AGENTS OF A HIGHER POWER
When reviewing this aspect of the Fed's history, questions arise about the patriotic loyalty of men like Benjamin Strong. How is it possible for a man who enjoys the best that his nation can offer—security, wealth, prestige—to conspire to plunder his fellow citizens in order to assist politicians of other governments to 1. Galbraith, p. 180.
2. Greenspan, pp. 99-100.
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continue plundering theirs? The first part of the answer was illustrated in earlier sections of this book. International money managers may be citizens of a particular country but, to many of them, that is a meaningless accident of birth. They consider themselves to be citizens of the world first. They speak of affection for all mankind, but their highest loyalty is to themselves and their profession.
That is only half the answer. It must be remembered that the men who pulled the financial levers on this doomsday machine, the governors of the Bank of England and the Federal Reserve, were themselves tied to strings which were pulled by others above them.
Their minds were not obsessed with concepts of nationalism or even internationalism. Their loyalties were to
It must not be felt that these heads of the world's chief central banks were themselves substantive powers in world finance. They were not. Rather, they were the technicians and agents of the dominant investment bankers of their own countries, who had raised them up and were perfectly capable of throwing them down. The substantive financial powers of the world were in the hands of rhese investment bankers (also called 'international' or 'merchant'
bankers) who remained largely behind the scenes in their own unincorporated private banks. These formed a system of international cooperation and national dominance which was more private, more powerful, and more secret than that of their agents in the central banks.1
So, we are not dealing with the actions of men who perceive themselves as betraying their nation, but technicians who are loyal to the monetary scientists and the political scientists who raised them up. Of the two groups, the financiers are dominant. Politicians come and go, but those who wield the power of money remain to pick their successors.
FARMERS BECOME DUCK DINNER
During the war, prices for agricultural products rose to an all-time high, and so did profits. Farmers had put part of that money into war bonds, but much of it had been placed into savings accounts at banks within the farming communities, which is to say, mostly in the Midwest and South. That was unacceptable to the 1. Quigley,
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THE CREATURE FROM JEKYLL ISLAND
New York banks which saw their share of the nation's deposits begin to decline. A way had to be devised to reclaim that money.
The Federal Reserve System, which by then was the captive of the New York banks, was pressed into service to accomplish the deed.
Few of those country banks had chosen to become members of the Federal Reserve System. That added insult to injury, and it also provided an excuse for the Fed to wage economic war against them. The plan was neither complex nor original; it had been used many times before by central bankers. It was (1) extend easy credit to the farmers to lure them into heavy debt, and then (2) create a recession which would decrease their income to the point where they could not make payments. The country banks then would find themselves holding non-performing loans and foreclosed property which they could not sell without tremendous losses. In the end, both the farmers and the banks would be wiped out. The banks were the target. Too bad about the farmers.
Congressman Charles Lindbergh, Sr., father of the man who made the world's first solo transatlantic flight, explained it this way: 'Under the Federal Reserve Act, panics are scientifically created; the present panic is the first scientifically created one, worked out as we figure a mathematical problem.'
The details of how this panic was created were explained in 1939 by Senator Robert Owen, Chairman of the Senate Banking and Currency Committee. Owen, a banker himself, had been a co-author of the Federal Reserve Act, a role he later regretted. Owen said:
In May 1920 ... the farmers were exceedingly prosperous.... They were paying off their mortgages. They had bought a lot of new land, at the instance of the government—had borrowed money to do it—and then they were bankrupted by a sudden contraction of credit and currency, which took place in 1920....
The Federal Reserve Board met in a meeting which was not
