those who wish to understand the mysteries o f

m o n e y w i l l n e v e r s u c c e e d u n t i l t h e y r e a l i z e t h a t m o n e y -

l e n d i n g i s a b u s i n e s s r u n s o l e l y f o r t h e p r o f i t o f t h e

m o n e y l e n d e r s , a n d t h e r e f o r e a l l r u l e s , l a w s a n d s o - c a l l e d

` p r i n c i p l e s ' g o v e r n i n g f i n a n c e a r e i n r e a l i t y d e v i c e s f o r

g i v i n g t h e m e m b e r s o f t h i s p r o f e s s i o n c o n t r o l o f t h e i r

b u s i n e s s . I n t h i s r e s p e c t t h e c o n t r o l o f m o n e y a n d t h e

m e a n s a d o p t e d a r e n o t d i s s i m i l a r t o t h o s e n e c e s s a r y f o r

c o n t r o l l i n g w h e a t , c o t t o n , wool and any other com-

modity . "

A f o r e m o s t A m e r i c a n a u t h o r i t y e x p r e s s i n g t h e s a m e

view as Mr . McKenna is Professor I r v i n g F i s h e r ,

f o r m e r l y P r o f e s s o r o f E c o n o m i c s a t Y a l e U n i v e r s i t y , a n d

w h o i s d e s c r i b e d by S i r J o s i a h S t a m p , a d i r e c t o r o f t h e

Bank of England and himself a much-quoted authorit y

on economics, a s r e p r e s e n t i n g the "best i n f o r m e d

o p i n i o n " o n t h e s u b j e c t o f m o n e y . I n h i s b o o k , " T h e

M o n e y I l l u s i o n , " p u b l i s h e d i n 1 9 2 8 , P r o f e s s o r F i s h e r



2 0 THE TRUTH ABOUT THE SLUMPp o i n t e d o u t t h a t t h e s t a t i s t i c s o f t h e I n t e r n a t i o n a l L a b o u r

Office a t Geneva showe d that in 1919 -25 monetary

d e f l a t i o n o c c u r r e d i n 2 2 c o u n t r i e s a n d w a s f o l l o w e d b y

d e p r e s s i o n o f t r a d e a n d i n c r e a s e d u n e m p l o y m e n t i n a l l

t h e s e c o u n t r i e s ,- w i t h t h r e e u n i m p o r t a n t e x c e p t i o n s . I n

t h e U n i t e d S t a t e s a n d E n g l a n d t h e d e f l a t io n o f 1 9 2 0 - 2 1

t h r e w m i l l i o n s o u t o f w o r k . I n E n g l a n d , t h e P r o f e s s o r

p o i n t s o u t , a s e c o n d d e f l a t i o n was brought about in1 9 2 5 - 2 6 t o b r i n g t h e p o u n d b a c k o n t h e g o l d b a s is . Again

came unemployment a n d l a b o u r d i s c o n t e n t , and the

b i g g e s t s t r i k e i n E n g l a n d ' s h i s t o r y . " O f c o u r s e , " a d d s

P r o f e s s o r F i s h e r , " o t h e r c a u s e s w e r e i n v o l v e d , b u t d e -

f l a t i o n w a s a p o w e r f u l f a c t o r , a n d a l l t h e m o r e p o w e r f u l

b e c a u s e h i d d e n f r o m v i e w b y t h e M o n e y I l l u s i o n . "

The . " m o n e y i l l u s i o n " r e f e r r e d t o b y P r o f e s s o r F is h e r ,

i s t h e i l l u s i o n f r o m w h i c h w e a l l s u f f e r , t h a t p r i c e s r i s e

a n d f a l l b u t m o n e y r e m a i n s u n c h a n g e d i n v a l u e , w h e r e a s

the truth i s that our gold money is one of the most

u n s t a b l e t h i n g s i n t h e w o r l d .

I n t h e f r o n t r a n kof

E u r o p e a n e c o n o m i s t s i s P r o f e s s o r

G u s t a v C a s s e l , o f S w e d e n . I n t h e c o u r s e o f s o m e l e c t u r e s

w h i c h h e d e l i v e r e d a t C o l u m b i a U n i v e r s i t y , N e w Y o r k ,

i n 1 9 2 8 , a n d w h i c h h a v e b e e n s i n c e p u b l i s h e d u n d e r t h e

t i t l e " P o s t - W a r M o n e t a r y S t a b i l i s a t i o n " ( C o l u m b i a U n i -

v e r s i t y P r e s s, N . Y . , 1 9 2 8 ) , P r o f e s s o r C a s s e l s a i d

" W h a t w e c a l l t h e g e n e r a l l e v e l o f p r i c e s i s , i n f a c t ,

m e r e l y a n i n d e x o f t h e p u r c h a s i n g p o w e r , o r v a l u e , o f

money . B u t t h e v a l u e o f m o n e y c a n n o t p o s s i b l y b e d e -

p e n d e n t o n a n y t h i n g b u t t h e su p p l y o f m o n e y i n r e l a t i o n

t o t h e d e m a n d f o r m o n e y . E v e n t h e v a l u e o f m o n e y m u s t

follow the general law of supply and demand . T he

p r e v a l e n t n o t i o n t h a t t h e g e n e r a l l e v e l o f p r i c e s i s d e t e r -

m i n e d b y a n u m b e r o f o t h e r f a c t o r s , s u c h a s t h e c o s t o f

i n d u s t r i a l p r o d u c t i o n , o c e a n f r e i g h t s , e t c ., must be

r e l e g a t e d t o t h e d o m a i n o f e c o n o m i c d i l e t t a n t i s m . "

O f t h e p o s t - w a r r e t u r n t o t h e g o l d s t a n d a r d , P r o f e s s o r

C a s s e l s a y s ( p . 3 4 )

" T h e o r e t i c a l l y t h i s w a s n o t n e c e s s ar y . The world

h a d a s y s t e m o f p a p e r s t a n d a r d s , a n d i f e a c h o f t h e s e

p a p e r - s t a n d a r d s h a d b e en s i m p l y s t a b i li s e d a t a c e r t a i n

p u r c h a s i n g p o w e r a g a i n s t c o m m o d i t i e s , t h e w o r l d w o u l d

h a v e h a d a s a t i s f a c t o r y m o n e t a r y s y s t e m . S t a b i l i s a t i o n

d i d n o t i n i t s e l f r e q u i r e that the separate c u r r e n c i e s

s h o u l d b e b o u n d u p w i t h g o l d . . . .




" T h e g o l d s t a n d a r d i s , h o w e v e r , b y n o m e a n s a n i d e a l

s t a n d a r d . T h e v a l u e o f g o l d i s s u b j e c t t o v a r i a t i o n s

w h i c h c a u s e s e r i o u s d i f f i c u l t i e s t o e v e r y c o u n t r y t h e

e c o n o m i c s y s t e m o f w h i c h i s b u i l t u p o n t h e b a s i s o f a

g o l d s t a n d a r d . The modern gold standard dates from

t h e N a p o l e o n i c w a r s . . . . A p a r t f r o m t h e s h o r t - t i m e

f l u c t u a t i o n s o f t h e p r i c e l e ve l , a t t r i b u t a b l e t o t r a d e c y c l e s ,

g r e a t s e c u l a r a l t e r a t i o n s i n t h e p u r c h a s i n g p o w e r o f g o l d

h a v e t a k e n p l a c e . W h e n , f o r i n s t a n ce , t h e i n d ex f i g u r e

o f S a u e r b ec k f e l l f r om 1 1 1 i n 1 8 7 3 , d o w n t o 6 1 i n 1 8 9 6 ,

t h i s i s s u f f i c i e n t t o p r o v e t h a t g o l d i s n o r e l i a bl e m e a s u r e

o f v a l u e , a n d t h a t e v e n w i t h a g o l d s t a n d a r d e c o n o m i c

l i f e i s e x p o s e d t o s e r i o u s d i s t u r b a n c e s h a v i n g t h e i r r o o t

i n a n u n s t a b l e m o n e t a r y s y s t e m . The period w hich I

m e n t i o n i s k n o w n i n h i s t o r y a s a p e r i o d o f p r o l o n g e d

e c o n o m i c d e p r e s s i o n . T h e g e n e r a t i o n t h e n l i v i n g h a d t o

p a y a v e r y h e a v y p r i c e f o r h a v i n g b u i l t u p i t s m o n e t a r y

s y s t e m o n a u n i t w h i c h c o u l d a l m o s t d o u b l e i t s v a l u e

w i t h i n a q u a r t e r o f a c e n t u r y . "

Later on we shall see from documents which have

b e e n q u o t e d i n t h e U n i t e d S t a t e s C o n g r e s s t h at t h e m o n e y

i n t e r e s t i t s e l f r e c o g n i s e s v e r y c l e a r l y t h e i m p o r t a n c e o f

b e i n g a b l e t o c o n t r o l t h e q u a n t i t y o f m o n e y .

T o u n d e r s t a n d t h e p r i c e s l u m p i t t h u s b e c o m e s n e c e s -

s a r y t o t r a c e o u t t h e m e c h a n i s m b y m e a n s o f w h i c h t h e

q u a n t i t y o f m o n e y i s c o n t r o l l e d a n d t o l e a r n w h a t w e c a n

o f t h e m e n w h o o p e r a t e i t .



22

CHAPTER III .

SOME TRICKS OF THE TRADEThe modern gold standard is t he invention of a British

s t a t e sm a n o n t h e a d v ic e of a B r i t i s h b a nk e r . Thatstatesman was Sir . Rober t Peel, whose own father

curiously enough regarded hi m as a financial l unatic, and

t h e b a nker w a s S amue l James Loy d , b e t t e r known a s

L o r d O v e r s t o n e . In 1 81 6 Lor d Liver pool's Government

had d emonetized si lver a s legal te nder except for small

trans actions not exceeding 12 . Prior to that date gold

and silver ra nked equally as legal tender i n Britain, as

they di d for many year s after in most other countries .

As a great battle has ra ged around the silver question

in different countries, it may be here explained that tw o

metals a re more difficult to control than one, and s ilver

for this re ason h as consequently been extremely obnox-

ious to the great international money interest .

A cheerful beginning to the adoption of gold as sole

legal tender in 181 6 was a decline in prices of 24 per cent .

b e t w e e n 1 8 1 9 a n d 1 8 2 4 . The cause of this was the

i nc r e a s e d d em a n d f o r g o l d i n B r i t a i n , w h ic h w a s f e l t

throughout the whole civilised world .

In 184 4 came Sir Robert Pe el's Bank Charter Act .

Under tha t Act it was laid dow n that eve ry ounce of gold

o f s t a n d a r d w e i g h t a n d f i n e n e s s t a k e n t o t h e B a n k of

England mus t b e pu rcha s e d a t 1 3 17s . 9d . and coined

i n t o s o v e r e ig n s , o r h a v e B a nk of E ngl a n d n o t e s i s s u e d

against it at the rate of 1 3 17s. 104d .

The parti cular price put on gold was found by com-

paring it with silver . In Sir Robert Pe el's time, when

silver was the st andard of most countries, an ounce of

gold exchanged for abou t 151 o unces of silv er-the pri ce

of which was 1 3 1 7s . 104d .

This Act had to be suspended three years after it was

passed to save the banks and th e country from ruin . I t

was again suspended in 1857, in 1866, and in 1914 . Asthe amount of gold is tot ally i nsufficient for monetary

purposes the gold standa rd collapses completely in any

g r e a t e me r g e n cy , a n d e v e n w h e n i t d o e s n o t e n t i r e l y

collapse it i s accompanied by pe riod ic financial crise s



SOME TRICKS OF THE TRADE 2 3 3

b r i n g i n g n e e d l e s s d i s a s t er o n h u n d r e d s o f t h o u s a n d s o f

i n n o c e n t p e r s o n s .

T h e g o l d d i s c o v e r i e s i n C a l i f o r n i a a n d A u s t r a l i a , a n d

later in S outh Africa, were the pr incipal things in

p r e v e n t i n g t h e g o l d s t a n d a r d f r o m p r o v i n g u n w o r k a b l e

l o n g a g o . When this n ew gold began, pouring into

E u r o p e s o o n a f t e r t h e m i d d l e o f t h e c e n t u r y t h e r e w a s

a l a r m a m o n g t h e m o n e y l e n d e r s . Some feared so much

g o l d w o u l d c o m e i n t h a t i t w o u l d b e b e t t e r t o a b a n d o n

g o l d m o n e y a n d g o f o r s i l v e r . A n o t h e r c o u r s e w a s * . o

counterbalance the new gold by cutting out silver.

Ultimately, on June 17, 1 867, de legates from twenty

g o v e r n m e n t s m e t i n P a r i s a s a n I n t e r n a t i o n a l M o n e t a r y

Conference and voted in favour of an exclusive gold

s t a n d a r d , b u t p e r m i t t i n g e a c h S t a t e t o k e e p i t s s i l v e r

s t a n d a r d t e m p o r a r i l y .

" T h u s , " d e c l a r e d M r . G e o r g e ' H . S h i b l e y , D i r e c t o r o f

t h e A m e r i c a n B u r e a u o f P o l i t i c a l R e s e a r c h , i n g i v i n g

e v i d e n c e b e f o r e a C o n g r es s i o n a l C o m m i t t e e i n 1 9 1 3 , " w a s

a c c o m p l i s h e d t h e f i r s t s t e p i n o n e o f t h e m o s t h o r r i b l e

c o n s p i r a c i e s a g a i n s t m a n k i n d t h e w o r l d h a s e v e r w i t -

n e s s e d . T h e s u b s e q u e n t h i s t o r y o f p e r i o d s o f f a l l i n g

p r i c e s f o r c o m m o d i t i e s b e a r s o u t m y a s s e r t i o n . "

F o l l o w i n g o n t h i s c on f e r e n c e m o v e m e n t s w e r e i n i t i a -

t e d a l l o v e r t h e w o r l d , e v e n i n c o u n t r i e s a s r e m o t e a s

J a p a n , w i t h t h e o b j e c t o f m a k i n g g o l d t h e s o l e m o n e t a r y

s t a n d a r d . I n t w o n o t a b l e i n s t a n c e s t h e o b j e c t i v e w a s

g a i n e d b y s u b t e r f u g e .

I n B r i t a i n , a l t h o u g h l o n g o n g o l d , t h e r e w a s p o w e r

u n d e r t h e l a w t o r e s u m e t h e i s s u e o f s i l v e r a s f u l l l e g a l

t e n d e r b y ' R o y a l p r o c l a m a t i o n , provided the Privy

C o u n c i l c o n c u r r e d . I n 1 8 7 0 a b i l l c o n s o l id a t i n g t h e m i n t

l a w s w a s i n t r o d u c e d i n t o P a r l i a m e n t w i t h t h i s p r o v i s i o n

o m i t t e d . " Y e t , " s t a t e d M r . S h i b l e y i n h i s e v i d e n c e

quoted abo ut, "when the bi ll was u p for passage no

m e n t i o n o f t h e g r e a t c h a n g e w a s m a d e - a t l e a s t n o t h i n g

appears in the deb ate reported by Hansard (Vol . 1 9 9 ,

c o l . 7 3 0 ) . Again in th e House of Commons th e members

w e r e a s s u r ed t h a t t h e o b j e c t w a s s i m p l y t o p e r f e c t t h e

m i n t l a w ; a n d t h e s a m e f a l s e s t a t e m e n t w a s m a d e i n t h e

H o u s e o f L o r d s . T h e f a c t s i n d e t a i l , " M r . S h i b l e y a d d e d ,

" h a v e b e e n s t a t e d b y A l e x a n d e r d e l M a r . "

I n t h e U n i t e d S t a t e s e x a c t l y t h e s a m e t h i n g w a s d o n e .

A b i l l w a s i n t r o d u c e d i n C o n g r e s s t o r e v i s e t h e m i n t l a w

a n d t h e s i l v e r d o l l a r w as d r o p p e d f r o m t h e l i s t o f c o i n s



2 4 THE TRUTH ABOUT THE SLUMPt h a t - m i g h t b e m i n t e d . T h e f i r s t a p p e a r a n c e o f t h i s b i l l

w a s t w e n t y - f o u r d a y s a f t e r t h e B r i t i s h m i n t l a w r e v i s i o n

h a d b e e n p a s s e d b y P a r l i a m e n t . T h e B i l l , h o w e v e r , d i d

n o t g e t t h r o u g h u n t i l 1 8 7 3 . N e v e r t h e l e s s t h e a b s e n c e

o f t h e s i l v e r d o l l a r w a s n o t m e n t i o n e d . The bill waspassed by Congress in 1873, and a letter written by

P r e s i d e n t G r a n t , w h o s i g n e d t h e b i l l , s h o w s t h a t e i g h t

months after it had been passe d he was unaware tha t

s i l v e r m o n e y h a d b e e n ab o l i s h e d e x c e p t f o r s m a l l c h a n g e

f o r a m o u n t s n o t e x c e e d i n g f i v e d o l l a r s . Lead ing members

o f C o n g r e s s w e r e a l s o n o t a w a r e o f w h a t t h e y h a d d o n e .

A t r e m e n d o u s a g i t a t i o n f o l l o w e d o n t h e d i s c o v e r y o f

t h i s t r i c k , a n d i n 1 8 7 8 s t a n d a r d s i l v e r d o l l a r s w e r e a g a i n

m a d e f u l l l e g a l t e n d e r s a v e t h a t b y p r i v a t e c o n t r a c t

parties might stipulate for gold payment of debts .

F o l l o w i n g o n t h e m o n e t a r y s t r i n g e n c y o f 1 8 9 0 t h e S h e r -

m a n S i l v e r P u r c h a s e A c t w a s p a s s e d b y C o n g r e s s , p r o -

viding that the Government in order to prevent con-

t r a c t i o n o f t h e c u r r e n c y s h o u l d b u y a s t i p u l a t e d q u a n t i t y

o f s i l v e r e a c h m o n t h . T h i s l a w w a s e x c e e d i n g l y d i s -

t a s t e f u l t o t h e m o n e y i n t e r e s t , a n d a n a g i t a t i o n a g a i n s t

i t w a s a t o n c e b e g u n .

S o m e i n t e r e s t i n g l i g h t w a s t h r o w n o n t h i s a g i t a t i on

by the Hon . C h a s . A . L i n d b e r g h , a m e m b e r o f C o n g r e s s

from Minnesota . From his place in the House of

R e p r e s e n t a t i v e s M r . L i n d b e r g h s t a t ed t h a t h e h a d s e e n

a c i r c u l a r s e n t o u t b y t h e A m e r i c a n B a n k i n g A s s o c i a t i o n

a n d c i r c u l a t e d a m o n g t h e i n f l u e n t i a l n a t i o n a l b a n k s o f

t h e U n i t e d S t a t e s . T h i s c i r c u l a r , b e a r i n g t h e d a t e o f

M a r c h 1 1 , 1 8 9 3 , w a s s t a t e d b y M r . L i n d b e r g h t o r e a d a s

f o l l o w s

" T h e i n t e r e s t o f n a t i o n a l b a n k s r e q u i r e s i m m e d i a t e

f i n a n c i a l l e g i s l a t i o n b y C o n g r e s s . Silv er, silver certifi-

c a t e s , a n d t r e a s u r y n o t e s m u s t b e r e t i r e d , a n d n a t i o n a l

b a n k n o t e s u p o n a g o l d b a s i s m a d e t h e o n l y m o n e y . T h i s

w i l l r e q u i r e t h e a u th o r i s a t i o n o f f i v e h u n d r e d m i l l i o n s t o

one thousand millions of new bonds as the basis of

c i r c u l a t i o n . You w i l l a t o n c e r e t i r e o n e - t h i r d o f y o u r

c i r c u l a t i o n a n d c a l l i n o n e - h a l f o f y o u r l o a n s . B e c a r e f u l

to make a monetary stringency among your patrons,

e s p e c i a l l y a m o n g i n f l u e n t i a l b u s in e s s m e n . Advocate an

e x t r a s e s s io n o f C o n g r e s s t o r e p e a l t h e p u r c h a s i n g c l a u s e

o f t h e S h e r m a n l a w , a n d f o r i t s u n c o n d i t io n a l r e p e a l p e r

accompanying form . Use p e r s o n a l i n f l u e n c e w i t h your :



SOME TRICKS OF THE TRADE 2 5

C o n g r e s s m e n , a n d p a r t i c u l a r l y l e t . y o u r w i s h e s b e k n o w n

t o y o u r S e n a t o r s . T h e f u t u r e l i f e o f n a t i o n a l b a n k s a s

f i x e d a n d s a f e i n v e s t m e n t s d e p e n d s u p o n i m m e d i a t e a ct i o n

a s t h e r e i s a n i n c r ea s i n g s e n t i m e n t i n f a v o u r o f G o v e r n -

m e n t l e g a l t e n d e r n o t e s a n d s i l v e r c o i n a g e . "

T h i s i s a s u r p r i s i n g d o c u m e n t , b u t m a n y s u r p r i s i n g

d o c u m e n t s m a y b e d i s c o v e r e d b y t h e c u r i o u s p r i n t e d i n

the Congressional Record reports of the degates on

U n i t e d S t a t e s c u r r e n c y a n d b a n k i n g b i l l s . M r . L i n d -

b e r g h , h i m s e l f , f o r i n s t a n c e , i n 1 9 1 3 q u o t e d w h a t i s

known • a s t h e H a z a r d c i r c u l a r s e n t o u t t o t h e l e a d i n g

American banks in 1862 during the Civil War . That

r e m a r k a b l e d o c u m e n t r e a d a s f o l l o w s

" S l a v e r y i s l i k e l y t o b e a b ol i s h e d b y t h e w a r p o w e r

and a l l c h a t t e l s l a v e r y a b o l i s h e d . This I a nd my

E u r o p e a n f r i e n d s a r e i n f a v o u r o f , f o r s l a v e r y i s b u t t h e

o w n i n g o f l a b o u r a n d c a r r i e s w i t h i t t h e c a r e o f t h e

l a b o u r e r s , w h il e t h e E u r o p e a n p l a n , l e d o n b y E n g l a n d ,

i s t h a t c a p i t a l s h a l l c o n t r o l l a b o u r b y c o n t r o l l i n g w a g e s .

T h e g r e a t d e b t c a p i t a l i s t s w i l l s e e t o i t i s m a d e o u t o f

t h e w a r m u s t b e u s e d a s a m e a n s t o c o n t r o l t h e v o l u m e

of money . T o a c c o m p l i s h t h i s b o n d s m u s t b e u s e d a s

a b a n k i n g b a s i s . We are n o w waiting for the

S e c r e t a r y o f t h e T r e a s u r y t o m a k e h i s r e c o m m e n d a t i o n s

t o C o n g r e s s . I t w i l l n o t d o t o a l l o w t h e g r e e n b a c k , a s

i t i s c a l l e d ( G o v e r n m e n t p a p e r m o n e y ) , t o c i r c u l a t e a s

m o n e y f o r a n y l e n g t h o f t i m e , a s w e c a n n o t c o n t r o l t h a t .

But we can control the bonds, a nd through them the

b a n k i s s u e s . "

T o r e t u r n t o t h e a g i t a t i on o f 1 8 9 3 , t h e s p e c i a l s e s s i o n

d e s i r e d b y t h e b a n k e r s w a s c a l l e d b y P r e s i d e n t C l e v e l a n d ,

w h o h a d j u s t b e e n i n a u g u r a t e d a f t e r a c a m p a i g n f o u g h t

o n t h e t a r i f f q u e s t i o n . I t w a s t h o u g h t t h a t t h e s p e c i a l

s e s s i o n w a s t o d e a l w i t h t h e t a r i f f , a n d t h e c o u n t r y a n d

p o l i t i c i a n s a l i k e w e r e g r e a t l y s u r p r i s e d t o f i n d t h a t t h e

s o l e m e a s u r e f o r c o n s i d e r a t i o n w a s t h e r e p e a l o f t h e S h e r -

m a n l a w , a m a t t e r t h a t h a d s c a r c e l y b e e n m e n t i o n e d i n t h e

e l e c t i o n c a m p a i g n .

C o n g r e s s w a s u n f a v o u r a b l e t o t h e p r o p o s a l a n d t h e

b i l l d i d n o t p a s s . On June 25 it was annou nced that

I n d i a h a d s t o p p e d t h e f r e e c o i n a g e o f s i l v e r . This at

o n c e s e n t t h e p r i c e o f s i l v e r d o w n t o t h e l o w e s t p o i n t

e v e r r e c o r d e d . T h e C o l o r a d o a n d o t h e r s i l v e r m i n e s i n

t h e U n i t e d S t a t e s s t o p p e d w o r k , b a n k s b e g a n t o f a i l i n

t h e S o u t h a n d W e s t , m a n y f a c t o r i e s s h u t d o w n , w e a l t h y



2 6 THE TRUTH ABOUT THE SLUMPm e n o f u n q u e s t i o n e d c r e d i t c o u l d n o t g e t c h e q u e s c a s h e d .

Compared with the prev ious year th e number of bank-

ruptcies doubled, with a sevenfold increase in the

l i a b i l i t i e s . T h r e e g r e a t r a i l w a y s y s t e m s w e n t i n t o t h e

h a n d s o f r e c e i v e r s , t h e U n i o n P a c i f i c ( o f w h i c h m o r e

l a t e r ) , t h e N o r t h e r n P a c i f i c , a n d t h e E r i e . A t a s p e c i a l

s e s s i o n o f C o n g r e s s l a t e r i n t h e y e a r t h e s i l v e r p u r c h a s i n g

c l a u s e o f t h e S h e r m a n l a w w a s r e p e a l e d . Meanwhile the

c r i s i s w a s a l r e a d y c h e c k e d . F o r e i g n i n v e s t o r s b e g a n

s e n d i n g i n m o n e y , t a k i n g a d v a n t a g e o f t h e l o w p r i c e a t

w h i c h s t o c k s w e r e s e l l i n g . I t t o o k A m e r i c a n i n d u s t r y ,

f o r a l l i t s r e s o u r ce s , f o u r o r f i v e y e a r s t o r e c ov e r f r o m

t h i s b l o w .

T h e r e s u l t s f o l l o w i n g o n t h i s p a n i c w e r e s u m m e d u p

b y M r . A r t h u r K i t s o n i n t h e p r e f a c e t o t h e E n g l i s h

e d i t i o n o f h i s book "The Money Que stion" ( G r a n t

R i c h a r d s , L o n d o n , 1 9 0 3 )

" W h e t h e r t h e e v e n t s w h i c h h a v e s i n c e t r a n s p i r e d a s

a n a t u r a l s e q u e n c e , " w r o t e M r . K i t s o n , " w e r e o r w e r e

n o t f o r e s e e n b y t h e p a n i c o r g a n i s e r s i t i s i m p o s s i b l e t o

s a y , b u t t h e c o n s o l i d a t i o n o f c a p i t a l - w h i c h b e f o r e 1 8 9 2

was a somewhat difficult problem-became very simple

u n d e r t h e s o - c a l l e d g o l d s t a n d a r d r e g i m e . With the

G o v e r n m e n t n o l o n g e r a c o m p e t i t o r , t h e b a n k s r a p i d l y

c o m b i n e d f o r p u r p o s e s o f f e n s i v e a n d d e f e n s i v e , a n d f o r

a l l p r a c t i c a l p u r p o s e s t h e c o n t r o l o f t h e c u r r e n c y u n d e r a

s i n g l e h e a d b e c a m e a p o s s i b i l i t y . H a v i n g t h e a b i l i ty

to employ so vast a powe r, the exploitation of the

i n d u s t r i e s o f America was rapidly accomplished .

U n d o u b t e d l y t h e s i m p l e s t w a y f o r f i r s t g e t t i n g c o n t r o l o f

t h e i n d u s t r i e s o f a c o u n t r y i s t o f i r s t g e t c o n t r o l o f i t s

c u r r e n c y . F o r t h e b l e s s i n g s o r e v i l s ( w h i c h e v e r v i e w

o n e c h o o s e s t o t a k e) r e s u l t in g f r o m t h e f o r m a t i o n o f t h e

great Trusts we must credit the financial policy of

P r e s i d e n t C l e v e l a n d . I n a d d i t i o n t o h a v i n g p l a c e d t h e

n a t i o n ' s i n d u s t r i e s a t t h e m e r c y o f t h e b a n k e r s , a n o t h e r

r e s u l t o f t h i s p o l i c y w a s t o i n d e f i n i t e l y p o s t p o n e t h e

F r e e - t r a d e e r a w h i c h w a s a b o u t t o d a w n u p o n t h e U n i t e d

S t a t e s . .

" I t i s b u t f a i r t o s a y t h a t P r es i d e n t C l e v e l a n d h a d n o

c o n c e p t i o n o f t h e r e s u l t s t h a t w o u l d f o l l o w t h e p o l i c y

h e i n a u g u r a t e d , f o r n o o n e h a s d e n o u n c e d t h e s y s t e m o f

m o n o p o l i e s a n d t r u s t s m o r e s t r o n g l y t h a n h e , w h o w a s

i n s t r u m e n t a l i n c r e at i n g t h a t g r e a t e s t o f a l l - t h e M o n e y

Monopoly . "



SOME TRICKS OF THE TRADE 2 7

T h e c r i s i s o f 1 8 9 3 w a s f e l t m u c h f u r t h e r a f i e l d t h a n

t h e U n i t e d S t a t e s , f o r i t e x t e n d e d e v e n a s f a r a s A u s t r a l i a

a n d N e w Z e a l a n d c a u s i n g t h e s u s p e n s i o n o f m a n y o f t h e

banks . W h i l e a c o n s i d e r a b l e a m o u n t o f p u b l i c i t y h a s

b e e n s h e d o n c e r t a i n f o r c e s c o n c e r n e d i n t h e p r o d u c t i o n o f

t h i s c r i s i s i n t h e U n i t e d S t a t e s , i t s e e m s e l s e w h e r e t o

h a v e b e e n a c c e p t e d a s a n a t u r a l v i s i t a t i o n . N e v e r t h e l e s s

t h e c l o s i n g o f t h e I n d i a n m i n t t o s i l v e r a t s o c o n v e n i e n t

a t i m e f o r t h e d r a f t e r s o f t h e A m e r i c a n b a n k c i r c u l a r

p o i n t s s t r o n g l y t o c o n c e r t e d a c t i o n b y f i n a n c i e r s i n

d i f f e r e n t c o u n t r i e s w i t h a v i e w t o p r o d u c i n g a w o r l d -

w i d e v a r i a t i o n i n t h e p u r c h a s i n g p o w e r o f g o l d .



2B

CHAPTER IV .

WHERE WE ARE RULED FROM .

The extracts quoted in the previ ous chapter show

pretty clearly that variations in the value of money aret h e c h i e f c a u s e s o f p e r i o d s o f p r o s p e r i t y a n d d e p r e s s i o n .

Our next step is to discover how these variations occur

today .

As many people are still innocent enough to believe

t h a t g o l d - u n l i k e s i l v e r , c o p p e r , t i n , l e a d , a n d a n y o t h e r

metal or commodity one l ikes to name-has a magical

unchanging value and is incapable of being cornered,

manipulated, controlle d, or managed in any way, it is

worth noting what some foremost authorities have to say

a b o u t t h i s m e t a l a n d i t s c o n t r o l .

E v e r y o n e kn o w s t h a t p a p e r m o n e y i s m a n a g e d

money and that a d anger of it is that those who manageit will p rint so much of it that it b ecomes worth less .

Here is what Professor Cassel says about the modern

gold standard"The whole les son of the wo rld's sad experience of

monetary mismanagement can only be dr awn if we realis e

that the gold standard is nothing else than a paper

standard, the value of which is entirely dependent upon

the way in which the supply of means of payment is

r e g u l a t e d . T h e c h a r a c t e r i s t i c f e a t u r e o f t h e g o l d s t a n d a r d

is only that this supply is regulated with the object of

keeping the currency on a certain par with the value of

gold . "

Professor Cassel goes on to tell us what happened to

gold when th e war came :

"It was not enough that the gold standard was

abandoned and that paper standards were adopted, but

even the value of gold itself was affected in such a way

that it was completely discredited as a measure of other

valueshen gold coins were dr awn out ofcirculation and when Euro pean gold flowed in large

q u a n t i t i e s t o A m e r i c a , a s u p e r f l u i t y o f g o l d a r o s e i n t h i s

country (the United States), pressing down the purchas-

ing power of gold to abo ut 40 per cent . of what it had

been at the beginning of the war . This lowest value was



WHERE WE ARE RULED FROM 2 9

r e a c h ed i n t h e s p r i n g o f 1 9 2 0 , f r o m w h i c h d a t e, b y m e a n s

o f a g r a d u a l p r o c e s s o f d e f l a t i o n , t h e v a l u e o f g o l d w a s

b r o u g h t u p a g a i n i n a f e w m o n t h s ' t i m e t o a b o u t t w o -

t h i r d s o f i t s p r e - w a r v a l u e . "

T h a t t h e r e i s n o t h i n g a u t o m a t i c a b o u t t h e g o l d s t a n -

d a r d i s a l s o t h e v i e w o f P r e f e s s o r I r v i n g F i s h e r . I n h i s

" M o n e y I l l u s i o n , " P r o f e s s o r F i s h e r s a y s

Under modern conditions with our vas t credit

s t r u c t u r e s t h e o l d t h e o r y o f a n a u t o m a t i c g o l d s t a n d a r d ,

b e y o n d t h e r e a c h o f a n y v o l u n t a r y c o n t r o l , h a s c e a s e d t o

h a v e m u c h r e l a t i o n t o r e a li t y. . . T o - d a y t h e n , i n s t e a d

o f s a y i n g t h a t t h e p a p e r d o l l a r , o r c re d i t d o l l a r , d e ri v e

i t s v a l u e f r o m t h e g o l d d o l l a r i n t o w h i c h i t is c o n v e r t i b l e ,

i t w o u l d b e t r u e r t o s a y t h a t t h e g o l d d o l l a r d e r i v e s i t s

v a l u e f r o m t h e - c r e d i t d o l l a r i n t o w h i c h i t i s c o n v e r t i b l e .

A n d s i n c e t h e v o l u m e o f c i r c u l a t i n g c r e d i t i s c o n t r o l l ab l e

a n d c o n t r o l l e d w e h a v e a l r e a d y a m a n a g e d c u r r e n c y i n

s p i t e o f o u r se l v e s . "

N o n e o f t h e w r i t e r s q u o t e d h a s a n y d o u b t a s t o w h e r e

o r h o w t h e w o r l d ' s g o l d m o n e y i s m a n a g e d t o d a y . The

i n s t i t u t i o n t h a t c o n t r o l s i t i s t h e U n i t e d S t a t e s F e d e r a l

R e s e r v e B o a r d , a b o d y e s t a b li s h e d i n 1 9 1 3 a s t h e c h i e f

p a r t o f a p l a n o f b a n k i n g r e f o r m e n a c t e d b y C o n g r e s s i n

t h a t y e a r .

Here is what Sir Josiah Sta mp has to say of the

United Sta tes Federal Reserve Board in an intervi ew

in the "New York Evening Post," r e p r i n t e d by the

N a t i o n a l C i t y B a n k i n i t s m o n t h l y c i r c u l a r f o r F e b r u a r y ,

1 9 2 6 :

" N e v e r i n t h e h i s t o r y o f t h e w o r l d h a s s o m u c h p o w e r

b e e n v e s t e d i n a s m a l l b o d y o f m e n a s i n t h e F e d e r a l

Reserve B oard . T h e s e m e n h a v e t h e w e l f a r e o f t h e w o r l d

i n t h e i r h a n d s , a n d t h e y c o u l d u p s e t t h e r e s t o f u s e i t h e r

d e l i b e r a t e l y o r b y s o m e u n c o n s c i o u s a c t i o n .

" M i n d y o u , I a m n o t c r i t i ci s i n g t h e m , b u t i t i s p r e -

c a r i o u s t o h a v e s u c h c o n c e n t r a t e d p o w e r v e s t e d i n s u c h

a body . "

In his book "America Conquers Britain" (Knopf

1 9 3 0 ) , M r . Ludwell Denny says

"Many nations may laugh at our S tate Department,

b u t a l l m u s t t r e m b l e b e f o r e o u r F e d e r a l R e s e r v e B o a r d .

" H i g h m o n e y r a t e s i n t h e U n i t e d S t a t e s ea r l y i n 1 9 2 9 ,

f o r i n s t a n c e , f o r c e d a n i n c r e a s e i n t h e o f f i c i a l d i s c o u n t



3 0 THE TRUTH ABOUT THE SLUMPrates almost at once in England, in ten European

c o u n t r i e s , i n t w o L a t i n - A m e r i c a n c o u n t r i e s , a n d t w o i n

the Far East . A n d i n a l m o s t e v e r y c a s e t h a t a c t i o n

r e s t r i c t e d b u s i n e s s a n d b r o u g h t s u f f e r i n g t o m i l l i o n s o f

f o r e i g n w o r k e r s .

" T h a t b l o w h i t B r i t ai n h a r d e s t o f a l l . I t c h e c k e d h e r

t r a d e r ev i v a l . . A s a r e s u l t t h e B r i t i s h B o a r d o f

T r a d e i n d e x s o o n s h o w e d a d e c l i n e i n c o m m o d i t y p r i c e s

w h i c h t h e B r i t i s h c o r r e c t l y a t t r i b u t e d t o t h e r i s e i n

European money rates owing to the necessity which

d e v o l v e s u p o n c e n t r a l b a n k s t o w i t h s t a n d t h e p u l l o f h i g h

c a l l - m o n e y r a t e s i n A m e r i c a . "

Here again is what Mr. Reginald McKenna had to

s a y o n t h i s s u b j e c t i n h i s c h a i r m a n ' s a d d r e s s a t t h e

a n n u a l m e e t i n g o f t h e s h a r e h o l d e r s i n t h e M i d l a n d B a n k

i n L o n d o n o n J a n u a r y 2 8 , 1 9 2 8 :

" T o d a y , a s b e f o r e the war, the price of gold in

A m e r i c a i s f i x e d , a n d w e a r e a p t t o a s s u m e t h a t t h e v a l u e

o f g o l d c o n t i n u e s t o g o v e r n t h e v a l u e o f t h e d o l l a r . But

s u c h a n a s s u m p t i o n i s n o l o n g e r c o r r e c t . W h i l e a n o u n c e

o f g o l d c a n a l w a ys b e e x c h a n g e d f o r a d e f i n i t e n u m b e r o f

d o l l a r s , t h e v a l u e o f t h e o u n c e w i l l d e p e n d o n w h a t t h o s e

d o l l a r s w i l l bu y , a n d t h i s , i n t u r n , w i l l d e p e n d u p o n t h e

A m e r i c a n p r i c e l e v e l . I f t h e p r i c e l e v e l i n A m e r i c a

f l u c t u a t e d a c c o r d i n g t o the movements of gold, the

p u r c h a s i n g p o w e r o f t h e d o l l a r w o u l d s t i l l d e p e n d , a s i t

d i d f o r m e r l y , u p o n t h e v a l u e o f g o l d . But we know that

t h i s i s n o t s o . A s I h a v e j u s t s h o w n t h e A m e r i c a n p r i c e

l e v e l i s n o t a f f e c t e d b y g o l d m o v e m e n t s , b u t i s c o n t r o ll e d

by the policy of the Reser ve Ba nks in expanding or

c o n t r a c t i n g c r e d i t . I t fo l l o w s , t h e r e fo r e , t h a t i t i s n o t t h e

v a l u e o f g o l d i n A m e r i c a w h i c h d e t e r m i n e s t h e v a l u e o f

t h e d o l l a r , b u t t h e v a l u e o f t h e d o l l a r w h i c h d e t e r m i n e s

t h e v a l u e o f g o l d .

"The mechanism by which the dollar governs the

e x t e r n a l v a l u e o f g o l d i s o b v i o u s . If the price level

o u t s i d e A m e r i c a s h o u l d r i s e i n c o n s e q u e n c e o f a n i n c r e a s e

i n t h e s u p p l y o f g o l d , A m e r i c a w o u l d a b s o r b t h e s ur p l u s

g o l d ; i f o n t h e o t h e r h a n d , t h e e x t e r n a l l e v e l s h o u l d f a l l

in consequence of a shortage of gold, America would

s u p p l y t h e d e f i c i e n c y . The movement would continue

u n t i l t h e p r i c e l e v e l s i n s i d e a n d o u t s i d e A m e r i c a w e r e

b r o u g h t o n c e m o r e i n t o e q u i l i b r i u m . A l t h o u g h g o l d i s

s t i l l t h e n o m i n a l b a s i s o f m o s t c o u n t r i e s t h e r e a l d e t e r -



WHERE WE ARE RULED FROM 3 1

m i n a n t o f m o v e m e n t s i n t h e g e n e r a l w o r ld l e v e l o f p r i c e s

i s t h u s t h e p u r c h a s i n g p o w e r o f t h e d o l l a r . T h e c o n c l u -

s i o n , t h e r e f o r e , i s f o r c e d u p o n u s t h a t i n a v e r y r e a l s e n s e

t h e w o r l d i s o n a d o l l a r s t a n d a r d . . . .

" I c o n c l u d e t h a t a s l o n g a s c o n d i t i o n s r e m a i n a t a l l

s i m i l a r t o t h o s e w e k n o w t o d a y A m e r i c a w i l l b e a b l e t o

m a i n t a i n c o n t r o l o v e r t h e w o r l d l e v e l o f p r i c e s . "

That Britain put her money and prices under

American control when she went back on to the gold

s t a n d a r d i n 1 9 2 5 i s a l s o t h e o p i n i o n o f P r o f e s s o r Ir v i n g

F i s h e r . Commentin g on Mr . M c K e n n a ' s s t a t e m e n t ,

P r o f e s s o r F i s h e r w r o te i n " T h e M o n e y I l l u s i o n "

"As Reginald McKenna has said, the world now has

a ` d o l l a r s t a n d a r d ' f i x e d b y c r e d i t c o n t r o l r a t h e r t h a n a

g o l d s t a n d a r d f i x e d b y g o l d b u l l i o n a s s u c h . It is

d o u b t f u l i f E n g l i s h m e n w o u l d h a v e r e l i s h ed t h i s f a c t h a d

they fully realised it when they adopted what t h e y

s u p p o s e d t o b e a n a u t o m a t i c g o l d s t a n d a r d . For what

t h e y r e a l l y d i d w a s t o s u b s t i t u t e f o r a n E n g l i s h - m a n a g e d

an American-managed standard . T h e y w e r e a f r a i d t o

trust the English Government to manage its paper

c u r r e n c y t o k e e p i t s t a b l e , b u t a r e n o w i n t h e p o s i t i o n o f

t r u s t i n g t h e A m e r i c a n F e d e r a l R e s e r v e s y s t e m t o m a n a g e

credit so as to keep it and all other money stable

t h r o u g h o u t t h e w o r l d . "

I n n u m e r a b l e o t h e r o p i n i o n s t h a t t h e w o r l d ' s m o n e y

and prices are chained to the policies prusued by

t h e f i n a n c i e r s w h o c o n t r o l A m e r i c a m i g h t b e q u o t e d . I t

i s s u f f i c i e n t t o c o n c l u d e w i t h w h a t P r o f e s s o r C a s s e l h a s

t o s a y o n t h e p o i n t i n h i s b o o k a l r e a d y m e n t i o n e d

" T h e m o n e t a r y p o l i c y o f t h e U n i t e d S t a t e s d e t e rm i n e s

t h e v a l u e o f t h e c u r r e n c y o f e v e r y o t h e r g o l d s t a n d a r d

c o u n t r y . The Federa l Reserve authorit ies therefore

c o n t r o l n o t o n l y t h e g e n e r a l l e v e l o f p r i c e s i n t h e U n i t e d

S t a t e s , b u t a l s o t h e p r i c e l e v e l o f a l l o t h e r g o l d s t a n d a r d

c o u n t r i e s i n t h e w o r l d . . . .

" W h e n t h e c e n t r a l b a n k s y s te m p o s s e s s e s a g o l d c o v e r

o f o v e r 7 0 t o 8 0 p e r c e n t . f o r n o t e s a n d d e p o s i t s , w h i l e a

r a t io o f 3 5 t o 4 0 p e r c e n t . i s r e q u i r e d b y l a w , i t d o e s n o t

i n t h e l e a s t m a t t e r w h e t h e r t h i s g o l d c o v e r i s i n c r e a s e d

o r r ed u c e d b y a f e w p e r c e n t . H e n c e t h e l e a d e r s o f t h e

U n i t e d S t a t e s b a n k p o l i c y a r e n o t o b l i g e d t o p a y a n y

c o n s i d e r a t i o n w h a t e v e r t o m i n o r f l u c t u a t i o n s i n t h e g o l d

c o v e r . T h i s m e a n s t h a t t h e F e d e r a l R e s e r v e s y s t e m i s i n



3 2 THE TRUTH ABOUT THE SLUMPa p o s i t i o n , o f c o u r s e w i t h i n c e r t a i n l i m i t s , t o r e g u l a t e t h e

s u p p l y o f t h e m e a n s o f p a y m e n t i n t h e c o u n t r y w i t h o u t

a n y r e g a r d t o th e m o v e m e n t s o f g o l d . T h u s t h e F e d e r a l

Reserve exercises an independent influence upon the

l e v e l o f p r i c e s . O t h e r g o l d s t a n d a r d c o u n t r i e s a r e

c o m p e l l e d t o f o l l o w s u i t a n d t o a d j u s t t h e i r p r i c e l e v e l s

i n c o n f o r m i t y w i t h t h a t o f t h e U n i t e d S t a t e s . Otherwise

t h e y e x p o s e t h e m s e l v e s t o a d e p l e t i o n o f t h e i r n o n e t o o

a b u n d a n t s t o c k s o f g o l d , o r e l s e t o a n i n f l u x o f g o l d w h i c h

t h e y c o u l d n o t a f f o r d t o l e a v e u n u t i l i s e d . T h e i n c r e a s e

o r d e c r e a s e i n t h e s t o c k o f g o l d i n t h e U n i t e d S t a t e s ,

w h i c h w o u l d b e c o n n e c t e d w i t h s u c h m o v e m e n t s o f g o l d ,

w o u l d h a v e n o m a t e r i a l h e a r i n g o n t h e m o n e t a r y s i t u a t i o n

o f t h a t c o u n t r y , w h i c h , i n s p i t e o f t h e f l u c t u a t i o n s o f i t s

m o n e t a r y s t o c k s o f g o l d , w o u l d h e q u i t e a b l e t o k e e p i t s

g e n e r a l l e v e l o f p r i c e s c o n s t a n t . C o n s e q u e n t l y t h e p r i c e

l e v e l o f t h e U n i t e d S t a t e s h a s a d e t e r m i n i n g i n f l u e n c e o n

t h e w o r l d p r i c e l e v e l , w h i c h i s a c t u a l l y r e g u l a t e d b y t h e

l e a d e r s o f U n i t e d S t a t e s b a n k p o l i c y . "

W h o a r e t h e s e l e a d e r s o f U n i t e d S t a t e s b a n k p o l i c y

w h o r u l e t h e w o r ld p r i c e - l e v e l t o d a y ? The answer to

t h a t q u e s t i o n d e s e r v e s a c h a p t e r t o i t s e l f , f o r w h e n w e

uncover that leadership we re veal the seat of world

c o n t r o l .





3 4 THE TRUTH ABOUT THE SLUMP"The panic of 1907 brought Mr . S t i l l m a n b a c k t oMr. W a r b u r g ' s d e s k , a n d i t b r o u g h t t o p o l i t i c a l a s w e l l

a s b u s i n e s s l e a d e r s t h e n e e d f o r f i n a n c i a l r e f o r m . M r .

Warburg likens our banking system at that t ime to a

c o m m u n i t y w h e r e e a c h h o u s e h o l d e r p o s s e s s e s a p a i l o f

w a t e r a s a p r o t e c t i o n a g a i n s t f i r e a n d j e a l o u s l y h o l d s o n

to his own supply whenever a neighbour's h o u s e i s

t h r e a t e n e d .

" L o o k i n g b a c k o v e r t h e r e c o r d o f s u b s e q u e n t y e a r s o n e

might wonde r how Mr . W a r b u r g k e p t h i s j o b w i t h t h e

b a n k i n g h o u s e , s o a s s i d u o u s l y d i d h e w a g e a c a m p a i g n

that was not ended with the passage of the F e d e r a l

R e s e r v e A c t . I n J a n u a r y , 1 9 0 7 , b e f o r e t h e f i n a n c ia l p a n i c

o f t h e s a m e y e a r , h e w r o t e b y i n v i t a t i o n a n a r t i c l e f o r

t h e ` N e w Y o r k T i m e s ' a n n u a l f i n a n c i a l r e v i e w u n d e r t h e

t i t l e ` D e f e c t s a n d N e e d s o f o u r B a n k i n g S y s t e m . ' L a t e r

i n t h e m i d s t o f t h e p a n i c h e p u b l i s h e d a p a p e r e n t i t l e d

` A P l a n f o r a M o d i f i e d C e n t r a l B a n k . ' H e f o u g h t a g a i n st

t h e i d e a t h e n p r e v a l e n t o f a n e l a s t i c c u r r e n c y b a s e d

e x c l u s i v e l y o n G o v e r n m e n t b o n d s . H e f o u g h t a g a i n s t

t h e d o m i n a n c e o f p o l i t i c a l o f f i c e r s i n a n y n e w p l a n . Hea r g u e d f o r t h e i n c l u s i o n o f s t a t e b a n k s a n d e v e n t r u s t

companies at a time when others talked only of an

a s s o c i a t i o n o f n a t i o n a l b a n k s . H e d e s i r e d t h e i n c l u s i o n

o f c o m m e r c i a l p a p e r a m o n g t h e l i q u i d a s s e t s o f a b a n k

a g a i n s t w h i c h n o t e s c o u l d b e i s s u e d .

" F i v e y e a r s a f t er M r . S t i l l m a n h a d p o u r e d c o l d w a te r

o n h i s i d e a s M r . W a r b u r g w a s b e i n g consulted by

Congressman B u r t o n , an d was e n j o y i n g one-way

c o r r e s p o n d e n c e w i t h S e n a t o r A l d r i c h , l e a d e r o f t h e O l d

G u a r d a n d a u t h o r o f t h e R e p u b l i c a n p l a n f o r r e f o r m i n g

A m e r i c a ' s b a n k i n g s y s t e m . . . "The Federal Reserve Law wa s duly passed by

C o n g r e s s . I t d i f f e r e d v e r y s l i g h t l y f r o m w h a t w a s d e s i r e d

by Mr . W a r b u r g , a n d t h a t g e n t l e m a n i s r e p o r t e d t o h a v e

s a i d t h a t t h i s d i f f e r e n c e c o u l d b e " c o r r ec t e d by

a d m i n i s t r a t i v e p r o c e s s e s . "

M r . Warburg was appointed a member of the board

o n i t s e s t a b l i s h m e n t , a n d h a s b e e n d e s c r i b e d by theL o n d o n " T i m e s , " t h e l a t e S i r C e c i l S p r i n g - R i c e , B r it i s h

A m b a s s a d o r a t W a s h i n g t o n d u r i n g t h e w a r , a n d o t h e r s ,

a s t h e d o m i n a t i n g f o r c e b e h i n d t h e F e d e r a l R e s e r v e

Board .

T h e W a r b u r g f a m i l y p e d i g r e e w i l l b e f o u n d i n t h a t



THE MEN AT THE TOP 3 5

m o n u m e n t a l w o r k , t h e J e w i s h E n c y c l o p a e d i a . M r . P a u l

Warburg is a younger brother of Herr Max Warburg,

head of the banking house of Warburg and Companyo f H a m b u r g , e s t a b li s h e d 1 7 9 8 . A l i s t o f t h e p a r t n e r s i n

this important banking house will be found in the

"Enropa Year B ook . " I n a d d i t i o n t o m e m b e r s o f t h e

W a r b u r g f a m i l y , t h e p a r t n e r s i n c l u d e D r . E r n s t S p i e g e l -

berg and Dr . C a r l M e l c h o i r . Dr . M e l c h o i r , d e s c r i b e d

by Lord D'Abernon, l a t e B r i t i s h Ambassador to

G e r m a n y , a s o n e o f G e r m a n y ' s g r e a t e s t f i n a n c i e r s , w a s

o n e o f t h e s i x m e m b e r s o f t h e G e r m a n d e l e g a t io n i n c h i e f

t o t h e P e a c e C o n f e r e n c e a t V e r s a i l l es i n 1 9 1 9. He is now

c h a i r m a n o f t h e F i n a n c i a l C o m m i t t e e o f t h e L e a g u e o f

N a t i o n s , h a v i n g s u c c e e d e d S i r . Otto Ernst Niemeyer,

a n d h e h a s b e e n a c h i e f p r o m o t e r o f t h e B a n k o f I n t e r -

n a t i o n a l S e t t l em e n t s , p l a n n e d t o b e t h e c e n t r a l b a n k f o r

g o l d - c o n t r o l o f t h e w o r l d , a n d s t a u n c h l y s u p p o r t e d b y S i r

Otto Ernst Niemeyer, and a large number of other

A n g l i c i s e d G e r m a n - J e w f i n a n c i e r s i n L o n d o n .

The memoirs of Prince Max of Baden s how th at

during the Armistice crisis in Germany in 1 918 Herr

Max Warburg was constantl y consulted by him . Herr

W a r b u r g , w i t h t h r e e o t h e r s , a c t u a l l y d r a f t e d t h e s p e e c h

d e l i v e r e d b y P r i n c e M a x o n t a k i n g o v e r t h e C h a n c e l l o r -

s h i p . W h e n t h e l a t e L o r d L a n s d o w n e w r o t e h i s

d e f e a t i st l e t t e r i n 1 9 1 7 u r g i n g p e a c e , H e r r W a r b u r g w a s

s e n t t o t h e H a g u e o n G e r m a n y s b e h a l f t o s e e w h a t c o u l d

b e e f f e c t e d i n t h e w a y o f d i s p o s i n g o f E n g l a n d . P r i n c e

Max of Baden refers to Herr Warburg as Germany's

g r e a t e s t a u t h o r i t y o n A m e r i c a n a f f a i r s , a n d t h e P r i n c e ' s

memoirs s how t hat Herr Max Warbur g occupied a

p o s i t i o n o f v e r y g r e a t i n f l u e n c e i n d e e d i n G e r m a n y . As

w e s h a l l s e e l a t e r h e h a s b e e n d e s c r i b e d a s t h e f i n a n c i a l

d i c t a t o r o f G e r m a n y .

Herr Max Warburg was born in 1 867 . H i s b r o t h e r ,

M r . P a u l W a r b u r g , w a s b o r n o n A u g u s t 1 0 , 1 8 6 8 . F rom

" ' W h o ' s W h o i n A m e r i c a , " i t a p p e a r s t h a t P a u l W a r b u r g

married Miss Loeb, dau ghter of Mr . Solomon Loeb of

t h e f i r m o f K u h n , L o e b a n d C o m p a n y , i n 1 8 9 4 . He thus

b e c a m e a b r o t h e r - i n - l a w o f t h e l a t e M r . J a c o b H . S c h i f f ,

who had also married a Miss Loeb, and wh o had

s u c c e e d e d a s h e a d o f t h e f i r m .

Another brother, Mr . F e l i x W a r b u r g , b o r n i n 1 8 7 0 ,

had gone to the United States in 1894, marrying a

daughte r of Mr. Schiff a year later, and becoming a



36 THE TRUTH ABOUT THE SLUMPn a t u r a li s e d A m e r i c a n c i t i z en i n 1 9 0 0 . H e a l s o b e c a m e a

member of the firm of Kuhn, Loeb and Company, which

h i s b r o t h er P a u l j o in e d o n a r r i v a l f r o m H a m b u r g i n 1 9 0 2 ,

b e c o m i n g n a t u r a l i s e d a s a n A m e r i c a n c i t i z e n a y e a r o r

t w o b e f o r e t h e w a r .

Another partner in the firm of Kuhn, Loe b and

Company since 1897 is Mr . O t t o H . Kahn. Mr. Kahn

was born at Mannheim in Germany in 1867 . He became

a n a t u r a l i s e d A m e r i c a n c i t i z e n a n d l a t e r o n a n a t u r a l i s e d

B r i t i s h s u b j e c t . Mr. K a h n g a v e h i s L o n d o n r e s i d e n c e ,

S t . D u n s t a n ' s L o d g e , a s a h o s p i t a l f o r B l i n d e d B r i t i s h

s o l d i e r s d u r i n g t h e w a r . M r . K a h n p u b l i s h e d a b o o k o f

m e m o i r s i n 1 9 2 1 , " R e f l e c ti o n s o f a F i n a n c i er " (Hodder

& S t o u g h t o n ) , a n d t h e f o r e w o r d t o i t i s w r i t t e n b y t h e

Rt . Hon . J . H . T h o m a s , n o w S e c r e t a r y o f S t a t e f o r t h e

Dominions. Mr. Thomas wrote of Mr . K a h n i n h i g h l y

e u l o g i s t i c v e i n , h i s c o n c l u d in g w o r d s b e i n g , " O t t o K a h n ' s

f a c e i s t o w a r d s t h e l i g h t . " When we come to examine

t h e w o r l d - w i d e r a m i f i c a t i o n s o f t h e f i r m o f K u h n , L o e b

and Company, and the nature of its a c t i v i t i e s , t h i s

intimacy of a British Labou r leader wit h o n e o f i t s

p a r t n e r s w i l l a p p e a r a l i t t l e s i n g u l a r .

S o m e i n t e r e s t i n g r e f e r e n c e t o t h e e a r l y h i s t o r y o f t h e

firm of Kuhn, Loeb and Company appears in "All in a

L i f e t i m e " ( H e i n e m a n n , 1 9 2 3 ) , t h e a u t o b i o g r a p h y o f M r .

Henry Morgenthau, formerly United State s Ambassador

to Turkey . M r . M o r g e n t h a u w r i t e s ( p . 7 7 )

" A n o t h e r g r o u p i n t h e f i n a n c i a l ol i g a r c h y (of New

Y o r k ) w a s K u h n , L o e b a n d C o m p a n y , o r i g i n a l l y c l o t h i n g

m a n u f a c t u r e r s i n C i n c i n n a t t i , t h e n n o t e b r o k e r s , a n d

f i n a l l y b a n k e r s . Their great feat was taking over

f r o m t h e U n i t e d S t a t e s G o v e r n m e n t R e c e i v e r t h e U n i o n

P a c i f i c R a i l r o a d a n d r e - o r g a n i s i n g i t . They then madetheir famous a l l i a n c e w i t h E . H. Harriman, and

e s t a b l i s h e d t h e m s e l v e s i n t h e f i r s t r a n k o f A m e r i c a n

f i n a n c i e r s t h r o u g h t h e s u c c e s s o f t h i s j o i n t f i n a n c i n g o f

t h e U n i o n P a c i f i c R a i l r o a d , o n e o f t h e m o s t p r o f i t a b l e o f

a l l f e a t s o f f i n a n c i a l l e g e r d e m a i n e v e r a c c o m p l i s h e d .

"The trust companies e nt er ed t he r anks of the

f i n a n c i a l o l i g a r c h s b y v i r t u e o f a p e c u l i a r p r o v i s i o n o f t h e

b a n k i n g l a w s w h i c h p e r m i t t e d t h e m t o a c c e p t d e p o s i t s

a n d g r a n t t h e c h e c k i n g p r i v i l e g e a g a i n s t t h e m w h i c h w a s

e n j o y e d b y t h e b a n k s , w i t h o u t b e i n g r e q u i r e d t o m a i n -




tain the cash reser ves against deposit s, which was exacted

of the banks . By paying interest on daily balances they

a t t r a c t e d t h e b e s t - t h e n o n - b o r r o w i n g - a cc o u n t s . "

In mentioning a trans action of his wi th the Knicker-bocker Real Estate Trust Company of New York, in1 8 9 9 , M r . M o r g e n t h a u s t a t e s t h a t " a mo n g i t s me m b e r swere Solomon Loeb, of Kuhn Loeb, Henry O . Haver-

meyer, John D . C ummins a nd John E . Parsons ." It was

the failure of the Knickerbocker Tru st tha t precipitated

the grea t New York financial pa nic of 1907, wh ich panic

has been wide ly denounced in the United Stat es Congress

a n d e l s e w h e r e a s h a v i n g d e l i b e r a te l y b e e n c r e a t e d b y

financiers at a time when the country was in a state of

prosperity . A r u n occur r e d o n t h e Kn icker b ocker T r u s t

and other institut ions which were left unsupported, the

p e r s o n s m a ki n g t h e r u n b e i n g , i t i s a l l e g e d , o f t h e

millionair e class . The panic was used to dire ct attenti on

to the need for reform of the banking laws and led to the

s ucces s of t h e cam p a ig n of M r . P a u l W a r b u rg , p a r t n e r

in the firm of Kuhn, Loeb, for the e stablish ment in t he

United Sta tes of central ba nking on more or less German

l i n e s .

For many years, until his dea th in 1920, the head ofthe firm of Kuhn, Loeb and Company was Mr . Jacob

Henry Schiff. Mr . Morgenthau in his memoirs refers toMr. Schiff as "Mr . Schiff, the great financier and much

beloved leader of the Jews, and recognised as one of the

most eminent citizens of America ." The S chiff pedigree

appears i n full in the Jewish Encyclopaedia . In this

work it is state d that the Schiff family is the olde st

contemporary Jewish family of which ther e is any r ecord,

its earl iest known member having been born about 1 3 70 .

This fact, in conjunction wi th Mr . Morgenthau 's reference

t o M r . Schiff as the `leader of the Jews'-Mr . M o r ge n t h a u

himself being one of the le ading members of the Jewish

race domiciled in America-lends a n es pecial significance

to the far-reaching operat ions of the late Mr . Schiff and

.his partners, operations which now encircle the entire

globe and affect the trade and industry of all nations .

The following biographical sketch of Mr. S c h i f f ' s

career, up to the date of its publication in 1906, appear s

in the Jewish Encyclopaed ia :

"Jacob Henry Schiff, American financier a n d

philanthropist, b orn January 10, 1847, at Frankfort-on-







40 THE TRUTH ABOUT THE SLUMPin Congress . O n e o f t h e r e s u l t s o f t h a t p a n i c , c r e a t e d

b y t h e f i n a n c i e r s , w a s t h a t t h e U n i o n P a c i f i c R a i l r o a d

went i nto the United Sta tes Govern ment Receiver's

h a n d s , being unable to meet its liabilities . Mr .

Morgenthau tells us that Messrs . Kuhn, Loeb next got

h o l d o f i t a n d r e o r g a n i s e d i t b y " o n e o f t h e m o s t p r o f i t a b l e

o f a l l f e a t s o f f i n a n c i a l l e g e r d e m a i n e v e r p e r f o r m e d . "

Webster's International Dictionary defines the word

"legerdemain" as follo ws : "Sleight of hand ; a t r i c k o f

s l e i g h t o f h a n d ; h e n c e , a n y a r t f u l d e c e p t i o n o r t r i c k . "

Much information about th e wate ring of stock and

the over-capitalisation of the American railway com-

p a n i e s w i l l b e f o u n d i n t h e " N e w E n c y c l o p a e d i a o f S o c i a l

Reform," publishe d by Messrs . Funk and Wagnalls, N ew

Y o r k , i n 1 9 0 8 . F o r i n s t a n c e , t h e U n i o n P a c i f i c R a i l r o a d

was immensely over-capitalised and this was common to

most systems . T h e E n c y c l o p a e d i a s a y s

" I n i t s f i n a l r e p o r t , 1 9 0 2 , t h e U n i t e d S t a t e s I n d u s t r i a l

C o m m i s s i o n s t a t e s t h a t o u t o f 4 5 7 m i l l i o n d o l l a r s i n c r e a s e

i n r a i l r o a d c a p i t a l i s a t i o n i n 1 9 0 0 , o n l y 1 2 0 m i l l i o n d o l l a r s

could be explained by new construction, the oth er 33 7

m i l l i o n d o l l a r s , o r n e a r l y f o u r - f i f t h s o f t h e w h o l e , b e i n g

d u e a l m o s t e n t i r e l y t o s u d d e n e x p a n s i o n s i n s e c u r i t i e s ,

i n c a s e s o f r e o r g a n i s a t i o n a n d c o n s o l i d a t i o n . . . .

" I n f l a t i on o f c a p i t a l i s r e g a r d ed b y m a n y a s a s p e c i e s

o f r o b b e r y . I t i s o n e o f t h e m o s t s e d u c t i v e m e t h o d s _ o f

getting something for nothing which has yet been

i n v e n t e d . The corporations a nd monopolies of America

a r e g r e a t e r s i n n e r s i n t h i s l i n e t h a n a r e t o b e f o u n d i n

a n y o t h e r c o u n t r yI n i t s a r t i c l e headed "Corruption" t h e same

publication quotes the following excerpt from the New

Y o r k " I n d e p e n d e n t " o f M a y , 1 9 0 7 , a s t o t h e C h i c a g o a n d

Alton Railroad. The Mr . Mortimer L . S c h i f f m e n t i o n e d

i s t h e e l d e s t s o n o f t h e l a t e M r . J . H . S c h i f f

"A syndicate compose d of Mr . Harriman, MortimerL. S c h i f f , J a m e s S t i l l m a n , a n d G e o r g e J . G o u l d , b o u g h t

n e a r l y a l l the s tock of the company . Within six years,

u n d e r t h e i r m a n a g e m e n t , t h e c a p i t a l s t o c k w a s i n c r e a s e d

f r o m 4 0 , 0 0 0 , 0 0 0 d o l l a r s t o 1 2 2 , 8 0 0 , 0 0 0 d o l l a r s , a l t h o u g h

only 22,000,000 was spent for improvements . Largeq u a n t i t i e s o f b o n d s i s s u e d b y t h e s y n d i c a t e w e r e v i r t u a l ly

s o l d t o t h e s y n d i c a t e a t s i x t y - f i v e a n d t h e n m a r k e t e d a t

n i n e t y t o n i n e t y - s i x , a c o n s i d e r a b l e p a r t b e i n g t a k e n by




t h e g r e a t l i f e i n s u r a n c e companies . T he c o n t r o l l i n g

o w n e r s a l s o d e c l a re d a n d p a i d t o t h e m s e l v e s a d i v i d e n d

o f 3 0 p e r c en t . T h e p r o f i t s o f t h e s e t r a n s a c t i o n s a p p e a r

t o h a v e e x c e e d e d 2 4 , 0 0 0 , 0 0 0 d o l l a r s . I n d u e t i m e 1 0 3 , 0 0 0

s h a r e s o f t h e A l t o n s t o c k w e r e s o l d t o t h e U n i o n P a c i f i c .

T h e t e s t i m o n y s h o w e d t h a t h e a v y c o m m i s s i o n s , a m o u n t -

i n g t o s e v e r a l m i l l i o n s h a d b e e n p a i d t o t h e a f f i l i a t e d

b a n k i n g - h o u s e f o r i t s s e r v i c e s i n h a n d l i n g s e c u r i t i e s . "

I n i t s a r t i c l e o n " R a i l w a y s a n d R a i l w a y P r o b l e m s , "

t h e " E n c y c l o p a e d i a o f S o c i a l R e f o r m " m a k e s r e f e r e n c e t o

a t r a n s a c t i o n i n w h i c h M r . J . H. S c h i f f w a s c o n c e r n e d .

U n d e r t h e h e a d i n g " S t o c k G a m b l i n g , " i t s a ys

" R a i l w a y s t o c k s c o n s t i tu t e t h e b a c k b o n e o f s p e c u l a -

tion in Wall Street and c o r r e s p o n d i n g c e n t r e s o f

s p e c u l a t i o n i n o t h e r c i t i e s . P a n i c a f t e r p a n i c h a s b e e n

p r e c i p i t a t e d i n W a l l S t r e e t by the struggles of r i v a l

b u y e r s t o c o n t r o l t h e s t o c k o f s o m e r a i l r o a d . I n 1 9 0 1 ,

f o r e x a m p l e , t h e s t o c k o f t h e N o r t h e r n P a c i f i c w a s f o r c e d

u p t o 1 , 0 0 0 d o l l a r s a s h a r e , a n d o n e o f t h e w o r s t p a n i c s

o f r e c e n t y e a r s w a s t h e r e s u l t . T h o s e i n c o n t r o l o f

r a i l r o a d s c a n e a s i l y m a k e l a r g e s u m s b y m a n i p u l a t i n g

s t o c k s s o a s t o a f f e c t t h e i r v a l u e s . "

Under the heading "Railway Politics" this same

A m e r i c a n r e f e r e n c e b o o k s a y s

"From Maine to California for many yea rs our

r a i l w a y s h a v e d o n e t h e i r b e s t t o c o n t r o l t h e g o v e r n m e n t

o f o u r S t a t e s a n d c i t i e s s o f a r a s t h e y c o m e i n c o n t a c t

w i t h t r a n s p o r t a t i o n i n t e r e s t s, a n d f o r t h e m o s t p a r t t h e y

h a v e s u c c e e d e d . Now and then a wave of popular

sentiment has o v e r c o m e t h e i r i n f l u e n c e i n l e g i s l a t i v e

b o d i e s , a s d u r i n g t h e G r an g e r m o v e m e n t i n t h e ' 7 0 ' s , a n d

t h e R o o se v e l t m o v e m e n t o f 1 9 0 5 - 0 7 , b u t i n t h e l o n g r u n

t h e r a i l r o a d s h a v e b e e n a b l e t o c o n t r o l i n l a r g e m e a s u r e

t h e n o m i n a t i o n o f m e m b e r s o f l e g i s l a t u r e s a n d o f t h e

n a t i o n a l C o n g r e s s . "

" ` T h e r a i l r o a d s w i l l b u y u p a l e g i s l a t u r e ju s t a s t h e y

b u y a c a r - l o a d o f m u l e s , ' s a i d t h e g o v e r n o r o f a g r e a t

stateW h e r e i t i s n e c e s s a r y t h e r a i l r o a d s d o n o t h e s i t a t e

t o u s e m o n e y t o b u y t h e v o t e s o f l e g i s l a t o r s , e i t h e r t o

s e c u r e t h e p a s s a g e o f m e a s u r e s f a v o u r a b l e t o t h e r o a d s ,

o r p r e v e n t t h e p a s s a g e o f m e a s u r e s l i k e l y t o d o t h e m

i n j u r y . "



4 2 THE TRUTH ABOUT THE SLUMPR e f e r e n c e i s m a d e b y t h e E n c y c l o p a e d i a t o a n o t h e r

c o n c e r n a s s o c i a t e d w i t h t h e K u h n - L o e b i n t e r e s t s

" S e n a t o r P l a t t t e s t i f i e d t h a t a n i n s u r a n c e c o m p a n y

l i k e t h e E q u i t a b l e u s u a l l y g a v e 1 0 , 0 0 0 d o l l a r s a y e a r t o

h i s m a c h i n e a s i t s o r d i n a r y p o l i t i c a l a s s e s sm e n t , a n d m o r e

i f i t e x p e c t e d u n u s u a l f a v o u r s . "

The "New Encyclopaed ia of Social Reform" quotes

f r o m a r t i c l e s o n m u n i c i p a l c o r r u p t i o n b y M r . L i n c o l n

Steffens which appea red in "McClure's Magazine" and

w e r e l a t e r p u b l i s h e d i n b o o k f o r m u n d e r t h e t i t l e " T h e

Shame of the Cities" (1904) . In this is given an

a c c o u n t o f . t h e c o l o s s a l c o r r u p t i o n i n S t . L o u i s , a n d

among the corporations prominent in expending money

c o r r u p t l y w e r e m e n t i o n e d t h e W e s t e r n U n i o n T e l e g r a p h

Company and Missouri Pacific Railroad, with both of

which Kuhn, Loeb and Company are mentioned above

a s h a v i n g b e e n a s s o c i a t e d .

Under th e heading of " F o s t e r i n g M o n o p o l y , " t h e

E n c y c l o p a e d i a s a y s

" O u r r a i l w a y s f o s t e r m o n o p o l y d i r e c t l y a n d i n d i r e c t l y .

B y c o n s o l i d a t i o n a n d c o m b i n a t i o n t h e y a r e b u i l d i n g u p

numerous monopolies in the railroad field, and by

c o n c e s s i o n s t o f a v o u r e d t r u s t s a n d c o m b i n e s l i k e t h e

S t a n d a r d O i l , t h e B e e f T r u s t , t h e S u g a r T r u s t , e t c ., they

h e l p t o b u i l d u p v a s t m o n o p o l i e s i n m a n u f a c t u r e s a n d

commerce . The Stand ard Oil monopoly was directly

c r e a t e d b y r a i l r o a d r e b a t e . T h e B e e f T r u s t i s a n o t h e r

e x c e l l e n t i l l u s t r a t i o n o f a g i a n t m o n o p o l y t h a t o w e s i t s

c r e a t i on t o t h e f o s t e r i n g c a r e o f r a i l r o ad d i s c r i m i n a t i o n .

"A distinguished railwa y officer writing in the

` O u t l o o k ' s a y s

" ' I t i s e s t i m a t e d t h a t 5 0 m i l l i o n d o l l a r s h a v e b e e n

c o n v e r t e d i n t o t h e t r e a s u r i e s o f v a r i o u s t r u s t s s i n c e 1 8 8 7

b y m e a n s o f r e b a t e s an d o t h e r f o r m s o f f a v o u r i t i s m , a n d

t h a t " p r e s e n t c o n d i t i o n s p r o m i s e n o t a n a b a t e m e n t b u t

a n e x p a n s i o n o f t h e m e t h o d s b y w h i c h t h i s d i v e r s i o n m a y

c o n t i n u e . "

" ' T h e f o r m a t i o n o f t h e v a s t i n d u s t r i a l tr u s t s b e g a n

i n 1 8 7 2 w h e n t h e a n t h r a c i t e c o a l c o m b i n a t i o n w a s f o r m e d

b y a n a l l i a n c e o f p r o d u c e r s a n d c a r r i e r s a n d w h e n t h e

i n t e r e s t s w h i c h c o m p o s e t h e S t a n d a r d O i l T r u s t f i r s t

b e g a n t o w o r k i n h a r m o n y w i t h e a c h o t h e r a n d u s e t h e

p o w e r o f t h e i r r a i l r o a d a l l i e s t o c l e a r t h e f i e l d o f

c o m p e t i t o r s . T o d a y t h e r e a r e 4 5 0 t o 5 0 0 t r u s t s , w i t h an




aggregate capitalisation, including the railr oad and other

franchise t rusts, of something like 20,000 million dollar s .

And stil l more trusts are forming and the limits of

existing trusts are b eing extended and the ir inter locking

interes ts increased and intensified . They are reachingout after the l and, and th e control of market, labour and

raw materials . T h e y a r e e s t a b l i s h i n g i n t e r n a t i o n a l

r e l a t i o n s h i p s a im ing t o mo n o p o l i s e t h e g l o b e i n t h e i r

lines of business . And they are joining hands with each

other .

"'On the whole t he situ ation seems to be this : Therailways and other big franchise monopolies areco-ordina ting with the great commercial combines into

a gigantic machine controlled by a few financiers a nd

crea t e d t o manufactu r e or capt u r e pr ofit for t h em .

Events are moving towards a consolidation of interes ts

that will g i v e a handful of capitalis ts practically imperial

power through the vastness of their industrial dominions .

There may be breaks in the movement, probably will be,but the int egration of industr y seems likely to continue

in spite of strenuous efforts to prevent it by st atutes and

decisions . . . .

"'And the railways are generally r egarded as forming

the basis of the structure, or a large part of it . I h a v e

met with this opinion all over the United States and i n

some other countrie s . " '

In the art icle on "Corporations," the Encyclopaedi a

prints the following :

"With corporate capitalis ations running up into the

billions of dollars and controlling entire industrie s, it is

necessary to keep the control in close touch with la rge

financial and banking interests . Thus the gigantic

railroa d, industrial , and public utility corporations of the

Un i t e d S t a t e s a r e a l l m a n a g e d f r o m w h a t i s c o mm o n l y

known as `the Wall Street end .' That is , the control of

the companies, as re presente d in the board s of directors

and officers, is all in t he hands of the banking interests

of the country, who supply the necessary capital, combine

t h e p l a n t s , f o r m u n d e r w r i t i n g s y n d i ca t e s , f l o a t t h e

securities, devi se the plans of capitalisation and stand

at the forefront of the financial organisati ons . Theb o a r d s of d i r ec to r s a r e u s u a l l y c h o s e n b y t h e b a nking

interests, and of course all matters of policy are either

a p p r o v e d o r d e v i s e d b y t h e s e s a m e b a n ki n g i n t e r e s t s .



4 4 THE TRUTH ABOUT THE SLUMPN a t u r a l l y t h e b a n k i n g i n t e r e s t s a d v o c a t e p o l i c i e s w h i c h

w i l l s e r v e t o s t r e n g t h e n t h e i r c o n t r o l o f t h e p a r t i c u l a r

i n d u s t r i e s a n d c o n s e r v e w h a t e v e r s p e c i a l p r i v i l e g e s t h e

e n t e r p r i s e s m a y h a v e . "

T h i s v i e w i s v e r y s i m i l a r t o t h a t e x p r e s s e d b y M r .

Louis D . B r a n d e i s , n o w a j u s t i c e o f t h e U n i t e d S t a t e s

Supreme Court, and t he first Jew to be app ointed a

m e m b e r o f t h i s h i g h e s t A m e r i c a n C o u r t a n d t h e g u a r d i a n

o f t h e C o n s t i t u t i o n . In his book, "Other People's

Money," published fifteen or sixteen years ago, Mr .

B r a n d e i s s a i d

" T h e d o m i n a n t e l e m e n t i n o u r f i n a n c i a l o l ig a r c h y i s

t h e i n v e s t m e n t banker . A s s o c i a t e d banks . trust

c o m p a n i e s , a n d l i f e i n s u r a n c e c o m p a n i e s a r e h i s t o o l s .

C o n t r o l l e d railroads, p u b l i c s e r v i c e and i n d u s t r i a l

c o r p o r a t i o n s a r e h i s s u b j e c t s . Though properly but

m i d d l e m e n t h e s e b a n k e r s b e s t r i d e a s m a s t e r s A m e r i c a ' s

b u s i n e s s w o r l d , s o t h a t p r a c t i c a l l y n o l a r g e e n t e r p r i s e

can be undertaken without their participation anda p p r o v a l . "

Before we trace the ste ps by wh ich the American

m o n e y p o w e r h a s b l o s s o m e d o u t u n d e r t h i s d i r e c t i o n t o

c o n t r o l t h e w h o l e c o m m e n c e o f t h e w o r l d , i t i s a d v i s a b l e

first to take a glance at the syst em whereunder the

financial ring has the people of Germany in leading

s t r i n g s .



CHAPTER VI .

THE GERMAN SIDE OF THE STORY .

If you will turn to the article on banking in the 1929

editi on of the Encyclopaed ia Brit annica you w i l l find that

t h i s a u t h o r i t a t i v e w o r k o f r e fe r e n c e s t a t e s t h a t t h e

mode r n German b a nking s y s t em w a s e s t a b l i s h e d a fte r

the revolution of 1848 . If you turn to th at equally

reputable English periodical, the London "Spectator,"

you will find in its issue of October 16, 1 920, a leading

article in which it points out that the revolut ions which

occur r e d i n E u r o p e i n t h e y e a r 1 8 4 8 w e r e l e d b y Jew s ,

just as the B olshevik revolution in Russia in 1 9 1 7 was

led by Jews . Thus we get the position that a ba nking

syste m which (as we sh all see ) has made Jewish b ankers

s u p r em e i n Germ an y w a s e s t a b l i s h e d f o l l o w i ng o n a r e-

volution led by Jews . This may be a coincidence, or it

may not.

In his b ook "Freedom in Fi nance" (Fisher Unwin,

1919 ), Sir Oswald Stoll says

"The financial ring which girdles the earth is

gathered from all nations . Powerful elements in it are

essen tial ly American, but the dominating influence is

T e u t o n i c . "

Of the German banking system Sir Osw ald S toll s a i d :

"Six great German banks contr ol scores of thou sand s

of mi l l i o n s o f cap i t a l t h r o ug h o u t t h e w o r l d , t h r o ug h

direct and indirect associations and si lent partnerships .See Document No . 59 3 of t h e Unit e d St a t e s S e na t eissued at Washington by the National MonetaryCommission . "This American Government document is a bulkyvolume of 1042 pages and d eals w ith "The German Great

B a n k s a n d t h e i r C o n c e n t r a t i o n i n C o n n e c t i o n w i t h t h e

Economic De v e l op ment of Germany . " I t s h o w s h o w t h e

financial r ing holds German industry in the hollow of its

h a nd .

In 1916 the late Dr . E . J . Dillon, for many year s one

of the best informed wr iters on foreign affairs in the

E ng l i s h mo n t h l y r e v i e w s , w r o t e a b o ok, " O u r s e l v e s a n d

Germany" (C h a pman & Hal l , 1 9 1 6), i n w h ich h e mad e

4 5





THE GERMAN SIDE OF THE STORY 4 7

heard of the great German dye trust, built up on an

E n g l i s h i n v e n t i o n f o r t h e e x t r a c t i o n o f d y e s f r o m c o a l

t a r . W h a t i s t r u e o f t h e d y e s i s a l s o t r u e w i t h a r o u g h

p a r e l l e l i s m o f m e t a l l u r g y , e n g i n e e r i n g , t h e e l e c t r i c a l

i n d u s t r y , a n d s o o n . I n p a s s i n g i t m a y b e n o t e d t h a t

a c c o r d i n g t o Lord D'Abernon's memoirs o f h i s

a m b a s s a d o r s h i p i n G e r m a n y , H e r r D e u t s c h , h e a d o f t h e

g r e a t Ger man electrical c o m b i n e , t h e A l l e g e m e i n e

E l e c t r i c i t a t s G e l l e s c h a f t , e m p l o y i n g 6 0 , 0 0 0 m e n , i s a

n e a r r e l a t i v e o f S i r G e o r g e L e w i s , t h e f a m o u s L o n d o n

s o c i e t y l a w y e r w h o w a s s a i d t o k n o w m o r e f a m i l y s e c r e t s

t h a n a n y o t h e r m a n i n B r i t a i n , a n d H e r r D e u t s ch ' s w i f e

i s a s i s t e r o f M r . O t t o K a h n , p a r t n e r i n t h e f i r m o f K u h n ,

Loeb and Company of New York . T h i s l i t t l e fa c t e n a b l e s

o n e t o r e a l i s e h o w i n t e r n a t i o n a l i n i t s c o n n e c t i o n s i s h i g h

f i n a n c e .

The kartels of Germany were la rgely buil t up by

Jewish bankers of that country, and later German

J e w i s h b a n k e r s i n t h e U n i t e d S t a t e s p l a y e d a p r o m i n e n t

p a r t i n b u i l d i n g u p t h e g r e a t t r u s t s t h er e b y m e a n s o f

w h i c h t h e y b r o u g h t A m e r i c a n i n d u s t r y u n d e r t h e i r o w n

c o n t r o l .

M a n y w r i t e r s h a v e r e m a r k e d o n t h e c u r i o u s f a c t t h a t

a l t h o u g h t h e J e w s h a v e b e e n w o r s e t r e a t e d i n G e r m a n y

t h a n i n B r i t a i n t h e r e a p p e a r s t o b e a m o r e s y m p a t h e t i c

f e e l i n g a m o n g t h e m f o r G e r m a n y t h a n f o r B r i t a i n . I t

i s s t a t e d t h a t t h e G e r m a n o r A s h k e n a z i m J e w s , w h o t o d a y

c o n s t i t u t e a g r e a t p o r t i o n o f t h e w o r l d ' s J e w r y , h a v e n o

b l o o d c o n n e c t i o n w i t h t h e J e w s o f P a l e s t i n e , b u t a r e t h e

descendants of people wh o at the time of the Kajar

Empire in South Russia , about A . D . 800 to 1 000,

e m i g r a t e d t o i t f r o m c e n t r a l a n d s o u t h e r n E u r o p e a n d

t h e N e a r E a s t , a t t r a c t e d t o t h e K a j a r d o m a i n s b y t h e

p r e s t i g e o f t h a t e m p i r e , w h o s e E m p e r o r , i n c i d e n t a l l y , h a d

b e c a m e a c o n v e r t t o J u d a i s m . The immigrants became

c o n v e r t s t o t h e J e w i s h f a i t h a l s o , a n d i n t e r m a r r y i n g w i t h

each other and w ith the Mongoloid and Armenoid

Asiatics they found there produced the type now

c o m m o n l y c a l l e d J e w i s h . W h e n t h e K a j a r ( a l s o s p e l l e d

Khazar) Empire came to an end some of thos e people

r e m a i n e d i n S o u t h e r n R u s s i a a n d o t h e r s g r a v i t a t e d b a c k

t o t h e l a n d s f r o m w h i c h t h e y h a d o r i g i n a l l y c o m e .

M r . E . A . Skrine in his "Expansion of Russia"

( C a m b r i d g e U n i v e r s i t y P r e s s , 1 9 0 4 , p . 2 7 5 ) , w r o t e t h a t

"Russia, ra ther than Palestine, is the Jewry of the






w h i l e t h e y a r r o g a t e d t h e i r o w n r i g h t t o c r i t i c i s e w h e r e s o-

e v e r a n d w h o m s o e v e r t h e y t h o u g h t f i t . I n t h i s a t t i t u d e

o f t h e J e w s T r e i t s c h k e a f f e c t e d t o f i n d t h e c a u s e o f t h e

then Anti-Semite agitation raging in Germany . S o

widesprea d is t he loath ing of the Jew by the German

t h a t i t h a s b r o u g h t i n t o b e i n g a c o m p l e t e A n t i - S e m i t e

literature . . . J e w s a r e s t i l l s t e r n l y b o y c o t t e d i n t h e

` b e s t ' s o c i e t y : t h e y a r e n o t a d m i t t e d a s a c t i v e o f f i c e r s i n

the army, although they are suffered in the r eserve

"To a man the Germans not only hate bu t fear the

Jew . O n l y t o o w e l l d o t h e y k n o w t h a t h e d o m i n a t e s t h e

P r e s s . T h e g r e a t i n t e r n a t i o n a l n e w s a g e n c i e s , R e u t e r

and Wolff are controlle d by him . He commands t he

m o n e y a n d t h e p r o d u c e m a r k e t s . H e d i r e c t s t h e t h e a t r e s ,

s u p p l i e s t h e c a p i t a l , m o s t o f t h e p e r f o r m e r s ( n o t t o

m e n t i o n c r i t i c s ) , a n d f u r n i s h e s a r e m u n e r a t i v e a u d i e n c e .

A l l t h e p r o f e s s i o n s i n G e r m a n y ( s a v e t h e a r m y a n d n a v y )

a r e c r o w d e d w i t h J e w s . T h e l a w a b o u n d s w i t h t h e m a n d

t h e r e a r e n o t a f e w o n t h e j u d i c i a l b e n c h . A Jew founde d

Germany's mercantile marine . The best and largest

h o u s e s i n B e r l i n , i n t h e T i e r g a r t e n a n d t h e B e l l e v u e -

s t r a s s e, a r e a l m o s t a l l t h e p r o p e r t y o f J e w s . N a y , i f t h e

G e r m a n P r e s s p o s s e s s e d t h e p o w e r o f t h e B r i t i s h P r e s s ;

i f e n t r y t o t h e R e i c h s t a g c o u l d b e a s s u r e d b y w e a l t h , a n d

i f t h e G e r m a n A r m y w e r e t o a d m i t t o o f f i c e r s h i p a l l t h e

Jews w ho go up for examination, Germany would so on

b e c o m e t h e J e w i s h E m p i r e . And pagan Germany knows

i t , a n d h a s f e a r e d i t f o r m a n y y e a r s p a s t . . . . I t i s

t h e J e w w h o i s p r i m a r i l y a c c o u n t a b l e f o r G e r m a n y ' s l a t e

c o m m e r c i a l p r o s p e r i t y : t h e G e r m a n s k n o w i t , b u t a r e t o o

e n v i o u s a n d c o n c e i t e d t o s a y s o . . . . Whatever town

o f i m p o r t a n c e y o u v i s i t i n G e r m a n y y o u w i l l f i n d t h a t t h e

p r i n c i p a l d o c t o r s t h e r e , t h e m e n o f s c i e n c e , a r t , a n d

l i t e r a t u r e a r e of t h e J e w i s h f a i t h . . A m a z i n g i t i s

t h a t t h i s w o n d e r f u l , a n c i e n t r a c e , s c i e n t i f i c , a r t i s t i c , f a r

more clever in eve ry way than the upstart Germans,

shou ld take the German ill-treatment of them `lying

d o w n ' a n d s t i l l p e r s i s t i n v a i n l y s e e k i n g a n e n t r y i n t o

B e r l i n ` s o c i e ty . ' W h o k n o w s , h o w e v e r , w h a t w i l l h a p p e n

i n 1 9W i l l t h e J e w s t h e n i n h e r i t t h e k i n g d o m o f

P r u s s i a. ?Will the German Empire become the

Jewish Empire?"

M r . d e H a l s a l l e i s n o t a n i m a t e d b y a n y f e e l i n g o f

h o s t i l i t y t o w a r d s t h e J e w s o f G e r m a n y . O n t h e c o n t r a r y ,



5 0 THE TRUTH ABOUT THE SLUMPhe remarks : " I m u s t s a y i t i s n o t w i th o u t a d m i r a t i o n I

r e g a r d t h e T e u t o n i c I s r a e l i t e . " I n s t a t in g t h a t t h e J e w s

d o m i n a t e d m a n y d e p a r t m e n t s o f a c t i v i t y h e w a s m e r e l y

r e c o r d i n g f a c t s , a n d h i s g e n e r a l l i n e o f a r g u m e n t w a s

t h a t t h e G e r m a n w a s a p e r s o n i n f e r i o r i n e v e r y w a y t o

t h e J e w h e d e s p i s e d , b u t w h o d o m i n a t e d h i s c o u n t r y , o r

p r o m i s e d s o o n t o d o s o . '

I n t h e " N a t i o n a l R e v i e w " f o r M a r c h , 1 9 2 5 , M r . A r t h u r

Kitson made some reference to German finance and

b a n k i n g m e t h o d s i n t h e c o u r s e o f a n a r t i c l e e n t i t l e d

"The International Bankers' Game . " I n t h i s a r t i c l e

a p p e a r e d a l e n g t h y e x t r a c t f r o m a n a r t i c l e o r i g i n a l l y p u b -

l i s h e d i n t h ee N o v e m b e r , 1 9 2 4 , i s s u e o f M r . H e n r y F o r d ' s

p a p e r , t h e " D e a r b o r n I n d e p e n d e n t . " A s w e w i l l s e e i n

a s u b s e q u e n t c h a p t e r , M r . F o r d i n 1 9 2 7 m a d e a g e n e r a l

r e t r a c t i o n o f h i s c r i t i c i s m s o f t h e J e w s p u b l i s h e d i n t h e

" D e a r b o r n I n d e p e n d e n t , " a n d h i s s o n , M r . E d s e l F o r d ,

now president of the Ford Motor Company, in 192 9

b e c a m e a f e l l o w d i r e c t o r i n a c o l o s s a l i n t e r n a t i o n a l

chemical combine wi th Mr . Paul Warbur g, whose

a c t i v i t i e s w e r e d e s c r i b e d i n t h i s a r t i c l e i n t h e " D e a r b o r n

I n d e p e n d e n t . " S o f a r a s t h e w r i t e r k n o w s n o s p e c i f i c

r e t r a c t i o n o f t h i s a r t i c l e w a s m a d e b y M r . F o r d o r b y

t h e " N a t i o n a l R e v i e w , " w h i c h r e p r i n t e d i t . M o r e o v e r ,

M r . K i t s o n i n a p r e v i o u s i s s ue o f t h e " N a t i o n a l R ev i e w "

( N o v e m b e r , 1 9 2 4 ) h a d p u b l i s h e d a g e n e r a l o u tl i n e o f t h e

same f a c t s , a p p a r e n t l y o b t a i n e d from i n d e p e n d e n t

s o u r c e s . I t w o u l d t h u s n o t a p p e a r t h a t a n y i n j u s t i c e w i l l

b e d o n e b y r e p r i n t i n g e x c e r p t s f r o m M r . K i t s o n ' s a r t i c l e

o f M a r c h , 1 9 2 5 . I n h i s o p e n i n g p a r a g r a p h s M r . K i t s o n

s a i d

" I n t h e N o v e m b e r i s s u e o f t h e ` N a t i o n a l R e v i e w ' I

o u t l i n e d t h e p l o t c o n c e i v e d b y c e r t a i n G e r m a n - A m e r i c a n -

J e w i s h f i n a n c i e r s f o r d o m i n a t i n g t h e w o r l d u n d e r t h e

c u r r e n c y s y s t e m k n o w n a s t h e ` g o l d s t a n d a r d , ' w h i c h i s

b e i n g c a r r i e d t o a s u c c e s s f u l i s s u e w i t h t h e a i d o f c e r t a i n

o f o u r L o n d o n b a n k e r s a t a n a s t o n i s h i n g r a t e o f s p e e d .

(Note . - B r i t a i n r e t u r n e d t o t h e g o l d s t a n d a r d i n t h e

m o n t h f o l l o w i n g t h e p u b l i c a t i o n o f M r . K i t s o n ' s a r t i c l e . )

" T h e p r o g r e s s o f t h i s c o n s p i r a c y w a s t r ac e d f r o m i t s

incipiency down to the introduction of the Dawes

Scheme-starting with the passage of the American

F e d e r a l R e s e r v e b a n k i n g s y s t e m , w h i c h w a s e s t a b l i s h e d

under President Wilson, with Mr . Paul Warburg, a

German-Jewi sh banker of Hamburg (wh o b ecame a




U n i t e d S t a t e s c i t i z e n o n l y t h r e e y e a r s p r i o r t o t h e W a r )

a s i t s c o n t r o l l e r . "

I n t h e s e c o n d p o r t i o n o f h i s a r t i c l e Mr. K i t s o n w r o t e

a s f o l l o w s

" W h i l s t o u r f i n a n c i e r s a n d t r e a s u r y o f f i c i a l s ( w h o s e

c h i e f s i g n i f i c a n t l y b e a r s t h e n a m e o f S i r O t t o E r n s t

Niemeyer) have been assist ing in welding the golden

chain which is to control the British public, the

i n s t i g a t o r s o f t h e w h o l e p o l i c y h a v e b e e n b u s y i n o t h e r

d i r e c t i o n s . Mr . H e n r y F o r d h a s r e c e n t l y t h r o w n a f l o o d

o f l i g h t o n t h e r e c e n t m o v e m e n t s o f M r. Paul Warburg

and his associates in N ew York and Germany . "

I n a f o o t n o t e M r . K i t s o n s a i d

"It is worth not ing how unanimous our Anglicised

G e r m a n f i n a n c i e r s a r e i n d e s i r i n g t h e r e - e s t a b l i s h m e n t o f

gold in this country - S i r F e l i x S c h u s t e r , Baron

Schroeder, Mr . Otto Kahn, Fruhling Goschen, Klein-

wort h & Co . , e t c . " The name of Professor Theodor

Emanuel Gugenheim Gregory might appropr iate ly have

b e e n a d d e d t o t h i s l i s t .Mr. K i t s o n c o n t i n u e d a s f o l l o w s

" I t s h o u l d b e r e m e m b e r e d t h a t a c o n s p i c u o u s m e m b e r

o f t h e W a r b u r g g r o u p , M r . Ot to Kahn-an Americanised

G e r m a n - h a s r e c e n t l y a d o p t e d E n g l a n d a s h i s h o m e , a n d

h a s b e e n e x p r e s s i n g h i s g r e a t a d m i r a t i o n f o r t h e g a l l a n t

B r i t i s h p u b l i c w h o a r e b r a v e l y s h o u l d e r i n g t h e i r d e b t s

a n d s e t t i n g t o t h e w o r l d a n e x a m p l e o f n a t i o n a l h o n e s t y !

How he must chuckle to himself when he reads h i s

o p i n i o n q u o t e d s e r i o u s l y i n a S u n d a y n e w s p a p e r w h i c h

h a s m a d e t h e - c a u s e o f t h e m o n e y l e n d e r s i t s o w n ! I n a

b u r s t o f e n t h u s i a s m t h i s j o u r n a l r e c e n t l y e x c l a i m e d ,

`What a fortunate people we are! '-referring to the

r e c e n t s p e e c h e s o f t h e P r e s i d e n t s o f t h e f i v e g r e a t b a n k s

w h i c h , t o g e t h e r w i t h t h e B a n k o f E n g l a n d , c o n s t i t u t e

one of the most gigantic monopolies in t he worl d : a

m o n o p o l y t h a t i s t o d a y t h e ` d e a d h a n d ' p a r a l y s i n g o u r

t r a d e a n d c o m m e r c e .

" I n the November number of Mr . F o r d ' s p a p e r , t h e

' D e a r b o r n I n d e p e n d e n t , ' t h e f i n a n c i a l c o n s p i r a c y o u t -

l i n e d b y m e i n l a s t N o v e m b e r ' s ` N a t i o n a l R e v i e w ' i s f u l l y

c o n f i r m e d i n t h e f o l l o w i n g p a r a g r a p h w h i c h a p p e a r s a s

a n i n t r o d u c t i o n t o t h e s e r i e s o f a r t i c l e s w r i t t e n b y t h e

American journalist, Mr . Hamilton York . He says

` T hi s is t he f ir st o f a s eries o f a r t i c l e s i n w h i c h w i l l b e



5 2 THE TRUTH ABOUT THE SLUMPs e t f o r t h t h e e l e m e n t s o f a s c h e m e w h i c h i s i n t e n d e d t o

place in the hands of a small g r o u p o f i n t e r n a t io n a l

f i n a n c i e r s , n o t o n l y t h e a r bi t r a t m e n t o f t h e f a t e o f E u r o p e ,

b u t c o n t r o l o f t h e d e s t i n i e s o f a l l n a t i o n s . In this article

t h e a c t i v i t i e s o f P a u l W a r b u r g , o f N e w Y o r k , a G e r m a n -

Jewish financier, n a t u r a l i z e d in America, a r e f u l l y

e x p l a i n e d . ' T h e w r i t e r t h e n p r o c e e d s a s f o l l o w s

"'The adoption of the Dawes Report est ablishes a

m e c h a n i s m w h e r e b y t h e w o r l d ' s g o l d i s p l a c e d i n c o n t r o l

o f t h e g e n e r a l b o a r d o f t h e S c h a c h t G o l d B a n k o f B e r l i n ,

o r g a n i s e d a t t h e s u g g e s t i o n o f t h e W a r b u r g s i n a n t i c i -

p a t i o n of the D a w e s Report as a cover for the

i n t e r n a t i o n a l g r o u p o f financiers-of which Mr . P a u l

Warburg is a member-and the existence of which Mr .

O t t o K a h n d e n i e s .

" ' I t w o u l d n o t h e p o s s i b l e t o m a k e t h i s s t a t e m e n t s o

c o n f i d e n t l y w e r e i t n o t f o r a n o t h e r e v e n t , n a m e l y , t h a t

Congress passed an amendment to th e Federal Reserve

Act i n M a r c h , 1 9 2 3 , w h i c h a u t h o r i s e d t h e F e d e r al R e s e r v e

Bank t o d i s c o u n t credit p a p e r , i n c l u d i n g f o r e i g n

a c c e p t a n c e s . The Federal Reserve Bo ard waited until

M a r c h , 1 9 2 4 , b e f o r e t a k i n g a d v a n t a g e o f t h a t a u th o r i t y .

T h e r e s o l u t i o n of the B oard, which n ow p ermi ts

d i s c o u n t i n g o f f o r e i g n a c c e p t a n c e s , w a s p r o m u l g a t e d i n

A p r i l , 1 9 2 4 , a l m o s t s i m u l t a n e o u s l y w i t h th e i s s u a n c e o f

the Dawes Report .

" ' T h e f u l l s i g n i f i c a n c e o f t h e l a s t e v e n t d o e s n o t

a p p e a r u n t i l i t i s d i g e s t e d i n t e r m s w h i c h a p p e a l t o t h e

G e r m a n - J e w i s h b a n k e r , w h i c h m a y b e s t a t e d t h u s

"'By r e - d i s c o u n t i n g Ger man t r a d e a c c e p t a n c e s ,

p a r t i c i p a t i n g A m e r i c a n b a n k s a n d t h e i r d e p o s i t o r s a r e

f i n a n c i n g t h e r e v i v a l o f G e r m a n t r a d e a n d s e c o n d a r i l y

R u s s i a n t r a d e .

" ' I t i n d i c a t e s f u r t h e r t h a t t h e G e rm a n - J e w i s h b a n k i n g

syst em by means of which Germany is now controll ed

h a s b e e n i m p o s e d u p o n t h e U n i t e d S t a t e s f r o m w i t h o u t ,

w h e r e i t c o u l d n o t b e m a d e t o g r o w f r o m w i t h i n.

" ' I f t h e A m e r i c a n p e o p l e a r e t o g a i n a c l e a r u n d e r -

s t a n d i n g o f t h e s y s t e m o f f i n a n c i a l c o n t r o l w h i c h i s a b o u t

to be imposed upon interna tional commerce through

c r e d i t o p e r a t i o n s , a n d w h i c h h a s b e e n g r a d u a l l y d e v e l o p -

i n g i n t h e U n i t e d S t a t e s s i n c e t h e p a s s a g e o f t h e F e d e r a l

R e s e r v e A c t i n 1 9 1 4 , t h e best way is to observe the

s y s t e m a s i t e x i s t s i n G e r m a n y . I t s h o m e i s i n t h a t




c o u n t r y w h e r e i t h a s b e e n m o u l d e d i n t o a p e r f e c t m a c h i n e

b y a s m a l l g r o u p o f m e n , p r a c t i c a l l y a l l J e w s .

" ' I t i s n o t a q u e s t i o n o f t h e a d e q u a c y o f t h e w a g e

w h i c h t h e s y s t e m a l l o w s f o r s e r v i c e a s o p p o s e d t o w h a t

s e r v i c e w o u l d b r i n g i n a f r e e a n d o p e n l a b o u r m a r k e t , b u t

i t i s a q u e s t i o n o f t h e p o s s i b i l i t i e s o f e x p l o i t i n g e v e r y b o d y

t h r o u g h a r t i f i c i a l l y i n d u c e d v a r i a t i o n s i n t h e v a l u e o f

money . S h o u l d e v e n t h e m o s t p o w e r f u l f a i l t o b ec o m e a

c o g i n t h e s y s t e m , h e i s e c o n o m i c a l l y b r o k e n , a n d h e i s a

l u c k y m a n i f h e c a n g a i n a l i v e l i h o o d f o r h i m s e l f a n d h i s

f a m i l y t h e r e af t e r. As will be shown, this system of

p u n i s h m e n t h a s a l r e a d y b e e n i n t r o d u c e d i n t o t h e U n i t e d

S t a t e s .

" ' I t i s p e r f e c t l y c o r r e c t t o c a l l t h i s a J e w i s h s y s t e m ,

f o r t h a t m i n d h a s d e v e l o p e d i t t h r o u g h l o n g y e a r s o f

a m b i t i o u s t r a i n i n g a n d e x p e r i e n c e . A t l e a s t , a s f a r b a c k

as th e time of Freder ick the Great, Jewis h bankers

dominated German finance . Itzig, Ephraim & Co . o f

B e r l i n f u r n i s h e d t h e m o n e y f o r t h e p r o s e c u t i o n o f t h e

S e v e n Y e a r s ' W a r , a n d t o b u i l d S a n s S o u c i a n d t h e l a r g e r

p a l a c e a t P o t s d a m . I t z i g w a s a l s o a n o t a b l e l e a d e r o f

t h e B e r l i n K a h i l l a .

"'Moses Mendelssohn, the earliest of the Jew

N a t i o n a l i s t s i n a m o d e r n s e n s e , w a s a c l o s e a s s o c i a t e o f

I t z i g ' s s o n - i n - l a w , Fr i e d l a n d e r . A l r e a d y t h e i n f l u e n c e o f

t h e h o u s e o f R o t h s c h i l d w a s b e g i n n i n g t o b e f e l t t h r o u g h -

out Europe . W i t h i n t e n y e a r s a f t e r t h e o p e n i n g o f t h e

nineteenth century, the private banking house o f

B l e i c h r o d e r w a s e s t a b l i s h e d i n B e r l i n , a n d f o r m a n y ,

many years the Bleichroders managed the personal

f i n a n c e s o f t h e H o h e n z o l l e r n s .

" ' T h e B l e i c h r o d e r s a n d t h e M e n d e l s s o h n s r e p r e s e n t e d

a s c h o o l o f p r i v a t e b a n k e r s w h i c h h a s b e e n p u s h e d a s i d e

b y a n i n v a s i o n o f m o r e a g g r e s s i v e J e w i s h t y p e s f r o m t h e

n o r t h - e a s t , a n d w h i c h a p p a r e n t l y h a d s t r o n g e r a d m i x t u r e

o f T a r t a r b l o o d i n t h e i r v e i n s . T h e y w e r e n o t s a t i s f i e d

t o b e p r i v a t e b a n k e r s , b u t s t a r t ed i n t o g a i n e n o n o m i c

c o n t r o l a n d a l s o t o o w n t h e S t a t e . We must credit the

Warburgs, the Wolfs, the Rathenaus and their c l o s e

a s s o c i a t e s f o r b u i l d i n g u p . t h e p r e s e n t J e w i s h f i n a n c i a l

syst em in Germany . R e a l c o n t r o l b e g a n i n t h e l a t e

' s e v e n t i e s a s t h e r e s u l t o f f i n a n c i n g S t a t e o w n e r s h ip o f

t h e r a i l w a y . T h i s i s a r o m a n c e a l l b y i t s e l f , a n d w e l l

w o r t h t h e s t u d y o f a n y o n e .



54 THE TRUTH ABOUT THE SLUMPÈxt e n s i o n s o f c r e d i t - t e a c h i n g p e o p l e t o b e c o me

d e p e n d e n t o n c r e d i t- w e r e n ec e s s a r y t o t h e d e v e l o pm en t

of the modern speculativ e financial sys tem . Co-ordinatewith these was the growth of that external trade

necessary for the maintenance of a growing population .

As th e busi ness of Germany grew and th e liquid capital

increased, the control be came more and more centralised

in Jewish h ands, until in the la st half of the last Kaiser's

reign the banking cabal controll ed the Sta te . I t w a s

the State .

"'Germany could not ha ve star ted the aggressi ve

w a r o f 1 9 1 4 w i t h o u t t h e e n co u r a g e me n t a n d a s s e n t o f

this group. It was t his group that staged an opera b ouffe

revolution to fool the world with th e loss of only a few

l i v e s . In establ ishing the so-called republic it fixed the

l a w s i n s u c h a m a n n e r t h a t i t s o w n p o s i t i o n w a s ma d e

more secure, and finally th rough the active participation

of Walter Rathen au, it arra nged the relati ons of big

business to the S tate so that th e political organization of

the German Reich today is simply a front for this small

group of German financiers . These men can do as they

p l e a s e , a n d h a v e d o n e a s t h e y p l e a s e w i t h t h e Ge r m a n

people .

"'The key to this s ituation, the fact that allows the

p e r s i s t e nc e of s uc h a p e r n ic io u s system, lies in the

German law which permits banks to hold sha res in ot her

banks and in industrial corporations . Until th e passage

o f t h e F e d e r a l R e s e r v e A c t s u ch p r i v i l e g e s w e r e n o t

accorded ba nks in t he United S tates for fear that t heremight develop a system of ov e r l or d s h i p w h ich h a s

r e ac h e d s uc h p e rf ec t i o n i n Germ an y . Eventual control

of industry a nd the banking facilities of the country

would necessarily dr ift into the hands of a few . But the

Je w i s h s y s t e m o f Ge r m a n y h a s l e d a n d d i r e c t e d s u c h a

movement for concent r a t i on and apparently with aconscious objective . The result i s that the inte rlocking

d i r ec to r s of t h e g r e a t e s t Germ an banks, abou t six in

n um b e r , d om in a t e t h e c o u n t r y . The list would include

T h e R e i c h s b a n k o f i s s u e f o r t h e G o v e r n m e n t b a n k e r s '

central bank, the directors of which are responsibl e for

the d epre ciation of the German mark and th e suffering

w h i c h i t e n t a i l e d ; the Disconto Gesellschaft ; MaxWarburg & Co ., of Hamburg, to which was all ocated the

s h i p p i n g o f Ge r m a n y , a n d w h i c h co n t r o l l e d t h e N o r t hGerman-Lloyd a n d Hamburg-American l i n e s ; the








German-American-Jewish b a n k e r s control Britis h

f i n a n c e s ? The answer is simply by means of their

c o n t r o l o f A m e r i c a ' s g o l d s u p p l i e s . I t i s w i t h t h i s g r o up

t h a t o u r s i m p l e - m i n d e d G o v e r n o r o f t h e Ba n k o f E n g l a n d

w i l l b e c o m p e l l e d t o d e a l . T h e c o n t r o l o f g o l d u n d e r t h e

g o l d s t a n d a r d m e a n s t h e c o n t r o l o f c r e d i t - w h i c h l e d t h e

l a t e S i r E d w a r d H o l d e n t o a d m i t i n o n e o f h i s i l l u m i n a t -

i n g a d d r e s s e s t o t h e B a n k e r s ' I n s t i t u t e : ` G o l d t h e r e f o r e

c o n t r o l s t h e t r a d e o f t h e w o r l d . " '

R e a d e r s w h o m a y b e i n c l i n e d t o q u e s t i o n t h e a b o v e

view of the role played by the Warburgs in recenti n t e r n a t i o n a l e v e n t s w i l l f i n d a m p l e i n d i c a t i o n s o f i t i n

t h e o c c a s i o n a l r e f e r e n c e s i n t h e M e m o i r s o f P r i c e M a x

o f B a d e n t o t h e i n f l u e n t i a l p o s i t i o n o c c u p i e d b y H e r r

Max Warburg during the momentous period in German

h i s t o r y w h e n P r i c e M a x w a s C h a n c e l l o r a n d t h e G e r m a n

r e p u bl i c wa s i n p r oc e ss o f e st a bl i sh m e n t . T h e f a c t t h a t

Dr . C a r l M e l c h o i r , t h e o n l y n o n - P a r l i a m e n t a r y m e m b e r

o f t h e m a i n G e r m a n P e a c e D e l e g a t i o n a t V e r s a i l l e s i n

191 9 was a par tner in War burg and Company, Hamburg,i s e q u a l l y s i g n i f i c a n t o f t h e g r e a t i n f l u e n c e o f t h i s

b a n k i n g h o u s e i n G e r m a n a f f a i r s . S t i l l m o r e s i g n i f i c a n t

is the le ading part taken by Dr . Melchoir in the

f o u n d a t i o n o f t h e B a n k o f I n t e r n a t io n a l S e t t l e m e n t s , a n d

his chairmanship of the Financial Committee of the

L e a g u e o f N a t i o n s .

Mention has been made by Mr . Kitson of Warburg

c o n n e c t i o n w i t h t h e t r a n s p o r t a t i o n t o R u s s i a o f L e n i n

a n d T r o t s k y , a n d t h e i r a l l e g e d f i n a n c i n g o f t h e B o l s h e v i k

r e v o l u t i o n . B e f o r e p r o c e e d i n g t o t r a c e o u t t h e s t e p s b y

w h i c h t h e F e d e r a l R e s e r v e S y s t e m . w a s e s t a b l i s h e d i n t h e

U n i t e d S t a t e s i t i s e x p e d i e n t t o d e v o t e a c h a p t e r t o

R u s s i a n a f f a i r s .



5 8

CHAPTER VII .

HOW RUSSIA WAS SMASHED UP .

That there was strong Jewish hostility to the Tsarist

regime in Russia is a wel l-known fact . In a previous

chapter it has b een noted i n a quotation from the Jewish

Encyclopaedia how Japan was financed in her war against

Russia in 1 904-05 by the late Mr. Jacob H . S c h i f f ,

p a r t n e r a n d b r o t h e r- i n-l a w of M r. Paul Warburg . Mr .

Schiff was des cribed by a foremost American Jew as th e

"belov e d l e a d e r of t h e Jews," and by the JewishEncyclopaedia as head of the oldest contemporary Jewish

family of which the re is record . It has been stated in

the "National Review" that this Jewish financial support

of Japan is thought to ha ve been a retal iation for Russia's

trea tment of the Jews .

T h e l a t e S i r C ec i l S p r i ng-Ric e, B r i t i s h Am b a s s a d o r

to the United States at the time, records a further

stri king instance of Jewis h disl ike of Russi a in a let ter

writte n by him in January, 19 14 . Under the o ld Hague

peace scheme the United Sta tes had negotiated tr eaties

of arbitr ation with var ious countries for the settlement

of international disputes without recourse to war . Thatwith Russia fell due for renewal, and Sir Ce cil Spring-

Rice in a letter writt en in January , 1914 , recorded that

P r e s i d e n t W o o d r o w W i l s o n p r o p o s e d a n e w t r e a t y i n i t s

place . H e a d d e d

"No s o o n e r w a s t h e P r e s i d e n t's s t a t em en t ma d e t h a n

a Jewish deputat ion came down from New York and in

two day s `fixed' the two Houses so tha t the Pre side nt

h a d t o r e n o u nc e t h e i d e a of mak ing a n e w t r e a t y w i t h

Russ ia . They are far better organised than the Irish and

far more formidabl e . . Their prese nt objective is

t o h a v e a j u d g e o n t h e S u p r e m e C o u r t b e n c h . Speyer,

the brothe r of your friend, has lost his influence by

marrying a Christi an . Bern storff (German Ambassado r

a t W a s h i ng t o n ) h a s s e n t h i s s o n i n t o S p e y e r's offic e

The pri ncipal Jew is now S chiff . "

The above extract indicates both the hostility of the

Jews toward s Tsarist Russia and their power in t he

United Sta tes . T h ei r d e si r e fo r a Je w is h ju d ge o n t h e



















HOW RUSSIA WAS SMASHED UP 6 7

Mr. W i l c o x i n h i s b o o k , " R u s s i a n ' s R u i n " ( C h a p m a n

& H a l l , 1 9 1 9 ) , a l s o r e f e r s to t h e a c t i v i t i e s o f P a r v u s

" . . . T h e c h a m e l e o n - l i k e P a r v u s ( D r . H e l p h a n d ) ,

who began life as a Russi an, then took on Turkish

c i t i z e n s h i p , a n d f i n a l l y d u r i n g t h e w a r b e c a m e n a t u r a l i s ed

i n G e r m a n y w h e r e h e m a n a g e d t o r e c o n c i l e p r o f e s s i o n s

o f a d v a n c e d s o c i a l is m w i t h t h e a c c u m u l a t i on o f c o n s i d e r-

a b l e w e a l t h , a n d w i t h s u b s e r v i e n c e t o a n I m p e r i a l i s t

r e g i m e . H i s n a m e f i g u r e s p r o m i n e n t l y i n t h e d o c u m e n t s

b y w h i c h i t h a s be e n s o u g h t t o i m p l i c a t e B o l s h e v i s m i n

t h e d e s i g n s o f t h e W i l h e l m i n i a n G o v e r n m e n t . "

On page 23 6 of his book Mr . W i l c o x s t a t e s

"Parvus during the war ran a paper, `Die Glocke'

( T h e B e l l ) , i n G e r m a n y f o r t h e e x p o s i t i o n o f a c u r i o u s

m i x t u r e o f S o c i a l i s m a n d I m p e r i a l i s m . Lenin was an

o c c a s i o n a l c o n t r i b u t o r . O n o n e o f H i n d e n b u r g ' s b i r t h -

d a y s t h i s p a p e r p r i n t e d a n a r t i c l e e u l o g i s i n g t h e F i e l d

Marshal as the embodiment of the German genius, and

d e c l a r i n g t h a t a s h i s w o r k w a s f a c i l i t a t in g t h e c o n c l u s i o n

o f p e a c e h i s n a m e s h o u l d b e ` s a c r e d t o s o c i a l is t s . " '

As to the amount placed a t t h e d i s p o s a l o f t h e

B o l s h e v i k s f o r t h e p u r p o s e o f e f f e c t i n g t h e i r r e v o l u t i o n ,

Mr s . W i l l i a m s s a y s o n p a g e 2 9 1 o f h e r b o o k :

"One is forced to draw the conclusion t h a t t h e

h u n d r e d s o f t h o u s a n d s , o r r a t h e r m i l l i o n s , s p e n t b y L e n i n

and his followers were furnished to them from some

e x c h e q u e r w h i c h h a d m i l l i o n s a t i t s d i s p o s a l . Only banks

a n d S t a t e e x c h e q u e r s h a v e t h e p o s s i b i l i t y o f s u b s i d i s i n g

p r o p a g a n d a o n s u c h a s c a l e . "

T h e m o s t a u t h e n t i c s t a t e m e n t o f t h e s o u r c e s w h i c h

f u r n i s h e d t h e m e a n s f o r t h e e n s l a v e m e n t o f t h e R u s s i a n

p e o p l e u n d e r t h e t y r a n n y k n o w n a s B o l s h e v i s m i s t h a t

c o n t a i n e d i n t h e S i s s o n R e p o r t p u b l i s h e d b y t h e A m e r i c a n

C o m m i t t e e o n P u b l i c I n f o r m a t i o n . A summary of this

report, forwarded by its Washington corresponden t,

was publis hed in t he London "Times" of October 18,

1 9 1 8 , a n d f r o m i t t h e f o l l o w in g e x c e r p t s a r e t a k en

" T h e C o m m i t t e e o n P u b l i c I n f o r m a t i o n h a s i s s u e d a

s e r i e s o f c o m m u n i c a t i o n s b e t w e e n t h e G e r m a n I m p e r i a l

Government and the Russian Bolshevist Government,and between the B o l s h e v i s t s t h e m s e l v e s , and also a

report thereon made to Mr . G e o r g e C r e e l , c h a i r m a n o f

the Committee on Public Information, by Mr . E d g a r

S i s s o n , t h e C o m m i t t e e ' s s p e c i a l r e p r e s e n t a t i v e i n Russi a









HOW RUSSIA WAS SMASHED UP 7 1

a s sord id commerciali sm . Mr. Steed adds (vol . 2 , p . 3 0 2 )

"I insisted tha t unknown to him the prime movers

were Jacob Schiff, Warburg and othe r interna tional

f i n a n ci e r s w h o w i s h e d a b o v e a l l to bolster th e Jewish

B o l s h e v i s t s t o s e c u r e a fi e l d f o r Ge r m a n a n d Je w i s h

exploit ation of Russi a . "Mr. Steed re cords that immediate ly following on this

interview he wrote a leading article which appeared in

the Par is edit ion of the London "Daily Mail" of March

28, 1919 . I n t h a t a r t i c l e h e c o n d e mn e d t h e p r o p o s e d

recognition of Bolshevi k rule and s aid

"Who are the tempters that dare whisper into the

ears of the Allied a nd Associated Governments? .

T h e y a r e a ki n t o , i f n o t i d e n t i c a l w i t h , t h e m e n w h o

sent Trots ky and some scores of associated despera does

t o r u i n t h e R u s s i a n Re v o l u t i o n a s a d e m o cr a t i c a n t i -

German force in the spr ing of 19 17 . "

I n c o n ne c t i o n w i t h t h e a b o v e s t a t e me n t i t m a y b e

noted that Trotsky reached Russia from New York,Lenin from Switzerland via Germany and Stockholm .The New York financiers named by Mr. Steed were in

close association w ith financiers active i n Germany and

recorded by other writ ers as participating in support of

the Bolsh eviks .

It is a s urprising thing that so far a s the writers

search of its files has gone, the London "Times," though

several times publishing statements on the British war

debt to America, etc., by Mr . P a u l Warburg-statementsof a n u n s ym p a t h e t ic, n o t t o s a y h o s t i l e n a t u r e- t h o ugh

referring to him as "the directing force behind the United

S t a t e s F e d e r a l Re s e r v e B o a r d d u r i n g t h e w a r , " a n d s oon : y e t s e em s o n n o occas i o n t o h a v e e n l ig h t e n e d i t s

read ers as to Mr . Warburg's close connection with the

lead ers of German finance . Its sile nce on this significant

fact is remarkable .

As to the attitude of certain Jewish opinion in B ritain

towards the Bol shevik regime in Russia, Lt . - C o l . Lane in

his b ook quotes the followi ng from the London "Jewis h

Chronicle" of April 4, 1 919 .

"There is much in the fact of Bolshevism itself, in the

fact that so many Jews are Bolshe vists, i n the fact that

t h e i d e a l s of B o l s h e v i sm a t m an y p o i n t s a r e c o n s o n a n t

with th e finest ideals of Judaism . "

It is tru e, according to Lt . - C o l . Lane, that after long













THE FEDERAL RESERVE BOARD 77

i s i n sympathy wit h t h a t work.-A. H . Wiggins,

P r e s i d e n t . "

A s a n example o f t h e i n t e n s iv e n a t u r e o f t h e

p r o p a g a n d a p u t o u t b y t h e M o n e y R i n g t o g e t t h e b i l l

through Mr . O s c a r C a l l a w a y , a m e m b e r o f C o n g r e s s f r o m

T e x a s , g a v e t h i s i n s t a n c e i n h i s s p e e c h o n t h e m e a s u r e

"Mr . C h a i r m a n , a p a p e r i n T e x a s c a l l e d t h e ` H o m e

a n d S t a t e ' i n i t s i s s u e o f A u g u s t 2 3 s a i d e d i t o r i a l l y : ` S i t

d o w n a n d w r i t e a s h o r t l e t t e r t o y o u r r e p r e s e n t a t i v e i n

C o n g r e s s a s s o o n a s y o u h a v e r e a d t h i s a n d u r g e h i m t o

s t e a d f a s t l y s u p p o r t t h e A d m i n i s t r a t i o n C u r r e n c y B i l l .

T h e r e i s n o t h i n g t o b e g a i n e d b y d i s c u s s i n g t h e d e t a i l s .

I t i s e n o u g h f o r u s t o k n o w t h a t i t h a s b e e n e n d o r s e d b y

Woodrow Wilson and William Jennings Bryan . " '

T h e f i r s t e f f o r t a t l e g i s l a t i o n , however, ha d taken

place before Mr . Wilson became President . I n 1 9 1 1

S e n a t o r A l d r i c h b r o u g h t i n a b i l l s e t t i n g u p a c e n t r a l l

b a n k i n g s y s t e m w i t h t h e b a n k s i n f u l l c o n t r o l o f e v e r y -

t h i n g . The senator was leader of the Republican Old

G u a r d , a n d h i s b i l l w a s f i e r c e l y r e s i s t e d b y t h e D e m o c r a t s

a s a s u r r e n d e r o f t h e n a t i o n a l i n t e r e s t s t o t h e i n i q u i t o u s

W a l l S t r e e t .

To show the thoroughgoing way in which Mr . P a u l

Warburg had worked up support for his scheme, Mr.

Gray quoted the following passage from a spe ech

d e l i v e r e d b y M r . W a r b u r g a t a m e e t i n g o f t h e N a t i o n a l

B o a r d o f T r a d e a t W a s h i n g t o n o n J a n u a r y 1 8 , 1 9 1 1

" I t h i n k y o u c o u l d n o t f a i l t o h a v e b e e n i m p r e s s e d

upon the reading of our report with the remarkable

degree of unanimity with which the proposed c e n t r a l

r e s e r v e a s s o c i a t i o n w a s a p p r o v e d . T h e d e l e g a t e s m e t ,

and after ten minutes they knew they were agreed on

t h a t q u e s t i o n . We then met with delegates from the

New York Produce Exchange and Merchants' Associa-

t i o n . I t t o o k u s a b o u t h a l f a n h o u r t o a g r e e . Meanwhile

S e n a t o r A l d r i c h ' s p l a n h a d b e e n b r o u g h t f o r w a r d , a n d i t

recommended the same plan th at had been recommended

b y o u r a s s o c i a t i o n . "

T h e A l d r i c h b i l l d i d n o t g e t t h r o u g h . Says Mr . G r a y

o n t h i s p o i n t

"Most fortunately for the people, a change in

a d m i n i s t r a t i o n c a m e j u s t i n t i m e t o w a r n t h e p a r t y i n

p o w e r a n d d e f e a t a c o l o s s a l c o n s p i r a c y t o w r e s t f r o m






the National B ank of Commerce, the Chase N a t i o n a l

Bank, the Guaranty Tr ust Company, and t he Bankers'

Trust Company of New York .

" T h e s e c o n d g r o u p , c l o s e l y a l l i e d t o th i s i n n e r a n d

p r i m a r y g r o u p , i s c o m p o s e d o f t h e p o w e r f u l i n t e r n a t i on a l

b a n k i n g h o u s e o f L e e , H i g g i n s o n a n d C o m p a n y , K i d d e r .

Peabody and Company, with three affiliated banks i n

Boston .

" T h e t h i r d g r o u p c o n s i s t s o f t h e i n t e r n a t i o n a l h o u s e

of Kuhn , L o e b an d Company . This firm is only

q u a l i f i e d l y a l l i e d t o t h e i n n e r g r o u p , y e t t h r o u g h i t s

r e l a t i o n s w i t h t h e N a t i o n a l C i t y B a n k , t h e N a t i o n a l B a n k

o f C o m m e r c e , a n d o t h e r f i n a n c i a l i n s t i t u t i o n s w i t h w h i c h

i t h a s r e c e n t l y a l l i e d i t s e l f , i t h a s m a n y i n t e r e s t s i n

common ; c o n d u c t i n g l a r g e f i n a n c i a l t r a n s a c t i o n s w i t h

t h e m , a n d h a v i n g w h a t v i r t u a l l y a m o u n t s t o a n u n d e r -

standing not to compete, wh ich is defended on the

p r i n c i p l e o f b a n k i n g e t h i c s . Together they have with

f e w e x c e p t i o n s p r e - e m p t e d t h e b a n k i n g b u s i n e s s o f t h e

i m p o r t a n t r a i l w a y s o f t h e c o u n t r y .

" T h e f o u r th g r o u p i s i n C h i c a g o . "

E l s e w h e r e i n i t s r e p o r t t h e C o m m i s s i o n s a i d

"The powerful grip of these gentlemen i s o n t h e

t h r o t t l e t h a t c o n t r o l s t h e w h e e l s o f c r e d i t , a n d o n t h e i r

s i g n a l t h o s e w h e e l s w i l l t u r n o r s t o p . "

T h e g e n e r a l e f f e c t o f t h i s f i n a n c i a l c o m b i n a t i o n on

American industr y was outlined by the Commission on

p a g e 1 6 0 o f t h e i r r e p o r t a s u n d e r

" I s s u e s o f s e c u r i t i e s o f l o c a l o r s m a l l e n t e r p r i s e s

r e q u i r i n g m o d e r a t e s u m s o f m o n e y a r e f r e q u e n t l y f i n a n c e d

w i th o u t t h e c o - o p e ra t io n o f t h e s e g e n tl e m e n ; b u t f r o m

w h a t w e h a v e l e a r n e d o f e x i s t i n g c o n d i t i o n s i n f i n a n c e ,

a n d t h e v a s t r a m i f i c a t i o n s o f t h i s g r o u p t h r o u g h o u t t h e

c o u n t r y a n d i n f o r e i g n c o u n t r i e s , w e a r e s a t i s f i e d t h a t

t he ir i n f l ue n c e i s s uf f ic ie n t ly p o te n t t o p r e v e n t t h e

f i n a n c i n g o f a n y e n t e r p r i s e i n a n y p a r t o f t h e c o u n t r y

r e q u i r i n g 1 0 , 0 0 0 , 0 0 0 d o l l a r s o r o v e r , o f w h i c h f o r r e a s o n s

s a t i s f a ct o r y t o t h e m s e l v e s t h e y d o n o t a p p r o v e . T h e r e i n

l i e s t h e p e r i l o f t h i s m o n e y p o w e r t o o u r p r o g r e s s , f a r

greater than the combined danger o f a l l e x i s t i n g

c o m b i n a t i o n s . . . .

" T h e a c t s o f t h i s i n n e r g r o u p , a s h e r e d es c r i b e d , h av e

n e v e r t h e l e s s b e e n m o r e d e s t r u c t i v e o f c o m p e t i t i o n t h a n



80 THE TRUTH ABOUT THE SLUMPa n y t h i n g a c c o m p l i s h e d b y t h e t r u s t s , f o r t h e y s t r i k e a t

t h e v e r y v i t a l s o f p o t e n t i a l c om p e t i t i on i n e v e r y i n d u s t ry

that is under th eir protection, a condition which, if

p e r m i t t e d t o c o n t i n u e . w i l l r e n d e r i m p o s s i b l e a l l a t t e m p t s

t o r e s t o r e n o r m a l c o m p e t i t i v e c o n d i t i o n s i n t h e i n d u s t r i a l

world . . . .

"The gentlemen c o n s t i t u t i n g t h i s i n n e r circle,

h o w e v e r , v i o l a t e d n o l a w i n w h a t t h e y h a v e d o n e , s o f a r

a s w e c a n d i s c o v e r , b u t t h a t i s r a t h e r b e c a u s e .

t h e l a w h a s n o t y e t p r o p e r l y s a f e g u a r d e d t h e c o m m u n i t y

a g a i n s t t h i s f o r m o f c o n t r o l . "

Before we go on to consi der the amazing way in

which President Wi lson hande d over control of America

t o t h e s e f i n a n c i e r s b y a m e a s u r e w h i c h h e t h o u g h t w o u l d

c u r b t h e m , i t i s c o n v e n i e n t a t t h i s s t a g e t o i n s e r t a l i s t

o f t h e b a n k s a n d t h e i n d u s t r i a l c o n c e r n s c o n t r o l l e d b y

t h e Money T r u s t in 1 9 1 3 . Without such a list for

r e f e r e n c e t h e t r u e i n w a r d n e s s o f t h e c o l o s s a l c o m b i n a -

t i o n s f o r m e d d u r i n g t h e p a s t y e a r o r t w o i n t h e U n i t e d

S t a t e s a n d i n t e r n a t i o n a l l y c a n n o t h e g r a s p e d

MONEY TRUST BANKS IN 1913 .

New NameYork-American Exchange Nat ional Bank

Resources

( d o l l a r s )

6 3 , 0 0 0 , 0 0 0

A s tor T r u s t Company - - - - 2 7 , 0 0 0 , 0 0 0

B a n k o f M a n h a t t a n - - - - 7 0 , 0 0 0 , 0 0 0

Central Trust Co mpany - - - - 1 1 8 , 0 0 0 , 0 0 0

Chase National Bank - - - - 1 2 5 , 0 0 0 , 0 0 0

Chemical National B ank - - - - 4 0 , 0 0 0 , 0 0 0

Commercial Exchange Ban k 7 8 , 0 0 0 , 0 0 0

Equitable Trust Company _ _ . . 1 0 2 , 0 0 0 , 0 0 0

Farmers' Loan and Tr ust Company - - - - 1 3 5 , 0 0 0 , 0 0 0

5 1 , 0 0 0 , 0 0 0ourth National Bank . . _ _ . . . . . . _ _

Hanover National Bank ____ _ _ . . . . . . 1 2 6 , 0 0 0 , 0 0 0

Liberty National Bank . . . . 2 9 , 0 0 0 , 0 0 0

Mechanics and Metals National Bank 8 7 , 0 0 0 , 0 0 0

Natio nal B ank of Commerce 1 9 0 , 0 0 0 , 0 0 0

National Park Bank . . . . 1 2 3 , 0 0 0 , 0 0 0

New York Trus t Company 6 3 , 0 0 0 , 0 0 0

Union Tru st Company . _ . . 7 4 , 0 0 0 , 0 0 0

United S t a t e s Mortagage and Trust

7 5 , 0 0 0 , 0 0 0o m p a n y . . . . . . . . . . . . . . .

United S tates Tru st Company . . . . 7 7 , 0 0 0 , 0 0 0



C o n t i n e n t a l and Commercial Nat ional

Bank - - - - - - - - . . . . . . . . . . . . 2 2 6 , 0 0 0 , 0 0 0

Continental a nd Commercial Trust and

Savings Bank ____ . . . . . . ._ 2 7 , 0 0 0 , 0 0 0

First National Bank -___ . .-_ 1 3 7 , 0 0 0 , 0 0 0

First Trust and Savings Bank 6 4 , 0 0 0 , 0 0 0

I l l i n o i s T r us t a n d S a v i n g s B a n k _ _ _ _ 1 0 7 , 0 0 0 , 0 0 0

Merchants' Loan and Tr ust Company 6 5 , 0 0 0 , 0 0 0

I n t h e 3 2 t r a n s p o r t a t i o n c o m p a n i e s c o n t r o l l e d b y t h e

Money Trust we re included the le ading American

railway sy stems, and among the 12 public utility

corporations was the great Wes tern Union Telegraph

Company controlled by Kuhn, Loeb and Company . The

produ cing and trad ing companies controll ed by the

Money Trust were as follows

Amalgamated Copp er .

American Agricultu ral Chemical Company .

American Bee t Sugar Company .

American Ca n Company .

American Car and Foundry C ompany .

American Locomotiv e Company .

American Smelti ng and Refining Company .

Armour and C ompany .

Bald win Locomotive Works .

Central Leather Company .

Colorado Fuel and Iron Company .

General Electric Company .

Intercontinental Rubber Company .

I n t e r n a t i o n a l A g r i c u l t u r a l C o r p o r a t i o n .

International Harvester Company .

International Nickel Company .


W a s h i n g t o n -American S ecurity Trust Company 1 5 , 0 0 0 , 0 0 0

Rigg's National Bank . . . . 1 4 , 0 0 0 , 0 0 0

Pittsburgh-

Mellon National Bank 5 5 , 0 0 0 , 0 0 0

Union Tr ust Company 6 9 , 0 0 0 , 0 0 0

Philadelphia-

Fourth St . N a t i o n a l B a n k . _ . . 5 7 , 0 0 0 , 0 0 0

Franklin National Ba nk . . . . 3 9 , 0 0 0 , 0 0 0

Girard Tr ust Company . . . . 4 7 , 0 0 0 , 0 0 0

Philadelphia National Bank 5 4 , 0 0 0 , 0 0 0

Chi cago-

Central Trust Company --__ -___ -___ 5 0 , 0 0 0 , 0 0 0





THE FEDERAL RESERVE BOARD 8 3

United S tates ; p r e v e n t f i n a n c i a l p a n i c s o r f i n a n c i a l

s t r i n g e n c i e s . . . "

T he b i l l was r u s h e d t h r o u g h t h e House o f

R e p r e s e n t a t i v e s i n e i g h t d a y s w i t h o u t a n y p u b l i c , h e a r in g s

o n i t . I t w a s p a s s e d b y t h e H o u s e b y 2 8 7 v o t e s t o 8 5 .

T h e S e n a t e t o o k a l i t t l e l o n g e r t o d i g e s t t h e m e a s u r e a n d

evide nce on it was t aken by a committee . T h e b i l l ,

n e v e r t h e l e s s , w a s p a s s e d w i t h l i t t l e a l t e r a t i o n .

One h i g h l y s i g n i f i c a n t a l t e r a t i o n was, however,q u i e t l y m a d e i n t h e b i l l d u r i n g i t s p a s s a g e t h r o u g h t h e

H o u s e , a n a l t e r a t i o n w h i c h e s c ap e d c o m m e n t a t t h e t i m e.

A s p a s s e d t h e a c t s a y s t h e d i s c o u n t r a t e " s h a l l b e m a d e

w i t h a v i e w t o a c c o m m o d a t i n g c o m m e r c e a n d b u s i n e s s . "

A s i n t r o d u c e d t h e r e w a s a f u r t h e r i n s t r u c t i o n t h a t t h e

r a t e s h o u l d h e m a d e s o a s " t o p r o m o t e s t a b i l i t y i n t h e

p r i c e l e v e l . " T h i s h a d v a n i s h e d b e f o r e t h e b i l l r e a c h e d

t h e S e n a t e , a n d t o t a l l y u n s u c c e s s f u l e f f o r t s h a v e s i n c e

b e e n m a d e t o a m e n d t h e a c t b y i n c o r p o r a t i n g i n i t a n

i n s t r u c t i on t o t h i s e n d .

A g r e a t n u m b e r o f p e o p l e h o n e s t l y t h o u g h t t h a t t h i s

m e a s u r e w o u l d f r e e t h e U n i t e d S t a t e s f r o m t h e d o m i n a -

tion of the Money Trust . Among them was the lateMr. W i l l i a m J e n n i n g s B r y a n , a l i f e - l o n g d e f e n d e r o f t h e

p e o p l e ' s i n t e r e s t a g a i n s t t h e f i n a n c i e r s , a n d w h o f o u g h t

a P r e s i d e n t i a l c a m p a i g n in 1896 as the champion of

silver money, declaring in a famous p h r a s e t h a t t h e

workers and farmers of the United S tates wer e being

" c r u c i f i e d o n a c r o ss o f g o l d . " M r . B r y a n h a d b e e n m a d e

S e c r e t a r y o f S t a t e i n P r e si d e n t W i l s o n ' s C a b i n e t i n 1 9 1 2 ,

a n d i t i s sa i d t h a t i t w a s l a r g el y b y h i s a c t i v i t y i n

w h i p p i n g u p s u p p o r t f o r i t i n C o n g r e s s t h at t h e F e d e r a l

R e s e r v e B i l l w a s p u t t h r o u g h .

A l t h o u g h t h e b i l l w a s c a r r i e d b y a b i g m a j o r i t y a

certain number of members denounced it as a sham .

M r . O s c a r C a l l a w a y , a T e x a s D e m o c r a t , f o r i n s t a n c e ,

m a d e t h e f o l l o w i n g p r o t e s t i n t h e H o u s e

"Mr . C h a i r m a n , i n o u r p l a t f o r m a d o p t e d a t B a l t i m o r e ,

a n d w i t h w h i c h w e w o n s u c h a s i g n a l v i c t o r y a t t h e p o l l s

l a s t N o v e m b e r , w e s a i d : ` W e o p p o s e t h e e s t a b l i s h m e n t

o f a c e n t r a l b a n k . ' I thought we meant that . . .

T r u e w e d i d n o t s a y : ` W e o p p o s e t h e e s t a b li s h m e n t o f a

c e n t r a l b o a r d , ' b u t I s u b m i t i n a l l c a n d o u r t h a t t h e r e i s

n o r e a l d i f f e r e n c e s o f a r a s t h e c o n c e n t r a t i o n o f p o w e r

i s c o n c e r n e d b e t w e e n a c e n t r a l b a n k w h i c h c o n t r o l s t h e






t h e s p e e c h o f M r . C h a r l e s A . Lindbergh of Minnesota :

" I t i s n o t m y p u r p o s e t o s h o w t h a t t h i s b i l l i s m o r e

vicious than the s ystem which it seeks to amend . I

propose to show that it would perpetuate the system

w h i c h a c t u a l e x p e r i e n c e p r o v e s t o h a v e b e e n t h e c a u s e o f

c e n t r a l i s i n g w e a l t h , s o t h a t a f e w h a v e r o b b e d t h e p e o p l e

g e n e r a l l y . I t i s p e r p e t u a t i n g a s y s t e m t h e v e r y p u r p o s e

o f w h i c h i s t o e n a b l e t h e m o n e y l o a n e r s , r e n t c o l l e c t o r s ,

d i v i d e n d b e n e f i c i a r i e s , a n d s p e c u l a t o r s g e n e r a l l y , t o t a k e

advantage of the actual producers so as to control

p r o d u c t i o n a n d f i x p r i c e s . "

B e f o r e t h e S e n a t e C o m m i t t e e M r . G e o r g e H . S h i b l e y ,

d i r e c t o r o f t h e A m e r i c a n B u r e a u o f P o l i t i c a l R e s e a r c h

a t W a s h i n g t o n , g a v e a v a l u a b l e h i s t o r i c a l s u m m a r y o f

t h e d e v i o u s s t e p s t a k e n t o f o i s t t h e g o l d s t a n d a r d o n t h e

world . I n c o n c l u d i n g h e s a i d , " T h i s c l o s e s m y o u t l i n e

o f t h e w a y t h e A m e r i c a n p e o p l e a n d t h e p e o p l e o f t h e

e n t i r e w o r l d w e r e t r i c ke d i n t o t h e d e m o n e t i s i n g o f s i l v e r .

I h a v e s t a t e d i t f o r s e v e r a l r e a s o n s : f i r s t , b e c a u s e a

s o m e w h a t s i m i l a r t r i c k i s b e i n g a t t e m p t e d h e r e i n t h i s

Senate Committee . "

It is unnecessary to quote the speeches of the

s u p p o r t e r s o f t h e b i l l , f o r t h e s e g e n t l e m e n m e r e l y t o o k i t

a t i t s f a c e v a l u e , a n d e x p a t i a t e d o n s u c h o f i t s f a n c i e d

a d v a n t a g e s a s a p p e a l e d s p e c i a l l y t o th e m .

T h i r t e en y e a r s l a t e r t h e p u b l i ca t i o n o f " T h e I n t i m a t e

P a p e r s o f C o l o n e l H o u s e " ( " 1 9 2 6 ) s h o w e d t h a t t h e b i l l

h a d b e e n f r a m e d b y t h e v e r y m e n o f f i c i a l l y d e n o u n c e d a

f e w s h o r t m o n t h s p r e v i o u s l y a s c o n t r o l l i n g t h e M o n e y

T r u s t ! These men were the people to whom Colonel

H o u s e a s a d v i s e r - i n - c h i e f t o P r e s i d e n t W o o d r o w W i l s o n

r a n f o r a d v i c e a s t o h o w t o f r a m e a m e a s u r e t o c u r b t h e

Money Trust . T h e w h o l e i n c r e d i b l e s t o r y i s t o l d w i t h

d i s a r m i n g c a n d o u r i n t h e s e " I n t i m a t e P a p e r s . " A l l t h e

t i m e t h e g o o d C o l o n e l , i t a p p e a r s , w a s f i r m l y o f o p i n i o n

t h a t t h e M o n e y R i n g s h o u l d b e b r o u g h t t o b o o k . Underd a t e o f J u l y 2 6 , 1 9 1 1 , h e w r o t e a s f o l l o w s t o S e n a t o r

C u l b e r s o n

"I think Woodrow Wilson's remark that th e Money

T r u s t i s t h e m o s t p e r n i c i o u s o f a l l t r u s t s i s e m i n e n t l y

c o r r e c t . A f e w i n d i v i d u a l s a n d t h e i r s a t e l l i t e s c o n t r o l

t h e l e a d i n g b a n k s a n d t r u s t c o m p a n i e s o f A m e r i c a . They

a l s o c o n t r o l t h e l e a d i n g c o r p o r a t i o n s . "

Colonel House's papers were ed ited by Dr . C h a r l e s



8 6 THE TRUTH ABOUT THE SLUMPS e y m o u r , P r o f e s s o r o f H i s t o r y a t Y a l e U n i v e r s i t y , a n d

h i s e d i t o r r e l a t e s t h e v e r y a c t i v e p a r t t a k e n b y t h e

C o l o n e l i n f r a m i n g t h e b i l l w h i c h M r . G l a s s s u b s e q u e n t l y

introduced, and which as we have seen in an earlier

chapter Mr . Paul Warburg last year claimed, with

e x c e l l e n t r e a s o n , a s h i s o w n c r e a t i o n . On page 164 of

" T h e I n t i m a t e P a p e r s " w e f i n d t h e i r e d i t o r r e m a r k i n g

"The task which Colonel House set himself was

p r i m a r i l y t o p r e v e n t t h e P r e s i d e n t - E l e c t f r o m c o m m i t t i n g

h i m s e l f t o a n y o n e s c h e m e u n t i l t h e p r o b l e m h a d b e e n

t h o r o u g h l y s t u d i e d ; l a t e r h e g u a r d e d t h e m e a s u r e s o t h a t

i t w a s l e f t i n t h e c o n t r o l o f e x p e r t s a n d p r e s e r v e d f r o m

t h e h e r e s i e s o f p o l i t i c a l i n c o m p e t e n t s . The Colonel was

t h e u n s e e n g u a r d i a n a n g e l o f t h e b i l l . . C o l o n e l

H o u s e w a s i n d e f a t i g a b l e i n p r o v i d i n g t h e P r e s i d e n t w it h

the knowledge that he sought . . . . H e l a i d c h i e f

stress on his frequent conferences with the bankers

t h e m s e l v e s . "

T h e f o l l o w i n g e x t r a c t s f r o m t h e p a p e r s t h e m s e l v e s

s h o w p r e t t y c l e a r l y w h e r e t h e C o l o n e l g o t h i s i d e a s f r o m

"December 19, 1 912 .-I talked with Paul Warburg

o v e r t h e t e l e p h o n e r e g a r d i n g c u r r e n c y r e f o r m . "

" F e b r u a r y 2 6 , 1 9 1 3 .-I went to the Harding dinner

[ a b a n k e r s ' g a t h e r i n g ] . . . . I t w a s a n i n t e r e s t i n g

o c c a s i o n . I f i r s t t a l k e d t o M r . F r i c k , t h e n w i t h D e n m a n ,

and afterwards with Otto Kahn [partner with Paul

Warburg in Kuhn, Loeb and Company of the inner ring

o f t h e M o n e y T r u s t ] . "

"March 13, 1 913 .-Vanderlip [National City Bank

chairman, allied with Kuhn-Loeb] and I h a d a n

i n t e r e s t i n g d i s c u s s i o n r e g a r d i n g c u r r e n c y r e f o r m . "

"March 27, 191 3 .-J . P . Morgan, Junior, and Mr .

Denny of his firm, came promptly a t five . McAdoo

[ S e c r e t a r y o f t h e T r e a s u r y a n d f o r m e r l y p a r t n e r w i t h

Paul Warburg] came about ten minutes afterwards .

Morgan had a currency plan already formulated and

p r i n t e d . W e d i s c u s s e d i t a t s o m e l e n g t h . I s u g g e s t e d

t h a t h e s h o u l d h a v e i t t y p e w r i t t e n a n d s e n t t o u s t o d a y . "

T o t h i s i s a t t a c h e d t h e f o l l o w i n g e d i t o r i a l f o o t n o t e

" T y p e w r i t t en i n o r d e r t o a v o i d t h e i m p r e s s i on t h a t m i g h t

b e g i v e n t h a t M o r g a n ' s w e r e s o s u r e o f t h e i r f i n a n c i a l

p o w e r t h a t t h e y c o u l d i m p o s e a c u t a n d d r i e d p l a n . "

" M a r c h 2 4 , 1 9 1 3 .-I had an engagement with Carter

G l a s s a t f i v e . W e d r o v e i n o r d e r n o t t o b e i n t e r r u p t e d








Mr. W a r b u r g s e e m s s e l d o m t o a s k i n v a i n f o r w h a t h e

w a n t s t h e s e s t e p s i n " p e r f e c t i n g " t h e F e d e r al R e s e r v e

System may possibly have been effected b e f o r e t h i s

r e a c h e s t h e r e a d e r ' s h a n d s .

I t h a s b e e n n o t e d a b o v e h o w a n i n s t r u c t i o n t o t h e

Federal Reserve Boa rd to use i t s p o w e r s t o s t a b i l i s e

p r i c e s w a s d e l e t e d f r o m t h e b i l l d u r i n g i t s p a s s a g e

t h r o u g h t h e H o u s e o f R e p r e s e n t a t i v e s . S e v e r a l e f f o r t s

h a v e s i n c e b e e n m a d e b y M r . J a m e s G . S t r o n g , a K a n s a s

m e m b e r o f t h e H o u s e o f R e p r e s e n t a t i v e s , t o p l a c e s u c h

a n i n s t r u c t i o n i n l a w . I n 1 9 2 6 - 2 7 a n d 1 9 2 8 - 2 9 t h e r e w e r e

hearings by the House C ommi tt ee on B anki ng and

C u r r e n c y o n b i l l s t o t h i s e n d i n t r o d u c e d b y M r . S t ro n g .

I n h i s e a r l i e r b i l l M r . Strong proposed that in

a d d i t i o n t o t h e i n s t r u c t i o n t o m a k e t h e d i s c o u n t r a t e

" w i t h a v i e w t o a c c o m m o d a t i n g c o m m e r c e a n d b u s i n e s s , "

t h e r e s h o u l d b e a d d e d t h e w o r d s " a n d p r o m o t i n g a s t a b l e

p r i c e l e v e l f o r c o m m o d i t i e s in g e n e r a l . A l l t h e p o w e r s

of the Federal Reserve System shall be used for

p r o m o t i n g s t a b i l i t y i n t h e p r i c e l e v e l . "

T h i s w a s v e r y s i m i l a r t o w h a t w a s i n t h e b i l l t o s t a r t

w i t h b u t h a d b e e n s u r r e p t i t i o u s l y removed . It was

merely in keeping with S enator Ow en's statements in

f a t h e r i n g t h e b i l l i n t h e S e n a t e . H o w e v e r , ev e r y p o s s i b l e

o b j e c t i o n w a s r a i s e d t o t h i s s i m p l e i n s t r u c t i o n . I t w o u l d

l e a d t h e p u b l i c t o e x p e c t i m p o s s i b i l i t i e s , e t c . , e t c . I n

o r d e r t o m e e t t h e s e o b j e c t i o n s M r . S t r o n g w e n t t o a l l

concerned for t h e i r views a s h o w t h e n e c e s s a r y

i n s t r u c t i o n s h o u l d b e d r a f t e d . T h e r e s u l t h e e m b o d i e d

i n a n e w b i l l in t h e f o l l o w i n g l a n g u a g e

"The Federal Reserve sys tem shall use the powers

and authority now or hereafter possessed by it to

m a i n t a i n a s t a b l e g o l d s t a n d a r d ; t o p r o m o t e t h e s t a b i li t y

o f c o m m e r c e , i n d u s t r y, a g r i c u l t u re a n d e m p l o y m e n t ; a n d

a m o r e s t a b l e p u r c h a s i n g p o w e r o f t h e d o l l a r s o f a r a s

such purposes may be accomplished by monetary and

c r e d i t p o l i c y . "

A r e m a r k a b l e f e a t u r e o f t h e h e a r i n g s o n t h e s e c o n d

b i l l w a s t h e e p i d e m i c o f i n v a l i d i s m w h i c h a f f l i c t e d t h e

members of the Federa l Reserve B oard when the time

t o g i v e e v i d e n c e a p p r o a c h ed . These gentlemen, who had

objected freely enough to t he crude language o f t h e

f i r s t b i l l w e r e n o w i n a n u m b e r o f c a s e s a f f l i c t e d w i t h

s h i n g l e s , r h e u m a t i s m and what not, and regrettably







9 2 THE TRUTH ABOUT THE SLUMPc h a r a c t e r i s e d s o c i e t y i n d a y s g o n e b y . T h e r e v o l u t i o n s

h a v e b e e n p r o m p t e d , i n o t h e r w o r d s , b y d i s s a t i s f a c t i o n

w i t h e x i s t i n g c o n d i t i o n s , t h e c o n t r o l b e i n g i n t h e h a n d s

o f a f e w , a n d t h e m a n y p a y i n g t h e b i l ls .

"Dr . C a s s e l : Y e s , I t h i n k t h a t g o e s v e r y w e l l w i t h

what I have said about the purpose of the Federal

Reserve S ystem . "

A t t h e c o n c l u s i o n o f t h e h e a r i n g s o n M a y 2 9 , 1 9 2 8 ,

M r . Strong summed up the position in t he following

words

" B o t h b i l l s h a v e b e e n a t t a c k e d b y f i n a n c i e r s , b a n k e rs ,

a n d f i n a n c i a l w r i t e r s , s o m e f o r s e l f i s h r e a s o n s , o t h e r s

b e c a u s e , h a v i n g b e c o m e v e r s e d i n e x i s t i n g c o n d i t i o n s

t h e y h e s i t a t e , o r r e f u s e , t o c o n s i d e r a n d s t u d y t h e r e a l

p u r p o s e o f t h e p r o p o s e d l e g i s l a t i o n , w h i c h w a s a l s o t r u e

when the Federal Reserve system was proposed and

s o u g h t t o b e e n a c t e d b y C o n g r e s s ; b u t I a m b e i n g f o r c e d

t o t h e c o n c l u s i o n t h a t t h e m a i n o p p o s i t i o n i s b e c a u s e o f

t h e f a c t t h a t c e r t a i n b a n k e r s a n d f i n a n c i e r s , t o g e t h e r

w i t h t h o s e t h e y c o n t r o l , d e s i r e the Feder al Reserve

S y s t e m t o u s e i t s p o w e r s ` t o a c c o m m o d a t e b u s i n e s s a n d

c o m m e r c e , ' a n d n o t ` f o r t h e s t a b i l i s a t i o n o f t h e p u r c h a s i n g

power of our monetary u n i t , ' w h i c h I hold with

D r . C a s s e l , D r . J . R. Commons and other s who have

c o m e b e f o r e t h i s C o m m i t t e e , t o b e t h e f i r s t d u t y o f a

f i n a n c i a l s y s t e m s e t u p b y a n y g o v e r n m e n t a u t h o r i t y .

" W h e n t h e F e d e r a l R e s e r v e A c t c r e a t i n g t h e F e d e r a l

R e s e r v e S y s t e m w a s f r a m e d a s t h e A d m i n i s t r a t i o n B i l l

i t c o n t a i n e d t h e d i r e c t i o n s that the powers so given

s h o u l d b e t o ' a c c o m m o d a t e b u s i n e s s a n d c o m m e r c e ' a n d

t o a im ' t o p r o m o t e s t a b i li t y i n t h e p r i c e l e v e l , ' b u t t h e

H o u se s t r u c k o u t th e c l a u s e f o r s t a b i li s at i o n a n d t h e

S e n a t e d i d n o t r e s t o r e i t .

" B u t l i t t l e i n f o r m a t i o n h a s e v e r b e e n g i v e n w h y t h i s

w a s c l o n e , b u t i t w a s e v i d e n t l y t h e w o r k o f t h o s e w h o d i d

n o t w i s h t h e F e d e r a l R e s e r v e s y s t e m t o b e u s e d f o r t h e

s t a b i l i s a ti o n o f t h e p u r c h a s i n g p o w e r o f m o n e y . "

N o w l e t u s s e e w h a t b e g a n t o h a p p e n w h e n t h e U n i t e d

State s was ens laved und er this German-Jew engine of

c o n t r o l .



CHAPTER IX .

BRITAIN IS DRAWN INTO THE TOILS .

S i x months a ft e r t h e F e d e r a l R e s e r v e Board was

e s t a b l i s h e d i n t h e U n i t e d S t a t e s t h e G e r m a n G o v e r n m e n t ,

a c c o r d i n g t o a d o c u m e n t p u b l i s h e d i n t h e S i s s o n R e p o r t

q u o t e d i n a n e a r l i e r c h a p t e r , w a s t e l l i n g i t s c o n t r o l l e r s

o f i n d u s t r y t o o p e n t h e i r w a r m o b i l i s a t i o n o r d e r s . A s

t h e a s s a s s i n a t i o n o f t h e A u s t r i a n A r c h d u k e a t S e r a j e v o

h a d n o t a t t h i s t i m e t a k e n p l a c e i t s h o w s c l e a r l y t h a t t h e

e a r l y o u t b r e a k o f w a r h a d b e e n d e t e r m i n e d o n i r r e s p e c t i v e

o f , o r i n a d v a n c e o f , t h e S e r a j e v o t r a g e d y t h a t n o m i n a l l y

p r e c i p i t a t e d i t . W h e t h e r t h e a s s a s i n a t i o n o f t h e h e i r t o

t h e t h r o n e o f A u s t r i a was part of a pre-determined

p r o g r a m m e i s a m a t t e r o n w h i c h o n e c a n o n l y s p e c u l a t e .

P o s t - w a r r e v e l a t i o n s h a v e s h o w n t h a t i t w a s m o r e t h a n

t h e i r r e s p o n s i b l e a c t o f a n i n d i v i d u a l , a n d t h a t t h e

Serbian Government had been warne d in advance that

an attempt would be made .

O n t h e f i n a n c i a l s i d e a l l w e k n o w i s t h a t t h e w a r

followed close on the es tablishment o f t h e F e d e r a l

Reserve Board, by which event New York financiers

w i t h i n t i m a t e G e r m a n a s s o c i a t i o n s a c q u i r e d a d o m i n a t i n g

p o s i t i o n .

In an article by Captain V . H. C a z a l e t , M. P . ,

p u b l i s h ed i n t h e " N a t i o n a l R e v i e w " f o r D e c e m b e r , 1 9 2 6 ,

a d e s c r i p t i o n w a s g i v e n o f a v i s i t t o t h e F o r d w o r k s a t

D e t r o i t a t t h e e n d o f O c t o b e r , 1 9 2 6 , a n d i n t h e a r t i c l e

a p p e a r e d t h e f o l l o w i n g

"Like other remarkable men Ford has one bugbear,

i . e . , i n t e r n a t i o n a l J e w i s h f i n a n c i e r s . We asked him who

t h e y w e r e . He said : ` I h a v e s e v e r a l b o o k s w h i c h w i l l

t e l l y o u w h o t h e y a l l a r e . T h e y w e r e r e s p o n s i b l e f o r t h e

l a s t w a r , a n d w i l l i n t h e f u t u r e a l w a y s b e c a p a b l e o f

c r e a t i n g a w a r w h e n t h e y f e e l t h e i r p o c k e t s n e e d o n e . ' "

I n t h e f o l l o w i n g y e a r , M r . F o r d i s s u e d a r e t r a c t i o n

o f t h e a t t a c k s o n t h e J e w s m a d e i n h i s n e w s p a p e r , w i t h

t h e c o n t e n t s o f w h i c h j o u r n a l , h e e x p l a i n e d , t h e m u l t i t u d e

o f h i s a c t i v i t i e s p r e v e n t e d h i m f r o m k e e p i n g c l o s e t o u c h .

This remark could not apply to a personal s t a t e m e n t

m a d e t o C a p t a i n C a z a l e t .

9 3









BRITAIN DRAWN INTO THE TOILS 97

t h i s d a t e a s a B r it i s h G o v e r n m e n t r e p r e s e n t a t i v e , a l s o

u r g e d t h a t s o m e o n e w h o u n d e r s t o o d p o l i t i c s a s w e l l a s

f i n a n c e s h o u l d b e s en t o v e r t o h a n d l e t h e l o a n n e g o t i a -

t i o n s . He summed up the position in a t e l e g r a m a s

f o l l o w s

" T h e y a r e c o m p l e t e m a s t e r s o f t h e s i t u a t i o n a s r e g a r d s

o u r s e l v e s , C a n a d a , F r a n c e , I t a l y a n d R u s s i a . . . . I f

l o a n s t o p s , w a r s t o p s . "

A s a r e s u l t o f t h e s e r e p r e s e n t a t i o n s L o r d R e a d i n g

( f o r m e r l y S i r R u f u s I s a a c s ) w a s s e n t a c r o s s t o a r ra n g e

m a t t e r s . Whether his appointment was suggested on

t h e A m e r i c a n s i d e o r t h e B r i t i s h i s n o t d i s c l o s e d i n t h e

m a t t e r t o w h i c h t h e w r i t e r h a s h a d a c c e s s .

T h e f i n a n c i a l p o s i t i o n a s i t s t o o d a t t h e t i m e o f

A m e r i c a ' s e n t r y i n t o t h e w a r in 1 9 1 7 i s t h u s s um m a r i s e d

i n " T h e L i f e a n d L e t t e r s o f W a l t e r H . P a g e " ( V o l . I I ,

p p . 272-3) . M r . Page was at the time United S tates

Ambassador in London :

" T h u s b y A p r i l 6 , 1 9 1 7 , G r e a t B r i t a i n h a d o v e r d r a w n

her account with J. P . Morgan to the extent of

4 0 0 , 0 0 0 , 0 0 0 d o l l a r s , a n d h a d n o c a s h a v a i l a b l e t o m e e t

t h i s o v e r d r a f t . . . . The money wa s now comingd u e ; a n d i f t h e o b l i g a t i o n s w e r e n o t m e t , t h e c r e d i t o f

G r e a t B r i t i a n i n t h i s c o u n t r y w o u l d r e a c h t h e v a n i s h i n g

p o i n t . Though at first there was a slight misunder-

standing about this matter, t he American Government

f i n a l l y p a i d t h i s o v e r d r a f t o u t o f t h e p r o c e e d s o f t h e f i r s t

Liberty Loan . T h i s a c t s a v e d t h e c r e d i t o f t h e A l l i e d

c o u n t r i e s ; i t w a s , o f c o u r s e , o n l y t h e b e g i n n i n g o f t h e

f i n a n c i a l s u p p o r t t h a t A m e r i c a b r o u g h t t o t h e A l l i ed a i d . "

Lord Reading entered into arrangements by which

t h e B r i t i s h b o r r o w i n g s w e r e s p e c i f i c a l l y m a d e r e p a y a b l e

i n g o l d , a n d b y w h i c h t h e y w e r e t o b e a r i n t e r e s t a t n o t

less than the highest rate on any United States war

l o a n . They were mostly repayable on demand, or atm o s t t h r e e d a y s ' n o t i c e , a n d w e r e c o n v e r t i b l e a t t h e

o p t i o n o f t h e U n i t e d S t a t e s i n t o l o n g - d a t e d s t o c k .

O n t h e s e t e r m s , a c c e p t e d o n B r i t a i n ' s b e h a l f b y L o r d

Reading, the B ritish Government bor rowed th e 1,000

millions which it owed the United State s at the

c o n c l u s i o n o f t h e w a r . O n c e m a t t e r s w e r e p u t o n t h i s

a m a z i n g f o o t i n g t h o s e i n c h a r g e o f A m e r i c a ' s f i n a n c e s

could not lend B ritain to o much money . The amount

a t h e r d i s p o s a l w a s u n l i m i t e d .



9 8 THE TRUTH ABOUT THE SLUMPA s w e h a v e s e e n , t h e t o t a l s t o c k o f m o n e t a r y g o l d i n

t h e w o r l d i s o n l y 2 , 0 0 0 m i l l i o n s . B r i t a i n u n d e r h e r b o n d

t o t h e U n i t e d S t a t e s m i g h t b e c a l l e d u p o n t o p r o d u c e h a l f

o f t h i s t o t a l s t o c k i n t h r e e d a y s o n p e n a l t y o f b e i n g

o f f i c i a l l y d e c l a r e d b a n k r u p t . The agreement meant that

t h e B r i t i s h p e o p l e w e r e a b s o l u t e l y a t t h e m e r c y o f t h e

U n i t e d S t a t e s . L o r d R e a d i n g , t h e i r o f f i c i a l r e p r e s e n t a t i v e ,

had signed on their behalf a contract to perform

i m p o s s i b i l i t i e s .

I n f a c e o f t h i s i t i s p a t h e t i c t o f i n d t h i s p a s s a g e i n a

l e t t er w r i t t en b y S i r C e c il S p r i n g - R i c e o n N o v e m b e r 2 3 ,

1 9 1 7 :

" S e v e r a l b an k e r s t o l d m e t h a t R e a d i n g ' s m i s s i o n w a s

m o s t u s e f u l , a n d t h a t h e w a s e x c e e d i n g l y a d r o i t . H i s

r e p u t a t i o n f o r c l e v e r n e s s w a s v e r y h i g h i n d e e d , s o h i g h

t h a t t h e r e w a s a g o o d d e a l o f a n x i e t y e x p r e s s e d l e s t h e

s h o u l d s u c c e ed i n p u t t i n g o n e o v e r M r . McAdoo . "

In January, 1 9 1 8 , Lord Reading was a p p o i n t e d

B r i t i s h A m b a s s a d o r t o t h e U n i t e d S t a t e s i n p l a c e o f S i r

Cecil Spring-Rice, who di ed in Canada a few months

later . L a t e r o n L o r d R e a d i n g w a s a p p o i n t e d V i c e r o y o f

I n d i a , t h a t c o u n t r y s o f i l l e d w i t h u n r e s t , a n d w h e r e

Jewish activity ha s been pronounced . In his book

M r . H i l a i r e B e l l o c s a y s

" T o d a y i t i s B r i t a i n w h i c h s t a n d s t o t h e M o h a m e d a n

a s t h e t h r u s t e r- i n o f t h e J e w . I t b e g a n w i t h t h e s u p p o r t

o f J e w i s h f i n a n c e i n E g y p t ; i t w e n t o n w i t h t h e e x t e n d e d

c o n t r o l o v e r I n d i a n c o m m e r c e b y t h e J e w s ; i t c o n t i n u e d

i n t h e c o n t r o l o f I n d i a n c u r r e n c y b y t h e J e w s . I t e n d e d

i n t h e g r o t e s q u e a p p o i n t m e n t t o t h e I n d i a n V i c e r o y a lt y

a n d t h e e x t r a o r d i n a r y e x p e r i m e n t o f P a l e s t i n e . "

M o r e r e c e n t l y L o r d R e a d i n g h a s b e c o m e , a s w e s h a l l

s e e , a d i r e c t o r of t h e A m e r i c a n - f i n a n c i e r - o w n e d c o m p a n y

w h i c h h a s g o t a s t r a n g l e - h o l d o n B r i t i s h i n d u s t r y byb u y i n g u p t h e p o w e r p l a n t s o f L o n d o n a n d p r a c t i c a l l y

a l l t h e p r i n c i p a l c i t i e s i n t h e B r i t i s h I s l e s .

T o r e t u r n t o o u r m a i n t h e m e , w e n e x t f i n d t h a t a f t e r

Britain h ad incurred this enormous i n d e b t e d n e s s t o

A m e r i c a , p r e s s u r e s o o n c a m e f r o m t h e A m e r i c a n e n d f o r

a r e t u r n b y B r i t a i n t o t h e g o l d s t a n d a r d . E v e n b e f o r e

t h e w a r e n d e d t h e C u n l i f f e C o m m i t t e e w a s s et u p b y t h e

British Government to report on the matter . This

c o m m i t t e e w a s c o m p o s e d a l m o s t e n t i r e l y o f b a n k e r s , t h e



BRITAIN DRAWN INTO THE TOILS 9 9

producers and manufacturers with whose de stiny they

were playing being given no voice whatever in the

m a t t e r .

T h e c o u r s e o f e v e n t s f o l l o w i n g t h e p i l i n g u p o f w a r

d e b t s w a s i n c i s i v e l y d e s c r i b e d b y M r . A r t h u r K i t s o n i n

t h e " N a t i o n a l R e v i e w " f o r M a r c h , 1 9 2 5 :

"Having created these national gold debts, the

c o n s p i r a t o r s w e r e s t i l l f e a r f u l l e s t t h e i r h o a r d s o f g o l d

m i g h t t u r n t o d r o s s i f E u r o p e s h o u l d s t i c k t o i t s p a p e r

m o n e y a n d r e f u s e t o e m p l o y t h e i r m e t a l f o r i t s i n t e r n a l

c u r r e n c i e s . T h i s f e a r w a s p a r t i c u l a r l y i n t e n s e a s f a r a s

England was concerned . The Treasury notes had

performed all t he functions of money per fectly-far

b e t t e r t h a n g o l d . There had b een no legal tender

inflation . Whatever inflation there had been was due

e n t i r e l y t o t h e v a s t i s s u e s o f c r e d i t b y t h e T r e a s u r y a n d

t h e b a n k e r s t h e m s e l v e s . T h e s e n o t e s f o r m e d t h e b a s i s

o f w h a t m i g h t h a v e b e c o m e a p e r f e c t e l a s t i c c u r r e n c y ,

a d m i r a b l y a d a p t e d t o t h e c o m m e r c i a l a n d i n d u s t r i a l n e e d s

o f t h e B r i t i s h p u b l i c , w h o h a d g r o w n a c c u s t o m e d t o t h e m

a n d l i k e d t h e m . Where gold had failed the Treas ury

n o t e s s u c c e e d e d . Mr. McKenna, the chairman of theM i d l a n d B a n k , h a s r e c e n t l y t e s t i f i e d t o t h e s u p e r i o r i t y o f

o u r ` m a n a g e d ' p a p e r c u r r e n c y o v e r t h e A m e r i c a n g o l d -

s t a n d a r d c u r r e n c y . M o r e o v e r , t h e s e n o t e s a d m i t t e d o f

e x p a n s i o n w i t h o u t d i s t u r b i n g i n t e r n a t i o n a l a f f a i r s a n d

w i t h o u t t h e a i d o f i n t e r n a t i o n a l f i n a n c i e r s . Hence their

d e s t r u c t i o n b e c a m e a n e c e s s i t y . The appoin tment of aCommittee consisting of the repre sentative s of high

f i n a n c e w a s t h e r e f o r e u r g e d u p o n o u r G o v e r n m e n t . The

C u n l i f f e C u r r e n c y C o m m i t t e e w i t h i t s c a r e f u l l y a s s o r te d

members was the re sult . These bankers recommended

t h e r e t u r n t o t h e p r e - W a r g o l d s t a n d a r d - ' a c c o r d i n g t o

p l a n . ' O n e c a n n o t s u p p r e s s a f e e l i n g o f i n d i g n a t i o n a n d

contempt for a body of men who, whil st millions of

B r i t a i n ' s s o n s f r o m a l l p a r t s o f t h e E m p i r e w e r e f r e e l y

g i v i n g a w a y t h e ir l i v e s t o s a v e u s a n d c i v i l i s a ti o n f r o m

the domination of German Kultur, wer e engaged in a

s c h e m e f o r a d d i n g t o t h e i r o w n a n d t h e i r s h a r e h o l d e r s '

e n r i c h m e n t a t t h e e xp e n s e o f B r i t i s h t a x p a y e r s !

" T h e n e x t s t e p w a s t h e B r u s s e l s C o n f e r e n c e , a t w h i c h

t h e r e p r e s e n t a t i v e s o f t h e l e a d i n g b a n k e r s o f a l l t h e

A l l i e d a n d n e u t r a l c o u n t r i e s w e r e i n s t r u ct e d t o r e c o m -

mend a - s i m i l a r p o l i c y t o t h a t a l r e a d y d e m a n d e d b y the





BRITAIN DRAWN INTO THE TOILS 1 0 1

s u b m i t t e d t o t h e v o t e r s . [ I t w a s r e s t o r e d i n t h e m o n t h

f o l l o w i n g t h e p u b l i c a t io n o f M r . K i t s o n ' s a r t i c le . ] With

t h e r e - e s t a b li s h m e n t o f t h i s s y s t e m , t h e German-

American plot may be regarded as having succeeded .

Indeed, so far as England i s concerned, t he German-

A m e r i c a n f i n a n c i e r s m u s t h a v e m a r v e l l e d a t th e e a s e o f

t h e i r c o n q u e s t . N o s h e e p e v e r w e n t m o r e r e a d i l y t o t h e

s l a u g h t e r t h a n t h e B r i t i s h p e o p l e h a v e b e e n l e d t o t h e i r

p r e s e n t h o p e l e s s c o n d i t i o n s o f d e b t - e n s l a v e m e n t , w h i c h ,

a s s o m e o f o u r p o l i t i c i a n s h a v e r e m i n d e d u s , w i l l l o w e r

t h e s t a n d a r d o f l i v i n g f o r g e n e r a t i o n s t o c o m e . T h e f u l l

e f f e c t s o f t h i s fi n a n c i a l p o l i c y a r e n o t y e t r e a l i s e d .

M i l l i o n s o f o u r people have already t a s t e d a n d a r e

experiencing some of them, viz ., unemployment, bad

t r a d e , a n d s t a r v a t i o n . B u t t h e e v i l d a y s a r e y e t t o c o m e

O n t h e f o l l o w i n g p a g e i s a r e p r o d u c t i o n o f a c h a r t

s h o w i n g t h e g e n e r a l l e v e l o f c o m m o d i t y p r i c e s i n t h e

U n i t e d S t a t e s f r om 1 8 0 0 t o 1 9 2 7 .

A s i g n i f i c a n t f e a t u r e of the r i s e i n p r i c e s i n

c o n n e c t i o n w i t h t h e w a r i s t h a t t h e g r e a t e s t i n f l a t i o n

o c c u r r e d n o t d u r i n g t h e w a r , a s h a d b e e n t h e c a s e i n ,

p r e v i o u s w a r s , b u t a f t e r i t . A t t h i s d a t e t h e A m e r i c a n

F e d e r a l R e s e r v e B o a r d w a s i n p o s s e s s i o n o f i t s huge

g o l d a c c u m u l a t i o n a n d i t s p o l i c y w a s t h e d e t e r m i n i n g

f a c t o r i n t h e p r i c e l e v e l . A c c o r d i n g t o e v i d e n c e g i v e n b y

P r o f e s s o r J . R . C o m m o n s , o f t h e U n i v e r s i t y o f W i s c o n -

s i n , b e f o r e t h e U n i t e d S t a t e s H o u s e o f R e p r e s e n t a t i v e s

B a n k i n g a n d C u r r e n c y C o m m i t t e e i n 1 9 2 7 , t h i s p o s t - w a r

i n f l a t i o n w a s d e l i b e r a t e l y c r e a t e d . Professor Commons

s a i d

"What I wish to say to you was le arned by me in

c o n f i d e n c e f r o m a m e m b e r o f t h e F e d e r a l R e s er v e B o a r d .

I , o f c o u r s e , w i l l not give his name . He and another

m e m b e r o f t h e F e d e r a l R e s e r v e B o a r d i n 1 9 1 9 a n d 1 9 2 0

u n d e r s t o o d w h a t t h e F e d e r a l R e s e r v e S y s t e m w a s d o i n g ;

t h e y w e r e i n f l a t i n g p r i c e s a n d w e r e g o i n g t o b r i n g a b o u t

a t e r r i f i c r i s e i n p r i c e s . They knew it . . . They

proteste d in a meeting of the Federa l Reserve B oard

against what was being done by the Federal Reserve

B o a r d a t t h a t t i m e . . . . T h e y c o n s i d e r e d f o r a t i m e

w h e t h e r i t w o u l d n o t b e b e t t e r f o r t h e m t o o f f e r t h e i r

r e s i g n a t i o n s a n d t h e n g i v e t h e i r r e a s o n s t o th e p u b l i c

f o r r e s i g n i n g . T h e y f i n a l l y a g r e e d t o g o a l o n g w i t h t h e







1 0 4 THE TRUTH ABOUT THE SLUMPa d v i s o r y b o a r d o f t h e M i n n e a p o l i s B a n k , h e s a i d , t o l d t h e

c o n f e r e n c e t h a t

" O u r b a n k i s m a k i n g 1 0 , 0 0 0 d o l l a r s a d a y , n e t v e l v e t ,

a n d w e c a n n o t o f f e r t h e s e p e o p l e t h i s r u l e , w e c a n n o t

k n o c k t h e m i n t h i s w a y a n d b r i n g r u i n , s t a r v a t i o n a n d

d e a t h t o p e o p l e w h o a r e d e p e n d e n t o n u s . "Mr. S c o t t , o f t h e F e d e r a l R e s e r v e B a n k o f D a l l a s ,

T e x a s , a c c o r d i n g t o a n o t h e r e x t r a c t q u o t e d , d e c l a r e d t h e

p r o p o s a l " m o n s t r o u s , " a n d a s t r o n g p r o t e s t w a s a l s o

made by Mr . D o w e l l o f N o r t h D a k o t a .

C o n t i n u i n g , M r . S t a r r s a i d :

" T h e s e a r e F e d e r a l R e s e r v e b a n k o f f i c i a l s w h o m a k e

t h i s s t a t e m e n t , o v e r r i d d e n b y t h e s t a t e m e n t s , p h i l o s o p h y ,

and arguments of W . P . G . H a r d i n g [ a t t h a t t i m e c h i e f

e x e c u t i v e o f f i c e r o f t h e F e d e r a l R e s e r v e B o a r d ] .

"Mr . Leatherwood : Do you think that decision of

t h a t f a m o u s m e e t i n g h e l d i n W a s h i n g t o n i n w h i c h t h e y

d e c i d e d t o i s s u e t h i s o r d e r , h a d a n y t h i n g t o d o w i t h t h e

g a t h e r i n g i n , s o o n t h e r e a f t e r , o f t h e m i l l i o n s a n d h u n d r e d s

o f m i l l i o n s o f s e c u r i t i e s o f t h e l i t t l e h o l d e r s ?

"Mr . Starr : M y d e a r s i r , i t i s o n l y a n o t h e r i l l u s t r a t i o n

o f t h e p r a c t i c e t h a t h a s p r e v a i l e d f o r m o r e t h a n 2 , 0 0 0

y e a r s . It has been the practice of what you might

d e s c r i b e a s t h e m o n e y e d c l a s s f o r m o r e t h a n 2 , 0 0 0 y e a r s

t o c r e a t e a l t e r n a t e p e r i o d s o f h i g h a n d l o w p r i c e s , b u y i n g

w h e n t h i n g s a r e l o w a n d c r e a t i n g a r t i f i c i a l l y s t i m u l a t e d

h i g h p r i c e s o n w h i c h t h e y s e l l o u t , o n l y t o c r e a t e a n o t h e r

p e r i o d o f d e f l a t i o n o n w h i c h t h e y b u y i n . T h a t h a s b e e n

t h e p r a c t i c e . W e h a v e h a d s i x t e e n d i f f e r e n t p e r i o d s o f

t h a t k i n d i n o u r o w n h i s t o r y a s a n a t i o n o f l e s s t h a n

1 5 0 y e a r s . "

F u r t h e r e v i d e n c e o f t h e a c t i o n o f t h e F e d e r a l R e s e r v e

B o a r d i n d e p r e s s i n g p r i c e s in 1920 was provided by

M r . S w i n g , a C a l i f o rn i a n C o n g r e s s m a n , i n a s p e e c h m a d e

i n t h e H o u s e o f R e p r e s e n t a t i v e s o n M a y 2 3 , 1 9 2 2 . I n

t h a t s p e e c h , q u o t e d b y M r . C a n f i e l d , a n o t h e r w i t n e s s o n

the B anking and Curr ency Committee hearings on th e

S t r o n g B i l l , M r . S w i n g s a id :

"I was present at a meeting of the bankers of

S o u t h e r n C a l i f o r n i a , h e l d i n m y d i s t r i c t i n t h e m i d d l e o f

November, 1 92 0, when W. A . Day, then Deputy

G o v e r n o r o f t h e F e d e r a l R e s e r v e B a n k o f S a n F r a n c i s c o ,

s p o k e f o r t h e F e d e r a l R e s e r v e B a n k a n d d e l i v e r e d t h e







BRITAIN DRAWN INTO THE TOILS 1 0 7

is Sir Otto E rnst Niemeyer, formerly Controller of

F i n a n c e i n t h e B r i t i s h T r e a s u r y . L a s t y e a r S i r O t t o

E r n s t Niemeyer and Professor Theodor Emanuel

Gugenheim Gregory visited Australia and Ne w Zealanda s e m i s s a r i e s o f t h e B a n k o f E n g l a n d . Australia may

h a v e been e x t r av a g a n t , b u t her present f i n a n c i a l

d i f f i c u l t i e s w o u l d n o t h a v e b e e n s e r i o u s b u t f o r h e r d e b t

i n c u r r e d i n f i g h t i n g G e r m a n y . I n f a c e o f t h i s f a c t i t i s

surely a v ery extraordinary thi ng that the Bank of

England should send out two agents, both from their

n a m e s o b v i o u s l y o f T e u t o n i c d e s c e n t . T h e c h a r a c t e r o f

t h e s e g e n t l e m e n m a y b e b e y o n d r e p r o a c h , b u t i n v i e w o f

t h e G e r m a n - J e w d o m i n a t i o n i n N e w Y o r k , i n v i e w o f t h e

way B ritish finance is under th e thumb of New York,

w h at f e el i n g c a n a l a y m a n e x p e r i e n c e b u t o n e o f d i s g us t

a t f i n d i n g a f o r e i g n f l a v o u r i n B a n k o f E n g l a n d a c t i o n

o n t h i s s i d e o f t h e w o r l d ? A s m a y b e s e e n b y r e f e r e n c e

t o t h e a p p e n d i x t o t h i s b o o k , q u e s t io n s h a v e b e e n p u b l i c l y

raised-and a p p a r e n t l y n e v e r answered-as to the

G e r m a n i c c o n n e c t i o n s o f S i r O t t o N i e m e y e r .

A s S i r O t t o E r n s t N i e m e y e r a p p e a r s t o b e g e n e r a l l y

c o n s i d e r e d b y o u r b a n k e r s , p o l i t i c i a n s a n d n e w s p a p e r

editors-barring a few notable exceptions-to be as u p e r h u m a n e m b o d i m e n t o f t h e p u r e s t u n d i l u t e d f i n a n c i a l

w i s d o m i t i s w o r t h w h i l e s e e i n g w h a t h e h a s d o n e f o r

B r i t a i n .

A f t e r t h e e l e c t i o n s o f 1 9 2 2 S i r O t t o E r n s t N i e m e y e r

accompanied Mr . B o n a r L a w t o t h e G e r m a n R e p a r a t i o n s

Conference at P aris when Mr . Bonar Law produced a

p l a n t o g i v e G e r m a n y a f o u r y e a r s ' m o r a t o r i u m , l e t t i n g

h e r o f f a l l r e p a r a t i o n s p a y m e n t s d u r i n g t h a t p e r i o d . The

F r e n c h r e f u s e d t o a g r e e , a n d t h e p r o c e e d i n g s e n d e d i n

d i s o r d e r . F o l l o w i n g o n t h i s c o n f e r e n c e t h e d e p r e c i a t i o n

o f t h e m a r k b e g a n - g e n e r a l l y b e l i e v e d t o h a v e b e e n a n

engineered swindle, and Germany defaulted on her

payments .

S i r O t t o N i e m e y e r a c c o m p a n i e d t h e C h a n c e l l o r o f t h e

E x c h e q u e r t o t h e U n i t e d S t a t e s w h e n t h e A m e r i c a n d e b t

was funded and B ritain unde rtook to pay America

a n n u i t y f o r 6 2 y e a r s , r i s i n g f r o m £ 3 3 , 0 0 0 , 0 0 0 a y e a r t o a

c o n s i d e r a b l y h i g h e r f i g u r e ( s e e A p p e n d i x , p . i x ) .

S i r O t t o N i e m e y e r w a s o n e o f t h e f i n a n c i a l e x p e r t s

on the Exchange Committee set up at the Imperial

Economic Conference in 19 23 which declared th at the





BRITAIN DRAWN INTO THE TOILS 109

From the moneylenders' point of view there was nodoubt about the benefits to be derived by having Britain's

trade once more tied' inflexibly to the hoard of goldcontrolled by the international moneylending interest .

Mr. Hattersley in his book, "This Age of Plenty," quotesan extract from the "Bankers' Magazine" recording howa shipment of 11 millions of gold from London to NewYork was followed by a decline in Stock Exchangesecurities to the extent of 150 millions . The owners of

that gold doubtless knew quite well what would followon their shipment of it and were simple people indeed if

they did not profit by it .

When the Jew-ridden Lloyd George Government,under German-Jew pressure from New York, embarkedon its policy of monetary deflation we find Mr . Reginald

McKenna in his annual address as chairman of theMidland Bank telling the British public very clearly what

it meant

"Let us look at the policy of monetary deflationLet us suppose that it were practicable by this

process to bring prices permanently down to the pre-War

level. What sort of a charge would our National Debtmean to us? It stands today at 17,770,000,000, mostly

borrowed when money was worth very much less thanbefore the war. With prices back to their former levelthe burden of the debt would be more than doubled, inother words, the creditor would receive a huge premium

at the expense of the debtor . "

Such a result, Mr. McKenna declared, would be"repugnant to every principle of equity and economicpropriety . "

That was the opinion of a British financier not born

at Frankfort-on-the-Main as to what the policies of our

Schusters, Schroeders, Niemeyers, Goschens, Gugenheim-

Gregorys, and the rest were going to mean. That Mr.

McKenna was not mistaken one has only to refer to the

file of the London "Statist" for July last. In an article

published during that month the "Statist" pointed outwhat the price decline had meant up to then in the dead-

weight of the debt Britain owed America. That debtwas funded in 1923 at 1945,205,000 . Since then135,755,000 had been paid off, leaving 1909,452,000outstanding . The "Statist" price index number in 1923was 133, in July last it was 98. Thus the outstanding



110 THE TRUTH ABOUT THE SLUMPAmerican debt, adjusted to the value of money in 1923,

would be £1,234,256,000, or 1289,051,000 more than theoriginal amount. The burden today is considerablyheavier than it was in July last, and the controllers of

gold can juggle the burden of the world's debts about to

any extent they please-excepting that if they go too

glaringly far the public at large may at last realise where

the root of their trouble lies .





CHAPTER XTHESTRANGLE-HOLD INCREASES

That Mr Paul Warburg, like his famou,co-religionist in the play, was determined to have his

pound of flesh so far as Britain was concerned was wellshown by the following statement issued by him as acounterblast to the Balfour Note on the American debtand published in the London "Times" of August 2, 1922 :

"He still clung to the hope that France would recedefrom what he called her present suicidal attitude 'of

wanting the milk, the cow, and her meat at the sametime,' and believed that when that happened Americawould co-operate sympathetically with Europe, forbear-ing her claims for war debts from those of her Allies who

could not pay without disastrous consequences. England'sdebt, however, he put in a class by itself, suggesting that

an understanding for its funding and ultimate repayment

was an essential preface to American co-operation inEurope ."

That was a clear-cut statement by the man whodominated the United States Federal Reserve Board,which dominated the world, that Britain was to be singled

out for exceptional treatment . What the war had failedto do the peace was to accomplish .

About this date one of the most prominent supportersof the Federal Reserve Act at the time of its passagehad come to an understanding of its true inwardness .

This was Mr. William Jennings Bryan, who had exertedall his influence to line up the Democratic Party members

in Congress in support of the measure . According toMr. Western Starr, Mr. Bryan said before he died thatthis was the one action in his political career that heregretted . In an article he contributed to "Hearst'sInternational Magazine" for November, 1923, Mr . Bryansaid

"The Federal Reserve Bank, that should have beenthe farmer's greatest protection, has become his greatest

foe. The deflation of the farmer was a crime deliberately

committed, not out of emnity to the farmer, but out ofindifference to him . Inflation of prices had encouraged

111









STRANGLE-HOLD INCREASES 115

"This declaration of intentions was the first avowal of

the policy which under the Taft Administration won the

title of `Dollar Diplomacy ."'

In 1911 Messrs . J . P. Morgan and Company, Messrs.

Kuhn, Loeb and Company, the First National Bank, and

the National City Bank of New York got in on theinternational Hukuang loan . The participation of this

group in the loan was not achieved until President Taft

had sent a personal message to Prince Chun, the Chinese

Prince Regent, referring to "the high importance Iattach to the successful result of the present

negotiations . "

After the war the old "spheres of influence" by which

the European diplomats had divided China up intosections for their respective concession hunters were

abolished by international agreement . In place of this

old arrangement there was established an international

financial consortium which, it was agreed, should hence-

forth attend to all foreign financing thereafter undertaken

in China . That is to say, the entire foreign financial

exploitation of the Chinese now proceeds through this

consortium, the Governments of the four Powers in it

guaranteeing their support . The agreement constituting

the consortium was signed on October 15, 1920. Thesignatories included

Britain-The Hong Kong and Shanghai BankingCorporation .

France-Banque de l'Indo Chine.

Japan-Yokohama Specie Bank .

United States-J. P. Morgan and Company ; Kuhn,Loeb and Company; National City Bank of NewYork ; Chase National Bank ; Guaranty TrustCompany of New York ; Lee, Higginson andCompany ; Continental Trust and Savings Bank.

The names of most of these American participators

will be found set out in the list of corporations included

in the Money Trust. It will be remembered that the

Pujo Commission reported that the Money Trust wasdominated at the date of its report (March, 1913) by

Mr J . P. Morgan . Mr. Morgan died at the end of that

month, and we have the statement of the BritishAmbassador at Washington that "since Morgan's deaththe Jewish bankers are supreme"-that means Messrs.

Kuhn, Loeb and their allied concerns .






scheme and brought it here from Hamburg for thepurpose of putting it over the American people . "

"Mr. Canfield : The bill they wanted was a different

bill from what passed .

"Mr. Starr : Paul Warburg said it differed only in one

particular, and that could be corrected by àdministrative

processes . ' "

"Now, the Federal Reserve Act was passed, and they

put one of the men that had been denounced . in

charge of it . Paul Warburg, a member of the firm ofKuhn, Loeb and Company, was put on the board to run'i t . That is what the farmers of this country saw, and

now think about your Federal Reserve Board. Theymay be away off ; they may be very much mistaken.

These men may be as patriotic as the Angel Gabriel and

all right, but the farmers of this country do not think so,

and the labour men of this country who do not stand in

to get a slice do not think so . "

Mr. Starr expressed in downright fashion his view ofwhat the Federal Reserve System meant internationally

"The nations for whom we have made sacrificesdespise us and hate us and abhor us ; you cannot go to a

music hall or read a comic magazine published in any

one of those countries in which they do not hold us up

as a Shylock and a robber. It is because our foreign

policy is dictated, not by the people of this country, but

by the bankers and. b y the credit monopolists of this

country, and if we are ever going to get away from that

feeling of detestation and hatred which they feel against

us, and which, if it is allowed, will grow into a war,

compared with which the last war will be a Fourth of

July picnic, we have got to take our domestic affairs and

foreign affairs out of the hands of these old men of the

sea. "

During the past few years the activities abroad of the

American money ring have been on a colossal scale .

All financing of China, of example, is now controlled by

the same little German Jew coterie that controls the

United States Federal Reserve Board . The octopus has

had its tentacles on China for many years . In their book,

"Dollar Diplomacy" (R. W. Huebsch, New York, 1925),Messrs. Scott Nearing and Joseph Freeman give muchinformation as to the close alliance between American

governmental action abroad and the activities of various




"It is claimed that the hands of the Federal Reserve

are tied so that the policy put into operation a year ago

to make money easier and help to bring about goldexports cannot be reversed . At that time the Boardlowered the rediscount rate even against a protest of

the Reserve Bank of Chicago, and was also a heavy buyer

of Government securities . This policy of making money

easier was the starting point of the wild speculation . "

This gigantic orgy of speculation was thus started

and stopped by the Federal Reserve Board . If the whole

nation was feverishly handing away its savings for stocks

and bonds somebody naturally must have been sellingthose stocks and bonds . What was the nature of thetransactions, and for what purposes was the money being

absorbed?

The answer to this question is very fully provided in

a recent book, "America Conquers Britain : A Record of

Economic War" (A. A. Knopf, London and New York,1930) . In this book, which is little more than a thinly-

disguised paean of triumph over the creation of huge

American-controlled (or in reality German-Jew con-trolled) international combines to the detriment ofBritain, Mr . Ludwell Denny tells the whole story. Hisbook is worth the closest study of all who desire to see

civilisation freed from its present domination .

Mr. Denny has embodied an enormous mass ofinformation in his book and his authorities are fully

quoted throughout . However, the reader who makes useof the voluminous index in it to trace the activities of the

Warburg group and the concerns linked with it, should

note that no indication whatever is given of the import-

ance of this group ; that only occasional reference is made

to the doings of concerns allied with it ; and, furthermore,

that unobtrusive as is such reference in the text it is

still more so in the index, for it is noticeable that although

Kuhn, Loeb and Company are mentioned in the text noentry appears in the index, and the same is true of the

important International Acceptance Bank . The frequent

reference to the "Harriman interests" is merely to the

Warburg interests under another and less suggestivename, and the Pujo Commission report shows that theactivities of the National City Bank of New York, of

which Mr. Denny's book is full, have been closelyassociated with the Warburg group .



120 THE TRUTH ABOUT THE SLUMP

In the United States during the boom period thefinanciers were busy effecting great company mergers .

Mr. Denny records more than 1,000 ' public utility

company mergers in the United States since 1926 . In

the period 1927-29 there were fifty bank mergers in New

York alone "creating ever larger concentration of

capital for domestic and foreign use," and our author

mentioned that the National City Bank has 98 branches

in 26 foreign countries . From 1925 to 1928 Americanloans to foreign countries averaged 1,100 million dollars

annually . Seventeen American corporations operating in

foreign countries floated bond and stock issues in 1928

totalling 147 million dollars .

As to what the financiers were doing with theAmerican public's money once they had got hold of it,

Mr. Denny supplies innumerable instances, of whichthe following may be taken as illustrating the designs of

those who beat up the "orgy of speculation" and next

decreed the slump .

In 1929 General Motors bought a controlling interest

in Opel Motors of Germany.

By March, 1929, American General Electric hadbought 60 per cent . of the stock of British GeneralElectric .

Early - in 1929 the leading electrical manufacturing

concerns in Britain : British Thompson Houston,Metropolitan Vickers, Edison Swan and Ferguson Pailin

were fused into the Associated Electrical Industries in

which the principal shareholder was American General

Electric.

In 1928 the Electric Bond and Share Subsidiary of

the American General Electric more than doubled itsinvestments, from 108 to 285 million dollars . Throughthis and other concerns General Electric is stated to

control 52 per cent. of the United States powerproduction . Abroad the Bond and Share concern controls

the public utilities of 11 foreign countries and has large

holdings in six other countries .

In Italy American General Electric is said to have

large holdings in Italian Super-Power "which is making

that country independent of British coal" (and thusincidentally increasing British unemployment) . It helped

to organise the French manufacturing combine, the

Societe Generale Construction Electriques et Mecaniques .




It has huge contracts for equipment and technicalassistancee in Russia. In 1929 it increased its holding in

the German electrical manufacturing trust, the A .E.G . ,

to one-third, and made an agreement with it forco-operation in every country in Europe .

The American General Electric further interlockswith the Radio Corporation of America, in its turn a

huge trust, with world-wide domination over wireless,

the greatest means of mass communication in the world .

Further, the British Marconi Company is now tied upwith the Radio Corporation .

In April, 1929, American General Electric and the

International Telephone and Telegraph Company wereconsolidated . According to Mr. Denny, the I .T .T . wasfounded by Sosthenes Behn in 1920 with a capital of six

million dollars . By, 1928 its gross earnings were81 million dollars . We are told that it " has done morein nine years to break the British world communications

monopoly than all other companies and governmentscombined in the century of electrical communication . "

American banks and the American General Electricin 1928 took substantial part in the organisation Of

the Trust Financiere de Transport et d'EnterprisesIndustrielles, an international combine got together by

Mr. Dannie Heinemann, an American living in Belgium,

in association with the mysterious Alfred Lowenstein

who disappeared from an airplane in the English Channel

soon afterwards . In this are stated to be the following

participators :--American : Guaranty Bankers' Trust ;

Dillon, Read ; Kuhn, Loeb ; Lee, Higginson ; Inter-

national Acceptance Bank. British : Barings ; Rothchilds ;

Midland. German : The four big "D" banks . AndBelgian, Swiss, Dutch and French houses . The TrustFinanciere is set up to control and operate public utility

companies all over the world .

In 1929 the American Power and Light Corporationbought up the entire common stock of the GreaterLondon Counties Trust, controlling the seven chief power

companies of Britain, supplying power on a monopolybasis to 95 cities in England and Scotland. It also

controls the Edmundson Electrical Corporation owning

twelve electric supply companies in Britain . A BritishGovernment inquiry was made into this Americanownership of the motive power of British industry, but

lamely reported that the ownership was unimportant.



122 THE TRUTH ABOUT THE SLUMPThe late Lord Birkenhead obliged the American owners

by becoming the ornamental British chairman of theconcern .

An American engineering firm has obtained thecontract for the Lake Tsana dam in Abyssinia, control-

ling the Nile waters on which Britain depends for her

"plan to escape from the American cotton monopoly . "

Based on American loans and investments, there is

now some form of United States fiscal, political, or

military control in 14 of the 20 Latin-American republics .

In Argentina Britain, according to Mr . Denny, had made

more head in foreign trade since the war than in any

other country . This was largely due to the pro-British

Irigoyen Government . Since Mr. Denny wrote his bookthis government has been ousted in a revolutionconsequent on the economic depression originating in

New York .

An American commission is outlining the economicreorganisation of China, which Mr. Denny tells us wants

600 million dollars of railway and other loans from the

United States .

We are further told : "American bankers have under-

written with State Department approval such dictators

as Machado in Cuba, Leguia in Peru, Pilsudski in Poland,

Horthy in Hungary, Mussolini in Italy, and Borno inHaiti . Only when dictators have failed to reach

satisfactory agrements with American capital, as in the

case of Rumania, the State Department has not beenfriendly to such loans . "

Mr. Denny states that although America had refusedBritain similar terms, Mussolini was given a cancellation

of a large part of Italy's debt to America, and New York

loans to the extent of 450 million dollars have been made

to Italy guaranteed by the best of her industries .

Under the heading "Grabbing Raw Materials," Mr.

Denny tells of the amalgamation in 1928 of the British

Mond Nickel Company and the International Nickel

Company of New Jersey, with control in Americaaccording to the "New York Times . " The MondCompany is, as is well known, a Jewish concern .

In copper America, it is stated, controls 46 per cent_

of the world's total, and in 1928 it was reported that the

Anaconda-Harriman interests had acquired Silesian

mines with another 10 per cent . of the world's production,




while at the end of that year it was reported that

American producers had joined the European cartelcontrolling 96 per cent . of the world's production.

Although Britain has smelting control of 70 per cent .

or so of the world's tin output, yet in June, 1929, the

British-American Tin Corporation was organised andwas said to represent more than 80 per cent. of theBritish controlled tin production .

Long detailed accounts are given of recent American

and British rivalries for rubber and oil, and incidentally

it is made apparent that America will probably take over

control of the Republic of Liberia on account of its

rubber. According to Mr. Denny the Arcos raid on theSoviet officials in London in 1927 was merely an incident

in the oil fight and was designed to benefit Shell Oil as

against Standard Oil . The international danger point in

oil will be reached, Mr. Denny predicts, when American

car-owners face higher prices as American suppliesare exhausted, and are told that the rise in price is due

to British grabbing . On both sides, however, the oil

financial activity would appear to have strong Jewish

associations .

In industrial chemicals, controlling supplies essential

to nearly all industries, are three great combines . In

Britain the Mond Imperial Chemical Industries, formed

in1926 ; in Germany the great I .G. Chemical trust that

grew out of the aniline dye combine built up on a British

invention ; and the American I .G. Corporation organised

in 1929 and being an alliance with the German combine .

The directors of the latter include Mr. Edsel Ford,president of the Ford Motor Company ; Mr. WalterTeagle, president of the Standard Oil Company ; MrCharles Mitchell, chairman of the National City Bankof New York; and Mr. Paul Warburg, chairman of theInternational Acceptance Bank .

The Mond Imperial Chemical Industries on its side

has strong American Money Trust connections, as is

shown by noting the names of its associated companies .

Beginning with a capital of £65,000,000, later increased to

£95,000,000, the I.C . I . included among its directors the

late Lord Birkenhead and Lord Reading. According to

Mr. Denny, I.C . I . has acquired substantial minority

holdings in the American Allied Chemical and Dye,General Motors and E. I. du Pont Nemours, the

American powder manufacturing company, which is the




controlling stockholder in General Motors . Theseconcerns are stated to have close associations with

J . P. Morgan and Company and the United States Steel

Corporation .

In 1928 the I .C . I . and the Chase National Bank ofNew York formed the Finance Corporation of GreatBritain and America, each holding equal shares . On thecommittee of this concern are stated to be representatives

of General Motors, American International Corporation,

American Car and Foundry, American Locomotive,

International Paper, American Railway Express,

Metropolitan Life Insurance, and Bethelem Steel . Theabove list should be compared with the list of concerns

controlled by the American Money Trust in 1913 . TheBritish directors included the late Lord Melchett (Sir

Alfred Mond) and Lord Reading (Sir Rufus Isaacs) .

German I.G. is stated to own a large block of sharesin the German Ford Company According to Mr. Dennythere is world-wide competition between the Mond-New

York Group and the Warburg-German group, suchcompetition extending into chemical, fertiliser, auto-

mobile, rubber, aviation, and other industries . Hefurther says the Mond group is trying to revive world-

war hatreds to prejudice the American public against the

German-American group.

In the light of the Pujo Report's revelations as to the

association of the companies in both groups in the Money

Ring under the Federal Reserve System, it is difficult

to believe in the idea of fierce competition between these

groups.

In 1928 when the National City Bank organisedUnited Aircraft and Transport, Standard Oil, Ford, and

their allegedly deadly enemy, General Motors, were all

represented on the board . Other huge air combines, we

are told, were formed during the boom, and there has

been American penetration of British Imperial Airways

by the purchase of stock in the Handley-Page Company,

which _ .has part interest in this British Governmentcontrolled concern . The National City Bank has alsobeen active in forming in 1929 the International Zeppelin

Transport Corporation for a transatlantic service .

After reminding us that in the winter of 1928-29slackness in shipbuilding accounted for 32 per cent. of

Britain's unemployed, Mr Denny points out that




German's mercantile marine has been brought up to80 per cent. of its pre-war strength by the building of new

tonnage. This building has been financed mainly by the

"Harriman interests," which seems to be just another

name for the Warburg group . America, we are told,

has now on a conservative estimate a three-quarterinterest in the North German Lloyd line, and another big

first mortgage on the Hamburg-America line Britain, on

her side, is left with the old out-of-date pre-war German

ships on her hands while Germany can offer travel in

new modern liners built with American money .

Such is the picture Mr . Denny gives of the directions

in which went the money taken from the Americanpublic by the financiers during the "stock exchangeorgy." The American financial pentration of Britain hasnot been followed by any conspicuous benefits to British

industry so far . According to Mr. Denny, it is notintended that it shall be . Britain is doomed, is the burden

of his song, and "if Britain is foolish enough to fight she

will go down more quickly, that is all. "

With the pitiful plight of Britain Mr . Denny contrasts

that of Germany : "The net result of the war and the

peace settlement imposed by the victors to ruin Germany

has been to give her new life and a future potentially the

brightest in Europe. The war `victory' has rid Germany

of an archaic, oppressive, and inefficient political system .

It has relieved her of an armament burden such as is now

breaking Britain's back . "

Further, it is pointed out that the German financial

deflation wiped out the capital liabilities on German

industry, and that "out of the ruins has risen a modernised

industrial organisation better than any in Europe,and incomparably better than Britain's ." To what extent

this achievement has been directed from New York the

reader can judge from the extracts from Mr. Denny'sbook quoted above.

Alarm has been expressed both by the AmericanNational Association of Manufacturers and the American

Federation of Labour at the huge diversion of American

money into foreign channels during recent years . Boththese organisations doubtless look at things from the

purely national point of view, whereas the financiers

who dominate American industry appear mainly inter-national in their interests and outlook . Whether theiroperations have been an unmixed blessing to the



126 THE TRUTH ABOUT THE SLUMPAmerican people is open to doubt . "The general trend

in this country," says Mr. Denny, "has been for large

corporations to grow richer, and for small factories to

grow poorer and go bankrupt . "

The American worker, we are also told, has shownmore willingness to transform himself in to a "human

machine" than has the more class-conscious British

worker . "Perhaps the best proof of the near-perfection

of the spirit of American labour for the purposes of an

unrestricted capitalist system is its submission to legal

injunctions and physical violence without effective

protest . The anti-labour injunction flourishes in all parts

of this country . There is terrorism and murder bysheriffs and company police, especially in the coal and

iron and in the textile industries, and constant violation

by officials and employers of the workers' constitutional

civil liberties . "

Finally it is asserted that half the members of the

Coolidge Cabinet were the representatives of bigbusiness, as are two-thirds of the members of the Hoover

Cabinet .

Such is a recent picture of what world domination by

German-Jew finance in New York is meaning . "No one,"

says Mr. Denny (who says nothing of Jews in his book),"can say the fight is clean . " And in another passage we

read : "To many this transformation of the world into a

cheaper imitation of all that is crude and little that is

good in American civilisation seems a frightful thing . "

In other parts of this book we have read statements

by those who fought the establishment of the Federal

Reserve Board that the desire of the Money Ring is for

alternate periods of high and low prices . For high prices

they sell stocks and bonds to the public, and for the low

prices they create by gold manipulation they buy back

these stocks and bonds for a fraction of what was given

for them, and in this way goes on a continual out-reaching over human life and industry by the moneypower .

It is to be noticed that Mr Denny expresses theopinion that war between America and Britain is more

probable than between America and any other power.

He instances particularly the struggle for oil between the

British (Shell) and American interests . Feeling was

also engendered by the American buying up of British




General Electric and the British fight to block this .

Another point at which an international explosion is

listed by Mr. Denny as possible is Panama . There the"Panama Corporation, a British syndicate promoted by

the Earl of Cavan and Lord Melchett (Mond) obtainedfrom the Panama Government a ten-year gold conces-sion ." Charges have since been filed with the United

States Department asserting that there is no gold in the

area, that the British Government by the concession has

obtained important naval bases, that there is a British

right to police the territory near the canal, and exclusive

rights to potential Panama rubber desired by America

to block the British world monopoly .

Of the heads of the Shell and British General Electric

concerns Mr. Denny says : "It is interesting to note that

the two most extreme leaders of the 100 per cent . British

movement against American capital, Sir Hugo Hirst and

Sir Henri Deterding, are not men of British origin . Sir

Henri, who is the British general in the oil war, is a

Hollander by birth, Sir Hugo, at the height of the General

Electric controversy, was denounced by a Labourite in

Parliament as a super-patriot of German origin."'

The passages quoted in this chapter suffiicently expose

the nature of the forces that might produce an armed

conflict between Britain and America . In the opinion of

many, Jewish financiers precipitated the South African

war of thirty years ago, and in the opinion of some the

Great War also . And 'history is said to repeat itself .



128

CHAPTER XIHENRY FORD RETRACTS

Of very great significance and importance in anyreview of the present world-control by high finance is

the story of Mr. Henry Ford's seven-year campaignagainst various undesirable influences declared by himto be Jewish in origin . This ended in the middle of 1927wit : . an abject apology by Mr. Ford as part of the termsof settlement out of court of a million dollar libel action

brought against him .

As is well known Mr. Ford in 1916 embarked on hisfamous "Peace Ship," in which he sailed with a party of

peace missionaries on a voyage to Europe . The shipproceeded to Stockholm, Mr . Ford himself leaving her

at Christiania. Up to this date Mr. Ford seems to have

blamed the German militarists for the war, but duringhis tour abroad he was given information which led tothe conviction- that German-Jewish international

fina-nc-iers_ were responsible for the disaster of the Great

War and the millions of lives sacrificed in it .

In 1920 Mr. Ford began in his newspaper, the

"Dearborn Independent," the publication of articles

criticising German-Jew financiers for their part in thewar, and for their activities in,--many other directions

deemed by him to be injurious. As Mr. Ford "Subsequently

disclaimed knowledge or approval of the articles in the"Dearborn Independent," perhaps it would be moreaccurate to say the articles dealt with such activities as

were deemed by the directors of the paper to beinjurious .

These articles appear to have covered a wide field .

The writer has not had access to a file of the "Dearborn

Independent," and his knowledge of the articles is derived

from excerpts published in other journals from time totime. Among other things the Ford journal dweltparticularly on the Jewish control of the motion picture

industry, on Jewish control of the American magazines,and the great predominance of Jew magazine writers, onJewish control of the stage . In Chapter VI has beenquoted a lengthy extract from the London "NationalReview" of a passage from a "Dearborn Independent"



HENRY FORD RETRACTS 129

article on the German central banking system and the

connection of the Warburg brothers therewith .

Mr. Ford was far from being alone in attaching asinister significance to Jewish activity . At the date at

which his campaign was begun there was widespreadconcern at the fact that the leaders of the Bolshevik

revolution in Russia were mainly Jews. Many news-paper articles and various books were appearing in which

the matter was dealt with at length .

In the middle of 1920 the London "Morning Post. "

for example, published a series of articles in which it

was asserted that Jewish revolutionary activityconstituted a world peril . These articles were later

republished in book form ("The Cause of WorldUnrest," Grant Richards, London, 1920) . In this book

the belief was expressed that a great conspiracy existed

the purpose of which was the destruction of the British

Empire . The "Morning Post," as is well known, is ahighly Conservative journal much read by Britain'saristocracy .

In reviewing this book the London "Spectator" in its

issue of October 16, 1920, said it was of opinion that a

case for full enquiry had been fully established by the

"Morning Post," and it hoped that some body in the

nature of a Royal Commission might be set up toinvestigate the whole matter . The "Spectator" evenwent so far as to suggest that Lord Sumner,,one of the

law lords, would make an admirable chairman for such

a commission . As to the terms of reference the"Spectator" suggested that the Commission should becalled upon to report

(1) Whether a world-wide conspiracy exists, or has

existed, in recent years .

(2) Whether, if its existence is proved, its objects are

merely vaguely subversive and, however mis-taken, inspired by the general desire to free and

benefit mankind, or whether they are destructive,

anti-democratical and tyrannical .

(3) Whether it is true, as alleged, that the leaders of

this world-wide conspiracy are as a rule Jews .

(4) Whether the object of those Jews who join the

conspiracy is the destruction of the Christian

religion as well as political revolution .






In 1920 there was also published by Messrs . Eyre and

Spottiswoode a reprint of a remarkable pamphlet issued

in Russia in 1905 containing the alleged "Protocols of

the Learned Elders of Zion . " With this extraordinary

document we shall deal in the next chapter .

In 1921 appeared Mrs . Nesta Webster's "WorldRevolution : The Plot Against Civilisation," a bookwhich Mrs. Webster followed up with her "SecretSocieties and Subversive Movements," published in 1924 .

The next year saw the publication of Mr. Hilaire

Belloc's book, "The Jews. "

In this book Mr. Bellocdeclared that the South African war `was openly andundeniably provoked and promoted by Jewish interests

-in South Africa . " Of the Panama scandal in France in

the nineties in which millions put up by the French public

to build the Panama canal disappeared in bribery and

corruption, and of the Marconi scandal in Britain ten

years later in which British Cabinet Ministers were found

to have been dabbling in Marconi Company shares prior

to an increase in their value by a Government contract,

Mr. Belloc said

"They might have passed as isolated things a

generation before . They were now connected, oftenunjustly, with an uneasy sense of a general financial

conspiracy . They were at any rate connected with anatmosphere distinctly Jewish . "

Of the ever-growing fields in which the Jews held a

monopoly, Mr. Belloc wrote

"It is an exceedingly dangerous point in the present

situation . I do not think that the Jews have a sufficient

appreciation of the risks they are running by its develop-

ment . There is already something l i k e a Jewishmonopoly in high finance . There is a growing tendency

to Jewish monopoly over the stage, for instance, the

fruit trade in London, and to a great extent the tobacco

trade . There is the same element of Jewish monopolyin the silver trade, and in the control of various other

metals, notably lead, nickel, quicksilver . What is mostdisquieting of all, this tendency to monopoly is spreading

like a disease . One province after another falls under

it, and it acts as a most powerful irritant . It will perhaps

prove the immediate cause of that explosion against the

Jews which we all dread, and which the best of us, I

hope, are trying to avert .



132 THE TRUTH ABOUT THE SLUMP"It applies, of course, to a tiny fraction of the Jewish

race as a whole . One could put the Jews who controllead, nickel, mercury and the rest into one small room

nor would that room contain very pleasant specimens of

their race. You could get the great Jewish bankers who

control international finance round one large dinnertable, and I know dinner tables which have seen nearly

all of them at one time or another . "

In another striking passage Mr . Belloc wrote

"The Great War brought. thousands upon thousandsof educated men (who took up public duties as temporary

officials) up against the staggering secret they had never

suspected-the complete control exercised over things

absolutely necessary to the nation's survival by half a

dozen Jews who were completely indifferent as to

whether we or the enemy should emerge alive from the

s t r t u r g l e . "

Throughout the war there had been a widespreadbelief that mysterious subterranean influences hadsomehow militated against Britain putting forth her full

effort in the struggle . This belief in a "hidden hand"

had been fanned up as a result of the extraordinaryallegations made in course of the libel action which Miss

Maud Allan, the dancer, had brought in 1918 againstMr. Pemberton Billing, M .P. Mr. Billing in his paper .

the "Vigilant," had alleged that Germany had carried on

a systematic campaign of blackmail of influential persons

in Britain, and two witnesses during the libel action

swore that they had seen a copy of what was called "TheBlack Book," an alleged German Secret Service docu-ment in which were set out detailed instructions how

to entice people into conduct facilitating blackmail . In

another section of this book was said to be a long list of

prominent British persons, including numbers in thefront rank in public affairs, who were listed as approach-

able, and against each name was a biographical note and

suggestions as to possible methods of getting at each

individual. The basis of the action was an allegation that

the performance of "Salome" (financed by a German-Jew) would attract influential, but morbid, personssuitable for Black Book operations . The book itself could

not be produced, but one witness swore that it had been

shown to him by Prince William of Wied in Albania,from whose cabinet he subsequently abstracted it . Noevidence was adduced that anyone had been so








According to the "Literary Digest" Mr. Ford'sretraction proceeded with an explanation that "themultitude of his activities made it impossible for him to

keep informed as to the contents of the 'DearbornIndependent' and the pamphlets entitled `The Inter-national Jew.'"

The "New York World Almanack" for 1930 has anentry in its chronology of the year recording howMr. Henry Ford attended a Jewish gathering anddelivered a eulogy of the Jewish race which by special

arrangement was broadcasted all over the United States .

In our chapter "The German Side of the Story" we have

quoted a long extract showing what the Ford newspaper

was saying of the Warburg group in November, 1924In the chapter immediately preceding this we have noted

how Mr. Ludwell Denny in "America Conquers Britain"

has recorded that Mr . Edsel Ford and Mr . Paul Warburg

in 1929 became co-directors of the American I.G .

Corporation, a huge combine co-operating with theGerman chemical trust, of which trust the Ford Company

of Germany is stated by Mr. Denny to have become asubsidiary .

Mr. Ford's retraction apparently extends only to the

matter published in the "Dearborn Independent," matter

which had only appeared in consequence of his otheractivities not permitting him time to keep in touch with

what those directing his paper were inserting in it . That

was the ground of the Ford apology . It is not a ground

that can be applied to personal statements made byMr. Ford himself . It cannot apply to the statement

which Captain Cazalet, MP ., in the "National Review"

for December, 1926, reports Mr . Ford as having made to

him at Detroit at the end of October in that year, and

recorded by Captain Cazalet as follows

"Like other remarkable men Ford has one bugbear,i . e . , international Jewish financiers. We asked him who

they were He said: Ì have several books which wiil

tell you who they are . They were responsible for the

last war, and will in the future always be capable of

creating a war when they feel their pockets need one . " "

In its issue of October 18, 1926, the London "Times"

quoted from the "New York American" a passage froman interview with Mr. Ford in which he attackedinternational financiers in very similar language .







138 THE TRUTH ABOUT THE SLUMPmerely dealing in evasion because they dare not tacklethe main question . Time will also show that we arebetter friends to the Jews' best interests than are those

who praise them to their faces and criticize them behind

their backs . "

This Ford campaign has now ceased, and Mr. Fordhas declared it mistaken, and its inception a matter ofregret. It is none the less an episode of significance .



CHAPTER XIITHE MYSTERY OF THE PROTOCOLS

It has been said that every country has the Jews itdeserves, and we all know that taken generally the Jewish

citizens of the British Empire are distinguished bypublic spirit and a high standard of commercial integrity

and fair dealing.

In some other European countries the Jews have beengreatly oppressed . Every student of German historyknows that for centuries the people of that country lived

under the despotism of a multitude of petty rulers, andin self defence were driven into secret organisation . TheJews in particular were singled out for exceptional

treatment.

It is an outstanding trait of human nature that everycommunity of human beings, large or small, tends tobecome inspired with an ideal of its destiny, and thatfrom such feelings spring the finest actions that adornthe history of the world . Occasionally there occurs aperversion of racial or national ideals, which then become

a public danger. We have now reached a point at whichit is necessary to consider, unfortunately, whether theatrocious treatment meted out to them in the past hascreated such a perversion of ideals among a section, orgroup, of the Jews on the Continent of Europe .

Ten years ago much interest was excited by thepublication in London of documents purporting to show

that a secret organisation of Jewish character had existedfor a long period on the Continent of Europe, and thatits object unceasingly pursued from generation to

generation was by degrees to enslave and dominate thenon-Jewish peoples of the world . According to thedocuments published the engineers of the movementwere wholly indifferent as to the moral character of themeans adopted to attain the end .

The publication of this matter led to expressions ofstrong indignation by leading Jews that reputablejournals should print such allegations . The documentswere declared to be gross forgeries, long known andexploded on the Continent of Europe and various sources

were given as their origin .

139







142 THE TRUTH ABOUT THE SLUMPIt is remarkable to think of the following passage as

appearing in 1905 :

"We will create a universal economic crisis by all

possible underhand means, and with the help of gold,

which is all in our hands . Simultaneously we will throw

into the streets huge crowds of working men throughout

Europe. We will increase the wages which will not helpworkmen, as at the same time we will raise the prices

of prime necessities . . . .

"It is essential to us at all costs to deprive the

aristocracy of their lands . To attain this the best method

i s to force up rates and taxes . These methods will keep

the landed interests at their lowest possible ebb . . . .

"In governing the world the best results are secured

by violence and intimidation . . . .

"In politics we must know how to confiscate property

without hesitation, if by so doing we can obtainsubjection and power . Our State, following the way of

peaceful conquest, has the right of substituting for the

terrors of war executions less apparent and moreexpedient, which are necessary to uphold terror,

producing blind submission .

"By new laws we will regulate the political life of our

subjects as though they were so many parts of a machine .

Such laws will gradually restrict all freedom and liberties

allowed by the Gentiles .

"It is essential for us to arrange that besides ourselves

there should be in all countries nothing but a hugeproletariat, so many soldiers and police loyal to our

cause .

"In order to demonstrate our enslavement of the

Gentile Governments of Europe we will show our power

to one of them by means of crime and violence, that is to

say, a reign of terror .

"Our programme will induce a third part of the

populace to watch the remainder from a pure sense of

duty, or from the principle of voluntary service .

"The main problem for our government is how toweaken the brain of the public by criticism, how to make

it lose its power of reasoning which creates opposition,

and how to distract the public mind by senseless

phraseology . "

A correspondent writing to the "Times" on May 11,



MYSTERY OF THE PROTOCOLS 143

1920, pointed out that in the original Russian pamphlet

there appeared in the preface the following statement by

the author, which had been omitted from the Englishedition .

"It will satisfy our feeling of responsibility if only by

the grace of God we have achieved the, to us, soimportant aim-to forewarn, and yet did not arouse in

the heart of any one person a feeling of animositytowards the until now blind Jewish people, the masses

of whom, keenly believing though in a lie, are not guilty

of the satanic sin of their leaders-the scribes andPharisees, who have once already ruined Israel . "

In 1917 Professor Nilus, at the time of the Bolshevik

descent on Russia, produced a second edition of hispamphlet bearing the title "It is Here at Our Doors!"

Of the subsequent history of Professor Nilus the writer

is unaware .

Apart altogether from any question of their origin,

it is a very extraordinary thing that documents setting

out such a programme as is outlined in the Protocols

should have been published as far back as 1905 .

Taking the points seriatim, what do we find?

It is an unquestionable fact that German-Jews have

been active in disseminating "disintegrating political

ideas." Marx, the founder of modern Socialism, was one

such, and many others have been prominent as theleaders of revolutions in Europe .

The Bolshevik Government in Russia has shown anundying hatred of the Christian religion, and the news-

papers have lately testified to governmental efforts there

to suppress all celebration of the Christian festival of

Christmas . [While this chapter is in the printer's hands

a news message in the daily papers has recorded thepublication in Germany of a derogatory life of Christ by

a German-Jew . ]

In the Panama and Marconi scandals in France andEngland the world was provided with instances of the

activities of Jewish agents . In the United States the

memoirs of a late British Ambassador testify to theformidable power the German-Jews have exerted onCongress . We have seen how the representatives of the

people were cajoled into accepting the Federal Reserve

System by representations that it would ensure industrial

stability, whereas it has not been used for any such






and more into the toils of the Money Power, becomingmerely its creatures and totally under subjection .

In the Russian Revolution Jewish leaders did

assuredly provide Europe with a demonstration of theirpower by means of "crime and violence, that is to say,

a reign of terror ."

As for the requirement that the public mind shouldbe distracted by "senseless phraseology," is there anysubject on which more senseless phraseology is writtenthan the subject of money and the gold standard in

particular? Did not the people of the United States losetheir power of reasoning when in face of the Pujo Reportthey immediately handed over control of the money oftheir country to the very men who had been denouncedas constituting the Money Trust?

We have thus reached the position (1) that theLondon "Times" has certified that the British Museumrecords provide indubitable evidence that the Protocols

were published in 1905 ; (2) that events set out in theProtocols as part of a future programme have transpired ;

(3) that Jews have been prominently associated with

these events ; and (4) that the Protocols supply a perfect

explanation of phenomena, so that what otherwise seemsa haphazard jumble of unrelated occurrences is found to

fit together like the pieces of a jig-saw puzzle, each

revealing itself as part of an ordered plan .

Uncanny as it is to find this fulfilment of the

Protocols, we must not jump to conclusions . Because

some person says that a certain thing will come to pass,or even urges that steps be taken to cause it to come topass, it is no proof on the event transpiring that theprophet or advocate was necessarily the agent whobrought it to pass .

A man may tell us that there will be an eclipse of the

moon at a certain moment in ten years' time, but on theeclipse occurring we cannot hold him responsible for it .

A clairvoyant, or person with a gift of prophecy, mayforetell a future event without in any way being its

cause.

Before we can assert that German-Jews, or anysection of them, are engaged in a conspiracy, we musthave actual positive evidence of their participation . In

any case a conspiracy to rule the world by owning itwould not be an illegal conspiracy . There is really






revolutionary plan, had become known at the end of the

eighteenth century it was promptly annexed by asuccession of scare-mongers and writers of sensational

hooks . After giving a list of these writers, Mr . Wolfdeclared that the Protocols from an examination of their

text were pretty obviously a plagiarism from a novel"Gaeta Duppel Warsaw," published by HermannGoedsche in 1868, Goedsche being, Mr . Wolf stated, an

ex-official of the Prussian postal service dismissed for

forgery .

In his novel Goedsche describes, we are told, anassembly of the Elect of Israel held once in every century

at which is expounded the plan of Simeon, handed downfrom from generation to generation, by which the Jewsmay secure their domination over all the nations of the

earth . The Jews are to work with gold and the Pressfor the subversion of Monarchy and Christianity. Theyare to act as a universal disturbing and demoralisinginstrument, and in particular they are to seduce and stir

up the proletariat to political revolution, so thateventually they may establish a universal JewishMonarchy on the ruins of Christian society .

As noted in the chapter on Russia, Mr . Wolf in his

letter asserted that the Nilus pamphlet was produced in

Russia in 1905 as part of the propaganda against theJews, who were blamed for the revolution of that year,

and was in particular used by the Russian ForeignMinister, Count Lamsdorff, in connection with a secret

memorandum which the Tsar submitted to the Kaiserurging joint action by Russia and Germany againstJewish and Masonic peril. Such peril we are assuredby Mr. Wolf is a pure myth . Nevertheless we shall look

in vain to find on the thrones of Russia and Germanythe two illustrious personages who in 1905 put their heads

together to combat a supposed Jewish peril .

So far Mr. Wolf. On August 16, 1921, the London"Times" published in a most prominent position, in the

outside column of its leader page, a long message from its

Constantinople correspondent headed "Jewish WorldPlot : An Exposure . " In this was set out how amysterious Mr. X had bought a second-hand book,"Dialogue in Hell between Machiavelli and Montes-qu~reu,"' written by M . Maurice Joly and published inBrussels in 1865 . It was a political squib directedagainst the Emperor Napoleon III . Parallel column






Bavaria of the Illuminati and the flight of its leaderselsewhere .

The basic plan of the Illuminati was by means ofinitiation in many degrees-the initiate on admission toeach new degree having a shade more of the real secretdisclosed to him-to band a great body of men together

for the execution of purposes which were known only tothe concealed superiors of the order, quite false informa-

tion being given to the initiates of lower degree as tothe Society's objects .

Weishaupt said : "It is absolutely necessary that Ishould remain during my life unknown to the greater

part of the adepts themselves . When the object is aUniversal Revolution, all the members of our Societies,

aiming at the same point and aiding each other, must find

means of governing invisibly and without any appearanceof violent measures, not only the higher and moredistinguished class of any particular state, but men ofall stations, of all nations, and of every religion ; must

insinuate the same spirit everywhere in silence, but withthe greatest activity possible ; direct the scatteredinhabitants of the earth towards the same point . That iswhat we call the force of Secret Societies .

"The empire once established by means of union andwith a multitude of adepts, let force succeed the invisible

power, tie the hands of those who resist, subdue and stifle

wickedness in the germ ."

His aim Weishaupt declared to be "to overthrowevery religion, every government, and all property what-soever." On the ruins patriarchal rule was to be erected .

The Marquis de Mirabeau, at the time FrenchAmbassador at Berlin, is stated by various historians tohave joined the Illuminati while in Germany . Thesociety was tacked on to Freemasonry by the creationof additional degrees in existing Masonic societies, sothat even the very organisations to which the Illuminati

belonged were ostensibly set up for some quite differentpurpose. Mirabeau on his return to Paris helped theIlluminati to gain a footing there, and worked with theDuke of Orleans, Grand Master of the French Free-masons, in his plot for overturning the French throneand getting himself elected first Lieutenant-General andthen sovereign of France. As a prelude to the revolutioncame the diabolically clever plot of the Diamond







152 THE TRUTH ABOUT THE SLUMPMacmillan, one of the foremost British publishing houses,

setting down the following opinion

"History will be likely to give prominence to plans

for the destruction of Russia formulated at the Masonic

Congress held at Brussels a few years before the world

war . . . . "

Of the significance of the Protocols we have the views

of a distinguished Englishman, Lord Sydenham, whohas twice filled the office of Governor in important parts

of the Empire, and who wrote as follows in a letter to

the "Spectator' 'in 1921

"Nothing that was written in 1865 can have anybearing on the deadly accuracy of the Protocols, mostof which have since been fulfilled to the letter. "

No person can be adjudged a party to a conspiracywithout definite proof, and however perfect an explana-

tion of world phenomena may be provided by the theoryof such a conspiracy, we have no proof whatsoever ofany individual being a party to it . Even if one took the

view that a great part of the Empire's public men have

been conforming to and furthering the programme setout in the Protocols, the same may be said of innumerable

private individuals in the conduct of their affairs. Yetthe whole of these may well have been entirelyunconscious agents with no awareness of the cumulative

effect of their actions. What they did may have beenmerely in conformity to pressure from above . It wasmade easy for them to act in a certain way, and theyacted in that way. It is easy for us to borrow money,and we borrow. If the modern credit system is a trapwe have walked readily enough into it .

Even if we assume that there is a prima facie evidence

of a world conspiracy it is improbable to the last degree

that the leaders of that conspiracy would be personsknown and visible to the public . More probable is theview that the visible figures on the stage are theunconscious agents of a hidden hand .

Some readers may consider that it is utterlyunwarrantable to publish such a document as theProtocols of the Learned Elders of Zion in the absence

of proof of its authenticity .

To that the reply is that the enormous significance

of the protocols is their fulfilment. Either that fulfilment

is mere coincidence, which is incredible : either the




revelations were a clairvoyant precognition of events

which is possible but improbable ; or else their fulfilment

is the result of action and policy deliberately pursued .

There is no other possibility. And if we reject the

incredibility of coincidence, and likewise refuse belief inthe diabolical malevolence of a plot, with what alternative

are we faced? The only remaining belief for us is thatthe Protocols were accurate as a clairvoyant or prophetic

vision of events, but are inaccurate in their prevision of

the motive inspiring those events. And this seems theleast credible solution of all .

Any book on philosophy will tell us that absolute

truth is unknowable by human beings . Truth, for us, is

merely the explanation that most completely fits theknown facts . If the Protocols supply an explanationwhich fits the facts, is it not sheer folly to dismiss them as

insignificant? Would not the writer in putting togetherthis book to make his fellow-countrymen aware of thenature of the influences by which they are surrounded-would not he have failed in his full duty if knowing ofthe Protocols he had suppressed mention of them?

Such a conspiracy, if it exists, would appear to have its

origin in Germany, and it would not seem that even thereany more than a small section of the Jews need be parties

to it .

Our concern is not with Jews as Jews, but withconspirators as conspirators, whether they be Jews,Christians, Mahomedans, or anything else. Our business

is to discover the facts and to put ourselves in a position

of security. If hatred has sprung from hatred, matterswill not be mended by sowing further hatred . Nor will

they be mended by closing our eyes and leaving policiesconceived in hatred to run to some tremendous cataclysm .

Furthermore, we must not forget that prominent inexposing and resisting the monopolistic and dangerousactivities to which attention has been directed in thesepages have been many public-spirited Jews themselves .

If there is conspiracy, the conspirators are as regardless

of Jew as of Christian, for in order to gratify their

ambition they imperil their race . The frustration of anysuch design of world enslavement is thus the commoninterest of Jew and Christian alike .



154

CHAPTER XIIITHE POSITION TODAY

Our review of the causes of the slump in commodityprices is now ended . In the foregoing pages the reader

has been given the facts so far as the author is able to

discern them. From many sources matter has beenbrought together giving a composite picture of the course

of events. It is now desirable that we should glanceback over the path we have come .

We have seen how by enacting that debts can onlybe legally discharged by the handing over of gold, theleading nations of the world have suffered from periodicstrangulations of their trade in consequence of a scarcity

of the means of payment. Control of gold, under thegold standard, thus gives control over all othercommodities.

We have seen that foremost economists, bankers, andcommissions of enquiry, after careful examination of the

facts have reached the conclusion that the present world-

wide depression, and most of the great commercial crises

since the beginning of the nineteenth century, have hadtheir root in variations in the purchasing power of gold .

We have seen how in consequence of the hugeaccumulation of gold in the United States the policypursued by the United States Federal Reserve Boardnow determines the general price level for commodities .

We have seen how, according to independent state-ments made by a number of responsible persons, theFederal Reserve Board deliberately created the post-warprice inflation and boom, and deliberately created theensuing deflation and slump . Nor is there any secretthat the Federal Reserve created the conditions leadingto the speculation of 1927 on . the New York StockExchange, which speculation it next suppressed byushering in dear money and the present slump .

We have seen how the Federal Reserve Board wascreated as the result of years of agitation by a German_

but newly naturalised as an American citizen.

We have seen that this man is the brother of thehead of a great German banking-house, and who has been





156 THETRUTH ABOUT THE SLUMPWe have seen how a recent well-informed writer

declares that war between Britain and America is more

probable than war between America and any otherpower, and how concerns developing situations describedby him as having potentialities of war are either Germane

Jew controlled or have strong German-Jewishassociations .

We have seen how subterfuge and deceit were used

to secure the passage of laws making gold the only legal

tender for the payment of debts .

We have seen how the Federal Reserve System wasput forward as a scheme to prevent financial stringencies,

and how the instruction that the board use its powers tothis end was struck out surreptitiously from the measure

during its passage, and how determinedly the officialsand members of the board have since resisted the placingin the law of any such instruction.

We have seen how Mr. Henry Ford conducted acampaign against Jewish influence in various directions

deemed by him to be harmful, and how in 1927 as partof the terms of settlement of a libel action he made aretraction and abject apology . And we have furtherseen how his son, Mr. Edsel Ford, is now a partner andco-director with the creator of the Federal Reserve Board

whose doings had formed a prominent part of Mr . Ford's

exposure .

Finally, we have seen how in documents publishedin Russia in 1905, and summarised in the London "Times"in 1920, there was set out an alleged programme forworld domination and the ruin and destruction of theChristian religion and the Christian national states . Andwe have seen how the course of events in the twenty-fiveyears since that programme was published has provideda fulfilment of a great part of it .

Are these things real, or are they a mere figment of

the imagination, an unbalanced and hysterical placingtogether of facts that have no relation, a fantastic tracing

of connections where there is no connection?The answer is that the evidence is there and the

reader must form his own conclusions on it . No one elsecan do that for him .

* * * *

If we accept it as a fact that the present gold control



THE POSITION TODAY 157

of commerce and industry today is in the hands of men

hostile, or at any rate wholly unsympathetic, to the

British people and British institutions, what is there that

we can do about it?

The first necessity is that there should bite and burn

into our consciousness the words of the late Lord Bryce

printed at the forefront of this book-words so vital that

no excuse is needed for here repeating them

"Democracy has no more insidious or persistent foe

than the money power, to which it may say, as Dantesaid when he reached on his journey through Hell the

dwelling of the God of Riches, `Here we found Wealth,

the great enemy. ' That enemy is formidable becausehe works secretly, by persuasion or deceit, rather than

by force, and so takes men unawares . He is a danger to

good government everewhere.

"The truth seems to be that democracy has only one

marked advantage over other governments in defending

itself against the submarine warfare which wealth can

wage, viz ., Publicity and the force of Public Opinion .

So long as Ministers can be interrogated in an Assembly,

so long as the press is free to call attention to alleged

scandals and require explanations from persons suspected

of an improper use of money or an improper submission

to its influences, so long will the people be at least

warned of the dangers that threaten them . If they refuse

to take the warning they are already untrue to the duties

freedom prescribes. "

* *

Under modern conditions it is impossible to conduct

a great newspaper without capital, and a considerable

amount of capital . Like the rest of us most newspapers

are in greater or less degree already in the toils of the

money power . Even though entirely independent intheir ownership, and free of external financial obligations

-which few of them are-they are all dependent onadvertising revenue, and any person of ordinaryintelligence on studying a daily paper or magazine can

perceive the great volume of advertising that is closely

linked with high finance . To nothing have the financiers

devoted more attention in America and Europe than to

control of the press . Here again we have the opinion of

that much-travelled and shrewd observer, Lord Bryce,

as given in 1921 :

CIO










when all is said and done . Has it made the world a better

place? In New Zealand we have borrowed a lot ofmoney. We have been borrowing for sixty years now.

Public works have been built all over the country, but

much of the money come by in this easy way has beensquandered : if the undertaking costs double what was

estimated, why worry ! It is always easy to go back to

the pawnshop and borrow more. Today we are payingmore in interest on our public debt than we borrow, and

if we had no debt we could spend about a million more

on public works each year than we are doing by going

on plunging headlong in the morass of indebtedness .

Moreover, we do not in the least know where we are

with that burden of debt interest . Some years ago weembarked on a policy of hydro-electric development.

This scheme means that instead of paying wages to New

Zealand miners to produce coal to generate power and

light we pay interest to financiers in London . Today that

interest bill represents about double the number of bales

of wool, double the quantity of meat, cheese and butter

that it did when we borrowed the money. In future

years what will it represent? None of us knows . Any-thing the money jugglers like to make it represent . If

we had built those works out of revenue the probability

is that we should have taken care to get a lot better value

for the money, and even if the works had cost too much

the matter would have been done with . As it is, we will

probably pay several times over in interest what the

work cost and still be owing the cost .

* * * *

"Startling as it may appear," wrote Mr . Arthur Kitson

in "The Money Question," "it is nevertheless an easily

demonstrated fact that, under the current rates ofinterest, the debtor classes of nearly all civilised nations

are rushing into bankruptcy. The fact is that the wealth

production of nations cannot keep pace for long with

their interest charges . In fact, interest as a universal

working principle is-at all ordinary rates-an impossi-

bility . Five per cent. interest means a doubling ofwealth every twenty years . At compound interest it is

doubled in about 141 years . . .

"Usury, is always increasing more rapidly thanwealth . It knows no period of depression, no time of

stagnation, no failure of crops, no unfortunate specula-

tions, no condition of ill-health and inability to produce .



162 THE TRUTH ABOUT THE SLUMPIt takes no holiday, and refuses even to keep the Sabbath .

It forever goes on as regular as time, and as relentlessly

as gravitation, counting and adding to men's burdens,piling them higher and higher, until the loan becomestoo great, and there is a financial crash. No system ofproduction has yet been discovered capable of maintain-ing this regular, never-failing supply which usurydemands

"All forms of wealth production are fitful, irregular,

and subject to fluctuations. One season's harvests areabundant and the next a failure . This year's fruit crop

may prove enormous, and the next spring's frosts maykill all the blossoms . The consequence is that thoughfor a limited period production may make rapid progress,yet, like the hare and the tortoise, usury invariablyovertakes and keeps ahead of production . . . .

"Every certain period there is a universal breakdown ;

panics and bankruptcy become world-wide ; interest

bearing wealth is swept away, and equilibrium is restored

only after interest-bearing capital has been greatlyreduced . . . . Startling as it may seem, it is anindisputable fact that panics, bankruptcies and failuresare absolutely necessary in order to keep the system alive

. . . . Usury, like gravitation, causes large bodiesto attract and eventually absorb smaller ones . The smallcapital of individuals is being constantly absorbed bythe greater capital of corporations . This is its inevitabletendency. The forces of attraction and absorption are

as strong, constant and relentless in the monetary as +nthe physical world.

"'Usury,' says Lord Bacon, 'bringeth the treasureof a realm into a few hands."'

We have seen how Mr. Ford relates in his autobio-graphy that bankers came to him in the post-war slump-a banker-created slump-and offered him a loan tohelp him through on condition that they were givencharge of the financial end of his business . Mr. Fordwas able to escape their clutches . In how many othercases, one wonders, were similar offers made, and howmany producers were as lucky as Mr . Ford was on thatoccasion? That is a very real instance of how thetentacles of the money octopus reach out in a period of

depression .

s 0




What is the moral of this for us? In New Zealandwe have taken to borrowing as a drug fiend takes todope Is there any limit to the mountain of debt which

we individually, and our public men for us collectively,

are willing to pile on our backs?

Interest charges are the real burden that is crushing

down on us today. Yet this plain obvious fact is the

last thing that we are willing to face . And when menget up and seriously suggest that the way to alleviate

our misfortunes is to borrow more money no questionis ever raised as to their sanity .

Even with money maintained at a stable level andcontrolled by financiers amiably disposed towards us,

our ever-widening bog of debt would be a menace . Withmoney controlled by interests inimical to us and subject

to violent artificially-induced variations in value we are

almost wholly in the hands of our enemies, and ourutmost endeavour should be to avoid further debts and to

reduce as far as we are able, and as rapidly as we are

able, the mountain of indebtedness already on our backs .

The forces opposed to us are capable of action on a

scale which, judged by our standards, is colossal . Manymay suppose that in face of them our only course is to

drift with the stream regardless of whether that stream

leads to destruction or not . That is a counsel of despair .

It is not given to mortals to command success, only to

strive and fight on, to learn the lesson of past mistakes,

and to make their failures the stepping stones to better

things . A man who lives by running to the pawnshopuntil he has nothing left to pawn ends his career only

in one place, and that is the gutter . The fate of a

community which follows the same course must in theend be the same .

If there is a conspiracy against civilisation, it is a

conspiracy of long standing, and those who direct it are

content to achieve their objective step by step . If in

danger of discovery they have only to ease monetaryconditions for the time being to lull suspicion to sleep .

In the end-be it soon or late-they will strike . Theenslavement of Russia was not accomplished in a day .



164

CHAPTER XIVSELF-HELP THE ONLY WAY OUT

In face of the economic crisis confronting us what

steps are we taking or proposing to take to mitigate its

effects? We read a lot in the papers about the need for

"reducing the costs of production . " To a large extent

this phrase seems to be another name for reducing wages .

So far as the farming community is concerned wages are

a minor item in the annual expenditure . In an openletter addressed by the President of the Farmers' Union,

Mr. W. J. Poison, to the Acting Prime Minister in

November last, figures were quoted showing the annual

expenditure on a 1,000-acre sheep farm and on a 120-acre

dairy farm . In the former case wages accounted for1250 out of a total of £2,650 ; in the latter for 1312 out of

11,395 . The sheep farmer was shown as paying £1,290in interest and the dairy farmer as paying 1393, and this

after the capital value of the dairy farm had been written

down by half . In both cases the interest bill is decidedly

the heaviest single item of expenditure . The committeeof enquiry into dairy farming conditions recently set up

by the Government has reported to similar effect .

There is not the least doubt that any attempt to

mitigate the evils of the slump which ignores the interest

burden is doomed to failure . Our trouble is that not only

have we suffered a very serious reduction in the total of

our national income, but that the proportions in which

the income is distributed are all out of adjustment .

A maxim for the distribution of farming income that

one sometimes hears quoted is : one-third for the rent

(in New Zealand, mortgage interest) ; one-third for the

farmer ; and one-third back into the farm . In Chapter I

we considered the position of a farmer who had bought a

farm in 1925 at a figure which worked out satisfactorily

on the above basis .

At the produce price level at which he bought the

farm, the farmer out of every £100 of income, on his

plan of expenditure had £33 for the rent and 167 for

himself and to put back into the farm . With a fifty per

cent . decline in the prices for his produce, instead of £100



SELF-HELP THE ONLY WAY OUT 165

coming in there would be only 150 . Out of that 150 the

same 133 would have to be found for the rent (mortgage

interest), leaving only 117 for expenditures for which

167 had previously been available .

The price slump would be had enough for that farmer

even though all charges were reduced in proportion to

the reduction in total income . With interest charges

standing at their old level it is, of course, simply murder .

There is a perfectly practicable way in which this

mal-distribution of our available income can be corrected .

All that is needed is for the Government to decree that

henceforth the gold content of the New Zealand pound

shall vary according to the movements of the export

produce price index compiled by the GovernmentStatistician, taking, say, the 1925 index figure as par .

The effect would be that the number of notes issuable

against a given quantity of gold would vary as the price

index moved up or down.

An enactment on these lines would mean that ourpound would fluctuate against the British pound, but it

would be a pound purchasing always the same amountof New Zealand produce.

We would make up a basketful of wool, meat, butter,

cheese, etc ., each in the proportion in which it figures in

our production, and the whole basketful representing

exactly what a British pound (113 grains of standard

gold) would buy at the 1925 average price level, or

whatever point we selected for stabilisation . Thereafter

a pound would be our name for the amount of goldnecessary from time to time to buy that basketful of

commodities . In other words our pound would be

constant in buying power and variable in gold . Todayit is constant in gold but variable in buying power.

The practical effect of this would be if, for example,

we had fixed our par point with the British pound at the

1925 level, and the general level of our produce prices

fell 50 per cent, below the 1925 level, that our poundwould be worth only 50 per cent . of an English pound .

We have seen the unhappy position of the farmer in

our illustration above, who is faced with a 50 per cent .

decline in his income as compared with 1925. Howwould he fare under the scheme sketched out above?He would receive for his produce sold in London 150 in

English pounds for every 1100 he had received in 1925 ;






our pound was based, fell below the general price levelof the goods he imported .

If the prices of imported goods had fallen at the same

rate as the gold content of our New Zealand pound hadvaried the importer would be in exactly the same position

as in 1925. His prices would remain round about the1925 level, his customers would be just as able to paythose prices as in 1925, and the importer's ratio of profit

would be the same .

The importer, as a matter of fact, would be very muchbetter off than he is today, for instead of a whollydisproportionate amount of the national income going tothe moneylenders, as is now the case with our shrunkennational income, the amount of free spendable income inthe hands of his customers, the public at large, wouldbe much increased .

What is killing trade is clearly seen if we look at the

case of the farmer who in 1925 out of every 1100 ofincome had 133 tied up in interest charges and 167spendable. With only 150 coming where there was 1100,and with 133 still going out for interest it means thatthe spendable balance is down to 117-a decline of75 per cent. in the farmer's spendable money, whereasthe farmer's total income fell only 50 per cent .

The above figures show pretty clearly that from theimporter's point of view things are half as bad again asthey would be under the plan suggested .

It may be said that the excessive share of the national

income now drawn by the moneylenders is still in thecountry. But a great part of this interest payment goesto wealthy people, and an increased expenditure by a

few people on luxury articles is no compensation for theloss of the widely distributed spending power of thepeople as a whole.

If the . fall in import prices was less than the fall in

export prices on which we based the gold content of ourpound, the importer would, naturally, suffer to thatextent. But that would be a condition in which it wasessential as a matter of public policy to restrict imports

to balance our national overseas trading account .

This plan would have a number of other advantagesat the present time . Some of these advantages are asfollows






The plan outlined above is not a fancy creation of

the author's. It is known as the Irving FisherCompensated Dollar Plan. This plan was put forwardas far back as 1911 by Professor Fisher, formerlyProfessor of Economics at Yale University in the United

States, and has been under criticism ever since . Its

technical details will be found fully set out in the

300 pages of Professor Fisher's book, "Stabilising the

Dollar," published in 1920 . More briefly it is discussed

in Professor Fisher's later book, "The Money Illusion,"

published in 1928 .

The Fisher plan was considered by New Zealand'snow defunct Board of Trade in its annual report for1919, when it was seeking a remedy for the greatfluctuation in the value of money brought about after the

war. After a lengthy review of the Fisher plan the Boardsaid

"So hopeful does Professor Fisher's suggested remedy

appear to the Board that we earnestly recommend it to

the serious attention of the Government . "

So far from getting the serious attention of theGovernment the Fisher plan seems never to have received

any attention at all .

Sir Josiah Stamp, one of Britain's foremost economists

and a director of the Bank of England, has expressed the

opinion that Professor Fisher represents the "bestinformed opinion" on the subject of money .

In an article published in the "United States Banker"

for January, 1929, Professor Robert H. Tucker ofWashington and Lee University, wrote of "Our Unstable

Standard of Value. " Declaring the Fisher scheme ofmoney stabilisiation to be the most complete andthoroughgoing of any put forward, Professor Tuckersaid

"It is not a panacea, or a substitute for economy or

for efficient management . It is not a guarantee of a

perfect system of distribution. But, as has been pointed

out, it would reveal the facts, instead of obscuring them,

as the present unstable dollar (pound) obscures them,

and directly or indirectly accomplish more than anyother reform proposed in the world today . "

Sir Josiah Stamp's opinion is very similar as to the

urgency of action : "Everything," he says, "depends on

whether our combined and international wisdom can



170 THE TRUTH ABOUT THE SLUMPmaster the next stage of monetary science . Certainly the

old ideas and practices will no longer serve . I have long

said that a new development in monetary knowledge is

the most important single problem of our age-moreimportant than unemployment, industrial peace, orcapitalism, because fundamental to them all . "

After twenty years of criticism the Fisher plan-it is

really much older than Professor Fisher, for you will find

the rudiments of it in Professor Devon's book on "Money"

published in 1870-and in many other works of foremost

writers-this plan still commands the attention ofa l l

writers on monetary policy . Everything has been done

with it except try it .

People may say, "Oh, yes, it is a very nice idea, but

quite out of the question for New Zealand to think of

doing anything about it on its own account ." This is not

the idea of Professor Fisher . In a letter written in re-

sponse to enquiry by the present writer under date of

October 14, 1930, Professor Fisher said

"You ask me if I think New Zealand could undertake

to put into operation the `compensated money unit plan'

without reference to any other countries . I would reply

that I think she could, but that it would be very much

better if she could induce the nations of the British

Empire to adopt the plan at the same time . "

That is clear enough . Undoubtedly it would be much

better for the rest of the Empire to adopt the plan with

us . But we will get nowhere if we wait for that tohappen. We need immediate present relief . The bestway to induce the rest of the Empire to fall into line is

to make a start here, and let them see for themselves

what the plan is like in operation .

*

Various plans for stabilising money have been put

forward of recent years . The late Professor Lehfeldt of

South Africa, for instance, advocated internationalcontrol of the world's goldmines in order to dig gold,

even at a loss, so as to increase the supply . The moneyinterest diligently talks of universal central banking as

the way to stabilisation . This was what the moneypower told the people of the United States when thecentral banking swindle was put across in that country .

They have put central banking across in Europe with

the Bank of International Settlements, which Sir Otto




Ernst Niemeyer has told us is the hope of the world . ACentral Bank Bill is in course of being pushed through

the Comonwealth Parliament at the time of writing . Asfor New Zealand, the two emissaries of the Bank ofEngland, Sir Otto Ernst Niemeyer and ProfessorTheodor Emanuel Gugenheim Gregory, were strongly ofopinion that we also should have a central bank . Weshall be wise people if we have nothing of the sort while

money is under its present control .

Perhaps some of our learned economists who advocate

central banking will tell us why if it failed soignominiously to provide the promised stabilisation in

the United States any better results are likely to be

secured by establishing it elsewhere?

* *

It is quite possible, of course, that the Money Power

may really intend to use central banks to stabilise money .

For example, it might make money still dearer even than

it is today, and then stabilise it on this depressed price

level for all time, or for a sufficient time to bankrupt theBritish Empire and every component part of it. Ofcourse there would be enough "senseless phraseology"

spoken and printed to bewilder the public and to have

some of our local financiers and pedants falling over one

another to lick the boots of those who were about to

destroy us .

*

There was recently formed in the United States aStable Money Association . This association announces

in issue No. 3 of its bulletin, "S.M.A . News Service,"

under date of April, 1930, that it is "the advocate of no

specific solution." Its object is to direct public attention

to the problem, and to promote research and discussion .

It is obvious, of course, that an association which

advocates no specific solution can itself get nowhere .

You have got to do something in particular if you do

anything at all. And a body of men assembled togetherand pledged to do nothing in particular on a vital problem

is not exactly an inspiring spectacle .

The president of this association is Mr . F. A. Delano,

deputy chairman of the Federal Reserve Bank ofRichmond. Among the vice-presidents are Mr . Otto H .

Kahn, partner in Kuhn, Loeb and Company ; General

G C. Dawes, for nearly thirty years head of the Central

Trust Company of Illinois; Mr. F. H. Sisson, vice-










in extricating ourselves from this particular bog .

Our salvation lies in doing things, not in talking,

arguing and wrangling about what we shall do . Atpresent we talk and flounder while the money interest

acts with silence and certainty . We are like people who

squabble all day about the particular brand of insect

powder to use to rid the house of vermin. In everyremedy advanced the money interest will pick holes and

discover defects . If we wait for the perfect remedy we

will wait for ever . The Fisher plan is practicable and

capable of immediate adoption .



176 THETRUTH ABOUT THE SLUMP

CHAPTER XVTHE BASIS OF SECURITY .

The land is the basis of all wealth, and if the farmer

lives in a state of insecurity it is impossible for the rest

of the community to be secure . With the farmer up in

the air financially, everybody else is up in the air, and

particularly so in a country like New Zealand . This fact

was very clearly recognised by the ingenious concocter

of the "Protocols of the Learned Elders of Zion," whoever

he may have been. It was obvious to him that to make

the money power supreme over the community thelanded interest must be kept at its "lowest possible ebb . "

If the people live in freedom on the land they will still

be secure even though the moneychangers have turnedthe temple into a den of thieves . It is thus of vital

importance to the money power to entrap the tiller of the

soil and the husbandman in the toils of debt .

This has been very completely achieved in NewZealand . Half a century ago a Conservative Minister of

Lands told Parliament that the only alternative he could

see before the farmers of New Zealand was to be either

the tenants of the moneylenders or the tenants of Crown .

Crown tenancy is of no use at all to the money power

as it cannot take away the land by enticing the farmer

into debt-not that he needs much enticement, for going

into debt has become as natural to a New Zealander as

sucking in his mother's milk . For some years we didhave Crown leaseholds that were inalienable, but the

moneylending interest soon saw to it that these leases

were done away with.

One current proposal is to alleviate the farmers'

distress by de-rating rural lands . It may be well-intentioned, but what is its effect? It means that in order

to enable the farmer to go on paying his interest bill he is

to be relieved of payment of local rates . The money forthese rates is to come from some other source, this source

being the towns. The proposition is thus that the towns-

people shall be roped in to pay the farmers' rates . Boiled

down it means that the townspeople as well as the

farmers are to be forced to work for the farmers'



THE BASIS OF SECURITY 177

mortgagees, and are to be robbed of their earnings in

order to keep up the value of the mortgagees' security .

With no rates the land will be worth more to themortgagees than before, but the let-off in rates will not

suffice to save the farmers, They need a lot more help

than that

What the farm mortgage total is is not very clearly

revealed in New Zealand statistics as no complete figures

are collected . Figures published in the Government year

book for 1930 deal with the mortgages as shown in40,494 rural land tax returns . These holdings total

23,418,000 acres of an unimproved value of 1148,130,000,

and the mortgages on them amount to 1109, 789,000 . Thecapital value is not given, but the total unimproved value

of all rural land is 1221,000,000 and the total capital value

is 1351,000,000, or roughly half as much again as theunimproved value .

So far as they go the figures indicate that the whole

of the rural lands of the Dominion are mortgaged toabout half their capital value as shown on the Govern-

ment valuation roll, all except a small fraction of such

valuations having been made prior to 1926. If these

capital values are written down by half we have theposition that the mortgages equal the whole capital value

of the rural land in the country and that the farming

population has just about no equity at all in -the land it

occupies .

Of course not all the farmers are in the same boat .

The little men are in up to their necks, about 20,000 of

them having mortages of 11,000 and more per 11,000 of

unimproved value, Government valuation. One wholegroup of these small farmers, for instance, is shown with

11,412 per 11,000 unimproved value round their necks .

The greater part of the land in the country is still

occupied in very large holdings, and many of these large

holdings are clear of mortgage . A regrettable feature

of the official figures is that no clue is given to the

number of holdings that are unencumbered. Anyway,pretty well right through the piece the rule is that the

more valuable the holding the smaller the averagemortgage per 11,000 of unimproved value, the biggest

class of land holders coming down to 130 per 11,000 .

The figures indicate quite clearly that if anything at

all is to be done to help the farmer it will only be done



178 THE TRUTH ABOUT THE SLUMPby getting him out of this bog of debt . In cold, hard

fact there is nothing to stop us from doing this . Nor can

we get our country into any sound state of prosperityuntil we do it . What we lack is the will to act .

The steps that require to he taken to put our farmers

in a position of security are really quite simple in

principle . One perfectly workable plan is set out in the

"Rural Report of the Liberal Land Committee, 1923-25,"

issued by the British Liberal Party, and published byMessrs. Hodder & Stoughton, Ltd., at the modest priceof one shilling net .

In the 584 pages of that report is embodied a mass of

invaluable information on the land question, and anexposition of the grounds on which the policy adopted is

founded . That policy was designed to give the tenant

farmers of Britain security in the possession of their

holdings and an equitable return for their labours .

Our problem can be solved by exactly the samemeans . The needs of our farmers are the same. TheEnglish problem is private landlordism . Our problem is

mortgaged freeholds, which is merely disguised land-

lordism . ' Where they have rack-renting in Britain we

have overmortgaged freeholds .

Our system is more vicious than the British system,

for whereas a tenant-farmer there who is turned off

through failure to meet his rent loses all the labour he

has put into the farm, with us the farmer turned out by

his mortgagee loses all the capital he put into buying the

farm, as well as his labour in improving it . When landvalues slump there is no share and share alike under the

moneylenders' system . The farmer is stripped of every-

thing he owns on the farm or off it before the mortgagee

loses so much as a brass farthing . The man who has notlifted a hand in labour gets all, the toiler and producer

loses all .

The British Liberal Party land programme is based

on the fact that in English law no subject can acquire

an absolute title to land . The greatest interest in land

which a subject can have is a tenancy in fee simple . In

former days that tenancy carried duties and obligations .

These were gradually whittled down to nothing. TheLiberal policy proposes that upon an appointed day the

Crown shall resume its rights .

Upon this taking place the State will have the right







THE BASIS OF SECURITY 181

entitled to sell their lands without obtaining the consent

of their mortgagees, but except where the sale prices are

fixed by the Acts, the mortgagees get notice of thepurchase prices and can object to them if they are shown

to be inequitable . Mortgagees receive notice of the

proceedings for sale, and, when the purchase money hasbeen advanced and lodged in Court for distribution tothe parties who may be found legally entitled thereto, the

mortgagees attend and prove their claims before theExaminer, who investigates the title. The claims arepaid out of the purchase money in so far as the money isavailable to meet them . . . .

"We do not believe that many cases of hardshipwould arise . In any case such hardships cannot beweighed in the balance against the present accumulatedhardships of rural life, and the present danger to national

stability, and great nations cannot be deflected frompursuing great policies by the possible grievances of

problematical minorities . Whatever, for instance, may

be the case for or against Prohibition in the UnitedStates, no one would argue that the interest of persons

who had mortgages on drink-trade premises should havebeen allowed to tie the hands of the American nation

, ,

A most important point in the British Liberal Partypolicy is the method of payment for the land . This is

set out in clause 245 of the policy, as follows

"The landlord's annuity shall be, in principle,

perpetual. But the State may make such arrangements as

are equitable, by sinking fund, drawings or other means,to redeem the annuities at any time in any way equitableto all parties . The annuity shall be paid in income bondsor in such other way as is necessary to enable therecipient to realise its value at any time in the open

market."

The essential thing is that the State can conduct thescheme without recourse to borrowed money . But itmay, at its convenience from surplus revenue, or by anyother means, buy in the annuity bonds on equitableterms . There is, however, no obligation on the Stateto redeem the annuities .

Under the Irish Land Purchase Acts passed by theBritish Parliament the mortgagees were paid in cash .





THE BASIS OF SECURITY 1 83

There is no warrant whatsoever for giving the mortgageemore than he is entitled to at present .

The position is amply met if the State pays out income

bonds backed with the State guarantee of a perpetualannuity and leaves the mortgagee to dispose of these inthe open market whenever he wishes to recover his

principal .

To say that the annuity bonds, although backed bythe credit of the community as a whole, are not going tobe saleable, is to say that the surplus wealth seekinginvestment is going to dry up or decline . So long asthere is surplus wealth in the community its ownersmust lend it . They have no option in the matter . If it

remains idle on their hands it either deteriorates and

perishes or at best produces nothing. In either event itceases temporarily or permanently to have value. Tomaintain its value its holder must invest it . No invest-ment for that surplus wealth can offer better securitythan one that is backed by the credit of the State . Solong as there is surplus wealth seeking investment the

present cash value attaching to all forms of securitydepends on the degree of certainty attaching to the

income to be yielded. If that income is uncertain thesecurity declines in value, no matter what its face value

or however assured the ultimate repayment of the

principal sum .

People do not buy Government stock maturing infifty years time because they expect precisely at themoment of maturity to have a use for the principal sumthey have invested. They buy Government stockbecause its absolutely assured income makes it at alltimes the most saleable of securities. Its present valuedepends on the demand for such assured income .

Here, for instance, is what a formerly well-knownfinancial writer has to say about irredeemable stocks.

The extract is from Mr. Charles Duguid's little book,"How to Read the Money Article" (Effingham Wilson,1901), pages 55_56 :

"A redeemable stock, of course, is one which will be

paid off: in which our investment must sooner or later

cease . We shall go on drawing our interest until thedate of redemption, but when that date arrives our capital

will be paid back. However much we may desire tocontinue, however convenient it is to receive the nice





CHAPTER XVICONCLUSION .

The remedies proposed in the two preceding chapters

go hand in hand . The second would be dangerouswithout the first, and the first would be incomplete

without the second . Taken together they offer animmediately practicable means of relieving the acuteness

of the present depression and of placing our country

in a position of relative security . Both these steps are

of the utmost importance to the entire population of the

Dominion for they go directly to the root of our troubles .

Instead of a multitude of re-adjustments, the whole

of which will be again dislocated immediately another

variation in the purchasing power of gold occurs-and

such variation is highly probable-all that we require i s

the passing of two laws, both quite simple in principle .

The first will enact that the gold content of our pound

is to vary according to the movement of the export index

number, the average figure for, say, the year 1925, or

some other suitable point, being taken as par. Theintervals at which the adjustments are to be made will

be prescribed, the exact manner in which the indexnumber is to be calculated will be laid down, and a small

board will be set up to certify to the accuracy of the .

index figure . The board's task will be important, and it

would be well to have represented on it the variousinterests affected as far as practicable, say, onerepresentative each of the banks, the Chambers ofCommerce, the Farmers' Union, and the Trades andLabour Councils .

The second law will enact that any farmer on making

application, and on being certified by the Land Board as

competent, will be given the option of having his freehold

converted into a Crown lease . The land will be valued

at its true productive capacity, and the basis on which

the valuation is to be made will require to be verycarefully set out . The farmer will be offered the holding

at a rental based on this valuation . The land will be

paid for in Government land bonds yielding an incomeequal to this rent, less administrative charges .

185











:190 THE TRUTH ABOUT THE SLUMP

ment. Accepting such a position, it becomes a merefront, a facade behind which these private persons rule

the country . So far as it serves the people at all it fills

the office, not of governing, but of mediating . The seatof sovereignity must be sought elsewhere . This state-

ment may be thought extreme, but it is in accord with

every recognised principle of sound government .

* *

That our institutions should be falling into such

anarchical chaos is due to the monopoly given to gold as

the sole legal tender . These legal tender enactments had

their origin when the State in olden times sought to rob

the people by debasing the coinage . To make bad moneypass current the compulsion of law was required . Tothis root can our present troubles be traced .

Nothing is more pernicious and misleading than the

idea that the measure of value must in itself have value .

Nobody exposed this fallacy more clearly than oldBishop Berkeley when he asked in his celebrated"Ouerist," published over two centuries ago

"Whether money be not only useful in so far as it

stirreth to industry, enabling men to mutually participate

in each other's industry and the fruits of each other's

labour? . . .

"Whether the terms, crown-livre-pounds sterling,etc ., are not to be considered as exponents of denomina-

tions? And whether gold, silver and paper are nottickets or counters for reckoning, recording, or transfer-

ring such denominations?

"Whether the denominations being retained, although

the bullion were gone, things might not nevertheless be

rated, bought and sold-industry promoted, and acirculation of commerce maintained?"

What we all need to realise is precisely that money is

merely a ticket to goods and services . This ticket no

more needs to have an intrinsic value in itself than a

theatre ticket needs to be made of gold or silver to be

worth having. Our commerce is in the same sort of amess that travel would be in if it were decreed that no

rail or steamer ticket could be issued unless made of

platinum . The amount of travelling that could be done

would thus be entirely regulated by the amount ofplatinum in existence . The cost of travel would depend






and creed, this fact should not inspire us with feelings of

ill-will towards persons of that race . It is given to no

man to control the accident of his birth . Each individual

must be judged by his own actions and associations . In

writing this book the author would gladly have omitted

from his pages all reference to race and creed had it been

in any wise possible for him to have done so . Nothingis further from the author's desire than to inspire his

readers with feelings of hatred or aversion towards Jews

because they are Jews. Christian history has beenstained by horrible persecutions of the Jews and the most

shocking outrage and brutality have been practised upon

these unfortunate people . Hatred begets only hatredand makes bad go to worse. It is in no such spirit that

we shall work out our salvation . Even a little reflection

will suffice to show that the international money power,

though markedly Jewish in its personnel, has yetsacrificed the bulk of the Jews as ruthlessly to its

ambitions as it has sacrificed persons of other race and

creed . Nor is that power exclusively Jewish by anymeans.

If by past persecutions, particularly on the Continent

of Europe, persons of Jewish race have been driven into

underground activity and combination, and have aspired

to bring about a state of things whereunder they may

dominate not only their former oppressors but the people

of all nations, we would be foolish in the extreme to

close our eyes to the evidence of such conspiracy . Ourdesire, and our right, is for freedom to live our lives in

our own way, and not in subjection to an alien force

subduing our institutions to its will .

* * * *

We must face the fact that monopoly and freedom are

ill-matched bedfellows . The legalised monopoly givento gold is a canker which has eaten at the heart of free

institutions . It has become the parent of innumerable

lesser monopolies in subjection to it . It is the mainspring

of the force driving men on to socialism . And socialism

under present conditions is likely to mean little more

than the total subjection of the people to the money

power . Controlling the executive of a socialised state

that power will then control everything . The collabora-

tion of international finance and international revolu-

tionaries in the production in Russia of the phenomena

known under the name of Bolshevism has provided a



CONCLUSION 193

very real and present instance of what this means .

Many sincere and self-sacrificing people have pinned

their faith to Socialism as the hope of humanity . It is

an idle hope so long as the commerce of the world is

directed by centralised 'gold control, and so long as

Socialism is pursued by paths meaning the piling ofillimitable and completely unpayable debt upon the backs

of the people . And that is the direction in which each

instalment of Socialism has so far taken us .

Many equally sincere persons are of opinion that

freedom and progress will best be found under, private

enterprise and free competition . Private enterprise and

free competition can only exist among a people that is

free . The gold monopoly has prevented the monetisation

of wealth and has caused a purely artificial scarcity of the

means of payment. Competitive effort is strangled under

it, and all over the world, in every country, the small

capitalist is being slowly but surely pushed to the wall

and crushed out of existence . Soon all that will remain

will be great non-competitive trusts and rings, all in total

subjection to the money power . No sincere believer in

private enterprise can be a supporter of monopoly . Yetwhat do we find in this country? It is forbidden by law

to start a bank without great expense and a special act

of Parliament, the money monopoly is buttressed by law

in every way . At the same time in almost everytrade and profession, are rings, combinations and close

corporations, all set up and designed expressly to check

competition and strangle enterprise . The predatorynature of these institutions and their failure to render

adequate service for the reward they demand is more than

anything else driving the people to seek relief in

socialism . It is because advocates of private enterprise

and free competition have been faithless to what they

preach that this system is now detested by thousands

upon thousands of the people .

The money monopoly is the parent of all other

monopolies, and it cannot be too earnestly attacked by

all who desire to see the survival of free institutions .

The Fisher stabilisation plan is no more than an

immediate practicable means of escape from an intoler-

able position . It is but a first step towards better things,

and to no question can the student turn his attention with

more profit to his fellows than to mastery of the problem

of providing a medium of exchange adequate to the needs









POSTSCRIPT 197

Secretary of the Treasury are-hereby charged with the

duty of making effective this policy . "

In moving the bill the chairman of the House Bank-

ing, and Currency Committee, Mr. Henry B . Steagall,

sai . :

"Mr. Speaker, this bill represents years of carefulstudy and-mature deliberation, and it is reported with the

unanimous judgment of the Banking and Currency Com-

mittee of .this House . . . No legislation since I haveserved on that committee was ever more fully discussedor- more, seriously and thoroughly considered .

.."The proposal i s not radical. It is not extreme : it is

not dangerous. It is conservative and constructive . It

comes before you with a unanimous report of the com-mittee, after hearing discussions by many of the ablesteconomists of the country, by - members of the Federal

Reserve Board, and by persons in other positions of high

authority. It -is backed by nation-wide sentiment among

farmers and business interests throughout the country."

Mr. Steagall pointed out that in 1920 and 1921 theyhad seen the power - of control possessed by the Federal

Reserve exercised in currency contraction and credit re-

striction to the extent of about $2,000,000,000 with the

result that prices were cut in half and confusion and dis-

tress .. reigned . Then the policy was reversed and ex-

pansion and liberal credit substituted, and prosperity re-

vived for a number of years . . In 1929 again there was an-

other horrible contraction of currency and credit with aconsequent decline in commodity prices that brought de-

pression and panic and a wave. of bank failures and bank-

ruptcy to all classes .

Although passed by a majority of nearly five to one

by the House, the Goldsborough Bill was rejected with-

out a :division by the Senate. The "New York Times"(see page 95) stated that even had the Senate passed the

bill President Hoover was certain to veto it .

* * *

Although the Macmillan Committee in its mainreport looked to international monetary control to remedy

the depression, six of its fourteen members saw no diffi-

culty in action by an individual State . Included in that

six were Mr. Reginald McKenna, chairman of the Mid-land Bank, and Mr. Keynes, the most quoted British



198 THE TRUTH ABOUTTHE SLUMPmonetary authority of the day . In their addendum they

said

"Theoretically the most obvious and comprehensive

method of effecting the desired object [of adjustment to

the slump] would be to leave money incomes alone but - t o

change the monetary standard . . . This would bring the

direct, initial benefit to those industries which need it

most, namely to the foreign trade industries. It wouldinvolve no interference with contract . . . It would affect

every class of income without the necessity of any other

especial measures .For a country which was not an inter-

national banker and was not owed large sums fromabroad fixed in terms of sterling this would be the

simplest solution . "

That paragraph appears under the heading "Devalu-

ation," which term is synonymous with "inflation", "re-

flation", and "depreciation of the currency" . Of thevarious terms "reflation" carries more meaning and signi-

fies a reversal of deflation until normal conditions are

restored . At this point is it not inappropriate to insert . a

brief passage from the evidence of Professor Irving

Fisher, the famous American economist, given in March

last on the Goldsborough bill

"It is discouraging and sickening to read all that stuff

spouted by the inerudite about the fear of an ìnflation' .

They simply do not know anything about the real situ-

ation . They do not know where, when, nor how theirown bread is buttered . Their policy has killed agricul-

ture, and now the inability of agriculture to consume as

well as to produce is killing all industry and investments . "

Equally emphatic was another leading Americaneconomist, Professor Willford I . King, who occupies the

chair of economics in New York University . Professor

King in the course of his statement on the Goldsborough

bill said he saw no economic difficulty at all in the wayof any country raising its own price level to any point it

desired . All that was necessary was to put more money

into circulation until the desired point was reached and

thereafter to regulate the quantity of money in circulation

to keep values steady at that level . To regulate moneyscientifically would be something new, but ProfessorKing said he failed to see that this was an objection . "Of

course," he said, "the first man . who went up in an air



POSTSCRIPT 199

plane was something new ; and if you never begin you

never get anywhere." If they were going to wait to getan agreement among all the nations of the world to

stabilise they might just as well quit in his opinion .

Exchange rates would, of course, vary, and thisalarmed some people . "I do not believe," said Professor

King, "you can find a shred of evidence that variation in

the exchange rate hurts trade . " The statistics of trade

between the United States and Europe in the 1920's when

there was rapid variation in exchange rates lent no sup-

port to the view that these variations made trade betteror worse .

The proof of the pudding is in the eating . Turningfrom theory to practice, one finds Argentina bearing wit . -

ness to the advantage derived from the deliberate depreci-

ation of its currency . In a memorandum published inLondon in July 1931 the Ministry of Finance recorded a

great improvement in the trade balance . It was added :

"The depreciation of the peso, which stands at 26

per cent. on the par value, has been an important con-

tributing cause of this improvement of the trade balance .

It has stimulated exports by cheapening the cost of

Argentine products [in other currencies] and has re-

stricted imports by making them dear in terms of pesos .

This is the outcome of deliberate policy, for the newMinistry of Finance has throughout taken care to prevent

any appreciation of the currency which would have hind-

ered the export trade and encouraged imports. "

In Australia currency depreciation has taken place

to some extent as the result of Government deficits, and

the Australian pound has thus been maintained 25 per

cent. nearer to the pre-slump level than sterling. Thishas considerably eased the situation in that country and

been a substantial benefit to the primary production on

which depends the national solvency .

The policy so far pursued in New Zealand has been

in the opposite direction, and at the time of writing the

Government is committed to a policy of maximum de-flation by means of a proposed central banking company

to be established on the basis of parity of exchange with

sterling. This private corporation is to be set up on the

advice of Sir Otto Ernst Niemeyer to "form a link with

the other central banks of the world . " .



200 THE TRUTH-ABOUT-THE SLUMPIn .Britain :a considerable body of opinion now exists

that - n o.' particular benefit to the public is resulting from

the intimate contacts established between the centralbanks of the world . Mr. Montagu Norman, Governorof the Bank . of England, still travels as diligently as ever

to consult the Federal Reserve in New York, and foreign

financial interests are still as strongly represented on the

directorate of the Bank of England . Lord Beaverb.rook

in his newspapers, the "Sunday Express" and "DailyExpress", in May last was, however, courageously urging

a national campaign to throw the foreign bankers off the

board and to restore the money power to Parliament .* *The chief central bank of the world is the United

States Federal Reserve system . Nothing is more remark-

able in the evidence of the numerous witnesses on the

Goldsborough bill than their general distrust of that

institution and disbelief in any genuine desire on the part

of those controlling it to relieve the present depression .

Even ex-Senator Owen, who in 1913 as chairman of

the Senate Banking and Currency Committee had spon-sored the Federal Reserve Act itself, declared that the

slumps of 1920 and 1929 had both been precipitated by

the "deliberate contraction of credit . "

Mr. Owen was of opinion that if improvement was

desired the Federal Reserve authorities must be directly

ordered to restore conditions to normal . Professor King,

already quoted above, was of similar opinion : that unless

it was mandatory "they will do nothing whatever about

i t . Professor Irving Fisher recalled that the Federal

Reserve had been created to function as a commonreservoir for the banks in times of emergency : in prac-

tice when the emergency came the tap was turned off at

the reservoir and the banks were worse off than before

they had pooled their resources .

On January 24th last Mr. Paul M Warburg, a promi-

nent founder of the Federal Reserve system, died in New

York in his 64th year . According to the "New YorkTimes" his death followed on "overwork, the result of a

strenuous summer spent in following the Europeanc r i s i s . "

Through the present deflation the Governor of the



POSTSCRIPT 201

Federal Reserve Board has been Mr . Eugene Meyer.

According to the "New York Journal" of January 19 last

Mr. Meyer is 56, and is the son of a successful Jewishstockbroker of California, formerly a partner in the inter-

national banking house of Lazard Freres, in which Mr .

Meyer himself served his apprenticeship . During thewar he was associated with Mr . Bernard M . Baruch, who

as head of the War Industries Board was the war dicta-

tor of America and controlled the delivery of supplies to

the Allies. Mr. Meyer was also stated to be controlling

the Reconstruction Finance Corporation, recently set upby Congress, and the Land Bank system . It should be

noted that the Federal Reserve system in addition to the

Board includes a powerful Advisory Council and twelve

regional Federal Reserve Banks . Responsibility for its

policies is thus not readily located by outsiders .

The Federal Reserve system has been trenchantlyattacked in Congress during the past year by Mr . Louis

T. McFadden, for twelve years up to 1931 chairman of theHouse of Representatives Banking and Currency Com-mittee, and thus in a position to know what he is talking

about. Mr. McFadden is a Republican (Conservative) inpolitics and is an ex-president of the PennsylvaniaBankers' Association . In opposing President Hoover's

policy of relieving Germany of her obligations Mr .

McFadden in Congress on December 15 last spo,&e asfollows

"If the German international financiers of Wall

Street . . . had not had this job waiting to be done, Herbert

Hoover would never have been elected President of the

United States . . . I wish to emphasise the fact that inter-

national finance is almost exclusively German . . . After

the world war Germany fell into the hands of Germaninternational bankers . . . There is no country in the world

to-day of which the inhabitants are so enslaved as are the

Germans. . .

"Through the Federal Reserve Board and the Fede-

ral Reserve Banks over $30,000,000,000 over and above

the German bonds that have been sold here has beenpumpedd into Germany. . . The Federal Reserve Boardand the Federal Reserve Banks have pumped so manybillions of dollars into Germany that they dare not name

the total .




"Do you know that Germany has been lending ourmoney to Soviet Russia as fast as she could get it out

of this country from the Federal Reserve Board andbanks? Do you know that she is the author of the Five-

Year Plan ; that she has armed and supplied Soviet

Russia with our money? Do you know that Germanyand Soviet Russia are one in military and industrial mat-

ters . . . I say that the Federal Reserve Banks have pur-

chased and rediscounted false, worthless, fictitious anduncollectible acceptances drawn in Germany . . . . TheGovernment's money in the designated depositaries is

gone, leaving nothing but this worthless paper behind it . "

Referring to the New York Stock Exchange collapse

which initiated the present slump, Mr . McFadden said :

"It was not accidental . It was a carefully contrived

occurrence . . . The international bankers sought to bring

about a condition of despair here so that they might

emerge as the rulers of us a l l . "

* * *

In passing it may be noted that the opinion that the

Hoover moratorium was designed mainly to benefit Ger-

many was strongly voiced by various speakers in a warm

debate- in the French Chamber of Deputies on June 26,

1931 . It was pointed out that under the Young Plan for

the payment of German Reparations it was necessary for

the German Government to give 90 days' notice of inten-

tion to default, whereupon commissions of investigation

at once came into action to assess what relief was needed .

By having President Hoover intervene the Germans were

enabled to default without investigation . Furthermore,

the time chosen was significant : on June 15 Britain and

France paid their half-year's interest on the American

debt ; on June 17 Germany announced that she could not

pay ; and on June 20 President Hoover issued his mora-

torium proposal . Thus immediately the cash had beenextracted from the former Allies things began to happen .

Within a few weeks a financial crisis followed inBritain consequent on these proceedings, and the Govern-

ment to keep going secured an immediate foreign loan,

half from America and half from France . According to a

speech made on August 26, 1931, by Dr . Addison, Minis-

ter of Agriculture in the Labour Cabinet; a condition



POSTSCRIPT 203

imposed by the financiers finding the money was that noeconomy made by Britain would be satisfactory unless itincluded a reduction in the allowance to a man out of

work from 17s to 15s 4d a week . Dr. Addison said thataccording to the reports made to Cabinet the demandwas very emphatic . It was perfectly fair, he considered,

for the lenders to say that the Budget should be bal-anced, but it was utterly unconstitutional to have them

dictate to the Government and Parliament in what waythe nation should economise .

Mr. Ramsay MacDonald impressively and indignant-ly denied that there had been dictation by the Bank ofEngland : the officers of the Bank, he said, had merelyadvised the Government of the conditions on which a

loan could be~ obtained . As Dr. Addison had not allegeddictation by the Bank of England this seeming denialreally denied nothing.

Why should foreign financiers desire to hit the poor-

est class in Britain by cutting down their pittance? If

they desired to promote discontent and pave the way torevolution their action would be intelligible . It is not

intelligible otherwise so far as the writer can see .

* * *

Mr. McFadden's allegations concerning the accept-ance of worthless European paper by the Federal Re-serve system were confirmed within a few months of his

speech by the revelation of the colossal Kreuger frauds .

The means by which these operations were conductedwere described at length by Mr. McFadden in a speech in

Congress on June 10 last in the course of which he said

"Mr. Chairman, we have in this country one of the mostcorrupt institutions the world has ever known . I referto the Federal Reserve Board and the Federal ReserveBanks. This evil institution has impoverished and ruinedthe people of the United States ; has bankrupted itself ;

and has practically bankrupted our Government."

Mr. McFadden proceeded to declare that these insti-tutions had been established by bankers who came from

Europe and foisted them upon the country. These bank-ers, he said, took American money to finance Japan in

her war against Russia in 1904-05 . He added : "Theycreated a-reign of terror in Russia with our money to help

that war along They instigated the separate peace be-tween Germany and Russia, and thus drove a wedge be-



204 THE TRUTH ABOUT"I HE SLUMP

tween the Allies in the .. World War. They financedTrotisky's "ma'ss meetings of discontent and rebellion" in

New York. They paid Trotsky's passage from New Yorkto Russia so that he might assist in the destruction of the

Russian Empire. They, fomented and instigated - theRussian- revolution, and they placed a large fund of

American dollars at Trotsky's disposal in one of theirbranch banks in Sweden . . . "

Pointing out that not a dollar could get into circula-

tion in the United States except- on terms fixed by theFederal Reserve Banks,- Mr. McFadden dwelt at lengthon the abuse possible in the issue of Federal Reservenotes .' These notes can be issued against 40 per cent . of

gold and 60 per cent. of commercial paper. . Great quan-tities of United States currency, he said, had been. thus

issued against mere finance drafts drawn by Germans .

"If you desire to obtain the thing of value upon which

this currency is based," said Mr . McFadden, "that is, the

Limburger cheese, the whisky, the illicit drugs, or any of

the other staples-you will have a very hard time findingthem. Many of these worshipful commodities are inforeign countries . Are you going to Germany to inspectthe warehouses to see if the specified drugs are there? I

think not . And what is more I do not think you wouldfind them if you did . "

"The Government and the people of the UnitedStates have been swindled by swindlers de luxe," declared

Mr. McFadden, "to whom the acquisition of Americangold or a parcel of Federal Reserve notes presented nomore difficulty than the drawing up of a worthless accept-

ance in a country not subject to the jurisdiction of theUnited States Courts, sharpers with a strong banking'fence' on this side of the water-a fence acting as receiver

for-the worthless paper coming from abroad, endorsing itand getting the currency out of the Federal Reserve

Banks for it as quickly as possible, exchanging that for

gold; and in turn transmitting the gold to its foreignconfederates

"Such were the exploits of Ivar Kreuger. . . Every

dollar of the billions Kreuger and his gang drew out ofthis country on acceptances was drawn from the Govern-ment and people of the United States through the FederalReserve-Board and Federal Reserve Banks . The credit of



. POSTSCRIPT 205

the United States Government was peddled to him bythe Federal Reserve Board and Federal Reserve Banks

for their own private gain . That i s what the Federal

Reserve Board and the Federal Reserve Banks have beendoing for many years. They have been peddling thecredit of this Government and the signature of this Gov-

ernment to the swindlers and speculators of all nations .

That is what happens when a country forsakes its con-

stitution and gives its sovereignty over public currency

to private interests . Give them the flag and they will

sell it."

Coming from the Republican Party's ex-chairman ofthe House Banking and Currency Committee, these are

remarkable statements indeed . Nor is Mr. McFadden byany means alone in his views .

In . the Paris newspaper "Le Figaro" in April last

the far-flung activities of certain Jewish-Americanfinanciers were dealt with at length in a series of five

articles by M. Francois Coty under the heading "Finan-ciers who Sport with the World ." To this source M .

Coty traced the American policies imposed upon EuropeU_v which France is to be deprived of the German indemni-

ties which are her right and of the arms which she needs

to defend herself against the new German-Russianaggression which is menacing her . The connections

between international finance and revolutionary move-ments in all parts of the world were also dealt with in

detail by M. Coty .

Evidence of the existence of a virtual alliance . b e -

tween Germany and Russia is given by Mr. Cecil F .

Melville 'in a book published a few months ago, "TheRussian Face of Germany" (Wishart, London, 1932) .

According to Mr. Melville, Germany since 1920 has used

Russia as an arsenal for war materials (in convenient

agreement with the Five-Year plan), as a field for mili-

tary training, and a s a prospective ally with an enormousarmy trained on modern lines outside the supervision of

Europe Mr. Melville has assiduously collected infor=mation from German and Russian sources throwing light

on . these matters and he quotes his authorities . As one

reviewer remarks, if one-half ofa what he says is true the

present talk of disarmament is a farce . Britain andFrance could commit no more perilous folly than to render




themselves defenceless while Germany is being thus used

as a tool in the hands of Bolshevism and international

finance .

There has been much comment on the fact that

Russia has been freely supplied with funds from abroad

for the prosecution of the Five-Year Plan . For instance,

Mr. James W. Gerard, American Ambassador to Ger-many during the war, stated on September 18, 1931, after

a visit to Europe, that Germany "did not need any finan-

cial assistance, and that a . large percentage of the loans

from the United States was lent to Russia." Mr. Gerard

added : "If we're going to do business with Russia let us

do it directly and not through Germany which hasarranged to give Russia millions of dollars' credit to

purchase commodities in Germany . "

The London "National Review" in April last record-

ed that whereas Britain in the previous five years had

imported goods to the value of £135,000,000 from .Russia,

her exports to Russia in the same period totalled only

£25,000,000, and even this had been sold on credit . Thebalance Russia had apparently expended on purchases

made in other countries .

In the third edition of "The Alien Menace" (Boswell

Publishing Coy ., London, 1932) Lieut .-Col. A . H . Lane

quotes the following from the "British Russian Trade

Gazette and Outlook" for December, 1931 : "It must be

ironic for them (British manufacturers) to view theforced cessation of work on the giant Cunard liner, which

is attributed to this country's 'frozen' credits in Germany

-credits which have been used in great part by Germany

to finance orders from Russia . During 1931 ordersamounting to £45,000,000 have been placed with German

firms by the Soviet buying organisations . "

Colonel Lane further wrote : "Though the Commun-ists profess to hate Capitalism and order their paid agents

in England to cry 'Down with the Capitalists', the lead-

ers in Russia never fail to give the international finan-

ciers a hearty welcome whenever they visit the U.S.S.RWhen Felix M . Warburg, of New York, visited Russia in

1927 he had a great reception, and the speeches delivered

on that occasion indicated that the Bolshevist leaders and

the leaders of world finance understood each other very

well, that their aims were not dissimilar, and altogether

they were a united family working in their respective



POSTSCRIPT 207

ways for a common end ." According to M. Coty in the

"Figaro", the wife of another partner in the firm of Kuhn,

Loeb and Company was received in Russia in June, 1931,

with ceremonial exceeding that on the occasion of theRussian visit of King Amunallah of Afghanistan, and theRed Army lined the streets at the present arms .

* * * *

It is worth noting that among the manifold activities

of the Schiff-Warburg group of financiers has been aclose association with the enormous Jewish migration

from Europe to the United States . In "Jewish Life in

Modern Times" (Methuen, London, 2nd edition, 1929)Mr. Israel Cohen points out that the migration of theJews in recent times "far exceeds that of their previous

history." From statistics quoted by him it appears that

in 1897 the total Jewish population of the world was10,342,000 : in 1928 it was 15,218,734 . In 1897 there were

in North and South America 986,000 Jews, and in 1928

this number had increased to 4,640,748, of whom aboutfour million were in the United States, the largest

number of Jews in any one country in the world . MrCohen added :

"The city of New York alone contains 1,873,390

Jews who form 23 per cent. of the total population . It

can boast not only of the largest Jewish community inthe world, but of the largest known in the entire annals

of Jewish history." We are further told that Chicago

has 325,000 Jews (which is more than Great Britain), andin eleven of the principal cities of the United States is

concentrated about three-quarters of the total Jewishpopulation of that country . In Australia and New Zea-land there are 24,189 Jews, of whom 8000 are in Sydney

and 6000 in Melbourne .

A prominent organisation in connection with thismigration has been the Jewish Colonisation Association .

This was founded and endowed with £11,000,000 byBaron Maurice de Hirsch, an Austrian Jewish financierlong resident in Paris. Associated with him was SirErnest Cassel, and in 1891, according to M . Coty in the"Figaro", an American branch was formed under the sole

and independent management of the late Mr. JacobSchiff. Baron Hirsch started this off with a gift of#493,000, and it later acquired colossal funds .



208 THE TRUTH ABOUT THE SLUMPIt is curious to reflect that the actual transportation

of this Jewish addition to America's population waslargely in vessels of the Hamburg-America and NorthGerman Lloyd lines, both controlled by the bankinghouse of Warburg and Company of Hamburg.

Persecution, Mr . Cohen tells us in his book already

quoted, has been . the principal cause of the dispersion of

the Jews . Of that dispersion the Jews themselves take

two views. The orthodox regard it as a divine punish-

ment for past transgression, and believe in the coming of

a personal Messiah and the return of the Jews to Pales-

tine . The Reformers, on the other hand, regard dis-persion as the Jews' final lot, and as "the divinely appoint-

ed means for universalising the teachings of Judaism . "

The world to-day, however, provides a spectacle of a

great concentration of Jewish power . In New York there

is the concentration of Jewish financial power dominating

the entire world in its material affairs, and side by side

with it is the greatest physical concentration of the Jews

ever recorded . On the other side of the globe, there has

taken place in Russia the greatest concentration of Jewish

revolutionary activity in all history .

"When we sink we become a revolutionary prole-tariat, the subordinate officers of the revolutionary party ;

whet ve rise, there rises also our terrible power of the

purse." So wrote Theodor Herzl, founder of the Zionist

movement, in his book "A Jewish State", published

thirty-six years ago .

The enormously significant thing in the worldd to-day

is that both this power of the purse and revolutionary

activity are working in tb' direction of destroying the

entire existing order of things, and that not only are

they working in a common direction, but there is a mass

of evidence that they are working in unison .

* * * *

As some readers have asked for further evidence of

Jewish participation in the Russian revolution, it may be

pointed out that in a British Foreign Office White Paper

issued in April, 1919, is a despatch from the Netherlands

Minister at Petrograd under date of September 6, 1918,

in which occurs the following passage

"I consider the immediate suppression of Bolshevism



POSTSCRIPT 209

is the greatest issue before the world, not even excluding

the war which is still raging, and unless, as above stated,

Bolshevism is nipped in the bud immediately, it is boundto spread in one form or another over Europe and thewhole world, as it is organised by Jews who have no

nationality and whose one object is to destroy for theirown ends the existing order of things ."

- Such was the opinion of one observer on the spot

after the Bolshevists had been in power for twelvemonths In evidence given before a committee of theUnited States Senate, the Rev. Dr. G. R. Simons, former-

ly in charge of an American congregation at Petrograd,stated that in December, 1918, out of 388 members of the

government of the northern communes only 16 were real

Russians and all the rest Jews, except one Americannegro, and that 265 of these Jews came from the lowerEast Side of New York Another witness, the commer-cial attache of the United States Embassy at Petrograd,described the revolutionary leaders as two-thirds Jews,

and an officer of an American bank in Petrograd said itwas well known in Russia that three-fourths of the Bol-shevik leaders were Jews . This evidence was taken in

1919 and is in Vol. III of U.S. Senate Document No. 62,

66th Congress, 1st session .

In the London "Times" of May 10, 1920, a corres-

pondent stated that a list of the principal State function-

aries of Russia compiled from Soviet sources showedthat out of a total of 556 no less than 458 were Jewsand only 17 Russians, the rest being Letts, Germans, etc .

Innumerable books by eye-witnesses of the revolution

remark on the preponderance of Jews among the leaders,and many comment on their conduct as that of invaders

in a conquered country .

According to Bolshevist figures, as published in the

London "Times" of September 1, 1922, "the Tchekaexecuted 1,766,118 persons before being renamed thesupreme political organisation last February." Estimatesof the total loss of life in the revolution, including that

consequent on starvation and disease, put it at upwardsof twenty millions.

In his book "The Soviet Five-Year Plan" (Lane,

London, 1931) Mr. H. R. Knickerbocker says : "Theterror has become a permanent institution . . . It is much



210 THE TRUTH -ABOUTTHE SLUMPmore active to-day than three years ago . . . Methods ofthe terror heighten its dreadful effect . All arrests are

made between midnight and the dawn. .

. Most prisoners

are condemned by the collegium of the G.P.U. [secretpolice] without trial, without witnesses, without a chance

to defend themselves . . . Their execution is in secret,

their burial places unknown . The G.P.U. allows nomartyrs." Mr. Knickerbocker adds that under the G .P.U.

"the nerve net of the most extensive and intensiveespionage system in history reaches almost to each in-

dividual family in Russia . "

In his book "Art Treasures in Soviet Russia." SirMartin Conway records that although treated most kindly

in Russia, he experienced a feeling on departing into Fin-

land as though a great weight oppressing him had beenremoved . He did not notice this feeling on enteringRussia, but as the days passed it slowly accumulated .

"The sense of freedom gradually disappeared. Thougheveryone was kind one felt the presence of an oppression,

not on one-self, but all pervading. Never have I felt so

completely a stranger in a strange land ; with successive

days what at first was a dire feeling took more definite

shape and condensed into an ever-increasingly conscious

oppression . "

The highly international outlook of the rulers of Rus-

sia is evidenced by their ceaseless propaganda with aview to promoting revolution throughout the world . Such

an obsession is foreign to the Russians, but entirelycharacteristic of the international Jewish revolutionary .

The total expenditure upon this propaganda must beenormous. That it should be possible to pursue it con-temporaneously with the stupendous task of industrialis-

ing Russia is in itself evidence of the unlimited financial

resources behind Bolshevism .

Summed up, the position is that internationalfinance, by enticing the world into enormous debts and

then withholding the means of payment, is goading man-kind into the arms of the international revolutionaries

established in Russia. The remedy is to take away thegoad by restoring the means of payment. And the placeto begin is here at home in our own . country . -

A, N. FIELD .

October 31, 1932 .



APPENDIX(1) BRITISH v. CONTINENTAL FREEMASONRY

The references to Masonic activities in this book are to the

Grand Orient Freemasonry of the Continent of Europe . Thisis quite distinct from British Freemasonry, which is not connected

with it in any way . As the Encyclopaedia Britannica (1929Edition) states : "On the Continent of Europe Freemasonry hasoften developed on different lines from that of the `Mother Grand

Lodge' and Anglo-Saxon grand lodges generally, and through its

political and anti-religious tendencies has come into conflict with

the State authorities or the Roman Catholic Church . The GrandOrient of France . is an example of this, having eliminated

the paragraph referring to a belief in the `Great Architect of the

Universe' . This action led to the withdrawal of all'regular' grand lodges from association with that body . .

"Since 1910 events have proved that the breach between Latin

and Anglo-Saxon Masonry was based on a fundamentaldivergence of opinion as to the basic principles on which the

Order rests, and that this breach tends to grow wider year by

year The disastrous results of interfering in politics have been

shown by the fact that the Italian and Hungarian Governmentshave declared Freemasonry to be a danger to the State and have

suppressed it within their jurisdictions . In France opposition to

the political activities of the Grand Orient culminated in 1914 in

the formation of a new body, 'Grande Lodge Nationale

Independante et Reguliere pour la France,' which avoids politics

and insists on belief in God . This body, which has increased

rapidly in numbers, is recognised by the Grand Lodge of England .

At the same time, one by one, most of the American grand lodges

which were still in fraternal relations with the Grand Orient have

felt compelled to sever relations . "

(II) "THE ALIEN MENACE"

A strong protest against the unnecessary employment in the

British public service of persons of alien descent was made by

Lieut.-Col. A . H . Lane in 1929 in his book, "The Alien Menace"

(St. Stephen's Publishing Company, London) .

From a copy of this book in the Parliamentary Library,Wellington, the following instances quoted by Lieut .-Col. Lanewere noted :

Sir Otto Ernst Niemeyer.-"Obviously of German descent-married also to a lady of the same name-this gentleman was an

important functionary at the Treasury from 1906 until 1927 . Hewas Controller of Finance from 1922 to 1927, and during that

period, in 1924, he was also a member of the German Reparations

Committtee . On leaving the Treasury he became a .director of

the Bank of England, and in 1928 chairman of the FinancialCommittee of the League of Nations . " [In this latter office Sir

Otto Niemeyer was last year succeeded by Dr . Melchoir, partner

in Warburg's Bank, Hamburg . ]

i



i i APPENDIXSir Charles Mendl.-In charge of the Foreign News Service

since 1920, and now a Counsellor of the British Embassy atParis.

Sir Sigmund Dannreuther.-Deputy Secretary of the AirMinistry .

Sir Ernest Strohmenger .-Principal Assistant Secretary andAccountant-General to the Ministry of Health .

Mr. Berthold Schlesinger Kisch.-Controller of the LocalClearing House (Enemy Debts) and administrator of Austrianand Hungarian property in India since 1920 .

Mr. Cecil Hermann Kisch.-Secretary of the Financial Depart-ment of the India Office since 1921 .

In the case of Sir Otto Niemeyer, Lieut.-Col. Lane noted thata London periodical in August, 1921, had published whatpurported to be a correspondence between the late Dr. EllisPowell, then editor of the "Financial News," and Mr . BonarLaw, then Chancellor of the Exchequer. From this it appearedthat under date of December 18, 1918, Dr. Powell had askedwhether certain Germans named Niemeyer (vide London "Times,"December 5, 1918, p. 9), had "a near relative occupying a highposition in the Treasury and married to a German wife . '

In answer to that question, Mr . R. M. Gower, writing fivedays later from Treasury Chambers, Whitehall, said : "Mr. BonarLaw wishes me to inform you that the case of Mr.Niemeyer wasrecently considered by the committee appointed by the Govern-ment to examine the cases of persons not the children of British-born subjects who are employed in Government Departments,and that the committee had decided that it was in the nationalinterest that Mr. Niemeyer should hold the post which he occupiesin the Treasury."

In two further letters Dr. Powell pointed out that no answerhad been given to his question, which question Col . Lanerepeated, saying :

"I make no reflection on the integrity and personal characterof Sir Otto Ernst Niemeyer . I publish the above facts becauseI feel strongly that it should be known to the British people towhat extent our Government services are directed by officials ofalien extraction."

Attention was further directed by Lieut .-Col. Lane to theremarkable fact that of the "accredited and recognised teachers"of the London School of Economics no less than one-third "appearby their names not to be pure-blooded Britishers." Thisinstitution was founded by Mr . Sidney Webb, now Lord Passfield

and Secretary of State for the 'Dominions in the present BritishGovernment. The names of the teachers referred to and thesubjects taught by them were stated to be as follows :

Frederick Rudolf Mackley de Paula, O.B.E. (Accountancy andBusiness Method) .

Edith Verena Eckhard (Sociology) .

Hermann Finer (Public Administration and Political ndEconomic Science) .



APPENDIXMorris Ginsberg (Sociology) .

Theodor Emanuel Gugenheim Gregory (Currency andBanking) .

Harold Joseph Laski (Political Science) .

Hersch- Lauterpracht (International Law) .

Bronislaw Malinowski (Anthropology) .

Alexander Feliksovich Meyendorff (Russian Institutions and

Economics) .

Charles Gabriel Seligman (Ethnology) .

Sir Henry Herman Slesser (Schloesser), K.C . . MP. (Industrial

Law) .

Edward Alexander Westermarck (Sociology) .

Abraham Wolf (Logic and Scientific Method) .

"There are also," remarked Colonel Lane, "citizens of the

U.S.A among the remaining àccredited and recognised teacher'

in this institution, which receives from the British Government a

grant of 140,000 a year." As Colonel Lane remarks, one wishesto make no reflection on the competence of the above persons,

but it is difficult to believe that equally competent teachers of more

distinctly British blood are not available for the instruction of

British youth in the conduct of British commerce .

PERSIII) WHO'S WHO:THIS BOgS MENTIONED INBelloc, Joseph Hilaire Pierre.-Born 1870. Author. Born in

France, his father being French and his mother English .

Naturalised in 1902 . M.P. for Salford, 1906-10, first as aLiberal then as an Independent . Author of novels, essays,

histories, etc .

Buchanan, Rt. Hon. Sir George.-Born 1854. British Minister toBulgaria, 1903-08 ; to Holland, 1908-10 ; to Russia, 1910-18 ;

to Italy, 1919-21 . Retired from the Diplomatic Service in 1921 .

Cagliostro, Count Alessandro.-1743-1795 . Italian alchemist and

impostor . A purveyor of love philtres, elixirs of youth, etc .

Much patronised by persons of fashion in London and Paris .W. R. H. Trowbridge in his biography ("Cagliostro"-Chapmaa & Hall, 1910) states that Cagliostro was a member

of the Illuminati and was financed by them. He was intimatewith Cardinal de Rohan, victim of the Diamond Necklaceaffair in 1785, and was arrested but acquitted . He died inprison in Italy . Cagliostro is said by Trowbridge to have

signed an oath on admission to the Illuminati to engage in

conspiracy against the throne of France .

The affair of the Diamond Necklace is generally regarded

as the prelude to the French Revolution. The Jewish Court

jewellers, Boehmer and Bassange, had on hand a diamondnecklace which they had failed to sell to Madame Du Barry

before the death of Louis XV. Cardinal de Rohan had takenas his mistress a so-called Countess de Lamotte . The countess

pretended intimacy with the Queen and by forged letters led

to Cardinal to believe that the Queen was in love with him.

The Cardinal was even met at a rendezvous by a lady whomhe supposed to be the Queen. Later he received through the



iv APPENDIXCountess a message saying that the Queen wished to buy the

necklace for 156,000, but it was inconvenient to find the moneyat once, and she desired the Cardinal to stand surety for it andto procure the necklace for her. The Cardinal did so,'handingthe necklace to a confederate of the Countess, whom hesupposed to be a court messenger. The necklace was pulledto pieces by the Countess and the diamonds sold . A year - later

the jeweller sought payment . The Queen declared she knewnothing of any necklace . The Cardinal, in debt to Jews, isunable to pay. The King is approached by the jeweller and isgreatly enraged on learning the story, the Queen also is beside

herself with indignation, and the upshot is that the Cardinal isarrested on August 15, 1785, in full pontificals just as he is

about to celebrate high mass on Assumption Day as GrandAlmoner of France. A trial follows in which public feeling ismuch inflamed against the Queen, who is thought to have set

a trap for the Cardinal . The Countess is imprisoned,: the

Cardinal acquitted. Cagliostro, who had been intimate with theCardinal, was accused of complicity by the Countess, but -wasacquitted. Various writers take the view that the affair was a

diabolically clever plot to discredit the royal family in the eyesof the people of France, and point with suspicion to Cagliostroas a probable agent of the Illuminati of Bavaria .

Cassel, Prof. Gustav. Born 1866. Swedish economist. Professorof economics at Stockholm since 1904 . His memorandum on"The World's Monetary Problem" attracted great attention atthe International Banking Conference at Brussels in 1920 .

According to the "Encyclopaedia Britannica" (1929 Edition)he is regarded as "one of the world's foremost authorities onforeign exchanges." Delegate at 1922 Economic Conferenceat Genoa ; at International Chambers of Commerce Confer-ences, 1921 and 1922; and at International EconomicConference at Geneva, 1927 .

Commons, Prof. John Rogers.-Born 1862. For many yearsProfessor of Political Economy at the University of Wisconsin,appointed 1904. Expert agent of the United States IndustrialCommission, 1901 . One of the founders of the AmericanProportional Representation League, active in the NationalCivic Federation . Author of "The Distribution of Wealth,""Social Reform and the Church," "Proportional Representa-tion," "Trades Unionism and Labour Problems," andcontributor of many articles to mazagines and economicjournals .

D'Abernon, Lord. Formerly Sir Howard Vincent. Born 1857.

British representative on the Council of the Ottoman PublicDebt, 1882 ; Financial adviser to Egypt, 1883-89; Governor' ofImperial Ottoman Bank, 1883-89; Chairman of DominionsRoyal Trade Commission; Ambassador to Germany after thewar

Dawes, General Charles Gates.-Born 1865. United StatesAmbassador to Great Britain . Connected with railwayadministration in early life. Was appointed Controller of theUnited States Currency under President McKinley, 1898-1902 .



APPENDIXThen founded and became head of Central Trust Company of:Illinois in 1902, a concern named as in the Money Trust in

the Pujo Commission report of 1913. Had control of Americantransport in France during the war, and of disposal of warsupplies on its conclusion . Was appointed Director of the-Budget under President Barding. Elected Vice-President ofthe United States with President Coolidge .

Dillon, Dr. Emile Joseph.-Deceased. Formerly correspondent ofthe London "Daily Telegraph" abroad, constant contributor toleading English monthly reviews and was a foremost authority

on foreign affairs .

Fisher, Prof. Irving.-American economist . Born 1867. Appointedprofessor of economics at Yale University, 1898 . Chairman ofmany commissions dealing with public health, prohibition and

labour. A foremost writer oir monetary problems . In . 1911

he formulated what is known as the Fisher Money StabilisationPlan. Author of "Stabilising the Dollar" (1920), "The Money

Illusion" (1928), and many other books .

Ford, Henry.-Born 1863. Founded the Ford Motor Co. in 1903on 28,000 dollars capital . In 1926 the Company had assets of1,000,000,000 dollars, and employed 200,000 people directly andan equal number indirectly. The company was built up byputting the profits back into construction . It is stated by the

Encyclopaedia Britannica (1929) to be entirely owned byHenry Ford and his son Edsel, the other shareholders having

been bought out for 70,000,000 dollars in 1919 .

Harriman, Edward Henry.-1848-1909 . American financier and

railroad magnate. At first associated with Stuyvesant Fish and

the Illinois Central System . In 1898 he formed a syndicatewith Kuhn, Loeb and Company to acquire the Union Pacific,then in the United States Government Receiver's hands . In1901 he secured control also of the Southern Pacific. Hisabortive contest in 1901 with J. J. Hill for -ontrol of theNorthern Pacific created one of the most serious financial crises

even known in 4a . .ll Street. At his death his influence wasestimated to extend over 60,000 miles of railways . TheEncyclopaedia Britannica says : "Harriman's methods excitedthe bitterest criticism, culminating in a stern denunciationfrom President Roosevelt in 1907."

House, Edward MandelL-Born 1858 Commonly known as"Colonel" House, as an American courtesy title . A Texasplanter . Was political adviser to several Texas Governors,but refused all office himself . Took a leading part in securingthe nomination of Woodrow Wilson as Democratic Partycandidate for the Presidency in 1912 . Refused office in theWilson Cabinet, but acted as adviser to President Wilson, who

referred to him as "my independent self . "

Kahn, Otto H.-Financier . Partner in Kuhn, Loeb and Company,New York. For biography refer to Chapter V .

Kitson, Arthur.-Born 1860 Chairman and managing directorof the Kitson Engineering Co. (London) Ltd. Inventor of theKitson_ Light now used in all British lighthouses and patentee-of -many inventions. Long President of the Banking and



vi APPENDIXCurrency Reform League . Author of "The Money Question"(1894) and many other books on money problems, andcontributor of many articles to the "National Review,London "Times," etc .

Ludendorff, General Erieh.-Born 1865 Chief of the GermanGeneral Staff during the world war . Since the war has beenassociated with the Kapp "Putsch" and the Hitler movementagainst the present regime in Germany, which he asserts hasplaced that country under Jewish control .

McKenna, Rt. Hon. Reginald.-Born 1863. British politician andfinancier . Called to the bar in 1887 In 1895 enteredParliament as a Liberal. Financial Secretary to the Treasury

(1905), President of the Board of Education (1908), First Lordof the Admiralty, Home Secretary, Chancellor of theExchequer (1915) . Went out of office with Mr. Asquith inDecember, 1916 In 1919 accepted the chairmanship of theMidland Bank Extra Dreadnoughts were built againstGermany during his period at the Admiralty, at which timeH.M.S. "New Zealand" was given by New Zealand andHM.A.S "Australia" by Australia.

Melchett, Lord.-Formerly Alfred Moritz Mood (1868-1930. )

Born in Lancashire, son of Dr. Ludwig Mond (1839-1909),_ aGerman chemist who in 1862 went to England, and in 1873with Sir Thomas Brunner founded the firm of Brunner, Mondand Co The late Lord Melchett became a director of theCompany in 1895 and succeeded his father as head of it andthe Mond Nickel Co., the South Staffordshire Mond Gas Co . ,

etc . Elected to Parliament in 1906 as a Liberal. Was FirstCommissioner of Works in the Lloyd George Ministry of 1916 .

Left the Liberal Party in January, 1926, as he disapproved of

its new land policy. Founder of Imperial Chemical Industriesand other huge combines since the war .

Melchior, Dr. Carl.-Partner in Warburg and Co. , bankers,Hamburg Chairman of the Financial Committee of theLeague of Nations, 1930. One of the six delegates representingGermany at the Peace Conference at Paris in 1919. Active inpromoting the Bank of International Settlements founded inconnection with the Young Plan for German reparationpayments.

Nienseyer, Sir Otto Ernst.-Refer to Appendix II for biographicaldetails .

Passfield, Lord. Formerly Mr. Sidney Webb Born 1860Secretary of State for the Dominions since June, 1929President of the Board of Trade, 1924 . Long prominent inthe Socialist movement as a member of the Fabian Society .

Author of many books on trades unionism and industrial andsocial topics . Served on London County Council and Senateof University of London . Founder and for years cha manofLondon School of Economics . Started the "New' Statesman"in 1913. Has sat on many Royal Commissions .

Rasputin, Gregory Efimovitch.-(1871-1916.) Russian monk Sonof a poor peasant . Because of his habits he was given thename of Rasputin, meaning "debauches." In 1907 he was



APPENDIX vfl

introduced to the Tsarina and acquired great influence at court

by means of spiritualistic seances, etc ., and by his treatmentof the sickly Tsarevitch . The appointment of an illiteratefriend of his to be a bishop caused a great scandal in 1911, andthe prestige of the Tsar and Tsarina was greatly lowered, by

their association with this dissolute and illiterate monk .

Rasputin was assassinated at the Yussopoff Palace onDecember 15, 1916, by Prince Yussopoff and others whodesired to rid Russia of him . In Chapter VII will be foundthe authority for statements that Rasputin was in Jewish pay

and that a Masonic plot had been formed to use him to destroyRussia .

Reading, Marquis of. Formerly Sir Rufus Isaacs . Born 1860.

Sof Joseph Isaacs, merchant Called to the bar in 1887 .

Elected to Parliament as a Liberal in 1904. Became Attorney-General in 1910, and in 1912 was given a seat in the Cabinet(the first time the holder of this office was ever so honoured) .

Then came the Marconi scandal. In this it was alleged thathe had bought American Marconi shares on information notgenerally available to the public, at a time when the BritishMarconi Company (managed by his brother, Mr. GodfreyIsaacs) was negotiating a contract with the Government ; andfurther that some of these shares were taken over by Mr. Lloyd

George (then Chancellor of the Exchequer) and by the ChiefMinisterial Whip. There were three reports made as theresult of Parliamentary inquiry . The first report stated thatthe charges were absolutely untrue, and those who made them

had no reason to believe them true. The second stated that ifin the debate of October 11, 1912, it had occurred to theMinisters concerned to make a statement of the facts asdisclosed in the libel action against "Le Matin" much misunder-standing would have been averted and the labours of thecommittee lessened . The third (minority) report stated thatthe Attorney-General had acted with "grave impropriety" in

buying the shares in the circumstances, and had placed himselfin a position in which his private interest might easily havebeen in conflict with his public duty. The same censure wasapplied to the Chancellor of the Exchequer and the ChiefMinisterial Whip . The minority further considered that thereticence of the Ministers in the debate of October, 1912, was

a grave error of judgment and lacking in respect for theHouse of Commons A few months after this Sir RufusIssaacs was made Lord Chief justice, and given a peerage as

Lord Reading . On the outbreak of war, states the

Encyclopedia Britannica, he "assisted in the drafting andadministration of those measures which saved England fromfinancial ruin ." He later went to America as a special financialenvoy and negotiated the terms for war borrowing by whichBritain agreed to pay back in gold on demand (in some casesthree days' notice) the enormous sums she borrowed from theUnited States. In 1918 Mr. Lloyd George's Governmentappointed Lord Reading Viceroy of India. He was successivelymade Earl and Marquis. He is director of several newspapercompanies and combines, and of the Mond Imperial Chemical



can APPENDIXIndustries combine and the allied Financial Corporation of

Great Britain and America, which is linked up with concerns

named in the Pujo report of 1913 as included in the UnitedStates Money Trust .

Schiff; Jacob H.-(1847-1920. ) For biographical details seeChapter V

Schuster, Sir Felix.-Born 1854 Son of F. J. Schuster ofFrankfort-on-Main, afterwards a merchant banker in .London .

Became Governor of the Union Bank of London in 1895, andholds many banking directorates in London . A brother, SirArthur Schuster, is a prominent scientist and during the war

and since has been active in the direction of national research .

Shibley, George H. Born 1861 Admitted to Illinois bar in

1887 . Founded American Bureau of Economic Research in1899, and in 1902 the National Federation for the People'sRule . Author of "The Elements of Law," "The MoneyQuestion," "The Monopoly Question," "Outline of SocialEvolution," "The University and Social Problems," "The Trust

Problem Solved," etc .

Spring-Rice, Sir Cecil .-(1859-1918. ) British diplomat. Joinedthe Foreign Office in 1882, and after service in United States

(where he formed a life-long friendship with Theodore Roose-

velt) and elsewhere, was successively British Minister to Persiaand Sweden, and Ambassador to the United States from 1912to the end of 1917, when he was replaced by Lord Reading .

He died unexpectedly at Ottawa on February 14, 1918, on his

way back to England.

Stamp, Sir Josiah.-Born 1880. British economist. Was assistantsecretary of the Inland Revenue Board from 1916 to 1919 ;

then director and secretary of Nobel Industries, Ltd. In 1925he became chairman of the London, Midland and ScottishRailway Co Is a director of the Bank of England . Sat onRoyal Commission on Income Tax, 1919 ; on Finance Arbitra-

tion Committee for Northern Ireland, 1923-24; on Committeeon German currency . and finance, 1924 ; on Court of Inquiryinto Coal Industry, 1925 ; on Reparations Commission, 1929.

Knighted, 1914.

Steed, Henry Wickham.-Born 1871. Successively London"Times" correspondent at Berlin, Rome, Vienna . Foreigneditor of the "Times," 1914-17 . Editor, February, 1919, to

November, 1922. Was head of a special Government mission toItaly in 1918. Now editor of the English "Review of Reviews ."

Stoll, Sir Oswald.-Born 1866 London theatre proprietor andmanager. Chairman and managing director the ColiseumSyndicate and many other theatre companies. Author of "ThePeople's Credit," 1919 ; "Freedom in Finance," 1918 ; "Broad-sheets on National Finance," 1920, and other books and articleson the same subject .

Sydenham, Lord. Born 1849 Governor of Victoria, 1901-04 ;

helped to reconstruct the War Office ; secretary of Imperial

Defence Committee; Governor of Bombay, 1907-13;- hasrepresented Britain on many missions abroad .



APPENDIX i x

Warburg, Paul Moritz .-Originator of U . S. Federal ReserveBoard, etc. (See Chapter V . ) .

Weishaupt, Adam.-(1748-1830.)' Bavarian University Professor .

Founded the Society of the Illuminati, May 1, 1776 . Thissecret organisation aimed at the destruction of monarchy and

the Church and the substitution of patriarchial rule . It . i s

held by some that Frederick the Great and Voltaire may have

been the concealed superiors, and that Frederick used it in

his designs against France . Searches and arrests were made

by the Elector of Bavaria in 1784. The Count de Mirabeauand other influential persons are said to have been members .

The plans of the Illuminati have marked resemblances to those

set out in the documents known as the "Protocols of the

Learned Elders of Zion . "

White, Arnold .-Born 1848. Author. Writer on social problemsand colonisation, making many visits to Canada, South Africa

and Russia . Acted for Baron de Hirsch in negotiating for

land in Argentina for the settlement of Russian Jews. Waslong an advocate of a strong navy . His books include "The

Modern, Jew," 1899 ; "The Hidden Hand," 1917 .

Wolf, Lucien.-Born 1857. Journalist . Sub-editor and leader-writer on the "Jewish World," 1874-93 . Foreign editor of

London "Daily Graphic," 1890-1909 . A frequent contributor

to leading publications . . Has been. president of Jewish

Historical Society of England, and W.M. of Authors' Lodgeof Freemasons . Represented the Jewish community at the

Peace Conference in 1919. Author of many books, including"The Myth of the Jewish Menace in World Affairs," 1921,

Young, Owen D.-Born 1874. Lawyer. Counsel for AmericanGeneral Electric Company, 1911 . In 1913 was made a vice-

president of the Company, and in 1922 became chairman 'ofthe board of directors . Organiser of the Radio Corporation of

America, and connected with many other companies . Wasappointed chairman of German Reparations Commission, 1929,

which drew up what is known as the Young Plan now inforce.

(IV) "HONOUR OR DOLLARS?"The references on pages 97, 107 and 109 of this book to the

British debt to the United States are instructive when read in

conjunction with the matter in "Honour or Dollars?" (Australian

edition : Angus & Robertson, 1929) . In that booklet, published by

the American Association Favouring Reconsideration of the War

Debts, appears the following comment on the terms on which the

British debt was funded :

"When by a. strange combination of eagerness and financial or

political ineptitude the American so-called debt was suddenlyfunded on terms which astounded the astute U. S . Treasury

officials themselves, this extraordinary faux pas of the British

Government, acting through its representatives, not -only fastened

a colossal burden upon the English taxpayer for this generation

and two or three more to come, but also made the lot of every

allied nation much harder . "



a

Agricultural Prices, 17 .

Air Transport Coys ., 124 .

Aldrich, Senator, 34, 77, 82.

Alexieff, Gen., 70 .

"Alien Menace, The," 54, i-iii .

Allan, Miss Maude, 132 .

Allegemeine Electritats Gel-

leschaft, 47 .

Amalgamated Copper, 81 .

"America Conquers Britain,"29, 119 et seq .

American Agricultural Chem-ical' Coy., 81 .

American Banking Associa-tion, 24, 75 .

American Beet Sugar Coy., 81 .

American Bureau of Political

Research, 85, viii .

American Can Coy., 81 .

American Car and FoundryCoy., 8t .

American Exchange NationalBank, 80.

American Locomotive Coy, 81 .

American Power and LightCorporation, 121 .

American Security Coy, 81 .

American Smelting and Refin-

ing Coy, 81 .

Argentina, 122 .

Armour & Coy., 81 .

Ashkenazim, 47 .

Asquith, see Oxford, Earl of .

Associated Electrical Indus-

tries, 120 .

Astor Trust Coy., 80.

Baden, Prince Max of, 35, 57 .

Baker, Geo. F.. 78.

Ballin, Albert, 95 .

Baldwin Locomotive Works,81 .

Baltimore and Ohio Railways,

38 .

Bank Charter Act, 22.

Bank of England, 106.

Bank of International Settle-ments, 35, 57 .

Bank of Manhattan, 80 .

Bankers Trust Coy., 79.

INDEXBanque de l'Indo Chine, 115 .

Batsell, Walter Russell, 59,151 .

Beedy, Carroll, L ., 91 .

Beef Trust, 42 .

Behn, Sosthenes, 121 .

Belloc Hilaire, 62, 73, 131, iii .

Bernstorff, Count von, 58 .

Billing, Pemberton, 132 .

Birkenhead, Lord, 122, 123 .

Bismarck, Prince, 55 .

B jorko, Treaty of, 60Blackett, Sir Basil, 95 .

Bleichroders, 53Bogaevsky, General, 70 .

Bolshevik Revolution, 58-73.

Bond and Mortgage GuaranteeCoy., 39 .

Boy-Ed, Captain, 95.

Brandeis, Louis J., 44, 59.

Brazil, German Banks in, 46 .

Britain, Depression in, 19, 30 .

Brown, Shipley and Coy., 106 .

Brussels Banking Conference,

99 .

Bryan, Wm. Jennings, 83, 111 .

Buchanan, Sir Geo ., 63-4, iii .

Cagliostro, 63, iii .

Callaway, Oscar, 77, 83. .

Cassel, Prof. Gustav, 20, 31,

91-2, 118, iv .

Cazalet, Captain V. H., 93,

135 .

Central Leather Coy ., 81 .

Central Trust Coy., 39, 80, 81, .

117Chamberlain, Austen, 105.

Chase Nat. Bank, 76, 79, 80,

115.

Chemicals Combine, 123 .

Chemicals Nat . Bank, 80.

Chicago and Alton Railways,40.

Chicago, Burlington andQuincy Railways,China, Concessions in, 113 etseq., 122 .

Churchill, Winston, 108,Cleveland, President, 25-6



Colorado Fuel and Iron Coy . ,

81 .

Columbia Bank, 39Commercial Exchange Bank,80 .

Committee on Public Inform-ation (U.S.), 67.

Commons, Prof. J. R., 92, 101 .

iv .

Continental and CommercialBank, 81, 115.

Coolidge Cabinet, 126.

Copper Control, 122 .

Corruption inUS.A. ,

40-2Creel, George, 67 .

Crisis of 1893, 25-6.

Crisis of 1901, 38,41 .

Crisis of 1907, 34, 37, 75 .

Culberson, Senator, 85 .

Cunliffe Committee, 98 .

D'Abernon, Lord, 35, 47, iv .

Dannreuther, Sir Sigmund, ii .

Darmstadter Bank, 55 .

Dawes, General, C . . G., 117,

171, iv.

Dawes. Report, 52, 100, 106,117 .

"Dearborn Independent," 50,128 et seq.

Deflation, Effects of, 12 ;

Ordered in 1920, 104 .

Del Mar, Alexander, 23 .

Denny, Ludwell, 29, 119 etseq

Deportation of Dr. Levy, 72; ,

Dernburg, 95 .

Deterding, Sir Henri, 127 .

Deutsch, Herr, 47 .

Deutsche Bank, 55 .

Diamond Necklace, 63, iii .

Dillon, Dr. E. J ., 45, iv .

Dillon, Read & Coy., 121 .

Disconto Gesellschaft, 54, 66Disraeli, 48, 150,

"Dollar Diplomacy," 113 .

Dollar Standard, 30.1 .

Du Pont, Nemours & Coy,,123 . -

Edmundson Corporation, 12LElectric Bond andShare Coy,120.

Equitable Life, 39, 42,

Equitable Trust, 80, 176-7 .

Farmers and the Slump, 13.

Farmers' Loan and Trust

Coy., 80 .

Federal Reserve Board, 29-32,33-4, 74-92, 95, 101-5, 111-3,

134 .

Fifth Avenue Trust Coy., 39 .

Finance Corporation of GtBritain and America, 124 .

First National Bank (N.Y. ) ,

78, 115 .

First National Bank(Chicago), 81 .

Fisher, Prof. Irving, 19, 29,

31, 169, v .

Fisher Money Stabilisation

Plan, 164 et seq.

Ford, Edsel, 50, 123, 135 .

Ford, Henry, 50, 93, 128 etseq.

Fourth National Bank, 80 .

Fourth St. National Bank, 8i .

Franklin National Bank, 81 .

Franz Ferdinand, Archduke68, 93 .

Fraser, J. Foster, 130.

Frederick the Great, 53, ix .

Freeman, Joseph, 113 .

Freemasonry, i (Appendix),

59, 60, 150-1 .

French Revolution, 63, 149,151, iii .

Friedlander, 53. -

Fruhling, Goschen, Klein-

worth & Coy., 51 .

Ganetski-Furatenberg, 65, 66General Electric Coy ., 81, 121 : .

General Motors, 120 .

German Imperial Bank, 68, 69 .

German Secret Service, 68 et

seq .

Girard Trust Coy ., 81 .

Glass, Carter, 33, 82, 86

Glass-Owen Bill, 82 .

Goedsehe, Hermann, 147 .

Gold : Instability of, 16 et seq,

Quantity in World, 13.

Gold Standard, 21, 22-4, 28 .

Goachen, Cunliffe & Coy ., 106 .

Gould, George G., 40 .

Grant, President, 24.

Gray, Finley H, 7S, $4,



x n1 INDEXGreat Northern Railway, 38 .

Greater London CountiesTrust, 121 .

Gregory, Prof., T. E. G., 51,

107, - iii ,

Grenfell, E. C., 106 .

Guaranty Bankers' Trust, 121 .

Guaranty Trust Coy ., 79, 115 .

Halsalle, Henry D ., 48 .

Hamburg-America Coy., 54,94, 95, 125 .

Hanover National Bank, 80 .

Harding, W. P. G., 86, 104 .

Harriman, E. H., 36, 39, 40,114, v.

Hattersley, C. Marshall, 106,109 . .

Hazard: Circular, 25, 74 .

Heinemann, Dannie, 121 .

Helphand, Dr., 60 et seq.

Higginson, Major Henry I . . ,

87 .

Hirst, Sir Hugo, 127.

Hoffman, General von, 60 .

Holden, Sir Edward, 57 .

Hong Kong and ShanghaiBank, 115 .

Hoover Cabinet, 126 .

House, Col. E. H., 62, 70, 85

et seq, v .

Hughes, Chas . E., 172.

Illinois Trust Bank, 81 .

Illuminati, 63, 146, 148-9, iii ;

ix .

Imperial Chemical Industries,123 .

Imperial Economic Conference

(1923), 107 .

Inflation : In 1919, 101 ; Effects

of, - 12 . . :

Intercontinental Rubber Coy. ,

81 .

International AcceptanceBank, 117, 121 . .

International AgriculturalCorporation, 81 .

Internation :Harvester Coy,81 .

International Monetary Con-ference (1867), 23: - -

International Nickel Coy ., 81 .

International -Paper:Coy. , $2

International Telephone andTelegraph Coy., 121 .

Irredeemable Bonds, 184 .

Italy, 46, 122 .

Itzig, Ephraim & Coy., 53 .

Jews: Ashkenazim, 47 ; British .

139; German, 48-50, Sephar-

dim, 48Joly, Maurice, 147.

Kahn, Otto H., 36, 47, 51, 52,

86

Kartels, German, 46Kerensky, 62, 65 .

Kidder, Peabody & Coy, 78-9 .

Kitson, Arthur, 19, 26, 48, 50 ;

74, 99, 117, 161, v.

Knickerbocker Real EstateTrust Coy . , 37

Kuhn, Loeb & Coy., 33, 36 etseq, 47, 78-9, 81, 94, 95, 115,

121 .

Lackawanna Steel Coy., 82.

Lamsdorff, Count, 61, 147 .

Land Policy, British LiberalParty's, 178-81 .

Lane, Lt .-Col. A. H., 59, 71, i .

Lansdowne, Lord, 35 .

Latin America, U.S. and, 122:

Law, Bonar, 107 .

League of Nations FinancialCommittee, 35, 57.

Lee, Higginson & Coy ., 78-9,

115, 121 .

Lehfeldt, Prof., 170.

Lenin, 56, 60, 62, 65, 67, 68, 69 .

Levy, Dr. Oscar, 72 .

Liberty National Bank, 80 .

Lindbergh, Chas . A, 24, 25,

74, 85, 173 .

Liverpool, Lord, 22 .

Lloyd George, Rt. Hon. D,

56, 72, 94, 105, 109 .

London School of Economics,ii-In.

Lowenstein, Alfred, 121 .

Ludendorff, General, 94, 117,vi .

McAdoo, .W, 86, 95, 96 . -

McKenna, Rt. Hon. R., 18, 30,99, 109, 173, vi.



Manchurian Railway, 114.

Marconi Coy ., 121 .

Marconi Scandal, 131, vii.

Marcu, Valeriu, 65 .

Maxse, Leo. J ., 130Mechanics and Metals Nation-al Bank, 80 .

Melchett, Lord, 124, 127, vi.

Melchior, Dr. Carl, 35, 57, vi .

Mellon National Bank, 81 .

Mendelssohn, Moses, 53 .

Meulen, Henry, 191 .

Midland Bank, 121 .

Mirabeau, 149 .

Missouri Pacific Railway, 38,42

Mond Companies, 122-3.Monetary' Commission(U.S.A. ) , 45, 75, 76 .

Money, Quantity and Prices,11-15 .

Money Trust Commission(U.S.A. ) , 78 et seq.

Morgan, J. P., Junior, 86, 95.

Morgan, J. P., Senior, 95 .

Morgan, J. P. & Coy ., 78, 95,

97, 106, 115 .

Morgan, Grenfell & Coy ., 106 .

Morgan, Harjes & Coy., 106Morgenthau, Henry, 36, 37,40

Mortgages, 13, 177.

Morton Trust Coy., 39 .

National Bank of Commerce,79, 80.

National Biscuit Coy., 82.

National City Bank of NewYork, 33, 78-9, 86, 115, 120,

124 .

National Park Bank, 80 .

Nearing,. Scott, 113 .

"New Encyclopaedia of Social

Reform,',' 40.

"New York Times," 95New York Trust Coy., 80.

Nickel Combines, 122.

Niemeyer, Sir Otto Ernst, 35,51, 107-8, i-ii .

Nilus, Prof . Sergius, 60, 63,

140, 143, 146, 148Norfolk and Western Railway,38.

Norman, Rt. Hon . Montagu,

57, 106

INDEX

Northcliffe, Lord, 96Northern Pacific Railway, 38,

41 .

Northern Securities Coy ., 38,

39.

North German Lloyd, 54, 125 .

Nya Bank, 66 .

Oil Companies, 123, 126-7 .

Overstone, Lord, 22.

Owen, Senator, 56, 82, 87 .

Page, Walter H., 97 .

Paish, Sir Geo ., 95 .

Panama, 127 .

Papen, Col. von, 95 .

Parsons, Jno. E., 37 .

Parvus (Helpland), 60, 65 etseq .

Passfield, Lord, ii, vi.

Peel, Sir R., 22 .

Pennsylvania Railroad, 38.

Philadelphia National Bank,81 .

Pitt-Rivers, W. G., 72 .

Powell, Dr . Ernest, 130, ii .

Price Level Chart, 102 .

Protocols of the LearnedElders of Zion, 60, 63, 145,

148, 152.

Protopoff, M., 61, 64 .

Pujo Commission, 78 et seq .

112 .

Pullman Co., 82 .

Radio Corporation, 121 .

Railways, US. , 40-44 .

Rasputin, 59, 61-3, 64, vi .

Rathenau, Walter, 53, 54, 55 .

Reading, Marquis of, 94, 97-8,

123, vii .

Reichsbank, 52-54Riggs National Bank, 81 .

Roosevelt, President Theo-dore, 39 .

Rothschilds, 38, 53, 121 .

Rubber Combines, 123 .

Russia, Arbitration Treatywith US . , 58.

Russo-Japanese War Loan, 38 .

San Domingo, 116Sapiro, Aaron, 133 .

Schacht, Dr., 106, 117 .

Schiff, Jacob H., 33, 35, 37-9,

58, 71, 75, 87, 88, 95, 114,



xiy

Schiff, Mortimer L., 40.

Schiedemann, Herr, 66.

Schroeder, Baron, 51 .

Schroeder, J. Henry & Co ,

106Schuster, Sir Felix, 51, 108,

v i i i .

Secret Societies, 131, 150Sephardim, 48Sera;evo Tragedy, The, 93.

Seymour, Dr. Charles, 85Sherman Anti-Trust Law, 39 .

Sherman Silver law, 24.

Shibley, G. H, 23, 83, viii .

Siberian Bank, 66

INDEXTitle Guaranty and TrustCoy., 39.

Towner, Horace Mann, 84 .

Treitschke, 48Trotsky, 56, 60, 68, 69 .

Trust Companies, 36, 42-3 .

Trust Financiers, etc., 121 .

Trusts (U.S.A. ) , 26, 39Tsar, the late, 60, 64, 147, vii .

Tsarina, the late, 63, 64, v i i

Underwood, Mr . , 84Union Pacific Railroad, 26, 36,

38, 40, 41 .

Union Trust Coy. , 80, 81 .US . Mortgage and Trust

Documents

The Truth About the Slump-A N Field-1932-221pgs-POL