the profits of war. But that is another chapter, and this book is long enough.
What happened after World War II was the focus of the first six chapters. That brings us to the end of historical record. It's time, now, to reset the coordinates on our time machine and return to the present.
SUMMARY
Congress had been assured that the Federal Reserve Act would decentralize banking power away from Wall Street. However, within a few years of its inception, the System was controlled by the New York Reserve Bank under the leadership of Benjamin Strong whose name was synonymous with the Wall Street money trust.
During the nine years before the crash of 1929, the Federal Reserve was responsible for a massive expansion of the money supply. A primary motive for that policy was to assist the government of Great Britain to pay for its socialist programs which, by then, had drained its treasury. By devaluing the dollar and depressing interest rates in America, investors would move their money to England where rates and values were higher. That strategy succeeded in helping Great Britain for a while, but it set in motion the forces that made the stock-market crash inevitable.
The money supply expanded throughout this period, but the trend was interspersed with short spasms of contraction which THE GREAT DUCK DINNER
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were the result of attempts to halt the expansions. Each resolve to use restraint was broken by the higher political agenda of helping the governments of Europe. In the long view, the result of plentiful money and easy credit was a wave of speculation in the stock market and urban real estate that intensified with each passing month.
There is circumstantial evidence that the Bank of England and the Federal Reserve had concluded, at a secret meeting in February of 1929, that a collapse in the market was inevitable and that the best action was to let nature take its course. Immediately after that meeting, the financiers sent advisory warnings to lists of preferred customers—wealthy industrialists, prominent politicians, and high officials in foreign governments—to get out of the stock market.
Meanwhile, the American people were being assured that the economy was in sound condition.
On August 9, the Federal Reserve applied the pin to the bubble.
It increased the bank-loan rate and began to sell securities in the open market. Both actions have the effect of reducing the money supply. Rates on brokers' loans jumped to 20%. On October 29, the stock market collapsed. Thousands of investors were wiped out in a single day. The insiders who were forewarned had converted their stocks into cash while prices were still high. They now became the buyers. Some of the greatest fortunes in America were made in that fashion.
Section VI
TIME TRAVEL
INTO THE FUTURE
In the previous sections of this book, we have
travelled through time. We began our journey by
stepping into the past. As we crisscrossed the
centuries, we observed wars, treachery,
profiteering, and political deception. That has
brought us to the present. Now we are prepared
to ride our time machine into the future. It will be
a hair-raising trip, and much of what lies ahead
will be unpleasant. But it has not yet come to pass.
It is merely the projection of present forces. If we
do not like what we see, we still have an
opportunity to change those forces. The future
will be what we choose to make it.
Chapter Twenty-Four
DOOMSDAY
MECHANISMS
That's enough history for one book. It will soon be time to reset the coordinates on our time machine and jump into the future.
