After the Civil War, America experienced a series of expansions and contractions of the money supply leading directly to economic booms and busts. This was the result of the creation of fiat money by a banking system which, far from being free and competitive, was a half-way house to central banking. Throughout the chaos, one banking firm, the House of Morgan, was able to prosper out of the failure of others. Morgan had close ties with the financial structure and culture of England and was, in fact, more British than American.
Events suggest the possibility that Morgan and Company was in concealed partnership with the House of Rothschild throughout most of this period.
Benjamin Strong was a Morgan man and was appointed as the first Governor of the Federal Reserve Bank of New York which rapidly assumed dominance over the System. Strong immediately entered into close alliance with Montagu Norman, Governor of the Bank of England, to save the English economy from depression.
This was accomplished by deliberately creating inflation in the U.S.
which caused an outflow of gold, a loss of foreign markets, unemployment, and speculation in the stock market, all of which were factors that propelled America into the crash of 1929 and the great depression of the 30s.
Although not covered in this chapter, it must be remembered that the same forces were responsible for American involvement in both world wars to provide the economic and military resources England needed to survive. Furthermore, the key players in this 1- Andrew Carnegie,
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action were men who were part of the network of a secret society established by Cecil Rhodes for the expansion of the British empire.
Chapter Twenty-One
COMPETITION IS A SIN
We have travelled to many points on a large circle of time and now are reapproaching the journey to Jekyll Island where this book began.
In the last chapter, we saw how the expansion and contraction of the money supply following the Civil War led to a series of booms and busts. We saw how the firm of J.P. Morgan & Company, with help from financiers in London, was able to reap great profits from both sides of those cycles but particularly from the recessions.
At that point, we jumped ahead in time to examine how J.P.
Morgan and other leading American financiers were closely aligned with British interests. We also saw how, in the 1920s, the American dollar was deliberately weakened by Morgan agents within the Federal Reserve System in order to prop up the sagging British economy. Let us return now to the point of departure and allow our cast to resume playing out that most important prior scene: the actual creation of the Federal Reserve System itself.
HALF-WAY HOUSE TO CENTRAL BANKING
Historians seeking to justify governmental control of the monetary system have claimed that the booms and busts that occurred during this period were the result of free and competitive banking.
As we have seen, however, these destructive cycles were the direct result of the creation and then extinguishing of fiat money through a system of federally chartered national banks—dominated by a handful of firms on Wall Street—which constituted a half-way house to central banking. None of these banks were truly free of state control nor were they competitive in the traditional sense of 432
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the word. They were in fact subsidized by the government and had many monopolistic privileges. From the perspective of bankers on Wall Street, however, there was a great deal more to be desired. For one thing, America still did not have a 'lender of last resort.' That is banker language for a full-blown central bank with the power to create unlimited amounts of fiat money which can be rushed to the aid of any individual bank that is under siege by its depositors wanting their money back. Having a lender of last resort is the only
