Creature From Jekyll Island by G. Edward

ENGLAND IN DEPRESSION

With the value of the pound set artificially high in order to sustain prices, wages, and profit levels, the cost of British exports also became high, and they ceased to be competitive in world markets.

With exports in decline, the amount of money coming into the country also declined. England became a debtor nation, which means that her payments to other countries were larger than her income from those countries.

As pointed out in chapter five, if an individual spends more than his income, he must either increase his income, dip into savings, sell off assets, create counterfeit, or borrow. The same is true of nations. England had already borrowed to the limit of her credit and was rapidly exhausting her savings in order to continue purchasing foreign goods to sustain the high standard of living to which she had grown accustomed. She couldn't counterfeit because payments for these imports had to be settled in gold, which meant that, as her national savings were spent, her gold supply moved out of the country. The handwriting was on the wall. If this process continued, the nation soon would be broke. It was a situation, incidentally, which was amazingly parallel to what has plagued the United States since the end of Word War II, and for mostly the same reasons.

By March of 1919, England's trade was so depressed that she had no choice but to let the value of the pound 'float,' which means to seek its own level in response to supply and demand. Within a year it had dropped to $3.21, a loss of thirty-four per cent. Since the American dollar was the de facto world monetary standard at that time, receiving fewer dollars for each pound sterling meant that the pound was valued lower in all the markets of the world. The result was that the price Britishers had to pay for imported goods was becoming higher while the price she received for the export of her own goods was becoming lower. The British economy was, not only badly anemic, it was experiencing a monetary hangover from the vast inflation of World War I. In other words, it was undergoing a painful but, in the long run, healthy recovery and a return to reality.

Such a condition was intolerable to the monetary and political scientists who were determined to find a quick and painless remedy which would allow the binge to continue. Several emergency therapies were administered. The first was to use the Financial 422 THE CREATURE FROM JEKYLL ISLAND

Committee of the League of Nations—which England dominated—

to require all the other European nations to follow similar inflationary monetary policies. They were also required to establish what was called the 'gold exchange standard,' a scheme whereby all countries based their currency, not on gold, but on the pound sterling. In that way, they could all inflate together without causing a disruptive flow of gold from one to the other, and England would act as the regulator and guarantor of the system. In other words, England used the power of her position within the League of Nations to establish the Bank of England as a master central bank for all the other central banks of Europe. It was the prototype for what the Cabal now is doing with Federal Reserve and the World Bank within the framework of the United Nations.

PROBLEM OF AMERICAN PROSPERITY

Europe was well in hand, but that still left the United States to be controlled. America had also inflated during the war but not nearly as much. She also had a fractional gold standard, but the stockpile of gold was very large and still growing. As long as America continued to exist as the producer of so many commodities that England needed for import, and as long as the value of the dollar continued to be high, the anemia of the pound sterling would continue.1

The therapy chosen for this problem was simple. Perform a monetary transfusion from a healthy patient to the unhealthy one.

All the London financiers had to do was find a large and robust specimen who, without asking too many questions, would be willing to become the donor. The specimen selected, of course, was Uncle Sam himself. It was the prototype of the transfer mechanism, previously described, which has been the life support keeping alive the moribund Communist and Socialist countries since World War II.

There are several ways the life blood of one nation can be transfused to another. The most direct method, of course, is to make an outright gift, such as the bizarre American ritual called foreign aid.

Another is to make a gift disguised as something else, such as needlessly stationing military bases abroad for the sole purpose of bolstering the foreign economy, or granting a loan to a foreign 1. For an overview of the foregoing developments, see 'The Federal Reserve as A Cartelization Device,' by Murray N. Rothbard, in Money in Crisis, Barry N. Siegel, ed. (New York: Ballinger, 1984), pp. 115- 17.

THE LONDON CONNECTION

423

government at below market rates or—worse—with the full expectation that the loan will never be repaid. But the third way is the