Since the latter part of the eighteenth century, the Rothschild Formula had controlled the political climate of Europe. Nations had increasingly confronted each other over border disputes, colonial territories, and trade routes. An arms race had been in progress for many years; large, standing armies had been recruited and trained; military alliances had been hammered together; all in preparation for war. The assassination of Ferdinand was not the cause but the trigger. It was merely the spark that lit the fuse that fired the first loaded cannon.
AN INVESTMENT IN WAR
The exigencies of war in Europe required England and France to go heavily into debt. When their respective central banks and local merchant banks could no longer meet that need, the beleaguered governments turned to the Americans and selected the House of Morgan—acting as partners of the Rothschilds—to act as sales agent for their bonds. Most of the money raised in this fashion was 236 THE CREATURE FROM JEKYLL ISLAND
quickly returned to the United States to acquire war-sensitive materials, and Morgan was selected as the U.S. purchase agent for those as well. A commission was paid on all transactions in both directions: once when the money was borrowed and again when it was spent. Furthermore, many of the companies receiving production contracts were either owned outright by Morgan holding companies or were securely within his orbit of bank control. Under such an arrangement, it will not be surprising to learn, as we shall in a moment, that Morgan was not overly anxious to see hostilities come to a close. Even the most honorable of men can be corrupted by the temptation of such gigantic flows of cash.
Writing in the year 1919, just a few months after the end of the war, John Moody says:
Not only did England and France pay for their supplies with money furnished by Wall Street, but they made their purchases through the same medium.... Inevitably the house of Morgan was selected for this important task. Thus the war had given Wall Street an entirely new role. Hitherto it has been exclusively the headquarters of finance; now it became the greatest industrial mart the world had ever known. In addition to selling stocks and bonds, financing railroads, and performing the other tasks of a great banking center, Wall Street began to deal in shells, cannon, submarines, blankets, clothing, shoes, canned meats, wheat, and the thousands of other articles needed for the prosecution of a great war.
The money began to flow in January of 1915 when the House of Morgan signed a contract with the British Army Council and the Admiralty. The first purchase, curiously, was for horses, and the amount tendered was $12 million. But that was but the first drop of rain before the deluge. Total purchases would eventually climb to an astronomical $3 billion. The firm became the largest consumer on earth, spending up to $10 million per day. Morgan offices at 23 Wall Street were mobbed by brokers and manufacturers seeking to cut a deal. The bank had to post guards at every door and at the partners'
homes as well. Each month, Morgan presided over purchases which were equal to the ^ross national product of the entire world just one generation before.
1. John Moody,
2. Chernow, pp. 187-89.
SINK THE LUSITANIA!
237
Throughout all this, Morgan vigorously claimed to be a pacifist.
'Nobody could hate war more than I do,' he told the Senate Munitions Committee. But such professions of righteousness were difficult to accept. Lewinsohn comments:
The 500 million dollar loan contracted in autumn 1915 brought to the group of bankers, at whose head Morgan was, a net profit of 9
million dollars.... Again, in 1917, the French government paid to Morgan's and other banks a commission of 1,500,000 dollars, and a further million in 1918.
Besides the issue of loans there was another source of profit: the purchase and sale of American stock which the Allies surrendered so that they could buy munitions in the States. It is estimated that in the course of the war some 2000 million [two billion] dollars passed in this way through Morgan's hands. Even if the commission was very small, transactions of such dimensions would give him an influence on the stock market which would carry very real advantages....
His hatred against war did not prevent him, citizen of a neutral country, from furnishing belligerent powers with 4,400,000 rifles for a matter of $194,000,000.... The profits were such as to compensate to some degree his hatred of warfare. According to his own account, he received, as agent of the English and F r e n c h g o v e r n m e n t s , a commission of 1% on orders totalling $3,000,000,000. That is, he received some $30,000,000.... Besides these two chief principals, Morgan, however, also acted for Russia (for whom he did business amounting to $412,000,000) and for Italy and Canada (figures for his business with the last two not having been published)....
J.P. Morgan, and some of his partners in the bank, were at the time shareholders in c o m p a n i e s that were ... concerns which m a d e substantial profits from the orders he placed with them. .. It is really astonishing that a central buying organization should have been confided to one who was buyer and seller at the same time.1
GERMANY'S U-BOATS ALMOST WON THE WAR
But there were dark clouds gathering above Wall Street as the war began to go badly for the Allies. With the passage of time and the condensing of history, it is easy to forget that Germany and the Central Powers almost won the war prior to U.S. entry. Employing a small fleet of newly developed submarines, Germany was well on her way to cutting off England and her allies from all outside help.
