home to persuade the Secretary to change his mind, lest his resignation be taken as a sign of disunity within the President's Cabinet Bryan agreed to think it over one more day but, the following morning, his decision remained firm. In his memoirs, annotated by his wife, Mrs. Bryan reveals that her husband could not sleep that night He was so restless I suggested that he read a little till he should become drowsy. He had in his handbag a copy of an old book printed in 1829 and called 'A Wreath of Appreciation of Andrew Jackson. He found it very interesting.'3
What irony. In chapter seventeen we shall review the total war waged by President Jackson against the Bank of the United States, 1 • Bryan, Vol II, pp. 398-9.
2. McAdoo, p. 333.
3. Bryan, Vol. II, p. 424.
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the predecessor of the Federal Reserve System, and we shall be reminded that it was Jackson who prophesied:
Is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country?... [Is there not] cause to tremble for the purity of our elections in peace and for the independence of our country in war?... Controlling our currency, receiving our public monies, and holding thousands of our citizens in dependence, it would be more formidable and dangerous than a naval and military power of the enemy.1
One can only wonder what thoughts went through Bryan's
mind as he recalled Jackson's warning and applied it to the artificially created war hysteria that, at that very moment, was being generated by the financial powers on Wall Street and at the newly created Federal Reserve.
From England, Colonel House sent a telegram to President
Wilson which he, in turn, read to his Cabinet. It became the genesis of thousands of newspaper editorials across the land. He said piously:
America has come to the parting of the ways, when she must determine whether she stands for civilized or uncivilized warfare. We can no longer remain neutral spectators. Our action in this crisis will determine the part we will play when peace is made, and how far we may influence a settlement for the lasting good of humanity. We are being weighed in the balance, and our position amongst nations is being assessed by mankind.2
In another telegram two days later, House reveals himself as the master psycho-politician playing on Wilson's ego like a violinist stroking the strings of a Stradivarius. He wrote:
If, unhappily, it is necessary to go to war, I hope you will give the world an exhibition of American efficiency that will be a lesson for a century or more. It is generally believed throughout Europe that we are so unprepared and that it would take so long to put our resources into action, that our entering would make but little difference.
In the event of war, we should accelerate the manufacture of munitions to such an extent that we could supply not only ourselves but the Allies, and so quickly that the world would be astounded.3
1 Herman E. Krooss, ed.,
2- Seymour, p. 434.
3.
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258 THE CREATURE FROM JEKYLL ISLAND
Congress could not resist the combined pressure of the press and the President. On April 16, 1917, the United States officially declared war on the Axis powers. Eight days later, Congress dutifully passed the War Loan Act which extended $1 billion in credit to the Allies. The first advance of $200 million went to the British the next day and was immediately applied as payment on the debt to Morgan. A few days later, $100 million went to France for the same purpose. But the drain continued. Within three months the British had run up their overdraft with Morgan to $400 million dollars, and the firm presented it to the government for payment. The Treasury, however, was unable to put its hands on that amount of money without jeopardizing its own spendable funds and, at first, refused to pay. The problem was quickly solved, however, through a maneuver described at some length in chapter ten. The Federal Reserve System under Benjamin Strong simply created the needed money through the Mandrake Mechanism. 'The Wilson Administration found itself in an extremely awkward position, having to bail out J.P. Morgan,' wrote Ferrell, but Benjamin Strong 'offered to help [Treasury-Secretary] McAdoo out of the difficulty. Over the following months in 1917-18 the Treasury quietly paid Morgan piecemeal for the overdraft.' By the time the war was over, the Treasury had loaned a total of $9,466,000,000 including
$2,170,000,000 given after the Armistice.
That was the cash flow they had long awaited. In addition to saving the Morgan loans, even larger profits were to be made from war production. The government had been secretly preparing for war for six months prior to the actual declaration. According to Franklin D. Roosevelt, then Assistant Secretary of the Navy, the Navy Department began extensive purchasing of war supplies in the Fall of 1916.2 Ferdinand Lundberg adds this perspective: By no accident all the strategic government posts, notably those concerned with buying, were reserved for the Wall Street patriots. On the most vital appointments, Wilson consulted with Dodge [President of Rockefeller's National City Bank], who ... r e c o m m e n d e d the hitherto unknown [Bernard] Baruch, speculator in copper stocks, as chairman of the all-powerful War Industries Board....
1. Ferrell, p. 89,90.
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